Ladies and gentlemen, good day and welcome to the Escorts Kubota Limited Morning Conference Call hosted by Emkay Global Financial Services Limited. Before we start, I would like to add that some of the statements made by the company in today's call will be forward-looking in nature and are subjected to risks as outlined in the annual report and investor releases of the company. 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 this conference call, please signal an operator by pressing star then zero on your touch-tone phone. I now hand the conference over to Mr. Chirag Jain, Emkay Global Financial Services Limited. Thank you, and over to you. Thank you, Navya. Good evening, everyone. On behalf of Emkay Global Financial Services, I would like to welcome you all to Escorts Kubota Limited Q4 and FY25 earnings conference call. I also take this opportunity to welcome the management team from Escorts Kubota Limited. Today, we have with us Mr. Bharat Madan, Full-Time Director and Chief Financial Officer; Mr. Neeraj Mehra, Chief Officer, Tractor Business Division; Mr. Sanjeev Bajaj, Chief Officer, Construction Equipment Business Division; Mr. Sanjeev Gurk, Head, Finance and Tax; and Mr. Pratik Singal, Investor Relations and ESG. We will start the call with brief opening remarks from the management, followed by the Q&A session. Over to you, sir. Thank you, Chirag. Good evening, everyone, and thank you all for joining us today. Fiscal Year 2025 has been a remarkable milestone for our company, making it clear for spreading prosperity and impacting lives. With a successful merger, starting operation in captive finance arm EKFL, and our best-ever financial performance with highest revenue and net profit. Few highlights of the company's standalone financial performance for the quarter ended March 2025 are as follows: Operating revenue from continuing operation at INR 2,430.30 crore, up by 6.1% year-on-year. EBITDA at INR 292.90 crore, up by 0.7% year-on-year. EBITDA margin in Q4 at now standard 12.1%. PBT before exceptional item from continuing operation at INR 358.40 crore, up by 9.7% year-on-year. During the quarter, there is an adverse impact of INR 27.10 crore on account of impairment of investment in Poland, a wholly-owned subsidiary, and a joint venture company in Gujarat for small tractors. Net profit from continuing operation at INR 250.70 crore, up by 0.9% year-on-year. Net profit including discontinued operation at INR 297.50 crore, up by 8.2% year-on-year. EPS stands at INR 27.05 as compared to INR 25.05 year-on-year. The board has recommended final dividend of 180% for the fiscal year 2025, equivalent to INR 10 per share, with the interim dividend already paid. The total payout for FY2025 will be amount to INR 28 per share for the face value of INR 10 each, an increase of 56% as compared to previous year. On the consolidated basis, company financial performance for the quarter ended March 2025 is as follows: Revenue from continuing operation at INR 444.90 crore, up by 6.3% year-on-year. EBITDA at INR 287.60 crore, with a margin of 11.8%. Net profit from continuing operation at INR 271.60 crore, up by 11.6% year-on-year. Net profit including discontinued operation at INR 318.40 crore, up by 17.9% year-on-year. Moving on to the segmental business performance, starting with the Agri Machinery Business Division. On the tractor business in Q4 FY25, the total tractor industry volume domestic and export was at 2.28 lakh tractors, up by 15.5% against corresponding quarter last year. Our total volume was at 26,633 tractors, up by 7.6% over corresponding quarter previous year. On the domestic front, the total industry in Q4 FY25 was at 2 lakh tractors, up by 17.3% as against corresponding quarter last year. Industry in North and Central region experienced a growth of 10%, whereas rest of the country saw a substantial growth of 25.1%. Our domestic tractor volume stood at 24,801 tractors, up by 6% as compared to the corresponding quarter last year. Looking ahead with favorable macroeconomic conditions such as good rabi harvest, higher crop prices, and above normal monsoon prediction this year, coupled with sufficient water level in reservoirs, we expect tractor industry to continue growing across various regions in the next fiscal year. On the export front, the tractor industry in Q4 FY25 came at 27,500 tractors, up by 4% as against 26,500 tractors in the corresponding quarter. Our export volume came at 1,832 tractors, up by 36.6% as against 1,341 tractors in the corresponding quarter. During the quarter, sales to Kubota Network accounted approximately 70% of the total export. Non-tractor revenue comprising of agri solution business, engine business, and spare parts business in Q4 FY25 constituted 19% of the agri machinery segment revenue as against 18% in the corresponding quarter and 21% in the sequential quarter. Agri machinery product segment revenue was up by 11.1% to INR 1,974.80 crore as against INR 1,776.70 crore in the corresponding quarter. EBIT margin for agri machinery business division was at 11.4% as against 11.5% in the corresponding quarter. Coming on to the construction equipment business, in Q4 FY25, serve industry volume comprising crane, backhoe loader, mini excavator, and compactor, which was down approximately 8% as against the corresponding quarter last year. This degrowth was primarily driven by the crane industry, which was down approximately 13% as compared to the corresponding quarter last year. Our total volume in the CE business was at 1,719 machines as against 1,958 machines in the corresponding quarter. CE segment revenue came at INR 453.90 crore as against INR 505.80 crore in the corresponding quarter. EBIT margin for the quarter ended March 2025 came at 9.1% as against 11% in the corresponding quarter, adversely impacted due to change in emission norms regulation. As our commitment to innovation and focusing on the introduction of the new product, during the year we introduced products in the backhoe loader and Hydra segment, complying with the higher emission norms. Our latest backhoe loader product is engineered for the mass market in domestic and the international market. The new crane models meet customer demand for performance, safety, and comfort in the non-industrial crane segment. The construction equipment industry is currently navigating challenges in retail demand, primarily due to cost escalation on account of changes in the emission regulation. However, as the government prioritized infrastructure development across various sectors and price stabilization following the liquidation of old emission inventory, we anticipate an uptake in the demand during the later half of FY2026. The Government of India has allocated INR 11.21 trillion for capital expenditure in this year's budget. This is a significant portion designated for the development of roads, railway, sport, and urbanization initiatives. Moving on to the Railway Equipment Business Division, that's a discontinued operation. Revenue for the quarter ended March 2025 came at INR 256.50 crore as against INR 213.40 crore in the corresponding quarter. PBT for the quarter ended March 2025 came at INR 62.70 crore as against INR 35.60 crore in the corresponding quarter. Order book for the division at the end of March 2025 stands at more than INR 900 crore. This order book, however, excludes BMBS order for the Weight Wagon, approximately INR 383 crore, suppliers for which have been temporarily held by RDSO. Now, I will request the moderator to open the floor for the 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 touch-tone phone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Mumuksh Mandlesha from Anand Rathi Institutional Equities. Please go ahead. Yeah, thank you so much for the opportunity. Sir, firstly, on the tractor industry growth outlook for this year, and sir, how will we see the response for the new Pro Max series? Going ahead, what are the focus areas for the new launches? Hi, good evening. This is Neeraj Mehra this side. The industry outlook is positive as it has been in the past couple of quarters. We see a growth in the industry in the coming quarter as well as for the entire year. Coming to your second question on how the Pro Max series is doing, it's early days yet. We have yet to get into a peak season for Pro Max, but the initial response is pretty good. I believe you had a third part of your question also. What are the new launches focused on? Which are the areas launches are focused on? See, we have a launch in PowerTrack, which is planned in the third quarter. That is primarily an entire series for the southern markets. Also, we have a product in Kubota in the mid-segment, which is planned in quarter two. These are the visible product launches for the current fiscal. Got it, sir. Sir, how's the product development going for the exports market? Any update around that? What are plans to enter the Europe market, sir? Mumuksh is already exporting to European markets, as Pratik mentioned. I think even in the last quarter, the export growth has been quite good. It's almost 36% growth, which has come even though the base is low. But 70% of the export has gone through the Kubota network. I think the export to Europe has started even though the market conditions are not really good even as of now, I think, as we speak. I think the numbers for us have started improving now. Any outlook, sir? How do you see the growth for FY26, sir, for exports? We are getting 20%-25% growth this year or last year, on the export numbers. Got it, sir. Sir, any update on the greenfield plant in UP, sir? We are in touch with the UP government. I think they already completed the acquisition of land. There are certain formalities we need to do internally, like there are some tests which we need to do for soil, water, and topography, etc. Those things are happening right now as we speak. Hopefully, I think they have indicated the UP government is keen for us to go fast. Once our internal processes are completed, I think we should go ahead with that. The timelines FY24 to the timelines, sir, for the broad lease, around that time should be for the plant, sir? Sometime, I think in second quarter, we expect the formality should get completed. End of second quarter or beginning of third quarter. The acquisition of land should get completed. Got it, sir. Sir, how is the dealer inventory for the tractor, sir? It's in the range of four to five weeks for all the brands put together. Got it. Sir, the dealer network has seen expansion over the last few quarters. For the next year, how do you see the expansion, sir? Hi, this is Neeraj again. The expansion is happening. Primarily, the expansion focus is different for the different brands. For PowerTrack, it is primarily in the southern markets. For FarmTrack, it is more in the eastern side and the western side. For Kubota, it is primarily in the northern and central part of the country. That is the plan, and the white space coverage is happening as per the plan. Any targets, sir? What kind of network expansion are you planning to do, sir? It's not very feasible to give the exact numbers at this point of time, but the intent is to improve our white space coverage substantially in this fiscal year. Got it, sir. Thank you so much for the opportunity. Thank you. Next question is from the line of Chirag Jain from Emkay Global Financial Services Limited. Please go ahead. Sir, just wanted to get your sense. I mean, obviously, in the last con call, we did mention that we are largely done with the correction that we were supposed to do on the sales front. Probably the second half of this financial year, we were supposed to grow market share, gain market share. Any update in terms of how things are likely to play out in terms of our market share within the tractor industry? Chiran, you're right to a certain extent. The inventory levels have been brought down to the level that we had aspired for. As regards to market share, as you see, the industry is growing exponentially in the southern part of the country. EKL has traditionally been pretty weak over there. Our focus as we go forward is in the west and to a certain extent in the east where the industry is growing. The intent is, as we go forward, to be at par with the industry growth in these markets. Understood. Understood. I think over the medium term, we have been expecting a major increase in market share. Can you share some light over there as well? Over the next two, three years, what kind of initiatives we are undertaking to improve the market share in the domestic market? You see, one thing that has happened in the last fiscal is that we have been able to grow market share marginally in our stronger markets. That was an area of concern over the last four or five years. Wherein in the previous calls also, I had mentioned that the focus primarily will be in the north and the western part. In our stronger markets, we have actually gained in the last fiscal year. Now, for the next couple of years, the focus or the strategy is primarily two-fold. One is how do we grow through the product side. In the 31-50 HP category, which contributes almost 90% of the total segment, we have already introduced Pro Max. In the initial question, I missed out that the second phase of Pro Max is also expected in the beginning of quarter four. FarmTrack will primarily grow on the basis of these complete product range and the new product range that we have introduced. In terms of PowerTrack and Kubota, the strategy primarily is two-fold. One, on coverage improvement, and secondly, introduction of products, especially in PowerTrack for the southern market and the paddy market, which we intend to do early on in the third week of in the third quarter of this fiscal. Okay. On the export front, you mentioned that we might grow at about 20-25% this financial year. Any thoughts on the component business? Because that was also supposed to start scaling up. Any update on that front as well? Also, guidance if you want to share for the next two, three years? Yeah. There also, I think, the work is happening. This year also, the exports have been there, but it's not much. I think it's only about INR 1,000,000,000 plus which has been done this year. Next year, they are targeting to double this number. I think it's a slow start, but the work is happening there with all the suppliers and the Japanese team also continuously working on this market. I'm sure that's a business with good potential to grow. Whenever it happens, I think it will see exponential growth maybe over the next three, four years. Just last question, and then I'll come back in the queue. In terms of profitability, how do we see, let's say, this financial year or at least, let's say, next one or two quarters considering various drivers? I think overall, the trend will continue. I think the way we are seeing for this year too, we expect those similar numbers should hold good. Maybe some improvement we are working on, so whatever, maybe 0.5%-1% sort of improvement. It depends on how the commodity prices move in the coming years and how the market reacts to that. Otherwise, broadly, it should be in the similar range. Obviously, in certain new product categories, we'll see some pressure on the margin initially in the time the product stabilizes and we get seeing volumes, and then the margins will start improving there. Initial introductory prices will probably have some impact there. Overall, we do not expect it to be lower than this year and next year. Understood. Thank you so much. I'll come back in the queue. Thank you. Next question is from the line of Mitul Shah from Dam Capital. Please go ahead. Thank you for the opportunity. Sir, first question again on market share. Seasonally, Q4 is very strong for our company, and generally, it has been roughly 100 to 150 basis points improvement on a sequential basis. This time, it is marginal improvement, or it is not appearing so strong. Any specific reason apart from South has reported high growth in this quarter? Is it to do anything with this merger of Kubota that combined entity market share will not get that benefit which we used to get during Q4? Mitul, good evening. See, you actually asked the question and answered it also. Yes, what you are saying is correct. It is about South also. It is a bit about Kubota merger also. It is also that the industry has grown in the eastern part where there have been certain dealer legacy issues in terms of capacity. All these have to a certain extent resulted in the performance that we have shared for quarter four. The second question on margin for tractor segment. Seasonally, it is a slightly weaker quarter compared to Q3. Still, margins are much stronger, also for the leaders also. Any specific reason apart from commodity, are these sustainable or was it a one quarter effect to some extent? Yeah. So there are two-three reasons actually for this quarter to report better margin. One, in the last quarter, as you know, since we normally built up inventory in second quarter to try to do the high season volumes in Q3. Normally, Q3 margins for material cost are slightly higher. That is almost 2% impact, which you can say. If you normalize, which is what you reflected in the current margins also, the material cost this quarter is lower than last year. The numbers are lower. That is one reason. Second, mostly there is a softness in the commodity prices. In this quarter also, we saw a deflation coming in. That benefit is also acute in Q4. That is also helping us in getting to the better margin. Thinking Q3, Q4 average is the right understanding, that would be the right metric? Yeah, that's right. When you look at the full year numbers, I think more or less it reflects the normalized margin. Okay. Last question on construction equipment side. Despite there is a variation in the volume, margins have now stabilized around 9%-10%, or even 11% previous quarter. Going forward, do you see any further expansion with the help of any synergy benefit coming from Kubota Global on this side with new products, or we should assume around this level? Yeah. I think indeed we'll have to decide very good degrees. Mitul, as far as margin is concerned, I think we don't expect too much upward jump from here. It will remain consistent for some more time until unless the demand from the market goes up, which is expected in the next one or two years. Probably we'll get the advantage of volumes and scale. As of now, this level seems sustainable, but a huge upward movement from here is not expected immediately. Yes, sir. Thanks. One thing around clarification. In initial remark on agri machinery, you highlighted something about non-tractor revenue or anything like that within the agri machinery components in spare part and other revenue stream? Yes, Mitul. We mentioned about the non-tractor revenue. Comprising of agri solution, engine business, and service and spare part business in Q4 constituted 19% of the agri machinery segment revenue. Yeah. Versus last time, 18%, right? Yes. Yeah. Thanks. Thanks a lot and all the best. Thank you. Thank you. Next question is from the line of Gunjan Prithyani from Bank of America. Please go ahead. Yeah. Hi. Thanks for taking my question. Just a few follow-ups. On the industry side, you mentioned positive growth. Usually, you do end up giving us some guidance for the year. If you can sort of share thoughts, how positive, what are the underlying on-ground sentiment you're seeing? Also an update on Trem, because we were expecting some easing there, right? I don't think that anything has so far come through. Maybe just talk us through the regulatory emission as well. Hi, Gunjan. Neeraj again. On the industry side, as I said, we're expecting a growth. You can actually look at a mid- to high single-digit growth this year. This is for sure that the industry is looking at the highest-ever volume in the Indian tractor market this year. If all things fall into place, we are probably looking at a 1,000,000 number this year. It's quite possible because all the factors that impact the industry, the forecast for the rains have been good, the initial forecast. All the other factors, the government focus on agri infra, everything is positive. We are actually looking at the highest-ever industry this fiscal year. Now, your second question was regarding emission norms. Yeah. Emission norms, the earlier date was 1 April 2026. We do not see, as of now, the norms getting implemented on that date as of now. Okay. Got it. There is nothing officially out yet on that, right? Nothing. Nothing official. Okay. In this mid to high single digit, is it fair to now assume that a lot of the product gaps, etc., being plugged, there should be market share gain on a fiscal year basis in fiscal 2026? See, yes, to a certain extent in FarmTrack, to a pretty large extent, the gaps have been plugged. In PowerTrack, as I mentioned in my initial remarks also, that we are looking at a launch of an entire series for the southern market, the paddy special series. That, to a certain extent, again, will cover up a lot of gaps. On the Kubota side, the product range is not there. We are in the midst of introduction of a product in the key segment of the 45 HP category, 40-45 HP category. Once that gets introduced, the coverage of Kubota will also improve. Yes, all these will impact in the growth of market share. As I have again mentioned in my initial comments, with the industry growth looking this year again in the southern part of the country and in the eastern part, the ask is tough. With the introduction of these products and certain measures on the coverage side, we hope to be at par with the industry or marginally better. Okay. Got it. Just moving to margin, maybe just sort of two-part question there. One is, when I look at the margin for the second half, roughly at about 11% EBIT margin for the agri machinery business. Now, there is certainly going to be some of these issues that we faced post the consolidation of subsidies. There has been some cost synergies, etc. Shouldn't we be expecting a better EBIT margin in fiscal 2026 from this 11% range? The comment that you made was it should be at pretty much the similar zone. I would have expected some improvement there. Any thoughts there? Gunjan, actually, obviously, we do not have these numbers separately mentioned in the public domain. Actually, the margin on the domestic business of Escorts Kubota, especially on the old brand, FTP, etc., the margins have improved. Actually, since the Kubota brand, most of the stuff is getting imported. There we got an impact of the exchange also, losses which have come up because the peers depreciated. There, the cost increases pressure has been there. That has actually further impacted the margin. Overall, the ETIN standalone margin will actually improve this year compared to last year. Going forward, I think it is difficult to predict how things will look because the localization is still some time away. It is not happening immediately. As I mentioned, the product which Kubota is selling, there is still a lot of import content there. That is, next two years, we expect those margins will remain in a similar range. Even though we will continue to work on the domestic margin for our products, so there will be some possibility of improvement there. Depending on how the exchange works out going forward on these products, that can actually impact the margin adversely too. That is why we're not really going very bullish on the margin front. Maybe offers and here and there can happen. It is, but it's a last question on this import bit that you talk about Kubota. I mean, this will change, based on your comments, only when the Greenfield Plant commissions, which is still a couple of years out. Isn't the alternative available to us that we use some of the engines that are there in the Escorts earlier plants, legacy plants? So is that substitution possible at all, or we have to wait for Greenfield to come? Obviously, this will not happen on their platform. They will not allow us to use the Escorts engine on their brand or their product platform. Like you mentioned, we are working on a hybrid structure where we are using our platform and selling it maybe under their brand name. That is where the margins are starting to improve. We will have total local content in those models. Again, the challenges are around emission norms. There is no clarity right now. It is a confusion if norms come, whether I should work on the Trem-V norms or we should work on Trem-4 norms. That is the issue I think which is coming up because we start working on the total product series now for Kubota based on Trem-V norms and if the norms undergo change, the entire effort will go to waste. If we start working on Trem-4 and they do not come, then again, we will have to restart again working on Trem-V norms. Otherwise, the cost increase will make it unviable to sell. There are some challenges we are facing on that front. Obviously, the study, as you mentioned, is what we are following also. There again, the lineup will sometime come maybe after say another one and a half, two years. It is not really something you see immediately. After that comes, the Kubota brand will also have complete coverage like we have for FT and PT names. It is still some time away. Okay. Got it. Thank you so much. Thank you. Participants who wish to ask questions may please press star and one at the stand. We take the next question from the line of Raghunandan from Nuvama Research. Please go ahead. Thank you, sir, for the opportunity. Firstly, to that, sir, on the margin side, how has been the trend in terms of commodity prices? What is the expectation for the next three to six months, given that there has been some increase of late? Second one, to Neeraj, sir, one of your peers commented that there has been some reduction in the competition intensity. If you can talk about how it is, how is the discounting trend, that will be very helpful. Thank you. On the commodity side, last year has been more or less flattish. There were a few quarters, I think two quarters, some increase was there, then two quarters, we saw a deflation. Net net, it was a positive year only from a commodity perspective. We are not seeing any major pressure on the commodity side right now. I think for four to six months, unless something really moves against us in the geopolitical scenarios, which we do not know right now and difficult to comment. Otherwise, it looks like the market will continue to be soft. Thank you, sir. Yeah. Hi, Raghu. As regards to the market intensity, the intensity remains the same. Actually, the buildup in terms of intensity and discounts and customer schemes, it is primarily once a year when we get into the peak season of Navratras and Diwali. Everybody gets very aggressive there. Post that, the additional discounts or the customer schemes are rolled back. That is precisely the case with us also. We are at the normal level of pricing and a normal level of discounts. Once we get into peak season, that would obviously change. Currently, we are at a pretty normal level of discounts and pricing. Got it, sir. Thank you. One last question. On the construction equipment outlook for FY 2026, given the emission norm changes, what is the kind of outlook expected for the served industry? Also, if you can throw some light on, given the blended shifting from TREM-3, TREM-4 towards TREM-5, or C3, C4 towards C5, what is the kind of blended price increase that is expected, and how much price increase we have already taken? Thank you. Yeah. Hi, Raghu. I mean, Sanjeev, as you said. This changeover from BS3, BS4 to BS5 has already happened. It was applicable from 1st of January. Whatever stocks industry is holding, most of these stocks are about to get liquidated. For us, the residual stock was over in the Q4 of last financial year itself. For many products and for a large number of high-volume products, we have moved to BS5 already. This is one. The impact to the customer has been in the range of about 10% for products which have moved from BS3 to BS5, and about 7% for products which have moved from BS4 to BS5. All of that impact on the cost for the customer is not fully recovered. We have built that in the pricing. It is since that mix of BS4 and BS5, both products are moving in the market by different manufacturers. So complete realization of that price increase is yet to happen. Since we are also entering into monsoon period a couple of months down the line, my sense is that by end of August and then September, when the new season starts, that is the time when full recovery of these price increases would happen. I hope I have answered. Raghu, if there is anything that you can let me know. It's got it, sir. No, that was comprehensive. Basically, the volume and margin, we should see it normalizing in the second half of the year. Yes. From a volume perspective, this year, first half is expected to be impacted because of this BS5 changeover, because 10% increase on one type of product, and there are products which are 6%-7% costlier for the customer. It is definitely expected to impact the demand, overall demand, because the product viability for a customer is at its peak. We also believe that with such high CapEx plans for the government this year, there will be fund flow which will start going into the market into various projects which are getting announced, but those fund flows are yet to happen. Once that happens on ground, the demand which comes up will probably be the balancer of the price increase, and people will come back buying equipment again. Understood, sir. Very comprehensive. Thank you. Just one follow-up to Varuther. Sir, over the next two years, there are various efforts you had earlier indicated in previous calls in terms of synergies, cost savings, and how you could try and get the margins towards that 12%-13% range. Just trying to understand how would your thought process be over the next two years on the margin part? Yeah. I think it will be something similar. I think, as you mentioned, though, like you mentioned, the major change will happen once we have this localization, I think, of Kubota products. Which is still two years away. I think till then, I think we'll remain in this range only, maybe 11.5%-13% range. Got it, sir. Unless the operating average stays very well for us on the volume shoot-up. I hope so, sir. Thank you so much. Thank you. Thank you. Next question is from the line of Vikram Damani from Damani Family Office. Please go ahead. Hi. Good evening. Am I audible? Yes, you are. Given where we are today, what's the best estimate for the new plant starting date? If we complete the land acquisition this year, which is likely, I think, like you said, by end of second quarter or the end of third quarter. The work will start from next year. It will take at least three years' time to go live on production there. Maybe end of February 2028 or 2029 beginning is what we're looking at. Okay. Thanks. In an earlier call, you had indicated that our exports should ramp up to geographies like Mexico, Southeast Asia, around now maybe starting FY 2026. Is there anything sort of moving along those lines? Yeah. Mexico will start now. I think we've already started the distributor, which was a common distributor for Kubota and us. That has started working now, it's operational. We'll see the numbers will start coming in from this quarter. U.S. market is where we thought, which is a bigger market. Now, I think also there's some impact on the tariff unless we see a stability coming in and, of course, some sort of negotiation agreement on that. In the long term, I think that's one market which will really work for us. You had heard from, I think Kubota globally has also talked about using India as a major hub for supplies to the world market for Kubota. They are working on a larger plant. All the basic tractors, they want to shift to basic and high-end also, they want to shift to India. That is the strategy what Kubota is working on. I think we had mentioned in the last call also, there is a midterm business plan which is being reworked now. Obviously, Kubota and your new strategy now is taking some time. They expect their strategy will get approved sometime. I think the first battery that approved maybe by middle of this year and then by end of last quarter or middle of last quarter of this fiscal, they will be hearing it from their board. Once that gets done, then obviously we will put it into our plan and we will also then make it public. Okay. Lovely. Just a last question. Given that the, I think, open remarks you had mentioned that the finance company has started operations. Do we expect some sort of outsized market share gain coming through the finance support to our customers? Not immediately. Right now, the company has just started operation. It's only, I think, about four months, and they're still testing the systems and gradually opening the market. It's opened the market in Uttar Pradesh, Madhya Pradesh, and Bihar, but in a very selected district. As we go along, the number of states and the districts will keep on increasing. More dealers will get targeted. I think it'll take two to three years' time to start making that impact. Right now, the numbers will be small. As we go along, the idea is they should be able to hit the similar penetration level as the other captive finance companies are, which is roughly 30%-35%. Once that starts happening, that will start impacting your market share numbers too. Okay. That ramp-up will take some time? Yeah. Obviously, it takes time to build up. Okay. Lovely. Thank you. Bharat. Thank you. Thank you. Next question is from the line of Jermin Desai from Emkay Global. Please go ahead. Yeah. Hi. Good evening, team. Thank you for taking my question. My first question pertains to exports to Europe, where you mentioned that we are looking at about 20%-25% growth this year. Just wanted a clarification. Is this because of the Europe-specific products that we have introduced, or are you also seeing some signs of some stabilizing in the European market as well? This growth is coming on an overall export number. It's not specific to Europe. Like you said, we are also opening Mexico now. We also started exporting to South Africa. There is a good market in Tanzania and Kenya. We are seeing good demand now. There's a large order switch-off in the pipeline, which we will materialize this year. Sri Lanka is in its market. We're also looking at Myanmar, Cambodia, Thailand, and other markets where we can look at exporting. I think overall strategy is the export numbers will continue to go. We'll open the markets one by one as your product availability becomes viable and you have the required products for their market. We'll see if it opens up. This year, we expect this year, we should have 20%-25% growth on the last year. Got it. So Jeremy, you highlighted upon U.S. being a good potential market for us going forward over the medium to longer term. There we had plans for some U.S. geography-specific products to be introduced. What is the update on that? Is that product development still continuing? U.S., like you said, will take time. That will be the last market they will open. The product profile they need is different from what we are producing here. That will be something which will be coming up in the new product development program. That is what the Kubota strategy will come into play, which is what they are looking at shifting some of the production volume from other countries to India. That will include products which are getting exported to the U.S. market too. That will take some time. I think once we get a plan from Kubota Japan in this year, then we will be able to form a strategy in the overall operations for that. U.S. is the biggest market for Kubota. I think it is almost $8.5 billion-$9 billion kind of comes from that. Kubota is the biggest market also in Japan. Obviously, the numbers are good there. Kubota is market-lead in the compared tractors in that market. Obviously, we expect that as and when the products start getting exported to the market, the numbers will ramp up. Understood. Finally, I know you spoke about the slightly gradual ramp-up of the component exports. Just from an opportunity point of view, the overall opportunity at about $500 million, giving about 5% shift from Kubota's current global sourcing, that sort of opportunity is taking into effect? Yeah. Like you said, the potential is huge. Obviously, a lot will depend on how many products get localized because the margins of the manufactured products in India will be much better compared to the source product from the outside vendor, which will be more like a trading activity. Even though the revenue may come up, the margins may not be good enough to really continue building on that. Our idea is to have a good mix of the manufactured product as well as the traded products from the supplier. Like I said, obviously, Kubota is sourcing more than $1 billion worth of components from China today. They are also looking at a China source side. They obviously have an obvious advantage over there. I think the issue they're facing is getting good vendors which can meet their quality requirements, which is where I think it's taking time for them to build up. The testing processes are stringent. I think the team from Kubota, as well as India, they're working jointly to promote this business in India. Understood. Thank you. Thank you. No further questions. Thank you. Participants who wish to ask questions may please press star and one at this time. Next question is from the line of Vijay Pandey from Nuvama. Please go ahead. Hi. Thank you for taking my questions. I just wanted to check with you about the industry outlook in the domestic market, if you can guide a bit about the domestic market and also region-wise, which, whether north or south, which will be the dominant region for the growth in NetPike of DFX. Hi, Vijay. As I have already mentioned, we are looking at industry growth this year, probably in mid to high single digits, which will actually take the overall industry to the highest level for India. Now, coming to the regional spread, we believe that the focus or the growth of the industry primarily will be in south and, to a certain extent, east. The northern part or the central part of India last year also was kind of stagnant. It was a marginal 2.5%-3% growth. We expect that only that similar growth will remain in the north. The primary growth actually will come from down south and the eastern part of the country. Okay. Can you share what is your strategy on the construction equipment side? Because the sales have been declining, and probably we have also lost market share in these construction equipment. If you could briefly tell us what is your mid to long-term view on the industry and how are you planning to tackle the decline in the field? Yeah. Vijay, good evening from UP, as you say. First of all, I would want to correct here that our market share is not declining. We should see this product by product. As we have two sections of business, one is material handling and compaction, and the other business is earthmoving, which includes mini excavators of Kubota and backhoe loader. For the last full year, our crane market share is intact. There is a small decimal percentage of increase. There is no decrease there. Also, we have gained the market share in mini excavators. Currently, we are number two player in the crane segment, and we are number one player for this calendar year and financial year in mini excavators. The challenge products for us are backhoe loaders and compactors. Compactors also, largely the market share is down because there is a huge volume increase in the exports business for the industry, which, of course, is not a strong play for us because all the multinationals, they have their manufacturing in India and they are exporting through their subsidiaries. As far as Backhoe Loader is concerned, yes, there is a huge headroom available, and we have lost a bit of market share this year. It is about 0.2% down from last year. It has also not been traditionally a very strong segment for us. That is the reason we are focusing on creating completely a new platform, which we introduced and showcased in January to the public in Boma exhibition and then Bharat Mobility exhibition. That platform has been developed, which is very modular, which will take care of the domestic demand, as well as it will also be adapted for various different specifications in various markets worldwide. This product, we believe that we have done a very good job. The initial reaction from the customers who have seen this product and the dealers is very, very positive. We believe that this segment, where we are very weak, we should be able to turn it around. This is the first platform which we have introduced this year. There are a couple of more versions of this product line, which is expected to come along with a premium range which can come with Kubota engineering and Kubota engine and other interventions. I do not see that for us, the challenge is having attained a good position in the market. Overall, the industry is going through a tough phase. Last year, of course, because of the assembly election, this was every year the industry is down. This year also, the main industry, which is crane industry, is down by 13% in the last quarter and overall about 8% for the whole year. I think in the second half of this year, as I said, things should start doing well. Next financial year is expected to be, again, a very high year because all the emission norms and other things which are currently the hindrance will go away. We believe that we will do well. Also, on the second point, we are very focused on our product lineup for the future. Our focus is creating more value for the customer, bringing the cost down for ownership of the customer as well as the operation costs, and also giving the right products for the right application. That focus will bring more products in the next two to three years' time, which I think will put us in a very strong position. We are very confident. Let's start things from here. Sorry. Thanks for the detailed answer. Just want to clarify, you mean the construction equipment industry will start improving from second half of 2026, right? Yes. Yes. Okay. Thank you. Thank you, sir. Thank you. Thank you. Ladies and gentlemen, in order to ensure that the management is able to address questions from all participants, please limit your questions to one per participant. Next question is from the line of Vishy Mora from Kotak Securities. Please go ahead. Yeah. Hi, sir. Thank you for the opportunity. Just one small question. What will the CapEx guidance for this year, FY 2026, and even if we could give it for FY 2027? For FY2026, we expect we survive within around INR 350-INR 400 crore. Mostly, this is excluding any investment towards greenfield. If the land acquisition gets done, there will be another INR 250-INR 500 crore this year. Okay. So most likely, we should do around INR 1,000 crore, including land acquisition gets done, approximately INR 800-INR 1,000 crore? Less than that. I would say about INR 800. INR 800. Okay. Should we expect that funding to sustain going into FY2027 as well, given that the overall CapEx outlay is around INR 4,500 crore for the next three-four years? That simulation we worked out will right now in the projected delayed now. I think they also need to look at the existing capacity, how much we can ramp up in the existing place. At the end of the day, we're also looking at the Doway to be there on the investment which we do. The volumes have to justify any fresh investment which will happen. Land acquisition is one part, but I think we'll get enough time to commercialize there in that area if we require the land. I think as the volumes come, then we'll obviously follow that. There will be lead time which will be required as minimum 24-36 months for any capacity to come up. We'll have to take that into account based on how the volumes ramp up happen, and then based on that plan how the processes come into the greenfield. Understood. Thank you, sir. Thank you. Next question is from the line of Mitul Shah from Dam Capital. Please go ahead. Yes, sir. Thanks for the opportunity once again. Just clarification. You said that after land acquisition for plant to become operational, it will be 24-36 months, right? Yeah. That's a minimum lead time after you start, you commission the construction there. T his INR 400-INR 500 crore related to land you highlighted, it's purely land purchase-related cost, or it will include anything on the building, the plant also? Oh, this is essentially land-related cost. Lastly, on the cash and cash equivalent, this INR 1,600 plus 110, INR 1,710 crore from the Sonar BLW already received, or excluding that, how much is the cash on balance sheet? No. You would have fully seen the inclination. The closing date was extended to 1 June. Certain approvals which are required did not come through. We had extended by another month. It was supposed to happen on 1 May. Now, we're planning to do it on 1 June. After the closing, there will be some money which will flow into our account. Since the approvals will be received post the closing only, some money will still lie in the escrow account. Free money will not be 100% available to us upfront. I think once you get the approvals in place, with the long stop date I think is September or October. After that only, that money will get released towards 100%. Some money will get released to us, but not 100%. Hopefully, within this fiscal year, everything should get completed in there. Yes, sir. Cash and cash equivalent, excluding all this amount as of end of fiscal? Hello? Hello? Thank you. Next question is from the line of Raghunandan from Nuvama Research. Please go ahead. Thank you, sir, for the opportunity. Just a follow-up. On the captive NBFC, what would be the equity investment so far, and what is the plan for FY 2026? Also, if you can share what is the current book size? Hello? I hope I'm audible? Yes, sir, you are audible. Please give me a moment. Hello everyone. We have the management connected again. Hello. Am I audible? Hi. Hi, Raj. Yeah. Sorry, the line got disconnected in between. Yeah, please go ahead. Sir, just a follow-up on the finance business. If you can indicate what has been the equity investment so far and the plan for FY 2026, and also if you can tell the book size? So far, we have done investment of about INR 60 crore in the finance company. The total accrued investment right now, I think, is about INR 200 crore in the initial phase. The final 80 goes to INR 700 crore. The balance, I think, amount will get injected in FY2026 into the company gradually. As in, the book really gets built up. As of now, the book size is very small. I think, like you said, they are more testing the systems and gradually open the dealerships. I think by end of FY2026, they'll be sitting on a book size of maybe close to 100-odd crore. The ramp-up will have happened. I think we expect maybe 5, 6, 8 crore by now, by then. Next year, I think the ramp-up should get completed on the final INR 800 crore. We'll see the faster book building happening with that. By end of next year, they will be investing INR 700 crore? Initial approval right now with us is for INR 200 crore of capital. Though the authorized capital is INR 700 crore. I think we still need to get the approvals from Kubota in Japan from the head office for the balance. Yes, the overall outlay which we had predicted was INR 700 crore of capital. The balance will be more leveraged. Got it, sir. I think the previous question Mitul was asking was the cash reserves. If you can share that? Yeah. I think the line got disconnected. I'm telling you, in the margin, we have almost INR 6,500-INR 6,600 crore of liquidity. This is after paying off the debt of the merged companies, which are almost INR 350-odd crore. With this railway deal getting closed, post-taxes, we'll get maybe another INR 1,400-INR 1,500 crore out of net cash. Maybe by next year-end, after taking into account the fresh cash generation and the CapEx and the land investment, maybe we'll be sitting at somewhere around INR 7,500-INR 8,000 crore of cash on the balance sheet. Got it, sir. Would that mean that would you consider anything on the dividend policy that the payouts can increase? We are gradually increasing the payouts. As you can see, even this year, the dividend which we announced is almost 25% of our profit. I think our policy is supposed to go up to 40% gradually in the midterm business plan with respect to what our follows globally. From the free cash perspective, obviously, this is almost 30%-35% now this year. I think we will continue to expand that. That is the idea. The idea is also to maintain the dividend and sustain the level, not go down from the level that we already distributed. That is, I think, the momentum which management really would like to continue with. Also, payouts could be in the form of buybacks also. Would that be possible? Buyback would have been a good option, actually. Because of this tax change, I do not think from the investor perspective this is really attractive now as an option. The first question is, would I need to do that? I just hoped to buy back 5%-6% of equity from the market and give them the cash to go. It would have really made sense. I am not sure from the tax perspective now it really makes sense to go with that option. Maybe distribution would be a better option rather than buyback. Understood, sir. Thank you very much. Thank you. As there are no further questions from the participants, I now hand the conference over to the management for closing comments. Thank you, ladies and gentlemen, for being present on this call. For any feedback or queries, please feel free to write into us at investor.relation@escorts-kubota.com. Thank you very much, and have a good evening. Thank you. On behalf of Emkay Global Financial Services Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your line.