Schaeffler India Limited (505790) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Schaeffler India Limited Q3 CY '23 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Ms. Gauri. Thank you, and over to you, ma'am.

Good afternoon, everyone. Welcome to Schaeffler India Limited's earnings conference call for the third quarter and 9 months ended 30th September 2023. We have with us from the management, Mr. Harsha Kadam, our Managing Director and Chief Executive Officer; and Mr. Satish Patel, our Director of Finance and Chief Financial Officer. Mr. Kadam will first take us through a short presentation on the results, after which we can open the floor for questions. Thank you, and over to you, Mr. Kadam.

Hello. Good afternoon. A warm welcome to this earnings call of Q3 and 9 months 2023. Satish?

Yes. Hello. Good afternoon. Satish Patel here. Welcome to this earnings call today. Thank you.

I would like to now take you through's a brief presentation for the next few minutes and then we can get into the usual questions and answers. Let me start with going on to Slide #1. I would like to touch upon briefly on the economy and the industry. A little light, I would like to show up on the business highlights for the third quarter as well as for the 9 months ending 2023. And then I would like to move on to the last chapter, which is on financial highlights. So I move to Slide #3 on the economy and the indicators. And as you can see on the slide, India's performance in terms of GDP growth rate have been pretty robust. The provision of Q2 numbers that we have is around 7.8. Rightfully, all the segment growth are indicating for a strong growth in the country's GDP. Some of the pointers to that affect are sectors such as steel, cement as well as mining and coal production are all in double-digit growth rates. I'll talk about the automotive production in the country, the commercial vehicles as well as being on a strong growth trajectory with the double-digit growth rate. So we anticipate that the succeeding quarters as well has strong growth rate in terms of GDP. The dampener what we see for increase in the inflation rates, that is cropping up. The Reserve Bank of India is still expecting continuing the further inflation -- inflationary trend growth. Talk about the industry production and you'll find that there's been consistently robust performance in terms growth rates, particularly the August provisional results are indicating for an index of industrial production to be around in the range of 10%, 10.3%. That said, I move on to the Slide #4, which talks about some sectorial performances, starting with the industrial sector, I would like to show light upon the cement production in the country. As you can see over last year same period, year-to-date growth has been in the range of 9%. Talk about steel production has been in range of around 14%. Coal has been again in the double-digit range at 11.5%, and electricity generation has been in the range of around 3% to 4% growth rate. So the industrial sectors have -- seemed to have done better. I will talk a little bit about the wind sector coming later because we are seeing some recovery in the wind segment, particularly on the back of the improved export business for our wind customers that's coming back. I'll move to Slide #5 and would like to talk a little bit about the automotive sector performance. The 2- and 3-wheelers have remained flat over a 9-month period as you can see. This quarter was expected for the 2-wheeler sector to bounce back in a much robust manner. Well, we will be able to comment on it once the numbers come in. But when you look at the other sectors, the passenger vehicle, obviously, has posted strong growth again over last year with 8.6% growth. Commercial vehicles too have posted a reasonable 5% growth. Tractors again have been languishing. And as we can see, the numbers month-on-month, tractor production in the country has been at the lower level when compared to the same tenure last year as well. So that said, some sectors, we have seen a mixed bag of improvements and upticks in the demand coming up will be for one, the infrastructure industry pushing up the raw material sector. Steel, cement, they are pushing it up forward. We still have not seen so much traction on the tractor segment and the 2-wheeler still continues to remain flat. I'd like to move now to the business highlights, and let me start with Slide #7. And for the third quarter, we have been able to show sustained performance in terms of the top line as well as the bottom line. Fundamentally, on the back of the Automotive Technologies, the growth that we have been able to -- continuing to play the game there well and recovering some of the businesses, which I already talked about in the Industrial for one being the wind as well as the railways -- I mean, for the raw material sector, which has helped us to continue on the growth trajectory. Also, we have been able to sustain our focus on the earnings quality, and we have been able to -- in spite of some of the headwinds that we faced on some of the sector demand, we have been able to sustain our earnings performance, which I will talk in a while. Where we did see some flattening of demand is on our own export businesses where the focus has been right now to see how we will mitigate and we have some countermeasures in place to try and recover the lost opportunities in our export businesses. And this is obviously coming because of the slowing demand due to the economic as well as the geopolitical situation in Europe. That said, when you look at the third quarter performance in terms of our sales growth, we have been able to post a 5.2% better sales than the same period last year and 1% or almost flat growth compared to the previous preceding quarter. And we have closed the quarter with INR 1,843 crores in terms of sales revenue. Look at the EBIT margin, and we have been able to sustain 16% EBIT margin, which is the same level as it was last year as well, bringing INR 293 crores profits into the company. And that leads to a profit after tax of INR 235 crores, with the resulting profit after tax margin to 12.7% and we're at the same level as last year, which was 13%. One of the areas that we have been able to demonstrate a strong performance, we will be generating more cash and bringing cash into the company. So we have been able to bring in the first quarter INR 172 crores in terms of cash. When compared to the last year same period, you will find that it has been one strong performance in terms of free cash flow with a 57.6% better than the same period last year. I move to the next slide, on Slide 8, talk a little bit about some of the new business wins in the quarter. When I look at the Automotive Technologies space, we have been able to garner quite a lot of wins in the commercial vehicle space, some of it's in the passenger vehicle space as well. And the product portfolio definitely attributing to some products which are into the next generation of technology, which is the hybrid technology. So we have the planetary shaft gears. We have the heavy duty clutches for commercial vehicles as well coming in. So our focus to continue to generate new businesses continues. And this quarter too, we have been pretty successful in taking a lot of such new product lines that we will get to a closure. That said, even our Automotive Aftermarket space, we have been expanding our market coverage for the traded products that we have launched as well as some of the new products that we have added into the market in terms of the BS-VI portfolio. It could be the FEAD, the front-end auxiliary drive, or the timing kits, or for that matter, the tapered roller bearings that go into the passenger vehicle segment as well. So we have consistently worked on expanding our reach in the marketplace and that will really make the desired results. Look at the Industrial division performance. And there again, a number of new business wins in the Industrial automation sector, in the railway sector as well as some of it in the 2-wheeler sector that we have been able to gain new businesses, bringing in a variety of portfolio, as we can see, in terms of the planetary gearboxes that we make or the linear guides that we make and the insulation-coated bearing that we manufacture in India for the railways sector. So our focus continues to remain on new businesses as we move forward. I now would like to take you to Slide #10, wherein I was going to talk about the revenue from operations and the business mix. So as we can see quarter-on-quarter, we have been consistently growing. Q3 was one of the quarters where our revenue growth was kind of flat at the same level as the preceding quarter. However, when you compare the revenue growth over the same period last year, we have grown at about 5.2%. So where is this coming from? And as I said earlier, all the businesses have contributed to this growth story successfully. So we have INR 559 million, which is coming in from the Automotive Technologies space, INR 172 million coming from the Automotive Aftermarket space and whooping INR 787 million coming in from the Industrial space, all in all. And I did also mention the slackening of demand in our export business, and you see that is reflected in the number. So while the rest of the 3 domestic segments were positive, we have a lower growth story to tell. And we were down almost INR 600 million in the export business. All in all, resulting to INR 1,848 crores, which is a 5.2% better than the same quarter period last year. So with that, we have been able to sustain the growth momentum in the revenues. And our business mix too has shown a little shift as our export businesses has come down a bit in this quarter. We can see the contribution to the total revenue of export is down to 12%. We have the Automotive Technologies at 42% and Automotive Aftermarket, which has remained at 9%, Industrial getting in a little more share. With the successful wins of new businesses, we have moved to 37% as such. I would like to now draw your attention to the right-hand side of the...

Ladies and gentlemen, the line for the management is disconnected. Please stay connected while we rejoin them. Ladies and gentlemen, we have the line for the management reconnected. Sir, please go ahead.

Hello. Sorry for that glitch and inconvenience part. So I was on Slide #10, and I thought I'd draw your attention to the 9 months performance. And as we can see, for the 9-month performance, except for the Industrial segment, Industrial business and the exports, both the Automotive Technologies and the Automotive Aftermarket have posted pretty strong double-digit growth rate compared to the 9-month period last year. Industrial, as you all know, we had a very weak demand from the wind sector in the first half of the year, which we see is now coming back gradually. So we expect the Industrial definitely to improve going forward. Exports, at this point in time, we'll have to wait and watch. With the situations that are developing in the western part of the world, we'll have to see how the demand pans out. So very difficult to predict at this point in time the demand scenario going forward. That said, I move to Slide #11, and I would like to talk about the earnings quality. And as we can see for the quarter 3, we have been able to sustain a strong performance in spite of the lower revenue growth rates that came into the quarter. So we ended the quarter Q3 with INR 293 crores, bringing into the EBIT -- resulting in an EBIT margin of 15.9%, which is a clear 6.4% growth over the previous year same period. Now this has come, obviously, from a strong improvement in our gross margin and that's something we continue to sustain. The volume drop impact has been kind of negative in terms of profitability overall, though the exports definitely could have brought in better margins. When you look at the profit after tax, again, we have been able to bring INR 235 crores for the quarter in the profit after tax, and that has resulted in a 9.1% better profit margins coming in compared to the same period last year. Now that said, at the 9-month period also, if you see the profit after tax, we are in the range of 13%, which is the same that it was last year as well. I move to the next slide, Slide #12, wherein I would like to throw light on the working capital management. And what you see here for the 9-month period is working capital to -- as a percentage to sales remain in the range of 18% to 19%, which is the optimum level of working capital that we want to keep it up to ensure better serviceability to the customers as well. When we talk about the CapEx and the investments that we make, as you can see, in the third quarter, we have been able to continue with our investments. We have invested in the third quarter around INR 157 crores. That is taking the percentage contribution to sales from a level of 7.2% to 7.6% when compared to the preceding quarter. So that said, the free cash flow was one of the good performances in this quarter. As we can see, we have been able to keep the focus on our receivables as well as overdues, and we have been able to rake in INR 172 crores into the books for the quarter. And this has been a big change compared to the same period, 137% better than the last year same quarter period. So free cash flow generation would continue to remain a key focus area and better working capital management is something that will stay. Our CapEx remains in line with our strategic framework, and we will continue to keep doing that. I move to Slide #13, which throws more light on the key indicators in terms of the performance. As I already said, for the quarter, we closed the quarter with a revenue of INR 1,848 crores with a revenue growth of 5.2% over the same period last year and quarter-on-quarter almost flat at 1%. The EBITDA margin do remains at 18.9% compared to the same period last year, which was around 19%. And profit after tax margin, as you can see, at 12.7% while it was 12.9% -- 12.3% in the same period last year. Now that said, I already talked about the free cash flow. All in all, with the headwinds that we did face in terms of the export businesses and some sluggish demand in the tractor segment, we have continued to keep the focus on our countermeasures with our projects sustained 16 wherein a number of projects that we have been driving to grow the top line and also improve the bottom line, we continue to keep the focus on that and we have been able to sustain these numbers. I move to Slide #14. And in summary, I would like to touch upon the performance for the quarter was mainly supported by continued growth in the domestic business what we do in India here. While on the export side, we did have challenges, but the domestic business we have been able to do better. The quality of earnings, we continue to sustain, again, as I already mentioned, with a clear focus and drive on a number of actions that we have put in place in terms of countermeasures, whether it is in cost management or playing with the mix. In the domestic market, we continue to keep the focus and we have sustained that. We will definitely continue to invest in capacity expansion. And as this is a long-term strategy for us and the current situation on slowing export demand, what we see is only an interim situation, and we hope that the situation is quickly going to recover, and so we'll continue to invest as planned in our strategy. That said, the way forward for us being, we still believe that the optimistic growth story in India, strong demand situations. We see recoveries on many of these sectors and many sectors doing well on the government initiatives on infrastructure growth and that's helping us as well. We do have some challenges on the exports as well as some sluggish demand from some specific segments within the automotive industry. But I guess with the countermeasures that we are putting in place, we should be able to sustain the performances going forward as well. So with that, I come to the end of the presentation. Back to you.

[Operator Instructions] We take the first question from the line of Mr. Mukesh Saraf from Avendus Spark.

My first question is on the export sales. We've seen exports decline 20-odd percent this quarter. While you did kind of mention that there are certain global factors and the weakness that's impacting exports. In some of the previous calls, you had also mentioned that we have about a year of an order book in terms of visibility and also that it is more like a substituting business that we're getting in a business that is basically moving out of getting manufactured in, say, Europe to getting manufactured in India. So with these aspects, could you kind of provide us some more visibility on exports? Is it just a temporary kind of a weakness until we have capacities coming in? Or is there something else happening here?

So thank you, Mukesh. So let me take your question this way. As far as exports performance for the quarter is concerned, yes, there is a decline. And when I compare this quarter versus the immediately preceding quarter, exports declined by about 14% versus the same quarter last year, declining close to 20%. Even in the last quarter also, there was a decline in export by about 11%. Then we did mention that we have the conditions in Europe and China. The current economic conditions actually causing the downfall of the demand from these regions, and that has continued even for quarter 3. So it will be the order position from, and I'm talking about the orders which we had to get from Europe and China for deliveries in quarter 3. Those have been impacted, and that is largely causing the down -- the decline in the exports. However, as far as our long-term strategy and long-term focus with regard to exports, that remains unchanged. Yes, you rightly mentioned, and we did talk in the last call as well that whatever strategic actions we have taken in terms of focusing India for serving the world better in terms of our exports, that remains unchanged. In fact, those -- some of those projects are helping mitigating some of the losses in exports. And therefore, the decline in export is around 15% or 20% in that range. Had it not, the decline would have been even severe and that would have caused a significant dent as well in terms of the overall performance for exports. On the other side, we do expect that this situation may not last too long. Hopefully, next year, we should be back on track. I once again like to mention and that's what I also mentioned in the last call that we have to keep also one aspect in mind that last 2 years, we have grown in exports over 50%. Previous year, we grew 66%, and prior to that 50%. So in a span of 2 years, the export has already doubled and we have reached a level from around 10% of revenue to close to 16% already in the last year. So on that high base, where we already realized the benefit of those projects, that continues. We have not lost so much of revenue like they have gained in the last 2 years. The loss is because of the global conditions. And yes, there is a little bit of contribution from the mix change, but that is not significant. Major reason is the global economic conditions. And the conditions are not still -- there are no signs of clear improvement in the short term. We hope situation would not remain like this at least 1 year or 1.5 years from now.

Got it. Got it. Got it. And just one follow-up on that. If you could give some sense on the geographic exports, how it moved. I think you had given some color last time about North America, Europe, Southeast Asia.

Exports about 45%, close to 47% in Europe; close to 30% or around 30% to Asia Pacific; over -- around 10% to 15% China; and about 10% U.S.A. That's the geographical split.

Got it. Got it. Okay. Great. And just the second question is on the mix itself. We've seen obviously the Industrial business doing better this time. We have seen a significant improvement there. So would that have impacted our margins a bit, maybe some higher traded components within the overall revenue? And if you could kind of comment on that?

Well, the current quarter margin level that we have been able to retain which was also the level achieved in the preceding quarter, and again, we mean margin, we are talking about EBIT. We earned EBIT of 16% in the quarter 2, and this quarter also around 16% despite...

No, sir, I'm not saying that the margins have declined, sir. I'm just wondering if there has been some impact of higher traded goods in this.

Yes. Yes. So I'm coming to that only. What I want to first highlight is that we have been able to retain the margin despite conditions of the downfall in exports because of better mix in the domestic business. And mainly Industrial business has grown in this quarter of around 9%. That is helping in terms of mix on the domestic side. However, there is no significant mix change between manufacturing and trading. Yes, there is some sort of shift towards trading, but not significant that can cause a major impact on the profitability performance.

The next question is from the line of Mr. Vimal Gohil from Alchemy.

On exports only, actually I had 2 questions. The first one on exports being what -- a factor that you are watching at or the lead indicators that you are watching at to sort of tractor revival of this particular segment? That's question number one. And the second question is on the progress of our electric vehicle order that we had received, a large INR 2,000 crore plus EV order that we had received. If you could just share the progress of the same?

Yes. Thank you, Mr. Gohil, for the question. Let me take the first one on what indicators do we look for the exports. Obviously, the first indicator is our own customers, and we are in close and closely engaged with our customers to understand how are their markets and the demand proceeding there. So clearly, as you know, our own export business, we sell it to our own entities in Europe and they, in turn, cater to the local market. So we have regular calls and meetings with them to understand the situation. And so obviously, that's the first indicator that we get. Apart from that, we look at some of the macroeconomic indicators, which definitely tell us the direction as to how things can evolve and this happens on a regular frequency, yes. The third, I would say, is also obviously looking and keeping a track and monitoring the situation that develops the situation in the Middle East, which has started off with another impediment that has come in recently. The implications of that still not visible. But what's more concerning is the news about Germany getting into a slow recovery in terms of the economic growth. Now that we are unable to tell, it's all the economic indicators that we have to watch. So that's on the export business. And meanwhile, what we can do and what's in our control is to see, can we leverage the capacity that we have to feed other markets and other segments with customers here in India, which we are trying to do now. Coming to the second question on your electric motors or the e-axle, the new business opportunity that we have won. I would like to state that we are working on a localization plan. It is going to take some time. However, the customer is evaluating our product and we have already submitted the samples. Now it's under evaluation. And that's by far what I can express at this point in time.

Right, sir. And sir, I try my luck on asking further on the outlook for export. What gives us the confidence, because you've clearly mentioned that we are not going to sort of reduce our CapEx intensity for localization plan for exports. But what gives us the confidence that next year should be better? And if at all, it turns for the worse, let's say -- saying like a scenario analysis, if the exports turns out to be worse, will we still look to sort of stay the course in terms of our CapEx plan?

Two ways. One, Mr. Gohil, what I would like to say is in terms of whether the export is going to change quickly. Well, your guess is as good as mine or vice versa. So I guess we are all in the same boat. But what I would like to say is on our strategy to invest in our capacity expansion continues because we, at Schaeffler India, believe we are here for the long run. So we will continue to invest. And clearly, our strategy is to stay in the range of 15%, 20% of our business to be the export part of the business, which we will continue to sustain. There are many more product lines that we have to localize to see even the Indian market. And we would like to leverage the cost competitiveness of the Indian market share to also look at the opportunities to export, so our strategy remains firm.

The next question is from the line of Harshit Patel from Equirus Securities.

Sir, my first question is on the bearings business. Have we taken any pricing actions so far in 2023 on both sides, either increments or the downward divisions for both the distribution business as well as the OEM business? So if you can give some flavor on the pricing which is prevalent in the market, in the light of the decline in commodity prices, that will be very helpful.

Thank you, Mr. Patel, for the question. Let me take first with the OEM side of the business. As you know, the OEM side of the business is always indexed to the CM steel prices and still being the biggest commodity in bearing, obviously, that would help as the index against which all of us operate in. So as you are also aware that there has been no increases in the commodity prices in the last quarters. So rightfully, we have not raised prices in steel or in our bearings product going to the OEMs. Talking about the distribution, in this quarter, we have not done any price increases because normally, we do that once a year right at the beginning of the year. And we will have to wait for the next cycle of the price increase.

Understood. Sir, my second question is on our Industrial business. I think since past few quarters, you have been very consistently highlighting the order wins in the areas of linear motion guides, ultraprecision drives, gearboxes, condition-monitoring products, so the nonbearing portfolio within the Industrial segment. So could you give some flavor on what is the scale of this particular business within our overall Industrial segment? Also, a follow-up to that would be which of these products that we have started making locally in India? So are there any localization plans as well on this front?

So let me approach your question with an answer wherein I would have to go back a little. As you know, the Schaeffler globally has been making some strategic acquisitions, as a result of which these businesses have flowed in India because the business already existed and once Schaeffler made the global acquisitions, they came within our portfolio. That said, we have increased our focus of growing these businesses as well. One such could be the Melior Motion acquisition we did 3 years back. And more recently, the Ewellix acquisition for linear guides. Well, I can say that post acquisition and our increasing focus in India as well, we have started to grow the businesses here as well. We have started to increase our engagement and reach with many of our customers when it comes to these kind of products, whether it is the Melior Motion guides or the high-precision ultra drive gearboxes that we make through Melior. For that matter, some of the other acquisitions that we have made and the launch of new products like the Lifetime Solutions as well. Obviously, today, without digitalization coming into your business, selling the pure mechanical products is no more -- the customer wants more value coming out of supply partner, and this is why we are in the digital space as well. And with the number of digital solutions that we have brought in, we have continued and we are continuing to add more to the portfolio. We are clearly focused on growing this business. And this is categorized as we call it the Lifetime Solutions, which we'll continue to grow, focusing primarily today on the raw material sectors. But we obviously are expanding into the other application segments like food and beverages, and we have started to do that. So we will continue to do that. But I want to highlight also here that as of now, we do not manufacture any of these products in India. What we have done is for some of the products, we will bring them from Europe and try and customize the sizes here in India for the customers so that we are able to deliver with very short lead times. That's what we are going to do.

We move on to the next question from the line of Mr. Nikhil Kale from Invesco.

So my question was, sir, I think you mentioned about the strategic acquisitions that Schaeffler has been doing. So just continuing on that part. So Schaeffler has recently announced the bid to kind of merge with Vitesco Technologies. So over the next few years, do you also see the possibility of the electric mobility side of things getting bolstered because of the capabilities of, say, Vitesco Technologies. So what could be the implications for us because of this merger?

Well, at this point in time, Mr. Kale, all I can say is that we have made our own offerings through Vitesco. So it's too premature to comment on this at this point in time. So at the appropriate time, certainly, we will give an answer on that. Obviously, if we have taken this step in this direction, it is with the strategic intent, it goes without saying. So clearly rest assured, soon we will get to hear whatever is the outcome of this.

The next question is from the line of Nirali Gopani from Unique PMS.

Sir, to begin with, I just wanted to clarify the CapEx number that we have announced. So we plan to do a CapEx of INR 500 crores each for calendar year '23, '24 and '25. Is that right, sir?

Yes, we did mention or we did announce that we would spend about INR 1,500 crores in 3 years. So it need not be exactly INR 500 crores each year, but it would be around that. So depending upon the projects sort of planning and also depending upon certain conditions in the domestic export market, some adjustment would be done in this. But -- and therefore, yearly CapEx would not be exactly INR 500 crores, but overall CapEx would still be about INR 1,500 crores in 3 years.

Perfect. So, sir, if I include calendar year '22, we are roughly doing a CapEx of about INR 2,000 crores on an existing gross block of INR 2,000 crores. So if you can highlight what kind of growth do we envisage over next 3 to 5 years? If you can qualitatively, I don't want an exact number, first with the export opportunity EV aftermarket. Sir, if you can quantitatively talk about growth that you see over the next few years?

Very difficult to put a number to that, but we are targeting minimum double-digit growth. And CapEx would certainly enable this level of growth realization. Also, we have a good sort of a ratio of CapEx to revenue, and that has been proved whatever projects we have already taken in the past. The past CapEx did deliver a better ratio of revenue, and we are expecting similar also in the future. But it would be difficult for us to tell you a particular number of growth because of the CapEx.

I think it's important also to understand why are we doing this. Let me explain this a little bit. So we are investing because of primarily 2 reasons. One, there is an organic growth in the Indian economy because there is a growth in demand. Obviously, we need to expand and we keep adding our capacities. So that's one. Second, we have been doing a lot of trading business, bringing products from Europe and selling it here, which we believe to remain more competitive, it's good to make the product in India. So that's what we call as localization. Now these 2 obviously would require new capacity investments to be made here. So when you look at it, the capacity investment does not necessarily mean that you're going to have an exponential growth in business. It is to make us more competitive, remain competitive or, if not, take advantage of the competitiveness to grow the market share. And you know how difficult it is to put a number to it at this point in time. But the effort continues to remain that our strategy is very clear. The organic growth is something we have to address. The strategy growth is something we have to address. The localization means our customer wants us to produce the products and manufacture the products here, and so we have to invest, so we remain committed to our customers' strategy.

[Operator Instructions] We take the next question from the line of Deepesh Agarwal from UTI AMC.

Sir, my first question is, in the opening remarks, you mentioned exports are weak due to weakness in the demand in Europe. However, if I see Schaeffler AG results, they have reported a constant currency growth of almost 9.8% on the second quarter -- or the September end. And even the exports and growth in Europe has been quite strong in the second quarter. So sir, are you able to reconcile the growth in Schaeffler AG in intend to grow -- why they are facing this struggle?

So let me answer very straight to your question. The growth that Schaeffler AG showing is the total Schaeffler group revenue growth consist of all the countries of the world. That growth includes what we grow in India also, for example. Our own growth has also been over 10% in India. Similarly, there is a growth in the domestic business in China as well, domestic business in quite many other Asia Pacific countries and likewise. So it is not only the growth of Europe, it is the growth of the world and that includes also the domestic growth of respective countries. And that is what is reflected...

I was referring to the Europe growth, which they report separately, which was 10.8% in the second quarter.

I don't have the number in front of us, but I doubt if that is so for Europe. And looking to -- and we'll come back to you -- Gauri would come back to you, but I really doubt if that's the growth.

Okay. Okay. So basically, you are still saying that it is because of weakness in demand, not because of the inventory-related problem which you were highlighting earlier?

No, inventory-related problem is no more there. That problem was certainly there in quarter 1. So quarter 1 impact was not because of the demand conditions, it was more of an inventory correction that lasted only for a quarter. But the subsequent quarter, particularly this quarter, is because of the demand conditions and that is caused because of the downfall in the market in other regions, particularly in Europe and China.

Okay. Sure. Also, sir, if you can share the growth rate numbers for railways, and EVs, 2-wheelers, MHCV, that would be helpful.

You mean the revenue growth in these sectors, right?

Yes. Yes. Revenue growth in this quarter.

Well, we have grown by about 12% in railways, 12% to 13% this quarter, vis-à-vis the same quarter last year.