CIE Automotive India Ltd — Q3 FY26

CIE Automotive India Ltd Q3 FY2025-26 Earnings Conference Call https://www.youtube.com/watch?v=tH_aDMrK71Y Published: 2 months ago

0:01 1 second Ladies and gentlemen, good day and welcome to CIE Automotive India Limited 0:08 8 seconds Q4 CY25 earnings conference call hosted by ICICI Securities Limited. As a 0:15 15 seconds reminder, all participant lines will be in the listenon mode and there will be an opportunity for you to ask questions after the presentation concludes. Should 0:23 23 seconds you need assistance during this conference call, please signal an operator by pressing star then zero on your touchstone phone. Please note that 0:31 31 seconds this conference is being recorded. And now hand the conference over to Mr. 0:36 36 seconds Smith Sha from ICICI securities. Thank you and over to you Mr. Sha. 0:43 43 seconds Good afternoon everyone. On behalf of ICICI securities, we would like to welcome you all to CI Automotive Q4 CY25 0:53 53 seconds earnings conference call. Today we have with us from the management team, Mr. 0:59 59 seconds Ander Arnesa Alvarez, CEO, Mr. KJ Prakash, CFO, Mr. Vikasa, senior VP 1:08 1 minute, 8 seconds strategy, and Mr. Oroit Lafuente, business controller. 1:14 1 minute, 14 seconds We will start the call with brief opening remarks from the management team about the quarter gone by and then we'll proceed with the Q&A session. Thank you and over to the management. 1:27 1 minute, 27 seconds Yeah, thanks uh Mr. Shah. Uh I welcome all the participants as also our CEO 1:33 1 minute, 33 seconds Ander. Uh we will present CIE India results for Q4 CY25 as well as full year CY25. 1:43 1 minute, 43 seconds uh we refer to uh to the investor presentation that we had uploaded uh last evening. Let me begin with the section that provides an overview of the 1:52 1 minute, 52 seconds company. Page five shows the legal structure of the company where there has been a small change in CY25. 1:59 1 minute, 59 seconds BS Precision Private Limited which used to be a direct subsidiary of CI India stands dissolved by the uh honorable 2:07 2 minutes, 7 seconds national company law tribunal Chennai with effect from 5th June 2025. 2:13 2 minutes, 13 seconds Pages six and 7 provide details of CI India's geographic technological and market wise segments. 2:20 2 minutes, 20 seconds plants in India accounted for 65% of the company's sales and the rest of that 35% came from Europe and Mexico. 2:30 2 minutes, 30 seconds Uh there has been a revision in the way we report sales in these two geographies. For historical reasons, the 2:37 2 minutes, 37 seconds Mexican forging plant was clubbed under India. But after the capital increase subscribed by Galur, uh Mexican activity 2:45 2 minutes, 45 seconds became a subsidiary of Galur CI Galur that is in Europe. So it is reported under Europe now from CY25 onwards. So 2:55 2 minutes, 55 seconds consequently all the CY4 numbers that you see for India and Europe in the presentation have been restated accordingly. So roughly the breakup of 3:03 3 minutes, 3 seconds sales is 65% of for India which is now completely India uh and 35% coming from Europe and Mexico. Now the Mexican 3:12 3 minutes, 12 seconds operations is very small roughly about 3 billion uh rupees. 3:17 3 minutes, 17 seconds Now as you can see our India business is very diversified in terms of technologies and segments. In India we supply to a variety of segments. Uh with 3:26 3 minutes, 26 seconds the segment wise dependence of our India sales in CY25 uh is as follows. Light vehicles 53% two 3:35 3 minutes, 35 seconds and three wheelers 23% tractors 13% and heavy trucks 11%. In contrast, our European business is more focused on 3:43 3 minutes, 43 seconds forgings, which is 80% of European sales, and light vehicles, which is uh more than 50% of European sales. Now, 3:52 3 minutes, 52 seconds page 8 provides a snapshot of our key product categories in different market segments including the emerging 3:59 3 minutes, 59 seconds portfolio for electric vehicles. What you can see from the above discussion is that CI Automotive India is unique as a 4:06 4 minutes, 6 seconds large diversified auto components group with presence across many processes, product lines, locations and customers. 4:14 4 minutes, 14 seconds Let me now proceed to the section on Q4C by 25. The results of the India operations for Q4 Q4C25 4:23 4 minutes, 23 seconds are on page 10. Uh sales of INR 15.4 4 billion which were 12% higher year on 4:31 4 minutes, 31 seconds year. The sales growth was slightly lower than the corresponding market growth. But we would request you to look 4:38 4 minutes, 38 seconds at the larger picture rather than just the growth snapshot in this quarter. 4:43 4 minutes, 43 seconds There has been a steady improvement in the growth performance in the India operations over the last few quarters. 4:49 4 minutes, 49 seconds The growth was 2% in Q3 C24, 4% in Q4 C24, 3% in Q Q1 C25 and after that a 4:59 4 minutes, 59 seconds steady improvement 7% in Q2C25, 9% in Q3 C25 and 12% in this quarter. In fact, 5:07 5 minutes, 7 seconds this was the highest quarterly sales that we have achieved in India. As discussed earlier, some of the new orders that have been delayed are coming 5:14 5 minutes, 14 seconds back on stream. uh we expect this improving trend to continue into the next few months and when we discuss our 5:22 5 minutes, 22 seconds annual results we'll also talk about some uh specific reasons uh which you know uh attenuated our growth rate to an 5:31 5 minutes, 31 seconds extent on an annual basis the India operations achieved an AIDA margin of 16.8% 8% in Q4C25 versus 17.1% 5:41 5 minutes, 41 seconds in Q4C 24 and 17.3% in Q3 C25. The drop in margin is due to two reason reasons. 5:49 5 minutes, 49 seconds Energy tariff increase in Maharashtra state which reduced margins by.3% and the new labor code impact on graduity which has a negative and one-off impact. 6:00 6 minutes It's a negative one-off impact of around8%. 6:04 6 minutes, 4 seconds If we adjust for these two factors, the AIDA margin for Q4C25 in India would be 17.9%. 6:11 6 minutes, 11 seconds In Q4C25, EIDA grew 9% yearonear, EBIT 9% and EBT 12% in the Indian operations. 6:19 6 minutes, 19 seconds On page 11, we have the Q4 C25 results for our European operations. Sales of 6:25 6 minutes, 25 seconds INR 7.8 8 billion in Q4C25 at 20 21% higher yearon-year versus Q4C24. 6:34 6 minutes, 34 seconds Uh but there was an exchange rate translation impact of 17% and the real growth in sales in euro terms was 4%. 6:43 6 minutes, 43 seconds Uh and this is you know very much reflective of what is going on in the market. The AIDA margin in our European 6:50 6 minutes, 50 seconds operations in Q4C2Y was 12.7% versus 14.9 in Q4C24 and 14.1 in Q3C25. 7:00 7 minutes Margin reduction was largely due to the one-off restructuring cost at CIE legs of euro2 million which amounted to 7:07 7 minutes, 7 seconds approximately 2.5% over sales. Adjusted AIDA margin for Q4C25 would thus be 7:13 7 minutes, 13 seconds above 15%. In Q4C25, EITA grew 3% year-onear while EBIT shrunk by 9 and 7:20 7 minutes, 20 seconds EBT by 1%. On page 12, we have the consolidated CIE India Q4C25 results. 7:27 7 minutes, 27 seconds Consolidated sales were INR 23.3 billion, 15% higher versus Q4 C24 and 7:34 7 minutes, 34 seconds fractionally higher sequentially. Aida was INR 3.6 billion, EBIT INR 2.6 7:40 7 minutes, 40 seconds billion and EBT INR 2.6 6 billion higher yearon-year by 8%, 4% and 9% respectively. 7:48 7 minutes, 48 seconds Let's move on to the section on fullear CY25 results. The fullear CY25 results for our Indian operations are on page 7:56 7 minutes, 56 seconds 14. Sales increased by 8% versus CY24 to INR 15.4 billion and this growth was 8:05 8 minutes, 5 seconds actually double digit during the second half of the year. On an yearly basis, the growth was close to the weighted average market growth. Uh but it could 8:14 8 minutes, 14 seconds have been higher. We would like to highlight a few reasons that reduced our sales growth. First, the restructuring of our business portfolio that we are 8:21 8 minutes, 21 seconds carrying out at our aluminium and magnetics verticles. Second, the way we recognize sales for a few categories at 8:28 8 minutes, 28 seconds our aluminium vertical wherein only the value ad is being recognized Q4 onwards. 8:35 8 minutes, 35 seconds Third, in a couple of large customers, some of the new platforms where we have a high share of business did not grow as expected. For example, in the CNG bike, 8:44 8 minutes, 44 seconds which did very well in Q4C24, but the corresponding sales in Q4C25 were much lesser, maybe you know, 8:52 8 minutes, 52 seconds roughly about 10% of what was uh you know the in the corresponding quarter last year. In the next few quarters, we 9:00 9 minutes have some good projects both domestic and exports lined up for start of production and this should help our growth performance. The outlook for the Indian automotive industry is positive. 9:10 9 minutes, 10 seconds The reduction in GST levied on the Indian automotive industry in uh September of last year led to an immediate jump in automotive sales 9:18 9 minutes, 18 seconds across segments and we expect this positive momentum to continue in the current year. The AIDA margin of our 9:26 9 minutes, 26 seconds Indian operations in CY25 was 17.5% versus 18.2% in CY24. The graduity 9:33 9 minutes, 33 seconds implication of the new labor code had a negative impact negative one-time impact of INR 132 million that is about 13 crores in CY25. 9:43 9 minutes, 43 seconds Please also note that CY24 margins were boosted by point uh point4% due to the extra subsidy of INR 220 million 9:53 9 minutes, 53 seconds received by the aluminium vertical in Q1C24. 9:56 9 minutes, 56 seconds On a likeliike basis, CY25 AIDA margins in India were same as that in CY24. 10:02 10 minutes, 2 seconds While sales grew 8% in CY25, Eida grew 4%, EBIT 3%, EBT 6% and PAT by 6%. 10:11 10 minutes, 11 seconds On page 15, we have the fullear CY25 results for our European operations. 10:16 10 minutes, 16 seconds Sales increased by 2% versus CY 24 to INR 31.9 billion. In Euro term, sales 10:23 10 minutes, 23 seconds declined by 6%. As can as can be seen on the table to the right, there was a small drop in production in both light 10:30 10 minutes, 30 seconds vehicles and MXCV segments. The European forgings market, a largest vertical in Europe, continues to be weak on account of competition from China as well as 10:39 10 minutes, 39 seconds India and also transition to EVs. This had a cascading effect with IBIDA declining 14%, EBT 22, EB EBIT22, 10:48 10 minutes, 48 seconds EBT by 16 and PAT by 13%. Our European business showed its resilience by 10:54 10 minutes, 54 seconds recording an EIDA margin of 13.3% versus 15.7 in CY4. The CY25 Aida margin was 11:03 11 minutes, 3 seconds lower by 1.5% due to one-time restructuring costs at the metal castillo and the gasp plants. So if you 11:10 11 minutes, 10 seconds add that 1.5 to 13.3, you know, we are more or less close to the 15% mark that we are targeting. Pad continued to be 11:18 11 minutes, 18 seconds healthy at INR 2.1 billion in CY25 in spite of a second successive year of 11:24 11 minutes, 24 seconds decline in net profits. On page 16, we have the CY25 consolidated results of CI 11:31 11 minutes, 31 seconds India. Sales were 91.2 billion, which is 6% higher than CY24. Growth trend accelerated in the second half of the 11:39 11 minutes, 39 seconds year supported by Indian markets positive sentiment. The Aida margin was 16% versus 17.3% in CY24. EBIT 12.1 versus 13.4% and EBT 11.9 versus 12.6. 11:54 11 minutes, 54 seconds Of course there are uh exceptional costs that we have talked about earlier. The consolidated PAT in CY25 is INR 8.3 12:02 12 minutes, 2 seconds billion almost same as last year. But if we exclude the exceptional costs on graduity in India and restructuring in Europe consolidated PAT would have grown 12:10 12 minutes, 10 seconds by you know roughly 3 to 4%. Next up is the section on balance sheet and cash flows. On page 18, you will see our a 12:18 12 minutes, 18 seconds bridge consolidated balance sheet which shows the healthy state of CI India. 12:22 12 minutes, 22 seconds Return on net assets is 18.4% a tad lower than last year. A part of this is explained by forex translation inflating 12:29 12 minutes, 29 seconds our euro assets especially the goodwill on our balance sheet. Return on equity is 11.1% largely due to the cash on our balance sheet. Net financial debt has 12:38 12 minutes, 38 seconds further improved and is negative INR 18.8 negative INR 18.8 billion versus negative INR 12 billion last year. We 12:46 12 minutes, 46 seconds are actively evaluating organic and inorganic growth opportunities to utilize the cash on our balance sheet. 12:53 12 minutes, 53 seconds The cash flows are shown on page 19. The company generated operating cash flows to the extent of 71% of consolidated 13:00 13 minutes AIDA. Growth capex was INR 2.3 billion concentrated mainly in India. Overall capex was INR 3.8 billion which is within our norms of 5% of sales. 13:12 13 minutes, 12 seconds SPAT has remained almost similar to that in CY24. The board of the company has recommended dividend payout of rupees 7 per share which is same as last year. 13:22 13 minutes, 22 seconds This of course is pending approval in the AGM schedule later in the year. We move on to the summary of our strategy 13:28 13 minutes, 28 seconds on page 22. The market trends in the two primary geographies that we operate in India and Europe are stly different. The strategy adopted in these two 13:37 13 minutes, 37 seconds geographies reflects these trends. We are confident in the short and long-term potential of the Indian automotive market. India is one of the priority 13:45 13 minutes, 45 seconds global markets identified by our parent CI Automotive. We'll continue to invest in expanding our production capacity within India to cater to both domestic 13:54 13 minutes, 54 seconds and export customers. The focus in India is on strengthening our customer portfolio, prioritizing high volume value added parts and developing a 14:02 14 minutes, 2 seconds product portfolio for EVs. We have identified product categories that will drive growth in each of our business verticles. At our Bengaluru forgings 14:11 14 minutes, 11 seconds operations, for example, we are developing low pressure fabricated fuel rails for patrol and CNG vehicles as well as large fully finished precision 14:19 14 minutes, 19 seconds forgings for vehicle drive lines. The aluminium business is developing competencies for different housings that will be used by electric two-wheers and 14:28 14 minutes, 28 seconds electric four-wheelers. The aluminum vertical is also planning to develop capabilities in high tonage machined castings. The iron castings business is 14:36 14 minutes, 36 seconds focused on increasing the proportion of machining in its portfolio and is adding capacity and technology for the same. 14:42 14 minutes, 42 seconds The stampings business is focusing on high tonnage press panels which may require investment in new press lines. 14:49 14 minutes, 49 seconds The gears and composite verticals are upgrading process technologies to cater to EV requirements among other projects. 14:55 14 minutes, 55 seconds So you know there is a whole slew of growth projects which are planned. On the other hand, the European automotive industry is dealing with uncertainty 15:02 15 minutes, 2 seconds around transition to EVs and competition from cheaper Chinese cars. Light vehicle production in Europe is expected to remain stagnant in the next 2 to three 15:11 15 minutes, 11 seconds years. In Europe, we are focused on optimizing margins and protecting profitability and are adapting our manufacturing facilities to evolving 15:19 15 minutes, 19 seconds volume requirements. We also seek additional business opportunities as the supply chain consolidates. While the 15:26 15 minutes, 26 seconds pace of EV adaptation in Europe is slower than anticipated, the company is developing products for the EV platforms being launched. 15:34 15 minutes, 34 seconds The next few pages after that present market statistics and forecasts from relevant sources followed by the results submitted to SEBI in the prescribed 15:42 15 minutes, 42 seconds format. CIE India's approach has been to attain an optimal balance across growth, investments and returns. The company expects that its mix of organic and 15:51 15 minutes, 51 seconds inorganic growth strategy will help it meet the aspirations of its stakeholders. Uh sorry for a slightly longish opening remark but now we can proceed to Q&A. Thank you. 16:03 16 minutes, 3 seconds Thank you very much. We will now begin with the question and answer session. 16:08 16 minutes, 8 seconds Anyone who wishes to ask a question may press star and one on their touchstone telephone. If you wish to remove yourself from the question queue, you may press star and do. 16:18 16 minutes, 18 seconds Participants are requested to use handsets while asking your question. 16:23 16 minutes, 23 seconds Ladies and gentlemen, we will wait for a moment while the questions. 16:30 16 minutes, 30 seconds Participants, you may press star and one to ask a question. 16:39 16 minutes, 39 seconds First question is from the line of Nisha Jalad from Access Capital Limited. Please go ahead. 16:45 16 minutes, 45 seconds Yeah. Hi, good afternoon and thank you for the opportunity and uh congrats on good set of numbers in India. Uh two questions from my side. Uh first is uh 16:53 16 minutes, 53 seconds around India, can you talk about a little bit about the new order events which you have talked about that some of it got deferred and are are panning out 17:02 17 minutes, 2 seconds now. Even if you can't name the clients, I would understand maybe just give us some color around how big those orders were, what led to the delays and how 17:11 17 minutes, 11 seconds should we how should we assume this to ramp up over the next few quarters. Just trying to understand how meaningful these orders are and how much can it 17:20 17 minutes, 20 seconds lead to uh uh a stronger growth u in our in our business over and above the industry growth. So so some details on 17:27 17 minutes, 27 seconds what got deferred and anything on new order wins that you can uh that you can talk about. Uh my second question is on in Europe. I think in the last few 17:36 17 minutes, 36 seconds quarters we saw a restructuring uh uh uh around Mati Castillo and now we have seen uh in one of the PV uh names. So 17:44 17 minutes, 44 seconds just wanted to understand how are we looking at this business and are there more cost that we will need to incur over the next one to two years uh to uh 17:53 17 minutes, 53 seconds restructure uh European business to kind of to kind of align to lower volumes because your commentary or IS commentary 18:01 18 minutes, 1 second around European PV industry is negative for the next two to three year as well right so these are the two questions I have thank you 18:10 18 minutes, 10 seconds so new order w I'll talk about you know in the opening remarks when I had talked about some of the projects that we are highlighting in our strategy section. I 18:19 18 minutes, 19 seconds think those are the ones that are coming on board some of which will require newer capacity also but uh uh from uh 18:27 18 minutes, 27 seconds from the earlier the main area and uh which was delayed to an extent was CI hosour which we have talked about it's a 18:34 18 minutes, 34 seconds very uh excellent plant that we have and but we took a little bit more time to fill that up so now it should uh you 18:43 18 minutes, 43 seconds know be reaching full capacity uh in the coming quarters Um and uh you know uh 18:50 18 minutes, 50 seconds that's a pretty significant you know large number plant uh that we are talking about. Of course the other uh start of production which is not delayed 18:59 18 minutes, 59 seconds but you know we are talking about some large export orders uh in our iron castings business that uh uh we should 19:07 19 minutes, 7 seconds uh you know u start uh in you know around the middle of this uh mid middle of this calendar year. But in terms of 19:16 19 minutes, 16 seconds the new order wins some of the things that we talked about and you know uh like uh uh the low pressure fabricated 19:24 19 minutes, 24 seconds fuel rails we are talking about inner races at our Bengaluru forgings. We're increasing our share of business in the races where we already have very high 19:32 19 minutes, 32 seconds share of business there. Aluminium is developing a whole set of portfolio. We talked about the uh portfolio uh 19:39 19 minutes, 39 seconds restructuring that we are doing that and we are definitely looking at uh uh a lot of new parts in our aluminium HP you 19:48 19 minutes, 48 seconds know HBDC business some of it um still under discussion uh so but there you know we are definitely looking at uh but 19:57 19 minutes, 57 seconds that may not fractify this year uh that is true in aluminium the others that we have talked about are for this year uh 20:04 20 minutes, 4 seconds gears and composites of Of course, you know, they are they are growing quite uh you know quite well. Uh stampings is 20:12 20 minutes, 12 seconds growing quite well. You know, we have got uh u you know a lot of uh press panels uh that uh that we would require. 20:20 20 minutes, 20 seconds It may also require a bit capacity or maybe you know uh debottlenecking for capacity addition. So those are the 20:29 20 minutes, 29 seconds things. So as I said if you see uh how much it can add of course we don't make forward-looking statement but I would 20:37 20 minutes, 37 seconds certainly say if you look at the trend that I highlighted quarterly growth trend hopefully it will continue in that direction 20:44 20 minutes, 44 seconds uh you know we are talking about you know the numbers precisely in the last three quarters 20:51 20 minutes, 51 seconds uh were our growth numbers were in the last three quarters 7 9 and 12. hopefully 20:59 20 minutes, 59 seconds that uh arithmetic progression can continue. So that is what I would say on India on Europe and any other thing that 21:06 21 minutes, 6 seconds Ander wants to add I I request Ander to join. 21:09 21 minutes, 9 seconds Now just to be specific on the new project allocation last year in calendar year 25 21:16 21 minutes, 16 seconds we got new businesses for a value of 8.7 billion rupees per year. Yes. Per rupees 21:26 21 minutes, 26 seconds per year in India and around 2.1 billion rupees per year in Europe. Okay. In 21:33 21 minutes, 33 seconds India approximately 10% of these new businesses are for EVs. 90% are for internal combustion engines. That's the 21:41 21 minutes, 41 seconds the share that we we got last year. And what I think it's it's important to say 21:48 21 minutes, 48 seconds is that in this moment we are opening and we are expanding our plants 21:55 21 minutes, 55 seconds in most of the verticals. We are planning to expand our composite business. We are expanding also stamping 22:03 22 minutes, 3 seconds business. We are expanding the aluminum business. So let's say that there is a huge 22:11 22 minutes, 11 seconds ramp ups coming up for iron foundry is also as explained we will start ramping 22:19 22 minutes, 19 seconds up the the new project for an export program to us in in mid of the year approximately we the SOP will be in June 22:27 22 minutes, 27 seconds so the expectations are really really good okay probably is the best time and 22:33 22 minutes, 33 seconds I think that everybody knows that the automotive industry in India now is 22:40 22 minutes, 40 seconds having a boom especially after solving the the tariff issue with us in a I 22:49 22 minutes, 49 seconds think in a proper way with this 18% tariff that was negotiated between Mr. 22:56 22 minutes, 56 seconds Trump and Mr. Modi. So I think that is we have eliminated one uncertain point that we had in the in for the exports. 23:05 23 minutes, 5 seconds Also the free trade agreement between Europe and India will boost the demand of Indian components especially in 23:12 23 minutes, 12 seconds certain technologies like forging and and iron casting. So I think that is also a very good move and on top of that 23:21 23 minutes, 21 seconds the GST reduction that the Indian government accomplished last year and 23:27 23 minutes, 27 seconds last last September is now paying his fruits and is coming the the demand and 23:35 23 minutes, 35 seconds the boom of the demand is coming. So we are very optimistic on the future. We see that the the trend is is positive 23:43 23 minutes, 43 seconds and most of the businesses are recovering recovering and in fact we are adding capacity in a very fast mode in 23:53 23 minutes, 53 seconds order to to cope with the demand that is our customers are are claiming. So that would be my my message on on the future. 24:03 24 minutes, 3 seconds You know that I'm usually very conservative. In this case, I can say that India is is in a in a very good path and and the country is doing well 24:12 24 minutes, 12 seconds and automotive sector in India will will be one of the winners in 2026 for sure. 24:17 24 minutes, 17 seconds Okay. And coming back to the European question yes this 2025 we had two two restructuring activities in in Europe. 24:30 24 minutes, 30 seconds One was done in metal castello at during I think it was Q2 2025. 24:38 24 minutes, 38 seconds After this restructuring the restructuring is finished. I mean the company and the manpower capacity is 24:48 24 minutes, 48 seconds adapted to the new demand scenario. We are waiting for the growth on the on the 24:54 24 minutes, 54 seconds next years but okay right now we we are perfectly aligned with the current capacity. So there is no any additional 25:04 25 minutes, 4 seconds restructuring expected in metagastel in the next in the next quarters okay in the next few few years. So that's for us 25:14 25 minutes, 14 seconds is solved and the profitability of metaccastello is now again in the profitability that we had before the the 25:23 25 minutes, 23 seconds downsizing of the business. Okay. So metal castello we can say that it's closed regarding the the leasp plant. We 25:33 25 minutes, 33 seconds made this first restoring activity and now we are h waiting for the market 25:41 25 minutes, 41 seconds behavior. Okay. In Legasti we made a big bet on electric vehicle components. You know that unfortunately the electric 25:48 25 minutes, 48 seconds vehicle let's say share is not is not going up in or is going up but slower than 25:56 25 minutes, 56 seconds expected. So we are waiting for this let's say growth electric vehicle growth to come in Europe. So if the volumes 26:06 26 minutes, 6 seconds come and we let's say we we are able to produce for these different car makers 26:12 26 minutes, 12 seconds the these components we will probably in a in a good shape. If the electric 26:20 26 minutes, 20 seconds vehicles delays anymore perhaps we will need to to do some additional activity. 26:25 26 minutes, 25 seconds So it will depend on the market evolution especially on the electric vehicle. 26:32 26 minutes, 32 seconds Okay. Thank you so much for the detailed answer and positivity around India business. Just one last followup on India's uh aluminium casting business 26:40 26 minutes, 40 seconds right now. We obviously uh uh since we have acquired this company in the last 3 four years uh it's been more like flattish or a low single digit growth 26:48 26 minutes, 48 seconds right. Uh we acquired it with one big customer. So just wanted to get a sense aluminium casting as an industry seems to be doing well. Have we been 26:56 26 minutes, 56 seconds successful in adding uh more newer customers or getting more orders? So should we expect group to revive in uh 27:04 27 minutes, 4 seconds this vertical as well? Because this is something which is which the expectation is that uh this segment as a whole is going to become big over the next few years. That would be my last question. 27:14 27 minutes, 14 seconds Thank you. 27:16 27 minutes, 16 seconds Yes, we we expect to grow in this in this vertical also. We are already adding additional customers. We we have 27:25 27 minutes, 25 seconds in fact added new customers and we are entering into a bigger tonage uh components I mean higher added value 27:33 27 minutes, 33 seconds components that we are launching. I mean we are now in the investment phase and and we expect to to start the production 27:41 27 minutes, 41 seconds during calendar year 26. I mean I would say in the Q3 Q4 of calendar year 26. So that that is a fact. Also, we are 27:51 27 minutes, 51 seconds working with other customers to uh to add new products to our portfolio and we 27:58 27 minutes, 58 seconds will probably launch a new factory for for this uh products. So yes, we expect 28:04 28 minutes, 4 seconds that the aluminum business will will go up. You know that till now our performance was not very good because in 28:13 28 minutes, 13 seconds terms of sales because we were we are mainly dependent on bayatch I mean on two wheeler and also with this uh CNG 28:22 28 minutes, 22 seconds programs that did not succeed and we were caught on on that on that CNG drop. Okay. But in the near future, we are expanding our portfolio. 28:34 28 minutes, 34 seconds We are expanding our customer base and we expect to to have a great aluminum 28:41 28 minutes, 41 seconds division in in India with further factories even and in aluminium as I pointed out there 28:49 28 minutes, 49 seconds was a little bit on the sales recognition side also. So cumulatively between CNG and that there was a 28:57 28 minutes, 57 seconds significant drop on the growth side because of that. 29:01 29 minutes, 1 second So otherwise as Ander pointed out we are very optimistic about aluminum and looking at uh a lot of additions. Of course we are considering a lot more 29:10 29 minutes, 10 seconds than Ander has talked about but uh uh but uh we'll come back at the right moment uh on uh what further we we are doing there. 29:20 29 minutes, 20 seconds Okay. Thank you and all the best for the future. Yeah, thanks Nishia. 29:25 29 minutes, 25 seconds Thank you very much. A request to all the participants. Kindly limit your questions to two per participant and we join the queue for a follow-up question. 29:35 29 minutes, 35 seconds Next question is from line of Kapura Desai from Korak Securities. Please go ahead. Uh hi. Am I audible? 29:44 29 minutes, 44 seconds So yeah. Uh hi team. So I want I just had one quick question to ask you. So uh in 29:51 29 minutes, 51 seconds your balance sheet you uh it was I noticed that there was this net loans given during the quarter to the tune of 29:58 29 minutes, 58 seconds 2.3 billion. Could you shed a bit more light on that? And that is the only question that I have. 30:06 30 minutes, 6 seconds Uh Apura can you just repeat uh JP uh uh you know like he didn't catch it fully. 30:11 30 minutes, 11 seconds So on the balance sheet what is the issue? 30:14 30 minutes, 14 seconds So uh so you have a line item uh regarding net loans which were given during the quarter. It was 30:22 30 minutes, 22 seconds during uh so I'll just tell you the numbers. So it was 2.3 billion during the quarter. 30:28 30 minutes, 28 seconds Yeah I I guess the question so yes guys so we have good cash generation in Europe and our loans and 30:36 30 minutes, 36 seconds we invested within the group uh at a good uh market rate. So we had a good cash flow in Europe where we reduced our 30:44 30 minutes, 44 seconds debt as well as we were able to deploy uh the surplus in loans uh within the group. 30:51 30 minutes, 51 seconds Okay. So so was this related to just the Europe entity? Is that so? Yes, it is entirely. 30:59 30 minutes, 59 seconds All right. All right. Thanks a lot. Thanks a lot. I'll drop back. Yeah. Thanks Auba. Thank you very much. 31:07 31 minutes, 7 seconds Next question is from line of Ganeshum from Unifi Capital. Please go ahead. 31:13 31 minutes, 13 seconds Thank you for taking my question. Uh Nish, I just want to drag drill a little bit more into what Nish was saying. If you could just give us a quantitative 31:20 31 minutes, 20 seconds sense of these new orders that have been slow that you expect to ramp up because the divergence between industry growth and CIA's growth in India has been um 31:30 31 minutes, 30 seconds material. So that would help and also uh what was the extent of the impact because of the change in aluminium reporting if uh reporting was um not 31:39 31 minutes, 39 seconds changed what would have been the growth in the India business. Thank you. 31:43 31 minutes, 43 seconds Oh you know if you see we would cover whatever is the you know you are saying that the difference at least in Q4 was 31:50 31 minutes, 50 seconds quite material otherwise over over the entire cy 25 you know the difference between the market growth and us would 31:57 31 minutes, 57 seconds not be that much. uh in uh in Q4 it was uh as I said a large part of that explanation is due to just two factors 32:06 32 minutes, 6 seconds one is the impact of uh sales on the CNG bike as well as this change in reporting 32:14 32 minutes, 14 seconds uh that would account for I would say a large part of the discrepancy between the market growth and US uh in India uh 32:23 32 minutes, 23 seconds you know let's not get into assigning actual numbers around that because you know that's a part and parcel of business but uh the point we are trying 32:31 32 minutes, 31 seconds to say is it's not that uh uh you know that there is a sudden loss of business or anything like that that's as far as 32:40 32 minutes, 40 seconds your uh you know the explanation with market growth is concerned on your second thing around new orders I think 32:48 32 minutes, 48 seconds uh you know to be very simple simply Andrew talked about the the order book 32:55 32 minutes, 55 seconds addition and generation in cy2 25. Um but normally that is the rate at which 33:02 33 minutes, 2 seconds we add orders in India. Anywhere between um the 8 billion to 10 billion of uh new 33:09 33 minutes, 9 seconds orders we almost add every year. So um you know there has been no slackness in uh in addition of new order books uh in 33:17 33 minutes, 17 seconds the new order book. It has been in this range. If you refer back to our uh commentary at the same time last year, you will hear the same thing. the 33:26 33 minutes, 26 seconds numbers were pretty much I think around the same same number. Maybe this is this year is slightly higher but that's that's the case you know we add about 8 33:35 33 minutes, 35 seconds billion to uh you know you know 800 2,000 crores uh every year so that addition is there in which areas we have 33:43 33 minutes, 43 seconds just talked about both uh in the opening commentary and and the question that Nishit had asked um and Ander has 33:50 33 minutes, 50 seconds specified almost all verticals if you look at uh this in he mentioned almost all verticals where we are growing except maybe magnetics uh where you know 34:00 34 minutes we may be requiring uh you know some uh uh you know like either enhancement in capability or 34:08 34 minutes, 8 seconds enhancement in capacity uh that that may be required and it includes we are considering a whole slew of options 34:15 34 minutes, 15 seconds including uh you know debottlenecking brown field green fields of course you know our preference would be to do it as 34:22 34 minutes, 22 seconds quickly as possible so between the first and the second options but you know we are considering all options so I would 34:29 34 minutes, 29 seconds you know say that uh yes um order book is not an issue. Now coming 34:36 34 minutes, 36 seconds back to your question can we be uh you know how much with relation to the market growth rate in CY26 34:44 34 minutes, 44 seconds again I would say let me not directly answer that question but again to Nishit I had tried to point out that if you look at our growth trajectory every 34:51 34 minutes, 51 seconds quarter we have been improving and I think we'll keep on improving you know if you can uh allow me to end my uh end 35:01 35 minutes, 1 second my answer there uh that would be that you know we would be improving. 35:07 35 minutes, 7 seconds That's very clear. And just uh one last question is uh incrementally are there any areas where you're seeing a degrowth 35:14 35 minutes, 14 seconds or weakness or or is it your view that most of uh the weakness is already in the business and how do you sort of 35:21 35 minutes, 21 seconds mitigate uh the foreign exchange volatility? Do you have any ongoing headlines? Thank you. No on where where the weakness is there. 35:30 35 minutes, 30 seconds In our opening remarks, I said that we are going through restructuring in our aluminium and magnetics business. I think uh magnetics business obviously 35:38 35 minutes, 38 seconds it's a very small business and I think uh when uh when you know our annual report comes out you will see the sales number there. It's a very small business 35:46 35 minutes, 46 seconds less than 200 crores. Uh but yes it faces a lot of competition from uh 35:53 35 minutes, 53 seconds Chinese suppliers as well as you know a lot of technology changes that are happening there. So we have to up our game as far as magnetics is concerned to 36:02 36 minutes, 2 seconds be to be more competitive in fact on a global basis. We have to do that. 36:07 36 minutes, 7 seconds Aluminium uh uh Ander has talked about you know how we are looking at product portfolio changes how to meet uh the 36:14 36 minutes, 14 seconds requirements of our anchor customer better there. So we have worked a lot you know and I think you could have heard from the optimism in his voice 36:22 36 minutes, 22 seconds about that business because the team has worked really hard for the last two or three years and as I think you or the previous questioner had pointed out the 36:31 36 minutes, 31 seconds aluminium business was a little stagnant for a couple of years and I think that was the time spent in in restructuring some of the operations. It is fully 36:39 36 minutes, 39 seconds done. Answer is no. It is always an ongoing process. uh and uh but you know we are at that stage where we can feel 36:47 36 minutes, 47 seconds confident about uh you know placing uh a lot of bets on capex in that area which we will we which we will do in aluminium 36:56 36 minutes, 56 seconds now because as you have pointed out aluminium business will certainly have certainly a good future in India given you know electrification given 37:05 37 minutes, 5 seconds lightweing and everything else so not just two wheelers I think four-wheers will also be a good area for that business and that is certainly what we 37:12 37 minutes, 12 seconds are looking at Veric. Yes, thank you and all the best. Yeah, thank you so much. 37:20 37 minutes, 20 seconds Thank you. Next question is from the line of Pratik Guadari from Unique PMS. Please go ahead. 37:30 37 minutes, 30 seconds Prik may I request to unmute your line and proceed with your question. 37:38 37 minutes, 38 seconds The line for the participant dropped. 37:41 37 minutes, 41 seconds The next question is from the line of Kosh Nahar from Electrum PMS. Please go ahead. 37:46 37 minutes, 46 seconds Yeah. Uh thank you for the opportunity sir. So so my question is my first question was so if you could uh tell us how much is your manufacturing capacity 37:55 37 minutes, 55 seconds that we have in Europe versus India and I'm going to follow up on that then as a strategy do we see some capacity is 38:02 38 minutes, 2 seconds being shifted to India since like you mentioned we are seeing a very strong domestic growth over here. So we are faster to market in that way and also 38:11 38 minutes, 11 seconds exports because of the trade deals that has already happened with U EU and US compared to you know having a manufacturing setup in Europe where costs are comparatively higher. 38:24 38 minutes, 24 seconds So you know as I as I said in my opening remarks Europe is largely forgings and gears for us you know you know almost 38:32 38 minutes, 32 seconds 80% of Europe is forgings and 20% is gears and in India you know we are looking at capacity addition in every 38:39 38 minutes, 39 seconds area you know iron castings aluminium uh magnetics uh stamping so you know those have you know like uh the one area where 38:47 38 minutes, 47 seconds there is an overlap is forgings and I think gears and pointed out is not doing quite well in Europe after the restructuring. we are back to the 38:55 38 minutes, 55 seconds pre-restructuring margins also which is pretty much you know high double digits. 39:00 39 minutes So uh so that uh uh so the the question is around forgings and we do think you know Andrew did mention in his earlier 39:09 39 minutes, 9 seconds remarks that uh forgings and iron castings are two areas where you do see 39:16 39 minutes, 16 seconds um you know lot of uh you know churn happening from Europe to other emerging emerging nations. It is not necessarily India. It can be other places also. 39:27 39 minutes, 27 seconds These are those two areas and we will consider you know what can happen in forgings. A lot of it depends on what the OEM wants but I will ask Andrew to opine on that. 39:36 39 minutes, 36 seconds Yes. No and just to give you some more details that because the the question done by the investor is is is 39:45 39 minutes, 45 seconds accurate and is is well done. Okay. We are moving and we are planning to move 39:51 39 minutes, 51 seconds certain capacity from our European sites to to India. We are executing this plan. 40:00 40 minutes I mean probably by by April we will start moving some uh presses fully 40:07 40 minutes, 7 seconds automatized presses also some gear production cells that we will transfer 40:13 40 minutes, 13 seconds from our units over let's say overseas to India. 40:21 40 minutes, 21 seconds So we are doing this this activity and we are on top of that we are increasing our capacities in in India. I told at 40:30 40 minutes, 30 seconds the beginning that we are expanding our factories and we last during this week 40:36 40 minutes, 36 seconds in in the in the different operational reviews that I had with each of the verticals we approved certain 40:47 40 minutes, 47 seconds factory expansions in composites in stampings in aluminum. I mean we see a lot of 40:55 40 minutes, 55 seconds activity here and we are preparing ourselves to increase our capacities to let's say to take the advantage of the 41:03 41 minutes, 3 seconds growth that is coming. Okay. We have already the orders from the customers. 41:08 41 minutes, 8 seconds We I think we are preparing everything and my message would be that we could have 41:17 41 minutes, 17 seconds done this before that could be the one of the questions from from the investors and the answer is yes but 41:26 41 minutes, 26 seconds we decided to do it in the safe way with the in a conservative way I would say with the proper teams in place with the 41:35 41 minutes, 35 seconds capacities with the technology so we and uh we will not fail uh to our customers in all these ramp ups that are coming. 41:45 41 minutes, 45 seconds So we are quite confident that we are a very solid company, very reliable company and that's what we have been 41:51 41 minutes, 51 seconds trying to do and we will see this growth coming and we will see also improvement in in our margins in the in the company. 42:02 42 minutes, 2 seconds So we are quite satisfied. I mean the the board our board yesterday was also satisfied 42:11 42 minutes, 11 seconds with the with the evolution and with the the security that we are giving to them. So 42:18 42 minutes, 18 seconds that's the the approach that we have and coming back to your question yes we are transferring certain capacities that 42:26 42 minutes, 26 seconds makes sense to uh India to increase our potential capacity here to to cope with the demand 42:35 42 minutes, 35 seconds right sir so just one follow up on that so just want some clarification since this EU India FTA has happened so since 42:42 42 minutes, 42 seconds we already have a presence in Europe in certain way so once we shifted do we see that our wallet share with our existing 42:50 42 minutes, 50 seconds customers and onboarding new customers have become easier because since we already have a presence and then we have a cost arbitrage also to offer to the customers. 43:01 43 minutes, 1 second Yes. What what we are doing is as we have the customers in Europe and the customers are approaching us in India, 43:07 43 minutes, 7 seconds we are negotiating with them the proper way to get the advantage of Indian cost and also the get the advantage of our 43:16 43 minutes, 16 seconds reliability being close to them in Europe. So yes, we are working with them on that 43:24 43 minutes, 24 seconds some during some period they were reluctant to to work in that way. I mean 43:31 43 minutes, 31 seconds making this mixed solution now looking at the geopolitics looking at the risks that they are having 43:40 43 minutes, 40 seconds especially with all what's going on with tariffs with wars in in in the war in Ukraine the 43:49 43 minutes, 49 seconds different logistic issues difficulties that are happening in the in the world they are 43:56 43 minutes, 56 seconds very very keen to to work in the way that we were proposing. So we think that our proposal is a win-win proposal where 44:05 44 minutes, 5 seconds we use our capacity and our lower costs in India but we give them the the safety 44:13 44 minutes, 13 seconds and the the assurance of the proper delivery and lower risk in the in the deliveries and of course in the quality 44:21 44 minutes, 21 seconds because we can react immediately from from Europe. So I think our position is uh probably the best in the in the 44:28 44 minutes, 28 seconds market and we will take advantage of that. 44:32 44 minutes, 32 seconds So just last question if I could ask what would be sorry to interrupt you. I will request you please come back for a follow-up question. Sure. 44:40 44 minutes, 40 seconds Thank you. Next question is from the line of Pratik Kotari from unique PMS. Please go ahead. 44:47 44 minutes, 47 seconds Yes I thank you. Good afternoon. uh because this aluminium recognition change this this happened in Q4 alone or 44:54 44 minutes, 54 seconds was it for the full year largely in Q4 but the impact is for the full year of course 45:01 45 minutes, 1 second okay correct because if if we look at see tractor contribution I mean while tractor uh industry has grown at 15 20% 45:09 45 minutes, 9 seconds we see a 20% degrowth,000 odds has gone to 800 what explains that what what happened there 45:17 45 minutes, 17 seconds where where are you seeing tractor deg growth. 45:20 45 minutes, 20 seconds So last year tractor was about 18% of our revenue mix. It is 13 right now. 45:27 45 minutes, 27 seconds Uh you know I don't think tractor has uh degrone. I I you know I you know possibly you know we can check the 45:34 45 minutes, 34 seconds number. It's about how those are approximate breakups. I think tractor as a proportion has come down a little bit but I think there there might be some 45:43 45 minutes, 43 seconds more uh you know revenue recognition. I don't think tractor has come down. In fact in Q4 uh the tractor growth market 45:50 45 minutes, 50 seconds growth rate in production was higher than the 20% and in fact it was closer to 30% and our growth rate was even higher than that. So that is uh tractor 45:59 45 minutes, 59 seconds is not a problem for us. In fact tractor was a severe for us in Q4. So that's not No, I meant for the full year but and 46:08 46 minutes, 8 seconds you stand by this comment that had this aluminium recognition and CNG not been there, we would have seen industry our weighted average industry growth which 46:16 46 minutes, 16 seconds is about that you know like you know I don't want to get into very definitive statements it would have been much higher because the reason to ask is because the 46:25 46 minutes, 25 seconds underperformance for now seems very very material. I mean 21 in the average industry versus 12 for us. So uh and 46:32 46 minutes, 32 seconds this is at times when we were expecting the older orders to start and hence we should have done even much better than industry and so it's a very negative surprise honestly and hence this 46:40 46 minutes, 40 seconds question of course you know like the gap uh you know that uh that that we are talking 46:47 46 minutes, 47 seconds about I think largely has come from that area but it will definitely not explain the full thing you know that's uh you 46:55 46 minutes, 55 seconds know more for our relevant weighted average it will be closer to 17 18 for us and that gap would have been closed 47:03 47 minutes, 3 seconds uh to a very large extent uh because of these two reasons u you know 47:11 47 minutes, 11 seconds they were very material let me put it this way you know like definitive numbers let's let's not get it was very very material let's let us put it this 47:20 47 minutes, 20 seconds way I don't want to make any excuses saying this is the reason why that growth has happened we do recognize that we need to do more growth there is no 47:28 47 minutes, 28 seconds question about that and that is the reason why we would rather emphasize on what are the new projects and new capacities that we are looking at rather 47:37 47 minutes, 37 seconds than you know just trying to explain this and that. Yes, it did make a difference but you know that's part and parcel of the business. So uh yes it 47:45 47 minutes, 45 seconds explains the reason why we are giving that explanation is only to give an assurance that you know we are not doing something uh wrong or you know there is 47:54 47 minutes, 54 seconds not anything drastic that is going on uh you know which uh you know which might occur to some people you know everything is all right. 48:03 48 minutes, 3 seconds In fact our new order book capacity additions the condition of our plants all of them have improved significantly. 48:11 48 minutes, 11 seconds their ability to serve the customer everything is way better. As I said, you know, some of the new plants that we are inaugurating are really world class. So 48:20 48 minutes, 20 seconds that is that is the only reason why that explanation is given. But I'd rather emphasize that new orders are there. New orders are picking up. We are 48:29 48 minutes, 29 seconds considering new capacities. Some are being added. Some are being considered and some will be considered. We will also look at inorganic growth opportunities. whatever we can as Ander 48:38 48 minutes, 38 seconds said can could some of of this have been done a little earlier maybe you know that question will always remain uh that that is a criticism we'll happily take 48:47 48 minutes, 47 seconds but uh but I would rather focus on this and rather than trying to explain this or that there you know like yes it's 48:54 48 minutes, 54 seconds very material you know the number for Q4 correct and lastly on Europe I mean while we say that uh we have betted 49:02 49 minutes, 2 seconds heavily on EV so if but I mean if you just look at data EV for the first time in December crossed gasoline vehicle sales in Europe. I think there was a 50% 49:10 49 minutes, 10 seconds growth back then. So is it this Chinese EV which is being sold which we don't cater to and hence we are not seeing any growth because EV is doing well in 49:18 49 minutes, 18 seconds Europe in general. So uh it is doing relatively less well on a small base obviously you will see growth 49:27 49 minutes, 27 seconds but you know the EV penetration in Europe if you look at it between CY 24 and CY25 is 13 to 16%. So there has been 49:35 49 minutes, 35 seconds an increase. So there's no denying that fact that there has been an increase. 49:38 49 minutes, 38 seconds But that increase is much lesser compared to what we you know what would have happened the number of platforms etc that have been launched. In fact, 49:46 49 minutes, 46 seconds uh, one of the reasons why the European auto industry is struggling is because of the large investments that a lot of these OEMs have made in the new EV 49:55 49 minutes, 55 seconds platforms and the new uh, norms on the ice engine side on on on emission and so on and lot of investment have gone 50:03 50 minutes, 3 seconds through which are yielding no result. In fact uh uh the you know the uh the 50:10 50 minutes, 10 seconds market numbers for production numbers as far as IHS is giving us is really stagnant between 16 to 17 million for 50:18 50 minutes, 18 seconds the next maybe till F30. Now IHS is reputed to be conservative. So hopefully you know some pent-up demand will come 50:27 50 minutes, 27 seconds at some point of time but uh nevertheless that's why the auto industry in in Europe is struggling. Now to your question on whether EV is fully 50:36 50 minutes, 36 seconds Yes, you're right. uh you know like uh Chinese have their own supply chain and everybody is struggling uh because of that you know uh if the Chinese become 50:45 50 minutes, 45 seconds bigger in the European market uh then obviously we'll have to make uh double the effort of entering them because they 50:52 50 minutes, 52 seconds are OEMs we don't know neither CIE at the parent level nor we in India know them or you know it will be a new OEM 51:01 51 minutes, 1 second that we'll have to access and then they will also have to be open to the idea of developing a supply chain in Europe and so on. So that's a long drawn process. 51:09 51 minutes, 9 seconds So Chinese presence will obviously make life little more difficult for everybody in the supply chain. There is no doubt about that. And therefore uh you know we 51:19 51 minutes, 19 seconds are considering what we are considering of you know like what Andrew just talked about greater synergies between Europe and India subject to what the OEMs feel 51:27 51 minutes, 27 seconds because at this point of time uh even European OEMs are willing to consider out ofthe-box solutions which they were not willing to consider even 5 years 51:36 51 minutes, 36 seconds back. So the situation is a little different from India and it it will be managed differently. So to your question 51:43 51 minutes, 43 seconds yes Chinese are making an impact. We don't have a presence with uh with the Chinese OEMs and yes their growth does 51:50 51 minutes, 50 seconds pose a risk uh to us. There's no doubt about it and and drop in 51:57 51 minutes, 57 seconds sorry I will request to please come back for a follow-up question. Sure. Thanks. 52:04 52 minutes, 4 seconds Thank you. I request to all the participants kindly restrict to two questions per participant. Next question is from the line of Vira from SIMPL. 52:13 52 minutes, 13 seconds Please go ahead. Yeah, hi uh thanks for the opportunity. 52:16 52 minutes, 16 seconds Uh couple of questions. First is on the European operations. Uh so if one has to understand say the cost base you know 52:24 52 minutes, 24 seconds for us and competition in Europe you know so if we are at 100 and uh you know the kind of margins we earned where 52:31 52 minutes, 31 seconds would they be at you know uh and in relation to that how is the consolidation played out so far? So uh 52:38 52 minutes, 38 seconds you know in terms of new wins we got is it from competition or any color you can give on that and then the related uh 52:47 52 minutes, 47 seconds second part of the question is if one has to understand the similar cost base to a facility from India or China how does the dynamic work you know between the two. 52:58 52 minutes, 58 seconds No uh you know very three three uh big questions like what is our cost base compared to competitors in Europe. No, 53:05 53 minutes, 5 seconds we are CIE is one of the most efficient producers in Europe. not just uh the the what is part of CI India but in general 53:14 53 minutes, 14 seconds uh you know the our parent CI Europe is perhaps uh you know like uh I cannot 53:21 53 minutes, 21 seconds produce any study to prove my point but perhaps the most efficient producer because if you look at the uh margins 53:29 53 minutes, 29 seconds and the numbers that CIE generates in Europe I don't think there's any other competitor which is as efficient as them that that's uh that's one uh one point. 53:38 53 minutes, 38 seconds Now your next question was uh cost visa v India and Europe. Now that's a really complicated question because uh yes 53:47 53 minutes, 47 seconds India there are some costs which are low some costs which are high for example if you look at power costs now power costs are not very low in India you know there 53:55 53 minutes, 55 seconds are states where the power cost is low but there are states where where it is extremely high. So uh uh so it depends 54:02 54 minutes, 2 seconds again it depends on yes uh labor cost is low other costs are also low in India but then you have to add uh logistics 54:11 54 minutes, 11 seconds and so on and so forth. So frankly the difference will be there but that difference will depend whether we are efficient in India or not. You know that 54:20 54 minutes, 20 seconds is a point that Ander has been making for the last 7 8 years now that yes if India has to or Indian manufacturing has 54:27 54 minutes, 27 seconds to take advantage of any of these labor cost advantages efficiency is most important. Uh the Indian plants are not efficient. It is not going to happen. 54:37 54 minutes, 37 seconds Some of the best exporters from India are actually efficient. They don't export on on the basis of just cost difference. They are actually efficient plants. 54:48 54 minutes, 48 seconds So that was the second uh you know second part uh to your question and the third part uh what was that I think you're talking about shift how do OEMs 54:57 54 minutes, 57 seconds view the shift yeah just to understand the consolidation how is that played out so is that reflected in our movement 55:06 55 minutes, 6 seconds consolidation we do expect consolidation to happen but consolidation takes a little bit of time you know like they 55:13 55 minutes, 13 seconds consolidation will certainly happen you know the average uh production of 55:19 55 minutes, 19 seconds automotive or you know cars in Europe, light vehicles in Europe used to be in the range of 19 to 22 million perm and 55:27 55 minutes, 27 seconds this I'm including Russia. Normally we report without Russia but I remember the numbers uh with Russia. So those are 19 55:34 55 minutes, 34 seconds to 22 million post till about 2019 after but after co everything changed. I think after that they have been hovering in 55:43 55 minutes, 43 seconds the range of 15 to 17 uh million units 15 to 16 17 been a year mean it's mostly 55:50 55 minutes, 50 seconds 156 so now if you see such you know a 20% reduction in production or 20 25% 55:57 55 minutes, 57 seconds reduction in production obviously there will be stress in the supply chain and there will be consolidation but consolidation takes time because you 56:05 56 minutes, 5 seconds know the consolidation actually happens when the production goes out of uh uh you know it is completely scrapped that 56:13 56 minutes, 13 seconds will take some time before that happens but we do see some consolidation will happen and to your point when it happens we will definitely gain as I said CIE is 56:22 56 minutes, 22 seconds one of the most competitive uh uh plants uh we have some of the most competitive plants in Europe so we'll gain we'll 56:29 56 minutes, 29 seconds certainly gain as long as it remains in Europe of course as I said some of in forgings and iron castings there will be 56:35 56 minutes, 35 seconds a shift out of Europe also so uh so as I said yes it will happen. Uh some of it 56:43 56 minutes, 43 seconds will come to uh you know our plants in Europe uh and and some of them will shift out to uh other emerging markets 56:51 56 minutes, 51 seconds depending on which is the most efficient country for that to produce. So it it you know like uh 56:59 56 minutes, 59 seconds let me say it is very uncertain you know and that is the reason why there is so much stress and is putting on protecting profitability in Europe. If you look at 57:08 57 minutes, 8 seconds our investor presentation also that is a point that we are stressing because of this situation which is uncertain you know somebody asked about Chinese 57:16 57 minutes, 16 seconds competition you are asking about consolidation uh we are talking about change in norms Euro7 and all that we 57:23 57 minutes, 23 seconds are talking about electric vehicle so these are very big changes that are happening in Europe and I think that's 57:31 57 minutes, 31 seconds the reason why we are stressing so much on on protecting profitability before we talk about you know whether we can get this extra business or that 57:39 57 minutes, 39 seconds extra business you know extra business will come because we are good company but over and above that there are a lot of other factors so in Europe we need to 57:46 57 minutes, 46 seconds wait and watch uh India is much more straightforward much happier situation so you know there's a huge contrast in 57:53 57 minutes, 53 seconds strategies between the two geographies yeah thank you very thank you very much so the line for the participant Rob 58:02 58 minutes, 2 seconds next question is from the line of Rajes Jooshi from Chris Capital please Go ahead. 58:07 58 minutes, 7 seconds Yeah. Thank you for the opportunity. Am I audible? Yes. Yes. Go ahead. Go ahead. Yeah. So the first question is on capex. 58:15 58 minutes, 15 seconds Given the demand outlook and where we are currently standing with regard to capacity, what's the capex figure for CY26B? 58:25 58 minutes, 25 seconds Uh we'll have to wait for that. It is too early for that. But it will be higher than last year for sure. 58:32 58 minutes, 32 seconds Okay. Okay. Secondly, uh on margins right margin express in Germany uh it seems to kind of have flattened. Uh where do we go from here in terms of margins? 58:45 58 minutes, 45 seconds Margins where in India or Europe both so to speak India specifically 58:52 58 minutes, 52 seconds margins in India said will improve that this year there were some specific issues that we have talked about. There was tariff increase uh and then and then 59:01 59 minutes, 1 second and then there was uh the graduity you know you know the impact of graduity which uh which was about uh 130 million 59:08 59 minutes, 8 seconds odd uh impact of tariff was also substantial. So uh there was some diminion in margins in India because of 59:15 59 minutes, 15 seconds that but other than that in India Ander mentioned that we are going to improve that should not be an issue in Europe we are looking at protecting wherever we are at this point of time. 59:26 59 minutes, 26 seconds Understood. And lastly uh with regards to growth right just wanted to get some sense on our strategy to break into uh 59:32 59 minutes, 32 seconds non- anchor customers. be for example like a TVS or a Honda or Toyota uh just our strategy to break into those uh kind 59:41 59 minutes, 41 seconds of customers with their have a lower exposure or no exposure so to say and secondly on opportunities outside also 59:48 59 minutes, 48 seconds right uh we've seen uh you know our peers some of them have now begun to get exposure in let's say industrial power 59:56 59 minutes, 56 seconds trains or defense so how are we looking at all those opportunities as far as you know the other companies 1:00:04 1 hour, 4 seconds that we are talking about I'll not get into names as I said you know we have four anchor customers roughly that we talk about Eminem is actually two 1:00:13 1 hour, 13 seconds customers auto and and and tractors and then we have Baj and and and we have Maruti so together they are you know 1:00:22 1 hour, 22 seconds would account for close to 50% of our business in India then and then there is a set of 10 to 15 customers who are in 1:00:29 1 hour, 29 seconds the range of anywhere between 1 to 5% the Largest among the lot will be Hundai Kia followed by Tata Motors and then we 1:00:37 1 hour, 37 seconds have you know many such customers where we are trying to grow. Of course Hundai Kia Tata Motors is our focus for growth. 1:00:44 1 hour, 44 seconds There is Royal Enfield where we are growing. Then there are some exports that we are talking about uh you know uh 1:00:52 1 hour, 52 seconds uh uh business that we are talking about where we are we are growing. So uh our focus is to grow these among these 10 15 1:01:01 1 hour, 1 minute, 1 second customers at least a few of them so that uh they they become uh much more uh much larger for us. Uh and that is and and we 1:01:11 1 hour, 1 minute, 11 seconds are getting a lot of traction there. You know a lot of uh frankly our order book is not just with these customers it is with other you know other people among 1:01:19 1 hour, 1 minute, 19 seconds the ones that you named. Yes we are uh moving ahead with uh a few of them not all. uh so uh we uh as I said you know 1:01:29 1 hour, 1 minute, 29 seconds like on the non-anchor side also we don't have an issue per se you know it is a question of how fast we can grow on 1:01:36 1 hour, 1 minute, 36 seconds your question on non-auto no defense and industrials we are not uh we are not considering you know it's a very 1:01:43 1 hour, 1 minute, 43 seconds different business as far as we think you know the way uh the business model is it is very very different uh we have 1:01:51 1 hour, 1 minute, 51 seconds some non-auto business uh but largely you know in small composites and LNT is a very big customer for our composites 1:01:59 1 hour, 1 minute, 59 seconds business. Uh, of course we include tractors in auto and not in non-auto. 1:02:04 1 hour, 2 minutes, 4 seconds Uh, in including even off-road is we include in auto only like you know customers like JCB and Caterpillar we 1:02:11 1 hour, 2 minutes, 11 seconds consider them as part of auto. So those are you know like Caterpillar is definitely a very big focus customer for us in our GIA business both in India and 1:02:19 1 hour, 2 minutes, 19 seconds Europe and it will be a growing business. So, so other than these I think the non-auto that uh people talk 1:02:27 1 hour, 2 minutes, 27 seconds about defense etc. No, we are not defense, oil and gas. No, we are not considering that. It's a very different 1:02:34 1 hour, 2 minutes, 34 seconds uh business model as far as uh we understand and as I said we have our hands full in our existing existing 1:02:42 1 hour, 2 minutes, 42 seconds areas where there's ample opportunity to grow and and at a good margin and that's 1:02:49 1 hour, 2 minutes, 49 seconds why uh we'll rather focus on that. Thank you for this answer. And last one sorry uh on strategy right uh I mean on this 1:02:58 1 hour, 2 minutes, 58 seconds call and earlier elaborated that we planning to move some productions from Europe to India and on capex otherwise as well there seems to be a positive 1:03:07 1 hour, 3 minutes, 7 seconds outlook on this call. So just want to get your sense on is has there been any change in strategy with regard to uh either manufacturing for Europe from 1:03:15 1 hour, 3 minutes, 15 seconds India now or or on capex as well update on that please. 1:03:21 1 hour, 3 minutes, 21 seconds No, you know like manufacturing in India was always a priority. You know what an Andrew did mention was we could have done some of the things that we are 1:03:29 1 hour, 3 minutes, 29 seconds trying to do now a little earlier but I don't think there was any lack of priority or lack of capex for India. I think we have enough capex available for 1:03:38 1 hour, 3 minutes, 38 seconds India. That's not the point. The project should be good. So uh as far as that strategy is concerned is not about focus. Focus on India was there. It is 1:03:47 1 hour, 3 minutes, 47 seconds still there and will continue to be there. India is as I said in a happy spot in a good spot at this point of 1:03:54 1 hour, 3 minutes, 54 seconds time and it will remain a priority for CIE. As far as capex is concerned it was more about you know evaluation of projects rather than evaluation of the 1:04:02 1 hour, 4 minutes, 2 seconds geography uh that we are concerned and now we feel more confident and therefore you will see much more capex happening in India but again as I said we will not 1:04:11 1 hour, 4 minutes, 11 seconds we will invest it in a very prudent manner. uh I understand we require new projects but these projects will be made 1:04:19 1 hour, 4 minutes, 19 seconds on a prudent basis uh that we'll continue to do that so I don't think strategy has changed as far as India is 1:04:27 1 hour, 4 minutes, 27 seconds concerned um now the other question that you asked is in terms from you know like 1:04:34 1 hour, 4 minutes, 34 seconds coming from Europe to India or India to Europe etc. Of course uh you know those opportunities are opening up uh the 1:04:43 1 hour, 4 minutes, 43 seconds domestic opportunities also quite large and those will also open up as and when they open up we are happy to take those. 1:04:50 1 hour, 4 minutes, 50 seconds Look it it is uh you know a lot of rethinking is going on among the European OEMs also and as and 1:04:58 1 hour, 4 minutes, 58 seconds when that happens we are happy to take it but as of now there are enough opportunities everywhere domestic export everywhere. 1:05:08 1 hour, 5 minutes, 8 seconds Yeah, thank you very much Rajes for your questions. Ladies and gentlemen, we will take that as a last question. I would 1:05:16 1 hour, 5 minutes, 16 seconds now like to hand the conference over to the management for closing comments. 1:05:22 1 hour, 5 minutes, 22 seconds Okay. So, thank you very much for the interest in our company for the well directed questions you made and we hope 1:05:31 1 hour, 5 minutes, 31 seconds that we answer properly. I just wanted to say that we are very optimistic on the evolution 1:05:39 1 hour, 5 minutes, 39 seconds of the company in the near future. We all know that the automotive sector in India is now in a very good shape and we 1:05:48 1 hour, 5 minutes, 48 seconds will be able to demonstrate that in the next quarter. So from our point I would like to send a optimistic message to to 1:05:58 1 hour, 5 minutes, 58 seconds the investors and to the to the people and of course as always I would like to thank to our team in India that is doing 1:06:06 1 hour, 6 minutes, 6 seconds a fantastic job and they will be the great uh executors of this growth that is to come. So thank you very much and 1:06:15 1 hour, 6 minutes, 15 seconds see you next week or next next quarter sorry. Thank you very much. 1:06:21 1 hour, 6 minutes, 21 seconds On behalf of ICICI Securities Limited, that concludes this conference.