Ladies and gentlemen, good day and welcome to Sandhar Technologies Limited Q2 FY 2026 earnings conference call. 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 touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Chirag Jain, from Emkay Global Financial Services Limited. Thank you, and over to you, sir. Thank you, Hamshad. Good morning, everyone. On behalf of Emkay Global Financial Services, I would like to welcome you all to the Q2 FY 2026 earnings conference call of Sandhar Technologies Limited. Today, we have with us from the management team, Mr. Jayant Davar, Chairman, Managing Director, and CEO, Mr. Neel Jay Davar, Director, Mr. Gurvinder Jeet Singh, Whole Time Director and Head of Corporate Strategy, and Mr. Yashpal Jain, Chief Financial Officer and Company Secretary. We'll begin the call with opening comments from the management team, followed by a Q&A session. Over to you, Mr. Davar. Thank you, Chirag, and thank you, Hamshad, for putting this call together. Thank you to all the investors who've joined early this morning. Let me begin by, first of all, saying that the auto industry, the domestic auto industry, grew by about 6.1% in Q2 of 2026, out of which the two-wheeler segment has grown by 7.4%. The passenger vehicle segment actually witnessed a degrowth of 1.5%. In terms of how Sandhar has built on this, if you look at—I am going to divide this into three different parts. One is the Sandhar India business growth, where our revenue from operations has grown by 33%. The operational EBITDA grew by 24%. Operational EBIT grew by 33%, and operational PAT grew by 28%. In terms of our overseas business, if I look at it from quarter to quarter, the revenue of operations grew by 2%. Operational EBITDA is down by 12%. Operational EBIT is down by 29%. You have to keep into context this was actually, as I had mentioned in the previous calls in the last quarter, if you compare it on a quarter-one basis, our losses have dropped by half. We are very, very confident that the next half of the year will bring it back on its own two feet the way we had promised it would be. If you look at Sandhar's consolidated business growth, our revenue from operations grew by 29%, operational EBITDA by 19%, EBIT by 32%, and operational PAT by 15%. In terms of our joint ventures, I'm very happy to announce, as I had in the past as well, all the five joint ventures have performed satisfactorily, registering a revenue of 68.57%. This is, of course, calculated on the basis of 50% of our partnership. All of them are now PAT positive, and they are on a strong growth and recovery path. We are constantly watching the performance and taking all necessary steps in collaboration with our joint venture partners to sustain growth and profitability. In terms of EVs, the company started commercial invoicing of battery chargers and motor controllers, while the pilot lot of DC-DC converters is getting positive response from the market. The customer base is gradually increasing, with more customers being added, and we generated a revenue of INR 6.4 crore in the first half of the current financial year. We expect to do a business of around INR 15 crore for this financial year. What I am also happy to announce is that the auto industry, per se, seems to be on a good thread right now. I do believe that the second half of the year, as always, will be stronger. The lucky thing is that even in the case of December, November, and December, because of the festive season, the elongated festive season, our order books are extremely strong. We do expect a strong third quarter and, of course, as always, a very, very strong Q4. With that, let me open it up for questions. We have on the call, like Chirag mentioned, we have GJ, Neel, and Mr. Yashpal Jain, our CFO, who will answer all your questions from the financial perspective in a more detailed manner than I possibly can. Thank you. With that, I'm open to questions and answers. Thank you all very much once again for joining. Thank you very much. We will now begin the question- and- answer session. Anyone who wishes to ask a question may press star and one on their 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. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of A.M. Lodha from Sanmati Consultant. Please go ahead. Hello. Am I audible, sir? Hello? Yes, you're audible. You're audible, Mr. Lodha. Sir, my question is that, sir, first half, you kindly refer to your presentation table number five. First half says grown from 25%, 24% from INR 1,896 crore to INR 2,360 crore, whereas EBITDA has been down from 9.7% to 8.5%. The PAT also down. EBITDA has down from 9.7% to 8.5%. The PAT also down from 3.2% to 2.3%. In spite of increase in sales by 24%, what may be the reason for the fall in EBITDA and PAT percentage? Okay. Thank you, Mr. Lodha, for that question. I'm glad you asked that question. If I compare Q2 of 2026 with Q2 of 2025, there are some exceptional items. One is the impact of the new projects. You know that we had bought over the unit of Sundaram-Clayton, and we had put up Pune and South India new projects, which have resulted in a negative case scenario or impact of 8.07% on our EBITDA margins. The other thing is the machining business, which also cost us INR 3.14 crore. In all, the total impact on the profitability has been INR 11.21 crore. If you were to normalize this, sir, then our EBITDA margin is 10.44% compared to what you see. If I look at it, the new businesses of you are aware that Sundaram-Clayton is the business which we've just taken over. We are in the process of moving it into our new facility. Obviously, it is not generating a normalized EBITDA as of right now. Also, another thing I want to—you mentioned half years, which is H1. H1, sir, you know that the first quarter was extremely tough on us, but the second quarter has been relatively much stronger. The H1 figures are only taking into account the impact of that first quarter, which is being generated into the second quarter as well in terms of when you compare it from H1 to H1. Those are my comments, sir. I'm happy to take on any supplementary questions in this regard. In this continuing discussion, sir, but in second quarter, in second quarter, you had other income of that INR 34 crore, total INR 45-something crore other income. No, no, no, Lodha. I meant that you elevated your EBITDA to 10%. Not actually—. No, sir. Our EBITDA—see, I'm talking of the India business normalized revenue. Our normalized India business revenue is INR 1,153 crore versus INR 868 crore in Q2 versus Q2. Operational EBITDA is INR 109 crore versus INR 84 crore, which is 9.47% versus 10.06%. If I was to look at this, then the EBITDA margin is exactly the same as 5.5% - 5.5%. If I look at the impact that I gave you of 11.21%, our EBITDA is 10.44% versus 10.16%, in fact, higher than the Q2 of 2025. I'll ask Yashpal Ji to please explain this a little Yashpal Ji, if you can come in and explain this, please. Sure, sir. Good morning, sir. Basically, may I answer the question? Other income, sir, while doing the presentation for investors, we have not included other income for calculating the effective EBITDA and margins, sir. Although in the published accounts, it is together because the CB format is combined on the total PAT level and EBITDA level. The reason, the exact reason for the downfall is because of the INR 11.21 crores that we have analyzed, and that is out of the five major projects internally that we identified. Out of them, three are totally new projects, sir, relating to two of them for the die casting and one for the sheet metal one, which are going to turn around from April 2026. Before that, they will continue with the same, I would say, margin base. Yes, Q2 would be better for them, and we are reviewing them. Q3 and half year two, they are going to be better compared to this half one and Q2 of the current year. We have not included the same into calculations. We have removed. If you see slide number four of our investor presentation, there we have shown on the top side of the left-hand side is operational performance, then there is other income breakup. If you add together both of them, they will simply tell you with the results that we have submitted to the stock exchanges. Right side is the major reasons why we have seen a downfall in the margins, sir. We have just tried to reflect that these are the five projects which are hitting. Had they not been in the place, we would have been on the same trajectory that we—I mean, at the beginning of the year that we have presented before the investor community. Yeah. Lodha, I think Yashpal Ji has explained it. We have not taken those extraordinary incomes into the presentations that have been given. We have only taken the operational, sir, for clarity for all of you. Thank you. That's the reason in the slide number five, also the margins are shown as down with a red marker. Thank you. The next question is from the line of Abhishek Kumar Jain from AlfAccurate. Please go ahead. Thanks for the opportunity and congrats for a strong set of numbers, sir. Sir, in overseas business, we have seen a very strong recovery in this quarter despite that muted growth in the top line. If you can throw some light on what are the reasons behind this, and the second, how the growth will start to come in overseas business. Can you repeat that question? One second. [Dubaara bataengi ji]. Sir, my question is on that overseas business. What is the reason for the expansion in the margin in the quarter-on-quarter basis? What would be the key growth levers in the top line growth in the coming quarter? Okay. My quick answers to this is one, the European market had gone down dramatically. It had become very volatile with whatever was happening with the Trump administrations and the overall industry going down. Europe was actually losing its orders. We, in the meantime, got orders for newer products. Those have started to ramp up, and we are very, very hopeful that the second half of the year, while we put a major control on our expenses in Q2 compared to Q1, we do believe that now, with that having been taken care of both in terms of financial costs and operational costs, where optimization has been brought in, with new orders kicking in and production starts, we do believe that, as we had said, we will try and remove the losses that we've had so far in the second part of the year. Yashpal Ji, you want to come in and add something to this? Yes, sir. So Abhishek, like as we discussed in the earlier quarters during the con call that we are striving our best to turn around the overseas operations. If you see the slide number six of the investor presentation, we have given a comparison of the four quarters, starting with Q2 of FY 2025, which happens to be the corresponding quarter. Although you can see a downfall in the revenue, if you see the margins, they are substantially improving compared to Q1 of the current year. I think Q3 and Q4 will be more better because, as sir has told, the operational cost also we have tried to plug in, as well as the financial decisions, some of the new financial decisions we have taken, which will effectively bring down the borrowing cost also. Okay. Got it. Sir, in this quarter, we have seen very high employee expenses. What are the key reasons for that? Is there any one-offs in the employee expenses? Can you repeat? Employee? Expenses. Employee expenses are very high. Is there any one-offs in employee expenses? Actually, the increments of the staff were finalized during this quarter. Although we have been taking provisions in the first quarter itself, but you know when the actual increments are finalized, then only we are in a position to know what has been the actual cost. And secondly, if you see, this time we had an all-time high production also in the revenue in terms of our core businesses like the die casting and the sheet metal, which happens to be a capital as well as labor-intensive in some reasons. That is the reason the cost of labor has also gone up because we have to supply, and there was all of a sudden demand from the customer side. The more manpower was deployed, and the machines were also running for all the three shifts in many of the months. That is the reason. Otherwise, it's going to be normalized in the coming Q3. Yes, the increments were finalized in Q2. Always there is a gap between the actual performance based on the provisioning that we are carrying in the books. Okay. Got it. The depreciation has gone down in this quarter versus the last quarter. What is the reason of the fall in the depreciation? Yes. Exactly. If you remember, like we have said in earlier calls also, we regularly revisit our depreciation policy and the effective life of the assets. The reasons like the intangibles, etc., which we have projected earlier, now they have started going out of the books in the sense they have depreciated to the full extent. That is the reason in the coming period of time that depreciation will be in the similar pattern. Initially, we have provided higher because we assumed because normally for intangibles, we amortize over a period of three to five years depending on their effectiveness and the product penetration in the market. Gradually, once the intangibles are written off, the depreciation will be in the normal course. That is the reason. We are regularly revisiting the effective life of the assets in consultation with the technical valuers and the statutory auditors. Based on that, we are reevaluating the life of the assets. That's the only change. Apart from that, it continues to be the same. Got it. Sir, in the ADC revenue growth in this quarter, that remains strong in the domestic side. How is the revenue trajectory of the Sundaram-Clayton? Basically, what is the EBITDA margin in this quarter and how will that margin improve in the coming quarter? Like Abhishek, if you see the ADC share has gone up even in the overseas and domestic. Overseas, if we negate from the half year, the last remains to be the domestic share. Roughly in this quarter, the ADC business has been above 32%, right? Which includes a revenue of INR 198 crore from Sundaram-Clayton business. Despite that, India business standalone in Q2 has given INR 177 crore of revenue to us, which is up versus INR 130 crore in the corresponding Q2 of FY2025. This growth will continue to come as we expand our lines. As for the margin profile, the Sundaram business has given us a margin of 4.48% only for the half year. It was near to 5% for Q2, which means an improvement over Q1. As we shared our plans earlier, like along with the machining, we expect something 11-12%. In terms of SCAS, the margins are expected to be around 9.5%-1 0.15%. That's all. So basically, INR 198 crores in the first half or in the second quarter? It is a half year. INR 198 crore is half year. So second quarter is INR 102 crore. Remaining was Q1. But the margins have improved. We are close to 5% in Q2 for the Sundaram business. Okay. How will the margin in the coming quarter? Coming quarter, we had a discussion with the business head. Yes, the relocation cost of the plant will also be coming in the coming half year. Also, our premises rental will be coming up. Our new premises are a much bigger one compared to the existing because a new set of machines are going to be deployed. This year, we expected to be around 5%. Yes, from next year onwards, as the business team has indicated, they will be going back to around 9% or something so that we are generating from other businesses, other parallel businesses. Thank you, sir. That's all from my side. Thank you. Thank you. The next question is from the line of Sailesh Raja from B&K Securities. Please go ahead. Yeah. Thanks for the opportunity. This quarter, on the absolute amount basis, we witnessed a significant drop in assembly business on both YoY and QoQ. Is there any reclassification here or any other reason for dropping sales? Assembly business, Salesh? Yeah, yeah. Correct. Yes, sir. Yeah. So assembly business, if you recall, we are into the spokes wheel. We are not into the alloy wheels. And one of the reasons is that the premium segment is now being replaced by the alloy wheels. So there's no much reclassification. It continues to be the same. If we see the assemblies volume in half year against 10.5%, it is 9.6%, right, sir? That's what we have. Yeah. So it's a normal 1% something down, 0.9%, I would say, because. This amount, it has come down a lot, actually. If you. Yeah. Absolutely. It has come down a lot. Yeah. Last quarter, it was INR 104 crore. Now, this quarter, it is INR 64 crore. Exactly. We have not done any reclassification because, like you say, if you see the assembly business, major of the components are coming from the customer side itself. While everything is dependent on how the volume will be performing, otherwise, I mean, with the passage of time, the spokes will be largely replaced by the alloy wheels in the coming period of time. As of now, the mopeds and some segment of the bikes are being run on the spokes wheel. That is the reason it is going down. Nevertheless, we are not idle space because we have combined the assembly and sheet metal businesses. Everything will be, I would say, adjusted with the sheet metal business in place of assembly business in the coming period of time. Okay, okay. Sir. For the past year, we have been waiting for quarterly revenue run rate to reach around INR 1,200 crore, and we have touched that number. If you see, the margins only, again, bottom line, still we have not achieved it with this high scale. Still, we have not crossed 10%. Can you help us understand what specific costs continue to crop up, and by when should we expect the margins to improve meaningfully? You are saying there will be a rental cost. Some of the costs are coming, keep cropping up. Can you please explain on that by when we can start seeing 11% EBITDA that we have guided earlier? Also, can you please discuss about the overseas business? Which geography is currently dragging the overall performance, and what are all the measures we are taking to turn around the operation? Also, recently, I came across an article highlighting a sharp increase in power cost in Romania. How is the company planning to mitigate these challenges and start supporting 11%+ of EBITDA at this INR 1,200+ crore top line. Y eah, sir, can sir, you want to answer something? No, no. I just want to answer. I am not going to answer on the numbers. I think Mr. Raja would you would be able to answer the numbers better. I just wanted to give the supplement of a comment that was made in Romania and for the overseas business. The overseas business, Mr. Raja, is now in a mode of consolidation. I don't know where we've got this information about power costs going up in Romania. Actually, the European power costs have started to come down. During the time of the pandemic and post that, power costs had gone up dramatically. In fact, gas costs had gone up 800%, especially with the war between Russia and Ukraine. Gradually, it started to come down. It is still not at the levels at what was there before the war, but it has come down dramatically. The cost of operations in Romania are lower than those in Spain by a significant margin. We do want to take advantage of the new facility that has been set up there. You are aware that the regular production there also got suffered on account of the war. I think the worst is behind us. It has now been established gradually. By the month, Romania is going up. We are trying to shift some business. In fact, some of the new projects that are coming into the overseas business are being routed through Romania. It is on that basis that we do believe that margins will go up as was projected. In fact, if you look at our overseas business in the past, our margins there are higher than those of the Indian business. They were at about 12.5%-13% at that. We expect those margins to come back very, very shortly. I do not see the margins are going to be an issue. The European business, you also have to consider the fact that with the depreciation of the rupee and the euro becoming stronger, we have had translation losses. When the overall business is in a loss, in the Indian context and in translation to the Indian rupee, that has a double whammy impact. That is what has happened. Going forward, I do believe that the overseas business will come back to its normal feet. We are very, very hopeful that in the second half of the year, we will be able to mitigate any losses that have been there in the previous quarters. That is the impact on the margins in the overseas business. In terms of the Indian business, you did mention, but I think if you actually calculate the Indian business on a normalized revenue, then on an EBITDA platform, we are exactly the same margin as we were in Q2 of financial year 2025. If you were to add to it the impact on profit on account of the new business that has been taken in, which is the Sundaram-Clayton business and two new plants in Pune and South India, we are actually at a margin of 10.44% versus 10.16%, which was there in the last year. If you ask me, we are on a very, very healthy scenario. Now, obviously, growth sometimes does mitigate and take away some of the margin growth, and that has happened with the growth coming in from the acquisition. Whereas Mr. Yashpal Ji said our margins are about 4.5% right now, we do believe by the end of the year, despite the rentals and despite all of that, and during the year translation and transition that has happened, we will still end up at 4.5%-5%. From next year onwards, we will go back to being a normalized die-casting business that we run with margins in the other businesses that we have. We are very hopeful and very happy that things will normalize very, very quickly. Therefore, that's the reason we have subjugated and have given you a feed on the normalized versus the revenue that would have been impacted or affected otherwise. I hope that answers your question. Y es, sir. Clear, sir. Very clear, sir. Sir, actually, with improvement in second half in India business, margin improvement, and also you are guiding overseas, also there will be improvement in margins. By year-end, what ROC that you are targeting, sir, this year and next year? Sir, again, in terms of ROC, yes, yes, yes. You asked me about the ROC. If you look at, sir, the India business, if you look at as of 30 September, if I was to look at adjusted capital employed in ROCE, we are on an annualized number this year at 16.09%. Now, this is compared to 15.5% of last year. We have given a call, and we have mentioned in the past that our aspiration is to reach a level of 18% as soon as possible. We are working hard, and that is our target. Yashpal Ji, you want to say more on this? Absolutely, sir. I echo what you have said because initially, in the first phase, we have given a target of 15% going to 18%. This will be pre-tax and subsequently for the post-tax one, sir. So bearing three projects, as we discussed earlier, also two of the die-casting businesses and one of the Cabins and Fabrication, these three are the new projects which are giving us a little tough time this year. As we have discussed with the business team, they are expecting to start full production in this by April 2026. In the Pune die-casting, we have received now the customer consent also. From next year, April, the volumes will gradually start. That is the reason this new business, which is dragging us down, would again be in the same profit trajectory. Hopefully, we will be able to achieve what we have promised to the market. Okay, okay. Great, sir. Thank you, sir. All the best. Thank you, Salesh Ji. Thank you. Thank you. The next question is from the line of Rajit Aggarwal from Nilgiri Investment Managers. Please go ahead. Good morning, sir. Congratulations for a good set of results in this tough environment. I have a few questions, some of the questions pertain to some of the things we discussed in the Q1 call. One was we had mentioned that the smart locks production will begin in Q2. Has that started, and what is the kind of volumes we are seeing there? Okay. Smart locks have started, sir. The volumes are small. We did get a review from some of the customers. We have two main customers. One project has been delayed a little bit, so they are in a stage where we've shipped out some. We do expect that the last quarter, there will be a little bit of smoothening of operations there where we will be supplying smart locks more on a daily basis than a weekly kind of basis, which is being done now. Yes, to answer your question, yes, we've started smart locks already. Okay. Wonderful, sir. We had taken an approval for a QIP of INR 500 crore. Can you update the status? In the same context, there is a news of a sheet metal fabrication company being put up for acquisition. It's an Italian group. I don't know if you have heard of it, but are we considering any such possibility in the near future? You know, Rajit, all I want to say here is that there are various opportunities that are brought up on the table. We are much more careful with any kind of inorganic growth. We would want to pursue it. In fact, the point that you mentioned, the QIP was to be kept as a watch list in case any such opportunities were to arise. We still have not finalized on any so far. There are several that one keeps on looking. We are very, very mindful that any inorganic growth that we consider, whether from M&A or from any new projects, has the potential in the medium term to be able to reward the stakeholders with an appropriate return on capital employed. I think, Yashpal Ji, you also mentioned that we are looking at an 18% pre-tax to begin with and then post-tax return to the shareholder. Keeping that in mind, if we come across opportunities where we can deliver and it's a part of our strategy and core competence, we will go ahead for that. At this point of time, I do not have anything to report. As and when, if something were to come about, obviously, you will be amongst all the investors who will be the first ones to know. Wonderful, sir. Thank you. May I ask a few more questions? If you call back in the... Yes, yes. Yeah, okay. Do we have HMSI as a customer, and what is their share of business? How has the performance been of that business in Q2? Rajit, you are aware that a few years ago, HMSI was not a part of the business, was not a customer, largely on account of the fact that we were at one point of time associated as being a hero supplier, and there were some tensions between the two of them. For the past few years, we've started business. We have now started in every category of their supply and what we hold a core competence in. Whether it is sheet metal, whether it is castings, whether it is locks, whether it is mirrors, we are in all those businesses now. You are aware that the latest technologies in terms of smart locks and so on have been awarded to us. They have become a strong customer for us. Going forward, I do believe that that number or the percentage of our revenue will grow dramatically with HMSI. In front of me, I do not know if Yashpal Ji has a number of what percentage we do right now, but it has been growing constantly, and it has been growing quite aggressively. There are some new projects that are starting with HMSI as we speak. In fact, HMSI also is a customer for our helmets. They cover a large part of the dimensions of all that we do. Yashpal Ji, if you have the number of percentages of what we did last year... Yeah, for current quarter, I mean, quarter two, the HMSI share is 4.2%. And for half year also, it is 4.2%. Whereas in the corresponding year, it was 3.7%. So half a percent we have gained. But as Faresh said, the new projects are in the pipeline. In the coming period of time, especially in the FY 2026-2027, the HMSI share will go up with the new products giving us a revenue. Rajit, just to answer that and add to this, it was 3.7%; it is 4.2%. If you look at pure revenue, obviously, that number is much higher on account of the fact that the overall company has grown by 30%. If the 30% growth in the company means 3.7% - 4.2%, adds and supplements to even that growth that has happened. I hope you understand that, right? Right, absolutely. Thank you, sir. Just one clarification on Sundaram-Clayton's numbers. Last quarter, I think during the call, it was mentioned we did INR 103 crore of sales. This quarter is the same. Is it correct, or did I get the numbers wrong? Yashpal Ji, can you answer that? Yeah, I'll just answer, sir. So Sundaram-Clayton, the effective sale is now INR 198 crore for the half year round. Yeah, it was around INR 95 crore last quarter, INR 102, INR 103 roughly, I mean 92.5% and 102.5%. This is how the breakup is quarter one and quarter two between. Okay, okay. I think there was some miscommunication in the Q1 numbers. Maybe I'll get back to you on that. This last quarter... Yeah, no issues. Have you added any customer in Europe in the last one or two quarters? Any new customers? Yeah, in the new, I mean, there's a process to add a customer like RFQs and the quotes, etc. That process started. There are four or five new customers coming in the pipeline. As Faresh also answered previously in this session, we are going to see a new customer base also. Starting might be quarter four of our financial year and quarter one of their financial year, which is effective January 2026. Okay, okay. Wonderful. Thank you, sir. Thank you. Thank you. The next question is from the line of Chirag Jain from Emkay Global Financial Services Limited. Please go ahead. Yeah, sir, just a few questions. I think you did touch upon the JV performance, which has improved significantly over the past few years. Any thoughts you want to share in terms of over the next two, three years, how we should see all JVs put together, or maybe any one or two JVs which you would like to highlight in terms of, let's say, which can contribute significantly? As of now, I think PAT contribution is about 6% - 7% in terms of our overall contribution. How do we see, let's say, over the next two, three years, JVs doing for us in terms of numbers? Chirag, thank you for that question. It's a good question in terms of JV performance. Obviously, the JV revenues don't show up in a consolidation or in standalone, and therefore we report it separately. See, JVs are a way for us to keep relevant in terms of newer technologies. It keeps us in the international domain of customers who want to buy and set up things in India where we become their local suppliers of sorts. That is the large intent. What we are interested in is that the operations of these JVs give a good return in terms of aggregate to the investments that have been put in. If you look at it from a perspective of return on capital employed, if you look at it in terms of return on equity, of course, the capital employed has become larger with the previous losses. Going forward, like I said, all our joint ventures are profitable. Each one of them gives us an opportunity of breaking into newer technologies that are still not being used in India. As and when they become a significant part of the component pack in India, we would be way ahead with our joint venture partners to be able to offer it to the industry. There is a strategic intent to these joint ventures. At the same time, we are also very conscious that whatever investments there are in the joint ventures give us an adequate return that justifies the financial impact of what we are doing. I do believe that each one of the five joint ventures that you see here are important. Each one of them has a new take. If you look at our joint ventures, whether they be in the area of rear parking sensors, whether they be in the area of shark fin antennas, whether they be in the area of new kind of cables, whether you look at special electronics, small componentry, I think each one of them has a much higher level of potential, not only in terms of the auto industry, but in some cases, even the non-auto industry, which could become very important into the future. Thank you. Thank you, sir. Just a couple of more questions. I think in two of our businesses, one is vision system, we have more or less doubled our revenues. In fact, even in the first quarter, we had almost 30% sort of growth. Can you please elaborate in terms of what is driving this and how do we see the outlook for second half and probably going ahead? I do believe I will not give any special outlook for the vision systems in the second half. I do believe that the growth that you are seeing will continue even in the second half and beyond. Some of it is coming from features that have been added into these mirrors. Some of it is coming from volumes. In the next quarters, we do see some growth on account of the addition of new customers. If I look at it, the entire wallet from market share to premiumization will take impact and growth, which will then help us in a faster growth in the vision system business. Thank you. Just lastly, on the Cabins and Fabrication business, I think this business has been somewhat subdued for the past three quarters, largely because of the emission norm changes in the construction equipment industry. What are the, let's say, outlook for this business now going ahead? Are we largely through with the emission norm changes on the ground, and the price increases have been largely absorbed? Any thoughts on that? I'll come back in the queue. Yes, to a large extent, yes. We've started green shoots of new orders coming in. The cabin and fabrication business, like you said, was affected a lot with the change in the emission norms. There was a lot of inventory lying with the customers. I do believe that the new orders that I see in quarter three and quarter four of this financial year seem to be much more solid compared to what we had in the first half of the year. Our fingers crossed, but that's the information that I have. We ourselves are conservative in our approach even for the second half of the year. I do believe it was definitely better than what was there in the first half. Okay, thank you. Thank you so much, sir. Hamshad, we can go back to the question queue. Thank you. The next question is from the line of Bishar from Sapphire Capital. Please go ahead. Hello. Yes, ma'am, you're audible. I'm audible. Okay. We've seen other income go up very sharply in Q1 and Q2. What is the kind of trajectory we expect for other income to stay going ahead? Yashpal Ji, you want to come in? I don't know if he's been disconnected, so let me answer this question. Hello. Am I audible, sir? Yeah, you are audible. Yeah. I will just answer the question. Other income has been exceptional in nature. That is the reason we have presented it separately in our investor presentation on slide number four. Other income came from one of the plants that we did the consolidation in Cabins and Fabrication in Bangalore. There we got a profit of INR 34 crore in the disposal of the land. That is the reason. Otherwise, there is no such planning to increase other income. More or less, it will continue as a casual income coming exceptionally. That is all. We are more focused on the operational business. There is no other source of other income. All right, all right. We just mentioned that we started Smart Locks production. We just started. What sort of EBITDA margins do we see for that segment? I do believe that, Bishar, Smart Locks business is as appropriate as any other locks business. At this point of time, we do believe that the margins will be probably better because the volumes are smaller. As the volumes go up, there will be a shrinkage in terms of the overall price of these Smart Locks. At any point of time, as our locks business is, that gives us a margin of 12%-14%. That's the kind of an EBITDA margin that we consider also in the Smart Locks business. All right, all right. Going ahead, just a bit of your comment on the product mix because we've seen the segment of ADC rise up very sharply. What are the two, three major products that we see dominating the product mix going ahead? Bishar, the way I look at it, we look at ourselves as four basic verticals. There are times when one is kicked up ahead of the others. You saw casting business grow. In the last year and a half, you have seen that our business of sheet metal has grown significantly. That is on a very, very aggressive path as well, where we set up new businesses. From a business only a few years ago, which was less than INR 200 crore, we are now looking at crossing INR 1,000 crore of the same business in sheet metal. The same aggressiveness has been in die casting. At this point of time, I think Chirag asked that question, and I said that the cabin fabrication is a business which is muted for the moment. I think going ahead and in the next few years, that could also take an aggressive shape. Let's not forget the main business, which has been the automotive business of locks and mirrors and so on and so forth. I think with Smart Locks and with a few other technologies that are in the pipeline, that will have a dramatic impact of growth in the coming years to come. I'm not saying what is happening. I do believe that each one of these verticals has a strong momentum coming ahead. Some years we'll see one racing ahead. Some years we'll see the other racing ahead. Our belief is in all these four businesses keeping up to the level of growth that we've anticipated for the entire company, which is, like I've said in the past, we would want to grow at least double of what the industry is going at. All right, all right. That's it from my side. Thank you. Thank you. The next question is from the line of Aryan Jain from Ari Capital. Please go ahead. We seem to have lost the participant. The next question is from the line of Vidisha from CRK. Please go ahead. Hello, sir. I wanted to know what kind of margin trends can we expect Sundaram-Clayton and what is the timeline that we can expect the full? Sundaram-Clayton, as we discussed earlier during the call, also we are expecting the margins to be in the normal die casting, I mean, at par with our other die casting business, which runs around a margin of 9%-10% in between as cast. The same margin we are expecting for Sundaram-Clayton going forward. Yes, that will start coming up from April 26 once we are into our own premises. Also, we add two new machines that we have set up the entire plant. That is going to come from April 26 only. Okay. For the overall business, what is the kind of margin trend that we can expect ahead and what will be the growth levels for the same? Basically, as we promised and we discussed with the market in earlier calls, we want to go up to a margin of 11% in the next two years of time with an improvement of around 50 basis points. I mean, 10 basis points to 50 basis points every year. Unfortunately, quarter one, as we discussed earlier, was not so well for us. That's the reason in overall half year, the margins have been down. We expect to go around 11% of a healthy margin from operations. The growth drivers would be all business segments because sometimes, as far as just said, some businesses up, some are down. That's how it goes like a family, all the business verticals. If one of the verticals is facing a tough time, the other one supports it. Yes, driving expectations, as we mentioned, that we want all the four business verticals to be big business verticals with an average profit margin of EBITDA margin of 11%. ROC, we intend to achieve 18% pre-tax in the first phase and then later on followed by 18% post-tax in the coming period of time. Okay, sir. Just one last question. As you mentioned, the sales were down because of the volatile market. What is your outlook on that? Basically, yeah, overseas, we are working on three different levels. One is increasing the operational efficiency over there at the same time, cutting down the operational costs. Second is we are trying to increase the customer base also from our traditional set of customers. We are moving to new customers also and just trying to tie up them from our existing facilities itself. The third one is that we are doing a financial re-engineering also in terms of borrowings and other product mix also. These are three sets of, I mean, the areas where we are concentrating. Even though the revenues might be in the same range, because till the time we see a final arrangement between the European Union and U.S. markets and other markets, at least the plan is that we should not incur the losses and we turn around to a break-even in the first phase and go back to our earlier margins in the coming period of time. In overseas, what is important for us to sustain our business is to have a margin in the business, despite the volumes might remain constant if the market conditions do not improve. The thing is, the return should come and there should not be any losses in that way. This is our first and prime task over there. Okay, sir. By how much time do you think you can move in that direction, near break-even? Yeah. Like in Europe, we are following the calendar year as the financial year. I mean, the update that we are getting from the overseas businesses, quarter three will be better compared to quarter two, as we have seen in the presentation also. Quarter two was better than quarter one of the current financial year. We are expecting our quarter three to be better, followed by quarter four to be neutral in terms of margins and losses. We expect to be in green. This is our prime desire. All right. Thank you for answering my questions. All the best to you as well. Thank you. Thank you. The next question is from the line of Sheila Aditya, an individual investor. Please go ahead. Hello. Am I audible? Yes, sir. Yes, sir. Yeah, yeah. So a question on the margin side, right? You mentioned that there were costs associated with new businesses. We understand. But at a consolidated level for FY 2026 and let's say FY 2027, what sort of overall margins we can expect? Can we expect to hit 11% margins by FY 2027? If you see on the guidance that we have been giving to the market, the current year we would like to do something between 9.9%-10.40% and another 50 basis points in FY 2026-2027. Going by that, it is around 10.90% or, I mean, sub-11%. Since the current year, the quarter one, as you all know, we are giving the reasons also, has not fared well. Yes, for the next year, we intend to be about 10.5%. That is how we are working. All these three new projects are expected to go live in the full volumes, which happens to be two die-casting businesses and one is the cabins. Plus the overseas business going into the old flare. Eventually, we should go to that margin in the coming period of time. Okay. So for the current financial year, will we be able to hit at least double-digit margins? Yeah. Our efforts are to have double-digit margin. At least we close at double-digit margin by March 2026. As far as said in the beginning of the call, quarter three and four would have a, I mean, backup of a strong demand. Proportionately, we are working on the same that at least these two quarters run about 10%. That our average margin should land something beyond 10%. That is our prime task. Let's see how quarter three goes. Everything will be dependent on quarter three. At that time, we'll come back to the all investor community how we are going to do in this current financial year. Okay. From a growth outlook perspective, consolidated basis for this year and coming couple of years, do you want to share some outlook there? In terms of revenue, the volumes, the market is going well. The customer base that we are having in terms of the OEs, they are also performing well. Keeping their growth in line, I think our growth should continue. The guidance that we gave in the beginning of the year that at least 15% of the normal business and the rest is a Sundaram guidance also, the additional revenues. I think we should be able to meet that by the end of this year. Quarter two this year has a festival. Sorry. Sundaram is around INR 400 crore annual business? Yeah. Annual is INR 400 crore. It is INR 198 crore for the half year. We have given up to 15% of the revenue growth in the existing business plus INR 400 crore of the Sundaram. That is the reason we are on the track. I think we should be able to because INR 2,370 something is the INR 2,360 crore is the revenue that we have clicked in the half year. We are well on the track. The quarter two has been good in terms of volumes because the festival is also there. There was a GST realignment by the government also, which helped to push the demand. I think three and four should also be good, especially in the fourth quarter with the new models coming in. The OEs are trying all best to increase the volumes. Let's see how it goes. Okay. Anything on the CapEx side, and also the debt position and the plans to reduce and all, can you share? Yeah. Yeah, sure. On the CapEx side, in the beginning of the year, we have said that around INR 300 crore of CapEx would be there, including the Sundaram one also. That is around INR 858 crore in the month of September. Yes, our working capital requirement has increased. That is the reason that has gone up. Earlier, we were having some favorable payment terms from some of the customers, which has now been rolled back to the earlier levels. It is a part of the business, a part of the arrangement that we already factored. In terms of the debt, I think it should be around INR 850 crore-INR 900 crore. Keeping in view the working capital requirements, as the business is going up, we need to maintain inventories also and the receivables. Also, the collection period is 45 days, while suppliers in some of the cases is 30 days also or 45 days also. This is how we need to maintain CapEx. Your message. When you have finished. Yeah. Hello. Hello. You can. I mean, yeah. Can you hear me? Yeah, yeah. I can hear you. Yeah, yes. Yeah. So the INR 300 crore of CapEx we have planned for this year, including some overseas and remaining for the India. Are you planning to reduce or continue at this kind of? Basically, for debt, three of the unfinished projects are in the pipeline that we have mentioned. The Sundaram one also, we are doing some additional CapEx of INR 40 crore-INR 50 crore. The majority of the same will be coming up in the month of March while we shift to our premises. There is another die casting coming up in Pune and Cabins and Fabrication again in Pune. We have to complete the same. With this, we will be through with all the CapEx in terms of new projects. That is the reason. Repayment is going continuously in terms of term loans. If you see term loans, we have already repaid around an installment of INR 45 crore in the first half. Similar will be coming in the next half also. As I said, the requirement of working capital is going on. The debt portion, the breakup of working capital is going up in the overall debt compared to the term borrowing. Working capital is directly dependent on the business. Nothing to worry about that. That's what I can say. Right. If we are 27, CapEx will be less because we have been doing a lot of CapEx in the last few years, right? Is it going to reduce the CapEx going forward? We have done a CapEx in the last three years. There has been huge because you see we had a very negligible presence in die casting and sheet metal. The revenues are also now started coming up from those businesses. As far as those businesses are concerned, I think they are through the same. Yes, the business expansion, it is a continuous process. The customers are reaching out, and if we do not have the capacity or the facilities, obviously the CapEx will be coming. The last four years have been a major CapEx because we did a major expansion in these two of the verticals. Now going forward, we have a presence. We have the facilities. If something will be coming, that will be in the sub-range of INR 40 crore-INR 50 crore per project if something new comes up. That too at the customer requirement with the assured volumes and margin based to us. I think this year we are through with the major CapEx. Yes, we are now focusing on increasing our base in our main property. I would say the automotive business, which is the vision and locking system. You could see something coming up over there, I mean, new over there with new technologies coming in. We might have to seek new technology partners, and all those sort of investment might come in the coming period of time. Safety and environmental CapEx are also there, which government is putting. All these things, I mean, INR 150 crore-INR 200 crores is a normal CapEx for an industry like us, which includes the environmental norms also, the safety CapEx also, the growth CapEx also. There is a replacement renovation of our old manufacturing facilities also. This is all. Just to supplement and clarify, I do not see anything which is happening on the basis of inorganic right now. What will be required will be incremental CapEx on incremental growth basis. Right now, with the additions that have been done in CapEx in the last couple of years, we do have a lot of capacity that will be utilized. In short, there does not seem to be any major requirement of CapEx in the next 12 months at least. We are well within our framework to grow at the rate at what you have been seeing us grow without further CapEx required on a large basis. Like Yashpal Ji said, there is always incremental and maintenance CapEx that is required. Beyond that, nothing. Thank you. All right. Thank you. Thank you. Ladies and gentlemen, we will take that as our last question for today. I would now like to hand the conference over to the management for closing comments. Let me once again thank all the investors who took out time to meet us this morning. I want to thank Emkay, Chirag, Hamshad, who put this entire thing together. Thank you for your patience, ladies and gentlemen. All I can say is that your company seems to be on a good growth path with a team that's working very, very hard to ensure that our stakeholders are kept happy. I'm also happy to report that your customers, both new and old, are happy. I'm also happy to report that the quality products that we supply are very well accepted and are looked forward to in terms of new developments of similar parts. We are also very happy to report that we have a good set of energetic employees who are working also extremely hard to deliver what is required in the market. We are guided by a very good set of board of directors and our senior leadership teams and management group teams. Once again, thank you all. Although a little early, let me take this opportunity of wishing each one of you a very, very Happy New Year and God bless in every way. Thank you all very much. Thank you. On behalf of Emkay Global Financial Services Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.