Ladies and gentlemen, good day, and welcome to Kirloskar Oil Engines Limited Q3 and FY 2026 Earnings Conference Call, hosted by Antique Stock Broking Limited. 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 touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Amit Shah from Antique Stock Broking Limited. Thank you, and over to you, sir. Yeah. Thank you, Palak. Good afternoon, everyone. On behalf of Antique Stock Broking Limited, I welcome you all to Q3 FY26 post earnings call of Kirloskar Oil Engines Limited. To discuss the results, we have the senior management team of the company, represented by Ms. Gauri Kirloskar, Managing Director of the company, Mr. Rahul Sahai, CEO of the company, and Mr. Sachin Kejriwal, CFO of the company. I would hand over the call to Ms. Gauri Kirloskar for her opening remarks, post which we can open the floor for Q&A. Over to you, ma'am. Yeah. Thank you. Good afternoon, everyone. Thank you for joining us today. I'll reintroduce my team on today's call. Rahul Sahay is here. He's CEO at KOEL. Sachin, who is the CFO, Kiran is the CHRO, Farah, the company secretary. From Arka, we have Samrat, who is the Managing Director at Arka. I will begin with business and operational updates. Sachin will then provide a brief overview of the financial performance, following which we will take questions. I'm thrilled to report that Q3 fiscal year 26 has been a standout quarter for KOEL. We delivered our highest ever third quarter sales, capping off the highest year-to-date sales in our history. This was powered by strong performance across all segments, with 35% year-on-year sales growth for the quarter and 25% year-to-date sales growth. That's double-digit growth in every single business. On top of that, robust operational efficiency drove meaningful improvement in our EBITDA margins, while our cash conversion cycle improved compared to the prior year. For the quarterly numbers, the domestic power gen business was a standout performer, delivering sales of INR 603 crore, which is a 44% growth over the previous year. Growth was primarily driven by our retail business and power generation. The high horsepower segment recorded substantial growth of 235% over the previous year. The domestic industrial business witnessed a significant momentum shift, recording its best quarter at 41% growth over last year with sales of INR 390 crore. This growth was fueled by strong performance of defense and nuclear and marine segment. Construction and mining segment was a bit slow this quarter, but we see it as a temporary phenomenon. The distribution business Q3 sales stood at INR 238 crores, registering 14% growth over the previous year. This was the highest ever quarter for the distribution and aftermarket business unit. The international business also reported 26% year-on-year growth in Q3. Now, coming to the geographic mix, domestic sales stood at INR 1,243 crores, which is a 38% growth year-on-year, and export sales were at INR 128 crores. That's a 14% growth year-on-year. As I had mentioned last quarter, this quarter saw KOEL's standalone B2C integration into LGM. Strategically, this integration of fluid dynamics business marks a milestone, enabling focused growth in the segment while unlocking synergies across LGM operations. With B2B strength persisting and tailwinds in industrial, we're well positioned for the balance of fiscal year 2026. Now if we go to the consolidated business performance, B2B consolidated reported INR 1,396 crores revenue for the quarter, registering 36% growth year-on-year. Fluid dynamics, that's the B2C business, reported Q3 revenue of INR 249 crores, which is an 18% growth year-on-year. Financial services, that is Arca, reported revenue of INR 227 crores, 7% growth year-on-year. Net interest margin at Arca grew by 28% year-on-year to INR 107 crores in Q3. In closing, Q3 underscores our momentum, record sales, margin gains, and operational discipline across the board. In power gen, it has been a strong quarter for KOEL, and what is also heartening to see is the progress that we are making against industry numbers. Our numbers clearly indicate market share improvements across the board. This is in line with our plans that we set out for ourselves. All the other business segments have shown growth. At Arka, we are successfully granularizing the book as planned by building a retail portfolio focused on used wheels and small ticket loans against property. Our ground presence is ramping up to match this ambition with 110 branches and approximately 1,600 employees now active. We see a great future for this business and aspire to build an institution in the financial services space, and I'm confident that the management team at Arka will deliver on the plans that have been laid out. Operationally, we continue to make steady progress and are advancing our expansion plans in line with our strategic roadmap for all our business segments. With a robust product pipeline and sustained focus on strengthening our existing segments, we remain confident about the opportunities ahead.... We remain firmly aligned with our long-term strategy and our commitment to sustainable growth. I'd now like to request Sachin to give a quick update on the financial performance. Good afternoon, everyone, and thanks, Gauri, for the update. I will give a quick overview of the financial performance for standalone and consolidated business. The result and the presentation for today's call has already been uploaded on the exchange and our website. KOEL delivered a strong financial performance in Q3 FY 2026, with the company registering its highest ever third quarter sales and achieving record year-to-date revenues. Year-to-date margin performance improved on the back of operational efficiencies, while prudent working capital management supported an improvement in cash conversion cycle compared to last year. Coming to the financial performance overview, I will start with standalone performance first for the quarter. Net sales at INR 1,371 crore for Q3 FY 2026, versus INR 1,050 crore and INR 1,015 crore for Q3 FY 2025, 35% increase year-on-year. EBITDA at INR 169 crores for Q3 FY26, versus INR 106 crores for Q3 FY25, 59% increase year-on-year. EBITDA margin at 12.2% for Q3 FY26, versus 10.3% for Q3 FY25. Net profit, excluding exceptional items, at INR 102 crores for Q3 FY26, versus INR 57 crores for Q3 FY25. That is 80% increase year-on-year. Cash positions, net of debt and including treasury investments, stood at INR 348 crores. Our working capital position continues to remain healthy, with payables at approximately 59 days and receivables at around 44 days. Inventory levels stood at approximately 66 days, reflecting an improvement over the same quarter last year. Supported by disciplined working capital management, led by improved inventory and receivables efficiency, the overall cash conversion cycle has strengthened year-on-year. Here is further breakdown of the standalone sales for the quarter. The B2B sales, that is, KOEL standalone sales, post the restructuring were at INR 1,371 crore, that is 35% growth year-on-year. We registered a double-digit growth across all the business units. So within B2B, Power Gen was at INR 603 crore, 44% increase year-on-year. Industrial was at INR 390 crore, 41% increase year-on-year. Distribution in the aftermarket was at INR 238 crore, 14% increase year-on-year, and international business of B2B was at INR 140 crore, 26% increase year-on-year. Please note that on October 10, we completed the transfer of our B2C business to LGM through the slump sale route. Accordingly, the financial performance for this quarter reflects the impact of this restructuring. For ease of comparison, top line without the restructuring effect on like-for-like basis would be at INR 1,503 crores for Q3 FY26, versus INR 1,154 crores for Q3 FY25. That is 30% increase year-on-year. Now, looking at consolidated performance for the quarter, the revenue from operation at INR 1,873 crores for Q3 FY26, versus INR 1,449 crores for Q3 FY25, 29% increase year-on-year. Net profit at INR 126 crores for Q3 FY26, versus INR 67 crore for Q3 FY25, 90% increase year-on-year. Please note, numbers reported are for continuing operations only and excluding exceptional items. Now, let us have a look at consolidated segment performance for the quarter now. B2B segment revenue for the quarter was at INR 1,396 crore, which is 36% growth year-on-year. The segment PBIT was at INR 137 crore, reflecting approximately 90% increase year-on-year. B2C segment revenue for the quarter was at INR 249 crore, which is 18% growth year-on-year. The segment PBIT was at INR 18 crore, against PBIT loss of around INR 4 crore for the same quarter last year. Financial service segment revenue for the quarter is at INR 227 crore, reflecting 7% year-on-year growth. The segment PBT was at INR 17 crore. Please note, numbers discussed here represent continuing operations only. The PBIT and PBT numbers are before exceptional items. To conclude, company has delivered a strong quarterly performance, complemented by solid year-to-date growth, supported by sustained market demand and positive momentum across our core product segment. Our recent product launches have been encouraging market acceptance, and we remain on track with the strategic initiative under our B2B vision. With that, I will open the floor for questions. Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question, may please press star and one on their touchtone telephone. 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 Jason from IDBI Capital. Please go ahead. Sure, sir. Thank you so much for taking my question. So my first question just pertains to, just wanted to know, the volume growth, both for YOY and QOQ, if you could highlight for this quarter. Yeah, just one second. Yeah. So for power grid, our volume growth has been 25%, compared to the last year. Okay, and QOQ, sir, that must be a decline, so if you could give that number as well. Sorry? Uh- QOQ, sequentially, sir. Yeah. Volume. It's a 15% decline. 15% decline. Okay. Yeah. Sure. And, sir, next, just wanted some color on the, the response for the HHP segment, some details about that, how, how, how are you creating market inroads, and just some color on the response for the HHP segment. Yeah. So, we've spoken in the past about our product portfolio- Mm-hmm. and, the initiatives that we are running on the HHP side. Mm-hmm. Today, we have products that for the HHP start right at 1000 kVA and go right up. What we are now seeing is demand for our 2500 kVA and 3000 kVA products also. So, I would say the market has always been there, but we are focusing on driving initiatives in line with the product readiness that we have now, and hence, we are essentially gaining momentum there. Okay. Sure. Sure, sir. And, sir, if you could give the numbers for the... If possible, just for a like-to-like comparison for the FMS and the WMS segment as well. Would that be possible for Q3? We're not breaking that out. Okay, not breaking it out. Okay. Sure, so I'll join back with you. Thank you so much for answering my question. Thank you. Thank you, sir. The next question is on the line of Mihir Manohar from Trust Mutual Fund. Please go ahead. Yeah, hi. Thanks for giving the opportunity. Congratulations on great set of numbers. You mentioned about the growth for HHP for this quarter at 230%. What's the growth on a nine-month basis for the HHP segment, and what's the absolute number that we are now clocking on broadly a yearly basis for HHP? So the number that we're sharing is the 235%. We're not breaking it out by segment, for HHP value. Sure. What would be the growth on a nine-month basis? It's 132%. Sure. Understood. Great. So basically, which end-use applications are driving this growth for HHP? So it's pretty broad-based, but essentially the main end application is infrastructure. What we mean by infrastructure is any of these large developments that you see being built, whether it's commercial or residential. And of course, it includes some data center customers as well. Sure. Second question was on the gross margin side. I mean, when I see gross margins for 3Q versus 3Q, and even on 9 months basis, the general understanding is that HHP should have higher gross margins. And if HHP proportion is increasing, then, I mean, should one expect gross margins improving as the HHP proportion goes up in the revenue going forward? Yeah, that's right. But right now, our gross margin is flat at 35% margin. But in future, as you see more sales from HHP, definitely the gross margin should improve. Sure. My last question was just on the data center side. I mean, we are getting business on the data centers, I mean, various interactions and all. But however, when we do a channel check, it becomes difficult to get a sense as to if Kirloskar Oil products are used. Generally MNC names which are coming out. So, if you know, how to understand the difference which is coming in channel checks versus the business that we are building in? Yeah, I think, essentially, your channel checks are an informal dipstick to get information. The whole information will only be ready once we disclose our results. So, it's hard for us to actually bridge, because we're not really sure what you're the information you're getting on the channel check. Sure. Yeah, that's it for much. Thank you. Thank you, sir. The next question is from the line of Harsha from Axis Capital. Please go ahead. Yeah, ma'am, thank you for the opportunity, and congratulations on the strong set of numbers. So my first question was on the industrial side. So you, so this quarter we have, what is the encouraging growth led by, defense, nuclear and marine segments. So what is the outlook here, and when do you expect the, pickup in construction as well as, mining segment? Yeah. So we saw a quarter where a lot of our OEMs were correcting their inventory... So the construction and mining segment was a little subdued because of that. In spite of that, however, we've grown. So the segment overall has performed decently well, and we expect that going forward, things will correct for themselves, because the correction, the inventory corrections seem to have happened. Okay. And second question was on the distribution network. So distribution net distribution revenue has also grown during this quarter, so what is driving this growth? Is it the asset base or the shift to organized power gens? Yeah. So, we've always said that our focus areas for driving profitable growth will remain to be more complex products, aftermarket and international. Now, more complex products, in case of, for example, power gen, are in the form of our OptiPrime range of products, our HHP products, and that has an eventual impact on the aftermarket business also. So we are seeing more and more of that impact coming in. Of course, the aftermarket team is driving a lot of initiative around growing the service penetration as well, both through have increasing the number of AMCs, as well as ensuring adequate capability for breakdown SRNs, service requests. Okay. Okay. And, and just one last question on the standalone EBITDA margin. So now that we have shifted the B2C business to a subsidiary, so should we see margin improvement here, or is it expected to remain at similar levels? You will see a slight improvement in the EBITDA margin with this move from B2C business to LGM. Yeah. Okay. Yeah, that's all from my side. Thank you. Thanks for your question. Thank you, sir. The next question is from the line of Suraj from Catamaran. Please go ahead. Hi, thank you very much. I have two questions. The first question is, from a global landscape, are there opportunities to do contract manufacturing for any of the global power genset companies, be it Caterpillar, Generac or Kohler, for Kirloskar Oil Engines? I mean, there may be opportunities, I mean, but we will figure out the opportunities that work for us, as per our strategy. There is nothing further to disclose at this point. Got it. But would we be willing to take up those, or would we be more of willing to sell these under the Kirloskar Oil Engines brand name only? Our strategy varies region to region. Mm-hmm. Mm. It's, we won't be able to disclose that, because that's proprietary information. Thank you. - but we would be open for what makes sense for the company. Got it. Got it. And then, next question is, you mentioned now you have a product for data center, right? So what kVA or MVA would this product be, and would it be OptiPrime or a single engine product? I mean, so we have a variety of different products. Data centers actually start buying gensets right at 400 and 500 KVA also. Mm-hmm. We've been supplying to data centers right through. Today, some of the units that we are looking at are, you know, 2,500 kVA and 3,000 kVA also. These are single engine? Our single units right now go up to 1500 kVA. Fifteen hundred. Actually, let me just correct that. Okay. Our high-speed single engine units go up to 1,500 kVA. We have engines that go to 10 MW. Yeah, I get it. Yes, got it. All right. Thank you very much. Thank you, sir. Ladies and gentlemen, to ask a question, please press star and one now. Participants who wish to ask questions may please press star and one at this time. The next question is from the line of Palak from MIV. Please go ahead. Hi, sir. So just an addition to the previous participant question. I understand that with the growing contribution of HSP, we will see margin improvement, gross margin and operating margins. But were there specific reasons that this quarter, both the gross margin and the operating margins saw some pressure on QOQ basis? Are we seeing some commodity price pressure due to a product mix? So, Palak, on quarter-on-quarter basis, it was a product mix and operating leverage, loss impacted by EBITDA compared to previous quarter. When you say product mix, is it because of the industrial, I mean, in industrial also we have a certain segment. So within industrial, there was the product, because if I look at overall, these are the contributions of power gen industries have been constant to our, I mean, it's been at a standalone level. So can you get in, get a bit specific of when you say product mix? Yeah, so we don't give those details, but definitely the product mix in all the business unit has impacted for this quarter. Okay. And, are we seeing any pressure due to commodity prices? And which are the major commodity, that we use to manufacture the product? ... So we are keeping a close watch on that, and if you look at our gross margin, that has remained flat, so we are taking the appropriate action on those commodity price increase. But when I'm looking at it on a QOQ basis, gross margins have declined. I don't think so. Okay. Okay. It's just a 50, it's just a 50 basis points dip compared to the previous quarter, and that is because of product mix. Okay. Got it. Thank you. Thank you, ma'am. The next question is from the line of Saif Sarang from ICICI Prudential AMC. Please go ahead. Yeah, thank you for the opportunity. So there is an exchange filing from your end about incorporation of Kirloskar Advanced Systems. Can you highlight what specific is the plans with respect to this entity? How do you look at it to the next two to three years? Yeah. So, there is a lot of specialized work that we are doing with our government customers, such as defense and railways. Now, that work is slightly different from our core engines business. It has a lot to do with, system integration and, you know, in case of defense, there's defense contracting kind of work. We felt it best to carve that work into a separate business entity, and that entity is called Kirloskar Advanced Systems Limited. The filing also mentioned about unmanned systems. So any efficiencies, how do you look at that? So are you gonna expand to UAVs or it's some again, powertrain related to unmanned systems you are looking at? We are not at a point where we can disclose that because that information is still proprietary. At an adequate time, we can speak more about it. Sure. And just one quick one on the employee cost in standalone that this quarter is at 25%. So any specific reason does this represent more of headcount addition, or there is some one-off, say, maybe relating to gratuity or something like that? It was a mix of both headcount and gratuity. Okay. Thank you, and all the best. Thank you, sir. The next question is from the line of Saurabh Arya from Oaklane Capital Management LLC. Please go ahead. Yeah, hi. Hi, congrats, team, for the good numbers. The first question is, let's say till now, our focus from exports side has been Middle East, Africa, and but now that we have this EU deal, and we have clearly avoided focus in Europe till now. So will there be any change in strategy in light of this EU FTA? So I wouldn't say we have a change in strategy because geopolitical movements keep happening. From a company standpoint, obviously, these changes are inputs into strategy, but our strategy, by and large, remains similar. We continue and remain committed to the Middle East and the African markets. We are studying each region and trying to develop an appropriate strategy that covers our capability, capacity, and coverage for each region. Okay, this is fine. And so we won some large orders of NPCIL and this marine, I think. So is there some execution expected from that in next few quarters, or it's already part of execution in industry? So it hasn't been part of the execution until now. These are for large gen sets of 6.3 MW each, and we will be executing them going forward. So none of them were executed in Q3. Okay, and that would be part of industrial segment only? Yes, that's part of our nuclear segment under the industrial business. Okay. Can you give some color how that execution would be? Like, what is the size of it? Will it be done in one year itself, or it's spread over two, three years? The overall order value that we have spoken about earlier is INR 798 crore in basic value. We have timelines of two years from now. I can't give more details around that in terms of execution at this Sure. Perfect. Thank you. I will go back to the team. Thank you. Thank you very much. Thank you, sir. The next question is from the line of Krish from Crosseas Capital Market Private Limited. Please go ahead. Hi, sir. I just had one more question regarding Kirloskar Group. So, the question is- Sorry to interrupt you, sir. Sorry, there's a lot of background noise. We can't hear you. Yes, sir. Can you please use your handset? Yeah. Am I audible now? Yeah. Yes, sir. Yeah, yeah. So, my question is regarding Kirloskar Group in general. So, Kirloskar Chillers is a private limited company, which is, as per my knowledge, is not a part of any of the listed companies. So is there any plan to, take it as a subsidiary into any of the listed companies or to separately in the future, if you could answer me that? ... So thanks for your interest, but because this is a Kirloskar Oil Engines earnings call, I won't be able to answer or address that question here. Okay, got it. No problem. Thank you. Thank you, sir. The next question is from the line of Preet Jain from Motilal Oswal. Please go ahead. Yes, hello, am I audible? Yes, sir. Yes, so I have two questions. My first question is, despite the B2C segment going out of financials in the current quarter, the other expenses still seem to be at a higher side. So any specific reason for that? No, it is related to B2B business, so there's no specific reason that, why it is going up. Okay, got it. My second question was on the domestic power gen business. In the PPT it was mentioned that it was driven by LHP, supported by the incentive schemes. Can you please highlight which incentive schemes are these, and whether these numbers are sustainable? So that's our retail business. The channel and the retail business incentive schemes are part and parcel of the business. So it's just, you know, those incentive schemes that are running, nothing in particular. Okay, that is all from my side. Thank you. Thank you, sir. The next question is from the line of Palak from MIV. Please go ahead. Hi, also just a follow-up question. Is it possible for you that you can give some sense of contribution from LHP, HHP, MHP in our power gen segment? So what I would say is that most of our business continues to be in the retail business. A lot of the retail business is LHP. At this point in time, the rest of the information is proprietary, so we won't be able to give out specific splits. Okay, so are we changing some significant shift towards HHP in terms of revenue contribution? The answer to that would be yes, because you can see that from the growth numbers, the HHP is growing at a faster rate. Okay. And in case of industrial segment, last quarters have been very good for us. I mean, is it because of the big orders that have shipped in defense, marine, railways? I mean, how sustained is this growth number for us? We will continue to focus and, do our best, and this is an outcome of that. It's not execution of one or two single orders. So what I would add is that, from the large orders that we have mentioned that we've got, this is not to do with the execution of that. But if you remember a couple of years ago, our strategy was to look at key account management in a very focused way, and also we had identified certain white spaces. So that's why you're seeing this kind of you know this kind of growth, and we hope that we can you know continue to aspire to these kind of growth rates. Okay, thank you. And just, do you have any guidance for a, for a growth number for next one or two years, or any, any comments on margins that we are targeting for- So we've stated a 5-year strategy, which is to be a $2 billion company by fiscal year 2030. And we've also said that we hope to continue to improve margins over that time, because our focus areas continue to be advanced products, aftermarket and exports, where these typically are the margin levers in our industry. So that's the, you know, that's the direction that we're giving in terms of where we want to grow on the revenue and margins front. So is the guidance for a consolidated entity or for the standalone business? Consolidated without Arka. No, I'm saying the guidance that you have given, is it for a consolidated entity or is it for just for- It's for B2B, for the B2B and B2C business. Okay. Anything specifically for B2B business? No, we've not broken it out that way. Okay. Thank you. Thank you. Thank you, ma'am. The next question is from the line of Omkar Sharma from Vyanch Ventures. Please go ahead. Yeah, hi. Thank you for the opportunity and, congratulations on a good set of numbers. I've just got two set of questions. Firstly, on the Arka, could you just talk a little bit about the current book split between the retail and wholesale? And also, if you could throw some color around the asset quality that you're observing. Samrat, would you take that question? Yeah. Hi, good afternoon to you. Currently, our wholesale book is INR 2,600 crore assets under management, and our total assets under management will be in the range of INR 7,600 crore. So the rest of the book will be retail or SME lending in nature. Pure retail, which is basically ticket size of about INR 15 lakh in small ticket loan against property and used vehicle financing, is about—sorry—as on thirty-first December, is about INR 328 crore. Asset quality, our GNPA is about 1.2% and NNPA is about 0.3%. ... Could you just talk with, about this asset quality for the last quarter? What, what was the number? Last quarter, asset quality was about 1%, and NNPA was 0.2%. Got it. Got it. And, just coming back to the, the main core business, like, you know, we've been talking about the HHP segment for a while now. You know, Gauri, if you could just spell out, you know, when can we start talking numbers around the HHP? When are we aspiring from, from, you know, from, articulating those numbers out? When are we looking at that? Sorry, you mean, like, segment-wide numbers, when will we articulate? Yeah. I'm just, so the reason I'm looking at it, so since we have, you know, launched this product, we have entered into HHP for about now, almost about two years. I just wanted a sense as to when are we thinking of, communicating in terms of numbers, what are we doing in, you know, on the overall genset business, from the HHP side? Yeah, we haven't thought about, you know, sharing those numbers yet, because we are sharing growth numbers across, you know, this segment, which is obviously a very new segment for us. Sure. A couple of years ago, we had zero market share. The market shares are, you know, will be incremental quarter on quarter, and it's not always linear. So I think, you know, the growth rates right now is sufficient as long as we are showing good growth in that segment and traction in that segment. And at least as a management team, we track node by node incrementally if we're making the progress that we should be making. Got it. And, Gauri, could you also just touch down if we are looking at, you know, I know you broadly touched upon it, in the one of the previous parts then. But are we seeing incremental, like, I think, we have, you, in the previous call you highlighted, right? We have tracked the Middle East well, at least in terms of the international side. Now, are we looking at exploring other international markets, or we would want to be, looking at scaling up some of the places where we have, got the market, placement right? So we are looking at places other than the Middle East, and we have been present in places other than the Middle East historically as well. The focus markets for us, you know, I mean, there are many focus markets across the world, and in each of them, you know, each of them is different. We have to look at what the competitive landscape is, what the local, you know, power gen or industrial market is like, who are the players in that space? Do we want to go in alone? Do we want to go in with a JV? Do we want to have an appointed genset OEM? What you're seeing in the Middle East is the result of us appointing a genset OEM for specifically, you know, power gen sales. You've seen the traction from that work in the last year or so. We had a pretty significant industrial presence there, but we didn't have, you know, we weren't doing so well on the power gen side. So I think that's what, you know, that's what you're seeing in terms of growth. But whether it's Africa, whether it's the U.S., whether it's Southeast Asia, we'll have, you know, different ways of going to the market, depending on what makes sense. Okay, got it. Perfect. Thanks, and all the best. Thank you. Thank you, sir. The next question is from the line of Aditya Mongia from Kotak Securities. Please go ahead. Yeah, thank you for the opportunity. The first question that I had was more to get a sense of some more insights on the HHP segment. As we understand in this segment, there's a requirement that customers have of consultants kind of approving the products that the company has. Could you give us a sense of how has that journey been for you, and are you being able to make inroads on that count? I'll just have Kiran, who's our CHRO, talk a little bit about what we're doing, because there is capability building we had to do, because the way this product is sold is quite different. So, Kiran, please give an update. Sure. Thank you, Gauri. So I think you already heard Gauri and Rahul talking about, you know, the progress what we are making on the HHP side. So while the focus has been on building out the great products, we also in parallel started working on improving our capabilities. And for that, we've worked on a development program for our frontline sales teams, which purely focuses on how the products are being sold. These products are way too more technical in nature compared to what our earlier product ranges were. And so we have worked through a detailed development program, including the technology of the products, the commercial aspects of the products, as well as focusing on the negotiation skills and the soft skills of how to sell these products. So, some of these programs have been going through the organization at this point in time, helping to build that capability inside the organization. Yeah, and we've done this, not only for our sales teams, but also for our, genset OEMs, you know, who are partners as well, for their sales team, as well. So that's part of it, because, as you said, and as you mentioned, you know, the, consultants have to be on board. They have to be aware of, what our product portfolio is, especially because we have, different solutions, like an OptiPrime, which is not a single engine solution. That has to be explained, it has to be witnessed. So it's been a lot of groundwork that we've had to do, but we are seeing, traction now come out of that. ... understood. And the second question that- Ladies and gentlemen, the line for the management has been disconnected. Please wait while we reconnect them. Ladies and gentlemen, the line for the management has been reconnected. Thank you, and over to you, ma'am. Yes. Sorry, I think, the person we were speaking to had a second question, and we couldn't hear it. Am I audible to you? This is Aditya. Yes. Yes, Aditya, sir. Thanks. Thanks. The second question that I had was, more to better understand, market share shifts that may be happening in the LHP front. As in, as we see through the relative changes happening, it seems, still seems that on a 2-year basis, since CP 34 happened, the market leader has gained share versus Kirloskar. Some pullbacks are happening right now, but it still seems that, a lot has been lost last 2 years on the LHP side. If... Do you think that there are, there are scopes of further pulling back market share, or how do you think about that aspect? So what makes you think that? So one is just kind of comparing the relevant segments and the relative growth that's happened, okay, over the last two years. And it seems to suggest that while on a YY basis, some bit of faster growth is happening for Kirloskar, the market leader is still kind of higher up on a two-year basis on aggregate growth. Which makes me believe that there is more to kind of recoup as a market share for Kirloskar, and that's why the question. Yeah, I mean, I think it's hard for me to comment because I don't know the source of your information. So, you know, I will not be able to answer that question. Got it. I'll take that separately. The third part was- Yeah, because unless you give me specific growth rates and, you know, and I can look at those numbers, it's very hard for me to answer that. I'm happy to take it in a separate, you know, call your numbers. But let me just move on. On the distribution side of things, could you give us a rough split of what are the key elements over here? I understand that spares would be a large proportion, and then there'll be other parts, such as solutions, that you may be doing. Some sense of how the breakup is for you? I think, so by and large, you're right. There's a lot of. It's mostly spare parts and service today. We also do overhauls and we do under our brand called New Life. So, but that component is very less. So bulk of it would be, you know, spare parts along with the service contracts. Sure. Those are my questions, then. Thank you for your responses. Thank you, sir. Thank you. The next question is from the line of Rolan Nadu from Edelweiss. Please go ahead. Hi, this is Rohan from Edelweiss. My question is on margin value. You answered the question. Just, you know, this quarter-on-quarter drop in margins on the EBITDA level, is it mostly all of it is explained by the mix change? Is that a fair understanding? I have already answered that. It's a combination of mix, product mix change and the operating leverage loss. By product mix, you mean the, you know, the distribution growth, right? Is that understanding? It's a combination of two, three factors, but we are not giving those details right now. Okay. And on your, the, marine and naval execution on that part, right, in a way, will the margins on this orders, marine orders be, at par with company average, or would it be lower? Or can you just understand, help us understand what could be the margin trajectory for this orders? We don't give those margin details for each customer segment. So sorry, we'll not be able to share any details further on that. Oh, okay. Thank you so much. That's it from my side. Thank you, sir. The next question is from the line of Jason from IDBI Capital. Please go ahead. So thank you so much for taking my question again. I just wanted to ask, you know, of course, Q3 tends to be, you know, even last year it was a little drop off from Q2, and then again, this year also is a kind of the same trend. So just wanted to know, what kind of seasonality, is it because of less cooling demand, because it tends to be cooler, you know, during... Just if you could highlight some reasons for the seasonality for the sequential drop in volumes? ... Yeah, I think, that's generally how CapEx flows happen here, mostly on the domestic side. So it's a phenomenon that's seen across the industry, so there's nothing very specific to KOEL. Okay, okay. Sure. And, just want to also know, I mean, of course, I understand that DG sets are going through a good phase of growth. Now, just wanted to know, any particular infrastructure verticals you want to highlight which are driving this growth? No, it's pretty broad-based. Pretty broad-based. Across segments. Yeah. Sure. And, ma'am, also, you know, you spoke in detail about how you are leveling up your, you know, just your sales capabilities in terms of programs and, you know, stuff, all that, that's good. Just wanted to know also, just a pertinent question relating to that. Now, I also understand from HHP, you require a better quality, better qualified service engineers, you know, servicing that segment, because service becomes a critical aspect for that solution. So what are the steps we are taking to basically up our game there in that segment to service, basically improve the quality of service engineers, hire the better hiring and those practices? Just wanted to know some color from your side on that aspect. Sure. Kiran is here to answer. Yeah, again, the capability building initiatives are not only focused towards one segment. We are driving that as a common upskilling theme across the organization. So a lot of training programs to make sure that, you know, our workforce is able to address the customer issues right on time. So that's what I would say. And what I would add is, you know, this training program, especially across service, is a continuous process, because, you know, you obviously have also people coming and leaving, and you have to address that. You have to have trained service engineers on a continuous basis, and the product portfolio also keeps changing, not only because of product expansion, but driven by emission norms as well. So, the training on the service engineer side is a continuous process. Sure. And lastly, ma'am, just wanted to ask about this notification on the BSE, where you have invested close to INR 8 crore in the Middle East entity, which in turn is going, you know, for basically acquisition of the South African entity with... Again, just if you could just give some color on what exactly - I understand you've given a lot of details there, but just your take on that. Yeah, I mean, it's the same thing. Yeah. It's just, you know- Yeah. When we look at our international markets, we do an assessment on a market-by-market basis of how we want to be structured and how we want to operate there. Mm-hmm. So this is just in line with that strategy and in line with how we want to operate in South Africa. And it's, you know, it just follows that strategic rationale. Right. Right. So you're basically saying that you don't want to basically keep it to an external party, but you want to basically do the industrial piece in-house. Is that correct, for the South African market? No, that's not necessarily correct. Right. It's just that we have now our own entity and office, where, like Rahul mentioned, about capability, capacity and coverage, which is- Mm-hmm ... what we need to build in all international markets. We now have our own entity and office there, so we can at least start building that people capability in-house in the future. And the reason I can't answer your question specifically is, in the future, if we see opportunities to tie up with people or any similar such thing, then we would do that. So, you know, I can't say that we will not do it today, because it remains to be seen as time goes on and how we do in that market and what we learn in that market. Sure. Thanks a lot for answering my questions. Thank you so much. Yeah. Thank you, sir. The next question is from the line of Suraj from Catamaran. Please go ahead. Yeah, thank you very much again. So to reach the stated goal, which is $2 billion vision, right, which is approximately a 3x growth from here. So how should one understand about the CapEx required to grow from the current levels? Like, will you need to scale the gross block from current INR 1,900 crores -INR 2,000 crores to, like, INR 5,000 crores -INR 6,000 crores? Yeah. So, there is, we have a CapEx plan. Mm-hmm. -as we have mentioned earlier, there is INR 700 crore of CapEx that we are deploying into ramping up our operations. A lot of that work is currently ongoing. There is a capital allocation philosophy that is underway. So from time to time, as we take actions, you will see the, you know, you'll see it reported post-board meetings, I mean, in these calls. Mm-hmm. At this point in time, the rest of the information is internal to KOEL, and we won't be able to give it out. Got it. Thank you very much. Thank you, sir. The next question is from the line of Rahul Kumar Mishra from Antique Stock Broking. Please go ahead. Hi, thanks for the opportunity, and congrats team for delivering a healthy set of numbers during the quarter. Most of my questions have been answered. I have just two questions. First, if you could help me give some color on the water management system. What is the demand outlook going ahead for the business? So, the water management systems and the LGM business has now been consolidated into a single entity called Fluid Dynamics. We call it KOEL Fluid Dynamics. It is going to be a subsidiary of Kirloskar Oil Engines, focused on pumping solutions. Pumping solutions will vary across different kind of end use and application. Water is one of them. As we proceed further, there are big opportunities that we see on the domestic pumps and agri pumps side, so we continue to remain focused and look at the appropriate products that need to be launched. Okay. Thanks, thanks for answering this. And my second question is on the export side. So we have seen that exports have grown healthy, about 20% on during this quarter, as well as on the YTD basis. So wanted to just get a sense of what has driven this healthy growth during the quarter? And lastly, on the U.S. market, last quarter, we discussed that it's going to be one of the largest market with some good opportunities. And with the recent announcement of relaxation and tariff by the U.S. government, how do we look at this market? And given that almost 60% of sales we derive from MENA region, do we see this proportion shifting going ahead for the next couple of years, once we build our capability for U.S. market and start securing orders? So, just a color on this. Yeah, sure. See, each region that we look at, there is a very careful evaluation around the three Cs that I spoke about earlier. That's capability, capacity and coverage. And then we take a look at how exactly do we want to go to market, whether it is through independence or joint ventures or an acquisition. So that's and it's a, it's a lot of effort and work that goes into it. Some of the traction that you are seeing on the international side is an outcome of the, outcome of the work that we've been doing. So there is work that we are doing, we've been doing on the Middle East and, Africa side. There is other work for other regions also. Now, coming specifically to U.S., we have been investing in the U.S. market for a while. We have a subsidiary called Kirloskar Americas, and there is work that's going on, but it is not at a mature stage that we can discuss about it right now. Okay. Okay. Thanks. Thanks for answering all my questions. That's it from my side. Thank you. Thank you, sir. As there are no further questions from the participants, I now hand the conference over to management for closing comments. Thank you very much for your interest on today's call and for the questions. See you next time. Thank you, ma'am. On behalf of Antique Stock Broking Limited, that concludes this conference call. Thank you for joining us, and you may now disconnect your lines. Thank you.