Carraro India Limited — Q2 FY26

Carraro India Ltd Q2 FY2025-26 Earnings Conference Call https://www.youtube.com/watch?v=qpV65CD6la4 Published: 6 months ago

0:00 Ladies and gentlemen, good day and welcome to with you to FY26 earnings conference call of Karo India Limited. 0:08 8 seconds This conference call may contain forward-looking statements about the company which are based on the beliefs, opinions and expectations of the company 0:16 16 seconds as on the date of this call. These statements are not the guarantees of future performance and involve risks and uncertainties that are difficult to 0:25 25 seconds predict. As a reminder, all participant lines will be in the listen only mode and there will be an opportunity for you to ask questions after the presentation 0:33 33 seconds concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchstone phone. Please 0:42 42 seconds note that this conference is being recorded. I now hand the conference over to Dr. 0:48 48 seconds Balaji Gopalan, managing director of Karo India Limited. Thank you and over to you. Yeah, thank you very much. This 0:56 56 seconds is Balagi Gopalan, managing director, Karado Indian Limited. Good morning to all of you and thank you for joining us 1:03 1 minute, 3 seconds today for Karo India Limited Q2 and H1 FY26 earnings call. I am joined today by 1:12 1 minute, 12 seconds Mr. Dravid Grati, our whole time director and CFO. Mr. Sudendra Manika, our chief operating officer and whole 1:20 1 minute, 20 seconds time director and Mr. Ashok Ray, our director sales and marketing along with 1:28 1 minute, 28 seconds members of our leadership team and our investor relations partners strategic growth advisors. 1:36 1 minute, 36 seconds Let me start with an overview of our performance for the first half of FY26. 1:43 1 minute, 43 seconds The first half has been steady and encouraging for Karu India. Revenue from 1:49 1 minute, 49 seconds operations grew 18% yearonear supported by healthy volume growth across both domestic and export markets. 2:00 2 minutes On the domestic side, revenue was up by 11% yearonear led by strong demand for 2:08 2 minutes, 8 seconds four-wheel drive axles in the agriculture segment and a stable performance in construction equipment. 2:17 2 minutes, 17 seconds exports delivered an even stronger growth of 31% yearonear largely driven by teleboom handler actions. 2:28 2 minutes, 28 seconds While indirect exports of agriculture guidelines remained subdued, resilient domestic market helped us maintain overall volume momentum. 2:39 2 minutes, 39 seconds volumes have remained strong, reinforcing our confidence in the sustainability of our performance. That 2:47 2 minutes, 47 seconds said, realizations and margins were temporarily impacted by a change in product mix. The growth in domestic 2:57 2 minutes, 57 seconds four-wheel drive axles, though very encouraging, was concentrated in a lower margin family of products within the 3:05 3 minutes, 5 seconds agriculture segment. As a result, we are experiencing some near-term pressure on 3:12 3 minutes, 12 seconds profitability. Nonetheless, we remain firmly on course with our middle-term 3:18 3 minutes, 18 seconds margin road map. Several focused actions are already underway to strengthen our product mix, accelerate localization 3:28 3 minutes, 28 seconds and drive deeper cost and process efficiencies across our operations. Also 3:35 3 minutes, 35 seconds on the localization front we have made steady progress with localized raw materials now accounting to 78% of our 3:45 3 minutes, 45 seconds total requirement and expected to touch 80% by end of this year thus 3:52 3 minutes, 52 seconds strengthening our cost structure and supporting long-term profitability. 4:00 4 minutes Now let me take a moment to dwell deeper and share some color on the performance across our key segments. 4:09 4 minutes, 9 seconds I'll start with construction equipment segment. The teleoom handler ramp up of our new range of teleboom handler axles 4:18 4 minutes, 18 seconds for a major global OEM continued through the quarter and is progressing very well. 4:26 4 minutes, 26 seconds We see strong visibility for sustained growth here. Our new projects with both 4:33 4 minutes, 33 seconds domestic and international customers in this product family are also on track. 4:40 4 minutes, 40 seconds Coming to backhold orders, exports registered positive performance supported by strong demand from China 4:49 4 minutes, 49 seconds and early signs of recovery in other overseas market. Overall exports of 4:57 4 minutes, 57 seconds construction equipment for Karo grew 33% yearonear. 5:03 5 minutes, 3 seconds On the other hand, the domestic construction equipment market declined by around 9% in H1 FY26 5:13 5 minutes, 13 seconds versus last year with back loader volumes down 12% mainly due to a 5:20 5 minutes, 20 seconds prolonged monsoon and the slower adoption of higher cost BS5 models. 5:29 5 minutes, 29 seconds Coming to agriculture segment. In the domestic agriculture segment, the shift from two wheel drive to four-wheel drive 5:38 5 minutes, 38 seconds has accelerated following the GST reduction, which has nearly equalized 5:45 5 minutes, 45 seconds 3GST two-w wheelel drive prices with postGST four-wheel drive models. In response, 5:53 5 minutes, 53 seconds Karo India is ramping its capacity to meet the anticipated rise in four-wheel drive demand over the next few years. 6:04 6 minutes, 4 seconds Coming to higher horsepower transmissions, export markets were relatively flat but 6:11 6 minutes, 11 seconds are expected to recover in the coming quarters which should improve offtake for high horsepower tractor transmissions. 6:21 6 minutes, 21 seconds its growth uh sorry it's also worth mentioning that two OEMs leading in 6:28 6 minutes, 28 seconds India including one from India and the other is a global one showcased tractors 6:35 6 minutes, 35 seconds equipped with Karo's high horsepower drive lines at Agri Technica show in Hanover Germany just recently a proud 6:44 6 minutes, 44 seconds moment that underscores our engineering strength and technological capability 6:51 6 minutes, 51 seconds Their business remained subdued during H1 FY26 with lower sales compared to last year. 7:00 7 minutes We expect this segment to remain stable in the near term with limited upside until the overall market improves. 7:10 7 minutes, 10 seconds Coming to engineering services business, we are seeing strong traction with growing inquiries especially for higher 7:18 7 minutes, 18 seconds horsepower and more advanced configurations. 7:23 7 minutes, 23 seconds A major highlight this half was our 17.5 crore rupee agreement with Montra 7:31 7 minutes, 31 seconds electric for industrialization and supply of e transmissions for electric powered agriculture tractors. 7:41 7 minutes, 41 seconds This marks a key step in our technology roadmap and aligns well with our vision 7:47 7 minutes, 47 seconds of enabling next generation clean and efficient power trains. Revenue from our 7:54 7 minutes, 54 seconds engineering services business was rupees 50 million in Q2 FY26 up from rupees 17 million a year ago. 8:07 8 minutes, 7 seconds Capacity expansion. 8:10 8 minutes, 10 seconds During H1, we invested 211 million rupees into our worldclass facility at 8:17 8 minutes, 17 seconds Ranjen Gao with two new sealed quench furnaces and a 800mm pallet Madak 8:25 8 minutes, 25 seconds machining center. We also installed the PLB test bench in July and a robotic 8:33 8 minutes, 33 seconds washing machine in September, further strengthening our operational readiness for future growth. 8:42 8 minutes, 42 seconds Arthur sales network is an area where we have focused very recently and to 8:49 8 minutes, 49 seconds reinforce our AR sales network we have partnered with one distributor and two authorized service centers to enhance 8:58 8 minutes, 58 seconds our aftermarket and spare parts coverage innovation continues to be a key focus 9:06 9 minutes, 6 seconds for Karo India during the half we developed six new prototypes and we productionized three from those developed last year. 9:19 9 minutes, 19 seconds Further, we dispatched two units of our high horsepower P100 EVO HD prototype to 9:28 9 minutes, 28 seconds a large Indian OEM and successfully completed the pilot batch of CVT 9:35 9 minutes, 35 seconds automatic transmission units which marks a significant step towards commercialization of this automatic gearbox technology. 9:47 9 minutes, 47 seconds We are delighted to share that Karo India received for the third consecutive 9:53 9 minutes, 53 seconds year the Caterpillar ACR award the highest global recognition for 10:00 10 minutes operational excellence quality and customer commitment. With that let me now hand over to Mr. 10:09 10 minutes, 9 seconds David Graci, our whole time director and CFO to take you through the financial performance. David, thank you Baji and 10:18 10 minutes, 18 seconds good morning to everyone. We will uh quickly go through the main figures and then we will give some space for questions as usual. Starting with Q2 10:28 10 minutes, 28 seconds income from operations grew by 33% yearonear to rupees 5,863,586 10:37 10 minutes, 37 seconds crores. The total income stood at uh rupees 5,931,93 crores also growing by 33% year on year. 10:51 10 minutes, 51 seconds Our eida grew by 25% yearonear coming at rupees 593 million translating to an 10:58 10 minutes, 58 seconds eida margin of 10%. Our profit after tax for the quarter increased by 44% 11:05 11 minutes, 5 seconds yearonear at rupees 317 million translating to a profit after tax margin of 5.2%. 11:15 11 minutes, 15 seconds Agricultural vehicle segment grew by 16% yearonear to rupees 2541 11:22 11 minutes, 22 seconds million254 crores while construction construction vehicles grew 57% yearonear to rupees 11:32 11 minutes, 32 seconds 2,665 million266 crores. 11:38 11 minutes, 38 seconds Uh moving to the results for the first half, we register income from operations 11:45 11 minutes, 45 seconds growing by 18% year on year to rupees 10,792, million1,79 11:53 11 minutes, 53 seconds crores driven by domestic volume growth and telemandler new business in export. 12:01 12 minutes, 1 second Our total income stood at 10,913 million 1,93 crores also growing at 18% 12:10 12 minutes, 10 seconds yearonear. Our evida grew by 13% yearonear coming at rupees 1,141,14 12:20 12 minutes, 20 seconds crores translating to an evida margin of 10.4%. 12:25 12 minutes, 25 seconds Profit of their tax for the off year increased by 22% yearonear at rupees 68 12:32 12 minutes, 32 seconds million translating to a pack margin of 5.6%. 12:36 12 minutes, 36 seconds Agriculture vehicle segment grew 6% yearon year at rupees 4,760 12:43 12 minutes, 43 seconds million 476 stores while construction vehicles grew 35% yearon year to rupees 4,843 12:52 12 minutes, 52 seconds million. Our focus remains firmly on achieving the guided margin profile through discipline cost management and 13:00 13 minutes portfolio optimity. Our revenues are growing well within the market absorbing Colorado projects and technology 13:09 13 minutes, 9 seconds and our balance sheet remains strong with healthy liquidity levels that enable us to fund operations comfortably 13:16 13 minutes, 16 seconds support strategic investment and remain agile in capturing growth opportunities. 13:22 13 minutes, 22 seconds Looking ahead, we stay optimistic about the rest of FY26 supported by strong revenue growth, rising contribution from 13:29 13 minutes, 29 seconds engineering services and incremental benefits from localization. With that, we can open the floor for question 13:39 13 minutes, 39 seconds if you want anything. No, I think we're ready. Yeah, we we're ready for the questions. uh as I explained in the 13:47 13 minutes, 47 seconds beginning I have uh the CFO David Grassi, Mr. Manikar, Chief Operating Officer and Ashokai our director sales 13:56 13 minutes, 56 seconds and marketing. So any questions we can uh now take with the concerned people chipping in as required. 14:04 14 minutes, 4 seconds Thank you very much sir. Ladies and gentlemen, we will now begin the question and answer session. Anyone who wishes to ask questions may press star 14:12 14 minutes, 12 seconds and one on the touchstone phone. If you wish to withdraw yourself from the question to you may press star and two. 14:19 14 minutes, 19 seconds Participants are requested to use only handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question assembles. 14:41 14 minutes, 41 seconds The first question is from the line of Ragunan Nan from Noama Research. Please go ahead. 14:49 14 minutes, 49 seconds Uh congratulations to management team on absolutely phenomenal results and also receiving the caterpillar award. Uh 14:58 14 minutes, 58 seconds firstly on full year uh euro 215 to 220 million was the previous guidance. Would 15:07 15 minutes, 7 seconds you be at higher end or beyond the guidance which you previously gave? What can lead to upside uh to the previous expectations? 15:18 15 minutes, 18 seconds Yeah, thank you very much uh for the call and thank you for your uh um good wishes and good words. uh we are also 15:27 15 minutes, 27 seconds excited by the situation that is emerging in the Indian market and our global exports they are turning out to 15:36 15 minutes, 36 seconds be much better than what we had anticipated. Uh coming to your specific questions the guidance for the full year 15:45 15 minutes, 45 seconds has been uh realistically we said 215 and we said we will target 220. Now we 15:52 15 minutes, 52 seconds are very confident that we will surely touch 220 and probably something more 15:59 15 minutes, 59 seconds could be an added uh sugar to the entire uh uh revenue that we have. But things are very positive and we are very 16:08 16 minutes, 8 seconds excited with the growth in revenue that is coming up. You have seen we have already clocked 18% higher revenue 16:15 16 minutes, 15 seconds compared to the comparable numbers last year and the going goes in the way it is now. we should surpass even the 220 16:24 16 minutes, 24 seconds million guideline that we had given for the full year. 16:30 16 minutes, 30 seconds It's a great book good to hear that. Uh one of the driver is export. Export is 16:36 16 minutes, 36 seconds going really well for you. 31% growth in H1 uh led by orders for Deliboom and 16:44 16 minutes, 44 seconds back loader. uh will it continue to support performance in H2 and FI27 16:51 16 minutes, 51 seconds uh the orders which you have and specifically on the TBH Axel uh uh how 16:59 16 minutes, 59 seconds much is the revenue in H1 and how do you expect the full year revenue for FI26 and 27? 17:08 17 minutes, 8 seconds Yes. uh the telephone handling business and the back loader. Uh these are new businesses that have come up this year 17:17 17 minutes, 17 seconds and uh the uh requirement is to understand that it is a ramp up phase that we are in. So whenever we are in 17:25 17 minutes, 25 seconds ramp up phase the initial takeoff is a little bit gray area because we don't know how the customers are responding to 17:34 17 minutes, 34 seconds the new model how the OEMs are looking at it from expanding their market with this product. So market penetration and 17:42 17 minutes, 42 seconds market acceptability becomes the challenge whenever there is a new ramp up and I'm very happy to share with all 17:50 17 minutes, 50 seconds of you that the response from the market has been quite overwhelming and to that reason there has been a big push for 17:59 17 minutes, 59 seconds increasing the volumes from the big global OEM that shows that only vindicates that caro products are exactly fitting the market requirements. 18:09 18 minutes, 9 seconds ments and there is a recognition and appreciation of the value ad that Karo brings to the table for the OEMs. Coming 18:18 18 minutes, 18 seconds to your specific question, are we looking at the same numbers to sustain? 18:23 18 minutes, 23 seconds Yes, for sure because it is a ramp up and it is not something sporadic with some tender or a contract that the OEM 18:31 18 minutes, 31 seconds has won that they are supplying to that region. This is a normal market absorption through their regular 18:38 18 minutes, 38 seconds dealerships and this will continue and this is what is giving us the confidence 18:45 18 minutes, 45 seconds that we will hopefully surpass the 220 million guideline for the year end. 18:53 18 minutes, 53 seconds Wonderful. Good to hear that. So, so will the TD hedge axel order be in excess of uh uh Euro 20 million for the 19:02 19 minutes, 2 seconds full year and for next year can it go to Euro 50 million? 19:07 19 minutes, 7 seconds Uh next year yes for sure the numbers are looking close to uh the figures you have shared. Uh this year answering your 19:16 19 minutes, 16 seconds previous question in the first half we have uh build roughly around 87 cr 19:24 19 minutes, 24 seconds rupees for the TLB. Okay. So uh this should uh teleoom handler this should 19:33 19 minutes, 33 seconds continue in the second half as well. So it'll be quite close to the numbers that we were projecting in the past but uh 87 cr is what we have done for this year. 19:45 19 minutes, 45 seconds Additionally for the same OEM the global OEM in the back order we clocked around 34 35 cr Indian rupees. So together if 19:55 19 minutes, 55 seconds you see it is giving us a significant um uh significant share of our exports in 20:03 20 minutes, 3 seconds Telibu handler or in uh I would say the construction equipment as a whole. 20:09 20 minutes, 9 seconds Thank you sir. This is very helpful uh to Mr. uh cavity grocery uh if you can kindly indicate the domestic 20:19 20 minutes, 19 seconds and construction equipment revenue for Q2. Yes. 20:25 20 minutes, 25 seconds Um okay. So um we had construct sorry 20:33 20 minutes, 33 seconds just a moment construction 42 was 45% 20:39 20 minutes, 39 seconds of our total uh revenue from operation and uh agri was 43%. 20:50 20 minutes, 50 seconds uh domestic uh domestic domestic sorry sorry okay I'll get to that 20:58 20 minutes, 58 seconds domestic construction was 38% and agree 53%. 21:06 21 minutes, 6 seconds If we look at uh export we have uh construction at 57% and agree at 27%. 21:18 21 minutes, 18 seconds Thank you. Thank you very much. That is very helpful. And would you look at uh maintaining the margin guidance of uh uh 21:27 21 minutes, 27 seconds 12% for next year and would we be closer to 11% for the current year. 21:34 21 minutes, 34 seconds Okay. Uh see on one side we are seeing uh development which is beyond what we 21:42 21 minutes, 42 seconds had anticipated and that has resulted in higher revenues of 18%. Eida in the 21:49 21 minutes, 49 seconds absolute value sense we have grown 13% and PAT profit after tax has been a very 21:57 21 minutes, 57 seconds impressive 22% higher than last year. So the numbers are all in our favor. But we 22:05 22 minutes, 5 seconds want the market and the investors to understand that whenever there is a ramp 22:11 22 minutes, 11 seconds up and the technology absorption in the beginning the margins do get affected because the kind of exponential growth 22:20 22 minutes, 20 seconds that has come in uh certain element of localizations were factored in because the numbers would have grown higher next 22:28 22 minutes, 28 seconds year. By that time our localizations have kicked in. But when something gets advanced like this then a lot of our 22:36 22 minutes, 36 seconds cost-saving initiatives in terms of plant efficiencies, purchasing efficiencies all these things uh get 22:45 22 minutes, 45 seconds overridden because our target is more on uh achieving the revenue because we need 22:52 22 minutes, 52 seconds to feed the market and at that point in time in that rush sometimes some of the costs are uh kind of uh going beyond 23:02 23 minutes, 2 seconds what is to be the most efficient cost structure. So answering your question this year we are not saying that we will 23:09 23 minutes, 9 seconds be very far away from the guidance that we gave. Our endeavor will be to run faster and try to catch up in the second 23:18 23 minutes, 18 seconds half. But we don't want to look at a change in our guidance for next year because we are quite confident that all 23:27 23 minutes, 27 seconds our cost cutting initiatives and the localizations will kick in and it will support us uh next year. Having said 23:35 23 minutes, 35 seconds this uh we want to be as transparent as possible and we have shown a history of saying what we do and doing what we say. 23:45 23 minutes, 45 seconds So I would factor in a little bit marginal uh reduction if at all if it is 23:52 23 minutes, 52 seconds there in spite of our best efforts. So 11 could be uh 10.9 10.85 24:00 24 minutes something like that but uh we are not looking at something uh very dramatic reduction and we are hopeful because all other parameters are positive for us. 24:11 24 minutes, 11 seconds The efficiencies have to kick in. 24:13 24 minutes, 13 seconds Localizations have to kick in. The validations took time because we were expecting things to get validated because there is a cycle time. There are 24:22 24 minutes, 22 seconds cycles for testing. So we were expecting those to happen by next year when the four-wheel drive market would have grown 24:30 24 minutes, 30 seconds bigger from the 17% 18% that we were anticipating. I don't have the real market numbers but the feelers I have 24:39 24 minutes, 39 seconds got is the four-wheel drive market has touched close to 24 25% which we were 24:45 24 minutes, 45 seconds expecting it next year. So these kind of uh big jumps that are happening sometimes puts our uh efficiencies and 24:55 24 minutes, 55 seconds those things at a stress. But answering again for the margins next year if not 12 probably 11 25:04 25 minutes, 4 seconds 9 11 you know those kind of numbers is what we are looking at. So we are close to the guidance that we are giving. If things go well surely we will exceed it. 25:14 25 minutes, 14 seconds So in the long term we are very very confident of achieving what we have committed. 25:22 25 minutes, 22 seconds Thank you sir that is very helpful. Uh the trajectory most importantly is very meaningful and in the right direction. 25:30 25 minutes, 30 seconds Uh uh just the last question on the capex part. Uh can you please indicate 25:37 25 minutes, 37 seconds uh given that uh there is capacity additions happening uh uh can you please 25:43 25 minutes, 43 seconds indicate how do you see fi 26 and 27 kex uh from the financials I can see that 25:50 25 minutes, 50 seconds first half uh it was about 147 million kind of a investment in keex 25:58 25 minutes, 58 seconds yeah uh looking at the uh ramp up that is happening and the kind of demand that 26:05 26 minutes, 5 seconds is coming for our products and also the inquiries that are coming in exactly the areas that we want to penetrate in the 26:13 26 minutes, 13 seconds market that is high horsepower transmissions uh the CVTs uh teleoom handlers these are uh giving us a lot of 26:22 26 minutes, 22 seconds uh hope at the same time pressure to build our capacities but as a management 26:29 26 minutes, 29 seconds we have decided not to go in for a big uh expansion and leave the capacities 26:37 26 minutes, 37 seconds idle for a couple of months before uh the ramp up takes place. Instead, we are adopting a very step-by-step uh 26:45 26 minutes, 45 seconds approach. You have seen we have spent over 20 cr this year. We have introduced the Mazak machine horizontal machining 26:52 26 minutes, 52 seconds center. We have introduced two uh uh seal quench furnaces, test benches. Now this is what we call as a progressive 27:02 27 minutes, 2 seconds improvement in our capacities. So we leverage on whatever efficiencies and improvements concurrent improvements 27:09 27 minutes, 9 seconds that we can do in our existing facility before we really start building another factory or another plant which we call 27:18 27 minutes, 18 seconds as plant 3. That activity should start next year but again it will be step by step. So we will defer it or rather 27:27 27 minutes, 27 seconds stagger it over 2 years or about 30 months from starting from now onwards. 27:33 27 minutes, 33 seconds So the incremental improvements and investments that we are making should hopefully take us through next year as 27:41 27 minutes, 41 seconds well. David would you like to add a few just a couple of things? Uh Ragun um the amount that we have spent this year 27:50 27 minutes, 50 seconds so far is mostly what we call as maintenance capex which means that uh uh 27:57 27 minutes, 57 seconds it those are expenses. at Capex for replacement of machine or making sure that our plant in general remain uh at 28:06 28 minutes, 6 seconds the quality that we need and also some interventions to uh create some the bottlenecking of a few lines. You might 28:16 28 minutes, 16 seconds have noticed that the growth is mostly happening on axel side. So we have to make sure that uh those lines can 28:25 28 minutes, 25 seconds sustain the volumes that uh we that demand that the market is demanding. Uh when we look at the future we know we 28:34 28 minutes, 34 seconds have always said it that uh if we want to reach our target of 350 million euro 28:40 28 minutes, 40 seconds uh important more important capex and real expansion capital will be required. 28:46 28 minutes, 46 seconds We are studying this. We have few ideas, few options on the tables because when you do this kind of capex you have to 28:55 28 minutes, 55 seconds look not just at three four years ahead but maybe 10 and and more than that. So um probably for the next uh 2 three 29:05 29 minutes, 5 seconds years you will see an amount of capex which is which will be more significant and this will be for meeting such future 29:12 29 minutes, 12 seconds uh future requirements. But as Vali mentioned uh it will be a phase manner approach. We do not we have we also have 29:20 29 minutes, 20 seconds to be mindful of how the market is reacting uh whether the global economy is recovering whether our markets uh the 29:29 29 minutes, 29 seconds markets where we sell are recovering or not. So we have to be uh cautious also. 29:38 29 minutes, 38 seconds Uh thank you thank you for that. Uh overall wonderful performance uh again and congratulations uh and wishing all the best. 29:48 29 minutes, 48 seconds Thank you. Thank you very much. Very much. 29:50 29 minutes, 50 seconds Thank you. We'll take the next question from the line of Mahesh Pendre from LIC Mutual Fund. Please go ahead. 30:03 30 minutes, 3 seconds Hello, Amudible. Yes. Yes, sir. Please proceed. 30:07 30 minutes, 7 seconds Yeah. Uh sir, uh congratulations. Great set of numbers. Um uh sir, uh the most heartening part was recovery in export. 30:15 30 minutes, 15 seconds Um I think earlier we were slightly um cautious on export side but exports have rebounded significantly. So do you think this is sustainable? 30:27 30 minutes, 27 seconds Yeah. Uh as we said the exports were basically banking on the teleboom 30:33 30 minutes, 33 seconds handler for a large global OEM and that was a new launch. uh the market had to 30:40 30 minutes, 40 seconds test it, the market had to accept it and that is why it was little subdued in the beginning considering the um global 30:49 30 minutes, 49 seconds scenario at that point in time. But when the market the test batch and the pilot batch went into the market the response 30:58 30 minutes, 58 seconds was overwhelming and that product got accepted by the market and that is the reason they have you know kind of upped 31:06 31 minutes, 6 seconds the ramp up uh to a very sharp numbers and we are now in that position to uh uh 31:13 31 minutes, 13 seconds what do you call uh meet that expectations. 31:17 31 minutes, 17 seconds uh we have a requirement roughly of around 1,700 numbers per quarter and we want to meet 31:25 31 minutes, 25 seconds the customer expectations of higher volumes as well. So answering your question, the ramp up will take place, 31:33 31 minutes, 33 seconds it will continue and we hope that it will sustain for the next one or two years when the market fully gets uh 31:42 31 minutes, 42 seconds covered by this new product that uh the OEM is launching. Yeah. So the answer is 31:48 31 minutes, 48 seconds yes. If I can just add one thing, um actually the performance that we uh 31:57 31 minutes, 57 seconds expect in the future from the experts should be much better than this one because as of today we keep repeating to 32:05 32 minutes, 5 seconds be honest this increment that you see today is due to new projects that we have acquired in the last one one and a 32:12 32 minutes, 12 seconds half years but there is a big bunch of sales for which we are still waiting for a 32:20 32 minutes, 20 seconds recovery of the market. X market in general remains uh not very sparkling at the moment. So 32:29 32 minutes, 29 seconds when the market bounced back you will be probably able to see a much better performance in the X for segment which 32:37 32 minutes, 37 seconds is what we are also betting for the future. 32:41 32 minutes, 41 seconds Sure. Great to hear sir. And sir uh earlier we were indicating that uh we will improve margins for 100 basis point every year for next 2 three years. So 32:50 32 minutes, 50 seconds what I heard from you is that because of the ramp up and sudden demand and scaling up the businesses uh instead of 32:57 32 minutes, 57 seconds 100 basis point we could it be 85 90 basis point improvement margin for next year. Am I right sir? 33:05 33 minutes, 5 seconds Yes. See uh as we said for us the margin calculation is always uh dependent on 33:14 33 minutes, 14 seconds the product mix. Okay. And when we say product it is not just the large product like a teleoom handler axle or uh 33:23 33 minutes, 23 seconds four-wheel drive axle that is the family but in that the configuration that goes in also matters in our marginality. Now 33:33 33 minutes, 33 seconds when the new technology is getting absorbed into the market there is always a tendency to start at the lower 33:40 33 minutes, 40 seconds spectrum and then keep adding on to the technology as the product stabilizes in the market. So to that reason our 33:49 33 minutes, 49 seconds product mix keeps changing because uh depending on the region depending on the dealer the overall numbers for the year 33:57 33 minutes, 57 seconds may get captured within what we have estimated but quarter-wise month- wise sometimes we are unable to predict and 34:05 34 minutes, 5 seconds estimate uh the impact of the product mix on our edida. So to that reason from the beginning we have been using this 34:13 34 minutes, 13 seconds slogan that for Karo trust us in the long term don't get too disturbed by uh 34:21 34 minutes, 21 seconds what you people perceive as some disruptions but we see it as a normal business uh activity that is happening 34:28 34 minutes, 28 seconds and we know it because we are here for 27 years. So we won't go wrong. It is a matter of trusting what we have been 34:35 34 minutes, 35 seconds saying. uh the numbers we have shown the revenue abida pack at absolute value everything has gone up the market is 34:44 34 minutes, 44 seconds accepting us the market is accepting our technology this is what is the northstar for us this is what will keep us going 34:53 34 minutes, 53 seconds and we are an organization who want to be humble we don't want to grow big too much the kind of revenues we are 35:00 35 minutes achieving you have seen we have maintained a very low profile uh last quarter when we gave the guidance although we knew something good may 35:09 35 minutes, 9 seconds happen this quarter but we kept it subdued we want to be realistic we want to be reliable that is more important 35:16 35 minutes, 16 seconds and look at the numbers the growth and the market response to caro in India this is very important and caro globally 35:25 35 minutes, 25 seconds that is coming up with the kind of exports although the export market is low our product our segment is doing 35:33 35 minutes, 33 seconds very well so we are exceeding the market numbers for exports we are exceeding the numbers in India as well in some of the 35:42 35 minutes, 42 seconds segments that we are operating in. So my suggestion again I reiterate please don't look into 100 points uh 90 points 35:51 35 minutes, 51 seconds or 80 points in the long run we will achieve the guidance we have given and the fact that the market is coming to us 35:59 35 minutes, 59 seconds and our revenues are growing that should give us confidence that cararo India will achieve what guidance we have been 36:07 36 minutes, 7 seconds giving so there will be some fluctuations up and down but don't read too much into it as long as The market 36:14 36 minutes, 14 seconds is growing, our revenues are growing, the margins will catch up. It is only a matter of time. And as human beings, we 36:22 36 minutes, 22 seconds have been estimating. These have been our targets and we are working towards it. But there are some temporary setbacks that that come in. These are not fundamental structural setbacks. 36:34 36 minutes, 34 seconds These are momentary temporary setbacks that come in which will get eased off as we grow in the future. So again I 36:42 36 minutes, 42 seconds reinforce look at the organization look at the technology look at how the market is treating us and you will realize what 36:50 36 minutes, 50 seconds we have been saying is uh well within what we have committed in the past. 36:56 36 minutes, 56 seconds Yeah sure. Thank you so much sir. 37:02 37 minutes, 2 seconds Thank you. The next question is from the line of J for from asset management. 37:08 37 minutes, 8 seconds Please go ahead. Uh thank you so much for this opportunity sir. On the telego handle ramp up I mean we have seen a strong ramp up with the major 37:17 37 minutes, 17 seconds international OEM and your domestic programs are also progressing well. So just to understand one page you have for these specific major international OEM 37:25 37 minutes, 25 seconds can you clarify this is I mean this just a regional award or eventually the part of the broad uh global sourcing 37:32 37 minutes, 32 seconds opportunity and secondly on a domestic time in the program when should we expect the additional customer being a 37:40 37 minutes, 40 seconds program nomination for this telome platform is it like it's going to be a in F26 or is the pipeline more back 37:48 37 minutes, 48 seconds ended okay As far as uh Caterpillar who is the big OEM that we were talking about, we have uh shared it in the past as well. 38:00 38 minutes Uh that is a global uh project that we are doing with them. So they will be sourcing it from India for their global 38:09 38 minutes, 9 seconds requirements. So answering your question, it is a global project and the market uh is being managed by them and 38:17 38 minutes, 17 seconds we are exporting it to one of their plants. From there they are uh further distributing it into their market. Okay. 38:25 38 minutes, 25 seconds So uh the going will be good. As I said this is not a small project localized project. It is a global project for that 38:34 38 minutes, 34 seconds entire platform. So that is why it is a very prestigious and very significant project and the fact that we are able to 38:43 38 minutes, 43 seconds give a product like that to a very big reputed OEM which is a benchmark for 38:50 38 minutes, 50 seconds quality standards that only strengthens our position as a very good product 38:56 38 minutes, 56 seconds supplier and that is a normal uh I would say uh goto factor for other OEMs that 39:04 39 minutes, 4 seconds they come to us because we have already established the credibility and the performance of our product. So this is a 39:12 39 minutes, 12 seconds big uh I would say a marketing tool a big uh advantage that we are building into our portfolio that our product 39:20 39 minutes, 20 seconds stands validated and accepted by one of the world's largest OEM player in the construction equipment. So that is the 39:28 39 minutes, 28 seconds reason there are many inquiries coming in. So we will have a competitive advantage when it comes to finalization of the contract. These are ramp ups. 39:37 39 minutes, 37 seconds Again keep in mind it will take time. 39:40 39 minutes, 40 seconds They will initially take small numbers, test the market and then go in for the ramp up. So it will all start next year 39:48 39 minutes, 48 seconds but the real meat I think will come after about 24 months. Um Ashok, do you want to add something? Our sales 39:57 39 minutes, 57 seconds director he's in Europe now. We could probably add a few words. Ashok, 40:04 40 minutes, 4 seconds you you are absolutely spot on s uh regarding the uh it will take 18 to 24 months uh before the uh serial 40:12 40 minutes, 12 seconds production start with the local OEMs because we have given the prototypes to them and uh there are certain prototype 40:20 40 minutes, 20 seconds we have given in in this quarter and uh couple of prototype we'll be giving in the next quarter. So that will take around 18 months to field validation and 40:29 40 minutes, 29 seconds all. So it will take 18 to 24 months to get uh into the serial production. 40:35 40 minutes, 35 seconds Yeah. Thank you. Another indication like we always say the bell weather for our future revenue is the prototypes that we 40:43 40 minutes, 43 seconds give because we build protos only when there is a serious uh uh contract for the project. We don't make protos and 40:52 40 minutes, 52 seconds keep it in our portfolio. So this year we are we have already delivered six different prototypes for six different 41:01 41 minutes, 1 second products and this year we have productionized three of the previous prototypes that were issu that were 41:10 41 minutes, 10 seconds tested by OEMs. What I'm trying to say is there are these prototypes which are in the pipeline including six of this 41:18 41 minutes, 18 seconds year which means we are getting six new additional contracts in the future and 41:25 41 minutes, 25 seconds our revenues our market penetration seems very very encouraging. There are 41:31 41 minutes, 31 seconds no two ways about it. Caro is really breaking the barrier and entering into the OEMs for higher horsepower uh 41:41 41 minutes, 41 seconds transmissions for uh automatic transmissions and for the back loader segment. So uh we are doing exactly what 41:51 41 minutes, 51 seconds we wanted and the market is responding favorably uh to us as of now. 41:58 41 minutes, 58 seconds Thank you. It's great to hear and just one uh piece you highlighted I mean temporary uh factors which are affecting 42:07 42 minutes, 7 seconds MX business and margin profile on annual guidance apart from mixed driven is there something I mean delay in globalization of cost reduction program 42:16 42 minutes, 16 seconds which might affect your annual guidance when we 42:25 42 minutes, 25 seconds yes have you finished can I answer yes sir Please. Yeah. Okay. See when we talk 42:32 42 minutes, 32 seconds about localization, these are estimates that we are doing based on uh how we are 42:39 42 minutes, 39 seconds able to clear the testing process, testing and validation. Okay. Testing happens at the component level and at 42:48 42 minutes, 48 seconds the aggregate level and then at the vehicle level. Okay. So, three different tests are done and these are called 42:55 42 minutes, 55 seconds basically validation process. very often the third level of validation at the vehicle level gets delayed. Okay. And 43:03 43 minutes, 3 seconds because of that our program the absorption of that localized part into the product or into our uh revenue gets 43:13 43 minutes, 13 seconds affected. So that is why we said these kind of things super little bit it will happen but they are not anything 43:20 43 minutes, 20 seconds structurally wrong or we have flawed in any of our efforts that it's a dead end and we are not able to move any further. 43:30 43 minutes, 30 seconds This is ongoing and we have consistently said that the margin improvements will come because of higher growth, 43:38 43 minutes, 38 seconds absorption of fixed cost, localization, improvement in efficiencies, cutting uh non-critical expenses. So we are doing 43:47 43 minutes, 47 seconds it across the enterprise like a business process re-engineering and making our organization very less and very 43:56 43 minutes, 56 seconds efficient so that we are one of the benchmark in the industry that we are in. So uh answering your question 44:04 44 minutes, 4 seconds nothing fundamental nothing structural these are all small variations that are happening. If the validation is delayed 44:11 44 minutes, 11 seconds by four months, my absorption of that localization is deferred by four months. 44:16 44 minutes, 16 seconds So even the absorption some OEMs are willing to totally change into all their uh uh uh supplies that we are giving. 44:25 44 minutes, 25 seconds Some say bring in 25%, then after 3 months another 25. So they also want to have a ramp up in terms of the localized 44:34 44 minutes, 34 seconds product into their vehicle. So all these things are a little uh situational uh very difficult to predict that is why we 44:42 44 minutes, 42 seconds give that factor and tell you that long-term we will achieve short term please overlook any of these ups and downs that are happening. Have I answered your question sir? 44:53 44 minutes, 53 seconds Yeah well I mean you already can I ask yes go ahead. 45:02 45 minutes, 2 seconds So on I mean when you look at I mean the kar group I mean India plant has been doing exceptionally well in terms of the performance and across I mean other 45:10 45 minutes, 10 seconds factors also is there any kar group as I mean whole they are undertaking any manufacturing footprint globally which 45:18 45 minutes, 18 seconds will led to indirect benefit in terms of your higher volume or the product transfer to the India plant over the next one to two years. 45:26 45 minutes, 26 seconds Yeah, see we are working on the industrial footprint of center of excellence. Okay. So, anything that is 45:35 45 minutes, 35 seconds working in the agriculture transmission side globally wherever we get contracts 45:43 45 minutes, 43 seconds and if it is of a significant volume then it comes into India from anywhere in the world. We are not setting up any 45:51 45 minutes, 51 seconds new facility as of now. we just have expansions that are happening in whichever market we are growing. Okay. 45:59 45 minutes, 59 seconds from the infrastructure point of view. 46:02 46 minutes, 2 seconds However, we are exploring new markets with the US uh Trump issues that gave us 46:09 46 minutes, 9 seconds an opportunity to look beyond what we are normally catering and we are seriously looking at exploring all other 46:18 46 minutes, 18 seconds markets and we will have some benefits because the teleoom handler uh 46:24 46 minutes, 24 seconds transmission uh sorry the uh um TLB the transmission for back loader that is 46:32 46 minutes, 32 seconds also gaining some momentums in some countries like China and other places and those volumes automatically will 46:40 46 minutes, 40 seconds come into Karo India. So we could see a growth in the CLB transmissions for 46:47 46 minutes, 47 seconds Teliboom which we have couple of models uh from various technology uh standpoint 46:54 46 minutes, 54 seconds and that seems to be gaining momentum in our global market and that is being sourced out of India. So answer is yes 47:02 47 minutes, 2 seconds but not very very uh it's not going to be a gamecher but it will help me in 47:09 47 minutes, 9 seconds reaching my higher revenue uh guideline that we are looking at today of crossing that 220 million uh target that we had 47:18 47 minutes, 18 seconds earlier given which we said is optimistic but now that has become realistic optimistic could go to 225 or something close to that. 47:29 47 minutes, 29 seconds Sure. Thank you for answering like this one and left over for the future. Yeah, thank you. 47:35 47 minutes, 35 seconds Thank you. The next question is from the line of Lakshmi Narayan from Tonga Investments. Please go ahead. 47:42 47 minutes, 42 seconds Yeah. Uh uh good morning sir. Just uh one question. uh you know I understand that uh we are uh we you know most of 47:50 47 minutes, 50 seconds our products are uh are system based and uh not necessarily uh uh we don't have like a build to print kind of product 47:59 47 minutes, 59 seconds right you know having said that uh uh you know how how do we explain that our margins our gross margins are low uh 48:07 48 minutes, 7 seconds because even if you look at forging companies and some of the other axel companies they have a a higher gross margin so therefore is it possible for 48:16 48 minutes, 16 seconds us to you know do even much better than what we are actually looking at in terms of 11% margin or so. uh just want to 48:24 48 minutes, 24 seconds hear your thoughts. Are we kind of uh um underpromising that uh we can't increase more because all the comparables we look 48:33 48 minutes, 33 seconds at in the industry be forging or be it some of the axel companies stand higher gross margin right so what is what 48:40 48 minutes, 40 seconds prevents us from aspiring even higher margins okay see this is a very good question 48:47 48 minutes, 47 seconds and this is a question that has been in every investor's mind right from the beginning um we don't uh manufacture to the OEM's design. It is caro technology. 49:00 49 minutes It is our IP and we manufacture it. We only co-design and adapt it to the 49:07 49 minutes, 7 seconds vehicle performance that is sought by our OEMs. Okay. So this is our strength that we have. Now don't compare us with 49:16 49 minutes, 16 seconds a forging company because they make huge margins. Okay. We are stuck in between. 49:22 49 minutes, 22 seconds We have the components which are below us which have their set of margins because there is a big demand for them. 49:29 49 minutes, 29 seconds If not for caro they can give it to somebody else. They can go to automotive they can go to any field and they can fill their capacity. So there is always 49:38 49 minutes, 38 seconds a demand at the component level and thereby the margins are higher over there. Even in our own Colorado, India 49:47 49 minutes, 47 seconds bigger plant obviously my internal margins are much higher compared to my main plant. Okay. In the main plant we 49:56 49 minutes, 56 seconds are bringing in technology, we are doing machining and we are doing assembly. 50:00 50 minutes That is largely the activity that we do with a paint shop that we have. Now when we introduce it into the market, there 50:09 50 minutes, 9 seconds are factors. Our main competitor is probably inhouse itself. Okay. So they have their numbers on their tables and 50:18 50 minutes, 18 seconds they have to take a make by decision. In that we have to get that foothold into the organization looking at the long 50:27 50 minutes, 27 seconds term. We have to sometimes look at a lower margin in order to get entry into that product line for a big big future. 50:36 50 minutes, 36 seconds Now when we do these kind of uh alignments our margins are reduced. We 50:43 50 minutes, 43 seconds are not underperforming. We are not away from the benchmark. We have to take the right benchmark. If you take uh say our 50:52 50 minutes, 52 seconds competitors like uh similar uh like a da off highway or a coma and others, we are 51:00 51 minutes quite within that range that we operate in and we don't think there is going to be a very big improvement that will 51:09 51 minutes, 9 seconds happen. That is why we are looking at localizations. Something that is intrinsic will be in my control. What is 51:19 51 minutes, 19 seconds extrinsic that is external which goes to the OEMs for negotiation, price negotiation, repricing or going to our 51:28 51 minutes, 28 seconds suppliers for alternate sourcing or a lower price sourcing. These are things that happen and these are ongoing. But 51:37 51 minutes, 37 seconds the actual we are banking on something that we have to do by ourselves and that is improving efficiencies, fixed cost 51:46 51 minutes, 46 seconds control, um localization. These are things that will surely come into the kitty and that is why sometimes there 51:55 51 minutes, 55 seconds are some fluctuations. And answering your question sir, we have benchmarked ourselves with other companies in the 52:02 52 minutes, 2 seconds processes that are common and we feel that these are quite uh appropriate to improve our margins. Now we are also 52:12 52 minutes, 12 seconds looking at spare parts because spare parts as everybody knows has a higher margin and we have a better leverage in 52:19 52 minutes, 19 seconds negotiating for the spare parts because these are original spare parts and the kind of duty cycle guarantees we give 52:26 52 minutes, 26 seconds for performance is much better than what is in the aftermarket uh uh products that are available to them. So that is 52:34 52 minutes, 34 seconds why we have increased the dealership. We have increased service centers. We are pushing OEMs to take uh more of our 52:42 52 minutes, 42 seconds spare parts. We are monitoring it. And I would say all in all using these kind of strategies our margins are bound to increase. Okay. 52:53 52 minutes, 53 seconds Sorry. And as we grow along uh now what are the critical places where we may get bottleneck? uh is it our uh supply chain 53:02 53 minutes, 2 seconds which is your inbound supply chain or your uh your capacity internally which you can actually manage. So as you grow 53:09 53 minutes, 9 seconds especially in the in exports uh what are the what are the places where you think bottleneck will be there and second uh exports I always understand that uh it 53:18 53 minutes, 18 seconds comes with some kind of an order book whereas in India you have uh um you know maybe rolling three months. So in these 53:25 53 minutes, 25 seconds two aspects what kind of visibility we have in terms of order book and uh secondly in terms of what would actually constrain us from an inbound supply 53:34 53 minutes, 34 seconds chain because we rely on other suppliers to provide us materials. 53:39 53 minutes, 39 seconds Yeah. See uh these are I would not say real constraints these are challenges in 53:47 53 minutes, 47 seconds front of us. Okay. And being a mature organization and having gone through the business cycles over the last many years 53:55 53 minutes, 55 seconds today we are able to anticipate and kind of contain any of the things that are disrupting. Uh looking at the supply 54:04 54 minutes, 4 seconds chain uh yes it is a challenge uh when there is a boom then capacities at the supplier end also gets affected. So we 54:14 54 minutes, 14 seconds have to factor in all that. So we get into a very detailed analysis on which are the suppliers we are dealing with. 54:22 54 minutes, 22 seconds Are they sustainable from a financial point of view, from a capacity point of view, from a quality point of view. So 54:29 54 minutes, 29 seconds we keep doing these kind of regular assessments because these are perceived as risks that if ignored can create a 54:38 54 minutes, 38 seconds disruption and to what is uh scientifically and humanly possible we are anticipating it and we hope that 54:47 54 minutes, 47 seconds there will be no disruption uh going by the way we are looking at those u uh 54:55 54 minutes, 55 seconds instances that can crop up when we are growing. The future is very strong for us and you have I must compliment you. 55:03 55 minutes, 3 seconds You have rightly highlighted the point that although the revenue could grow, what are the other challenges that could 55:10 55 minutes, 10 seconds pull us down and let me assure you we are very well clear on what could be the issues that are coming up and we are 55:19 55 minutes, 19 seconds having a very scientific and systematic approach in handling those kind of disruptions potential dis disruptions 55:28 55 minutes, 28 seconds that could come up. As of now we don't see anything major. If there is a shipping line issue, if there are 55:36 55 minutes, 36 seconds disruptions in the sea and in the port that is something we have to handle it at that point in time. In the past also 55:43 55 minutes, 43 seconds the Mumbai JMP port was uh full was choked but we had to go to the Gujarat port and then transport it by road uh 55:52 55 minutes, 52 seconds into our plant. So that gave us a delay of about a week or 10 days. So these are kind of small small things that come up 56:00 56 minutes but nothing structural nothing fundamental that is what I would like to reassure all of you 56:08 56 minutes, 8 seconds on the order book of exports how you think about it the order books for export are more or less stable there is 56:16 56 minutes, 16 seconds no spike in the second half nor there is a big reduction so I would say we would sustain more or less at the same level 56:24 56 minutes, 24 seconds David you want to add no is also what we mentioned at the beginning uh when we commented the expectation for the full 56:30 56 minutes, 30 seconds turn order for the year we we have a decent visibility. We believe that uh what we have seen so far can pretty much continue for the next uh six months. 56:42 56 minutes, 42 seconds Uh Dr. Thank you for your detailed answers and and uh very good disclosure. Thank you so much. 56:49 56 minutes, 49 seconds Thank you. Thank you. 56:52 56 minutes, 52 seconds The next question is from the line of Satyan Vadwha from Profusion. I'm sorry the participant has left the queue. 57:00 57 minutes We'll move on to the next question which is from the line of Vijay Pande from Nwama. Please go ahead. 57:09 57 minutes, 9 seconds Thanks. Thank you for taking my question. Congratulations for excellent numbers 57:16 57 minutes, 16 seconds sir. I was uh very recently started to look at the company to have a few 57:23 57 minutes, 23 seconds understanding wanted to check uh in actions to dealer drive business. 57:30 57 minutes, 30 seconds Uh um the prospective is for mentioned that non-captive is like what will be the non-captive business in the Excel is 57:40 57 minutes, 40 seconds two wheeler drive and what will be our market share. Okay. 57:46 57 minutes, 46 seconds Two wheel drive market share. We are yeah two wheel drive is largely captive 57:54 57 minutes, 54 seconds and historically Karo has never wanted to compete in the two wheel drive because the OEMs are well having the 58:01 58 minutes, 1 second capacity and the right price points because they have been doing it historically. What Cararo does because we are a technology company. We want to 58:10 58 minutes, 10 seconds focus on where the future is going to go with the adoption and absorption of the technology that we would be providing. 58:19 58 minutes, 19 seconds So um in terms of uh market share I don't think we have uh anything worth 58:26 58 minutes, 26 seconds talking about in the two wheel drive market because that is a dead axle. It's a very low-end product which there is 58:32 58 minutes, 32 seconds nothing anybody can do it. um largely it is a fabricated uh axle it's a 58:40 58 minutes, 40 seconds fabricated beam whereas four-wheel drive is all casting so it is the same material that gearboxes are built so to 58:48 58 minutes, 48 seconds that reason our focus will be only in the four-wheel drive market and that is where the future is as I said five six 58:56 58 minutes, 56 seconds years back four-wheel drive was zero it was 100% um two wheel drive today it is uh 59:05 59 minutes, 5 seconds unconfirmed sources talk about 23 to 25% penetration of four-wheel drive. Once 59:11 59 minutes, 11 seconds technology like four-wheel drive gets uh absorbed in the market, then the ramp up becomes very steep. So what we were 59:19 59 minutes, 19 seconds anticipating 40% after 3 to four years seems like we will achieve it in the next uh 12 to 18 months uh period 59:28 59 minutes, 28 seconds itself. So our focus is four-wheel drive. 59:32 59 minutes, 32 seconds Okay. So uh that means that the addressable market for us will increase significantly over next 12 to 18 months. 59:43 59 minutes, 43 seconds Uh right. Yes. Yes. Yes. Not in 2 3 months. Huh? 59:50 59 minutes, 50 seconds 2 3 months. 12 to 18 months. Oh yeah. Yeah. Yeah. Two years. Exactly. 59:56 59 minutes, 56 seconds Yeah. Because these kind of technology absorption 2 three months is nothing. uh a relevant period the least count should be at least 18 to 24 months. 1:00:07 1 hour, 7 seconds So when we uh uh talk about the export and the construction equipment so what 1:00:15 1 hour, 15 seconds are the what was the faith in the second quarter? 1:00:20 1 hour, 20 seconds Uh the second quarter is more or less mirroring the first quarter in construction equipment. 1:00:30 1 hour, 30 seconds Yes. Export, right? Yes. Yes. 1:00:34 1 hour, 34 seconds Yes. Yes. It is more or less mirroring the first quarter uh sorry first half. 1:00:41 1 hour, 41 seconds Okay. And sir, how do you how are you seeing the domestic uh construction market coming up like because there has 1:00:48 1 hour, 48 seconds been a good decline in uh you mention 9% decline. So in terms of how business uh 1:00:58 1 hour, 58 seconds it has been somewhere and are you seeing the momentum to pick up from like October August or is it still very weak? 1:01:08 1 hour, 1 minute, 8 seconds Yeah, see uh the domest Yeah. The domestic market largely because of the heavy rains and extended period of 1:01:16 1 hour, 1 minute, 16 seconds rains. Usually when you have rains and these kind of environment then the construction industry goes into a kind 1:01:24 1 hour, 1 minute, 24 seconds of a uh low-level sustenance uh situation. That is what we have faced. 1:01:32 1 hour, 1 minute, 32 seconds We are as usual we don't want to be over optimistic or commit or get too excited 1:01:39 1 hour, 1 minute, 39 seconds and excite the investors as well. We want to be steady. We want to be realistic. We will assume that the 1:01:47 1 hour, 1 minute, 47 seconds market will be subdued till the end of the year and then probably pick up for next year. But we don't want to factor in something that is not in our control. 1:01:58 1 hour, 1 minute, 58 seconds So we are factoring in that it will remain subdued for the rest of the year as well and probably it will show a ramp 1:02:06 1 hour, 2 minutes, 6 seconds up in the next financial year. Our sales director is there Ashok Ray would you like to uh double and say a few words on this Ashoke. 1:02:17 1 hour, 2 minutes, 17 seconds Uh yes sir market as we said as Dr. Gani said few minutes ago because of the uh rain uh 1:02:26 1 hour, 2 minutes, 26 seconds and also the stage five uh prices uh because we introduced stage five norm in January 2025 the prices of the machines 1:02:36 1 hour, 2 minutes, 36 seconds were high. So both the factors have kept the uh the sale of the new machine at the lower level in the first half. In 1:02:44 1 hour, 2 minutes, 44 seconds the second half we are expecting this slightly better than the first half but not as a as an overall year would be 1:02:52 1 hour, 2 minutes, 52 seconds more or less flat. We are not expecting to have a increase in the in the sale of the machine in the field with every previous year. 1:03:01 1 hour, 3 minutes, 1 second Okay. Okay. Uh I had uh one one question sir if I may uh I wanted to uh check uh 1:03:10 1 hour, 3 minutes, 10 seconds like in terms of the new emission revolution that is expected to come. So how 1:03:19 1 hour, 3 minutes, 19 seconds are still in the pipe like uh how is the discussion looking because couple of uh 1:03:26 1 hour, 3 minutes, 26 seconds OEMs have said that uh it may be delayed for the tractor business and how much 1:03:33 1 hour, 3 minutes, 33 seconds that will impact our four-wheeler drive business uh for FI27 if that becomes the case. 1:03:43 1 hour, 3 minutes, 43 seconds Yes. uh Ashok uh okay I'll answer this question in two parts one is uh the emission norm in the 1:03:52 1 hour, 3 minutes, 52 seconds tractor uh segment is delayed that is confirmed it is expected to be after 2027 second part it doesn't affect our 1:04:00 1 hour, 4 minutes four-wheel drive uh business because that engine and the emission norm has no link with our product it is uh basically 1:04:09 1 hour, 4 minutes, 9 seconds we are we are the conversion which is happening from two wheel drive to four-wheel drive irrespective of the emission norm it will h continue to 1:04:18 1 hour, 4 minutes, 18 seconds happen it is like this in the past people were not using the power steering and as soon as they started using the power steering they never gone back to 1:04:27 1 hour, 4 minutes, 27 seconds the manual steering the same is happening in the four-wheel drive actors any customer who has started using four-wheel drive tractor he rarely goes 1:04:35 1 hour, 4 minutes, 35 seconds back to the two wheel drive and this conversion will continue irrespective of the emission norm and it has no bearing on the on the conversion of two wheel drive to four-wheel drive tractors. 1:04:46 1 hour, 4 minutes, 46 seconds Hope I answered your question. 1:04:49 1 hour, 4 minutes, 49 seconds Yes sir. Yes sir. Thank you. Thank you and all the best for upcoming quarters. Thank you. 1:04:57 1 hour, 4 minutes, 57 seconds Thank you ladies and gentlemen. That was the last question for today. I would now hand the conference over to Dr. Balaji Gopalan for closing comments. Thank you and over to you sir. 1:05:08 1 hour, 5 minutes, 8 seconds Yeah thank you very much. Thank you all the participants for taking interest in Karo India. Uh the going is good. Uh we 1:05:16 1 hour, 5 minutes, 16 seconds are in control of the situation. Uh the market is responding very well to our products. OEMs are respecting what Karo 1:05:25 1 hour, 5 minutes, 25 seconds can bring to the table. Lot of discussions are going on for new projects with OEMs. So we are very confident of a very successful future. 1:05:36 1 hour, 5 minutes, 36 seconds uh the next H1 is going to mirror what we have done now. So all in all uh we 1:05:43 1 hour, 5 minutes, 43 seconds are feeling that we are in control of the situation and we will be surely able to uh fulfill the guidance that we have 1:05:52 1 hour, 5 minutes, 52 seconds been given given from time to time and I hope all of you will support Karo as a long-term investment and long-term 1:06:01 1 hour, 6 minutes, 1 second opportunity. So thank you very much once again and uh good day to all of you. 1:06:06 1 hour, 6 minutes, 6 seconds Thank you members of the management. On behalf of Karo India Limited that concludes this conference. We thank you for joining us and you may now disconnect your lines. Thank you. 1:06:18 1 hour, 6 minutes, 18 seconds Thank you.