Ladies and gentlemen, good day and welcome to Sona Comstar's Q3 FY23 earnings call. Please note all participant lines are in the listen-only mode as of now. There will be an opportunity for you to ask questions after the presentation concludes. Please note that this call is being recorded. We request that you place your lines on mute except when asking a question. We will now go to the disclaimer. Some of the statements by the management team in today's conference call may be forward-looking in nature, and we request you to refer to the disclaimer in the earnings presentation for further details. The management will also not be taking any specific customer-related questions or confirm or deny any customer names or relationships due to confidentiality reasons. Please refrain from naming any customer in your questions. I'll hand over the floor to Mr. Kapil Singh, Head of Customer and Digital Commerce Research India and Lead Autos Analyst at Nomura. Kapil, please go ahead. Thank you. Hi. Good day, everyone. To take us through the Q3 FY23 results, we have Mr. Vivek Vikram Singh, MD and Group CEO; Mr. Kiran Manohar Deshmukh, Group CTO; Mr. Sat Mohan Gupta, CEO Motor Business; Mr. Vikram Verma, CEO Driveline Business; Mr. Rohit Nanda, Group CFO; Mr. Amit Mishra, Head Investor Relations; and Mr. Pratik Sachan, BGM Corporate Strategy and IR. I will now hand over the call to Vivek for his opening remarks and the presentation. Over to you, Vivek, please. Thank you, Kapil, welcome, everyone, to the earnings call of what has been our best quarter ever in almost every aspect of our business. First, as is our policy when talking to shareholders, we will begin with the challenges. Due to the new battery standards, most of our EV two-wheeler customers had to get their vehicles homologated again, which meant we saw very little production in October and November, which has negatively affected Q3's traction motor sales. The production run rate has normalized since December. Things are back on track. We are back to our old run rate. On the cost side, as you would have seen in other companies and industries, raw material prices have continued to come down. Our largest purchase commodity, which is alloy steel, remains at elevated prices. To be perfectly frank, for the first time in almost four quarters, there's very little challenges to talk about, and the lead indicators are frankly good, so I'll move on quickly to the positives. In financial terms, we've achieved our highest revenue, highest EBITDA, and highest net profit. We also won the biggest single new order in our history, which is an EV driveline program, which is a big step for us, in both business development terms as well as technology, because this is also a new product for us called an electronically locking differential or EDL. This win demonstrates our ability to keep adding new and higher value products for our customers, and hence new revenue streams with higher per unit prices for ourselves. We also signed our first acquisition since 2019 with Novelic in this quarter. We are adding a third pillar to our business, which is of sensors and software. We hope that we can close this deal by the end of this quarter, the current one. From Q1 FY 2024 onwards, we should see that also further adding to our numbers. Last, but not the least, on the ESG front, we released our first sustainability report. I'd encourage all of you to please go check it out. We've taken quite ambitious targets for ourselves as a company. Now, before I go on to the numbers. Now, we don't consider ourselves to be macro experts, actually probably the opposite. We inevitably get asked questions about the markets we serve. To kind of preempt that, here are a few highlights. Q3 was positive on a year-over-year basis for the U.S. market, things continue looking good. Indian market did well across all the three categories that we serve, passenger vehicle, commercial vehicle, and off-highway, and also continue to be strong. Asia is quite volatile with the COVID situation in China, we have to wait and watch before we can take a medium-term call. Q3 was also positive for a change on a YOY basis for Europe light vehicle sales. We believe that after five quarters of weakness, going forward, the Europe market appears to be slowly turning around. To the numbers, we've had good sequential growth, and more importantly, on a YOY basis, our revenues grew by 39%, while EBITDA and net profit have grown by 43% and 45%, respectively. This is because of consistent margin improvement. BEV revenue in absolute terms grew by 29% to its highest ever number of over INR 173 crore, while the BEV revenue share for the quarter was 26%. This is the first time we've actually crossed INR 100 crore in quarterly net profit on an organic basis. Please forgive me for a bit of nostalgia, but I still remember when we crossed INR 10 crore PAT. For the first time, it was Q4 of FY 2016. That was my first year at Sona. Obviously, for Vikram and Mr. Deshmukh, it was many years, but my first year. To have grown over our quarterly profits by about 10 times in less than 7 years is a really proud, and I'd say, meaningful milestone for all of us here in the team. Coming to nine-month figures, our revenue, EBITDA and PAT are up by 22%, 17%, and 18% respectively. I'd also like to point out that due to a strong Q3, our EBITDA and PAT margins have both returned to our usual long range of 25%-27% and 14%-16%. I think, given how the product mix and geography mix look like going forward for the next, I'd say, at least four or five quarters, I think it's safe to say that we can sustain the new 27% and 15% margin ranges. Since calendar year 2022 has ended, we also got our global market shares calculated by Ricardo. Again, first, not so good news. Our starter motor global market share has declined from 4.6% to 4.1%. This is not because we lost any business, but mainly because our highest starter motor market shares are in Europe, followed by U.S. Both of these declined as a percentage of world auto market, while Asia, where we have lower penetration, grew its share in CY 2022. Hopefully, as both Europe and U.S. look like they're picking up, we should see recovery on this front in calendar year 2023. Our market share in differential gears, on the other hand, continues to grow rapidly and has reached 7.2% of global volumes, despite this relative shift of U.S. and Europe going down. This is what underlines our ability to grow on the strength of new orders alone. Coming to EV. Our battery electric vehicle revenue share has increased from 23% in 9-month FY22 to 25%, and BEV revenue in absolute terms has grown by 31% to over INR 4.6 billion in the first 9 months of the year. We continued to build on our EV order book. In Q3 we have added four new EV programs and two new EV customers. There are two new driveline program additions, both for existing customers and targeted at the North American market, on which I'll elaborate on the next slide. There are also two new motor program wins, both for electric two wheelers makers in India. While one is for a new entrant, the other is for a currently top 15 e-scooter maker. With this, we have now reached 41 EV programs across 25 different customers. Exactly a year ago, this metric was 24 across 14 customers, which means we have added 17 new programs and 11 new customers in just 12 months. This displays our growing EV presence globally and the pace at which we are growing this. In fact, we did an internal analysis based on a JP Morgan report and found that in the next 3 years, 98 new EV car models are going to be launched in U.S., Europe and India, and our driveline products will be present in 31 of them. Coming to our proudest and perhaps the single most significant achievement this quarter. We have won a new order for electronically locking differential assemblies or EDLs, which is the single largest new order win in the history of our company. This is for an existing EV customer and is our most advanced and highest value driveline product. If you happen to visit us at Auto Expo, you may have seen this on display. This win has come after a lot of effort, a lot of joint hard work between our customers and our own engineering teams. In addition, we've also won another differential assembly program for electric cars for the U.S. market from a different existing customer. What is remarkable in both is that both programs must start in less than 12 months. Which shows two things. One, the urgency of people to launch EV models and also how much our customers rely on our agility in going from design to production quickly. Like we are showing agility in product development, we're trying to also show agility in dynamically changing our strategic approach. We had shown this about a year and a half ago when we did our first call. We have changed this a little to cover both passenger and commercial vehicle applications. In driveline, which is on your left-hand side, you can see that we already cover most segment on both sides. This is a point I want to make because oftentimes we get asked on things like content per vehicle and how much is a differential assembly? The thing is, it depends on the application and the torque. Differential assembly value alone per vehicle can range from $30 at the bottom to almost $300 at the top on the passenger vehicle side. On the commercial vehicle side, it can range from just about $20 to almost $900 going to the top of the range. Our strategy is to cover the whole spectrum for sure, but focus more on maximizing our penetration in the top three segments of both PV and CV. PV, we are already fairly significant. I think CV also, we intend to increase our penetration, while also being present in and benefiting from the higher volumes of the lower power segment. In motors, on the other hand, we cover only the lower end of the power range today, which is high volume but medium margin. I mean, we produced 120,000 traction motors in 2022, and given that only around 630,000 E-two wheelers were sold in India in that time, that should comfortably put us among the top players, if not the single largest player in India. That's not the end goal for us. It never was. That is only the beginning. We intend to cover all vehicle segments. The focus in the next three years at least will be on light passenger, light commercial vehicles and electric buses. That's gonna be our focus. In time, we hope to advance to larger passenger vehicles and commercial vehicles, but not in this current phase. That's the strategy on electrification. With that, we come to our net order book, which has increased on the back of these four new EV programs and five new non-EV programs. Those are mostly in the driveline products for commercial vehicles. This increases by 35% year-on-year. Order book increases 60% over just last quarter. We reach finally INR 238 billion at the end of Q3. The large size of the EV program wins have also increased the proportion of EV in this order book, and now it's 73%. We've also updated our customer reach metrics at the end of 2022 and are exceptionally honored that today we serve 7 of the world's top 10 passenger vehicle OEMs. We serve 3 of the top 10 truck makers and 7 of the top 10 tractor makers of the world. We're also privileged to supply to 4 of the top 15 electric two-wheeler makers in India and 5 of the top 15 electric car makers in the world. This reach ensures that we are well diversified and a part of a structural growth trend as electrification increases and not just dependent on one or two customers. We neatly come to diversification. The weakness in Europe in the first nine months means that the revenue share from hybrid and micro hybrid has been lower as compared to previous years. On a longer term trend, the increasing share of BEV and decreasing proportion from ICE seems to be continuing. Geographically, things have been far more interesting. As you can see, Europe and Asia, which used to constitute around 40% of our revenue last year, were reduced to only 25% for the first nine months. Despite that, our exceptionally strong growth in the US, backed by new programs and new order wins and the strengthening of the Indian market, have more than made up by increasing to 45% and 29% respectively. Relative market shares can be tricky, like I said, I think last time also, especially in the times of big growth. When analyzing these numbers, also look at the absolute numbers, like how our Europe revenue has in fact increased on a YOY basis in Q3. There is little change in product mix or vehicle segment mix from the last quarter, not too much to add here. With this, I turn to our group CTO, Mr. Deshmukh, to update us on technology. Over to you, sir. Thank you, Vivek. Good evening, ladies and gentlemen. Like in the past, I am sharing our technology roadmap with you. Every time a new product under development is commercialized, we move it from the white area to the blue zone. Last quarter, for example, our breakthrough Net-Shaped bevel gear set moved to the blue semicircle, reflecting its commercial launch. This quarter, our newly developed electronically locking differential assembly or the EDL, debuts for the high-end electric SUV for the North American market. The EDL is an advanced technology used in high-performance and off-road vehicles to enhance stability, traction, and safety. An EDL is a type of differential that uses electronic actuators to lock the wheels on the left and right sides of a vehicle together. This allows the wheels to rotate at the same speed, providing maximum traction and stability. The differential is controlled by a computer that receives input from various sensors, such as the vehicle speed, steering angle, and yaw rate. The computer then uses this information to determine when the differential should be locked or when it should be unlocked based on the driving conditions and the driver's inputs. The technology enables better performance in off-road and inclement weather conditions. The EDL, as you would have seen from what I said before, is a critical component of the car and must integrate seamlessly with the rest of the vehicle systems. This development required a significant amount of engineering and testing to ensure that the EDL performs effectively while minimizing the impact on the vehicle's energy efficiency and meeting regulatory requirements. In this particular case, the customer's launch schedule was highly aggressive and our engineers worked closely with the customer's team to make this happen. This demonstrates our engineers' abilities to work collaboratively in quickly developing a highly engineered product and the customer's trust in their capabilities to do so. On that note, I hand it over to Rohit to cover financial update. Thank you, Mr. Deshmukh. A very good day to you all. It's my pleasure to share our third quarter and nine months results for financial year 2023 with you. Q3 was our best quarter in all three parameters of revenue, EBITDA and PAT at INR 685 crores in revenue, INR 186 crores in EBITDA and INR 107 crores PAT. Our BEV revenue grew by 29% this quarter, whereas our non-BEV revenue grew by a robust 42%, which is more than 2 times of the underlying market growth of 18%. Our EBITDA margin has improved to back above 27%, and it was 80 basis points better than comparable quarter last year, primarily due to better product mix. Absolute EBITDA has grown by 43% compared to a revenue growth of 39%. On a sequential basis, though, EBITDA margin is up by 200 basis points, mainly due to better product mix. Profit after tax at INR 107 crores is higher by 45% compared to adjusted PAT reported for the third quarter during last year. Next. During the 9 months of the year, our revenue grew by 22% to INR 1,932 crores. Our BEV revenue grew by 31% to INR 467 crores and constituted 25% of our total sales. Our non-BEV revenue grew by 20%, while light vehicle market in our 3 largest markets of North America, India and Europe grew by only 1% over the same period. For 9 months, our EBITDA grew by 17% to INR 494 crores. EBITDA margin% was lower by 120 basis points, largely due to arithmetic effect from increase in RM prices in spite of the cost pass-through. The PAT for the first nine months grew by 18% to INR 276 crores compared to adjusted PAT of INR 234 crores for the same period last year. Margin transmission between EBITDA to PAT is better due to lower finance cost as compared to the previous year. This brings me to the slide on the key ratios. Our value addition to employee cost ratio continues to improve further, and it is now 6.4 times, showing that the rate of marginal growth in the value addition is higher than the growth in employee cost of the company. Our return ratios of ROCE and ROE continue to be strong above 25%, though these are a bit lower from the past 2-year levels, primarily due to higher working capital and ongoing CapEx for revenue to be generated in future. Return on equity also had a base effect due to primary equity raised in the IPO during the last financial year. Our net debt continues to be negative, reflecting the balance sheet strength to raise debt in order to support future growth. Working capital turnover ratio has improved to 4.1 times, whereas fixed asset turnover ratio has come down a little bit to 3.9 times, mainly on account of new capitalization done during the year. Last but not the least, we are glad to share that our first sustainability report has been published in December. This can be accessed on our website. For now, I'll just briefly touch upon the key ESG goals that we have set for ourselves. Our environmental goals include providing solutions for low carbon mobility by increasing revenue from products meant for electric vehicles to 45% of our revenue by 2026. Besides this, improving resource efficiency in our operations through reduction of specific energy consumption by 4% by year 2025 and 8% by year 2030. Besides this, we have also taken targets for reduction in Scope 1 and Scope 2 emissions. Apart from environmental goals, we've also set other ESG goals like social and governance goal, which include maintaining highest levels of quality and health and safety environment for the employees, be an equal opportunity employer, create a meaningful impact through our CSR programs, and ensure highest level of corporate governance through zero tolerance for corruption and non-compliance. I will encourage you all to access our sustainability report on our website. With this, we have now come to the end of our Q3 earnings presentation, and I'll now hand the proceedings back to the Nomura team for Q&A. Thank you so much. We will now open the floor for the Q&A session. If you wish to raise a question, please use the raise hand function located at the bottom right of the Webex page. We will unmute your line and prompt you to speak. You may submit your questions via Q&A chat box addressing to all panelists. Please be reminded to keep your questions to a maximum of 2 questions. If you have more questions, please return to queue. Thank you. The first question is from Gunjan. Gunjan, your line is unmuted now. Kindly go ahead. Sure. Thanks, thanks team for taking my questions. Two questions from my side. Firstly, on the, you know, on the order backlog. Clearly this is impressive that, you know, we are adding new programs, we're adding new customers. What I'm just trying to get more color on is, you know, slide 9, where you give your, you know, programs which are under serial production. Now, though that number has been sort of at 10 for last couple of quarters, you know, if you can give us some color on when do we see some of the new commissioning, you know, the new wins that you spoke about today, you mentioned, you know, that is towards the end. There's something which flows through in the next couple of quarters. What segments would that be? some color on how we should see the order book translating into revenues over the next, you know, three, four quarters. That'll be the first question. Gunjan, first of all, hello. Second, you know, our business is long-term in nature. It's a long-term game we're playing with long-term plans. 3 quarters, 2 quarters is not the way to look at programs. Even if a program, and you covered auto for a while. 10 means, this 10 is not just in serial production, it is at its maximum, so it is at the fully ramped up thing. No program can go from start to fully ramped up in just 3 quarters. It doesn't happen, so it'll be hard for me to comment on that. We will keep looking at it every quarter and we should see. In the next 4, 5 quarters, we should see a lot of program becoming active, even if they're not fully ramped up. I mean, if you look at our BEV revenue, right? That should give you some indication that they are obviously ramping up, which is why numbers keep going up. You do expect like, you know, few of these which are, you know, which are in the order book start, you know, commission or start contributing. I understand that ramp up will take time, but is there visibility from the next three, four quarters perspective? Yeah. Even in this quarter, there are four or five that have started, but they've not come to a stage where it's fully ramped up. That, how much time it takes, one, that's not in our hands, right? That's in the customer's hands. That can take a while. Yeah, a lot of them are starting. Actually, this quarter, a lot of them are starting. Okay, got it. Vivek, the second question is on this whole, you know, the EV competitive landscape that's been changing globally, right? I mean, we all saw the way the, you know, the EV makers are looking at price cuts and aggressively pricing the models. You know, in that context, when you're looking at your opportunity, you know, any, you know, how are we approaching this now? Does this mean there is more cost pressure as a supplier, you know, given the pricing from the OEMs is getting more aggressive? I don't want to name the customers or OEMs here, but I mean, clearly there has been very aggressive pricing and, you know, or, you know, does this aggressive pricing mean that the market shift could accelerate? How are you guys approaching this change in the narrative on the EVs? There is lot of noise out there and not enough signal. With most of our customers we've worked, and I know who you're talking about, but we have worked with most of them for decades. Behavior between customer and supplier, if you have long-term relationship, doesn't shift overnight. Market news shifts overnight. Yes, capital markets react overnight, but relationships don't change that much, and business models don't change that. We do not see any significant impact on that front, to be honest, at all. Acceleration in electrification. Yeah. I mean, look, if people cut prices, of course it can be accelerated. However, the biggest shift will come when battery prices actually go to the level they should be, which is much lower than today. Actually, last couple of years is when the battery prices have plateaued. That's what has kind of made electrification penetration slower in the last couple of quarters than it was. That is the big one that I will ask you to look at. I mean, I can understand, in your role, you come across news every day and you have to see that changing. Let's say we win a new order, right? We've been working on this for the last two years, on the pricing and on the product development. It doesn't suddenly change overnight just because a news item comes. Nothing, I mean, you have, you know our numbers for the last 22 years. We get asked this question a lot, do you think auto was ever a market in which customers were like, "No, no, increase your margins a lot. We don't care about cost." I mean, when was auto not cost competitive? It isn't got to do with the EV world. It was always this way, which is perhaps why we are rare, in making the kind of margins we do. Okay, got it. Just last clarification and I'll join back the queue. The EDL product that we've, you know, we showcased at Auto Expo Components and, you know, if you can give some color on how the cost of this product is different from the diff assembly that we've been doing so far. I mean, just broad numbers, approximate numbers would help. Cost or price? I mean... No, no. Content value. Let me put it very simply for you because you know we obsess over content value. How would it be different from the conventional diff assembly that you were doing? It is at the highest end of the range I indicated to you. In my commentary, I had indicated that differential assemblies can go from $30 per vehicle to $300 in passenger- Mm-hmm. Vehicle side, it is towards the highest end of that range. Okay, got it. All right, thank you. I'll join back the queue. Okay. We have next question from Kirat. Yeah, just following up on the DDL thing, one second. If I may. Vivek, can you just talk about, you know, what is your competition in this EDL and how much time did it take to make this product? What are the additional components that go into making this compared to a standard differential assembly that you do? In terms of future potential of this product as well, where all can it be applicable in future? I'll let Vikram answer this because to be honest, it is his achievement, not mine. Second, Again, we should not look at each product and say, "How much can we multiply by?" The thing is, at any range, we can compete, and the higher end is what we will try to service. We won't even stop at EDL, right? We are going to do the whole transmission eventually. Everything that you see to try to predict how our future will look in a year or two, it will not work because if you did the same exercise two years ago, you would have taken $60 differentials and multiplied by a large number. If you'd taken it four years before that, you would have taken $18-$20 per gear set and tried to multiply by that number. Every three years, who we are as a business and what we can do in capability terms itself will change. Anyway, Vikram. Yeah, I understood. Talk about- I understand your question. Yeah. I think the present differential, which can have 6 to 7 main parts, can go up to 15 plus parts to make an EDL. The content within the differential actually goes up twice. That's one, of course, the complexity of making is quite different than the normal differentials which we are making for EV vehicle, for PAS car. A low-end PAS car application to a very high-end PAS car uses EDL. Off-roading application it is required. As I said, it will be twice in numbers of parts going in. Okay. That I think was your question. Competition, Vikram, and what is unique about our EDL. Competition. is on the design. From a design perspective, I think, the EDL which we have made is quite different than what competitors have been making for ICE. From that angle, it is very different. I can't explain you in terms of how it functions. Well, the end function is same, but the construction is very much different. That's the uniqueness of what we have made in collaboration with customer. Yeah. This was done jointly with the customer because EDLs existed in the ICE world, but they didn't really in the EV world. To make it with the customer was a challenge, and we've done well. The traditional competitors were GKN and Dana. I think these were the two who were known for EDLs in the past. This is different because it's made only for, like they say, born electric. This is a born electric EDL. In a way it's a different product. Again, we are trying to be one step ahead of global competition. I mean, if we have to make our mark globally, we have to always be doing, you know, different things. That's, that's the goal of this. Yeah. How much time did it take us to make this? From beginning to now? Yes. Yeah, a while. Vikram? I think we have been working for last two years. Yeah. Okay. Got it. We also have another order for differential assembly for electric cars. Could you talk about it as well that is this a product? Also the question that I was asking on EDL was also the same, not so much from, you know, numbers prediction, but just to understand the applicability of EDLs. Will the future high-end electric cars also be using EDLs according to you? Is that a requirement? Big SUVs and pickup trucks. Okay. You think most of the electric SUVs and pickups will be using it? All right. It's a better way than doing what, I won't name the company, was trying to do with a quad motor configuration. This is a better way to achieve the same end result. Okay. Does it have any software components as well? No. No. I mean, software is at the OEM end, not at. We just have the electronic actuator. I think I showed you at the Auto Expo what that does, but not software. This will be over what period, this order is, the order book that we have assumed is over what period? The order book's end is 10 years, as you know. I mean, we only give for 10 years, so obviously it is less than 10 years because it begins in... Yeah, this is an open order, so as long as the vehicle... By when can we hit the peak revenues here? That's a good question. I think it kicks off from the end of this year and should grow over next 2 years. 2026 probably it will peak. Yeah. I assume. Calendar 2025 or 2026 calendar should be peak. Yeah. Okay. Okay. Thanks, Juliet. You can continue with the queue. Okay. Okay, thank you. Next question is from Chirag. Your line is unmuted now, please go ahead. Yeah, thanks for the opportunity. I had a question- Hi. Yeah, hi. Hi, Vikram, and hi, everyone. I had a question on a follow-up. Actually, you answered some of my questions on EDL. See, my basic question was: how and why an OEM would adopt EDL over a differential assembly, one, be it fast car or be it commercial vehicle? That is a broad question. Second, is there a regulatory push required for you to achieve the penetration of EDL? I'll let Ashish answer it. EDL is a differential assembly. The name is electronically locking differential assembly. No, the reason I'm asking you is the price, the cost difference or the value difference, as you indicated, from 30 to 300, it is at the top end of the spectrum, means it involves good amount of value content jump from an OEM perspective also. OEM who is spending $30 may not be willing to spend $300. What will drive them? You partly answered SUVs and pickups. Why and how could they transition to even lower vehicles, or cars or commercial? Regulatory push is required for this to have a faster penetration. No, okay, I'll answer that. I think you're trying to ask that, is it a new product that will go in everything? No, it won't. EDL is required if you, one, need to have a four-wheel drive as a beginning, right? Why $30 versus $300 is also how many driven axles, right? Yeah. First you have to say it's actually $30-$150 in that sense. Yes. In that case, it is the class of vehicles. If you don't have an off-roading four-wheel drive requirement, you don't need anything. Mm-hmm. Like, you don't need an EDL for a city car. Yeah. Fair point. Which is why I said SUV and pickup truck is the target segment, which is why speak in foreign language in that if you look at the highest segment, you'll see the logo on. BorgWarner also says that. I presume no regulatory push is required for adoption, right? It's a natural progression the way it happens in ICE. Not really. This is more a OEM's desire to give you better handling of the vehicle. Yeah. Let's say one gets locked and you can match up to the other one. Mm-hmm. Yeah. It is almost all, I'd say reputable and global SUVs. I'm taking global definition of SUV. Yeah. big definition of SUV where crossover is also coming in. Mm-hmm. Almost all of them, if they're SUVs, they'll be four-wheel drive. Mm-hmm. Many of them will have EDL even now. It's a nice product also. Yeah. Just to ask extension, are you looking to enter the ICE market also for... Given that you have a EDL now and there will be requirement in ICE market or you are not looking at ICE market at all? Not at all. Look, I mean, we started making differentials in 2016 for EV. Yeah. There is no reason to go supply to a market that will start shrinking. Right. Right. Fair point. Opportunity, it just doesn't make strategic sense. Yeah. My second question was on this market share data that you shared, you know, for differential and motors. Is it possible to indicate what is the global denominator in that? Because it would be helpful to us for us to understand what according to Ricardo was the global sales are. Given that there have been so many upheavals last year, if you can share that number according to the... What was the industry volume that were calculated? One more. Sorry, Chirag. Your voice actually is slightly. I understand. I got, like you said, market share numbers. Okay. Am I audible now? What I'm saying is, if you can share the industry data that Ricardo has used, or the industry volumes to calculate the market share for the full year. Sure. That's widely available. I mean, 80 million vehicles sold, last year, CY 2022. I mean, okay, we'll send it to you. I think that's enough to, like, you can Google also. No, fair point. I was more focused on what Ricardo was using. I'll take it offline. I'll take it offline. Yeah. Yeah. Thank you. You know, also gets it from IHS also. Like, they don't get it from... Okay. Okay, great. Because data source eventually. Yeah. Yeah. Yeah, thank you. Thank you very much for the opportunity. I will come back for more questions. We have next question from Hitesh Goel. Hitesh, your line is unmuted now. Please go ahead. Hi, Vivek. Hi, team. Hi, Hitesh. Good afternoon. You know, my question is more on the PLI scheme. You know, can you give us some sense on what is happening on the PLI? You are already applying to the government on the, you know, incentive that you're getting. As of yet, as far as I understand, it's not coming into the P&L as of now, right? When do we expect that? How is it getting calculated? Somewhere I read it, government is looking at value add to really compute that rather than revenue, which was the first draft which we saw in the PLI scheme. Whether you will be passing on to the OEMs, because that will be a competitive advantage, especially for, you know, Indian automakers or suppliers, right? Whether some part of that will be passed on or you have sufficient pricing power to hold on to that gains. I'll let Rohit answer it. Our accounting, treatment policy, et cetera, is clear. Till we get it, we are not accounting for it. We haven't made any provision or any adjustment for PLI. Rohit. Hitesh, to the best of our understanding, the scheme continues to be linked to the revenue. Value addition criteria is basically the qualifying criteria, the domestic value addition. To the best of our understanding so far, we've not... I mean, we were called by the ministry also recently, to have a meeting and all, but we've not heard about any changes from them. Like Vivek already clarified, we don't intend to start taking the credit in our books till the time we actually get it, which will be in the next financial year. The next financial year is also something that we don't know as of now. We'll probably keep everybody informed as and when we get more information from the government. This is where we are. Just to be clear, what is the average incentive on revenue that you're looking at, I mean, on your portfolio? There are two factors here. One is that it will be limited to the products which qualify under the scheme, that I'm sure you understand. The percentage also is graded depending upon the turnover we achieve. I think my sense is that at the peak over the years, because, one, there is an EV, sort of top-up that we are likely to get. Overall, over five years, I think the peak rate that we'll hit will be, I think, around 15%. We may start at around, I think, 11% or so. Is there a necessity to pass on this to the OEMs or you have, you know, because you're a you know, supplier? Obviously it is, because you know who our customers are in India. Yeah. Yeah. There is no customer. I mean, there is only one customer who's above 5%. Most of the customers in India are less than 2% of our revenue. Bargaining power is not the same as it is everywhere. Second, on most of our Indian customers, we are not getting any incentive. Yeah, I know. Two-wheeler guys alone, not much there. Yeah, Got it. Thank you, Rohit and Vivek. Welcome. Thank you. We have next question from Amyn Pirani. Your line is unmuted now. Please go ahead. Yes. Hi, can you hear me? Hi, Amyn. Yes, we can. Hi. Thanks for the opportunity, and congratulations on the order win on the EDL. Some clarification on that. A, this order, basically, is this for an entirely new product or are you, like, replacing someone or are you giving a better product to something that you are already supplying? Some color there would be helpful. New product for this customer. Okay. The product exists in ICE vehicles of different car makers, but not for them. For them, this is the first EDL they have. Okay. Okay. The other order that you know, declared today, obviously the amount is significantly lower. Is it because it is for a significantly lower tenure or is it just because it is a relatively lower value add product compared to the EDL? Just wanted to understand that. Amyn, correct. It is lower value, lower volume and lower tenure. All three. Okay. Okay. Okay. Small cars, I mean, Yeah. That's why I'm saying in an ordinary quarter, that would have been a highlight, win, small cars. That's the point I've been trying to make to a lot of people that, you know, you win a big SUV with a big value, in money terms, you get way more than you get in volume terms. Here, even if the volume is decent. The value is so little and 1 axle driven, so it's just not a big car, so you don't get that much money. Great. Great. Most of my other questions are answered. Thanks a lot. I'll come in the queue. We have next question from Jinesh Gandhi. Jinesh, your line is unmuted now. Kindly go ahead. Yeah. Am I audible? Yes, Jinesh. Very much so. Yes. Thank you. Congrats on the EDL order. Can you indicate what's the share of business? Would it be 100%? Are we single source supplier for that product for that particular model or it's a? Yes. of business? No. Yes. Yeah, single source. Okay. That's great. Secondly, when you look at our Asia-Pacific ex-India revenue, that market has been under tremendous pressure, if I have to put, so, in terms of share has been falling, partly because other markets are doing well, but on absolute basis also, that geography seems to be coming down. What is happening there? Why are we seeing decline in that geography particularly? I mean, I presume that's China. Correct. It's China plus Southeast Asia. The decline mainly on the ICEs, your starter motors as a percentage of vehicles sold is getting over. If you have only one product, and that is what the plant in China does, right? That's a, it's a starter motor plant. Yeah, there is a time where we'll have to figure that out, that what is the point of continuing in a particular market that's electrifying fast. That was bound to happen. Okay. Okay. You know, China is electrifying far faster than India. India, your starter motor business or even in U.S. can continue for 15 years or so. In China, maybe 5 years, 6 years, it may be all electric. Okay. Okay. Are we seeing increased penetration of our driveline products in China or that is difficult? No. Okay. Okay. I think we mentioned this even right from the IPO time, that our strategy is North America, Europe and India to retain, because we already have very, very high market share. Grow in U.S. and Europe. This time, by our market share increases, we grew quite a lot in North America. Europe is still very under-penetrated. I would say low single digits is what would be our differential in the market share. Asia, especially China. The biggest problem is there is a duty changes. If I export, there is a duty. If I want to go set up there, you know, we don't see that as a better choice. Right now, if you have a lot of room to grow in North America and Europe, like a lot. Right. It is also lower margin market, by the way. Right. Right. Got it. Lastly, on the PLI part, I mean, given that only few of our products would be qualifying for that, can you talk about what percentage of our current revenues would be eligible for PLI scheme, in the sense, in terms of the portfolio mix would be eligible for PLI scheme? Similarly, if you can do it at the order book level, that will give us some indication of how we stand in terms of our qualification for PLI. I don't think that's a true assumption that only a few of our products are qualified. Will be qualifying is not the thing because the list is out. All EV differential assemblies, all EV traction motors, and Rohit, IMCM will also qualify, right? That we are getting clarification, but right now, our EV revenue largely would be a good indicator as of now. Yeah. Actually, Jinesh, that's a very good one. EV revenue. Whatever is EV is pretty much automatically qualified. Got it. That, that's very helpful. Thank you. Thanks and all the best. We have a couple of questions in the Q&A box as well. One of them is from Pragya Shah. You have added a lot of new products in the last year. Have you seen any new customers or existing customers ordering these new products apart from first initial customer, for whom you have initially built these products? The reason is to understand ROC on these products. Yeah. Rohit, you can take this. I think the number of customers and the products actually we disclose every quarter. If you see, the number of customers and number of orders, they've been going up. There are repeat, no, I shouldn't say repeat, but there are different customers buying same or similar products. What was the second part of the question? Basically, the question here implies that if there are more people ordering the same new product, then maybe the ROC on the product will be better. Is that how it works? How do the ROC on the new products work? I don't subscribe to that philosophy, number one. Right. I think if your product doesn't make... in the first batch itself it doesn't start making good money and return, you shouldn't do it. We don't follow or subscribe to that philosophy. If we have a single order also, it will be ROC positive, and it will be in the range that we have been doing business. That is the discipline with which we do anything, anyway. We don't price... Actually, it's, as you guys would have also found out in other companies, that thing of let's first introduce a low price and then when volumes increase, we will get higher price, does not work in auto. Whatever is the price you set, it can only go down from there. It can never go up from there. Economies of scale, yes, they come in, but not that much. However, if you just add... Look at the latest order. I mean, traction motors is a new product category. We went from no customers to 7, 8 customers in almost 2 years. If you take any of the ones, but you have to go at least 2, 3 years because for a product to go from when we announce it to SOP is 1 year. From SOP to other customers seeing it and inquiring and then trying to build that would be another 1 year minimum. 2 to 3 years is how much time it takes. Anyway, I mean, economic value-wise, it should start working out from product 1. Yeah. Then, the last question from my side, you know, Rohit, you talked about the fact, or Vivek you also, that, we should be able to hold on to the margins around these levels. If you could just talk us through, in the context of EV revenue mix will be going up and what are you seeing on the raw materials costs and also the motor business mix will also be going up. When you put these three variables together, what are you seeing? Just three? There are more. There are many more, but I won't confuse you, which is why I said very simply- Right. That at least for the next four, five quarters, we see 27 and 15 as sustainable levels. If nothing changes drastically, alloy steel does not go up further or, you know, aluminum can go up further. I think there is also potential for good deals, which is equal, which is alloy steel can come down also, which it should. Geographic mix and product mix, we kind of have a idea of what the next four quarters are. It looks like it should hold at this level. There are other variables also, by the way, but I'm not confusing the matter. I'm just trying to give a straight and simple answer. It should be continuing. Nothing else. I mean, interest, et cetera, doesn't really affect us that much. I don't think there are other variables at play. Okay, great. Juliet, I'll hand you back for the closing remarks. Okay. Thank you very much. We will now conclude this call. If you have any follow-up questions, please feel free to email your Nomura sales representative or corporate access. Thank you everyone for your time. Over to the management for the closing remarks. No, thank you, Juliet. Thank you, Kapil. Thank you everyone for attending. I'm sure you have other places to be, so I won't take long. Thank you. Thank you. Thank you. Thank you so much. On behalf of Nomura. Thank you very much. I thank the management as well as all the investors for joining us. Thank you very much. We can close it now. Thanks, Juliet. Thank you.