Q2 23/24

Nov 10, 2023

Ladies and gentlemen, good day and welcome to Sharda Motor Industries Limited Q2 FY 2024 earnings conference call. This call will be scheduled for 60 minutes. This conference call may contain forward-looking statements about the company which are based on the beliefs, opinions and expectation of the company as on the date of this call. These statements are not the guarantees of future performance and involve risk and uncertainties that are difficult to predict. 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 * and then zero on your touch tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Puru Aggarwal, President and Group CFO from Sharda Motor Industries Limited. Thank you and over to you, sir. Thank you. Good evening to all. A very warm welcome to all the participants on this call. On the call, I am joined by Mr. Aashim Relan, our CEO and our investor relations advisors, SGA. I hope that you have seen our results and our investor presentation by now. The presentation is also uploaded on the stock exchange as well as the company's website for reference. Before touching upon company's financial, I would like to provide an overview of some key highlights in the industry. Let's begin with an update on the automotive industry. The automotive sector is currently going through significant changes due to initiatives like PLI schemes and FAME, leading to a noticeable improvement in the industry. Demand has been strong in various segments except for two-wheelers and tractors, which have seen less growth. Retail automobile sales in India have seen an impressive 9% year-on-year increase in H1 FY 2024, mainly because of a surge in registrations of passenger vehicles and three-wheelers as reported by FADA. The automotive industry is on an upward trajectory driven by factors like increased consumer confidence, higher spending, a growing preference for premium products and stable input prices. In terms of segment performance, growth in the passenger vehicle segment continues to be driven by SUV segment with highest ever sale of 4 million units sold in the H1 FY 2024. OEMs are building inventory in anticipation of a strong two-month festive season driven by new model launches and a growing trend towards premiumization in the market. In the commercial vehicle segment, healthy demand across various industries and high fleet utilization levels continue to drive growth. In the second quarter of fiscal year 2024, the industry achieved an impressive 6% growth in sales volume compared to the same period in the previous year. Heavy commercial vehicles displayed remarkable growth of 17.6% year-on-year with both passenger and goods carrier segments contributing to the expansion. In contrast, light commercial vehicles in Q2 FY 2024 experienced modest growth of 1%. The sector's robust order books indicate the potential for this positive momentum to continue. Turning to the two-wheeler segment, a 3.7% year-on-year decline in volume was observed for the quarter ending in September 2023. This decline can be attributed to sluggish export demand and shift of festive season in Q3 as compared to last year. However, there was a noticeable recovery in export demand with approximately 12% quarter-on-quarter growth. The demand for entry level variants continues to underperform due to sluggish rural demand. In the three-wheeler segment, positive momentum continues with a remarkable 62% year-on-year growth for the quarter ending September 2023. Having shared my thoughts on the industry, I will now move to operation and financial performance of the company. On the consolidated basis, we registered a revenue of INR 763 crores in Q2 FY 2024, which is a growth of 9% as compared to Q2 FY 2023. Our revenue for H1 FY 2024 stood at INR 1,417 crores, which is a growth of 7% as compared to H1 FY 2023. Our EBITDA for Q2 FY 2024 is INR 99 crores as compared to INR 76 crore in Q2 FY 2023, which is a growth of 31% on a year-on-year basis. The EBITDA margin for the quarter grew by 220 basis points from 11% in Q2 FY 2023 to 13% in Q2 FY 2024. Our EBITDA for H1 FY 2024 is INR 168 crores as compared to INR 137 crores in H1 FY 2023, which is a growth of 23% on a year-on-year basis. The EBITDA margin for the half-year grew by 155 basis points from 10% in H1 FY 2023 to 12% in H1 FY 2024. Our PBT for the quarter was INR 106 crores, after accounting for this year in profits in JV and its associates. Our JV and associates recorded a profit of INR 1.1 crores in Q2 FY 2024 as compared to a profit of INR 0.6 crores in Q2 FY 2023. Our PBT for the half year stood at INR 180 crores after accounting for share in profits in JV and its associates. Our PBT grew by 44% compared to Q2 FY 2023, and for H1 FY 2024, our PBT grew by 35% compared to H1 FY 2023. EBITDA for Q2 FY 2024 was INR 80 crores, which registered a growth of 47% as compared to Q2 FY 2023. For H1 FY 2024, PBT stood at INR 135 crores compared to INR 100 crores in H1 FY 2023, which registered a growth of 35%. On the balance sheet front, we continue to maintain a healthy liquidity position of INR 658 crores in cash and cash equivalents and other bank balances as on 30th September 2023. With this, 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 Ankur Shah from Coalesce Capital. Please go ahead. Yeah. Hi, sir. Congratulations on a good set of numbers. So two questions. Can you highlight the volume growth this quarter? Hi, Ankur. This is Ashim Desai. Good evening, and thanks so much. Your voice is coming a little bit muffled, if you can repeat the question. Yeah, sure. Am I audible now? Very roughly, it's a muffled voice. Maybe you want to speak- Is this good now? Is this good? Okay, we'll go with it. We'll try to do this thing. Yeah, please go ahead. Yeah. Ashim, can you share with us the volume growth for this quarter? Yeah. We don't share volume growth per se, but maybe it's a good distinct to look at our gross profit increase, and that's an indicator of volume. That's roughly grown by 20, 23%, I think. Okay. Ashim, one more thing. I saw a stark improvement in your margins. Generally, they are range bound at around 11.5. Is there any specific reason apart from the increased volume or we are actually consciously doing higher margin products, which makes the margin structurally at a higher number? Yeah. I said, in the last investor call that all our new products which have been launched as part of BSVI from 1st April, they have come without a catalyst, right? As a strategy, we are looking to make the catalyst FOC basis, so the new products are basically on the value-added sales part. As they've ramped up in this quarter, that definitely becomes an indicator of EBITDA margin improvement. In general, this quarter, we've had a good product mix also, which is favorable, and that has also supported the margins being better. Great. Good to know. Last question, just because now we have entered November, any update on the TREM V norms because it's just 4 or 5 months away and the OEMs would be planning their schedules from January if the TREM V is applicable. Anything you hear from them? Yeah. There is a likely delay, which I mentioned last time also post-election, but there is no notification of it. The way the OEM planning is going is that business nomination is being concluded, half the customers has already concluded, and the balance half we are expecting to conclude by February. And I think the finite date will come from a government notification, which likely will be post-election only the way it is looking. Okay. Thank you so much. All the best. Happy Diwali. Thank you. Happy Diwali to you as well. Thank you. The next question is from the line of Sonal from Bowhead. Go ahead. Hi, Aashim. Congratulations on an exceptionally good quarter. I wanted to understand, because of these new norms, your margins were anyway expected to go up, and you had mentioned about that whenever you start any process, like in the past as well, there are extra costs involved. Over the course of next few quarters, you start seeing the benefits of that. As you mentioned in the presentation, your EBITDA per vehicle, et cetera, was all supposed to go by 10% to 15% anyway because of this. I wanted to understand all of that has been fully captured in terms of productivity gains and less wastage as the process gets standardized, or there is more to come in the subsequent quarters as well. Sure. Thanks so much for the question. Regarding the productivity improvement and the new products really started around April 1, so basically Q1 of this financial year. I think quarter 2 is a good indicator of them becoming more streamlined. In terms of further improvement, there is always possibility of further improvement and optimization. The good part of it has already come in this quarter, but there is always scope, right? As products mature, generally productivity and other parameters improve. But the benefit that was to be arise from RDE, that can be now clearly seen in the results also, and the outperformance vis-a-vis the industry is also now very similar to what we had indicated of a 10%-12% tailwind. That tailwind, it is hard to predict in terms of exact numbers, but we do expect a tailwind because of the introduction of these new RDE products as we move forward as well. I did not understand when you said tailwind. Were you alluding to EBITDA per vehicle being more than 10%-12%, or something else in terms of market share gains as well in your existing customers? In terms of as our new products have come in, we have grown, in terms of indicative volumes as well as gross profit, higher than the market. Market roughly grew at 5%-7% on a blended basis, but we have grown roughly 20% plus this quarter. I am just utilizing the gross profit number as an indicator. On an H1 basis also, the market grew 4% or 5% versus us growing at 18%. The delta benefit which was expected is due to our content per car that is increased on a blended basis. Would it be possible for you to also share a Q-on-Q volume growth number? Yeah. What we are doing now, because of this catalyst thing, we are not able to share direct volumes, but we have worked out a very good mechanism based on gross profit. If you look at gross profit as an indicator and growth in gross profit, it generally correlates with volumes, but of course, with various caveats attached to it. I would say for the time being, it is better to monitor gross profit. We are also monitoring the movement vis-a-vis gross profit and industry volume growth. As new products will be coming, without catalysts, it will become very simple then, as time goes by, to have a measurement in terms of volumes and sales growth. But right now as we speak, we do not do just volume disclosure, but I think gross profit is a good indicator for that for the time being. Aseem, thanks. This is very helpful. The problem is that on a Q-on-Q basis and Y-on-Y basis, both for this year and also next year, it is not a problem, it is actually a good thing. Your EBITDA per vehicles are going to increase because of RDE norms and therefore the gross profit per vehicle as well. Even next year when tractors come in, it may be even a more profitable business for you than your existing business for various reasons we have discussed in the past. What I would suggest, and if it is possible, like you mentioned about a 20% volume growth Y-on-Y, if it will be possible for you to also share similarly a Q-on-Q volume growth if it is handy with you. Otherwise, we can always take it offline as well. So gross profit, I understand on a steady state, a very good indicator for you, but because you are going through this per vehicle increase in profitability, in the short term it may not be a good indicator for you. Second follow-up question was that when you are talking about Q2 already capturing a lot of this gross profit per vehicle, what I remember from our past discussions and the last quarterly call was, you mentioned that the entire process takes couple of quarters. It does not get over in one or two because there is a new learning curve, more cost, and therefore it takes typically three, four quarters before the entire new process stabilizes. In light of that, I was trying to understand, is it bulk of it is over? Like 90% of it is over, or we can still expect some reasonable growth in profitability? As you mentioned, it takes three, four quarters for the entire process to get standardized. Sure. Just from your first point first, taking the gross profit part. I think we are looking at very long-term and annual base, at the minimum annual base indicators only because it is very tough on a quarter on quarter basis to be matching due to various reasons, right? Okay. That is just the nature of the business that we are in. It is very long-term oriented and given product mix, et cetera, it is something as a philosophy only, we do not really go by, which is like quarter to quarter matching and things like that. But it will be a rough indicator and working on a potential index, just testing it out that if it works well, then that can be utilized. On the second side, that yes, it does generally happen that as a product matures, then profitability does go up because productivity improvement, learning curve. It is very hard to say how much of it is already captured and how much is yet to be captured. I would say just to be conservative, that we can look at stabilizing and of course, there is always scope of improvement. Markets are dynamic. Just to be conservative, I would say that our focus is to stabilize on this. Sir, last two questions, with your permission, please. One, I understand Q-on-Q for various reasons is very difficult, but would you by any chance be having handy your, and if you don't have it handy, maybe subsequently, you can also share YTD, Y-on-Y growth. Not Q-on-Q, I understand what you're saying, but let's say first six months of this year versus last year's six months and first nine months of this year versus nine months. That will give a very good context in addition to quarterly Y-on-Y. If you don't have it's fine. In the future, maybe you can also use that just as a suggestion. It will give the entire picture. Secondly, on the Noida land, any plans to monetize it in next one year? It might be very feasible now. The first one on the YTD numbers, each one I have on gross profit level, it's roughly, I think 18%, 15%-18% where the growth has been, and that's just a good indicator to see little bit content per car increase as well as the general sales increase. On the front of the Noida land, there's no particular plan as such. We are monitoring it and we are seeing if we get a good deal. Land prices have generally gone up a lot, right? Since first we made this unit or shifted this unit to the western region. If we do get a very good deal, we would monetize it. But we would wait and watch for how the deals for this land would be. So there's no plan as such to do it within one year only, but if the opportunity arises, then why not. Sir, lastly, on the EV progress, if any, and secondly, PLI, and thirdly, any plans to come with a dividend policy sometime in next six months or one year? Okay. The first one, we will just take it one by one. The first question is on the EV side. Yes. EV venture. Okay. The EV venture, our products are now in the testing queue with the agency. There is a big queue that has been lined up at the agencies because of multiple regulatory changes as well as multiple strategy changes that have happened in the two-wheeler EV market. It remains to be very dynamic, and there are multiple changes in regulations. I think in the last six months alone, there have been maybe four to five major changes. With the EV subsidy reduction, et cetera, there is a lot of cost pressure in the market. So we are being very diligent and cautious because a battery is a field product also. We will wait for the full testing to be done and full approval before we really get going on this product. We will be very cautious on this, and we will move steadily rather than dive into this, given that the risk associated with it, and we will also incrementally invest on this side, on this particular venture. On the other hand, we have made some good progress on our other components, which are used in EVs as well, and we have been nominated for a few programs now, which is on our suspension side, for EV range of our customers also. The second part was PLI? The second question was PLI? Yes. Yeah. PLI, we have applied for it, and we are working, in fact, with a third-party consultant also to manage all the testing as well as approvals that are required because there were a lot of guideline changes that happened regarding PLI. It is still ambiguous, and we are seeking clarity. As of now, we are not considering any benefit from PLI in our numbers, but once we have the approvals, once we have clarity, then definitely I will keep you updated on the PLI front. But we are working with a third party now, consultant, on a focused project. It's just been a lot of changes and a lot of ambiguity so far. But it could be a positive if we could successfully get some benefit on the PLI side. And third was on the dividend policy. Sonal, I'm so sorry to interrupt you, but we have more participants for questions. If you have a follow-up question, I would please request you to rejoin the queue, please. Sure. I'll just maybe answer this last one on the dividend policy side. We already have a dividend policy of 10%-30% of PAT, but given the liquid cash reserves and the free cash flow that we are expecting, we are working on upward revision of the same, and we will be taking that up shortly as well. Not only to revise it upward, but also to make the band a little bit less, in terms of min and max, so that it becomes much more predictable. Work is on, and as we get the approval and internal consensus on that, I will be updating there as well. Wonderful. Thank you. Thank you. The next question is from the line of Kartikeyan from Suyash Advisors. Please go ahead. Yeah. Hi, good evening, Kaship. Excellent results. I mean, these are more of standard questions because your business works like clockwork at some level. So in terms of phase out of catalyst contribution to your revenues, what kind of timeline can we reasonably anticipate that happening over? Sure. Thanks so much for the question. Regarding catalyst, already as a policy new projects that we are taking, we are requesting the OEMs not to keep catalyst as part of our business. We successfully done it, right? That is such a big change that came in terms of a regulation and not even one product of ours had a catalyst in it. So progress is very good. As the share of new businesses over the years increases and the old businesses get phased out, it could be fully that catalyst would not be part of the sales front. But on the other hand, if a customer really insists that due to business model reasons that they want us to procure the catalyst, then we would. But it would be a strong exception. We are trying our best that for all the new business that we are developing, it would be without the catalyst so that then it becomes very easy in terms of matching volumes and sales and so on, and solves that issue. It is very hard to have a timeline on that because it really depends on the phasing of business and so on, and that would remain to be dynamic, but it will improve over time for sure. Can I assume, say, 30% already on a no catalyst basis in terms of revenue contribution? I do not have a specific number with me right now. I do not think that there is a specific number we would give out. But definitely you can be assured that no new RDE product that has started has a catalyst in it. Fair. Would there be any contribution from OBD in the last six months? Our contribution, the way our product goes, the contribution came from RDE, and I think maybe an alternate word could be OBD. The way we call it is BS6 RDE, and that was 1st April. That is where there was a change in our product. Yeah, if it is similar, I am not sure between the distinction of both, but 1st April is when a BS6 RDE started. Fair. So in terms of your next regulatory trigger, would that be deferred to FY 2026, therefore? There could be. There could be a delay in that. But at the same time, there is no notification. On the tractor side, I think you are asking, there could be a delay on that on terms of regulation. Yes. On the construction equipment, it is possible that it could go too. Construction equipment, I already gone through. Construction equipment, the next series would be probably equivalent to tractors. There is a unique market that has opened up that we also did not expect much, which is on the Genset construction equipment side. It is a very niche market, but our products can be cross-used there. It is a niche, but a very attractive niche. We will start playing in that market. That is live already. A lot of the products right now that are being used on the market are either imported or they are being done, let us say, not in a very competitive way. There is a very good opportunity that is opened up there, and we will start playing in that, and you may hear of us developing some business in this segment. Yes. Any comments on the JV's performance? I see that the profitability is almost INR 1 crore for the quarter. Can you give some color on the performance of the JV? Yeah. The JV for this quarter benefited, I guess, from the heavy commercial vehicle sales went up little bit, so their sales also went up little bit. Given that on a percentage basis it has gone up on an absolute figure, the profit was in total INR 2 crores or contribution INR 1 crore, which accounts only 1%-2% of our consolidated PBT. As long as the markets remain smooth, JV performance could improve. But that sector of heavy commercial vehicles, as I mentioned before, is very concentrated in terms of engines. There are literally four or five engines and that really determine the entire market. The fluctuations are also much more than the other parts and other sectors. We are hopeful we are doing our best in terms of improving performance, but it is a very dynamic market, this particular segment that they are playing in. One last question, then I will join back in the queue. Given the fact that there are all these moving parts, if you had to guide us on the outlook for, say, FY 2024 to near-end FY 2025, I do not need exact number but shall we say a teens kind of range or whatever. Some thoughts will be helpful because there are certain deferrals or certain areas where scale-up is not as anticipated and some places where there have been gains. Why do not you guide us on some kind of a visibility? Without giving any specific numbers, we are very optimistic in terms of the business development in 2024 and 2025. There have been some surprise good news business developments that business of suspension which was not our core focus at that time, we have been nominated for a few programs now and actually all of them are EV programs as well as our international business development cycle is going good. The volumes in general look solid in terms of how the automobile industry is doing. One more very interesting business that has opened up for us is this 3 liter to 4 liter segment in the commercial vehicle market, which we can now play on a standalone basis. We are developing a product for that. If we could break into that segment, that is a fairly large market when it comes to our content. There is a lot of optimism. But at the same time, we have to be cautious because it is a dynamic environment in the market and globally the geopolitical situation seems to be quite risky as well as a lot of headwinds from macro factor are seeming to be there globally. We would be optimistic but at the same time cautious of the macro environment as well. Absolutely. Thanks very much for the details and very best wishes as always. Thank you so much. Thank you. Thank you. The next question is from the line of Ajay Sharma from Maybank. Please go ahead. Hi. Can I check on your revenue mix? How much is coming from the PV and the CV segment? Sure. Our revenue mix right now is roughly 40% PV. I am just talking about the emission side right now, 40% PV and 60% on the LCV and other side. Okay. Can I check, what is the percentage of catalyst in your revenue this year, first half and last year, full year? Sure. We do not disclose the catalyst content in our revenues due to commitments with customers. We do not disclose that as a standalone number. I mean, the margin optically goes up as the catalyst content goes down, right? I am just trying to understand what is the underlying margin you make on your product. Yeah. As the catalyst goes down, because we do not really make any margin on the catalyst, it does that the EBITDA margin goes up as a percentage. It does happen, but we do not disclose standalone catalyst numbers due to the commitments we have with our customers. While you might not disclose the exact percentage, can you qualitatively suggest, has it declined substantially compared to last year? What is the underlying profitability of your business excluding the catalyst? How is that changing, basically? Sure. In terms of just the qualitative thing, our new products which have come in April 1 as part of BS6 RDE, there we do not have any catalyst. We are utilizing the FOC business model there. In the new products, there is no catalyst. If just qualitatively, if I was to look at the margin profile, it has been similar or slightly improved over the years. Okay. I know you are planning a higher dividend policy. I guess you are sitting on a lot of cash compared to the CapEx needs and your working capital. I am just wondering, other than dividend, is there plan to do any buyback or because the share is also very undervalued, so I am just wondering how are you thinking about it? Sure. Utilizing the cash surplus, our first preference is to utilize it for an M&A opportunity in powertrain agnostic products. We also want to be conservative and long-term oriented when it comes to M&A, and we would only do it if it fits the strategy and at the correct value and price, which we are consistently trying to get a deal. No fixed timeline. We have many interactions happening regarding that. At the same time, we are looking at options of benefiting all the shareholders, and one of the key options is dividends. Other options, as and when things materialize, we would consistently be looking at as well. Okay. Just the last question. I guess in terms of shareholder value enhancement, I know you start doing these con calls, but is there any plan to go on roadshows, particularly overseas, and reach out to a larger set of investors? Because your share prices does not really reflect the kind of business you're doing, the kind of returns you're making, and the strong growth you're seeing currently. Sure. Definitely we are augmenting our management bandwidth to enable that. If you look at the company, it has grown fairly fast in the last four years or five years, and that is also due to great execution on the front of these market opportunities that opened in emissions, and that did consume a lot of management bandwidth. But we are working on augmenting our management bandwidth to enable better interactions as well as being more strategic on value creation. Okay. Thank you. Thank you. Thank you so much. Thank you. The next question is from the line of Chetan Doshi, who is an individual investor. Go ahead, sir. Yeah. Congratulations to entire Sharda Motor Industries team for giving a fantastic performance. I have couple of questions. Ashim, particularly, are these margins sustainable? Because, the growth in margins in this particular quarter is tremendous. So coming quarters, can you just tell that, yes, we have certain product lines which will help us in building up similar margins in next two quarters? That is one question. Second is regarding exports. What is the quantum of exports in this first half turnover, and into which companies you are supplying overseas? Because locally you may not disclose, but overseas you can definitely say that if some premium clients are there with you, then if they grow, definitely our company, because the margins are also very high as far as exports are concerned. The third thing is that overall auto industry at present is doing exceedingly well. Apart from auto, you are planning to have some diversification done in some other non-core sector, or you want to stick to only auto? Sure. Thank you so much for the good wishes. I will take the questions one by one, and in case I forgot a subpart, please do re-ask the question. The first one regarding margin sustainability. This quarter did see a very good product mix, as well as it was the first quarter with the full RDE products coming in, which are more on value-added sales basis. In terms of future outlook, it is very hard to comment on maintaining this number or slightly better or slightly lower. But we will be at double digits, hopefully, if everything goes well, that we will maintain double-digit EBITDA margins, which is 10%-plus margin. But very tough to give exact number because product mix has a big shift in terms of margins. And this quarter was definitely a favorable product mix quarter. There were some products that sold more, which had better margins in this particular quarter. Coming to your second question, if you could just repeat the export side, right? Correct. Exports. We are very new in terms of exports. In fact, just maybe one and a half years ago that we have started this initiative of exports. Right now, exports, I do not have the exact number in front of me, but would not be a very large percentage of revenues. And we do only supply mainly to the U.S. market right now. Customer names, that is something in general we do not disclose. But at the same time, we have now developed a complete team for international business, and they are working very diligently. We have a good pipeline of RFQs. We are learning how to come into the export market. I think there is a learning curve in terms of business development also. And we do expect initial orders flowing in with small pilots, and will grow over time. This is very new to the company. As a macro, it is definitely a huge tailwind for India. The China Plus One theme is playing out much more than even I had imagined. We do see a very large opportunity in the international business side. But we also recognize that we are new to international business development. Now that we have a team in place, I think results will also gradually follow. Yeah. Last question is whether you want to stick to auto or you would be investing in something which is non-core business. Sure. We will most likely be within our core business, but our core business is definitely auto from the point of view that we have passenger vehicles, light commercial vehicles, as well as heavy commercial vehicles as part of our business currently. But with the new regulations in tractors, TREM IV has already launched, and when TREM V comes, a significant part of our business will also become agriculture or tractor-based. As well as I was mentioning that there is a very good opportunity on the power gen and construction equipment side, and that is definitely also something that we are open to. We, as of now, don't have any plan to do something radically different when it comes to diversification. We do want to be within our strengths and our core competencies, but definitely if they could be cross-applied in other areas, we would always be open for those opportunities. Ashim, one last question. See, for the last three and a half or last four years, your top line has grown year on year. It is not that it is 5% or 10% growth. Now, see, without target-oriented approach, it is just impossible to finish with these kind of numbers in last four years. See, if you don't want to disclose, I cannot pressure you on this, but going ahead, what will be your growth engine? Where you are looking forward to, and if you can just share a thought that, yes, we want to achieve in next three years, maybe we want to be a INR 10,000 crore company. Can you just highlight on this? Sure. I will not mention any numbers as such, but maybe I can share that broadly our five-year growth plan. Number one is to maintain or increase our market share within LCV as well as the passenger vehicle domestic exhaust business alone, RDE segment, which is our core domain. Second is to enter into this new space of the three liter to four liter commercial vehicle market, which is a very new opening for us and new products which are being developed for that. Third is to attain at least first or second market leadership in the domestic tractor market. That's a huge market that's opening and we do want to be one or two there, and that's going to be a big driver of growth. In addition to that, just mentioned on the export side, that international business development, that is a very large area. That is something that could be a very positive surprise, and it is within our business plan to be establishing an export business, which is for emission systems, for smaller tractors, gensets, as well as sub-components, which is part of our backward integration already. Next is also to utilize our surplus, which we have in terms of liquid reserves, to build or buy a powertrain agnostic product or products. Definitely on the M&A side, but we also see a good opportunity to build some of our smaller businesses right now, like suspension. Lastly, to also play in the EV field little bit, like we have started with our joint venture, but we want to be more focused on the two-wheeler and three-wheeler side right now, when it comes to EV. So this is broadly the plan. In terms of exact numbers or fixed listing, that's something that we don't disclose. Broadly, this is what we expect as a growth journey. Thank you. Thank you very much, and wish you good luck, and Happy Diwali. Thank you, and Happy Diwali to you as well. Thank you. The next question is from the line of Sonal from Bowhead. Please go ahead. Thank you, Aashim, again, for this opportunity. It has been some time since the tractor business for the higher end tractors has started, and as you mentioned that next year, this regulation is going to unfold. Your market share in the passenger vehicle market is around 30%, and next Maruti may be 55% or so. Do you think your market share in this market could be higher, based on whatever we have seen so far as compared to your passenger vehicle market share of about 30%? Yeah. In the tractor segment, there are only three companies in India who are present, and maybe in the whole world there may be only four or five companies that can be part of the tractor emission regulations, and touch wood, one of that is us. We do expect a good business development cycle there. It will be a three-tier market the way it is looking at. How it is finally distributed is based on various factors, but we are optimistic that we would be in a good position when it comes to the agri market. Is it fair to say the competitive intensity is much less than the passenger vehicle market? The competitive intensity is lesser due to the technology requirement. From that angle it is lesser. But the tractor market is also a cost sensitive market, right? It is something that we need to be cognizant of. But in general, the technology that is required for these emission norms is much higher than most of the passenger vehicles. From your side, you are completely ready now? Yeah. We already have very good business on Tempco side and on the higher horsepower side, so we already have products on the market. For the exports that the tractor makers do out of India, we have a very good market share. So our products are ready. They have been ready for now one year, and we have the full technology to cater to this market. In terms of Tempco, would it be more than 1% of your revenues as of now? It is a small percentage. I think it is nothing significant, right? Just because the volumes are so less, it would be 1%, 2%, 3%, 4%, you can say. It is hard to put a number because they are also very lumpy volumes right now. It is just starting off. But it is not a significant percentage as of now for us. Your PLI scheme, which you applied for, which obviously has not passed as of now, so I am not asking you to comment on that. Can you take advantage of the tractor market for that PLI scheme? Our products, the PLI scheme is for some of our existing products where we can work with suppliers to localize. However, it is very early for me to comment on how it will play out just because there is lots of ambiguity and changes that keep happening. We also do not have a clear picture on how it will pan out, right? But being conservative, we are just looking at it that if it happens, it is something that would be an added positive. As of now, we do not take anything in our results for our business plans linked to PLI. But in case it happens, well and good. We have now a focus team who is working on PLI. But very difficult to comment on how it will pan out just given the changes as well as the ambiguity that exists. Can you throw some light on the kind of index you are working for in terms of disclosures for us to understand? Because some investors in the last call had mentioned about certain disclosures, so maybe you mentioned something but Yes. To make it simpler for this interim period that we will be in. To make it simpler, it will be a gross profit list, and that is something that we are working on. We find that our gross profit number could be a good indicator. We have back tested it little bit. But again, it will not be on a quarterly basis just because this business is a long business and there are various reasons why quarter-to-quarter mapping is not very accurate. But definitely on an annual basis, it will be a very good indicator of volumes as well as business growth. So that is something that we are working on. And once we are comfortable to share it formally, we will definitely add it. Are you seeing gross profit per vehicle or are you talking about gross profit, or are you talking about some base and then growth is what I was We will take the base year, pre-BS6 as a base year, and we will look at the gross profit number, or we are already looking at it, and then mapping the gross profit number over annual basis on how the market has grown, how we have grown, and it is seeming to match. We have, of course, outperformed due to the various initiatives, and it seems to be a good indicator. However, it is work in progress, until we are not fully comfortable, we will not formally utilize it as an index. This is only interim. Because we get to see the gross profit anyway. That is not a new indicator for us. What you may mean is gross profit per vehicle, from a particular base. Gross profit we can anyway see. Yeah. So it is right now gross profit and we are trying to map it to vehicle, but the gross profit which you can anyway see a part of an index is what we are working on and whether it can be mapped to a vehicle just because engines are cross SKUs and all is still a work in progress. Understood. Thank you and congratulations. A lot of new initiatives, better disclosures, such as volume growth and plans for a dividend policy and hopefully some investor relationships activity. Thank you so much and all the best. Thank you. Thank you so much. Thank you. As there are no further questions, I would like to hand the conference over to Mr. Puru Aggarwal for his closing comments. Go ahead, sir. We thank you for your participation in our earnings call today. We hope we have been able to address all your queries. However, if you have further questions, you can get in touch with our IR advisors, SGA. Wish you all a happy Diwali and a prosperous New Year. Thank you, and have a good 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 lines.