Ladies and gentlemen, good day and welcome to KPIT Technologies Q4 FY 2025 Earnings Call hosted by Dolat Capital Markets Private Ltd. 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 the conference call, please signal an operator by pressing star then zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Rahul Jain from Dolat Capital India. Thank you, and over to you, sir. Thank you, Avirat. Good evening, everyone. On behalf of Dolat Capital, I would like to thank KPIT Technologies Ltd for giving us the opportunity to host this earnings call. I would now like to hand the conference to Sunil Phansalkar, who is Vice President of F&G and Head of Investor Relations at KPIT, to do the management introductions. Over to you, Sunil. Thank you, Rahul. Good evening and a very warm welcome to everybody on the KPIT Technologies Q4 FY 2025 and FY 2025 earnings conference call. On the call today, we have Mr. Ravi Pandit, Co-Founder and Chairman, Mr. Kishor Patil, Co-Founder, CEO and MD, Mr. Sachin Tikekar, President and Joint MD, Mr. Anup Sable, Board Member and CTO, Priya Hardikar, CFO, and Sunil from IR. As we always do, we would have the opening comments made by Mr. Ravi Pandit on the performance of the company for the year and during the quarter and the way forward, and then we'll have the floor open for questions. Now I will hand it over to Mr. Ravi Pandit. Good evening and welcome to our fourth quarter investor call. What I would like to do is to first talk about the financial results that we have declared, which are in your hand, and then I would like to talk about the broad movements in our area of work. Coming to the financials first, if you look at the on the quarter basis, if you look at the top line, the year-on-year growth in constant currency has been 15%, and quarter-on-quarter growth has been 3%. The EBITDA this quarter was 21.1%, where the year-on-year growth on this quarter has been 18.5%, and quarter-on-quarter has been 3.5%. For net profit, we have given two numbers this time. The year-on-year growth in net profit for this quarter has been 48.9%, but includes some one-time incomes, which we have detailed in our investor presentation. If you exclude that, then the growth has been 34.9%, and on a quarter-on-quarter basis, it's 30.9%, and without the exceptional, it is 18.5%. I believe that the results growth in quarter-on-quarter EBITDA as well as on net profit has been quite healthy. We had during this quarter a total closures of $280 million. We ended the year with a healthy cash conversion, with a cash on hand of INR 15.8 billion. If one were to look at the year part, on a constant currency basis, the top line growth has been 18.7%. EBITDA is 21%. Growth in that has been 24%. The net profit has been 41.2% rise, and without considering the one time, it is 29.8%. We had given a certain revenue guidance, which we are within that. We had also given some EBITDA guidance in the first place, which was 20.5%, which we later on increased to 21%, and we have kind of met that. On the basis of the results that we have, we are proposing a dividend for the AGM at INR 6 per share, and if that gets approved, then the final dividend will be INR 8.5 per share, which would be a 27% growth over the last year. That is the broad financial picture. What I would, however, like to do is to talk to you about what's happening in the marketplace and how do we see things happening. In our presentations to you all along, we have been talking about three main drivers for our future growth, and I want to do a bit of a deep dive in each one of them so that we understand where we are on that. We talked about three basic drivers. One was geographical adjacency. The second is offering expansion, and the third one was vertical adjacency. We have talked time and again about the work that we are doing in China. As things are becoming more and more clear, we see four buckets of opportunities for us. We have been doing extensive work in China now, really understanding the market very well, and therefore we have come to a conclusion that we can possibly look at four ways in which the work can be in which we can use China for our growth. There are some significant learnings from China, and we believe that those learnings are going to be extremely relevant to the global OEMs. Those include new features. They include cost reduction, and we believe that we have an opportunity of taking these learnings from China and taking them to our global OEMs, which should help them to become better in their products and cheaper and also in their faster delivery. Secondly, we are also working with our existing OEM clients to remain relevant in China. We are finding that especially in the area of architecture, the work that we do globally with our global clients could be inducted in the China market, and that is something that can give them some edge in that market. The third thing is that we all know what the current political conditions are, but we see a possibility that we can take the offerings of the China OEMs to go global. Lastly, and not the least, we believe that we can help China in China, the Chinese OEMs. That is because of the tools and the PTAs that we can bring to the table. All put together, we see that there is a possibility for us to grow in China. We are also working outside of China in some markets, but as we come to a more definitive work on that, we will come back to you. The second area has been the work on the offerings. The extraordinary work that has been done in China by the Chinese OEMs has actually gotten all the OEMs to think about some serious work on cost reduction. How can they consolidate their hardware or software or configure it differently so that the cost can come down? That is an area where we see a lot of opportunity. We are also seeing opportunity, and this is a global opportunity in the area of cybersecurity. We are building some muscle in that. We have added some people in that area, and we think that we have some interesting offerings to give. Also, considering the fact that the speed at which the new vehicles are going to be launched in the years to come, there is a need for end-to-end validation. That is an area where we have been investing our time and money, and we see a possibility of growth in that area. The third dimension has been the area of vertical adjacency. We have spoken about this earlier that we want to look currently, we are looking at the entire spectrum of mobility, but our main thrust has been in the area of passenger cars. We talked earlier that we want to look at both commercial vehicles as well as off-highway equipments. Last time, in our last presentation, we talked about eight new clients with whom we have been having positive conversations. Out of them, we have started already working with four, which include. Ladies and gentlemen, thank you for patiently waiting. We have the management line reconnected, and we can continue with the Q&A session. Hello. I think when Mr. Pandit was speaking, the line got dropped, and people could not hear what he said, at least for the last five minutes. What we want to do is we want him—I mean, he will do it again, and then we can have the Q&A session. Could you hear till the end? I said thank you, operator. Hello. Can you hear us now? Yes. Yes, I can hear you now, sir. Hello. How much did you hear when I was talking last? We were going to start with the Q&A session. Did the others hear completely? Some of us did not hear that. Those of us who were kind of listening in from outside. Would you want to ask one of your listeners? I mean, I have got messages where they have said last five or six minutes, at least, they were not able to hear. All right. I told them we restart the Q&A. I mean. No, no, no. No, no, no. Wait. We will have the opening comments again. I think financials have been done. Post-financials, we'll have the opening comments again, and then we can have it open for Q&A, please. Okay. Let me start with that. Are we on? Or you are not connected? Have you connected with them? Yes, yes. We are connected on the main call, sir. You are connected on the main call? Yeah. Yeah. Hi, everyone. I understand that somewhere in the conversation, we got disconnected. What I would like to do is to bring out the points that I wanted to make. First, I covered the quarterly and the yearly financials, which I understand were heard by all. I talked about how do we see the current market opening up. As I said, in Q2, we talked about certain uncertainties. In Q3, we gave confidence regarding how things are moving. Today, we are far more clear regarding how the market is moving and how we will perform in this market. Let me talk about the broad drivers of our revenue and go a little bit deeper into that. In all our past three investor updates, we talked about three leverages that we wanted to use. One was the look at geographical adjacencies. The second was look at broader offerings to service our clients. The third one was to look at vertical adjacencies. These are the three levers that we were looking at. Coming to the first one, on geographical adjacency, we have been talking about China for quite some time. Now it seems that the picture relating to what we can do in China is getting clearer and clearer. We are seeing four possible avenues for us to work. Let me take you very quickly through the four avenues. One is that over our work in China and our partners' work in China, now we have realized what are the learnings which are from China which we can take to our global clients. We believe that that will help our global clients to do work at lower cost with better quality, more features, etc. That is one thing that we see happening, especially in the area of autonomous L2+ part as well as in the area of digital cockpit. We see our global clients can help from our work in this area. Secondly, we believe that we can help our existing OEMs to remain relevant in China, especially on account of the extra work that we have been doing, the specialized work that we have been doing in the area of architecture. That is an area where we have some definitive edge, and that is something that can be used by our global clients to operate in China. The third thing is about taking some pieces of work which has been done by Chinese OEMs and taking them global. This, of course, depends on the various political situation, but we believe that there are parts of the work that we can take from China to the global market. Last, and not the least, is helping the Chinese OEMs to work in China. This is especially in the area where we have some extremely good tools and the PTAs, etc. We see there is a possibility for us to help them. This is our first axis of operation, our first leverage. The second one has been on the additional offerings. We believe our three major offerings, namely the cost reduction, cybersecurity, and end-to-end validation, will be of relevance in the current peak period. The third thing that we talked about was the vertical adjacency. You would recollect we had talked last time that there are eight new clients with whom we are having positive conversations. Out of those eight, we have started working already on four. Out of them, two are commercial vehicles, and one is off-highway. The last one is, of course, passenger car. We are seeing growth in our vertical adjacencies. We have created specific administrative structure for that, and we are progressively seeing growth in that area. We are also beginning to see that many OEMs, especially the European OEMs, are now doing a substantial consolidation of vendors. We see that there is a possibility that we will have some piece of the cake. Clearly, because we believe that we have more expertise than most others can offer, and we would become very natural partners to these OEMs. We see this as an overall traction. If you were to look at our deal closures over the last four quarters, you would see that consistently on a quarter-on-quarter basis, they are going up. In the first quarter of this year, the deal closures were $202 million. In the second quarter, $207 million. In the third quarter, $236 million. In the last quarter, that Q4, our deal closures were $280 million. The point that we are trying to make is that we believe that this industry will continue to go for transformation. We believe that we have established our reputation as good, dependable suppliers of software integration for them. We believe that we have some extraordinary offerings for them, and this should actually see us through in the years to come. With these opening remarks, I'll be happy to—we'll be happy to take any questions from you. Over to you now. 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 touchstone 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. We will wait for a moment while the question queue assembles. The first question is from the line of Abishek Kumar from JM Financial. Please go ahead. How much is this uncertainty which has kind of stopped us? Abhishek, sorry. Abhishek, are you able to hear us? Not able to hear you from the initial—from the start. Could you just repeat your question from the start? Yeah, sure. Is this better? This is better. Thank you. Yes. Hi, good evening. My first question is on the dichotomy between the deal that we have seen building throughout the year and the decision to not give guidance. If you could just help us understand how difficult it is, what the kind of visibility we have right now getting into FY2026. Overall, as we have said, there are clear areas where we are engaging with the client. We have seen the traction. We have seen pretty reasonable results for Q4 also. At the same time, there are a lot of things which are changing currently, and we think it is in the process of settling down. I mean, for example, everybody is aware about tariffs. I think many of these areas, from that perspective, the speed at which the things will get executed is still not fully clear in the short term. While we believe it is a question of a quarter or two at the most. That is the reason—one reason is that's why we do not know how the conversion of orders into revenue will happen. At the same time, I must tell you that many of these larger deals which we have got, many of them are already in the transition phase. Many of them have started scaling up, but slowly than what we would have liked from the client perspective. The clients have been a bit cautious at this stage. All our discussions with the clients tell us that—the governments and the industry—that the trade agreements will get settled in the next three to four months. Every day, you see a better environment. With that, we believe we should be in a position to move on quickly from there. Okay. My second question is on this collaboration with Mercedes-Benz. Now, Mercedes, their strategy was to do their vehicle operating system, which was called MB.OS, if I'm not wrong, all in-house. Do you see any change in stance by Mercedes in this case and in general across OEMs who are now more open to collaborating and offshoring even their SDV programs, especially the German OEMs? Absolutely. I think we have been working with German OEMs, as you know. That's a large part of our clients too. Recently, what we have seen is there are two things they are seeing, and it is related with their local ecosystem, which has not been very cost-competitive, number one, which has been slow in some sense, the kind of work environment they have, number of hours they have, and also the way in which they have been innovating for the future. With all this together, many European OEMs are absolutely looking at how they can very quickly catch up. Naturally, we are in a specific situation where, specifically in SDV or some of these areas, we are very well entrenched. We have many platforms, many PTAs, as we call. We can accelerate this growth. From that perspective, we got engaged. You will see that from many companies in Europe so that their response can be improved. The main thing for them is typically their SDV programs have been delayed for most of them, and they want to catch up on that. Where they see the opportunity, where a company can step in and help them to do that, I think that's where now they are moving. Did I answer your question? Yeah. Hi. Sorry. Yeah. That's all from my side. Thank you so much and all the best. Thank you. The next question is from the line of Karan Uppal from Phillip Capital India. Please go ahead. Yeah. Thanks for the opportunity. The first question is again on, let's say, FY2026. Assuming there is some certainty to tariffs in the next three to four months, will that be a trigger for auto companies to start resuming the spend? Also, will that have an impact on the growth trajectory through FY2026? Absolutely so. We believe that it's not something which we will start from there. We have already started walking. We'll start running after that. I just want to be very definitive in saying this. Basically, it is not a question that we start the process from there on in terms of this. We are already in the process of most of the clients we are talking about in terms of either transitioning or getting more clearer in terms of deliver and already started in some way. The point is how quick when to scale on a large scale, which I think will happen. Okay. Thanks. Thanks for those comments. Secondly, on Mercedes deal, congratulations on that deal. I just wanted to understand the size of this engagement. Is it similar to our previously announced SDV deals like of Honda or of Renault? If you can mention the tenure of them. Yeah. Absolutely, it is the similar scope we are doing, but I think we came a little bit late. Absolutely, it is the same contour. It will be a longer-term deal. It's a multi-year deal, which we are looking at a three- to four-year deal. This engagement is there, and naturally, it's being a strategic partner for them in these areas. That's what we are looking for. Okay. Last question is on Europe. There was a sharp drop in Q4. What led to that? Also related to that is in FY2025, we saw the majority of the growth being led by Asia. In FY2026, can we expect a broad-based sort of a growth? I think if in a quarter or two anything happens, we have already mentioned that in the pipeline we have, the largest pipeline we have is from Europe. Many of these opportunities we have started are from Europe. Actually, as we have also mentioned last time, some of these engagements, like Mercedes, which is a European client, start getting reflected sometimes in Europe or outside, depending upon how it gets staged. We see that there are different opportunities in different regions, and Mr. Pandit talked about it. I think in Europe, we believe the speed to catch up is important, and we are a very well-established as well as acknowledged player in that area. The situation is in terms of how quickly they can do it, how reliably they can do it. I think from that perspective, we are in a prime position. Okay. Thanks and all the best. Thank you. Thank you. The next question is from the line of Sandeep Shah from Equirus Securities. Please go ahead. Yeah. Thanks. Thanks for the opportunity. Sir, just wanted to understand your comments indicate some growth slowness in the first half with expectation of pickup in the second half. Just wanted to understand the first-half growth on a Q-on-Q basis. You believe because of macro pressure, it could be even negative, or you believe it could be marginally positive with growth momentum to pick up in the second half? We do not talk about quarter-to-quarter growth, but it would be positive. Okay. Okay. Second, in terms of these kind of a difficult macro situation, maintaining margins could be a difficult task for the industry. How do you see the FY 2026 EBITDA margin versus FY 2025? See, what we intend to do during this year is, first thing is, you have seen that if you look at even last year, I mean, if I'm correct, most of the companies, their margins have dropped, as long as I know, almost all. For sure, before the last quarter, for sure. I think we have been in a position to maintain our margins through multiple ways, and we believe that we are in a good position to do that. There are many things. We have been focusing a lot on things such as platforms, the automation, as well as AI together. That is a much more compelling reason than a pure AI-based solution. This can give a disproportionate productivity for us, which will be great for the client and for us, both in terms of time and the quality. We believe that many of these things will help us because not only we want to, not only that we want to continue having the same margins, but we would like to invest in terms of many areas for the future and really making a transition to the new models, business models. That is why we feel that there is a good possibility for us to manage the margins while we are not giving any particular time. I would also say that during the year, as the things settle, we will certainly come back and give the outlook for the rest of the year. During this time, we intend to give at least once in quarter in between some more updates so that we keep engaged with you and you keep on getting more updates frequently. Thanks. Thanks. That would be helpful. Just a last question, Kishor Patil, in your presentation comments, you have mentioned, apart from other factors, a potential acquisition would also be one of the growth drivers for medium term. Any update on M&A versus QIP announcement, which we had two quarters back, and whether the potential M&A is at advanced stage, and will it be financed through internal accruals, debt, or through QIP proceeds? Yeah. First thing is, yes, I think we have been talking about the areas, and especially in the areas which are becoming more and more important, as Mr. Pandit talked about the cost reduction part or cybersecurity and these, where we already have the offerings, but where we really want to catapult into, again, the leaders in this area very clearly. In that aspect, we may look at we are looking at certain acquisitions also in advance stages of discussion, but till it doesn't happen, it doesn't happen. Those opportunities are there. The idea is not really for a growth, as we always say. It is about more a strategic intention. The strategic intention will be whether it is adjacency of vertical or adjacency of offerings. I think that's what we will do the acquisition for these matters. Okay. Thanks. I will come in the follow-up. All the best. Thank you. Thank you. The next question is from the line of Bhavik Mehta from JPMorgan. Please go ahead. Yeah. Thank you. So a couple of questions. Firstly, you did mention that there have been some delays in ramp-up of the projects, but have you seen any ramp-down to cancellation since the tariff announcements on 2nd April? We have seen certain projects which we were expecting not coming up, and some small way where the projects got closed, they did not continue with some of these. That has happened, but nothing on a significant scale. Okay. The second question is on the Mercedes deal. Firstly, of that application, is it part of the 2020 deal we announced for the quarter? Secondly, how should we think about the margins on this deal, given that we are working with the India R&D Center of Mercedes? I think two things I would say is this was pretty active in the last wind for the last quarter. We were transitioning in this area. We are completing the transitioning and closing those formalities. It is not a part of this. The second thing is we had covered it in the earlier quarter. Some of it was covered in the earlier quarter. The other areas, I may say that we, I mean, we have been working with India Centers earlier too. We will continue to look at the margin in a holistic way. Okay. Got it. Thank you. Thank you. The next question is from the line of Nitin Padmanabhan from Investec. Please go ahead. Yeah. Hi. Good evening. Thank you for the opportunity. I had a couple of questions, actually. The first is this quarter, we saw a decline in passenger cars, but growth was primarily driven by the other segment. Could you give some context as to what kind of work actually drove growth there? Yeah. Is it better? Yes. Now it's better. Okay. Great. Sorry. Your question was? My question was that during the quarter, we saw a sequential decline for passenger cars, and growth was largely driven by the other segment. Could you give some context on what kind of work actually drove this? Yeah. I mean, actually, it was a marginal number. We will come out. We will check it out. It should be something to do with either the commercial and off-highway or semiconductor company. We will check that. I think that's what we— Sure. That's helpful. The second is, this time, the sh are of profit from associates is around INR 14 crore. Is that from Qorix, and is this sort of a sustainable number we should think about? Yeah. Yeah. Yeah. No, I think yes, absolutely. It is from Qorix. Actually, it is from both. I think we also had a profit in entry also. It is a profit from both. In terms of Qorix, I do not think it is something sustainable. We have to look at it more on a yearly basis. It is the last order which got approved during this quarter. Can you go to a few of these because there is not much noise? Hello? I do not know why that— Thank you. I think if you look at the Qorix, every quarter, there was a certain loss during the last year, but this made it up largely for the profit. I think it is a product business, so there will be quarter-to-quarter variation. I am sure as a year, we should be in a position to do. Perfect. I hope the audio is better now. Yes. Yeah. How should we think about margins going forward? Last year, we had the ESOP costs which sort of tempered margins a bit. Do you think if you could give some context on how much of a tailwind that could be this year? No, I think we'll come out with, as I mentioned, that once there are, I would say, down the line, we would come up with a more specific number. Right now, there is nothing to assume either way. I think that's what I would just say at that point. Perfect. Just two quick questions. In the last quarter, you mentioned a 20% sequential increase in deal pipeline, and a lot of that was from Europe. How is it now post the wins that you have had? Any update on the large deals that you have spoken about in the past? All right. Listen, Europe pipeline looks solid. The two truck OEMs that Mr. Pandit talked about, they are from Europe. The passenger car OEM also happens to be from Europe. The pipeline keeps getting better. The outlook for Europe for this year remains encouraging for us. Nitin, what was your second question? The outlook for Europe and the— The second one was earlier, you mentioned a couple of large deal wins. I mean, large deals in the pipeline. How are they stacking up at the moment? Yeah, that's primarily what I have. Yes. Yes. Thank you. They're tracking really well. We do hope to have a closure on at least one of them during this quarter. They're tracking well. As the dust settles down, hopefully, there will be some acceleration in the next couple of quarters. Perfect. That's very helpful. Just one last one, if I may squeeze in, is how are you thinking about the wage increase cycle this quarter? Any thoughts on holding it back, or it should be a normal cycle in Q2? I think we are changing a lot of things in the company and the way we are working, specifically with the AI. For sure, for the year, we would have increments specifically. Those would be, if I would say, more linked with certain performance. Specifically, we want to ensure that our direction in terms of AI and overall productivity or the end-to-end solutions. How the people deliver on the overall productivity, we would have more incentive-based payments, and the fixed increments will be smaller. Perfect. That's very helpful. Thank you and all the very best. I'll get back into the queue. Thank you. Thank you. The next question is from the line of Chandramouli Muthiah from Goldman Sachs. Please go ahead. Hi. Good evening, and thank you for taking my questions. My first question is just around passenger vehicle versus off-highway and commercial vehicles. I think we have been trying to build up the business potential within commercial vehicles, given that it is a little more intelligent driving and AI-friendly. So far, the last couple of years, I think passenger vehicles have comfortably outgrown commercial vehicles. Just trying to understand over the next one to two years how you see commercial vehicle as a driver and when you see more meaningful growth potential there. From the point of view of if you see the winds some of these, I mean, we look at commercial vehicles as well as, I mean, off-highway commercial together as a segment. We do see that there will be, we have one win, a meaningful win in the more strategic win. We believe that this is something which will take off during the year. We may not have significant numbers to add, but reasonably growth in this year, we would build a base. From the next year, we will see meaningful growth is what we see as of now. Passenger car, of course, I mean, that will remain as an engine for years to come. As I have always said, we believe that there is a lot of headroom for us to grow in the passenger car. As Mr. Pandit also mentioned and Mr. Tikekar mentioned last time, we are already in discussions with multiple clients, and we are seeing a great conversion on the new clients. We have shown about the Mercedes-Benz. I think those were some of the concerns earlier, whether you will get SDV programs for the new OEMs. I must say that actually, there are many OEMs which we were not working or for the reason that they were not really driving this holistic way, this program. Many of them are coming back to us right now. From there, that's how we have started the traction in this area. Absolutely, we believe in a medium term, I mean, the passenger car vehicle growth will be always there from this year, next year, and onwards. Chandru, another way to look at it is from off-highway, we had five OEMs in mind that are of meaningful size. On the truck side, there were four OEMs. What we have done is two out of the four we have already signed up with. I think over the next several quarters, we'll start to engage with them more meaningfully. Out of the five on off-highway, we have started an engagement with one. Having said that, there are two others that we hope to start engagements with in the next quarter. In order to have a broad-based growth, which is across the three geographies and across the three verticals, I think we are setting ourselves reasonably well. We'll be able to do so during the H1 so that our growth going forward in the second half of this year and in the midterm will be more balanced across the geographies as well as across the three subverticals. Reasonable progress from that perspective. Got it. That's helpful. My second question is just around the focus on China. In the global EV market, this is the set of OEMs from China that seems to be rapidly gaining market share and entering more and more markets which are accessible to the Chinese OEMs. I think KPIT over the past couple of years has been focusing more on trying to build a bigger base and close a relationship with some of the Chinese OEMs that are growing global. Just trying to understand, are there any sort of early examples or early wins that you're able to share with us which you think can germinate into larger opportunity sets just to see over the past couple of years the efforts you've been putting, if there's any early indications of what sort of direction and trajectory this maybe more thematic shift in the global EV industry could take and benefit you? Yeah. As Mr. Pandit talked about our China strategy and what are the three, four angles which we have in terms of our China strategy. First, I must say that for sustainable growth for long term, we have to build our organization. We are in that process where we have hired people from the technology side who can bring our learning from China to here. We are building a local stronger presence who can meaningfully engage with China in China. Of course, we have moved some people from outside China to there, Chinese people who can really engage with us in terms of global OEMs. We have actually first established the structure. I may say that we have established some partnerships there at this point of time. I believe in the later part of this year, we should have something going. We are progressing on some conversations there. I would not say anything concrete beyond that. There are certain conversations which are progressing positively. The first part for us was to really create, as you know, we are not there to just go and sell. First, we have to build an organization. We have to build an offering which makes significant sense to the OEMs for the long term and strategically. That is something we have built, some of these partnerships and a conversation with the end consumers. We see that, I would say, a better confidence in penetrating in that market. Got it. That's helpful. My last question is just around pricing in the market as well as sort of profitability metrics. When I look at your EBITDA per employee, it continues to grow on a year-by-year basis. Just trying to understand from a pricing standpoint, even though the macro is a little more of a pause kind of situation at this stage, what sort of negotiations are you having on pricing? Are you able to take price hikes the way you were able to take one or two years back? Or is there maybe sort of a pause on sort of pricing trends as well? Just related to that, on the margin side, I think part of this was asked earlier. Last year, we did have meaningful ESOP headwind in spite of which I think the company was able to expand margins by a way. This year, there is much less of an ESOP headwind, and you have spoken about more offshoring. I just want to understand directionally if there is some color you are able to share on margin and pricing. Yeah. I think we look at it holistically. The way we look at it as a company, I mean, there are many things, right, we continue to invest and continue to do. One is in the people, right? Last time, like stock options, we invested quite a bit. We invested quite a bit into market expansion. We will continue during this year also to invest more meaningfully into markets. Also, we are making a meaningful investment into AI transformation. It is in terms of hiring the team, then also really building our really, as I said, AI is not by just AI because that any company can come up with. We are looking at how we can make a very automotive-specific or mobility-specific AI agents, platform tools, and along with our accelerator, it creates end-to-end solutions. We would like to accelerate that part of the journey also during this year. Of course, to your point, in some customers, we have got to increment increase rates in some customers. Of course, there are clients which are coming back for a better cost-effective solution. Currently, our approach is take this opportunity to change the business model and really find a better way to give them benefits as well as maintain the margin, if not increase it. Right now, that is what we have been doing. To answer your question, we'll take a whole we will manage our margins based on the KPI we have and where we are making the investments. That's what I would put it. Got it. That's very helpful. Thank you very much and all the best. Thank you. Thank you. Thank you. The next question comes from the line of Ruchi Mukhija from ICICI Securities. Please go ahead. Good evening. Thank you for the opportunity. Most of the questions have been answered. Just to double-click on China strategy, do you think localization, partnership ecosystem, and special solutioning, will it have some implication on margin for KPIT? I mean, how flexible we are if it requires some balance sheet commitment to build a China-scale business for us? I mean, it will be a part of our KPIs I talked about, right? We'll develop, invest in the market. China will continue to, it's a little longer game. I think we believe that we should be in a, as in any market, like including India, we have been in a position to have reasonable margins. It's something we have to do. I think I must say that with AI, we believe more confident, actually, with the overall platforms and solutions we are beginning to compete in any market. I think I won't say that whether it is accurate margin for this or that, but right now, it will be it's a little medium-term game, at least in China, but it's very strategic. We will continue to do that, and we'll find our way to improve the margins. Got it. In the presentation prepared, comments mentioned that transformative largely we expect to contribute revenue in H2. Just to clarify here, are the ramp-up timeline have been planned like that, or because of the tariff situation, this is some delay that we anticipate? I think we believe these two or three bigger opportunities which we have, it's nothing planned or this, but I think some of these, as I mentioned earlier, we have already started in some small way. I think it will take some time to scale during this part. That is one part. A couple of things, I think they are in that natural process, they will realize that around that time. Okay. Last bit, a more accounting one. The profit from JV INR 14 crore, we repeat, we did mention that there will be some fluctuation around the Qorix. Can you give some broad sense? Are we confident that the next year we will net positive for the year, or still we are in the experiment phase and there could be negative or losses in the JV effort? There could be, like Mr. Patil mentioned earlier, there will be quarter-on-quarter variation because it's a product company, Qorix itself. We do believe that in coming times, in medium term, it will be positive. Cannot say right now whether it will be one year or two years. Understood. Thank you for patiently answering. All the best. Thank you. Thank you. The next question is from the line of Ankur Pant from IIFL. Please go ahead. Hi. Good evening, sir. Thank you for the opportunity. I have a few questions. First is Asia has been a key growth driver for us over the last several quarters. Post the tariff announcements, have you seen more caution in your clients in Asia as well, which might lead to some tapering in growth in 1H? How have the conversations changed there? Asia is a fairly broad market. We look at Asia as Japan, Korea, one bucket, China one bucket, and India one bucket. What we are trying to do is we want to have more broad-based growth in Asia from passenger cars as well as trucks. I think the efforts are on. As Mr. Patil mentioned earlier on, I think quarter-on-quarter, there will be fluctuations, but year-on-year, we will continue to see growth coming from Asia. In fact, we do hope that this year, the growth will be broad-based in the sense that all three geographies will be firing in the same direction. At a high level, maybe if I may add, India will be a growth market. We see a reasonable growth in India. I mean, China has been a small part, so we will see at least something positive there than what it was last year. Japan will be also positive. Korea is probably flattish as of now, and we'll see where it goes. There are other markets in Asia where we see some growth opportunities, and that we expect to grow during this year. Sure. Talking about these geographies, how is the demand environment? If you could just elaborate in brief, different in U.S. versus Europe, for example. Asia you have already explained. How are clients thinking differently in U.S. and Europe? I'll generalize for each of the geographies. We just talked about Asia, and we also talked about Europe earlier on. There are German OEMs who are trying to, they know what they want. They're trying to consolidate business, and they're looking for a partner who'll sort of help them accelerate some of these programs. As Mr. Pandit explained earlier on, we are in a pole position to capture growth from them. As far as the U.S. is concerned, we've started an engagement with a new OEM in the U.S., which is a good thing for us. We believe that we'll grow, we'll have substantial growth from that particular passenger car OEM in the U.S.. The existing OEMs that we have, both on passenger car as well as trucks, will have growth. Having said that, we do hope to have more growth coming in the U.S. from off-highway. There are two or three really large off-highway players. We've started an engagement with one of them this year. We do believe that growth in the U.S. will also come back. It's just that it'll be broad-based. It'll be across passenger car, off-highway, and trucks for the U.S. Whereas in Europe, it's going to be mostly passenger cars and trucks. Asia primarily will be passenger cars supported by trucks in some ways, if that's helpful in any way. Yeah. Yeah. Yeah. Definitely. Another question is, now there is heightened uncertainty. Are there any specific types of programs that you are seeing delayed and any specific types of projects which you are seeing that are going as planned and specific programs which are getting delayed? Just wanted some color around what kind of programs are being delayed. I will start for this, and then maybe Anup can talk about it. I think, as we mentioned, most of the OEMs are closer to production program for their new production program in next year and year after. This is a very important stage for the integration. Many OEMs are lacking behind. That is where we have a very differentiated solution to help them. Maybe Anup, you can elaborate on this. Yeah. Typically, the programs for the OEM fall in multiple categories which are going from urgent to important. The current programs which basically deal with the next release of vehicles, right, the startup production, are the most critical ones. They are urgent and important both. Subsequently, after that, there is a new platform development or a new next-generation platform which is critical. After that, any R&D or proof of concepts activities that are important. I think if you look at when you look at tightening of situations, some of these further in the timeline activities start falling into discretionary activities, and they start getting tuned. They're not necessarily canceled, but they start getting tuned in terms of temperament, what to do now, what to do later, two quarters later, etc. I think all the programs that were taken in the last generation will basically hit production, some in the current year, some in the next year, and some year after that. From a calendar year, 2025, 2026, and 2027, many of the current programs will get delivered. As time goes by, as the production dates get closer, the programs also start getting into challenges from an integration perspective. That is where normally, because we have domain as well as technology expertise, and we bring to the table the full solutions, we start getting engaged also significantly, even at those stages, even at the last stages of the delivery. I think more or less, this is the explanation. From that perspective, validation is an area where we see significant growth and integration, which will happen. We believe we have a very differentiated solution which we can take to many clients and take the full ownership of this program. That is the area of growth we see. The other areas of growth Mr. Pandit talked about in terms of both autonomous and digital cockpit area, which are critical apart from the cybersecurity. These are the areas which will be more important. I must say that some of the smaller discretionary expenses will go down, but these are the areas which companies will double down. Finally, one last question from my side is that a couple of quarters back, you had highlighted that there is the clients want increased offshoring. Are you still seeing that happen? Would that be a margin we are going into next year? What about the revenue depletion impact on them? Absolutely. It's one of the areas when we are moving towards fixed price. There are many areas how we can do it. In many areas, we can do that. It depends upon the stage of the program. I mean, if we take a very large program initially, you will have to deliver at least have some people on site, but in six to eight months, we can move them offshore. That is what has happened even in the past. Most of the time, we do believe that people are open for a large-scale, cost-effective solution. We want to move as we always, we move away from on-site or offshore, but we are in a position to put a model based on productivity, offshoring our PTA, as we call, platform tools, accelerators. Based on that, give a cost-effective solution. Would there be any revenue depletion from that? We did call that out last year. Yeah. Yeah. From that perspective, if you look at it, I think in case of our current engagement, I think there will be marginal, if at all, it happens over the period. Hopefully, we are taking more work from the OEMs from that perspective. That is not something we believe. In the new wheels or new clients which we are taking, as we mentioned, we are trying to take away from the Europeans or local companies. Perfect. Thank you very much. All the best for a successful FY2026. Thank you. Thank you. Thank you. The next question and the last question is from the line of Bharat Shah from ASK Investment Managers Ltd. Please go ahead. Yeah. This is less on KPIT, but broadly in what is happening in the world in the automobile arena. When we, at least the impression I get is when I look at what is happening in China, especially on the passenger vehicle side, it is the explosion of innovation at a scale. I mean, number of new products, different features, variety, kind of stylizing, and customer choices. There is such a dramatic proliferation which has occurred in a relatively short period of time. Europe, like most things in life, Europe is behind by a big margin. America also, barring Tesla, to an extent that innovation is not to be had. Even Japan seems to be really behind. Given the kind of context of that industry, if I'm right in my judgment, what it means is despite the highly questionable trade practices and commercial behavior of China, it will raise the heck of other countries into some areas like we are witnessing. That kind of innovation can kind of damage the brand equity. I mean, Mercedes is driving ahead of a lot of prides but offering inferior features. When brand equity gets reported very high, far more this vehicle with so many features that Mercedes simply doesn't offer, don't you think that kind of risk seems to be around and given your business being predominantly in these geographies? You are right in your observations about how China has significantly changed the whole scope in the last years. I agree that it has taken all other OEMs by complete surprise. It is also true that the rest of the countries are putting up kind of temporary trade barriers. Europe has done that. America is talking that, etc. I mean, that cannot be a long-term solution because the customers would like to have good products. Of course, the Chinese OEMs can open their operations in multiple locations and, so to say, get around these legal barriers. The fact of the matter is that now that these extraordinary new offerings which have come from China are now being seen by the European and American OEMs, they are in a rush to make sure that they catch up. The China cost, the China quality, the China speed is kind of becoming like a mantra with the remaining OEMs. We really do see a tremendous potential in that. In the original remark, in the opening remark that I made, I talked about taking learnings from China and taking them to our global clients. This is what we exactly meant. As Mr. Patil mentioned, this whole caracle about the tariffs, etc., between U.S. and China may kind of unwind over a period of time. That is the time that the American OEMs will try to see how they can use that time to kind of match up. We really do see opportunity in that area. I mean, the way we look at it is that in this whole bargain, the consumers are getting a better deal, which is how things should be. We should be like the catalyst for making that happen. To us, it's a very good opportunity for growth. No, I understand. You try even when your customers are in trouble because otherwise they survive at least at a stake and therefore they will need to invest. If your customers or primary customers are usually behind the curve, does it not affect you over a period of time that also makes you behind the curve at some stage? No, not. I mean, good question. A couple of things. It is not safe to assume that the Chinese OEMs are ahead of the remaining and ahead of us in every department of software. I believe that we are good in architecture, and that's something that I mentioned earlier we could possibly take to China. There are some areas like we talked about the autonomous. These are the areas where the Chinese have done well because of the extraordinary amount of data that is available to them, which is not available elsewhere. Some strengths that they have got are the strengths that they have got from their environment. That does not in any way put us as KPIT kind of behind. From customer's point of view, it is those features, the dramatic kind of new offerings which customers may not have even thought about. I mean, auto parking, vehicles, parking for vehicles. No, none of these offerings are what customers did not think about. These are the offerings available also in some cars outside of China. It is not such a sweeping difference between China and the rest of the world as is sometimes felt. There are avenues where they are good. We talked about that, like the digital cockpit and some part of autonomous. That is where they are ahead. It is not an insurmountable lead. I see. Where are Chinese behind, if there is any? Architecture, I mentioned cybersecurity. Cybersecurity. Again, China leadership right now is China OEMs for China. This is where they are dominating. From world, of course, they are getting in different countries, but it is just an insignificant amount in terms of number of vehicles, even though they are going up. The concerns that the global consumers have about Chinese vehicles, they work really well in China because some of the reasons that Mr. Pandit talked about, it will take quite some time for them to localize them for each of the countries in which they need to operate. Also, after-sales has been, so A, the quality of the vehicle and the offerings, and B, the after-sales and dealer network. That is also something that the traditional OEMs have very well established. As Mr. Pandit said, it's not everything lost. The way we see it is Tesla disrupted everybody, and then Chinese caught on. They're disrupted. Chinese learned from Tesla, will learn from China, and so will the global OEMs, right? I think that it's a great wake-up call and opportunity for everybody to sort of get their act together and move on. No, I appreciate it. That means even though Europe remains somewhat leaders-driven and sleepy in general, you still believe it is not a lost cause. No, no, no. I think everybody's woken up now. I don't think. On a parting note, I must say I was very impressed with the current Mahindra vehicle line. I think it gives me hope that in a few years, India will have vehicles which can compete with China. Yes. Yes. Now, on that good note, thank you so much. Thank you. Thank you very much. Thank you. Okay. Thank you. Do we close with that? Hello. Hello. Thank you. Ladies and gentlemen, with this, we conclude the Q&A session, and I now hand the conference over to the management for the closing comments. Thank you very much. We appreciate your participation on the call, and have a great evening. Bye-bye. Thank you. Bye-bye. On behalf of Dolat Capital Markets Private Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.