Samvardhana Motherson International Limited (517334) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Q1 FY '27 Results Conference Call hosted by Samvardhana Motherson International Limited. [Operator Instructions] Please note this conference is being recorded. I now hand the conference over to Mr. Laksh Vaaman Sehgal from Motherson. Thank you, and over to you, sir.

Thank you, and good evening, everyone, and thank you for joining us for the Q1 FY '27 earnings call of Samvardhana Motherson International Limited. We are pleased to report our highest ever quarterly revenue in Q1 FY '27, driven by robust performance across our businesses. Revenue grew by 17% year-on-year and 3% sequentially during the quarter. It is worth noting that historically, Q1 has always seen a sequential decline in revenue over Q4. This year, however, Q1 revenues came in higher than Q4 FY '26, underscoring the strength of the momentum across our businesses. The growth was driven by healthy performance across all our core businesses as well as our emerging businesses, particularly those built using our demo capabilities, namely consumer electronics and aerospace. Within wire harness, there was strong momentum in India, combined with the recovery in the North American commercial vehicle business, which drove 31% year-on-year revenue growth. The [indiscernible] and polymer, vision systems as well as integrated assemblies businesses grew in line with the industry. Our consumer electronics business continues to scale meaningfully. The third facility remains on track for commissioning in the third quarter of FY '27 and will bring added upstream integration capabilities. CapEx for this third facility is expected to be approximately INR 65 billion spread over a period of 3 years, building manufacturing capacity of 40 million units annually at full scale. Our Aerospace business delivered revenue growth of over 20% year-on-year, while the order book grew by more than 17% since FY '26 end, giving us strong visibility on future growth. EBITDA grew by 26% during the quarter, ahead of revenue growth, with EBITDA margin improving by 60 basis points year-on-year. This improvement was primarily driven by the modules and polymer business, wherein the restructuring initiatives undertaken over the last 1.5 years to breathe with the market helped absorb input cost inflation and deliver year-on-year margin improvement. Normalized PAT grew by 55% in the first quarter of FY '27, driven by the scale up across our businesses. There was no one-off items impacting PAT this quarter. Adjusted for the normalization in the base quarter, the Q1 FY '27 PAT grew 102% on a reported basis. These results were delivered against a genuine tough external business environment, which makes this performance all the more meaningful. Globally, the light vehicle market and industry degrew by 1.8% year-on-year during the quarter, led by weaknesses in China, the largest automotive market, which degrew by 3.1%. South Asia, led by India, was a clear bright spot and continue to see strong growth. Planned European OEM launches are expected to support industry growth in the quarters and years ahead. On the commercial vehicle side, a recovery in North American market has sustained the CV industry's growth momentum, which is estimated to have grown 5.4% year-on-year. The outlook for the CV industry remains favorable through FY '27. That said, certain developments did weigh on the business during the quarter. Copper prices continued to rise up 4% sequentially, following increases of 13% and 15% sequentially in the third quarter of FY '26 and the fourth quarter of FY '26, respectively. On a year-on-year basis, copper prices are now up 40%, creating near-term input cost pressures as these costs are typically passed on to the customers with a lag of 1 or 2 quarters. Geopolitically driven crude price inflation also pushed polymer prices in Germany up by 55% year-on-year and 66% sequentially. This primarily affected our MPP and Vision Systems divisions. Nonetheless, both divisions held flat to improving margins aided by ongoing cost optimization initiatives. We continue to work with our customers to pass on these higher input costs. Freight costs were similarly affected with the World Container Index up 40% year-on-year and 83% sequentially. In certain instances, we incurred additional costs to ensure timely delivery to our customers. Detailed divisional performance and the underlying drivers of revenue and profitability are covered on Slide 15 to 18 of the presentation. With that, I will now hand over to our CFO, Gandharv, to take you through the key highlights on capital allocation, our balance sheet and recent M&A activity. Gandharv?

Thank you, Vaaman. We continue to invest heavily in CapEx during the quarter to build future revenue streams. We spent INR 1,614 crores on CapEx in the first quarter, in line with our full year guidance of INR 6,000 crores, plus/minus 10%. This represented 52% of the quarter's EBITDA invested across growth, backward integration and maintenance CapEx and should support both business expansion and margin improvement going forward. 3 plants were operational during the quarter, and we currently have 13 facilities at various stages of development, of which 10 are expected to become operational during the course of this year. Despite this continued investment in growth, we further improved our leverage position. Our leverage ratio is now at an all-time low of 0.8x, well within our financial policy ceiling of 2.5x and our internal aspiration of staying below 1.5x. This reflects the financial discipline we continue to maintain across the organization. We also made further progress on the inorganic growth front during the quarter. We announced the acquisition of Shenzhen Auto Cruise, a company primarily engaged in interior and exterior digital vision and monitoring systems. This acquisition broadens Motherson's technology offering and competitiveness in interior and exterior digital vision systems and strengthen our position in next-generation mobility. Key products include camera monitoring system, full display mirrors, 350-degree around view monitoring system, driver monitoring system and Dash 10 with video recording. We also completed the acquisition of Nexon Auto Electric [indiscernible] in July. Nexon AUto Electric acquisition increases our addressable market through the addition of passenger vehicle and commercial vehicle wiring harness capabilities globally, improves our relationship with large OEMs and opens up cross-selling possibilities. Key products include EV and EV wiring harness, specialty harness, safety components and body harness. [indiscernible] marks our third acquisition of our Honda San asset. It will be housed under a new vertical within our emerging businesses called vehicle systems with a product range spanning exhaust systems, brake systems and others. This acquisition expands our product portfolio and unlocks new growth opportunities for the company. Overall, this was a very good quarter for the company. We remain very positive on the company's growth prospects through increasing content per vehicle deepening relationships with our OEM partners and serving new opportunities across powertrains. We will continue to leverage our demo capabilities to scale up our nonautomotive businesses. As always, our focus remains on financial. Thank you, and we will now open the floor for questions.

[Operator Instructions] Our first question comes from the line of Binay Singh with Morgan Stanley.

Two questions. One on the existing business. We are adding 2 companies this quarter, kata and Exxon. Could you remind us again about the annualized run rate and the margin that these businesses are at? And the second one on consumer electronics, the CapEx number that we've disclosed, as I understand, it's only for what Motherson will do INR 65 billion. What is the full CapEx of this project? Like is the other partner also bringing in capital? And any sort of trajectory on how to think about revenue potential from this INR 40 million annual capacity?

[indiscernible] you can take the first one on the sales and what we have for the acquisitions on Nexon [indiscernible] and electronics one.

Sure. Thanks for your question. Both of these businesses put together, [indiscernible] and Nex should contribute almost close to $2 billion to our top line on annualized basis. Over the midterm, the margin profile should broadly reflect the comparable margins in this particular industry. And as you know, in general, our aspiration is that all of our businesses, whether the recently acquired businesses or the existing businesses should meet our internal expectation of 40% growth. And we believe that over the period, all the acquisitions should contribute and move in that direction. On the second part of the question as Vaaman I'll probably -- I'll defer to him. Vaaman, over to you.

Yes, for the consumer electronics business, our joint venture partner does have 10%. So they are bringing 10% of the equity. They do have an opportunity to go up to 49% by the moment they're holding that 10%. So we are [indiscernible] 80% of the equity. The complete I think CapEx requirement would be finished in this year and it will ramp very close to the [indiscernible] facilities to be ready. We will have a formal inauguration in a couple of months as well for that facilities. It will be the largest facility in Motherson so a historic moment for us [indiscernible] that facilities [indiscernible] that we would ramp. And I request for another 2 quarters for you to really see the impact of that and what sort of revenue run rate that will come. It does ramp much faster unlike the automotive business, which ramps as the customer program launches and it takes about 2 years to really get to the height of the program. There you see a much faster launch that will happen in the next couple of months. These orders are also currently in negotiation and you can imagine that [indiscernible] does not have large -- such long order tails. It happens more in the same year itself. So all that is happening as we speak and I think you will see that impact in the next couple of quarters as these plants launch. There could be a quarter here and there. But like I said, we are pretty excited in the next 2 quarters. It will launch in a very meaningful way.

Just one follow-up on the first question. So even Nexon and wiring harness, is it now closer to our EBITDA margin of 11% also?

See, as of now, not necessarily the newly acquired businesses are meeting the comparable industry benchmark. But as we have done in several of the acquisition over the period, the objective is to transform and we believe that the new acquisition, including Nexon and [indiscernible], we should be able to transform over the period and improve their margin profile in times to come.

Just add on that, look, I think these are meaningful and strategic acquisitions for us. The size and scale of our wire harness business is, of course, much larger than what we have acquired from Nexon. So we are very much excited about the possibilities of clubbing together our purchasing and driving synergies together, which we have done, if you have seen with how we did with NWSI, [indiscernible]. So I'm sure that the wire harness team is extremely excited about this opportunity. [indiscernible] brings in completely new products for us. So it perhaps will take slightly longer as we get more comfortable and understand how to drive more synergies with this. But again, opening up new customers, opening up new locations for this business and bringing in vital capability to increase our product portfolio that we can bring to all the other customers as well. Of course, that takes a little bit of time, but that should grow up nicely. So we're very excited about these 2 acquisitions.

The next question comes from the line of Gunjan Prithyani with Bank of America.

Just a quick follow-up again on the consumer electronics. Looking for a bit more clarity, there was this 26 billion that you called out earlier in terms of investment. So this 40 billion. The 65 billion is on top of that. So just trying to understand the cumulative business is 65 billion plus 26 billion, that 26 billion is already done. Is that fair to assume? And what would be the cumulative units that you've called out 40 billion for third plant? Is there a cumulative number for the business that you can share on the consumer electronics?

Vaaman, you want me to clarify that?

Yes, please [indiscernible] I'll add on.

So thanks a lot for your question. The overall CapEx, including what we have already incurred in this facility, including GF 1, GF 2 and GF 3 should be around INR 7,500 crores. As of now, we have more or less incurred 1/3 of it, 1/3 of INR 7,500 crores and balance is expected to be incurred between -- in the next 2 to 3 years. As far as the third plant capacity is concerned, it should be around 40 million units annually at full capacity, and this will be achieved over the period. And as Vaaman mentioned in the response to the first question, we are trying our best to commission this facility later in the current calendar year. I hope I have clarified, but happy to attend your follow-up question.

Okay. No, that's helpful. Okay. And the second question that I had was on the margins. There's a fair bit of benefit that we are getting from the restructuring program or optimization program. Is there a way you can give us some sense of what was the commodity or metal -- I mean, all these pressures that you're seeing, what was that headwind in this quarter and the offset that we saw from the restructuring program? And how do we think -- is there a way that we can think through more pressure in quarter 2? Is there more to come through in terms of the headwind on the RM side? So some color on that margins, if you can focus a bit more on the modules because that's where the restructuring bit was?

Sure. I'll see how I can help that. Look, the restructuring on the European footprint if you look at what we've been saying for the last few years, we have acquired a lot of businesses as well, a lot of businesses the customer requested us to look into. So we actually added a lot of footprint in Europe with the acquisitions that we had done. The restructuring was done so that to keep in line with these new facilities that we had acquired. And of course, some of the [indiscernible] assets in this facilities were not running at full capacity, so to speak because the EVs did not come out as expected by a lot of these suppliers who invested heavily. So restructuring the footprint required that we were able to drive some of these units that were not driving -- producing at full capacity to merge them, combine them and also, of course, trim some headcount at these locations and focus and combine more locations together so that the locations are now able to sustain and add decent capacity levels with headroom for future growth as we do believe that the new programs that the customers are now launching the new state of EVs definitely have a much better response from the customers. And it's evident that the ones didn't perform as expected. So this headcount restructuring in tune with the market as our customers were also rebalancing their lines. You saw a lot of news coming from the general OEMs that they were also reducing was done in line with that and to make our footprint more optimized. Right now, we believe, of course, that it is at a decent level. Of course, there are new programs that are still coming. Customers are still asking us to do more acquisitions. We're constantly looking at balancing this whole thing up. There is also an opportunity perhaps to do more in this financial year, which we are focusing on to try to be the most efficient producer. But of course, the commodity pressures, which are happening, those are negotiations that we continue to have with the customers, which are out of our control and we try to get, of course, compensation if it goes either which way. And of course, in the last couple of quarters, it's only been going in a negative manner. So there is a lag for us to be able to go and claim that. But I think the reduction in the headcount and the optimization of the footprint, you're seeing those benefits which are meaningful that even with such high impact of the commodity prices and logistics for all the issues that are happening in the world that we've been able to maintain, and of course, improve some of our performance in the margins. And again, as a company, we're not really focused on just the EBITDA margins. We believe that the whole program should deliver 40% ROCE that takes time. So of course, margins have a contribution to that. So we are tracking it. But overall, the idea is to have an extremely efficient footprint in the region, I mean that is profitable and then, of course, get back the lost contribution for the margin pressures towards the end of the year when we see the entire volume play out of the customers of these programs. I hope that was there. I mean there's a tremendous amount of programs, customers, locations. So to get into final details of all of that only happens towards the end of the year as we go customer by customer, program by program, and we're in the middle of a lot of launches that are happening right now as well. So really difficult to quantify it in the first quarter.

Got it. That's pretty useful color. I mean just a follow-up, is there any way to break up the benefit that we have in terms of just to understand how much were we able to offset? Or maybe if you can give us a color on how much was the commodity impact, RM impact in this quarter, just to think through how do we think about the normalized margin, if there is a number that you guys can share?

Ma'am, I would love to give you a number. The thing is that each customers have different grades of engineered plastics. So these do not move exactly in line with just how crude prices move. Some moves higher, some moves lower, some are fairly static. And as you know, we're not making one product. It's not just a bumper. It's dashboards, [indiscernible], addings, mirrors. There is hundreds of different products that we are supplying. So each program is actually what we look at towards, again, the end of the year only with the whole year going through because some quarters, there might be lower pickup, but then that picks up later in the quarter. So we don't have that kind of a mechanism where we're doing it every month or something like that. I think with the wire harness for copper, that's a more direct one because it's a direct commodity. But with the plastics and what we have in Europe, it's a lot more complicated and the relationship is not exactly 1:1. So that happens only towards the end of the year. That's why you see most of our Q4 are the ones where we have the strongest kind of performance because all the nettings and all of that kind of happened in that quarter. And the volume also is enough time for the customer to understand that it's a meaningful impact over the year, and we're not going back every single month for something like that. Of course, if the impact is -- there is something that is really out of the extraordinary in terms of some of the logistics costs because of what happened with straight moves and stuff like that, we look for immediate support on things like that. But mostly, these volume compensations and what happens on commodity price happens -- it doesn't happen in every month or so. Usually there is a little bit of lag in time that the customer needs and also some time for them to catch up on their models. So we'll really be able to talk more about that in Q4 and what kind of numbers that kind of impacted. I think that will be the right time to discuss that. I think what you should take out is, look, even in probably one of the most difficult quarters in terms of fluctuation of commodity prices and logistics and what's happening in the world, we were able to hold margins, improve margins, which means that the other actions which we have taken to rightsize our operations has really worked and helped us in our favor. And again, the customers really appreciating us because there are not so many strong suppliers with a strong balance sheet and performance like us. And hence, we're also getting a lot more growth opportunities. And we have just announced 2 more acquisitions and our balance sheet is again one of the strongest point. So I think you should really take a lot of strength from the kind of report that we are making that we're in good shape.

The next question comes from the line of Amyn Pirani with JPMorgan.

Two questions. One related to the quarter on wiring harness. Now you mentioned that obviously, copper prices went up and margins were impacted by the denominator effect and the pass-through. But if I look at the numbers, honestly, it doesn't look like there has been any impact. And I just wonder how much higher the margins could have been if the commodity was not there. So are there any -- like you have spoken at length about the polymer, is there any structural cost changes, any mix changes which are helping the underlying margins for wiring harness because given the commodity and the copper inflation, a 30 basis points margin impact is, at least in our view, not really anything material. So what's going on there, if you could help us?

Pankaj sir, do you want to take that and I can support whether or...

I can explain that. So basically, while copper has gone up, there is an impact, as we've explained that on an overall basis, we have a pass-through, which has a lag of 3 to 6 months. If you see quarter-on-quarter, there's a 4%, 5% impact if you look at a global thing. So the impact has been very, very high in India because the impact is also having the currency factor with the rupee depreciation. However, globally, if you look at it, the impact is not so much because if we are in Europe, the impact has been in dollar terms, but in euro terms has been much less. Secondly, on an overall basis, some of the facilities globally, since we are in so many geographies and there are multiple businesses, some of them which were not doing so well in the first quarter of last year have shared better. And the U.S. market has also started to rise. So that has also given us a very improved performance compared to the last year.

If I could add, I think this is really fantastic performance by the wire harness team. In the last few years, the China volumes were significantly impacted and the U.S. also see slow down. So we really worked hard at, again, chipping away at the cost base that we have for these businesses. And now that those markets are coming back, I think you're seeing that the impact of what happened in India with the wage rate increases and the copper hitting harder here. Overall, it was fairly muted because of the diversification, the cost improvement actions taken by the team. So really, we are really quite impressed with how hard the team has worked during these tough times. And those steps which were taken in the last couple of years for the international wiring harness business is really helping us to show this kind of a performance. So it was well done by the team.

Yes. I mean a very good performance here as well. My second question is slightly more medium term. In your automotive business, obviously, Europe is a large part of revenues across segments and even China is an important part. How should we think about the Chinese OEM engagement in China because in China also, I think most of your engagement is with European OEMs. So is there an engagement happening with Chinese OEMs in China? And the medium-term question is with respect to Europe because as these Chinese are already gaining market share in Europe and planning to put up facilities in Europe, do you think that there will be engagement for you with Chinese OEMs? How should we think about the medium-term opportunity here? Because it looks like the European OEMs at the margin are losing some share to this new competition?

Look, our entire business in China is balanced well. I think, of course, we started the business in China with the international OEMs, but the local market is also transitioning more towards the local OEMs, which we are also reflecting in our business. Of course, we are being extremely picky because we are very focused on the top line and bottom line. So we do not chase top line where we cannot make the profitability margins. So we have seen a lot of the local Chinese OEMs also been added to our product mix in China. However, we still are the largest share of the business with the international OEMs with the local JV partnerships in China, which I think is still holding on and doing well. Yes, the numbers have come down, and we have seen a little bit of shift towards that the Chinese OEMs, which our businesses are also making that shift. Now because we already have those good relationships with those local Chinese OEMs that we have over time and selectively built, I think that gives us good strength for us as these businesses -- as these OEMs move to Europe and other locations. We do -- we've already been visited by them. We already have those relationships with them. And we're also discussing supplies with them. So Motherson is, as you know, an independent supplier. We supply to all OEMs. So wherever we do see that we could make the returns as a profitable business, we will surely supply. And I think we're probably one of the best place because of our international presence, because of our local presence in China, our numerous local Chinese JV partners, which we have a very strong relationship with. So wherever these OEMs are going outside, we're definitely getting the opportunity to supply to them first because we're already supplying to them in China. But like I said, I think when you're talking about market share loss and things like that for the OEMs, I would be careful and look at the numbers a little bit more in detail going on over there. And the situation is not as bad. I think the international OEMs are, of course, holding ground in their regions, and we're seeing some OEMs also have growth with their new program launches that are competing head on with the EV launches of the Chinese OEMs. So -- and like I said, for us, the more customers there are, the more opportunities for us to supply. So for us, we don't really -- we are fairly balanced, and we will continue to grow even with the Chinese OEMs that are coming into Europe because of our deep relationships already established with them in the local market.

The next question comes from the line of Kapil Singh with Nomura.

The question is a bit strategic in nature. Just wanted to understand there are several new areas which are throwing up substantial opportunities, for example, robotics or industrial automation, AI-related areas or semiconductors. So which of these areas are of interest for you or you are studying? And do you think there is a match in terms of ability for Motherson to tap those opportunities?

Great question. Answer is all of them. Look, we haven't really spoken about some of the other businesses because we are in building block of these businesses because these are new growth opportunities. And again, with our demos, the design, engineering, manufacturing, assembly, logistics framework and core competence that we have developed at Motherson. We are being looked at many of these companies that are looking for meaningful partnerships, of course, in India, but globally also to be able to take advantage of the progress that we have in the operational excellence of manufacturing and be able to supply to them. So we are definitely doing stuff in semiconductor. We are supplying already to some of the players in that field, of course, in the B2B kind of segment for manufacturing and supporting there and their ambitions in India and in their countries. So there is some opportunities there, which we will again come back to once it reaches a size of scale. That is currently being reflected in a small way in the numbers that you are seeing. But again, I'm really positive about what we're going to be doing in the semiconductor. You will also hear more about potential joint ventures that we are discussing with at the moment. Of course, I cannot disclose until they are signed, but we are very much a JV specialist. So with these partners that are looking to, again, expand in India, we become a partner of choice with our track record on that. I'm also really glad to tell you that we already have won small orders for actually supporting [indiscernible] production. Again, I cannot really disclose too much on that because as you know, the market right now is extremely niche and only growing, but we have already targeted those kind of customers and to bring new solutions from our product portfolio to be able to supply to that. Again, the numbers are extremely small right now. But I think, again, as this business grows, we are setting ourselves and sowing the seeds to be in a great position to be able to supply to these businesses because if you look at some of the volume projections, they're absolutely mind-boggling. But again, we cannot comment on any of that right now because it really hasn't happened. So we will wait for that to happen. But we are positioning ourselves that if these businesses do take off in the future, we are well positioned to take advantage and supply from our complete solution suite in terms of plastics, electronics, wire harness, everything that is required in these businesses to be able to go after them. And our own use of robotics is also really increasing. We have our own company inside called [indiscernible], which has been some stellar work to be able to help manufacturing and automation drive that we are putting in all our facilities globally. And our strategy of producing locally, source locally, produce locally, supply locally. Now with AI, automation, the labor arbitrage and everything really becomes really miniscule because if you're able to really automate and bring all of these kind of cost synergies or drive, you can really be competitive in any location because now with logistics costs being so high and so much volatility in currencies and logistics, I think local production is being preferred everywhere by a lot of our customers. So that really gives us upper hand to be able to supply, again, our demo capabilities to these customers for all bunch of different things, everything that means manufacturing, and we're really going after these businesses to get to 108, you will see that some of these things will help us to get there.

It's very exciting to hear about. A few of the questions on consumer electronics. Just wanted to know what is our current capacity and the utilization level?

So it's -- again, I can't tell you too much about those numbers. The current 2 facilities are a fraction of what the new facility is going to be at. And these were just to prove it out that we could do it, and we have experience because this is the largest facility in Motherson Group. So you can understand the size and scale of this, the factory is the size of 3 football fields in a row. So in that sense, the first 2 facilities were just prototypes and I think small batch production just with the process. It's a very -- it's a 17-stage process to get the glass products that we do. So highly technical, requires a lot of engineering, a lot of getting used to and the scrap rates and everything are like even a small fraction one is a meaningful impact. So to really get it right to understand the chemistry, to understand how to deal with glass, extremely fragile, scratches very, very easily and gets completely rejected. So very different to what we've been doing in some of the other products portfolio. So again, I think you guys have to be just a little bit more patient with us. I think 2 quarters, you will see -- you will see that. And like I said, we can give you a volume kind of growth, but what kind of revenues and all that generate depends on the programs, it depends on the future, depends on what we finally win, which is all happening as we speak. So please just be a little bit more patient. I know we've kept you guys waiting for some of this, but please believe me, it's worth it. It's going to be great for our company to be able to upstream into this new business and create something a complete new line of business for the group that will be meaningful. And we will share a lot of these things with you in a couple of quarters as we ourselves learn and understand how this business is fully ramped up and how it goes.

Okay. And just lastly on emerging businesses, because it involves a lot of new businesses and probably we don't understand it so well. So what I'm noticing is that the margins, at least on a quarter-on-quarter basis have been moving up and down a lot. So can you just help us understand what is causing this? Is there some kind of seasonality here we should keep in mind? Or is the mix changing? Just any color here to help understand this will be helpful.

Yes. Look, and I think, [indiscernible] can support me. If you look in the emerging businesses, we are clubbing a lot of different businesses together right now because they're all at the infancy stage. There are facilities that are ramping up. There are new programs that are launching over there. And again, once these become meaningful size, we will bifurcate them so that you will get a more detailed picture on, for example, consumer electronics itself, we will look to see -- to give you a lot more clarity because that is obviously one of our largest facilities with the CapEx, et cetera. So right now, you see some of that clubbing effort, which is happening with some of those emerging businesses all coming together to give you a more consolidated view. And like I said, we are in the middle of ramp-ups, new facilities that have come to support what the orders are going to come. But I think again, in coming quarters, you will see a lot more detailed view of that. But you can see that there's tremendous amount of growth there, a lot of the electronics piece that we are doing in consumer electronics, not just with this facility of glass, but also other capabilities that we are building for what we want to do with SMT lines and things like that. We have a lot of use of PCBs ourselves. So there are a lot of things that we are thinking and we are trying out ourselves, which is there. But again, I think, in a couple of quarters, by the end of this year, you will see a lot more clarity on that as some of these things come up to full swing, and we are kind of fully ready to present to you what we are doing in some of these new growth areas.

[Operator Instructions] The next question comes from the line of Raghunandhan N. L. with Nuvama Research.