Thanks Hina. Welcome all the participants to Timken India Limited 3Q FY26 post-results conference call.

From Timken India management, we have with us today Mr. Sanjay Koul, Chairman and Managing Director, and Mr.

Sujit Kumar Pattanaik, Business Controller India, CFO and Whole-time Director. I'll now handover the call to the management for the opening remarks, to be followed by question-and-answer session.

Over to you, sir.

Thank you, Mr. Annamalai, and since that I am in a car, my schedule of flight was changed, I'm asking my CFO to carry on and do the opening remarks.

A lot of data is in the opening remarks. Go ahead, Sujit, please.

Thank you, sir. Once again, good evening and thank you for joining us today.

We appreciate your continued interest and support in Timken India. Before I go to the numbers, during the period we continue to focus on executing our strategic priorities, including the capacity expansion and strengthening our operational capabilities to support the long-term growth.

I will briefly walk you through about the quarter and nine months performance, after which we will open up our floor for the questions. Quickly on the quarter three of the financial year '25-'26, the revenue for the operations was ₹764 crores, 7,644 million, which is a 13.8% increase over the same period last year, while sequentially we were down very close to a percentage, primarily driven by the seasonality of the rail business.

There are a lot of one-time transitional impact that came in during the quarter, the profit before tax during the quarter was 719 million. It was lower year-over-year and sequentially as well, on account of few, one-time transitional impact.

One was the labor code related impact, which came in during the quarter. The second is the other income reduced during the quarter because of reduction in the investable capital.

The third is the new plant, Bharuch ramp-up cost. If I take out these exceptional items, this one-time transitional impact, we would have ended the profit before tax very close to 13%, which is primarily because of unfavorable mix versus last year same quarter.

Now moving on to the nine months for the quarter three of financial year 2025-2026, the revenue stood at 2,346 crores, reflecting almost close to 6% year-over-year growth, and across all the end-user segments we grew our revenues. Profit before tax stands at 13.8% versus last year of 15.9%, again the similar impact for this YTD, primarily driven by the labor code impact, the transitional impact on account of the ramp-up cost, and of course the lower other income.

Without that, the profit would have been flattish to 30 basis point lower compared to the same period of last year. Now, as we know, the recent global trade developments, particularly the ongoing trade engagements between India and the United States and European Union, are expected to create favorable opportunities for the Indian manufacturing in general.

Progress towards deeper trade partnership, supplies and diversification, and global OEMs and increasing localization requirements are supporting India's position as a preferred manufacturing destinations. These developments, which have come in over last couple of weeks, are expected to strengthen the export opportunities for engineering and industrial product companies, which includes the bearing and the related components as well over the medium to long term.

As the new capacities and stabilization and utilization improves for our new manufacturing plant, ramp-up costs are expected to moderate, which is going to support the gradual margin normalization. We remain focused on disciplined capital allocations, operational productivity, and capturing growth opportunities across various end-user segments.

Now I will move to the segment-wise sales, after which we will open up the floor for the questions. During the quarter, the rail front ends we did ₹128.6 crores, mobile others is ₹167.1 crore, the distribution business we did ₹138 crores, process ₹167 crores, export intercompany we did close to ₹159 crores, and a small amount that came in in the export incentives of ₹4.4 crores.

Total revenue is ₹764.4 crores, 13.8% favorable compared to last year same period, 1% down sequentially compared to the last quarter of this financial year. That's a quick summary of the opening remarks from our side.

With that, we'll open up for questions.

Thanks for the opportunity. Could you help us understand how demand from the commercial vehicle segment is shaping up both OEM and aftermarket, roughly how much of CV offtake is driven by replacement demand versus OEM production?

Sujit, yeah, you can compare the quarter-to-quarter numbers of mobiles.

Yeah. As I talked about, the commercial vehicles, primarily which includes both on-highway and off-highway, put together we did for the quarter is ₹167 crores, which is almost 9% quarter-over-quarter and almost 20% year-over-year.

As we have discussed in the last quarter, we see a little acceleration in the commercial vehicle segment, and that's something which is reflecting in our revenue as well. From a distribution standpoint if you look at it, which of course we report the numbers both auto distribution as well as the industrial distribution piece of it, we did 198-- ₹138 crores for the quarter, which is again very flattish compared to the sequential quarter of last quarter, 1.5% off, but year-over-year we have grown by 8.5%.

In both the segments you talked about, we have seen a steady growth, and we expect probably the momentum to continue given that it is the last quarter of the financial year and most of the OEs are going to kind of build up the stock and do their record

sales. Okay.

Is this purely volume increase or are you also seeing an increase in kit value or content per vehicle contribution with OEMs?

I would say it would be more of the volume increase at this stage, not in terms of the content values from a bearing industry perspective. I would say it's more of a volume increase.

Right.

Also, adding to what Sujit said, as we speak, as we all know, commercial vehicles are picking up and whether it is now a long-term demand or it is just the last quarter of the financial year, but the CV market is currently for sure pulling more bearings. We see steady growth in volumes.

Thank you. That's all from my side.

Yes, sir. Good evening and thank you for the opportunity.

My first question is regarding the Bharuch facility. Could you kind of give an update on the SRB line commissioning and also our targets in terms of revenues from this plant say this year and probably next year based on the utilization rates you want to hit?

Yeah. As far as the Bharuch facility is concerned, all our lines are capitalized as we speak.

That is why we have taken all the depreciation impact in this quarter. Both the SRB lines, both the small and large, as well as the CRB lines are capitalized.

Now as the Chairman explained in the previous meetings, of course in a manufacturing of bearings, it goes through multiple steps before we do the commercial sales. Starting with the customer PPAPs, the approval from the customers, on, forth.

We are currently in the process of ramping up for doing the PPAPs, doing the tooling up of the parts as quickly as possible. Now as we speak, for the quarter, we had a moderated sales figure of very close to ₹12 to ₹15 crore rupees, but as we are ramping up significantly and we are tooling up the parts as much as possible, we would expect in the near future we are going to ramp it up quickly.

With the recent developments of the trade deals which got signed off between Europe and US, we expect some kind of favorability in terms of loading up the plant. Again, we need to wait and watch for the fine prints of those printouts, we are yet to look at it the overall impact, but again that may accelerate a little bit in terms of the loading of the plant.

Again, it comes back to the executions, how quickly we are tooling up the parts. The entire team is working to kind of ramping it up as fast as possible in terms of PPAPs and tooling up the parts.

Right. Do we have a target of say exiting the year at 45% utilization?

In connection to that, where will we stand?

It's difficult to tell the exact percentage in terms of the capacity utilization if you look at it at a high level. I would say we're not definitely 45%.

I would say it's some 30% level, but our expectation is to ramp it up as quickly as possible during the first quarter and sorry, the last quarter of this financial year and the first quarter of the next financial year, so that at least we are in a sizable percentage, more than a little more than 50% utilization by then.

Sure. Understood.

You did allude to the fact that even the European trade deal now kind of opens up new opportunities. I think when you had initially announced the investment into this plant, I think you had said that the opportunity size for SRB was say around ₹17 billion rupees and for CRB is ₹20 billion based on the current imports, etc.

Any update, any change to that number? Do you see a higher opportunity now for localized SRB, CRB, obviously import substitution plus exports?

Anything that you could share there?

Again, as I said, though the trade deals have been announced with both European Union and the US, but I think the fine prints are yet to be evaluated, we are in continuous evaluation. As we speak, we do not have ready-made numbers to talk about, but to answer your question, I think the Chairman also explained in the last meeting as well, our whole objective is to find out the overall capacities expansion as quickly as possible, the utilization for the plant, and definitely these external activities which have happened over last 2 weeks, so that's going to accelerate that process.

Got it. Thank you.

Just lastly, the GGB, the plain bearings line that we're kind of setting up, could you give some more color on that in terms of the immediate opportunity? Because I understand that I think it's entirely imports right now into the country.

Now that you're setting up a line here, when would that be ready in terms of commercial manufacturing and what kind of opportunity could that give us?

Yeah. If you're referring to the FRC line which we talked about in the last call, so that project is on timeline.

The original plan was to install all the equipments by Q1, end of Q1 and beginning of Q2 of this financial year, next financial year, '26-'27, and we are on track, and that's an investment of for FRC line very close to ₹35 crore rupees. We are on track in terms of that investment, in terms of that project, and I'm sure once that get executed, we will get the appropriate payback which was considered in the assumption.

Got it. Great.

Thank you so much. I'll get back in the queue.

Hi, sir. Thanks for taking my question.

Firstly wanted to understand, largely our top line was strong this quarter, however we saw 400 bps margin compression QoQ. What was the reason for the same?

Yeah. Again, as I explained, broadly there are driven by three major items.

One is the one-time labor code impact. As all of the labor codes came into effective of 21st of November, which have got an impact the way you are actuaries values in terms of the gratuity, in terms of--

Sir, I am talking about the gross margin impact.

Yeah. Gross margin is primarily if you are excluding the labor code, you are taking only the material margin piece of it.

That's primarily because of the unfavorable mix and the incremental cost that we got on our Bharuch plant. Okay.

These are primarily two drivers. Yeah.

Got it. Secondly, we indicated-- Yeah.

Sure, go ahead.

Since December is a typical quarter where our product mix are unfavorable, as the sales number I have given, the rail sales were lower compared to the earlier quarters, so as the other profitable segments I would say, the unfavorable mix played a role in terms of that margin.

Got it. Secondly, we indicated a 120 crores crore capex coming up in Jamshedpur.

Wanted to understand what kind of asset turns are we looking at in that plant, and when do we see that ramping up?

Again, we do not refer to asset turns, but if you look at it, the asset turn what we have given to our existing portfolios in the past, we follow the similar kind of asset turns. As the Chairman explained in the previous meeting as well, rail business cannot be hockey stick, okay?

It's a slow and steady business, but it'll give you a clear capacity utilizations as far that capacity is concerned. In terms of the asset turn, if you look at it the overall company, the asset turn whatever given, it's going to be for the new investment as well in the similar way.

Sir, by when do we expect that line

to-- That project we are expecting to go live towards the end of this calendar year, which will be Q3 of financial year '25 '26-'27.

Okay. Got it.

We can aim at around 30% utilization by end run rate of FY27?

That's a fair assumption I would say at this stage. As I talked about, this recent trade deal announcements are going to have some acceleration in few of these projects.

Yes, so that's a fair assumption I would say at this stage. Again, we need to wait and watch what's the fine print about those trade deals.

Got it, sir. If I can squeeze in one last question.

Can you also share the revenue break-up for the last quarter?

Yeah. I'll just repeat what I explained.

The rail was ₹128.6 crores, mobile others was ₹167.1 crores--

Sir, last quarter, Q2 Q2.

Oh, you mean Q2. Okay.

Rail was ₹178.2 crores, mobile others was ₹153.2 crores, the distribution business was ₹135.9 crores, process was ₹141.5 crores, export was ₹161.2 crores, and we had a small export incentives which was ₹3.2 crores, total ₹773 crores.

Pure sir. Thank you so much.

Thank you.

Hi. I have two questions pertaining to margins.

Firstly, if you can quantify what was the absolute impact of Bharuch plant ramp-up? 53 versus a 12 to 13 crore revenue impact which you had.

Second one, if you can give some color as to how we see margin from perspective of let's say auto versus non-auto. On top of that, the Bharuch ramp-up taking its own time, I can understand the labor code impact, we exclude that.

If you see, how should the mix play out for us in terms of margin, and whether we can look at 17%, 18% margins? Is it sometime away from now or it can come back very quickly?

Yeah. I think there are multiple questions, let me give an attempt one by one.

The first one, am I audible? There are a lot of background noise I'm hearing.

Yeah. The first one is in terms of the Bharuch, so as I said the roughly sales was very close to ₹15 crore rupees for the quarter, but we had the depreciation full impact because we have capitalized all the lines, and as we know, the ₹750 crores of investment, the depreciation will be anywhere between ₹9 to ₹10 crore rupees a quarter approximately.

That has impacted in terms of the basis point very close to 170 basis point impact because of the ramp-up cost for the quarter. Then on top of that, we had the labor code impact, which was very close to 60 odd basis point.

Then if you're taking other income as part of your PBT calculation, so that has got another impact of 120 basis point given that we did a significant capital allocation in terms of the dividend payment and the GGB acquisitions in last two quarters. These three put together if you look at it, that's primarily the transitional impact for this quarter in our PBT.

Now if I exclude these three aspects of it, we had a little bit of unfavorable mix, which has impacted the gross margin per se, but again to a great extent that got offset with the improved operating leverage. The net impact of the gross margin because of the unfavorable mix and the improved leverage is very close to 1.5%.

That's the broad answer to your margin questions. Now coming to the Bharuch auto versus non-auto margin, of course we have just one segment overall, but again we don't give the segment-wise margin per se or the front-end wise margin, but generally as you know probably from the OE side of it, you'll always see the margin portfolios are different from an auto and non-autos.

The same thing you can take it for here. We don't give any specific margin percentage for auto and non-autos.

Now coming to your margin expansions, are we in the range of 17%, 18% or that's going to probably take a little bit more time? As I said, everything is dependent on how quickly we are ramping off the Bharuch plant.

Historically we have seen given the fixed cost categories for the manufacturing plants here in India, the moment we start ramping it off, our leverage that comes to the bottom line is significantly higher compared to many other industries. That is what our expectation is.

Our expectations and the work what we are currently doing by the entirely team is the execution in the fast mode, ramping up the parts, doing the quick PPAPs, and these external factors like the trade agreements, if that's going to accelerate a bit in terms of the loading of the plants, so that's going to help us. Once these three things happens, we will definitely see the margin at a very close to what the numbers you're referring to, and that's what historically we have been doing that over last several quarters, several years, even pre-COVID as well.

That's all I would say at this stage. Did I answer all your questions or anything I left out?

That's helpful. Just one last thing.

Is the GGB consolidated and under which head of the sub-segment is it consolidated right now?

Yeah. GGB, if you look at it, of course for the first time we have published two results, consolidated financial sales and the standalone financial sales.

Again, GGB has got they're more into the plain bearings, the bush bearings. They are into multiple segments, but I would say most of their sales would be in distribution and the process industries, and some components goes to mobile others, but most of them will be in distribution and process.

Got it. Thanks, Sujit.

Thank you so much.

Thank you.

Hi. Two questions from my side.

First is, now I see good strong growth in both mobile and process. Mobile, as I understand, CV growth is strong.

My question is what is the outlook on rail and the export segment now that the India-US BTA is done? What is the kind of outlook for Q4 as well as FY27?

Yeah. Again, formally we don't give any future guidance per se, but since you have asked the questions on rail, again we keep by repeating this every quarter.

Rail business per se is not going to be a hockey stick. It'll have a slow and steady.

If you would have seen this recent budget, the allocation of the capital from the government is going to be a slight improvement compared to last year, which effectively means the infrastructure around the rail are going to come up exactly in the similar range what we have seen in the past. Now if we look at it the rail per se for this quarter was the lower quarter, ₹128 crores we did.

Historically if we look at it the rail per se, the quarter four of the financial year is always going to be a strong quarter. That's what historically we see.

Year-over-year if we look at it, there is a growth of rail of very close to 10.5%, that is ₹128 crores of this quarter versus last year same quarter we did ₹116 crores. From your perspective, you'll always see rail business is a steady growth.

Definitely there won't be any decline unless until we see a significant impact of government spending diversification to other segments. As of now, we don't see, and with the recent budget what the Honorable Finance Minister has announced, we see the capital allocation to the rail of course growing for the next year as well.

That with respect to the rail. Coming to the export piece of it, as I said, we are still evaluating detailed fine prints about the trade agreements are yet to out soon.

Our expectation is the European trade agreement what we saw, again by the time it gets signed off by the European Unions with all the members of the European Unions, so that may happen anytime towards the end of the year, so that's why I would see probably that will be effective sometime beginning of next year. The US trade deal, with the recent announcement they come out with the interim press release.

That of course we need to look at it the details of the chapter ID and the HSN code, all those stuff, but that's definitely going to be helpful in some way to our industry per se. Again, we need to wait and watch.

There is no kind of concrete answers whether that's something which is going to have a direct impact on our export, but these are all the directions in the positive way. We definitely can expect to the industry like us we'll have beneficial out of those agreements.

Just a follow-up here. With tariffs, US tariffs going down from 50% to 18%, what happens to the shipments?

Is there anything material that is happening because our parent is US parent, right? Anything on that front in terms of shipments, in terms of orders?

Are we seeing any pickup, anything on that?

No, even before the tariff announcement, if you look at it our exports, okay, technically it has not gone down significantly, because we closed the quarter exports with ₹159 crores, and it was ₹152 crores same year same quarter, and ₹161 crores sequentially. It was almost flattish.

Now to your question, again as I said, still the fine prints are being looked at it. That 50% to 18% is a headline tariff reduction, but we need to go into the details of the engineered goods, on, forth, which is most likely going to be reduced from 50% to 18%.

As it reduce, of course the movement of the supply chain, the other piece, it's not only for Timken Company, we need to look at it other aspects as well, what's going to happen. Again, we need to wait and watch.

It's very early to come to a conclusion that's going to significantly improve the numbers. We need to wait and watch.

I'm sure in coming days we will have a better visibility to give a numbers on that aspect.

Got it. My second question on GGB, effectively we saw just 1 month of revenue in this quarter and probably fixed cost was, full, the absorption.

Am I just correct if my understanding is right here?

There is a slight comment there. We have also given the notes, note number five in our consolidation financials.

It is not just 1 month revenue. Since it's a group company acquisition, so as for the Indian Accounting Standard, we need to do the pooling of interest, which effectively means the consolidation will look like as if it has happened from 1st of April 2024.

Okay? For this quarter what you are seeing, the revenue numbers are 3 months revenue for GGB.

It is not 1 month revenue. You would have seen if you reduce the consolidated financials minus the standalone financials, that's very close to ₹15 crores revenue for 3 months.

Okay. The annual run rate for this entity is close to that ₹60 crores mark.

That's I would say--

I would say somewhere close to 50, 55. They will also have their seasonalities.

I would say somewhere close to ₹50, ₹55 crore range, yeah.

Got it. That's all I have.

Thank you.

Thank you.

Hi. Thanks for the opportunity.

Just couple of questions. First is on the railway.

Can you give some more granular color in terms of the tendering activity in different subsegments: freight, passenger, metro, and a related question is how is the pricing? This question is also in relation to the competitive intensity.

Do you see any major change in terms of competitive intensity in railways?

Yeah. Again, subsegment-wise the numbers I have already spoken about.

Rail, if you start with those five broad end-users segment we talk about, rail again, it's a typical lower quarter for the rail business per se, and we always see historically the quarter four of the financial year always picks up given the wagon builds, the government spend allocations, on, forth. For this quarter, it was down sequentially for rail, but if you look at it year-over-year, still we had a best December quarter.

That's rail. As a future prospect, as we discussed, again we don't give the future guidance for this per se for the company, but overall if you look at it with the recent budget announcement, we have not seen a significant reallocation of the capital as far as the rail segment is concerned, which effectively means the infrastructure around the rail ecosystem are going to probably sustain.

That's going to happen for any developing countries like India, at least for the medium to long term. Now on the mobile others piece of it, as the Chairman explained, the commercial vehicles, both on-highway and off-highway, we see a slight acceleration than the earlier years.

That's something which we closed with ₹167 crores. Again, traditionally we have seen the quarter four of the financial years is always a great year for majority of the OEs.

Since we supply to majority of the OEs, we also foresee probably this quarter four of the financial year will accelerate to a great extent. Now is it a sustainable increase in the demand or it is more of a stock correction, so that's something which we need to wait and watch.

As we speak, for this quarter and what we see as we speak in January, we see probably an acceleration in terms of that. Now distribution, again both auto and industrial distribution, there also we see an year-over-year growth.

What we have seen for this quarter is 8.5%, and we see a steady momentum for most of the stationary equipment OEs and the steel plants. Same thing is for the process as well.

Export, we talked about. Despite those tariff issues, what we had, the geopolitical dynamics what we had, we have not seen a significant drop in our export if you look at it the numbers.

We closed ₹159 crores, which was 4% year-over-year growth, a slight decline sequentially. With this trade sign-off that's been happening over last 2 weeks, we see probably that's something which is going to be favorable for most of the industrial manufacturers.

That's broadly--

Sorry to interrupt. My question was on competitive intensity in railways, if you can give any color.

Is there any change in market share, number of players, and pricing?

Competition is always there. Be it rail or be it any other segments, competition is always there.

Then obviously, Timken has the ability to innovate relentlessly, we are not afraid of the competition. What we are really looking at into the market with more innovation.

That is why we are the leaders in rail for last so many decades, not only in India, but globally also, the parent as well.

Okay. Second question was on the distribution side.

Post GST cut, do you see any material change? There used to be a very large market for counterfeits and spurious in bearing per se in distribution.

Post the GST cut, do you think there's trend of unorganized to organized? Has that seen any acceleration or any color you can give on that?

You're talking about GST on distribution business?

Distribution, yeah.

You mean you're referring to there is a change in GST recently?

The impact in terms of the unorganized to organized, especially the large counterfeit and spurious market that's was there in bearings.

Yeah. Again, if you look at it, per se there is no change, apart from the administrative changes which was been brought in in the GST Council meeting of the quarter four of last calendar year plus the current budget.

Now from a rate perspective if you look at it, still majority of our product falls under that 18% categories. Of course GST has got its own facilities in terms of the e-invoicing, the cascading impact of credit, on, forth.

It was there since the inception of GSTs. Now the changes which you are talking about from unstructured business to structured, in unorganized business to organized business, so that's again that's an evolving step.

That's something which is not going to have a significant impact in terms of our sales the way we were doing it. Now if you look at it, our distribution business per se, majority of our distributors were the tax-compliant from the beginning of the GST implementation, and Timken being a good-governed company, we always do business with any of those distributors or the OEs who has a good governance system with them.

Per se the changes what you're referring to in the GST that has come in, so that's primarily the administrative piece of it, whether it is e-invoicing, whether it is invoice management system, on, forth, which is going to help probably many other unorganized sectors to come into the organized sector per se. Majority of the profiles what we are looking at, with whom we do the business, they were all compliant much before these changes that came in.

Okay. Thank you.

Just to add to that, in railways, unless and until you are not certified by the certifying body where the norms are pretty pretty tough, because it is a safety item. Just by changing a little bit of a norm here and there cannot lead to a lot of people.

Obviously, people can try and should try, but the entry bar is very high because of this criteria of the safety, especially for rails.

Thank you.

Thank you.

Yeah. Thank you for taking my question.

Just had a couple of questions. Firstly, just on the SRB the new plant at Bharuch, you talked about the kind of revenues that you had in this quarter.

What were the fixed costs? I am talking about at EBITDA level you would have probably seen a loss.

If you could maybe just highlight that number to help us understand what is the core profitability, core business profitability?

Yeah. Again, we do not monitor profitability at the plant level, but as I said in my previous questions as well, overall from a PBT perspective if you look at it, because of this plant ramp-up cost, which is nothing but the fixed cost over the revenue that we have generated, that has impacted very close to 1.7% approximately for the quarter.

Understood. Just to double-check on the unfavorable mix part of it.

I think YoY if you look at it, the segmental mix is not too different. Just wanted to understand, is the gross margin reduction also a function of say traded goods kind of higher mix of traded goods in the revenues?

It's

again, when we use the word mix, it is also trading versus manufacturing. It is also mix between the front-end units per se.

This is combination of both.

Understood. Understood.

That's it from mine. Thank you.

Thank you.

Hi. Thank you for the opportunity.

I just have a follow-up again on this gross margins, right? Even if I look at from a sequential basis, the cost of traded goods has gone up significantly.

Is there any change in the traded goods agreement with the parents, some tariff impact which we are bearing, anything of that sort has happened on a sequential basis or on a YoY basis which explains such a sharp drop in gross margins?

No. Again, to answer your question, of course, any transaction that happens through the group companies, we follow the transfer pricing policies and we all know probably the regulations that surrounds with the transfer pricing.

To answer your question, there was no changes done during the quarter when it comes to the pricing mechanisms of the group company. It followed exactly the same pricing mechanism which is being followed in the previous quarters.

The gross margin impact what you see, as I explained before, this is two mix. One is of course the front-end wise sales and the profitability mix.

The second is also for your traded product, we import from multiple countries. Every country will have the transfer pricing mechanisms, the pricing methodologies between that countries, and the mix of that will have an impact as well.

To answer your question, there was no change which has done during the quarter in terms of the pricing mechanism. It followed exactly the same pricing mechanism what it was followed in the earlier years.

It's primarily the unfavorable mix, which I would say transitional impact which has impacted for this quarter.

Understood. My second question is just pertaining to when we are importing the finished goods from USA, do we pay any duty at this point in time?

If US and India deal happens and if that duty comes down to 0%, then is there something, some benefit which we could accrue once that happens?

Yeah. Answer to your first question, do we pay any duty as of now, answer to that is yes.

Most of our products that falls under the industrial bearings, which is 84 chapter ID, I think the duty which is applicable very close to 8% plus certain cess, on, forth. Now with the trade deal that is happening, so far again, we have not seen a detailed fine prints of the trade deal.

We need to wait and watch for the TS code. If I take hypothetically if that's going down from the existing rate, definitely that's going to be beneficial from a profitability standpoint.

Again, as we speak, there are no details HSN code-wise released in terms of the duty. We need to wait and watch what that percentage is going to be.

Understood. This 8% currently is borne by us, right?

It's not shared between us and the parent?

It's part of the landing cost, right? The same thing is applicable for export as well, because when we export bearings there is a cost and the importing country always takes the cost.

That means parent takes that cost for our export side. The same thing is applicable for imports.

Understood. Just last question, you said that India-EU deal also would be at least over the medium term beneficial to us.

Just wanted to understand, my understanding was the import duty today from India of any auto and part including the industrial bearings is anywhere between 2% to 5%, right? That essentially goes down to zero, right?

Do you think that that 3% price cuts is good enough for us to be competitive in that market?

Answer to that again, whether it is competitive or not, that future will say. Again, at the end of the day, if you look at it the economics piece of it, if today you have a market share of X and that cost is going down let's say 3%, 4%, whatever that number be, definitely you will be in a advantageous position to gain some market share, right?

That's how the economics will work. Now to your point, whether that is today 2% to 5%, that's going to come to zero all of sudden or gradually that's come to zero, that we need to wait and watch.

To your point, if there is a reduction and what the trade deal headlines talk about, eventually that's come to very close to nil, at least 98%, 99% of the products, we need to wait what is the timeline of that. Is it something is going to happen from day one or probably gradually they're going to bring it down, we need to wait and watch.

Anything that's getting reduced from your existing base and that's how the economics works, we will always have the advantage positions in that particular market.

Understood. Sir, just last question, if I may squeeze in, just on the SRB, CRB, is there any order book number, at least in terms of domestic, export, where are we seeing incremental traction, which end-segments?

If you could share some details around it, that would be helpful.

Maybe the order book we don't give per se, but as I said, there are two, three aspects which to be considered as far as this new plant is concerned, and that is true for any greenfield investment that happens. One, specifically in industry like us, gestation period will be slightly higher in the sense that it has to go through the PPAPs, the customer approvals, then the plant loading.

Our whole objective, the entire team is working to do that as quickly as possible. Now having said that, with last 2 weeks the favorable comments that's coming in both for India-US and India-European deal, so that's going to bring in some kind of acceleration to this entire program.

Again, as we speak, there is no order in mind, we don't disclose the open order numbers per se, but I can tell that definitely we are in a much better position in terms of the visibility what we are seeing now versus what we saw probably 3 months down the line. Sir,

this 15 crore, how is it split between domestic and exports?

Which 15 crores?

The quarterly revenue which we did for SRB, CRB. What is the split between domestic and exports?

Yeah. That's roughly around 12 crores.

I would say maybe 20%, 25% is domestic and 75% will be export at this stage, but again that should not be taken as an indication, there will be an export as well.

Okay. Thank you so much, sir, for your time.

All the best.

Thank you.

Hi. Thanks for the opportunity.

What was the profitability for this GGB Technology Private Limited which we have acquired for the last financial year in terms of EBITDA?

Yeah. Again, this is there in the consolidated financials.

If we look at it the last financial year, they had a revenue of ₹50 crores with a profit before tax of very close to ₹19.5 crores.

Profit before tax of 19.5 crores?

Yeah.

Okay. Thank you, sir.

Thank you.

Actually, sir, when you took up this capital expenses towards the CRB and SRB plant, it was envisaged that the top line growth will be around three times of the capex, which is around 1,800 crores. In the last conference call Sanjay told that we would be achieving this target a little earlier because we are already an established player.

A new bearing company will take 4 to 5 years to achieve this, but Timken India will achieve this within maybe 2 to 3 years. My first question is that how much will be there in top line for the next year?

Second thing, why you are depending so much on the trade deal? Because there was no question of any trade deal and all this.

All this bearings were to be actually import substitute. There was nothing of that trade deal thought of when this plant was conceived.

Will you kindly tell me that whether we are depending on the trade deal to get this thing for this plant?

Yeah. Two aspects to it.

As you explained, the Chairman explained about 3 years versus the industry average of 5 years, I think still that holds good in a way that the way acceleration of demand we are seeing and the way team is working and putting their efforts in speeding up the PPAPs and all those tooling up, I think that is still achievable as we speak. Now to second part of your question, we are definitely not depend, because trade deal is something where we do not have control to, we are not dependent on trade deal per se.

The comments what I gave is with this favorable geopolitical situation, whenever that happens, that's going to only be advantage and favorable to us. To your point, when the assumptions were taken, the tariff was not 50% during those days.

When we took the approval about those plants, to your point, it was not 50%, it was below 50%. This tariff of 50% came in over last three to four quarters.

To answer your question, definitely we are not dependent on the trade deal, because that's something where the government has to negotiate and close to, we have very limited controls on that. We focus on where we can control, which is execution piece of it, and the team is on the job to execute it as fast as possible in terms of the tooling of the parts, the PPAPs, interacting with the customers, and getting the plant loaded.

I would say the assumptions what Chairman told in the earlier meetings still holds good, and we are in a better shape, and as we speak, I would say the visibility is slightly better than we had 2, 3 months before.

Sir, on a lighter side I will just ask one question. When we can be excited after seeing the result?

Because every quarter we are very excitingly wait for your publishing the result, and when the result comes out, it was a damp squeeze. This time when can we be once again excited seeing the Timken's result?

On this, Sujit, the answer is that hope sustains life on the lighter side.

Yeah. That is okay.

For next year we can expect some good things, sir, out of the new plant and the new acquisition and all that?

I can only tell you one thing, sir, and Sujit can quantify in terms of numbers and everything. I have worked in this company for 30 years and I know the bearing market, I can say among the best in India.

This certainly is among the best companies where one can grow business and see better results for all the stakeholders. That much I can tell you.

Over to Sujit for more numerical answer.

No, I think you have covered it well. Just to give a perspective, if you do the historical analysis of Timken India Limited since from 2010 to today, you would have seen a marked improvement in the profitability.

Now all those things were possible because we look at it long term, whether the investment which we have made in Bharuch, whether the acquisitions and the merger which we are talking about of the GGB, whether the investment that's happening in FRC product of GGB, whether the expansion of rail portfolio that's happening in Jamshedpur, all those things by keeping an eye in the long term. Historically if you look at it, we used to be the operating margin somewhere close to 10%, 12% range in 2014, 2013, now that has moved to 18%, 19% range.

All those things were possible because the investments which were being made by keeping an eye of the long term and which we are getting the return now. The same thing you can take it.

Of course, we don't give the future guidance. The investment which we have made in the Bharuch, these are not bad investments.

These are good investments, the world-class plant that's coming up. That's going to compete with a lot of our competitors in India in terms of the product quality, in terms of the cost positioning, in terms of the price positioning.

The rail expansion what's going to happen in Jamshedpur, so that's going to help in a big way. All those things are good investments which are definitely going to pay back us at some point in time.

Now when is that time? The team is working on flawless execution to see that that time comes as soon as possible.

Great. Great.

Great feedback on this company, sir. Thank you very much.

Thank you, sir.

Should we take a last question?

Sir, I have got two small questions. One is regarding the ceramic line coming at Bharuch.

What is happening on ceramic part of bearings for electrical vehicles? That was one.

Second question was regarding do we have plans for linear motion products to be manufactured in India?

The line which is coming in Bharuch is not ceramic per se. It is a different alternate material called FRC.

It is not ceramic. We are not producing yet ceramic in India.

This is a little bit different. Obviously it can be used in EVs and other applications in process industry as well.

That is not actually pure ceramic if you're referring to ceramic ball bearings. What was the other question, Sujit?

Regarding linear motion products.

Linear motion, yeah, linear motion certainly is a low-hanging fruit for both Timken India Limited in India and for the parent company as well. Debates and discussions are very actively going on.

As our global CEO also, recently new CEO has taken over. He is very bullish on industrial motion products.

Hopefully some good things will come up shortly.

Okay. Thank you, sir.

Okay.

No, thank you very much for the support, and we relentlessly work hard to improve shareholders' return. That is the dharma and karma for us.

Obviously last quarter we know the challenges, both in terms of labor, taking those provisions, and also the mix and things like that, but as I see, future of this year looks to be pretty good, we should be all happy in coming days. Sujit, any comments?

No, I think you have covered well. Again, we work on the long-term value creation, and I'm sure the investments which are being made, which we had the transitional impact during the quarter, are going to come up at some point in time.

Once again, thank you everyone for joining us today and all your interest in Timken India Limited. Thank you.

Thank you.