Bharat Forge Limited (500493) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Bharat Forge conference call hosted by HDFC Securities. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Aditya Makharia. Thank you and over to you, sir.

Hello, ladies and gentlemen. Welcome to the investor call by Bharat Forge to provide an update on the company's business in India and its overseas subsidiaries. We have the senior management of Bharat Forge, including the Chairman and Managing Director of Bharat Forge, Mr. Baba Kalyani. Over to you, team.

Good afternoon, ladies and gentlemen. This is Amit Kalyani. Welcome to our investor call, and thank you for joining us today. We have with us, as Aditya mentioned, our Chairman. We also have our senior management from Finance, Investor Relations, Sales and Marketing and Business Development. And we'll try to provide you an outlook and a current picture of what things are looking like and then take questions and answers. So first, I'd like to inform you that -- sorry, so first, I'd like to inform you that we have taken utmost precautions as far as safety of our employees and our surroundings are concerned. And as of date, all our employees are safe and healthy. And we have tried to distribute information and best practices on keeping healthy and keeping hygiene within their systems so that they don't get infected. All our plants in India have been shut down from Monday after the announcement by the Prime Minister on Sunday, and our operations abroad will shut down by Friday as well, depending on the situation in each potential or each specific geography. Most of our automotive customers have stopped production last week, especially in Europe first and then in the U.S. And most of them expect to resume operations by the middle of April. However, some of our customers, particularly those in the industrial space, such as Cummins and Caterpillar in the U.S., which are categorized as critical manufacturing and support companies because they manufacture power gen equipment and other equipment, which is used for critical and immediate response, are still operational. And we are in touch with them to ensure that between what we have in our supply chain and in warehouses, we meet all their demands adequately. In India, originally, we had contemplated to work till the end of the month to meet customer demand. But due to the call for a shutdown by the Prime Minister, we have -- had to stop production 8 days before we had originally planned. And therefore, the shipments for the month of March were not fully complete and will only be now completed once we resume. But we have planned this, along with our customers that between what they need, we are able to meet all their needs once they resume activity as well. The good news was that in the first 23 days of March, we saw a registration in the medium and heavy commercial vehicle sector of 38,000 vehicles in India. And we believe with that, pretty much the entire BS-IV inventory has been liquidated and sets a good stage for BS-VI introduction once the manufacturing resumes. Additionally, most governments are rolling out stimuli aimed at protecting jobs, livelihood and providing liquidity to all sectors of economy in order to sustain the economic activity once the lockdowns are eased. And we expect the same in India as well over some time, and this should provide some boost once we resume activities. As a company, we are very well placed in terms of liquidity. We have over INR 1,800 crores of cash on our balance sheet in India plus we have undrawn limits of more than INR 700 crores. We have no major CapEx plans in India at all, and we will see cash flow this year, next year as well. And originally, based on our business plan, we had planned for a 10% to 12% growth next year in India and some amount of growth outside of India as well. We are focused on fixing our subsidiaries. Our twofold actions for our subsidiaries, which were already underway was, a, reducing fixed costs and improving the overall product mix by moving more towards aluminum, which is for future platform. So that is unaffected with the current slowdown and downturn. I'd also like to thank and recognize all our senior and middle management executives who are working very effectively using Zoom and Webex and other platforms and working on strategic issues, tactical issues, innovation, including working with customers on any kind of problem solving or ideation or cost reduction measures or anything new that we can do because this is a time when you're not running on a treadmill and you have the time to do this. So I think with that being said, I'd like to hand over now to Q&A, and then -- maybe I'll hand over to our Chairman to make a few comments and then we can take your Q&A.

Thank you, Amit, and good afternoon, ladies and gentlemen. First of all, I think all of you and your families are all well, and we have taken this lockdown pretty seriously. And I think it's important. That is what we are doing with all our employees. We are trying to ensure that everybody is safe, their families are safe, both in India as well as outside India. I think that's one of the most important things. Second, as Amit has explained, our plant is shutdown from Monday. And I think, currently 3 weeks. So we hope to be back into operation by close to the middle of April. For us, this is not the first downturn that we have seen. I think we have seen many downturns. The last biggest one was 2008, '09 and then was 2011 in Europe. And in every downturn, I think we have come out much stronger. And we believe that in this downturn also, we will come out much stronger. We have developed many new strategies for growth and many new avenues for growth, some of them that we have discussed during our last meetings. And we are taking -- making use of this opportunity with more than a few hundred people in our company who are connected virtually and who are working on 4 important topics. First is new business development. So Subodh and his team, along with our plants and their engineering teams, are working with a virtual network and along with our technology and innovation center. The Kalyani Center for Technology and Innovation is recognized by the -- even by the government as a frontline science and technology R&D organization in this whole country. And we are working on some very innovative things to develop new products for our customers. Financially, we are reasonably -- we are very strong. I won't say reasonably, we are very strong. In India, we have net no debt. We have undrawn limits from the banks, and we expect that we will have continuing cash flow this year, next year and going forward. To me, this whole COVID-19 issue is more like a reset button for a quarter or 1.5 quarters. And I think if we were to look ourselves in the future backwards, we will realize that exactly like what happened in 2008 and '09, we were able to grow and become much stronger, something like that will happen again. And most important is our team led by Subodh and his group is in touch almost every day with every customer around the world and in India. And everybody recognizes at the customer end that Bharat Forge and its subsidiaries have a lot of capability and resilience. And therefore, I think they are talking to us in a very transparent manner in terms of what they wish to do in the future. I think this is all the things that I wanted to talk about. And COVID-19 has come as a bolt from the blue for everybody. And right now, the only thing I can say is we have the first priority, keep everybody safe. And I'm sure that when this problem is under control, we will all come back stronger and get back to business as usual, but even with much more horsepower.

So ladies and gentlemen, I think that's really all in terms of introduction. We'd be happy to take Q&A, and we will answer your questions as a team.

[Operator Instructions] The first question is from the line of Binay Singh from Morgan Stanley.

Binay, this side. Wish everybody good health. Thanks for arranging this call in between these tough times. My question is basically on the non-auto exports side. Do you see any sort of structural changes in your revenue mix because of the way -- because of the COVID and then the oil fracs, like you do have exposure to U.S. oil and gas sector, what is your -- what are the customers telling you on that segment? That is first question. The second is relating the same segment, like what percentage of your non-auto exports would you classify as critical, the segments which are still sort of running in this time period?

Let me try to answer that. First of all, I think it's very difficult to estimate today what the impact of COVID is going to be in the United States. If you look at the numbers, they are pretty frightening. But at the same time, the U.S. government has taken a pretty strong response in terms of what they're trying to do to solve the problem. So having said that, it's almost impossible to predict what's likely to happen in the oil and gas segment, what's likely to happen in the other segments. But seeing that companies like Caterpillar, companies like Cummins are still operating their plants based on the U.S. government approval, that's an area, obviously, is connected with infrastructure-related activity. And if you look at our nonautomotive business, I think, roughly 50% of that is connected with infrastructure-related activities and about 50% is in oil and gas type of activities. I think what we are also hearing from our customers in the oil fracs is the U.S. government wants oil independence with the United States. So we don't see that getting too much impacted.

See, also this whole funding that the U.S. government is rolling out, this $2 trillion of stimulus, I mean, you've heard them say that they will support critical industries.

Out of our total business, oil and gas is only about 6%, 7% of our business. It's not a very big piece.

So the one that is directly related to shale gas is, basically, I think, 6% to 7% of the stand-alone profit line?

Less than 6%. It's 5% to 6% of revenue.

The next question is from the line of Nishit Jalan from Axis Capital.

Sir, my question is, you highlighted in your initial remarks that company is debt-free and has lot of cash, which is obviously your biggest strength. A lot of players globally and in the domestic market would not have that. So just wanted to hear your thoughts as to what kind of market share gains you can see because some of the leveraged players globally and domestic market may not be able to survive this crisis or may kind of, b, become very weak after this crisis. So just wanted to understand your thoughts and maybe if you can highlight some of the names of your peers who you think are really leveraged and can get impacted more because of this crisis?

Yes. As a company, we don't want to talk about other companies. We can just tell you what are our thoughts and impressions, and I'll let our Chairman talk about it.

Yes. I think exactly what Amit said. I think what is -- what we are hearing from the customers and what we are hearing from the strategic side of the customers is that there are going to be strategic structural changes in the supply chain going forward. And I think these strategic changes in the supply chain would be beneficial to companies like Bharat Forge because of its power of technology, because of its financial strength and because of its capability for innovation. There are very few companies in our space in the whole world that have innovation capacity as much as we have. So I think we are pretty much well placed, but we will see once the system gets back to work.

The next question is from the line of Sahil Kedia from Bank of America.

I have 2 questions. One, before this issue happened, in the last call, Amit had mentioned that the expectation was that the U.S. class 8 market is likely to be down. Given that there is now an increasing risk of a recession, is there a worry that, that number becomes quite material, number one? Number two, as you mentioned that you have come out always stronger from the downturns, and in the last downturn, there was a big focus towards growing the nonautomotive business as a vertical. Are there similar kind of verticals that have been identified as potentially growth opportunities that you guys can think of?

Yes. Yes. We've been doing this for some time now. And I can tell you there are 3 verticals that we have identified, where a lot of work is happening. And we are also seeing a lot of traction. We were seeing a lot of traction till the COVID-19 came up. But even now, we're seeing a lot of traction. First is on the pass car side. So pass car, we continue to grow. And one of the reasons why we continue to grow in pass car is because most OEMs in the world do not want to invest anymore in making mechanical parts. So that creates a huge opportunity for companies like us, and we are growing in that business, especially in our Indian operations, exporting products to Europe and the United States and even other parts of the world, including even China, for that example. Second area where we are generating traction is aerospace. From 1 customer starting last year, we now have 4 customers, and we are increasing traction. And I think we have taken a good strategy there. It takes little more time in aerospace because of the process of approval because all aerospace components, especially live components are very safety critical. And everything has to happen in a highly defined manner with a lot of testing, et cetera. But the fact that from 1 customer, we have now moved to 4 customers is a pretty good, let's say, result from whatever we are doing there. So that's the second area. The third area is lightweight components, aluminum. This, if you see 5 years from now, will be one of the largest areas for growth as far as not only automotive but as far as automotive and even the industrial sector, I'm not talking about oil and gas. But a lot of sectors will move into aluminum. You'll be surprised as to amount of aluminum that will get used even in things like medical equipment coming forward with this COVID-19. So there's a lot of opportunity in the lightweighting sector. We have focused in this area, both in India as well as in our plants in Europe as well as what we are doing in the U.S. And we have -- the good thing there is, we have programs for vehicles that are coming out, '21, '22, '23. So this is not for existing products. This is all for new products that are having new designs and new platforms. So that's a good thing for us. And then the last one will be EV and hybrids, as and when that starts taking off here. There was a lot of traction happening late last year, but I think COVID-19 has kind of put a lot of cold water on it right now.

I think the whole focus has shifted towards how do we safeguard and protect people and everything else has gone into the background, but nonetheless.

That's right.

And for the first part of my question, how much now do you expect the U.S. class 8 market to decline? If I remember, you had said that your expectation was that CY '20 will be a decline. In the light of current things, what is your sense of where that number would be?

We have no idea right now what the number would be, but I think we had, last time, projected that FY '20 -- I mean, calendar year '20 will be somewhere in the 240,000 mark. As of now, many truck plants are closed. And I think a realistic explanation -- a realistic expectation would be 15 -- 10% to 15% lower than that.

All right. And sir, one last question, if I may. You said that you are increasingly focusing on passenger car products. We understand that, historically, those have been lower margin than the industrial and the kind of commercial vehicle products because of lower machining. In the programs that you are getting, are the margins of profitability or value add, however you want to think about it, is it comparable to your existing business better? How should we think about that?

Yes. First of all, we are only making critical components in pass car. We are not doing commodity parts at all. So -- second, we are doing completely finished parts, to a large extent. So we have margins which are as good as our normal margins, comparable.

Our margins will be only comparable.

The next question is from the line of Kapil Singh.

I wanted to know how are we thinking about resuming production? I mean, what are the steps we are taking to ensure that whenever the production resumes, we can do it in a safe manner. What are the learnings, if at all, from customers overseas, how are they doing it?

Well, we have had a lot of experience in this area even in 2008 when the financial downturn happened because we had shut down for more than a week at that time. And right now, what we have done is using all our learnings, using best practices that people operate outside India, we have roughly about 100, 150 key people in the plant even every day, looking after key installations, keeping everything running. I mean, one of the most important things in a plant like ours, when you have a 3-week shutdown, is to make sure that all your data and your machines that work on data are kept running every day. Otherwise, you will lose the data. And if you lose the data on your CNC machines and programming and everything, then it's a question of reprogramming hundreds of equipment, and that's very, very difficult. So people who don't do that will have a very difficult time to deal with this. So that's what we are doing. We are ensuring that all our data is secured, kept, machines run. I mean the data part of the machine runs every day, and everything is, let's say, rebooted and kept ready. The physical part is very simple.

Yes. And then on the resumption of people coming in, we have a protocol in place, which is what the government has indicated plus what WHO has mandated. So we will have screening and checks by -- in every shift, and we'll have separation of shifts and stuff like that so that there is no cross-contamination, et cetera.

Okay. And secondly, sir, wanted to check what kind of fixed costs do we have that we continue to incur when the plant is shutdown? What would be your fixed cost as a percentage of sales or in absolute terms?

Our finance -- we are working on that because we are doing a lot of cost reduction.

Amit, today the fixed cost basically is manpower. That's the largest element of cost because as per the government directive, you have to continue paying salaries at least till this lockdown period is over. So that's the biggest part of fixed cost. Everything else is very little compared to that.

The next question is from the line of Pramod Amthe from CIMB.

A couple of questions. One, what's your reading for how the user industry, that is, cars and trucks at OEMs will shape up post this crisis? Do you see some bailouts required, the way it happened in 2008? And hence, how are you placed to make a best use of it?

Pramod, are you talking about the U.S. or where?

No, the -- globally, I think, some companies are really asking for the help to support to come from, even in the European nations, for that, the car makers or...

Well, I think Europe and the United States have both announced that the government will fully support the manufacturing sector. They'll do whatever is required to keep the manufacturing sector alive.

I mean look at Germany's language, they called it a bazooka, okay? And Germans are very conservative people. For them to say stuff like that means they will do whatever it takes.

Well, I think -- I have no doubt in my mind that like the TARP funding that happened in 2008 for the automotive industry, now President Trump has announced a $2 trillion package. So a large part of that will also go for manufacturing industry to keep them alive and floating because that's what his entire election campaign is all about. And I think, in Europe, everybody is hell bent on keeping their manufacturing industry alive, at least in Germany. Now one would expect that in India, after the initial announcements that have been made, including today's, they will start focusing on the industrial side, but we'll wait and see what happens.

The reason to ask is even though GM and Ford got some benefit in the year of 2008 or '09. But 7, 8 years down the line, they continued to trickle down and they seems to have only come down in shape. So that was a big disruption which happened, which had a bearing for substantial years. So do you see even if the bailout happens, there is going -- the shape under which they were there before the COVID, that will change?

First of all, I don't agree with you because I think when the -- with the TARP bailout, GM, Ford, Chrysler did extremely well after the bailout. And I think the government got all its money back. GM and Chrysler. Ford didn't opt for a TARP bailout, okay? And if you look at the industry volumes, the industry volumes haven't declined. They have remained pretty stable.

I mean U.S. was still at 17 million, so that's a pretty high number.

So I don't think that's a correct reading of that. Matter of fact, TARP money was, from what I've -- whatever I have read, government was able to recover a large part of that TARP money plus something more.

I think, Pramod, the point is that the industry as a whole still is operating at a high level. 17 million is a very high level. There may have been market share changes within players, but I think, overall, the industry is still operating at a high level.

Sure. And the second one is, considering that you have been doing a good amount of work in EV space, both on your own and through some small acquisitions. With the way the funding can become challenging for some of the new startups in EVs, do you see more room for you to play through acquisitions post this crisis, and considering that you are relatively better off on the balance sheet now?

I don't think we are focusing on...

We are not going to be opportunistic. We will follow our strategy and do whatever it takes to make the longer-term picture happen. We are not going to be opportunistic because that doesn't -- it's not in our DNA, and it takes -- that's not a good approach.

Or the other way to ask is, are there any product gaps where you would like to build in this current scenario in the EV space?

Yes. That is exactly the ideation and infrastructure process that is going on.

The next question is from the line of Priya Ranjan from Antique.

One is on the strategic changes, which we have talked about in the supply chain. So how do we see if suppose some governments in U.S. or maybe some European countries ask you to start manufacturing some of the parts, which has -- which have been importing or exporting -- I mean, exporting from India, so how do you see that might be playing out?

First of all, we have manufacturing in Europe. We have manufacturing in the U.S. We are setting up a new facility in the U.S. to make aluminum components. So I think we are doing whatever we can to make this happen. Second, I don't believe any government is going to ask you to make something which can't be made there. So there are some types of components that simply can't be made there because there's no manpower and skills available in a country like the U.S. to make these things and not at a cost or a price with -- which is competitive. So there will always continue to be the kind of opportunities that we see today. The only thing I would say, which I said earlier, is, you're going to see a lot of restructuring of the supply chain. And stronger suppliers are going to come out winners out of this game than weaker suppliers because it's very difficult for OEMs to depend on weak suppliers just on pricing on this account. And I think there is going to be, overall, in my opinion, a shift, some sort of shift coming out of China into other parts of the world. And it's up to us as to how much advantage we can take out of this opportunity.

Okay. And in terms of the products or the segments where we are operating. So can we have some kind of numbers, how much is coming from China in the global supply chain?

That's -- I mean I don't have the numbers, but you can -- I mean, China has a huge amount of exports all over the world.

There are a lot of customers, maybe in other segments in industrial space, which we may not be addressing today in Europe and U.S., where there may be supplies coming from China. So these will be new opportunities that will open up for us.

So that's what I wanted to understand. How much is probably China catering to the same segment?

So we're -- China's exports are huge. I mean let's look at raw materials. China produces 100 million tonnes of steel a month. So that gets converted into products, into consumables, into all kinds of things. So the scale that they operate at is 5 to 10x the scale of India in any sector. Not all of it is exported, of course, but there is huge volume.

Sure. And lastly, on the -- I mean, on a stand-alone basis, we are very well capitalized. But how do we see in terms of the subsidiaries overall at the consol level in terms of the liquidity in the European operation or the U.S. operation?

The -- in the overseas subsidiaries, this is a difficult period, especially with the shutdown of the customers. But it's not a crisis period. I think we have put a good strategy in place of reducing our manpower and manpower-related costs and shifting to aluminum in a large way. And I think that is the right strategy as far as we are concerned. And we have -- if the COVID-19 hadn't happened, then our European subsidiaries, our overall overseas subsidiaries would have had positive cash flows and profits this year. So that's the situation. And I think all we're going to see is a reset of 3, 4, 5 months depending on how long this COVID-19 effect in Europe and North America happens. But in terms of strategy, we are very clear. If things get back to normal, let's say, by June, July, then I think we will be back to normal 12 months from there. We will achieve whatever we were planned -- we have planned to achieve this year.

If there are no more questions...

We have a few more. We have the next question from the line of Sonal Gupta from UBS.

Just wanted to understand, on the European part, what is your current exposure? I mean on your European subsidiaries, how much is CV, how much is PV really speaking right now?

Just 1 second. I think our CV is roughly about 60% and about 30% would be PV and 10% would be industrial and others.

Right. And just on, like -- I mean, like, clearly, while oil and gas has clearly shrunk for you last year significantly in terms of revenues. But I mean, one was thinking that maybe in a period of time, it will sort of come back. But still, in terms of -- so -- and we're hearing a lot of things in terms of the high-yield market and the funding drying up. So what is your outlook for oil and gas for the next 12 months?

See, our focus in oil and gas, if you look at the shale market, is largely on replacement parts. We are not getting into CapEx-related business.

CapEx is 1/4 of the...

So our business in oil and gas has been largely focused on parts that require replacements, like the pumps that are used for shale gas. And I think as long as oil or gas is coming out of the ground through shale fracking, these replacement parts will be required. Of course, if there was CapEx, then the quantum goes up like what happened 2.5 years ago. But we are clear that our focus is on the strategy of getting into more and more replacement-related components, which have an ongoing market.

We'll be able to take one last question. We'll take the last question from the line of Puneet Gulati from HSBC.

Just if you can talk a bit more on the changes that you are seeing in the structural supply chain. Is it more driven because of COVID? Or was it something that you saw happening because of the tax concessions also that came in last year?

Can you please repeat that? Sorry.

You talked about the structural changes which you expect to happen in the supply chain. I'm trying to listen, is it more driven by the recent COVID-19 events? Or is there more to it at industry level as well?

No. I think it is largely structural from the OEM side because as uncertainty increases, people want -- I mean, customers and OEMs want suppliers who can respond much faster, who can develop products much faster. If you look at every OEM today in the world, their biggest bottleneck is ability to develop and reengineer and revalidate new components. Now we are the only -- we are one of -- we are probably the only company in India in our business who has this capability, which has been certified by most OEMs. And this helps the OEMs to reduce their fixed cost. If you look at all companies, OEMs in Europe, they're all reducing manpower, they're reducing engineering manpower. The same thing is happening in the U.S. So anybody who can give them engineered products, who can do testing, who can do validation for them, who can do innovation for them and who can do it fast, they would prefer that. I mean a company like Tesla today wants suppliers who can -- from the time they give you a electronic data, they want components in 4 weeks on their table. So it's not something that everybody can do. And this is what is restructuring the supply chain systems around the world. And I think we are pretty well placed in that as far as the supply chain is -- and we've been working in this direction, not today. I mean the whole idea of setting up a tech center almost 12, 14 years ago was to create this capability. And we have created some amazing capabilities in our technology center. So I think we will use that very effectively to get more and more traction with our customers, get new customers and get new areas of business with existing customers. And that is the whole strategy that we are really applying.

Yes. That's undeniable. But did you see any change when China got hit with COVID-19? Did you see anybody talking about moving supply chains from there?

Yes, a lot -- I mean, a lot of it, but the problem was, by the time all this happened, even we got hit with COVID.

And so did the customers.

So did the customers.

This is a global inflection point.

I mean just to answer your question. We're a very large Tier 1 supplier in Europe. We are supplying products to China because of this. That was pre-COVID-19 story. The only thing I'd like to mention before we close is we have -- I mean, many of us in the supply business have a large impact on this quarter because suddenly the quarter was shut down 8, 10 days earlier. And people like us who export a lot of products, all our containers are stuck in the ports. And therefore, I think you should look at our Q4 and Q1 of next year together, and I think you will see pretty good results.

Any other questions?

Yes, we have one last question. We'll take the last question from the line of Ashwani Kumar from Nippon India Mutual Fund.

Sir, just wanted to understand, although the Finance Ministry currently is focused on the very basic thing, which is very critical, which they announced today. But let's say, scrapping, et cetera, where is it struck? Because in the fourth or fifth year of the -- this government and the first few years, we are at minus 3% industrial production, just prior to this event has broke out. So where is the scrapping and other stuff struck, sir? And will it make any difference at some point in time if it is around for the trucking business?

It's largely struck -- stuck Ashwani, in the system. And right now, ever since, let's say, last 2 weeks, no -- I mean, first of all, most of the ministries are working with skeletal manpower because everybody has been asked to stay home, so nobody is coming. Nothing is happening. Even meetings with stakeholders such as the automotive industry or the supply industry is all happening through video and video conferencing. I mean, to give you a simple example, Ministry of Defense is shut down, with nobody even coming to office there. It's an important ministry. But my gut feeling from whatever, let's say, little bit I know, this is pretty much on the cards, this has to happen. The question is, today, the priority is to deal with COVID-19. The priority is to deal with -- I mean, they're really worried that if this infection spread and we have some 50,000-odd infected people, we don't even have that many hospital beds in this country. We don't have ventilators. We don't have respirators. And look at -- in the rural part of India, I mean, there will be a catastrophe of a scale, which is -- which we have never seen before. So I think it is very right that the government's attention is put on this, at least for the next 2, 3 weeks before this incubation period of this virus is over.

And sir, when the China activity picks up, let's say, and there are, let's say, improvements in the demand, and they basically again might focus on infrastructure, although they are talking more of 5G this time versus the rail, which they did in the last 5 years, does it offer you an opportunity because if in Europe for some places, your competitors are working at a much lower capacity. So if China picks up, does it in any way help you in compensating for the decline in U.S. and Europe directly?

Well, to some extent, yes, but our exposure to China is not very large right now. We have deliberately -- we used to have 2 operating plants in China at one point in time. And we sold them and walked away from it because we thought it was a lot of waste of management effort and time and resources and not producing the right kind of return on investments. And that's why we shifted our focus to wherever we were. And I think that was right because we were able to grow our business in India during that period to a fairly good level. I think what we see happening in China right now is as the growth picks up, we have today some customers in China, European OEMs who operate in China, who are buying products from us, and that business will pick up. As far as 5G is concerned, yes, that is China's focus. And I think India doesn't have a electronics or a telecom industry to really do anything in that area. So I don't see much opportunities coming out of that. But I honestly don't see a big downturn in Europe on a continuing basis. I mean this will have an impact of 1 or 2 quarters, and that's about it. And I don't think that's too much time in the life of a company.

Sure, sure. And sir, just last thing, in India, they had just prior to 31st of December, they chalked out a big infrastructure plan, basically, which is, let's say, INR 2,000,000 crores per annum, et cetera. This might be a bit delayed because of the new priorities at this point in time. But in India, for example, railways, et cetera, if they are going from INR 400 -- let's say, INR 150,000 crores kind of CapEx to INR 400,000 crores in a 2, 3-year time frame, if they were to do it, does it offer you any new opportunities in Bharat Forge directly or indirectly?

Very large opportunities, which we're already working on. I mean all these areas of infrastructure that you've talked about, whether it's railways, even defense, even ports, we are working on all these opportunities. All right. Thank you, and be well, everybody.

Ladies and gentlemen, thank you for your time and interest in our company. And on behalf of our management, we wish you all good health, and please be safe, and we look forward to continuing our connection and conversation as we go ahead. Thank you very much for your time, and have a nice evening.

Thank you very much. On behalf of HDFC Securities, that concludes the conference. Thank you for joining us, ladies and gentlemen. You may now disconnect your lines.

Thank you.