Q1 2027 Timken India Ltd Earnings Call

August 5, 2026

Speaker #1: Ladies and gentlemen, good day and welcome to the Timken India Limited Q1 FY27 Post-Results Earnings Conference Call. As a reminder, all participant lines will be in listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes.

Operator: Ladies and gentlemen, good day and welcome to Timken India Limited Q1 FY27 post-result earning conference call. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing star then 0 on your touch-tone phone. Please note that this conference has been recorded. I now hand the conference over to Mr. Annamalai Jayaraj from 361 Capital Market Limited. Thank you, and over to you, sir.

Operator: Ladies and gentlemen, good day and welcome to Timken India Limited Q1 FY 2027 Post-result Earning Conference call. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing star then 0 on your touch-tone phone. Please note that this conference has been recorded. I now hand the conference over to Mr. Annamalai Jayaraj from 361 Capital Market Limited. Thank you, and over to you, sir.

Speaker #1: Should you need assistance during this conference call, please signal an operator by pressing * then 0 on your touch-tone phone. Please note that this conference is being recorded.

Speaker #1: I now hand over the conference to Mr. Anamalai Jayaraj from 361 Capital Market Limited. Thank you, and over to you.

Speaker #2: Thanks, Amit. On behalf of 361 Capital, welcome all to the Timken India Limited Q1 FY27 Post-Result Conference Call with the Timken management. We have with us today Mr. Sanjay Kaur, Chairman and Managing Director, and Mr. Siveek Kumar Patnaik, Business Controller India, CFO, and Full-Time Director.

Annamalai Jayaraj: Thanks, Amit. On behalf of 361 Capital, welcome all to Timken India Limited only FY27 post-results conference call. From Timken management, we have with us today Mr. Sanjay Koul, Chairman and Managing Director, Mr. Sujit Kumar Pattanaik, Business Controller India, CFO, and Whole-time Director. I will now hand over the call to Mr. Sanjay Koul for the opening remarks, to be followed by question and answer session. Over to you, sir.

Speaker #2: I'll now hand over the call to Mr. Sanjay Kaur for the opening remarks, to be followed by a question-and-answer session. Over to you, sir.

Speaker #3: Thank you, Mr. Anamalai. Thanks a lot. Hello to everybody, and a very warm good afternoon. Thank you for joining. I must say it is my privilege—and Sujit is with me—our privilege, both of us, from Timken India's side for this investor call.

Sanjay Koul: Thank you, Mr. Annamalai. Thanks a lot. Hello to everybody, and a very warm good afternoon. Thank you for joining. I must say it is my privilege, and Sujit is with me, our privilege of both of us from Timken India side for this investor call, and to share with you a little bit more details on the Q1, which ended 30 June 2026. Before I turn to the current quarter, let me briefly reflect on how we closed FY26. It was a strong finish here as we spoke in May a little bit as well. The Q4 always in India and traditionally for us has been the best, and FY26 was no exception. We closed the year with the highest standalone revenue of INR 3,147 crore, and robust Q4 was more than INR 1,000 crore.

Speaker #3: And to share with you a little bit more details on the first quarter, which ended 30th June 2026. Before I turn to the current quarter, let me briefly reflect on how we closed FY26.

Speaker #3: It was a strong finish here, as we spoke in May a little bit as well. The fourth quarter, always in India and traditionally for us, has been the best.

Speaker #3: And FY26 was no exception. We closed the year with the highest standalone revenue of ₹3,147 crore, and a robust Q4 with more than ₹1,000 crore.

Speaker #3: So again, with that backdrop, I'm pleased to report that we have started FY27 on a steady note, carrying forward the consistency in our growth-based performance.

Sanjay Koul: Against that backdrop, I am pleased to report that we have started the FY27 on a steady note, carrying forward the consistent and outsized performance which we have been doing, that which defines Timken India. We have delivered high double-digit revenue growth this quarter YOY, driven by resilient demand, especially in the core segments, and then our execution both for export and domestic. As is typical for our business, bearing the cyclical nature, Q1 comes off from the Q4, which is always very high. Against that backdrop, our revenue has been INR 929 crore, almost 15% growth for the same period last year. PBT for the quarter stood at INR 150 crore, and it was at INR 130 crore in the same quarter last year. That gives us 15% top-line growth, 15% bottom-line growth, and you know the cost pressures we are at.

Speaker #3: Which we have been doing, which defines Timken India. We have delivered high double-digit revenue growth this quarter, year-over-year, driven by resilient demand, especially in the core segments.

Speaker #3: And then our execution, both for export and domestic. As is typical to our business, bearing in mind this business being cyclical in nature, the first quarter comes off from the last quarter, which is always very high.

Speaker #3: So again, with that backdrop, our revenue has been ₹929 crore, almost 15% growth for the same period last year. PBT for the quarter stood at ₹150 crore.

Speaker #3: And it was at ₹130 crore in the same quarter last year. So that gives us 15% top-line growth, 15% bottom-line growth, and you know the cost pressures we are at.

Speaker #3: PBT margin was at 16.2%, broadly in line with 16.1% in Q1 '26. It is worth noting that the same quarter last year did not carry depreciation of our new capacity investment, which has since been capitalized.

Sanjay Koul: PBT margin was at 16.2%, broadly in line with 16.1% in Q1 2026. It is worth noting that the same quarter last year did not carry depreciation of our new capacity investment, which have since been capitalized. Adjusted for this higher depreciation, that is also in that. You can see there is a margin improvement because depreciation has grown. Other income for the quarter was INR 10 crore. Net profit after tax stood at INR 115 crore. EBITDA margin for the quarter was at 19.6%. We also have the consolidated numbers because of the other entity. Consolidated revenues at INR 943 crore for the quarter ended 30 June. Consolidated profit at INR 156 crore. Consolidated net profit at INR 119 crore. Also, I am happy to share that during the quarter, we have secured the BIS certification for CRB and TRB rollers, and we are on the journey to complete that process.

Speaker #3: So, adjusted for this higher depreciation, that is also included. You can see there is a margin improvement because depreciation has grown. Other income for the quarter was ₹10 crore. Net profit after tax stood at ₹115 crore.

Speaker #3: EBITDA margin for the quarter was at 19.6%. We also have the consolidated numbers. Because of the other entity, consolidated revenue is at ₹943 crore.

Speaker #3: For the quarter ended 30th June, consolidated profit was ₹156 crore and consolidated net profit was ₹119 crore. Also, I'm happy to share that during the quarter we have secured BIS certification for CRB and CRB rollers.

Sanjay Koul: Also, I am happy to share that during the quarter, we have secured the BIS certification for CRB and TRB rollers, and we are on the journey to complete that process.

Speaker #3: And TRV rollers, and we are on the journey to complete that process. That is obviously certifying our commitment to quality and the standards for our domestic market.

Sanjay Koul: That is obviously certifying our commitment to the quality and the standards for our domestic market. The scheme of amalgamation of the Timken GGB Technology Private Limited with Timken India Limited has been approved by the board earlier and is now with the NCLT, that is the National Company Law Tribunal Bangalore bench. This merger will help drive further synergies and efficiencies and reduce overall costs. Our new Bharuch plant continues to ramp up progressively, and investments towards rail expansion at Jamshedpur and plain bearings continues to be on track. With that, I will open the question and answer session. Happy to answer any questions.

Speaker #3: The scheme of amalgamation of Timken GGB Technology Private Limited with Timken India Limited has been approved by the board earlier and is now with NCLT, that is, the Large Revenue Bangalore bench.

Speaker #3: This merger will help drive further synergies and efficiencies, and reduce overall costs. Our new Buruj plant continues to ramp up progressively, and investment toward scale expansion at Jamshedpur and Plain Bearings continues to be on track.

Speaker #3: With that, I would open the question and answer session. I am happy to answer any questions.

Speaker #1: Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press * and 1 on the touch-tone telephone.

Sanjay Koul: Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star 1 on the touchtone telephone. If you wish to remove yourself from the question queue, you may press star 2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is on the line of Mukesh Saraf from Avendus Capital. Please go ahead.

Operator: Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star 1 on the touchtone telephone. If you wish to remove yourself from the question queue, you may press star 2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is on the line of Mukesh Saraf from Avendus Capital. Please go ahead.

Speaker #1: If you wish to remove yourself from the question queue, you may press * and 2. Participants are requested to use handsets while asking a question.

Speaker #1: Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Mukesh Sarabh from Avendus Park.

Speaker #1: Please go ahead.

Speaker #2: Yes, sir. Good evening, and thank you for the opportunity. Firstly, just a bookkeeping question—if you could give the revenue breakup for this quarter, for the ₹929 crores.

Mukesh Saraf: Yes, sir, good evening, and thank you for the opportunity. Firstly, just a bookkeeping question. If you could give the revenue breakup for this quarter for this INR 929 crores?

Speaker #3: Yes, thanks, Mukesh. So for this quarter, FY27 first quarter, revenue stood at ₹200 crore, and that is 22% of the total ₹929 crore. Mobile others was at ₹184 crore.

Sanjay Koul: Yes. Thanks, Mukesh. For this quarter, FY27 Q1, rails stood at INR 200 crores, and that is 22% of the total 929. Mobile others was at INR 184 crores. Distribution was at INR 153.9, which is INR 154 almost. Process was INR 186. Exports was at almost INR 200 crores and slight export incentive of 1% of the total.

Speaker #3: Distribution was at ₹153.9 crore, which is almost ₹154 crore. Gross was ₹186 crore. Exports were at almost ₹200 crore. And there was a slight export incentive of 1% of the total.

Speaker #2: Got it. Got it. Thank you. So my question now is, I was just seeing that the parent has recently divested its belts business under its 80/20 philosophy.

Mukesh Saraf: Got it. Thank you. My question now is, I was just seeing that the parent has recently divested its belts business under its 80/20 rule and has been kind of mentioning about relooking at the portfolio to improve profitability and kind of getting out of some low margin businesses. Just trying to understand, how does this kind of reflect for the India business? Is there going to be some kind of a change in strategy here in India? You are obviously expanding into Bharuch, but is there something more strategic that India business is also going to be doing?

Speaker #2: And has been kind of mentioning about re-looking at the portfolio to improve profitability and kind of getting out of some low-margin businesses. Just trying to understand, how does this reflect for the India business?

Speaker #2: Is there going to be some kind of a change in strategy here in India? I mean, there is you are obviously expanding into Buruj, but is there something more strategic that India business is also going to be doing?

Speaker #3: Yeah. Thanks for the question, Mukesh. And NJB obviously the Timken Global more than 50% of their revenues is in America. And in America's, they have their portfolio, which is different to India.

Sanjay Koul: Yeah. Thanks for the question, Mukesh. Obviously, the Timken global, more than 50% of their revenues is in America.

Mukesh Saraf: Right.

Sanjay Koul: In Americas, they have their portfolio, which is different to India, the markets are different. 80/20, at the end of the day, is largely a Pareto analysis of

Speaker #3: The markets are different. And 80/20, at the end of the day, is largely a pareto analysis. Of how and why you should serve. Obviously, endeavor for every company, is to grow their margins.

Mukesh Saraf: Yeah

Sanjay Koul: how and why you should serve. Obviously, endeavor for every company is to grow their margins. At the same time, I won't say exit, how do you serve some businesses which are not conducive to the overall business? 80/20 is that, who are your 80s, which are the performance enhancers, and who are your 20s, which are maybe a little bit of a drag down. That

Speaker #3: And at the same time, I won't say exit. How do you serve some businesses which are not conducive to the overall business? So, 80/20 is that—who are your 80s, which are the performance enhancers?

Speaker #3: Who are your 20s, which are maybe a little bit of a drag down? So that strategy is being used, and 80/20 is a very proven science.

Mukesh Saraf: Right

Sanjay Koul: strategy is being used. 80/20 is a very proven science and has been effective in elevating many companies, necessarily is to focus on improving sales, improving service levels. Say, for example, in our business, on time delivery levels, should it be 90% or should it be 100% for customer A versus customer B versus customer C? That due diligence is happening globally, and this is performance to elevate. That is the whole idea. The idea is to become different and better. I think it would help the India piece as well, because this is a performance enhancer, which means that how do you serve the customer? How do you bring in more speed to the customer? At the same time, how do you also decrease your cost? How do you consolidate?

Speaker #3: And has been effective in elevating many companies. And necessarily, is to focus on improving sales, improving service levels, say for example, in our business, on-time delivery levels.

Speaker #3: Should it be 90% or should it be 100% for customer A versus customer B versus customer C? So that due diligence is happening globally.

Speaker #3: And this is performance to elevate. That is the whole idea. The idea is to become better and better. And I think it would help the India piece as well, because this is a performance enhancer.

Speaker #3: And which means that how do you serve the customer? How do you bring in more speed to the customer? And then at the same time, how do you also decrease your cost?

Speaker #3: How do you consolidate? How do you manage your MTF versus made-to-forecast versus made-to-order? How do you serve the customer out of inventory versus how do you serve the customer out of orders, and things like that?

Sanjay Koul: How do you do your MTS versus made to for customer versus made to order? How do you serve the customer out of inventory versus how do you serve the customer out of orders and things like that?

Speaker #3: And should you serve the small customer directly? Or should you empower your distribution more? And how do you use digitization? So, all this is actually going to help the company.

Mukesh Saraf: Right

Sanjay Koul: should you serve the small customer directly, or should you empower your distribution more? How do you use digitization? All this is actually going to help the company, and it has a very good past record of enhancing the performance of companies. We are looking forward to this strategic direction, which globally, Mr. Lucian has started with Timken in Europe, America. We can already feel the energy in that piece. We are looking forward to it, and we'll do what is best for Timken India Limited. The idea is obviously grow more in all the territories and for Timken India in India and the subcontinent.

Speaker #3: And it has a very good past record of enhancing the performance of companies. So we are looking forward to this strategic direction, which globally, Mr. Lucien has started with Timken in Europe and America, and we can already feel the energy in that piece.

Speaker #3: So, we are looking forward to it, and we'll do what is best for Timken India Limited. The idea is, obviously, to grow more in all the territories and for Timken India in India.

Speaker #3: And the subcontractor.

Speaker #2: Sure. Sure. Sure. Thank you. Thank you for that detailed answer. Second, my second question is a little more specific to the Buruj plant. I think last time around you had commented that around July-August, some of the people, etc., have begun.

Mukesh Saraf: Sure. Thank you. Thank you for that detailed answer. Second question is little more specific to the Bharuch plant. I think last time around you had commented that around July, August, some of the PPAPs, et cetera, will be done, and the commercial supplies will start from many other SKUs. Could you give us an update on the current utilization rates of the facility there, and how are we seeing that FY27 kind of ramp-up for the FY27 plants?

Speaker #2: And the commercial suppliers will start from many other SKUs. So, could you give us an update on the current utilization rates of that facility there?

Speaker #2: And how are we seeing FY27 kind of ramp up for the Buruj facility?

Speaker #3: Yeah. Yeah. So we with every passing week, we are producing more. More PPAPs. So we are doing the ramp up, obviously, bearing plants are cooling specific.

Sanjay Koul: Yeah. With every passing week, we are producing more PPAP. We are doing the ramp-ups, obviously, bearing plants are tool specific and customer specific, and you have to get the management of approvals, some customer approvals. I am pleased to say that, in my long span in the world of manufacturing, this is one of the fastest ramp-up we are seeing, and a pretty top quality product being produced out of a very top-notch plant. The revenues are growing with every passing week, and I'll ask Sujit to add more color to the whole thing so that you get a little bit more specific answers. Overall, the sense is very good.

Speaker #3: And customer specific. And you have to get the management of approvals to some customer approvals. I am pleased to say that in my long span in the world of manufacturing, this is one of the fastest ramp up we are seeing.

Speaker #3: And pretty top quality product being produced out of a very top-notch plant. So the revenues are growing with every passing week. And I'll ask Sujit to add more color to the whole thing, so that you get a little bit more specific answer.

Speaker #3: But overall, the sense is very good.

Speaker #2: Yeah. That's right, sir. And the chairman explained the revenues are growing. And here the objective is how quickly we are ramping up in terms of the past deployment to be engaging and customer approvals.

Sujit Kumar Pattanaik: Yeah, that's right, sir. As you have been explained, the revenues are growing. Here the objective is how quickly we are ramping up in terms of the parts deployment, getting the bill and customer approvals. That's something which team is doing an extraordinary job over the last three quarters. It may not seem like it will be, because of course, there will be a conditional time between the way PPAP and with the production versus the revenue. We are playing quarter was concerned, the revenue was approximately in the range of INR 50 crore, and we are doing a bit of that. We are almost-

Speaker #2: And that's something which the team is doing an extraordinary job over the last—because, of course, there will be a transitional time between the way PPAP and the production.

Speaker #2: But it's the revenue. As far as I was concerned, the revenue was approximately anywhere close to ₹50 crore, and we are growing every quarter.

Speaker #2: And we are almost very.

Mukesh Saraf: Sorry.

Speaker #3: Sorry, just.

Speaker #2: Yeah, okay. Just reconfirming that number, sir—₹60 crore, you mentioned?

Sujit Kumar Pattanaik: Yeah.

Mukesh Saraf: Okay. Just reconfirming the numbers. INR 60 crore you mentioned?

Speaker #3: 50. Five zero. Five zero.

Sujit Kumar Pattanaik: 50. Five zero.

Speaker #2: Five. Okay, got it, got it, got it. So this would be what? Utilization levels?

Mukesh Saraf: Five. Got it. This will be what? Utilization levels?

Speaker #3: Yeah. Again, utilization at the plant level—we cannot put it across. As you know, probably, broadly, we have three manufacturing: SRB and CRB.

Sujit Kumar Pattanaik: Yeah. Again, utilization at the plant level, we cannot put it across. As you know, probably that broadly we have three manufacturing plants, SRB and CRB.

Speaker #3: So, spherical and—so at a high level, you have—the Chairman explained in the last meeting as well. So we are seeing a ramp-up of the demand on the spherical roller bearings.

Sujit Kumar Pattanaik: At a high level, as Shishir explained in the last meeting as well.

Mukesh Saraf: Yeah

Sujit Kumar Pattanaik: We have seen a ramp-up of the demand on the spherical roller bearings. That utilization level in the last quarter would have been very close to 40% to 45%, and we expect that to ramp it up to 70%, which I told in the last meeting, that in August, September time frame.

Speaker #3: So that's utilization level in the last quarter would have been anywhere close to 40, 45 percent. And we expect that to ramp it up to 70 percent with them sold in the last meeting in August, September timeframe.

Mukesh Saraf: Yeah.

Speaker #3: And the CRB line is slightly lower in terms of its utilization. And we expect to ramp it out towards the Q2 end and Q3.

Sujit Kumar Pattanaik: The CRB line is slightly lower in terms of its utilization, and we expect to ramp it out towards the Q3 end and Q4.

Speaker #2: Got it. Got it. That was good. That was good. Thanks so much. I'll get back in the queue. Yeah, sorry.

Mukesh Saraf: Got it. That was clear. Thanks so much.

Sujit Kumar Pattanaik: Yeah.

Mukesh Saraf: I'll get back in the queue. Yeah, sorry.

Speaker #3: Yeah. Thank you. Yeah. Go ahead.

Sanjay Koul: Yeah. Thank you.

Mukesh Saraf: Yeah.

Mukesh Saraf: Thank you. The next question is on the line of Raghu N. L. from Nuvama Research. Please go ahead.

Operator: Thank you. The next question is on the line of Raghu N. L. from Nuvama Research. Please go ahead.

Speaker #2: Thank you.

Speaker #1: The next question is on the line of Raghunandan from Nuwama Research. Please go ahead.

Speaker #4: Good evening, sir. Thank you for the opportunity. Sir, firstly, on the export segments, we have seen a growth of 28% and 21%. If you can talk about which categories are helping the growth in the process segment, and also on the export side, directionally, if you can talk about the outlook—whether you see that strong growth continuing.

Raghu N. L.: Good evening, Sir. Thank you for the opportunity. Sir, firstly, on process and export segments, we have seen a growth of 28% and 21%. If you can talk about which are the categories which are helping the growth in the process segment and also on the export side, directionally, if you can talk about outlook, whether you see that strong growth continuing?

Speaker #3: Okay. So on the process side, YOY it is, I think, almost 30% growth. And largely coming from the metal customers, as we see a little bit of projects coming into.

Sanjay Koul: Okay. On the process side, YOY it is, I think, almost 30% growth, largely coming from the metal customers, as we see a little bit of projects coming into. There are some companies which are exporting, making mills in India and exporting out of India. We are being pretty successful in that. It is not necessarily only the MRO, it is the projects which is there. Also, there is a nice RE factor in this. The wind is playing a good part. As you know that wind is growing in India, both in terms of export of the gearboxes out of India, and then putting more windmills and wind farms in India. That is the story on process. Some of it is metal, but largely it is wind. On the intercompany, as you know that America market is resilient.

Speaker #3: And there are some companies which are making mills in India and exporting them out of India. And we are being pretty successful in that.

Speaker #3: So that is, it is not necessarily only the MRO. It is the projects which are there, and then also, there is a nice RE sector in this.

Speaker #3: So the wind is playing a good part. As you know, wind is growing in India, both in terms of export of the gearboxes out of India and also by installing more windmills and wind farms in India.

Speaker #3: So that is the story on process. Some of it is metal, but largely it is wind. And on the intercompany, as you know, the American market is resilient.

Speaker #3: It is showing nice signs. Though Europe and other places South Africa is okay. Australia is flattish. ASEAN is down. China is down. But American market is up.

Sanjay Koul: It is showing nice signs, though Europe and other places, South Africa is okay, Australia is flattish, ASEAN is down, China is down, but American market is up. We are supplying tapers to America. That is the intercompany push, which is almost 21% coming out of that. We see that this will continue. Though obviously the geopolitics is playing its role and all that is happening on one side. I believe the new normal, like the post-COVID, this is the new normal, that geopolitics challenges, war will be there in bits and pieces, and at the same time, the life will go on. You know the big pipeline they are putting up in Oman, 300, 400 kilometers, $300-plus billion, despite the war happening on the other side is happening. Similarly, the exports to America are looking up currently.

Speaker #3: So, we are supplying tapers to America. That is the intercompany push, which is almost 21% coming out of that. We see that this will continue.

Speaker #3: Though, obviously, the geopolitics is playing its role, and all that is happening on one side. So, I believe the new normal, like the post-COVID period, this is the new normal.

Speaker #3: That geopolitics challenge—war—will be there, in bits and pieces. And at the same time, life will go on. And you know, the big pipeline they are putting up in Oman—300, 400 kilometers.

Speaker #3: So $300-plus billion, despite the war happening on the other side, is happening. And similarly, the exports to America are looking up currently.

Speaker #3: And I think Europe is down, but the U.S. looks pretty okay. That is the story in the U.S. for the exports for us.

Sanjay Koul: I think Europe is down, but US looks pretty okay. That is the story in the US for the exports for us.

Speaker #4: Noted, sir. And just a clarification on the exports to the US: what would be the applicable tariff?

Raghu N. L.: Noted, sir. Just a clarification. On the exports to US, what would be the applicable tariff?

Speaker #3: Applicable tariff for US—I don't remember exactly, but that I need to check. I think I don't remember. But China tariff is certainly far more on tapers.

Sanjay Koul: Applicable tariff for US, I don't remember exactly. That I need to check. I think I don't remember. China tariff is certainly far more on tapers as compared to India, and that regime has been there for many, many years. Exact tariff, I don't remember what was our landing in US. Once upon a time was 5.6%, 5.8%, then went up and then came down, went up. Exact, I don't remember.

Speaker #3: As compared to India—and that regime has been there for many, many years. But the exact tariff, I don't remember what was our landing in the U.S.

Speaker #3: Once upon a time was 5.6, 5.8 percent. Then went up. And then came down, went up. So exact, I don't remember.

Speaker #4: Got it, sir. As long as we are more competitive, that is good for us. On the railroad side, I had a question: we have started the year with single-digit growth, around 3%.

Raghu N. L.: Got it, sir. As long as we are more competitive, that is good for us. On the railway side, I had a question that we have started the year with a single-digit growth around 3%. How do you see the outlook ahead in terms of the government procurement? Also if you can indicate how the ramp-up in Jamshedpur plants can help the revenue, maybe by end of the fiscal and next fiscal.

Speaker #4: And how do you see the Outlook ahead in terms of the government procurement? And also, if you can indicate how the ramp-up in Jamshedpur plants can help the revenue maybe by end of the fiscal and next fiscal?

Speaker #3: Yeah. So the government buy, especially on the railway side, is slow. The government buying for railway is certainly slow. But that is a time issue.

Sanjay Koul: Yeah. The government buy especially on the railway side is slow. The government buying for railway is certainly slow. That is a time issue. Year on year, there will be that slow, steady growth. While some of the projects get deferred at times, because many times the funds of the central government get diverted, sometimes to infra, sometimes to defense, depending on the need of the government. Railway is little bit sluggish as we speak, but it is an issue of time, so it will come back. That is A, and B is that our rail investment as it comes to start producing commercially by this calendar year end, we will immediately ramp it up because of the fact that rail also has a nice market in other parts of the world, which would benefit.

Speaker #3: The year-on-year, there will be that slow, steady growth. So while some of the projects get deferred at times because many times the funds of the central government get diverted sometimes to infra, sometimes to defense.

Speaker #3: Depending on the need of the government. So, railway is a little bit sluggish as we speak, but it is an issue of time. So, it will come back.

Speaker #3: So that is A. And B is that our rail investment, as it comes to start producing commercially by this calendar year-end, we will immediately ramp it up because of the fact that rail also has a nice market in other parts of the world.

Speaker #3: Which would benefit. And by the time the Indian Rail would also have their own tenders, etc., out—which are delayed a little bit generally; they should have been out a couple of months back.

Sanjay Koul: By the time the Indian Railway would also have their own tenders, et cetera, out, which are delayed a little bit. Generally, they should have been out a couple of months back. They are a little bit delayed because the government is diverting funds maybe to defense and other places currently.

Speaker #3: So they are a little bit delayed because the government is spending diverting funds maybe to defense and other places currently.

Speaker #4: Noted, sir. Thank you. Just one last question. Last quarter also, you had indicated the cost pressures, and you have been taking price hikes and pass-throughs.

Raghu N. L.: Noted, sir. Thank you. Just one last question. Last quarter also, you had indicated about the cost pressures, you have been taking price hike and pass-throughs, you would be working on cost savings also. This quarter, your gross margin has been maintained on a QoQ basis. If you can talk about the cost pressures and whether you see any more pressures going forward.

Speaker #4: And you would be working on cost savings also. But this quarter, your gross margin has been maintained on a QOQ basis. If you can talk about the cost pressures and whether you see any more pressures going forward.

Speaker #3: So, the cost pressures are very much there. The steel industry is pushing hard to increase their prices. They have already put some in January—₹1,500 or ₹1,600 per ton.

Sanjay Koul: The cost pressures are very much there. The steel industry is pushing hard to increase their prices. They have already put some January INR 1,500 or INR 1,600 per ton, then by April, another INR 3,500 per ton. In totality, that's 1,500 plus 30. Around INR 5,000 per ton is already into this, which obviously we are trying to get from all of our customers. Most of them have started paying. Steel will not go up if you see the capacity utilization of the steel. That is still not fully utilized. You know that better than me. Cost pressure from the gas is already now into the system, bearing industry has an option to convert from LPG to natural gas.

Speaker #3: Then by April, another 3500 rupees ton. So in totality, that 100 plus 20. So around 5000 rupees per ton is already into this. Which obviously, we are trying to get from all our customers.

Speaker #3: Most of them have started paying. But steel will not go up. If you see the capacity utilization of steel, that is still not fully utilized.

Speaker #3: You know that better than me. So, cost pressure from the gas is already now into the system. And bearing industry has an option to convert from LPG to natural gas.

Speaker #3: And we have largely been able to implement all that across our supply chain and in our plants at a warm footing. While they were fighting Hormuz, we are fighting the conversion from LPG to natural gas.

Sanjay Koul: We have largely been able to implement all that across our supply chain and in our plants at a war footing. While they were fighting Hormuz, we were fighting the conversion from LPG to natural gas. We have done it in all our plants at some record speed, which is normally unthinkable in other parts of the world. I would say that the cost which is already into the system is very much now part of the system. Further cost escalations depend on how the war will play out which, by the way, the Brent was less than INR 80 two days back despite the war because then Mr. Trump said that, I'm holding. Maybe that indicated something. Beyond this, whatever that has come, I don't see major. There might be a little bit, like the carbide market has gone up pretty significantly, grinding market slightly.

Speaker #3: We have done it in all our plants. At some record speed, which is normally unthinkable in other parts of the world. So I would say that the cost, which is already into the system, is very much now part of the system.

Speaker #3: Further cost escalations depend on how the war will play out. Which, by the way, the brand was less than $80 two days back.

Speaker #3: Despite the war, because of the ban, Mr. Trump said that I'm holding. Maybe that indicated something. But beyond this, whatever that has come, I don't see major—there might be a little bit, like the carbide market has gone up pretty significantly.

Speaker #3: Grinding market slightly. And the residual like the cooling industry, all that has gone up a little bit. But beyond that, the only market which is a little bit currently volatile is the base oil, which goes into the Greece.

Sanjay Koul: The residual, like the cooling industry, all that has gone up a little bit. Beyond that, the only market which is a little bit currently volatile is the base oil, which goes into the grease. Other than that, I don't see any further escalation from today.

Speaker #3: Other than that, I don't see any further escalation from today.

Speaker #4: Noted, sir. Thank you for that comprehensive answer. I'll fall back to the queue. Thank you so much.

Raghu N. L.: Noted, sir. Thank you for the comprehensive answers. I'll call back to the queue. Thank you so much.

Speaker #3: Thank you.

Sanjay Koul: Thank you.

Speaker #2: Thank you. Ladies and gentlemen, anyone who wishes to ask a question may press star and one on the touch-tone telephone. The next question is from the line of Harshit Patel from Aquarius Securities.

Sanjay Koul: Thank you. Ladies and gentlemen, anyone who wishes to ask a question may press star and one on their touchtone telephone. The next question is on the line of Harshit Patel from Aquarius Securities. Please go ahead.

Operator: Thank you. Ladies and gentlemen, anyone who wishes to ask a question may press star and one on their touchtone telephone. The next question is on the line of Harshit Patel from Aquarius Securities. Please go ahead.

Speaker #2: Please go ahead.

Speaker #1: Thank you very much for the opportunity, sir. Sir, continuing from one of the earlier questions on the divestment of some part of the portfolio, namely mills.

Harshit Patel: Thank you very much for the opportunity. Sir, continuing from one of the earlier questions on the divestment of some part of the portfolio, namely belts. In the same earnings made held by the parent during May 2026, they had also indicated the divestment of the automotive oil business. Now, as I understand it, commercial vehicles and tractors are a very significant part of our business here in India. Any read-through for us on the indications made by the parent? That's my only question.

Speaker #1: In the same ending feed held by the parent, during May 2026, they had also indicated the divestment of the automotive oil business. Now, as I understand it, commercial vehicles and tractors are a very significant part of our business here in India.

Speaker #1: Any read-through for us on the indications made by the parent? That's my only question.

Speaker #3: So okay. So on the belt, certainly Timken had taken over a great brand for car lights in the belt. And then they started manufacturing in US and then in Mexico.

Sanjay Koul: Okay. On the belt, certainly, Timken had taken over a great brand for life in the belt. They started manufacturing in US and then in Mexico, then later on, they found that the belt is not really pretty much augmentive to our new idea of TechMotion. They got rid of it. The automotive in US They have looked at the portfolio, they are looking at the ATQA. We have capacities around the globe that is on behalf of the parent. They have capacities around the globe. Obviously they would like to use those capacities for their best portfolios. Those lines, while they make the mass automotive, they can also make the limited industrial piece as well.

Speaker #3: And then later on, they found that the belt is not really pretty much aligned with our new idea of tech motion. So they got rid of it.

Speaker #3: And then the automotive in US, they have looked at the portfolio. They have looked at the T20. And we have capacities around the globe that is on behalf of the parent.

Speaker #3: They have capacities around the globe, and then obviously, they would like to use those capacities for their best portfolios. And those lines, while they make mass automotive, they can also make the limited industrial piece as well.

Speaker #3: And then those lines, at times, can be moved around and serve the market where there is a better chance of making more money, and things like that.

Sanjay Koul: Those lines at time can be moved around and serve the market where there is a better chance of making more money and things like that. As far as India is concerned, we are focused on what we do here. Mobile is almost a 20% market for us, which is tractors, which is heavy truck. As you know, we don't play the commercial vehicle market, I mean to say passenger cars. We don't do two-wheelers, three-wheelers, washing machine, which is essentially ball bearings. We don't do that, but we are focused on off-highway equipment. We are focused on backhoes, excavators. We are leaders in the rail application in freight, et cetera. We'll remain focused on that and look at what assets can be further utilized for growth in India, hopefully.

Speaker #3: So, as far as India is concerned, we are focused on what we do here. Mobile is almost a 20% market for us, which includes tractors and heavy trucks.

Speaker #3: As you know, we don't play in the commercial vehicle market. I mean to say, passenger cars—we don't do two-wheelers or three-wheelers. Washing machines, which are essentially ball bearings.

Speaker #3: We don't do that. But we are focused on off-highway equipment. We are focused on backhoes, excavators; we are leaders in the rail application—in freight, etc.

Speaker #3: So, we'll remain focused on that and look at what assets can be further utilized for growth in India—hopefully.

Speaker #1: Understood. Thank you very much, sir.

Harshit Patel: Understood, sir. Thank you very much, sir.

Speaker #2: Thank you. The next question is from the line of Varun Jain from Dollar Capital. Please go ahead.

Harshit Patel: Thank you. The next question is from the line of Varun Jain from Dolat Capital. Please go ahead.

Operator: Thank you. The next question is from the line of Varun Jain from Dolat Capital. Please go ahead.

Speaker #4: Yeah. Hi. Good evening, sir. So just a little follow-up on the previous question. So while you talked about the cost, you said in Q4 that of the total cost inflation and grinding wheel, coolant, etc., you had taken 10% of the required price hike.

Varun Jain: Yeah. Hi, good evening, sir. Just a little follow-up on the previous question. While you talked about the cost, you said in Q4 that of the total cost inflation and grinding wheel, coolants, et cetera, you had taken 10% of the required price hike. As of now, by end of Q1, how much price hike have you taken of the total cost inflation?

Speaker #4: So as of now, by the end of Q1, how much of a price hike have you taken out of the total cost inflation?

Speaker #3: So, it is tough to tell you the exact percentage. Different customers have different behavior, and one factor is the input cost. That also has a different pattern and behavior, and then, between customers—from off-highway to heavy truck, to rail, and other places—some are tender-based, some are where you have fixed contracts.

Sanjay Koul: It is tough to tell you exactly percentage. Different customers, different behavior. One is the input cost, so that also has a different pattern and behavior. Then the customers between off-highway to heavy truck to rail and other places, some are tender-based, some are fixed contracts. We are able to pass on certain level of cost escalation, especially in the heavy truck market. There are like railways are fixed contract, so as we get into the new contracts, then that would start going in. In the public sector units, we have annual rate contracts, or even in large cement plants, we have ARCs and that cannot be violated, fortunately, unfortunately. That would, as they come into when new ARCs get made, then we'll try to pass on to them.

Speaker #3: And we are able to pass on a certain level of cost escalation, especially in the heavy truck market. But there are, like railways, which are fixed contracts.

Speaker #3: So as we get into the new contracts, then that would start going in. In the public sector units, we have annual rate contracts, or even in large cement plants, we have ARCs, and those cannot be violated.

Speaker #3: Fortunately, unfortunately. So that would, as they come into new ARCs gets made, then we will be able to we'll try to pass on to them.

Speaker #3: But in the heavy truck market, tractor, we are able to get our large cost escalation into the pricing.

Sanjay Koul: Heavy truck market, tractor, we are able to get largely our cost escalation into the pricing.

Speaker #1: Let me just one.

Sujit Kumar Pattanaik: Maybe just one.

Sanjay Koul: Yes, Sujit.

Speaker #3: Yeah. Sujit.

Sujit Kumar Pattanaik: Maybe just one additional point there, just to put the numbers into perspective. If you look at it, the gross margin for this quarter, we were at 39.9%. That is 100 basis points expanded year over year. Just to give it a context, the Q4 of the financial year is always going to be a favorable mix for us from a margin standpoint. You may be seeing a flattish margin from a gross margin perspective sequentially, but technically the Q1 of the financial year are always unfavorable mix from a margin perspective. You have an unfavorable mix, plus the chairman, whatever he has explained in terms of getting those price increases from heavy truck and off-highway customers have actually expanded the margin. That is why we have not eroded the margin.

Speaker #1: Let me just add one additional point there, just to put the numbers into perspective. So, if you look at it, the gross margin for this quarter—we were at 39.9%.

Speaker #1: That is 100 basis points expanded year over year. And just to give it context, the fourth quarter of the financial year is always going to be a favorable mix for us from a margin standpoint.

Speaker #1: So, you may be seeing a flattish margin from a gross margin perspective sequentially. But technically, the quarter one of the financial year had an outright unfavorable mix from a margin perspective.

Speaker #1: So, you have an unfavorable mix, plus the chairman—whatever he has explained—in terms of getting those price increases from heavy truck and off-highway customers, has actually expanded the margin.

Speaker #1: So that is why we have not eroded the margin. It was almost flat compared to sequential of last quarter, but 100 basis points expanded from the same period of last year.

Sujit Kumar Pattanaik: It was almost flat compared to sequential of last quarter. 100 basis point expanded the same period of last year.

Speaker #4: Got it, sir. And secondly, for Q1 FY27, what was the manufactured versus traded mix? And also, you spoke on the Bharuch product ramp-up. So can you tell us other than the utilization terms, can you tell us product-wise which product made the most headway, like large SRV or CRV or small SRV?

Varun Jain: Secondly, for Q1 FY27, what was the manufactured versus traded mix? Also you spoke on the Bharuch product ramp-up, can you tell us, other than the utilization terms, can you tell us product-wise which product made the most headway, like large SRB or CRB or small SRB? Like that, if you can give us some color.

Speaker #4: If you can, please give us some color on that.

Speaker #1: The product we explained, I think, from a utilization perspective. So as for the revenue perspective, as we speak, the SRVs are probably higher compared to the cylindrical load bearings at this stage for work.

Sujit Kumar Pattanaik: That we explained, I think, from an utilization perspective, was from the revenue perspective. As we speak, the SRBs are probably higher compared to the cylindrical roller bearings at this stage for one.

Speaker #4: And the manufactured versus traded mix for Q1?

Varun Jain: The manufactured versus traded mix for Q1?

Speaker #1: It is almost in the similar range, I would say. So, though we don't disclose, I think whatever numbers we gave in the earlier quarters, it's almost in the similar range of 75:25.

Sujit Kumar Pattanaik: It is almost in the similar range, I would say. Though we don't disclose, I think whatever numbers we gave in the earlier quarters, it's almost in the similar range of 70/35.

Speaker #4: Got it. And so, for FY27, CAPEX was 8 to 10 percent of sales. That was the indicative range given. So, any plan for exact CAPEX? How much will it be?

Varun Jain: Got it. For FY27, CapEx was 8% to 10% of sales. That was the indicative range given. Any plan of exact CapEx, how much it will be and where it will be allocated to which plants?

Speaker #4: And where will it be allocated? To which plants?

Sujit Kumar Pattanaik: Again, plant-wise breakup we generally do not give. I think directionally it will be very similar numbers what you have explained. There are a lot of work is happening. As the Chairman explained, the rail plant is on track. The plain bearings, which is going on in our Bharuch factory, that's on track. We are almost on track to the overall CapEx numbers. There may be a timing difference here and there in terms of this financial year spilling over something to the next financial year. From a project perspective, we are almost on track, and the CapEx should be within the range.

Speaker #1: Again, plant-wise breakup we generally do not give. I think the direct summary will have very similar numbers to what you have explained. But again, there is a lot happening.

Speaker #1: As the Chairman explained, the rail plant is on track. The plain bearings, which are being produced in our Bharuch factory, are also on track. So, we are almost on track to achieve the overall CAPEX numbers.

Speaker #1: There may be a timing difference here and there in terms of the financial year. This financial year is carrying something over to the next financial year.

Speaker #1: But from a project perspective, we are almost on track, and the capex will be in a similar range.

Speaker #4: Okay, sir. Okay. Okay, got it. Thank you, and all the best.

Varun Jain: Okay, sir. Okay. Got it. Thank you and all the best.

Speaker #3: Thank you. Thanks a lot. And as we had indicated, we'll be closing at 4:30 today because of an urgent customer visit on the campus.

Sanjay Koul: Thank you. Thanks a lot. As we had indicated, we'll be closing it. It's 4:30PM today because of an urgent customer visit on the campus. Thanks a lot. If there are any further questions, we are always open on an email and things like that. Take care, and God bless you all. Thank you.

Speaker #3: So, thanks a lot. And if there are any further questions, we are always available by email and similar channels. So, take care and God bless you all.

Speaker #3: Thank you.

Speaker #2: Great. Thank you, sir. On behalf of Timken India Limited, that concludes this conference. Thank you for joining us. And you may now disconnect your lines.

Sanjay Koul: Great. Thank you, sir. On behalf of Timken India Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.

Operator: Great. Thank you, sir. On behalf of Timken India Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.

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Q1 2027 Timken India Ltd Earnings Call

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