Good morning, again, thank you for joining us today. I hope it's better for all of you right now, for us.
Now it better, sir.
Okay. We don't have any echo on our side as well.
Yeah, yeah.
Okay. So today, I'll begin with a brief overview of the global and Indian macroeconomics. Followed by that, I'll give an update on the automotive market before getting into our financial results. Lastly, I conclude with the business and other key highlights for the fiscal year ending 31 March 2024. The global economy is projected to see a flat growth at 3.1% in 2024, same as 2023, before edging up slowly to 3.2% in 2025. Despite the challenging global macroeconomic environment, the Indian economic growth remains positive and very optimistic. The IMF forecasts a 6.5% growth rate for the Indian economy in 2024, with expectations of continued growth into 2025.
Robust domestic demand and investments in infrastructure are the primary drivers for this growth. Despite the global headwinds, the Indian automotive industry exhibited resilience. Overall, the vehicle production, excluding two-wheelers, surged by 5% during FY 2023-2024, compared to FY 2022-2023. Solidifying India's position as the third-largest auto market worldwide. However, Q4 FY 2024 showcased a mixed performance. While the passenger car, two-wheeler, and three-wheeler segments witnessed growth, commercial vehicles remained stagnant, and the tractor market experienced a correction. In Q4 of FY 2024, heavy commercial vehicle production experienced a correction of -7%, primarily due to the high base established by pre-buying in Q4 FY 2023, to circumvent price increases ahead of emission norm changes.
However, growth in the medium and heavy commercial vehicle sector is being propelled by the bus segment, a trend anticipated to persist. In Q4 FY 2024, LCV segment grew by 5%, fueled by increased private consumption, e-commerce expansion to tier two and three cities, and hub-and-spoke network adoption. However, the risk of three-wheelers encroaching on the sub-one-tonne segment remains a concern here. Tractor sales declined by 15% in Q4 FY 2024, attributed to an erratic monsoon pattern, and low reservoir levels impacting rural sentiments, particularly in central and southern regions of India. The tractor segment is notably sensitive to rural sentiments, rainfall, and reservoir levels. The passenger car production achieved a double-digit growth of 11% in Q4 FY 2024, driven by robust demand for SUVs.
However, sedans and compact cars experienced a decline, as consumers displayed a preference for premium goods. This trend is mirrored in car purchases, with buyers gravitating towards the utility vehicle segment, enticed by enhanced features, superior ride quality, and premium aesthetics. Furthermore, there is a growing inclination towards alternative fuels, evidenced by increased demand for strong hybrids and, electric vehicles. Two-wheeler production staged a remarkable recovery, surging 27% in Q4 FY 2024. This growth is primarily propelled by strong demand from rural customers and, replacement demand from urban areas for premium vehicles. However, export volumes continue to face pressure due to local currency depreciation and forex availability issues. Additionally, there is a notable increase in the share of higher-priced 135 cc scooters, reflecting evolving consumer preferences.
The three-wheeler segment witnessed a growth of 12% in Q4 FY 2024, indicating sustained demand for passenger transportation. Additionally, this segment has seen growth in last-mile operators, catering to e-commerce and, food delivery services, among other applications. While three-wheelers are steadily recovering in domestic markets, exports remain weak. In this slide, we depicted the market's journey from its peak in 2018, navigating the challenges posed by COVID to the subsequent, recovery. The automotive market concluded on a positive note in 2023, reaching an all-time high in LCVs and maintaining momentum in other segments. Looking ahead to 2024, factors such as election year and historical trends indicate restrained growth in the automotive industry. Additionally, the erratic monsoon of 2023 may impact rural sentiment, potentially affecting tractor volumes. Nonetheless, the underlying economic conditions remain robust, and the overarching growth narrative of India remains unchanged.
We anticipate a moderate growth trajectory for the upcoming year, influenced by election year dynamics, a high baseline set in the current year, and the impact of erratic rainfall patterns. Sector-wise sales performance quarter-on-quarter, Mobility business has grown by 2.7% in January to March 2024, as compared to January to March 2023. Driven mainly due to growth in Mobility Aftermarket business by 9.4% on account of increased market demand for spark plugs and diesel products. Growth in Two-Wheeler business by 17.6% due to higher demand and new product launches. However, Power Solutions business remained relatively flat due to weak tractor market. Consumer Goods business grew by 10.5%, driven by higher demand for Blue tools and accessories.
The Building Technologies business grew by 13.9% on account of execution of high number of orders for installation of security systems. On a year-on-year basis, the Mobility business grew by 11.1% in FY 2023-2024, as compared to FY 2022-2023, mainly due to the growth in Power Solutions business by 10.9%, aided by growth in sales in passenger car and heavy commercial vehicle segments, and higher content per vehicle, mainly exhaust gas treatment components. Our growth in Mobility Aftermarket business by 10.2%, mainly due to higher sales of spark plugs, lubricants, filters, owing to higher demand. Growth in Two-Wheeler business by 19.2%, mainly due to higher sales of fuel injectors and exhaust sensors to TVS and Bajaj.
Consumer Goods business grew by 15.8% due to higher sales in tools and accessories due to market campaign and new product launches for grinders and cutters. The Building Technologies business has increased by 17%, mainly on account of execution of higher number of orders for installation of security cameras. The key financial highlights. Revenue from operations, quarter-on-quarter. Revenue from operations in January to March 2024 stood at INR 442,334 million, which is a growth of 4.2% over January to March 2023. The growth is mainly driven by Mobility Aftermarket business , Two-Wheeler business , and Consumer Goods business , as seen in the previous slide. Year-on-year, likewise, overall revenue for FY 2023-2024 was INR 167,271 million, which grew by 12% over previous year.
The growth is mainly contributed by increased sales in Mobility business and consumer business, Consumer Goods business . EBITDA. Quarter-on-quarter, EBITDA in January to March 2023-24 was INR 5,572 million, which grew by 6.7% over the same quarter of previous year. EBITDA, as a percentage of total revenue, improved from 12.9% in January to March 2023, to 13.2% in January to March 2024. The improvement in EBITDA margin is mainly attributable to increased revenue and lower spending in other expenses. Year-on-year, similarly, EBITDA, in absolute terms for FY 2023-2024, increased by 15.9% as compared to FY 2022-2023. EBITDA, as a percentage of total revenue, improved from 12.1% to 12.5%.
The EBITDA margin improvement is again on account of revenue growth and lower spending in other expenses. PAT, the profit after tax, in absolute terms, grew by 41.4% in January to March 2024 over the same quarter of previous year. This includes a one-time credit of income tax received pertaining to assessment year 2013, 2014, as the assessment was completed during the quarter. PAT, as a percentage of total revenue for the quarter, is 13.3%, as compared to 9.8% in January to March 2023. Year-on-year, likewise, profit after tax, including exceptional items, increased from INR 14,245 million to INR 24,905 million.
The exceptional item mainly pertains to the profit of, on, sale of Project House Mobility Solutions business, which was hived off in, July of 2023. Profit after tax, as a percentage of total revenue for FY 2023-2024, was fourteen point nine percent, including exceptional items, compared to nine point five percent in the previous year. In the Mobility business, the power solutions division experienced a ten point nine percent surge in sales during the financial year 2023-24. This growth can be attributed to the rising year-on-year sales of both passenger car and commercial vehicle segments, driven by the adoption of BSVI technologies across diesel, gasoline, natural gas and electric vehicles. Additionally, TREM IV projects within the tractor segment and the development of electric vehicle systems contributed to some extent, despite the limited volume in India.
We pioneered the development of the first hydrogen engine demo truck in India, demonstrating our unwavering commitment to innovation in the automotive industry. Our company introduced this technology to a diverse array of stakeholders, including OEM representatives, nodal agency experts, ministry secretaries, and legislators at prestigious events such as Symposium on International Automotive Technology and the Bharat Mobility Global Expo. Through these efforts, we are making significant strides towards securing projects with our valued customers, further cementing our position as leaders in technology advancement. Bosch's Power Solutions division plays a pivotal role as a partner for vehicle manufacturers in transitioning from reliance on conventional liquid fuels to alternate low to zero carbon fuels. Our system solutions and products for CNG and flex fuels are poised to support OEMs during this transition period.
However, it's worth noting that conventional fuels like diesel and gasoline will remain relevant until alternate energy infrastructure becomes more widespread. Two-wheeler and Powersports division achieved a record sales growth of 19.2% over the previous year. This success was supported by stabilized semiconductor supplies, new customer acquisitions, new projects, and growth in the two-wheeler market. The division continues its journey of profitable, sustainable growth, focused primarily on cultivating talent, fostering a culture of excellence, and driving strategic innovations. The net sales of the Two Wheeler division are anticipated to rise in FY 2024-2025, due to the transition to BS6 OBD2 norms and the projected growth in two-wheeler sales following the general elections.
The two-wheeler division has proactively prepared for OBD 2.2 regulation upgrade by making appropriate investments in lambda sensor technology, foreseeing a substantial surge in demand in by 2025. We are fully equipped to assist our customers with advanced sensor solutions. Bosch is dedicated to supporting Make in India and electrification initiatives by offering comprehensive two-wheeler solutions, encompassing engineering, software, and testing facilities. Our solutions, crafted by riders for riders, are engineered to elevate safety, efficiency, and overall riding experience. We are proud to have received accolades such as the Gold Consistent Category Award from Bajaj Auto Limited and a prestigious performance award from Suzuki Motorcycle India Private Limited. These recognitions underscore our commitment to excellence and our value partnerships with esteemed industry leaders.
The Mobility Aftermarket division achieved highest ever total net sales in FY 2023-2024, with a growth of 10.2% compared to previous year. The Independent Aftermarket segment , the largest segment within the Mobility Aftermarket division, accounted for approximately 63% of the total business, witnessed a notable growth of 9.1% in FY 2023-2024, compared to the previous year. This growth can be primarily attributed to increased sales of lubricants, spark plugs, and filters. The Mobility Aftermarket segment now proudly boasts of over 50,000 retail touchpoints spanning across 650 districts, offering a comprehensive range of over 15,000 part numbers. This expansive network ensures widespread availability of both products and after-sales services.
Additionally, the division operates over 1,500 authorized workshops and service centers, including Bosch Car Service, Bosch Diesel Service Centers, electric modules, and bike service centers throughout India. Furthermore, the Mobility Aftermarket has ventured into the home segment with the introduction of Bosch i6 inverter battery for power backup solutions. The Independent Aftermarket segment 's growth was driven by the ZINC+ strategy, focusing on demand generation and market penetration. We increased the visibility with Har Shop Mein Bosch, improved branding in dealer networks, and achieved top retail branding in key towns. The Mobility Aftermarket division was also honored with two awards from Mahindra for outstanding performance in the spare parts division, recognized in both construction equipment and farm division categories. The Beyond Mobility sector saw a 17.7% increase in sales, driven by growth in both power tools and building technology segments.
During FY 2023-2024, power tools achieved significant double-digit growth of 15.8% over the previous year. The manufacturing accounted for 30% of the total power tools sales in India, and the company gained market share across various categories. The power tools business in the coming years is expected to continue its growth trajectory. The focus will also be on cordless tools, industrial tools, dealer engagement, and innovative new product launches tailored to the medium and entry-level segments. Concurrently, medium-priced products will be pivotal, serving as essential drivers of overall business growth. The cordless tools segment reached approximately 11% of total sales, marking its first double-digit contribution.
The launch of Cordless Means Paisa Vasool campaign was awarded the marketing campaign of the year by the Global Marketing Excellence Awards, and recognized for best use of out-of-home media by E4M Indian Marketing Awards during 2023. A dedicated engineering center has been set up at the Bosch Chennai Power Tools plant. The Chennai plant became the first plant in Bosch at Bosch in India to sign an MoU with the Tamil Nadu government for skill development program. The company also launched a new B2C online repair service to better serve customers. The service network has been expanded to 21 new towns during the year. With the celebration of 30 years of Bosch Power Tools in India, the company has also launched its, launched its, purpose statement, Bosch Tools in Every Artisan's Hand.
The Building Technologies business achieved a double-digit revenue growth of 17% compared to the previous year, securing significant wins across various verticals. The division secured pivotal projects across transportation, including metros and airports, government, energy, and consumer sectors, which remained significant contributors to business growth. Additionally, support from the education and health sectors, verticals, further bolstered our performance. We anticipate a positive outlook for Building Technologies business in 2024-2025. In addition to the building, in addition to the business unit communication, our Local for Local program has been extended to include business units, Video Systems , and Fire Systems . Sustainalytics, a global leader in ESG ratings, has reassessed Bosch Limited. I am pleased to announce that the company's scores have improved, dropping from 8.5 in 2022, to 6.5 in 2024.
Bosch's sustainability commitment is driven by our Invented for Life ambition. Over the past decade, Bosch's corporate social responsibility has positively impacted millions of lives across various locations. During the year, we trained youth, including persons with disability and LGBTQs, with a 68%-70% placement rate. Our trained trainers and teachers through the Train the Teacher modules. Our efforts in environmental sustainability include conserving water through rejuvenation, planting, and maintaining trees. In education, we supported government schools, benefiting numerous students and teachers through provision of Midday Meal schemes , need for basic infra support towards Anganwadis, training students in IT skills. We provided basic healthcare, including eye care for children and cataract surgeries for the elderly, to many beneficiaries across villages in four states.
Our outreach connected program in over 100 villages connects the rural community members with over 50 government schemes, and has trained several women through sustained self-help groups. Additionally, we supported more than 1,000 families through disaster relief, and engaged employee and participants of Future Leadership Program at Bosch, who contributed over 10,500 volunteering hours through their time, expertise, and knowledge for social causes. These achievements were made possible by the unwavering commitment of our CSR team, invaluable partnerships, stakeholders, and Bosch employees. Bosch continues to develop and refine CSR interventions, which are nationally engaging and locally relevant, empowering individuals and uplifting communities. Thank you all for your contribution and for listening patiently through the call. We will now address your queries. Thank you for your attention, and, we are open for questions.
Thanks for the detailed presentation, sir. We will now begin the question and answer session. For participants who wish to ask a question, I request you to please raise your hands, and we will invite your questions in turn. Alternatively, you can type your questions in the chat box, so we will ask the questions from the chat box, sir. We will now wait for a moment as the question queue assembles. I will now take the questions from the chat box, sir. Why did you hive off the OEM diagnostic business from the mobility aftermarket? What products you use to manufacture in this segment, that accounted for INR 33 crore revenue? Hello?
Yeah.
Yeah. So thank you for the question, and yeah, I'll give you a quick input on this business, and then our CFO will also add more. So this is a business we carried within our mobility aftermarket division, which was largely doing documentation and wiring and other work for OEMs, specifically preparing such material for the aftermarket and service applications, diagnostic applications. This business, we see that there is very little growth in the upcoming years because of the nature of the business, which is going largely online and changing the nature of the business, moving into the future.
The business itself was a relatively small part of the mobility aftermarket division. Globally, what is also happening is that Bosch, through its sister company, ETAS, has consolidated this business and will provide these this diagnostic business directly to third-party companies. We felt integration of this business into ETAS in India was the right thing to do, and that's mainly the reason. This is not a business that we foresee to grow over the next years. The nature of the business and the kind of diagnostic applications that will come in the future of cars and vehicles will be more software-heavy, which are handled more by the OEMs.
The kind of things we did would not be the ones which would lead to further growth in this area, and that was primarily the reason for hiving it off. If you want to add anything, Karin?
Yeah. Thank you very much. Yes, and based, of course, on the looking on it from the perspective of what is our core business, that we then followed our process of valuation from the buyer and the seller side. We also made a fairness opinion on it so that we have a very good and stable proven process in for this hive off. And as Guru already mentioned, this was then the basis why when we start to effective of first of July, we go ahead with the transfer of the business.
Yeah. Thank you. Now we will go to the, I mean, people who have raised their hands. So the first question is from Mr. Gokul Maheshwari. I have unmuted your line. You can unmute and ask your questions.
Audible?
Uh, yeah.
Okay. Thank you, Annamalai, for the opportunity. So just first question, I have three questions, and with, with your permission, I would like to take them one by one. So one of the emerging technologies, which is fast gaining acceptance, is hybrids. Can you please elaborate what role and what products does Bosch play in this technology globally and in India? And are you working with any of the existing OEMs which are offering this product in India, and what are these products?
Okay. Do you want to finish all your questions so we can take it all together?
I would prefer it with one by one, if that's okay with you.
Yeah. Okay. I'm fine with it. So, we have a full range of... See, okay, let me restart this way. Hybrids have seen a recent emergence, not just in India, but all over the world. And, you know, the new energy vehicles in China, for example, constitute quite a significant amount of hybrids. It's not at least clear how long this phase will last before full battery electric vehicles will come in and or will become more prevalent, having already come in. But in the meanwhile, I think there is a limited time window, in our view, for hybrids, and we've always believed in that thing. And as a technology company, we have a full range of products for the hybrid market. So we offer the hybrid energy batteries.
We have systems which are for different classes of hybrids. We have from P1 to P4, all classes of hybrids catered to within our product technology. And this, we are offering also to the Indian OEMs. Currently, we are talking to several OEMs. Of course, the big ones who have introduced are using the Toyota hybrid system, and the other OEMs are very open to consider us. And we are already in discussion with several OEMs on the full range of our hybrid solutions to be offered.
Great. Thank you so much. Secondly, in the past few quarters, you've been highlighting the urgency to improve margins, and one of the key levers for that was localizations. But are you finding it difficult to justify investment in localizations, given the volumes could be still low, and there may not be an economic sense to invest? Because when I see the gross margins for the company, this is second consecutive year where we are at a 15-20-year low, gross margins, and this is despite the fact that the commodity prices have been fairly soft in the last 12 months. So my question is that: where are we in terms of localizations, or should we consider this, these gross margins as a new normal for the company?
Okay. So I'll give you my take on the localization, and I'll also let my CFO add on the margins, part. See, we've always believed in localization for the Indian market, and with or without a subsidy regime, which seems to be prevalent today, we've done substantial amount of localization for the Indian OEMs. In some product classes, we are nearly 90%-95% localized. In some others, maybe we start at 30% and go all the way up to 65, 70, going up to 90% towards steady state of that product class. So we've always believed in localization, and we've invested in localization in line with that.
And we know that our OEMs also fully support this stand, that localization should benefit economically, otherwise it doesn't make sense all the time. But of course, there are certain areas where there are government mandates on localization, and in that case, even if the technology costs end up to be higher than what it is when imported, we will go ahead and localize, and of course, our OEMs are supportive of that move. So, to answer your question, localization, we've never worried about localizing in India, and we've also not bothered about doing it only when there is subsidy or incentive towards localization. We have always done it together with our OEMs, as and when it is fully justified. Karin, you want to add on the margins?
Yes. Perhaps on the margins and, of course, what you're currently seeing, our profit and loss is a sort of mix, because on the one side, we have what we see to come from the conventional products to the common rail products. And as my colleague already said in the conventional products, which we are doing for decades already here in India, we have, of course, a very, very high localization rate already. In the common rail, we are working on it. We are coming up in the localization rates, so therefore, of course, you see this in the gross margin. In addition, besides the finished goods, it's also a component. We are working on the supplier development, even for very complex parts.
Meanwhile, here in India, we have decisions made already in the direction of the exhaust gas treatment for the future, which we will start in the SOP in the upcoming years. I would like also to give you a very good example where we were successful in localization also for export volumes, and this was your question regarding the need. Of course, the volumes of the Indian market, but we also have chances in the export business, and here we have a very good example. For example, the spark plugs, where we not only produce for the Indian market, but we also have also export business, and we were very successful here in the localization.
To summarize, we are going ahead with the localization because we deeply believe that this is one of the success factors for our company for the future.
Just to follow up on that, in that case, in our localization as it plays out over the next two, three years, should we be expecting the benefits of that to convert into slightly higher gross margins over the two to three-year period? That they should be trending up?
Well, without giving you a guidance, let's say, of course, whenever you have a localization, we are not doing localization because of localization, but in the end, of course, we would also like to see the result in our figures.
Okay, lastly, this is not a question, but more of a feedback slash observation. There's one more related party transaction done, and I know you have followed all the procedures with respect to appointing a big four firm and following the valuation norms. I'm not doubting that intent, but unfortunately, it just creates a wrong perception, where we end up incubating certain emerging businesses, and then we sell it to the subsidiary firms of the parent, terming this as non-core. So just as a feedback, whenever you are making future capital allocation decisions, you know, you may just want to be investing in businesses which are core to your strategy, and we would want to prevent situations like this, because this is sort of ending up taken up negatively by the capital markets.
This is just my feedback, so these were my questions. Thank you.
Yeah. So, maybe just a quick response on that.
Sure.
See, this is, yeah, you perceive it that way, but we are, as already indicated couple of quarters earlier, we are looking at an overall portfolio restructuring internally. And this is done, not just in India, but also at Bosch globally, in terms of how to set up things for success for the OEMs and for us. And in that context, there are some parts which don't belong within Bosch Limited, which are small, which occupy a lot of effort, but they don't really add future revenues or growth. And it's better in terms of management focus, to cut down on such and bring in topics which are much more relevant for the future.
Keep tuned, and we will let you know how this develops as we move forward in terms of-
In that context, any-
What happens for Bosch Limited?
Sorry. In that context, any more realignments to be done at the portfolio level, or you're largely done with that?
No, I wouldn't say it's all done. So, we will give you, as and when the information is public, we will let you know. We are working on this, and together with the board, we'll let you know.
Great. Thank you, and all the best.
Yeah.
Thanks, Gokul. The next question will be from Jinesh Gandhi. Please unmute and ask your question.
Yeah, yeah, yeah, we could hear you.
Yeah. Hi. So continuing on the localization question, would you update us on the new facility which started about 2-3 quarters back, to what level it has ramped up and by when it is expected to be fully ramped up?
Sorry, could you clarify a bit? The new facility you, you're referring to something?
Primarily the localization of the CV-related components, which started, I think, about three quarters back. To what level has it been ramped up?
You want to-
Yes. And, I assume you refer to the localization of the commercial vehicles.
Right.
So-called injector for the commercial vehicles, where we have ramped up a line in Nashik.
Right. I'm referring to that.
Yes, exactly. So we had a very good ramp-up of the line of the assembly and testing. Meanwhile, we had last year, or in this financial... In the last financial year, we had a ramp-up of the component business. We are going ahead with the localization of third-party suppliers also for the, for the raw materials, et cetera. So overall, localization is ongoing. We have done the main steps already, and for us, of course, now it's crucial that the commercial vehicle, market, will grow and that we can use all our facilities and all our localized products here in India.
Okay. And you also referred, Karin, regarding EGT also being localized. So when is the SOP expected for EGT localization? And this would be at Bosch Limited level, or that's at the vendor level, we are doing this?
Yeah. Okay. So let's say the line is on the way, and we expect the SOP, the start of production, in April 2025. Because you have to understand that these are quite complex lines, but it's on the way. It's decided, it's ordered, SOP, April 2025.
Okay. This is at our end and not at the vendor's end?
Oh, no, this is at our end.
Yeah.
Yeah.
Got it. And the second question pertains to the TREM V norms. So are we getting any clarity on by when it will be implemented? And in that context, would we need to invest in new capacities for localization or, there is existing capacity which is available?
I would say in general, capacity is available. The current indication is April 2026 for TREM V introduction. We hope that standard does not get pushed. It's possible that it's ±1 quarter earlier even. So we are hoping that by 2026, first quarter, second quarter, we should be in with TREM V.
Okay. And we'll be starting with very high level of localization over here, considering we have already localized the CV parts. So would there be any commonalities, or we'll have to start from scratch from localization for TREM V?
No, we will start with a fairly good level of localization here.
That's great to know. And lastly, if I look at our EBITDA margins, improvement on YY basis has been quite small, especially considering that we have seen- we would have seen some benefit of localization, and also there was benefit of divestment of digital Mobility business. So are there any one-offs or am I missing anything over here?
You refer to the EBITDA margin, yeah?
Right.
Okay. So financial year to financial year, we see an improvement, of course, coming from the EBIT improvement, and we see a translation of our EBIT improvement, translated into the EBITDA, of course, with a little bit more depreciations, mainly coming out of the Adugodi campus here. You see an increase in the operating profit by 4.6%.
Considering that we had savings on other expenses on divestment of digital Mobility business, would not the improvement should have been higher than that?
So you have to see that the investment, and you are referring to the Project House Mobility Solutions.
Right.
It is after the EBIT. It is below the EBIT and the EBITDR. It is between the EBIT and the profit before tax.
Okay.
So what you see in the EBITDA is really the operational development in the profit.
Got it. Got it. Thanks. I have a few more questions. I'll call back in queue.
Yeah.
Thanks.
Thanks, Ganesh. Next, in the question queue will be Lakshminarayanan. Please unmute and ask your question. Yes, you.
Yeah, two questions. First is, in terms of our exports, just want to understand what has been the mix of exports for this year. And, I think, in one of the conference calls, you mentioned that you are pushing exports as a lever for a slightly longer term. I just want to understand that particular part. What's the mix of exports this year across various product lines? And second, any new initiatives that has come up recently?
Okay. So, exports, currently for FY 2022, 2023, 2024, stood at 8.1%, overall of our total net sales. And we are working on increasing this over the coming years, but currently, it stands at 8.1%. So our approach is that we continuously look at opportunities to increase exports over the coming years.
Of course, if we link this to our approach of localization, because it is also important for us, if we want to go ahead with the export, that we are competitive, and therefore, localization in India and the value added in India is a very crucial point for us.
Are we on the call?
Yeah, yeah, we are on.
Okay.
Lakshminarayanan, your questions are over, sir. I think he has gone.
He has dropped off.
I think he has, yes.
Yeah, I think he has dropped off. Yeah, yeah, we'll go to the next one, sir. Sir, I'll read some questions from the chat box, sir. When do we expect implementation of OBD 2.2 for two-wheelers, as per government notification? Will this be a significant technology upgrade for the OEMs?
Okay, give me a second. It will be an upgrade for the OEMs, for sure, but the OBD 2.2 norms should be applicable in 2025.
Okay, sir. And, another question from the chat box is: By when do we expect Hydrogen ICE to see inflection point?
Okay, so, hydrogen ICE is currently undergoing a design maturity phase with most OEMs. We are working with them quite closely. Almost all our OEM partners have now trucks running within their premises or on the streets. We also ourselves have a truck ready, and that's undergoing tests. The component maturity will take a while, but that's not a bottleneck at all. We expect between 10%-15% of all trucks sold by 2030 to be with hydrogen ICE technology.
Yeah. There is another question on EV. Any updates on EV order wins, sir? What percentage of our FY 2024 revenue will be from electric vehicles?
We don't divide it that way, but yeah.
Do we have a number? No.
No, we don't. We don't have a number.
So, we don't have a number on that segmentation, but we are continuing... All I can say is, we are continuously increasing our EV share. We are already quite good with our EV percentage in two-wheelers. We are now in serious conversations with several OEMs on E-axles and the electrification business. And that trend is continuing. So we are on a good path, and in the coming quarters, you will also see them clearly announced.
Yeah. There is a question on building technologies, sir. Parent was looking to divest building technology business as per October 2023 release. By when do we expect this to go through?
We expect this to go through by Q1, Q2 of 2025.
Okay. We'll go to the question and answers, sir. Next in the line will be Viraj, please unmute and ask your question.
Questions. First, on the realignment of portfolio, in line with what parent has been communicating, will the realignment largely be of some of the businesses going out of the listed entity, or it also would include, some of the other adjacent products or businesses of other group companies in India coming into listed entity?
I would not speculate at this point of time on anything. These are portfolio discussions that are currently ongoing, and we will keep you updated as things develop.
But is there a timeline to it? Because I think the parent was talking about by CY 2024, most of the alignments to be done with. So in terms of the listed entity, do we have internally any timeline to...?
No, I won't put a timeline on it. I would say, this is an ongoing, portfolio realignment, overall. And yeah, if I were to give you a broad timeline, then maybe it's, the next one year, we will see some amounts of, portfolio readjustments, continuing to happen.
Okay, second question is, you know, in the past few years, we've been talking, we've been giving some guidance in terms of what we expect the growth and, similarly in terms of CapEx and the R&D. So for 2025, what would that be for us?
So, on average, we've had a CapEx of between INR 400-600 crore, INR 300-600 crore, if I can be broader, year-on-year, and this is a trend that we will continue. We believe this is something that is needed year-on-year for us, both to include localization and other CapEx. So this is something that will continue.
In terms of the R&D and expectation for growth this year?
Yeah, I again bordering on guidance, but I would say the growth of FY 2023-2024 is something that we are looking forward to also in the upcoming year. The first quarter could be a little slow because of the election effects. We have seen that already in the market right now. There is also a little bit of a liquidity crunch for some of our businesses in the market, and these things should be resolved by June, and after that we expect a very good year for the rest of the year. So overall, we see continued improvement in our margins and performance as we move forward.
Just two more questions. One is on the OpEx part. You know, I think one of the earlier participants was also trying to understand. You know, in last few quarters, you know, we had this investment in P&L from the Project House Mobility Solutions. And I think on an annual basis, we had around INR 120-130 crores of losses, which we, you know, we were investing in the business, which is not there. So what - if that is not reflected in other expenses, then what explains the drop in other expenses on a year-on-year basis?
Well, I think, we have in the other expenses, we have, as you rightly said, see two topics. One topic is that, we do have a lower spending, related to the new business, which we hived off. On the other side, we also put in place cost measures, which are sustainable. And, of course, what we also have to see in the other expenses, besides the variable costs, which we are in line with the, with the growth, that we have in the other expenses, also some fixed costs, which we would like to, grow under proportional compared to the, to the, revenues. So overall, let's say we are working further on the other expenses because we see this also as a very important topic to the, to our competitiveness and of course, to the profitability.
Nevertheless, I think we are already on a good way. We were in March 2024, on a 14.7%, comparable in 2023, 16.8%. So besides the lower spending and, of course, some more costs variable due to the growth, we also see that our cost measures are well fit in the base now.
Okay, just last part. It's again on the localization piece. I'm just trying to get more perspective in terms of how we at Bosch look at it. So when you say localization, is there a change in terms of approach versus the past, say, where we used to kind of localize a lot more internally vis-a-vis, you know, outsourcing or local vendor development in India? And why I'm asking this is, in the past, we communicated that we will be looking to spend somewhere between 300-400 to 500-600, and that figure also included the PLI, which we were looking to participate, so roughly around INR 200 crore per annum. But when I look at, say, FY 2024 also, you know, our spend is very meager, 300-350 crores or.
That is below the depreciation run rate, which we have on annual basis. So somewhere, you know, the optimism or the localization which we always talk about, that doesn't get reflected in the numbers per se. And when we look at the product level margins, you know, which we own at Bosch, you know, for a proprietary product, it's much below than what other auto ancillaries in the commoditized products own. So, it seems a big disconnect. So I'm just trying to understand, is there a marked shift in terms of how we look at localization? And if that is the case, then how one really perceives the use of cash. So these are two parts of the question. Thank you.
There's actually no new view on the investment. If I look at the CapEx for 2023 or for the financial year, then we see I informed you already, we got the new product, the NOx sensor, which is very important in the exhaust gas treatment. What we are looking at, of course, is how can we prepare ourselves or how can we adjust our existing machines, and how can we upgrade to new to new generations? What we are doing is that we are using already invested lines and machines and via upgrade to make them a fit to the new generations. So there is no change in the investment policy. Localization is key also in the, as you rightly said, third-party supplier development, as well as in our own plant.
Therefore, there is no change. Localization and investment, what we have to invest, we invest.
So just to put it differently, say, I'm not talking about very near term, looking at more next 3, 4, 5 years. For you to achieve the level of localization which you always aspire, like, you talked about 85%, 90% in the past, what is the level of CapEx one would require in the business? And if the CapEx intensity is not much because of refitting and upgrading, which you're talking about, then what is the use of cash we are looking for?
We've estimated that our CapEx requirements will be in the region of INR 400-600 crores.
Okay. In terms of the use of cash flow?
In terms of usage of cash, you mean our reserves?
Yeah. We have a sizable surplus cash-
Yeah.
On the balance sheet, and even-
Yeah.
Towards the CapEx, it will just keep on building up.
Yeah. So there is certainly a plan that's being worked on, and as soon as we are clear with it, we will let you know.
Okay. Thank you. Good luck.
Yeah.
Can we take only one more caller, sir?
Yeah, sure.
Yeah. Due to lack of time, and the last question will be from Mr. Sonal Gupta. Please unmute and ask your question. Sonal, you can ask. I think he's not able to ask the question.
Probably he dropped out.
Yeah.
Yeah.
No, he's there, I know. Can we close, or I'll go for one more question, sir?
We can close for today.
Ah, okay, sir. Do you have any closing comments, sir?
No, I think, we are on a good path, in my view. Overall, there has been a continuous improvement in our performance, and, we will continue to keep this momentum going, for the future.
Thanks, sir. On behalf of B&K Securities, we thank all the participants for joining the call. Special thanks to Bosch management for taking time out for the call and giving us the opportunity to host the call. Have a good day.
Thank you. Thank you, everyone.
Thank you. Bye-bye.
Bye.