CIE Automotive India Ltd — Q4 FY26

CIE Automotive India Ltd Q4 FY2025-26 Earnings Conference Call https://www.youtube.com/watch?v=0F6xpD42PTs Published: 2 weeks ago

0:01 1 second Ladies and gentlemen, good day and welcome to the CIE India Q1 CY26 results conference call. As a reminder, all 0:10 10 seconds participant lines will be in the listen mode and there will be an opportunity for you to ask questions after the presentation concludes. 0:18 18 seconds Should you need assistance during this conference call, please signal an operator by pressing star then zero on your touchstone phone. Please note that this conference call is being recorded. 0:29 29 seconds I now hand the conference call over to Mr. Schmidt Sha from ICIC Securities. Thank you and over to you. 0:37 37 seconds Good afternoon everyone. On behalf of ICICI Securities, we would like to welcome you all to CIE Automotive Q1 0:45 45 seconds CY26 earnings conference call. Today we have with us from the management team, 0:51 51 seconds Mr. Ander Arnesa Alvarez CEO Mr. KJ Prakash CFO Mr. Vikas SA senior VP 1:00 1 minute strategy and Mr. Ooids Lafwante business controller we will start the call with brief opening remarks from the 1:09 1 minute, 9 seconds management team about the quarter gone by and then we'll proceed with the Q&A session. Thank you and over to the management. 1:18 1 minute, 18 seconds Yeah, thanks Smith and uh uh you know u I welcome all of you on this call as also Ander our CEO. I will present CI 1:26 1 minute, 26 seconds results for the uh for the quarter Q1 CY26. 1:30 1 minute, 30 seconds Uh let me proceed directly to the results. Uh the results of the India operations for Q1C26 are on page six of our presentation. 1:39 1 minute, 39 seconds Sales at INR 16.2 billion were 15% higher yearonear largely in line with the market. This is an improvement on 1:47 1 minute, 47 seconds the 12% growth in Q4C25 and 9% in Q3C25. 1:54 1 minute, 54 seconds The growth would have been higher even higher if the exports in Q1C26 had not faltered largely on account of the geopolitical situation. The Indian 2:02 2 minutes, 2 seconds automotive market remained strong though there are uncertainties created by the war in West Asia. As discussed in earlier calls, some of the new orders, 2:11 2 minutes, 11 seconds especially the ones uh on the export side are coming on stream and we therefore expect positive momentum around growth in the India business to 2:20 2 minutes, 20 seconds continue into the next few months. The India operations achieved an IBIDA margin of 17.6% in Q1C26 2:28 2 minutes, 28 seconds versus 18.6% in Q1C25 and 16.8% in Q4C25. 2:36 2 minutes, 36 seconds The drop in margin on year-on-year basis is due to three factors. The first gas and material cost increase due to the 2:44 2 minutes, 44 seconds Iran geopolitical situation, energy tariff increase in Maharashtra state. 2:49 2 minutes, 49 seconds And third, if you remember, a Q1 C25 Aida included a positive one-off impact 2:56 2 minutes, 56 seconds of INR87 million which amounted to almost 0.6% 6% of sales and this was uh 3:03 3 minutes, 3 seconds on account of the mega subsidy at our Zahiraabad stampings unit. Even with these issues, the AIDA margin increased 3:10 3 minutes, 10 seconds by 0.8% sequentially between Q4C25 and Q1C26 as we focus on initiatives to reduce the 3:18 3 minutes, 18 seconds impact of input cost increases. On page seven, we have the Q1 C26 results for 3:25 3 minutes, 25 seconds our European operations. Sales of INR 9.2 2 billion in Q1 C26 at 17% higher yearon-year versus Q1C25. 3:36 3 minutes, 36 seconds The entire growth is attributable to favorable exchange rate but the flat sales in Euro terms is as per the market situation. The AIDA margin in our 3:45 3 minutes, 45 seconds European operations in Q1C26 was 15.7% versus 13.9% in Q1C25 and 12.7% in Q4C25. 3:57 3 minutes, 57 seconds Margin recovery is due to the restructuring activities done in CY25 which we had highlighted in our previous calls. We would also like to highlight 4:05 4 minutes, 5 seconds that the EBT in Europe the earnings before tax in Europe for the quarter Q1C26 4:11 4 minutes, 11 seconds is almost INR1 billion of course helped along the way by the favorable exchange rate. Nevertheless, it represents a 4:19 4 minutes, 19 seconds healthy bottom line in a not very exciting market situation. Now IHS is forecasting that the European light vehicles market will be slightly 4:28 4 minutes, 28 seconds negative in the next few quarters. You know somewhere 0 to 3% negative while the heavy trucks will grow in low single digits you know 3 to 5% but this growth 4:37 4 minutes, 37 seconds is on a reduced base. On page 8 we have the consolidated CI India Q1C26 results. 4:45 4 minutes, 45 seconds Consolidated sales were INR 25.4 4 billion 16% higher versus Q1C25 4:51 4 minutes, 51 seconds and 9% higher sequentially. This is the second successive quarter of 15% plus growth yearon-year uh in consolidated 5:00 5 minutes sales. Aida was INR 4.3 billion. EBIT INR 3.4 billion and EBT INR 3.3 billion 5:09 5 minutes, 9 seconds and these are higher yearonear by 16% 18% and 20% respectively. 5:16 5 minutes, 16 seconds uh consolidated bida margin was a robust 16.9% ebit 13.2% and eBT 12.9%. 5:27 5 minutes, 27 seconds In fact we have recorded the highest absolute quarterly consolidated sales and consolidated IBIDA in our history. 5:35 5 minutes, 35 seconds And now we proceed to Q&A. 5:41 5 minutes, 41 seconds Thank you. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchstone telephone. 5:51 5 minutes, 51 seconds If you wish to withdraw yourself from the question queue, you may press star and two. Participants are requested to use handset while asking a question. 6:01 6 minutes, 1 second Ladies and gentlemen, we will wait for a moment while the question cue assembles. 6:20 6 minutes, 20 seconds The first question comes in the line of Dishi Vora with Kotuk Securities. Please go ahead. 6:27 6 minutes, 27 seconds Yeah. Uh hi. Hi team. Uh congratulations on a decent set of numbers. Uh my first question is pertaining to India business. uh you know over the last 6:35 6 minutes, 35 seconds couple of quarters uh our topline growth uh has been let's say on a blended basis very similar to how the industry has 6:42 6 minutes, 42 seconds been doing and earlier we had guided that at least there is an intention to outpace the industry growth anywhere between 3 to 5 percentage points so at 6:50 6 minutes, 50 seconds least where are we in this journey I know are there any new orders uh which you are forcing which you are expecting let's say to grow in the coming quarters 6:58 6 minutes, 58 seconds which will help the company you know at least outpace the industry growth because you know last two three quarters also has been supported by the industry 7:05 7 minutes, 5 seconds tailwind owing to GST card but at least what is company doing to make sure that if even when the industry uh growth 7:13 7 minutes, 13 seconds moderates uh we we'll you know at least outpace that growth number uh Rishi I'll I I'll take this question 7:21 7 minutes, 21 seconds first and then I'll request Ander to add on uh on the new order uh new order situation later uh of course you know we 7:28 7 minutes, 28 seconds have talked about the export orders at uh you know Aaron Castings uh we have talked about the bill forge two-heer business both on the crankshaft and on 7:37 7 minutes, 37 seconds the races side where you know we are seeing a whole lot of growth especially we're very excited about the two-heer 7:44 7 minutes, 44 seconds crankshaft project uh iron castings there are other projects besides the export order that uh that we are we are 7:53 7 minutes, 53 seconds talking about that there is of course uh many new orders uh in the stampings and composite space uh related to uh 8:02 8 minutes, 2 seconds Mahindra itself and next year of course we are expecting uh you know a lot of uh new orders to come on steam in our 8:09 8 minutes, 9 seconds forging uh crankshaft uh crankshaft side so that's the reason why we are you know like of course uh the base for the last 8:17 8 minutes, 17 seconds uh two quarters Q4 and Q1 has been very high uh you know the base growth in the market has been very high as you rightly 8:26 8 minutes, 26 seconds pointed out due to the GST reforms uh of course there will be some tapering down of the market but I 8:34 8 minutes, 34 seconds as uh our new order momentum uh is concerned I think uh we are in a good space uh there and therefore that's the 8:42 8 minutes, 42 seconds reason why I understand that there might be some tapering down of the market but uh we are quite confident in the uh new 8:50 8 minutes, 50 seconds order uh in in our new order situation and would you like to add anything? Yes. 8:58 8 minutes, 58 seconds Yes. because you explained perfectly the the situation and the view that we have about the the next quarter growth and 9:07 9 minutes, 7 seconds growth expectations. Okay. As as you explained because we have several projects in the pipeline now being ramped up. So that is a positive sign. 9:18 9 minutes, 18 seconds That's why we're optimistic on the on the near future sales. Regarding the new order allocation in the first quarter 9:26 9 minutes, 26 seconds also was a very good quarter for us we we had almost 3.5 billion rupees on per 9:34 9 minutes, 34 seconds turnover per year new orders and approximately 11% for EV EV sector. So 9:41 9 minutes, 41 seconds let's say that that uh idea of the company and the new orders are coming and and we are quite satisfied with the 9:50 9 minutes, 50 seconds with the trend and regarding the the capacities and also the the way the businesses are growing mostly all the 9:58 9 minutes, 58 seconds businesses are doing well and we are adding capacity in in all the verticals in order to cope with the demand that is 10:06 10 minutes, 6 seconds coming. So overall I would say that the growth trend that we show in the last quarters will continue. That's our 10:15 10 minutes, 15 seconds expectation. Of course providing the the war and the economy that the geopolitics are not affecting us too much. I mean in 10:24 10 minutes, 24 seconds our basic scenario we think that the the year the calendar year 26 will 10:30 10 minutes, 30 seconds be a good year. That's our expectations till now at least. And what we expect is 10:37 10 minutes, 37 seconds that to continue this growth trend with all the verticals doing uh really well. 10:43 10 minutes, 43 seconds Okay. So overall I would say that we are uh confident that we will continue the current trend in the next quarters. 10:52 10 minutes, 52 seconds Understood. [clears throat] Uh and just in your opening remarks you mentioned that export was impacted uh because of these geopolitical tensions at least. 10:59 10 minutes, 59 seconds Can you give us some color on what are which are our end markets over here? My sense it would be Europe and maybe neighboring countries, right? 11:07 11 minutes, 7 seconds Uh no, US. Yeah. And what? 11:13 11 minutes, 13 seconds No, no. What do you mention? I mean both US market and European market that those are our our export markets are not doing 11:22 11 minutes, 22 seconds well in this first quarter. Okay. So the that's the reason that the export rate did not grow too much. So also uh we 11:31 11 minutes, 31 seconds some of the projects that we have in the pipeline are export projects and those will when those uh projects start during 11:38 11 minutes, 38 seconds the end of Q2 we will see this rate to continue growing. So that's the explanation perhaps because you want to give some more details. 11:48 11 minutes, 48 seconds Yeah. Uh no Ander has indicated that we are of course relying on new orders uh on the export side to pick up the 11:56 11 minutes, 56 seconds overall export rate. So that is where you know we are got quite comfortable that way. Uh you know in terms of 12:03 12 minutes, 3 seconds breakup of course uh you know we have talked about the breakup exports are roughly around 13 14% based on cy25 12:12 12 minutes, 12 seconds uh out of which the direct exports are roughly 11%. You know uh and out of the direct exports roughly about uh uh 3% would be US and the rest is Europe. 12:24 12 minutes, 24 seconds That would be not any direct impact like container markets on 12:31 12 minutes, 31 seconds it is end market. It is end market. We are not not so much on containers and all of that. It is purely numbers schedules. It is purely schedules. 12:40 12 minutes, 40 seconds Understand this this aluminum like the Orangaba electrical business now will get merged with standalone right? 12:47 12 minutes, 47 seconds Uh JP. 12:50 12 minutes, 50 seconds Yes. See that is the intent to merge castle into the parent company. Yes. 12:56 12 minutes, 56 seconds So unders. So now there will be standalone entities then and there will be Europe and which will also include bill for Mexico. Right. So that's how the reporting now would be right. So 13:04 13 minutes, 4 seconds there won't be any other subseond Europe. 13:07 13 minutes, 7 seconds So India we will have hosur and the sandal that will be okay. So hos will still be outside of these. 13:14 13 minutes, 14 seconds It's a it will be a sub. So understood. And just last question on the Europe uh uh any outlook on the ML castello business how do you see that 13:23 13 minutes, 23 seconds business given that last two three years had been challenging any any recovery which you are expecting in C by 26 or it 13:29 13 minutes, 29 seconds gets delayed to C27 I think yes sorry 13:38 13 minutes, 38 seconds I was requesting you to yes yes no I was I started answering 13:45 13 minutes, 45 seconds the situation in metal after some let's say business reduction or the slowdown 13:54 13 minutes, 54 seconds trend that we had in the last years now it's in a stable situation so we see that the 14:02 14 minutes, 2 seconds business is fl or stable in in this moment last year if you recall we did the restructuring 14:10 14 minutes, 10 seconds activities so now the company is perfectly aligned with the with the turnover level So the the margins are 14:18 14 minutes, 18 seconds are positive and we are in a let's say very very nice VA margin status in this 14:26 14 minutes, 26 seconds moment. So what we see is that and we are all expecting is that the the American market finally will 14:35 14 minutes, 35 seconds start growing in the in the off highway sector. Okay. You know that our main customer is Caterpillar. We we expect 14:42 14 minutes, 42 seconds that uh in in the next quarter this market will ramp up again. Unfortunately 14:49 14 minutes, 49 seconds due to the different situations in the market this market has been very very low very very weak in in the last couple 14:59 14 minutes, 59 seconds of years and we expect that you know as this is a cyclical business we expect the the recovery to come soon. So it but 15:07 15 minutes, 7 seconds in this moment we are comfortable with the metarcastello's performance and uh let's see if this market comes and we 15:14 15 minutes, 14 seconds are ready to to cope with that growth if if it comes. 15:19 15 minutes, 19 seconds Understood. And this last question on the gross margins uh you know standard of business gross margins improved by 20% on a sequential basis. So uh you 15:27 15 minutes, 27 seconds know was there any commodity related inflation which is set up or is it something which will flow through in one? So how should we look get at the 15:36 15 minutes, 36 seconds percentage gross margin levels in the subsequent quarters? 15:40 15 minutes, 40 seconds So when you say gross margins rishi what uh what are you referring to exactly? 15:45 15 minutes, 45 seconds The standalone business standalone right uh JP uh basically the idea is what 15:53 15 minutes, 53 seconds would be the impact of the inflation right? Yeah, the alumin at least the aluminium and maybe the steel prices which will be going up from. So 16:03 16 minutes, 3 seconds yeah, so commodities there is no issue in terms of pass through but there could be some other inflation which we will take some time to sort of um overcome. 16:14 16 minutes, 14 seconds So there is um there is a challenge for sure uh in terms of some imports we were doing uh 16:23 16 minutes, 23 seconds which were helping us keep a cost but basically there should be but even with a pass through the margin 16:30 16 minutes, 30 seconds should dilute right the gross margins percentage yeah yes yes the percentage yes yes so should when should we see that impact 16:38 16 minutes, 38 seconds one is where we should see some bit of maybe top line goes faster but the percentage gross margins are also shrink right or should 16:48 16 minutes, 48 seconds yes but we will shoot see that in in the Q2 mainly because the during the Q1 we 16:56 16 minutes, 56 seconds didn't see it because we have not passed through I mean the the the hike of the aluminum presses happened in the last 17:04 17 minutes, 4 seconds month now we we are starting with the pass through process I mean because we have the delay so yes you are right that 17:11 17 minutes, 11 seconds we have a temporary impact because the the delay [clears throat] of one month approximately it affect us but 17:18 17 minutes, 18 seconds then we will see this impact in in margins because of the delusion because the absolute value of the VA will be the 17:26 17 minutes, 26 seconds same but the and the turnover will be higher because of this pass through. So we will see certain impact especially in 17:33 17 minutes, 33 seconds the aluminum business where the the the increase of the aluminum price has been really really high and also we are 17:41 17 minutes, 41 seconds facing this also in the rest of the of the regions in the world. Okay in in Europe or in in US the the aluminum is 17:49 17 minutes, 49 seconds also going up mainly because of the restrictions uh coming from the war. I mean that affected the the production of aluminum in the in the Middle East. 18:00 18 minutes Understood. Okay. All the best. Thank you. Thanks. Thank you very much. 18:07 18 minutes, 7 seconds The next question comes from the line of Pratik Kotari with unique PMS. Please go ahead. 18:14 18 minutes, 14 seconds Yes. Good afternoon and thank you. Uh with us first on India if we can talk about so ane anecdotally we do hear 18:22 18 minutes, 22 seconds about some lines getting shut here or there because of gas issues, some paint issues. uh so because of this war I mean so one how serious is this issue which 18:30 18 minutes, 30 seconds you also called out that India could have done better I mean not the export part even locally it would have done better not for this war so just going 18:38 18 minutes, 38 seconds into April May uh how serious is this issue from no no of course there is uh uh you know 18:46 18 minutes, 46 seconds some talk uh really uh and smashioning of things like APG and so on so far it has really not affected the schedules or 18:54 18 minutes, 54 seconds the production uh There has been of course uh we are taking uh we are taking precautions we are trying to look for 19:02 19 minutes, 2 seconds alternatives like bio gas LDO wherever we can those kind of things we are doing but to be fair there has been really no 19:10 19 minutes, 10 seconds impact on the schedules because of those issues and as I talked about so I wouldn't say that the domestic market 19:17 19 minutes, 17 seconds was held back by such issues during this period I think the domestic market was okay if at all any you know anything on 19:25 19 minutes, 25 seconds production was really the inventory in the retail chain you know at the distributor's end you know that was the key issue uh in March uh it really 19:35 19 minutes, 35 seconds wasn't uh the uh these kind of issues of course we are planning there is rationing there is uh you know 19:42 19 minutes, 42 seconds curtailment of uh PNG LPG etc that of course is there but it has yet not had a material impact as far as the schedules 19:51 19 minutes, 51 seconds are concerned the schedules also for the next say a few weeks going ahead there is absolutely no impact of such issues 19:59 19 minutes, 59 seconds so far. So I don't think it is uh uh right for us to say that you know the domestic market was held back by such 20:06 20 minutes, 6 seconds issues. I don't think so right now I don't think there is too much of an impact but yes if it stretches then of 20:14 20 minutes, 14 seconds course uh you know these issues will get magnified. uh the key issue will be less 20:21 20 minutes, 21 seconds of this and more of inflation and if the you know the OEM start uh passing on the 20:28 20 minutes, 28 seconds inflationary uh impact to the market then the vehicle prices will go up that is what uh we have to worry about. Then 20:36 20 minutes, 36 seconds of course you know Ander did talk about of what is happening on the aluminium side which in fact again to be fair the increase in aluminium prices was 20:43 20 minutes, 43 seconds happening even before February 28th. It was not as if it was not happening before. There was inflation on uh on 20:50 20 minutes, 50 seconds aluminum cost even before that but it has of course uh accelerated after uh you know the war started in the Gulf. Uh 20:58 20 minutes, 58 seconds so the inflationary impact is very important. There could be some disruption in supply chain less uh uh 21:06 21 minutes, 6 seconds you know on you know it could also be on the aluminum side. So we have to worry about it but at this point of time it is not making an impact. That is our assessment. 21:17 21 minutes, 17 seconds Fair enough. Sorry. Sorry. Go ahead. 21:22 21 minutes, 22 seconds No, I I just wanted to make a comment on on Vikas statement. Okay. The the risk that we can have here in this 21:31 21 minutes, 31 seconds environment is that in certain cases because of this geopolitical issues and also with the logistic 21:39 21 minutes, 39 seconds difficulties that are happening starting happening now in in the the world. We 21:45 21 minutes, 45 seconds can have certain our our customers can have certain supply chain issues. Okay. 21:50 21 minutes, 50 seconds and that could have tempor certain temporary impact on the on the demands in the short term. Okay. So that's 21:58 21 minutes, 58 seconds that's what we can also expect because of the situation. So that's the main risk that we see in the short term. What 22:05 22 minutes, 5 seconds we are now seeing as as V said is that all our customers they expect to continue 22:13 22 minutes, 13 seconds the same production trend. So uh the the only problem they can have is if the supply chain is disrupted for any 22:21 22 minutes, 21 seconds reason. Okay, that's the the thing that we need to monitor closely. 22:27 22 minutes, 27 seconds Fair enough. And just to confirm on the export front, you said the the growth was muted because of logistical issues 22:34 22 minutes, 34 seconds or the end demand issues. End demand and demand schedules not really on logistics. Again you know there are 22:40 22 minutes, 40 seconds certain uh you know constraints on you know as Rishi also asked containers etc. 22:47 22 minutes, 47 seconds But that's not the major impact. Again all of this may get accentuated going forward. You know we are not discounting any of the risks. The risks are all 22:56 22 minutes, 56 seconds there. The risk of inflation the risk of logistics uh the supply chain risk. In fact there's another bigger risk. you 23:02 23 minutes, 2 seconds know fertilizer uh if if the fertilizer supply chain gets disrupted and then there is a bad monsoon then there will 23:09 23 minutes, 9 seconds be a double impact on uh on uh on the sewing season uh in the later half of the year and that will have its own own 23:17 23 minutes, 17 seconds impact. So the risks are all there but those risks have not manifested in a very uh big way so far. 23:28 23 minutes, 28 seconds Fair enough. And last on Europe. So, so last time there was major such supply chain disruptions back in 2022, energy 23:36 23 minutes, 36 seconds prices. Uh we gained a lot of market share maybe at the expense of weak hands and then again anecdotally we do hear 23:43 23 minutes, 43 seconds about lot of uh uh either orders shifting out of Europe to some other geographies or within that uh some stronger players uh taking lead. So 23:52 23 minutes, 52 seconds while we understand that the end market is not growing or growth rates there are muted uh given the issue back again in 23:59 23 minutes, 59 seconds Europe 3 four years later do we see any we gaining at the expense of weekends? 24:08 24 minutes, 8 seconds Ander the question is is the European auto component industry consolidating and will we gain in the next two to three years? 24:17 24 minutes, 17 seconds Okay, it is difficult to say the if we will gain in this moment but we expect that we 24:25 24 minutes, 25 seconds will win and the market will continue consolidating. Okay. The the consolidation is happening already in in 24:33 24 minutes, 33 seconds Europe. It's it's clear. I mean the there are a lot of companies especially 24:40 24 minutes, 40 seconds in the in the in Germany, France. We see a lot of companies struggling and the smaller companies are also struggling. 24:49 24 minutes, 49 seconds So the trend of the customers right now is consolidating. we have every week, every month we have 24:57 24 minutes, 57 seconds interactions with the customers in in this sense. So we are working actively on on this on this field. So we expect 25:05 25 minutes, 5 seconds that we at least we will remain solid in our current or another levels 25:12 25 minutes, 12 seconds and hopefully if this consolidation finally happens then we will we will have the chance to grow. So we are 25:21 25 minutes, 21 seconds optimistic on that the signals are not yet or the let's say the results of the 25:28 25 minutes, 28 seconds execution of this consolidation is not yet obtain or fixed from our side but we expect that this will happen. Yes. 25:40 25 minutes, 40 seconds Thank you and all the best. Yes. Thanks. Thank you. 25:46 25 minutes, 46 seconds The next question comes from the line of Vijay Kumar Pande with Access Capital. Please go ahead. 25:55 25 minutes, 55 seconds Hi sir, thank you for taking my question. Congratulations for a good set of numbers. Uh I have couple of 26:02 26 minutes, 2 seconds questions. Wanted to check first on the gas and energy price and the material cost. What can if you can please 26:11 26 minutes, 11 seconds quantify the impact in the on the Indian business as well as in the European business from the list and was it mainly 26:20 26 minutes, 20 seconds for the one month or or and do we expect to see this to increase over the next 26:27 26 minutes, 27 seconds coming periods like and because now it will be if the war persists it will continue for two months so on. So if you 26:36 26 minutes, 36 seconds can help us with this this automated price increase. 26:41 26 minutes, 41 seconds Vijay you know I I would assume you are asking that whether first the gas uh 26:48 26 minutes, 48 seconds price increases will remain uh at this level going forward. So that price increase has happened is that and what 26:55 26 minutes, 55 seconds is the impact of that on our financials in Q1 right are these the two questions. Yes. 27:01 27 minutes, 1 second Yes. Yes. We assume that given the supply chain risks and given the disruption in the supply chain of gas, we do expect this to remain elevated uh 27:10 27 minutes, 10 seconds for some time. So it's not really a temporary phenomena gas increase. So we are you know like uh more concerned if 27:19 27 minutes, 19 seconds the supply remains constant rather some price increases will happen and we expect the price increases to be there. 27:26 27 minutes, 26 seconds In terms of the impact right now the impact has not been much. You know we did talk about uh the drop uh in uh our 27:34 27 minutes, 34 seconds margins from uh you know like uh uh in Q1 our margin was 18.6 today it is 27:42 27 minutes, 42 seconds 17.6.6 of that is coming from uh you know the stamping subsidy and the rest is divided 27:51 27 minutes, 51 seconds between the energy tariff increase and the gas increase that you are talking about. So if you look at 1% 0.6 is 27:58 27 minutes, 58 seconds coming from the subsidy out of that. 04 some some part of that is coming from what we are talking about the gas buys 28:07 28 minutes, 7 seconds increase and some part of it is coming from the energy tariff increase. If you remember in our last call also we had said that there was an increase in power 28:15 28 minutes, 15 seconds tariffs in Maharashtra which was having an impact in in our year end result we had quantified that impact. So that 4% 28:23 28 minutes, 23 seconds drop is divided between uh these two these two things. So you can make an assessment uh you know like uh it is 28:32 28 minutes, 32 seconds somewhere between uh you know uh uh you know 0.1 you know 0.2.3 that kind of impact we are talking about as far as the gas is concerned. Okay. 28:44 28 minutes, 44 seconds Okay. Uh second the new export order for the US business. So that remains on the track 28:53 28 minutes, 53 seconds that that is not getting impacted from the end user market at all or from the political zero in 29:02 29 minutes, 2 seconds uh you know of course right now the tariff thing as you know is is still open but it is now more or less you know 29:10 29 minutes, 10 seconds uh uh like uh we know where it is. So we have zero we have had no impact on our export orders to the US and as Ander 29:19 29 minutes, 19 seconds pointed out we'll start in Q2 and of course the bulk of it will be in the second half of the year 29:26 29 minutes, 26 seconds and when it comes to the euro the guidance the IF guidance is pretty weak 29:34 29 minutes, 34 seconds for second quarter and third quarter so we uh wanted to check is the downward Is 29:43 29 minutes, 43 seconds there more going to be more downward risk from here? How are you seeing the on ground situation? But like 5% decline 29:52 29 minutes, 52 seconds in production numbers for second quarter. So do you expect it could go further down than this or things can be 30:01 30 minutes, 1 second better from here or like this is the worst case scenario and also 30:08 30 minutes, 8 seconds on our margin. So our margin has been pretty volatile in Europe for at least from last three four quarter. So just 30:15 30 minutes, 15 seconds want to get a steady state number what is our expectation in the near term and the long run. 30:23 30 minutes, 23 seconds So I will make a few comments. I'll make a few comments and then I'll request Andrew to talk about the European market a little bit. I think the European 30:32 30 minutes, 32 seconds market is very steady at uh it is almost like stable you know 16 million units of production. The issue is how much is the 30:39 30 minutes, 39 seconds Chinese share in that that that's all you know there is uh uh it's pretty much stable. We are not looking at you know minus5 going to minus 10. Of course on a 30:48 30 minutes, 48 seconds quarterto quarter basis IHS is talking about minus5 and minus1 but if you look at the year uh you know the entire year 30:55 30 minutes, 55 seconds prediction it is still about -1 -2. So that's uh not much uh of a difference. 31:01 31 minutes, 1 second So it is steady and it is expected to remain in this range 16 16.5 million for the next couple of years as per ISS. So 31:09 31 minutes, 9 seconds the market is steady it is not moving up and down. The second question it is steady at a low level that's the second 31:16 31 minutes, 16 seconds question around margins that our margins were fluctuating. Now if you look at it our margins were uh you know like uh we 31:24 31 minutes, 24 seconds were doing some restructuring activities. If you put back the restructuring activities we have been in the range of 14 to 15% or 14 to 16% in 31:34 31 minutes, 34 seconds that range if if you take you know if you add back the restructuring cost that we are talking about so in Europe also we are at a very steady margin. So right 31:43 31 minutes, 43 seconds now what you are seeing you know we had restructuring activities going back to Q2 of last year. So some of that was affected uh the European margins that 31:51 31 minutes, 51 seconds were reported were affected by the restructuring cost in this quarter. you are there is no restructuring cost you are seeing the full impact of those 31:59 31 minutes, 59 seconds restructuring activities. So the margin has been steady somewhere around 15% if you take away the restructuring cost so 32:06 32 minutes, 6 seconds to say that is uh since you are talking about a steady state on both the market on the margin side but now I'll hand it 32:13 32 minutes, 13 seconds to and he will explain more the you know what is actually going behind rather than just the numbers. 32:20 32 minutes, 20 seconds No, you you explained it perfectly because I mean the the situation in in the market in Europe is stable. I would 32:28 32 minutes, 28 seconds say that the behavior or the performance that we expect for the next quarters is that we 32:35 32 minutes, 35 seconds will see a rather stable market. So not big changes are expected. I mean perhaps 32:44 32 minutes, 44 seconds because of the geopolitical tensions we could see certain lowdown but overall I think the impact is of the war is not 32:52 32 minutes, 52 seconds not not big in in Europe. Okay. So also regarding Spain and regarding the gas 32:58 32 minutes, 58 seconds and energy price increases in in Spain due to the 33:05 33 minutes, 5 seconds high percentage of renewable energy production the energy prices has not go up in in this in this uh first quarter. 33:15 33 minutes, 15 seconds Okay. And so we expect that the energy prices will remain more or less under control and also the future of the 33:23 33 minutes, 23 seconds gas for next year are around 35 uh euros per megawatt. So uh let's say quite 33:30 33 minutes, 30 seconds quite stable. So let's say that our view of the near future in in Europe is we will be more or less stable and 33:40 33 minutes, 40 seconds regarding the margins we saw a certain recovery after the restructuring activity that we did last year and we 33:48 33 minutes, 48 seconds expect to be in that in that ranch. Erh in the near future or in the during the 33:56 33 minutes, 56 seconds next quarters if additional restructuring small activities are needed we will accomplish them because what we are now looking is always to the 34:04 34 minutes, 4 seconds long run and and just to be ready to to keep and to maintain our margins in the long term. So that's the the approach 34:12 34 minutes, 12 seconds that we have. So we have a profitable business car generating unit in Europe despite this low wage and we will continue like this. 34:24 34 minutes, 24 seconds Thank you. So thank you for this detail. 34:26 34 minutes, 26 seconds Just wanted to more of a broad level question. uh with the Chinese players entering into the European market and 34:35 34 minutes, 35 seconds setting a factory do we have a plan or can we get also uh to 34:42 34 minutes, 42 seconds the like to supply products to Chinese companies or will that not be feasible or uh if you can just comment on that. 34:55 34 minutes, 55 seconds Chinese cars that are sold now in in in Europe are mainly produced in China. 35:00 35 minutes Okay, they are now entering the the European market and they will start producing. That's the the plan they have 35:08 35 minutes, 8 seconds to to produce in in Europe and if they produce in Europe for sure we will be there. Okay, we have been quoting we are 35:15 35 minutes, 15 seconds working with them. So far there is locally we we don't have let's say Chinese customers in this 35:24 35 minutes, 24 seconds moment in in Europe but mainly because there is no production. Okay. Once the production starts we will probably be 35:32 35 minutes, 32 seconds there because the in the in the European area we we are quite competitive supplier. Okay. Of course the 35:41 35 minutes, 41 seconds competition is worldwide but the what we expect that certain local rules local content rules will be there and uh there 35:50 35 minutes, 50 seconds are also another barriers like the carbon the adjustment on on the border I 35:57 35 minutes, 57 seconds mean the CBAM activities all these kind of things will will come. So the the we 36:03 36 minutes, 3 seconds expect to be supplier for any OEM that will produce cars in in Europe. 36:12 36 minutes, 12 seconds Thank you sir and all the best for coming quarters. Thank you. Yeah. Thanks Vij. 36:21 36 minutes, 21 seconds Thank you. The next question comes from the line of Ganesh Ram with Unifi Capital. Please go ahead. 36:29 36 minutes, 29 seconds Uh thank you Vikas and and you've been very clear so far. Um I just have a couple of questions. The first one is uh 36:37 36 minutes, 37 seconds on the India market itself because you've previously indicated that directionally grown 9 12% 15%. Um and 36:44 36 minutes, 44 seconds when we look at the forecast from IHS when we compare how this quart has been to the next quarter uh compared to what they expect in next few quarters. So 36:51 36 minutes, 51 seconds about 9% in every category this quarter but expectations are around 8 to 10% um in in the remaining few quarters. Uh how 37:01 37 minutes, 1 second do we expect to perform relative to this industry? Do you think there can be an outperformance of 3% 4% with the new orders that are coming in? What's the quantum performance you expect? 37:12 37 minutes, 12 seconds Uh you know we do expect to be a little higher than the market. I will not really give you know we have been uh uh 37:20 37 minutes, 20 seconds last two three quarters we have done well but a few quarters before that uh we were a little tardy. So yes uh we are 37:27 37 minutes, 27 seconds confident about the growth. We should be market plus. Of course it also depends on you know the market. Uh we have many 37:35 37 minutes, 35 seconds customers. So you know how different customers behave. For example, Hyundai and Baj uh Bajage did well in Q1. Uh 37:43 37 minutes, 43 seconds Hundai did not do as well uh as well in Q1. And then within those customers, you know, there will be some models which 37:50 37 minutes, 50 seconds perform better or worse. So depending on that you know so but we are more or less you know across uh different customers 37:58 37 minutes, 58 seconds uh across many models. So we do expect we are you know we are in a very comfortable situation as far as that is 38:05 38 minutes, 5 seconds concerned. we do expect to be a little higher than the market but given you know how everything uh pans out uh you 38:13 38 minutes, 13 seconds know we we will see the quantum so I leave it at that it's very hard for me or you know like uh not right for me to 38:21 38 minutes, 21 seconds even try to justify you know what kind of outperformance I think you are right the market will you know taper down a little bit given from the GST highs but 38:30 38 minutes, 30 seconds it's still very reasonably it's reasonably good hopefully you know the impact of geopolitics petrol price 38:36 38 minutes, 36 seconds increases which you know everyone is expecting maybe uh a few weeks later uh 38:44 38 minutes, 44 seconds that does not have a dramatic impact so I would say that we are comfortable on uh on the growth side but quantum let's 38:51 38 minutes, 51 seconds leave it at that okay but uh do you think you'll be able to sustain at the low teams level 38:59 38 minutes, 59 seconds and do you have any production constraints currently I think last quarter you mentioned there were some constraints because of the ramp So just to check if that that has been 39:07 39 minutes, 7 seconds elevated now or know we are in the process of increasing our capacity. If you look at our growth numbers growth capex numbers you know 39:16 39 minutes, 16 seconds this quarter uh we do expect uh growth capex in India to be higher than last year. That is number one. Uh number two 39:25 39 minutes, 25 seconds uh you know uh right now uh you know the almost 95% of the growth capex is being 39:32 39 minutes, 32 seconds done in uh done in India. So uh we are adding capacity and we are adding capacity across the board. If you look at our annual report, we have clearly 39:41 39 minutes, 41 seconds mentioned that uh almost all uh verticals except maybe magnets we are adding capacity uh which uh which is as 39:49 39 minutes, 49 seconds per the new orders. So uh right now uh we we are okay with this capacity situation. 8 10% growth is fine but lot 39:58 39 minutes, 58 seconds of capacity additions are happening because of the uh uh because of the new orders. capacity should not be a 40:04 40 minutes, 4 seconds constraint going forward. Uh but you know as I said uh next uh few months or 40:12 40 minutes, 12 seconds next you know one one and a half years I think there is a lot of focus on uh uh growth capex in India. So that will 40:19 40 minutes, 19 seconds continue so uh uh we we'll continue to do that. Okay. 40:26 40 minutes, 26 seconds Understood. and and and just my last question um is on the export impact that you were talking about from India um 40:33 40 minutes, 33 seconds would you have an estimate of how much of exports could have been achieved this quarter that has probably been delayed to the coming few quarters 40:43 40 minutes, 43 seconds that's my last question thank you uh no no uh thanks uh you know it was not delayed the schedules were lower the schedules were lower now if the Indian 40:51 40 minutes, 51 seconds market uh grew in the range you know like we have talked about that uh almost 10% growth for uh for light vehicles and 41:00 41 minutes 20% growth for uh for you know two wheelers and the other segments uh the exports was uh in say mid single digits 41:10 41 minutes, 10 seconds uh this uh uh basically on the uh in Q1 but Q2 onwards as Ander mentioned we are 41:18 41 minutes, 18 seconds we are banking on new orders so that situation will change you know no matter what happens on the geopolitics side I think For us, our export performance 41:27 41 minutes, 27 seconds will improve Q due to onwards because of our new orders. That's what So just to clarify, you're saying it wasn't an impact because of logistics. 41:36 41 minutes, 36 seconds It was an impact because of schedules. 41:37 41 minutes, 37 seconds Or is it that the schedules were impacted by logistics? Uh just to be clear, hard for me to say let's you know, from our point of view, it was schedules you 41:45 41 minutes, 45 seconds know like it's not that we were not able to send our uh our goods across. So that's why I'm saying less logistics. 41:52 41 minutes, 52 seconds Well for them as whatever is happening on the supply chains there that could have been a factor but for us the schedule that's all 42:01 42 minutes, 1 second okay thank you and all the all all the best yeah thanks thanks thank you very much 42:10 42 minutes, 10 seconds thank you the next question comes from the line of bat with quest investment advisor please go ahead 42:18 42 minutes, 18 seconds hi good afternooner and uh Vikas thanks for the opportunity and you stated in 42:26 42 minutes, 26 seconds that consolidation in Europe is happening. So can you give little more color for which product say particularly 42:34 42 minutes, 34 seconds crankshaft and metal custo also. So if you can give some color how do we see we are with the consolidation getting 42:43 42 minutes, 43 seconds market share hence may be able to do I mean some kind of a growth in down the line next three four quarters. 42:53 42 minutes, 53 seconds Mhm. Yes. the the reality on on the consolidation. If we look at the our 43:00 43 minutes crankshaft production for example in in our European units, we have been able to maintain the the crankshaft production in the in the last quarters. Okay. 43:13 43 minutes, 13 seconds And considering that the internal combustion engines volumes are slowly slowly going down with the EVs growing 43:22 43 minutes, 22 seconds up and also with the entrance of the Chinese competitors then uh we see that we have been already consolidating 43:31 43 minutes, 31 seconds partially this this production of CRA. Okay. What what is happening in in in Europe is that our 43:40 43 minutes, 40 seconds customers now they are concerned that in their supply base they have suppliers with a very complicated financial 43:49 43 minutes, 49 seconds situation and some of them they are already struggling. If you consider that 43:57 43 minutes, 57 seconds in the north of uh Europe for example there are also some stresses on the energy prices and also some inflation 44:04 44 minutes, 4 seconds the materials and so on then the situation the financial situation of this struggling competitors will worsen 44:11 44 minutes, 11 seconds in the next quarters. So the customers are looking for the solutions to to to 44:19 44 minutes, 19 seconds let's say assure their supply and they are coming to us in order to increase the the production. So that's what's 44:26 44 minutes, 26 seconds going on. some specific suppliers are being let's say eliminated and the the 44:34 44 minutes, 34 seconds strongest suppliers will continue and in that let's say uh consolidation process 44:42 44 minutes, 42 seconds CIE CI India is very well positioned because we have a very solid financial situation our companies are running 44:50 44 minutes, 50 seconds perfectly smoothly our quality levels delivery performance are are exceptional 44:56 44 minutes, 56 seconds So in that environment I think we will be one of the winners on this consolidation. That's the bet that's the 45:04 45 minutes, 4 seconds reality and now we will continue. Of course it's not a nice situation because 45:10 45 minutes, 10 seconds of course our growth will come from the the let's say the bankruptcy or or the difficulties in other competitors. 45:17 45 minutes, 17 seconds That's not the the the best way to to grow. But of course that's the market and we need to adapt and we need to 45:24 45 minutes, 24 seconds survive in this difficult uh market environment. So that's the the basics of the of our view and we think that we are 45:32 45 minutes, 32 seconds very well positioned to to continue with our let's say production hopefully with certain growth and at 45:41 45 minutes, 41 seconds least with margin maintaining the margins and even improving them if possible. 45:48 45 minutes, 48 seconds And how about metal cast what's our outlook now currently we are operating what level and how do we see is there 45:55 45 minutes, 55 seconds any improvement or not oh metast I explained before metagon is 46:02 46 minutes, 2 seconds doing very well now okay it's the the company is now adapted in all the 46:09 46 minutes, 9 seconds structure and the the manpower everything is at in line with the current production levels and demand 46:18 46 minutes, 18 seconds levels. So the company's in a very solid situation with good margins with evida 46:25 46 minutes, 25 seconds margins around 20% of margin. So it's in a very uh solid position. Regarding the 46:34 46 minutes, 34 seconds market, you know that all these have of way of highway products are let's say in a 46:42 46 minutes, 42 seconds very weak uh market situation and we are ready to to grow and to recuperate the 46:51 46 minutes, 51 seconds margins once once the the the market comes back our dependence on US market is 46:59 46 minutes, 59 seconds important. So we we are waiting for the US market to rebound and and start production. So uh my my comment would be 47:08 47 minutes, 8 seconds in Europe the of highway production is very low. The the strong erh production is coming from US and also from from 47:16 47 minutes, 16 seconds Asia. So our position we look for US market and we're waiting for that. 47:23 47 minutes, 23 seconds Also one one important comment on on metacartello if you recall in in previous 47:31 47 minutes, 31 seconds quarters when we were talking about the EV programs that we were awarded correct 47:37 47 minutes, 37 seconds those EV programs unfortunately did not come and the the real production of this 47:45 47 minutes, 45 seconds EV programs will be I don't know 10% or just a minor fraction of the expected volumes okay and that's a reality So 47:53 47 minutes, 53 seconds that's one of the reasons why we are not let's say growing or we are not recovering the previous levels. That's 48:02 48 minutes, 2 seconds the market reality in US you know that the electrification has gone down and most of the electric programs has been cancelled by our customers and that's a 48:11 48 minutes, 11 seconds something that okay we need to wait probably will come later on in the in the future but in the next quarters we 48:19 48 minutes, 19 seconds can we are not expecting them to to come. Okay. I believe while this administration is in in in office in in 48:27 48 minutes, 27 seconds in US and second question is now related again now this energy fossil fuel crisis has 48:37 48 minutes, 37 seconds erupted in Europe. So do you think that EV adoption will adoption of EV uh uh will uh accelerate 48:47 48 minutes, 47 seconds than what it was in past and how do we think then now about a ice engine market? 48:54 48 minutes, 54 seconds Yeah. So yes. Hello. 49:05 49 minutes, 5 seconds Yeah. Hi. 49:07 49 minutes, 7 seconds Yeah, I got you know I just hope and it seems that we have lost. 49:17 49 minutes, 17 seconds Yeah, sorry. 49:22 49 minutes, 22 seconds Sorry. I think the connection was I I don't know where I I I got cut in the the communication. 49:35 49 minutes, 35 seconds So you may restart please. 49:36 49 minutes, 36 seconds We were talking about the the the EV market in Europe. 49:40 49 minutes, 40 seconds Correct. Because of this again crisis in the fuel fossil fuel, how do we see the adoption again accelerate? I mean uh EV. 49:51 49 minutes, 51 seconds Yes. What what we see is that you are right that at least in the last month 49:57 49 minutes, 57 seconds what after the the war happened and the the petrol prices went up dramatically 50:06 50 minutes, 6 seconds in in Europe then there has been a reaction from the market and and more the the EV market has seen an 50:14 50 minutes, 14 seconds acceleration. We see this this trend I mean recovering a little bit. The the 50:21 50 minutes, 21 seconds best the sold car in in March in Europe has been the Tesla Model Y again. I mean 50:29 50 minutes, 29 seconds they were very low in the on sales and now they recuperated. So this this is something that is is is happening but 50:39 50 minutes, 39 seconds what we see is a certain recovery to the previous forecast. Okay. So no there is no big big jump on that. 50:48 50 minutes, 48 seconds There's no big big movement and we still think that the the problems on the EV adoptions are still the the lack of 50:56 50 minutes, 56 seconds infrastructures and the ranch anxiety that is not yet solved. I mean the this branches of 500 kilometers 450 51:06 51 minutes, 6 seconds kilometers are not enough to to convince the the massive the mass consumers. 51:13 51 minutes, 13 seconds Okay. So the we see certain acceleration we we are okay with that because you 51:20 51 minutes, 20 seconds know that we have been in the last years uh working on the EV side also. So we we 51:27 51 minutes, 27 seconds are comfortable with that. So we are adapting our production to the demand of the customers. So we we have no uh no 51:35 51 minutes, 35 seconds chance than looking for the balance between the the two two technologies. 51:42 51 minutes, 42 seconds Okay. One last question on India side because earlier we had a lot of tail end 51:49 51 minutes, 49 seconds kind of I mean customer van but which we were not I mean for a one one or other reason were not able to really ramp up 51:58 51 minutes, 58 seconds and grow. So how do we think about despite I mean this new deal win how do 52:04 52 minutes, 4 seconds we see this really a tail end can start making a bigger uh uh I mean contribution to our sales. 52:14 52 minutes, 14 seconds No uh bug by thanks. Uh you know a lot of uh these uh new orders you know it is 52:21 52 minutes, 21 seconds it is for as I said uh not tail but the you know like if you look at our four main anchor customers Eminem as fasi and 52:30 52 minutes, 30 seconds uh and uh uh baj beyond that for example Ford is becoming a very big uh customer. 52:37 52 minutes, 37 seconds Hundai is very important. Royal Enfield is very important. So a lot of these uh uh you know new order you know Ellison 52:46 52 minutes, 46 seconds is uh is getting uh more important we have been steadily working with John Deere over many many years very very 52:54 52 minutes, 54 seconds small increases every year but now very substantial so that part is happening it's not that it is not happening as we 53:01 53 minutes, 1 second have pointed out given that the diversity in our customer base sometimes uh uh you know uh when Eminem was 53:09 53 minutes, 9 seconds growing baj was not growing. Now when Bajage is growing, Honda is not growing as much. So this you know that portfolio balancing will will happen but as I said 53:19 53 minutes, 19 seconds uh you know uh we are quite okay with the new order situation yet in the meantime uh you know some few quarters 53:28 53 minutes, 28 seconds back we had the issue with RCI Hosu production then there were certain you know electric vehicle orders that had not come about. all of this had got 53:36 53 minutes, 36 seconds bunched together but now hopefully you know uh you know it is being more balanced so we have now we are seeing a 53:43 53 minutes, 43 seconds much more balanced growth so I don't think we have any uh you know you know to put it very simply we don't have 53:52 53 minutes, 52 seconds issues with uh either our customer base uh or even you know the diversity of products 54:00 54 minutes uh you know uh or even new orders as Ander was pointing out our new order performances has been pretty good. So 54:08 54 minutes, 8 seconds even going forward next 15 18 months also we uh we don't have much of an issue around new orders. So we are quite 54:15 54 minutes, 15 seconds comfortable there. Other what had happened that you know that were delayed had got me together. Now we have a much more balanced thing. So you are seeing a 54:24 54 minutes, 24 seconds much more balanced uh uh growth uh that uh that uh that you are seeing now. And that is exactly what we are saying once 54:31 54 minutes, 31 seconds that balance happens you will not have that problem. So that's how I'll put it. 54:36 54 minutes, 36 seconds It is just you know it has been balanced out like for example in Q1 exports did not do very well you know exports we have NGPM 54:44 54 minutes, 44 seconds uh from our aluminium plant they didn't do that well but you know the other side did well Hundai didn't do well only 2% 54:53 54 minutes, 53 seconds or something like that in Q1 which is you know given that the light vehicle market grew almost 10% it's know like uh 55:00 55 minutes way down the performance but it didn't impact us that much because uh that balancing is happening now. So that 55:08 55 minutes, 8 seconds that's all we are quite comfortable on the new order side uh on you know the diversity of products, diversity of customers. I don't think those are 55:16 55 minutes, 16 seconds issues. The issue earlier was the bunching which I think hopefully that's behind us now. Okay. Thank you and all the best. 55:25 55 minutes, 25 seconds Yeah. Thanks for thank you. Thank you very much. 55:31 55 minutes, 31 seconds The next question comes from the line of Priya Anjan with HDFCMC. Please go ahead. 55:38 55 minutes, 38 seconds Hello. Thank you. Uh just couple of things. One is on the capex side. You uh do you see there is acceleration in 55:47 55 minutes, 47 seconds capex this year? uh because last year we were short of capacities in many of the quarters and uh I mean when the demand 55:55 55 minutes, 55 seconds has picked up and how do we see this uh do you need to increase the kind of prices maybe higher tonnage prices etc 56:04 56 minutes, 4 seconds is required now I mean what is this capex and capacity increases uh the pan I'll of course leave it to JP 56:13 56 minutes, 13 seconds and to answer uh you know give more uh color on the details but the answer to your question is in India the growth capex will be much higher this year and 56:22 56 minutes, 22 seconds uh probably next year also and the other part are we looking at different tonnage of presses in forgings in aluminium 56:28 56 minutes, 28 seconds casting etc yes we are we are looking at at that also so with that ander I'll request you to 56:37 56 minutes, 37 seconds give your perspective yes in India in this quarter we have already invested around a little bit more than 56:46 56 minutes, 46 seconds 900 million rupees that is around uh close to 6% of sales. So it's in line 56:53 56 minutes, 53 seconds with our our internal let's say control targets. But you are right and and the second half of this year we expect to to 57:02 57 minutes, 2 seconds boost the capex and we will let's say probably surpass the this six 7% of the 57:10 57 minutes, 10 seconds turnover in India that we are let's say fixing as a control 57:18 57 minutes, 18 seconds target okay regarding the the different presses and machineries and everything 57:24 57 minutes, 24 seconds that we are now looking for uh it's you are right I mean uh we are adding at 57:31 57 minutes, 31 seconds least three new forging lines uh in our uh forging business we are also adding 57:39 57 minutes, 39 seconds stamping stampings line I mean metal stamping line for our customers because the we are also fully booked in this 57:48 57 minutes, 48 seconds moment we are also adding iron casting molding line also to the to the to increase our capacities and to 57:57 57 minutes, 57 seconds cope with the demand that is coming for the next years. So as you can see we are adding machinery and capacity. All this 58:05 58 minutes, 5 seconds capacity will be installed in the next in the next quarters. So uh we expect that our capacity will increase and of course our our production will increase. 58:17 58 minutes, 17 seconds So we are aligning the demand with the capex and that's why we control perfectly the this situation. 58:27 58 minutes, 27 seconds I can tell you that we have not been short of production in this video. Yes, we have been tight in certain 58:34 58 minutes, 34 seconds technologies but not not short and in the in the future we are adding the capacity to to let's say uh to go with 58:43 58 minutes, 43 seconds our customers to be in line with our customers requirements on in terms of capacity some of them they are expecting 58:50 58 minutes, 50 seconds big growth the new projects are also there and of course we need to be ready for the growth when it's coming so 58:59 58 minutes, 59 seconds that's the more or less the the it to give you a flavor of let's say adding capacity in almost all the technologies 59:08 59 minutes, 8 seconds I would say that except in the magnets that is a very specific business the rest of the businesses will add new 59:16 59 minutes, 16 seconds capacities for full year I mean how much capex we are planning now I mean this year for 59:26 59 minutes, 26 seconds if we have okay yes you can imagine that We have done 1 59:33 59 minutes, 33 seconds billion in or close to 1 billion in one quarter. We can talk about it is four to five billion that would be the the the 59:41 59 minutes, 41 seconds capex that we can be expecting in in in India in in in this calendar. Yes. 59:49 59 minutes, 49 seconds And I mean I'm just a little bit puzzled about your metal castello performance. I mean if I look at the caterpillar global 59:57 59 minutes, 57 seconds growth they have been growing very very strongly. uh I mean the North America market etc is growing like 18% 17% if 1:00:06 1 hour, 6 seconds you look at so what category of the caterpillar you are catering to and that's why you are underperforming I mean if you look at the caterpillar 1:00:15 1 hour, 15 seconds numbers I mean that it doesn't show that I mean there is a weakness I mean why should uh we underperform there unless 1:00:23 1 hour, 23 seconds we have certain segment which caterpillar is also underperforming and why we are working for for Caterpillar in 1:00:31 1 hour, 31 seconds the transmission sector. Okay. and and the the balance of the production that of course depends because Caterpillar 1:00:38 1 hour, 38 seconds has his own internal capacities and then they they outsource part of the components to to let's say let's say 1:00:47 1 hour, 47 seconds reliable customers and and strategic c suppliers sorry like us and also they are uh producing part of their 1:00:56 1 hour, 56 seconds production in in Asia in India and other countries okay so let's say that uh with 1:01:03 1 hour, 1 minute, 3 seconds with Caterpillar we had this slowdown because of the product mix that unfortunately we were there and we 1:01:12 1 hour, 1 minute, 12 seconds expect that this production and at least with the the comments coming from Caterpillar is that this this will ramp 1:01:19 1 hour, 1 minute, 19 seconds up mainly as when there is an situation when the customer is producing and deciding make 1:01:27 1 hour, 1 minute, 27 seconds or buy then we our position is is weaker weaker But uh we we expect to to grow 1:01:35 1 hour, 1 minute, 35 seconds and to recuperate our our market share in the next quarters. So the the point 1:01:42 1 hour, 1 minute, 42 seconds on caterpillar is we depend on on them especially in in Italy and with all 1:01:49 1 hour, 1 minute, 49 seconds these probably the tariff issues and geopolitical issues they decided to to 1:01:57 1 hour, 1 minute, 57 seconds integrate or to insource more than than outsourcing the production. That's the 1:02:04 1 hour, 2 minutes, 4 seconds the balance or the decisions that our customers are doing. they are not always very transparent with with the suppliers 1:02:12 1 hour, 2 minutes, 12 seconds you know they they make their own decisions depending on on the situations. So we are expecting this 1:02:19 1 hour, 2 minutes, 19 seconds this growth to come and we are ready and the relations and the strategic relation we have with them is is fantastic. So no no issues there. 1:02:29 1 hour, 2 minutes, 29 seconds Okay. Okay. Great. All the best. Thanks again. 1:02:36 1 hour, 2 minutes, 36 seconds Thank you ladies and gentlemen. This will be our last question. It's from the line of Hajj Kachara with SIMPL. Please go ahead. 1:02:46 1 hour, 2 minutes, 46 seconds Yeah. Hi. Uh thanks for the opportunity. 1:02:49 1 hour, 2 minutes, 49 seconds Just two questions. Uh first is uh you know we talked about us benefiting from consolidation 1:02:56 1 hour, 2 minutes, 56 seconds uh you know starting you know next few quarters. uh any color you can give you know how is your conversation you know 1:03:03 1 hour, 3 minutes, 3 seconds in your conversation with customers is we benefit more from the European entity or you see a further ramp up in exports 1:03:11 1 hour, 3 minutes, 11 seconds from India to Europe uh Raj let me take this question first 1:03:18 1 hour, 3 minutes, 18 seconds and then you know can add more details based on his experience. Now first question around consolidation in Europe. 1:03:26 1 hour, 3 minutes, 26 seconds Yes, as Ander pointed out, consolidation is happening. Some manifestation is we are able to maintain our cranksha production even in a declining market. 1:03:34 1 hour, 3 minutes, 34 seconds But that consolidation takes time as as you know it does not happen at one go. 1:03:39 1 hour, 3 minutes, 39 seconds Yes, consolidation will happen eventually. Uh it is not going to manifest itself in the next next quarter or the next two quarters or something 1:03:47 1 hour, 3 minutes, 47 seconds like that. Eventually it will happen and because we such strong players with strong manufacturing capabilities as well as a very good financial position we expect to benefit in the medium term. 1:03:59 1 hour, 3 minutes, 59 seconds It's not going to happen in the next one year or so something like that. uh because uh when we say consolidation will happen if you uh recolct Europe 1:04:08 1 hour, 4 minutes, 8 seconds used to do about 20 million car production say pre-COVID or whatever and that's now down to 16 million plus there 1:04:15 1 hour, 4 minutes, 15 seconds is the uh threat from Chinese imports uh or Chinese uh supply in in Europe which will even make that is the reason why 1:04:23 1 hour, 4 minutes, 23 seconds consolidation will happen but these things are stretched over a period of time because what happens is that the 1:04:30 1 hour, 4 minutes, 30 seconds capacities don't go out of uh the business you know like most of the time they are brought up they are either bought by a private equity guy or by 1:04:39 1 hour, 4 minutes, 39 seconds somebody who tries to you know buy all the underperforming assets and then it takes some time before it leaves uh 1:04:46 1 hour, 4 minutes, 46 seconds leaves the market that's uh uh you know that's really on uh on consolidation it will happen it will take time the second 1:04:54 1 hour, 4 minutes, 54 seconds aspect on whether uh you know the European light vehicle industry will uh start outsourcing more to India Now that 1:05:03 1 hour, 5 minutes, 3 seconds question Ander had answered in the last call but I'll you know I'll repeat that uh you know the outsourcing from Europe 1:05:10 1 hour, 5 minutes, 10 seconds to India has been more on the truck side and less on the you know on the light vehicle side. uh what is happening is 1:05:18 1 hour, 5 minutes, 18 seconds that with the European FTA that India and Europe had that FDA I think there has been an interest on and a lot of 1:05:26 1 hour, 5 minutes, 26 seconds buyers in the light vehicle space also to look at outsourcing from outside uh Europe uh and they are of course 1:05:33 1 hour, 5 minutes, 33 seconds considering different geographies but the first places where that's going to happen are in iron castings where we are seeing the impact we are seeing a lot of 1:05:42 1 hour, 5 minutes, 42 seconds RFQS coming in gears and machining where you know India has a very big competitive advantage that's happening 1:05:50 1 hour, 5 minutes, 50 seconds uh some some on the forging side and perhaps at some point of time on aluminium casting but unfortunately aluminium casting India is not that competitive at this given point of time. 1:06:02 1 hour, 6 minutes, 2 seconds So yes that will also happen but none of neither the consolidation nor the exports will happen in a hurry. That's 1:06:10 1 hour, 6 minutes, 10 seconds uh you know that's something we'll ask you to keep in mind. So it's not going to happen in this calendar year for example it there will not be a tangible 1:06:18 1 hour, 6 minutes, 18 seconds impact but over the next 2 3 5 years definitely both the things will happen and on both we will gain. So with that 1:06:27 1 hour, 6 minutes, 27 seconds uh generic remark I'll request Andrew to add details and and his perspective. No, 1:06:34 1 hour, 6 minutes, 34 seconds there is a clear situation now and a clear interest from 1:06:41 1 hour, 6 minutes, 41 seconds most of our customers here in in Europe to localize the production in in India. 1:06:47 1 hour, 6 minutes, 47 seconds I mean we are in contact with them. They are absolutely really interested in our capacities in India and we are 1:06:54 1 hour, 6 minutes, 54 seconds developing we are quoting we are they are visiting us. They allow it in our our facilities in in aluminum in in 1:07:03 1 hour, 7 minutes, 3 seconds forgings machining in the gears castings. I mean we we have a very 1:07:10 1 hour, 7 minutes, 10 seconds strong commercial activity in this moment regarding this this transfer of the potential exports from India to Europe. 1:07:20 1 hour, 7 minutes, 20 seconds So we are optimistic very optimistic on that. Okay. we are preparing ourselves to to be ready to supply properly to 1:07:28 1 hour, 7 minutes, 28 seconds Europe in the in the next years. So that will be a reality. So I think that India will be a winning 1:07:36 1 hour, 7 minutes, 36 seconds market, a winning region on this European supply especially because of the competitivity and the and the let's 1:07:44 1 hour, 7 minutes, 44 seconds say price pressures that European OEMs are are having. So in this sense we are 1:07:51 1 hour, 7 minutes, 51 seconds perfectly located to supply from uh prepared to supply from from India to Europe and we will we will do that uh 1:08:00 1 hour, 8 minutes let's say according to our customers uh demand so that why we are adding our capacities and we are preparing 1:08:09 1 hour, 8 minutes, 9 seconds ourselves to be in in in a very good positions in terms of quality and delivery because that's the the main 1:08:15 1 hour, 8 minutes, 15 seconds risk that we all the suppliers is we can have I mean the the quality requirements and the delivery requirements on on 1:08:23 1 hour, 8 minutes, 23 seconds European audience are are very very stream so we need to be well prepared not to fail to them so that's the the 1:08:32 1 hour, 8 minutes, 32 seconds challenge and that's the reality and so we are optimistic and we are preparing the company to to continue growing both 1:08:40 1 hour, 8 minutes, 40 seconds internally locally in in India and also of course with additional export that we will see happening in in the next quarters. 1:08:50 1 hour, 8 minutes, 50 seconds Okay, just one last question. Uh see you mentioned about uh 400 to 500 crores of capex in the India entity. Uh you know 1:08:58 1 hour, 8 minutes, 58 seconds that that is a slip up. I get that. But you know even post that your cash accretion will just further expand right 1:09:06 1 hour, 9 minutes, 6 seconds I mean the surplus cash which you have any color in terms of you know uh you know in the new products or uh 1:09:15 1 hour, 9 minutes, 15 seconds acquisitions or you know anything in the okay yes this is also you know that we 1:09:24 1 hour, 9 minutes, 24 seconds are in a in a cash position as you said and and and we have the capability to continue uh increasing our capex uh and 1:09:32 1 hour, 9 minutes, 32 seconds increasing our capacities and that will be one reality. The second growth area that could be the the the inorganic 1:09:40 1 hour, 9 minutes, 40 seconds growth I mean growing through M&A we are also active on that field. Uh it's true 1:09:48 1 hour, 9 minutes, 48 seconds that it is difficult to to close operations in India in this moment also the price and the expectations are very 1:09:56 1 hour, 9 minutes, 56 seconds high. So but we continue in a very active way to look for potential partnership where we can grow our 1:10:04 1 hour, 10 minutes, 4 seconds business. we can join forces with other players. So this is an an activity that 1:10:12 1 hour, 10 minutes, 12 seconds we are also active. So uh unfortunately in the next last years we did not uh uh 1:10:19 1 hour, 10 minutes, 19 seconds close any any operation but we we continue active on this area and we would like to to have one additional 1:10:27 1 hour, 10 minutes, 27 seconds operation so that will boost also our growth. Thank you very much and good luck. 1:10:35 1 hour, 10 minutes, 35 seconds Thank you. Thank you very much. 1:10:37 1 hour, 10 minutes, 37 seconds Thank you ladies and gentlemen. That was the last question for today. I would now like to hand the conference over to the management for closing comments. 1:10:49 1 hour, 10 minutes, 49 seconds So uh I would like to thank you all the participants for the for the questions and the well directed questions as as 1:10:58 1 hour, 10 minutes, 58 seconds always very interesting. It was a big pleasure to to be with you and to answer and I hope we we answer properly and all 1:11:06 1 hour, 11 minutes, 6 seconds our team JP all our team answered properly to your questions and also I 1:11:12 1 hour, 11 minutes, 12 seconds would like to thank as always to all CIE Automotive India's team for the great work done in in this quarter and we 1:11:21 1 hour, 11 minutes, 21 seconds expect that we will continue doing well and and showing good results in the next quarter. So thank you everybody and have a nice day. 1:11:34 1 hour, 11 minutes, 34 seconds Thank you on behalf of ICIC Securities. 1:11:38 1 hour, 11 minutes, 38 seconds That concludes this conference. Thank you for joining us and you may now disconnect your lines. Thank you.