Thank you, Nasia. Good evening, everyone.

On behalf of Dolat Capital, I would like to thank KPIT Technologies Limited for giving us the opportunity to host this earnings call. Now I would like to hand the conference over to Mr.

Sunil Phansalkar, who is Vice President, CFO and G and Head of IR at KPIT, to do the management introductions. Over to you, Sunil.

Thank you, Rahul. Good evening, and a warm welcome to all on the Q1 FY27 earnings call of KPIT Technologies.

On the call today, we have Mr. Kishor Patil, Co-Founder, CEO, and MD; Mr.

Sachin Tikekar, Co-Founder and Joint MD; Mr. Chinmay Pandit, Board Member and Head Americas; Mrs.

Priyamvada Hardikar, CFO; and yours truly from IR. As we always do, we'll have the opening remarks by Mr.

Kishor Patil on the performance during the quarter and the outlook for the remainder of the year, and then we'll have this open for questions. Once again, a very warm welcome to all, and now I will hand this over to Mr.

Kishor Patil. Thank you.

Good evening. I will take you to the our results for Quarter 1.

Automotive industry has been for some time facing some challenges globally, especially on account of extreme competition from China. It was accentuated by certain geopolitical situations, whether it is tariff or other other parts in different parts of the world.

The last one, which was the war, which was probably the most unexpected by many many companies, it also had a significant impact in terms of their supply chain and the cost input cost. With all this, specifically for European players have been the most impacted, both because they had impact in China market as well as the Chinese competition getting into their own market, which is in Europe, and last, but not the least, the having a restricted US market because of the tariff or uncertainty because of that, and last, but input cost because of the war.

With all that, I think the profitability had a significant impact apart from their drop in the number of cars sold. This specifically impacted European players, also Japanese players, but European players significantly impacted.

With that, you could see that there have been many job cuts, many profit warnings, many pay cuts, ongoing restructuring, significant write-offs, etc. On the back of this, after some of this, one one month back, we made a disclosure to the stock market about the impact on KPIT in the for this year, and we talked about how it may pan out to some extent, and specifically for the Quarter 1, we talked about that year-on-year it would have a degrowth of about 1%, and quarter-on-quarter about a 5% drop in terms of revenue and more than disproportionate impact on the profitability.

On the back of this, the for this quarter, year-on-year revenue, we had a CC revenue growth of 0.1%, year-on-year revenue decline of 0.6%, quarter-on-quarter CC revenue decline of 3.6%. In terms of profits, the EBITDA at 17.2%, EBIT at 12.3%, and the PAT at 1.17 billion rupees.

This is the this is where we are in terms of actual numbers. The the profit, basically the PAT got impacted both on two other accounts, which was one is the forex loss and also a loss of share loss of share of loss from Qorix, which again in some way was an impact of postponement of certain revenues specifically in the Europe region.

That had a further impact on that. On the back of that, what was still good was KPIT could we could do $257 million worth wins during the year during the quarter, which was across across the world, but mainly driven through connect connected cars, then after sales transformation, and autonomous.

These were some of the few leading areas which helped us to get this revenues. Now, while we reach there, I think the two things which we have mentioned about is this this, of course, is not where we have been in the past, and we would like to come back to the growth.

During the outlook, we have just mentioned that H2 will be better than H1, and we will return to growth in H2 by Q4 driven by the Q4 performance, and we and our profitability will return when the the revenues largely when the revenues come. Of course, there are other levers we will use it before that.

This is where we are. Now, the point is how we will do it, and we have talked about some multiple areas where which could help us getting there.

Now, I may say that this is not a response to this situation. We have been working at it for last many months, even during the last year.

The now the issue is about how quickly we can do that. I think the drop in the revenue was quicker than we got the revenues out of some of these areas which we have been talking about.

First thing is overall, I would say that we have been trying to broad base the revenues in multiple ways. The first thing is on the existing OEMs.

In the existing OEM, apart from focusing on increasing our wallet share in the areas in which we work by getting a larger responsibility of the of the programs and through multiple ways. We have also added many areas of practice or offerings which we provide to the client, which will help us.

For example, in the existing areas where we are trying to really you remember we have done an acquisition, Caresoft, some some some time back. Now we are leveraging that for cost reduction programs, and we will do that more actually, and that is one area which is absolutely essential for these OEMs at this point of time.

The second, for example, is after sales transformation, and that's some of the areas we are doing. First is in the existing car OEMs.

This is what we we are doing. We are seeing now a good traction in these areas.

Couple of these areas, these are some of the fast-growing areas which we are seeing. Then the second thing is new passenger car OEMs.

There are some car OEMs very stable and I would say successful OEMs in Japan, Korea, and also in Europe, which we have not been working enough. Now, these are some of the OEMs we have been engaging for last few years, and now we see a places where we could actually be in a position to accelerate their journey.

I think these are this is from the existing car OEMs or some new passenger car OEMs. The second is off-highway and trucks.

We talked about it that we had started focusing on this some time back. There are new logos across US, Europe, and Asia, which with whom we are engaging in.

As as like SDV, now SDM is what you look at, like Software Defined Machines. This has a tailwind across these off-highway and trucks.

Specifically, if you look at the off-highway, there has been a big success for some of the some of these companies. You you would know that some of the leading off-highway companies have a market cap which is bigger than most of the OEMs, and they are highly profitable, growing very well over last few years.

These are some of the clients we are engaged with, and we would like to and some of the new logos which we have got, we would like to really double down on this. The third thing is the products and solution.

We have multiple products and solution. Again, we have made multiple investments and development.

One of the few of the latest one is has been N-Dream. The second I talked about is after sales transformation was the Idart, Technica products, which and the Cybellum, the cybersecurity.

Now, we have all What we have done is we have we have been putting together to integrate the whole story across the software development cycle and the vehicle development lifecycle. This is all being getting powered by the automotive intelligence platform of, it's a Beacon, what we have done a partnership with Microsoft for a global go-to-market in automotive area.

That becomes the base for all this. This should help us apart from So basically basically, Technica becomes like a infrastructure for in the validation, which is powered by Beacon.

Then Idart becomes after sales powered by Beacon. Similarly, we are so validation is there, Idart is there, and the the similarly, we are looking at the overall product lifecycle across which we can build autonomous, where we have bring the World Foundation model.

Across these areas of offering led powered by Beacon, we are providing the product. This is one area where products and solution, is really helping us to grow, and this will be also margin accretive over the period.

This is where we are investing, and this is where we are seeing a good traction. Other adjacencies we are looking at is one is the micromobility, where we are already seeing a good traction.

We are already have some wins, which is the last-mile connectivity. The second thing is about the deep tech, some of the opportunities we are looking at in the area of deep tech.

With all this, we are trying to see that we are improve wallet share expansion across all the practices and create offering which are cross-practice offerings for these clients. This is how we are looking at to do this.

Now, this has been our places. This is where we have invested, and we have been taking this is how we were furthering our strategy.

Unfortunately, there has been some gap between the impact we had versus the revenue realization, but we do believe that this this will be this this will, of course, will be overall revenue accretive, and we will return to growth. As we said, by the quarter end of H2, we will be by Q4, we will be back to the growth, and hence, the reasonable margins there which we have we have been used to.

I I would like to say that we we are not very comfortable where we are. I think we have taken we believe that mobility overall as a area is very very much there in multiple forms.

It will expand its scope, and we will continue to have a balanced growth, broad-based growth across the clients, across the practices, and across the adjacencies. Thank you.

Hi, good evening. Congrats on the strong deal wins despite a tough quarter.

I had a couple of questions. The first is by when do we think commercial vehicles will really come back to growth?

If you would give some color on why we saw the weakness during this quarter there and because you have had reasonable deal wins and client additions to the off-highway and commercial vehicles. That's the first question.

The second is from a Europe perspective, we seem to have at least in the presentation a reasonable number of deal wins in Europe despite the weakness that you spoke about. Also, it looks like some of the OEMs have a reasonable number of model launches or updates by the end of next year, which is a large number.

In that context, do you believe that this weakness can be sort of temporary? These were the two questions, and I just have one last question on margins, which I will sort of ask after this.

Nitin, as I mentioned, we of course don't think that these are the kind of a permanent drops or anything. We enjoy a very healthy relationship with the clients, and we have also broadened our scope.

Of course, many of them have to reinvent themselves. They look at KPIT as a natural partner.

We are engaged with all the OEMs you are talking about. That's the reason our pipeline is also strong.

What we are not sure in the case of the current part is when these deals will realize. We are not at all worried in the sense whether we would get our share of the business.

It is about the timing. That's why at least in the short term, we have discounted that part at least for a few quarters, and that's why we have said what we have.

On the commercial vehicle, we will be on for growth next quarter. Actually, this quarter also, there was one specific thing what had happened was a quarter before, we had one significant revenue in a particular place.

That's why this looks like this, but I think you will see a growth next quarter.

Sure, perfect. Lastly, on the margins, during the Analyst Day, you spoke about an aspiration of achieving 22% to 24% by FY29.

That aspiration can still hold or would you worry about it at the moment?

I would say the medium-term outlook remains good for two, three reasons. I will not just make a statement.

There are two, three things. As I said, we believe that our product revenues will grow, and the solutions revenue will grow exponentially.

I would say that we have a reasonable success. It is not that we are not started.

We have already seen the success in some areas. In solutions, there are many solutions we have identified.

Some of them are in the initial stages. We believe in next quarter or two, they will also be ready to be deployed.

With this, we believe that our growth will be largely driven by products and solutions, and this will be margin accretive. In the medium term, we do believe that because some of these we have also looked at outcome-based kind of business model.

Over the medium term, we do believe that we will be in a position to get where we have mentioned.

Super perfect. Thank you so much, and all the very best.

Thank you.

Thanks for the opportunity. The first question is on the US geography.

It has done well this quarter. Can you unpack the growth between, let's say, OEMs and off-highway, and do you expect this momentum to sustain for next few quarters?

That's the first question.

This is Chinmay. The growth in the geography is fairly well-balanced across the entire portfolio.

We have seen good growth on the commercial vehicle side and some of our long established relationships on the pass car side as well. I think we have a fairly good visibility for the upcoming quarters to have it continue in the same line.

Thanks. Second is on the Europe.

Actually, the revenues didn't fall off versus what we were expecting. Can we expect the impact in Q2, and also if you can quantify the revenue impact for European geography?

I think there are two things. First is absolutely optically that looks like that, but there were two reasons.

One is there were certain revenues we were expecting which did not come there. Some of this, you will see that it will have some impact next quarter as you will see.

I think we saw a reasonable impact in Europe, which was about 4 4% or so.

For the quarter.

For the quarter, about 4% or so. We also see, as you would look at, this impact will not be at a company level, I'm telling you at a geography level.

This will be more than will be made up by US as well as SEEMA. Where this quarter it shows a particular because of one one transaction, there are multiple things look like that, but this quarter it looks drop.

As the revenues are less, so that's why that drop looks big. We are seeing a significant growth in SEEMA also.

I think with growth in US and this, you will see, but the Europe impact, you will see next quarter.

Okay. Kishor sir, there were two SDV programs which were going to be ramped down.

Are they in the base now or do you expect the impact to continue? If they are in the base, then should we expect the Japan, Korea, and China, JKC geography, to bottom out?

One program from Europe is almost getting over now. We'll go to start of production, but that's been planned.

The one in Japan that was actually canceled at the last minute. Both these programs are coming to a natural kind of an end.

In terms of these specific programs, I think this is where we are.

Just to clarify, the program means the actual vehicle program was cancelled.

Yes.

That's the impact. This is what has happened.

Of course, we do have a pipeline from these clients. It is not that we don't have a pipeline from these clients.

What we are not sure again is in the current situation, specifically this being from the Europe and Japan, is the timing of when we will be in a position to get a further revenues. Got it,

got it. Just last question on the margins.

The other expenses were up significantly this quarter. Surprising to see expenses being up in this kind of a quarter.

Are there any one-timers there, and how should we expect margin trajectory from here on for next few quarters?

In terms of other expenses, there has been a certain impact because of the foreign exchange rate also. As these are consolidated accounts.

Secondly, there have been some provisions because of the acquisitions that we did and some bit of subcontracting cost in European region that we incurred for our client. Nothing out of the way.

These are operational things.

Going forward, the way we see is the margins will improve, but it will improve incrementally, not significantly till our revenue go back. Revenue will be the major driver.

We will be in a position to optimize cost, but only incrementally. That is point number one.

The second is the Qorix loss, which we said, I think it will continue for at least next quarter or two. That we believe that how it will be.

Mainly the driver will be the revenue coming back.

Thanks. Thanks a lot, and all the best.

Thank you.

Hi, good evening, and thank you for taking my questions. My first question is just around one of the prepared remarks that Kishor you had made.

Over the past 18 months, I think the European OEMs have found the going a little harder in China because of the higher luxury taxes there. Also on the other side of the coin, the Chinese OEMs have been taking market share in Europe from European OEMs in a lot of the markets.

KPIT has for the past 2 and a 1/2 years been trying to seed businesses in China and try to see how you can contribute to Chinese OEMs who are now making a bigger impact in the global EV market. Just want to understand over the past 3 to 6 months, have there been any developments there, anything changing there which might enable KPIT to participate more in this trend, which at this stage seems to be a little more structured?

First thing is absolutely I have also said that we'll be very patient with China, but we'll continue to grow and invest in China. We have engaged with two OEMs, and at least one of that, we are about to get to a meaningful engagement in that case.

The third thing I must say that we have found a reasonable traction for our products and solutions in China. These all the three things are working.

The scale will happen because now, as the China [audio gap] also their volumes have gone down and there also the industry has taken a beating. The impact is basically most of the companies are aware that they will be in a position to really grow meaningfully outside China profitably.

I think that is where they see KPIT as a partner which has been in China as well as has a very strong both client relationships as well as ecosystem play outside China. We do believe and we absolutely can believe in our efforts and strategy for China.

Apart from that, as I mentioned earlier, we want to be very broad-based. Multiple areas I talked about.

The third thing I would say is China is a place where we want and we are also learning, but as important is, as many global OEMs are forming partnerships in China. We believe that that also we can leverage significantly going forward.

Got it. That's helpful.

Second question is just around, I think in the past at the start of the year, you have provided some color on how you think the first half versus the second half can progress. This year as well, I think you've given clarity that the first half, the first two quarters might be sort of similar.

Just want to understand the back half, I think you seem to have visibility that things will improve in the back half. Just want to understand what are the key drivers of that, and also relative to I think at the Investor Day after 4Q results, the initial thought process was that there could be possibility for organic double-digit growth YoY.

Is that a run rate that you think is feasible for the back half of the year once the first half sort of headwinds are cycled?

I think we have mentioned that, of course, as I would think you would appreciate our clarity or if I would say transparency, and we share whatever happens at the earliest. When we were of the opinion that in the first half because of some of the reduction of or cancellation of SDV programs, our revenues would go down and it would impact the first half.

We had this Investor Day after that, and where we explained what would be the impact on KPIT and what we would be doing, and we talked about the whole strategy. I've not told you anything much different than what we have said then, and we would make up for it.

Now after that, there were major changes in the European ecosystem, and many European OEMs had an impact on their results and the subsequent actions post that. Because of that, we had to come back and talk to you about that, and that created a lot of uncertainty because it takes time for people to figure it out and understand what they will do.

That is the impact, and frankly, because of that, we have been saying what we have been saying. Beyond this, we have talked about two things.

One is H2 will be better than H1, and by Q4, we will have a meaningful growth. That is what we have mentioned.

We also believe in our medium term and next year year after growth strategy because of the multiple actions we have taken. I must say that the impact we had is in a couple of clients, which is significant, but the growth has been more broad-based and across multiple clients, and we do believe that by the end of the year and the next year, these accounts will bring a meaningful growth.

Got it. That's helpful.

Completely appreciate all the clarity and transparency there, for sure. Just last question, I think over the past two to three quarters, becoming more and more visible that your fixed-price contracting is increasing 600 to 700 basis points versus where we might have been last year.

Just want to understand from a margin standpoint in this kind of environment, how that needs to be construed. We've also made the points around we've had multiple months of working with many AI tools, the Beacon AI project and so on, and how that can also add productivity options.

Just want to understand how to put these two points together to try to figure out what the range of profitability could be for the company in this sort of newly constituted business model in a steady state environment. See,

the first thing we felt that any change in the business model, the basic thing is move to the fixed-price business model. Once we do that, then we have multiple options.

Number one, of course, the usage of AI. Again, I must tell you, it takes some time to move towards completely AI-based delivery because, depending upon how the infrastructure is set up, how much they allow our tools to be used on their infrastructure versus our infrastructure, it takes some time.

There is some buy-in and that process. The second thing is also the solutions which we bring in as a part of the fixed-price delivery, which have better margins.

The third is the products. For example, Beacon itself has two business model.

One is as a product or platform, which is basically subscription-based. Then the second, of course, we use for delivering to the client.

With all these combinations, flexibility is available to us to drive with the clients to maximize. That's what we are doing.

To answer your indirect questions probably is we believe it has two meanings. One is we are in a position to improve our margins where we are signing the contracts.

First is they are always meaningful. We are typically continue to hold some premium against the competition.

That I always talk about. Secondly, where even in the geographies where it is very competitive, in a certain amount of time, we can move towards a better reasonable margin or a better margin.

I think this is how I would describe the scenario.

Got it. That's very helpful.

Thank you very much, and all the best.

Hello, am I audible?

Yes.

Good evening, sir. Sir, my first question, when we say Q4 will be stronger in the terms of growth, I just wanted to understand how are you seeing European OEM in that particular quarter onwards?

Are you seeing them start using KPIT solutions to compete against the Chinese competition or do you think the current situation will be there for those quarters as well, but you will get support from the other geographies? I'm asking this because in order to return to our earlier growth trajectory of 20%, 25% organic growth and the kind of margins that we did earlier, I think we need to have a decent contribution from existing European OEMs as well.

Where we are on that, sir?

Let me take that question, and thanks for setting the expectations for next year as well from growth perspective. No, I think let's talk about European OEMs.

What is happening to them, as Kishor talked about earlier, there are three forces at play. Their share in China, which used to be the highest, that has gone down and it continues to go down.

Number two, in their own home turf territory, Chinese are gaining market share. Because of the tariffs, they are becoming not so competitive in the US.

They are under tremendous pressure. Having said that, they also realize that it means structural change.

This is not something that gets over, right? They are rethinking their strategies.

That's the fact, and this is where all the European OEMs are. Now what does that mean to KPIT perspective?

We still believe that all of these OEMs, they've been around and they're going to be around. They just have to figure out how they're going to be around and viable going forward.

In their journey, given our relationship with them, the conversation has shifted towards how does KPIT help these OEMs reduce the cost of their product by at least 30% to 40%, and secondly, how do we help them reduce the cost of their production. If they are able to bring these price points down by 30% to 40%, they become competitive again.

Our conversations have actually shifted towards these two topics for the European OEMs. This will take time as they're sort of re-baselining what does it mean to them and where they really want to spend money.

These conversations are already been initiated, and we believe that once we get over this hump over the next couple of quarters, some of these cost reduction initiatives will yield revenues to KPIT. This is point number one.

Point number two, our current business is more than 50% comes from Europe, absolutely. The effort over the last six quarters has been to have a broader-based growth.

That means how do we have balanced growth across Europe, Americas, SEEMA, which we call Southeast Asia, India, Middle East, and Africa. This is a new sort of a region for us, and JKC.

We need to have balanced growth, A, across the four geographies. Number two, within that, how do we get more business and wallet share from our existing clients in passenger cars?

Number two, the clients that we never worked with, we have started engaging with them. An OEM in Korea, one OEM in Europe, two OEMs of one OEM in the US, and one in Japan.

We have started doing this. This is step number one to have broad-based growth.

Number two, we have opened seven different OEMs in off-highway segment, and we have started working with four different OEMs in trucks and bus business. The composition of our revenue is going to be broad-based as compared to what it has been over the last three or four years.

This is a transformation that we are also going through. I think we are going through it as we speak.

Once this transformation happens, I think we believe that we can go back to our growing ways. It's just that there are certain obstacles that come our way.

What we are trying to do is to sort of build a more resilient company that can withstand some of these shocks and still grow in spite of these shocks. This is in a nutshell, this is what our effort has been.

I think the learning from the recent challenges with Japan and Germany is, I think we just need to have a lot more intensity and we have to run faster. That's what it means.

A long answer to your question, but I do hope that it helps to understand what we've been doing and how this transformation is taking place in our company.

Understood. Basically, what I am understanding is from the timing perspective, there are uncertainties, but yes, European OEMs are basically considering the solutions of our company.

Absolutely.

Okay. Secondly, on the deep tech side, you mentioned in the slide, I just wanted to understand more on what are these areas, because in the past also, we were speaking about sodium-ion technologies and then hydrogen fuel technologies, but in the last few quarters, we are not hearing anything on them.

I just wanted to understand what are we exactly thinking in this space?

I think two, three things I would say that so, for example, in that other parts, I think we continue to work on the hydrogen tech, but meaningful revenues will take some time, though currently the government is pushing hydrogen specifically in view of multiple controversies, they do believe that hydrogen may be a viable option. Some of these things we will be careful in terms of factoring into our growth.

I think the points we are looking at is some of the areas in which we are working in the practices, they are very adjacent to some other parts of the mobility, whether you're talking about drones or whether you're looking at few other areas, humanoid or few other areas, whether it is on the production floor or otherwise of the flying ones. I think these are some of the areas which we are exploring right now.

Also, some other areas where we are looking at and we see an opportunity. Again, these are some initial efforts, but we believe the opportunity is big one, and we are not factoring any significant growth right now, but we believe these are the good opportunity which we should be in a position to capture, and we are in the process of putting together the overall plan.

The second is the data center opportunity, where some of our clients like Cummins or some other clients are engaged meaningfully. We can probably take these offerings to many more clients in that sector.

This is what we are doing. We're putting together our story, and we believe that we will be in a position to grow in these areas, which are again, the areas where we already have an experience, we already have the offerings, and we are already working with few clients.

We have not yet taken the holistic view yet or made any organizational focus fully on that, which we are exploring, and we would do that.

Understood, sir. Sir, about sodium-ion technologies, how is it going right now, because I think it is more than two years now, right?

What are the updates on that side?

No, I think we talked about it. We have taken certain revenues some time back last year.

There was a NRE, and I think after that, there has been See, the battery technology takes about 2 to 3 years to really put even the pilot production plant. Even if we look at 1 GWh, I think that takes about more than $100 million of investment, and it takes a significant area.

That's not come where it actually gets into production, and after getting into production, there are certain milestones after which we get entitled to a lot. It's not something which is immediate from the revenue perspective.

Thanks for the opportunity. Just one clarification question.

If I look at the fact sheet, there has been a marginal growth in Europe, as well as strategic customers has not declined materially lower than the company average decline. Is it fair to assume what we anticipated in the month of June in terms of a decline in the Europe-centric OEM revenue has not happened and may come in the second quarter or am I understanding wrongly?

I think we were expecting a higher growth there, which has not turned up. At the same time, we have committed the cost and we were in the middle of the engagement of the projects and etc.

First is the revenue has not come through, but as I mentioned, you will see that impact coming in the next quarter. It will be impact at a regional level.

I have said that it will not be at a company level, because we will see a broader growth in USA as well as SEEMA.

Okay. In margin uplift, you are saying the major uplift where you have already guided Q-on-Q improvement, but the major uplift can happen with the growth turnaround, which we expect by Q4.

Q4 growth turnaround, we are talking on a Q-on-Q basis or on a YoY basis?

I think, as for sure, it will be quarter-on-quarter. I don't have a clear answer to this right now, but I guess it will be at least flatish, if not.

I think we would get back to a certain number by that time.

Okay. Thanks, and all the best.

Hi, thank you. Again first, couple of clarification.

I think during the end quarter update in June, you had said 2Q's revenues will be flattish and 4Q will see significant growth. Is it fair to assume that still holds, that we see flat growth in 2Q and then some growth in 3Q and then significant growth in 4Q?

A related question is the margins, when you say you expect to go back to normal levels of margins by 4Q, are you indicating 20%-plus EBITDA? Obviously, it will depend on growth, but is that what the assumption we are working with right now?

Frankly, the large part is related with the growth, and it really depends on that. Yes, Fundamentally, if you look at the way the cost structure and to tell you clearly, the European cost to take out takes a much longer time than the other parts.

I think considering that the time as well as the cost will be longer from that perspective. Yes, it will be really when we get to the revenue growth, I think that is where we will be in a position to bring the margins back.

Got it. My second question is you did mention that pipeline in Europe remains quite strong, but it's difficult to put a timeline in terms of when does that convert to deals.

Is that also playing out in terms of deal-to-revenue conversion also, because the deal wins have been quite strong over the last few quarters, but the revenues are not coming through. What are the client conversation indicating in this environment, especially in Europe?

See,

the point is actually in certain accounts, it is coming through. I think the point had impacted us is not the wins.

Wins we have got, you we got the strong, and that's why what Sachin was also mentioning earlier is the drop has been pretty strong pretty big in these two accounts. We did not drop revenues as much because of the wins in the other market.

Conversion has not been the it has been slow, for sure, but it has not been like pending for or perpetually waiting. That has not been the case for project to start.

What we feel is European wins even when currently they will actually get started, it will be they would look at, doing more work out of India than Europe and many of those things. For us to, that that will happen, and so we we do believe that those wins when they come, they will come.

It has nothing to do with the earlier wins. Earlier wins, many of that has already started, many of those projects.

We are right now two uncertain things. One is the revenue part, which I mentioned to you, is specifically in European part, when actually where we are now the pipeline is there and where we have even some wins, recent wins with some accounts, when they will start now, not the earlier ones.

The second thing is about how the time it will take to cut the cost in Europe. I think these are the two points which we are Okay.

Just lastly, are you seeing any vendor consolidation exercise being played out at the OEM level, and how are we faring in those exercises? Are we winning share?

The answer is absolutely yes. We're doing pretty well there, but our belief is the client engagement model will change.

Even though right now people may look at the client consolidation in the traditional way people talking about, we believe that over the period, the OEMs will go to the best of the solutions where they can compete with their competition. I think that's why our focus is more on solution and products and AI.

Got it. Thank you.

Thank you.

Hello.

We are not able to hear you clearly.

Am I audible now?

Yes.

Yeah. I have one question that we got some contract from Tata Motors.

At business model level, what KPIT does differently as Tata has their own ER&D companies and all? KPIT gets the contract from Tata Motors also.

How company does something differently that they got this contract?

I think it's a valid question. Tata Motors is a large company that is growing.

Like any other OEM in the world, they also have their ER&D. Other OEMs have their ER&D.

At the same time, they work with partners like us. Tata Motors has the same kind of model.

We know it's not just their own ER&D and KPIT. There are also other players that also support Tata Motors.

The recent win and it's nothing new. Our business with JLR is significant, which is also a Tata company, and we've also been working with Tata Motors for many years.

The reason we mentioned this particular deal, it's our N-Dream in-vehicle gaming platform. This is the first time such platform has been launched in any vehicle in India.

That's why it has its own unique significance, and that's why it's been highlighted. We continue to look at Tata Motors, both the passenger side as well as the commercial side, as a viable client where we'll have growth with them.

The business model here is per vehicle, which charge.

It's a license model per vehicle.

Okay. My second question is around that you said the European OEMs are discussing about the cost structure to reduce their cost and how KPIT would help in that kind of sense.

Is there similar kind of discussion are going around for the product development at lower cost to compete with the Chinese OEMs so that product differentiation, at the same time, cost structure would improve for them?

What we said was, in fact, in reference to the product itself, how do they make their product far more cost effective offering attractive features in order to compete with the global competitors. There are two parts to the cost reduction.

One is how do we reduce the product itself. If a vehicle costs 100, what kind of contribution KPIT can make to help them get to 60 or 70.

Second is if their cost of production is 50, is there a way for us to take it down to 30 or 35? What role KPIT can play in this journey.

I think these are the discussions that we are having with the European OEMs, because they are under the highest pressure. We believe the same thing will also be taken to the clients in Japan as well as in Korea, and at some point, in the US as well.

Right? This is just going to be fact of life for everybody, because the Chinese OEMs have created vehicles at that price point offering incredible features.

I want to add one part. It is not only cost, it is the speed.

I think European OEMs are taking too long to bring a new model, and that's why in terms of competitiveness goes down by the time new vehicles come on the road. That is one thing which we are focusing, how we can reduce the time to market for the OEMs.

Thanks for taking my question. Just wanted a clarification in terms of the segmental revenue.

There was a planned completion. There was a ramp-down of SDV program.

Then we were hit by European OEMs towards the end of the quarter. One would have assumed that it's the PV segment which would take the brunt of the revenue contraction.

The passenger vehicle segment revenues have just come down by $3.5 million in this quarter. It's the CV segment which has fallen more.

Just wanted to understand, is the base not incorporating a large part of the SDV ramp-down or am I missing something here?

I think because last quarter we had one

Hello?

Hello.

Yeah.

I answered this question earlier.

Yeah. I think in the commercial vehicle, there was a one-time large license deal last quarter that is not there this quarter.

That's why you see on a smaller base of revenue, you see a significant impact. That's the end of it.

Going forward, you'll see CV growing for us. When you look at our numbers in Q2, Q3, you will see growth coming back to CV, because it's going to be broad-based.

Point number one. In pass car, we were actually, as Mr.

Patil mentioned, we were actually getting ready for growth, and that growth has not happened. That's why that was the last-minute setback that we got towards the end of the quarter, last quarter.

Has the project completion and the ramp-down, a large part of that is already there in the base or that is something which is still pending towards?

I think yes, the Japanese part is getting over now as planned, and the one that we realized towards the end of next quarter will happen. The complete thing will happen in Q2, and we believe that both accounts will start to stabilize in Q3.

Okay. Thanks for that.

The second question is on wage hikes. Are you thinking of wage hikes anytime soon or this is something that would depend on how growth comes back and something which would be deferred to 2H?

How are you thinking about wage hikes?

Last many years, I think there have been many years when people have not given increments. In last five years, I think at least three years, most of the companies were very soft.

We have not stopped the increments always. This is the first time we have delayed it.

We will do it in stages, and we'll give it to some of the younger grades soon, and the senior people will get it over the period. Sure.

Finally, your overall revenues in terms of sequential growth are down around 4.5% in USD terms, whereas the strategic clients, which are around 87% of your revenue, are down only 1.3%, which means that bulk of the decline is from the non-strategic clients, which, given the situation, doesn't really reconcile. Just wanted some clarity on this.

I think our degrowth, I have not seen the numbers, we'll analyze and tell you, but it has been because of the top two clients. These are, of course, our strategic clients.

I will analyze the number. I have not seen the numbers.

I'll look at it at a weekend. It is from strategic clients.

As we mentioned, one of the client, the degrowth is not factored completely, actually. Next quarter, you will see the impact.

We have said it will be on only the region. At a company level, we will grow because of the growth in the other accounts.

I think what you are translating this, the numbers of 87% and 84%, don't look at them absolute. 87% is a percentage of the current quarter revenue, how much are strategic clients, and 84% revenues of that quarter's revenue.

Don't compare 84 to 87. They are quarter-on-quarter 1.3% decline, which is mentioned out here.

There were some other revenues which we talked about license revenues last quarter.

Thank you, everyone, for your active participation, and I look forward to interacting with you in the near future. Thank you, and have a great evening.