Ladies and gentlemen, good day and welcome to Bosch Limited Q3 FY 2022-2023 Post Results Conference Call limited, hosted by B&K Securities. I also take this opportunity to welcome the senior management team of Bosch Limited. We have with us today Mr. Soumitra Bhattacharya, Managing Director; Mr. Guruprasad Mudlapur, Joint Managing Director and Chief Technology Officer; and Ms. Karin Gilges, Chief Financial Officer. At this point, all participants' lines will be in the listen only mode, and there will be an opportunity for you to ask questions after the management presentation and opening remarks. May I remind you of the safe harbor. The company may be making some forward-looking statements that has to be understood in conjunction with the uncertainty and the risks that the company faces. Over to you, sir. Thank you, Annamalai Jayaraj. A very good afternoon to all the colleagues who are participating in this call. Today I'd like to brief you a little bit on the macroeconomic policy as well as what's happening on the auto aftermarket, and then I'll walk you through our financials. Finally, I would like to tell you something about the quarter relating to our business. The global economy is facing a significant down risk on the growth with persistently high inflation. If you look at India and its economy, IMF expects for the FY 2023 a real GDP growth of around 6.6%-6.8%. India is expected in FY 2024 to be anywhere between 5.5%-6%. Of course, the government has a continued focus on CapEx, as you have seen in the budget, while of course also trying to balance and reduce its fiscal deficit. The overall automotive market production has increased by 17% or +17% year-on-year in the current quarter. This of course excludes two-wheelers, and this is on a low base of Q3 FY. The robust order book across Passenger Car OEMs on a strong festive-led retail across the segments, inventory destocking that has happened amid a calendar year change and continued correction of commodity prices were some of the key highlights of Q3 FY. Pass Cars segment has outperformed other segments, growing by a +21% year-on-year volume growth, supported on one hand by easing chip supplies to the past. I have to also say that the supply chain on the semiconductors and chip are still extremely vulnerable and the inventory levels on the supply chain very low. Based on the past quarter's relative easing, we have seen a healthy order book and we have seen also relatively the longer waiting periods have got reduced. Two-wheeler segment has been stable on year-on-year basis, albeit nowhere near the past records of INR 25 million. We expect in the fiscal year 2022, 2023 to be about INR 20-plus million. LCV segment at +5% year-on-year, HCV segment has grown on a +20% year-on-year, albeit on a low base. On the ground situation, there is a steady fleet utilization levels which are healthy and this is primarily led by a healthy economy growth, including infrastructure activities. The tractor segment grew on a +6% year-on-year on a high base. Three-wheeler is on a recovery path with shared mobility picking up, albeit the peak of FY2018, 2019 are far away to be reached. Let's have a look at the automotive market outlook for 2023. In this slide, the rows represent a particular segment. For instance, the first row represents the Passenger Car, followed by HCV, LCV, tractors, two-wheelers, three-wheelers respectively. The first column represents 2018 production volumes, which is considered to be one of the best years in the Indian automotive industry. The second column represents the year 2020 production volumes. The third column represents 2021 production volumes, and of course the fourth column gives the 2022 actual volumes released by SIAM. The fifth and sixth provides low and high scenarios based on how we look at GDP growth. Based on the numbers in 2023, industry will grow, albeit of course at a lower pace over 2022. This can be attributed to multiple factors. For example, the instance of slowing down in the pace of GDP growth, the higher base of 2022, and a more stable demand as opposed to a pent-up demand which happened in 2022. Bulk of the growth across the segments can be attributable to replacement demand. Within PVs, we can continue to expect a shift towards utility vehicles. Within HCVs, we are seeing a shift towards higher tonnage vehicles. LCVs shall continue to grow giving the increased last mile transportation requirements, mainly-intra-city. Tractor segment is expected to witness a minor decline, of course, on a high base, while two-wheelers will continue to grow and this though it will be well below the 2018 peak, which I spoke about. Within two-wheelers, we'll continue to see and witness the growth in greater segments than the 125 cc variants. Let's have a look now at how the company has performed in October-December 2022 quarter compared to October-December 2021 amidst all these above economic and automotive factors. The overall revenue from operations for October to December stood at INR 36,599 million, which is an increase of 17.7% on the comparable basis of the corresponding period of the previous year. Here, the automotive sales has grown by 21.2%, largely driven by powertrain solution, while the non-automotive sales have increased by 2.9%, largely led by the consumer goods division. Overall, product sales have increased by 18.8%, primarily on account of improved market demand and positive consumer sentiment. Income from services mainly comprise of R&D services provided to OEMs and Bosch Germany. While billing for R&D services was set at a healthy level, income recognized in the books based on custom SOP dates was INR 1,701 million. Balance income would be recognized in subsequent quarters on the project completion dates of the customers. Other operating income mainly includes income from lease rentals and miscellaneous income and export incentives. In the quarter, increase is mainly on account of recovery of central regional charges and rentals owing to additional income from the leasing of our smart campus, which we call as Spark.NXT campus. Our material cost as a percentage of total revenue from operations is at 60% in October to December 2022, as compared to 60.8% in October to December 2021. However, when you look at material cost as a percentage of net sales, that is excluding income from services and other operating income, then material cost is at 64.9% in October and December 2022, as compared to 66.4% in October-December 2021. The reduction in material cost percentage is greatly on account of actualization of the year-end closing inventory. Post the restructuring that we've done, the employee cost has stabilized at a level of INR 2,700 million-INR 2,800 million per quarter. As a percentage of total revenue from operation, this looks low at around 7.4% due to higher revenue in the current quarter. Let me share a few elements on the other expenses. Other expenses stood at INR 7,890 million, which is approximately 21.6% of the total revenue in October-December 2022, as compared to INR 5,700 million, that is 18.3% of the total revenue in October-December 2021. The reason for the increase is that the current quarter has seen certain one-time impacts in our expenses. For example, provision was made for special warranty for customer claims on certain field complaints for automotive products. This amounted to approximately INR 350 million. Exchange rate impact due to depreciation in the INR versus the euro and the USD amounted to approximately INR 300 million. We also increased our spending in increased areas. We have told you earlier that we were doing new business areas in the Project House Electrification, Project House Mobility Solutions, as well as hydrogen, and this amounts to approximately INR 250 million, and we have a few other higher spendings also in this quarter. The depreciation for the current quarter is INR 1,083 million, which is 3% of the total revenue, as compared to INR 851 million, which is 2.7% of the total revenue in October-December 2021. Increase in depreciation in current quarter is a majority on account of depreciation impact on the capitalization of our smart campus, which we call as the Spark.NXT campus, and the plant and machinery localization of new products, which was done also in July-September 2022. With this, our operating profit stood at INR 2,954 million in October-December 2022, as compared to INR 2,723 million in October-December 2021. While EBIT was at 8.1%, EBITDA was at 11%. The other income primarily comprises of interest on fixed deposits and change in market value of mutual funds, which are debt-based. The other income has increased from INR 804 million in October-December 2021 to INR 1,312 million in October-December 2022 on account of higher mark-to-market gain on mutual funds as well as higher FD interest income, as all of you know that FD interest rates have firmed up. For the quarter ended October-December 2022, your company posted PBT or profit before tax of INR 4,276 million, as compared to INR 3,358 million in October-December 2021. As a percentage of total revenue from operations, PBT or profit before tax stood at 11.6% of total revenue in the current quarter. Profit after tax for the quarter ended December 2022 stood at INR 3,189 million, which is 8.7% of the total revenue from operations. Profit after tax in October, December 2021 was at INR 2,349 million, which was at 7.6% of total revenue from operations. Let me provide you a few insights to our aftermarket business, which has delivered the highest ever turnover in 2022, also with a decent and high EBIT. Our aftermarket continues to be a benchmark on working capital management, with net working capital currently at 23 days. We are the fourth largest car service network, currently with 500 locations across the country. We have also witnessed strong growth in exports by expanding largely untapped markets with our product range in the countries of Sri Lanka, Bangladesh and Nepal. This has been delivered with the help of our strategy in aftermarket, which we call as Zig Plus, which is a demand creating and generating strategy and has enhanced the customer experience. Bosch Limited offers complete system solution also for hydrogen-based powertrains in India. My colleague, Guruprasad Mudlapur, will later explain some of these areas if you have interest. We offer systems and components catering to hydrogen engine and fuel cell electric vehicle technology. Bosch has entered into a partnership to offer hydrogen tank system as well. We have set up a state-of-art hydrogen engine test facility at our technical center in Adugodi at Bangalore, where internal demonstrators are currently being developed and optimized for performance as well as emissions. We are also building an H2 engine powered demonstrator vehicle in India to run extensive trials in order to offer the best value proposition to all our customers, current and future. Bosch Limited has established also close collaboration with technical experts in Germany, and together we are supporting Indian customers on series of applications to develop as well as release hydrogen-powered vehicles in the Indian market. A few words on people. Bosch Limited embarked its journey on Great Place to Work Institute and launched the Ullas program as a program with an objective to build a high trust, high performance culture in the year 2019. As per the trust survey in December 2022, Bosch Limited has a trust index of 79. Basically we have improved from 67 in 2020 to 77 in 2021 and now at 79. Which means that the employees who participate in these surveys, and 96% of our employees have participated, nearly 80% shared a positive perception across all the statements. The culture audit is also at a score of four out of five, where we had begun our journey at three out of five in 2019. With a trust index score of 79 and a culture audit score of 4.0, Bosch Limited continues to remain in the top quartile companies with best cultures in India. We continue our journey to provide a consistently positive work experience and inspire every individual to achieve their full potential. As a team from Bosch India, we would like to thank you for, as always, listening patiently throughout the call. We would now like to address your queries. Thank you very much, and we look forward to hearing your questions. Thank you, sir. We shall now begin the question and answer session. Ladies and gentlemen, at present, you are all in listen-only mode. For participants who wish to ask a question, I request you to please raise your virtual hands. As the moderator, I shall be able to see your hand, virtual raised hands, and will invite your questions in turn. Alternatively, participants can also type in their questions in the chat box. Please address your questions to all panelists. We will now wait for a moment as the question queue assembles. The first question is from Jinesh Gandhi. Please unmute and ask your question. Hi. Can you hear me? Yes. Yeah, hi, sir. Over to you, D.P. Good, sir. Congrats on good set of numbers. Two questions from my side. One is on the RDE norms, given that many OEMs have decided to exit small diesel, how are we progressing on our gasoline portfolio? Are we seeing market share gains on that side? Are we also getting more traction on the gasoline direct injection system given mainstream OEMs are launching products on that technology? Hello? Can you hear me? I can hear you now, sir. Yeah. Okay. Jinesh, I said there are two points. Since you said that they are going away from small scale diesel, small diesel engine. I would just like to say that you must remember that diesel, which had gone up to a 48% market share, has come down to 18, but is stable around that. The 18 may come down to 16 or so, but it's not going to, you know, go down to 10% and 5%. First, you must remember that there are certain segment of utility vehicles which are selling still well, albeit at a lower market share percentage on diesel, number one. Number two, on gasoline, though relative to diesel, we in Bosch came later, the gasoline division is doing very well. Basically, I can say that the growth figures that you see, Jinesh, from Bosch Limited, where one year ago we were in the region of, let's say, INR 2,800 crores per quarter, and we have transitioned to about INR 3,600 crores per quarter and growing. The powertrain division has also done well. I would say we are quite firmly entrenched. We have made big acquisitions on the BS4 to BS6, which I told you. We have made very good acquisitions in the TREM IV to TREM V, on the off-highway, and we are confident on both the core and rewiring of the core, that we will continue to see a good growth path for Bosch Limited, mainly led by our powertrain division. Okay. Okay. On the GDI side, any, anything to share on that side? Are we seeing increased acceptance now? We do see GDI having come in, especially for the higher value cars. We do see that both the technologies are there to be in India. In India, GDI was lesser, compared to, you know, the Western world, et cetera. We see the coexistence of both. As I said, we have a strong position in gasoline. Gasoline is relatively a slightly, compared to diesel, a fragmented market, but our powertrain division has good growth going, both in FY 2022, 2023, and we are looking forward to that growth in 2023, 2024. Okay, okay. Second question pertains at a broader level, given that Bosch India, the listed entity, is operating on its own and then there are other entities. Is there any thought process on making Bosch Limited as go-to-market company and in turn, channelizing the revenues of other companies through the listed entity? Any thoughts on that? Jinesh, I had given an answer to this earlier. I'll repeat it again. Many of our legal entities actually give their products or part of their solutions to Bosch Limited. Take the example of our automotive electronics company, which is growing at a very fast pace. A majority of their products, which are ECUs and other electronics, come into Bosch Limited. Sure. Sure. They go into our powertrain. This example can be extended to our two-wheeler division. It's not an exception on its own. We have seen that because of the type of divisions that we have in Bosch Limited, we work very closely, both as being responsible for the region in India, where we provide a lot of services, which many of them are also financially linked, and also technology services and also collaboration projects which actually result also in billing. This will continue, and we will continue to have a very healthy, focused working of all our Bosch companies, where the parent of all these companies is the listed company. Okay. Okay. Just to clarify the two-wheeler business that you mentioned, the entire all other components like ABS also gets routed through the listed entity or that goes separately, given that there is no direct synergies? Two-wheeler has two parts. There is a certain part which gets done through the listed company. There are some smaller parts which go out, but a sizable part of the two-wheeler business goes through the listed company. Got it. Thanks. I'll come back in queue. Thanks, Jinesh. Next, Mr. Pramod Kumar, you can unmute and ask your question. Thanks a lot, Jairaj sir. Sir, my first question is pertaining to the electrification side. We've seen rapid EV adoption on the two-wheeler side, and a lot of new companies, lot of component companies have started to launch motors and win big orders, substantial orders. Some of your peers on the listed side have gone on the public record to state the kind of order wins they're getting. In that context, if you can just share how is Bosch shaped faring in the two-wheeler EV and the three-wheeler EV side, sir, in terms of what's the kind of prospect to look, you're seeing for this business? Related to that is the extension on the PLI side, as to what are the kind of PLI benefits which you expect for the business, including ICE and the EV side, for the foreseeable future, as you kind of reduce your import content? Let me start with the PLI and then with a couple of remarks, I would request also, my colleague and our GM to come in on that. First on the PLI, we have extensively worked with the government on advanced technologies. I think the government has taken a very good approach to take tech agnostic inputs and really put in advanced technologies, and we compliment the government. Like all other companies or many other companies, we've also applied for the PLIs, and we believe that over the years, because this is our timeframe, you will see, you know, that the PLI usage, we will do in a proper manner. That is clearly an assurance, especially for the listed company, where we are very focused. No further details we would not like to talk right now. On the EV two-wheeler, we have certain products and solutions which we are already doing. Our part of the EV turnover, and this is already a part of Bosch Limited of the two-wheeler. Our two-wheeler division is doing well already. In relation to now EV two-wheelers, both startups and regular OEMs, I hand over to my colleague, Guruprasad Mudlapur. Thank you, Soumitra. I think, Pramod, you are aware that we already have been supplying electric vehicle components to two-wheeler OEMs, and we also have very large orders from them moving forward. That is already existing. We are now working towards higher levels of localization content to match the requirements of FAME and the local norms on subsidy towards this. This is also an ongoing process for us. We are increasing our market share in several other components. We have acquisitions on battery systems now and other portfolio like ECUs for electrification. Of course, you know that, two-wheeler OEMs are, I mean, are also, you know, the two-wheeler economics today does not really favor a match to the ICE vehicles, if you take out the subsidy. Yeah. Also a lot of two-wheeler OEMs are really struggling to make ends meet on pricing. We are conscious about the fact that we will not go and destroy the market by offering things which are below value. There we are going to be very careful. At the same time, on healthy margins, we are in on all OEM acquisitions. We are already doing it with several big ones. Second and final question pertains to localization, sir, which is which could be a big driver for margins as well, and that's the expectation. How do you see with the entire lot of the focus on EV work being done in India and the PLI scheme and should one expect reasonable reduction in the% contribution from traded goods or imported components for Bosch going forward? Pramod, this part is applicable to any component here. I would really like to tell you, localization has two sides of the coin. You can have either healthy localization or you can have unhealthy localization. Yeah. It's about the timing of the localization that you do and for the volume of the localization that you do. Both timing and volume are very important. In Bosch, we always take a stated call, a very calculated call on phased localization. This is either about our traditional conventional products or our new age products or even the, you know, completely new age like EV and future it will be also hydrogen. In summary, you already heard from my colleague on what we are doing in EV. You heard a little from me at the starting on what we are doing for hydrogen. I can assure you, Bosch India is doing a lot of work at Bosch Limited on hydrogen. We will do the localization and we continue to do localization at the right time. This you can be rest assured. Sir, just a clarification on that. Forgive me for this, but given the fact that Bosch globally has enough and more reasonably strong capacities and capabilities on the ICE component side. As a responsibility for Bosch Limited, the subsidiary in India, the listed entity, would it be wiser to assume that you will be deploying your focus or the incremental resources and the focus on electrification, where you can do a lot more value add in India, or just simply duplicating capacities in India in addition to what you have at the parent level globally? I'm just trying to understand the prioritization, how does it work? Is it more towards advanced technologies or to kind of reduce the cost and reduce the import content on the existing parts, which are anyway you can source from the global parent? That's a pretty deep question, and I have to give you an answer in simple three parts. We have a very clear focus on the. Yeah. -which will continue for a long time in India. We have an equally clear focus on revived core, which is the advanced core, which also there are certain parts of advanced technology in that. That also we are equally focusing. The third one, where we have given very clear focus, and you remember five years ago, we established a Project House Electrification, which included hydrogen. Five years ago, we established Project House Mobility Solutions and Services, which is on digital. We actually have done a few things well in advance. I shared with you also this quarter, we spent a decent amount of money for our new business areas. All this is, and this will come into play, as we go along and as India moves along. Thanks a lot. It's not either/or. It is all three in a very systematic way with the... It's like a piano key that you have to play to make music. Sounds great, sir. Thanks a lot. Wish you all the best. Thank you. Thank you. Thanks, Pramod. The next question is from Viraj Kacharia. Please unmute your line and ask your question. Yeah. Hi. Thanks for the opportunity. I have three specific questions. First is on the margins, you know, especially the contribution margins. If you look at this particular quarter, you know, we did something like close to 40% contribution margins now. This is despite you talking about high cost inventory impacting the overall raw material cost. Considering that, you know, I mean, I'm just trying to understand, is there any further high-cost inventory still here? On the pricing part, you know, where are we with respect to recovery of both the raw material and the Forex? That is one. Second is largely the question on the CapEx side. You know, you talked about us investing in EV to meet FAME localization. To use analogy, you know, currently in the recent annual results, we talked about the Chinese EV operations turning profitable, especially for motors and eAxles and all. For us, when we look at localization, would it largely be for the domestic market, or is there a thinking to use the base also for the export? Viraj, I'll try... You've asked many questions, so I'll try to give you quick, short answers. Look, on the margins, I told you, first of all, you know, we want to turn in healthy margins, yeah. The world is going through challenging circumstances. I will link up the margins to your, you know, price recovery on, you know, raw material and electronics. A, because of a good order book, you see a very steady and improved growth, number one. Second, on a very challenging year 2022 for the world, including India, where margins were under pressure due to raw material cost increases, electronic cost increases. We have a very clear focused approach, including contracting with our OEMs and including approaching where we've seen that either they should pass on or they should share in a win-win basis. Bosch applies that. Because you've also seen, you know, in OEM, the prices of cars have gone up considerably. More value-added and higher cost cars are being sold and so on, so forth. We believe that this win-win should be across the industry, and we follow a very systemic process regarding that. The CapEx, Bosch has never been shy to put CapEx in place for the future. Whether it will be hydrogen, electrification, whether on a smart campus, whether on localization, that we will continue. In summary, Viraj, I would say, A, the margins that you see in this quarter, which are not too bad, also has a few one-time impact. B, the growth you have seen, which we will sustain and retain and improve further. RMI, ECI, we will continue to focus to recover on a win-win basis for everyone. CapEx numbers will be put in place. We always, you know, look at CapEx on what we need. Last year, the calendar year 2022 naturally was a higher CapEx, but we will continue to spend money on plant and machinery and of course, also on other areas. Just two questions. On CapEx, you know, in the past, you talked about an annual spend of somewhere around INR 500-INR 550 crores. Given the kind of initiatives you've talked about, will that lead to a change in that figure? If yes, then what would that be? Second is, you know, any update you can give in terms of the order wins, we would have, say, for BS6 Phase 2, TREM IV and, you know, on those aspects, I think we are pretty much close to the rollout and launch. Any color you can give. Thank you. Yeah. You see, I told you know, our CapEx spends in the listed company are anywhere between INR 300 and up to INR 600 crores. You can't take a single figure, yeah. For example, if you look at 2022, we've had a decent CapEx spend, yeah. It is in the region of nearly INR 790 crores. You can sometimes have INR 700 plus, sometimes you can have INR 400, so it varies. This CapEx is determined by the need of the organization. We will not be shy on spending CapEx. Bosch Limited has a very healthy free cash flow. We try to convert our head count ability to free cash flow. We are driven by not just top line, bottom line, but also cash. We have, as you know, a healthy amount of financial investments and instruments which we can liquidate at any time and use for either expansions or M&As or also internal growth. We will continue to use those in an intelligent manner. On the second part on the acquisition update. On the acquisition update, we've had a pretty solid acquisition. In fact, if you remember when we had the previous Auto Expo, just before the COVID hit us, I talked about a very healthy figure of INR 23,000 crores. I had also told you after COVID hit us, that same value, because the market went down, had gone down to INR 18,000 crores and then that again recovered. That's dependent on how the market recovers. Bosch Limited has had, A, on BS4 to BS6, very high acquisition. This you can see with the higher content per vehicle, this you can see with the higher growth in turnover, including in our powertrain. Second, we have recently, in the last year of fiscal year 2022-2023, also done very good acquisitions in TREM IV, TREM V and in the off-highway. These changes that are happening on legislation, Bosch is well prepared in the outlook based on a good set of acquisitions that we've done. Okay. Any perspective in terms of what opportunity that translates into? I mean, last time we gave a figure for phase one. For phase two, that's already 2. TREM IV is already in the process. Any perspective you can give how much that translates into. It will help us understand how we have done relatively, you know, in the market. Viraj, we don't give you a number like that because you're trying to put that into exact turnover increases. What I gave you was a very clear leading indicator to say that a year ago when we were at INR 2,800 crores on a quarter, and now that we are at INR 3,600 and growing, you can see that growth in our top line. This is led by powertrain. The second indicator I gave you that our powertrain has a healthy growth prospect, provided India grows and automotive grows in 23, 24. That itself should give you that on a healthy growth year, we are looking at a further growth possibility for the FY 2023-2024. That's one. The second one I gave you, very high acquisitions. All our acquisition targets have been met in FY 2022, 2023, and we had very high acquisitions in FY 2029, 2020, and these were the landmarks for the legislation roadmap. I think you can add 2 plus 2 together. If you consider the overall positivity and the enthusiasm, you know, if you look at the overall wins which we had and if you kind of match it with the maybe the indicated CapEx which you are spending, it doesn't really kind of, you know, correlate. If I look at the kind of the cash generation as an entity which you'll keep on doing, you know, the cash levels will just keep on building up every year, you know. I'm just trying to understand, one, on the CapEx part again, and then second relation to the usage of the cash which you'll, you know, which will add to the existing large balance. I want to give you an assurance on behalf of the team that we are looking at all possibilities not only of organic but also inorganic growth. As and when we finalize any of the organic big ticket or inorganic growth, you all will be the first to hear. We are very conscious that we have cash. We have just rewarded our shareholders with the interim dividend due to the high liquidity as well as a good performing year on the calendar year 2022, where we had reached our record turnover. We are churning out a decent set of numbers which we want to further improve on the bottom line. Okay. Wish you good luck in all this. Thank you very much, Viraj. Thanks, Viraj. Next will be Pramod Amthe. Please unmute your line. You can ask your questions. Hi, Shekar. First question is with regard to your aftermarket business. It's impressive to hear about the business scaling a new high. Traditionally we have seen aftermarket business is a very superior profit margin for any of the companies. If I have to look at your firm, in spite of the aftermarket scaling new high, the overall company margins are much, much lower. Wanted to know, has the aftermarket characteristics had changed towards more of services than products? Because products are anyway legacy products on the aftermarket. Why is this margin tailwind not coming through in the aftermarket business? Pramod, I've given you feedback that we are happy that our aftermarket has not only turned around but has become a strong market leader. We are very happy that aftermarket has focused on top line, bottom line, cash, networking capital, market share, as well as Great Place to Work. Now, I would slightly differ on what you said on aftermarket being traditional. There are many new age areas on where we get a lot of help from our parent on, you know, our analytics that we have with the Bosch machines across all models and platforms for vehicles. I mentioned, and I would like to repeat, we are at 500 Bosch Car Service and where we are focusing hugely on creating USPs, and you will see that. Our true north is 1,000 Bosch Car Service. We have huge number of Bosch Diesel Service. We are starting on two-wheeler services. The aftermarket has also gone digital. Having said that, you have to remember, while aftermarket is growing, the overall company is also growing at a pretty good pace. I had given for the first time a guidance of 15%, now you can see the YTD growth is much above 15%. In fact, it has crossed 20%. You must remember that when aftermarket does well and if power tools does well, and if the powertrain business does well, then aftermarket will be a significant but not the dominant portion of the total turnover, number 1. The number 2, in powertrain, when you see a company must invest on existing business but also future businesses. Bosch Limited has not been shy. I can only tell you, while delivering a good set of numbers, and I suppose you would agree in terms of not just turnover, but also cash and EBIT, we are also investing money for the future. You heard from my colleague, Guruprasad Mudlapur, and from me on both EV and hydrogen. Please look at not quarter to quarter. Please look at a year. Please look at three years. You are interested in our doing well. If we are not investing in the future businesses, we cannot turn that into turnover and profits in the future and acquisitions. Sure. Thanks for the detailed answer. Second one is, you alluded to TREM IV, TREM V opportunities. What is your assessment of timeline for these to come? Because TMA has its own thinking and still there are debates happening about when to implement. Can you give some clarity on that? That's one on the tractor norms. As we saw in case of BS6, when it happened, we have seen your margins, even though you won amazing amount of business, either because of complication or localization, the margins are diluted and they're yet to recover. Do you see a similar thing happening out based on the price quotations which you are giving to the end customer for the tractor norms? Can you repeat that last part of the sentence? Last part. Sure. I said, like we are seeing in case of BS6 wins, where the sales- Yeah. was able to come through. If I have to look at. Yeah. three-year margins, they have come down. now once- Yeah. you are giving the quotation to the tractor makers, do you see a risk of further margin dilution from tractors upgrades? Look, I told you that we've had a very good acquisition on TREM IV conversion to TREM V. On the matter, dates, we have always talked to the government, not about Bosch. Always talked to the government for the good of India and ease of doing business to stay with the timelines. Sometimes there's a change because of, you know, 3 months, 6 months, and that's not a problem. In India, I don't see now changes that, you know, TREM IV will go to 2026 and all. It'll be in 2024. Maybe you are referring to a few changes on months and all that. That's okay. Acquisition is already in the bag. It's a healthy acquisition and with a decent bottom line. I'm not going to indicate what is decent, because that would be a guidance and a leading question. Sure. Thanks a lot. Thanks, Pramod. Now we'll read some questions from the question box, sir, or the chat box. First question is, can you please state the headwinds and tailwinds in the medium term for the business? Let's start with the tailwinds, and I will request my colleagues also to give a couple of sentences on that. India is on a sweeter spot. Therefore, Indian industry has a sweeter spot chance, and therefore, automotive industry overall. We from Bosch India and Bosch Limited would like to capture the sweeter spot and be a part of this market journey because of our very strongly embedded processes, innovations and affordability. We have done it in the past. We are committed to doing it in the future. Headwinds. We are in a critical situation of election year. If we continue like a growth driven, CapEx driven budget, if India focuses on the basics, including Make in India, Made in India, ease of doing business, and allowing industry to meet market expectations, I believe that on one hand, we are not insulated against the global situations, what I talked, U.S., Europe, China, supply chain, semiconductor crisis which happened. In summary, those are the headwinds that we can see. Internal headwinds in India, the government, if we can control the inflation, if we can continue the improvements where there's a lot of work done, but for more improvement needs to be done. I think industry will further flourish and create a reliable India also to the outside world. I would like any other comments from my colleagues. Yes, Jayaraj, perhaps from my side. We see in the headwinds, at least, a certain where, or where we have to be careful or take care of is in the supplier situation, the whole supply chain all over the world. We are currently in a quite good situation also with the semiconductor. Nevertheless, it's still fragile and therefore we carefully consider all these constraints in the supplier base and in the supply chains. Yeah, this is where we have to taken care of. I think we should not underestimate the impact of the possible global recession or slower growth in the developed economies coming our way and impacting us to some extent. The auto industry will not be immune to that globally, so that's something that will have a bearing on us. The semiconductor situation has been dicey all along, while for the consumer electronics sector, we already see a drop in semiconductor demand in the last quarter of last year, which means good supply is there. You can already see that from the memory prices going down dramatically. It's not been the same in the auto industry. The auto industry uses semiconductor processors which are very unique, and that makes it still a very touch-and-go situation with regard to supplies. As we speak, we are in the midst of one again, which we thought we would not have in the beginning of this year. There are issues like this, including a constantly rising energy price. I think it's something that's happened all over the world. We are also going through that. The uncertainty around energy is generally a big headwind overall for the auto sector. But I think we can focus on a very positive state as of today in the Indian context, and hope this continues for us to take a positive impact out of it. Thanks, sir. Next question is from Niranjan. Yeah, thanks. My question is, I mean, one is on the raw material side. I think you have said that from 66.8% it has come down to 2.9%. Is it like, say, 390 basis points you have got the benefit quarter-on-quarter because of bottom cost benefit? Is it the right understanding? Niranjan, since you talked about that, I have to set the numbers in the right context, please. The question is very valid, but I would request you to please refer to what I mentioned. I said that in this quarter of October-December 2022, the material cost as a percentage of total revenue from operations is 60%. When you compare the like to like of material cost as percentage to total revenue from operations, the previous quarter, that means October-December of 2021, previous year same quarter, was 60.8. However, now this however is very important. Material cost as a percentage of net sales, net sales means excluding income from services and other operating income, which is the right way to look at it, is 64.9% in October-December 2022, as compared to 66.4% in October-December 2021. Niranjan, the point is, yes, in this quarter there has been a marginal reduction in the material cost. We are very focused on material cost. However, I said on the right material cost. You know, everything localization can also lead to higher either material cost or higher losses. It's not that, you know, just to say material costs will go down and all, profits will happen, or localization will done and more profits will happen. It's the timing of what you do on localization or what steps you take on material costs, and it's the content of what you do. In summary, since you gave two sets of numbers which were slightly different, I had to just do that small correction, please. Tell you that we are focused, like all other costs on material cost, however, with the clause of what is sensible for us. just trying to understand what it was, say, 60.8 in, say, December 2021 quarter. What was it in September 2022 quarter? July-September. I have given you material cost of October, December, which was 2022, which was 64.9%, like to like in July, September of '22, it was 67.3%, like to like. Understood. Like to like in the previous year, I also mentioned to you the cost was 66.4%. Have you got it? Got it. Got it. Just coming back to your other expenses, you have given three numbers. Out of, say, 250 million rupees, which is broadly for the new projects for electrification, et cetera. How should we look at it? Is it like, say, one-off or is it like, say, recurring because for electrification, et cetera, you will I told you the warranty is a one-off. Yeah. already. yes, we have a very strong focus on other expenses, Priya Ranjan, I already told you that this quarter has been sprinkled with certain items of one-time expenses, which we don't expect every quarter to have. Understood. Understood. Just on overall electric mobility side, I mean, there is a your way of localization, which we understand, and there is another way of localization which is driven by the government of, say, for the benefit of FAME subsidies. Are our priorities and the government priorities are aligned or how should we look at it? Sure. Yeah. I'll take this. See, our priorities are definitely aligned with what our OEMs are expecting in line with the FAME requirements. There's no difference of opinion there. But what you need to keep in mind, and which is what Mr. Bhattacharya was referring to, is that localization when done too early does not necessarily mean that this is resulting in cost savings. This may actually mean that the overall cost of the product or solution goes up. When done at the right scale and volumes at the right time, at the right levels, this certainly has a significant benefit. Now, the PLI benefits offer some level of cancellation of these disadvantages, and we are factoring all that in and taking into account on when and how to localize to what extent in line with what our customers are asking. Understood. Understood. There has been... I mean, in recent Auto Expo. Priya Ranjan, you have to give a chance to others now. This is the last question, maybe if it's okay, I'll request one last question to be given from Annamalai Jayaraj to another colleague, yeah. Okay, sir. Thank you. Yeah. Thank you for asking. Yeah. The last question is from Mr. Ravi Purohit. You can unmute and ask the question. I think he's not there, I think. With that. We close. It's 5:29 P.M. Yeah, yeah. Do you still have one more question? No, no. One more caller has come, sir. I'll just. The next question is from Jan Gram. I have unmuted. Jan Gram, sir, I have unmuted your line. Oh, he has typed a question, I think, sir. One minute, sir. I'll just check. I think I typed a question, sir. I'll just reread the question. Bosch India has localized plenty of ICE technology advances and has been able to offer these advances at an affordable price to Indian OEMs. Has it developed the skill to replicate this localization in EV space, sir? Are there specific areas of EV technology that Bosch India would focus upon to localize? That's the question, sir. I mean, just to give you confidence, Bosch has always relied on manufacturing excellence, whether in India or abroad. We've already localized, and we are maybe the largest tier-one supplying electrification components to global OEMs worldwide. We have a market leading position in several geographies around the world, and we will certainly do everything necessary to bring that situation also into the Indian context. We have definitely all the competence to make early localization happen also for electrification in the Indian context. I would like to definitely reassure that. Okay, sir. On behalf of B&K Securities, we thank all participants for joining the call. Special thanks to Bosch management for taking out time for the call and giving us the opportunity to host the call. Have a good day. Thank you very much. Thank you. Thank you.