Ladies and gentlemen, good day and welcome to Bosch Limited 2Q FY 2023-24 Post-Results Conference Call, hosted by B&K Securities. From Bosch management, we have with us today Mr. Guruprasad Mudlapur, Managing Director and Chief Technology Officer, Mr. Sandeep Nelamangala, Joint Managing Director, and Ms. Karin Gilges, Chief Financial Officer. At this point, all participant 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. Over to you, sir. Thank you, Jayraj. Good afternoon, everyone, and thanks for being a part of this call. Today, I'll start with a brief on the macroeconomic policy, followed by an automotive market update, and then walk you through our financials. Finally, I'll end with the highlights of the quarter affecting our business. As per recent IMF report, the global economy is expected to grow at 3% in 2023, down from 3.5% in 2022. Advanced economies to grow by 1.5% in 2023 from 2.7% in 2022. With this backdrop, Indian economy is doing well and expected to grow between 6%-6.5% in financial year 2023-24. More importantly, our inflation remains controlled and the financial sector is resilient. Next slide, please. Q2 FY 2024 presented a mixed picture, mixed performance with positive year-on-year growth in the passenger vehicle, three-wheeler and commercial vehicle segments, while two-wheeler and tractor segments experienced a decline. Despite a decrease in two-wheeler volumes, there are signs of recovery in both domestic and export markets. Inventory build-up ahead of the festival season has supported volume performance in Q2 FY 2024. Sports Utility Vehicle segment maintained strong dispatches due to efficient order book execution and supply chain improvements. However, there was a moderation in demand for lower-end passenger cars. Among all segments, medium and heavy commercial vehicles are in a favorable position, driven by demand, better demand in underlying industries and healthy fleet utilization levels. Light commercial vehicle volumes saw a marginal growth attributed to a high base, while tractor volumes declined due to erratic monsoons in key regions and a high base from the previous year. Three-wheeler volumes show positive growth, indicating a return to full normalcy in demand. Looking at year-on-year production volumes, there was approximately 19% growth for medium/heavy commercial vehicles, 6% for PV, 16% for three-wheelers, 5% for LCV. However, two-wheeler volumes declined by 1% year- on- year, and tractor volumes saw a significant drop of 10% year- on- year in second quarter of 2024. Let's look at the automotive outlook for 2023 and 2024. Next slide, please. In this slide, we have illustrated the market's trajectory from the peaks of 2018 through the challenges posed by COVID to the subsequent recovery. Year to date, volumes indicate a notable shift, with most segments surpassing their previous peaks and achieving record levels. PC, LCV, tractor segments are expected to particularly excel, surpassing previous peak sales, while other segments are steadily recovering, demonstrating positive quarter-on-quarter growth. Looking ahead to 2024, the election year factor and historical trends suggest restrained growth in the automotive industry. The erratic monsoon of 2023 may have some impact on the rural sentiment. Nevertheless, the underlying economic conditions remain robust, and the overarching India growth narrative remains unchanged. We anticipate for the upcoming year, a moderate growth trajectory attributed to the election year dynamics, a high baseline set in the current year and the impact of erratic rainfall patterns. However, the global headwinds to be monitored closely. Let's look at how the company has performed in the July to September 2023 quarter, compared to the July to September 2022, amidst the above-mentioned factors. Next slide, please. Sector-wise sales, the Mobility Solutions sector now. Mobility sales have grown by 11.7% in Q2 FY 2024, as compared to Q2 FY 2023. 12.3% growth in product sales of powertrain solutions is driven majorly due to growth in HCV and passenger car segments, and due to increase in content per vehicle, mainly in exhaust gas treatment components. Automotive aftermarket business has grown by 10.2% quarter-on-quarter, mainly due to increase in demand for spark plugs and higher sale of lubricants. Our two-wheeler business sales have also increased by 18.6% quarter-on-quarter, due to higher sales for fuel injectors, driven by improvement in the overall semiconductor supplies as compared to previous quarter. Now, beyond Mobility Solutions, sales have grown by 9.9% in Q2 FY 2024 as compared to Q2 FY 2023. Consumer Goods business, comprising of power tools segment, has increased by 10.4% quarter-on-quarter, mainly due to higher demand for Blue tools. Building Technologies grew by 3.9%, mainly on account of higher number of orders for installation of security systems. Now, the profitability statement. The overall revenue from operations for July to September 2023 stood at INR 41,301 million, which is an increase of 12.8% as compared to the corresponding period of previous year, mainly driven by growth in product sales by 11.5%. Mobility Solutions grew by 11.7%, while sales from business beyond Mobility Solutions increased by 9.9%. Income from services mainly comprising of engineering and application services provided to Indian OEMs and also to Bosch Germany. Service income recognized during the quarter was mainly towards completion of BS VI Stage II projects for the OEMs. Other operating income mainly includes income from sale, lease rentals, export incentives and miscellaneous income. In the current quarter, the increase is mainly on account of higher lease rentals for leasing out of property in the Adugodi premises, and incentive received from the Government of Maharashtra under the mega project scheme. The material cost as a percentage of total revenue from operations is at 66.8% in July-September 2023, as compared to 64.9% in July-September 2022. However, the material cost as a percentage of net sales, that is excluding income from services and other operating income, is at 70.1% in July-September 2023, as compared to 67.3% in July-September 2022. The increase is mainly on account of mix impact, the higher share of traded goods, adverse Forex impact on imported material and the previous year had certain one-time credits, that is, provisions written back which were no longer required. Employee cost. Employee costs for July to September 2023 is INR 3,355 million, as compared to INR 2,751 million in July to September 2022. Increase is mainly on account of year-on-year salary increases. Also, previous year had certain one-time credits. Other expenses stood at INR 5,449 million, 13.2% of total revenue, in July to September 2023, as compared to INR 5,781 million, 15.8% of total revenue in July to September 2022. The current quarter expenditure has decreased mainly on account of the following: lower spending on new businesses, on account of sale of Project House Mobility Solutions business, lower one-time technical access fee in current quarter for localization of ECUs and Common Rail injectors. Depreciation for the current quarter is at INR 1,013 million, 2.5% of the revenue, as compared to INR 919 million, which was 2.5% of the total revenue in July to September 2022. Increase in depreciation in current quarter is on account of additions during the year, mainly in buildings and plant and machinery. Operating profit. With this, the operating profit stood at INR 3,900 million in July-September 2023, as compared to INR 3,392 million in July-September 2022, which is an increase of 15%. Other income primarily comprises of interest on fixed deposits, intercompany loans, change in market value of mutual funds. The other income has increased from INR 1,497 million in July-September 2022 to INR 1,542 million in July-September 2023, mainly on account of increase in interest income. PBT and PAT. For the quarter ending July-September 2023, your company posted a profit before tax, before exceptional item, of INR 5,320 million, as compared to INR 4,870 million in July-September 2022. As a percentage of total sales from operations, the profit before tax, before exceptional items, stood at 12.9% of total revenue in the current quarter. Profit before tax, after exceptional items, stood at INR 13,170 million in July-September 2023, as compared to INR 4,870 million in July-September 2022. As a percentage of total revenue from operations, profit before tax, after exceptional items, stood at 31.9% of total revenue in the current quarter. Our profit after tax for the quarter ended September 2023 stood at INR 9,989 million, which is 24.2% of total revenue from operations. Profit after tax in July-September 2022 was INR 3,724 million, which is 10.2% of total revenue from operations. The profit after tax for the current quarter includes gain on sale of our Project House Mobility Solutions business, amounting to INR 6,054 million, net of tax. On the technology front, next slide, please. On the technology front, this quarter we commenced on-road trials following the development of our hydrogen ICE engine project, and post receiving permissions from the Ministry of Road Transport and Highways. Engine calibration activities to meet the BS VI Stage II norms have begun. Trials are primarily taking place on Bangalore roads and TAAL, which is the Hosur Road Airstrip. We will keep you updated on any new developments on this topic. Next slide, please. We also wanted to give you an update on the work Bosch Limited has been doing around CSR. Since April 2023, a total of 8,000+ volunteer hours were completed, involving 900 volunteers, of which 650 are from Bosch and 250 were from non-Bosch volunteers. For the second quarter alone, we have achieved 2,750+ hours, comprising of over 40 activities. The activities included tree plantation, lake rejuvenation, animal welfare, World Youth Skill Day, environmental projects, mentoring programs, school painting, medical facility enhancement and assistance, and so on. By December 2023, we will cross 100+ activities across all locations. The Bosch leadership team also took part in many of these activities. Next slide, please. Thank you all for your contribution and for listening patiently through the call. We will now address your queries. Thanks again, and open for your questions. Yeah, thank you, sir. We shall now begin the question and answer session. Ladies and gentlemen, at present, you are all in the listen-only mode. For participants who wish to ask a question, I request you to please raise your virtual hand. I shall be able to see your raised virtual hand, and will invite you in turn. Alternatively, participant can also type in their questions in the chat box. Please address your questions to all participants. The first question is from Pramod Kumar. Please unmute and ask your question. Data on the electric vehicle business in India, especially on the two-wheeler side, where we are seeing the market is kind of bounced back pretty well after the subsidy cut. And we are seeing more product introduction by OEMs, and everyone's talking about ramping up volumes. So if you can just share any update there in terms of how we are doing in terms of the category market share on electrification, and how does it compare versus our ICE portfolio? If you can just help us understand that first, sir. Yeah, my MD, Sandeep will take this up. Well, on the electrification front, I think your observation is right, that post subsidy adjustments and changes, the two-wheeler demand has kind of recovered. On the passenger cars, we see we see a consistent demand of of the EV, EV cars. So we will continue to focus on our portfolio engagement in both these segments, and we will we will watch how the market goes before we can get into more specifics on portfolio enlargement. Pramod, are you in line? I think he has dropped out, I think. Next question is from Gokul Maheshwari. Please, unmute and ask your questions. M argins. Well, you mentioned the fact that there has been deterioration on account of inferior mix. But we've had a very benign cost environment with respect to the commodity prices, and we are primarily trading, which traded percentage has gone up dramatically over the last few years. So, not for the shorter term, but more, where do you see the margins coming back in terms of your localization program and trying to improve your gross margin profile? Because it's, like, nearly 10 percentage points lower than your longer term averages. So if you can just give a sort of a path in terms of how do we recoup our prior gross margins? Yeah. Okay, Karin speaking. Yes, the gross margin, as already mentioned by my colleague, Guru, we see currently, and as you are already rightly mentioned, an increase in the share of the traded goods. This is partially coming out of the what we see the change in the content of the vehicles, especially also in the heavy commercial vehicles. This is the exhaust gas treatment. Good news in the heavy commercial vehicles, we have last year localized the injector. We are going currently ahead with the child parts of this injector as a very important step. And, in the future, we are currently also planning or making the further steps in the direction of the exhaust gas treatment. We have another effect, which we see, and this is a change from the conventional combustion engine to the Common Rail combustion engine. There we have a general higher share in the material of the total costs in the Common Rail systems. This is based on the technology, let's say, so a lower value add share. And also in the Common Rail, we have picked up already from below the 50%. Now, this year we will end up at about 68% localization of the components, and we will go ahead to come up to a decent localization share also in the Common Rail systems. Of course, all these activities will support our gross margin in the future, and this is one of the priority topics, is localization of finished goods, localization of child parts, and localization of components here in India. Thank you for that. So should I assume that the gross margin improvements is given that the localization benefits are coming and coming sooner, the improvements in the gross margin should be reflective in more in the next forthcoming quarters rather than forthcoming years, given that we've already made some progress over here? Yeah. So, this is for sure, when we talk about the localization, then this is not in the next quarters. So we are going ahead, but, you know, doing a localization with all the quality releases, with all the cross-checks, with the customers releases, et cetera, and this is also quite complex technologies, especially in the Common Rail and also in the exhaust gas treatment. So we are talking about a mid-term. Okay. And would you be able to quantify the CapEx budget for FY 2024 and 2025? For the current, for the next year, we are estimating a CapEx of INR 3.5 billion. For the year 2025, we are currently in the middle of the mid-term planning. Okay, great. Thank you. Thank you, Gokul. Next, Mr. Jinesh, you can unmute and ask your question. The question is on the localization itself. So you talked about localizing EGT components as well. So that will be done through Bosch entity, or it will be done at the vendors level? And what I'm trying to understand is would that lead to lower share of traded goods, particularly on the EGT side? Yes. Yes. The answer to both is yes. Okay. So, Bosch should be localizing EGT components. Got it. Secondly, you alluded to the fact that we've already reached 68% localization for Common Rail components. We are looking to take it up to 100%, or certain components will still be imported? 100%, we will not reach. We even have in the conventional, and please do not underestimate a localization, even in our lovely A pump, which is for decades already here in India, we are at 95%. So the 100% we will not reach, but we will try to do everything to localize as much as possible here in India. But certain things also volume-wise make sense to import. Sure, that was highly appreciated. In this quarter, we saw almost 19% growth for our two-wheeler segment business. If I look at the underlying industry, production grew sub 2%, in fact, production declined sub 2%. So what led to such a strong growth for Bosch in a weaker industry growth? Well, this is Sandeep speaking. I think, out of the total growth or degrowth of the two-wheeler segment, we need to segment, we need to, you know, segment the different categories. There is a higher distress in the commuter segment, where our play is rather low, but in the premium part of the two-wheelers, the market has done better and so have we. That explains the reason why there is a disconnect between our growth and the industry growth numbers. Got it. Got it. I have a few more questions, but I'll fall back in queue. Thanks. Thanks, Jinesh. Pramod Kumar has again joined. Pramod Kumar, you can unmute and ask your question. For the opportunity again. And, can you please provide us an update on the PLI scheme? If there's any progress which has been achieved there, and if yes, what kind of components are we, are we getting the approval from the government, and when can we expect the benefits of the same kind of kicking in? And as it normally happens with such programs or such benefits, will you be also sharing some of these benefits with your, with your customers, or, would you expect the benefits to be largely retained at the Bosch end? So if you can just help us understand the PL bit of the PLI bit more in detail, that would be really helpful. Yeah. So I'll not get into every specific part of your question, but I'll give you a general answer on PLI. Yes, we are, we have applied and qualified for PLI. There's a lot of echo. Could you please mute? Yeah, sorry. I'll unmute my. Yeah, I'll, I'll mute myself, but the problem is I can't unmute again if I have a follow-up, so I'll request there are. You can stay online, then it's okay. Yeah, let's continue. So, in general, we've qualified for PLI at Bosch Limited. We are planning to bring in lots of local manufacturing, thanks to the PLI benefit that occurs as a consequence. We will, of course, as quarters go by, keep you updated on what has been the benefit of this, which product categories, which segments, and how this is going to be dealt with. In general, we intend to keep the benefits with us, and also share where required with the customers. But this is not totally finalized as of now, and we will update you as we move forward. Thanks, Pramod Kumar. Next, we'll go to the next Pramod, Pramod Amte. You can unmute and ask your question. So the first question is with regard to the royalty, which you said you have paid lesser for ECU and the injector localization. Can you specify? I didn't get you in the other expenses? Royalty. The question is on royalty. You have called out that in the slide, saying that your other expenses are lower because of some localization program on the ECU and injectors. Okay, so you are referring to the P&L, to the other expenses, yeah? Exactly, yeah. Okay, got it. So, we have different effects in the other expenses. One effect is we have a sale of business of the mobility platform, and therefore, we have a reduction in the spending for this project, let's say. This is which we see now in this quarter. Then we had, in this quarter, the reduction in the one-time cost of technical access fees. This is, let's say, depending on localization, depending on the product mix we have, we have these technical fees, but this is if we compare it to the last quarter, we see here a reduction. Then we had several cost-saving measures, that means this is a performance program. Also, we have that we are looking frequently in our cost categories, and we are also making here real cost progress. And the fourth is that we also see a reduction due to better fixed cost absorption. If we compare it to the past, we under- proportional growth in our variable costs, or in our fixed cost, under- proportional to the growth in our revenues. Sure. Thanks. The second question is with regard to sale of business. What implication it will have on your sales and EBITDA because of this sale of business? This has been explained in the past on what was the rationale and why we sold it. You want to comment on the one-time effect that has come in, Karin? Yes. So, but perhaps we have to explain first the top and the bottom line. So this was actually in the last two-three years, where we explored the mobility platform here in India, and we made investments via the other expenses into these platforms. Do we now see a huge effect in the top line, means in the revenues? No, we're selling the business. In the bottom line, we see it in this quarter under the one-time expense or exceptional items, where we see the sale of the business below the profit before tax. So that's the Hinduja entity which you sold, right? The energy. No, that's the project house Mobility Solutions business. Okay. Sure. Thanks, and all the best. Thank you. Thanks, Pramod. Pramod Kumar, I have unmuted your line again. Yeah, thanks a lot for the opportunity. Again, follow up on the commercial vehicles side, sir, because we're getting different views here. Some of the larger peers on the component supply chain side have started to call out a peak for the industry now. And, so the OEM have also started to talk about the flattish trend emerging from 4Q. So in that context, given that you have exposure to all of them and across all, listed, unlisted, and across tonnage, what are your thoughts on the commercial vehicle space, as we go forward from here? I think on the commercial vehicle, there was this peak which we saw the industry getting to in 2018. And then subsequently, we have had a continuous downturn due to several factors which have been explained in the earlier discussions as well. But now we see a turnaround, albeit in a very low base. It is a slow recovery, and we have to basically keep a watch on the effect on larger investments, which will happen in the infrastructure space. So we'll keep a close watch on this industry. Yes, you are indeed right that our exposure to this industry is very sensitive and high, so we'll keep a very close watch on it. So at the moment, we see a slow but sustained recovery. It's good to understand that there are some structural changes in the logistics sector in terms of how India moves goods. And as a consequence, for example, there's now FASTag, there are better roads, better infrastructure, and of course a good amount of cargo is now moved on railways. But at the same time, there are higher tonnage trucks playing on Indian roads, unlike in the past. So there are many changes that are happening all at once. And so my colleague already explained that I will keep a very close watch on how the market develops over the coming years. Our own content per vehicle in this category is also increasing. So we have to bring in multiple factors in, and we will see how the market develops going forward. Thanks, Pramod. Next is Mr. Viraj. Please unmute and ask your question. Yes. Yeah, yeah. I just got three specific queries. First is on the contribution margin, you know. So if I compare sequentially, right, the share of traded goods was, say, somewhere around 67%, is now close to around 65%. And if I look at the environment which we are in, in terms of the raw material, it's, it's one of the most benign environment. And so, I mean, I'm still not able to understand the mix part, or is it that other than the mix, in the past, we used to be quite strong in terms of the contracts, in terms of the RM recovery or FX cost recovery. So, is it that, you know, post BSVI, you know, the terms of the trade are no longer that, strong, you know, as what it used to be in a pre-BSVI environment? Just trying to understand, you know, on the contribution part. So that is one. Second is on the CapEx, you know, so at the AGM also, we talked about upwards of INR 400-600 crores kind of a CapEx, and that was including PLI. But if I look at the first half, we've just done a CapEx of, say, INR 105 crores. So, you know, how should we understand the CapEx if I have to understand in the sense of the localization which we are trying to achieve? So if I have to look at next, say, three or four years, what is the quantum of CapEx we would have to do to achieve those kind of CapEx, those kind of localization? Would you like to start with the recovery? Sandeep speaking. I'd just pick up the first question of yours with regards to the, how do you say the. Contribution margin. Yeah, on the contribution margin and the recovery of economics. I don't think that there is, on a contractual basis, a difference between a pre-BSVI or a post-BSVI. So we do have coverage for raw material recovery, indexing, et cetera. But what we have seen the last 12-18 months is a rather disproportionate increases in the cost driven by logistics costs, wages costs, energy costs, semiconductor-related costs. So that is putting a lot of distress on the cost part of it, while we are also discussing with customers regarding this additional recovery. So I don't see it as a contractual issue, but rather a disproportionate circumstances we are passing through. Just a follow-up. You know, what is the extent of that additional cost, which is still yet to be recovered? I mean, and the reason why I'm asking this, if I look at the end OE space, you talk about CV, passenger vehicles, two-wheelers. Across the board, these are reporting one of the best contribution margins, you know, and the commentary is further on an improving trajectory. But when I look at, a player like us, you know, who offer a very strong technology-oriented product, the same is not yet reflected in terms of the recovery part. I think the extent of exposure, of course, depends on category to category, domain to domain, so there is really no, no one number which represents that. Of course, you're right that, if we consider a vehicle manufacturer, possibly he has a lot more revenues and ways and means for recovering cost impacts from the market compared to a Tier 1 supplier like us. So that's a continuous challenge. So we will be faced with this also the coming years, coming quarters, and then we will, we will see how to navigate our position in the market. On CapEx? Yes. Then I would go for the CapEx. The CapEx, which is planned for the year 2024, I think you were referring to the next year to look a little bit into the future, which we are at INR 3.5 billion-INR 3.6 billion. This is mainly in the, in our plans, and this is really, if we look into the localization, this is supporting our further localization strategy. If we go into the Common Rail, into the exhaust gas treatment, this is where we now set up the plans for the future. So more or less, we have partially, of course, we have to partially invest also further in our buildings, but the main part will go into the machinery in all of our production plants. So, the question was to achieve, say, the localization of, I mean, over a period of time, 90%-95%, what kind of a CapEx that would entail, you know? Just trying to understand the intensity in terms of spend it will require. So to reach a 90%-95%, this is really mid-term, and therefore we cannot give you now here the guiding figure for this. What we are looking is into the mid-term planning, and this is our planning, how we would like to go ahead with the localization. But, the figure I can give you today or for the next year, what we have planned and agreed to invest in CapEx. Any thoughts on the surplus cash? I mean, post the sale of business, it will just add to the overall cash balance and the CapEx figure, which you're talking about, even after that, the cash accrual on the balance sheet, and it, it'll just keep on building up further. Yeah. Any thoughts on the surplus cash? You know, what do we want to do with it? Yeah. So, as you rightly said, we have a quite good liquidity position. And, what we are ongoing looking at is of course, besides the organic growth and the investment we make into the organic growth, we also look strategically now in the mid-term planning, into an inorganic growth. Nevertheless, we have also to see that we have a transfer in the technology currently, plus to have a look, how is the market moving, in the direction of electrification and hydrogen. So therefore, we observe the market. We know that we have a very good, cash position. Be assured that we would like to place, the right thing in the market for the company. So just to reassure you that there is a lot of internal focus on better utilization of cash and putting that to more productive use. We are looking into that seriously. As and when we finalize the plans, we'll get back to you. Okay. Thank you, and good luck. Thanks, Viraj. Next is, Mr. Senthil. Please unmute and ask your question. Hi, sir. Good evening. Just one question. Recently in the EICMA 2023, Bosch has showcased a lot of recent innovations or products on the two-wheeler side, like integrated powertrain, radars, and stability control devices. So, what could be the relevance of those products with respect to the Indian market? And, what's the potential over the medium term? So that's my question. Thanks. I think part of the technologies what we showcased in EICMA we are investigating the use case relevance into India as well. So there are certain topics on powertrain, certain topics on electrification, and also on the display units which would be of relevance to India, and we'll follow them up with demonstrators, proof of concepts, et cetera, for India. Not all what we showed in EICMA would have direct use case relevance, but we are checking which of those would bring value and also create traction in the market. We'll keep you informed about it. Typically there is a lag between what's seen at EICMA to what gets into the markets in India, even in premium bikes. So expect that delay typically three years in most cases, and only some relevant technologies, and also sometimes they're even further localized for the needs of the Indian market and then brought in. So that work is on. We are talking to Indian OEMs about this. Thanks, Senthil. Next is Mr. Ravi Purohit. Please unmute and ask your question. Yeah, we could hear you. Ask your question. Okay. Okay, thank you. Yeah, so, you know, going back to the question on margins, I know I think couple of years back we had shed more than 20%-25% of our workforce, right? We have taken various cost initiatives, and yet after the end of the two-year period, right after all those cost initiatives and everything else, the RM costs have also come off, logistics costs have also come off. If we had not taken those steps, our margins would probably be like low single digits today, at the operating level, which has never happened in our history in Bosch. It's very, very, you know, confounding to investors, whether is there a problem in our own, is there a problem with our strength with our competitors, or sorry, with our OEMs, and which has reduced over a period of time? Or whether we are, we have to pay more to the parent or the associate companies from whom we are importing more on, you know, transfer pricing. You know, somewhere there is a lot of margin that has got lost during this period, and we can't seem to kind of, you know, understand. And the last two, three years, we've also not been able to communicate as to what is the normalized margin that investors are, you know, should hope to, even on a medium term basis, right? Each time we have on these calls, discussions. Yeah. Yeah. Pick it up? Yeah, okay, I take it up, and then perhaps. I like So, I think these initiatives on the personnel cost side were the absolute right ones. And, if you look to that today at our position, we are in the current quarter in the personnel costs at 8.1% of the revenues, which is a quite healthy number. If we look at the other expenses, with the cost contribution we made, and together now also with a selling of the new business, we are back at about 13, 13.2% of the revenues, which is also back on the healthy. So if we are looking at the P&L and if we are looking at the revenues, we see twos, we see one thing, and these are the material costs. Knowing that we are, we're coming from BS IV to a BS VI now, and yes, we have increased our portion of imported goods, of traded goods, which we are on the mid-term now coming into the next localization wave, let's say. This is what I explained beforehand, in the Common Rail, where we have to come up to a decent percentage of localization. And in addition, it is especially in the exhaust gas treatment, where we have planned already which products we would like to localize here in India, and we are now going ahead to make these planning on the mid-term basis. Well, I just want to give a general perspective, that every time there is a technology transition, be it from BS III to BS IV, BS IV to BS VI now, or another technology standard coming in, there is a dip in the localization effort. And then over a period of time, when the technology is maturing, we increase our localization extent, and then reach a very healthy localization content. This is something that's been the practice even in the past, and that's the same trend that's happening today. There are now increased efforts to get higher levels of localization done at a faster pace. That action is already ongoing. But, some of the other effects you see today, which are rather new, are the increases in material costs, increases in many other factors that have come in, which, to a large extent, will need to be passed back to the OEMs and then recovered, and that action is also on. So overall, I think we should be back on a healthy path, so. Yeah. So, you know, if I could just extend that further. When we say healthy path and when we say medium term, are we talking of going back to our erstwhile range of margins? Is that something that we should work with? Because, you know, we used to make 18% margins, EBITDA level, in the past. We used to make 45% gross margins in the past, and we are at 33% right now, so there is a huge gap between then and now. So when we say over a medium term, we are working, can you assure investors or at least give some path to investors to say that, you know, this 33 will go back to the historic band, or it's not going to happen? Which effectively would mean that there is something structural that has come down in our business or in the, you know, overall operations. Yeah. We don't want to give you an outlook for the future like this. We are working. All I can reassure you is we are seriously working on multiple elements, and you will start to see the improvements over the coming months. Okay. So over the last 1.5 years, we've also mentioned a focus on exports, right? Growing our exports. We had mentioned them in our annual report. We had mentioned them at various platforms in the last 1.5 years. We had said that we had fairly large ambition on export, right? Taking the export as a percentage of total revenue to mid-teens. So far, we've not seen much happening on that. Can you kind of share some insight into what is happening on the export side? Is it really a sizable opportunity? Is there any serious thing that is happening at the company table on export side? So, if you look at the current situation of the exports, and if you look at the global, at the global economic situation, and as Guru mentioned beforehand, we see the weak European market, we see a weak U.S. market. We know that China is struggling with the growth rates. And, I would say we are in a sweeter spot here in India, and this is what we also see. We see negative growth in all these areas, especially in Eastern Europe, we see Germany very, very slow. So therefore, we also see, even if in our current low share of exports, we saw in this quarter a negative trend in the injectors for the passenger cars, which we usually deliver to Europe, we saw a negative trend. So therefore, is export a chance? I would say, in general, yes, but as long as all other markets are fighting like hell, what they currently do, this is of course then not the big chance for us to deliver in any way weak market with overcapacities. Okay. And, and Karin, just to clarify, when you mentioned mid-term planning, are we, when we say mid-term, are we talking of one or two years, or are we talking about, like, more than four to five years? Oh, we are talking to four-five years. Okay. Okay. Okay. Thank you. Thanks, Ravi Purohit. Next is, Mr. Priyaranjan. Priyaranjan, you can unmute and ask your question. Priyaranjan? Yeah, yeah, yeah. Yeah. So in terms of technology roadmap, I think the MD's showcase in one of the slides that the hydrogen ICE, the preparation and the trial run, et cetera. So in terms of the technology roadmap as well as priority in terms of the new technology, where are our major focus right now, or focus is on that front? And in terms of is hydrogen ICE is much bigger priority than going to probably the electrification? If you can just throw some light on. You know, I would say that, we prioritize one over the other. Both are in very different, segments, and both have different, needs in each of these segments. Currently, we see, hydrogen ICE as an upcoming technology, which will be deployed, beyond 2026 onwards, towards 2026 to 2030, and we are preparing ourselves towards that. Electrification is there in pockets in different segments already today, but, will not be a dominant one in heavy commercial vehicles, so we have, hydrogen ICE in those areas. And electrification is a dominant technology for the future in, two-wheelers, three-wheelers, and passenger cars, and we are also working and, preparing ourselves for that. So these are two different categories, and, no, no need also for us to internally prioritize on any of them. We are working on all of them. Okay, good. Good to hear that. And so, to achieve all these technologies, so the, one of the participants was earlier mentioning about the CapEx. So one, I mean, so far the CapEx is more towards, driven towards localization and the machineries and all. So when we look at the, these technologies, do we require, really require to step up the significant jump in the CapEx going forward? As you also mentioned that we are, evaluating how to best use, put use to the cash which we have in the balance sheet. So I mean, if you can throw some light in terms of the directionally, in terms of CapEx. So, is it going to significantly increase? Because you will have a new technology will keep coming in then. So what has been showcased is the CapEx plan for 2024. Of course, for other technologies that we introduce and also get into localization and manufacturing, like electrification or hydrogen or other things which come in the future, there will be more CapEx required, that's clear, and we are looking into that. And as and when we have further updates on that, we'll certainly get back and update you. Sure. And in terms of lastly, in terms of the overall technology, not only on the powertrain side, but also on the vehicle side, like, say, the new technology or the new smart vehicle system, et cetera, like we have the camera-based viewing system, et cetera. So what is the kind of thought in terms of Bosch India? I mean, because we have these technology globally, but I don't think we have a meaningful presence in India for all these technologies. So if you can help us understand, are we looking to bring those technology? Because the technology gap gradually is going down, I mean, between, say, the developed market and the developing countries like India. So I mean, the technology earlier, the gap between technology was probably a decade, now it's shrinking to, say, two, three years, and maybe with the smart vehicles and all, it will be even lesser than that, so. So let me start, and I'll let my colleague, Sandeep, answer after that. See, in terms of technology, we have a global portfolio of these products and technologies which are offered to Indian OEMs. We, of course, also do Indianization of these technologies as and when required and offer them to that, to the OEMs. What you brought in as examples may not necessarily be in the portfolio of Bosch Limited, and then it doesn't matter whether that's required or not. But in any case, whatever we have as a general rule, whatever we have as technology globally, is available for Indian OEMs, and further customization of that, or even local development or local variant development for Indian OEMs, is always done in India and offered to the OEMs. You want to add anything, Sir? Well, I think you have covered most of it, so, while this portfolio may necessarily not be within the Bosch Limited portfolio, but on a bigger mobility scale, of course, there are technologies which is getting adapted, like you mentioned. So this could be in the area of driver assist or parking assist or automatic emergency braking or driver monitoring, et cetera. These are things which are being worked on. Okay, got it. Thank you. Thank you, Priyaranjan. Due to time constraint, we'll take the last question from Vasudev. Please unmute and ask your question, Vasudev. Vasudev, we could not hear you. I think he's. Can we go to the next question, sir, or we want to close, sir? Last question. We can take one last question and close. Okay, okay. We'll take the last question from Mr. Rajesh. Please unmute and ask your question. My question is regarding the exports and margins, were exhaustively discussed with previous participants. I wanted to clarify that and on EGT, two things, though, from your answers. Regarding EGT, from your answer, am I to understand that, as and when EGT is localized, it would be part of the listed entity in terms of its sales and margins, and not be a traded good? Yes, you are right. Oh, that's great. Yeah. That's okay, because that, there was some uncertainty about it earlier, so thanks for clarifying that. Yeah. Y eah. Yeah. So, so, we are currently importing from, Bosch Group companies. We are importing, and we have it as traded good, according to the transfer price agreements, based on arm's length, of course. And we are localized, we localize in the listed company, and therefore, we have then also the benefit in the listed company of localization. Yes, you are right. Okay, thank you. And the second question was related to the answer. You know, when we import for traded goods, we have a contract due to transfer price if it's internally, or if it's externally, we have a procurement price. And then, you know, therefore, this gap that we have in our inability to pass on costs, it's not just about you know, the competitive environment here, it's about, it's a two-way agreement, right? We're buying from somebody, we're selling to somebody, we are just a trader. So if at all, there is a gap in maintaining our margins, it should be temporary in nature. Is that right? Or, have we made a mistake in the contract and somehow we are not able to, that we have agreed for price increases on a buying side, but somehow not penciled that in, in our selling? No. If we, if you import today, then, of course, you buy something, you trade it, and you sell it. Localization is then that we, first of all, localize the value add part, where we here in India, of course, in the value add, competitive, highly competitive, cost competitive. And in addition, as the second step is then, as, I explained in one of our meetings before, that we usually start with the assembly, and then we start, we go ahead with the child parts, we start the localization of the supplier. And this is all part of the whole story, that we try to localize as much as possible, value add, plus material here in India, because on the long run, this is how we maintain our margins. Yeah. Thanks for the answer. Maybe I didn't explain my question clearly. What I meant was, currently, we are having a gap in passing on the cost of traded goods, right? And I'm trying to clarify that it's purely a timing gap, that in the forthcoming quarters, the contracts get automatically adjusted? No. Or is it that we made a mistake in the contract, and somehow some of these cost increases cannot be passed on? No. As traded goods. Yeah. So actually, for the traded goods, for the pricing issue and recovery of certain things, my colleague answered already. What we mean is, if we talk about the change in the product mix, if I look at, if my all my products are 100%, that we see an increase in the portfolio which is traded, and the only way to balance it is that we go ahead strong in the localization. Just to answer quickly and close this, we do not have issues with contracts. Yeah. And we do not have any such things. Costs will be passed on and recoveries will happen, but there are processes behind it, and OEMs also ask for a lot of clarifications, justifications, and so on, and this is work in progress today. And the real cure for this issue is having much higher localization effort than what we have today, and that is the effort we are putting in. Contractual passing on of costs will happen, and recoveries will happen as per the contracts, and there is no issue with that. Thank you so much. That's so clear. Thank you. Thanks, Rajesh. On behalf of B&K Securities, we thank all participants for joining the call. Thanks to Bosch management for taking time out for the call and giving us the opportunity to host the call. Have a good day. Thank you very much. Thank you. Bye-bye.