Please note that this conference is being recorded. I now hand the conference over to Mr. Vishal Rangwala, CEO from Harsha Engineers International Limited. Thank you, and over to you, sir. Thank you, and, dear all, welcome to you in our quarter three financial year 2024 investor call. As per our normal practice, our CFO, Mr. Maulik Jasani, will take you through the numbers in greater detail. But I presume most of you would have had a chance to go through the same. As indicated by the quarter two investor call, I'm really happy to report that quarter three results are in line with our expectations. Though the consolidated top line for Q3 looks well flattish as compared to the previous quarter, there is a noticeable improvement in the business undercurrent, as well as a profitability of both India level as well as our key global subsidiaries in China and Romania. As a conscious strategy implemented in Romania and China for cost cutting, we have started seeing a positive outcome in terms of improved margins in both these subsidiaries. But while China has reported a positive EBITDA and a PAT, there is a marked reduction in operating net loss in Romania, so that on a consolidated performance of both these subsidiaries, practically there is no loss in current quarter. We are definitely expecting at least the same or maybe a slightly improved position in quarter four, so that as per plan indicated earlier, we should be in position to arrest the combined losses of international subsidiaries at H2 level, and in fact, maybe reduce slightly in Q4, when we expect the situation to improve in Romania. This is in wake of early sign of improvement in the wind market that we have started to witness in quarter three, and we believe that in quarter four there should be some further improvement in the off take in financial year 2024-25. And hopefully wind market should return to its earlier normal levels. In India, our engineering business in quarter three saw a slight dip in our top line, which is more cyclical in nature, not reflecting any particular structural trend, except for the slight softening of demand, in, you know, industrial segment of products, and, you know, similar things what we talked about, softening of, or continued softening of Europe and, China. However, there is a distinct improvement in EBITDA and PAT margins in quarter three, partly owing to positive impact of pass-through of the increased raw material cost and partly to the quarter end inventory adjustment. Again, we are continuing to work on several outsourcing and development opportunities, which is evident from the fact that in nine months period leading up to December 2023, we have completed the development of more than 200 SKUs, and current development as well as inquiry pipeline continues to be very robust. Again, this quarter, we have started to witness a distinct firming up of the bronze bushing business, visibly in terms of order that we have started to receive, whose impact will start coming up in quarter four, financial year 2024, as well as next year 2024-2025. The stamping business is also reporting a decent growth. Further, though the new business offtake large size bearing cages and business from Japan-based customer is slightly muted during this nine-month period, ending December 2023. And we firmly believe that it, this will start catching up in coming quarters and we remain committed and bullish in as much as the prospect of these segments are concerned. But at India level. Hello. Sir, please go ahead, sir. Yeah, sure. Yeah. Thank you. So thus, at India level, I think quarter four should definitely look better, and as indicated earlier, we should be back on track of normal growth in India as well as, for financial year 2024, 2025. As far as solar business is concerned, there is a positive push coming in the wake of favorable, renewable energy policy from Government of Gujarat, which encourages both industrial as well as domestic solar rooftop projects. As a fallout, we are seeing positive growth on the top line, as well as, our continued focus on making solar a sustainable business is also showing up in the, bottom line in current quarter. However, as indicated earlier, there is no material additional capital allocated to this business. I wish to express my sincere thanks to all our investors for continuing to extend their support and for their continued confidence in our long-term growth story. With that, I pass it to Maulik to talk about numbers. Thank you very much. Thank you, Vishal, for the business overview. Hello, everyone, and good afternoon. For the quarter ended December 2023, for our engineering business at consolidated level, we have achieved a top line of INR 278 crore, against top line of INR 298 crore in the immediately previous quarter, and almost similar top line of 297 crore in the same quarter last year. We have achieved consolidated EBITDA for our engineering business at 48.5 crore for the current quarter, against 40.5 crore in the previous quarter, and 54.9 crore in the last year same quarter, Q3. Major impacts on top line are on account of the weaker export demand and on improved EBITDA, owing to cost control measure, coupled with improved realization due to RM pass-through, as discussed by Vishal. In our solar business, we have achieved EBITDA of INR 2.3 crore in the current quarter. While our overall working capital cycle at consolidated level remain at 139 days, against 144 days in the previous year, quarter three. With this brief on the financial numbers, I hand it over the call to the operator to take up the Q&A from the participants. Thank you. 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 the touchtone telephone. If you wish to withdraw yourself from the question queue, you may press star and two. Participants are requested to use only 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 Amit Anwani from PL Capital. Please go ahead. Hi, sir. Thanks for taking my question. My first question on the bronze bushing, you did highlight it so that the wind market is coming back. So just wanted to understand, what was the contribution from bushings this quarter. I recollect, I think H1, it was on a lower side. So what is the full year guidance? And now, since things are reviving and, we have been doing CapEx on bronze bushing, any revision in guidance or any outlook now you are seeing, for FY25 on bronze bushings contribution? So I will not be able to share the exact numbers for bronze bushing this quarter or this year. Having said that, these are roughly in line with our expectation, what we had shared earlier. We were expecting that some improvement, which has actually taken place. Second part about next year, we are expecting significant growth. At this point in time, to give it an exact number would be difficult. However, we are seeing very bullish signs. So with that, current indication is a significant growth. All right. My next question on the subsidiaries, Romania and China. You did highlighted that, there's an improvement, which you have witnessed because of cost control and a few other things. Just wanted to understand, was there any improvement in offtake from Romania and the way we thought from past, you know, 4-6 quarters, that there are several finished product, we will have better opportunity for the large cages getting sold off from that factory. So any sense? Because we have seen the improvement after the, you know, 4-6 quarters of continuous expectation, now we are seeing some improvement. So can we see numbers improving quarter-on-quarter, or this is preliminary that we have to again wait and watch just to see the clear trend happening in these two subsidiaries? So, we believe that we would see improvement going forward on this. However, to definitely say, you know, to be able to predict what is the market, how the economic situation develops in Europe, specifically, which is the market there being served by our Romania facility, is extremely difficult. So, in general, I would say that yes, we are expecting positive direction going forward, after, as you mentioned, a significant number of quarters of softness. And but that, that's a certain understanding based on what our customers are talking as we are seeing the wind market reviving and all that input. ... So lastly, sir, on any guidance revision for FY24 on revenue and margin and any guidance for next year? So, as you know, as Vishal explained, in Romania, it's we don't have any further losses even in the second half. That will mean that whatever losses we incurred between Romania and China at around a level of around INR 14 crore-INR 15 crore will remain in the current year, and it should go away in the next year. And India continuing to do as it is. We think that in Q4, the run rate of consolidated PAT should improve marginally, and in Q next year, at least a 10%-15% overall growth can be expected at India level, which would mean that on a consolidated basis, assuming that there is no loss in China and Romania and no positive contribution, we should expect a much more aggressive, more than 20, 20% bottom line growth overall in FY 2024-2025. I would say even little higher, more than about 20%-25% bottom line growth next year. This is what we believe is definitely deliverable, but let us see. This is the target, may not be taken as a guidance, but definitely we will revert by the end of the year. Thank you. Thank you, Sanjay. All the best. Yeah. Thank you. The next question is from the line of Jason Soans from IDBI Capital. Please go ahead. Yeah, sir. Thanks for taking my question. So sir, this quarter, we have seen a good healthy improvement in gross margin from around 42% last quarter to 45.9% for this quarter, and EBITDA margin also has seen good improvement in bearing cages, or the engineering segment as well. Just wanted to know what exactly has gone, I mean, is there some raw material softness, or what exactly is the reason for this? Yeah. So, two things. I believe you are talking about at a consolidated level. That's right. That's right, sir. Yes. Right. So at the consolidated level, it's two impacts. One is, you know, material pass-through, you know, catching up finally, because we have seen a lot of volatility over last, you know, year and half on material prices, and there was always a significant lag both ways. So, we think that it has now stabilized, and then the whole pass-through mechanism catching up to the, to the reality. So that's one part of the improvement. The other part is, you know, some cost reduction, including material costs and other things, we started working on in our subsidiary level, and, you know, reskilling the operations at those subsidiaries to the current market situation. The combination of that has given the overall, consolidated market improvements you're looking at. Sure. Sure, sir. And, sir, also, what I wanted to understand is, you mentioned in the presentation that the bearing cages cycle has been weak. Now, one of your competitors or one of the industry players in the industry, they have also mentioned and spoken about some weakness in the domestic bearing CapEx cycle as well, some weakness there. So just wanted to know your take on how do you look at, you know, the domestic bearing cages. Of course, there are strong plans, you know, for various MNCs that to see sizable CapEx in India in terms of localization and other things as well. So just wanted to know what, how does your outlook on the bearing cages segment in that light? See, for you know, India, we see a decent, robust growth in India market. I will not be able to comment specific to, you know, what you know, other companies have shared. Mm-hmm. However, from our perspective, you know, Indian market remains strong, robust, one of our growth engines. Right now it's pretty positive. We see that specifically in India, strong growth happening, specifically in smaller automotive cages. So we are seeing, you know, two-wheeler demand, two-wheeler related demand also improving and few other things happening there. So overall, we think that India is positive now. Most of my customers, you know, we work with, they have continued to invest in India for bearings, and I'm sure you know these customers, and they have their plans which are ongoing. So we see a pretty decent confidence that that is happening. Maybe there might be a short-term trend of something which I'm not aware of. So I think just as you mentioned about the CapEx cycle, I think the CapEx plans of all the big companies are absolutely in line with what you know earlier we were talking about, so we don't see any deferment or postponement of those CapEx cycles, to my mind. Mm-hmm. Again, that's more a function of their long-term strategy to position, you know, their India additional CapEx as a China Plus One kind of a global supply center. And therefore, from our standpoint, as a key corollary to their CapEx cycle, I think we remain bullish. I don't think we are a problem. The only thing is, we have a little softening right now on the industrial side. That's where the pinch is actually. Okay. So currently, there's a little softness on the- Everything else is okay. Yeah. Okay. A little bit on the industrial demand side. Okay. Sure, sir. Sure, sir. And sir, just, you spoke about this automotive, healthy volumes being in automotive, you know. Just wanted to know in terms of, of course, the EV transition is in space, and, you know, two-wheelers are the first to, you know, go up that ladder, first two-wheelers. So, are we ready in terms of bearing kit solutions for, you know, providing to EV vehicles as well? So yes, definitely. You know, we have worked on a few solutions when it comes to EV. If you look at two-wheelers, you know, some of those ball bearings are the one which gets targeted in initial sales. And there we are, you know, working on some of the EV bearings and plastic cages within that. So we are ready with that. We are working with some of our customers for developing those. These are going into some of the ceramic bearings as well, and so on. Other part of the solution is, you know, low noise, low vibration cages, mainly driven by, you know, low dirt content or high, extremely clean cages. And that also, you know, we, as a solution, we provide to our customers. So we are working on various fronts, when it comes to alternate solutions, for cages which are better adapted to EV conversion. And that's an ongoing program with our customer we work on. Sure. So, so then the same thing, probably volumes will get lesser, but realizations will go higher. That theme stands, right? Probably in these, in these solutions for EV. Yeah. You're correct, in terms of long term. Yeah. However, short-term, we are seeing, you know, significant opportunities that conversion has not yet taken place. There is, you know, the industry has to also build up the capability to deliver that. So we are part of that chain and, working closely with our customer, and we're confident that we will continue to lead within that. While we do this, we believe that overall volumes in India will grow to compensate for whatever reduction happens on account of EV. Because the bearings don't get eliminated, they just the numbers get reduced and application changes. So we are ready for the application change and very confident of, you know, volume growth so that we can fulfill our capacity with this alternate demand. So that's where we are. Okay, sure. Sure, sir. And sir, lastly, just wanted to know, I mean, in terms of CapEx, what exactly, in which areas are we, you know, investing this CapEx? Of course, you mentioned that your first phase is already... You started implementing it. So in which areas are you investing? Yeah. So current investment we are doing in the large size bearing cages. One second, you know, on the bushings side, we are investing. And third is stamping component. That's our big investment. Fourth one, in line with the EV trend, the plastic cages is also the area where we are continuing to invest. So these are some of the areas we are currently investing, as well as we are drawing up some further plans of investment for the long-term growth. Okay. And sir, and sir, amount will be how much for FY 25, 26? The CapEx size. 24 for 25, you mean. Yeah, 25. For FY 25. Yeah. So for 25, we are anticipating about INR 100 crore or more investment. So, that sort of plan, we are firming up that and may increase depending on how fast the market develops and, you know, how we see the demand developing. Then we may have to firm up those, maybe little earlier and maybe amount may increase a little bit. But right now, the thing, we are working with an approximate number of INR 100 crore. 100 crore. Okay, sure. Thanks. Thanks. Thanks. Thank you. Thank you. Before we take the next question, a reminder to all participants, you may press star and one to ask a question. Ladies and gentlemen, to ask a question, you may press star and one on your touchtone telephone. Our next question is from the line of Harshit Patel from Equirus Securities. Please go ahead. For the opportunity, sir. So my first question is, our engineering business has broadly three parts: what we produce in India and sell in India. Second, what we produce in India and sell outside. And third, what we produce outside and sell outside. So could you give us a sense on how the volumes have panned out in each of these three parts for the first nine months of FY24? So where the volumes have grown higher than the other, how has been the overall movement, whether it's a growth or a decline for the first nine months? So, it is, I can, I can share, surely share one thing. You know, overall, there is a decline this year. Now, on a macro level, there are micro trends within those, each segments and product lines and, you know, different things going on. And from India to India, so if I, if I follow the segments you have, you know, created for us, if I talk about India to India, that is actually positively grown on volume side, the nine months this year. And India to outside and outside to outside or, or what you call, so all that has actually degrown. Primarily, you can see that, you know, Europe and China, as an economy, there is a degrowth. At least we believe that's the case. And we are seeing a reduction in volume going to those locations. Basically, demand has softened significantly. That's the general trend. Overall, considering, you know, Europe, China, are very big market for us, obviously overall, you may have we may see or likely we have seen a little bit of degrowth on a macro level. We are still hopeful of, you know, flattish finish to this year, but let's see. So just to add India to outside volume, while, you know, first thing I want to qualify that exact volume is a misnomer in our case. But going by the generality of the concept, assuming that here we are talking of general directional volume number, India to India, as Vishal explained, is good, not negative, but positive, but India to outside is little negative. What exact quantification? Not possible. But Europe to Europe, Romania to Romania is a more significant dip, at least 15%-20%. And even China to China is about at least 10%. I mean, this is just again, putting numbers on the top of the head. If you ask me to statistically prove because of the volume itself being a misnomer in our case, it's difficult. But just to give you a direction. Sir, understood, sir. Very, very well taken, sir. That is quite clear. And so this pricing trend would be negative in all, all these three aspects, right? I see. Because the raw material. It is also a function of pass-through. Yes, sir. So, yeah, it is, like, yeah. Yeah, so we have seen, to answer that specific question, we have seen, a lot of volatility with the reduction coming in in 2023. However, I think, we have also seen spikes in the raw material prices and, you know, other things. So, ultimately, as I said, even in December quarter, quarter three, we have seen that fluctuation stabilizing, and some of the impact of that happening. So in general, you are right, but I would say there might be a little bit of, volatility within that. For example, you know, steel prices are reducing, but then, the brass, copper, zinc prices are trending up now. So all those things are happening, so difficult to exactly point out a single trend there. Understood. My second question is on the Japanese front. So, we have seen quite consistent improvement over the past 5-6 quarters, in terms of improvement in the business from them. So could you highlight how much we would have grown in the first nine months, FY 2024, from these customers? I, I understand that the base is very low, the kind of base which was there in FY 2024, but still from a low base, what kind of improvement we have seen? Arvind, you have mentioned talking about what specific area? Sir, I'm talking about the kind of business that we have received from the Japanese customers. I expect majority of this business is for the Japanese plants only. But still from a low base of FY23, how much improvement we have seen in the first nine months of FY24? Yeah. So, overall, we have seen about, you know, 10-12% growth in Japanese customer over 9 months. And I think as we have covered earlier, the initial quarter, the growth numbers were good. However, last couple of quarters, it has gone flattish. And we are very hopeful to, you know, return back on the variety of aspects. There are reasons on that front. There are developments going on, which got there was some impact of, you know, delay on that front, and so on. So, in general, we are bullish on that. However, this year, so far, 9 months numbers don't look as per our earlier expectation. However, quite confident that they will return to the expected numbers soon. Understood, sir. Thank you very much for answering my questions, and all the best. Thank you. Thank you. A reminder to all participants, you may press star and one to ask a question. Our next question is from the line of Jason Soans from IDBI Capital. Please go ahead. Yes, sir, thanks for this, for the follow-up. I just wanted to know, sir, I mean, your losses at your subsidiary have significantly reduced from INR 92 million in Q2 to around INR 3 million loss right now in Q3, which is quite commendable. EBITDA margin also has turned positive, you know, to up to 3.3%-3.5% odd. Now, I just wanted to know, sir, what steps have you taken, you know, for improving this performance? And other thing is, are you seeing any revival in demand also from Romania and Europe. Sorry, from Europe and China, so that this steps taken towards reducing the losses, or is it only in the cost front? Yeah. So, one, on talking about the cost front, we have started tightening our purse there, trying to focus on, you know, right product portfolio, and improve some of our material skills as well. So, all those, you know, variety of things were going on, and they started giving results. Second part of this is that, we made a difficult call of saying, "Okay, we need to scale it down, in terms of having the right overheads, considering the volume reduction in those markets." So we've taken, adjusted those, you know, worked on reducing those fixed costs, type of situation. So combination of those, that, and the third is the material part to all that, combined, is where we are, you know, on, on in terms of turning around those, you know, cost facilities or making—I mean, making profit there. Now, on the demand side, we are seeing right now, and I would say towards the end of quarter three and quarter four, we are seeing a positive, direction on those. Too early to say how sustainable these are, but fairly confident that, work done on the cost side and, improving demand should, combination give us a good, outcome, going forward on both these subsidiaries. Sure, sir. Thanks for that. And, so one question I just had, you know, just from an accounting perspective: so in your presentation, the share of profit and loss from your associates, which is CleanMax and Sunstream, has been included in the other income section. Now, just wanted to know, I mean, isn't that supposed to be, you know, highlighted, mentioned separately as a line item, or can you club it in other income? Just a bookkeeping question I had. Yeah, as rightly mentioned, it has been clubbed in the other income. Equity method. We are following equity method- Okay. associates. So Okay. That's what is the correct method, as we understand, from our auditor also. Okay. We'll be visited if required. Okay. So that can be included in other income. Okay. Okay. Yeah. Okay. And it will not be refunded back. Okay. Sure. Sure. That's all. Those are the questions. Thank you. Thank you. Thank you. A reminder to all participants, you may press star and one to ask a question. Ladies and gentlemen, you may press star and one to ask a question. As there are no further questions, I now hand the conference over to Mr. Vishal Rangwala for closing comments. Yeah. Thank you, and thank you very much for all of you to participate in this conference call. Really appreciate your continued interest, and we look forward to a positive future going forward. Thank you. Thank you so much. Have a good evening. Thank you. Thank you. On behalf of Harsha Engineers International Limited, that concludes this conference.