Automotive Axles Ltd

NSE:AUTOAXLES

Earnings Call Analysis

Earnings Call Transcript 2024-Q2

[Sailesh Raja]

Ladies and gentlemen, good day, and welcome to Automotive Axles Limited 2Q FY '24 Post Result Earnings Call hosted by B&K Securities. Before we proceed to the call, let me remind you that the discussion may contain forward-looking statements that may involve known or unknown risks, uncertainties and other factors. It must be viewed in conjunction with our business risk that caused the future result, performance or achievements to differ significantly from what it is stressed or implied by such forward-looking statements. For better voice clarity we all you to switch off the [ Duo ] while asking questions.[Operator Instructions] So to take us through the results and [Technical Difficulty] your questions today, we have top management of Cummins, Meritor and Auto Axles team represented by Mr. Muthukumar N., India Leader, Cummins, Meritor; Mr. Nagaraja, President and Whole Time Director, Automotive Axles; Mr. Ranganathan, CFO, Automotive Axles Limited.So we'll start the call with your presentation, and it will be addressed by all the 3 member of the management team. Then we'll conduct a Q&A session.So with that said, I'll now hand over the call to Mr. Muthukumar. Yes, over to you, sir.

[Narayanswamy Muthukumar, executive]

Thank you, Sailesh. Happy morning, ladies and gentlemen. It's nice to be back with you for the investor call, and really appreciate [ for ] taking the time to join [ us ] during this call. Your support, the questions that you ask always makes us to perform better, and we strongly believe in the [Technical Difficulty] support. With that, I have my colleague, Nagaraja, who is President and Whole-Time Director of Automotive Axles. He'll be running through the company's history, followed by Mr. Ranganathan on the company financials.Once again, over to Nagaraja.

[Nagaraja Sadashiva Gargeshwari, executive]

Good morning, everyone. And just a brief introduction to Automotive Axles Limited. As you are all aware, Automotive Axles was founded in 1980. And over the last 40-plus years, the company has grown to this level. And just to remind everyone that we have 4 manufacturing sites, [indiscernible] [ which is ] in Mysore and then we have 2 satellite plants in Pantnagar and Jamshedpur, [ are ] mainly catering to Ashok Leyland and Tata Motors respectively. We have about 2,600 employees. We are #1 axles manufacturer in India when it comes to independent axle manufacturer, and #2 when it comes to brakes. Our major customers are Ashok Leyland, Tata Motors, Mahindra, BharatBenz, [ heavy ] commercials. And our main products that -- as we mentioned, mainly axles, brakes and also the axles for off-highway [ application ].Next slide, please. As part of a growth strategy, we continue to innovate and then develop our products ahead of time. And last quarter we did discuss about how it is helping us to achieve the growth strategies. So these are all the 5 new products they are in pipeline at various stages and many of them are with the design completed and under testing.We are introducing the largest Tandem axle for application called MT160. This is again focusing mainly on 8/4 [ chippers ] and 10/4 tipper applications. We have a product for the Backhoe Loader. Again, this axle is under testing. We are -- we have come out with new products. We will -- we [ lend ] Hub reduction axle along with MT145. This is for the light and medium-duty tipper application.We are also upgrading our current portfolio of products of RS120 and 145 to [indiscernible], keeping in mind a regional specific application requirement of both the OE customer and end customer requirements. This will be fuel efficient, lightweight and having a higher durability [ life ].Next slide, please. We continue to focus on Destination Zero. So as you can see on the [Technical Difficulty] top banner, 80% of our power consumption will be coming through in new energy. And I'm very happy to share with you some data. We have already achieved -- 40% of our energy requirement is coming from renewable sources.It's not just about the energy, we are looking at reducing the packaging that we have. Almost -- the usage of wood has been reduced by more than 80%. We are focusing on water positive. And in fact, we -- our Mysore client is one of few clients in Karnataka region which is having a water positive for the last several years.So we continue to focus on consumer preference and how the things are changing and how technology is going to help them -- help us in meeting their expectation. We continue to believe in diversified and the inclusion initiatives. So there's a very big push from the management here to achieve this. And the employee safety, health and fair treatment is always core to our business. These are the core values, and we continue to support and then make a significant progress in these areas. Thanks.

[Narayanswamy Muthukumar, executive]

Thank you, Nagaraja. With that, I'll request Mr. Ranganathan, our CFO, to talk about the financial highlights and how we have been performing year-on-year [Technical Difficulty]. Over to you, Rangnathan. [Audio Gap]?

[Sankaran Ranganathan, executive]

Sorry, I got muted [Technical Difficulty]. Thank you, Muthu, thank you, Nagaraja. Just adding a few points to what Nagaraja explained on the ESG initiatives. IT initiatives were in line with the mission '25, also driving automation, all the processes, basically improving the productivity of the employees as well as the elimination of paper or working towards a paperless office. And we [ have ] come across significant way -- more than 30 to 40 papers [Technical Difficulty] we are [ targeting ] [ next ] to the [Technical Difficulty] about 80% of the paper usage into the other [ key ] processes and [Technical Difficulty]. With just a closing remark on the ESG, I'll take you all through the financial performance.For the year we have achieved revenue of INR 588 crores with an EBITDA of close to INR 70 crores and EBIT around INR 60 crores.[ Coming ] next slide. Just have a comparison of this quarter performance versus the last year. And compared to the last year, our revenue has grown by 24%. And our EBITDA has grown -- absolute grown by [ 35% ]. Last year, the same period, our EBITDA was 10.9%, we are at 11.9 now%. And PBT increased by 49%, with 40.5% last year -- [ gross ] last year which is [ INR 60.4 crores ] in the current year.Last year, the -- for quarter PBT was 8.5%, now it's about 10.3%. And as far the YTD performance is concerned, really see -- for first 6 months, we have done about [ INR 1,122 crores ] as compared to [Technical Difficulty] last year with a growth of 15%. And EBITDA is concerned, we are -- this quarter, the 6 months is about 11.6% is a run rate which is 10.7% last year the same 6 months.And PBT is concerned, we've done about 35% growth with [ INR 821 million ] to [ this ] INR 11.2 crores in the current year -- current quarter -- current 6 months. So close to about 35% growth with 8.4% last year for the first 6 months, to 9.9%, close to 10% for the 6 months [ is our ] financial performance. So these are the broader highlights of the financial performance for the quarter and for the 6 months.Over to you Muthu.

[Narayanswamy Muthukumar, executive]

Thank you, Ranga. I see Mr. Prateek Poddar raised his hand. We will complete the [ session ] and then we'll come to [ question-answer session ]. With this, team, I just wanted to give you how the market outlook look like in the Indian economy. India [ continues ] [ to ] be very strong economy [ tradition ] from most of the [Technical Difficulty] and the global as indicated that India will continue to grow same passion and [ it ] will be the fastest growing economy. You all know that our ambitious target of becoming the third largest economy by 2030, [ when ] we'll cross $5 trillion economy by that time. And if all these things need to have -- a lot of infrastructure push is happening. And you have seen that the [Technical Difficulty] the [ current ] [Audio Gap] [Technical Difficulty].You have seen that the government is giving a lot of push on green passenger vehicles across [ move to ] the year towards Tier 2 cities and already a good amount of contract which [Technical Difficulty] the various vehicle manufacturers.So with push from one side on papers and other side on [indiscernible] and on the passenger vehicle, the commercial vehicle industry is set to grow. But not that easy with what is coming up the political situation or going for election year for next year. And we are seeing this [ conserving ] cash from every fleet operator is going to be there. The other biggest advantage is a flat diesel price for the last 1 year.While there are not good amount of [ advantages ] for us to grow in this segment, you are seeing other side, the conservative customers to make sure that our market is slightly flat or single-digit growth [ is ] what is happening in this. You all know that our largest customer is Ashok Leyland [Technical Difficulty] share, which is really good for us because that keeps us growing.There are few indicators globally, which is like our [ push ] in price has come to pre-COVID level, which is a good sign and again, making India competitive in the global, even though the vehicle scrappage policy has come as a [ voluntary ]. The scrappage [Technical Difficulty] started [Technical Difficulty] we added [Technical Difficulty].These are the indicators, they are positive. I think the commodity prices are [ perfect ]. But it looks like the steel imports from China as we [Technical Difficulty] [ controlled ] by the government. But at the same time, [ U.S.A ] that we reduced the [ manifold ] tariff, which means more steel is imported from India, which may all [indiscernible] [ concern ] on the price in the future.Commercial vehicle market, if you see, we are [ bidding ] about 3% growth over last year in FY '2024, while the first of the year has been reasonably good. We predict almost a flat in second half of the year in this year. But in reality, it may go from 3% to 10% depending on how the equation and the verdict [ changes ] they come. Your Company continue to work on agility, the Automotive Axle team [indiscernible] Nagaraj [Technical Difficulty]a.They continue to work on agility that whatever the way the market goes up and down, the team will be agile to meet the customer demand, thereby capture the maximum market [Technical Difficulty]. If you see over the period 2018 to '19, the commercial vehicle market has grown. It is actually closely [Technical Difficulty].We have made about [ 476,000 ] vehicles in 2019, whereas currently it is [ 407,000 ]. Well, the vehicle is less -- I think we already closed more than 4% CAGR growth in the market, every year [ ruling ] when compared to the market. And that is how we have -- you can see Your Company, the earning per share is giving a better return. And our focus on the growth strategy for future, especially from every angle from exports or penetrating into the market share or -- and value addition to every [Technical Difficulty] is really helping us to [Technical Difficulty].The company continues to focus on new product [ modular ] design. Nagaraja is the -- [ represent ] the team. We have launched 3 or 4 products well ahead of procurement, which will take care of the huge procurement till 2030.Customer value -- the customer [ responsiveness ] is key in the organization, and your organization continued to get the support from all the OEMs being a customer [ responsive ] customer. People are key for the organization, and our operation excellence and employee recognition and employee engagement continue for the organization to make sure that our organization is [ based on ] [Technical Difficulty].A couple of focus areas which I want to tell you is the FY '23, '24 the market overall maybe about 5% to 8% growth as compared to the previous financial year. The company continued to focus on Industry 4.0. Last time Nagaraja presented this, not this time, maybe he will give an update next time, and, of course, other digitalization activities. The company is moving on to 100% digitalization by the year [indiscernible].As I said, commodity price continued to soften, but however, our focus continued to be on the cost control. The focus on improving [Technical Difficulty] conversion and material performance, always rewarding and the company plan to take the [Technical Difficulty]. People [ mix ] the difference between us and our competition.So the employee will be the corporate social [ responsibility ] [Technical Difficulty] the diversity, equity and inclusion, sustainability. These are the core on which we continue to work on people and [Technical Difficulty]. We have started a program called for [indiscernible] all our employees to make sure that how good our people engagement and health continues to improve, particularly post-pandemics which make the organization more [ directive ] and organization form a team.So the various activities that we have been doing in terms of the diversity, in terms of equity and in terms of inclusion or in terms of making the employee always the best place to work continues. The commitment to social responsibility in terms of getting [Technical Difficulty] development or in terms of that health, care and training more and more people, employee will continue [Technical Difficulty].The key actions in taking forward the employee will be -- and taking -- making sure that you feel that it's the best place to work [Technical Difficulty] continue to stay focused, trying to utilize Atmanirbhar Bharat and thereby expand exports and new [indiscernible] vertical, bringing an alternative technology, disruptive innovation, value [Technical Difficulty] see that Your Company is always competitive, and we continue to gain our share continue [Technical Difficulty]. Compliance [Technical Difficulty] and vertical code of conduct [Technical Difficulty], and it is a [ focus ] area for the organization. Like Nagaraja said, moving towards Destination Zero by 2045, the company is working towards 0 car production.These are the key focus areas that we work with. Once again, thank you for your patient listening and we stop the presentation here. And over to Sailesh, back for questions. Thank you very much for your attention.

[Sailesh Raja]

Yes. Thank you, Sir. [Operator Instructions] So the first question is from Pratik Kothari. He's from Unique PMS.

[Pratik Kothari, analyst]

Sir, first of all, congratulations to the team. I think we have done much better than the industry. Sir, one question, I mean, very broadly. We do hear a lot about -- I mean, in your comment, you did speak about the government's push on infra spend, the stable diesel prices. We also hear a lot about spend on mining, infrastructure, [ core ] development, et cetera. So if you can just highlight -- and try to correlate this to the [ HCV ] numbers that kind of predict for, say, this year, and we've seen not much growth. So if you can just highlight what is happening, given the macro or [ term ], what we -- how does it start reflecting in say the M&HCV volume numbers?

[Narayanswamy Muthukumar, executive]

We have just come out of the supplier conferences of all the major OEMs in India, be it Ashok Leyland, Tata Motors, Mahindra, [ Volvo Eicher ] and all. All of them are up [ redouble ] numbers. I'm sure that like us, you would have seen the number. During my presentation I have shown that peak volumes in 2018 is around 465,000. When you talk about the M&HCV it's [indiscernible] [indiscernible] and above. Last the number was 407,000. The market is expected to be -- the prediction today is by 2028 -- 2030, the industry is set to [Technical Difficulty]. Still 500,000 vehicles for India for the population is a every [Technical Difficulty] number compared to what we are using in other countries.But I just wanted to let you all know, even though the number of vehicles about 18% less, the tonnage wise we have [Technical Difficulty] crossed the year [ 2018 ]. That means India is manufacturing more and more [ bigger ] vehicles. That is why there is a demand for new product, which what Nagaraja explained about going in a bigger axle. So -- And our per axle revenue going up. So while the India market is not weak at the same level of 2018 in terms of the numbers, last year we [Technical Difficulty] crossed the tonnage in terms of [ 2018 ].Looking forward, if you want the M&HCV segment has to grow, GDP to grow, our M&HCV sales is always in relation to GDP. Of course, we have little concern on [ this year ] in terms of overall [Technical Difficulty] in India. The agriculture produce [ come down ]. But generally, it doesn't look like -- the second half of the monsoon period, it has picked up. So with a good agricultural harvest and a GDP growth of 7%, we believe that the M&HCV segment is set to grow.The other advantage is the mining that's going on [Technical Difficulty] so both surface tipper and deep mining tippers are growing. Haulage is growing. If you have seen that the [Technical Difficulty] like diesel price [Technical Difficulty] there, so the truck [Technical Difficulty] per kilometer has gone up [Technical Difficulty]. And good government push in terms of buying buses for the [indiscernible].All these things makes us to believe that the market is set to grow. Even though not, it's going to be a very, very high growth. It's going to be a [indiscernible] growth is what we are seeing. While these are the positive factors that I can see, we have conservative numbers where India is moving to an election year.So lot of [Technical Difficulty] will be there [indiscernible] spending. So conserving cash will be [ one ] point which will be [ working ] [Technical Difficulty]. So India is in a mix, but the long-term forecast for India seems to be very, very [indiscernible].Hope I've answered your [Technical Difficulty].

[Pratik Kothari, analyst]

Sir, second question on Cummins. It's been a while now that we have been together. So, can you just highlight how has our journey been all this while? Any changes that has brought us in terms of customers are operating -- or operations, et cetera?

[Narayanswamy Muthukumar, executive]

The Cummins integration is [ globally ] completed in full, and we are now part of Cummins. As I said earlier, I'm very, very optimistic about [Technical Difficulty] because it's going to bring a lot of new systems into our organization. I mean, I think already, we are working in various areas from operation transformation to going to the customer or cost reduction or consolidation. In every area, we are working with them, and Nagaraja and team [ is ] working on how to improve the synergies and operations. The business teams are working together to see that how we can [ enhance ] the business.But however, [indiscernible] area is working, but for all of your information, automotive vehicle in India is a joint venture with Cummins and Kalyani Group, and the [ independent ] company operate to the best of the -- making sure that the best of both. What we got from [Technical Difficulty] and what we have got from [Technical Difficulty]. [indiscernible] you like to make sure that this organization be there turning [ global ].

[Sailesh Raja]

[Operator Instructions] Our next question is from Divyansh Gupta. [Operator Instructions]

[Divyansh Gupta, analyst]

Just -- I have 4 questions. I'll take them one by one. What would be our CapEx guidance for the year and for the next year? Is there any road map that has been finalized by the company?

[Narayanswamy Muthukumar, executive]

I'll leave it to Ranga to answer the question.

[Sankaran Ranganathan, executive]

If you really look at it, the CapEx for this year it is more in line with maintaining the [indiscernible]. But definitely, in the coming year we are working on some automation and removing the bottlenecks. As and when we introduce new products, we also have some alignment and changes into the entire manufacturing processes. In that regard, definitely to improve the productivity, automation and to [ also ] new product we'll be spending more than the CapEx. Next year -- this year, probably you may not see more than INR 10 crores, INR 20 crores.And next year, definitely, it will be -- we are looking at doubling that just to ensure that all the process automations and productivities and process improvements in [ double-digits]. But just if you're looking at something, like whether you're going to do it in a substantial investment, like what we did in 2018, we may not [ going to ] gear up to that level.

[Nagaraja Sadashiva Gargeshwari, executive]

Sorry, just what Muthu has explained, we are not hesitating, it's not [indiscernible]. As you really see our cash position is quite strong. But the point is that we need to have a business case. And based on the business case, and if you need additional investment, that we don't hesitate. But what we are [Technical Difficulty] and sharing the input based on what information we have today.

[Divyansh Gupta, analyst]

Related to this quarter's performance, I was -- if I look at the overall P&L, there were couple of things which were standing out. So, one, if you could explain what drove the increase in the other income? It's higher than what happened in the Q2 of last year, almost doubling.

[Nagaraja Sadashiva Gargeshwari, executive]

Yes. A couple of things. We are going through a TPM journey as a process. We are also going [through ] every stream of our key processes, which is the -- providing the support towards the top line growth or towards any other [ contribution ] to the EBITDA. So in the client finance team brings -- I mean, one thing like we've done is about the management of the cash flow, we've gone through a complete brainstorming. We set aside the base. Basically, the reason would be like we have brought on very strong monitoring system in terms of [ deposit ] and management system, which where to invest and where to get the return on that. Broadly, the answer is about the interest income on the surplus cash is significantly contributing on other income, and number one.And we have started new initiatives in terms of weekend parking in the mutual finance and X, Y, Z. You'll see the cash [Technical Difficulty] significant reason for it. It's basically bringing the [ efficiency ] in the surplus cash and the management process.

[Divyansh Gupta, analyst]

And the second question with respect to the P&L, was that -- the depreciation amount has been reducing, right? So from about INR 103 crores last September '22, it has now become INR 89 crores.

[Nagaraja Sadashiva Gargeshwari, executive]

Yes.

[Divyansh Gupta, analyst]

And it has been continuously reducing. So is it just we are not investing further new and therefore there is -- depreciation is going down or…?

[Narayanswamy Muthukumar, executive]

That's a very sensible question, and thanks for asking this. We are debating internally. There are 2 things where we are looking at. One thing is about [Technical Difficulty] product, we don't hesitate to invest. Point number two is about whatever the investment what we are planning between now and next year is about INR 60 crores, INR 70 crores, in that range we're having in our mind in terms of doing [ that ]. We are filling up the opportunities to do that and also our [indiscernible] is to investor. Just because depreciation is going up, we also do have a demand in the market to invest. And second, that is -- comes out with additional capacity and definitely we are ready to invest. Point number one.Point number two, if you are going with any product lines or any new support to the growth initiatives, definitely we will be doing that. These are all [ pipelines ] which the strategic team is working on it, but it takes time to finalize it, point number one. That is [ movement of time ], that's in the pipeline.Point number three, definitely, as we are going for in the [indiscernible] and other automations, [ and the ] product as a part of the regular process, the investment definitely going to happen. Probably, yes, it is a 42-year-old organization. And we have to [ organize ] in segments because the 2 teams only support -- our bandwidth to implement our CapEx proposals is probably [ in ] the [indiscernible] design with the value proposition to the investment, we are working on it.Definitely, as I said, during this year to next year, we will be definitely doubling our investments over the low – we are doubling it more towards automation and towards new product. But would be -- to be -- launch to be between now and next year, whether the position will continue to be this level, yes, it will be -- continue to be be [ that level ]. There will be -- slight improvement will be there in terms of percentage.It might go up slightly, but it may not be substantially go up. Then large industry, [ around ] 42 years, most of [ our ] assets been depreciated. And wherever needed, we also gone with the automation. In 2018, we are also invested in -- lot of [ auto ] we brought in. The new lines were introduced. So rigorously working on it. We don't have to [Technical Difficulty] and do the investment just as the regulation is [ go ]. Based on the businesses, new products and automations we'll be selectively doing it, which gives a maximum benefit to the -- overall to the business, and we are doing it. So that's the status.

[Divyansh Gupta, analyst]

And certainly for the other expenses, that has also seen about a 40 bps reduction. So was it trade related or something else which…?

[Nagaraja Sadashiva Gargeshwari, executive]

No [indiscernible], see, we are actually -- Muthu was saying that cost control is one of the major drivers. And [ it's ] lot of your volume benefit, keeping the base cost at same level with a minor variation. So that's the big impact.

[Divyansh Gupta, analyst]

And just one last question. So while you had shown that graph of M&HCV production, whereas automotive has kept on growing. I understand also that some portion of our products actually ends up getting exported, right? So can you give us some sense of light of how much of our product ends up going to the export market?

[Narayanswamy Muthukumar, executive]

I think this is one of the questions that come in every investor call. We have been saying that we won't be able to provide [Technical Difficulty] there. But [ basically ] on majority of the [Technical Difficulty] that you [Technical Difficulty] not be able to provide you the absolute [Technical Difficulty]. I can [Technical Difficulty] front view. Between 2018 to '19, our [Technical Difficulty], okay? We have done [Technical Difficulty] what we have done in 2018, '19. So that's an indication [ you'd ] be able to -- I'm sure that you analysts would be able to be [Technical Difficulty].

[Nagaraja Sadashiva Gargeshwari, executive]

And we will continue to grow. With coming, taking over and with a lot of [Technical Difficulty], we -- our focus is predominantly on the domestic customers and we have to meet their [Technical Difficulty]. But at [indiscernible] times, we want to do more of import. Doing exports we are going to phenomenally improve the systems and [Technical Difficulty] the company and also quality in this company. So we'll continue to focus expanding exports and see how we [Technical Difficulty]. At this point of time, most of our exports are going -- our different factories that [Technical Difficulty] globally [Technical Difficulty] import to the customer that we have [Technical Difficulty].

[Divyansh Gupta, analyst]

The reason I was asking was that…

[Nagaraja Sadashiva Gargeshwari, executive]

Go ahead.

[Divyansh Gupta, analyst]

is looking at the domestic M&HCV, hence comparing it against automotive performance, is it a fair metric or not because -- as you have mentioned exports have grown significantly.

[Nagaraja Sadashiva Gargeshwari, executive]

Yes.

[Divyansh Gupta, analyst]

But as the industry [Technical Difficulty] Indian M&HCV hasn't grown. So that's why I was trying to get a sense for that.

[Nagaraja Sadashiva Gargeshwari, executive]

Thank you for pointing it out. But I just want to tell you the last 10 years if you see -- or the last 5 years if you see, we have doubled the budget [Technical Difficulty] if you clearly take only [Technical Difficulty] segment. Even on the commercial vehicle market if you see, the market is only about 20% less than the [ previous ], but we have grown 20% [Technical Difficulty]. [indiscernible] 2 other points, I think Ranga explained to you very well on the CapEx. Again just want to tell you [Technical Difficulty]. Our objective is not to review the [ depreciation ] on this. 2018, '19 we made significant investment to increase the capacity. And today, the team is compared to a good level of [ capital ] utilization. So we're [Technical Difficulty] definitely working on the [ figure ] to come about -- looking at how the Indian M&HCV market is going to go [ overseas ] opportunities, our [Technical Difficulty] acommitment. We are going to [Technical Difficulty], so we are very, very careful on where to do [Technical Difficulty] [ because ] electrification is yet to come and [Technical Difficulty] newer technologies [Technical Difficulty] CapEx that we need, Nagaraja and team are working extensively to see that what new technologies is going to come in electrical, can we do those investments in those things. So they are working with the global team.So that is what is going to happen now. And [ many ] more implement that we do in the future [Technical Difficulty] we are [Technical Difficulty] spending money on utilization. But any capacity [ expansion ] that we do [Technical Difficulty] which will take care of the mutation [Technical Difficulty] to comee.

[Divyansh Gupta, analyst]

And sir, just one because you touched on electrification. There is also a trend, or lot of the articles are pointing that EV might not be correct, let's say, mode of power for CVs, whereas hydrogen might be a good alternative. Are we working anything on those lines?

[Nagaraja Sadashiva Gargeshwari, executive]

We are -- I think it's more coming from [Technical Difficulty] or I think Cummins India leadership team will be the right person to tell. Cummin is already working on hydrogen fuel cell or something. But if I restrict my [Technical Difficulty] to -- only to the axles and brakes manufacturing, we are making axles which can meet any of the fuel [Technical Difficulty] whether it's the battery operated electric vehicle or hydrogen fuel cell or hydrogen or LPG, LNG. Definitely if you see, there are more than [ probably ] 14 to 16 players who are aspiring to get into the [ inventory ] segment in India today and new players with [ fewer ] management and [ fewer ] team working with [Technical Difficulty] customers [ proceeded ] when the axle is fitted with our [Technical Difficulty].

[Sailesh Raja]

[Operator Instructions] Next question is from Mr. Dhaval Shah.

[Dhaval Shah, analyst]

Yes, great set of numbers. My question is with regard to the mining point which you were mentioning in the call. So if you could help us to understand what's -- so how many trucks sold in India would be going towards pure mining application? And given the comments from various big companies, including the largest Coal India, the kind of output they want to increase over the next, say, 3 to 5-year period, it is a large opportunity for M&HCV industry.So any number -- like how many trucks are sold for the mining application? And any other big emerging opportunity do you see which will support the growth of the M&HCV industry, which we have not seen in the past?

[Narayanswamy Muthukumar, executive]

There are 2 things, obviously M&HCV is one and [indiscernible] is one [Technical Difficulty] Coal India, they're talking about making 60 tonne vehicle, 100 tonne vehicle on the mine. Okay? So I will not touch on that. If you look at commercial vehicle and [Technical Difficulty] M&HCV, about 30% of the overall truck they produce is in the tipper segment. And on that about 45% to 50% -- or 55% to 60% goes to surface mining activity, [Technical Difficulty] for the mining.The deep mining will be only hardly 10%, 20%. So OEM will be right people to give this number or how [Technical Difficulty]. But I want to tell you -- during the presentation of Nagaraja -- I will request him again to come and talk about, India [Technical Difficulty] is the largest tandem [Technical Difficulty] taking care of these mining [Technical Difficulty] design for both surface mining with a higher [indiscernible] and also going for deep mining because [Technical Difficulty]. [ Enough ] amount of development is done. Testings have been completed with [ mainly ] OEM and we are ready to launch the product, whichever the market, whether it is going for a deep mining or taking a higher [ low ]. And that is why Nagaraja during his presentation said, we are ahead of [indiscernible] and they are launching products. It's almost 5 years at -- more than 10 years the launch product activity is picking up now.We have launched with the Tandem 160, which is a bigger [ size ] about 2 years before, and we are now getting customers to [ fill it ] up. So Nagaraja -- do you want to add anything on that, Nagaraja, how we are being ready for that?

[Nagaraja Sadashiva Gargeshwari, executive]

Yes. Nothing much. As Muthu mentioned, we have all the [ required ] products in our locally developed and available right now. And apart from that, there are -- additional products are also available in our global regions or portfolio. So that -- it takes a very short period of time for us to localize it, test it and then applicate it for the specific requirement. And then we did talk about last time, one is developing the product, second thing is also validating it. Cummins Meritor has invested heavily into the testing facility here in Mysore.[Technical Difficulty] 80% of the products we should be able to do a validation locally and then launch it in the market much faster than our competitors.

[Dhaval Shah, analyst]

And sir, also to touch up on the highway. So JCB has also given a very a strong guidance for its [India ] market. And also right now they are exporting I think roughly 40% of what they make in India. So how can [Technical Difficulty] capitalize on JCB's growth in India?

[Narayanswamy Muthukumar, executive]

Well, for us, I think you know [Technical Difficulty] make their own axles [Technical Difficulty] in the [ operating ] segment. Nagaraja touched upon another point called [ GLV ], which is more India-specific and [Technical Difficulty] [ 50% ] of [Technical Difficulty] or 60% is the [ GLV ]. We develop the product which is very competitive and technically superior. [ Talking ] with the customer to go, we will have challenges, [indiscernible] while the opportunity challenges of the [Technical Difficulty] because we are going to [ increase ] internal [ GLV ] [Technical Difficulty]. We are very, very upbeat about [ GLV ]. We will be able to [Technical Difficulty] and go to the [ customer ]. We continue to work with all the operating segments.

[Dhaval Shah, analyst]

Okay. So this product… [Audio Gap]

[Narayanswamy Muthukumar, executive]

[Technical Difficulty] We are not choosing [Technical Difficulty], but with everybody to [Technical Difficulty] we will work with.

[Dhaval Shah, analyst]

And last question, since, sir, discussed -- in the past we discussed about expanding our margins over a longer term. So by when can we see that thing, and any comments on the margin expansion front?

[Narayanswamy Muthukumar, executive]

You have seen our conversion efficiency at any point would double up what market growth in top line, and [ growth ] that we are going in [indiscernible] EBITDA or PBT is growing almost -- again a double of [ it ] -- while -- like I think Sailesh spoke in the [Technical Difficulty] we are not giving [Technical Difficulty] where we are going to end up with. I can continue with the team led by Nagaraja and company to work on improving our efficiency, internal capability [Technical Difficulty] that we outgrow the market. I think that's the statement I can give.– Ranga, if you want to add specifically, you can tell [Technical Difficulty].

[Sankaran Ranganathan, executive]

[ That's ] a right question. The point is that always all of you have a "Dil Maange More", almost [indiscernible] we do. That's always the point, which is the expectation, that put us -- and sometimes sleepless nights, but nevertheless, we are working towards it. As Muthu was saying, we have a strategic viewpoint looking at [indiscernible] where we are very -- we are looking at in terms of improving the bottom -- and where opportunities are -- like Muthu and team [ are keen ] about how to get the best realization of the axles from the customers. And as I mentioned, one other [Technical Difficulty] asked the question about -- even in the cash cycle, we are trying to improve [ different ] -- So we're looking at every opportunity. [ Look ], as -- I'm constrained not to share numbers at what we are looking at it. But the volume is to our favor. We definitely see much improvement in terms of the margins, Automotive Axle stand-alone. And also in future, if -- there's more opportunities coming in, in terms of the export or all other markets [Technical Difficulty] products and everything. Definitely we also seek an opportunity to improve our margin in those areas too.So as you rightly said, value grows, you'll definitely see the growth. And even the volume stable [ condition ] during the COVID and other hand you see that we -- our margin -- we have put our best to [indiscernible] margins. So it doesn't mean -- [ conscious ] about our fixed cost spending and the key for the fixed cost and control.And also the [ commercial ] efficiency, and earlier Nagaraja also mentioned that [Technical Difficulty] our power, our -- and now solar power, the overall power consumption is 40% more. We are working at taking it to 80% and keeping the fixed cost [ control ]. Definitely [Technical Difficulty] precautions looking at M&HCV recycle as organization has learned over 40 years.So in terms of managing the upside and downside, we are very careful about it. And we go down -- we will -- also we ensure that we don't go down to that level of general [ laggy ] market. And also when we go up, we try to maximize the profit. So definitely we are [ forward ] looking the market growth. We are there to do the margins.

[Dhaval Shah, analyst]

Sir, the raw material basket has softened. So while around 2 years back when it was high, but our gross profit has remained consistent. So what is the reason for that? Like we're not -- in this call, we're not seeing an increase in the GP [indiscernible], we saw a sharp drop in the GP.

[Sankaran Ranganathan, executive]

No. Compared to last year, definitely there's an improvement in GP. [indiscernible] If you really see the GP, we are seeing a middle class level [Technical Difficulty] there's an improvement of 0.4% compared to the last year.

[Narayanswamy Muthukumar, executive]

But [ I can ] also, Ranga [Technical Difficulty] we have a very good system of a back to back [Technical Difficulty] with customers. And so when the commodity goes up or comes down, our organization is not very greatly impacted in terms of timing. I think we explained this in one of the presentations earlier. Whereas the market goes [Technical Difficulty], we will go back to the OEM that -- the Indian automotive [Technical Difficulty] we'll go back and make sure that the correction is done. Except for the feedback [Technical Difficulty]. Ranga, do you want to add [Technical Difficulty]?

[Sankaran Ranganathan, executive]

No, absolutely right. The commodity does not have any margins at the bottom line. It actually -- Gross-to-gross either the reinvestment is happens, whether reduction [ of fees ]. So we don't tend to get in anything on -- only -- It probably -- either it impact your bottom -- your percentage, in terms of percentage, there's more a base impact. Other than that I don't think there's [indiscernible].

[Sailesh Raja]

[Operator Instructions] Next question from Mr. Sunil Kothari.

[Sunil Kothari, analyst]

We are running [ PMs ]. Sir, just a little bit more clarity on the relationship with this parent JV, Meritor and Kalyani. So how we transfer, what is the transfer procedure? Because what I understand the -- from previous -- [ because ] -- [ so ] commodity raw material prices has fallen, but we are not that benefited. We are doing innovation, we are doing automation, we are improving productivity, reducing costs, creating new products. But that reflection is not here. So how it works [Technical Difficulty]? We transferred the -- all the products -- we manufacture everything and we transfer to that JV, and they sell to our customer. So how the pricing works?

[Narayanswamy Muthukumar, executive]

Ranga?

[Sankaran Ranganathan, executive]

No. Mr. Sunil Kothari, as far as the pricing between [Technical Difficulty], we have established transfer [ placing ] mechanism. And basically, the transfer pricing mechanism is set and we have been calling out for some time. And this has also been validated by PwC as a matter of governance and to see how are we doing it and [indiscernible]. And this application is also placed before the old product [ rules ]. So as far as the pricing mechanism is concerned, we have this table and established mechanism. Definitely, that is no concern from the investor's standpoint, that's a [ second view ]. Point number two is about you're looking at so many initiatives we are doing about -- so if we really look at [indiscernible], though we are [ putting ] fixed costs and other variable costs in control, there are also cost increases naturally happening around us.If we don't bring the initiatives -- every initiative, if you're looking at that and we need to bring up the bottom line improvement is a quite natural expectation. It's not -- But there's also inflation that impacts there [Technical Difficulty] in every cost element year-on-year.Today's scenario in every element, of whether transportation cost, whether it is the -- all our suppliers' [ conversion ] costs and also the power plants and so many things. So we bring -- there are so many initiatives to mitigate it and also try to bring over and above this inflation impact, what is the best we can do it in the bottom line.As far the new products are concerned, definitely, there are 2 things here. You can't expect the new product development initiatives to show the profitability overnight. And it does go through a cycle before it comes into volume -- the required volumes to start contributing to the bottom line.So just about future [ still ] one-by-one definitely will show up. And the point I'm trying to bring our perspective is about -- definitely, our desire is to do better material performances and bring -- mitigate the inflationary issues through the internal initiatives and all the stuff. So definitely, the great efforts have gone in terms of mitigating these cost inflation and also showing a better profitability in the bottom line.So it's very difficult outside of looking at -- [indiscernible] talking so much great. But the bottom line, if you really look at the puts and -- bits and pieces into the future, so much cost escalations are [indiscernible] coming into the system, that also -- we have to go over and above that then what is the [indiscernible].So it's a very -- quite challenging environment. Some issues will happen next quarter. Quarter-on-quarter you can see -- some issues in next 6 months to -- [ only ] to show the performances. But really -- see the real [ comments ] I'll suggest you sir, if you really look at it in terms of the EPS, the end of day, earnings per share is one of the highest we have shown in the last March 2023. Our desire is always to protect the shareholders' interest.And in that we will do the best value, not only in terms of profitability but also in terms of the governance. And you work very independently in terms of ensuring the governance and give the maximum confidence to the shareholders. That's basically a prime objective and prime value system in this organization.

[Sunil Kothari, analyst]

Sir -- if Mr. Nagaraja or Mr. Muthu can explain a little bit on what that JV do the very [Technical Difficulty]? We transfer them the product, are doing the everything. What [ valuation ] they are doing? so that would be helpful.

[Narayanswamy Muthukumar, executive]

Nagaraja, do you want to add?

[Nagaraja Sadashiva Gargeshwari, executive]

So a couple of things [Technical Difficulty] during the presentation, we didn't kind of repeat it. So the biggest value was our partners being -- our MHVSIL is bringing in the product and technology well ahead of time and then having the necessary infrastructure to validate them. So once upon a time our time to market for a new application or a new product is to be anywhere between 2 to 3 years. And then in the last 3 to 4 years, it has been dropped down to less than 1 year.In many times it is less than 6 months. I think that is the biggest, I would say, value add that is coming, which is really helping us to be very, very competitive in this market. We have been able to keep that #1 position when it comes to independent axle manufacturer just because of that.And if you go back to the history, in the last 10 years, we are the -- Automotive Axles is the first company to introduce any of the products, whether it's a hub reduction, whether it is axle with a diff lock or the tandem axles.We are the first in our company to introduce into the market. So this is going to be a big challenge without the support of Cummins Meritor.

[Sunil Kothari, analyst]

So the things are done by this year. Product releases and new product launch and new product technology, that you mean to say, sir?

[Nagaraja Sadashiva Gargeshwari, executive]

Yes, business development. All these activities [ have ] been [Technical Difficulty] testing [Technical Difficulty].

[Sunil Kothari, analyst]

Sir, just to draw your attention, which -- why are we as a investor or [indiscernible] being minority asked this question is just [indiscernible] -- you have the data, but just I'm -- for the sake of other listener would like to [ convey is ] the profitability of that JV has tremendously gone up during the last 2, 3 years. Profit before axle item was INR 61 crores in '20, it was INR 1500 crores in '21 and now INR 106 crores. So my point is the efforts which you people are taking, are we able to gain or keep our -- the share of whatever you are doing? Or it's just because it's a 50-50, we being minority always we will think that way?And frankly, I could raise this question 2, 3 years also back. Yet I'm not able to satisfy myself, just trying to draw your attention, that's all, I'm not seeking for any answer. But this is not comforting for minority, that I would like to definitely convey.

[Narayanswamy Muthukumar, executive]

Sunil, [Technical Difficulty] thank for your [indiscernible] and the questions you asked. We really appreciate it. If you see the profitability of the effort, who is putting the effort, [indiscernible] being the one company and [Technical Difficulty] then taken -- Your questions, I think as you said, you have put up this question. I would request you to please visit to Mysore. I think that was one of the request that we have been giving [Technical Difficulty] have it. Please understand for yourself the amount of investment that is going on product [Technical Difficulty] the investment that is being done on testing. As in -- like what Nagaraja has said, [Technical Difficulty] Please understand, 75% of that will be top manufacturer by the OEM [Technical Difficulty] just 72%, I would say, precisely.The companies which are making vehicle, they are making axles [ with them ]. In spite of that for the critical important application, they come to us because we are competitive even with that only because of the technology we brought it. But thanks for taking these questions and giving the honest feedback. We will certainly work on giving the comfort to -- it's not a minority [Technical Difficulty].You are [Technical Difficulty] and we continue to work with you to gain the confidence and make this organization [Technical Difficulty].

[Sunil Kothari, analyst]

The point was just to make you say that what minority investors are feeling, because that profitability from '21 to '22 to also double profit from INR 51 crores to INR 200-plus crores. So it gives little discomfort to minority. That is my viewpoint. I don't know whether you'll be able to satisfy me or other listener. But this JV is not giving comfort. I mean, you have to -- I understand this is a quarterly con call. I can't say anymore on this. But this -- the parent is supposed to think about consolidating these things at some time. That is my suggestion and request. Thanks a lot for your explanation, sir.

[Sailesh Raja]

Our next question is from Mr. Sagar Parekh.

[Sagar Parekh, analyst]

Congratulations on excellent set of numbers. So first question would be on the capacity utilization currently, what would be the capacity utilization for brakes and axles, if you can give it give us separately?

[Narayanswamy Muthukumar, executive]

Ranga?

[Sankaran Ranganathan, executive]

No. Brakes will be around at this moment of time, close to about 70% -- 70% to [ 100% ] Nagaraja, and axles, they're more or less at the same level. So yes, around 70% to [ 100% ] realization

[Sagar Parekh, analyst]

So basically at INR 600 crores [Technical Difficulty]about 70% of kind of run-rate. So you can still improve about…?

[Sankaran Ranganathan, executive]

See, one point I just wanted to add. I think Nagaraja can add value. See, as a new product introduced, the capacity what we talk is about overall full-fledged axles. But the various combination is – always a 10%, 14% variation will be there when the new products introduced, new ratios introduced, because it comes with their own gear set, their own other assembly processes and X, Y, Z. So what I'm trying to say is 70% to 75% -- it would be 78% or 80% also. So -- but it depends on the ratios, depends on type of axles we manufacture, based on order book of the customer. Roughly, you can take 75% to 78% level kind of things at which the [ realization ] is there. And Nagaraja, do you want to add something?

[Nagaraja Sadashiva Gargeshwari, executive]

I think you're right. I think Mr. Parekh, our capacity is kind of based on the product mix like water. Ranga just now mentioned, it depends on how many axles we make for, let's say, a tipper application, what's the regular [indiscernible] application, what's hub reduction. So it's kind of -- because we have put up our manufacturing line so lean and so modular so that our capacity kind of vary on the product itself. Like -- I agree with Ranga, it ranges anywhere between 70% to 80%, depending upon on that particular -- on the product mix.And just to bring everybody's attention to that, the demand, our expectation from the customer has significantly upwards. And then I remember Muthu talking about this last quarter. The warranty expectation from the customer has gone -- almost doubled. And they want to take it all the way up to 100,000 to 600,000 kilometers, 5000 hours, 44 applications.So this is -- has -- this requires different kind of manufacturing process. And that will have some kind of a say on our capacity. And similarly, for the bus application lines, [ MVH ] requirement has gone up significantly.So that's where Ranga was mentioning, in next 1 to 2 years' time we are looking at making significant improvements to enhance the current capacity to accommodate all these different product mix so that our capacity will be -- it will be good to especially meet those peak demands like this current quarter and next quarter.

[Sagar Parekh, analyst]

Thanks for the elaborated answer. But basically, if -- next year, if we grow by about 10%, 15% in top line, then you probably we had about 90% kind of utilization, so next year, we would have taken some kind of decision in terms of capacity addition? Or do you think it's still some time away? Because debottlenecking and all those things can also improve the capacity.

[Narayanswamy Muthukumar, executive]

No, sir, parallelly, we'll be doing it, like what Nagaraja [Technical Difficulty] -- Ranga and Nagaraja did overall utilization, like there are station wise [indiscernible] utilization and the team is working on the CapEx. For example, that's what Ranga was telling. Next year, we have planned to deal [indiscernible] for the new technology, the new product that is coming in, and we will continue to invest. And never in our system -- we will wait for the market to invest. Even in 2018 what we invested is really helping us today. So we will continue to be ahead of market because by knowing the market systems and we'll continue to be [Technical Difficulty]. As I said, whatever investment we want to do, we will be doing it for the next technology.So that we -- even when the market goes, whether to batteryoperated or [Technical Difficulty] gestation, our capacities or our current equipment is capable of delivery growth [indiscernible] and accurate product.

[Sagar Parekh, analyst]

Secondly, on the M&HCV expectation for Q3 and Q4 that you have given on the slide -- Thanks for that. Just wanted to check, just on Q4, our M&HCV volume expectations would be lower on a Y-o-Y basis versus Q4 last year, [ 126 ] and?

[Sankaran Ranganathan, executive]

That is the current indication from the OEMs at this point of time. That actually registrations slowly started coming down this quarter, okay? So we have just gone ahead [Technical Difficulty] initiatives coming from the market .

[Sagar Parekh, analyst]

So that indication will be driven due to largely because of election driven slowdown? Or is there anything…?

[Narayanswamy Muthukumar, executive]

That is what is people are -- People want to conserve the cash -- like a normal investment that has happened in the last quarter, people are saying that, people wanted to wait on much. Maybe after December, depending on this mid-election result maybe [Technical Difficulty] all sentiment will change and we may be ready. That's why as I said, the company is prepared. I think Nagaraja and team, they are prepared to deliver even if the market is going to up, so that we'll [ adjust ] and try to ensure that every opportunity is converted.

[Sagar Parekh, analyst]

And last question on the defense side. So do you like to throw any color on how the defense business shaping up? So in H1, for example, our sales have grown by 15%. Any kind of contribution mix or anything that you can give us quantitatively or even qualitatively you can share some details on how the defense business is shaping up, that will be really helpful. That's my last question.

[Narayanswamy Muthukumar, executive]

We have 5 products that have been approved, and maybe if you look at the [ CHR ] there, I think while the overall [ difference ] from our customers has come down. I think we have grown by about 3% to 4% from the base year, like what I have indicated earlier, but difference in the long-term. But we are looking every effort to make sure that 100% of our [Technical Difficulty] partners of OEM, we are present there. That's what I would be able to tell at this point in time.

[Sagar Parekh, analyst]

So you're saying that we have grown by 4% to 5% growth from….?

[Narayanswamy Muthukumar, executive]

Yes, in exports we are growing, continue to grow.

[Sagar Parekh, analyst]

On exports or -- I was talking about defense.

[Narayanswamy Muthukumar, executive]

Defense, you're right.

[Sagar Parekh, analyst]

So defense you have grown by 4%, 5% CAGR over the last…?

[Narayanswamy Muthukumar, executive]

3%. If you take as a base of 2019 or 2020, yes [Technical Difficulty] 3%.

[Sagar Parekh, analyst]

But we have been approved for 5 products, so…?

[Narayanswamy Muthukumar, executive]

We continue to work with the customers and products getting approved. When it is going to convert the vehicle when it is going to go, it's $1 million [ question ].

[Sagar Parekh, analyst]

So this will be largely Ashok Leyland or or any other OEMs also?

[Narayanswamy Muthukumar, executive]

Majority of Ashok Leyland, sir. Other customers we are working, but everybody has their own manufacturing and we are working.

[Sagar Parekh, analyst]

So Ashok Leyland themselves would also be having their own capital for defense -- a capital asset land for defense or they largely book there from us? Or is there anyone else?

[Narayanswamy Muthukumar, executive]

Can you repeat sir?

[Sagar Parekh, analyst]

For Ashok Leyland, would we be the only sole supplier for axles for their defense applications? Or would there be anyone else also…?

[Narayanswamy Muthukumar, executive]

I don't know about it, but whichever the product is approved, we are 100%. See, the Ashok Leyland they have different verticals of vehicle like mining [Technical Difficulty] various application. In those applications where we are supplying we're 100%. But there are a lot of other different [Technical Difficulty] that they have where we may not have a product which we are [Technical Difficulty]. So I'm not able to answer you clearly about what is it, whichever the product we are applying, we have 100%.

[Sagar Parekh, analyst]

And what will be the contribution of defense as a percentage of… ballpark?

[Narayanswamy Muthukumar, executive]

It'd be normally maybe better but it comes with a huge development cost and validation and testing for us. I would say that. So it's a long term -- this is an investment for the long term for the organization. We can definitely make this organization a better contribution in the days to come. The government is also whatever the commitment that they have given they are working towards it, still whatever the commitment is given by 2025, how much it's going to be procured is not happening, only 50% of that done.

[Sagar Parekh, analyst]

And just -- sorry, just last question on this. [ the Bharat Forge ] was talking about their defense business significantly going up, especially on -- even on the vehicle side. So there would we be like supplying the axles to Bharat Forge or any color on that?

[Narayanswamy Muthukumar, executive]

No, Bharat Forge should be using majority of their vehicles with the independent suspension, and we don't -- we are making a [Technical Difficulty]. [Technical Difficulty] wWe are not there. Nagaraja, do we supply 1 or 2 axles or we are notthere, right?

[Nagaraja Sadashiva Gargeshwari, executive]

Pardon Muthu?

[Narayanswamy Muthukumar, executive]

We are not there for selling to Bharat Forge from our plant, right?

[Nagaraja Sadashiva Gargeshwari, executive]

No.

[Sailesh Raja]

Sir, we have one question in chat box from Sridhar from Axis Securities Limited. I just read out. So what are the factors that led to EBITDA margin expansion by 100 bps Y-o-Y to 11.9%? And what is the management further are doing to improve the margins? Also, any EBITDA margin target in the medium to long term? Shall be thankful if contribution to sales from top 2, 3 customers in percentage could be shared?

[Narayanswamy Muthukumar, executive]

Ranga?

[Sankaran Ranganathan, executive]

No, I think I answered it before. We have -- desire is definitely improve the margins. As I said, as the volume grows, you definitely see the growth in the margin percentages too. We are constrained to share a number, but definitely, we have it as part of our strategic initiatives. We have a specific program called Mission '25, driving the cost lines and material performance. Systematically, we are doing it for the last 5 years. That's the reason we have -- larger the amount [indiscernible] initiated.One way is mitigating the inflationary pressures which is coming into the business to further contributing to the profitability. But our desire is to earn as much as possible. We seek every opportunity when the new product has been launched and as well as other conversion initiatives we are taking it. We surely will improve the performance.As long as the volume increase, we will definitely see a better performance in the overall bottom line.

[Sailesh Raja]

Yes, sir. Due to time constraint, that was the last question for the day. Sir, any closing comments would you like to make?

[Narayanswamy Muthukumar, executive]

Once again, thank you very much for all your confidence and continue to inspire us to grow. We will continue to put our efforts on product development. We will continue to put our efforts on making our plant the best plant to work with, with the new digitalization and new technologies to come. We'll continue to invest on people to make sure that the differentiator between us and our competition is the people who work for the organization. Technology and innovation continues to happen and you will have seen that we are #1 in launching.I think Nagaraja talked about how many type of new technologies that we have launched. We'll continue to work on that. We're looking for your support. All the feedback that you have given, we take it. And we will continue to work on this and to see that how we continue to make this organization more trusted organization for you to invest mostly. With that, ladies and gentlemen, thanks for your time. Thank you very much. Thanks, Ranga and Nagaraja and Panda for joining us and answering all the questions. Thanks Sailesh and team for organizing this wonderful presentation. Thank you very much. A Great Diwali to everyone of you. Thank you very much.

[Nagaraja Sadashiva Gargeshwari, executive]

Thank you very much. Wish you a very Happy Diwali.

[Sankaran Ranganathan, executive]

Yes, all of you a very Happy Diwali.

[Sailesh Raja]

Yes. Thank you, sir. We'll conclude this call.

[Narayanswamy Muthukumar, executive]

Thank you, Ranga. Thank you, everyone. Thank you, Nagaraja.