Schaeffler India Limited (505790) Earnings Call Transcript & Summary

Ladies and gentlemen, welcome to the results call for Schaeffler India. Today, we have with us Mr. Kadam, our CEO for Schaeffler India Limited; and Mr. Satish Patel, Director of Finance and CFO, Schaeffler India. I now hand over the call to Mr. Kadam, who will take you through a short presentation on our results. And over to you, Mr. Kadam.

Thank you. Thank you, Vijay, and good afternoon, and a very warm welcome to all of you on the call. And I would like to take you through the presentation on our quarter 4 performance. I am right now on Slide #2 which is talking about the economy and the market. I would like to cover 3 broad areas: first would be the economy and the market; second would be the key highlights; third would be our quarter 4 performance highlights. On the economy and the market, as you all know, the Indian economy went through a turbulent time due to the pandemic, and the GDP has been -- it's predicted that the GDP would contract to about 8.3% in this current year 2020. While it is on a recovery path with the un-lockdown, the last 2 quarters have shown a resurgence in some of the sectors of industry, thereby prompting to a positive upturn in the GDP growth. While this was happening, one of the challenges, obviously, that was seen was on the inflation rate, which was an irritant, which was well above the 5 percentage point mark consistently, as you can see in the graph below, month after month, and it was clearly evident that actions were needed to this effect. Looking at the index of industrial production too, while it went down into the negative region, well, during the lockdown period, but post the un-lockdown, you have seen that recovery happening there as well. Obviously, this was coming on the back of some of the automotive and the infrastructure industries which received the fillip from the policies and the initiatives taken by the government of India to create a stimulus and propel the economy back on track. Also, you would see that the pent-up demand by the consumers, which was there was also beginning to play its role in enabling some recovery in the quarter 3 and the quarter 4 of the economy. Look at the core industries growth and here too you find a similar trend that after a period of almost 6 months, it began to bounce back and towards the last quarter, the core industry growth rates began to show almost a breakeven point. While all this was going on, the government did undertake a lot of initiatives; Atmanirbhar Bharat obviously being one of the notable ones; the new education policy that was rolled out; the farmer's bill, which is still under dispute; and of course, more rigor in the Make in India campaign. All this kind of came together to enable many sectors in the industry to kind of start to get back on track and not to be left behind the recent union budget announcement on the vehicle scrappage policy only goes to show that the right buttons are being pressed to ensure that the demand creation and growth in the economy happens, and look forward to now '21 being a much better year in terms of the GDP growth rate. I move to the next slide, wherein I would like to touch and talk upon some of the sectors, how did they perform last year. And the interesting thing here is, let me start with the cement production, riding on the back of the push and the drive, which the government is doing on the infrastructure industry with the number of kilometers of road laying going up, close to 70 kilometers per day of road laying. This sector has started to now see investments come in as well, and particularly, the point to note here is when you look at the last 3 months, the quarter of Q4 and compare that with the previous quarter, it is still below 5%. But however, it is -- the trajectory is in the right direction. And at an annualized level, the cement production in the country was down 15%. But when you look at the steel, it had a much better story to tell. In the last quarter, particularly of Q4 of 2020, it outgrew by 4% when compared to Q4 of 2019, clearly indicating that the infrastructure industry is driving as well as the automotive industry, which is back on track, began to drive the steel production in the country back on track. One other sector, which is very relevant is the coal production in the country. And obviously, that has been on a consistent rise since September last year. And effectively, when you see, this growth too has been phenomenal. At an annualized level, the core production did grow 1% over last year 2019. The energy generation, electricity generation was another one wherein we saw some positive story scripted in the last quarter, with 8.3% better energy production in the country in the last quarter when compared to Q4 of 2019. Although at an annualized level, we are still down minus 1.6%. However, the indicators were all there that this is moving in the right direction, too. What is interesting is what you see on the coming on the next slide, and that's the phenomenal growth story scripted by the auto sector with a very quick recovery. Let me start by first commenting on the two- and three-wheeler sector. What you see on this slide here is the dip during the lockdowns of April, May, June, and then they started -- sector started to come back on track. However, this was a sector which was the most hardest. Around April-May, the sector was down close to 60% when compared to last year, and the recovery was still far away. So at an annualized level, it is still at 25% below 2019. However, when you compare the last quarter of 2020, the performance has definitely been better than the Q4 2019 performance with about 6% better performance. Passenger vehicle has been one of the stellar performers in the last quarter of last year. And as you can see here, at an annualized level, while it was 24% down compared to 2019, the October, November, December quarter posted almost 17.7% higher production of the passenger vehicles in the country compared to Q4 of 2019, clearly pointing to an upswing here. Look at the tractors. Tractor has been consistently going up. And as you can see here, at an annualized level probably the only sector which has shown the strongest growth over the previous year, which is 10% more than the 2019 story. And the last quarter performance also has been very high compared to the previous year's last quarter at almost close to 62%. Having said that, I would like to now touch on the key highlights of what -- before getting into the key highlights, let me talk a little bit about our effort against the COVID pandemic and how we sailed through the pandemic in Schaeffler amongst our plants and offices. As you all know, these were testing and trying times. So with the situation that we were in, like any other company, we got into the act of putting in considerable measures in terms of bringing awareness, in terms of training, in terms of safety protocols, in terms of adopting to work-from-home practices, in terms of cluster deployments, even in terms of putting in processes to enable contact tracing of employees, also to ensure that we interact with our customers and our neighboring companies to know what are the best practices and who is practicing better than us, and we were able to benchmark with them and implement robust safety protocols within our plants and offices. And I'm happy to say that at the end of 2020, when I -- if I were to just for the sake of comparison, look at the number of infected COVID-confirmed cases within Schaeffler India versus the national average on any parameter, be it the number of confirmed cases or be it in the recovery rate or in the fatality rate, we are -- our Schaeffler India's performance has been much, much better than the national average. And I take pride in saying that it is entirely due to the splendid teamwork put in by the Schaeffler team here. Well, as I said, the hallmark of this entire thing was the tremendous teamwork, which was demonstrated, and also, at the same time, the market recovering back, this was a parameter that was tested, and we came out with flying colors. Moving on, I would like to touch upon "We pioneer motion" campaign. Now what is this? I'm sure in the last 2 weeks, you must have been seeing a lot of print media advertisements pertaining to Schaeffler with this campaign -- new campaign, which we call "We pioneer motion." Now Schaeffler is a strong company. We prove this every day wherever we operate in whichever part of the world. We show that we are innovative and we can develop technologies that are in demand all over the world. We also offer products and services with which we inspire our customers today and all the contents in due course. Furthermore, we also have moved forward and brought out our own roadmap 2025, which is our strategy, and exactly in line with that, our corporate purpose and our claim and our vision being that we are an automotive and an industrial supplier of choice that leads through innovation, agility and efficiency. Now the vision follows our corporate purpose, why does Schaeffler exist? It exists because we pioneer motion to advance how the world moves. That is our purpose. It is in our DNA. That is what makes us special, and that is the reason why we have also adopted or claim we call, "We pioneer motion." And it goes without saying that for generations, we have been moving the world with our innovative components, systems and service. But we just cannot leave that at status quo. So we are working every day to make motion even better. And having stood for innovation spirit and have exceptional ideas and thinking outside the box, we always love to go one step further. So the color we represent is green. We are green and green makes the difference. In order to convey this message, so we have developed this image campaign, which will significantly increase our brand awareness globally and even in India and strengthen and expand our position in the markets that we are active. Now this, we believe, will make us stronger going forward. So what would that bring Schaeffler? It would obviously improve the image of Schaeffler in a sustainable manner, strengthen the Schaeffler brand. We believe that this campaign promotes and supports the implementation of our strategy as well. It also engages the business partners and employees in Schaeffler Group and also enhance employer attractiveness and particularly in terms of transformation, which we, at Schaeffler, are going through in India as well. Added to this, I would like to talk about some of the new products and wins that we have encountered in the last quarter. One of them is what you see on the left is the industrial product. During the lockdown period, we were establishing the manufacturing setup called the Quick Center to enable us to offer the linear guidance, which is a very prestigious and a valuable product required for the machine tool industry. Now earlier to this, the product used to be imported from our plants in Germany with long lead times and long waiting periods. Now with the center that we have set up in our plant in Baroda, we will be able to offer these products to our customers in India in the shortest possible time and also with customized sizes required by the customer. Having said this, incidentally, we officially launched this in September last year. And within a month or so, we began to see the order books opening up. And I must say that we have received tremendous response for this product in the Indian market. The other success story which I would like to talk about is on the automotive side of the business, and we have been successful in taking some of our prestigious projects that we were working with our esteemed customers to a closure, and one of the product happens to be the DCT damper, which had a lot of design contents, we customized in specific of Schaeffler design, which we are able to offer that value to the customers in the Indian market. Also, around the engine and transmission system, there have been the chain and belt transmission systems as well as some clutch release systems that we have been specifically designing and working with our customers to address the BS-VI requirement, which we have been able to start business and supply as well. Also in my last investor call, I did share that we have launched Schaeffler TruPower as a brand in our automotive aftermarket range of products and the first product that was rolled out under the Schaeffler TruPower was the lubricants engine oils. And I must say that in the last quarter of 2020, we have received a tremendous response to this range of product from the market and with very strong order books that have started to come in. With all this, I would like to now talk on the next slide a little bit on the highlights of what were the good things that we did and what happened. Obviously, one of the key positive highlights has been the way we manage the COVID situation with an all-round focus on health and safety of our employees, be it in our plants, be it in the offices or be it in the remote locations that our employees were located. The second was, since the economy went through a lockdown, it was -- clearly gave us an opportunity to sit down and identify countermeasures which would address how do we play the game once the economy starts to open up and come back on track. And I must say this has been an immense satisfaction because the countermeasures that we had identified, be it on the generation of sales revenue, be it on the strict cost discipline and any other kind of overhead cost cuttings or be it on taking the projects that were in the pipeline to a closure, all 3 have enabled us to put up a very strong financial performance in the last quarter. Also, there -- we did see a good tailwind coming from the market with the pent-up demand that was there, which also enabled us to accelerate faster and capitalize on the demand that was coming in the marketplace. Of course, stellar performance we have seen from the automotive division coming on the backdrop of a very strong demand, which I will share with you in my next slides. Of course, we did face some headwinds during the last quarter of last year. One of them happened to be the inflation and the increase in the steel prices that we began to face in addition to the intermittent supply breaks that we saw as a result of which some concerns were there, and they still continue to be a concern going into 2021. One other headwind that we faced was on the delay in consignments coming from overseas, mainly due to rigid safety protocols in terms of sanitization due to the pandemic of the shipping lanes as well as handling more consignments at ports caused a delay of close to 3 weeks to 4 weeks, and this to put a strain on our operations as such. Having said that, what you see on the right side of the slide is the performance, how did we end up Q4 of last year. As you can see, we posted INR 1,273.8 crores of sales growth in Q4. That happens to be a 13.7% better performance than the immediate preceding quarter Q3 of 2020 and a 22.9% better sales performance compared to Q4 of 2019. So coming to the financials, the EBIT, we were able to deliver, INR 180.6 crores in terms of EBIT, and that was 25 -- 27.5% better than the preceding quarter Q3 and 61.8% better than Q4 of 2019. The profit after tax, again, a sound performance there, INR 141.7 crores delivered and that happens to be 24.8% better than Q3 and 67.5% better than Q4 of 2019. One of the hallmark areas was performance on the free cash flow. We were able to generate a strong cash flow in the fourth quarter with INR 348.4 crores coming into the system and which was 66.5% a better cash flow than the Q3 of the same year 2020 and 18.6% better than Q4 of 2019. Moving on, I would like to now cover the Q4 performance highlights. So as you can see on the chart, what you see is our Q4 performance on the sales total revenue of INR 1,273.8 crores has been one of the strongest performance in the last 8 quarters. And having said that, as I already said, over the preceding quarter, this was a 13.7% better performance and over the Q4 of 2019 was about 22.9% better performance. Obviously, this came on the backdrop of the recovery from the automotive sector, followed by some of the sectors in the industrial market as well as our own intelligent and agile utilization of the capacity, the plant capacity which was available to us, we were able to post a strong operational performance there. So if one were to look at how did we fare between the Q4 and the Q3 and where did the revenue come from, obviously, the automotive was one of the strongest contributors, as you can see, with INR 118 crores coming out of the automotive sectors, industrial contributing marginally better than the previous quarter and exports too marginally contributing to the top line as such. And like always, I have always said that we have a pretty balanced portfolio of business in India. And as you can see here, our automotive part of the business represents about 48%, the industrial represents about 42%, and we do have 10% of exports as well end of 2020. Compared between the mobility and the rotating components of the static sector, 70% -- 79% of our revenue comes from the mobility sector and the other 21% comes from the other sectors, which we talked about. So moving on, the next slide, where I talk about the earning quality. We had a significant improvement in Q4, as I already mentioned, due to; one, the market recovery and coming back; and two, because of the very, very robust countermeasures that we have put in place and coupled with some of the projects that we were working upon, which were realized into business in the last quarter of 2020. So when you look at the EBIT, as you can see here, we were able to develop -- deliver in the last quarter, Q4 of 2020, a robust EBIT margin of 14.2%, which at an annualized level for the year 2020 stands at 9.2%. When you look at, in value terms, how did this EBIT reconcile, as I said, the strong recovery from the market coupled with the fact that we were able to take a lot of projects to closure we were realizing into business, brought in about INR 163 crores from the revenue alone. We did have some adverse impact coming in from material cost, which was a saving there, and then we also had employee cost where we decided to pay off some of the parts of the variable part of the salary during the last quarter. And with that, we ended the year with INR 180.6 crores in the quarter for EBIT, as you can see, which stands at 14.2%. So the profit after tax, as you see here, compared to 2019, which was at an annualized level 8.4%, 2020 we closed the year at 7.7%. And as you can see, the last quarter, Q4 of 2020 profit after tax was also a strong performance at INR 141.7 crores, which annualized to was INR 291 crores that was delivered in 2020. I move to the next slide, which talks a little bit about the working capital ratio and the CapEx and the free cash flow as well. The working capital was one of the pressure points for us during the year. While we started off in the second quarter of last year 2020, the working capital went up due to underutilization and due to inventory buildup and also due to our over dues going up. However, towards the end of the quarter, as you can see, Q4, we were -- had a much better situation on the inventory and the receivables management, which enabled us to get the working capital as a percentage of sales down to 17%, both for the quarter and at an annualized level as such. A look at our CapEx. And as I had mentioned in my last investor call that during the second quarter and the third quarter, we had cut down our investments but it was not a stop in investments, it was only a deferment of the investments. As you can see here, in the last quarter of 2020, we have already spent about INR 66.8 crores in our CapEx plans. Now going forward, a few of the projects, which we did take to defer it into 2021, however, many -- most of the projects we -- are on schedule -- our expansion plans are on schedule. And as you can see, at an annualized level, the CapEx spend to sales was at 5.6% which is lower, obviously, when compared to 2019, but that is attributed to the 2 months of lockdown that we encountered and as a result of which we have to stop activity. Look at the free cash flow, and we have one of the stellar performance, as I mentioned earlier. And for the full year, we were able to generate INR 457.2 crores of cash compared to 2019, which stood at INR 247 crores of cash. Having said that, I would move to the performance indicators. And on the next slide, wherein we talked about, as I already mentioned, our Q4 performance has been a strong performance in the last 8 quarters. With a revenue growth of 22.9% compared to the same quarter of 2019, and quarter-on-quarter being at 13.7% better. On the EBITDA margin, also, we were able to deliver 18.2% EBITDA margin in the last quarter of 2020 compared that with Q3, which is at 17% or Q4 of 2019, which stood at 14.9%. Now the EBIT margin, obviously at 14.2%, I already shared this. And when you look at it, it has again been a strong evolution from where we were in Q4 at 10.8% in 2019. With this, the earnings before tax, as you can see, stands at 15% margin at INR 191 crores in the last quarter of 2020, compared that with Q4 2019, was 12% EBIT -- EBT margin and with INR 124 crores. And when you look at an annualized level, of course, the percentages are lower. As you can see, the EBITDA remains at 14.4% for the full year, which was almost at the same level of 14.8% in 2019. The EBIT margin stands at 9.2% when compared to 11.2% of last year, and the EBT stands at 10.6% compared to 12.3% of last year. I already talked about the profit after tax. As you can see here, at an annualized level, we stood at 7.7% as against 8.4% on the previous year. All in all, a strong performance if the demand driven by the demand revival that happened and also realization of many of our projects and operational efficiencies, which we had planned. And the good thing was the countermeasures that we set up to achieve, we have put in a robust review process, and I'm happy to say that we have delivered and achieved whatever we set out to achieve in terms of our countermeasures. I'll come to the last slide, where we talk about the conclusion and outlook. Yes, it has been one of the refounding performances in the quarter. The market did help us to a large extent as well, plus, as I said, a countermeasures, which topped both on the sales performance side, on the successful realization into business of our projects in the pipeline, also a balanced portfolio between the automotive and industrial, that do help us to quickly recover the situation and continue to leverage the strong and deep connect, that we -- engagement that we have with our customers, which also enabled us to build a strong order book from the automotive customers as well. Not to mention that TruPower range of lubricants, which has received a tremendous response in the marketplace with strong order books coming in again, and of course, the demand uptick that we have seen in some of the sectors in the industrial sectors like the wind, the distribution aftermarket, the off-road sector as well as the two-wheelers. With this, we are optimistic, and we want to remain optimistic and continue to stay ahead, and we will continue to focus on being agile, being innovative and being efficient. With that, I come to the end of my presentation. Thank you.

[Operator Instructions] The first question is from the line of Nishit Jalan from Axis Capital.

Congratulations on very, very strong performance. Sir, my first question is on -- if you can give some color on performance across mobility segments within passenger, two-wheeler, CVs. Just wanted to get a sense of which are the segments where you are significantly outperforming industry because of the increase in content per vehicle or because of new product introductions that you would have done.

Before I get into the sectors, I would like to talk a little bit about the applications. As you know, Schaeffler as a brand, we are very strong with our product portfolio in the engine application and the transmission applications. And having said that, so be it the passenger vehicles or be it the light commercial vehicles, we do enjoy a strong presence in the engine and the transmission applications. So with this, we did have a lot of projects in the pipeline as well when the transition in each sectors happened from the BS-IV to BS-VI. And as I did share in my past investor call as well, the projects were coming into culmination resulting into business and which we have seen the business realizations happening. So I would say that both in the passenger vehicle segment and in the light commercial vehicle segments, we have seen strong growth in our businesses because of the products portfolio and the strong presence that we enjoy in these applications.

Sir, possible to give any numbers for segments or at least on the replacement side or our key segments like passenger vehicle as to what was the revenue growth on a Y-o-Y basis for the quarter, for annual, whatever way you feel comfortable?

Well, I have shown you that our portfolio, as such, is about 48% automotive and 42% industrial. But within the automotive for me to go deeper, to share at this point in time, I'm a little handicapped, Mr. Jalan.

Sure, sir. No problem. Sir, my second question is on the margin front. We are seeing significant cost increases happening. So just wanted to get a sense with regards to your OEM relationships, both on the auto and industrial side, how has been the pass-through to the customers? And on the replacement side, have you taken any price increase to upset those cost pressures?

Let me split the question into 2 parts. Let me take the latter part of the question first. On the aftermarket and the distribution side, yes, we did do some price corrections last year, which has also contributed to the positive development in our bottom line performance, as you can see. Coming back to the challenges that we face, yes, the material costs began to go up in the last quarter of last year. But we did not feel so much of an impact in the last quarter, fundamentally because we were already having inventories, which tided over. However, this year, we recently see that the material cost inflations have become much challenge to deal with, particularly on steel as a product.

But sir, do you think that you'd be able to maintain the margins and get price increases from the customers because we have seen a significant improvement in our EBITDA margins in this quarter as well.

Well, when you look at the extent of the inflation in the steel prices that have happened, they are abnormally high. So this is something we cannot fully absorb within our operational efficiency improvements and cost cuttings, whatever we do. So we will definitely be exploring the options of approaching customers to raise the price levels to cover the cost -- input cost increases that are happening. We also look forward to what the government would do in this inflationary situation. The main reason being because the rationale and the logic behind the increases are still not visible to us. However -- and the increases are abnormally high as well. So we believe that, yes, it is a challenge, and we will -- we see no options but to seek out and see to raise the price levels to cover those input cost increases that are coming our way.

Sir, my third and last question is on the CapEx front. I just wanted to understand how should we look at CapEx in the next few years? And if you can classify or segmentize the CapEx between expansionary CapEx or on the localization front because that's also another factor that we are working upon. I just wanted to understand how should we look at CapEx between expansion and localization as well?

Okay. You want to take, Satish?

Yes. So let me take this question. Satish Patel here. As far as our CapEx spent is concerned, we have been consistent last couple of years, and a large chunk of our CapEx has been spent towards the capacity expansion. This year also, the CapEx outgo that we have actually shown also in the presentation, over 70% -- 75% approximately goes for capacity expansion. So a large chunk of the CapEx is towards capacity expansion. But at the same time, we have also earmarked certain CapEx for the rationalization and replacement because all the plants are not at the same age and lot many sort of machines require overhauling and the replacement but those also are linked with the latest technology and the sort of linked to certain sort of capacity contributions because of the enhanced rationalization of those replacements as well. So yes, I confirm that our CapEx is mainly towards the capacity expansions.

Also, if I may add here, when you look at our localization content as well, in terms of percentage, we have actually increased our localization content close to 75.5 percentage points vis-à-vis is which was at 72% last year, the year 2019, I mean. So with that clear indication that the investments are coming in the region of CapEx, capacity expansions and will continue to pursue that route.

Okay. Sir, so that means the CapEx will remain around INR 3 billion, INR 3.5 billion range on an annual and absolute basis for the next couple of years, right?

Yes, not billion, million.

Million.

The next question is from the line of Shyam Sundar Sriram from Sundaram Mutual Fund.

A very strong operating performance this quarter and continuing performance there, sir. My first question is on the content journey that we started post the BS-VI. So we have seen, once again, a very good revenue performance, along with underlying industry being very supportive in terms of higher production levels per se. Just wanted to check, you have highlighted new products like the DCT damper, engine chain, clutch release systems, et cetera. So last quarter, you highlighted the average content per vehicle was around say INR 3,600 and we were on this journey to touch somewhere around the INR 4,700 mark per se. So have we added any new content for new customers per se in this quarter as well? If you can share your thoughts on that, that would be very helpful to understand, sir.

And yes, we acknowledge that a host of products have got added to the portfolio for the BS-VI range. Some of them -- a couple of them I did show on the slide. Apart from that, we have added the hydraulic lash adjusters. We have added the overrunning alternator pulley, also some variable cam-timing mechanism system, then some valve-train systems as well, some, idler pulleys as well. So there have been a spate of products that we have brought into the portfolio for the gasoline engines, mainly to address the BS-VI requirements. And as I had shared in the past as well, the content per vehicle, which was at EUR 33 per vehicle in the year 2018, in 2020, we are at EUR 38, and we believe that we will continue to increase this content per vehicle with further product portfolio that we are building up in the pipeline to continue to add more value products to our customers.

Understood, sir. And very congratulations on that, sir. Sir, these, just to understand, are very strong operating performance as well. So that -- our pricing for these products, is it right to assume that we are -- we can also get better pricing because these products would have otherwise been imported, therefore, our overall pricing would have also improved because of the consent addition? Is that a fair understanding per se just to make sense of our EBITDA performance therein?

Yes, you partly answered your question, Shyam, that while we started off with some of the products to be imported and given to our customers, parallelly, we did -- we started the CapEx plans, which Satish talked about, also covers the automotive part of the requirements. And our localization will continue and further enable us to become more cost competitive rightfully. The only question is the volumes as they pick up, only then we do have a case to continue to build the investments in this country, which I expect to see with this kind of recovery and the growth rates should continue to happen.

The next question is from the line of Sandeep Tulsiyan from JM Financial.

My first question is pertaining to the railway segment, it has been around 10% to 11% of our overall sales. If you can give some more color about how the performance was in the past year, by what percentage has it increased or declined because rolling stock orders were deferred? And within railways, how much is freight versus passenger? And how much is metro? If you could give a broad outline to understand your portfolio there?

Railway as a sector is an important sector for us. And yes, last year, the number of projects were put on hold, fundamentally because of the lockdown and even in post un-lockdown as well, we saw a slower recovery in the railway sector. So if you were to look at last year's performance, I must say we kind of remained status quo on the railway part of the business. However, when you look at the first budget -- 1st of February budget and the kind of announcements that the government made in terms of launching a spate of projects to stimulate the railway growth story in India, particularly on the dedicated freight corridors, both the east to west and the north to south, we believe that we definitely have a strong game to play here, and we do have a strong product line, the Class K, which is under validation right now, the testing and validation. So we believe that, yes, the railway is an important sector. We do have the product portfolio with us. Also, what is interesting is the emergence of the government talking about some Metro Light as well as the intra-city trains that are going to come up. So with this, we see a plethora of opportunities in the railway. We do have the portfolio, and we will continue to focus and develop and also invest. We are in the investment route to bring in investments for the -- to roll products into India more and more as well.

Just to add 1 clarification that as far as railway business contribution in our total shelf is concerned, that is about 5%. However, if you talk about only industrial business, that is about 10%.

Got it. Understood. And sir, second question is pertaining to the aftermarket piece of our business. If you could also give us some more color as to how that piece performed in the past financial year? And where is the reform as a percentage of our auto and as a percentage of industrial, we did share that because it used to be 20% of auto and, say, 35% of industrial base in the past. So has those percentages changed material in the previous year?

If you were to see the aftermarket part of our business, that is both the automotive aftermarket and the industrial aftermarket, both put together certainly, we have seen some kind of I should say a consolidation that we have done there. In terms of automotive aftermarket, especially with the launch of new products, we have seen definite growth and improvement there. On the industrial aftermarket, yes, we have not grown as much as we wanted it to grow. There has been marginal reductions there in terms of the growth there, fundamentally because of the surging demands and catering to the OEM part of this sector. So -- but that is something that we will be addressing soon coming into this year. We have started to fix that to get more traction on the industrial aftermarket part of the business.

On an overall basis, we would have still grown in the past financial year?

Yes.