Ladies and gentlemen, good day, and welcome to Q3FY25 Earnings Conference Call of Ashok Leyland Limited, hosted by Emkay Global Financial Services. 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 the star then zero on your touch-tone phone. I now hand the conference over to Mr. Chirag Jain from Emkay Global Financial Services. Thank you, and over to you, sir. Thank you, Steve. Good evening, everyone. On behalf of Emkay Global, I would like to welcome you all to the Q3FY25 Post Earnings Conference Call of Ashok Leyland Limited. Today, from the management team, we have with us Mr. Shenu Agarwal, Managing Director and CEO, and Mr. K. M. Balaji, Chief Financial Officer. I'll now hand over the call to Mr. Shenu Agarwal for his opening remarks, post which we will open the floor for Q&A. Over to you, sir. Good afternoon, ladies and gentlemen. Thank you for your continued trust in Ashok Leyland. I'm pleased to report our company's performance for quarter-ending December 2024. Our focus has been on profitable and sustainable growth through levers of product premiumization, cost leadership, and expansion of service reach. In Q3, we have continued to consolidate our position in that direction. Our net profit in Q3 FY25 jumped 31% on YoY basis. Our EBITDA margin improved to 12.8% from 11.6% in Q2 of the current fiscal and from 12.0% in the same period last year. The M&HCV industry, which had slowed down in Q2, gained strength in Q3, led by a pickup in consumption demand during festive season and better flow of government Capex in the second half of the quarter. As a result, Q3 FY25 domestic MSTV TIV was sequentially up by 10%, while on YoY basis, the industry was still down 1%, but compared to Q2 YoY degrowth of 12%, this is a major comeback. Q4 industry momentum is good, with January already recording positive industry growth. Ashok Leyland Q3 FY25 domestic MSTV volume at 26,838 numbers was lower 1% YoY, in line with the industry. Domestic MSTV truck volume was at 22,796 numbers, lower by 2% YoY, and MSTV bus volume was at 4,042 numbers, higher by 5% YoY. Ashok Leyland continues to retain 30% plus market share in domestic MSTV market. Our nine-month-ending December 2024 market share stood at 30.4%. We remain committed to achieving our MSTV market share goal of 35% in the medium term. Ashok Leyland LTV domestic volume in Q3 FY26 was at 15,415 numbers, lower by 9% YoY. In the addressable two to four-ton market, AL market share was 18.5%. With the launch of SATHI, we are committed to improve our market share to 20% in the short term and 25% in the medium term. Our latest LTV product, SATHI, which was recently launched at the Bharat Global Mobility Expo at New Delhi, is our first offering in the entry-level mini truck market. Q3 also proved to be a milestone quarter for us as we crossed 1,000 MSTV touchpoints and 800 LTV touchpoints. The export volumes registered a growth of 33% in Q3 on YoY basis. Our export business is driven by our continued focus on export-specific products and our strong local presence in GCC, SAARC, and African markets. For the nine-month period ending December 2024, export volume was 19% higher on YoY basis. Our export order book for Q4 is also very robust. Our non-CV businesses also witnessed good growth momentum. Engine volume was higher by 3.5%, and spare parts revenue was higher by 14% on YoY basis. Ashok Leyland recorded all-time high Q3 revenues of INR 9,479 crores, which are worth INR 9,273 crores in Q3 FY24. EBITDA again was a record for Q3 at INR 1,211 crores. EBITDA margin at 12.8% was better than 11.6% in Q2 of current year and also better than 12.0% in Q3 of last year. Operating PBT at INR 994 crores was higher by 10% YoY. Reported PAT at INR 762 crores was higher by 31% YoY. Material cost as a percentage of revenue was at 71.5%, lower than 72.2% in Q3 last year. This was achieved by our continued focus on material cost savings. Our balance sheet and cash position have grown stronger. At the end of last quarter, we were cash positive at INR 958 crores. As compared to a net debt of INR 1,747 crores at the end of Q3 last year, this is a major positive swing in our cash position. CapEx for the quarter was INR 179 crores, and cumulative for the year is at INR 486 crores. The reverse merger of Hinduja Leyland Finance with NDL Ventures is on track. As mentioned earlier, this is likely to be concluded by the end of Q1 FY26. Both Hinduja Leyland Finance and Hinduja Housing Finance are growing well, with asset under management at end of December quarter at INR 44,000 crores and INR 13,400 crores, respectively, recording year-on-year growth of 26% and 43%. Switch and OHM, our EV subsidiaries, are progressing as per plan. Switch Mobility unveiled Switch EiV 12, a cutting-edge low-floor electric bus tailored for the Indian market. At the end of Q3 FY25, Switch India had an order book of more than 1,800 buses, including export orders of 100 buses from Mauritius. Switch eLCVs are also gaining momentum, with monthly run rate now at over 100 numbers. OHM, our EMaaS subsidiary, is operating more than 600 buses, with fleet availability of 98% plus. Ashok Leyland Board of Directors has approved further investment of INR 200 crores in Hinduja Leyland Finance and of INR 500 crores in Optare, the holding company of Switch. This is to support capital adequacy needs of Hinduja Leyland Finance and Capex requirements of Switch. With the electrical bus market in India expected to grow, Switch India is deemed rightly positioned to benefit from the opportunity. However, the outlook for the electrical bus market in the UK continues to be uncertain. In view of these trends, we are providing due focus to the India market and concurrently evaluating available options for the UK. Europe, however, continues to offer good potential. We are happy that the first few units of the latest e1 buses from Switch, designed specifically for the European market, have been delivered to Spain. We also hope the new e1 bus will capture the GCC market in the future. At the Auto Expo in January 2025, we had displayed the country's first concept of an electric port terminal tractor. Also, we displayed the country's first 15-meter bus with air suspension and front engine, with industry-first capacity of 42 sleeper berths. At the show, Switch displayed a concept electric truck in the 7.5-ton GVW range, again first of its kind in the Indian market. All these products would go into commercial production within the next nine to 12 months. Ashok Leyland will continue to focus on product and process innovation to meet dynamic customer and market needs and to maintain its technology leadership position in both ICE and the alternative fuel space. On the customer service side, where we are now working on a mission mode to set up world-class infrastructure and processes, we further launched multiple initiatives to enhance our customer experience, transforming our service workshop operations and enhancing our breakdown and on-site support. Many of these improved processes are backed by analytics and AI-led solutions. Ashok Leyland made significant progress on its ESG commitments as well. I am proud to share that Ashok Leyland has been ranked number one globally in the heavy machinery and truck category by Sustainalytics. Our Road to School and Road to Livelihood programs continue to grow, extending their reach to about 5 lakh students now, with 92,000 students being added this year and targeting to add another 100,000 students in FY26. We made significant progress towards Re100, improving from the level of 61% at the end of FY24 to 68% now. Ashok Leyland is making good progress towards all its medium-term goals, which are as follows: achieve mid-teens EBITDA, achieve M&HCV market share of 35%, substantial growth in our non-M&HCV businesses, leadership in alternate fuel vehicles, value unlocking from subsidiaries, and leadership in ESG. The Union Budget for FY26 has been encouraging. The focus of the Union Budget on boosting consumption demand while continuing to push infrastructure buildup is favorable for the growth of core industries. Pickup in consumption demand would be positive for segments of LCV, LTV, ICV, and HCV, and healthy growth in core industries would drive the momentum for M&HCV trucks. We believe that FY26 would witness growth in all the CV segments: LTV, ICV, and M&HCV. Thank you very much for your patience. I now hand it over to the moderator for Q&A. Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchscreen telephone. If you wish to withdraw 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 Chandramouli Muthiah from Goldman Sachs. Please go ahead. Hi, good evening, and thank you for taking my questions. My first question is just around industry growth. So I think previous quarter, I think the expectation was that on a full-year basis, FY25 might be closer to sort of flat volume growth for the CV industry. And for that to happen, I think the Q4 potentially will be 4% or 5% volume growth. I think January has started off, as you said, slightly better than that. So I just want to understand how you're thinking about, is there any upside optionality or downside risk to this flat volume growth for FY25 the way you're seeing it, and how that leads your view into what potential magnitude of growth you would expect in FY26 as things stand? Yes, Chandramouli, thank you for the question. Actually, the way we look at it is Q1, the industry had grown 4%-5%, and then Q2 it was down roughly 12%. And then Q3, while it is still slightly negative, but it is a major comeback from where we were at Q2, right? Because at the end of Q2, there was a lot of pessimism whether this is the start of a new down cycle. While we maintained our outlook that it was temporary, the Q2 phenomena was mainly because of the slowdown in CapEx and also because of some erratic rains that we had experienced in some parts of the country. So we were very hopeful that it should come back. And I think Q3 kind of proved that. Like I said, while it was still slightly negative, but then January is already behind us. January, we have seen a positive growth, and February and March are looking better. So while on YoY, we are still minus 1% on M&HCV TIV for the nine-month period, but we think Q4 would be positive, and yeah, and if this continues into Q1 and Q2, then even next year could look strong. Got it. That's helpful. My second question is just around, I think, the margin upside that we've seen this quarter from CV companies operating in the Indian market. I think the last two quarters, we had YoY ASP declines, but our ASP at sort of a consolidated level is up 4% YoY this quarter. We've had similar volumes quarter on quarter, but margin has been much better quarter on quarter. So just trying to understand what the factors were in delivering some of this margin upside this quarter. Chandramouli, thanks for your question. See, this quarter has witnessed quite a good mix, both in the truck side as well as on the bus side. That has only resulted in a higher ASP, as you are observing. The mix has been quite good, especially with good pickup on the multi-axle vehicles and the cheaper segment volumes. So both these are much better sequentially. That is what is getting reflected. Of course, there has also been an increase in the ASP of the buses side also. Buses side, we have got good revenue. That has also got reflected in the overall revenue. That is why you are seeing the ASP in this month, I mean, quite good. On the margin side, actually, margins are more driven by the cost reduction measures, which we have been doing for quite some time now. Last two years, we have also shared this in the previous call. Last two years has been quite good. Now we ended up with a good 650-plus crores of cost reduction each year. And this year also, we are continuing with the cost reduction measures. And on top of all these things, the steel price, the commodity price has been quite good in this quarter. That has also added to a significant portion to the bottom line, so you are seeing a mix of confidence of all these benefits getting reflected in the margin. Just to add to that, Chandramouli, I mean, while M&HCV and LCV volumes were more flattish or more similar, but our other businesses, which are more profitable businesses like Power Solutions, Defence, Spare Parts, they had good levels of growth in Q3 as well, right? So especially on the IO side, which is again a more profitable business, we had a growth of 33% in Q3. And Q2 growth, if I remember right, was like 14% or 15% on YoY. Right? So I think other engines are also firing well, which are actually better for our margins. Got it. That's helpful. And just the last question I had is just on. Can you please come back in the queue for further questions? Sure. Thank you. Thank you. The next question is from the line of Binay from Morgan Stanley. Please go ahead. Hi, team. Thanks for the opportunity. Just continuing, actually, on a previous chat. So if you look at gross margin versus mix, ideally, this quarter, we should have had some gross margin expansion. Steel tailwinds, and we talked about product mixes better with more truck sales, lesser bus sales, exports were very strong. But our gross margin has actually come down quarter over quarter. And a lot of the margin expansion is coming from other expenses being down on a YoY basis. So could you just help us tie this up that why is the gross margin not showing the expansion, and is this other expenses YoY declined despite the revenue increase sustainable? Maybe defense has something to do that defense has fallen this quarter or something. Actually, I mean, a portion of the metal cost reduction. I mean, we have also witnessed an increase in the prices of rubber. It's been about. We had to concede a bit of the increase on the rubber side also. So that could have also got reflected on the gross margin. As well as your observation on these other expenses YoY, I mean, we have been able to contain the cost in a better way. That's all I can tell you. Especially, I mean, some of the costs like the variable costs, like the production overhead, selling overhead, the delivery charges, the administration overhead. So all this, we have been able to, I mean, contain. We have a better cost monitoring mechanism, which helps us to monitor these things in a better way. Chandra, how has defense done for us this quarter? Like any percentage revenue mix or because the earlier quarter, it was weak, so how has it done this quarter? Defense revenue has been about INR 100 crores this quarter, as against INR 150 crores in the previous quarter. Yeah. So that, in a way, would have hit your gross margin. Yes. Yes. Secondly, just in the opening remark, we talked about net cash, and we talked about two investments. Could you sort of, so the net cash is post this 700 crore investment that we talked about? No, this is before the investment. And so could you repeat that number again for net cash? What is the number you gave? 900? 958 crores. Okay. And so just lastly, on just two trends we are seeing. Bus volumes being very strong in the last few years were supporting profitability. They've started to sort of, growth has gone in the last two, three months, whereas exports have seen a pretty stellar growth, 33%. And in the previous conference call, you had talked about a 50,000 target for exports for the company eventually. So could you comment a little bit about these two trends that we are seeing? Slowing bus growth. I know base is getting tougher, but how do you see that going ahead? And at the same time, sustainability of this export jump that we've seen. Thanks. This bus demand is a temporary thing. I mean, overall, there is a huge pent-up demand still available in the market. Whether it is STUs or MDVs or even ICV buses, we still believe that bus is a story which will continue to be favorable, right? Not just like next year, but probably for at least two years or so. Right? So this is just a temporary thing because sometimes a confluence of a lot of STU orders come in, and sometimes they don't. Right? But Q4, I mean, we have an order book of like 4,000 buses already, right? Which will be not supplied in Q4, but they will be supplied over the next six months or eight months or so. Right? But these are confirmed orders we have in hand. So nothing to really worry about on the bus. I think we'll continue. The market will continue to be good. And you have seen we have already grown to 38% plus market share on buses. Right? So we will continue to have our leadership position intact also. Your other question was about exports, right? Yeah. So exports also, yes, in the long run, our target is to achieve 50,000. But in the medium run, also, we want to achieve a number of 25,000. This year, we are hoping that we will end up close to 15,000. That is at least we are stretching to achieve right now. Although the gap is a little bit on the higher side, but we are still very confident based on the order book that we should be close to that number. So that would be a very good growth when you compare our export volumes of last year of roughly 11,800 numbers or so. Right? So export journey is actually very good. And like I said before, this is a result of some recent efforts, but more credit I will give to the actions that Leyland had taken several years ago when we really solidified our position in some of these markets by investing into manufacturing assembly facilities, investing into local branch offices, positioning people locally so that we have a better understanding. And that is the reason in some of the markets like UAE or Bangladesh, Ashok Leyland is like a formidable brand in the CV business. So as long as we continue to put in more products now, since we have a very strong brand and strong distribution available in some of these markets, as we continue to put in more and more products, I think you will see our export volumes going up. But just to summarize, 25,000 medium-term target, we should be around 15,000 this year. For another two years or three years, we will try to reach that 25,000 number. Great. Great. Thanks, team. I appreciate the response. Thanks. Thank you. The next question is from the line of Pramod Kumar from UBS. Please go ahead. Yeah. Thanks a lot for the opportunity and congratulations on excellent operations by Ashok Leyland. My first question is regarding the non-vehicle revenue mix. How should we see it going forward? Because this quarter, you had a defense decline. I can understand it could be lumpy, but how do you see the near-term non-vehicle revenue piece in terms of especially the kit supplies to defense and other defense supplies? Because they kind of come with higher margins. How should one look at that particular piece evolving over the next one or two quarters? Yeah. Listen, I think I can just say that defense business will continue to surprise all of us. Our pipeline is really very strong. Although in Q3, we had a major blip because some of the orders got pushed out. But I'm not just talking about from the Q4 perspective, right? I'm talking about like next three or four quarters, you will see a good jump in our defense business. And, Shenu, if you can just help understand because everyone's worried about the cyclicality of the business and whether we are in a down cycle, up cycle, we don't know. So if you can just help us understand at this point of time, how much is the revenue component which is not cyclical, which is basically domestic excluding basically what's the percentage of revenue coming from excluding domestic trucks, including international, including buses and everything? If you can just help us understand. We used to share this historically back in the time. But if you can just help us, where are we there? And because that kind of gives us idea as to what piece of the business is going to remain resilient. And the rest, of course, it depends on the macro and the recovery and inflation and all that. So if you can just help us understand that better as well. Pramod, regarding the CVs, I can tell you that including the LCV, our revenue share is about 80%. Rest, 20% comes from the spares, engines, exports, defense. And if I were to include LCV and buses in this side, Balaji, I mean, because they are not that cyclical, and ideally, they should do well, especially with the LCV portfolio expansion, what you're doing. So anything there which you can share, if you don't mind? Purely domestic trucks would be, I think, 55% to 60%. 55% to 60%. So the percentage exposure has kind of come down over the years. Yeah, but within that also, I mean, if you just split it into different segments, I think ICV industry is not that cyclical as the heavy-duty truck is. So ICV comprises of about 25% of the overall domestic trucks. Right? So I mean, you can then do the math and see how it is. So buses and LCV constitute about 23% to 24%, yeah. Okay. So effectively, a big chunk of the business is not that deep cyclical anymore. And even the cycle, the nature of the cycle has changed, right? We are not seeing that sharp up move and down move as such. But Shenu, I believe you guys are constructive on CV demand incrementally, so is Volvo Eicher, so is Tata. So if you can just help us understand, when you look at Q4, are you looking at the industry level, the TIV to grow on a year-on-year basis despite the higher base? And from when you look at FY26, do you expect the volume momentum to be more back-ended? When you're doing the business planning, how are you looking at the FY26 period? Because there's a lot of concern around whether FY26 will be a big volume correction again or very muted or a small decline for that matter. So if you can just help us understand how you're navigating the business planning side for FY26? Yeah. Listen, Pramod, we don't think we have a very high base, actually, because last three years, industry has been more or less within a range, quite flattish. Right? Of course, FY23, we saw a big jump, but FY24 and FY25 have been very similar range. So we think that FY26, at least first half, we have good visibility now. We think the market should be positive. Q4, we are already getting some good signals. January was positive. February is definitely looking positive. Yeah. So yes, I mean, we are very hopeful that FY26 should be a growth year right now. Of course, maybe later sometime, we can give you more specific projections on FY26. Yeah. But we definitely think I have been saying this on this thing on the call before, that we'll all be surprised the way cyclicity in this market will behave in future. Right? It is not, I mean, being in India, I don't think it is right to look at cyclicality of the past and project the same thing in the future. Yeah. India is going to be a very, very different market. If you look at penetration rates in India of trucks and compare those with any other country, China, U.S., Europe, we are far behind. So there, India would need many more trucks. The replacement demand has to be strong. I know it has not triggered itself in the last couple of years that much, but it has to be kind of strong in the future because we are at the all-time high aging. Most of the customers I meet in the market are very clear. They are realizing more and more that they have to replace the truck at a certain given point in time. Right? Because after that, it becomes a losing proposition for them, especially with the large fleet owners on contracted freight, etc. Right? So I think interest rate reduction, general upbeat on the economy, consumption demand, we don't see any reason that anything adverse would happen. We only see an upside. Now, how much it will be, we'll come back to you maybe in another 30 to 45 days of time. Thanks, and just one quick clarification. The price discipline holds in the industry? The timing? I'm sorry. Can you say that again? The price discipline in terms of discounting, there's no cut-throat competition aspects, right? Or we've seen some improvement or yeah. Yeah. Actually, in January, we have been able to improve both on the pricing and slightly on the mix as well. Right? But on the mix side, definitely, we have more headroom. Because in the last couple of years, we had lost a bit on the tipper side and on the M&H side because of some internal issues, some gaps in the products. But now, those are behind us. So I think what we are looking at now is good growth in tippers and multi-axles, which are much more profitable for us than the rest of the segments. No, great response. Thanks a lot, Shenu. Wish you guys all the best. Thank you. Yeah. Thanks. Bye. Thank you. The next question is from the line of Kumar Rakesh from BNP Paribas. Please go ahead. Hi. Good evening, and thank you for taking my question. My first question was around the defense business, which you spoke about that you are quite confident in the coming quarters, and it should continue to do pretty well given the pipeline which you're looking at. Now, looking at the budget allocation from the government for vehicle procurement for the defense forces, it's lower for next financial year compared to the current financial year. So do you think that could create a headwind for you, or do you have enough visibility on your pipeline that this growth could continue to expand? Are you talking about the defense side? That's right. Yes, defense. Oh, yeah, yeah. No, no. See, I mean, overall, budgetary allocation to defense does not really matter too much for us. Basically, we have been supplying mobility solutions only. We are not into rest of the areas, right? On the mobility solution, it just depends. The market just depends on the replacement demand, more or less. Now, Indian Army and Defense Forces have a large fleet of our trucks. I think the number is close to 70,000. And many of these are now beyond their productive age. And therefore, we expect that in the next three to four years, and this is what we are also hearing from the ministry, that about 10,000-12,000 new trucks would be acquired. Right? So that is what is building us our confidence. And some of these orders are also coming in as we speak. Right? So yeah, I mean, that is what drives our confidence on the defense business. And even beyond these three, four years, the rest of the trucks will again start aging. Right? So this is kind of a cycle which is very beneficial to us. Great. Thanks for that. My second question was on the Switch investment which you are making in the quarter. So last quarter, you had spoken about that in second half, you would need about INR 500 crore of investment, which is what you have already announced. So it's fair to expect that for now, the investment is done. And also, you were looking at a bit of break-even in the business this year. So where are we trending on that? Yeah. So yeah, you're right. I mean, we had said earlier that we would probably be making about INR 500 crore. So that is what we are doing now. I think Switch India going forward should be a bit positive. Now, it can happen Q1 or latest Q2. So that is quite in sight. It just depends on our ability to fulfill all the orders we have in hand. And the order book is roughly 1,800 plus now that Switch has. Right? So we are quite strong on the order book, and the margins are good. So all these buses would be supplied in, I would say, next 12 to 18 months. So that is on the Switch India side. But Switch UK side, the market itself is not doing very well. The government policies and other issues around the EV adoption have not been taken care of. Therefore, EV market is still kind of very, very subdued in U.K. against our expectations two, three years ago. Right? So we are evaluating the option for Switch UK because there we are making losses. And also, given that the market conditions are not okay, we have to kind of do some rationalization of Switch UK in terms of reducing the losses. Also, there is a debt there in Switch UK which we want to pare down because the market, again, outlook is not very good. But we are evaluating various options on Switch UK. But as far as Switch India is concerned, we are very, very positive. Switch India is actually going to be something that will be very value-accretive to Ashok Leyland. That is what we believe at this stage. Although we are not looking at listing it in any near future, I think that part would be still two to three years away because we would like to expand volumes. We would like to expand technology, mature the technology, have a broader product range, etc. But yes, overall, we are very happy with the way Switch is moving. Great. Thanks a lot for that answer. The next question is from the line of Kapil Singh from Nomura. Please go ahead. Good evening, sir. And congratulations on a very strong performance in a tough quarter. I just want clarification on the previous question. This 500 crore investment is going in Switch UK or Switch India? See, the way Switch is structured is that we have the holding company which is in U.K., which is called Optare. And below that, we have Switch UK, and then we have Switch India. So a part of the, of course, this investment is going into Optare, but a part of that will flow into Switch UK. And also, some part may flow into Switch India for some Capex needs. Okay. Because you seem to say that there is some uncertainty there. So I was just wondering why we are making this investment right now? Like I explained, I mean, we want to pare down the debt. We have some debt in Switch UK, so we want to pare down. We are trying to reduce all the costs there, including the interest burden on Switch UK. Also, the rest of the money could flow to Switch India for their CapEx. Understood. Sir, my question is on the financing side. We have seen pretty good performance by Hinduja Leyland Finance with an improvement in segmental results as well. So just want to understand that how is the financing situation for commercial vehicles? And we heard or read about certain problems in financing, either on personal loans, two-wheelers. So just trying to understand if you could give some perspective on this. There is no significant change on the financing side, really, both on MSCV and LCV side. So there's nothing to really worry about. I mean, we don't see anything, any major shift on the financing side. Okay. And sir, the second question is on LCVs. I think you mentioned close to achieving 20% market share in the near term. Is that on the overall LCV where currently we are at about 11%? If you could just talk us through how you are thinking about gaining market share or what are the salient points of the new product that we have launched? See, right now, we are still looking at two to four tons as far as market share is concerned, so in the shorter term, we want to achieve 20%. And then in the medium term, we want to achieve 25%, but that is within the two to four ton market. Now, coming to the rest of the market where we are not participating as of now, as I have been telling you that we participate only in about 50% of the overall LCV market, our goal is to cover about 80% of that market, right? So SATI is like the first attempt where we are, although we are positioned technically at 2.2, but we are placing this position as a premium product in the entry-level pickup truck market, right? So that is the first attempt. But you will see many more launches and many more products that will be coming in the future, which will take us from this 50% coverage to about 80% coverage. So that roadmap is very clear. Many of these projects are under development. So as time progresses, you will see some of those launches happen. Okay, sir. Thanks, and wish you all the best. Thank you. The next question is from the line of Amit Hiranandani from PhillipCapital. Please go ahead. Yeah. Thanks for the opportunity and congrats to the team for good operational performance. Sir, my first question is basically the quick commerce segment is emerging very fast. So do you see a positive or a negative impact on any of our segments? No, no. It will only mean positive developments on the last mile, mobility. Yeah. And somewhat to the medium mile also. So I think ICV and LCV segment should get benefited with all this positive news on Q-commerce. Right. Sir, my second question is on what will be the growth drivers and the company strategy, especially on the LCV side? And continuing on, where do you see the product gaps and largely in which segment? And would you like to share any launch pipeline for the next two to three years, please? Yes. As I just explained, we have two mission objectives on LCV. One is that right now, we are at 48-49% of the market coverage. We want to expand that into 80% coverage. Now, of course, that will take us about three to four years to go there because of the gestation period in developing new products. But that product roadmap internally in Ashok Leyland is very, very clear. SAATHI was actually the first major launch where we are trying to address that sub-2 ton market. Although technically speaking, we have placed the product at 2.2 ton, which is at the border of sub-2 ton. Right? But really, we wanted to start with addressing the customers who are upgrading from sub-2 ton to two to three and a half ton. Right? So we have strategically positioned ourselves there. Now, in future, we will go both downwards, like more towards more entry level, and also, we will go upwards. Right now, we are at two to three and a half, but we see that there is a huge potential in products between three and a half to five tons and also in six to seven and a half ton, right, so all those plans are in place. Like I said, Stallion is the first launch. Within the next two or three years, you will see some major launches from Ashok Leyland in the LCV segments. Right. This is helpful, sir. Sir, lastly, as per your assessment, how much presently is the impact of DFC on the CV industry? Please, sir. [inaudible]. Okay. DFC, yeah. So see, I mean, this has to be there would be some impact, like we spoke last time also. But it would take a long, long time. And the impact would be gradual, right, because there are a lot of challenges in setting up DFCs, in making the right proposition for the customers. Then there are a lot of challenges in you go from point A to B. But once you reach B, then how do you go forward? So all these things will take a lot of time to really kind of create an impact. Yeah. So I think this will be small, and this will be a little bit more long term. Great. All the best. Thank you so much. The next question is from the line of Mukesh Saraf from Avendus Spark. Please go ahead. Good evening and thank you for the opportunity. My first question is on the pickup segment. When I look at your volumes in Q2, sequentially, pickup seems to have grown significantly. So could you kind of comment more on this? Is this more just a seasonality, or are you seeing some significant revival in this space? No, no. Not exactly. So what has happened, like I explained earlier, if you look at our last four or five or six quarters of pickup volumes, you will see that we have substantially degrown in our pickup segment. Right? And that was some specific issues, some specific gaps that got developed in our pickup range, which we have now addressed since last three months or so. So now, here onwards, you will see that our pickup volumes will continue to grow. And thankfully, this is a segment where the margins are much better than the rest of the segment. So that is also margin-accretive to us. But you will see that continuous growth in our volumes, I mean, disproportionate growth in our volumes in pickup. Okay. So we can expect you to kind of gain back some of that market share loss in this segment. Yeah, yeah, yeah. Roughly, we were close to 29%-30% about two years back. Now, we are at 23% or so. Right? So we have this 7% headroom on market share in pickups. Got that. Got that. And secondly, you had alluded something on pricing, but could you give, say, some more details? What will be net price realization increase in Q2, except discounts, etc.? Discounts? Can you repeat your question, Mukesh? No. In Q3, what would have been your net realization increase? Pricing, discounts, rates? It has almost been flat, Mukesh. We tried to increase the prices in one month. We succeeded, but subsequent two months, we could not succeed. But overall, if you look at, we have remained flat as far as the trucks and buses are concerned. All right. All right. Thanks for that. I'll be back in. Thank you. The next question is from the line of Joseph George from IIFL. Please go ahead. Mr. Joseph, your line has been unmuted. Please go ahead with your question. Yes. I have two questions. Can you hear me now? Yes, Joseph. Yeah. So I have two questions. One is in relation to what you're hearing on the ground from fleet operators. Are there any cases of NPAs going up? And secondly, when you look at fleet utilization rates and freight rates, what are you seeing on the ground? Yeah. All these continue to do well, Joseph. If you look at the operating economics of the freight operators, it has been good. They are able to increase the freight rate. We are only witnessing a gradual increase in the freight rates. And we all know that fuel rates continue to be constant. And with now a possible passing on of this quarter percent rate cut, EMIs are going to become lower. So this bodes well for the transporters from the profitability point of view. And the utilization levels are also quite healthy. This we are seeing in terms of the volumes in the last two, three years. It continues to be around the same level of 350,000 to 370,000 vehicles. So I mean, all this bodes well, Joseph, for the entire demand outlook, both on the utilization side as well as on the profitability side. All right. Okay, and the second question that I had was in relation to Optare. So right now, you said that things are challenging. Can you let us know what is the annual cash burn that you're seeing in Optare? It's very difficult to quantify because volumes keep fluctuating there, Joseph. Okay. But the last two, three years, you've seen a lot of fluctuations in your revenue numbers. But is it right to assume that the last two, three years has never been FCF positive as such? You are talking about Optare, per se, or you are talking about? I'm talking about Optare PLC, the UK operation. Optare PLC, it depends on the volume there. Sometimes volumes come, sometimes they don't. In case if volumes are there, then we are able to get good margins, good money. In case if volumes are not there, then it becomes an issue. See, what has happened in the last year is that there has been a good increase which has happened on the diesel demand. Diesel vehicles have gone up. It has grown by more than 100%. But when you look at the growth percentage, it will look very good, 120%. But if you look at the numbers, it will be small. It will be around 300 to 500 vehicles. The market itself is like that. And on the electric vehicle side also, there has been a drop of 30% on the total volume. So volume itself is less than 1,000 there. So I mean, it doesn't make much of a sense to continue and be there in this kind of a market unless you have some visibility on the future volume. Actually, consistency is the problem. Lack of consistency is a real problem. We have a factory there in U.K., as you know, but sometimes the factory is idle, and sometimes it is more than full. Right? So that is the issue. And then also, while this company was conceived to be an electric company, last few months, we have been producing diesel buses only because the electric demand is just about nothing. Right? So I mean, these are the situations we are trying to tackle as to how to eventually deal with this situation. Understood. Thank you. The next question is from the line of Jinesh Gandhi from Ambit Capital. Please go ahead. Question. Jinesh, we are not able to hear you, Jinesh. Yes, sir. Jinesh got disconnected. We will move on to the next question. It's from the line of Abhishek, an individual investor. Please go ahead. The margin of 13%, is this sustainable? Margin is dependent on various aspects. As we discussed earlier in the call, it depends on the mix of the overall business with more revenue coming from the non-CV side, especially the spare parts, defense, and power solution business, as well as the mix within the business, like in trucks, you have the higher-tonnage segments, higher volume, higher share from the higher-tonnage segments, like the multi-axle vehicles, tractor trailers, tippers. If all this happens, then this kind of mix is sustainable. And just to add, Abhishek, what Balaji just said, we have been actively working on lowering our break-even volume. Right? Because we know that we are in a cyclical cycle, and therefore, we should be ready for a bad cycle also. And I'm very happy to say that our break-even volume, monthly break-even volume, has reduced to more than half in the last couple of years. Now, that gives us a lot of confidence that we would be able to sustain a good financial performance even in bad cycles. Of course, if the cycle is good, then definitely 13% is sustainable. Okay. Thank you. The next question is from the line of Sanket from Ashika Stock Broking. Please go ahead. Thank you for the opportunity, sir, and congratulations on good set of numbers. Sir, income from operations from subsidiaries is somewhere around INR 938 crores. So can you give us a segregation on which subsidiaries are contributing the major section over here? Income from? Subsidiaries. I don't know. I mean, you are looking at a consolidated number. We'll give you later. We don't have that number readily with us. Okay, sir. Sir, can you provide us what is the revenue share of Switch under consolidated? Revenue share of Switch will be one minute. Better to get back to you. We don't have the table right now, but we will get back to you. Sir, no problem. Sir, my second question is, so government is planning to mandate AC cabins in commercial vehicles starting from October this year. So do you look at any pre-sales happening in Q1 of FY26? I'm sorry. You will have to repeat the question. We couldn't get it. Sir, I mean, government is going to mandate AC cabins in commercial vehicles. Oh, AC cabins? Okay. Yes, sir. So accordingly, do you? Yeah. AC cabins are coming into effect from 8 June, I think. Right? So first week of June. And the cost delta because of this new regulation is very minuscule. Right? So it is not something that will influence the market at all. That is what is our opinion. Okay, sir. Thank you, sir. That's all from my side. Thank you. Ladies and gentlemen, this will be our last question. It's from the line of Jay Kale from Elara Capital. Please go ahead. Yeah. Thanks for taking my question. So my question is on the replacement demand. I mean, we have mentioned that the average age of the holding period of the vehicle has moved up, and hence, eventually, the replacement demand should kick in. But what we also hear is that because of the price increases that we saw over the last three, four years because of emission norms, etc., the tenure of the loans of the CVs have also moved up to cover for that price increase. And hence, structurally, there is an increase in the average holding period. And hence, the replacement demand may not be as fast as what we were expecting. Has that played out in the last one or two years, and how do you see that impacting replacement demand going forward? Yeah. It has played out. You are right, Jay, that the cost has gone up, and because of that, the tenure of the loans have gone up. But the difference, what we are seeing in the aging now with respect to what it usually was, which is a difference of at least two years, if not two and a half years, that loan tenures have not gone up by that much. So loan tenures would have gone up by like six to seven months on an average. But the replacement age, but the aging of the fleet has gone up by two and a half years, two to two and a half years. Okay. Understood. And so in the last one and a half years, how would you have seen the replacement growth versus I mean, have you seen acceleration of replacement growth, and the first-time buyer growth probably has softened, or how are you seeing that trend? Yeah. Definitely, two trends we are seeing, although they are not like they are quite gradual. But two trends is that we are seeing a shift from FUs to fleets. That is one. And the other is replacement demand is also becoming a better contributor to the overall growth. Understood. Great. Thanks, and all the best. That's all from me. Thank you. Ladies and gentlemen, that was the last question for today's conference call. I now hand the conference over to the management for the closing comments. No, thank you very much, and thank you for your continued interest. We are well positioned on our journey, our midterm goals, which is around EBITDA, market share, etc. So we are very, very focused on that, and we assure you that we will do our best to continue on this path. Thank you very much. Thank you. On behalf of Emkay Global Financial Services, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.