Q2 24/25

Nov 14, 2024

Summary

Q2 revenue fell 7% YoY, but gross profit and EBITDA grew, with EBITDA margin reaching 14.8%. A first U.S. commercial-vehicle export order and investment in lightweighting support longer-term growth, amid uneven domestic vehicle demand.

Ladies and gentlemen, good day and welcome to Q2 FY 2025 Sharda Motor Industries Limited conference call hosted by Equirus Securities. As a reminder, all participant lines will be in the listen only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchtone telephone. Please note that this conference is being recorded. I now hand the conference over to Mr. Mihir Vora from Equirus Securities. Thank you, and over to you, sir. Yeah. Thank you, Riddhi. Hi, good evening, everyone. On behalf of Equirus Securities, I welcome you all to the Q2 FY 2025 post results conference call of Sharda Motor. From the management side, we have Mr. Aashim Relan, the Chief Executive Officer, and Mr. Puru Aggarwal, President and Group CFO. Without further ado, I now hand over the floor to Mr. Puru Aggarwal for his opening remarks. Over to you, sir. Thank you. Good afternoon, everyone. A warm welcome to all the participants on the call. I am here with Mr. Aashim Relan, our CEO, and our investor relations advisors from SGA. I hope you had a chance to go through our results and the investor presentation. You can find the presentation on the stock exchange and on the company's website. Before going into company's financials, I would like to give a brief overview of some highlights of the industry for the quarter gone by. The Indian automobile industry saw a strong year-on-year volume growth of 9% in Q2 FY 2025, reflecting a recovery compared to Q2 FY 2024. This growth in sales was on account of strong performance from two-wheeler and the three-wheeler segments, while the passenger and commercial vehicle segments experienced a decline. However, ongoing infrastructure investments and the upcoming festival season, strong demand is expected in the next quarter. In Q2 FY 2025, passenger vehicle sales volume reached 1.25 million sales units, showing a slight year-on-year decline of 0.6%, indicating softer demand in this segment. Conversely, the utility vehicle category continued its strong performance with 12.3% growth during the same period, driven by consumer preference for SUV and multifunctional vehicles. The outlook for the second half remains positive, especially with the upcoming festive season. In Q2 FY 2025, the commercial vehicle segment experienced a 9.2% year-on-year decline. Although CV exports showed robust growth of 16%, domestic demand lagged with an 11% decrease. This decline was mainly due to the extended monsoon delays and unfavorable weather conditions, which disrupted activities. Additionally, a reduction in government infrastructure spending due to election impacted sector growth. Looking ahead, the CV segment anticipates improved performance driven by new product launches and expected sales growth in rural markets. With favorable agricultural conditions following the monsoon season, demand in rural area is projected to rise, indicating optimism for a near future rebound. The two-wheeler segment demonstrated strong year-on-year growth of 13.1%, led by scooters at 16.7%, followed by motorcycles and mopeds, which grew by 11.3% and 17.9% respectively. The three-wheeler segment also showed positive momentum, reaching 2.9 lakh units in sales, a 4.7% increase compared to the previous year. This robust growth across two and three wheelers highlights a rise in demand for affordable, fuel-efficient transportation, particularly in rural and semi-rural areas. In Q2 FY 2025, tractor sales grew by 3.4%, reaching 1.3 lakh units, up from 1.25 lakh units in Q2 FY 2024. September typically sees a sales boost due to the start of the harvest season, encouraging farmers to invest in tractors for increased agricultural activities. The tractor segment is expected to see strong growth in FY 2025, driven by favorable monsoon, rural development efforts, and rising mechanization in farming. I will now shift the focus to operational and financial performance of the company. On the consolidated basis, we registered revenue of INR 711 crores in Q2 FY 2025, a decline of 7% as compared to Q2 FY 2024. Our gross profit was INR 188 crores in Q2 FY 2025, which is a growth of 8% compared to Q2 FY 2024. In full H1 FY 2025, our revenue stood at INR 1,397 crores, a marginal decline of 1% as compared to H1 FY 2024. Our gross profit for H1 FY 2025 stood at INR 368 crores, a growth of 19% as compared to H1 FY 2024. Our EBITDA for Q2 FY 2025 was INR 105 crores as compared to INR 99 crores in Q2 FY 2024, which is a growth of 6% on a year-on-year basis. The EBITDA margin for the quarter grew by 178 basis points from 13% in Q2 FY 2024 to 14.8% in Q2 FY 2025. For H1 FY 2025, our EBITDA was INR 201 crores as compared to INR 168 crores in H1 FY 2024, which is a strong growth of 20% on a year-on-year basis. The EBITDA margin for the half year grew by 258 basis points from 11.8% in H1 FY 2024 to 14.4% in H1 FY 2025. Our PBT for the quarter was INR 106 crores after accounting for shares in profits in JV and its associates, which was stable as compared to Q2 FY 2024. For the half year, PBT stood at INR 209 crores after accounting for shares in profits in JV and its associates, which registered a strong growth of 16% as compared to H1 FY 2024. The consolidated PAT for Q2 FY 2025 is INR 79 crores as compared to INR 80 crores in Q2 FY 2024. For H1 FY 2025, PAT stood at INR 156 crores compared to INR 135 crores in H1 FY 2024, which registered a strong growth of 15%. Our standalone PAT for Q2 FY 2025 was stable at INR 79 crores as compared to Q2 FY 2024. On the balance sheet front, we continue to maintain a healthy liquidity position of more than INR 782 crores in cash and cash equivalents, including investments and bank balances as on September 30, 2024. I am also very happy to announce that we have won an export order for emission components to the U.S. market with annual business of approximately $7 million and lifetime business of $40 million plus. The SOP for the order is expected by January 2026. With this, now we can open the floor for Q&A. Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Karthi from Suyash Advisors. Please go ahead. Yeah, hi. Good evening, gentlemen. Congratulations on the performance. A couple of things. One is, whatever visibility is available today, would you be able to sustain gross profit growth that is shown in the first half? Hello. Good evening. Yeah. This is Anshul. Yes. Good evening. Sorry. Yes. We have just guided that we will continue to outperform the industry, and gross profit is the right barometer rather than sales in our case, the way catalyst accounting is done. However, it's difficult to predict any momentum or specifics because there's a lot of volatility, of course, within the Indian market as well as global changes that are happening. However, gross profit would be the right barometer to continue to watch out. All I meant was, does the momentum sustain or no? If you want to confirm that. Sure. I think that we will hope for outperformance, in particular any specific momentum, H1 to H2, that's very hard to firmly guide on. Fair enough. On the order that you just spoke about, your colleague spoke about rather, can you give some additional details? This is related to the stationary engines? Yeah. We are actually very excited about this order, and this is a very good achievement by the efforts we have been making on the global business. This will be for commercial vehicles, and this is emission components. These go into very advanced emission systems, which are coming right now in the U.S. market. Mainly these are modules. SOP is expected for January 2026. It is also a huge opening for our company because before this, we have not been producing such products and definitely it is a first for us in the U.S. market. Given that it is with the largest emission control company in the world for commercial vehicles, it also gives us a good opportunity for the future to cross-sell as this order builds a lot of confidence, one for us internally, but also for other customers. Fantastic. Just to clarify, would this be contingent upon the EPA norms being implemented, or do you believe that it is independent of that? This is independent. I think these norms are already underway. However, because it is the U.S. market and here we are Tier 2, right? We are talking to the company, and the company then, of course, manages all this, so our visibility would not be as good. In U.S. market from the norms perspective. However, this is a firm order and there is no contingency as such that we are aware of. Classic. So $7 million would be the very first calendar year. That is the way to understand it, right? Yeah. So rather than projecting on very first calendar year, we are calculating it based on a ramp up on the first year, so between $5 million to $7 million in the first year. Then for the next five years, $7 million. Generally, these products last way more than what we indicated. Just to be conservative, I think this will be a good starting point, given that this is a first for us on the export front. Fantastic. Congratulations and very, very best wishes. Thank you so much. Thank you. Thank you very much. Participants, to ask a question, you may press star and one on your touchtone telephone. The next question is from the line of Payal Shah from Billion Securities. Please go ahead. Yeah. Thank you so much for the opportunity. I have two questions. One, our EBITDA margins have shown steady improvement each quarter recently. Just wanted to understand, going forward, can we expect this trend to be sustainable, and what range should we expect going forward? Yeah. Hi. Thank you for the question. To look at EBITDA margins in our case, they have also got tailwinds just because of sheer accounting on the catalyst front also. It's good to note that because our newer products come without catalyst and the way then accounting comes because catalyst is moved out of the sales as well, and hence it shows as higher EBITDA margins. Definitely, that is an impact also when you see in terms of these improving EBITDA margins, the way they're calculated. It's hard to guide on a number. However, with the FoC model coming in, from that perspective, the EBITDA margins will definitely be better under FoC model mix versus when catalyst is included, as when catalyst is included, then our sales figure gets inflated and it doesn't add much to profitability because that is directed by from the OEM. Okay. Thank you. My next question is, we have witnessed 14% increase on our other expenses on a year-over-year basis. Can you throw some light on that? Yeah. In other expenses, job work, labor hire charges also get added. I think it gets clubbed with various things and then there are few one-offs also. Just as we've had underlying volume growth, in line with that, job work, other labor hire charges, et cetera, also go up, and that gets clubbed into that category of expenses. There are some small one-offs as well. Okay. That's it from my side. Thank you very much. Participants who wish to ask a question may press Star and One on their touchtone telephone. The next question is from the line of Mihir Vora from Equirus Securities. Please go ahead. Yeah. So hi, sir. My question was on the construction equipment norms, which are going to be effective from January 2025. Are we seeing some new order wins here? What would be the potential here going ahead for us? Yeah. For the construction equipment market in India, the volumes are low relative to other industries. However, the customers who are present in India have very large wallet shares when it comes to emission control products globally as well as their adjacencies. For the norms that are coming in in India, our goal is first to develop the customer relations and focus on the adjacencies, which are temperature-controlled tubes. These are also very high-value products, which I've spoken before about. For this, we have received a good business and we expect some revenues to be coming in starting next week. We expect maybe mature volumes to start more towards June 2025 onwards. However, because this is a starting point and these are starting relations, in terms of overall revenue, it won't be very significant to begin with. However, it will grow over time. All right. What would be sort of increase in content between this change of norms, like any some percentage? As of now, we have no business in construction equipment. This will be a first. Okay. Prior to these norms also, not much was put into construction equipment that was related to our product within the Indian market, at least. After this, these adjacencies will be added. It will all be new revenue for us because we have no business right now, and these are all new relationships. Sure. The other question is on the TREM V timeline, whether is it intact or do you think will it get delayed, or how is it? It is hard to predict in terms of any delay. However, in terms of development and in terms of readiness, it is fully there. If there is any delay, it would be linked to government delaying the norms. However, we don't have any communication so far on that. That's right. Are we also seeing interest from the customer side? Are we looking at some business here in terms of winning? Yeah. We've developed very good business in this segment. From the perspective of business nomination as well as development work, it is fairly mature. We find most customers, barring maybe one customer, their readiness is very strong. We are hopeful that we'll have a very good market share there. Sure. My last question is on the suspension business. Given there were few launches in the quarter, are we winning, like do we see some order in from these new launches which are recently launched in the last two, three months? Is the suspension business picking up? We are new to building up the suspension business. Our new plant is coming up for that. The SOP for the plant is most likely to be mid-December, early January. Some revenues will come in Q4 of FY 2025. The current volumes that we have, there'll be a gradual ramp up. Hence, at least for Q4 of this year, there'll only be marginal revenues. For this plant, we have indicated a CapEx of INR 50 crores. Some is already done, and some will be done over this quarter. We have a capacity of 290,000 control arms set. In terms of orders, we've won a good platform for which we put this plant, and this is a platform that will be used in EV as well as ICE. At the same time, we have one new customer now in the region who has given us a business. The new business is still small to begin with because this will be our first time doing this product with the customer. On successful implementation, we are very hopeful to get a larger size of that customer's volume share, and we are actively looking to build this business, which is going step by step as we are new to scaling up this business. Sure. That's all from my side. I'll fall back in the queue. Thank you. Thank you. Thank you very much. Participants who wish to ask a question may press star and one on their touchtone telephone. The next question is from the line of Harsh Patel, who is an individual investor. Please go ahead. Mr. Harsh, your line is unmuted. Hello, Mr. Harsh. Since there is no response, we'll move on to the next participant. The next participant is Piyush from Acquaintview. Please go ahead. Hello. Hi, sir. Congratulations on the performance. Just wanted to understand, we've filed around ten IPs in the last couple of years. So anything very different in terms of substantial gains that you envision from these products wherein you could outsource the technology to others? Yeah. Thanks for the question. In terms of IPs, we are new in formal intellectual property in terms of patents. However, we've had very good success, and now the innovation funnel and process is robust, so we expect to continue on this journey. The current IPs, we have focused on two areas. One is which strengthens our competitive advantage within emissions, and especially there are few technologies that we anticipate in the next emission norms. It's around being ready and building competitive advantage for that. Second is on products which are more exportable. By products exportable means adjacencies of emissions only. However, it's too early to get in terms of business results or outsourcing this technology or licensing it right now. However, this will build up and compound over time, and we may see results for this in the future. Okay. Sir, how is our JV with Purem now going on? How is that relationship scaled up, if you could? Yeah. We are at a fairly similar level as the products are quite sticky within this industry. So we have the same business that we've had, and commercial vehicles is going through a downtime. However, we have been awarded a good business now within that JV, which is more a localization program by an international customer. Once that's added, that's going to give some boost to the JV, and we're expecting somewhere around the middle of 2026 for that to kick in. That's a good program that the JV has won. Generally, these products are so sticky, so even winning one program is a big boost in terms of confidence as well as it'll help the revenues and bring it above a break-even point comfortably. All right. Sir, wanted to also understand. These couple of CV OEMs, they had some newer engines on which this JV had won some business. Yes. Has there been a market share shift wherein the newer engines are now grabbing more and more market compared to the older ones? It is not been to the degree that was expected even by the OEMs. It is fairly stable from where it was last year. There has been no increase or decrease. We see a quite similar level in terms of overall market share for the new engines. The hope is that these engines will have more and more market share. However, the Indian market does seem to be a very sticky market, so we will have to see how this goes in terms of those engines taking more market share in the future. Okay. Sir, if I may, a couple of more questions. This 3 to 4-liter engine segment for commercial vehicle. This is again, a heavy vehicle, or this is a lightweight vehicle that we see? If you could just explain to us, and how is this segment performing, because you specifically mentioned this as part of the presentation. Sure. What is heavy and what is light is, I guess there is a lot of ambiguity, because it is all relative, and the way India looks at it and U.S. looks at it, Europe, it is all different. That is why we have defined it as litreage, because that is what goes into our product, or products are based on the litreage of the engine, and our JV is also defined on the litreage only as a result. So under 4 liters, we are permitted or as per the JV, to do it standalone. And that is a business where currently we have no market share, as one of the competitors has almost 90% market share in that segment. And we have the full technology now ready. We have the product ready, and we are working on the business development cycle really to get some business and even one platform in that business would be good in terms of profitability. However, it is, let's say, a niche segment. In terms of revenues, it is not the largest segment. However, in terms of value addition and profitability, it is a very good business to be in. We are working and putting efforts to get business in that segment as a standalone company. Have you won any market share so far in terms of business development with a particular client wherein you have some visibility in the next year or so? Yeah, we are hopeful. As of now, we have not been awarded any platform in that segment. That is one of our target segments where we have ready with the product and we are in the business development cycle for that. All right. Sir, on the export side now. We have already won one good business from the U.S. What is the present share of exports in terms of our overall gross profit you want to look at from a gross profit perspective? It's very less. The current share is very less in terms of our exports. We roughly exported less than INR 25, 30 crores last year. So in millions it would be negligible. Okay. However, this business alone more than doubles our exports or triples our exports. This is all value-added business, so this is not including any catalyst or anything. So we're very excited. It's a big achievement. We are very hopeful. We have various other RFQs, business development pipelines under this, and we're very hopeful to grow this segment to make it a substantial part of our revenues. I think this breakthrough has given us a lot of confidence and a lot of visibility in terms of making this a substantial business for us. All right. Thank you. Thank you so much, sir, for your time. I'll join in the queue if I have any further questions. Thank you. Thank you. Thank you very much. The next question is from the line of Ankur Shah from Kasara Capital. Please go ahead. Yeah. Hi, sir. Thanks for taking my question. Sir, just a question on the CEV V. Is it possible for us to quantify the market? I know you mentioned that it is quite a small market, but in terms of figure. I am just trying to figure out what will be the top-line difference for Sharda Motor. Yeah. First on CE, I will just bifurcate it into two products. One is an emission system that goes into CEV V, and second is the adjacencies, which are the temperature-controlled tubes. For the emission systems, most of the customers right now in India, as they are transitioning, are going with the strategy of not localizing this immediately and waiting a year and a half to really localize it. However, for the tubes and the temperature-controlled tubes, which is largely done by only maybe two companies in the world, they are planning to localize it. For the temperature-controlled tubes, we run the business, and we have a good business in terms of market share. However, in terms of overall revenues, it is not anything significant to share a number. We are not being specific about the number because the whole idea is, one, to get into these temperature-controlled tubes as a business because they have a very attractive margin profile as an adjacency. Second is to develop the relationships with these new OEMs for us, as we never had the opportunity to work with construction equipment companies. To utilize that to definitely participate in the localization of their emission systems whenever they do that, but more importantly, to really build the export business out with them on temperature-controlled tubes, which is a very attractive market from an export perspective. Okay. Just for my understanding, the first part which you mentioned, is it because the cost difference is not going to be very huge in the end product? Is that why this decision has been taken not to localize the product? It has been made because the volumes of the engines vis-a-vis the global volumes within India are less, and it takes a lot of time, effort, as well as money for them to localize it in India. They had the products already available in whichever countries they are in, so they are just modifying that and seeing when to localize it, because it is not an easy product to localize and get validated. The volumes within India for them didn't justify. Okay. No, understandable. Very clear. One more question on the suspension business, because now since we are also setting up a plant, very interestingly, we have scaled up this business. Just what question comes to my mind is because we have a base of exhaust system business, which is a very high ROE profile business. How is the suspension business in terms of technology barriers, in terms of competition, in terms of winning new business, in terms of the ROE profile? How do you think about that business, and what is the scalability of this business? Sure. The way we are looking at it is not suspension as a vertical, rather lightweighting as a vertical. When we utilize the word suspension, we largely mean control arms and assemblies of suspension. Suspension is a word that is often cross-used in the industry, and there are sometimes shock absorbers also called suspension and so on. Sure. But for us, suspension, when we say, is control arms and axle assembly. This is the content that we are focusing on for the time being. We did have a legacy business already. As we speak today, also about 8% of our revenues comes from the lightweighting or slash suspension business. When we look forward, we want to play in areas which would have a moat or a high ROE or high ROCE. It's basically where technology would play and where a lot of our R&D efforts can be put in. The current business that we've developed is also from internal R&D efforts only, and we augmented our R&D or started working on this probably 18 months to 24 months ago, and now it's yielding results. On the suspension business, we will be selective to really look at areas which will meet thresholds on gross ROE and which do require some technology. At the same time, lightweighting as a vertical or a market is so large and going through huge change, and change in terms of going from traditional to more technology-focused areas. So we are evaluating and we are doing a lot of effort within that area. On which components can we play, in which technologies can we play, which do meet a good profile in terms of gross ROE or just competitive advantage. That's something underway parallelly. For the time being, the suspension business is limited to control arms, and we see a good amount of scalability. At the same time, we are also looking at it as a starting point for our lightweighting work. Interesting. On the slide, I also see the market share of China in both suspension and engine exhaust systems being much higher, and I think we have had this conversation before that exhaust systems as such fully cannot be exported. Obviously, congrats on your recent win. But on the suspension part, will we be able to ever leapfrog directly to an export product where our acceptance is there? Like example, control arms or any of the lightweighting products which you are mentioning. Is it possible for us to have an export focus or that's not right now in the cards? Definitely, there is a lot of potential and there will be a shift even in those segments. However, our exports is first focused on our core areas, and our core areas which we guided on, number one is commercial vehicle emission components, and that was an area where we might get even more traction. The first order win is already there because it's massive in size and it's also very sticky. Not a lot of companies can do these kind of modules and so on globally. Then on the second side is these temperature-controlled tubes, which we just spoke about, which are also going to be used in CEV V, but they're used all over the world. They have a huge market and are generally also imported by these companies. Third is on the stationary engine gen set market, where there's a good boom going on. We already have some export business there, and we are hopeful to add some business and some customers in that area. Last is on the smaller tractor segment globally, which is under 100 horsepower. So these are four core areas where we want to focus our export business. However, in the future, definitely these products are also exportable. Control arms, exactly how it is may or may not be. However, there are some adjacencies in lightweighting, which are definitely exportable. However, for us, it could probably come after we have a strong domestic footing on lightweighting. Sure. That's very extensive and really good execution. Just last question, again, very repetitive. I think I've been asking this for 2 years. On the capital allocation part, while it's really commendable on the way you all have grown the business, but considering the business has been so capital efficient, what do we plan to do with this cash pile? I know acquisitions and all have been very difficult to find and all. Just as a thought, what's stopping us now investing this money? Because the cash flow, the constant cash flows, the customer set, everything is there. So maybe we take a little bit of risk. Why not? Just from that angle. Yeah. So I think, very valid question and couple of things. For M&A, as I've said before, beyond scanning the market and wherever there is potential, we will definitely execute it in a way that creates value for shareholders, right? If not done in the correct way, it can also not lead to good value, right, it can lead- Yeah to other issues, right? So being very conservative on that and not being conservative to a very massive degree. However, at the right timing, we will definitely do it. We have a full team, in fact, now dedicated only looking at M&A within powertrain agnostic products. However, any timeline or so on for this is tough to give, given that we want to be careful there. Now, coming to your question of other verticals, that's a good point. That's why we started allocating capital to build a lightweighting vertical. The first stage is the INR 50 crores that we've already put in terms of putting up this plant, and we'll continue to do that. So definitely the lightweighting vertical will take up a good amount of capital. However, again, in a selective way only we will be moving forward. At the same time, we've also substantially- Ashim, that will be the interest income of your year from the cash in that case. No, at the same time, we are also substantially increasing our payback to shareholders. I think the buyback was the first part of the journey. At the same time, we also now have a dividend policy that is established, and we will continue to do that. But point is well taken, and I think we will become more efficient in terms of usage of surplus cash. Wonderful. Congrats. Thanks a lot. Thanks. Thank you so much. Thank you. Thank you very much. The next question is from the line of Karthi from Suyash Advisors. Please go ahead. Yeah. Hi, Aashim. Just to clarify a couple of things. One is this order, U.S. export order that you won. This would be for a new customer, right? This is not through Eberspächer. Am I correct in understanding this? Yeah. This is a mega customer. We are talking maybe of the largest customer in this domain. I am very tempted to have you mention the names, which is why We do not mention names, right? Just as a precedence, we do not mention customer names. We do have existing relationship with a different vertical of this customer. This is a huge customer which works in multiple verticals. This is the emission vertical of the customer. We did not have business with them before, and this will be our starting point. And- They are the world's largest commercial vehicle emission company. Yes. Would you be replacing the German facility by, sorry, Russian facility by any chance? Is that reasonable to ask? No. We won't be doing any Russian facility. This is a new win for them also, new product, and this is an export product, right? So we will be exporting this. We are not at all into anything with Russia. This is to the U.S. market. No, will you be replacing their Russian facility? That's what I was asking. Oh, no. This is a new win and this, previous to us, in the panel was definitely, I think one Chinese company, one local company as well, who we were competing with for this. Okay. This is a new product you are saying, right? It is a new product for us because it is the module of commercial vehicle emission. No, I am saying for them. For your customer, for your Tier 1. It is an upgraded product. It is an upgraded product. Okay. So you are replacing, in that sense, some existing supplier. To that extent. To that extent, yeah. Right. How is the pricing structured out here? I think it's a new experience, so therefore, I'm trying to understand it. Would you be reasonably protected on the profitability side? Yeah. I won't maybe speak about any specific order. However, what we've guided in general about exports, that generally margins are better in exports, however, working capital is also more in exports. So on a net cost basis, it generally works out to be the same as our domestic business. Not any specific order, but that's the threshold that we have in general for exports. Fair enough. Yeah, thanks for clarifying, and that's precious as always. Thank you so much. Thank you very much. Participants who wish to ask a question may press star and one on their touchtone telephone. The next question is from the line of Manish Parekh, who is an individual investor. Please go ahead. Hello? Hello. Yeah, am I audible? Yeah. Yeah. This could be a basic question for you, but just two questions I wanted to ask. One is on the export front. We've been talking about getting into exports aggressively. For next, say for two years, what are our export targets in terms of percentage of revenue? Second is, what are the capacity utilizations as of now for our various products? Sure. First question, our export targets in terms of firm numbers, it is just for it to be a much more substantial part of our sales. Currently, it is a very small part of our sales. After this order, then yes, it will be a decent part. However, there is a lot of opportunity, and we have been working on this for some time now. We have a focus team on it, and we are very hopeful to build this business up into a substantial part of our revenues. Not guiding on an exact number, either 2 years, 3 years, or 4 years out. In general, this is our core focus area, one of our core focus areas. The second question, if you can repeat, please. Yeah. As an individual investor, how can we look at if we are targeting exports or the new guidelines which would come into effect from January 2025 and then in April 2026. So how does our capacity, do we need to incur additional capacity, or we already have capacity and what is the current utilization then? Like we need to do additional CapEx for the same, or we have enough capacity to serve the current domestic market as well as the export market? Sure. In general, our capacity can be augmented fairly easily. When we are talking about the core emission vertical, then to cater to the growth, whether it is in April 2026, TREM Five, or to increase market share in commercial vehicle segment or on the exports front, it will all be incremental CapEx only. It is not going to be substantial CapEx. We would continue on a very similar CapEx trajectory that we have had last 2 years. However, on the lightweighting vertical, as and when we make progress there, we will be allocating additional capital like we have on this new plant. Going forward, also, we would require more capacity or more capital to build that vertical up. Thank you, sir. That answers my question. Thanks for your time. Thank you. Thank you so much. Thank you very much. As there are no further questions, I would now like to hand the conference over to Mr. Aashim Relan for closing comments. Thank you, and over to you, sir. Thank you. Thank you, everyone, and appreciate you taking out the time and wishing you a lovely evening. Thank you. On behalf of Sharda Motor Industries Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your line.