Q1 2027 Sharda Motor Industries Ltd Earnings Call

August 11, 2026

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Speaker #1: Ladies and gentlemen, you have been connected to the Sharda Motor Industries Limited Q1 FY27 earnings conference call. Please stay connected. The conference will begin shortly.

Speaker #1: Ladies and gentlemen, good day, and welcome to Sharda Motor Industries Limited Q1 FY27 earnings conference call, hosted by Aquarius Securities. 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 Sharda Motor Industries Limited Q1 FY2027 Earnings Conference Call hosted by Equirus Securities. 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 zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Mihir Vora from Equirus Securities. Thank you, and over to you, Sir.

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

Speaker #1: I now hand the conference over to Mr. Mihir Vora from Aquarius Securities. Thank you, and over to you, Sir.

Operator: I now hand the conference over to Mr. Mihir Vora from Equirus Securities. Thank you, and over to you, sir.

Speaker #4: Yeah, thank you, Balak. Hi everyone, welcome to the Q1 FY27 post-results conference call of Sharda Motors. Without any further ado, I'll now hand over to the management for the opening remarks.

Mihir Vora: Yeah. Thank you, Palak. Hi, everyone. Welcome to the Q1 FY27 post-results conference call of Sharda Motor. Without any further ado, I will now hand over to the management for the opening remarks. Over to you, GD, sir.

Mihir Vora: Yeah. Thank you, Palak. Hi, everyone. Welcome to the Q1 FY2027 post-results conference call of Sharda Motor. Without any further ado, I will now hand over to the management for the opening remarks. Over to you, GD, Sir.

Speaker #4: Over to you, GD, sir.

Speaker #5: Thank you very much, Mir. Thanks a lot. Good day, everyone. My name is G.D. Thakkar, and I would like to thank all of you for joining today's call.

GD Takkar: Thank you very much, Mihir. Thanks a lot. Good day, everyone. My name is GD Takkar, and I would like to thank all of you for joining today's call. I extend a warm welcome to all the participants. I am joined today by our Group CEO, Mr. Aashim Relan, Deputy Managing Director, Mr. Ashwani Maheshwari, and Chief Manufacturing Officer, Mr. K.K. Sharma. I trust you have had the opportunity to review our Q1 FY27 results and investor presentation, which are available on the stock exchanges as well as on our website. Before we discuss the company's financial performance, I would like to briefly touch upon the performance of the Indian automobile industry during Q1. The industry began FY27 on a very strong note with healthy momentum visible across all vehicle categories, supported by steady consumer demand, improving rural sentiment, infrastructure-led activity, and continued traction in exports.

GD Takkar: Thank you very much, Mihir. Thanks a lot. Good day, everyone. My name is GD Takkar, and I would like to thank all of you for joining today's call. I extend a warm welcome to all the participants. I am joined today by our Group CEO, Mr. Aashim Relan, Deputy Managing Director, Mr. Ashwani Maheshwari, and Chief Manufacturing Officer, Mr. K.K. Sharma. I trust you have had the opportunity to review our Q1 FY2027 results and investor presentation, which are available on the stock exchanges as well as on our website. Before we discuss the company's financial performance, I would like to briefly touch upon the performance of the Indian automobile industry during Q1.

Speaker #5: I extend a warm welcome to all the participants. I am joined today by our Group CEO, Mr. Ashim Rellan; Deputy Managing Director, Mr. Ashwini Maheshwari; and Chief Manufacturing Officer, Mr. K.K.

Speaker #5: Sharma, I trust you have had the opportunity to review our Q1 FY27 results and investor presentation, which are available on the stock exchanges as well as on our website.

Speaker #5: Before we discuss the company's financial performance, I would like to briefly touch upon the performance of the Indian automobile industry during Q1. The industry began FY27 on a very strong note, with healthy momentum visible across all vehicle categories.

GD Takkar: The industry began FY2027 on a very strong note with healthy momentum visible across all vehicle categories, supported by steady consumer demand, improving rural sentiment, infrastructure-led activity, and continued traction in exports. Overall, industry performance during the quarter reflected broad-based momentum, with domestic automobile production increasing over 22% year on year to 93.6 lakh units, underscoring strong OEM activity and healthy demand visible across automobile value chain. During Q1 FY27, the automobile industry witnessed healthy production growth across key segments. Passenger vehicle production grew by 16.8% year on year to 14.53 lakh units, with the growth primarily led by utility vehicles, which increased 21.2% year on year, reflecting continued consumer preference for SUVs and feature-rich models.

Speaker #5: Supported by steady consumer demand, improving rural sentiment, infrastructure-led activity, and continued traction in exports, overall industry performance during the quarter reflected broad-based momentum. Domestic automobile production increased over 22% year-on-year to 9.36 million units, underscoring strong OEM activity and healthy demand visible across automobile value chains.

GD Takkar: Overall, industry performance during the quarter reflected broad-based momentum, with domestic automobile production increasing over 22% year on year to 93.6 lakh units, underscoring strong OEM activity and healthy demand visible across automobile value chain. During Q1 FY27, the automobile industry witnessed healthy production growth across key segments. Passenger vehicle production grew by 16.8% year on year to 14.53 lakh units, with the growth primarily led by utility vehicles, which increased 21.2% year on year, reflecting continued consumer preference for SUVs and feature-rich models. LCV segment also witnessed healthy momentum, with production rising 20.8% year on year to 1.91 lakh units, supported by sustained demand across last mile transportation and goods movement applications. To sum up, the demand continues to remain healthy across all vehicle categories relevant to Sharda Motor's business.

Speaker #5: During Q1 FY27, the automobile industry witnessed healthy production growth across key segments: passenger vehicle production grew by 16.8% year-on-year to 1.453 million units, with the growth primarily led by utility vehicles, which increased 21.2% year-on-year, reflecting continued consumer preference for SUVs and feature-rich models.

Speaker #5: The LCV segment also witnessed healthy momentum, with production rising 20.8% year-on-year to 1.91 lakh units, supported by sustained demand across last-mile transportation and goods movement applications.

GD Takkar: LCV segment also witnessed healthy momentum, with production rising 20.8% year on year to 1.91 lakh units, supported by sustained demand across last mile transportation and goods movement applications. To sum up, the demand continues to remain healthy across all vehicle categories relevant to Sharda Motor's business. Passenger vehicles, particularly utility vehicles, continue to drive momentum and commercial vehicles are benefiting from infrastructure activity, freight movement, and logistics demand. Three wheelers are also witnessing steady traction supported by urban mobility and last mile delivery requirements. Coming to now our financial performance for Q1 FY27. As previously, we have remained focused on disciplined execution, cost control, operating efficiency, prudent capital allocation, cash generation, and maintaining balance sheet strength.

Speaker #5: To sum up, the demand continues to remain healthy across all vehicle categories relevant to Sharda Motors' business. Passenger vehicles, particularly utility vehicles, continue to drive momentum, and commercial vehicles are benefiting from infrastructure activity, freight movement, and logistics demand.

GD Takkar: Passenger vehicles, particularly utility vehicles, continue to drive momentum and commercial vehicles are benefiting from infrastructure activity, freight movement, and logistics demand. Three wheelers are also witnessing steady traction supported by urban mobility and last mile delivery requirements. Coming to now our financial performance for Q1 FY27. As previously, we have remained focused on disciplined execution, cost control, operating efficiency, prudent capital allocation, cash generation, and maintaining balance sheet strength. As we move ahead, the operating environment remains supportive, although we remain mindful of certain risks arising out of evolving geopolitical conditions. However, we believe the structural drivers for the automobile industry remain intact. Rising mobility needs, replacement demand, infrastructure spending, formalization of logistics, premiumization, and export opportunities should continue to support the industry over medium to long term. Let me now walk you through the operational and financial performance for the quarter ended 30 June 2026.

Speaker #5: Three-wheelers are also witnessing steady traction, supported by urban mobility and last-mile delivery requirements. Coming to our financial performance for Q1 FY27, as previously, we have remained focused on disciplined execution, cost control, operating efficiency, prudent capital allocation, cash generation, and maintaining balance sheet strength.

Speaker #5: As we move ahead, the operating environment remains supportive, although we remain mindful of certain risks arising out of evolving geopolitical conditions. However, we believe the structural drivers for the automobile industry remain intact. Rising mobility needs, replacement demand, infrastructure spending, formalization of logistics, premiumization, and export opportunities should continue to support the industry over the medium to long term.

GD Takkar: As we move ahead, the operating environment remains supportive, although we remain mindful of certain risks arising out of evolving geopolitical conditions. However, we believe the structural drivers for the automobile industry remain intact. Rising mobility needs, replacement demand, infrastructure spending, formalization of logistics, premiumization, and export opportunities should continue to support the industry over medium to long term. Let me now walk you through the operational and financial performance for the quarter ended 30 June 2026.

Speaker #5: Let me now walk you through the operational and financial performance for the quarter ended 30th June 2026. For this quarter, on a consolidated basis, the company reported revenues of ₹1,011.1 crore, representing year-on-year growth of 34%.

GD Takkar: For this quarter, on a consolidated basis, the company reported revenues of INR 1,011.1 crores, representing year on year growth of 34%. Gross profit for this quarter stood at INR 203.9 crores, reflecting year on year growth of 8%. As you know, gross profit remains a better indicator of the company's underlying operating performance. As against 8% to 10% growth of the addressable market which we can serve, our gross profit growth was 8% as above, due to production impact arising out of a supplier fire at one of our key customers and one time impact due to premium RM procurement on account of geopolitical situation. EBITDA for Q1 came in at INR 103.2 crores, reflecting year on year growth of 5%, with EBITDA margins standing at 10.2% for the quarter.

Speaker #5: Gross profit for this quarter stood at Rs 203.9 crore, reflecting year-on-year growth of 8%. As you know, gross profit remains a better indicator of the company's underlying operating performance.

Speaker #5: As against 8% to 10% growth of the addressable market, which we can serve, our gross profit growth was 8%, as above, due to production impact arising out of a supplier fire at one of our key customers.

Speaker #5: And one-time impact due to premium RM procurement on account of the geopolitical situation. EBITDA for Q1 came in at ₹103.2 crore, reflecting year-on-year growth of 5%, with EBITDA margins standing at 10.2% for the quarter.

Speaker #5: Profit before tax, before exceptional items, stood at Rs 115 crore for the quarter, after factoring in our share of profit from joint ventures and associates.

GD Takkar: Profit before tax, before exceptional items stood at INR 115 crores for the quarter, after factoring in our share of profit from joint venture and associates. In the corresponding quarter last year, PBT stood at INR 107.7 crores after excluding exceptional gain of INR 22.4 crores. Profit after tax for this quarter stood at INR 86.5 crores. With this, I now hand over to Mr. Ashwani Maheshwari, Deputy Managing Director of the company, to take you through the key business update. Thank you. Over to you.

Speaker #5: In the corresponding quarter last year, EBITDA stood at ₹107.7 crore, after excluding exceptional gains of ₹22.4 crore. Profit after tax for this quarter stood at ₹86.5 crore.

Speaker #5: With this, I now hand over to Mr. Ashwini Maheshwari, Deputy Managing Director of the company, to take you through the key business updates. Thank you.

Speaker #5: Over to you.

Speaker #3: Thanks a lot, Giri, for the updates. This is Ashwini Maheshwari. I extend a very warm welcome to everyone on the call. It's a pleasure to connect and share our key business and strategic updates for the quarter.

Ashwani Maheshwari: Thanks a lot, GD, for the updates. This is Ashwani Maheshwari. I extend a very warm welcome to everyone on the call. It is a pleasure to connect and share our key business and strategic updates for the quarter. As you all know, the global business environment continues to remain uncertain, with geopolitical developments, evolving trade dynamics, and macroeconomic volatility influencing markets across regions. Against this backdrop, the Indian automotive industry has demonstrated remarkable resilience and continues to offer an attractive long-term growth opportunity. While the global industry continues to debate the pace and direction of electrification, the reality emerging in India is diverse. We are seeing simultaneous growth of conventional ICE vehicles, CNG, hybrids, flex fuel technologies, and electric vehicles. This is being supported by rising domestic demand, new model launches, improving affordability, and India's growing relevance as a global manufacturing and supplying base.

Speaker #3: As you all know, the global business environment continues to remain uncertain, with geopolitical developments, evolving trade dynamics, and macroeconomic volatility influencing markets across regions.

Speaker #3: Against this backdrop, the Indian automotive industry has demonstrated remarkable resilience and continues to offer an attractive long-term growth opportunity. While the global industry continues to debate the pace and direction of electrification, the reality emerging in India is diverse.

Speaker #3: We are seeing simultaneous growth of conventional ICE vehicles, CNG, hybrids, flex-fuel technologies, and electric vehicles. This is being supported by rising domestic demand, new model launches, improving affordability, and India's growing relevance as a global manufacturing and supplying base.

Ashwani Maheshwari: This is being supported by rising domestic demand, new model launches, improving affordability, and India's growing relevance as a global manufacturing and supplying base. This strong underlying demand is supported by a broader manufacturing opportunity. The auto component industry is becoming an increasingly important part of India's economic and manufacturing story. ACMA states that this sector contributes approximately 2.3% to India GDP, 25% to manufacturing GDP, and directly employs about 1.5 million people. In FY26, the industry reached approximately US$85.9 billion, with exports about US$24 billion. The sector has grown at a five-year CAGR of around 14%, demonstrating both domestic scale and increasing global relevance. For Sharda, this environment is particularly favorable. The future is unlikely to be defined by one winning powertrain.

Speaker #3: This strong underlying demand is supported by a broader manufacturing opportunity. The auto component industry is becoming an increasingly important part of India's economic and manufacturing story.

Ashwani Maheshwari: This strong underlying demand is supported by a broader manufacturing opportunity. The auto component industry is becoming an increasingly important part of India's economic and manufacturing story. ACMA states that this sector contributes approximately 2.3% to India GDP, 25% to manufacturing GDP, and directly employs about 1.5 million people. In FY26, the industry reached approximately US$85.9 billion, with exports about US$24 billion. The sector has grown at a five-year CAGR of around 14%, demonstrating both domestic scale and increasing global relevance. For Sharda, this environment is particularly favorable. The future is unlikely to be defined by one winning powertrain. It will be shaped by a combination of technologies, with OEMs choosing the most appropriate solution by vehicle segment, usage pattern, cost, and regulatory environment. Our strategy is therefore not dependent on any single powertrain technology.

Speaker #3: ACMA states that the sector contributes approximately 2.3% to India's GDP, 25% to manufacturing GDP, and directly employs about 1.5 million people. In FY26, the industry reached approximately $85.9 billion, with exports of about $24 billion.

Speaker #3: The sector has grown at a five-year CAGR of around 14%, demonstrating both domestic scale and increasing global relevance. For Sharda, this environment is particularly favorable.

Speaker #3: The future is unlikely to be defined by one winning powertrain. It will be shaped by a combination of technologies, with OEMs choosing the most appropriate solution by vehicle segment, usage pattern, cost, and regulatory environment.

Ashwani Maheshwari: It will be shaped by a combination of technologies, with OEMs choosing the most appropriate solution by vehicle segment, usage pattern, cost, and regulatory environment. Our strategy is therefore not dependent on any single powertrain technology. Instead, it is to build capabilities that enable us to participate across this multi-powertrain landscape while simultaneously creating a powertrain agnostic product portfolio. Against this industry backdrop, let me now explain what this transition means for Sharda and how our strategy is progressing. Over the last few years, we have been systematically diversifying Sharda along three dimensions: products, powertrains, and geographies. Our objective has been to reduce dependence on any one of the technology or market and build multiple independent engines of growth.

Speaker #3: Our strategy is, therefore, not dependent on any single powertrain technology. Instead, it is to build capabilities that enable us to participate across this multi-powertrain landscape, while simultaneously creating a powertrain-agnostic product portfolio.

Ashwani Maheshwari: Instead, it is to build capabilities that enable us to participate across this multi-powertrain landscape while simultaneously creating a powertrain agnostic product portfolio. Against this industry backdrop, let me now explain what this transition means for Sharda and how our strategy is progressing. Over the last few years, we have been systematically diversifying Sharda along three dimensions: products, powertrains, and geographies. Our objective has been to reduce dependence on any one of the technology or market and build multiple independent engines of growth. During our Q4 FY26 investor call, we had highlighted lightweighting, exports, emission adjacencies, regulatory readiness, and technology partnership as our key growth priorities. I am pleased to say that during the quarter, we made progress across these priorities.

Speaker #3: Now, against this industry backdrop, let me explain what this transition means for Sharda, and how our strategy is progressing. Over the last few years, we have been systematically diversifying Sharda along three dimensions.

Speaker #3: Products, powertrains, and geography. Our objective has been to reduce dependence on any one technology or market, and build multiple independent engines of growth.

Speaker #3: During our Q4 FY26 investor call, we had highlighted lightweighting, exports, emission adjacencies, regulatory readiness, and technology partnership as our key growth priorities. I'm pleased to say that during the quarter, we made progress across these priorities.

Ashwani Maheshwari: During our Q4 FY26 investor call, we had highlighted lightweighting, exports, emission adjacencies, regulatory readiness, and technology partnership as our key growth priorities. I am pleased to say that during the quarter, we made progress across these priorities. We continued to ramp up our temperature control tube business, expanded our emission order book in multiple powertrains, booked additional orders with export customers, accelerated production ramp-up in control arms, and made further progress on subframe and torsion beams. These developments demonstrate that the priorities communicated earlier are moving progressively from strategy and customer engagements towards orders, SOPs, and revenue contribution. Moving on to lightweighting. Lightweighting remains a key pillar of our powertrain agnostic strategy.

Speaker #3: We continue to ramp up our temperature-controlled tube business, expanded our emission order book in multiple powertrains, booked additional orders with export customers, accelerated production ramp-up in control arms, and made further progress on subframes and torsion beams.

Ashwani Maheshwari: We continued to ramp up our temperature control tube business, expanded our emission order book in multiple powertrains, booked additional orders with export customers, accelerated production ramp-up in control arms, and made further progress on subframe and torsion beams. These developments demonstrate that the priorities communicated earlier are moving progressively from strategy and customer engagements towards orders, SOPs, and revenue contribution. Moving on to lightweighting. Lightweighting remains a key pillar of our powertrain agnostic strategy. During the quarter, previously announced control arm and link programs continued to ramp up while the order pipeline provides further visibility across FY27 and FY28. Customer engagement and RFQ activity remains encouraging, with growth linked to customer production and program ramp-up schedules. Our current control arm and link business has been built on Sharda's organic manufacturing, local R&D, and customer capabilities.

Speaker #3: These developments demonstrate that the priorities communicated earlier are moving progressively from strategy and customer engagements towards orders, SOPs, and revenue contribution. Moving on to lightweighting, lightweighting remains a key pillar of our powertrain-agnostic strategy.

Speaker #3: During the quarter, previously announced control arm and link programs continue to ramp up, while the order pipeline provides further visibility across FY27 and FY28.

Ashwani Maheshwari: During the quarter, previously announced control arm and link programs continued to ramp up while the order pipeline provides further visibility across FY27 and FY28. Customer engagement and RFQ activity remains encouraging, with growth linked to customer production and program ramp-up schedules. Our current control arm and link business has been built on Sharda's organic manufacturing, local R&D, and customer capabilities. We are strengthening this platform further through technology partnership and by extending the portfolio into more engineering-intensive structural products. Our technology licensing agreement with DongA expands our lightweighting portfolio beyond control arms into subframe and torsion beams. Building on the ongoing engineering collaboration with DongA, we jointly showcased cutting-edge products and technologies to key OEM customers during the quarter.

Speaker #3: Customer engagement and RFQ activity remain encouraging, with growth linked to customer production and program ramp-up schedules. Our current control arm and link business has been built on Sharda's organic manufacturing, local R&D, and customer capabilities.

Speaker #3: We are strengthening this platform further through technology partnerships and by extending the portfolio into more engineering-intensive structural products. Our technology licensing agreement with Dongi expands our lightweighting portfolio beyond control arms into subframes and torsion beams.

Ashwani Maheshwari: We are strengthening this platform further through technology partnership and by extending the portfolio into more engineering-intensive structural products. Our technology licensing agreement with DongA expands our lightweighting portfolio beyond control arms into subframe and torsion beams. Building on the ongoing engineering collaboration with DongA, we jointly showcased cutting-edge products and technologies to key OEM customers during the quarter. This has further strengthened ongoing technical discussions and generated RFQ opportunities across multiple product platforms. While it is still early to comment on commercial timelines, we are encouraged by the progress being made. Overall, our objective is to build a leadership position across the broader relevant lightweighting portfolio by expanding beyond control arms and links into high-value structural products. Let me now move to exports and global business. The momentum in our global business continues to remain encouraging despite the evolving geopolitical and trade environment.

Speaker #3: Building on the ongoing engineering collaboration with Dongi, we jointly showcased cutting-edge products and technologies to key OEM customers during the quarter. This has further strengthened ongoing technical discussions and generated RFQ opportunities.

Ashwani Maheshwari: This has further strengthened ongoing technical discussions and generated RFQ opportunities across multiple product platforms. While it is still early to comment on commercial timelines, we are encouraged by the progress being made. Overall, our objective is to build a leadership position across the broader relevant lightweighting portfolio by expanding beyond control arms and links into high-value structural products. Let me now move to exports and global business. The momentum in our global business continues to remain encouraging despite the evolving geopolitical and trade environment.

Speaker #3: Multiple product platforms piloted. Still early to comment on commercial timelines, but we are encouraged by the progress being made. Overall, our objective is to build a leadership position across the broader, relevant lightweighting portfolio by expanding beyond control arms and links into high-value structural products.

Speaker #3: Let me now move to exports and global business. The momentum in our global business continues to remain encouraging, despite the evolving geopolitical and trade environment.

Speaker #3: Our previously announced three orders from a North American engine and genset manufacturers with a combined annual value of approximately US 10.7 million dollars and a lifetime value of approximately US 58.5 million dollars remain aligned to revised customer schedules SOPs are expected across Q3, FY27, and Q4, FY27.

Ashwani Maheshwari: Our previously announced three orders from a North American engine and genset manufacturers with a combined annual value of approximately US$10.7 million and a lifetime value of approximately US$58.5 million remain aligned to revised customer schedules. SOPs are expected across Q3 FY27 and Q4 FY27. Execution activities, including sampling, validation, and SOP readiness, are progressing in line with customer requirement. In addition, we are working on execution for various SOPs of previously announced businesses and have a good RFQ pipeline across our focus area of CD, agri and large genset emission components, temperature control tubes, small tractors and genset exhaust systems. Let me now share the key developments in our emission business and adjacencies across new segments, fuel technologies, and products.

Speaker #3: Execution activities, including sampling, validation, and SOP readiness, are progressing in line with customers' requirements. In addition, we are working on execution for various SOPs of previously announced businesses, and have a good RFQ pipeline across our focus areas of CD, agri and large genset emission components, temperature-controlled tubes, small tractor, and genset exhaust systems.

Speaker #3: Let me now share the key developments in our emission business and adjacencies across new segments, fuel technologies, and products. In the emission business and adjacencies, our strategy is to grow by early preparedness for regulations, including DS-7, cross-channel newly developed temperature-controlled tubes across all segments, increase participation in the domestic emission market for premium two-wheelers, commercial vehicles, construction equipment, and genset market, and export key emission components.

Ashwani Maheshwari: In the emission business and adjacencies, our strategy is to grow by early preparedness for regulations including BS VII, foster newly developed temperature control tubes across all segments, increase participation in domestic emission market for premium two-wheelers, commercial vehicles, construction equipment, and genset market, and export key emission components. We are making good progress across these areas through customer development, program execution, and technology readiness. During Q1, we have secured multiple WLTP replacement businesses orders from leading passenger vehicle OEMs. These wins reflect our proactive preparation for evolving regulatory requirement and our ability to convert regulatory changes into business opportunities. The SOP of the previously announced temperature control tube order for a leading off-highway equipment manufacturer has commenced and is ramping up as planned. Moving on to infrastructure and capacity. Our investments remains modular and closely linked to confirmed programs and customer requirements.

Speaker #3: We are making good progress across these areas through customer development, program execution, and technology readiness. During Q1, we have secured multiple WLTP replacement business orders from leading passenger vehicle OEMs.

Speaker #3: These wins reflect our proactive preparation for evolving regulatory requirements and our ability to convert regulatory changes into business opportunities. The SOP of the previously announced temperature-controlled tube order for a leading off-highway equipment manufacturer has commenced and is ramping up as planned.

Speaker #3: Moving on to infrastructure and capacity, our investments remain modular and closely linked to confirmed programs and customer requirements. Our Chakan 3 lightweighting facility has commenced SOP and is ramping up in line with customer schedules.

Ashwani Maheshwari: Our investments remains modular and closely linked to confirmed programs and customer requirements. Our Chakan III lightweighting facility has commenced SOP and is ramping up in line with customer schedules. The facility has been designed with modular capacity, allowing investment to remain linked to confirmed programs and future customer demand. As the announced control arm and link orders ramp up, utilization is expected to increase progressively. Our new Uttarakhand facility is progressing in line with the customer implementation plan. The project involves an investment of approximately INR 20 crores and has been planned closer to customers' manufacturing location to improve logistics, responsiveness, and JIT alignment. In the first phase, it will support the relocation and co-location of existing business as the customer shifts production.

Ashwani Maheshwari: Our Chakan III lightweighting facility has commenced SOP and is ramping up in line with customer schedules. The facility has been designed with modular capacity, allowing investment to remain linked to confirmed programs and future customer demand. As the announced control arm and link orders ramp up, utilization is expected to increase progressively. Our new Uttarakhand facility is progressing in line with the customer implementation plan. The project involves an investment of approximately INR 20 crores and has been planned closer to customers' manufacturing location to improve logistics, responsiveness, and JIT alignment. In the first phase, it will support the relocation and co-location of existing business as the customer shifts production. Over time, the location can support additional share of business and create opportunities with other customers in North India across emission and light-weighting products.

Speaker #3: The facility has been designed with modular capacity, allowing investment to remain linked to confirmed programs and future customer demand. As the announced control arm and link orders ramp up, utilization is expected to increase progressively.

Speaker #3: Our new Uttarakhand facility is progressing in line with the customer, involves an investment of approximately ₹20 crores, and has been planned closer to customers' manufacturing location to improve logistics, responsiveness, and JIT alignment.

Speaker #3: In the first phase, it will support the relocation and co-location of existing business as the customer shifts production. Over time, relocation can support an additional share of business and create opportunities with other customers in North India across emission and lightweighting products.

Ashwani Maheshwari: Over time, the location can support additional share of business and create opportunities with other customers in North India across emission and light-weighting products. Moving on to technology and R&D, we continue to strengthen the capabilities required for both our current portfolio and future growth areas. During Q1 FY27, we filed two additional patents. This takes the total number of patents filing to 24, with four patents awarded. Our R&D team are also supporting WLTP, Euro 7 benchmarking, hybrid solutions, flex fuel readiness, temperature control tubes, and the localization of lightweighting technology. Let me now provide an update on the evolving regulatory environment and the opportunities it creates.

Speaker #3: Moving on to technology and R&D, we continue to strengthen the capabilities required for both our current portfolio and future growth areas. During Q1 FY27, we filed two additional patents.

Ashwani Maheshwari: Moving on to technology and R&D, we continue to strengthen the capabilities required for both our current portfolio and future growth areas. During Q1 FY27, we filed two additional patents. This takes the total number of patents filing to 24, with four patents awarded. Our R&D team are also supporting WLTP, Euro 7 benchmarking, hybrid solutions, flex fuel readiness, temperature control tubes, and the localization of lightweighting technology. Let me now provide an update on the evolving regulatory environment and the opportunities it creates. The revised CAFE 3 draft, issued on 16 July 2026 and proposed to be implemented from 1 April 2027 for M1 passenger vehicle, retained its multi-technology approach while introducing certain refinement. The revised framework sets modified targets for lighter and average weight vehicles while reducing the compliance advantage previously available to heavier fleets.

Speaker #3: This takes the total number of patents filed to 24, with four patents awarded. Our R&D team is also supporting WLTP, Euro 7 benchmarking, hybrid solutions, Flex Fuel readiness, temperature-controlled tubes, and the localization of lightweighting technology.

Speaker #3: Let me now provide an update on the evolving regulatory environment and the opportunities it creates. The revised CAFE 3 draft, issued on 16th July 2026 and proposed to be implemented from 1st April 2027 for M1 passenger vehicles, retains its multi-technology approach while introducing certain refinements.

Ashwani Maheshwari: The revised CAFE 3 draft, issued on 16 July 2026 and proposed to be implemented from 1 April 2027 for M1 passenger vehicle, retained its multi-technology approach while introducing certain refinement. The revised framework sets modified targets for lighter and average weight vehicles while reducing the compliance advantage previously available to heavier fleets.

Speaker #3: The revised framework sets modified targets for lighter and average-weight vehicles, while reducing the compliance advantage previously available to heavier fleets. It also moderates the super credit benefit for strong hybrids and flex-fuel vehicles, while retaining the existing incentive for electric and range-extended electric vehicles.

Ashwani Maheshwari: It also moderates the super credit benefit for strong hybrids and flex fuel vehicles while retaining the existing incentive for electric and range extended electric vehicles. The likely OEM response will therefore involve a combination of EV, hybrid, CNG, flex fuel, and improvement in vehicle efficiency rather than one uniform technology solution. Except for pure EV, all these powertrains continue to require engineered emission systems. This makes CAFE 3 relevant to both our emission and lightweighting portfolio. BS 6.3 or BS 6 with WLTP will be effective from 1 April 2027 for M1 passenger vehicles. While WLTP may not require a complete exhaust system redesign in every case, it increases focus on catalyst efficiency, calibration, thermal management and durability. Our new WLTP related orders demonstrate that we are participating in this transition. BS 7 has not yet been officially notified.

Speaker #3: The likely OEM response will therefore involve a combination of EVs, hybrids, CNG, flex fuel, and improvements in vehicle efficiency, rather than one uniform technology solution.

Speaker #3: Except for pure EVs, all these powertrains continue to require engineered emission systems. This makes CAFE 3 relevant to both our emission and lightweighting portfolio.

Speaker #3: We have 6.3 of BS6 with WLTP, which will be effective from 1st April 2027 for M1 passenger vehicles. While WLTP may not require a complete exhaust system redesign in every case, it increases the focus on catalyst efficiency, calibration, thermal management, and durability.

Speaker #3: Our new WLTP-related orders demonstrate that we are participating in this transition. BS7 has not yet been officially notified. Directionally, if India adopts requirements aligned to Euro 7, content is expected to increase mainly in the hot end and after-treatment systems, through high catalyst requirements, gasoline particulate filter, and additional catalytic applications. This would, of course, depend on vehicle category and OEM architecture.

Ashwani Maheshwari: Directionally, if India adopts requirements aligned to Euro 7, content is expected to increase, mainly in the hot end and after-treatment systems through high catalyst requirements, gasoline particulate filter and additional catalytic applications. This will of course depend on vehicle category and OEM architecture. Our R&D work with an existing customer on Euro 7 related solutions provides early technology exposure and preparedness. Another area receiving increasing industry attention is the transition towards higher ethanol blends. Up to E20, changes to the emission system are relatively limited. The final content opportunity will depend on notified fuel specifications, regulatory requirement and OEM platform design. We continue to work closely with the OEMs and remain well-positioned to support this transition as the market evolves. Let me now update you on our technology alliances and joint ventures, which are another important pillar of our growth strategy.

Speaker #3: Our R&D work within existing customers on Euro 7-related solutions provides early technology exposure and preparedness. Another area receiving increasing industry attention is the transition towards higher ethanol blends.

Speaker #3: Up to E20, changes to the emission system are relatively limited. The final content opportunity will depend on notified fuel specifications, regulatory requirements, and OEM platform design.

Speaker #3: We continue to work closely with the OEMs and remain well positioned to support this transition as the market evolves. Let me now update you on our technology alliances and joint ventures, which are another important pillar of our growth strategy.

Ashwani Maheshwari: Let me now update you on our technology alliances and joint ventures, which are another important pillar of our growth strategy. Our ETPL joint venture continues to have stable performance and remains to be profitable during the quarter. China and Korea continue to be important market for technology scouting. Both have developed significant capabilities in lightweighting, hybrid systems, EV platforms, chassis technology and advanced manufacturing. We continue to engage with potential partners where there is a clear technology advantage, customer relevance, localization potential and long-term commercial viability. We will remain selective and will communicate developments once they reach a mature stage.

Speaker #3: Our ETPL joint venture continues to have stable performance and remains profitable during the quarter. China is important for technology scouting. Both have developed significant capabilities in lightweighting, hybrid systems, EV platforms, chassis technology, and advanced manufacturing.

Ashwani Maheshwari: Our ETPL joint venture continues to have stable performance and remains to be profitable during the quarter. China and Korea continue to be important market for technology scouting. Both have developed significant capabilities in lightweighting, hybrid systems, EV platforms, chassis technology and advanced manufacturing. We continue to engage with potential partners where there is a clear technology advantage, customer relevance, localization potential and long-term commercial viability. We will remain selective and will communicate developments once they reach a mature stage. Moving on to acquisitions. Over the last few years, we have consciously invested in organizational capability required to evaluate, execute and integrate acquisitions successfully. We have strengthened our strategy, M&A, business development and integration capabilities and established a disciplined framework for assessing opportunities. Having established these capabilities, we believe we are now ready to be more assertive in pursuing strategic acquisitions. However, this does not mean compromising on discipline.

Speaker #3: We continue to engage with potential partners where there's a clear technology advantage, customer relevance, localization potential, and long-term commercial viability. We will remain selective and will communicate developments once they reach a mature stage.

Speaker #3: Moving on to acquisitions, over the last few years, we have consciously invested in organizational capabilities required to evaluate, execute, and integrate acquisitions successfully. We have strengthened our strategy, M&A, business development, and integration capabilities, and established a disciplined framework for assessing opportunities.

Ashwani Maheshwari: Moving on to acquisitions. Over the last few years, we have consciously invested in organizational capability required to evaluate, execute and integrate acquisitions successfully. We have strengthened our strategy, M&A, business development and integration capabilities and established a disciplined framework for assessing opportunities. Having established these capabilities, we believe we are now ready to be more assertive in pursuing strategic acquisitions. However, this does not mean compromising on discipline.

Speaker #3: Having established these capabilities, we believe we are now ready to be more assertive in pursuing strategic acquisitions. However, this does not mean compromising on discipline.

Speaker #3: Any transaction must continue to meet our filters of strategic fit, customer and technology relevance, valuation, integration feasibility, and ROC. Our strong balance sheet provides us with the capacity to pursue suitable opportunities, but capital deployment will remain balanced between organic growth, technology partnerships, acquisitions, and shareholder returns.

Ashwani Maheshwari: Any transaction must continue to meet our filters of strategic fit, customer and technology relevance, valuation, integration feasibility, and ROC. Our strong balance sheet provides us with capacity to pursue suitable opportunities, but capital deployment will remain balanced between organic growth, technology partnership, acquisitions, and shareholder returns. Finally, let me briefly summarize our outlook. The key contributors to FY27 growth include the full year benefits of previously announced lightweighting order, ramp-up of additional lightweighting programs, the temperature controlled tube adjacencies, SOPs of North American export orders, and the supportive outlook for domestic OEM volumes. The exact quarterly trajectory will remain linked to customer production schedule, SOPs, and the program ramp-up. Overall, the quarter reflects steady progress in converting our strategic priorities into execution. Our focus now is on timely SOPs, successful ramp-ups, conversion of customer pipeline, and disciplined capital allocation.

Speaker #3: Finally, let me briefly summarize our outlook: The key contributors to FY27 growth include the full benefits of previously announced lightweighting orders, ramp-up of additional lightweighting programs, the temperature-controlled tube adjacencies, SOPs of North American export orders, and the supportive outlook for domestic OEM volumes.

Speaker #3: The exact quarterly trajectory will remain linked to customer production schedules, SOPs, and the program ramp-up. Overall, the quarter reflects steady progress in converting our strategic priorities into execution.

Speaker #3: Our focus now is on timely SOPs, successful ramp-ups, conversion of the customer pipeline, and disciplined capital allocation. We remain very confident in the long-term opportunity and will continue to balance growth ambition with disciplined execution and return expectations.

Ashwani Maheshwari: We remain very confident in the long-term opportunity and will continue to balance growth ambition with disciplined execution and return expectations. Thank you so much. With this, we can open the floor for Q&A.

Speaker #3: Thank you so much. With this, we can open the floor for Q&A.

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

Operator: Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may please press star and 1 on their touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and 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 from the line of Gurpreet from InCred AMC. Please proceed with your question.

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

Speaker #1: Ladies and gentlemen, we'll wait for a moment while the question queue assembles. The first question is from the line of Preet from Incred AMC.

Speaker #1: Please proceed with your question.

Speaker #2: Thank you so much for the opportunity, sir. My first question would be along the lines of our export or the order book which we mentioned in the PPT, and on the suspension side.

[Analyst] (InCred AMC): Thank you so much for the opportunity, sir. My first question would be on the line of our export or the order book, which we mentioned in the PPT and on the suspension side. On export side, I can see that from the PPT, the order which is going to flow, which has already started, the SOP for which you have mentioned as a Q3 or Q4 of FY26, was around $23.7 million. There are 2 orders which are going to start from Q3 or Q4 FY27, which is around another $11.85 million. If I add these both and multiply with the current order rate, it comes around INR 330 million. Out of that, how much can we expect in FY27 and FY28? If you could just give some brief on the same.

Gurpreet S Arora: Thank you so much for the opportunity, sir. My first question would be on the line of our export or the order book, which we mentioned in the PPT and on the suspension side. On export side, I can see that from the PPT, the order which is going to flow, which has already started, the SOP for which you have mentioned as a Q3 or Q4 of FY26, was around $23.7 million. There are 2 orders which are going to start from Q3 or Q4 FY27, which is around another $11.85 million. If I add these both and multiply with the current order rate, it comes around INR 330 million. Out of that, how much can we expect in FY27 and FY28? If you could just give some brief on the same.

Speaker #2: On the export side, I can see that from the PPT, the order which is going to flow, which has already started, the SOP for which you have mentioned as Q3 or Q4 of FY26, was around $23.7 million.

Speaker #2: And there are two orders which are going to start from Q3 or Q4 FY27, which is around another $11.85 million. If I add these both and multiply by the current dollar rate, it comes to around ₹350 crore.

Speaker #2: Out of that, how much can we expect in FY27 and FY28? If you could just give some brief on the same.

Speaker #3: So, we have enumerated the order sheet as you had said. At various points of time, the SOPs are happening. The SOPs that are complete are happening as per schedule.

Ashwani Maheshwari: We have enumerated the order sheet, as you had said, at various point of time, the SOP happening. The SOPs are happening as per schedule, and one of the SOPs, as I announced earlier, is starting in Q3 FY26, one is starting in Q4 FY26, and subsequently, it will ramp up. Our SOPs will completely remain aligned to the customer requirement and schedules. You will progressively see this impacting or getting accretive into our top line. Classifying to how much would happen in various months would completely depend upon the customer schedules. Suffice to say that the SOPs and the plan are as per the dates which we have mentioned.

Speaker #3: And one of the SOPs, as I announced earlier, is starting in Q3 FY26. Another is starting in Q4 FY26, and subsequently, it will ramp up.

Speaker #3: Now, our SOPs will remain completely aligned to the customer requirements and schedules. So you will progressively see this impacting or getting more accurately reflected in our top line.

Speaker #3: Now, classifying into how much would happen in various months would completely depend upon the customer schedules. Suffice to say that the SOPs and the plan are as per the dates which were mentioned.

Speaker #2: Sir, would it be safe to assume that, out of all these orders, we could do around ₹100 crore of top line in this year and around ₹200 crore of top line in FY28?

[Analyst] (InCred AMC): Sir, will it be safe to assume that out of all these orders, we could do around INR 100 million of top line in this year and around INR 200 million of top line in FY28?

Gurpreet S Arora: Sir, will it be safe to assume that out of all these orders, we could do around INR 100 million of top line in this year and around INR 200 million of top line in FY28?

Speaker #3: So again, as I said, giving a number is going to be a little difficult because this would depend upon the customer schedules. Now, our SOP and ramp-up will remain completely aligned to the customer schedules.

Ashwani Maheshwari: Again, as I said, giving a number is going to be a little difficult because this would depend upon these customer schedules. Our SOP and ramp-up will remain completely aligned to the customer schedules. As on date, we do not see any changes in the SOP dates.

Speaker #3: As of now, we do not see any changes in the SOP dates.

Speaker #2: Right. So if just a follow-up on this, how do we see ramp-up to happen? So like if our annual value is 2.3 million dollars, we have and the order is of around 5 years lifetime value which comes around 5 years.

[Analyst] (InCred AMC): Got it. Just a follow-up on this. How do we see ramp-up will happen? If our annual value is $2.3 million and the order is of around five years, lifetime value comes around five years. Do we see full ramp-up could be happen in second year, third year, fourth year? Any ballpark number?

Gurpreet S Arora: Got it. Just a follow-up on this. How do we see ramp-up will happen? If our annual value is $2.3 million and the order is of around five years, lifetime value comes around five years. Do we see full ramp-up could be happen in second year, third year, fourth year? Any ballpark number?

Speaker #2: So, do we see the full ramp-up happening in the second year, third year, or fourth year? Any ballpark number?

Speaker #3: So, I mean, we can take this question as with an experience. Normally, the ramp-ups are linked to the pickup of the vehicle.

Ashwani Maheshwari: We can take this question as with an experience. Normally, the ramp-ups are linked to the pickup of the vehicle. If it is a new platform, there is a pickup schedule which the OEM would formulate. Our experience says that it would take a year or a couple of years to get to the peak volumes.

Speaker #3: Now, if it's a pickup or if it's a new platform, there's a pickup schedule which the OEM would formulate. Our experience says that it would take a year or a couple of years to get to the peak volumes.

Speaker #2: Got it, sir. And on the suspension side, last year, as of year-end, we had a market share of around 14%.

[Analyst] (InCred AMC): Got it, sir. On the suspension side, last year, as of year, we had a market share of around 14%. Is there any improvement in the current quarter? If you could just bifurcate the growth into suspension or exhaust, or if you could give any quantitative number. On gross profit growth, we have done around 8% growth. If you could give like, we understand there is a catalytic converter portion subtract due to whichever raw material prices fluctuate. This quarter, apart from that, aluminum and steel prices have also risen a lot. If you could just tell us how much gross profit we might have lost because of that aluminum and steel cost increase, which we would be getting in next quarter.

Gurpreet S Arora: Got it, sir. On the suspension side, last year, as of year, we had a market share of around 14%. Is there any improvement in the current quarter? If you could just bifurcate the growth into suspension or exhaust, or if you could give any quantitative number. On gross profit growth, we have done around 8% growth. If you could give like, we understand there is a catalytic converter portion subtract due to whichever raw material prices fluctuate. This quarter, apart from that, aluminum and steel prices have also risen a lot. If you could just tell us how much gross profit we might have lost because of that aluminum and steel cost increase, which we would be getting in next quarter.

Speaker #2: Is there any improvement in the current quarter, or if you could just bifurcate the growth into suspension or exhaust? Or if you could give any quantitative number? And another thing, on gross profit growth—we have done around 8% growth.

Speaker #2: If you could just, like, we understand there is a catalytic converter portion subtraction due to which our raw material prices fluctuate. But this quarter, apart from that, aluminum and steel prices have also risen a lot.

Speaker #2: So if you could just tell how much gross profit we might have lost because of that aluminum and steel cost increase, which we would be getting in next quarter.

Speaker #3: Right. Sorry, I couldn't get your name. Can you repeat it?

Ashwani Maheshwari: Right. Sorry, I couldn't get your name. Can you

Speaker #2: Preet.

[Analyst] (InCred AMC): Gurpreet.

Gurpreet S Arora: Gurpreet.

Speaker #3: Preet. Preet, there are three questions, if I understand correctly.

Ashwani Maheshwari: Gurpreet, there are three questions, if I correctly understand.

Speaker #2: Yes.

[Analyst] (InCred AMC): Yes.

Gurpreet S Arora: Yes.

Speaker #3: Your first question is around the suspension or the control arm, and links to the lightweighting market share, right? That's the first question. So, we had given the market share of 14% in the last financial year.

Ashwani Maheshwari: Your first question is around the suspension or the control arm and links, the lightweighting market share. That is our first question. We have given the market share of 14% in the last financial year. We do market share analysis every year. We do not do it every quarter. It was 14% at the end of the financial year. With the SOPs and the visibility we have, which we see now happening even in Q3, this market share will certainly go up. How much will it go up is something which we will calculate at the end of this financial year. We will be able to give you a number only at the end of the financial year, but suffice to say that this will go up with the visibility of orders which we have in hand. Your second question was related to the gross profit. Correct, Gurpreet?

Speaker #3: We do market share analysis every year. We don't do it every quarter. So, it was 14% at the end of the financial year. With the SOPs and the visibility we have, which we see now happening even in the third quarter, this market share will certainly go up.

Speaker #3: How much it will go up is something that we calculate at the end of this financial year. So, we'll be able to give you a number only at the end of the financial year.

Speaker #3: But suffice it to say that this will go up with the visibility of orders which we have in hand. Your second question was related to the gross profit, correct, Preet?

Ashwani Maheshwari: Your second question was related to the gross profit. Correct, Gurpreet?

Speaker #2: Yes, sir.

[Analyst] (InCred AMC): Yes, sir. Hello? Yeah. I will just request GD to take that question.

Gurpreet S Arora: Yes, sir.

Speaker #3: Yep, yeah. So I will just request GD to take that question. Hi, Preet. As far as gross profit is concerned, you rightly said gross profit is the right indicator of our performance.

Ashwani Maheshwari: Hello? Yeah. I will just request GD to take that question.

GD Takkar: Yeah. Hi, Gurpreet. As far as gross profit is concerned, you rightly said gross profit is the right indicator of our performance. This quarter, as we mentioned, our growth was 34% because of the catalyst, which is one of the pass-through element of our sales, and then product mix of the items which are with catalysts. That all impacts the overall revenues and therefore, gross profit is the right indicator of the growth. Now, in this quarter, it was 8%. In terms of impact of steel or aluminum, et cetera, while aluminum has no relevance for us. Most of the direct materials are on pass-through basis. There was small impact of a premium RM procurement, which is built into the gross profit growth of 8% because of the geopolitical situation. Some impact was there, which is already built into this.

Speaker #3: So this quarter, as we mentioned, our growth was 34% because of the catalyst, which is one of the pass-through elements of our sales, and then the product mix of the items which are with catalyst.

Speaker #3: So that all impacts the overall revenues and therefore gross profit is the right indicator of the growth. Now, in this quarter, it was 8% and in terms of impact of steel or aluminum, etc., while aluminum has no relevance for us, so most of the direct materials are on pass-through basis.

Speaker #3: And there was small impact of premium RM procurement, which is built into the gross profit growth of 8% because of the geopolitical situation some impact was there, which is already built into this.

Speaker #3: And the pass-through happens gradually. So it happens on different time scales with different customers. So it's a regular activity. So you won't see anything specifically missing in any particular quarter which will get covered in next quarter because this is a regular feature of every quarter or half year.

GD Takkar: The pass-through happens gradually. It happens on different timescales with different customers. It is a regular activity. You will not see anything specifically missing in any particular quarter, which will get covered in next quarter because this is a regular feature of every quarter or half year. There will not be any impact arising out of that lag. Hope that gives you the answer.

Speaker #3: So there won't be any impact arising out of that lag of that gaps that gives you the answer.

[Analyst] (InCred AMC): Yes, sir. Just to get it more clear, do we mean to say that all the raw material price increase, apart from substrate, we get on a live basis and not with a quarter lag like other auto ancillary companies? Is my understanding correct?

Gurpreet S Arora: Yes, sir. Just to get it more clear, do we mean to say that all the raw material price increase, apart from substrate, we get on a live basis and not with a quarter lag like other auto ancillary companies? Is my understanding correct?

Speaker #2: Sorry, just to get it more clear. So, are we saying that for all the raw material price increases, apart from substrate, we get them on a live basis and not with a quarter lag like other auto engineering companies?

Speaker #2: Is my understanding correct?

Speaker #3: So, in terms of timelines, it differs from customer to customer, and our situation is also exactly as other ancillaries have in the sector. However, the only point I mentioned, for example, assuming for a particular quarter, for a particular customer, I get it on a quarterly basis.

GD Takkar: In terms of timelines, it differs from customer to customer. Our situation is also exactly as other ancillaries have in the sector. However, the only point I mentioned, for example, assuming for a particular quarter, for a particular customer, I get it on quarterly basis. I will be getting for the previous quarter. For this quarter, I will get next quarter. There will be a lag, but that lag doesn't create any vacuum for a particular quarter because you get for the previous quarter. Therefore, you won't see any vacuum because of this reason in the numbers.

Speaker #3: So I will be getting for the previous quarter; for this quarter, I will get next quarter. So there will be a lag, but that lag doesn't create any work vacuum for a particular quarter because you get for the previous quarter.

Speaker #3: So therefore, you won't see any vacuum because of this reason in the numbers.

Speaker #2: No, sir. For the substrates, we get it on the live basis, right?

[Analyst] (InCred AMC): No, sir. For the substrates, we get it on the live basis, right?

Gurpreet S Arora: No, sir. For the substrates, we get it on the live basis, right?

Speaker #3: Sorry. For substrate, for substrate,

GD Takkar: Sorry. For substrate?

[Analyst] (InCred AMC): For substrate, the raw material which is very volatile, we get it on a live basis, right? Like this quarter, if there is a price increase on the substrate.

Gurpreet S Arora: For substrate, the raw material which is very volatile, we get it on a live basis, right? Like this quarter, if there is a price increase on the substrate.

Speaker #2: The raw material, which is very volatile, we get it on a live basis, right? Like this quarter, if there is a price increase of the substrate, but for this...

Speaker #3: Yeah. So let me just clarify, Preet, on this substrate prices. So that is customer-directed item and prices are determined by the customer only. So there is no sort of lag on that particular part.

GD Takkar: Yeah. Let me just clarify, Gurpreet, on this substrate prices. That is customer-directed item, and prices are determined by the customer only. So there is no sort of lag on that particular part.

Speaker #2: Yes, exactly. So, if there was no steel or copper price increase in this quarter, what would have been our gross profit growth? It would have been higher than 8%, right?

[Analyst] (InCred AMC): Yes, exactly. If there was no steel or copper, steel prices increment in this quarter, what would have been our gross profit growth? It would have been higher than 8%, right?

Gurpreet S Arora: Yes, exactly. If there was no steel or copper, steel prices increment in this quarter, what would have been our gross profit growth? It would have been higher than 8%, right?

Speaker #3: So in terms of one is the substrate impact which we have already mentioned. Now, steel is back to back. So therefore, there won't be any impact of the movement in the steel prices.

GD Takkar: One is the substrate impact, which we have already mentioned. Steel is back to back. Therefore, there won't be any impact of the movement in the steel prices at gross profit level because gross profit is net of raw material cost so there won't be any impact. Therefore, gross profit growth will be same irrespective of this.

Speaker #3: At gross profit level because gross profit is net of raw material cost. So there won't be any impact. And therefore, gross profit growth will be same irrespective of this.

[Analyst] (InCred AMC): Sorry for taking a lot of time. I just did not understand yet. For example, if steel prices have moved up by 20%, this 20% delta we would be getting in the next quarter because we get it with a quarter lag, right? If steel has moved from 100 to 120, the 20 rupees delta we would be getting in the next quarter. So there would be impact of gross margin compression in this quarter of 20 rupees. Correct? Or am I getting it wrong?

Speaker #2: So sorry for taking a lot of time. I just did not understand yet. For example, if steel prices have moved up by 20%, this 20% delta, we would be getting in the next quarter.

Gurpreet S Arora: Sorry for taking a lot of time. I just did not understand yet. For example, if steel prices have moved up by 20%, this 20% delta we would be getting in the next quarter because we get it with a quarter lag, right? If steel has moved from 100 to 120, the 20 rupees delta we would be getting in the next quarter. So there would be impact of gross margin compression in this quarter of 20 rupees. Correct? Or am I getting it wrong?

Speaker #2: Because we get it with a quarter lag, right? So, if steel has moved from 100 to 120, the Rs. 20 delta—we would be getting that in the next quarter.

Speaker #2: So, there would be an impact of gross margin compression in this quarter of 20 rupees, correct? Or am I getting it wrong?

Speaker #3: So you are getting it right. Let me explain how the entire commodity thing is passed on. Now, for direct buy parts like catalyst, it's a complete pass-through. That is clear.

GD Takkar: You are getting it right. Let me explain you how the entire commodity thing passed on. For direct buy parts like catalyst, it is a complete pass-through. That is clear?

[Analyst] (InCred AMC): Yes.

Gurpreet S Arora: Yes.

Speaker #3: Most of the direct materials are also indexed. Now, in this particular quarter, there’s also a one-time premium freight or premium price RM procurement, which has been absorbed by us to ensure a smooth supply chain.

GD Takkar: Most of the direct materials are also indexed. In this particular quarter, there is also one time premium freight or premium price RM procurement which has been absorbed by us to ensure smooth supply chain. There are lots of one time costs which are paid on account of labor, the dynamic situation because of geopolitical disruption. All this will not be coming quarter, if that is your question. These one time costs which are incurred will normalize over the coming quarter. As far as the indexing is concerned, it is difficult for us to put a number to this indexing because what we are talking about is a lag. I do not know what will the RM prices be this quarter. If the RM prices this quarter, whatever delta changes will be the impact with the respective OEM, whether it is 3 months or 6 months accordingly.

Speaker #3: There are lots of one-time account, one-time costs which are paid on account of labor, and the dynamic situation because of geopolitical disruption. Now, all this will not be in the coming quarter.

Speaker #3: If that's your question, now, these one-time costs, which are incurred, will be normalized over the coming quarter. As far as the indexing is concerned, it is difficult for us to put a number to this indexing.

Speaker #3: What we are talking about is a lag. Now, I do not know what the RM prices will be this quarter. Now, if the RM prices this quarter—whatever delta changes—will be the impact with the respective OEMs, whether it is 3 months or 6 months, accordingly.

GD Takkar: If the RM prices this quarter, whatever delta changes will be the impact with the respective OEM, whether it is 3 months or 6 months accordingly. It is not possible to predict whether the RM prices are taken into account or not taken into account. Is that clear?

Speaker #3: So, it is not possible to predict whether the RM prices are taken into account or not taken into account. Is that clear?

GD Takkar: It is not possible to predict whether the RM prices are taken into account or not taken into account. Is that clear?

Speaker #2: Yes, sir. Got it. Lastly, on...

[Analyst] (InCred AMC): Yes, sir. Got it. Lastly on-

Gurpreet S Arora: Yes, sir. Got it. Lastly on-

Speaker #4: Sorry to interrupt, Preet sir. May we request that you return to the question queue for follow-up?

Operator: Sorry to interrupt, Gurpreet, sir. May we request that you return to the question queue for follow-up?

Speaker #2: Sure. Sure.

[Analyst] (InCred AMC): Sure.

Gurpreet S Arora: Sure.

Speaker #4: Thank you, sir. Ladies and gentlemen. To ask a question, please press star and 1 now. Participants who wish to ask questions, may please press star and 1 at this time.

Operator: Thank you, sir. Ladies and gentlemen, to ask a question, please press star and one now. Participants who wish to ask questions may please press star and one at this time. The next question is from the line of Sonal Gupta from HSBC Asset Management.

Speaker #4: The next question is from the line of Sonal Gupta from HSBC Asset Management.

Speaker #5: Hello.

Sonal Gupta: Hello.

Speaker #4: Please proceed with your question. Sonal, your line has been unmuted. Please go ahead with your question.

Operator: Please proceed with your question. Sonal, your line has been unmuted. Please proceed with your question.

Speaker #5: Hi, thanks for taking my question. I hope I'm clear. Sorry, just carrying on with the previous question, right? I think there's some confusion around the steel price impact.

Sonal Gupta: Hi. Thanks for taking my question. I hope I am clear. Sorry, just carrying on with the previous question. I think there is some confusion around steel price impact. Is the steel price accounted for with a quarter lag, or I think you mentioned that it is back to back, then in which case there is no lag on steel prices, right?

Speaker #5: So, is the steel price accounted for with a quarter lag? Or, I think you mentioned that it is back to back. So in that case, there's no lag on steel prices, right?

Speaker #3: Absolutely, Sonal. There is no lag in steel prices. You rightly said so. Therefore, there is no impact. Yeah.

GD Takkar: Absolutely, Sonal. There is no lag as in steel prices. You rightly said, therefore, there is no impact. Yeah.

Speaker #5: So then, given that catalyst and steel are largely covered back to back for us, there is no major real under-recovery for us, right?

Sonal Gupta: Given that catalyst and steel are largely covered back to back for us, there is no major real under-recovery for us, right?

Speaker #3: No, absolutely not. This is what I said: the only limited impact was the premium freight on RM procurement to ensure smooth supplies because of the geopolitical situation.

GD Takkar: No, absolutely not. This is what I said. The only limited impact was the premium freight on RM procurement to ensure smooth supplies because of the geopolitical situation. That is already into the numbers.

Speaker #3: So that is already into the numbers.

Speaker #5: Got it. Got it. And would you and you also mentioned there are some other one-time factors. So would you be able to quantify the impact of these one-time factors?

Sonal Gupta: Got it. You also mentioned there are some other one-time factors. Would you be able to quantify the impact of these one-time factors?

Speaker #3: So, Sonal, it's very difficult to quantify, but two things we can say. One is that these are already factored in. These were because of the geopolitical situation in April and May.

GD Takkar: Sonal, very difficult to quantify, but two things we can say. One is that these are already factored in. These were because of the geopolitical situation in April and May. In July, these have already stabilized. We are hoping for the best for the future as well. Whatever limited impact we had, we have already captured into the numbers, and number was not very significant, just to say something on that.

Speaker #3: In July, these have already stabilized. We are hoping for the best for the future as well. And whatever limited impact we had, we have already captured in the numbers.

Speaker #3: And number was not very significant. Just to say something on that.

Speaker #5: Got it, got it, thanks. And just, I think again, the questions have been around, right? Like, if we look at our gross profit growth while the industry is growing very well, I understand the challenge is one of the OEMs this quarter.

Sonal Gupta: Got it. Thanks. I think, again, the questions have been around, if we look at our gross profit growth, while the industry is growing very well, I understand the challenges of one of the OEMs this quarter, but our growth has been relatively weaker. We have been underperforming the industry growth. I am just trying to understand, at what point do you think we will be able to address those issues and given our order book and other things, when do we see that we at least start growing in line within the industry?

Speaker #5: But we are growth has been sort of relatively weaker. So and we've been underperforming the industry growth. So I'm just trying to understand, right?

Speaker #5: Like at what point do you think I mean, will we be able to address those issues and sort of given our order book and other things, when do we see that we at least start growing in line within the industry?

Speaker #3: So I will divide the question in two parts. And the later part, Ashwini, will take over. So in terms of our growth versus the industry, overall growth was higher at 16, 17 percent for the industry.

GD Takkar: I will divide the question in two parts, and the later part, Ashwani Maheshwari will take over. In terms of our growth versus the industry, overall growth was higher at 16%, 17% for the industry. As you know, we are not present in Japanese OEM, so we adjust the growth, and then again, one of our key customer, one supplier had a fire which had production impact. If I net off all of this, the growth of the industry, which we can serve, was close to 8% to 10%. Our growth is at 8%, which is net of these premium freight adjustments also. So we are broadly growing in line with the industry. I will let now Ashwani address the other point in terms of how we can grow further.

Speaker #3: And as you know, we are not present in Japanese OEMs. So we adjust the growth and then again, one of our key customer one supplier had a fire which had production impact.

Speaker #3: So if I net off all of this, the growth of the industry which we can serve was close to 8 to 10 percent. And our growth is at 8 percent, which is net of these premium freight adjustments also.

Speaker #3: So, we were broadly growing. We are broadly growing in line with the industry. I will now let Ashwini address the other point in terms of how we can grow further.

Speaker #3: So one is one point there is that we do not provide guidance. But having said that, there are three factors of growth which I also mentioned in my opening remark.

Ashwani Maheshwari: So one point there is that we do not provide guidance. Having said that, there are three factors of growth, which I also mentioned in my opening remark. The first factor of growth is the existing orders, the lightweighting orders, and the export orders, which are already announced. The SOPs of those orders and the ramp-up will happen. So that is one factor. Then the conversion of the existing RFQs into orders will be the second area of growth. The third area of growth will be the organic growth of the industry itself, which will happen. So we are extremely hopeful of the time going forward.

Speaker #3: The first factor of growth is the existing orders. The lightweighting orders and the export orders which are already announced. The SOPs of those orders and the ramp-up will happen.

Speaker #3: So that is one factor. Then the conversion of the existing RFQs into orders will be the second area of growth. And the third area of growth will be the organic growth of the industry itself, which will happen.

Speaker #3: So, we are extremely hopeful about the times going forward.

Sonal Gupta: Got it. Just last question, if I may. Just on the DongA TLA, where are we? Have we been able to sign up some customers for these products? Anything that you can share on that regard?

Speaker #5: Got it. And just last question, if I may. Just on the dongi TLA, I mean, have we where are we? I mean, have we been able to sign up some customers for these products?

Speaker #5: I mean, anything that you can share on that regard?

Speaker #3: Yeah, sure. So just to give a context, on the TLA, as we had said last time, this is a long-term technology collaboration.

Ashwani Maheshwari: Yeah, sure. Just to give a context on the TLA, as we had said last time, this is a long-term technology collaboration. In this collaboration, what we are doing is we are focusing on capability building, technology transfer, and localization, including strengthening our control arm and link business in design and development. During this quarter, building on our ongoing engineering collaborations, what we did is we jointly showcased physical cutting-edge Korean products to key OEM customers. This has strengthened our discussions and generated RFQ opportunities across multiple product platforms. Strategically, our aspiration is to build a leadership position across the entire broader lightweighting portfolio which we want to address. Our internal assessment on this portfolio is around five years now. It can be between INR 8,000 to INR 9,000 crores.

Speaker #3: Now, in this collaboration, what we are doing is we are focusing on capability building, technology transfer, and localization. Including strengthening our control arm and link business in design and development.

Speaker #3: Now, during this quarter, building on our ongoing engineering collaborations, what we did is we jointly showcased physical, cutting-edge Korean products to key OEM customers.

Speaker #3: Now, this has strengthened our discussions and generated RFQ opportunities across multiple product platforms. Strategically, our aspiration is to build a leadership position across the entire, broader lightweighting portfolio that we want to address.

Speaker #3: Our internal assessment on this portfolio is around five years now. It can be between 8,000 to 9,000 crores. And we firmly believe that we can actually build a mid-team to high-team percentage share in that portfolio.

Ashwani Maheshwari: We firmly believe that we can actually build a mid-teen to high-teen percentage share in that portfolio.

Speaker #5: Okay, got it. Great. Thank you so much.

Sonal Gupta: Okay. Got it. Great. Thank you so much.

Speaker #2: Thank you, sir. The next question is on the line of Viraj Kacharia from SIMPL. Please proceed with your question.

Operator: Thank you, sir.

GD Takkar: Thank you.

Operator: The next question is from the line of Viraj Kacharia from SiMPL. Please proceed with your question.

Speaker #5: Yeah. Hi. Thanks for the opportunity. Just two questions. One is, you talked about initial changes between

Viraj Kacharia: Yeah. Hi, thanks for the opportunity. Just two questions. One is, you talked about emission changes between

Speaker #2: Sorry to interrupt, Viraj sir. Your voice is breaking.

Operator: Sorry to interrupt, Viraj, sir. Your voice is breaking.

Speaker #5: Am I audible now?

Viraj Kacharia: Am I audible now?

Speaker #2: Yeah. Please proceed.

Operator: Yeah, please proceed.

Speaker #5: Yeah. First question is, we talked about non-emission changes. 63 captain.

Viraj Kacharia: Yeah. First question is, we talked about small emission changes, 6.3, CAFE.

Operator: Viraj, your voice is breaking, sir. Can you rejoin the queue after?

Speaker #2: Your voice is breaking, sir. Can you rejoin the queue after disconnecting? Can you speak? Yes, sir. Can you say something?

Viraj Kacharia: Audible now?

Operator: Can you speak something?

Viraj Kacharia: Hello.

Operator: Yeah, sir. Can you speak something?

Speaker #5: No, I can hear you guys. Am I audible now?

Viraj Kacharia: No, I can hear you guys. Am I audible now?

Speaker #2: Yeah. Go ahead.

Operator: Yeah, go ahead.

Speaker #5: Yeah. So I was asking, what kind of a content change do you see from the S63 café to the big emission centers? Like, the S7 coming into play.

Viraj Kacharia: Yeah. I was asking, what kind of a content change you see from BS 6.3, CAFE, till the big emission standards like BS 7 come into play?

Speaker #3: Right. So, we spoke about the upcoming three standards. One, we said, is typically called BS 6.3 and WLTP. Now, WLTP essentially is a measurement norm, wherein the measurement is around real-life driving conditions.

Ashwani Maheshwari: Right. We spoke about upcoming three standards. One we said, which is called typically BS 6.3 and WLTP. WLTP essentially is a measurement norm wherein the measurement is around real life driving conditions. There essentially, the increase in the content might not be very high because it doesn't require a complete exhaust system redesign in all the cases. However, it focuses essentially the way it is delivered is through catalyst efficiency, calibration, and thermal management. That's first norm change. The second norm change is the BS 7. BS 7 is not officially notified, but if we follow what Euro 7 is happening, and in Euro 7, we are in advanced stage of developing the engine with one of our customers for export requirements, which gives us a very decent understanding of what the norm can be.

Speaker #3: Now, there essentially we increase in the content might not be very high because it doesn't require a complete exhaust system redesign in all the cases.

Speaker #3: However, it focuses essentially on the weight being delivered through catalyst efficiency, calibration, and thermal management. Now, that's the first norm change. The second norm change is the BS7.

Speaker #3: Now, BS7 is not officially notified, but if we follow what is happening with Euro 7, we are in an advanced stage of developing the engine with one of our customers for export requirements, which gives us a very decent understanding of what the norm can be.

Speaker #3: The exact norm would depend upon how much we adopt from Euro 7. But suffice it to say that there is a content increase which will come up.

Ashwani Maheshwari: The exact norm would depend upon how much do we adopt from Euro 7, but suffice to say that there is a content increase which will come up. Why will that come up? Essentially, it'll come in the hotel after treatment system, there'll be catalytic higher requirement, there'll be a GPF requirement which will happen. That's on the BS 7 content. The third point which you mentioned was on CAFE 3. CAFE 3, the latest notification has come in, I think, on 16 July. That notification moderates a little bit on the lighter and the heavier vehicle, but the essence remains the same. Essence is that it is promoting all technology in powertrain transmission. So it's talking about CNG, it is talking about hybrid, it is talking about flex fuel and overall corporate average efficiency norm it is talking about.

Speaker #3: While in that come up, essentially it will come as a hotend after treatment system will be catalytic high requirement. There'll be a GPF requirement which will happen.

Speaker #3: That's on the BS7 content. The third point which you mentioned was on cafe 3. Now, cafe 3, the latest notification has come in, I think, on 16th of July.

Speaker #3: Now, that notification moderates a little bit on the lighter on the lighter and the heavier vehicles. But the essence remains the same. Essence is that it is promoting all technology in power train transmission.

Speaker #3: So, it's talking about CNG, it's talking about hybrid, it's talking about flex fuel, and overall, it's talking about corporate average efficiency norms.

Speaker #3: So, which means besides EV, all the others would require engineered emission systems. The lightweighting portfolio also gets a boost because lightweighting is going to be one of the key criteria, which OEMs are going to pursue.

Ashwani Maheshwari: Which means besides EV, all the others would require engineered emission systems. Lightweighting portfolio also gets a boost because lightweighting is going to be one of the key criterias also which OEM is going to pursue. Translating to content increase, that would depend on the design, but translating to our addressable market size, increase and a portfolio diversification, that would certainly happen.

Speaker #3: Now, translating into content increase, that would depend on the design. But translating to our addressable market size increase and a portfolio diversification—that would certainly happen.

Speaker #5: Okay. Second question is, see, if you look at the global market for exports, sorry, you're saying something?

Viraj Kacharia: Okay. Second question is, if you look at the global market for exports. Sorry, you were saying something?

Speaker #3: Yeah. Yeah. Please go ahead.

Ashwani Maheshwari: Yeah, please go ahead.

Speaker #5: So, if you look at the global market for exports for emission, between now and 2030, different markets will be seeing the next level of emission upgrade, right?

Viraj Kacharia: So if you look at the global market for exports for emission, between now and 2030, there are different markets will be seeing the next level of emission upgrade, right? Which means that at least 2, 3 years in advance, we would have been almost finalized or in the process of shortlisting the vendor for next generation emission upgrade. In that backdrop, how should we understand pipeline for us playing out for emission subsystems, for export market?

Speaker #5: Which means that, at least two to three years in advance, OEMs would have almost finalized, or be in the process of shortlisting, the vendor for the next-generation emission upgrade.

Speaker #5: So, in that backdrop, how should we understand the pipeline for us playing out for emission subsystems for the export market?

Speaker #3: So, our export market strategy essentially is focusing around CV emission components, temperature-controlled tubes, genset emission components, and small agri genset exhaust systems. Now, all these areas—around the question is, how are we selecting these areas?

Ashwani Maheshwari: Our export market strategy essentially is focusing around CV emission components, temperature control tubes, genset emission components, and small agri genset exhaust systems. Now all these areas, around the question is how have we selected these areas? This is essentially on our core strength and diversification. There would be various components orders, there would be various orders which will be dependent upon various strategies which the OEMs in this area will follow. There can be an organic growth which can happen. Let's say the genset market is really booming in India as well in US because of various requirements. So organic growth will lead to opportunities. The transition from one regulatory norm to the other will lead to growth opportunity and a China plus one strategy will also lead to growth opportunities.

Speaker #3: This is essentially about our core strengths and diversification. Now, there will be various component orders. There will be various orders which will depend upon the different strategies that the OEMs in these areas will follow.

Speaker #3: They can be an organic crop, which can happen. So, let's say the genset market is really, really booming in India as well as in the US, because of various requirements.

Speaker #3: So organic growth will lead to opportunities. The transition from one regulatory norm to the other will lead to growth opportunity. And a China plus one strategy will also lead to growth opportunities.

Speaker #3: So, it will not be only one opportunity, which is around the regulatory norm, which we would be banking upon or which we are banking upon.

Ashwani Maheshwari: It will not be only one opportunity which is around the regulatory norm, which we would be banking upon or which we are banking upon. We are talking about working in a very specific product set and a very specific segment. The requirement will come from various inputs or various takers.

Speaker #3: We are talking about working in a very specific product set and a very specific segment. The requirement will come from various inputs or various triggers.

Speaker #5: No, no. So I understand. What I was trying to understand is how should we understand pipeline shaping of us when it comes to exports of components and subsystems in emission?

Viraj Kacharia: No, sir, I understand. What I was trying to understand is how should we understand pipeline shaping up for us when it comes to exports of components and subsystems and emission? So any color you can give in our pipeline, because if you look at the order book, while we have seen some wins in emission, I think the larger momentum or attraction is what you are seeing on the controls and light AM. So in that backdrop, just trying to understand in terms of pipelines, especially on exports for emission components, how should we understand that shaping up? Any color you can give us, numbers or inquiries?

Speaker #5: So any color you can give on another pipeline, because if you look at the order book, while we have seen some wins in emission, I think the larger momentum or traction is what you're seeing on the controls or in light arms.

Speaker #5: So in that backdrop, just trying to understand, in our pipelines—especially on exports for emission components—how should we understand that shaping up? Any color you can give in numbers or inquiries?

Speaker #3: So, if you—so I don't know where you have picked up the data saying that we are essentially doing emission systems only. If you look at our export data, in the export, the orders we have announced are in various areas.

Ashwani Maheshwari: So I do not know where have you picked up the data saying that we are essentially doing emission systems only. If you look at our export data, in the export, the orders we have announced are in various areas. There are emission adjacencies in which we have announced orders, and those orders are for, if you look at order book, that is for a large heavy industry emission company which we announced. We have announced orders in emission components. We have announced orders again in agri components, which are essentially on either adjacencies or tubes. So there are various areas which we have been announcing the orders on.

Speaker #3: There are emission adjacencies in which we have announced orders. And those orders are for—if you look at our order book—that's for a large, heavy industry emission company which we announced.

Speaker #3: We have announced orders in emission components we have announced orders again in agri components which are essentially on either adjacencies or tubes. So there are various areas which we have been announcing the orders on.

Speaker #5: Okay. No, actually, I was asking more in terms of the pipeline for customers.

Viraj Kacharia: Okay. No, actually, I was asking more in terms of the pipeline for customers.

Speaker #2: Sorry to interrupt, Virat sir. There's a request that you return to previous questions before follow-up. Yeah, thank you, sir. The next question is from the line of Manpreet Arora from Arora Wealth Advisors.

Operator: Sorry to interrupt, Virat, sir.

Viraj Kacharia: Yeah.

Operator: May I request that you return to questions.

Viraj Kacharia: Thank you.

Operator: For follow-up. Yeah. Thank you, sir. The next question is from the line of Manpreet Arora from Arora Wealth Advisors. Please proceed with your question.

Speaker #2: Please proceed with your question.

Speaker #1: Yeah, thank you. Ashwin, maybe just a clarification before I ask my question. In the opening remarks, did I hear correctly that we are also exploring opportunities in premium two-wheelers?

Manpreet Arora: Yeah. Thank you. Ashwani, maybe just a clarification before I ask my question. In the opening remarks, did I hear it correctly that we are also exploring opportunities in premium two-wheelers in the emission system? Did I hear it correctly or

Speaker #1: In the emissions system, did I hear it correctly, or?

Ashwani Maheshwari: Yes, Manpreet, you heard it absolutely correctly.

Speaker #3: it absolutely correctly.

Speaker #1: Oh, interesting. So, when you say premium two-wheelers, should I understand that as mostly these high-end motorbikes? Would that be a...?

Manpreet Arora: Oh, interesting. When you say premium two wheelers, should I understand mostly these high-end motorbikes? Would that be a-

Speaker #3: Yeah, it would be, yeah, it would be above a particular CC.

Ashwani Maheshwari: Yeah, it would be above a particular cc.

Speaker #1: Okay. Interesting. And so is that space also meaningful in terms of the capabilities that are required and the content and the patent knowledge that we have built over the last so many years?

Manpreet Arora: Okay, interesting. Is that space also meaningful in terms of the capabilities that are required and the content and the patent knowledge that we have built over the last so many years? I mean, is that a differentiated space?

Speaker #1: I mean, is that a differentiated thing—space?

Speaker #3: Yes, yeah, absolutely, Manpreet. I mean, that's what we I said in the opening remark. That we are looking for areas where our capability differentiated set which is into engineered emission systems are applicable, and we can add value.

Ashwani Maheshwari: Yeah, absolutely, Manpreet. I mean, that's what I said in the opening remark, that we are looking for areas where our capability differentiated set, which is into engineered emission systems, are applicable and we can add value. During that analysis, a premium two-wheeler segment is something which we analyzed and found that there is a capability set which is directly applicable. One might ask between premium two wheelers and the lower cc systems. One is what are the kind of difference and why do we want to play in a particular segment, and that's what the strategic call which we have taken dependent upon our capability, the customer requirement, and the long-term visibility of future which we see. That's how we have decided to also explore a premium two-wheeler market.

Speaker #3: During that analysis, the premium two-wheeler segment is something which we analyzed, and found that there is a capability set which is directly applicable. Now, one might ask, between premium two-wheelers and the lower CC systems, what are the differences and why do you want to plan for a particular segment?

Speaker #3: And that's what the strategy call which we have taken, dependent upon our capabilities, the customer requirement, and the long-term visibility of the future which we see.

Speaker #3: And that's how we have decided to also explore the premium two-wheeler market.

Speaker #1: Great. So, is this only for domestic or international? Because some of our two-wheeler players out of India have now acquired companies in Europe, and all that.

Manpreet Arora: Great. Is it only for domestic or international? Because some of our two-wheeler players out of India have now acquired companies in Europe and all that. Are you looking at-

Speaker #1: So does this are you looking at?

Ashwani Maheshwari: Manpreet, as of now, we are looking at domestic. As we do for tractors, if the domestic production is being exported, that's the OE's choice. But as of now, we are looking at supply in domestic market.

Speaker #3: As of now, yeah, Manpreet, as of now we are looking at domestic. Now, if—as we do for tractors—the domestic production is being exported, that's the OEM's choice.

Speaker #3: But as of now, we are looking at supply in the domestic market.

Speaker #1: Okay, great. Yeah, thanks for the clarification. Now, thank you. My question—no, sorry. Hello?

Manpreet Arora: Okay, great.

Ashwani Maheshwari: Yeah.

Manpreet Arora: Thanks for the clarification. Now,

Ashwani Maheshwari: Thank you so much.

Manpreet Arora: My question. No, sorry. Hello.

Speaker #3: There's a follow-up. Go ahead.

Ashwani Maheshwari: There is a follow-up. Go ahead.

Speaker #1: Yeah, yeah. I mean, I was just clarifying on your opening remarks. My first question is actually on the PureM JV. Now, a few calls before, you had mentioned that we have won a new program in the PureM JV.

Manpreet Arora: Yeah. I mean, I was just clarifying on your opening remarks. My first question is actually on the Purem JV. A few calls before, you had mentioned that we have won a new program on the Purem JV. Just wanted to understand what is the SOP for that program, when does it start? Also just a follow-up to that is, when do we really start seeing an inflection in the Purem JV? Only when new standards now come in, like BS 7 would probably be a time when we start probably having discussions with customers and working on their engines and then maybe get a foothold into some of the newer programs. Is that the right way to think about that JV?

Speaker #1: So just wanted to understand is that what is the SOP for that program? When does it start? And also just to follow up to that is when do we really start seeing an inflection in the PureM JV?

Speaker #1: Only when new standards now come in? Like DS7 would probably be a time when we start probably dealing having discussions with customers and working on their engines, and then maybe get a foothold into some of the newer programs?

Speaker #1: Is that the right way to think about the JV?

Speaker #3: So Manpreet, as far as that program which we mentioned last time, that program is concerned, it started in Q4 last year. And it will gradually ramp up during the course of FY27.

Ashwani Maheshwari: Manpreet, as far as that program, which we mentioned last time, that program is concerned, it started in Q4 last year, and it will gradually ramp up during the course of FY27. That is very much on track. In terms of JV as such, as you would be knowing, this JV is for a CV segment above 4 liters, where we are not present directly. Since we are a partner, we get access to advanced technologies and global landscape, which helps us in many ways to strengthen our position as well as our offerings.

GD Takkar: Manpreet, as far as that program, which we mentioned last time, that program is concerned, it started in Q4 last year, and it will gradually ramp up during the course of FY27. That is very much on track. In terms of JV as such, as you would be knowing, this JV is for a CV segment above 4 liters, where we are not present directly. Since we are a partner, we get access to advanced technologies and global landscape, which helps us in many ways to strengthen our position as well as our offerings.

Speaker #3: So that's very much on track. In terms of the JV as such, as you would know, this JV is for the CV segment above four liters.

Speaker #3: Where we are not present directly. But since we are a partner, we get access to advanced technologies and a global landscape, which helps us in many ways to strengthen our position as well as our offerings.

Speaker #3: As such, I think this also we have mentioned previously as well. We get very lit in from the joint venture because we are not in management control, only 50% of that which is left after many deductions.

GD Takkar: As such, I think this also we have mentioned previously as well. We get very little from the joint venture because we are not in management control, only 50% of that which is left after many deductions. That is what we get. This industry is very lucrative. Unit economics is also very good, and we are evaluating a lot of options to participate more deeply. When will that happen? Obviously, we will definitely update all of you in due course as things progress in this regard. This sector, this industry, this part of the industry is very lucrative, and we would definitely like to explore more and do more in near future, and we will update all of you as we progress.

Speaker #3: So that is what we get. But this industry is very, very lucrative. Unit economics is also very good, and we are evaluating a lot of options to participate more deeply.

Speaker #3: Now, when will that happen? Obviously, we will definitely update all of you in due course. As things progress in this regard, but this sector, this industry, this part of the industry is very lucrative.

Speaker #3: And we would definitely like to explore more and do more in near future. And we will update all of you as we progress.

Speaker #1: Okay, so would DS7 be a point in time when we will see some of these discussions happening, or is it a continuous process?

Manpreet Arora: Okay. Would FY27 be a point in time when we will see some of these discussions happening, or it is a continuous process?

Speaker #3: It's a continuous process. It's a continuous process. And as and when something develops, we will update.

GD Takkar: It is a continuous process. As and when something develops, we will update.

Manpreet Arora: Okay. One small question, if I can ask, that is on the integrated muffler side. Ashwani, you had mentioned that is something that will happen because of the trend changes that have been announced. Have any discussions started on the integrated muffler side with our potential customers? Also, if you can give a range of what would be the content per vehicle for such an integrated muffler. I do not want an exact figure, you can, INR 1,000 to INR 3,000, INR 3,000 to INR 5,000 kind of number is good enough. If you can help there.

Speaker #1: Okay, one small question, if I may ask. On the integrated muffler side, Ashwini Ji, you had mentioned that this is something that will happen because of the trend changes that have been announced.

Speaker #1: Now, have any discussions started on the integrated muffler side with a potential customers? And also, if you can give a range of what would be the content per vehicle for such an integrated muffler?

Speaker #1: I don't want an exact figure. You can 1K to 3K, 3K to 5K kind of a number is good enough. So if you can help there.

Speaker #3: So Manpreet, as I had mentioned last time—and I must compliment you, your memory is pretty sharp on that—we did talk about the only opportunity arising. Out of ten, three are integrated mufflers.

Ashwani Maheshwari: Manpreet, as I had mentioned last time, and I must compliment, your memory is pretty sharp on that. We did talk about the only opportunity arising out of Tier 3 is integrated mufflers. But it is a very small market. The total market size in our estimate would be between INR 60 crores to INR 100 crores. That is about it. This is like a normal course of business development for us, rather than tracking individually as to opportunity arising out of Tier 3.

Speaker #3: But it's a very small market. The total market size, in our estimate, would be between 60 to 100 crores. That's about it. So, this is like a normal course of business development for us, rather than tracking individually as to opportunity arising out of Q3.

Speaker #1: Okay. Okay. Thank you very much.

Manpreet Arora: Okay. Thank you very much.

Speaker #3: Thanks. Thank you so much.

GD Takkar: Thanks.

Operator: Thank you.

GD Takkar: Thanks a lot.

Speaker #2: Thank you, sir. Ladies and gentlemen, in the interest of time, that was the last question for today. I would now like to hand the conference over to management for closing comments.

Operator: Thank you, sir. Ladies and gentlemen, in the interest of time, that was the last question for today. I would now like to hand the conference over to management for closing comments.

Speaker #3: Thank you. Thank you very much, everyone, for your participation. I hope you were able to get answers to your queries. If you have any further queries, you can reach out to our investor advisors.

GD Takkar: Thank you. Thank you very much, everyone, for your participation. Hope you were able to get answers to your queries. Still, if you have any further query, you can reach out to our investor advisors, Ernst & Young. Thank you again, and wish you a pleasant evening. Thank you very much.

Speaker #3: Ernst & Young, and thank you again. I wish you a pleasant evening. Thank you very much.

Speaker #2: Thank you, sir. On behalf of Equitas Securities, that concludes this conference call. Thank you for joining us, and you may now disconnect your lines.

Operator: Thank you, sir. On behalf of Equirus Securities, that concludes this conference call. Thank you for joining us, and you may now disconnect your lines. Thank you.

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Q1 2027 Sharda Motor Industries Ltd Earnings Call

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