Ladies and gentlemen, good day and welcome to Sona Comstar Q3 FY24 Earnings Group Conference Call. Please note, all participant lines are in the listen-only mode. 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 statements by the management team today, 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 now 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. Hi, good evening, everyone. To take us through the Q3 FY24 results, we have the management team of Sona Comstar, Mr. Vivek Vikram Singh, MD and Group CEO, Mr. Kiran Deshmukh, Group CTO, Mr. Sat Mohan Gupta, CEO, Motor Business, Mr. Rohit Nanda, Group CFO, sorry, Mr. Vikram Verma, CEO, Driveline Business, and Amit from Investor Relations team, along with Pratik Sachan, DGM, Corporate Strategy and Investor Relations. Vivek, I'll hand over the call to you now for the presentation and open the marks. So thank you, Kapil. On behalf of Sona Comstar, I welcome all of you to the earnings call of what has been our best quarter ever in terms of EBITDA, net profit, BEV revenue, BEV revenue share, as well as order book. But first, as is our policy when talking to our owners, our shareholders, we'll begin with the challenges. So first, the off-highway market, particularly in India, has been weak and production declined further in the last quarter. Given our high market share in this segment, this has affected the sales of our differential gears and differential assemblies to this market. Second, aggressive discounting by a few EV two-wheeler companies has temporarily disrupted the EV two-wheeler market and its market shares, which has affected some of our customers' sales, thereby impacting the sales of our traction motors in Q3. We expect this to continue for a few months, but we believe it is unsustainable, beyond that. Third, the Red Sea Crisis. While the current impact on our operations is, negligible, if the crisis continues, we expect adverse effects due to the longer shipping time, higher freight costs, and increased inventories. Fourth, we lost about INR 25 crore of revenue in October due to the UAW strike impact in the United States. However, the strike's now over, and, this production loss will partly reverse in the current quarter. The good news, as is usually the case, far outweighs the bad. So in financial terms, we achieved our highest ever EBITDA and net profit, despite marginally lower sequential revenue. We have also introduced a new product that should improve electric powertrains for EV two-wheelers, and we will cover this in detail later. As the calendar year has ended, we got new Ricardo estimates, and as per them, we have increased our global market share in both differential gears as well as starter motors in 2023. In terms of markets, the European light vehicle market has recovered strongly this year. 2023 was also positive on a YOY basis for the U.S. market, and things continue to look good in both of these markets. The Indian market has been mixed across the three segments that we serve and will likely remain volatile over the next few quarters. On the ESG front, we continue to make progress on all of our sustainability targets, and I'm very happy to report that we reduced the emissions intensity of our operations by over 10% last year. Q3 of FY 2024 was also one of our best quarters for business development. We won 5 new BEV programs, and we closed the last quarter with an all-time high net order book. Three of the new BEV programs won are for three innovative and unique powertrain solutions, which more than anything reaffirm our position as technology leaders in the products that we make. Lastly, from where we stand today and what we see from where we are standing, based on customer schedules and our strong order book, we are certain that electrification will continue to drive strong growth for us in the immediate, in the medium, as well as the long term. Now, coming to the numbers, revenue grew by 13%, while EBITDA and net profit increased by 22% and 24%, respectively. This is because our margins improved due to operational efficiencies, better product mix, and lower material costs. Our EBITDA margins have now been higher than our usual long-term range of 25%-27% for the last five quarters running. So I guess I must comment on this, and I, I have to add that we expect this to stay above 28% in the near term. Coming to BEV revenue, it grew by 28% in absolute terms to the highest that we've ever had, INR 222 crore, while the BEV revenue share increased to an all-time high of 30%. Coming to the nine-month figures, we've increased our revenue, EBITDA, and PAT by 19%, 32%, and 34%, respectively. As I mentioned before, since this is the end of the calendar year, 2023, we got our global market shares calculated. Our starter motor market share improved from 4.1% to 4.2%, as Europe and the U.S. market, where we have higher market shares, have grown faster than Asia. Our market share in differential gears have grown from 7.2% to 8.1% of the global volumes. Just to add some perspective here, this increase is the equivalent of adding around one third of the entire Indian car market to our market share in just 12 months. Now, our first strategic priority, electrification. In this, our BEV revenue share has increased from 25% in the first nine months of FY 2023 to 28% for the first nine months of FY 2024. Our BEV revenue in INR terms has grown by 31% to over INR 6.1 billion in the 9-month period. The growth in BEV revenue for us has been more than double the growth in non-BEV revenue, with EV traction motors and EV differential assemblies being the fastest growing product segments for us this year. We continue to build on our EV order book, and in Q3, we have added 5 new EV programs and 2 new EV customers. There are 3 new driveline program additions. Two are for existing customers in the North American BEV market, which I'll elaborate upon in the next slide, and 1 is for the domestic, electric off-highway segment. There are also two new motor programs for us, both for electric two-wheeler makers in India, and while one is a new customer, the other is an existing top five e-scooter maker. So, yes, we want to highlight these three new EV wins, where we'll supply three of our new or recently developed products, which is always one of the most key criteria for us as we move along in our journey, that how many more branches can we open up into our revenue growth? So the first one on your left is the EV order we won from a new customer. It's an Indian legacy OEM of ICE and electric two-wheelers. We have developed a new product, an Integrated Motor Controller, for the customer's high-performance electric motorcycles. It's a unique design, and I'm very, very proud of our engineering team for having done that so quickly. The second one is the spool gear, you may have heard about it in our earlier presentations as well, for electric SUVs of a global OEM of electric vehicles. This is an existing customer. We will supply these spool gears for the three-motor architecture of the customer's most advanced and perhaps the highest torque SUV. This win has come after a year of joint hard work between our customers and our engineering teams, and it will be one of the highest torque products ever made for electric SUVs in the world. This program will begin serial production in the current quarter itself, so that's a plus. The third is the EV order we won from another existing customer, a North American new age OEM of high-end electric cars. Last quarter, if you recall, we had won the order to supply rotor-embedded differential subassemblies for this customer, and now we've been awarded the epicyclic gear train and rotor shafts as well. This win is kind of proof of how we are growing our content in a car by developing new products in adjacent areas of our focus area. Now, these three wins also demonstrate our capabilities to offer solutions to customers for all types of BEV powertrains. I mean, if the customer is looking to innovate and have a product-based differentiation... We are clearly the partner of choice for this, and this is the advantage that I think we've been talking about for a while, that a technology-led company like ours has over those companies who build to print for standard parts. With these new wins, we now have 53 EV programs across 30 unique customers. Exactly about a year ago, I think this number was 41 programs across 25 different customers. Which means in the last month we've added 12 new programs and five new customers. As I mentioned in my opening statement, Q3 was also one of our best quarters for business development, and on the back of the five new EV programs I mentioned and the seven new non-EV programs, the net order book has increased by 9% over the previous quarter, to reach an all-time high of INR 240 billion. The proportion of EVs in the order book has also grown to 79%. With this, I come to our fourth KRA, diversification. Now, the strong demand recovery in Europe in the first nine months means that the revenue share from hybrid and micro hybrid has been higher than in the previous years. This trend of increasing electrification and decreasing ICE dependence continues unabated, and this year we've seen the ICE-dependent revenue shrink to only about 10%. Coming to geographies, North America remains our largest end market, contributing to 39% of revenue, and this is despite the negative impact of the UAW strike that I spoke about earlier. The European market was our fastest growing market, attributing 25% to our revenue. India remains our second largest market, and its revenue share has remained stable at 29%. In the product mix, the charts changed a little after the NOVELIC acquisition. We have added a new segment called Sensors and Software, which is small at the moment. It's just about 1%, but we hope to add to this as we go along in our journey. The fastest growing segments in products for this year have been EV traction motors and EV differential assemblies. Although differential assemblies here seems to have come down by 1%, it is more the off-highway differential assembly business that has actually lagged, not the EV differential assembly. Differential gears, of course, have also grown quite strongly, and this reflects in the changes in the product mix, where you see that it's gone up from 32% to 33%. In the end market, or market segment mix, we've added a new segment, Semiconductors and Embedded Software. This is to reflect the non-product or the services revenue that we do in NOVELIC. The weakness that I mentioned in the off-highway demand has resulted in the share of non-automotive revenue declining from 12% last year to just 10% in the first nine months of this year. With having covered this, I turn to our Group CTO, Mr. Kiran Deshmukh, to update us on the technology front. Over to you, sir. Thank you, Vivek. Good evening, ladies and gentlemen. We have been making the mid-mount drive motor and low-voltage inverters for two and three-wheelers as two separate products so far. This quarter, we have added a new product in our product portfolio, which is an Integrated Motor Controller. With this development, we have come a step closer to developing an integrated drive unit, the E-Axle, that we show on our technology roadmap. The Integrated Motor Controller, distinct from a separate motor and controller setup, has several key aspects. It offers our customers matchless advantages, and this slide shows some of them. Number one, compact design. The integrated unit combines both motor and controller into a single compact package, leading to a smaller overall footprint. Two, simplified installation and maintenance, because with integration, the complexities involved in connecting and configuring separate motor and controller units are significantly reduced. This simplification can lead to easier installation and maintenance since there are fewer connections and components to manage. Three, improved efficiency and performance. Our integrated system is designed to optimize the interaction between the motor and the controller, leading to higher efficiency and better performance. This is due to the fact that controller is finely tuned to the specific characteristics of the motor. Four, reduced wiring and connectivity issues. Since the motor and controller are contained within the same unit, the need for extensive wiring and the potential for connectivity issues is greatly reduced. This also enhances reliability and reduces electromagnetic interference, which is EMI issues. Five, cost effectiveness due to reduced installation time, lower maintenance cost, and improved energy efficiency.... The overall cost of ownership of the new product is much lower. Sixth, customization and optimization. The integrated unit can be more easily customized and optimized for specific applications. We can design these units for a particular application of the OEM, ensuring that the motor and controller are perfectly matched for the requirement. Next, aesthetic and space considerations. Our integrated unit has a more streamlined and aesthetically pleasing design. It's particularly advantageous in applications where space is at a premium, since it occupies less room than a separate motor and controller. Eight, thermal management. In our integrated unit, thermal management has been more efficiently addressed, since the system is designed to handle the heat generated by both the motor and the controller in a unified manner. Next, communication and diagnostics. Our integrated unit comes with advanced communication capabilities, allowing for better diagnostics and monitoring. This includes real-time feedback on performance, predictive maintenance, and more sophisticated control strategies. Finally, ten, functional safety. This new product is a high integrity system that meets rigorous safety standards and follows best practices in software development processes, for the automotive industry. This ensures both functional safety and quality management in its design and implementation, making it reliable and suitable for critical applications. So in conclusion, our new integrated motor controller unit offers a compact, efficient, and easy-to-install solution, with improved performance, safety, and reduced wiring complexities compared to separate motor and controller systems. On that note, I hand it over to Rohit to cover the financial update. A very good day to you all. It's my pleasure to share our third quarter and 9-month results for FY 2024 with you. In the third quarter of the year, our revenue grew to INR 777 crore, which is a year-on-year growth of 13%. Compared to this, the underlying industry growth was 11% in our key markets of North America, India, and Europe. Our BEV revenue grew by 28% to INR 222 crore, and it constituted 30% of our overall sales for the quarter. In terms of EBITDA and PAT, it was yet again our best quarter at INR 227 crore of EBITDA and INR 133 crore of PAT, showing a growth of 22% and 24% respectively. Growth in EBITDA was higher than revenue growth, primarily due to better operational efficiency and lower input costs. EBITDA, adjusted for ESOP cost under the newly approved ESOP scheme of 2023, comes to INR 233 crore, and if we were to look at adjusted EBITDA growth, it was 25% year-over-year. Similarly, adjusted PAT at INR 137 crore, is higher by 28% year-over-year, primarily due to higher EBITDA. Coming to the nine-month results. On a year-to-date basis, our revenue for nine months grew by 19% to INR 2,300 crore, against 14% growth in our key markets of North America, India and Europe. Our BEV revenue grew by 31%, and it now constitutes 28% of total sales. Against 19% revenue growth, our EBITDA grew by 32% to INR 654 crore, and PAT grew by 34% to INR 369 crore. Growth in EBITDA was higher than revenue growth, primarily due to better product mix, operational efficiency, and lower input cost. EBITDA, adjusted for ESOP cost, similar to what I have just spoken about for the quarterly results, it grew by 33% to INR 661 crore. Our PAT, adjusted for ESOP cost and exceptional expenses in the previous quarters, grew by 37% to INR 380 crore, mainly due to growth in EBITDA margin. The exceptional expenses were on account of acquisition of NovelIC. Coming on to our key ratios, we have seen improvement in our return ratios, primarily due to improvement in our margins. Our working capital turnover ratio has also improved due to better efficiency in the working capital. Our VA over employee cost and net debt to EBITDA ratios are largely similar to the March level, whereas fixed asset turnover ratio is slightly lower due to higher capitalization during the last nine months. This brings us to the last slide in our presentation, which is on ESG update. So this is the first time we are providing you with an ESG update. Yeah. So we have recently published our second sustainability report, and it's available on our website. I would like to share the key ESG highlights for FY 23 with you. The first one being we've been rated by Sustainalytics as a low ESG risk category, with a score of 14.4, which puts us in the top 9% of more than 15,800 companies rated by them. On the environment front, like Vivek mentioned earlier in his comments, we have improved our energy intensity per rupee of revenue by 10%... and water intensity by 2%. Our Gurgaon and Manesar plants have won silver medal in India Green Manufacturing Challenge this year. Coming to the social aspects, we were certified as a Great Place to Work in 2023 for the first time, and in fact, we've been recertified in January of this year, again, as a Great Place to Work with a higher rating than last year. As part of our social initiatives, we are also incubating startups innovating for sustainability in partnership with IIT Delhi and IIM Ahmedabad. To our other initiatives to provide sanitation and other facilities to school kids, we have positively impacted nearly 5,000 student lives. On the governance side, the highlights include winning of Golden Peacock Award for corporate governance in 2023. In terms of board structure also, we are going beyond what has been mandated for us, so we now have five independent directors and two women directors in an eight-member board. The promoter of the company holds the office of chairman in a non-executive capacity, which is also not so common in the Indian listed space. So these were the key highlights on the ESG side. With this update, we have now come to the end of our Q3 earnings presentation, and I'll now hand the proceedings back to Nomura team for Q&A. Thank you very much. We are now at the Q&A session. If you wish to raise a question, please use the Raise Hand function located at the bottom right of your Webex page. We will unmute your line and prompt you to speak, or you may submit your question via Q&A chat box addressing to all panelists. Please be reminded to keep your question maximum of two questions. If you have more questions, please return to the queue. Thank you. We will now go on to the first participant, Jay Kale. Your line is unmuted. Please go ahead with your two questions. Thanks for the opportunity, and, congrats for a decent set of, margins. So my first question was on your Integrated Motor Controller. If you can a little speak about, how has been the journey in terms of the product approval? How much time does it take to get this kind of product approved, and what is the pathway to... You know, you've spoken about this getting adopted in a premium motorcycle. What is the pathway to get adopted in the more of a mass market, product, going forward? And, my... If you can answer for this first question, I'll get back, for the second. Sure. Thank you, Jay. Mr. Deshmukh, I think you'll be best placed to take it. You or Sat could take this one. I just wanted to add as an aside that almost 30% margins are more than decent. No, absolutely. That's frankly excellent margins. Just, it was an understatement, I agree. Mr. Deshmukh, sir, you want to talk about the product development process and approval? Yeah. So this goes to, I mean, in automotive industry, there is a process of approvals, testing, validation by the customers. Typically, it takes its own time, but in this particular case, and today with the electric vehicles, this cycle time is much shorter. But still, this is a traditional two-wheeler manufacturer in India, so it did take its own time, and this is a work which has been going for last almost three years that we started working on this. So in terms of timeline, you can say this, but now, having developed this product, we can quickly develop products for different applications, because this is a sort of a modular design that we have developed. Having said that, to address your second question, for the mass manufacturing, again, it depends on the layout and the space constraints that the particular vehicle requires. Typically, mass produced two-wheelers have hub- wheel motors. This particular application is for a mid-mount motor, so there are certain differences between for specifically applying this particular motor for a mass manufacturing mass manufactured two-wheelers will not be reality because the type of motor which is used there is quite different. Adding to that, and I think Sat can add further, the same concept can be applied to a hub drive motor also, but you have to understand here that this has to be led by the customer's requirement and demand, because when you are redoing the powertrain of a vehicle, you are, in a sense, redesigning the whole vehicle itself. So you have to start from scratch and then say: What would an ideal electric two-wheeler look like? And that's the stage at which we typically get involved. But, Sat, you can shed some light on applicability of integrating motor controller, not just for mid-mount, but for hub- wheel as well. Yes. I mean, it open up lot of opportunities to read across some of the learning, what we have on the mid-drive and Integrated Motor Controller on our hub motor technology. And so, it can be useful for motorcycle as well as scooter operations. And also on the timing, one point is, I mean, it also depends how much validation and what's the- ... development stage, the OEM is, and how much validation they would like to do before they go to SOP. And based on our experience, I mean, that time is very, very different between OEM and the amount of validation each and every OEM does to validate the product. And it's not only the validation of motor controller, it's the complete vehicle validation they do, so. Jay, you have a second question as well? Your second question? No, I think he just unmuted himself. Unraised the question. Sorry. Kapil, can I go to you, Kapil? Yeah, sure. Thanks, Diana. So, I also wanted to check on this margin guidance. You know, we have changed the guidance or increased it to some extent from earlier range of 25%-27% to 28%. If you could just talk us through the factors why we have done this. So, as in all things, we go by data. Five quarters, if your guidance is not true and you are doing more than what you said, you should revise it upwards. So that's, that's the real reason. We don't see. So why we said four, five quarters, if you go back actually and read our transcript, I think about four quarters or five quarters ago, I had said that I think it is going to stay above 27%. So that's kind of held true for four, five quarters. Most of it, Kapil, is material price. So we have seen enough of these cycles to know that when material prices, especially steel, copper, start going up, your revenue grows much faster than your profit. And when the reverse happens, your profit grows much faster than your revenue, which is the natural cycle. So it's more a percentage thing. We don't see any indication of steel going up to where it was in 2021, et cetera, anytime soon, which is why for the near term, we will hold to it. If it changes, of course, we will also change. As they say, when intelligent people are presented with new data, they change their opinion. Sure. If you could also talk about, you know, profitability profile of your business, the way things are shaping up, is, is that also something that, that has contributed to this, margin view? Because, you know, we've heard some concerns that, for example, some of the motor business could be, less profitable. So some of your thoughts on this would be helpful. Yeah. So obviously, look, all products are not alike, all customers are not alike, and all markets are not alike. There are low-margin products, there are low-margin markets, and there are low-margin customers. And it is a mix. As a management team, your job is to balance it and try to solve for absolute profit growth. The percentages, frankly, are an outcome, and that's what eventually, at the end of the quarter, is what you realize, that that's what it is, and then you try to explain it. We don't try to set out to do that. The solution or what we are solving for in the equation is, how can we sustainably grow our absolute profit at a rate that we want, while not taking any decision that affects us in the long term? Because all of these decisions have a bearing, which is very large in the 4-5-year period. So that's, that's the goal, because, see, eventually, if you do discounting of price, you can do growth, you can optimize growth while sacrificing a little bit on margin. You can maximize margin by sacrificing growth. So it is a balance that you have to play. I think we are, we are fairly, versed with it, now, and, we continue to play that. These ups and downs in market segments will happen. They are out of our control. So let's say, like this quarter, I said that there are two weak ones. Electric two-wheeler market is a lower profit segment market, and that our customer sales are lagging, so that is also a contributing factor. Sure. I had one, one more question on the bus opportunity. We have recently read a lot of news flow, that the Indian government is quite keen to increase the EV bus adoption in India, and there are, you know, various kind of orders being discussed as per news flow. As far as you are concerned, you have a tie-up with Equipmake for bus motors, right? So just in terms of how this opportunity, is likely to evolve, what is your view? What kind of discussions are happening with OEMs, if at all, just some views on that would be helpful. Sure. So we've, as you would have seen in our presentations also for the last three years, we've always maintained that the two segments that are likely to electrify fastest in India are electric three-wheeler and electric bus. Just because of the way, the industry is structured, it's an economic asset, and if you run it for more than five or six hours, the payback is far faster in an electric vehicle than an ICE vehicle. So it's just economically sensible to switch, and we believe in that opportunity. Electric three-wheeler, I would say we are moving very fast, and we've done very well. We already have a few orders. In bus, we had partnered with Equipmake to develop, test, validate, and launch those products. We are still in that journey. We haven't reached that journey that we can go offer it to customers. Sat, you can add on where we are and when is it likely that we can start seeing some revenue from that segment? So as far as the bus motor and controllers is concerned from the equipment design, we are right now in the validation stage of those motors, because we need to tune those motors for Indian conditions. And our launch is in the last quarter of calendar year 2025 or the first quarter of calendar year 2026. So that's what we are targeting to work on it. Sure. Diana, I'll hand back to you. I think there's a follow-up question from Jay, and then, we can take- Okay, thank- Many from the chat box as well. All right. Thank you, Jay. Thank you, Kapil. Jay, we are now going to you, back to your second question. Sorry, I wasn't able to unmute earlier. So my second question is, regarding, of course, you know, in an inflationary scenario, you had mentioned about, your top line getting benefited, but that was an empty sale kind of a thing. And now with the deflationary scenario, you know, we've, we've had a 13% odd, revenue growth. How much of that, would be because of that deflationary scenario? Or, or maybe if you can just split between volume and, the reversal of that MTC sale. That's hard to do, because we don't do it. It has very little... See, all analysis, especially for management at least, has to have some purpose. If an analysis does not lead to a specific or actionable output, it is not very meaningful. The fact that steel prices have gone down has led to, you know, price erosion in sales, as you correctly said. How much, we haven't really, I think, tried to figure out. Rohit, you may have this answer. I certainly don't. This impact was around 1%, I would say. Okay, understood. And just on your electric two-wheeler side, you mentioned about, you know, pricing pressures, sorry, volume pressures for some of your customers in the third quarter because of the pricing actions by many of the competitors. How should one look at, you know, the suppliers' profitability in that context going forward? I mean, you did mention about this continuing for the next few months, but then reversing. But is there an incremental pressure on the pricing of suppliers because of this so-called price war? In that context, with our cost structures and our efficiencies, does this also provide an opportunity of a little bit of, you know, market share gains if at all, or consolidation of the traction motor market with more efficient suppliers getting larger share with better cost structures? The very short answer is no, because, Jay, I think, there is a lot of recency bias in the way we analyze information. This thing that has happened is only about one and a half months, and at max, it'll go on for three months. Sat just told you about how we developed a product with a new customer. It took over three years to develop and launch it. These are longer items, and in automotive industry, especially if you're doing critical items like the motor or any powertrain or the drivetrain part, you are playing what are essentially long-term, long-term, objectives with other long-term players. These things don't happen in a haste. No one is coming to us and talking about pricing for motor, et cetera. I think everybody knows that this is not sustainable, these actions, and they will not be there for too long. Cash burn has never been a great strategy for the automotive market. I mean, history is replete with examples of people who've tried and failed at this. But yeah, we will wait and see. So far, it has affected volumes for us, but no other impact. Great, uh- Sat, anything you want to add to it, like what you've seen or heard? I don't think our customers have even brought this up, to be honest. Oh, no. I mean, it's not a discussion actually, either with our customers or with our suppliers. Because, I mean, most of us, I mean, are in automotive business for so long, so we understand these ups and downs. So it's, it's very normal. Yeah, none of us actually in the industry talk in quarters, right? Yeah. We all talk in years, and quite a lot of time is like 7-10 years is the conversation you have. Because let's say you get a sourced on any project, the model will always run for 5-7 years, and then you have to keep spares, et cetera, to supply the vehicle park. So you are entering on, into almost a 10-15-year marriage type of situation with the customer. Thinking in quarters does not lend itself well to the way our industry is structured. Sure. Great. This really helps. Thanks, and all the best. Thank you, Jay. Yeah. So we're going on to the next participant. His name is Gunjan Prithyani. Gunjan, your line is on mute. Please go ahead, you have two questions. Yeah, her name is Gunjan Prithyani. Trying to understand from the next 12-18 months perspective, this is, there's this increasing, you know, narrative that EV, at least ex of China, seems to be slowing down a bit. Hybrids seem to be the new, you know, sort of increasing their share within the global, you know, in Europe or U.S. In that context, you know, is it something that you can comment a bit on? You know, do you see a similar trend when you are having conversations that some of these new EV model that we were hoping that would kickstart in next 1-2 years, get pushed out? You know, what are we seeing on EV and then, you know, hybrid, are we seeing that in motor part of the business? And also, if you can cover the India outlook, there's certainly been some moderation. I'm just trying to get some color from you across segments. You know, how are we approaching more from next one to, one to two years perspective? Sure, Gunjan. Thank you for the question. The EV slowdown seems to be clearly a case of narrative trumping data, but it's okay, I'll answer it. EV sales grew by 31% last year in calendar, which is not slow. And the similar question I remember, we were asked, at that time we went public, so I was asked by my board, in 2020 to 2019 was 40% or something. And then the year after that, it went up by 120%. So, in a longest journey, what—at least from tracking this for the last eight years, what I've realized is, this is very linked with localized market dynamics of two things. One is government policy, and second is new model launches. So if you were to look at those two things, one, let's say... First, let's start with the North American market. That's our largest EV market, so we study that far more than any other. In that, on these two data points, the first one is the $7,500 tax rebate that has come into effect from January 1 itself, and that is now a point of sale rebate. So it's not like a tax refund that you claim and get it later, you can get it immediately, so that should be a good push for EV. For Plug-in hybrid, is $3,750, half, basically, of that amount. Both should do well. I don't think it is applicable or extended to other form of hybrid vehicles. Second, on new model launches, we actually did looked at the program launches of 2024 and 2025 across automakers. The number of EV, I don't remember the exact number, but it's 70-75% of the new model launches are EV. So yeah, one, like I said, from where we stand and what we are seeing and what we are listening to our customers, and looking at the schedules that we have already received for the next couple of quarters, we are certain that electrification will continue to drive, for us, the growth in the immediate, in the medium, and the long term. For us, that's pretty clear. The second part of your question is actually far more hard to answer, which is the Indian market. It's quite mixed, so I will take it in three segments: passenger vehicle, the commercial vehicle, as well as the off-highway. So passenger, I don't know, but it looks decent. I'll use Jay's word, decent. It is, it is plus, but plus, not very much, right? Mm. Commercial vehicles are holding, but our past experience and from what we sense, I think it is, it is going to decline in 2024. And then we come to off-highway, which has already been weak for the last couple of quarters, and it is weakening further. So that's the weakest of these segments. Commercial vehicles, I mean, Gunjan, you've also been tracking this election years. Just before election, it is always a bit of a tough quarter- Mm. When government spending, et cetera, is highly linked to especially the bigger, bigger tippers and construction type of things. So we'll see. Sure. India, India is looking in the three markets that we serve, the weaker of the three, the weakest of the three. What would be the best? North America. North America is best in terms of value and volume for us, so yeah, that's the best. Europe's done a fair bit of recovery, but that's happened. Some of that has played out last year. So Europe would be second, and then I would say India. Okay, got it. Now, this EV thing is good to hear from you, because, I mean, it's been something that we keep hearing that it's, you know, its adoption incrementally slowing down. Honestly, we are, like, far away from what's happening on the ground. So you see the production schedules better than us, so, you know, good to hear that. My second question is on the, the motor. You know, it's clearly looks like a, you know, a, quite compact design. I'm just trying to understand, was it driven more from the perspective that we need to bring the cost down, for the, you know, for the electric two-wheelers? Or this is... You know, is there any, you know, from a performance perspective, does it change anything? I'm trying to understand, you know, what, what led to this, you know, sort of, redesigning of the motor powertrain? And if it is a cost reduction, can you share what sort of cost reduction it is, versus what we were doing earlier on the, on the more high performance motors? Yeah. So, Gunjan, this is a new customer and a new program for a new vehicle, so there's no comparator to what other things we are doing. Cost is certainly better because you're packaging, instead of having two separate item, motor and motor controller, you put it in one. Mr. Deshmukh covered a lot of advantages, but I would say, if this has to be customer-led, right? Because you are changing the way the motor will be placed and changing the way the entire vehicle's powertrain is designed, and how it is going to interact with each other. Mm. There are many technical advantages. Technically, I would say so, yes, there are commercial advantages, but technically the advantages are far, far greater. The biggest one being thermal management. See, if you have both motors and motor controllers, any power electronics item also has a heating issue, right? Mm. All of us have experienced that, right? Any electrical or electronic thing heats up. How quickly you draw out heat from any system is directly proportional to how efficient it is going to be. Delta temperature upon delta time is basically how you improve efficiency in electromechanical systems. Now, this does that far more effectively because you have combined the thermal management into just one unit. Mm. That's a big one. Second, communication. Earlier, you had all these wires connecting a controller to the motor. Now, it's in one, so communication is far more compact. Serviceability will be much better. Lots of benefits, and in hindsight, now that we've done it with our customer, we realize that why didn't everybody think of it? Actually, this is one of those products that this should have always been designed like this, in one unit, that it makes sense. Mm. But yeah, I hope other people will also kind of try and do this and at least for the newer models. You can't do it in running models. It's much harder, but newer models, people should look at this. Okay, got it. Just very last one, I'm slipping in, any update on PLI that you can share? Our PLI internal champion is Mr. Rohit Nanda, so There is progress, but, nothing to report as of now. So like, everybody else, we are also in the queue. So approval process is on. That's all I can share with you right now. Okay, got it. Thank you so much. We will go to the next participant, Sabyasachi Mukherjee. Your line is unmuted. Please go ahead with your two questions. Thanks for the opportunity. Am I audible? Yes, Sabyasachi, you are. Hi. Hi. So, Vivek, first thing, I wanted a clarification. I joined a bit late. Did I hear you correctly, that there was a INR 25 crore revenue loss in October 2023, that would get deferred to Q4? Correct, but I said partially. Let me... I think I said some of it shall partially reverse in this quarter. Okay. Okay. Got it. Next would be, if I look at the, you know, the order book and the past order wins, many of the programs are scheduled to get, you know, into production in H2 and some of them in Q4 of FY 2024. And a large program of electronically locking differential for electric SUV that we won in third quarter of last financial year, that was, I think, supposed to get operation in H2. So how are we, you know, in terms of readiness, in terms of are these on track getting into operational? So just wanted an update from you. Thanks, Sabyasachi, that's. Well, thank you for following so closely. But yes, all of them are on track. Actually, some of them are slightly ahead of track, which is obviously making Vikram's life a little hard, that, it's, it is a lot of work. So when a lot of new programs, launches, come at the same time, operationally, it becomes a lot of time from engineering, teams, production teams. So yeah, we are running six days, sometimes seven days, very little sleep, et cetera. But yeah, it's all good. It's all good. This is a good problem to have. Let's put that way. Great to hear. So, probably a good deduction of your reply to that would be, we should see a good ramp-up in revenues from Q4 onwards. Is it a fair understanding? You know, we don't give forward guidance, especially that near term. But also, let me just put a caveat that in these things, right, when a product launches and the ramp starts, if you're making 100 a week or 1,000 a week, that first 100 or first 1,000 will take far more energy than six months later when you're doing 10,000 a week. So, it has started. All of them are on track, and they are on track as per customer production schedules. It's all I can say. Got it. And lastly, you know, if I look at your breakup of the EV programs that we are currently having 53 programs, out of that, 10 is fully ramped up, 15 is in the ramp-up stage. And another 28, 5, of course, we have got this quarter, which is yet to be, you know, kind of get into production. So, you know, out of this, let's say if I exclude the 10 programs which are already fully ramped up, we have around 43 programs. In the next, let's say, 1-2 years, how are you, you know, foreseeing how many programs will probably get into fully ramped up stage? Any broad color on that would be helpful. Yeah, most of them, most of them. Very few are actually as long lead as the one that we won right now. Most of them should in calendar year 2024 and 2025, yeah, most will ramp up. Prateek, you want to add some better color or more? Yeah, yeah, that's correct. Most of them will ramp up in 2024 and 2025. I think there are one or two programs which will ramp up later, maybe by 2026. Yeah. Got it. That's all from my side, and all the best. Thank you. Thank you, Sabyasachi. Thank you for attending. So we have a few questions. Yeah, we have a few questions from the Q&A chat box. I think you referred to this one, but in case there is anything more to share, can you please talk about the impact on supplies due to geopolitical tensions around the Red Sea? Is there anything more to add, Vivek? Not really. I mean, it's a little early. We are a management team that is, I'd say, fairly, fairly watchful and active. So we have secured some of these things already because if you don't go on winter break and you are actually in office on second January, it's easier to get containers booked, et cetera. So it's not much for now, but as I said, if it continues and it becomes like a problem for two months or something, then we can't even guess right now, because we saw that happen in 2021. Because it doesn't go... There is no linear logic to it. It suddenly will start shooting up, and then availability is not there. Because of that, if you add routes, yeah, working capital costs will go up, shipping time can even go up from 10 to 20 to 30 days. It's very unpredictable, how it will all play out. The biggest impact would be our deliveries to Europe, but even for some of the ones that go into some of the North American, they use that route. So it's hard to say. It will be negative, which is why we brought it up and shared as a challenge, already, if it continues. Right now, it's negligible as an impact. Okay. There is one more question. If you could share update on the NovelIC business, as well as the product development update with Equipmake. I think Equipmake you've already talked about. Yeah, I think Equipmake we, we discussed even the timelines. In NovelIC, it's going well. As all of you know, when you have a smaller company integrate into a large public listed company, there are a lot of different systems and processes and setups, quarterly audits that we are doing. So we're doing three things. One is to ensure that engineering services revenues continue to be stable or grow. Third is pivot this business into starting to make products, and any of the product opportunities that we are chasing could be anywhere between half of their current annual revenues to, one and a half times annual revenue, even one project if you win. So that is a endeavor that's also going on in parallel. And so these three, yeah, all three are happening. Early days, first quarter, a lot of growing up to do in a lot of things, and over time, I believe we will have some positives to share. But just the sheer opportunity size is so immense. I mean, the technology is so wonderful that anything you hit, I mean, if we look at the four or five big ones we are chasing, they are transformational, at least for NovelIC. I know in the overall scheme of things, for Sona Comstar revenue, it might not be a big thing, but for NovelIC, it's, it'll be a fairly large thing, anything that we win. So it's all going. It's been four months that we've been doing this, and it is a wonderful learning experience for them also, I hope. It has been wonderful for us, at least. Yeah. And then, one more question we have is on, you know, we updated the vision statement in the recent quarter to valuable mobility companies. We detailed a lot of opportunities, including aerospace, et cetera. Any homework we have already started, what percentage of revenues we foresee that will come from this new area, say, in next two to three years? Did we, though? I don't think we detailed out. I mean, I have a very decent memory, but yeah, we just said that mobility, it could mean anything that moves. The core thought of it comes from just this simple, simple logic, that anything that has motion or propulsion would need a motor and a gearbox, which are the two primary things we make. If it is an intelligent motion device, it would have also, sensing as well as the intelligence to process it, so sensors and software will be required. That is the reason, and if you refer back, and, Prateek, you can go to that slide, which has a product or market segment revenue mix. Yeah. If you look at it, it already has, I mean, automotive traditionally, if you look at how ACMA or SIAM defines itself, is passenger vehicle, commercial vehicle, two-wheeler, and three-wheeler. That today is 89% of our revenue. Currently, non-automotive, which is industrial, farm equipment, tractors, and the services business, is about 11% of our revenue. This will continue to grow. How fast? When will it become 20, 30? We can't say. It is an endeavor. We are at a very early stage of it. We just changed it last quarter. As I mentioned before, this is not a company or a business that changes on a quarterly basis. These are businesses that are run by long-term people for long-term objectives. So if you say that: Oh, we have intention to get into aerospace, unless you're a acquisitive company that just goes buys another, aerospace company or something, it's not going to happen immediately. It's a statement of intent. Anything that we do takes 3-4 years minimum. So again, if anybody's expectations are that things will overnight change, they won't. This is slow, deliberate, and very, very well thought out plans that will take years of effort and dedication to execute. We are seeing some early wins, but for them to be meaningful enough to match our ambitions, they will always take time. Sure, Vivek. And, just one last question from my side. I wanted... You talked about the outlook for India in terms of various segments, but I specifically wanted to touch upon the electric vehicle outlook for domestic segments like passenger vehicles and three-wheelers. You know, what kind of opportunities are coming up in those areas? Because, you know, it's still a very, very small segment and new models we know will be coming up in 2024 and 2025. So how do you see that shaping up from a Sona Comstar point of view? So we fundamentally believe that the three-wheeler opportunity is almost absolute. Like, in 4-5 years, all of it will become electric. And it is a decent value, decent value segment for us. We have, I think, 3 programs already. We want to be a meaningful player in the electric three-wheeler. We also think that the electric light commercial vehicle segment, anything below 4-ton, we believe, should get electrified sooner rather than later. And in the next 5 years, we'll see a lot of action on it. Almost, almost, most of our existing product R&D efforts in the motor area are directed towards that, because higher voltage and higher kW, both endeavors are on, and both of them will should find a very good and ready audience. The motor one, obviously, is a far higher voltage architecture for the bus, so that I'll keep separate. But three-wheeler is immediate and actionable, and it is happening as we speak, so that's, that's urgent. Passenger car is still slow. I hope it takes off, but I believe in genuinely that unless something fundamentally changes in battery tech and batteries become far, far less expensive, it is hard to go to double-digit penetration anytime soon. Yes, in by 2030, economies of scale, designing pure EV platform will happen. But if we want it to happen fast, in the next three years or so, lot has to happen in battery tech. And the good news here is, there is a lot happening in battery tech. So for those of you who follow battery technologies, and I would recommend reading this, if you can get your hands on the Bernstein Report, on Battery Strategy Roadmap 2023, and you look at what people are doing in either electrolyte space, where gelatinous or solid, or lithium metal, LFP, everybody knows about, and Sodium-I on. There is a huge opportunity that we could go even to $60-$70 per kW, and that, that can change the game. I mean, if you have batteries go down by 20-30%, which are 40%-50% of the cost, EV suddenly become cheaper than ICE. That tipping point, when it will come, is hard to predict, as it is with any technology, but will happen in the next 5-6 years. That's, that's our belief that we've been working on for almost eight years already. There is this thing we had presented, and Tony Seba had done this study of—by RethinkX Institute, on how much time it takes for new technologies to overpower dominant technologies. And this study goes back to examples of 200 years ago. So anthracite coal versus bituminous coal, digital camera versus film, motorcar versus horse. So many examples. Once any penetration of a new technology reaches 10%, it takes usually about 15 years from that point for the dominant technology to get reduced to single digit. Now, that happened for EV somewhere around 2021, that it crossed 10% for the first time. So by our calculation, by 2036, EV will be 90%+ of the total market, and in which I include, to Gunjan's point, Plug-in hybrid, as long as it has a motor and a battery and a charger, for us, it is the same thing. And the battery will be the biggest change in this. I know I'm taking long on this, but this is a subject I'm very passionate about. So, Thomas Edison, I don't know if you know this, Kapil, but in 1908, there were more electric cars in America than ICE cars, right? The electric car actually precedes gasoline or the internal combustion engine. And Thomas Edison, in his notebook, had written: "Motors, easy to solve. Running gears, solvable. Control systems, can be done." And then he wrote battery, and he put a question mark. For a very long time, almost 90 years, we could not figure battery out. This smartphone, this is actually the mother of the modern electric car. The Lithium-Ion Battery made it possible for electric cars to be viable again. Now, that is not stable, though. That is not the final form of the battery. We've already seen it come from $200+ to almost $100 now. The day it goes below $100, and it goes to $70, $80, that's the day this paradigm will completely shift. I think it's a near, company... There are lots of companies doing interesting research, QuantumScape, Northvolt, CATL is doing a lot of good work in this field. So follow that. Again, we are also reading, this is not something we do ourselves, but this is a market we keenly study. At that point is when the Indian market turns, because India will be a cost-sensitive market. In value terms, we are still only about 1% of the world auto market, if you take our passenger vehicle market. For that market to suddenly electrify, cost has to be solved. It is, it has not been solved yet. Thank you very- A very long-winded answer, but again, this is something that I've been studying for nine years, man. This is what I do. No, thanks. That was very insightful. Thank you so much, the team from Sona Comstar. As usual, it's a pleasure to host you. To the investors, we've come to the end of this call. Thank you so much, and good evening. Do you have any closing remarks, Vivek? No, thank you. Thank you, as usual, for those of you, for making time. I know it's slightly late for some of you, to have attended, but yeah, I hope we can continue doing well, and thank you for attending. Thanks, everyone. Have a good day. Diana, we can close the call. Thank you. Thank you.