Thanks, Swapnali. Good morning and thanks to everyone who have logged in to Automotive Axles' 4Q FY '26 earnings conference call.

From the management side, we have with us Mr. Nagaraja, who is President and Whole-Time Director, Automotive Axles Limited; Mr.

Raman K., he's Interim CFO, Automotive Axles Limited; and Mr. Kishan Kumar, Whole-Time Director, Meritor HVS India.

Now, I'll ask Mr. Nagaraja for an opening remark, post which we'll open for Q&A.

Over to you, sir.

Good morning, ladies and gentlemen. I'm Nagaraja Gargeshwari, President and Whole-Time Director of Automotive Axles Limited.

As Sailesh mentioned, along with me are Kishan Kumar Udupi and Mr. Raman K.

Thanks to the strong market. As you're all aware, we were able to close FY '26 on a very high note.

We were able to convert the demand and improve both the top and bottom lines. What we will do is, first, Kishan will take us through the market and how we are looking at it, and followed by Raman sharing the results of Q4 and also the full year FY '26.

Then we will open up for the question and answer. Over to you, Kishan.

Thanks, Nagaraja. Good morning to everyone.

Like all of us know, and I think I have been repeating this in the previous calls as well, the industry, especially in the commercial vehicle above 7.5-ton, it's been on a tremendous ride for the last 3, 4 years. We have been seeing consistently 400-plus market since FY '23.

That continued and ended in even a better place now for the FY '26 full year with the market closing at around 480,000 vehicles, which is 16% above FY '25. The special note here is the Q4, which is a phenomenal number for the industry, each OEM crossing their own individual records.

Did we with our delivery and production during this quarter. What we can probably make out of the last year was probably the GST cuts that happened later part of the year, and then the fleets, the large and small fleets trying to get the benefit out of it.

The replacement cycle also kicked in a little bit earlier than the earlier predictions. The fleets actually went ahead replacing the vehicle.

Very positive sentiment overall, and that showed up all the way to the last date of March in terms of production and sale. One more positive note here is, which probably there will be questions later, we also converted a good amount of the new products that we launched during the year, and the ramp-up was pretty good done, and we were able to convert that as well at a very high success rate, I would say.

With that, probably, I will hand this over to Raman for a financial summary. Thank you.

Thank you, Kishan. Good morning to all the participants in the call.

Gladly take this opportunity to present the results for Q4 as well as full financial year FY '26. From a top-line perspective, we ended the quarter four with revenue of 6,643 million, which is when, comparing to sequential quarter, we were up by about 18%, and year-over-year also, I think we had a similar growth of about 18.5%, 18.7%.

The other income is about 55 million. That is kind of lower when compared to last quarter given the geopolitical situations and the interest rate cuts that happened in the market.

Our investment income was slightly lower in the quarter, but nonetheless, I think most of the investments income are in the recovery stage at this point as we speak. Moving down, when compared to the material costs, I think we had a total material cost of about 4,518 crores, sorry, million, which is at about 68%, which is which has slightly improved year-over-year.

This is, in line with the new business model as well. The employee benefit expenses stood at 473 million at 7% on revenue, which is kind of mostly flat when compared to sequential quarter.

The finance cost and depreciation are more or less in line. The depreciation is slightly up because we had some of the investments that that kind of were capitalized in the last quarter.

There is a slight increase in the depreciation when you compare to the sequential quarter. The other expenses stood at 880 million.

I think that is again slightly up. Obviously, there is a there is a variable portion in that other expenses as well.

That is the reason it has it has moved up. Otherwise, all other fixed expenses remain quite stable.

That leaves us with a total EBITDA of 825 million, which is about 12.4% on on on the revenue for the for the quarter ended Q4. There were no exceptional item.

We had reported some exceptional item in the last quarter. For this quarter, we don't have any exceptional item.

That leaves us with a PBT of about 700 PBT is at 723 million at about 10.8%, and our PAT stood at 539 million at 8% PAT, sorry, at 8% PAT at 8%. When when you compare this over the last, last Q4, like Q4 of last financial year, I think we ended up with a similar PAT of about about 8%.

I think in terms of profitability, we have we have sustained the same level of profitability, though we had, the the cost structure from last year to this year significantly varied due to the, reasons that we explained in the last quarter. Coming to full year, the revenue overall for the financial year '26 was 21,777 million, and the total income including the other income, which is the investment income, is 22,099 million.

There is a 5% overall growth in the revenue year-over-year. When comparing when coming to the cost structure, I think our material cost for the current year stood at about 67.5%, close to 68%.

I think we are we are fairly stable, and we have been improving year-over-year on the material cost front. Our employee cost stood at 1,592 million at at about 7.3%.

We had a lot of expenses this year. We had the workmen settlement that happened in the last quarter as we explained in the last investor call.

That had an impact. That is a one-time settlement for the next 4 years.

That's had an impact. That so from last year, when compared to previous year, it has kind of gone up from 6.7% to 7.3%.

Our total other expenses, which is the next significant item, is about 3,106 million at about 14.2 26% on on on revenue. As I said, there is a variable portion in the new business model.

I think fairly I think it is it is in line with the with the revenue, that, that we had over the over the year. Overall, our EBITDA for the for the full year is at 2,692 million at 12.4%.

Then we had the exceptional item, the annualized impact what we discussed last time of about 120 million. Netting off that, our EBITDA stood at 10.6% for the year.

When you compare to previous year, we had 10.1%, we have we have we're about 40 50 40 to 50 basis points above there. The PBT for the full year stood at 2,198 million at at 10%, and our PAT for for for the full financial year was excuse me, was 1,643 million at 7%.

When coming to the cash flow, I think the the major significant highlight that I want to give an update is on the CapEx. When compared to last year, sorry, the last financial year, we spent more than 70 crores of CapEx.

Whatever investments that was committed, most of about 60% to 70% was was spent in the last last year. Instead of all that, we were able to generate net of investments 30 crores of cash that we have generated into last financial year.

That's a financial update. I'm happy to take any questions.

I'll hand it back to NG and Kishan for any other comments.

Hello, sir. Am I audible?

Yes, yes. Yeah.

Sir, we have changed the sales agreement. As per the new sales agreement, we pay technical fees to Meritor HVS.

Can you share how much percentage of the sales we are paying to them now? Because you had mentioned that you will come out with this number somewhere around Q2, but we are yet to disclose the number.

Raman, would you take that?

I'm just giving that. See, overall, see, the technical fee is anywhere in the range between 4% to 4.5% depending on the mix of revenue that we have.

I think that's the broad percentage in which the technical fee operates. I hope that answers your question.

Okay. Sir, and in the last year in Q4 FY '25 call, we had mentioned aspirational target of 4,500 to 5,000 crore top-line over next four to over next 4 to 5 years, and you had mentioned that exports will be a key lever for this strategy.

Can you talk more about exports? Now, considering that US Class 4 Class 8 is also recovering and European markets are also stable, do you expect that we see a significant growth in exports going forward?

I can take it. This is Kishan.

Thanks for the question, Samarth. Yes, in the long run, if you ignore the temporary situation that we have seen in the US with the tariff, I think, in the long run, the visibility is still to accumulate a good export orders, and this is also part of our global supply chain strategy.

The investments that we are doing in AAL, whether it is for the capacity or to bring more robust process, that is all in line basically demand that we have in the export and domestic market. Overall, as you rightly mentioned, the forecast with the domestic market growth, export and all other initiatives that we are taking up, the top-line should grow in rough order of 4,000 to 5,000 crore with export being a large better than the current contribution what we have today.

Sir, and will this be limited to subsystems or we will go for completely assembled axles only in exports?

Samarth, I think we have answered this in the past. The product line as such in Europe and North America don't allow us to supply the fully dressed axle because the products are different.

It is largely going to be limited to the assembly, subassemblies, and probably child parts. Also, in all those regions, there is a requirement to customize the end product to meet those regions' OEM requirements, just like how we have a customization.

That also limits the export content to or scope of export to the extent to the drive head, what we call the subassembly, and maybe some child parts.

Got it, sir. Sir, and earlier, we had mentioned in the existing production facility that we have, we can do somewhere around 2,700 crore in sales.

Now, since we are doing the CapEx, is this CapEx enough to reach your aspirational target or we need to spend more?

I'll take that. Nagaraja here.

Again, it all depends on type of product mix that we are looking at. Currently, what we are looking at, trying to understand or forecast the peak market demand and then putting up enough capacity to that, and there will be one more set of investment is going to come in next 6 to 18 months' time.

With that, we will be having enough capacity to meet our aspirational top-line.

Sir, how much will be spent in this new facility or the new capacity creation?

Yeah. Again, I think, at this point of time, it will be a little bit challenge for us to forecast what it is because we are, like Kishan mentioned, we are looking at the needs of both domestic customer and export opportunities.

Based on that, we may have to come out with the overall plan. That is what we are kind of working on in next 6 to 12 months.

Then once we finalize on our next set of CapEx, we'll be sharing with all of you.

Sir, last question from my side. We were having another three products like the slipper suspension, the off-highway axle, where we also had good growth plans earlier, and even the ICV axles.

What is the status on this?

Let me take that question. This is Kishan again.

Coming to off-highway, we do have sustained the business over past several years with this customer, and apart from that, we are closely monitoring the off-highway industry. The products we have in the global portfolio, they are very unique to those regions.

India is very unique. For that matter, it is still a very close watch and plan your long-term strategy.

Right now, the current product portfolio what we have is what we are supplying. Coming to the slipper suspension, we are still supplying that to our largest customer with a different arrangement where we have handed over the supply chain under an agreement so that it is easier for them to manage because it has to be closely associated with their chassis on the assembly line.

Both the businesses, we continue to pursue. The last question was ICV.

ICV is typically not a very strong hold for us globally as well. We do have products which we continue to improve and supply to the same customers.

For us, the core is the heavy-duty market, which is where our largest portfolio and the launch that we have done in the recent past is. That remains our focus.

Got it, sir. Sir, is there any situation where we are not able to supply enough demand, means because of our capacity constraint in the domestic market?

I'll take that. Like I mentioned, we foresaw that the kind of product mix is going to probably limit our ability to serve the market, and that's the reason we initiated it about 12 months ago.

At this point of time, unless the market really goes beyond the volumes what we have seen in the last Q4, I don't think we have any capacity constraints at this point of time.

Got it, sir. That's all from my side.

Thank you.

Yes. Good morning.

Sir, my question is regarding capacity utilization. At what percentage of capacity we are running our plant at the moment?

The last quarter, when I look at it, it was over 90%.

Presently, sir?

The last quarter, we almost crossed 90% of our capacity. We were really doing at peak of our capacity.

Last quarter you are talking. At the moment, sir, in the month of April, May, what we are doing?

Pardon me? Could you repeat?

In the month of April and May, what we are doing, sir? No,

April and May, again, the market has softened a little bit. We generally operate somewhere between 70% to 80% of the capacity.

That's what we'll be looking at. Again, it will be very difficult to look at one particular month.

We should be looking at broader horizon because the capacity on a particular day, week, or a month, it will be completely misleading.

Okay. Sir.

Sir, by what time our capacity is expected to be completed, this capacity enhancement?

As we committed to you, the Phase 1 and I would say Phase 1 and 1A, that's what we call, is that capacity will be completed by end of December '26. Then that's what we were telling to earlier question that in next 6 to 9 months, we will be coming and forming up our next phase of CapEx investment based on the both the domestic and export market outlook.

Okay. Sir.

Thank you.

All right. My first question is that, in terms of the supply directly to the OE.

My question is that, currently after the technical fee agreement, now we would directly supply to the OEs or Tier 1s, right? All our products,

basically Yes, your understanding is correct.

Both in exports as well as in domestic. Correct?

Yeah.

Yes. Yes.

Yeah.

The second question is that, see, I've been told that I may be wrong, please correct me. I have been told that there is a transition towards tractor-trailers, and if that happens, multi-axle trucks would actually come down because of this tractor-trailers.

If that is the case, how does it positively or negatively impact us?

Let me take that. This is Kishan here.

Thanks for the question. You are right.

There is a very clear trend for the last couple of years where we see the proportion of tractor-trailer, specifically 4x2, that is on the increase. In fact, we were expecting this, anticipating this even before the trend started happening because this is a very typical trend we have seen in the global markets.

We had always the product ready. The product that we launched, the 185, a couple of years ago and which we are now ramping up significantly, that is to cater to this heavy-duty tractor-trailer market.

What it means to us is where there were rigid axle or the rigid multi-axles, that proportionately will reduce, but then the tractor-trailer will increase. It will be a cannibalization of some of the products that we have in the rigid vehicle platform getting into the 4x2 tractor-trailer.

This product what we have launched with one customer 3, 4 years ago, now we have launched with all our major customers. That is probably the highest in terms of capacity also that we are creating, expecting that this trend will continue for some time.

On the other side, there is enough headroom in the industry where even the multi-axle rigid vehicle will also grow. If you have seen any of the forecasts, we are expecting the overall TIV by '29, 2030 to be 500,000-plus, which means there is enough headroom for each of those platforms also to grow, which is a positive news for us because we have every segment covered with our portfolio.

I hope that answers the question.

Yeah. Which means that it is not deflationary for you as, for example, the last concluded year or the year forward, it has not been deflationary for you in terms of your component that actually goes into these vehicles, right?

Am I right?

You're right in a way because we have a product available and it's not a loss of business for us. If you take a pure number of axles that we produce, because the configuration changes from a multi-axle to a single axle, that will bring the number of axles down, but not at the cost of loss of business.

It's a continuation of business because we have the products available.

Got it. The other thing which I have thought is that at least for the last 1 month or the last 2 months, there has been an increase in steel prices and all the metal prices in general.

How is that actually impacting us?

I'll take that. Probably Raman, you can add to that.

We always have a back-to-back agreement with most of the customers when it comes to commodity changes, and this is a standard industrial practice. There may be a little bit of a lag or lagging in that adjustment, but definitely, the business is always protected and it is a standard industrial practice.

Just to add to that, our financial results are already trued up to the last increase. I think we always take the provisions.

The settlement may happen later, but the financials are completely protected for any market increase.

Okay. Does it mean that since the fixed costs are there, this inflationary thing will be more contributing to a bottom line, right, if that's how it is, if inflation is secular for the next 6 to 9 6 to 12 months?

Maybe I will just take it. Raman,

again,

probably add to this. See, if you really look at our operation efficiency, there is always a focus on improving the productivity and then at the same time also growing our top-line, and thereby we protect our bottom line and even in cases, as you can see in the Q4, we also improve it.

While there is always an inflation, if you look at the last several years of our results, we've been able to always bring in the efficiency and then productivity improvements and both in internal operation and from our supply chain. We always have to work on that, and that is one of our strengths.

We've been doing a good job, and we are very confident going forward also. We'll be able to take care of that, any potential inflation, and then also offset it by our productivity improvements.

One of the reason for the CapEx improvement is not only to add in additional capacity, but also to bring in the latest technology and efficient equipment so that we are always improving the focus on improving our bottom line.

Got it. Just one more question, if I can squeeze in.

You mentioned that as an industry, we are clocking more than 400k per year. Two questions.

Is it right being so cyclical as it was, because this is something which I heard from one of your OEs also saying that dating industry is not very cyclical in the last 3, 4 years. Second, as we look ahead in current year, the demand continues to be strong, is that what I could hear from your first few statements?

Can you just help me understand or dwell deeper into these two observations?

Let me take that question. This is Kishan.

What you have heard about the cyclicality being more, I would say, narrowed in terms of the peaks and valleys, that is true, and the numbers are in front of us. One the year we came out of COVID, FY '23, we had a 37% growth and we crossed 400,000 for the first time after COVID.

Then from there onwards, it's always the variation is within the 5% until last year. Last year, we saw last year in the sense FY '26, we saw a significant growth of 16%, and this is expected to continue because there is consumption.

There is rural consumption, there are very clear indicators whether it is GDP, IIP. It is going to continue.

Whoever the OEM partner, it is not just one, I think most of the OEMs are expecting this year, FY '27, should also be a good year. When I say good year, it is 400-plus, but whether it is 420, 450, 480, that is probably too early to say because if you look at FY '26, nobody forecasted 480.

It was around 450, 460. There is always a room to cross I would say the average of last 4 years.

Got it. Thank you, sir.

I'll come back in queue.

Thank you.

Hello, sir. Thank you for the opportunity.

Am I audible? Yes, please.

Sure. Sir, my first question is, I understand that while our focus has always been in M&HCV, but since the company had entered into LCV, ICV segment a few years back, can you give us some sense from the next 3 to 5-year perspective on your thoughts on expanding the addressable market available for the company by launching more products either in LCV, ICV, and if possible in SCV also in the future?

Thank you for the question. This is Kishan.

What we have been doing consistently in the past several years in terms of our product strategy, that is aligned with how the industry is moving and where our core strength lies. Globally, it is in the US, if you have to talk about the US market, it is Class 8, and Europe, it is heavy-duty axle and heavy-duty vehicles, and even in India, we are in the same forte.

This is what differentiates us from the competition. We will continue to do that.

All our product launches are focusing more on the medium and heavy duty and more so in the recent part on the heavy duty. Having said that, we already have enough products in the ICV, LCV where we strategically wants to want to play, and we we necessarily don't want to go beyond a certain GVW or GAW level because that requires a lot of investment in the plant and the return on that investment may not be as good as in our core business.

For that purpose, product strategy and our supply chain and CapEx, that's always been focused more towards the heavier side of the industry.

What percentage of your revenue is coming from LCV, ICV currently?

Raman, you want to give an answer to that?

Yes, Kishan. See, LCV, ICV, it's a very small portion of the revenue that we have.

Maybe I would say somewhere in the single digits at this point, maybe low, less than 5%.

Understood, sir. Secondly, since India is a cost-effective production and a lot of auto ancillary companies are keeping India as a production hub to export to their group companies, and the margins are, in fact, better in the exports market.

Considering that we have Meritor as a partner, currently, what percentage of overall sales is exports to Meritor Global, and do you see this as a big opportunity going forward?

Kishan?

I can take the second part of it. I think we answered that partially in one of the earlier questions.

Export is a growth area for us, and it is part of the global supply chain strategy as well to make sure that all the investment that we are doing is utilized to the best of its capacity. Even the answer to what extent we can grow in the export is basically the product portfolio that are common today.

There are also opportunities depending on how the domestic market behaves in the future. Right now, even though we are talking about 500,000-plus, if there is a downside, we always have the ability to do the global products.

That is already plugged in our manufacturing strategy.

Understood, sir. Sir, lastly, I understand that you already have e-axles as a product already ready with you for many years now.

Can you give us some sense on how the content per vehicle increases on an average if you compare it with the conventional ICE axles?

Let me answer this question again. The technology or the architecture that we have in the e-axle, that is an add-on to the traditional mechanical axle.

That means what we are currently manufacturing in terms of the mechanical parts, gears, and other things plus the electric motor and power electronics. It's always an add-on.

Now coming to, which again you're not asked this question, but coming to India more specifically for e-axle-ready, I think the industry is not ready yet. We are still in the traditional central drive plus mechanical axle world, which we have anyway protected with our current product portfolio.

Yes, sir. I understand that.

I just wanted to understand how the content per vehicle will improve if and when it happens.

That's, like I said, 100% of what we are doing today plus the power electronics. It all depends on the pricing strategy.

For India, it is too early to comment on that.

Sir. Thanks and all the best to you.

Thank you.

Hello.

Namaskar, sir. Thank you for the opportunity.

Sir, firstly, if you could just give us some color on the tonnage part. I think so you alluded to some number of peak revenue we are prepared for a 5 5 lakh tonnages.

Currently, for this quarter and for the year as a whole, what have been our tonnages? Namaskar,

Saket. I am not sure if I understood your question well.

The way I'm reading the question is, you are talking about the gross tonnage of the industry. Is that right?

Sir, both, sir. Firstly, about you talk about that we are prepared when the industry requirement for 5 lakh reaches.

Since you mentioned about we are operating at 90%, 95%, what was our number for the quarter? Sir, second question or there's a continuation to the same was that, last quarter, you did spoke about some specification changes in the buses segment in with respect to some state government making some changes with the floor height, and that will lead to the axle product that we have developed.

What is the update on the same, and when will that product be introduced, sir?

I'm still not clear on the first part, but let me take a hit on that how I'm going to answer that. In terms of tonnage, there are two things.

One is our axle, what we supply, to what vehicle it goes in terms of tonnage carrying capacity. Today, if you see the heavy duty when we talk about, it is 50-ton and above.

Our product portfolio today with the single axle, 185 largest axle in the industry, and the tandem and HR axle, we are already there. We're going up to 70-, 80-ton range.

In terms of the industry tonnage for the full year, we were at 9.4 million tonnage. That is the total tonnage carrying capacity of the industry.

Just to give you a comparison of this versus the previous peak, which was FY '19, where we also did the similar vehicle production of 476,000, it was 8.7. So 8.7 to 9.4 with the same industry level, that addition is coming from that heavy-duty or higher-tonnage vehicles, which is more and more increasing in the past few years, and it will go to continue.

The second part of the question is related to the bus code, the low floor. Yes, there is more clarity on that and it looks like the current product portfolio what we have can meet most of the requirements, but then there are also some OEMs have a different strategy, and that is yet to evolve.

It is still something that is currently evolving. The products that we have for that space, those are protected for that particular regulation that came in.

Right, sir. Sir, I think so we did CapEx closer to 70 crore last year, sir, 73 crore rather.

What are we envisaging for the current year in terms of CapEx? Sir, as you were answering to my question, sir, if you could come up with a investor presentation wherein we speak about our product profile, the industry scenario, where are we placed in, and some color so that my questions are more aligned and we people get more aligned to what the industry trends are.

That will suffice a lot of understanding to the same, sir.

Hi, this is Raman here. I'll take the question.

On the CapEx part, first piece of the thing, I think last year to now, I think last year we spent about 30 crores, this year we spent 70 crores. The coming year also, we are expecting because the major spend as we going to complete the phases that we had already spoken about.

We'll be almost similar range of CapEx spend will be there in the upcoming year as well. To your second question on the investor presentation, I think, yeah, we will look at that possibility of having a presentation done, yeah, at least once a year or something for product portfolio.

Right, sir. Last point is on the employee benefit expenses part.

Is it proportionate to what the utilization levels were for the quarter? I think so we hit a number of 47 48 crore for the quarter.

That is on the higher side itself. How should that be aligned?

Sir, just to get more sense, you mentioned that we will be doing a similar amount of CapEx that we did for the last year. In terms of the capacity augmentation, what should we end the year in terms of the incremental capacity that we will be operational by the end of this fiscal?

The second question, I will take. Probably first question, Raman is going to come back and talk to you.

See, again, like we mentioned, the capacity what we are putting in here, there is an augmentation, like I mentioned, with all these projects going on. We should be able to really meet any of the near-term demand that is coming in domestic market and also potential opportunity from the export market.

As Kishan mentioned, that we are expecting a domestic peak something should happen at 580 levels. We don't know what the product mix is, but we are putting enough capacity to meet those peak demands.

Again, the CapEx, I want everyone to be on the same page that it is not just the capacity, but also like I mentioned, how do we bring in the new technologies and productivity so that we can always offset the inflationary pressure that might be there on our fixed cost. Raman, would you like to take on the earlier questions?

Sure. Yeah.

Just on the employee benefit expenses, yeah, we had about 47 crores for the quarter. That had a bit of one-offs this time.

We had some leave encashment settlement and all that happened. About 8% of it was a one-off.

On a like-to-like, it should be lower by around 8%.

Sir. Thank you for all the answers.

Just to get a small sense of that, since we will be working also on the efficiency part, what should be the EBITDA margin range going ahead? Where are we currently?

With the type of efficiency and the aspirational program that we took, I think so, on a 5-year basis, where should our EBITDA margin shaping up? Does the current set of business environment provide us into a different paradigm altogether with the type of changes and the CapEx that we have done?

While we don't want to do a forward-looking statements at this point of time, like we have been always sharing and you can look back at our past records, one is we have been continuously focusing on improving our top-line, but at the same time protecting the bottom line. All the efficiency what we are bringing in, we can assure you that it will not only offset any potential inflationary pressures or a potential adverse product mix, but at the same time, we have been always working towards and we have demonstrated that our bottom line is always going to improve.

Definitely, the product mix and top-line will kind of help us to get a much better fixed cost absorption, but the rest is assured. I would say that you can look forward to our margins.

Hello, sir. Am I audible?

Yes, please.

Yeah. Sir, taking off from the previous participant, since our new capacity is expected to come live maybe by December this year and we're currently as on Q4 already at 90% utilization, is it a fair assumption to make that going forward, whatever improvement we see in our top-line for the next two or three quarters will be mainly based on new products, which might get us better pricing and better margins?

Kishan, you want to take it up?

Yes, I can answer the second part of that more specifically on the new products that we are launching. Yes, these new products are aligned with the change that we are seeing in terms of the OEM strategies.

Like I mentioned earlier, some of them will partially cannibalize our current product line. Whenever we launch a new product, we try to capture the value pricing from that in terms of what features and what benefits that gives to the end customers.

Yes, marginally, it will be better in terms of profitability compared to the legacy products, and we capture the value in terms of placing the right pricing strategy, knowing that there will be a migration to certain extent from the traditional to the new product that we launch. This has been a policy for a long time.

This is not something new, and we continue to do the same.

Sir, I think on a previous concall, you had mentioned that from a single to a tandem axle, I think your realization goes up almost 2 to 3x. Is that correct?

Is that the right way to see it?

It's not to that extent. It depends again on the product family and specifically the tonnage or the GVW of the vehicle.

It is probably not to 2 to 3 times extent. I don't know if we can put a number there.

It is probably around 10% to 25% as a broad range, not more than that.

Okay. Sir.

Understood. All right.

Sir, lastly, on our market share, I think we have around 50%-plus market share with Ashok Leyland. Is that maintained this quarter?

Do we have any comment to make on that?

On an average, the whole year, we have maintained as per our agreement with Ashok Leyland. There, like Nagaraja mentioned earlier, it is very difficult to pick one particular day or a week or a month because the product mix changes so much.

We always try to keep the healthy average where our top-line and the profitability both are well balanced.

All right, sir. As on date, are we supplying products other than brakes to Tata?

No, our primary supplies to Tata is only brakes right now. There are cases when there are products which they need for the export market or, for example, buses, there are certain business that we do with them time to time, not a regular business.

All right. Is this something that is part of our strategy to increase as a wallet share or are we happy with where we are currently?

In terms of brakes, I think we are pretty well placed where we want to be. I think the focus in brakes is always to have a healthy share so that we also cater, considering the capacity that we have, we always have multi-OEM strategy there.

It's not just single OEM.

No, sir. I was asking on the axle side, is there a strategy to increase our wallet share in say Tata Motors or not really?

We're happy with where we are.

There are continuous discussions, but right now, I'm not in a position to confirm. There are different discussions at different levels.

All right, sir. All right.

Thank you so much and again congratulations.

Thank you.

Hi. Am I audible?

Good morning. Thank you for the opportunity and congratulations on the good set of numbers.

Just on the demand side, Laxmi sir already asked about it, but looking at the diesel price increase that we have seen and the availability of diesel, do we see anything changes in the schedules as kind of a thing from the OEMs happening in the near future or have we seen already that the schedules are revised, any kind of sense on that and the overall demand considering the diesel price hike, sir? If you can throw some light on that, that would be helpful.

Thank you for the question. Let me restate what I mentioned earlier.

The industry as such is in a very stable 400-plus scenario every year. The next year as well, we are expecting it to be 400-plus.

Now the other dynamics, external dynamics like the diesel cost, that's too early to comment right now because there is demand. Specifically talking about Q1, Q2 of this financial year, that's a typical softer market historically it's been like that, and we think it will continue that.

Then how we come out of monsoon and how we end Q4, that will probably define whether it is a 400 plus 20%, plus 5%. That's something wait and watch.

On a demand level, there is a consistent demand what we have been seeing for the Q1 and Q2, that is continuing. Whether it changes significantly or not, time only can say that.

Understood.

As of now, there is no change to whatever we have seen from the OEMs demand, that's what I can gather, right?

That is true. It is a very typical Q1, Q2 that we see historically, and that's the level of demand we are seeing.

Understood. Thank you.

That's it from my side. Thank you, sir.

Thank you.

Yeah. Thank you.

A few questions. Sir, as you step into the coming year, what are the three important priorities for the company either qualitative or quantitative?

The second question is that there is an operating margin which you actually reported just now. Is this taking into consideration the technology fee or how does it work whenever the technology fee kicks in?

The third question is that as regulatory or safety norms go through changes, how do you benefit or is our business is neutral when it comes to regulatory or safety norms for the commercial vehicles? Got three questions.

Okay. I'll take the first part of the question.

Probably Kishan can talk about the safety norms and what is happening in the industry. Our three focus area we have been always telling that.

One is we wanted to make sure that we are completing all this CapEx investment on time and then bringing in all the benefits associated with that, and so that is our focus. Again, by December, we should have those things in place.

We are also kind of potentially looking at technology we were talking about, the gears required for buses and coaches and then product associated with that, which is under development and testing, which again we're going to kind of look at it, and that's where we want to kind of look at it the opportunities and probably realize the additional share of business in the segments where we are still present, but may not be very strong in that area. That is our second area of focus.

The third area, obviously, that is, I would say it has become more like a routine, and always be sensitive to the market demand changes and then continuously focus on protecting and growing our bottom line, and then continue to be ready for any potential opportunities available in the export market. Those are all the three areas we would like to continue to focus and especially this year.

Got it, sir. About the other two questions, which is margins and

Hi, yeah. This is Raman here.

On the margins, I'll take it. Especially on the technical fee.

The operating margin that we have declared now is after considering the technical fee. It is being accrued on a monthly basis based on the revenue, as I said, the mix and all that.

Then for the year, it's considered. For

the fourth quarter is completely after taking into that particular number.

No, it is all the quarters. All the quarter results are after considering the technical fee only.

Got it. This is applicable on both exports and domestic or only domestic?

Both exports and

It is based on the agreement what we are having. I think we probably will not be able to disclose all those details.

No, sir. My question is that as an external participant, what is the number one has to assume on a blended basis for the entire year, right?

Because the exports and domestic keep changing. Now, there is a margin that is being reported.

I just want to understand that.

Yeah. Like Raman mentioned earlier, it is in the range of somewhere between 4% to 4.5%.

That's a thing you can look at it.

On the total revenue.

Depend on the product mix.

On the total revenue, there is a broad range depending on the mix of domestic and export. It will be,

yeah. On regulatory?

The last question was related to the regulations. There are in the next 3 to 5 years couple of regulations that will come in the safety space.

When we look at our product line, mainly the foundation brake in this case, there is not much that's going to change unless there is a very stringent norm on the stopping distance, which we are not seeing in today's discussions in the regulation space. It is more on bringing EBS and supporting systems where our conventional foundation brakes are qualified, it can be used.

There is no change that we are expecting. Now the big industry move that has happened in the Western world is moving from drum to disc brake.

With the current regulation landscape what we have, we think it will continue to be in a very niche market like buses and maybe hazardous goods, and that means our current capacity and the demand what we see for the drum brake, that will continue.

All right. In the axle space?

Sorry. Go on.

Yes, sir. Axle space, yeah.

Continue.

Axle space, we are not seeing any major changes in the regulation. There was one where the overload has been to some extent regularized, but that's a typical overload that we see on Indian roads all the time.

It has not changed anything in our product portfolio.

Sir, and as electronic braking system or ADAS, all of things come to mainstream, right, whether there are trends such as smart axles or smart braking systems, which means that there is some amount of digitalization happening there. Is it a far-fetched idea or it will actually get absorbed and you are actually capable of handling and the signals are passes from the braking system or the axles to the electronic braking or ADAS or whatever that's, right?

I just want to understand your view on that.

Sure. You are right.

The ADAS and the electronic braking system, that's going to happen, but that doesn't have any influence on the mechanical axles or the brakes that we have. Whether you're talking about smart axle, yes, we have couple of axles that we qualify as smart axle in the global portfolio, but they're not applicable for Indian market as of now.

If it moves in that direction, the products are available. It's more of licensing them and industrializing them.

There's a wide range of different features that axles can provide, but that value has to be perceived by the end customer, which is where India has always been different.

By how far are we? Is it 2 years behind or 3 years behind from smart axles as a trend in India?

Absolutely anybody's guess because Indian market behaves very differently from the Western world. All I can say is when it happens, we will be there.

Is smart axle penetration is 100% in developed countries or is it even there it is

No, even there it is very limited, very limited.

Got it.

The definition of smart itself is very unique for each region. Unless we know that, it's difficult to say when what will happen.

Okay. Thank you, sir.

Thank you.

Thank you. Once again, really appreciate all of you who have called into this conference, and then thanks for all those questions.

Like we mentioned, we are in the midst of going through the CapEx cycle. The Phase 1 we have already completed, and then we'll be able to complete the next phase by end of December.

We've been really focusing on bringing in the new products, and as you can see that those results both in top-line and our bottom line. Rest is assured we'll continue to strive hard and make sure that we meet all our customers' demands and continue to explore growing opportunities that potentially might be coming in our export market.

Thanks once again and have a great day.

Thank you,

Thank you.