Ladies and gentlemen, good day, welcome to Q1 FY 2027 Varroc Engineering Limited post-result conference call hosted by Equirus Securities. As a reminder, all participant lines will be in listen-only mode, there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing star then zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Mihir Vora from Equirus Securities. Thank you. Over to you, sir. Thank you, Atsawa. Good evening, everyone. We are pleased to invite you to the Q1 FY 2027 post-results conference call of Varroc Engineering. The management team will be represented by Mr. Tarang Jain, Chairman and Managing Director; Mr. Arjun Jain, Whole-time Director and CEO of Business Unit I; Mr. Dhruv Jain, Whole-time Director and CEO of Business Unit II; Mr. Mahendra Kumar, Group CFO; Mr. Bikash Dugar, Head IR; and Vishal Raval, Head Finance Controller. Without further ado, I now hand over the call to Bikash for the disclaimer. Bikash, over to you. Thank you, Mihir. Thank you, Equirus, for hosting the call. Just a small disclaimer. Today's discussion may include statements which may constitute forward-looking statements. All the statements that address expectation or projection about the future, including but not limited to statements about the strategy for growth, business development, market position, expenditures, and financial results are forward-looking statements. Forward-looking statements are based on certain assumptions and expectations of future events and involve known and unknown risks, uncertainties, and other factors. The actual results, performance, or achievement could thus differ materially from those spoken in any such forward-looking statement. No obligation is assumed by the company on forward-looking statements. With this, I hand over the call to our chairman, Mr. Tarang Jain. Thank you, Bikash. Thank you, Mihir and Team Equirus, for hosting the call. I am Tarang Jain here. Good evening to everyone. India's economy has remained resilient in quarter one of FY 2027, April to June 2026, supported by a strong domestic consumption, improving rural demand, healthy infrastructure spending, and accommodative financing conditions. These macroeconomic tailwinds translated into one of the strongest quarters for the Indian automotive sector, with passenger vehicle sales reaching record levels and broad-based growth across two-wheelers, commercial vehicles, tractors, and exports. Improved affordability, rising consumer confidence, robust freight activity, and accelerating EV adoption supported demand, while rural recovery particularly benefited two-wheelers and farm equipment. For the auto component industry, the positive environment led to higher production schedules, improved capacity utilization, and stronger opportunities in electronics, EV systems, lighting, and advanced vehicle technologies. Despite the ongoing risks from commodity price volatility and global geopolitical uncertainties, the overall outlook for FY 2027 remains positive, with India continuing to be one of the fastest-growing automotive markets globally. In Q1 of FY 2027, we saw strong growth across all the automotive segments on a year-on-year basis. On a year-on-year basis, two-wheelers grew by 22.8%, three-wheelers grew by 39.1%, passenger vehicles grew by 16.8%, and commercial vehicles grew by 15.2%. The EV two-wheeler volume on a year-on-year basis grew by 91%. Despite seasonality effect on a quarter-on-quarter basis, we still saw a growth in two and three-wheelers. Two-wheelers grew by 2.7%, three-wheelers grew by 3.4%, passenger vehicles de-grew by 7.5%, and commercial vehicles de-grew by 16.9%. In Q1 of FY 2027, the company registered a very strong growth of 29.9%, and the consolidated revenue reported is INR 26.3 billion. The growth was supported by both India operations, which saw a growth of 28.6%, and also overseas revenue growth. The momentum of growth in the overseas business, which started in Q4 of FY 2026 and gathered further pace in Q1 of FY 2027, registering a 45.6% growth on a year-on-year basis. As emphasized in our last earning call, our foremost priority remains accelerating revenue growth across both India and the international markets. Our EBITDA for the quarter was around 8.5% as compared to 9.5% during the similar period last year. Our PBT before joint venture and exceptional items for Q1 FY 2027 came in at 4.3% of revenue, an improvement of 20 basis points on a year-on-year basis. The profitability in this quarter was adversely impacted by higher commodity prices due to war-related costs, higher tooling sales, and the business mix. Despite that, the Indian operations reported a 10.6% EBITDA margin and around a 7% PBT margin. The revenue from supplying to electric vehicles in this quarter was around 15.8% of revenue and grew by 87% on a year-on-year basis. In the overseas electronics and lighting business, we have further won some business, notably for our lighting operations in Thailand. Sequentially, the losses from the overseas operations as well as from overseas R&D is reducing. We hope to maintain this momentum of increasing revenue and hence the profitability here. We continue to invest not only in technology, but also in people and strengthening our capability. Recently, we've appointed Mr. Eric Hamon as a Chief Technical Officer for our Business Unit One. He comes in with 25 years of global automotive technology and engineering leadership experience, with deep expertise in electrification, software-defined vehicles, connected systems, embedded software, functional safety and cybersecurity. He has successfully led large scale global R&D organizations, developed next generation mobility technologies, and partnered with leading automotive OEMs to deliver innovative and safety critical solutions. As I emphasized earlier, in India, we continue to leverage our strong customer relationships, technology capabilities and expanding product portfolio to capitalize on opportunities emerging from electrification and the premiumization trends. In our overseas markets, we are strengthening our presence through deep customer engagement, enhanced engineering capabilities and focused business wins, positioning ourselves as a reliable global partner. In Q1 of FY 2027, our net new business wins with an annualized peak revenues of INR 5,991 million. The net debt of the company in quarter one of FY 2027 is INR 5,268 million, which is an increase of INR 316 million from the last quarter, mainly due to the increase in net working capital of INR 441 million due to higher revenues. The net debt to equity is very comfortable at 0.28x. The average ROC of the company is around 24% in quarter one of FY 2027. In this volatile new normal environment, we continue to strengthen our company for long-term growth and performance by taking appropriate decisions and meticulously executing them. Our endeavor remains to improve the contribution margin, control the fixed costs, generate free cash flow, and improve on the return on capital from all the business segments in which we operate. With this, I will now ask MK, our Group CFO, to walk you through the presentation and give more insights into the financial performance. We have uploaded the investor presentation to the stock exchanges as well as on the website. Over to you. Thank you, Tarang. Good evening, everyone. Let me take you to slide number seven in the presentation, which is on the highlights for Q1. As I have seemingly explained, Q1 revenue was at INR 2,634 crore, which meant a growth of almost 30% year-over-year. Out of this, if you eliminate the inflation-related impact, it could be a 4% difference. Within this 30%, Indian operations registered close to 29% growth, and the overseas operations saw a growth of close to 46%. You may recollect that last quarter, Q4 also, we registered a significant growth in the overseas operations. That is continuing now also. More than the percentage, it is the direction which is important here. Revenue from EV models in Q1 was at 16% of total revenue, which again, was a phenomenal growth of 87% year-over-year. Coming to PBT during Q1, it was at 4.3% versus 4.1% shown last year. EBITDA came in at 8.5% compared to 9.5% last year. But this was largely impacted by the war-related impact. Basically, the war-related impact at EBITDA level was totally coming to about 0.75%. This has two parts, actually. The genuine under recovery impacted us to the extent of 0.5%. The remaining 0.25% at EBITDA level or PBT level was driven more by the numerator-denominator impact. Coming to net debt. Net debt was at INR 527 crore compared to INR 495 crore. This was largely because of the front loading of CapEx which we explained in the previous calls also. Regarding the order wins, in terms of net new business annual peak revenue, it was close to INR 600 crore. The prominent wins were relating to the four-wheeler lighting business, then for our Thailand operations from a prominent customer. We also restated the e-mobility volumes in India based on the recent trends, that also increased the overall peak revenue potential. Another significant improvement in terms of the capital efficiency metrics is relating to ROCE, ROE and of course, the EPS improvement also. If you take out the exceptional items in Q1 of last year, which was basically relating to the accounting adjustment which we had to do after the exit from China JV. If you compare the ROCE, last year same time, we were at 23.6%. It went up to 24.6% now. A significant improvement in return on equity also from 11% to 16.4% this time. In terms of EPS also, last time it was INR 11.5 on an annualized basis, which is now INR 20.3 on annualized basis. That's a significant improvement compared to last time. Coming to the other points, of course, the patents filed continues to be strong at 135+ patents. Going to slide number eight. This is about the industry performance. As all of you know, automotive industry continued the good run which started during the GST simplification exercise. In Q1 also, the two-wheeler grew by almost 23%, three-wheeler by 39%, passenger vehicle by 17%, and commercial vehicle by 15%. All these are year-over-year growth numbers. Within this EV two-wheeler volume registered a growth of 91% year-over-year. On sequential quarter-on-quarter basis, two-wheeler had a marginal growth of 2.7% and three-wheeler by 3.4%. Passenger vehicle had a degrowth of close to 7.5%. Going to the next slide number nine. Basically, EBITDA came in at 8.5% versus 9.5% last year. If you compare with the previous quarter also, it was 9.7%, now it is 8.5%. If you really look at the reasons for this, we also had a significant tooling sale in Q1 sorry, at a lower margin, which is more like a significant one-timer. Of course, there'll be some tooling sales every quarter to a small extent, but this was a large number. That impacted close to 0.8%. Other major reason was the war-related inflationary impact, which I spoke about. That was about 0.3%. That was the performance during this quarter. If you really look at PAT, if you take out the exceptional items in Q1, it is almost a 70% growth year-over-year in Q1. The next slide, we updated this information, where you can see what happened in terms of geographical segmentation, India and overseas. India, if you really see, it was like 29% year-over-year growth and a 10% sequential growth. In terms of EBITDA also, year-over-year growth was 22% and PBT was like 41%. Overseas business also, we can see a continuing improving trend from the earlier quarters. The last box relates to the R&D investment, which we started largely from Q2 of last year. That's why it was significantly lower in Q1 of last year. Here again, we see improvement compared to the previous quarter. Coming to the next slide, which is about reduction in net debt. There was a marginal increase in net debt this quarter compared to the March end number. Like how I explained, this was largely driven by the CapEx frontloading. This year is going to be a CapEx heavy year, as we explained in the previous calls also. This is needed to support the growth. Even with this increase also, the net debt to equity was below 0.3x. It was at 0.28x, net debt to EBITDA was below 0.6x. The next slide is about the revenue breakdown and the customer breakdown, which is more for information. Slide number 13, we again gave the order book status. We started with INR 3,509 crore at the beginning of the year. Current quarter, we added close to INR 600 crore. Out of that, close to INR 500 crore has been taken to start of production already. All this is in terms of annual peak revenue potential, not actual numbers for this year. In terms of mix also, if you really see the Bajaj, non-Bajaj mix shows a Bajaj mix of 58% in the annual peak revenue. Two-wheeler and three-wheeler at 75%. Let me stop here. I will be happy to take your questions. Thank you. Thank you very much. We will now begin with the question- and- answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we'll wait for a moment while the question queue assembles. The first question comes from the line of Shubham from Investec. Please go ahead. Hi. Thanks for the opportunity. Congrats on a great set of numbers. First question, you had reported an order win of about INR 600 crore this quarter. Can you please provide the split between the four-wheeler lighting order and the e-mobility one? We have the breakup. Yeah. The bulk is e-mobility, which is a volume expansion on our existing running programs. I would imagine, I think 2/3 is e-mobility, the balance is a combination of four-wheeler lighting. I would say the most significant portion of the balance is the four-wheeler lighting business win. I would say, different smaller business wins across product groups. For your overseas order book now, there have been some reports of expected delay in launches by some overseas OEMs. Do you foresee a situation wherein you would face a delay in your order book execution? Yes. No. For your overseas business. Yes. Yeah. Just to answer this question, we've reported some wins in past quarters, and it's really across multiple customers and multiple programs. Just to answer your question, our main message so far has been that we will be continuing to increase our revenue in our overseas locations. This will certainly still take place because we're not dependent on any one customer here. Okay. For your traction motor business, you had earlier indicated that you are in advanced discussions with an OEM, X Bajaj. When should we expect that order win to flow in? We've already announced one business win, which we expect is going to begin imminently, I would imagine, in fact in quarter two. There is two further customers where, I would say we're in fairly advanced discussion, where also I would expect SOPs to take place in this financial year. Okay. Also, given the strong demand momentum that we are seeing across the automotive industry, and more so for the EV industry where we have a much higher content, how should we think about growth for Bajaj, for the domestic business for this year? If you can put a number around it. Yes. Okay. Honestly, I think it's difficult to predict a forward number, especially if we're talking about a forward number for one particular customer. Of course, if EV penetration continues to grow at the rate at which it has been growing, I would definitely imagine that our e-mobility business would gain further significance in our overall revenue. Hence as a natural result of that, Bajaj would also become more salient than it is today in the overall revenue. Having said that, from an EV perspective, like we've just talked about, there is further customers also that we expect will come on board. Okay. Also, last one on margins. You mentioned about 50 basis points of under recovery this quarter. Now, how much of that you expect to recover from your customers going ahead, and how should we think about margins for the full year? Yeah. The efforts are already underway, so we should be getting it between this quarter and next quarter, most of it. Okay. Thank you. That's it from my side. Thank you. Thank you. The next question comes from the line of Arvind Sharma from Citig roup. Please go ahead. Yeah. Thank you so much, sir, for taking my question. The first question, which you, again, indicated a bit already, is on the e-mobility segment. Based on the order book that you have, how sustainable do you think the growth is? Because this quarter was a very strong quarter. I would say the order book is fundamentally strong, right? We're a primary supplier to essentially the market leader when you combine two-wheeler and three-wheeler. From that perspective, I think, growth fundamentally depends also on EV penetration, which is something that we see gaining momentum rather than, reducing in momentum. Further to that, like we talked about, we have incremental customer gains also, which in my mind, coupled with the fact that the content in an EV that we have is so high, I would imagine that that growth really continues to take place. Just to add to that, looking at the situation globally now, due to this Ukraine war, we do see a very positive, maybe you can call it structurally a shift also in the consumer mindset to move towards EVs, at least in a two and three-wheeler space. Of course, the moment, you see the main volumes are today more in the scooter segment, which is 20%-30% of market. Now we are looking at OEMs, also looking at motorcycles now. Going forward, we do expect that even the motorcycle segment will see EV penetration as we move forward. We, being one of the very significant players in this e-powertrain segment, I think we stand to gain from it going forward. Sir, thank you so much. Sir, the other question would be on the electronics Romania segment. You've given a separate slide on it. Could you please share the key customer segment? We don't have a previous quarter or previous period revenue. How is the revenue trending there? What are the key drivers? The electronics Romania segment. Just to pick up this side, Arvind. The cloud. Yeah. Because this side, Arvind, earlier, our Romania location used to support, was the captive for lighting business. That was clubbed under the lighting revenue. Now, since we are doing more related to E-architecture, and the business which we have won is towards those only, that's why we have segregated that. The growth in that Romania business is going to grow. Because of that, we are showing that slide separately now. Prakash, who would be the key customers out there? We haven't disclosed the customer. Segment. Yes. No, maybe I'll try to answer this one. Basically, our Romania electronics plant is focused on passenger vehicle electronics. As Prakash mentioned, the focus is on a variety of low voltage and high voltage electronics, and we've already announced some order wins in past quarters, and we believe this will continue. Sure, sir. Thank you so much. I have a very small data query. When I look at the revenue breakdown that you have in slide 13, I believe the overseas forging, which is 3.3%, that is a part of the ICE powertrain business, when we move down and you have the actual numbers. Yes. That's right. That's correct. Okay. Thank you so much, sir. That's all from my side. Thanks a lot. Thank you. The next question comes from the line of Rahul Kumar from Vaikarya Funds. Please go ahead. Yeah, hi. You briefly discussed about this, but can you tell us the progress on the top three EV player discussion? Top three EV. Okay. I would say there is a top three in two-wheeler and also the top three in three-wheeler. Today, we are essentially engaged in terms of business relationship with each of the three. Right? In fact, from an e-powertrain perspective, one we already have significant business with, and one more, when I say there is two that we are further engaged with, it is essentially two more from this list of the top three in both these segments. We've also been able to win business, not necessarily for e-powertrain, but for other product lines with another one of these top three players. Really, I think, across the board, I think the engagement with the market leaders here has been extremely strong, and we expect that that will convert into more significant revenue, like I said, through the financial year. Actually, I meant, I think, in the last con call, actually, we had discussed about the progress on the two-wheeler EV side, for the EV powertrain products. On that, we had mentioned that we are in advanced stage with one of the top three. Do we understand that we are now in discussion with both the top three players? Ex-Bajaj. Again, I will repeat. With one of them, we are in discussion for the e-powertrain. With another one of them, we've already won business for another technology product, which we will be getting Q1. Understood. The SOP which is starting in Q2, this is with another EV player, right? Am I right? Yes. Did I understand? Yes. It's another EV player with investment from an extremely significant global OEM. Okay. Understood. Second question is on the overseas, actually. I think there was one project which was expected to start from H2 of this fiscal. Are we on track for that? Second question is on the overseas again, given the robust business we have done so far, the progress which we have done. Do we expect a break-even for the overseas earlier versus the previous guidance of Q4 exit? Maybe just to clarify the second question. The second question, I believe that our message stays the same. We are not changing our message from the past. Regarding the first question in terms of the launch that you're mentioning in midyear this year. We've already had a few new launches this year in our Romania electronics location. I believe that's the one that you are referring to. This is also why we are seeing an increase in revenue quarter-on-quarter in our business overseas. This will continue to increase in subsequent quarters. Basically, it's progressing well. Okay. Understood. Thank you. Thank you. The next question comes from the line of Siddhant Dand from Goodwill. Please go ahead. Yeah. Hi. Our largest customer has taken over a global OEM, KTM. Is there any potential for business over there that we have gotten? Any inquiries? Yeah, of course. Even prior to this, we did a fair amount of direct business with KTM. Post this, I would say, more complete takeover, there is incremental opportunities that had arisen in line with the strategy that Bajaj Auto follows with KTM now. Yes, there's definitely a couple of immediate opportunities, and we hope over time, this translates to more. Okay, perfect. Could you quantify them or too early? No, I'd say it's too early to quantify because KTM is a brand with a very high SKU mix, right? You go at this really step by step in terms of how you grow in there. Understood. Perfect. Thank you. Thank you. The next question comes from the line of Naman Maheshwari from Shanghvi Family Office. Please go ahead. Hi, sir. I hope I'm audible. Yes. Great. Sir, many congratulations on a very robust set of number, I hope this trend continues sustainably. Just two quick question more from a forward-looking point of view. We onboard Mr. Eric. Now, how does the strategy change with him coming on board? Are there some new avenues that we are looking to come in, basically into E-axles, or would it focus more on ADAS? If you could throw some light at what sort of a market are we trying to chase, and how to look at customer wins happen. I know it's not going to happen overnight, but how do you see that from a structural point of view for the company? I think it's a very important and a very good appointment. How does it move the needle or help Varroc grow? That's one question. Yeah. I would say the strategy does not necessarily change. Yeah. I feel Eric comes on board and I think really compliments, with his experience, the path that we have set out for ourselves. Eric has a vast experience with E-powertrain, and this is also where, when it comes to two and three-wheeler EV, I would say really, we're E-powertrain market leader. From that perspective, I think strengthening our position in this core segment, which as we see also is an extremely high growth segment, I would say is a critical priority. Of course, as a part of the roadmap, we look to expand this capability into other market segments. I would say Eric definitely comes with the experience to really lean into that. Whether it is in terms of addressing higher voltage systems, whether it is in terms of addressing, let's say, really more X-in-one kind of concepts, we believe this is where the market is moving towards. We believe we have the core capabilities required to execute it. I think with Eric, I think we also achieve the experience of having seen and done that. Yeah, like you, we are also very excited by the appointment. Yes. Yeah. No, sir. Very good. Sir, just one more part onto the order wins. We see a good traction coming on. How do we look at new engagements that are taking place? There are some new OEMs which have set up their shop in India, in the EV system, like VinFast and everyone. You see that incrementally we can get in that supply chain also, and they are also having a very large expansion plan, we could be part of it. Just wanted some thoughts on that. Yes, of course. With, let's say, the customers you name and also the customers you allude to, we're already engaged, and we would expect to see some action in those spaces. Okay. Many congrats, sir. Keep delivering. All the best. Thank you. Thank you. Thank you. Before we take the next question, a reminder to all the participants, to ask a question, please press star and one. I repeat, to ask a question, please press star and one. The next question comes from the line of Jyoti Singh from Haitong. Please go ahead. Hi. Thank you for the opportunity. Sir, congrats on the big beat on the revenue side. First question on the revenue as well. It is nearly 2x that we have delivered, and we have guided mid to high teens for FY 2027. This is the first quarter we have delivered this kind of growth. What kind of expectation we can build going forward? I think that this year seems to be very strong for us. Though we have grown 30% this quarter, we do believe that probably for the whole year, we could be achieving about at least between a 20%-25% growth. In this financial year, looking at how things are moving at the moment. That would be our expectation, because the second half last year was fairly good. Considering that, I think 20%-25% would be the right level of growth we would be achieving this year. Don't take it as a guidance, but it's more like our ambition. Okay, understood, sir. Sir, also, like earlier participant was asking question around VinFast and other player. Can you guide us any new client that we have empaneled or any other that it is in the pipeline, so that we are seeing the visibility for even FY 2028? I think, especially in any new customer engagement, I think we generally cannot talk about that before there is actual certification of SOP. Having said that, I think it is clear there is entrance, it is clear there are people entering the market. It is clear also that existing incumbents in the market are looking to build more vehicles also for export. Wherever those opportunities are, we will look to participate. We have already won some new customers also in this year. The thing is that we cannot disclose the names at the moment. We are engaged and definitely one of the objectives is to get in new customers also, not just rely on existing customers, who are very important to us. Yes, we are expanding our customer base also in India as well as abroad. Great, sir. Sir, going forward, we are targeting diversification of the customer and some certain percentage that we are targeting from each customer, or Bajaj will be keep continue major customer for Varroc? We said this before, but I would say our path is not necessarily a customer diversification strategy. I think our path forward is really a product line and competence-driven strategy. There is clear product lines where we look to drive growth and where we look to drive focus. As those materialize, I think it really depends on how the end customers also perform in the market, which determines the customer mix for us. The point here is that, like we have said before, that see, Bajaj Auto continues to remain a very important customer for us and will be always. Having said that, I think, we are actually kind of also growing with quite a few other customers. Going forward, you will see that increased revenues coming in from many other customers also, not just from Bajaj. Okay, sir. Sir, just last question on the order book side, this time we have a major customer around 72% from the EV side versus ICE was 28%. We are going to see this kind of revenue shift on the segmental side keep getting I understand we are 95% powertrain agnostic. We are seeing much demand from the EV side and as well as on ICE, or how it is going on? I think there's a few different questions in there. Firstly, I would say we are not 95% powertrain agnostic. In fact, I would say, we're I think only around 70% powertrain agnostic. The balance comes from our ICE powertrain, EV powertrain business. Yes, I think like we said earlier also during this call, we expect the balance to move more towards EV product, really driven by the fact that EV penetration is increasing. Right. This does not mean that ICE is declining in absolute terms, but it means that in terms of the percentage of our growth, we would expect more to come from EV. Okay, great. Thank you, sir. Thank you. Ladies and gentlemen, you are requested to restrict your questions to two questions per participant. I repeat, you are requested to restrict your questions to two questions per participant. The next question comes from the line of Ankur Poddar from Svan Investments. Please go ahead. Hi, sir. Congrats on a good set of numbers. My question is regarding our overseas business. Firstly, can you let us throw some light on how the order wins do we see going forward? Secondly is on our margins, we see that the losses have come down. By when do we expect to break even in terms of EBITDA as well as on PBT, and what do we see steady state margins going forward? Yes. To the first question regarding what we're projecting in the future as order wins. I'll just say again that when it comes to the past year, I believe we have mentioned certain significant order wins. Certainly, we are expecting to see this also in the future. In subsequent quarters, we believe we will be mentioning certain significant order wins, both in the electronics as well as in the lighting space overseas. Yes. Yeah. As far as the margins are concerned, previously also we explained, in two-wheeler we already make money. We are on the positive side already, two-wheeler overseas. Only in Romania we have been having challenges. Earlier also, we explained that by end of this year or by Q4 in Romania, we will reach a bit of breakeven. Coming to the overall guidance, we generally go by PBT targets. Our long-term strategy is to take it to 10% PBT in the next three to four years. All right. Thank you. Thank you. The next question comes from the line of Mihir Vora from Equirus Securities. Please go ahead. Yeah. Hi. Sir, my question was basically on the EV powertrain products. Here, if we see the revenue has grew around 56% odd on a year-on-year basis, but if you see the industry volume growth has been in the range of 80%-90% odd kind of a range. Sir, just breaking it into what kind of ASP decline are we seeing because of the scales increasing? And throw some light here whether what is happening here in terms of volume growth and ASP growth. I would say a couple of things here. I think one, definitely, I think ASPs have declined. I would say this is really driven by improvement in the product composition. Honestly, I don't know the exact number off the top of my head versus the comparable period. I would imagine maybe high single-digit kind of decline in ASPs. The second topic also that we have here is, especially through the early part of the quarter, due to labor challenges, both in our own plants and also in our supply chain, we were definitely challenged for April and also maybe a little bit of May. That is now really fully recovered. I think that has also probably contributed a slightly lower number over there. All right, sir. Just a follow-up here, sir, that going ahead, we know EV volumes are expected to grow at a good 30%-35% kind of a CAGR for next five years. Here, given the volumes increasing, what kind of ASP, because of product engineering or because OEMs also will be pressurizing you in terms of reducing the cost or some sort of stuff. In terms of this, what could be a sort of a trajectory here wherein I definitely think revenue growth will not align with the volumes, but some color on how these OEM contracts happen or and whether in terms of the costing of the product. You ask me, I don't think OEMs anymore are really insecure about what is the cost of their product. I think there's a fair amount of work that has gone in over the last five years to really bring product to a far more cost optimal level. Of course, there is always scope for improvement and opportunities for improvement, and I think that will continue to happen. I wouldn't expect some very material change in terms of what When I say material, I mean, I won't expect some double-digit changes in ASPs that will take place. In fact, I think potentially the opportunity for us really comes through, let's say, more integration of components into smaller boxes. That is actually an ASP increase opportunity. I think the end answer will be a balance in between both somewhere. To cut it short, there's a few different trends running, but I wouldn't expect significant ASP decreases taking place. Okay. All right. Sir, lastly, given the speed at which the electric vehicle growth is increasing right now, what would be the CapEx strategy here? Are we increasing the allocation here? Some color on that. Yeah. This year will definitely see higher CapEx expenditure than what we've seen over the last two, three years. A large portion of that is, yes, in terms of our e-mobility capacity expansion and also capacity expansion to service the EV models that we're supplying to even with our engine agnostic product. That's the reason we front-loaded also the CapEx. All right. Sir, can you quantify the CapEx guidance for this year and next year? It'll be INR 500 crore-INR 550 crore, in that range. This includes both India and overseas also. Okay. Okay, sir. Thank you. Thank you. The next question comes from the line of Aditya Jhawar from Investec. Please go ahead. Yeah, hi. Thanks for the opportunity and congrats on great set of numbers. My first question is on our customer split. While we understand that Bajaj volume has grown as the content in Bajaj has also grown for us, how should we assess our progress in other OEMs? In the past, you had mentioned that there is a possibility of further acquisition of land to support Japanese OEM and South India-based OEM. How should we assess our progress both in ICE as well as EV powertrain products, in non-Bajaj customers? Yeah. I think if you look at the progression of our order book, there is definitely a very large amount of outside of Bajaj Auto business wins that have taken place. Even today, I think also given the fact that the market is growing, even today, we see significant demand for product lines across our product categories, taking place outside of Bajaj Auto as well. Having said that, I would definitely say, given the content we have in EVs and given the fact that we are a primary source at Bajaj Auto for EV and the growth rate of EV, I would expect that the absolute revenue there also would continue to grow and grow fairly quickly. Where we end up as a percentage, honestly, it's hard to predict past a point. Yeah, the expectation is that we grow whether with Bajaj Auto, whether outside of Bajaj Auto also. Helpful, Arjun. If you can help us understand that, say, X number of products you are supplying to Japanese OEM, and there, the share of business of Varroc went from A to B. Some quantification and is there a necessity of setting up a manufacturing facility in Southern India for supporting these? Any quantification you can do in terms of number of products or how we have grown in few OEMs that are Japanese or the South India or the new OEMs that we have entered. Some quantification would be helpful, Arjun. I think the simplest quantification I could probably give you right now is in terms of maybe what we've done in Q1, where if we look at our India business, we've grown, let's say, I think 30%, and we've seen the phenomenal growth in e-mobility. I would not say that our customer mix percentage has really changed too dramatically. I think the easiest way to put it is, we're growing fast, but we're growing fast in Bajaj Auto, but also outside of Bajaj Auto. Sure. Fair enough. My second question is on margin. When we look at EV business, it has come to a scale where possibly we can assume, or you can correct me, that the margin could be sustainable. How different are EV margins versus ICE margin? Considering you have a strong line of sight with customers, considering the pricing dynamics that are expected to play out when customers come down the pricing curve on EVs, how should we expect the margin trajectory to change? Again, I would say from a pricing and margin standpoint, I think the right metric to look at is not necessarily EBITDA, because EBITDA, even within different product lines we do for ICE, is very different based on the capital intensity of the product. Really, I would say at a PBT level, I would imagine today ICE as well as EV to be comparable. Ultimately, again, we've talked about this before, but ultimately pricing even for an EV needs to be sustainable, and OEMs recognize that, because otherwise how do you drive capacity increases in a growing market? Yeah. Final question for Tarang. Tarang, looking at a balance sheet that has significantly improved over a period of time. Clearly, possibly we can become net cash next year. Keeping that in backdrop, are we considering expanding into newer growth avenues, looking at inorganic opportunities? What are the areas that we are considering to expand inorganically? Inorganically, honestly, we would be more keen on, either it could be electronics or e-powertrain, these areas. Also in the area of aftermarket. Aftermarket also, we are experiencing a strong growth. I would say more on the four-wheeler or the exports front. Aftermarket, we are more keen over there if we get an opportunity with the right company. Otherwise, we are very keen, of course, of any acquisition opportunity or a joint venture where it comes to e-powertrain or the kind of electronics, which could be for e-power. It could be e-electronics, or it could be also other electronics where we are playing even for the ICE engine. It all depends where there could be some customer acquisition also. Yes, exports focus is definitely there. Where we're making an acquisition, we should be able to get also into some export markets. This would be critical for us. That's something we are very open to, whether JVs in India, or it could be some acquisition where there's export opportunity in these areas. What we see also is a lot of opportunities on organic growth, whether it's in India or our plants abroad. We'll be focusing, because nowadays it's pretty expensive also to go in for acquisitions. It's pretty expensive. When you're only looking at a 20%-25% growth organically, we have to see whether inorganic makes sense. We'll have to weigh in. We'll have a balancing approach. We'll only go for something inorganic if it makes some sense financially. Absolutely. Where we can see that we can exponentially grow that already existing business to a good level. Unless that is there, we will not go into any inorganic. Organic, definitely, there is a strong focus to grow strongly year- on- year. Yeah. Largely acquisition would be in India? Yeah. We are interested largely in acquisition in India. Yeah. Final question to MK. Sir, you used to give us some PBT margin kind of a number that we can expect by end of the year. Any sense you can give on that one? Yeah, Jhawar, we don't give that kind of guidance, but we have this medium term target of touching 10% soon. That one holds good. Okay. Anyway, you can extrapolate based on the current performance. Sure. Medium term would be two years? That's our wish. Yes. Also, like yours. Yes. Thank you so much. All the best to you. Thank you. Thank you. Thank you. The next question comes from the line of Neha Garg from Zenflow Finance. Please go ahead. Yeah. Hello, sir. Good evening. Thanks for taking up my question. Hello. Good evening. Am I audible? Yeah. Yes, please. Yeah. Okay. My question is on the working capital. You have mentioned that it has increased. Has there any change in the receivable days from OEM customers or it's mainly from the inventory side? Yeah, no, there's no change in the inventory, sorry, receivable days. Yes, inventory went up to some extent, largely in preparation to the peak season which is coming up. Second thing is, these war-related recoveries, which we just spoke about. They need to be now converted into invoices and they need to be collected. It's a temporary increase which we see because of that. Oh, okay. Sir, earlier you have guided that the company is going to achieve a zero debt in FY 2028. With the debt increase, can we see that it will be pulled a little further? No, we will stay with that for now, yeah, we will always try to do it as soon as possible. Oh, okay. Sir, can you please just specify on what, if you can, how much, like the INR 360 crore that you have spent so far. Can you just split where have you spent, like new capacities or any new EV lines? Can you please just specify? Sorry, you said INR 350. You're talking about last year or? No. The debt that has been increased due to CapEx, INR 360 crore. No. It's not entirely because of CapEx spending. CapEx spending during quarter one was about INR 160 crore. Most of it went into the capacity increases. That number is in million, not in crore. The debt increase of INR 360 crore. Oh, okay. Okay. Sorry, sir. I didn't get that. Okay, thank you very much, sir. Thank you. Thank you. Thank you. The next question comes from the line of Apurva Mehta from AM Investments. Please go ahead. Congratulations on good set of numbers. Thank you. Hello. Yeah. Please go ahead. Yeah. Just wanted to know your next two, three years of overseas. How do you look overseas turnover, and can you just split the margins of how can the margins directionally be in Romania kind of thing, and the two-wheeler which we are profitable, but on the Thailand four-wheeler lighting. Where do we see this journey happening in next two, three years? What kind of orders we are bidding? It's our larger orders we are bidding going ahead or just we can get some sense how big this overseas business can become. Yes. I'll try to answer your question. Yeah. If you compare to last year, we believe that this year our revenue in the overseas business can be, and here I am referring to the overseas electronics and lighting business. Yeah. This can be double. This is something that we can say. Okay. In terms of, if you talk about margins, here I believe our CFO already mentioned that in three to four years, yes, we are targeting also to get to a 10% PBT number in our overseas business. That is what we can say as of right now. In terms of what our strategy is for overseas, here, of course, the focus is on electronics, particularly on the passenger vehicle side and also on lighting. This will be both a passenger car as well as for two-wheelers. Where we are expecting the biggest growth is going to be when it comes to passenger car electronics and passenger car lighting. In terms of why do we feel this will happen? It is mainly because in passenger car electronics today, there is a lot of evolution in the electronics architecture. There is a lot more electronic content in vehicles, both when it comes to high voltage parts, more to do with, of course, the electric powertrain or low voltage parts such as body controllers, ADAS, infotainment, et cetera. This is the space that we are trying to play in. We have already announced certain large orders in past quarters, and we believe this will continue. Yes, we are not giving you an exact number right now in terms of how big this business can become in the next three to four years. Certainly, we are expecting to grow significantly compared to where we are today. What kind of aspiration we will have by FY 2030, this number can be close to INR 3,000 crore-INR 4,000 crore kind of thing? You know, just a ballpark number. Yeah, sure. I think our CMD also explained earlier that by FY 2031, our intention is to double our overall revenue to INR 20,000 crore from around INR 10,000 crore that we do this year. Yeah, in that overseas would be how much? Yeah, I'm coming to that. Yes. Out of that, maybe around 25%-30% could be the overseas part. Okay, great. 20%, I would say. Yeah. 20% would be overseas. Okay. 80% would be Yeah. Okay. This quarter we had tooling revenue, what was the tooling revenue this quarter? INR 60 crore. It's about INR 70 crore. INR 70 crore. That impacted 0.8% of your margins? Correct. That means, how does it 0.8% is on that means there is a loss on this tooling revenues. No. 0.8% on the overall impact. Compared to the normal business, there is a significant lower margin which we make on tools, because this is basically to generate part revenue in the future. These are one-time things which come every now and then in one or two quarters. Okay. Ballpark, the 12% margin which normally we do in the India business, is likely that Q2 we can see that coming? Yeah. It has basically a couple of parts. The one-timers like tools and all, of course, should not come to this extent in the subsequent quarters or at least in Q2. Yeah. There are things like the inflation recovery, which is more like an arithmetical impact, because the same number goes up in numerator and denominator. To recover that disadvantage, it may take maybe one or two quarters. Otherwise, the other impacts, we should be able to see a recovery most of it in Q2. Sir, one request is there. Why can't we provide a breakup of number of clients which we are only showing Bajaj and rest of Bajaj? Is there anything which is most of the auto ancillaries, if you see, they would be showing us the kind of client breakup is there. This would help us to know that how the pie is moving. This becomes very difficult for us to judge that where the pie is moving now. Which client we are concentrating, which client we are gaining market share or something like that. It would be really helpful to us. Understood. We'll look into that. We understood. Yeah. Okay, thanks a lot, and wish you all the best. Thank you. Thank you. The next question comes from the line of Naman Maheshwari from Shanghvi Family Office. Please go ahead. Hi. Just came back into the queue. Sir, this time the annual report was very well articulated. Right? It definitely gives a direction of INR 20,000 crore ballpark revenue, in FY 2031. That number, just one clarification, that is solely based on the current product profile and the organic business growth, correct? Any inorganic would be on top of this. Is that the right understanding? No, there will be about maybe 10% of that which will come from inorganic route also. Okay. Maybe something from non-auto also. If I understand, just join the connect the dots together. 10% PBT at a INR 20,000 crore revenue FY 2031 is probably the management vision to grow, right? Correct. In action. The investors are preparing for FY 2031 revenue. The order book has to get built probably say by FY 2028, FY 2029, right? Is that the right understanding? That is right. A large extent. Yeah. That means that we are working in that direction and we are that close to the customers that we will be able to fill up and deliver on this guidance. In a nutshell, what I'm trying to imply is that there is a very solid customer relationship that's getting built right now, and we are getting the right traction from the targeted clientele. Is that the right implication of all of these things? Yeah, that's true. It also includes the organic growth on the existing business also, which has already been. Okay. Plus the inorganic thing we explained, yeah. Fantastic. You're right, yeah. That's the intention. Fantastic. Congratulations. We'll talk again probably next quarter. Thank you so much. Thank you. Thank you. Thank you. The next question comes from the line of Rahul Kumar from Vaikarya Funds. Please go ahead. Yeah. I think this is a data keeping question. Out of this EV revenue of 16% which we have disclosed, how much is that from Bajaj, and how much is that from non-Bajaj? What was it last quarter? I would imagine three quarters would be from Bajaj Auto. Honestly, last quarter, I will not know off the top of my head, but I would imagine a similar-ish kind of pattern, right, few percentage points here and there. Okay, got it. Thank you. Thank you. As there are no further questions, I would now like to hand the conference over to the management for closing comments. Thank you, and over to you. Yeah. Thank you, everyone. I would like to again reiterate that the journey ahead is filled with opportunity. Backed by strong capabilities, strategic clarity, and the passion of our people, we are confident of achieving our aspirations while creating lasting value for every stakeholder associated with Varroc. Thanks again for joining the call and for your continuing support. Thank you. Thank you. On behalf of Equirus Securities, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.