Ladies and gentlemen, good day and welcome to the Q2 FY26 earnings conference call hosted by Tenneco Clean Air India Limited. As a reminder, all participants' 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 touch-tone phone. I now hand the conference over to Ms. Roopali Singh, Company Secretary and Compliance Officer from Tenneco Clean Air India Limited. Thank you, and over to you, ma'am.
Thank you, Danish. Good evening, ladies and gentlemen. We welcome you to the First Earnings Call of Tenneco Clean Air India Limited. Today, we will be discussing the results for the quarter and half-year ending 30th September 2025. I take this opportunity to introduce the management team. I have with me Mr. Arvind Chandra Managing Director and CEO, Mr. Manavendra Sial , Chief Financial Officer. The presentation on the business and financial performance is available on the company's website and on the website of the stock exchanges as well. We will begin with Mr. Chandra providing a business update, followed by Mr. Sial covering the financial results. This should approximately take about 15 minutes, after which we will open the floor for a Q&A session of about 45 minutes. With that, I will now hand it over to Arvind.
Great. Thank you. Thank you very much, Roopali. Good evening, everybody. First, let me start by wishing you all good health and happiness, and let me be the first to wish you a very happy New Year for 2026. Thank you all for joining us for Tenneco Clean Air India's First Earnings Call as a listed company. This is a very important moment in our journey, and the strong IPO reception with subscriptions of over 61 times reinforces the trust placed in us by our customers, our partners, and now our shareholders. As we begin this new chapter, our focus remains on strengthening the business through disciplined execution and building on the capabilities that have shaped our performance over the years. Tenneco India has always had a clear and simple purpose: to be the most trusted partner and the world's best manufacturer and distributor in the transportation industry.
We engineer and manufacture the critical systems and products that make mobility cleaner, safer, and more comfortable. Our product portfolio spans two integrated pillars: clean air and powertrain solutions, where we support high-end and increasingly complex emissions, efficiency, and durability requirements, and Advanced Ride Technologies, where our suspension and ride performance systems play a central role in delivering comfort and handling, especially as the India market continues to premiumize in the coming years.
These pillars come together through a shared engineering and manufacturing backbone, reinforced by Global R&D support with 5,000+ patents and four decades of experience operating across the Indian automotive market. Being part of the Tenneco Group gives us the scale and engineering depth of a multinational leader, enabling us to bring cutting-edge technology and manufacturing best practices into our India operations. We have established strong market leadership across our four product categories.
In Clean Air for example, we lead the market in India for commercial trucks and off-highway OEMs, while in Advanced Ride Technologies, we are number one in the supply of shock absorbers and struts for passenger vehicles. This leadership is a result of decades of manufacturing excellence and sustained collaboration with OEMs across segments. What differentiates our model is the way this ecosystem is structured. We bring global R&D, local application engineering, simulation and testing, and manufacturing together with a unique operating model across 12 plants and two R&D centers located close to OEM bases.
This gives us the ability to make more affordable products, which our customers want, reduce validation costs, pursue lightweighting technologies, and enable faster time to market. In manufacturing, we bring high safety and zero-defect process discipline in our continuous endeavor to be the most trusted partner for our OEMs.
This approach has helped us build long-standing partnerships of an average of 20 years with the country's major passenger commercial vehicle and off-highway OEMs, and these relationships continue to strengthen as the platforms evolve and require more advanced content. When we look at the broader industry, the trends are very supportive. Demand for passenger and light commercial vehicles in India is good, driven by a shift towards larger and more premium models, rising expectations around safety and comfort, and increased disposable incomes.
Stricter emission standards are also raising the need for more advanced clean air and powertrain solutions across all vehicle segments. In parallel, India is emerging as an important export hub for global OEMs, thanks to our engineering talent, competitive cost base, and resilient supply chain.
These shifts align very closely with our strength and strategy to be the export hub for the world for both third-party exports and to our global plants. With our leading positions in several of our core product areas, our exports already reach 20 countries and are poised to grow further. Financially, we delivered solid performance in Q2 and H1, with value-added revenue growing 8.9% and 8.2% year- over- year, and clearly outperforming the Served Applicable Market growth.
Our EBITDA and PAT margins remained at strong levels throughout the period, demonstrating the quality of our earnings and the inherent resilience of our operating model. On capital efficiency, we continue to post numbers in cash conversion cycle, free cash flow generation, debt to equity, and ROCE numbers that are industry best in class. Manavedra Sial , our CFO, will walk you through the financials and the key drivers in more detail.
Now, I'm also very happy to report that we have secured important strategic wins of INR 98.4 billion, which is 9,840 crores, in incremental lifetime bookings, including INR 17.6 billion of exports, which is about 1,760 crores. These are on top of the INR 43.8 billion value-added revenues from FY25, which is 4,380 crores.
So these are additive to that. So these bookings include a strategic clean air business entry into a leading Japanese passenger vehicle OEM, which was previously untapped white space for us. It also includes another major Advanced Ride Technologies win with a prominent Indian OEM, thereby further securing our number one position in shock absorbers in India. These bookings represent lifetime value-added revenue potential from awarded programs which are yet to start production and materially enhance the company's revenue visibility over the next five to six years approximately.
Finally, I want to acknowledge the contribution of our people. The strength of Tenneco India lies in its engineering and manufacturing teams. The engineers, the technicians, the operators, the supervisors, the managers across our various sites, they are the ones who ensure precision, reliability, innovation, and continuous improvement every single day. As we have transitioned into a listed company, their daily dedication, the velocity of decision-making, and the tenacious execution remains the bedrock of our culture and hence our performance. With that, thank you once again for your time. I will now hand you over to our Chief Financial Officer, Manavedra Sial , who will take you through our financial performance for Q2 and the first half of FY26. Thanks. Over to you.
Thank you, Arvind. Good evening, everyone, and thank you once again for joining us in today's call. Let me walk you through the financial highlights of Tenneco Clean Air India Limited for Q2 as well as H1, FY2026. Keeping the discussions aligned to the value-added revenue, or VAR, which is a most appropriate representation of our operating performance given the past two years of substrate of precious metals. It has been a strong quarter and a strong half-year as far as financial performance is concerned. I'll start with Q2 first. For Q2, FY2026, value-added revenue stood at INR 11,515 million, a growth of 8.9% year- on- year, and it has been supported by stronger customer demand across key programs, both in domestic as well as export markets.
EBITDA for the quarter was at INR 2,168 million up by 5.7% year- on- year, with strong margins at 18.8%, while PAT was at INR 1,507 million up by 9.9% year- on- year, and in terms of percentage, it was at 13.1%. Reported revenue from operations for Q2 was INR 12,806 million, up by 9.6% year- on- year, reflecting steady momentum across the business. In terms of half-year FY2026, our value-added revenue was INR 23,181 million, and a growth of 8.2% year- on- year, and in both the periods, Q2 as well as H1, FY26, our growth exceeded the sales market growth of PV, CT, OS, and industrial, which grew 5% in Q2 and 4% in H1 underscoring the strength of our demand profile.
For H1, the EBITDA was INR 4,457 million, a growth of 6.6% year- on- year, with strong margins at 19.2%, and PAT for the half-year was INR 3,188 million, 10.9% up year- on- year, with margins at 13.8%. For the first half, revenue from operations stood at INR 25,663 million, growing 5.2% year- on- year. Our profitability in H1 reflects the benefit of top-end volume growth, product mix improvement, operational and capital efficiencies, and PAT margins expanded by 34 basis points year- on- year.
This was aided by the stable material costs and higher interest income during the period. These factors effectively supported the excellent financial performance both for Q2 as well as H1, FY 2026. In terms of operational and capital efficiency, we maintained a strong return on capital employed profile and continued to operate with negative working capital intensity.
Our cash conversion cycle for half-year stood at negative 22 days, underscoring the capital-efficient nature of our business model. We continue to stay debt-free and have been meeting all our requirements in terms of CapEx as well as working capital to interest accruals. Further, we have very healthy fixed asset turnover ratio, which is resulting from the efficient capital investment through centralization and modular approach in manufacturing.
Looking at our segments, clean air and powertrain solutions delivered revenue of INR 5,702 million in Q2, growing 3% year- on- year, while advanced ride technology delivered INR 5,813 million up by 15.4%, and this has been supported by overall volume growth and the increasing demand for dynamic suspension components and continuous momentum in exports. For the balance sheet, we continue to operate with financial discipline. Operating cash flow for the half-year was INR 11,220 million, supported by our efficient working capital cycle.
CapEx per period stood at INR 246 million, and that is in line with the planned investment across our facilities and our localized roadmap. Just to summarize the financial performance, for Q1 and H1, FY2026, it demonstrated steady revenue growth, consistent profitability, and continued balance sheet strength. Margin optimization and operational discipline supported our margins, while the capital-efficient model enabled strong ROCE and a negative working capital cycle. With that, we believe the business remains well-positioned as we move into the second half of the year. Thank you, and with that, I would hand it over to Roopali.
Thank you, Manavendra. We will now move to the Q&A session, which will be led by Arvind and Manavendra. We request participants to kindly limit questions to two at a time. If you want to ask additional questions, please rejoin the queue. I will now request the moderator to please commence the Q&A session.
Thank you, ma'am. Ladies and gentlemen, I would like to read the call disclaimer before we proceed with the Q&A session. This conference call may contain forward-looking statements about the company, which are based on beliefs, opinions, and expectations of the company as of the date of this call. These statements are not a guarantee of future performance and involve risks and uncertainties that are difficult to predict. We'll now begin with the question-and-answer session. Anyone who wishes to ask a question may press star and one on their touch-tone telephone. 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'll wait for a moment while the question queue assembles. Our first question comes from the line of Ravi Gupta from InCred Capital. Please go ahead with the question.
Yeah, hi. Thanks for asking. I'm audible?
Yes, sir, you are. Please go ahead with the question.
Yes. Thank you for the opportunity, and congratulations on the great set of numbers and the bumper listing. So my first question is related to the export order book. Could you please help us understand the execution timeline of it and also outline which products are part of this order and the key markets or the location you'll be supplying to? Thanks.
Is it Ravi?
Yes, yes. Ravi, yeah.
Yeah. Hi, Ravi. It's nice to meet you. So yeah, Sue, very good question. Look, like I said, we've had a very, very good order booking cycle, right? If you look at our order booking formula, so everything that we've—it's not in production and has been booked as of September 30th, 2025, right? And think of lifetime revenue, right? Typically, in automotive, you know, a program life is five to seven years. Obviously, commercial trucks might be a little bit longer, some might be a little bit shorter. So overall, five to seven years. Exports of order book comes in two parts. One is the exports to third-party OEMs, and the second one is exports to our own Tenneco India export and back to Tenneco Global.
So right now, the good thing is we're getting export on both sides, clean air as well as powertrain as well as ARS, which is the advanced ride technology business. So we are booking business fast. A lot of these bookings are coming from third-party exports. I obviously cannot reveal the customer names because we don't have the permission yet. But suffice to say that exports is going to grow much, much, much faster than our domestic business simply because we are starting from the low base. If you remember our roadshows and press conferences, we always said, "Look, we started from a low base, only 5% product exports." And now, if you look at our Q2 numbers, we're already somewhere around 7% or 8%, right? So that percentage of exports as part of the total pie is growing slowly.
The other great thing about exports is exports are coming in at nice margins, right? And as the nice margins come in, the product mix will also help us improve our margins over time. Now, typically, it takes about a year, year and a half to kind of get the product validated, obligated, and into production. So you would expect to see a lot of these start to come in late 2026, 2027, 2028, and so on. That's why it's because we have a longer sales cycle. So obviously, I cannot give specific customer names and so on, but all I will say is that they are growing faster than domestic business at a very high cadence. These are more profitable, and they include both clean air product and the advanced ride technology business, including full product as well as you can call it semi-finished assembly components.
For example, Advanced Ride Technologies that will be product like rods and sensor parts that will actually benefit even our European brokers and sister divisions to be more competitive as they buy from us and then sell back to their OEMs, right? So that's also another area to grow. So third-party exports growth. Tenneco India to Tenneco Global in terms of full finished goods as well as semi-finished, the sub-assembly components. So that's why it's so exciting for us because India obviously has the labor arbitrage, right? The advantage of the lower labor costs and also, we are, because of technology equalization, right? Five, ten years ago, India was always behind technology.
But now, in both clean air powertrain and in Advanced Ride Technologies, if you look at what products we sell to our local OEMs in clean air, for example, which is BS 6.2, the same product with the same technology and the same legislation can also be exported to Europe as part of Euro 6, right? And their own version of real driving emissions. Same thing on the shock absorber advanced ride technology side, right? We can also export the same technology like a semi-active suspension that we're selling to our Indian OEMs, also to our European OEMs. So it's a very exciting period for us, and thank you for asking the question, Ravi.
Thanks for the detailed explanation. My second question is with regard to the margin. So what was the margin for the clean air segment and the advanced ride performance segment in this quarter? And also, if you can share full year guidance or directional outlook on the margin front? Thanks.
Okay. So very high. This is Mahendra. So as far as BU margins are concerned, we as the management team have not yet closed on that. We will be disclosing the margin at an overall level, not at a BU or the segment level. So that's about the margins at the business unit level. In terms of the full year guidance on the margins, so as you know, we have got listed very recently. There are certain costs related to operating as a listed public limited company. For example, management costs, taxes, fees, compliance costs, and other costs related to legal IT and all. We expect EBITDA to be a bit soft, but with the increase in the revenues that are coming here, these additional costs will get absorbed as we progress, and we'll come back to the same levels. Hope that helps.
Yeah, thanks. Thank you so much, Al, for that interview.
Thank you. Our next question comes from the line of Vipul Agarwal from HSBC Bank. Please go ahead.
Hi, sir. Thank you for taking my question. My first question is on the capacity expansion side. Like you highlighted earlier, that you'll be extending capacity, almost doubling the capacity over the next three to five years. So can you just talk about where are we right now? And if you're putting up new plants or expanding in the current capacity, maybe separately on clean air and suspensions both?
Yeah. Thanks, Vipul, for asking the question. This is Mahendra. So we'll be using the order book visibility that we have, and that we have exposed. So considering those plants and order book visibility that we have, we would be investing both in the capacity extension, I mean, in the extension towards the capacity increase and also in the extension related to technology. We know, specifically in Advanced Ride Technologies, the things are moving from conventional to semi-active suspension systems. So we have to invest towards that as well. So we would be investing in line with the growth plans that we have, including putting up the new plants in the coming years.
Sorry, [crosstalk]
Vipul, just to finish that. Also, a lot of some of that CapEx growth, right, will also come from transfer of CapEx from other chemical regions into India simply because we can make it much cheaper and more affordable out of India, right? So that way, we get the benefit of the lower CapEx. So that's one of the reasons why if you notice, our ROCE numbers are always very, very high, right? Very exciting, big, nice numbers. So it's a combination of normal volume growth of India, which is the expansion CapEx, and then it's technology-related CapEx that is related to more advanced dynamic suspension, for example, or in that same particular sectors for CapEx.
And the other thing is the CapEx transfer that happens from moving a lot of the equipment from maybe Europe and other regions to Asia and then exporting back from here. That, again, gives us nice margins, and we're very excited about that as well. Yeah. Yeah. Just to add to that, if you look at the way we do the capital investment, if you look at some of our SIRs, our capital investment has always been pretty efficient through standardization and modular tools. Since we do not have any direct and kind of basically decent accrual cash for calculation, so we intend to meet all the CapEx requirements in the coming years from our internal accruals.
Understood. Thanks for that over-detailed answer. Maxine, next question is on the export side. Will you be disclosing your export numbers going forward, maybe separately for, you gave revenue numbers for clean air and suspension separately. Would it be possible to give separate export number as well for both segments?
Yeah, I think that's not a bad idea. I think that's a good suggestion. I think we can look at it. Right now, because we are just starting our journey, right? I mean, exports, if you remember, Vipul, if you remember from the roadshows and the press conferences, historically with Tenneco, if you go back, let's say, a decade, exports was never a focus. It was always local for local, right? It was Europe for Europe, U.S. for U.S., China for China. But now, for the first time, even Tenneco India has become Tenneco India for the world, which means we export. If we are competitive, we get to export to third-party OEMs, and we also get to support other regions to enable them from being competitive, right?
So that Tenneco Europe benefits from having Tenneco as a supplier of everything from sub-assemblies to components to even full-finished parts, right? So at some point, I think when we get some critical mass, we could possibly separate that. But in any way, right, it's a very, very exciting story for us. And that's what makes us grow our business much, much faster because it is like the labor advantage plus technology equalization.
And also, once again, many customers themselves, right? If you look at the Western OEMs, are all pushing for India to be an export base. So by default, the business is being forced to come to India just because Western OEMs are asking for a contingency plan. So they want to diversify their supply chain risk. So that also benefits us, right? So I think all of this makes it very exciting. So very good question. Let's think about it. I think it's not a bad idea. But let's aim for critical mass. Once we have some nice bookings, we're starting to see a lot of export bookings. So I think once that's solidified into a nice number, we could possibly separate that and show that in future earnings.
Yeah.
Thank you.
Thank you. It would be really helpful if you can give your order book as well in clean air and your ERT division. That would be really helpful just to understand because both businesses are very different in nature, so that would be really helpful.
Understood. [crosstalk]
Thank you, sir. Thank you.
Thank you. Ladies and gentlemen, anyone who wishes to ask a question may press star and one on their touchscreen telephone. Our next question comes from the line of Jimmy Shah from Motilal Oswal Financial Services Limited. Please go ahead.
Hi, sir. Am I audible?
Yes, sir. Yes, sir, you are.
Congratulations, sir, and first of all, congratulations on a great listing. So a couple of questions, largely on the order book side. So the INR 1,900 crore order book, majority from the domestic. So number one, this is because we have booked certain projects from the Japanese OEM in the India business. So is that a major chunk of potential business that we can get from them? I'm just trying to assess that. Is there potential to significantly increase our order in that specific OEM's wallet share?
Yeah. So first of all, the 9,840, right? So 9,840 crores, right? So that is lifetime revenue. So it represents all booked business before September 30th, 2025, that are not yet in production, right? And it is a pretty long laundry list of many, many acquisitions or many, many business wins. The reason we called out the clean air business win with this Japanese OEM is because it is so strategic for us that getting a foot in the door of this OEM opens us up to a huge opportunity in terms of growth, in terms of market share, right? The fact that this customer said, "Okay, you can be part of our supply panel," gives us that entry. So yes, to answer your question, huge opportunity for growth in clean air because of the strategic—that's why we call it a strategic win in the white space.
White space is an area where we've never been allowed to play in for whatever historical reasons. But now that we are a key member of the panel, we are allowed to play and also grow and participate in RFQs, etc., etc. So this is a huge win for us. The other win being consolidating our position at a very, very well-known Indian OEM for shock absorbers. So we are basically constantly inching our way up the market share, right? We are already number one in shock absorbers. We're kind of taking it to the next level. Slowly, slowly, slowly, slowly adding a few percentage points of market share is what's happened. I think shock absorbers, we're already about 52%. You would have seen from the DRHP to RHP, that's 48%. It's already gone to 52% market share because, again, from CRISIL, right? So CRISIL has given us that.
So anyway, I think to answer your question, these wins are very strategic and allow us to grow faster in the next few years. Yeah.
So is it fair to assume that these order wins are not counted in the Lifetime Order Book?
No, no, [crosstalk]
they are. They're all part of the 9,840. The reason we just called them out is because these two wins have the ability to take us further into the panel in a bigger way, right? Some order books are more, let's say, visible and successful for us than others, right?
Yeah. Secondly, so on the exports front, more of a group thing. So we are expecting export growth to be much, much higher than the domestic growth. So is this growth that we're expecting largely because we're consolidating the global operations in India and making India the export hub, or is it incremental order wins in the wallet share of existing customers around the globe?
It's all of the above. Let's start with third-party OEMs, right? Third-party OEMs are pushing for a supply diversity. By the way, some of it is not even to do with cost, right? It's global OEMs, Western OEMs saying that, "Hey, Tenneco, we want you to put more business into India because we want to source product out of India for export through either an engine plant at the customer or an assembly plant at the customer," right? So this is coming from an edict from the customers themselves saying, "We want to use India as an export hub," right?
So this way, and because, again, you can call it a China plus one or sort of a diversification strategy. And this comes from post-COVID when there was a big supply chain issue. If you remember, the years after COVID, there were huge supply chain issues, and they don't want to be in that situation anymore. So why is India a great export hub? One, it's access to engineering talent, access to operations talent. India scales much better than any other country other than China, right?
And also the ability to source raw material, the ability to get affordable prices, affordable costs. So that is driven by third-party OEMs, okay? Now, even internally, to answer your question, even internally, yes, there is going to be consolidation of the Tenneco Group. But don't forget, the Tenneco Group is a $17 billion company, right, in terms of total revenue, and in terms of value-added revenue, it's around $14 billion or so. But still, $14 billion compared to our side, we are only about $500 million versus the corporate value-added revenue of $14 billion, right?
So there is a lot of opportunity for consolidation. There is a lot of opportunity for labor costs, arbitrage. There's a lot of opportunity for bringing business to India and using it as a global hub, an export hub to support our own Tenneco operations in Europe and the U.S. to help them become more competitive. Don't forget that even Western OEMs are putting a lot of price pressure, right? Price, price, price. It's all about cost with the latest technology, right?
So we in India can be a very good supplier of these either components, subsystems, assemblies, and even finished products. And our job, right, my job is to make sure we are technology-ready. And luckily, we happen to have excellent R&D centers. We have two state-of-the-art R&D centers for clean air, powertrain or suspensions, what we call Advanced Ride Technologies.
Because of the strength of the local engineering team, the application engineering team, we are able to deliver these kinds of mandates, even coming from our Tenneco Group to us saying, "Okay, can you make this product at a certain price?" We're able to deliver that. Those two put together give us excellent export traction in the next few years.
That is the answer. Just a clarification. Would it be possible to share out of the INR 1,750 crores that we booked currently in this quarter for exports and order wins? How much would it be from third-party and from the Tenneco Group company?
I guess we have not reported that. We didn't think about how to report that. But roughly, I'm telling you, the growth is coming actually on both sides equally. Don't forget that this is just not an advanced-type technology business. Because of technology equalization, right, the same BS 6.2 with RDE, what we supply to the, let's say, commercial trucks or even OEMs, Indian OEMs, the same product can be exported back to Europe.
So even clean air and even powertrain has a lot of potential for export. So I think in that 1,760, I mean, I wouldn't be able to tell you the exact numbers for it. But let's put it this way. The growth is coming from both engines nicely and coming both from third-party OEMs and from our own domestic, let's call it Tenneco to Tenneco, right? Tenneco India to Tenneco Global, right? It's firing on all cylinders, I might say.
Sure. Thank you so much, and all the best.
Thank you so much, Jimmy.
Thank you, sir. Our next question comes from the line of Pradip Pandey from Axis Capital. Please go ahead.
Hello, sir. Thank you for taking my question. I had two questions. One was on precious metal parts, which has been on the rise since the middle of Q1, and since the royalties are linked to revenues from operations, what impact do you see on margins in that sense? That's one, and so, okay, let's first go ahead with one and then I'll ask the second question.
Arvind, you want to take it?
Yeah. Sure. So as we know, being subsidized by the parts too, which we buy at the direction of the customer, then we recover the money from the customer pay. I mean, it doesn't really impact the profitability in terms of EBITDA absolute, but yes, in terms of EBITDA margins, it makes our profitability look, give the right picture. Now, in terms of royalty, we are paying 2.5% royalty to our corporate, which is kind of a related party transaction. There has been a benchmarking that has been done. It has been evaluated by an independent third party and approved by the board, independent board.
Now, in terms of this royalty, yes, we know that we have been paying this royalty on the overall revenues from operations, and the benchmarking was done considering that we would be paying royalty on the overall revenue and not on the VAR.
No, and. Yes, sir. [crosstalk]
So the impact on margin, to answer your question, the impact on margin is little to nothing. I mean, why? Because first of all, precious metals content itself is a small part of the total. And on top of that, the 2.5% of that delta is going to come to nothing, right? So if you just do the mathematics, it's really not nothing.
And plus, don't forget, in return for just that 2.5%, which is fairly middle of the fairway for royalty, there are companies, MNCs, that are as high as 5%-6%. So 2.5% is fairly average. And for that, we get access to thousands of patents. And the fact that we are able to win all of this technology, new technology business, the win that I put in the press release is purely because of the access to technology that our corporate parent HD plus right? So the benefits are far more than the small royalty that we pay out. That's my point. Yeah. Thanks.
Yeah. Understood, sir. The second was on the EBITDA for last year. We reported 18.6% for the full year, and as I see, the first half EBITDA margin is 19.5%. So, is there an element of seasonality in the margins? Or was there some higher margin business that was done in the first half, and that is why we see the margins to be slightly subdued in the second half?
Go ahead
Yes. So yes, our margins in the first half have been really good. And if you compare it to the previous year where we were at 18%, we are better off. Now, in terms of the guide, I mean, one of the main reasons for that has been the increase in the exports where we got really good margins on those exports. In terms of going forward, like I said, we have become a publicly listed company now.
There are certain costs that are related to running such organizations. And for example, the cost of the senior management, compliance, legal record-related costs. So we would increase these costs, and EBITDA margins could be a bit soft in the next couple of quarters. But as the business grows, we would be able to absorb these costs with the incremental revenue and the margins that we make. We should be coming back to the same levels.
Understood, sir. Thank you so much, sir.
Fantastic.
Thank you, Pradip.
Thank you. Our next question comes from the line of Himanshu Singh from Baroda BNP Paribas. Please go ahead.
Yeah. Hi, sir. Thank you for the opportunity. So can you please highlight what is driving the performance at the ART segment, and what is the mix of different types of tech within the ART segment?
I can sort of start it off in line that if you want to add anything, right? So Himanshu, Himanshu, right? Yeah.
So Himanshu.
Yes, sir. [do you agree]
Advanced-type technologies in India right now, 95+% of the business is conventional shock absorbers, right? And these are fairly commoditized. Everybody uses them and has been using them for decades. What's happening in India right now is a massive disruption, okay? I think primarily driven by benchmarking that's done by our Indian OEMs, finding out that their competitors overseas are able to make advanced suspension in vehicle prices that are quite affordable.
So this is like an eye-opener, right? And this has prompted several of our top Indian passenger vehicle OEMs to really start thinking about, "You know what? If we don't disrupt ourselves, then we're going to be in trouble." And you know in India, ride and handling comfort while sitting in a vehicle is the last remaining area for disruption, right? So we've had everything. We went from small cars to SUVs. We went to connectivity and Bluetooth.
We went to excellent interiors, sunroofs, ADAS has come, emergency braking. But that last remaining frontier happens to be Advanced Ride Technologies. So as Advanced Ride Technologies have come in, as you move from conventional to a frequency-dependent damping, which is still mechanical, but then you move into an active or a semi-active or an active suspension which requires more electronic controls, you find that the basic shock absorber accessory, an apparent area, grows, right?
So the content per vehicle starts growing dramatically. And even more so when it comes to an electric vehicle because of the way the vehicle is damped and it's got a bigger, lower center of gravity, needs a more robust suspension. So the point I'm making is that as the technology roadmap advances from a basic conventional shock absorber to a more active suspension, and that's happening very rapidly.
In the next few years, you're going to see everybody and their brother, every OEM trying to push this in a big way because they have to keep up. It's a survival thing. Our margins will also track up simply because there are not that many suppliers out there who can provide such advanced technologies, including electronic controls, who can systems integrate, etc., right? So we have that national advantage. And the best news is these technologies are already pre-validated. They are proven technologies.
We are not coming in, and we're not using the customer as a guinea pig, right? We are already bringing in something that works elsewhere in other regions. So I think from that standpoint, we're excited because the growth rate of advanced-type technologies, because of the fast disruption, is going to be faster.
It's going to take us to a place of higher margins because there's not that many competitors, at least for now. And the fact that we have a higher velocity of execution. Why? Because we're the same company. We don't have any joint ventures between us and the Tenneco Group.
It is literally me calling up my boss and saying, "Hey, I need this technology here localized very quickly." And with the strength of our local Indian applications engineering team, we're able to bring that to market faster. So more than anything else, our Indian OEMs want something, but they want it now. They want the advanced-type technologies now, and they're not willing to wait for like two or three years. They want it within months, right? And we're able to do that immediately. So that's sort of the answer to your question.
So yes, margins will go up, but it will take some time. But the adoption rate will be faster simply because it's a survival thing for our OEMs. Yeah.
Okay. Thank you, and how much was the listing expenses and which line item you have included that in?
So the listing expenses were to be borne by the selling shareholder. So that's not part of my P&L.
Okay. And sir, can you highlight what was the growth on the export side for this quarter?
So we don't have the growth number because we're not publishing the growth. But I think that's like the early. If you were there earlier, there was a question earlier from one of the people that we should call our exports separately. Right now, it's still at a very nascent stage, but it's growing very, very fast. So I think for a future earnings call, we might call that out separately, and we might also publish growth rates, etc. Yeah, that would be kind of nice to do. So we'll take notes earlier, and we'll make sure that we have something on export growth as well.
Okay. Thank you, sir.
Thank you very much, Himanshu.
Thank you. Our next question comes from the line of Rahul Ranade from Goldman Sachs Asset Management. Please go ahead.
Yeah. Hi, sir. Thanks for the opportunity, and congratulations on the successful listing. Just one kind of follow-up question on one of the earlier comments. So what kind of headwinds should we kind of expect in terms of the margins given the listing compliance costs, etc., that you talked about as one of the reasons for margins being muted going forward for the near term? Because generally, such cost, I think, doesn't kind of show up to be a material headwind for many of the companies that go IPO. So just wanted to understand that a bit.
So I'll start maybe whenever you can add. So look, there are two different costs. One is the listing itself, and that's paid for by the promoter. It's called the promoter selling shareholder. This cost, what we're talking about, which has a sort of a soft impact on EBITDA, is because of the hire of new leaders, right? New leadership. There's also strengthening of HR, IT, finance, legal. Because once you go to a public entity, you have to hire certain key resources to manage things like compliance and HR-related labor law, etc. So you are held to a higher level of scrutiny, which requires you to add certain headcount. And plus, of course, there are also auditors and external consultants and advisors and so on. So these are sort of cost additions that happen when you move from a private to public entity.
However, having said that, once we add these costs, they will be pretty flat-ish because the revenue growth will absorb these costs nicely, right? So it's just a matter of a few quarters when the revenue growth catches up, and we're able to absorb this much better. But it's not a big, it's not material enough where you have to panic or anything. It's very, very minimal. We are adding leadership very carefully to make sure that we meet the needs of a public entity from a board and statutory, etc., perspective. At the same time, we're going to stagger it over time so that it doesn't hit us severely in any specific quarter. In terms of headwinds, right, our headwinds are more about the general market, what happens to commercial trucks.
For example, with the road infrastructure, we're going through a five-year low, and commercial trucks don't seem to be growing in a big way. Or there's a slowdown in the passenger vehicles, especially the B, C, and E segments. Our headwinds are more to do with the market and how the market will behave. There is also potential for some headwinds around this labor law announcement, but that just happened a few days ago. So most companies around India can't figure out what this means for us, right? So every company will be affected by these labor laws. So our headwinds are more macroeconomic related that affect everybody, not just us. We're not so worried about our own internal growth strategy simply because, like I said, we are already losing a lot of market share. We are growing with the technology, with the OEMs, and we're also growing exports.
So all of those three are areas for growth. And of course, white space, there's a lot of white space still that is untapped between Clean Air as well as Advanced Ride Technologies. Anyone want to add something?
No, I think we've covered that. I mean, the cost of running a public limited company, like I mentioned, one, we have been careful in kind of increasing these costs, and these will come over a period of time, and by the time we get these costs in our P&L, we have kind of only the revenue and profitability to be able to absorb these additional costs, so we don't see any major impact on the P&L on some of these costs, but yes, these are essential costs that we need to incur.
Sure. Sure. No, that's helpful. And just wanted one more clarification in terms of what's the internal understanding in terms of the timelines for the tractor emission norms? Because I understand that is one kind of meaningful trigger for us in terms of our clean air business. So what's the current understanding on that?
So great question. Now, look, it depends on when the norms happen, right? So TREM V is where we have our strongest position, right? Because TREM V forces an OxyCat and a particulate filter, where we are very, very strong, right? So we're just waiting for the legislation to come in. It might be 2027. It might be early or late in 2027. We think it'll be around 2027. And that's when those norms will very positively impact our sales revenue. Like I said, every time a legislation changes or there's complexity, we come out on top a nd this is the history of Tenneco. We have grown our market share over several years purely because of legislation where we can meet the affordability criteria, right? We can reduce weight. We can make it lightweight.
We can respect the packaging environment of the customer vehicle architecture. And we can deliver faster time to market. Time to market is so important for the OEMs, right? So because we resonate on all of these four or five key dimensions, our ability to win every time that the legislation changes becomes much, much stronger, right? That's how we have captured market share. Like on commercial trucks, we are leading the market there as well, right? Very, very high market share with our SP as well. So I think the timeline, I couldn't tell you, it really depends on when this legislation will be announced. I think, again, somewhere around 2027. But once that comes, then we are in very good shape because then we will have a lot of content growth for clean air within TREM V.
Sure. Sure. And can I imagine that this forms part of our order book that you're discussing? The TREM V or RDE?
Yes. There are lots of TREM V order books in here as well. Yes. Good observation. Yeah.
Got it.
I mean, we'll continue to be there. I'm just saying the order book is just a snapshot in time, right? So after September 25th, we would still be booking lots and lots of business. So that's already set in motion. So there will be more legislation-related bookings. Like for example, CAFE norms, right? There will be still more CAFE norms-related bookings for passenger vehicles. There will be more there might be something around BS7.
For example, if they do a watered-down BS7 and it's pulled ahead, I've heard about some discussions around them pulling ahead some of these legislations forward. So if that happens, then we will be growing our content-related with it. And same thing on the shock absorber advanced-type technology side. So depending on how quickly the OEMs want to disrupt themselves in the comfort area or the dynamic suspension area, we will be there to support them.
Sure. Sure. Great. Thanks.
Thank you, Rahul.
Thanks, Rahul. All the best.
Thank you. Our next question comes from the line of Jimmy Shah from Motilal Oswal Financial Services Limited. Please go ahead.
Hi, sir. Can you hear me now?
Yeah, Jimmy, we can hear you.
Yeah. Yeah. Thanks for the opportunity again, sir. Just circling back to the exports front, is there a particular timeline that the management or the promoter has in mind to kind of consolidate the plants into India? Maybe the customers are pushing for it. Maybe we want to leverage the recent listing to kind of have a stronger growth impact by manufacturing more OEM and shut down a couple of plants overseas, which are less cost-efficient.
One of the core values of our company is organizational velocity and tenacious execution. These are the two main values. And you wouldn't have seen values like that in any other company, right? So we have a very interesting set of values. So organizational velocity really talks about what it takes our company three years, months. For us, it takes weeks. We make decisions very, very fast. And tenacious execution means the high level of accountability and transparency and the discipline, the daily discipline that comes with executing, right, a program or a task.
If you look at our group performance, just forget India for a second. If you just look at the Tenneco Group, they've made an amazing transformation at the group level. So India's success, right, the Tenneco India success is a subset of the fantastic success that the group has also had. And you can go online and check what they've done to their EBITDA margins in just three years. It's insane how wonderfully our Global CEO, Jim Voss, and the executive leadership team have led this company into one of the best transformations in the auto industry, right?
And India has also done really well. In the last three years, we've achieved very nice EBITDA margins. So I think to answer your question, that high velocity and discipline, tenacious execution will ensure that looking at a clean sheet approach, we are always looking at ways in which we can make a higher enterprise value for our overall Tenneco Group. And if that means moving more business to India quickly, we will do that. And this is happening already. I can tell you that, right?
Now, just the third-party audience, there's a push, but there's also it takes some time to test the product, validate the product, homologate the product. Now you're moving, let's say, the same product from Europe to India, and then it has to be validated, and then you have to check what the logistics and etc. So that takes a little bit of time.
But I'm just saying that from a fact of using India as an export hub, there's this tremendous drive from Western OEMs to push more and more business to India. So those two, the Tenneco internal need to achieve higher enterprise value that automatically puts India in a very favorable spot from the labor and arbitrage standpoint a nd secondly, OEMs, customers themselves pushing to say, "Hey, I want this out of India.
I want to have a supply chain diversification," which is not just cost, but also contingency planning from a supply chain standpoint, right? So all those will help our exports to go faster. I cannot tell you when it's going to happen, two years, three years. All I will say is that the velocity is there on both sides to happen from the internal Tenneco Group as well as the third-party OEMs.
Sure. Sure. Secondly, on the advanced-type technology systems, sir, you mentioned that all of the Indian OEMs are trying to go for more of a semi-active from a mechanical suspension point of view. So are there any tangible things that we can track, maybe RFQs or change in RFQs as a percentage, right? Let's say if there's an X number of RFQs which are for advanced-type semi-active technologies, where are they now? Is it a 2X or a 3X increase in RFQs? Are the OEMs also trying to track?
Jimmy, we can't hear you anymore.
Jimmy, sorry, but we are not able to hear you.
I'll answer this question anyway. I think, Jimmy, I got your question, right? I think what you're saying is, is it possible to get better RFQ visibility on the technology disruption that's happening, right? Look, the technology disruption has already set in motion. I won't take the name of the customer, but you can just YouTube this or Google it, and you'll know who's leading it from an Indian OEM standpoint. It's very clear. I think that disruption has already started. Already, conventional shock absorbers have given way to more frequency-dependent damping. That's already starting to become more transient as semi-active suspension started to take off, right? We're taking this very, very seriously. We want to localize this and bring this to the Indian OEMs as quickly as possible.
So I think all I would say in this is that all it takes is one Indian OEM to say, "You know what? I'm doing this." And their main marketing this is all about the ride quality, right? Ride quality, comfort, convenience. And that's the fact that we are making this the main differentiator for our end user, which is the car drivers and the passengers and so on. So for us, that itself means that all the other OEMs who are either fast followers or slow followers, they will have to do it. Otherwise, they will be left out. From a marketing perspective, you don't want to be the last remaining OEM that says, "I still sell basic shock absorbers from the 1990s or 2000s," right? So you have to kind of move with the times. And the global technology has already moved in that direction.
In China, for example, they've already moved to dynamic suspension. So I think that thing is going to get disrupted really fast. Whether we can give you exposure or not, we'll have to discuss that because a lot of these are confidential RFQs. But we'll tell you, I think whenever we book something that is new technology or, let's say, a disruption, we will make it appear through an order book announcement, maybe once every six months or so. Because these things, they have their own timelines in terms of getting the RFQs quoted, winning business, etc., etc., right? But we'll figure out a way to kind of, through our order book, to give you some understanding of what that is.
Thank you. Our next question comes from the line of Pradyumna Choudhary from JM Financial's Family Office. Please go ahead.
Yeah. Hi. Thanks for the opportunity. So if I look at your two segments, the growth in Clean Air and Powertrain Solutions was 3% below the industry. So that's actually slightly underperformed the industry. So what would be the reason for that? And what really is your growth expectation here? Would this segment also pick up, or it would largely grow in line with the industry?
Yeah. Yeah. Look, don't look at it just as a quarter, right? Look at the clean air part. We have to zoom out, right? We have to zoom out and look at the bigger picture. So there will be exports. There will be more growth happening in the near future. So it's more of a quarterly thing. And again, you have to remember that in some cases, because of this AC cabin requirement, right, many OEMs pulled ahead a lot of their volumes to Q1 because they wanted to sell as many vehicles as possible without the AC cabin. Because AC cabin means you have to pay another, I don't know, INR 60,000, 70,000, 80,000. So I think before that legislation came in, around July, August, a lot of the commercial truck OEMs pulled ahead.
So you'll notice that PAT probably did better in prior quarter than this one. So anyway, don't worry about it too much because you have to kind of zoom out and look at the bigger picture of the market itself. Yes, commercial truck is a little bit slower, and we are affected more by it because we are a bigger presence in commercial truck. But in clean air, our exposure on the passenger vehicle side is we don't have a very high market share, but we will be growing market share there as well in passenger vehicles. But because of the slowdown, or let's call it a lackluster performance in commercial trucks, that has affected our Q2 performance. But if you look at the H1 in totality, H1 is okay for commercial truck, clean air and power train, right?
So my suggestion would be zoom out always for our kind of business because we have long sales cycles, and usually one quarter doesn't tell the full story. Sometimes there's a lot of pull ahead. Sometimes there's a pushback. In this case, at commercial truck, there was a pull ahead because of the legislation coming in on the AC cabins for commercial trucks. Mind if you want to add something?
Okay. No, yeah, that's fine.
Okay.
All right. Thank you.
Thank you so much.
Thank you. Ladies and gentlemen, in the interest of the time, that was the last question for today. I would like to hand the conference over to you, passing for the closing comment. Thank you, and over to you, Rupali ma'am.
Thank you, Danish. That concludes the Q&A session. The recording of this call will be available shortly on the company's website. Thank you all for your participation. We really appreciate that and have a good evening, please.
Thank you, ma'am. Ladies and gentlemen, on behalf of Tenneco Clean Air India Limited, we thank you for joining today's conference call. This concludes this call. You may now disconnect your lines.