Good morning, everyone. Thank you for joining us today.

With us, we have SKF India Managing Director Mr. Shailesh Sharma, our CFO Mr.

Mayank Holani, our Strategy and Business Development Head Mr. Prahlada GirishKumar, former Interim CFO Ms.

Ashi Arora, and Company Secretary Ms. Mayuri Kulkarni.

The purpose of today's call is to share our quarter four results and our overall financial year's performance. Please note that financial information for previous years as reported in the presentation shared have been extracted from consolidated financial statements of erstwhile combined entity and may involve some assumptions by the management pertaining to the demerged industrial undertaking.

These are prepared in accordance with the Appendix C of Ind AS 103 business combinations by using the financial information maintained by the SKF India Limited. Before I turn over the call to the management, I would like to remind you that in this call, some of the remarks contain forward-looking statements which are subject to risk and uncertainties, and actual results may differ materially.

Such statements are based on management beliefs as well as assumptions made by and on the information currently available to the management. The audience is cautioned not to place any undue reliance on these forward-looking statements and making any investment decision.

The purpose of today's call is to purely educate and bring awareness about the company's fundamental business and the financial quarter under review. Let me now turn over the call to Mr.

Shailesh Sharma. Over to you.

Thank you, Sylvia, and good morning and welcome, everyone, to this Q4 financial '25-'26 investor call. I am Shailesh Sharma, Managing Director of SKF India Limited.

Let me start with the agenda, which is on slide number three. I am sure you must be having your presentation.

You can refer to slide number three. We will cover a quick executive summary, then we'll talk about macro sector updates followed by quarterly and annual financial highlights, and last but not the least, our strategy going forward and some success stories.

In the end, we will take your questions. We can move to executive summary, which is slide number five.

Here, as you can see the results, we are glad to inform our investor that we had positive sales growth this quarter, which is about 3%. We will focus more on quarter-on-quarter comparison as stated in the introductory statement.

Here, we are comparing Q3 of financial year to Q4 of this financial year. January to March 2026 is being compared with October to December 2025.

As I said, we had a sales growth of 3% with 5.6 billion INR of the sales. We had 770 basis points drop in our profits before tax, which is about 9% due to some previous quarter performance, which included certain one-off gains leading to a higher profitability, which includes gain on forex transaction, higher income from fixed deposits, and reversal of some employee cost provisions.

Moving to our net working capital, the quarter it increased by about 4.6% due to one-off factors and the same is expected to normalize as we move forward. If we look at our full-year performance as well, sales grew by solid 12.8% to amount to 20.3 billion INR.

However, profit before tax dropped by 694 basis points, which was due to a variety of factors including mix, discounts, as well as the reasons explained in the introductory statement. For the full year, net working capital improved by 3.7% year-on-year.

Moving to slide number seven, which talks about macro key indicators, IIP growth since last three quarters has been stable and was 4.1% for Q4 2026. Manufacturing PMI growth stood at 53.9 for March '26.

Automotive production has been an upward trend during last quarter for the passenger vehicle, commercial vehicle, as well as two and three-wheeler. Iron and steel production was highest during Q4 financial 2026 with 9.7% year-over-year growth.

These were some macro key indicators. Now, I will request CFO Mr.

Mayank Holani to take us through the detailed financial performance.

Good morning, everyone. Happy to be connecting to you and speaking about our financial performance.

Now, we move to quarterly performance highlights in slide nine. We achieved highest quarterly sales of 5.55 billion INR for this financial year with a quarter-on-quarter growth of 3% and year-on-year growth of about 14.8%, which was primarily driven by higher growth in cars, two-wheelers, and powertrains, partly offset by drop in distribution business.

In terms of mix, original equipment manufacturers accounted for about 2/3 of our sales, that is about 66%, while distribution sales was about 20%, exports 8%, and SKF industrial share stood at 6%. In terms of growth, you will see quarter-on-quarter about primarily quarter-on-quarter and annual growth was driven by volume.

Moving on to slide 10 now, here we will talk about the profitability for the quarter. Our profitability for the quarter dropped by about dropped to about 9%, which is primarily impacted by one-off factors which are and these factors are expected to normalize as we move forward.

Lower mainly due to one-off gains in previous quarter, which is quarter three of financial year '26 related to interest on fixed deposits, forex gains, and employee cost provision reversal, and we'll those were one-off factors. Now, talking about year-on-year change in profit before tax, this was again, there were certain one-off factors including costs related to demerger, mix impact, as well as the comparability issue as mentioned in the introductory statement.

Now, let's move to slide 12 and focus on our full-year performance. Sales for financial year grew by about 12.7% and mainly it's contributed by OE sales, which grew by strong 20%, while exports and distribution dropped a bit.

Now, again, let's move to slide 13 on profitability. Profitability for the year dropped to about 12.3% due to a mix of reasons as mentioned earlier.

Again, similar reasons here also impacted full-year profitability. Let's move to slide 14 on cash flow.

Our cash flow for the year stood at 4.05 billion INR, which represents a cash conversion ratio of about 85%. Cash flow during the year was also impacted by certain one-off factors related to the demerger and these are expected to smoothen as we move forward, and we look forward for the next financial year.

This brings us to the end of financial part of the presentation and now, I'll request Mr. Prahlada GirishKumar to talk about our our strategy and success stories.

Over to you, Girish.

Thank you, Mayank. Now, I draw your attention to slide number 16.

We call the strategic priorities as a RACE strategy. It's an acronym of the full value chain in our focus.

Basically starting with products that are meant to help customers build efficient vehicles, new energy vehicles, and also the vehicles which are now being designed into new environmental and emission standards. Accelerate growth through commercial excellence.

The purpose here is to really sharpen the efficiencies both on the top line and the bottom line performance as well, and it is driven through number of full-fledged value chain actions. Also the capability and the capacity development across the full value chain.

Not the least, E is about execution of the strategy with speed, agility, and attentiveness. Holistically, this is addressing the complete SKF India automotive business basically.

These are the four pillars under which various initiatives are being driven that directly addresses the financial performance of the company. Next, I draw your attention to slide number 17.

This strategy needs to work and the indication is basically the portfolio of the wins that we are having across three verticals: two-wheeler, three-wheeler, passenger vehicles, and commercial vehicle. The character of the wins that we are having in quarter one is reflecting the market shift to EVs as well, and the OEMs going back to the drawing board to redesign their drivetrain subsystems to new emission norms that are coming in, mainly the BS-VII and the CAFE norms as well.

Some of the listings that we have done here is primarily the wins that we have with electric motors and also some of the wheel hub bearings, primarily the new launches that are upcoming into the '26-'27 financial year. This represents quite a strong portfolio and the order book going up to about 2030 basically.

Customer awards as well. The shift and the focus and the drive that we have in sustainability initiative on the operations, the supply chain, and also the product advocacy is gaining recognition across our supply base and also the customer groupings.

Out of three what you see is basically a clean energy champion among the supply chain partners of TVS Motors. This is a prestigious award which basically signals that we are the leaders in the market as recognized by TVS, which sets as an expectation to really add more value to TVS in their future development as well.

In a similar way, our environmental initiatives have been recognized by Honda Motorcycle. Again, a prestigious award.

The third one is essentially the business performance from Suzuki Motorcycles. This is in recognition of the top-of-the-line excellent delivery performance through the year that we basically had.

These are the high-level customer recognitions that we got in the quarter one. Now, we come to the end of the presentation.

Now, I hand over to Cilvina Pereira. Over to you, Sylvia.

Thank you. Now, we open the forum for question-and-answer session.

Moderator, kindly let us know who is the first one in the queue.

Good morning and thank you for the opportunity. My first question is a bookkeeping question.

Just wanted to get a sense around what would be the mix of end segments, which is two-wheelers, passenger vehicles, and CVs for the quarter and FY26? Would you be kind enough to break up between what would be the extent of exposure we would have to engine, transmission, and wheel end in our entire portfolio?

We don't comment on the subsegments per se, Krupa, but our portfolio on wheel end dominates the transmission if you're talking about passenger vehicle and commercial vehicle. Transmission is following the second position there.

Got it.

You would not be sharing the end segments of two-wheelers, passenger vehicles, and CVs, the revenue mix from them?

No.

Got it. Second question would be more on margin profile.

What you've seen across is deterioration on a YoY basis. Just wanted to get a sense around what would be the one-off costs relating to the demerger in the fourth quarter of FY26 and FY26?

With respect to margins, what can be the sustainable margin expectation going ahead into FY27? See,

if you look at in quarter four of financial year, there won't be too much of demerger-related cost. If you look at the one-off costs which I mentioned in the Q3, one-off gains in Q3, if we remove them, it was more or less at par.

Now, going about the sustainable margin, we could be looking at 11 to 11-12% kind of margin in the near future while obviously in long term, the focus would be on improving it further. That's the kind of margin we could be looking at.

Got it, sir. Looking at FY25 performance and what you have shared, I think the margin profile over there were far more robust at close to about 20-odd percent.

Just want to get a sense around what is driving this sort of guidance of 12% going ahead? Is it more of a traded proportion which is increasing in our overall RM mix and probably throw some light on that, sir?

Sorry, what percentage you mentioned? Sir,

what I meant was the EBITDA margins last year was close to about 20-odd percent in FY25.

I was not talking about EBITDA margin. I was talking about the PBT.

Oh, understood, sir. Understood.

From a gross margin standpoint, what I was also looking at is that given that automotive business is largely localized, the purchase of traded goods in the third and fourth quarter has been quite high at around 15% to 20% of revenues. Just wanted to get a sense around what is exactly that we are buying?

Is it primarily from SKF India Industrial and how long is it expected to continue?

Okay. In Q4 or before that actually this is largely from SKF India Industrial Limited.

From automotive perspective, we have almost more than 90% localized products, we don't trade. We don't bring too much of our bearings from overseas and sell it.

For automotive, it is fairly localized. Industrial, yes, that is continuing and I'm sure you must have seen the results of Industrial separately.

Did I answer your question or there is anything?

Yes, sir. I just wanted to know is this going to continue until our new plant in Haridwar and Pune ramp up or are we expecting this to be ongoing on a continuous basis?

Some light on that.

No. As I said, in automotive, our focus is on localization.

It's already more than 90% and that is going to continue. For Industrial, if you are a little bit confused with the Industrial mix, that is not going to sustain, of course.

Over a period of time, it will go away. Industrial will be a separate things and automotive will be highly localized.

Understood. Last question from my side if I may.

Just wanted to get a sense around EV piece of business. While you did allude to new business wins from the EV e-motors bearing side of things, wanted to get a sense around given that we have seen a certain scale-up over the last 2-3 years on EVs, have you seen the content per vehicle being similar to the ICE in EVs despite the number of bearings coming down?

Going ahead, would you want to call out anything on EV-related contribution to your overall revenue proposition with the margin accretive? Will it be more margin accretive vis-a-vis your existing business?

Yeah. Of course, the number of bearings in EV are lesser than our ICE engine and our growth as of now is going in two-wheeler mainly.

We will see the ICE

Is it better?

Okay. What I was saying is yes, number of bearings in electric vehicle is lesser than our ICE engine.

As of now, we are going in both the situation, but in two-wheeler, especially in EV, our share of business is 50% around. As you see, EV adoption is still not caught up the pace which was anticipated earlier.

Giving a specific number, Girish, maybe can you add the numbers on it? Oh

yes. The current two-wheeler is about 6% and then the passenger vehicles is about 4%.

Krupa, specific to what you mentioned, certainly the performance of the electric vehicle products is much, much higher than the ICE vehicles. If you are referring to any kind of margin erosion due to the reduction in volume and other things, for sure more positions are getting opened up in terms of, let's say, the motor bearings and also the electric insulation high-speed bearings, which are of multifold in terms of its pricing.

That will offset some of the losses that we might have in the revenue there. Otherwise, much of the assortment what we see as a high-value bearing would remain common between ICE and the EV, especially on the chassis and the axle bearings.

Thank you. Appreciate the response.

Thank you, sir, for the opportunity. Sir, firstly on the cost side in Q4, how much was the demerger-related impact in other expenses?

Going ahead, do you see further impact due to demerger-related costs, sir?

We don't have much of demerger-related cost in Q4 and going forward also, we don't see any demerger-related cost specifically to be in our P&L. Got it.

Got it, sir. Sir, we're seeing a lot of raw material prices going up.

Just want to understand how are the pass-through happening in both aftermarket and OEM? What kind of price hikes are being taken, sir?

That is on the way for starting with aftermarket. As per agreement with OEM, whatever increase in steel price and something happens, we get.

As of now, we have taken only from couple of customers. Similar discussions are happening with some other OEMs.

Got it. Even aftermarket price hikes have started, right, sir?

Aftermarket is a little bit different game altogether. That is also expected.

I can't reveal the exact information, but yes, it's planned. That much I can tell you as of now.

Got it, sir. Got it.

Maybe in transitory, there could be slightly more gross margin pain with the lag in the pass-through, right, sir?

Sorry, come again?

Just because the pass-through would happen with a lag, sir, on the cost inflation, in near term, there could be pressure on the gross margin side.

Yes, that's true.

Got it, sir. Sir, this year, we have seen exports and distribution being down YoY for full year.

Any reason why both the areas are down, sir?

I'm not sure which number you are seeing, but yes, in automotive, our aftermarket business is slightly down. Yes, that's right.

If we talk about volume, somehow we are keeping it flat. On net sales point of view, it is a little bit down because of the discounts we offered to remain in the market and to beat the competition.

Export is more or less steady. I'm not sure.

It is slightly lower with two reasons. One is India for India, our focus is first to serve our domestic customers.

There is a huge demand coming from all our customers, capacity is still limited. For overseas customers, we are trying to fill that demand from the nearby factories to the customer.

It is not very significantly dropped off also

as far

as automotive.

Got it, sir. Sir, for the FY27, what kind of capex expected, sir?

From '26 to '28, we have around 500 crore investment, which will go through each year. This year, '26 is will be around 200 crore.

In calendar year '26 you're saying, right? Or FY26?

'26

to '20 Yes,

yes. Up

to '28. Three-year period, 500 crore.

And 200 already spent in FY26, you're saying, sir?

It's going to be spent, which will spill over to '27 a little bit in the first quarter. You can say roughly financial '26-'27 is around 200.

Got it, sir.

Got it, sir. Thank you.

Thank you so much for the opportunity.

Thank you.

I have two, three questions. Sir, just trying to understand on the gross margin piece a bit more in detail.

See, if you look on an annual basis, the aftermarket, as you said, it's not degrown significantly. If you look at our overall localization, right, we are already at 90-95% plus level, whether be it aftermarket or the OE piece, right?

What explains the drop in gross margin, say from '25 to '26? It has dropped from, say, around 55-60% levels to now, you're talking about 46%, almost a 9 to 10 percentage points drop.

That is one question. Similarly, if I look at other expenses, which is excluding the demerger, we have been seeing an increase in other expenses in last two, three quarters.

What are the key elements in other expenses which is driving this increase? That is one question.

See, when you say aftermarket sales have not dropped much, you are right. The growth, if you see, has all come from OEM.

The full year, if you see, it's almost 20% growth coming from OEM, for which there is a big difference between aftermarket and OEM. Now, coming to other expenses and its comparison to previous year, I'll refer you to the opening statement which Sylvia made because see, the previous year numbers at all places may not be exactly comparable because we split from the combined entity.

Right? Which is now expected to stabilize.

If you see from last quarter onwards when after separation, it will be more clearer and plus you will have stable performance ahead.

Sir, just follow-up on this. See, if I look at pre-demerger also, and if I compare other players in the space, in auto, given the high localization and healthy mix of distribution, they have typically earned somewhere between 16% to 18% at least in terms of EBITDA margins when gross has been upwards of 55%.

This is what we have also pre-demerger earning in the auto business, right? I'm just trying to understand that, how should one look at the margin structure in our business going forward?

What is the sustainable margin one should look at and what will drive this? That is one.

Second is can you explain a little bit in detail what is the arrangement with SKF Industrial? What product segments or application we buy from them and what we sell to them?

Similarly, any payouts in terms of royalty or service charge to them?

On margin, I already answered earlier in response to another question that we are looking at in terms of PBT about 11-12% is what we expect in the near future. Probably, I will request Shailesh to answer about the other question.

What kind of product we deal, generally these are two very different businesses. Industrial makes larger size of bearings and automotive is slightly on lower side when I'm talking about size range.

Yes, there is some certain overlap in between where we are because of the kind of assets we have on both the companies, still we have certain amount of trading from each other, largely from Industrial to Auto, because of certain product line like medium-size DGBB and taper roller bearings. The capacity is a little higher side or I must say the demand and capacity point of view, In Auto, we are short of a little capacity, we are buying from Industrial.

It's not particular application or certain things. It is about basically what we can get from there and serve our customer.

Is there any other payout in other expenses which either we have to pay to Industrial or we receive from Industrial in terms of any manufacturing service charges or anything?

Yes, yes. Because our plant is common as of now and this plant belong to SKF India Limited and right now, Industrial assets are lying in this plant till the new factory of Industrial comes in.

Till then, we receive rent from Industrial. Also, there are some certain service charges which we get from Industrial.

Can you quantify what is it on an annual basis?

No, as of now, we don't have that exit. This all started from last October, it's too early.

That is there.

Okay. Fine.

I'll come back in queue. Thank you.

Hi, sir. Good morning.

My first question was on customer concentration. Can you tell us what percentage of your sales come from top five, top 10 customers and who are the top one, two, three customers?

Varun. The top five customers would typically represent about close to 50%.

If I had to name top three customers, basically in the two-wheeler segment, Bajaj is our number one customer followed by Mahindra, meaning the passenger vehicle, and Tata, both the entity combined, commercial vehicle and passenger vehicle combined.

Sir, top 10?

Top 10 will have remaining OEMs, the likes of Royal Enfield, Honda, and some of the tier-one companies as well.

No, sir. My question was what percentage of your revenue would they constitute?

Top 10, I would rather say it could be close to about 70%.

Okay. Sir, my second question was on the capex plan which you laid out.

This 500 CR once it's all on the ground, what is the revenue potential it has?

Okay. See, there are two things which we are trying to do.

One is to reduce trading from Industrial, some capacity will go into our own automotive capacity, which will not essentially add to our revenue because anyway that revenue is there as of now. The only thing, it's through trading.

The second is looking into our growth, which is about 6% to 8% growth. Girish, do you remember the number by 2028, what's the number we are talking?

I need to check up. I do not have the right away figures.

You can consider around 6% to 8% CAGR.

6% to 8% revenue CAGR you're telling?

Yeah.

Okay. Sir.

That's all. I'll come back in the queue.

Thank you and all the best.

Thank you.

Hope I'm audible?

Yes.

Yeah. I just want to have one question.

As management, what are the two or three strategic priorities you are working for the next one to three years and how you like yourself to be measured or how you are measured in terms of sales growth or in terms of margins so that as investors, we can also use the same lens to track company?

Okay. Girish, maybe you can take through our strategy.

Yeah.

In terms of the strategic priorities, and the focus is basically to shift portfolio significantly to energy efficiency and the emission norms addressing value propositions to the customers across vehicle segments. That would be the single most priority.

Certain manufacturing capabilities will have to be invested upon and the investment amount that you heard is also going in terms of not only capacity, but also upgrading some of these capabilities as well. Significant portfolio shift will happen towards passenger vehicle and commercial vehicle.

In proportion, these two segments have a high potential for us to grow and also the premiumization in the market that is happening is driving certain product value propositions that are in the sweet spot for SKF to really do well in those segments. That's number two.

Number three is to amplify the value selling. That means close partnership with customers because much of the OEMs' new launches that are being announced since last year and into this quarter as well is to be in close coordination with customer R&Ds and we already see major partnerships already developing there.

These are the three priorities that we are invested in and we are building our, let's say, capabilities and capacities both on the supply base, also on the manufacturing capabilities. This is how we basically look at it.

As Shailesh was mentioning, this kind of strategy, we believe, will give us a edge in the value propositions that are likely to give us a bit of a pricing power. That's where we believe in the next quarters that follows once the industrialization and new vehicle launches really happen, we should be in a position to really see a better business performance on that.

Sir, and in terms of how you measure the company's performance in terms of top-line growth, how do you benchmark either with the industry or with your peers or competitors? In terms of margins also, what is the kind of thing which you like to measure?

Because some companies use operating margins, some companies use PBT margins, some of them would say that we want to grow x percent more than the automotive growth. Some color so that we can also track the company in the same lens.

The color that I can give you is, of course, the cash is more important to us, we are more driven on quality of earnings that we basically make. Certainly not the top line is a number one priority.

Of course, we need to really win the space that we believe we have an advantage and that's what actually I mentioned, the premiumization that is happening is a sweet spot for us to really do well. To that extent, we'll try to focus there.

As you mentioned, the focus would be on margin improvement. Because

you mentioned the PBT margin of 12% or thereabouts if I heard it right. Is that something which band of margins the company is most comfortable to operate where you would not go below x and just want to understand that particular bit?

You can add

PBT or operating or free cash or gross cash income.

Sir, can you repeat your question?

Now, I I heard you saying that 12% margin at the start of the call and I think again you mentioned that. As as a management, what are you calibrating yourself on as a as a band of margins you like to operate?

Is that band of margin should is evaluated at the PBT level or at the operating margin level? What is that band, which is is it like 9% to 15% or 9% to some kind of a spectrum would be very helpful.

See,

this 11-12% margin range we gave you is kind of average across it. Within the different products and market segments, the margin range is varying.

It will be varying between distribution, exports, and OEM. But 11-12 is the overall at the company level what we would be looking at.

Then, obviously, within the product range there are multiple factors which we have to use and we will be using it already, like mix of new products for different segments.

Sir, your voice is not clear. I think even the earlier participant questioned I had some difficulty in hearing you while the other participants appeared clear.

There has been some issue in your line, I guess. Is it better now?

Is it better now? Slightly better, sir.

If you can just come closer to the microphone.

See, 11-12 is what overall margin or PBT percentage is what we are looking at. Now within that, you have different segments have different margins.

OEMs will have different margins. Aftermarket will have different margins.

Exports will again have different kind of margins. Overall, as a bouquet of products and market segments, 11% to 12% is what we would be looking at in the near term.

Got it. Sir, my last question is that I've been either owning or tracking the company for the last decade or so.

There has always been a practice of you sharing the industry mix of OEMs broadly in terms of two-wheelers and passenger cars and commercial vehicles. Can you just at an aggregate level for the full year, can you just help me understand what is the mix of revenues across the three segments?

Because this is something which you always give.

Not sure about it. What we can actually say is about the retail and the OEMs.

I think that's what we provided in the beginning. It's about 20% or rather even if you exclude the export, it's about 28% is the distribution and the rest is on the OEM side.

What I can actually share is, of course, two-wheeler is by far very dominant volume contributor towards, followed by passenger vehicle and commercial vehicle.

Which is the white space you have identified? Because you are strong in DGBB, but in terms of the other areas, you just put a matrix across different segments and different type of bearings.

Which are the areas where you think you're putting your effort on to win the markets? What are the white spaces?

Can you just elaborate?

White space for us is the unitized bearings for the wheel application in the SUV segment and also in the light commercial vehicle, if I had to call out those as an area that we can do significantly well and we are doing well there. Specifically the new generation transmissions that are coming in for the CAFE 3 norms with our portfolio of low-friction, low-weight assortment.

That's a space that we are relaunching ourselves to be a dominant player there. These two are standing out as a significant white spaces for us.

Thank you, sir. I'll get back to you.

Yeah. Hi, thanks for taking my question.

Sir, generally, I would like to share that we've been tracking, just like the earlier participant was saying that we've been tracking our company for more than 10 years. The investor communication under Mr.

Manish Bhatnagar was very transparent and very articulate. We were able to kind of understand where our margin structures are, what the gross margin levers are, where the new product introductions are.

Increasingly, post the demerger, what we are realizing is that the investor communication and the disclosures have dropped substantially. There is absolutely no clarity amongst investors both for the industrial company as well as for the auto bearings industry as to what the normalized margins were pre-merger, what they are today.

They look significantly lower than what they were pre-merger. Is it because we have started paying out more royalties to the parent?

Is it because of the transfer pricing arrangement between SKF Industrial and SKF India Auto? In the last 6-7 years, if you see our average EBITDA margins used to be 16% and 17% of the combined entity.

Today, it looks like both the entities are much lower than that. Is there something changed during the demerger which the shareholders should be aware of, but they are not being made aware of?

I would really appreciate if you could kind of share some thoughts about this and at least share this concern with SKF parent also that there was a lot of effort being taken previously doing meetings and all for the demerger vote. Since then, the communication has dropped, disclosures have dropped, and there is absolutely no clarity as to what the long-term sustainable margins for SKF is.

SKF is global leader by far. In India, SKF trades at a 50% to 70% discount to its peers from market valuation point of view.

From margins point of view, its margins are probably 200 to 400 basis points or even 500 basis points lower than the peers. This does not look like a market leader's attributes, right?

Just wanted to share this feedback. I missed the industrial call, could not share it with them.

We are already existing shareholders, but we thought we should kind of air our views on this aspect. We would really appreciate if you could kind of help us understand the numbers, overall numbers and margin structures better.

If you could just answer if there is a significant increase in royalty that has happened pre-merger and post-demerger?

Okay. Just before Mayank talk about, thanks for feedback.

If you think so, that's a good feedback for us. I can just assure you that we would like to remain transparent as it was earlier, and we are very committed to that.

SKF as a company always value our investor, our customers, our community, and everything. We have no intention to hide anything.

If you feel so, that's a feedback. We will work on it.

If in particular some information which you need, maybe if it's not in kind of confidential in nature, we will be happy to share. Mayank, maybe you can

Your feedback well taken and we'll see how to further improve the communication so that this feeling goes away. We'll make effort towards that.

Now, as far as royalty is concerned, there is no change in any royalty or trademark fees from the earlier setup. It remains the same how it was pre-demerger.

Is it fair to assume because pre-demerger, when we had spoken on concalls, when the concalls were held and the meetings were held in the run-up to demerger, what was communicated to us was the auto on its own makes about 16% to 18% EBITDA margin, right? In fact, higher EBITDA margins as compared to the industrial business because it is 95% localized in India, right?

Now, if I take the average of the last 5-6 years, the EBITDA margins used to be 16% to 17%. If Industrial is basically 60% of the revenue and the margins of Industrial are significantly lower than the average because it is predominantly a trading business as of now, then logically, mathematically, the auto bearings margin should be closer to 18-19% EBITDA level, right?

If it is 18-19%, as of now, since the demerger, we've not seen those kind of numbers. Can you help us or if you could kind of break it down for us as to when do we see those kind of margins coming back?

When does this arrangement between us and Industrial kind of change on the transfer pricing or whatever contract manufacturing that they are doing because they hold the land on which our line is kind of located or set up?

In fact, it's other way around. It is SKF India land where we have given kind of rent to Industrial.

See, the demerger which happens at group level, the carve-out or in India, it's a reverse carve-out. Generally, automotive has come out of Industrial.

Overall, at group level, automotive is close to 30% of total revenue. In India, it is slightly higher.

It is slightly 34-35% from revenue point of view. In India, it's a reverse carve-out where Industrial has gone out.

SKF India Limited remains as automotive division.

See, the EBITDA margin which you mentioned, okay, last financial year if you look at it, it's about 15.3%, right? Slightly lower than the previous year, what 16% something you were mentioning or 20%, but we should be back to the level very soon.

This is a kind of transition which is happening. One-time costs are sitting here and there slowly.

Maybe you may be seeing, but we are very hopeful and we are confident about going forward, maybe after couple of quarters, we will become stable and will back to normal.

Sir, if I can just take this point forward. If someone from your team can actually read the transcripts of the concalls which happened in '24, right?

In '24 and maybe early part of '25 and '23, right? Particularly when the demerger was announced, around that time if you see the concall transcripts and if you see the number, right, and if you analyze the last five years, 16% was the average of both the businesses combined.

Industrial is actually lower margin business and it is a 60% business, total revenue business. This was on record said by Mr.

Mukund, right, that we will basically move back to 16% to 19% EBITDA margin range, right? In the earlier calls also, he had mentioned auto is significantly more profitable in India because it is fully localized, right?

Sir, also on this contract manufacturing, on this year's P&L that we have reported for the results, there is a very large amount of purchase of traded goods. I'm assuming there must be something that the Industrial piece is also manufacturing for us, right?

Yes. Of course, Industrial, as I said earlier, Industrial is definitely making.

Because of capacity shortage in automotive after GST cut, we are seeing a huge growth in all sector, all segment, and we have limited capacity, which we are anyway working on. As I said, already two new product lines are coming in our Haridwar this year only and some things are also in pipeline.

Because of that, we are kind of trading from Industrial. About EBITDA, see, this is true that in automotive, we are more localized product.

If you see, automotive is very price-sensitive market, especially OEM. Distribution market both in Industrial as well as in automotive is works on more or less in the same margin.

Yes, maybe because of the import cost, maybe the margins somewhat get impacted in Industrial. Overall, as per me, Industrial is a little higher margin business than automotive.

At a global level if you see, for any automotive industry outside India if you see, 8% operating margin is considered to be very good margin for automotive, including OEMs. In India, of course, our plan is to always to remain in double digit.

There may be some compression because of all this transition, and we are confident we will go back there.

Sir, if you could from next quarter onwards, if we can actually include in our presentations, right, the breakup of the cost or the margin compression, right, and this is because of one-off or merger-related costs, right, or these even this transfer contract manufacturing-related cost between Industrial and us. It will help us understand and appreciate what a true business margins are, right?

Because if you compare to us to our peers like Schaeffler India or Timken, they are at much, much higher margin levels. They are your competitors.

They sell products at a discount to SKF India's price because SKF India commands premium. SKF globally also commands a premium over Schaeffler and Timken, even if the premium is 2% or 3%, right?

The point is, if they can If they're making 20% EBITDA margins and if we have communicated in the past, just a year back, if someone can actually read the concalls and understand and you'll see the numbers and see the commentary that was provided to us in the run-up to demerger, it was very clearly communicated that our margins are going to be significantly higher once we localize more and auto already makes a significantly higher margin. There seems to be like a very, very, distinct difference between the communication post-demerger and pre-demerger.

Just a very, very sincere feedback. Please have someone in the team to read the transcripts or the communication or the information that was provided to shareholders pre-demerger and what we are communicating today.

Is there a significant difference between the two and if yes, can someone take the effort and initiative to bridge that gap?

As I said, feedback taken. We will try to give even more detail.

Just to extend the answer, first of all, now post-demerger, if you see, we really don't have somebody to benchmark because now Industrial is purely Industrial and automotive is purely automotive. Timken and Schaeffler both are still combined.

They are Industrial plus automotive. Earlier there was a good comparison, but now it is no more actually.

Even if we want to compare, there is not a single listed company which is purely for automotive. There is no such company exist where we can compare.

Probably same thing goes with Industrial also. I'm just giving you a little bit heads-up so that you can think about it.

It is not apple-to-apple comparison. About localization, as I said, if Mukund has said, yes, there are a lot of investment which has been made even in Ahmedabad factory and even in Pune factory for Industrial.

I should not talk about Industrial as such if you must have attended that call. The statement which was made that is true.

We don't want to go back and we don't want to say that that was not true. Everything is true what we said.

It's maybe a matter of time. It's just a transition time which we are going through.

Okay?

Sure. Thanks a lot, sir.

I'd really appreciate if you could include some more information and data points on the margin breakup and one-off related demerger-related costs in the subsequent presentations that we make for the quarterly results.

Okay. Thank you, Mr.

Ravi.

Okay. Thank you very much for your question and continued trust in SKF India.

This year has been one of transformation and resilience. While restructuring costs temporarily impacted our profitability, our strong revenue growth, robust demand across automotive, and strategic focus on electric mobility and sustainability give us confidence for the future.

The demerger position us to unlock greater value by enabling sharper focus and agility in our business. We remain committed to our innovation, operational excellence, and delivering consistent shareholder return.

As we move forward, our priorities are the clear margin recovery, sustainable growth, and strengthening partnership with customer and stakeholders. We appreciate your support and look forward to continue this journey together.

Thank you very much.