Q2 22/23

Nov 8, 2022

Yes. I am ready. Thank you. So I can I'm ready to move. Yeah. We can I'll make the opening remarks. Ladies and gentlemen, good day and welcome to Bosch Limited 2Q FY2223 Post the sales conference call hosted by B&K Securities. I also take this opportunity to welcome the senior management team of Bosch Limited. We have with us today Mr. Samutra Bhattacharya, Managing Director Mr. Gurud Prasad Mudulapur, Joint Managing Director and Chief Technology Officer and Ms. Karim Gilles, Chief Financial Officer. At this point, all participants line will be in the listen only mode, and there'll be an opportunity for you to ask questions after the management presentation and opening remarks. Also, may remainder of the safe harbor, the company may be making some forward looking statements that have to be understood in connection with the uncertainty and the risk that the company faces. Over to you, sir. Thank you very much, Mr. Anand, Anamalai Jayaraj. Good afternoon, colleagues, and thank you for being part of this call. At the outset, I would like to thank all of you For the excellent in person interaction that we had in August at Mumbai for our Annual Investor Meet. Today, I will start with a brief on the macroeconomic policy followed by an automotive market update. And then I would like to walk you through our financials. Finally, I will end with the highlights of the quarter affecting our business. Next slide, please. The global economy is facing a significant downside risk to growth with persistent high inflation. In relation to the Indian economy, the IMF released its latest focus on the world economy this week in which India's FY 'twenty three real GDP growth was revised downwardly to 6.8% from the 7.4% projected in July 'twenty two. Having said that, the domestic demand continues to be quite robust in India. Next slide. Overall automotive market production has increased by plus 28% on year on year in the current quarter. This excludes 2 wheelers. However, on a low base of the quarter 2 of fiscal year 2022, The production volumes in Q2 fiscal 'twenty three stood robust across the segments aided by the inventory getting filled For the festive season, the passenger car segment outperformed other segments growing at plus 35% Year on year volume growth supported by the somewhat easing of chip supplies or semiconductors and the pent up That's still season demand. By the way, colleagues, you must know that October had the highest sales for past cars due to the festive demand. Serving this already healthy order book and thereby mitigating longer waiting periods. The 2 wheeler segment also witnessed a healthy plus 8% year on year growth, largely supported by the festive season and premiumization trend. The LCD segment continues to witness growth and which was plus 30% on year on year while the heavy commercial vehicles Our HCB segment saw plus 37% year on year on albeit a low base. However, on the ground situation is Steady at fleet utilization levels are healthy and have led by increased economic and infrastructural activities. The cracker segment also grew marginally by around minus 2% year on year. Of course, very high base With the OEMs building up the lead went free in anticipation of the strong demand, which was there for the festive season. The 3 pillar is on a recovery path with shared mobility slowly picking up. Overall, automotive market production As increased by plus 30% quarter on quarter in the current quarter, this of course excludes 2 vehicles. Let's have a look at the automotive market outlook for 2022. In this slide, Each row represents a particular segment. For instance, the 1st row represents the pass card followed by HCV, LCV, tractor, 2 wheeler, 3 wheeler segments respectively. The first column represents the 2018 production volume, which is considered as one of the best years In the Indian automotive industry, which was at its peak. So, by the way, we have shown here 2018, but you can also Tensionally read it as 2018's growth. But the numbers here indicated are the calendar. 2nd column represents 2020 production volumes and the 3rd column represents 21 production volume and the 4th column gives you an outlook For the 2022 calendar year onwards. Basis of these numbers, we are expecting a solid year for PASCAL, LCB segment and very likely they will reach the 2018 peak. Example, you can see in Bhaskar, we've said 4,300,000 for the forecast of 22 as against the 4,070,000,000 In the year, in philosophy. The factors peaked. In case of heavy commercial vehicles, 2 wheelers and 3 wheelers, recovery continues over and we can see Based on differentiated situations, they are still far away from the 2018 peak. Practice peaked already last year, And we're expecting a minor deep growth albeit on a very high basis. Let's look at how the company has performed in the July, September 2022 quarter as compared to the July, September 21 amidst all these aforementioned factors. Our overall revenue from operations for July, September in 2022 stood at 36,616,000,000 or INR 3,662 crores, Which is an increase of 25.5 percent as compared to the July, September 21. Here, the automotive sales have grown by approximately 1%, largely driven by the powertrain solutions, while non automotive sales have increased by 7.5% largely led By the Energy and Building Technology division. Overall product sales have increased by 27%, Primarily on account of a low base in the July September 2021 owing to the impact of COVID-nineteen. Income from services mainly comprised of R and D services provided to OEMs as also our parent in Germany. While billing for R and D services was at a healthy level for the quarter, Income recognized in the books based on customer SOP deals was INR648 million or INR64.80 crores. Balance income would get recognized in subsequent quarters based on project completion dates of customers. Other operating income mainly includes income from lease rentals, business income and export incentives. In July, September quarter of the previous financial year, We have received an installment of claim for refund of taxes under the mega project scheme of the government of Maharashtra pertaining to our Nasik plant. However, other operating income for the current quarter was comparatively slightly lower. The material cost as a percentage of total revenue from operations has increased from 62.8. In July September, 62.8% in July, September 21 to 64.9% in July, September 22. Increase is mainly due to two reasons. 1, change in product mix was traded goods over the same quarter of the previous year. And second, What's happening internationally, which is raw material price increase, including increases in the prices of electronic competence. Employee cost for July, September 21 includes reversal of employee related provisions. On a like to like business without the reversal of provisions, employed costs in July, September 'twenty two would have remained the same as the back to the previous year. Other expenses stood at 5,781,000,000 or 5.78, 4, which is 15.8% of the total revenue in July, September 22 as compared to 4,757 or 476 gross, 16.3 percent of total revenue in July, September 21. Increase is in line with the increase in sales and also Higher spending on new business areas and one time technical access fee paid for localization Of new products. Our depreciation for the current quarter is at INR 919 billion, 2.5% of the total revenue as compared to 829,000,000, 2.8% of total revenue in July, September 21. Increase in depreciation is an account of capitalization of our new Spark. Next campus And the plant initially for localization of our new products in the current quarter. With this, the operating profit stood at INR 3,392,000,000 in July, September 2022 as compared to INR 2,700 and INR 47,000,000,000 in July, September 2021, which is an increase of 23.5%. Other income primarily consists of interest of fixed deposits and changes in the market value of our mutual Funds which are debt based. Other income has also increased from INR1443 1,000,000 in July 2021 to RMB1497 1,000,000 in July, September 2022 mainly on account of increase in interest, Income on fixed deposits and dividend received from equity shares. For the quarter ended July, September 2022, your company has posted a profit before tax or PBT of INR4870 1,000,000 As compared to INR3975 million in July, September 2021, As a percentage of total revenue from operations, profit before tax stood at 13.3% of total revenue in the current quarter. FACT or profit after tax for the quarter ended September 2022 stood at 3,724 minuter 1,000,000, which is 10.2% of the total revenue from operations. Profit after tax in July, September 2021 was 3,720 minuteor which included tax adjustments Which is a credit amounting to 765 MINR pertaining to previous years. We in Bosch We believe that by 2,030 approximately 1 in 3 new vehicles across the globe is likely to be an EV. Bosch is already gearing up for this change that hence offers comprehensive offers and solutions from PC to CV At hybrids to be BEV as well as FCEV or battery electric vehicles and fuel cell electric vehicles. On Hydrogen, our Powertrain Solutions division in India located inside RBIN is a deep engagement with key energy sector players And OEMs for hydrogen engine business and you will be glad to know that we have also received our first hydrogen pilot project. This includes the conversion of ICE engine, PS4, to hybrid ICE And the details of this will be shared with you later at the time of SOP by our OEMs. The sustained Nibble Analytics or Global ESG Ratings Agency, ESG stands for Environment, Social and Governance Has again rated Bosch Limited and our scores have improved from 13.2 in 2021 Up to 12.8 in 2022. The lower the scores, the better. Limited currently ranks At 11 out of 208 within the automotive components, industries And on 734 out of 14,794 within the global universe. We would like to thank you for your contribution as well as for your patience listening Throughout this call, we will now address your queries and thank you for your questions. Thank you, sir. We shall now begin with 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. As the moderator, I shall be able to see your hand, Rise the hands, and I will invite your questions in turn. Alternatively, participant can also type in their questions in the chat box. Please address address your question to our panelist. We will now wait for a moment as the person queue assembles. Yes, the first two questions from Mr. Jinesh Gandhi. Please unmute your line and ask your question. Yes, thanks. Am I audible? Yes, please. Yes, my first question pertains to the CapEx. So first half CapEx Was close to about INR 3,100,000,000. Any indication of what kind of investments we expect in second half or for the full year FY 'twenty three? And In which areas are we investing for Futuregrowth? Yeah. So as I said, Vignesh, That we are investing in the future both for our plant and machinery As also, we have invested for our smart campus, which the brand is still inaugurated, which is called spark.nextcampus. So we have also based on this quarterly since we have capitalized it, this has also come into the books And therefore it shows the depreciation. In relation to the CapEx plan for 2022, we have approximately anywhere between 520 crores to 560 crores in that bank bill. As you know, Bosch Limited For over the last many, many years, that's between 400 crores to 600 crores and Bosch in India does anywhere between 600 to 18. Right. And this 520 crore to 560 crore will also include investment towards PLI scheme related CapEx, right? Actually, we have applied for Bosch Limited as also our other sister companies. And we plan to, Of course, apply and also go ahead for the PLM. Okay, okay. And second question pertains to this hydrogen engine business award which we have got in India. So as you indicated, this is conversion from ice to hydrogen. Any indication of whether this is pilot or it's actually for commercial application? And Right. When do we expect this to get commercialized? So as I mentioned, 2 things. And then I'll request our CTO to talk about it, who's also handling this portfolio. We have got a pilot Conversion project. The pilot conversion project will is will be done based on our having put up our lab, I appreciate that. I thought ROD campus and only on SOP by our OEMs, which is our standard practice. We will give further details. But over to you, Kudu. Yes. Thank you, Sumitu. The project itself is a pilot right now. So the first engine conversions have happened and there is proof both in terms of engine conversion And those engines being fitted on the vehicle, that hydrogen conversion of current engines is possible. So that this is what has been done right now. And based on that, we have acquired a series project. And we will now Support the OEM to build additional vehicles before December. And from then on, the series project will Start and the timeline is about one and a half years for Citi's budget. Got it. Thanks. I'll follow back in queue. Thank you. Yeah. Thanks, Janesh. Next Next will be from Pramod Amte. Your line is unmuted. You can go ahead with that. Yes. Thanks. So first is with regard to the currency movement. If I had to look at your annual report, almost 38% is your Forex as a Forex usage as proportion of net sales. Would you give a breakup in terms of what is the dollar exposure and euro exposure because both these currencies are moving in a different direction this time. So hence to understand the volatility impact of currency. And second, how these are passed on to the clients? Do they come through easily or they are tough negotiations? Thank you, Pramod, for a very Insightful and interesting question. You'll be happy to know that our company over decades has a very robust A, treasury management system and B, a very robust hedging system. And we have been doing it consistently. And of course, we follow the mark and then do it. So in summary, for Bosch Limited, we are pretty well secured against A huge currency fluctuations. While the exchange rate changes have been I won't say passive, but it has been there. For example, the quarter July date, The changes were approximately 8.5% compared to the sequential quarter about 3% or YTD at 7%. We have both at USC and at euro, thanks to our hedging policy, had a pretty stable situation. And this is handled by our CFO, who's also participating. The second point of yours was, how is our contractual obligations? So we have systemic contracts with different OEMs in relation to different elements. So these are both based on the past as well as in the future. So we do put in Some of these clauses, but naturally as you would understand, they are not uniform across all. So in summary, I would say 3 sentences. 1, India's exchange rate fluctuations have been, thanks for finance minister, not massive. 2, we have a very solid hedging Policy which has allowed us not to have any major impacts. And 3, our contractual Contracting with OEMs are pretty good. And, yes, they are slightly differentiated depending on different OEMs including the timing. Sure. Thanks. And second one is with regard to the alternative technologies. Congrats on winning this pilot project on hydrogen. Considering that EVs have taken a big spike in the festivals in recent months, any update in terms of Wins or what product offerings have been accepted by the OEMs in the recent times for you? Nothing compared to the past that we declared, Pramod. Okay. Thank you. Thank you. Thanks, Pramod. Next question is from next caller will be Ashish Abhishek, sorry. Abhishek, your line is unmuted. You can go ahead. Abhishek? Hello. Am I audible? Yes. Abhishek, you are audible. In the beginning of your narration, you said that there was some one off kind of localization expenses included in other expenses. So can you please quantify and explain the nature of the expenses? Which one are you referring to? So there was some is there some one off expenses included in other expenses in this quarter, sir? Look, Abhishek, we have, which we have explained multiple times, We have technical access fee at a arm's length based on when we take a new technology from our parent. So unlike royalty, which is a regular payment, again, which is at an arm's length that we're missing, Our one time technical access fee was paid for a localization of a of a few new products. And that was the one time this time. Can you please quantify that? It's around the INR 35 crores. INR 35. Okay. And sir, can you please elaborate something on about your BS fixed order book, which you said that last time it was the highest ever. So have you seen further increase in that and your outlook on the At the time of The auto expo before the COVID and at that time I had declared if I Correct. We recall around INR 23,000 crores on the lifetime of the acquisition of the BSX. This by the way, the definition of lifetime is between 5 6 years. I also mentioned later after the COVID, The same value based on the changed demand for vehicles at the COVID At come to approximately 18,000. So you can imagine, again, that 18,000 will move up because the demand has moved up. So a couple of years have also gone by. So in summary, a, we had already shared the BS 6 Stage 1. That's not stage 2. In the last auto expo which happened physically before the COVID. That was in 2020, sometime in January of February. Now coming to what I mentioned in the last quarter was something different. Having acquired the BS 6 stage 1, you are aware that there has been several government Announcements based on which OEMs have actually started investing, whether it is Rev 4 to Rev 5, other emission law Legislations for which in the Powertrain systems, we've had one of the highest acquisitions in the year 2020 And therefore, based on the current legislations which have been announced And started to be acted upon by the OEMs, we are happy, good order. So I hope I've clarified between PSC stage 1 and the current technology. Okay. Thank you. Thanks, sir. Next question will be from Mr. Priya Engin. I have unmuted airline. Here, Anjan, can I unmute and ask for a question? Yes. So just on the commodity cost outlook, even this quarter, you have highlighted that the commodity cost has been On the higher side, while we are seeing the commodity and the pure commodity like steel, aluminum, etcetera, is coming down. So what's your thought on going forward the commodity cost? So I will request our CFO to briefly speak about it, having said a sentence or 2 on you. Yes. So The first sentence, Piyarajan, is that, yes, there is a slight easing of commodity cost compared to the peak. Yes. There is a slight easing also, as I mentioned, on the availability of semiconductor. But please remember that those same costs on materials are nowhere near the base of when it started. So having said that, a little bit more from our CFO, Ms. Karen Gilles. Thank you very much, Jeanette Ho. Yes, as mentioned already by Jeanette Ho That the RMI what we currently see is of course based on the past and on the past increases. So we are expecting an ease in the high RMIs. But nevertheless, we will see also in the Coming months that we will not come to the base we had beforehand. In addition, if we look at our material costs, we also see that in the traded goods, We have an increase in the last quarter of the traded goods, which is also an influence of our material costs. So, both effects together, You can see reflected in our material cost of the current quarter. Having said, of course, Priya and Anjan, you must also realize that in a very systemic way, we are approaching our customers For these increases, which are unusual, and as we know that OEMs have also on several locations this year Had to increase the prices of their end product, the cards, and therefore, we from our side are also systematically approaching. Understood. And in your press release, you have mentioned about the injector, the common rail injector being localized. So In this quarter, have we seen some kind of supply from that or we are expecting localization of that to Benefit in the sub second quarters or years? Yes. I suppose you are bidding with the localization of the injector and the commercial vehicle injector. We just Yes. We just have the SOP of this. So we are step by step now going into the production. But it is not a one time approach. So the overall localization needs a little bit longer. So we have started the production. The assembly line is already capitalized and step by step we are ramping up now the production. And back to your questions, in the current quarter, we do not see this influence. We expect it now in the upcoming months. So if I can add a sentence, the key point, we are running to notice that we have actually got the line Up and running in India. This also coincided with the Nasik plant's 50 years of being in India. So a, we have committed to the localization. It will happen step by step. The line is up and running, as our CFO mentioned, already in our plan. And like what we did in the past decades, now that the line is committed in India, it's not being imported. The product components will have step by step. Understood. And one thing on The consumer products good. So I guess in your annual report, you have also mentioned, I mean, from the Related party transaction, there is a lot of credit goods in that segment. So and the margin for that segment has been lower Compared to the automotive product segment. So, I think the first phase of localization was started from that product line. So when can we expect the benefit coming from that line? Which line are you referring to? So the power tools, the consumer goods segment, because that was the first Project which I think in last couple of years where we have undertaken more localization because we were doing a lot of Red goes to the out there. I got it. I got it. So, Preetanjan, there are 2, 3 points on the Powertools that you must note. The Powertools production line, which was at a very nascent stage, was shifted around four and a half years from Bangalore, 4 and a half to 5 years are down from Bangalore to Chennai to the Odakkadir area. This Power Tools plant for 3 times have been selected as the best Power Tools plant overall rating out of 18 Powertools plant in the world. From a very low base, we are nearly at 40% localization of our Powertools And we are committed to increase the localization where we have now shifted to our own premise and a larger premise. In Powertools, we are the market leader in a very fragmented market. And Our commitment towards further localization is there. And our commitment also is to Have a very clear commitment on cordless atlapwash, which means cordless Means Bosch. And along with this, we will share in the future further And deeper commitments on bonds. Understood. Just last question is on the electrification and your way of participating in So are you looking 2 wheeler, 3 wheeler electrification also as a key driver for BOS? Or you are more inclined to work for Shell vehicle and the passenger vehicle side in future? What's your thought on that? So already in the 2 wheeler, 3 wheeler Bosch has clearly participated Respect to what we discussed earlier on OEMs when they announced, example, DBS, example, Bajaj, we had already mentioned it. And as we speak, our 2 wheeler division, which is Located inside RPA but caters with Bosch Limited sorry, located with Bosch Limited but also works with Bosch Limited as well as other Divisions is having various electrification projects at system and component level Various 2 wheelers, weekly and also 3 wheelers. As you know, 3 wheelers In India today, pre COVID and post COVID is a different scenario. Okay. So, basically, Bharat. No. Just to add to that, in terms of your question, Bosch has a complete portfolio right from Ebikes, so these are cycles which are electrified all the way up to trucks and heavy commercial vehicles In terms of our electrification portfolio. And we are discussing with various Indian OEMs on the complete portfolio To offer in India. 2 wheelers, as Sumitra already explained, we have acquisitions and we are fighting for more projects here. Passenger cars, we are discussing with key Indian OEMs and then we will over the coming months also here, the focus there. On commercial vehicles, there is not much action on electrification, which means battery electric vehicles. But hydrogen has taken off and you've already heard our pilot acquisition. Thank you. Thank you. That's all from us. Thanks, Priya Rajat. Next, I'll read a Question from the question box, are we expecting shift in manufacturing from Europe to India in coming years in our automotive segment? And What are the benefits that we can reap out of it? Who has asked this question? One Tejas Shah. Thank you, Tejas. Tejas, it's a very generic question, so I can give you a generic answer. We have mainly a strategy called local for local, Which we have shared with you. So India is a huge domestic market. However, our export percentage Of our total sales is hovering between 7% 8% as you're aware from our annual report. This In a strategic way, over the next years, we want to increase it to double digit and then add in the double digit. So this is a part. In summary, Bosch Limited will always remain focused towards Our big Indian market, which gives huge opportunities, while seizing opportunities for export Based on our products, components or systems which are available, which can be given through designated markets With the focus on increasing the current value and percentage to a healthy double digit In the future. Thanks, sir. Next two questions will be from Mr. Sonal Gupta, unmuted airline. Yes, hi, thanks for taking my question. Good evening to everyone. Sorry, I have a little bit of bad cold. What I really wanted to And was we have the OBD II norms for the BS VI coming in. So what sort of an implication do you see of that? Do we see Any major shifts like we've already seen significant shift away from diesel. Now there's a lot of speculation on the passenger cycle side that This could further raise significantly the cost of diesel engines. So I just wanted to understand that, I mean, is the technology still valid or everybody needs to move to SCR for OBD2? If you could just shed some light on that. And also For your other key categories like medium and heavy commercial vehicles, do we see a major change in content for you? So first of all, Sonal, if I come with your second question and then come back to the legislation. On the heavy commercial vehicle, As I mentioned before, both on heavy commercial and light commercial, Bosch has a lot of content, especially after we say stage 1. And also as of that stage 2 takes on and also on the various other emission Legislation related legislations for which we have also acquired projects here including Prem four to Prem five. So In summary, we see that to be healthy. I had also mentioned to you that the light commercial vehicles At 6 lakh 70,000, which was a peak is already reached in the year 2022. In heavy commercial vehicles, the peak in 'eighteen was around 4 lakh 80,000 and it will take a little time to reach up to that. But we should we even at 3 lakh 60,000, we are sitting pretty On our higher than 10 per vehicle. So now coming to the OBD, we had already mentioned last time that The slight delay in OBD, which has happened, this is industry wide phenomena, but We are prepared to deliver even after the revised OBD II dates. I think that should be answering your question. Sorry, do we see a significant change in cost for the OEM as a result of this transition to OBD2 from OBD1? Look, Sonal, let's take the matter of cost of material, including cost Of upgrading based on emission, every emission change, including BS4 to BS6, including Fab 4, Including OED has certain cost changes. However, unlike what was discussed The 2019 2020 that would the numbers take off, the numbers have taken off. In the year 2022, we see no change or let up on pass car sales. And if I look at the data, The value per car, the price per car has increased significantly, but the demand has not come down. So In summary, to your question, we do not see a change in the demand Based on the improvement, which is legislated, either at the component level or at the overall level. Got it, sir. Just to add just to add another perspective for the OEMs. When Either ambition norms or safety norms which have also greatly improved in the Indian context, keep growing Continuously to the next levels. For the OEMs, this also opens up an opportunity to take the vehicles globally, Which has not been the case earlier when we lag behind on regulations and standards. And So our wakers would not really fit many markets other than maybe Africa or some places like that. So This also is a significant opportunity for OEMs to have a level playing field towards having global markets which are opening up. And this should also be seen as a stepping stone towards electric vehicles when many of these things simply disappear. There are no emission norms. So everything becomes open and an electric vehicle in India is also equally capable of operating in any other region Alright. It it means all other notes. So there are different advantages. While the cost may go up a little bit, time premiumization Continuously happens in terms of features or addition of technology into the vehicles. This also opens up a much bigger opportunity for Indian. So Gudu, thank you. And also for us, as tier 1 to export to other regions. Absolutely. Gudu, thank you for that. And if I could add to what, Gudu, you mentioned, today, The inventory for pass cars which is around 460,000 at the end of October It's the normalized inventory. And the only area of this inventory Which is lower is on the high end cars. And definition of high end cars, if I may indicate, is around 12 lakhs plus. Yes. For India, so the slightly higher income. So, a, the sales in October, retail sales Has been 3 lakh 180000 this festive season as compared to the last 4 years where the festive season we have sold between 3 lakh 20 and 3 lakh 30,000. So significant decrease, number 1. Number 2, our annual sales will be at 3.4.3 or 4.4000000000 against 4.07000000000 or 4.5000000000. And number 3, The sales for lower and mid end cars for India are having Good enough inventory, but not so for the highest cars where the demand has been high. So you can actually make out from this, Sonal, what the trend is. Got it, sir. Great. Thank you so much. Yeah. Next, I'll read out a question from the question box. It is from mister Ajit Motwani. What's our exposure to USD and Europe? And how does the moment impact us with our clients? Is forex impact the pass through? So as mentioned before regarding the forrest, we have a very good hedging strategy in place As Sumitra Bhattacharya already explained, and therefore, we see a change in the U. S. On a negative 3 on the euro on a positive way. We are importing for both of the markets, of course, mainly on the euro base. But based on our hedging policy, Which we have in place for a very long time, we do not see an influence which is significant Based on our stable policy. Yes. I mean, thanks, Karim. I think Satish is theoretically tracked to us Are we buying in U. S. And selling in euro? The answer is no, Subhasin. A, as our CFO said, for years, we have had a strong hedge policy. And we do this for both USD as well as for Europe, number 1. Number 2, we are not one of those companies who are in the slightly unfortunate situation Of, having that on matters, USD and then selling it there too. Does that answer your question, Satish? It's Ajit Motoy, sir. I think it's clear, sir. Thank you. Thanks, sir. Next question will be from Ramoth Kumar. You can unmute or ask questions. Yes, thanks a lot, Gerard. Sir, my first question is the for 2 wheeler segment because that is something which is still being debated whether it will come through or Whether it will come through or not and given the demand in this category is already pretty weak. So any thoughts on that on as to what do you see The cost implication there, whether you expect it to be a minor one or a meaningful one. And when I say meaningful, around like 4% to 5% kind of a cost in place for the degree? Can you repeat that last sentence, please? What will be the? What will be the cost implication for the category, sir? Because this is in context of the kind of demand hit what this category has seen as it has transitioned to BSX and to the new safety norms. So just wanted the OBD norm impact on the 2 wheeler cost curve? So again, I repeat, Ramon. You must understand in 2018, 2019 or the calendar year 2018, The 2 wheeler peaked at 25,000,000. I showed you that graph where the calendar year of 22, we would be at 19, max 20,000,000. So first of all, the Indian industry is not reaching up to the 25,000,000, number 1. Number 2, In the 18, 19, we are talking of apples and oranges between 18, 19, 20, 18, and 22. Why? Because at that time, there was a card reader. Today, we have a fuel injection system. Number 3, the OBD 2 will come. Number 4, very important. The base models during that period, you must remember, were between 65,000 to 80,000 rupees. Today, the base models are between 1 lakh and 1 lakh 20,000. So when you take a standard 100 cc vehicle or 125 and so on and so So we are actually comparing apples with oranges. Having said that, I would say at 19, 20,000,000 vehicles, It is not a bad size in India. And, of course, we hope that it will further pick up and go towards the peak. But we are confident that India has seen a very clear growth curve on value added by making Vehicles both at 4 wheelers or wheelers, 3 wheelers safer by bringing in technology, the cost Naturally, we'll go up both from inflation as well as value added products we brought in to make into contemporary and still are relatively affordable It's there. It's in context. So, I've already shared the other details on a v d two, so I won't repeat that. Yes. And just a follow-up to that, sir, given the increased compliance, will Electronic carpenters still be relevant or would you expect the 2 wheeler market to 100% or 2% reduction with the OB G2 norms? So, OPGR2 norms have been made very clear by the government. On matter, ECAB, We at Bosch has very clearly said that we are believing in the Technology, which is there not only in the west, but also declared by the government. And I would not like to comment on the intel because Different people do it and I would not like to indicate that. I understand. Appreciate that. A final question on the AIS 150 How do you see this kind of impacting the current battery procurement in India, which is heavily dependent on lot of Chinese imports, Including the OEMs. Does Bosch as a large EV player see a big opportunity there where you expect incrementally a lot of these smaller electric vehicles and OEMs approaching you because the government is clearly up the ante there in terms of the kind of For safety standards, the need and the kind of even the kind of super Or the battery assembly. So do you see this as a big opportunity for Bosch to ramp up its EV wallet share? Yes. So I'll take this question. Thank you. I think the tighter regulation was Going to happen anyway. So the government, I think, initially let this a little bit free for market to Get established and then use the opportunity of battery fires and other things to send a message to All the OEMs and all the players in the market. So that's what has happened. This is a very good move in our view. This tightens Technological preparedness in this area in terms of safety, significantly to make The battery is safer, the vehicle is safer. This is something that we are always believing in. So all our batteries which we design and offer to the market have very high levels of safety and standards compliance including It's a level compliance built in. So we are able to offer this already now into the market and we have also worked Closely with the government to help them refine these standards over the past year or so. So overall, I think this is a very good move and we certainly hope to benefit from this coming years. And And sir, any cost implication which you can share because we are getting closer to the deadline for the first stage, right, because So, entail a cost inflation, right, for the battery for the electric vehicles in general? Cost implications due to the ASK Snorbs being introduced? Yes, sir. Okay. I think it's going to be very difficult to quantify this Because there is no baseline we are comparing against. See, there are a lot of batteries today in the market Without even basic battery management systems. So they just wired up to deliver 48 volts or 12 volts or whatever is the voltage system, without any basic requirements in terms of voltage, our battery management system to manage, the batteries. What's for thermal performance and cell level degradation or protection? So it's very, very hard to compare. Any, I mean, Western system or systems offered in the West, which are compliant to the SIL standards Always have had these things built in. So in that sense, this will not from a good well designed battery. A lot of these protection mechanisms in the BMS are already there so that the new norm should not add any further debarkals. Fair enough, sir. Thanks a lot and best of luck, sir. Thank you. Thank you. Thanks, Pramod. Next question is from Navin Mata. We need to close at 5:30. Yes, sir. This is the last caller. Thank you. Yeah. Hi. Am I audible? You're audible. You're audible. Yeah. Okay. Yeah. Thanks for the opportunity. And I just wanted to check on the gross margins if you had commented in this quarter. We've seen some further pressure. So just wanted to understand, is it largely commodity or is it also a product mix effect out there? Yes. It is a mix, let's say, but we see the product mix effect mainly out of between the manufactured goods And the traded goods, which has implication and if you look at the P and L, you can see that the material costs especially Increased and this is based on the product mix on the one side, but also and especially based on the increase of the raw material And on the electronic components, and as Sharmitur, but I'm Sharmitur already mentioned, We are in discussion with our customers regarding the recovery of especially these raw material increases. But overall, if you look from 1 quarter last year to this quarter, then you'll see an aberration in the margin, Especially due to the raw material increases and the product mix. Understood. And just on this common rail localization that we've spoken about. Just wanted to get a sense as to once this is fully productionized, where will it take our localizations level up to? It will take up our localization level from roughly 73% Up to 76%. And this is but besides the Pure percentage in the localization and the strategic objective of the localization of this injector on the commercial vehicle It's much more important because if you look on the midterm and of the long term, this was a very strategic step To localize this line here in India for the Indian market. So I would not go rather for the pure percentage. But Please look from the strategic point of view. This is a very important step for post year India. Got it. Thank you for this. And just one last one, if I can try. I just wanted to get a sense if we could share any thoughts on where our EV order book stands at currently, just to understand our progress in this space. Yeah. We do not we are working actively. We do not make statements, as you know, Naveen, until the SOPs which happen from our customers. So while we are working as we mentioned And also, as CQ mentioned, further statements would come only when the SOPs happen, which is consistent to our Practice of declaration also. Got it, sir. Thank you so much for the opportunity. Thank you, Nava. We thank all the participants. We thank Bosch management for taking time out for the call and also providing us the opportunity to host the call. Have a good day. Thank you. Thank you.