Ladies and gentlemen, good day. Welcome to Sona Comstar Q1 FY 2024 Earnings Group Conference 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 line on mute except when asking a question. Some of the statement 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 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 question. Now, I will hand over the floor to Mr. Kapil Singh, Head of Consumer and Digital Commerce, Research India, and Lead Auto Analyst at Nomura. Kapil, please go ahead. Good day, everyone. To take us through Q1 FY2024 results and to answer your questions, we have the entire senior management team of Sona BLW Precision Forgings. We have Mr. Vivek Vikram Singh, MD and Group CEO, Mr. Kiran 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. Prateek Sachan, PGM, Corporate Strategy and Investor Relations. I will hand over the call to Mr. Vivek for his opening remarks, followed by the presentation. Over to you, Vivek. Thank you, Kapil. Welcome everyone to the earnings call of what has once again been our highest ever quarterly EBITDA. First, as is our practice when talking to our shareholders, we let bad news take the elevator while good news takes the stairs. As highlighted in the last earnings call as well, the EV two-wheeler industry continues to face issues around phase II subsidy reduction and the related fallout on pricing and demand. This is meant in almost INR 25 crore negative impact on our sales this quarter from what would have been. We estimate that for the full year, we should see an INR 100-120 crore negative impact on the budgeted revenue from this category. Having said that, we still expect traction motors to be our fastest growing product segment, because this will happen on the back of new programs and new customer additions. EV two-wheeler motors have relatively lower margins than our other products, so the corresponding impact on EBITDA and profit should be smaller. I come to the good news part of it, which is, which far outweighs the bad. In financial terms, we achieved our highest ever EBITDA in Q1 FY 2024. This is despite marginally lower sequential revenue. We've also begun FY 2024 with some meaningful new wins in both motor and driveline businesses that give us the confidence that we are moving swiftly on our long-term strategy. Three of the new programs, one, also mark our entry into three distinct new market segments that we had not been addressing before. We have additionally made substantial progress on our technology roadmap by partnering with a road-tested technology partner in Equipmake. This is to enter the high- voltage motor and inverter space. The macro view of the markets we serve also remains positive, with light vehicle sales in both U.S. and Europe growing by double digits on a year-on-year basis in Q1. Growth continues to look robust in most of our markets. The Indian market also did well in passenger cars and was, I would say, flattish in CV and off-highway. Overall continues to look positive. Coming to the numbers. On a year-on-year basis, our revenue grew by 24%, while EBITDA and net profit increased by 43% and 48% respectively. This happened because our margins have improved due to product mix as well as operating leverage. Battery electric vehicle revenue grew by 13%, and the BEV revenue share was at 26%. Both these metrics should have been higher, if not for the subsidy reduction impact on the EV two-wheeler segment, which we believe should ease out going into the next few quarters. We move to an update on our biggest strategic priority, which is electrification. Our BEV revenue continues to grow, and we continue to build on our EV order book. In Q1, 3 programs have gone into production, 2 in the motor business and 1 in driveline, and this takes the number of programs which are active to 23. We have also added 4 new EV programs and 1 new EV customer to the order book in the last quarter. One program is for EV differential gears for a North American customer. The remaining three program wins are substantial enough that we would like to elaborate upon them in the next slide. We wanted to emphasize these wins as they are meaningful for the future of both businesses, financially as well as directionally. The first one is a differential assembly program for a Class 5 electric truck for a new North American customer. This customer is a new age OEM of commercial vehicles. Last quarter, if you recall, we had won our first ever order for commercial vehicle differential assemblies, and by following up on that with this second order, and that too with a new customer, we can see that the electric truck market, especially in North America, is becoming a meaningful addition to our future revenue. The second one is a large volume traction motor program that we have won from an established Indian two-wheeler OEM, who's an existing customer. This program is for their upcoming electric scooter model, which is expected to target the more, let's say, affordable market segment. This program is slated to become serial production in this financial year itself. You know, repeat business wins from the same customer are always special, because if you win a business again for a new model that a customer is introducing, it proves our merit of being the first choice supplier or the first supplier, and it shows the faith a customer has in the quality and delivery of our product. The third new EV program win is an interesting one once again, it's a mid-drive traction motor as well as the motor controller for this, and this is for electric tractor application. Like the second program, this too comes from an existing customer, where we currently supply motors for their electric three-wheelers. Apart from the obvious show of faith, this win is also important as it is our first traction motor order for tractors, and this goes to show our journey and the progress we are making on it. Two quarters ago, if you remember, in Q3 of last year, we had presented to all of you this slide on what is our approach to electrification and how we intend to cover both passenger as well as commercial vehicle applications, and all the segments of that. It gives us great pride in reporting that only in six months we have secured new orders that enable us to address almost all the market segments in the driveline business. Only one remains, 40 to 100 kW in commercial. In the motor business, we continue our steady journey, moving up on both the capability axis of power as well as voltage. When we did our first earnings call, nearly two years ago, our driveline business used to cater only to passenger vehicles in the electric vehicle space. Our motor business, on the other hand, had barely begun in EV, and we had a couple of EV programs contributing literally next to zero revenue. The progress we made in only 2 years is quite remarkable, I mean, sometimes even to ourselves. I think this mindset and approach, one of continual addition of new products and new market segments, has been and will remain the reason we grow much faster than our industry. This slide, I think, is a good visual summary of this section. It shows the reach and diversity of our electrification mission. This quarter, as you can see, we added 1 new customer in North America, while adding 2 programs, each in North America and India. This brings us to our net order book with the addition of INR 13 billion worth of new orders last quarter. At the end of Q1 FY 2024, our net order book had expanded to INR 220 billion. Two interesting things, the EV portion of this has now reached 78%, and if you notice the other side of it, which is non-EV, in that, passenger vehicle is only 6%. If we do believe that commercial vehicles and off-highway are less, are going to electrify, let's say, later, the business at risk is very, very low for us in the order book. Of course, in addition to the four new EV programs that we discussed, we have also added 10 new programs for non-EV applications, out of which we would like to highlight one new win, although it is non-EV. We wanted to emphasize this win as it is our first differential assembly program for recreational off-highway vehicles. This order is from a new global customer, and apart from signaling entry into yet another new market, it is quite material from a revenue perspective as well, but most importantly, from a strategic perspective. This category of vehicles, in our humble and limited opinion, would be the least and last to be affected by electrification. Which makes it a very good business development target for our starter motor business as well. That's what we would hope, that we would like to target this for that segment and try to get more traction here. Our fourth KRA is diversification. On this slide, you can see that the trend of increasing electrification and decreasing ICE dependence continues unhindered. In the last two years, we've seen the ICE-dependent revenue shrink to only about 11%. Geographically, the revenue mix is largely similar to the last financial year. North America remains steady at 43% of our revenue in Q1, which is quite robust growth because we have increased by 24%, and to maintain that in such a large market means it's a very good time for North America. Second, after dropping to nearly 11% revenue share in Q1 last year, the European market has also recovered quite strongly and it has come back to 23% of our revenue, which suggests a return to, I would say, normal demand. Coming to product mix or vehicle segment mix, the most glaring change is the reduction in revenue share from traction motors for electric two-wheeler and three-wheeler segment, and this is due to the reasons I've already covered earlier. The other change would be the exceptional growth in the differential gears business this quarter, and the lack of the similar rate of growth or relative growth in conventional starter business. Having said this, we expect the traction motor business to gain relative revenue share this year and be the fastest growing product segment for us, as there are several new programs that have either already begun or will begin in the next few months. With that, 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. This is our technology roadmap that we share with you every quarter. This quarter, I would like to highlight some important products, which are about to move from the white area to the blue zone, which is high- voltage traction motors and matching liquid-cooled inverters. We expect to commercialize these products in year 2025, thanks to our recently concluded partnership agreement with Equipmake of the U.K. Equipmake's next generation electric motors differ from the conventional permanent magnet machines due to their unique and patented spoke architecture. Here, the magnets are arranged like the spokes of a wheel, allowing the best use of the magnetic flux and achieving the highest torque density. You need to use the most powerful magnets to get the most power-dense electric motor. Those magnets don't like getting very hot, so they must be kept cool. With a spoke architecture, we can have the cooling liquid very close to the base of the magnets, which is impossible in the conventional internal magnetic machines, as a result of which, we can get very highly effective heat extraction. This efficient cooling system means we can run spoke motor harder and for longer. These motors are around half the size and about 80% of the mass of the equivalent conventional interior permanent magnet motors. They are among the best in the world in power density. Equipmake's very high torque, high power motors, high power density motors, meet the needs of the growing electric bus and commercial vehicle market. The technology has been tested, proven, Equipmake has delivered these motors to several customers worldwide. Our agreement with Equipmake covers the EV drivetrains, consisting of the inverters and the motors in the 100 kW and 440 kW, 100-440 kW range for electric passenger cars, buses, commercial vehicles, and off-highway vehicles, including tractors. We will have the exclusive rights to sell Equipmake's motors and inverters in the licensed territory, which is India, Thailand, and select South Asian markets. We will manufacture these products in India and supply them, obviously, to our customers in licensed territory, but also to Equipmake's other markets. In other words, our partnership with Equipmake will help us add high- voltage traction motors and inverters to our product offerings. With that, I hand over to Rohit to cover the financial update. A very good day to you all. It's my pleasure to share the key highlights of our first quarter numbers. Our revenue during the quarter grew by 24% to INR 732 crore. Our BEV revenue grew by 13% to INR 184 crore, and as Vivek has already mentioned, it was affected adversely by a loss of sales in India, electric two-wheeler, three-wheeler market due to reduction in FAME II subsidy. Non-BEV revenue grew by a robust 28% to INR 548 crore, a growth of nearly two times the underlying growth in our key markets of North America, Europe and India. During the quarter, our EBITDA grew by 43% to the highest ever number of INR 203 crore. There was a recovery of about 3.6% in EBITDA margin to 27.8%, primarily due to better product mix and operating leverage. Our PAT grew by 48% to INR 112 crores, reflecting the improvement in our EBITDA margin. PAT, adjusted for exceptional expense on account of ongoing acquisition-related diligence work, grew by 51% to INR 114 crores. Next one, please. Coming on to the key ratios, which is the last slide in the presentation. Our value addition to employee cost was stable at 6.4 times this quarter. Our return ratios of capital employed and return on equity continue to be strong with some improvements. ROCE was at 31.4%, and ROE was 27.1% due to high year-on-year growth in the profits. Our net debt to EBITDA continues to be below zero, as net debt number is negative. Working capital turnover ratio has further improved to 4.4 times due to higher last twelve-month revenue. Fixed asset turnover ratio was slightly lower at 3.8 times, primarily due to new capitalization done during the quarter. With this, we have come to the end of the presentation. I'll now hand the proceedings back to the Nomura team for Q&A. Thank you very much. Now we are at the Q&A portion of the session. If you wish to raise a question, please use raise-h and function located at the bottom right of Webex page. We will unmute your line and prompt you to speak up, or you can submit your question in the Q&A chat box addressing to all presenter. Please be reminded to keep your questions to a minimum of two questions. If you have more question, please return to the queue. Thank you. We have a couple of participant has used the raise- hand. We will start off with Mr. Gunjad. One second. Your line is unmute, Mr. Gunjad, please go ahead. Mr. Gunjad Priyani, are you able to speak up? If you can't speak up, you just submit your question in the chat box. We will now go to the second participant, Mr. Jinesh Gandhi. Please go ahead with your two questions. Yes. Yes, sir. Yeah, congrats on a very good set of numbers. A couple of questions from my side. One is, can you talk about drivers of gross margin improvement in 1Q? We have seen a very sharp improvement in gross margin, so is it just the product mix or there are also additional benefits of commodity which came in? Similarly, other expenses have gone up quite substantially on quarter-over-quarter basis. If you can clarify on these two P&L item, and then I have one more question on the business. Jinesh, on the margin improvement side, there is no commodity benefit which is there in this quarter. It's purely on account of improvement in the product mix and operating leverage. Sorry, what was your second question? Other expenses have gone up on QoQ basis, so any one-offs there? There won't be one-offs, actually. Other expenses will also have manufacturing expenses, so it's also a function of change in the mix. There are no exceptional expenses in this quarter, I mean, except for what is separately disclosed as ex, exceptional expense, which is a small INR 3 crore. Sure. Sure. Just to help Jinesh understand, in the driveline business, raw material expenses are relatively lower, but manufacturing expenses are much higher because there we start from steel and build everything in-house. In the motor business, raw material expenses are higher because there are also a lot of bought out items and it's assembly. The manufacturing expenses are relatively lower. As the product mix shifts between motor and driveline, these numbers change, but there is nothing exceptional. Right. Right. Okay. Second question pertains to the order book which we have, and as the revenue ramp up over the next 2-3 years as this order book comes into P&L. What are the factors you're looking from margin perspective in terms of push and pull, given that we are already at about 27.5%, 28% margin? How do you see margin evolution based on the order book coming into the into P&L over the next 2-3 years? Jinesh, the answer is the same as it has always been. I mean, this is our ninth earnings call, and I think we've answered it nine times. We expect our margins to remain in the range of 25%-27% over the medium term, and it shouldn't change that much. If you look at every year, yes, there could be quarters where it could go very out of this range, but it, on an annual basis, it always remains in that, and that is what we have seen for the last, I would say, 15 years. That's where we expect it to remain also, even going forward. ... got it. I have a few more questions. I will come back in queue. Thanks. Thank you, Jinesh. Thank you very much. Let's go back to Miss Gunjan Prithyani. Your line is unmute. Are you able to? Hear me now? Yes. Very good. Go ahead. Two questions. Okay. Sorry about earlier. I don't know what happened, really. Thanks so much for taking my question, and, you know, really impressive wins this quarter. Good to see the way the portfolio is expanding. I just wanted to get a bit more color on this Equipmake, you know, because this is absolutely new product category. You know, what I really want to understand is, you know, what is this arrangement? Particularly, is it, you know, we going to be manufacturing for them in India? Is it sort of outsourcing? The business development that you sort of referred to in the release, that business development, you know, you know, how big is the opportunity size? If I think about it, e-buses is something which is already seeing huge traction. Is that something that we can cater to, or is, you know, is my understanding correct on that front? Maybe, you know, a little bit cover that, because I haven't heard much about it in terms of the arrangement as well as the economics. Sure. Gunjat, as usual, you are more right than wrong. You're very close to the thing. India and Southeast Asia, Thailand, these countries, as you know, India is the second largest bus market in the world. This is where Sona Comstar takes the lead and does the business development, selling, et cetera, and Equipmake is paid a royalty, which is, say, X% of the gross margin. When Equipmake does marketing in Europe, U.S., U.K., and wins an order, that's where Sona Comstar's role will be to manufacture those motors for them. The two motor categories that were presented, one is very suitable for buses, that's where, if you saw, the power density is almost twice the competing motors. That is for the bus category. The other one, which is more, I would say, suitable for cars, it is quite good and compares with the best, but it isn't so much relative outperformance. I would say bus is where the primary focus is. If we get any other applications, of course, great, but that's the focus, market. Mr. Deshmukh, sir, if you can add anything more on the arrangement, it would be nice. The arrangement is exactly what Vivek mentioned, is that we will have the manufacturing facility in India, and since our market, India and the Southeast Asia, is the largest, which is the licensed territory, whatever we make here will be to serve that market. If Equipmake gets any business from outside this territory, which is Europe, U.K., U.S., et cetera, then it will be like subcontracting. They will use our facilities. Our facilities will be mainly set up for our market, which is India and Thailand and Southeast Asia. That's the arrangement. Just to add to Vivek. Hi, Sunny. Mr. Deshmukh comments, the APM-200 will also be a very good product for the LCV segment in India, because that would be capturing between 80 kW to 150 kW. It's a very, very light and it's very, very efficient motor design. LCV is the segment where we can use APM-200. Correct. My bad, Satay, forgot that one. Actually, electric CV market, which, if you saw that strategic approach, is the right next to where we reached this time. We generally believe that is a market that should electrify very fast and should electrify completely in India. If the large, LCV players, they seem to be fairly serious also, I think there is a good scope for that motor to succeed, because compared to the competition that is there in that segment, this motor will perform quite well. Power density upon dollar is what we have to deliver to customer, and that's our objective. Anything you can put in terms of, you know, the opportunity size? I mean, target I get is small commercial vehicles, the buses in India. If I have to think about the opportunity size in terms of, you know, how much, let me put it, what is the cost of, you know, broad range, if you can share? The e-buses that we see, you know, from STU orders, is that something which is also the relevant target market? Yes. The answer, in a more prosaic sense, is this, that if you take the bus market and the LCV market, how much of that will electrify? That's a call you can take and then make that assumption. Mm. The entire electric CV market, entire electric bus market, and frankly, even the tractor market. Now, what percentage will electrify, let's say, by 2030, 2035, that we leave to you. We don't do that analysis. As you know, and I think I explained to you before, if we think a market is large enough, and if we think we have a product that puts us in the best 3 or 4 in the world, we go for that market. Because if you read Clayton Christensen's The Innovator's Dilemma, large companies often fail to address new and emerging markets when they rely too much on TAM and what is the market size. We try not to fail in that trap. Whenever we think a market opportunity is big enough for our scale and is interesting enough to do, and we have the right product, we tend to go for it. Assumptions on electrification is the only thing that would vary amongst different people who try to size this market, but it is significant. Even if you take 100 buses, right, and you calculate the motor inverter cost, it is actually decent enough number for us to stake our claim there. Okay. Okay, got it. I mean, I was trying to understand the value opportunity, but maybe, I'll, you know, I'll maybe take it later. Just take extending this forward on the traction motor, clearly, this is now in, you know, like you called out, will be a big growth area. It goes beyond the e-two-wheelers and three-wheelers. You know, if I have to think about the contribution that can come through from this sub-segment, is that something that you're, you know, you can call out? How big can this become in next, like, 3 years or so, in terms of the contribution to the revenue? Not really, no. That I'll be completely honest, we don't know. We know it will be higher than what it is today, and that is good enough for us to continue. How fast depends on so many factors, including government policy, government support, et cetera, that we don't want to get into that bit. It's meaningful, and it's a high growth rate, and that's good enough for us to proceed. Okay, just last question, on the differential assembly. You know, how does the cost or the value differ from, you know, PV differential assembly to a CV or truck differential assembly that, you know, you've been winning for last 2 quarters? By a lot. Any number? It depends on the, from, customer to customer, Class 3, Class 4, Class 5, Class 8. I mean, it's I can't really give it in that straight an answer, but it is many time. I think we gave the range last time, that here we're talking about from $150-$750 per vehicle. $150 for the lower class trucks and $750 for the higher, I would say Class 5, Class 6. Yeah, it's much higher. All right. Thank you. Thank you very much. Thank you. Just a reminder to all participants, please keep your questions to 2 maximum. If you have any further questions, you can join back the queue. Appreciate it. We'll now go to Rishi Vora. Hi, your line is unmute. Please go ahead, 2 questions. I think that acquisition has been delayed, so when should we expect that acquisition to go through? Also, if you could give some business update about Novelic as well, how it has done over the last one, two quarters. Hi, Rishi. I suppose you were asking about the Novelic transaction. I'll let Rohit answer this one. Rishi, it is indeed delayed. We are expecting to close this next month. That's the answer to your first question. The second is performance of Novelic. Is that the second question? I would say this year it's been largely in line with the plan that they had shared with us initially. For us, I mean, the real performance will start kicking in when we start consolidating, and that's after closure of the transaction, as you know. Right. Thanks for that. Just a follow-up on Equipmake. Like, when should we start expecting the company to manufacture this product? Because Equipmake is already going to supply us one order, so when should we expect the manufacturing to start of the products? Have you also started discussing with the domestic OEMs? Any color on the product feedback or whatever you could share at this point in time would be helpful. Thank you, Rishi. I'll invite Sath to shed more light on that. Rishi, from the production point of view, we are targeting 2025 to start our commercial production. We are validating these products. These are already used products in the U.K. and other territories. We are working on to do the validation of these products and the technologies to suit the Indian conditions and the roads. We are targeting to complete that by this year, and we will start working with OEMs post those validations. Our plan is to launch sometime in 2025. Understood. Just last bit on Equipmake, how should we look at the margins of this product vis-a-vis our business margins? As we will be paying royalty, some part will also be more like we'll just be supplying motors to traction motors to Equipmake. Will it be lower than the business margins or like any sense around that? Well, it'll be lower than 27% for sure. How much lower? Even we will find out once we start doing it. Yes, there will be a royalty element. They will also in the space that we will be doing manufacturing, and then some margin will be taken by Equipmake for doing the marketing, et cetera. There obviously it'll be lower. Yeah, expect it to be lower. How much lower? Again, we don't know today. Understood. Thank you. We now move on to the next participant, Amyn Pirani. I think she has gone off. The next participant will be Arvind Sharma. The line is, yes, answer the question. We'll go on to the next participant, Basudeb Banerjee. Hi- Basudeb? Sir, go ahead. A couple of questions. One is with respect to the last year, those tie-ups with C-Motive and IRP Nexus, Israel, those news came up. Any update on those tie-ups products when they are getting commercialized or business coming from those two tie-ups? That's the first question, sir. Basudeb, I'll answer that, and I think we mentioned it very clearly, even in the earnings call at that time. Those were product development partnerships, and if you were to look at the transcript, I think I had written that somebody had asked that what is the probability of success? I'd said between 0 and 100, which is what it remains. Equipmake is a commercial partnership for a proven product. Those 3 were to develop products. When they do get developed, and product development is the thing that 1 can't predict, day 1, that this will happen, and then it will happen at a cost that we can sell it at. Then the third, which is how many will we sell? I think that's too early. If any of those do get developed into commercially viable products, we will certainly inform everyone. Sure. Second thing, sir, any update on PLI related event, et cetera? We are moving on our application. It has been, and I'll choose my words very carefully, it has been a slow process. It isn't as simple as it appears. I think for the last year, from what we know from people in ACMA, et cetera, no auto component company has been approved. We are working on our application, and, yeah, we will let you know when we know more. I mean, I, even I feel bad. I wish I knew more. We don't. Sure. Last, if I can, chip in, like, in the initial comments you said, around INR 130 crore, revenue missed because of the film subsidy reduction. Am I right, sir? INR 100-INR 120 is our estimate. This quarter we lost about INR 25 crore from what we had budgeted from our electric traction motor customers. We did an analysis of what we think will be the whole year impact, and INR 100 is the best case, according to us, and INR 120 is the worst case. That's what we are seeing. Yeah. That analysis was based on June retails or a more holistic picture? Because in July, despite that reduction in subsidy, retails have started to improve. Yeah. I mean, if first week of June, it would be far worse. No, slightly more realism after the first 15 days of July. Okay, understood. Thanks. Thank you very much. We go to the next participant- Basudeb, I get what you're saying. We could be positively surprised, but this is what it looked like on 15th, 16th July, and that's where we kept it. Let's see what happens. Sure. Sure. Thank you very much. We go to the next participant, Sonal Gupta. Your line's unmute. Please go ahead. Hi, Sonal. Your lines are mute. Are you able to speak up? Yeah, I think, we can't hear you. Would you like to submit your question in the Q&A chat box, please? Is there a problem with our end or not? That, I mean, three or four people, I think, they're not being able to speak. Hi, Sonal, is that you? Yes. Hi. Sorry, I hope I'm clear now. Yes, you are. Okay, great. Thanks a lot. Just a couple of questions. One, I mean, on the conventional motor side, right, both the mild hybrid as well as the conventional electric, starter motors, we are seeing a very lot of quarterly volatility. Just trying to understand what is happening there. Is it because of customer production issues, or what is driving this quarterly volatility? Sorry, I didn't get that. Sorry. I'll repeat it again. I don't know if you will... I was just trying to understand, there's a lot of quarterly volatility in terms of the revenues, so just trying to understand what is the reason for that and how do you see the this segment, is this more like a flattish segment or what's happening there? Yes, I'll let Sat answer it. I mean, look, if you were to look at the long term, starter motors as a product would decline to 0, right? Now, is that date in 2032, 2033, or is it 2038? We don't know yet. We prepare for the worst case in that scenario. Only starter motors for, I would say, off-highway and maybe some segment of commercial vehicle might survive. Commercial vehicle, we are not there. Off-highway, we want to get into, but not in the tractor segment, in more construction equipment or recreational vehicle segment. We'll see that. Long term, it's going to decline. In the short term, yes, there has been volatility because this business has been focused mostly on North America and Europe, right? Very few, little bit sales we do in India. Yes, last five or six quarters, because of supply chain risk, the Russia-Ukraine situation, there has been a lot of fluctuation in those two markets. Apart from that, nothing exceptional has actually happened. If you look at absolute revenue from three years ago to now, it might not actually be very different. It is a long-term downward trending product. It hasn't shown up yet, but it will at some point. Got it. I understand there's a lot of shift, like in Europe, more than 20% BEVs are there. I mean, are we actively seeking new business in these areas, or we are sort of completely focusing on the traction motor for EV side? I'd say both, Sanal. While it is a market that eventually is going to decline and traction motors is the future, if one looks at it, in 3 years out, traction motors will be a larger business for us than starter motors, already. There is still focus on trying to find niches in which starter motors will remain. There is very little focus on trying to maximize within segments we know we are not going to be in. I think I mentioned that recreational vehicle category. Similar categories, if we find, we will keep trying to make that investment last as long as possible for us. Got it. Just my second question, was on the order book size, on the new order wins that we are giving. I mean, like, is this based on customer projections or volumes? How does this work? I mean, like, how do you estimate that? I mean, because why I'm asking is that you're signing up these new- age OEMs who do not have a very long history, right? Always tricky. Always tricky when you deal with, customers who you don't have a history of, you know, their forecast accuracy. I'll let Sat answer it, more, because we are good. From my side, I think just we are being very conservative. That's just the safest way to do these things. Sat, you can add. Yeah. Generally, I mean, it's based on what's the customer has projected or based on the pricing agreed with the customers. We take a little bit conservative view when we put it in our order book. The data we get is from the customer, and on which base we have taken the pricing. Thank you very much. We'll go now to Hitesh Goel. Please go ahead with your question, Hitesh. Yeah. Hi, thank you. My question first is on the, you know, Europe part. Can you give us some sense on the BEV parts, BEV revenue? Actually, how much is, you know, Europe from, in this right now? You know, there is, you said that one customer program is ramped up and six is yet to come through. I just wanted to get the Europe revenue out of BEV, in the BEV revenues. Hi, Hitesh. This will require some work on our end. I don't think we have that ready because we don't segment it internally also that, with that many cuts. I mean, when we do it, even internally, we have the geography and then divide it by category. India PV, India off-highway, India CV, Europe PV, CV, off-highway, this is how we do it. We don't sub-segment into battery, electric or not, we'll have to kind of get back to you on this one. No problem. No, because I was asking because it's an important part from ramp-up phase for the electric programs, right, Europe? I was just trying to- There is a program that has started and that has picked up quite well, actually. I wouldn't know the exact percentage. Okay. My second question is on the BEV. Can you give us what is the e-motor revenue out of that? Just to get a sense that how we can. Yeah. That we give more. 2.5% was this quarter. Last quarter it was 4%. That, if you go to product mix, Pratik. Yeah, in this, we give this one. Yeah, that's right. You can see, traction motors 2.5%. This used to be 4. Traction motor is all medium. Okay. Sorry, I missed that. Thanks. Thanks, Vivek, and all the best. Thank you, Tej. Thank you very much. We go to Chirag. Chirag, your line is unmute. Please go ahead. Hello, am I audible? Yes, Chirag. There is a bit of an echo, but you're audible. Yeah, I have some issue. Sorry about this. I don't know why there's echo. Quickly, two questions. One, can you indicate something on your cross-selling opportunities that you are looking at, you know, given that the product book are now very well widened? Can you talk a little bit about it? Secondly, coming back to Equipmake, what was the driver of this arrangement? Was it a product gap that you were looking at in your portfolio or something else? How do we look at the further product opportunities? Sure. The second one I'll take up first, and then Mr. Deshmukh can add on it. It was a product/capability gap, because if you look at the bus market, not only is the power much higher, it is also the voltage is also much higher of the system. As you know, we have been progressing quite well organically on our own path, but to get there, it would have taken a fair bit of time, and we would have missed the first wave. If you miss the first wave, you only come in the second wave as a second supplier. Second suppliers traditionally compete only on costs, right? You have to be better cost. This, we didn't want to take that role. Hence, to accelerate that. That is the biggest driver. I'll let Sat and Mr. Deshmukh add that. One, of course, is that electrification, we have seen that it's happened first in two-wheelers, three-wheelers, the next electrification is gonna happen in buses and commercial vehicles. That market segment is quite clearly, needs to be addressed. We didn't have the technology for this high- voltage applications. As Vivek just now mentioned, to get there internally would take time and we may miss the bus, right? That's why we were looking at partners who could offer products in that market. With Equipmake, two distinct advantages. One is that this particular patented design, which is spoke design, makes these motors extremely compact. As you have seen, especially for the bus application, they are almost two times in terms of power density. Much compact and much less weight, so easy to package, and so therefore, that is a unique thing that we are in a position to offer with these motors. Second is, of course, as I earlier mentioned, is the high- voltage and bus application. These motors have been used, they have proven, they've been running for several years now in UK, in London, so there is a proof of pudding. It's a product which is already proven. These are the 2 things which drove us to get to have this partnership with Equipmake. Sat, maybe you want to add something? No, sir, I think, you have covered, pretty well, sir. Thanks. What was the first question that Chirag had asked? Chirag, you'll have to help us out here. Hello, am I audible? Yes. Yeah, sorry for this. The first question was about cross-sell opportunities. You have been looking at that since last two, three years, and now that the basket has widened for you have the product basket, and hopefully you add more on that. Are there increasing interactions and acceptance, and are you able to leverage your this? When we look at your revenue growth, we are, given the strong growth that you have been seeing even in the past, you know, we are, as an outsider, I'm not able to figure out whether the growth is driven by single product businesses or more of a cross-sell driven businesses. Where are we in that journey? Just before you answer that, just a clarification on the earlier question. Are you looking at acquiring Equipmake kind of businesses if you get the opportunity or you are happy with this kind of arrangement, you don't want to go for acquisitions? Just a clarification on that. Sure. I'll answer the first one. I mean, cross-sell, I don't know if it's a word in our business. Every product has to win on its own merit. It doesn't matter. This is one company, so there is no... I mean, I'm not sure what that means. Are there places where we supply motor products as well as driveline products to the same vehicle? Yes, there are actually quite a few of those already. It doesn't actually matter, because when you are speaking to the team of one product, who has to select one product or one engineering team, they only care about that. It isn't like... See, this would work if you're selling something which is a commodity product or a commodity service, in which what you're trying to piggyback is on a relationship. That I have a relationship, let me sell more. What we do is highly engineered and customized products which stand on their own merit, there isn't like, if I'm going to discuss, let's say, a final drive differential assembly with a customer, they are not going to discuss the traction motor with me in that meeting. In the same customer, do we have it? Yes, but both teams have independence, both teams do their own selling. Growth has been good because of that. Because relationship-dependent growth will always have a finite shelf life. If your product is better and it offers better economic value, it should be selected, and it should win on its own merit. That's the way we run our business. On the second one, on Equipmake, on acquisitions in general, yes, we would also... I mean, we would be open to acquisitions in general. However, the acquisition threshold for a company to qualify on is a far more stringent threshold than a collaboration. Because not just the company has to be very good technically for us to have a collaboration. For us to actually acquire it has to be not just good technically, it has to be also amazing commercially, which means it can deliver growth while delivering very high returns. That's not usual. We want both. We don't want just one of two, which is why we are fairly, I'd say, selective in our acquisitions. I don't know if that's answered, but that's. I just kind of shared how we think about this. No, no, it fairly answers, it very well answers it. Thank you very much, and all the best. Thank you, Sidharth. We'll now go next, to the next participant, Pratik Kothari. Pratik, please go ahead. Hello, am I audible? Yes. Yeah. I just wanted to ask about the two new products or three new products which you have added to your basket, right? The liquid-cooled inverter, high- voltage inverter. Maybe you could just talk a bit about the size of opportunity, applications in which they would be implemented. Pratik, those products are a result of the Equipmake partnership. Oh, okay. Yeah. This is what we are getting from this partnership, is the IP and the technological capability to build. Got it. Thanks. Thanks. Very helpful. Thanks. Thank you. Thank you so much. We'll now go to the next participant, Sidharth S, please go ahead with your question. Thanks for the opportunity. Sir, my first question, is basically on this power source neutral segment. If you see in terms of share and even in terms of absolute revenues, I think it has grown quite well. I would assume predominantly maybe because of the gear export business. Can you just help us understand about what is happening here, how much any order book or how much growth or which customers are driving this? It's a good question, Sidharth, as usual. It is driven by North American customers in general, and you're right, it's a differential gear segment, and North American customers have been driving this more than any other geography. It is literally everyone in North America. If you look at. Yeah, everyone. It's quite well spread, It is North American passenger vehicle segment that's driving this growth. Okay. Okay. Okay. Any, particular, I mean, market share, would you have an analysis about how much would you have in that region? Based on the orders, I mean, how should we expect that it can go up? Just to understand the growth potential. Last we looked at it was in calendar year 2022. I think if we looked at it... Because, see, we do this once a year, right? This market share analysis that we get Ricardo to carry out for us. In 2022, I think of North American market, we were early double digits as market share. I think there is a lot of room to grow there, a lot. Yeah, that is one of, I would say, one of the tailwinds that we anticipate in the next 2-3 years, it should grow quite strong. Okay. Okay, got it. The value of these products can range between what number? Can you just guide us about this product, how, what is the value generally it ranges between? Sidharth, differential gear pricing is it depends so much on the- Uh. size and the vehicle category. Yeah. The torque that it has to deliver. I think once I mentioned that the lowest price gear we have ever made is INR 45 and the highest at INR 4,500. That's why I think Gujin also asked me what is the value? The thing is, the values are very divergent depending on what size of vehicle. If you take an 800 cc small commercial vehicle and you take an 18-wheel truck, it'll be very different. That's why it's very hard. I can give you average, but the average will hide more than it will show. Value in North America in general is higher, Sidharth, because. Okay. It tends towards bigger SUVs and pickup trucks, et cetera. Larger the vehicle and the larger the weight of the vehicle and higher the acceleration, the higher would be the torque, and hence the higher the value of the differential system. Okay, sir. Okay. Thanks a lot, sir, for the good. We will now go next, to the next participant, Garvit Goyal. Garvit, please go ahead. Am I audible? Yes, Garvit, you are. Good evening, sir. Congratulations on a good set of numbers. My question, lot of questions have been already answered, but the thing is, you mentioned that several programs that entered in, are likely to enter into production in the next few months. In your press release also, two programs likely to commence from quarter four 2024 onwards. Sir, what percentage of order book is likely to be executed in next 3-4 years, sir? Tough one, yeah. Again, I don't think we analyze these things that way, but I would say, the order book is always heavier to the front and in the middle than the back. If I were to state the first, let's say, 5 years, which is what you actually wrote in the Q&A chat box, how much of it will come in the next 5 years? Yeah. I would say, and Prateek and Amit, help me out here. I'd say 65%. 2/3, 1/3. First half, 2/3, second half, 1/3. first half is close to 60%. Okay. I wasn't that off, right? Prateek is the man who has all the Excel sheet and all the data, so he knows more than me. Understood, sir. That's all from my side, sir. Thank you, and congratulations. Thank you, Garvit, for your question. Thank you very much. We go now, to Dhaval Shah. Dhaval, your lines are mute, sir. Yes, Dhaval, we can hear you. Yeah, just one very small question. The PCB assembly project, which you've announced, was this outsourced before or is it more of a backward integration strategy for us? It was outsourced. Also because we didn't have enough production of motor controllers. As one motor controller production increases- Mm-hmm. We want to control every step of the manufacturing. If you've been looking at how we operate, even in both businesses, we like to keep everything in-house. We believe that it gives us far greater control of the technology and the final output, and that's why we want to keep it. It is a fairly integral part of it. I mean, if you're getting into power electronics, the board is important. Yes. More and more of these controller opportunities are coming, so we want to have our own SMT line. Sat, you want to add to the rationale? No, I think, this is a strategy, and, we are on the right path. Okay. Okay. Okay, that was the only question. Thank you very much, and good luck. I'll hand over to Kapil. Kapil, would you like to go ahead with your question, Kapil? Yeah. Vivek, just one question. You know, if you can comment on, you know, the customer concentration that you have, you know, if, where are we today on that? Specifically on EVs, I know you don't comment on customers, but just your general thought on how do you see this, you know, diversifying? We have not seen so much success of a lot of players with electric products, right? In which, at least in which geographies do you see other players succeeding beyond your top customers? See, it's a fair question, and I think let me address it, because quite often people think the concentration, customer concentration is much higher than it is because we don't comment on it. It is actually, I would say, one of the best in this industry. There is no customer greater than 20% for us, not even a single one. Even in EV, I would say the high, biggest customer is, I don't know the exact one, but between 70%-75%, not more. That's right. Yes, it is true that one person being 75% of EV revenue is very high, but that is for this quarter, when a lot of our two-wheeler revenue went away. Over time, this will start coming down. Our top 5, and I think I mentioned it in my shareholder letter this time, that this is a constant thing that we keep looking at. I think it's about, it's less than 60%, top 5. It's fairly healthy. If you look at now, let's just do an equivalence. No company can be, in a world, different from the industry itself. Let's look at the automotive industry. Let's say Volkswagen, Toyota, Hyundai, Kia, Renault, Nissan, and Stellantis. These 5. How much of the world market do the top 5 automakers control? It will be greater than our top 5 customer concentration. The reality is, and this is one of the things that I have seen, that when you're in a public market, people compare you even to industries that you're not in, and it doesn't really reflect that reality. We are in an industry that is heavily concentrated. At the top, the top five automakers are any, I think 60%, top ten are 80%. We are less than 80% for top ten and less than 60% for top five. If you're doing better than your industry, you're okay. Customer concentration is not that, not that big an issue. Yes, we actively monitor this. This is something that is a KPI for us that we always keep looking at. In EV, I think there will be a lot more people doing well. One of the things that's not let us proceed on this was also a product of things. As we add more products that can address more market segments, I think this diversification will increase. Yeah, it is not the problem that it is the number of customers. We actually have a lot of number of customers. What we can't solve for is making or helping our customers sell more vehicles. That's something they have to do on their own. That's basically where our limitation lies. Sure. Just one more question, just so that we understand how, you know, you are positioning the growth for the company. You mentioned about KPI, so I'm just wanting to hear, what are the KPIs for the management? you know, just some broad, top two, three sort of things that you are very focused on. Sure. I think we disclosed them. My contract, by the way, can be found on MCA. We are a very public and transparent company. The first KPI is EBIT for the company. We look at new order intake very seriously because we are a growth company. To deliver that growth, new order intake becomes a very important metric, as important as the current year's profitability or if not more. Third is EV order intake, specifically not just as a subset. If you do that, you actually score on two KPIs. Fourth would be around technology and progress on our technology roadmap. Every year we choose a number that these many products we must deliver. Safety is, we are in manufacturing after all. This is one of those KPIs where the target is always zero. You can only underperform on that KPI. That is important because if we don't put our people first and make the workplace safe, we fail. That is our first charge here as managers, is to ensure that the working environment is safe for our people. There are others that go, once they go below me, there are lots of them on quality, on delivery, on cost. Yeah, I mean, I think when we passed the resolution, and, Rohit, you can help me out here, for the ESOP program, we did put out a lot of the management KPIs, right, with, along with that document? Yeah, so that should have. Explanation statement, actually. Yeah, that we have more exhaustive ones. Okay. Thank you so much, the entire team from Sona Comstar. That was the last question we had. Vivek, I'll hand over to you in case you have any closing remarks. Nothing. Just thank you. Thank you, everyone, for coming here. Your questions obviously make us better at running our business. We hope we have been able to answer all questions. There are some questions we can't answer because either we don't think that way, and hence have never actually tried to answer those questions, or because we don't know and we will try to do better if it's a second category. If it's the first category, hopefully we can continue being ourselves and not being driven by external questions alone. Yeah, that's it. Thank you for attending, and have a great day. Thank you, everyone, for joining this call. Diana, we can close the call now. Have a good day. Thank you again, to all participants. Thank you for joining today's group conference call. You may drop off the line. Have a good evening.