Finally, INR 200 down. Finally, INR 200 down.
Hello? It will. Yeah, yeah, yeah. Sir, can we go to the main call, sir? Hello?
You can start, Jayaraj.
Yes, sir. Yes, sir. Ladies and gentlemen, good day and Welcome to Bosch Limited Q1 FY 2024-2025 Post-Sales Conference Call, hosted by B&K Securities. From Bosch management, we have with us today Mr. Guruprasad Mudlapur, Managing Director and Chief Technology Officer, and Ms. Karin Gilges, Chief Financial Officer. At this point, all participants line will be in the listen-only mode, and there will be an opportunity for you to ask questions after the management presentation and opening remarks. Over to you, sir.
Thank you, Annamalai, and good evening, everyone. Thank you for joining us today. I'll start with a brief overview of the global and Indian macroeconomic landscape, followed by the financial and business highlights. The global theme is one of slowing growth as central banks navigate the delicate balance between inflation and recession. The exception is U.S., which continues to show strong performance right now. Developed markets are bracing for lackluster growth in 2024, with a forecast of 3.3% for global growth in 2025. Emerging markets present a mixed picture. While India, Indonesia, and the Philippines are experiencing expansion, this is counterbalanced by tepid growth in China.
With the election dust settling and the budget finalized, the government will shift its focus to infrastructure projects and job creation in the manufacturing sector. Auto sector found mention in the government budget for 2024-25, though exemption of customs duty on minerals, which can aid in reducing electric vehicle prices, while alterations in personal tax and the announcement of employment support are expected to help the sales of passenger vehicles and two-wheelers in the country. Additionally, the emphasis on skill development and infrastructure will benefit the automotive sector. The budget aims to encourage companies to set up battery manufacturing plants in India and invest in battery technology, research and development. Despite challenges, the overall sentiment in the automotive sector remains positive. Now getting into Q1 FY25 versus Q1 FY 2024.
The financial year commenced with healthy growth in the automotive market, despite high base of last year, election related slowdown and seasonal heat waves. The passenger vehicles market in Q1, FY2025 grew by 6% compared to FY2024, due to high demand for utility vehicles and a positive consumer sentiment, despite high inventory levels caused by low footfall at the showrooms due to heat waves and general elections. Heavy commercial vehicles experienced modest growth of 3% on a high base in Q1, FY2024, and a slowdown in infrastructure and construction activities due to the transitional period for the newly elected government.
The government's ongoing emphasis on infrastructure development, anticipated policy stability and a robust monsoon forecast are expected to boost future HCV sales, alongside continued bus orders from state transport utilities or STUs. Light commercial vehicle segment experienced a correction of 3% compared to Q1, FY 2024, owing to financing challenges faced by first-time users and expected loss of market in less than one-ton vehicles to three-wheelers. Last mile connectivity is expected to grow with continued expansion of the economy and demand for consumer goods. Tractor production grew marginally by 1% compared to Q1, FY 2024, driven by an above normal monsoon forecast and a timely arrival of the southwest monsoon, improving the farmer sentiment.
Growth is expected to accelerate in the coming months due to increased minimum support prices, or MSPs, for kharif crops and inventory buildup ahead of the season. The two-wheeler segment started from a slow base, exceeded expectations with 20% growth in Q1, FY 25, driven by the revival of rural consumer sentiment and strong motorcycle demand. Positive sentiment is expected to continue throughout the year, fueled by a trend towards premiumization, with consumers seeking larger and more feature-rich bikes. The three-wheeler segment grew by 11% in Q1, FY 25, due to sustained demand for passenger transportation and last mile operators for e-commerce, food deliveries, and other applications. The wallet-friendly, long-term, total cost of ownership of electric- three-wheelers has driven the fastest transition to e-mobility among all vehicle segments.
The electric- three-wheeler segment is poised for substantial growth, driven by government support and cost advantages. Now, sequential Q1, FY 2025 versus Q4, FY 2024. When compared to Q4, FY 2024, the market has seen a degrowth. This is in line with the seasonal cyclicality. In this slide, we will illustrate the market's trajectory from the peaks of FY 2019, through the challenges posed by COVID, to the subsequent recovery. The automotive market ended FY 2024 on a positive note, reaching all-time highs in the car and LCV segments, and maintaining momentum in other segments. Looking ahead to FY 2025, moderate growth is expected due to the election year factor, high base effects, historical trends, and recent pipeline inventory buildup in the car segment, causing a bit of concern.
However, robust economic conditions and an anticipated above normal monsoons suggest a moderate, moderate, growth trajectory influenced by election year dynamics and high base set in the previous year. Looking into the sector-wide sales performance, the Mobility business has grown by 4.1% in April to June 2024, as compared to April to June 2023. Driven mainly due to the Mobility Aftermarket business, which grew by 8.1% on account of higher demand for new generation diesel components. Power Solutions business, which grew by 2.3%, mainly due to growth in passenger car segment, driven by high demand for utility vehicles. The two-wheeler business grew by 14.6%, mainly due to higher sales for fuel injectors and fuel supply modules, owing to additional demand from TVS and, Bajaj.
The Consumer Goods business grew by 5.1%, driven by higher demand for grinders, drillers, cutters on account of market growth. The Building Technologies business grew by 19.4% on account of execution of higher number of orders for installation of security systems. Getting into key financial highlights. The revenue from operations, quarter-on-quarter, revenue from operations in April, June 2024 stood at INR 43,168 million, which is a growth of 3.8% over April, June 2023. The growth is driven by Mobility Aftermarket, Power Solutions business, and Consumer Goods business, as seen in the previous slide. EBITDA. Quarter-on-quarter, EBITDA in April, June 2024 was INR 5,197 million, which grew by 11.1% over the same quarter of previous year.
EBITDA, as a percentage of total revenue, improved from 11.3% in April-June 2023 to 12% in April-June 2024. The improvement in EBITDA margin is mainly attributable to the growth in revenue and reduction in other expenses during the current quarter. The Profit After Tax, in absolute terms, grew by 13.8% in April-June 2024, over the same quarter of previous year on account of growth in EBITDA. PAT, as a percentage of total revenue for the quarter, is 10.8%, as compared to 9.8% in April-June 2023. Now, getting into the Mobility business, powertrain solutions, we start to see global recognition of hydrogen engines. Hydrogen engine technology is gaining recognition globally as a viable zero-emission vehicle powertrain.
In the European Union, it is classified alongside battery electric vehicles, or BEVs, and fuel cell electric vehicles, or FCEVs, as a ZEV powertrain. North America's Environmental Protection Agency, EPA, the Greenhouse Gas Emission Regulations, Phase III regulations, also acknowledge hydrogen engines. China is considering incorporating hydrogen engines into their new energy vehicle framework or NEV framework. These global endorsements highlight the potential of hydrogen engines to revolutionize the transportation industry. In India, the hydrogen engines present a promising alternative to diesel for a long-haul truck segment. Achieving hydrogen prices below $4 per kilogram is essential, but equally critical in the development of a robust refueling infrastructure to ensure widespread adoption. Bosch is at the forefront of this revolution, working on multiple projects with commercial vehicle manufacturers globally and in India.
Furthermore, Bosch continues to support other alternate fuel technologies, including CNG and flex fuels. Coming to the two-wheeler and power sports segment, in April 2024, we inaugurated a second production line for lambda sensors or LSF- MH at our Bidadi plant to address the rising demand. The new line was inaugurated by representatives from HMCL or Hero MotoCorp Limited, along with the Bosch management. This partnerships with HMCL, the world's largest two-wheeler OEM, marks a major milestone for the growth of LSF- MH sensors. The new production line supports the upcoming BS6 OBD II Stage B regulation, effective from April 2025. The journey of the lambda sensor at Bosch's Bidadi plant began in December 2020, in anticipation of the BS6 emission norms.
Starting with a production volume of 1.2 million pieces in 2021, we have significantly ramped up our capabilities. By 2025, we are set to achieve over 8 million pieces annually. The new Bajaj Pulsar N250 cc and the Pulsar 400 cc models launch confirms Bosch's role as a preferred technology partner for premium powertrain components. This launch introduces value-added functions, or VAF, for the first time in Bajaj motorcycles, showcasing Bosch's commitment to enhancing performance and attributes to the premium mass market. Moving on to the Mobility Aftermarket segment, Bosch has introduced a new tire pressure monitoring system for both two-wheelers and four-wheelers, providing enhanced diagnostic capabilities as an aftermarket solution. We have also gone live with the AdiCare extended warranty offer for diesel and rotating machines, benefiting from both independent aftermarket and OEM customers.
Now, moving on to power tools, it is with immense pride that I share this momentous news of Power Tools India transformation from a country sales organization to a region, effective from 1st of April, 2024. India now has become one of the five independent regions within the Bosch Power Tools global organization. India, as a region, is now responsible for consolidated figures for India, Sri Lanka, Bangladesh, Nepal, Bhutan, and Maldives, or the entire SAARC. The focus will be on the cordless tools business, Cordless 2.0, industrial tools, dealer appointment, aggressive marketing campaigns across business units, global tools, accessories, measuring tools, and outdoor and garden tools, and innovative and new product launches tailored to all market segments. Concurrently, medium-priced products will be pivotal, serving as essential drivers for overall business growth.
The newly formed region has added various capabilities as new business development director, marketing head, and a new cross-business unit marketing structure in place to drive the business towards exponential growth journey. With detailed plans to scale up our dedicated engineering team setup, Bosch Power Tools in India is set to achieve its ambitious goals and targets. In the Building Technology segment, we launched the AVENAR Made in India detectors, marking the first product from our business unit, Fire Systems, to be manufactured locally. Additionally, we introduced the ZLX-G2 portable speakers under the Electro-Voice brand, further expanding our innovative product lineup. With these slides, I conclude my speech. Thank you for listening patiently. We will now address your queries. Feel free to ask your questions. Thank you.
Thank you, sir. We will now begin the question and answer session. Ladies and gentlemen, at present, you are all in the listen-only mode. For participants who wish to ask a question, I request you to please raise your virtual hand. I shall be able to see your raised hand, and will invite your questions in turn. Alternatively, participants can also type in their questions into the chat box. We will now wait for a moment and the question to assemble. First question is from Pramod. Please unmute and ask your question.
This opportunity. So thanks for the detailed presentation and giving more granularity for the client-wise wins. That's useful to understand. So first question is with regard to the power tools. You did allude to the region, you coming as a region. So what does it mean for. Is it in the sense you, the manufacturing operations will be set up by Bosch India in those locations, or you'll be exporting from here to those regions?
Okay. Currently, there is. Okay, let me explain what the regional concept means.
Okay.
Till now, India was a sales organization for power tools, reporting into our Chinese power tools headquarters, and that has been disconnected now, and India is a region, like I mentioned earlier, together with the rest of SAARC, minus Pakistan. So basically, Bangladesh, Nepal, Sri Lanka, Bhutan, and Maldives, all come under the management of the regional president for power tools located in India. Of course, he also manages the entire portfolio of business from India. Now, coming to your specific question on manufacturing and export or local manufacturing, there are no current plans for setting up any plants in any of these countries. All of them benefit from our current manufacturing plant, which is already in Chennai, in India.
We will continue to export from Chennai to these regions. The reason for aggregating these regions is because the markets are very similar, and the power tools demand and the nature of tools are also very, very similar. So we are logically using the same tools across the entire region, and hence it makes a lot of sense. Geographically, they are also located very close, so traveling is easy and management is easy. So the Indian team manages the whole thing, and they will export from here and ensure that the business growth happens for the entire region.
Sure.
So power tools within our Bosch Limited will significantly benefit from this one.
Sure, understood. So second question is with regard to your annual report, where you asked for, in today's AGM, the shareholder approval for, inter-party relations or the, the transaction to be done. So there you talked about, exports to the parent, literally tripling in next four years as a resolution, and imports to the parent, from the parent, doubling up, more than doubling up. What is the thought process there, and, is it a serious number to look at? Because on the financials, it looks at big implications. What has changed in the thought process in the last two, three years?
Yeah. Thank you very much for the question. Yes, there is not a change in the thought process. We were all the time seen as we, our main and core market is India. But we have worked in the last couple of years massively on our cost competitiveness. We are now scaling with our quantities, which helps us also to become cost competitive, and therefore, for certain volumes, like injectors, VE pumps, et cetera, India will also become very attractive. And therefore, we see an increase, and it's a serious number, also in the automotive. But again, still, we are, our main market is India and SAARC. Wherever possible, of course, we also step into the export business with our parent or our affiliated companies, which helps us also in the local volumes because we have a better fixed cost coverage.
Sure, thanks. And any explanation for imports, literally doubling up, which you're talking about? At one side, you are localizing, and you are also importing, planning to import next four years.
Yeah. So what we plan to import for the next four years, we are, you know, we have two technology changes. One is from the conventional to the Common Rail product, and therefore, we see a decline in the conventional products, where we have a very good and high localization rate set up after the last four decades, let's say. In the Common Rail system, we are heavily working to come to a very good localization rate. We are working on this. We have already, we were already successful, but this transfer is that we see a higher import for the Common Rail systems until we have finished the main localizations. Second thing is that in these systems, in the content of the car, there is mainly exhaust gas treatment components.
We will start with the first component of the exhaust gas treatment in April 2025. We have the SOP, and this is the NOx sensor, and we are currently looking and discussing the next localization of the NOx sensor as well. In addition, for the next four years, we also considered, we have now to see where the market, to which technology the market is, is going into the electrification or hybrid or whatever, but we have also considered partially the first imports for this new technology. This is also part of our related party transactions.
Sure.
Thanks for the. Perhaps this was the automotive part.
Sure.
The same is, of course, we have, we said we have a new approval for the related party transaction for the power tools, and there is also, we see a very good growth. Guru already mentioned our plant in Chennai. We are a region now. We see a good growth, and there is partially things also imported, and therefore we are above the 1000 growth.
Sure, ma'am. Thanks for the detailed answer. Helpful. All the best.
Thank you.
Thanks, Pramod. Next in the line will be Gokul. Please, unmute your line and ask your question.
Is on your gross margins. So your gross margins remain at around the mid-thirties mark, where we are currently facing very softer commodity prices. So, in that context, can you just give an update on localization plans, and how does this impact our gross margins more from a 12- 18-month perspective?
Regarding the gross margin and the localization, it is very clear for us strategically, we have to localize also to increase and to improve our gross margins. This is very clear. On the other hand, you also have to see, we have a shift from the conventional products to the Common Rail system, where overall, we have a higher share of material in the Common Rail system, therefore, localization will be even more crucial. So localization is what we have to work on in the Common Rail systems, and perhaps also you should know that we have started with a project team in our purchasing here in India, also with an early, let's say, screening of the supplier market for the future for all components in the electrified powertrain system.
Just to follow up on that, so your long-term margins have been in the mid-40s or early 40s at the gross margin level. Given the change in the composition of the products, where you're moving from conventional to CRDI, as well as more to electronics, should we assume that it would be these margins perhaps might improve a bit on localization, but this is more like the new normal?
So this is a little bit a guiding question for the future. Let me say it in this way. We did now the first step, coming back to a double digit, which was very important for us, and we do everything to keep this double digit. For the future, we have to see how the market is growing, what is the product mix, and how fast coming technology is in. It's our job to be as flexible as possible, and therefore going ahead with the localization in the Common Rail system and in the new generations of the combustion engine, and be prepared also in India for a fast change to the electrified powertrain.
Great. Just my second question. In the Q4 call, you had indicated that the Q1 could be soft because of the sales with respect to certain automotive impacted by elections or macros. But for the full year, you were expecting a similar performance as FY 2024. Does that broad expectation of growth still hold, or you're changing on that stance?
Yeah, the broad expectation of growth for the year holds. There is change. We, like we had already sort of indicated, Q1 would be a sort of a moderate or very weak growth. Knowing that, there would be an upcoming election, and we would also come into the summer months with not knowing how intense that summer was, but we had expected some slowdown primarily due to elections. But I think it's largely in line with our forecast for this quarter.
Well, just lastly, on CapEx, would you be required to do a step up in your CapEx spends, maybe INR 500 crores plus, given you would want to accelerate your localization?
Whatever we have to spend to have a feasible and profitable localization, we will spend.
Great, ma'am. Thank you so much, and all the best.
Thanks, Gokul. A reminder to participants, who has a question, you can raise your hands or type your questions. Now I will go to the chat box. There are some questions in the chat box, sir. The first question is, "What are the estimated content increase for two-wheelers due to upcoming, stage B, with effective from April 2025?
Are you referring specifically to the OBD Stage II?
Yeah, yeah, OBD Stage II. Actually, it's a question from the chat box, but I presume that it is for OBD II. What will be the content increase for Bosch?
Okay, we have to get back to you on that. I can't give you an exact number, right now, but there is an increase, and we will get back.
Okay. The second question is, "Is there clarity on timelines for TREM V norms? What could be that, again, the same question, what could be the content increase in tractors for Bosch Limited due to TREM V? How much of this content increase would be value added by Bosch, and how much will be bought out of components?
So, I would again say, TREM V has been postponed so far. I'm not aware of any recent discussions towards changing the date, or if there is any further change in the date, but mostly by second quarter of 2026, TREM V should be rolling out and in place. So that's what we expect today. There is again a change in the content per vehicle, and there is going to be a change towards the Common Rail systems there, but we will get back if necessary on the exact change in the content.
Okay, sir. Next in the question queue is Viraj Kacharia. You can unmute and ask your question.
O pportunity. So just three questions. First is on the margin piece. So what do you kind of give a color on in terms of the increase in third party, because of the change in technology, which is taking place both in tractors and other components. So while localization may take some time to play out, would it be right to think that margins may remain around current levels, what we are, we've been reporting, given the kind of technology change the business or the portfolio will be undergoing?
Again, regarding margins in the future, we do not want to give this guidance. We would not like to give. But, you know, it is all the time, if you have a change in technology and if you have a strong co-parent or like us, then there is, of course, possibilities, there are chances, there are opportunities, and you have the flip side of the coin, where you have for the one or for the other product, perhaps a negative impact. It's our task to balance it and to prepare for all the scenarios. There will be definitely a change in the technologies. The question is when?
Too early localization also is totally counterproductive in terms of our margin. So we will have to balance it against when is localization most appropriate, what volumes justify localization with reduced costs and improved performance in terms of margins. Only then we go, or maybe a little bit earlier to that phase we go in. But if you start to localize too early and either the standard shifts or the rollout date shifts, like in case of TREM V, or the volumes don't happen, then we are sitting with high CapEx, which may not be very effective. So we take a very conscious call not to drop our margins in everything we do, and ensure that we will be successful also with increasing localization in the coming years.
Perhaps to add, to give you a concrete example, the NOx sensor, which we will have the SOP in April 2025, we nearly worked two years in the front loading of this project. If you look at this product, it looks very simple, but there is laser welding, new competencies in. And for us, it is very important. As soon as we have the lines, and our lines are usually expensive, we have to set up a very fast ramped up, because otherwise we have to keep the imports and we have the fixed costs. Therefore, we are, as Guru explained, we are really thinking through when does it make sense, and we invest a lot in the front loading of the project.
If the lines are coming to India, if they are capitalized, we need to come to an OEE of 85% and 90% as fast as possible, not to sit on the fixed cost in the P&L.
Just an added question. You know, when you're kind of adding CapEx towards localization, say, for after treatment or NOx, is the thought process largely towards localization or meet the requirement for the local market? Or now there's a change in thinking in terms of looking at export also, at least in the interim, to drive better utilization? That's one. And second is, given now you're looking at newer technologies and localization of that, is there a change in CapEx spend range versus the past? So we talked about INR 300 crores-INR 600 crores annually, but spends in last few years has been at the lower end of the range. So is there a change in thought process on that?
Okay, coming perhaps first to your first question, and here we can also say the NOx sensor line, if we only look at the Indian volumes, we would have a two-shift model, and we would have then an impact in the costs. Here, we get a certain export volume as well, because we need in the overall production network, there were volumes which we could bring to India, and therefore, we will get a line where we have India plus export volumes, which is also favorable then for RBIN, of course, because we have good utilization. There we have a very good example. We have other examples as well. Nevertheless, of course, if the Indian volumes requires two shifts, three shifts already, then for us, we first deliver into the Indian market. So, this is a general. Sorry to ask, can you repeat the second part of your question?
You know, the range of CapEx of.
Oh, yeah.
It used to be 300-600. So with this, does that drive a material shift or we will be in that bind only?
So again, you know our balance sheet, and whenever a localization, MAE, investment, or CapEx is feasible and we see, let's say, a contribution to the top line, to the bottom line, or to both, then we will make this CapEx, we will make this investment.
Just last question. On the portfolio, you know, for the Bosch listed entity, I think last quarter or the quarter before, you gave a color that CY 2024, we may see a similar announcement as for the parent announcement in the portfolio realignment and the mobility. So we did give some color that you will be announcing or coming up with a decision sometime during the year. So any thought process in terms of whether any further businesses will be exiting from the listed entity or any businesses you think will be merged in the mobility segment into the listed entity? Any color you can give on that?
Yeah, I do not want to speculate on things which are very sensitive information, so I would not want to comment on these things right now. All I can say is that we are continuously relooking at portfolio and how we can do it better, not just for ourselves internally, but also for our customers in India, and potentially also for the export markets which are opening up for us. So as and when there are decisions in the board, we will keep you updated.
Thank you. Good luck.
Thanks, Viraj. I'll read some questions from the chat box. In the quarterly numbers, the other expenses has gone up, sequentially as a percentage to sales. Any one-off expenses in the other expenses this quarter?
Yeah, exactly. So we had a one-off in the last quarter, where the other expenses of sales were very low, because we had there a Forex impact. And in this, of course, this quarter, we have the reversal impact, or you see the reversal impact, and we have one warranty case, where we have a special warranty where we made a provision in this quarter. So this is actually the reason.
Can you quantify it broadly?
Pardon?
Can you quantify this request?
No. No, we've had. It is, we would, yeah, no. We will not quantify the different lines, please. But we have the reversal effect from the last quarter, in this quarter with the, with the, forex and one warranty special warranty case.
Okay. Then the next question from the chat box is, can you talk about what percentage of our revenue comes from electric two-wheelers and four-wheelers now? Are there any worthwhile order wins in EV components to call out for?
No, right now, we would not like to do that. We don't get into such very specific, segment and product line, revenue numbers, but we can look at it, in the future.
Okay. Then the next question in the chat box is, in the presentation you talked about, value-added function provided for Bajaj Pulsar. What are these components, and are they manufactured by the listed entity? Hello?
I'm just referring to what.
Yeah, yeah, yeah. Okay.
On this, Annamalai.
Yeah, the Bajaj one, the two-wheeler you indicated, sir, Bajaj Pulsar.
Yes, I know. I get it, but exactly what those value-added functions are, we will get back to you.
Okay, sir. Next, I'm unmuting Jai. You can unmute your line and ask your question.
To understand on the recent news article, if there is more light that you all can throw in terms of Bosch potentially getting the DVA certificate under the PLI Scheme. So two questions related to this are, if there's any details that can be shared on the kind of products that we are looking to localize, and what's the kind of incremental CapEx that the domestic listed company will commit to post this event going through? And is that being the reason for slower CapEx versus what we could have put on the ground? And should this accelerate more investments?
No, actually, our CapEx planning and, you know, investments are not necessarily connected to DVA approvals. We've been a manufacturing company all along, and we've invested significantly on CapEx, as and when we feel localizations make sense. DVA and PLI benefits come on top of it, which of course will be an added bonus. So that's one part of the thing. On the aspect of the news item on DVA approvals and so on, all I can say is that we are an applicant in the PLI Scheme. We have not officially got any confirmation from the ministry on DVA approval, although there are market speculations or, you know, social media or media speculations or news items on this.
We do not want to comment on that. We hope to. We have fulfilled more or less all the requirements to meet the DVA, so as and when we have the formal approvals, we will indicate that with you. Hello?
Mr. Jai, are you through with your questions? Okay, we'll move to the next, Pramod. You can unmute and ask your question.
Yeah, thanks for the opportunity again. We have always been asking you in terms of when are you localizing? But if I had to look at tractor industry as an example, where the implementation timeline itself had changed. So how as, when such policy delays happen, how do you accommodate in your decision-making and capital allocation, and do they go for a slow utilization in the initial period? Just wanted to get your thoughts on that.
See, I'll give you a general philosophy on how we get into manufacturing and localization. Whenever a new technology is introduced, it takes—unless there is a digital switch, like, for example, BS4 to BS6, with a clear cut-off date and a transition from one phase to another, the ramp-up on new technology areas is quite slow. And then we prepare for that and invest in line with the ramp-up volumes that we forecast or we have acquired, and then we go in line with that, with gradual upgradation of CapEx to ensure that our manufacturing OEs are at the optimum level. That would be the general philosophy. So we are not constrained by cash or budgets to ensure localization.
It's the bigger worry generally is, are we investing too early and then starting to depreciate, starting to waste our line capacities and add on fixed costs, and thereby impact our bottom line? Or are we doing the right things with regard to a good mixture of imports plus local ramp-ups, and then subsequently making the local ramp-ups very significant and totally cutting off imports. So that's how we operate in general, and this has been our philosophy for a long, long time, and this is something we have very good alignment with our OEM partners, and we work very closely with them on how we do it, and that's how we've operated all.
Sure. And the second question is with regard to the two-wheeler exposure. With the Lambda sensors, do you see two-wheelers becoming a prominent portfolio of your part of your portfolio into high double digit, might be in 2026 or so? Any direction you want to give?
Two-wheelers are already a very significant part of our portfolio, so we have engine management systems, a lot of sensor components that go in. Of course, outside of the listed company, we also have braking ABS components going in. So two-wheelers are a significant part of our overall turnover.
Sure.
We expect this trend to continue. With increasing premiumization and movement towards higher cc motorbikes, we expect this trend to continue.
Sure. Thanks a lot, Guru.
Thanks, Pramod. I'll read some questions from the chat box, sir. Many questions have come. One minute, sir. I'm just. Yeah. First question is, "I'm not looking for a specific number, but directionally, can export in next three years, growth rate higher than the domestic growth, given the base difference?
See, by and large, we are set up with an intent of being local- for- local. So we, within the Bosch world, we have production capacities installed in several regions, and India is one of those regions where we ensure that we do largely what is required for the Indian OEMs. Of late, thanks to several geopolitical issues and changes in the fuel emission norms and electrification and so on, export is becoming a very attractive proposition for either enhanced utilization of our line capacities or also to reduce capacity somewhere or change our production dynamics and export from India. We do not currently foresee a major change in our export portfolio right now, but the intent is that we continuously increase this.
Okay, sir. Mr. Jai, who had a question on PLI and got disconnected, he has typed in his question, follow-up question: "Thanks for taking my question. One follow-up, are the benefits of PLI and other incentives captured in the margins largely or passed through as they have limited life?
Can you please rephrase your question?
No, no, I think his question is, whether the PLI benefits.
Yeah.
When you get it, we can retain it, or we need to pass on to the customer. That is what his question is.
I mean, this largely depends on product categories and our agreements. I would say the eventual benefit should be seen by the consumer, and so there is an overall value chain passing on the benefits, and we will do the same.
Yeah. Okay. So, again, the next question, so I am reading from the chat box. Can you suggest on our plans for hybrids in PVs, considering EV penetration is not taking off in the near term and more OEMs are announcing hybrids?
Yeah, I mean, we've talked about EV penetration several times, and many of you have countered us, saying that very high EV penetration likely, and so on. But we believe our numbers are pretty fair and correct, and we have anticipated what is likely the EV penetration rates in India, or we get as signals from the global OEMs. So this is an anticipated trajectory right now, and we see that when the subsidies reduce or when the very premium EVs are sort of saturated, and now the more common market class EVs have to come in. There is likely a slowdown for a while, and slowdown still means a pretty good growth rate compared to traditional combustion vehicles.
This is something that is known and well understood. So that's the EV part of the story. Now, for hybrids, we have a portfolio which caters specifically to the engine management systems. Basically, a lot of things we already do towards the combustion vehicles will still continue. There are some extra components which come on hybrids, like the battery systems, which we don't make currently, and that's how it will stay.
Okay. Can you please give an outlook for our key different, key segments for us, CV, tractor, PV, two-wheeler and consumer goods?
What does outlook mean?
No, no, basically, I mean, all these sectors, how we look at maybe in the shorter to medium term?
Yeah. Short term is really.
Presentation.
We had covered most of this in the presentation already, so I would not want to.
That's.
E nlarge anything more than that.
Okay. Again, this next question you may not answer, but anyhow, I'll just read out the question. Share your market share and content value for EVs currently.
No, I would avoid that question. We don't go into product class.
Yes, and.
Description, so.
Yes, and we also have to say, we are with all the important OEMs in discussions, but it is a very, very early stage in the market of electrification. And to discuss today of market shares, when I see the market, then this would be really, we are talking about, I don't know, a couple of thousands, 100,000.
Or thousand.
So this is not. The important thing for us is not on the classical KPIs. The important thing for us is we are in discussions with our customers. We are with them together, co-creating, and we are the strong partner for them, technology-wise. And when it's coming up, we are ready to work with them together. And this is the current status. But now to say, what is the KPI, the market share, this is really too early. For us, important is that we have a strong backbone with our parent company, where we have certain technologies which we can offer to the Indian OEMs, that we are, have the competencies to work with them together on adjustments and give them a good consulting.
As I mentioned before that we are in a very early stage, have already the supplier base on the radar here in India, we start this as well.
More importantly, we have a profitable portfolio.
Okay, sir. We can take the last question from the chat box, sir. Tata Motors today has launched a Curvv.ev at a price which is very close to a mid-sized diesel SUV. How do you think about this as a major diesel player? And the take on it if the customer switched to Curvv.ev.
No, I mean, if, yeah, we wish lots of success for this. We have our components going into many of the EV launches coming up, so we are happy to get in that portfolio. But, yeah, it's maybe too early to speculate what will happen, how will diesel go down. We have already forecast that the diesel share will go down over a period of time, quite long. And, we will stay with that, and, in parallel, we will do everything to have a very successful, profitable EV portfolio, which we can carry for the OEMs in India.
Okay. Okay, sir, do you want to make any closing comments, sir?
No, thank you. I just want to say thank you for this opportunity. We had some good questions, also some good thoughts to introspect within ourselves. And yeah, thank you everyone for this.
Okay, sir. On behalf of B&K Securities, we thank all the participants for joining the call. Special thanks to Bosch management for taking your time out for the call and giving us the opportunity to host the call. Have a good day.
Thank you. Bye bye.