Sona BLW Precision Forgings Limited (SONACOMS.NS) Q1 FY2026 Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Sona Comstar Q1 FY '26 Earnings Conference Call. [Operator Instructions] Please note that this call is being recorded. We request that you place your line on mute except when you ask a question. Some of the statements by the management team in today's conference call may be forward-looking in nature, and we request you to refer to the disclaimer in the earnings presentation for further details. The management will also not be taking any specific customer-related questions or confirm or deny any customer names or relationship due to confidentiality reasons. Please refrain from naming any customer in your question. Now I'll hand over the floor to Mr. Kapil Singh, Nomura Head of Consumer and Digital Commerce Research India and lead auto analyst. Kapil, please go ahead. Thank you.

Thanks, Tina. Good day, everyone. To take us to 1Q FY '26 results and to answer your questions, we have the management team of Sona Comstar, led by Mr. Vivek Vikram Singh, MD and Group CEO; Mr. Vikram Verma, Whole-Time Director and CEO, Driveline Business; Mr. Sat Mohan Gupta, CEO of Motor Business; Mr. Rohit Nanda, Group CFO; Mr. Amit Mishra, Head Railway Business and Investor Relations; and Mr. Pratik Sachan, GM Corporate Strategy and Investor Relations. I'll pass it on to you, Vivek, for the opening remarks and the presentation.

Thank you, Kapil, and welcome, everyone, to the earnings call for Q1. Before we discuss the business performance, as most of you would be aware, we've suffered a great loss last quarter. So I'd request all of us to observe a minute of silence in the memory of our late Chairman Emeritus, Sunjay Kapur. Please join me in honoring his warmth, his friendship, his vision and his memory. Okay. So while Q1 was firstly one of the worst quarters of my life, even from a business performance perspective, Q1 was undoubtedly our worst quarter since our IPO. This is mainly due to the convergence of, I'd say, 4 adverse, but, in our view, at least temporary factors. First was the change in the supply terms with an EV customer in Europe, which affected our revenues last quarter. The supply terms changed from ex works to deliver to the customer, which added 60 days of extra time in the recognition of revenue because of which revenue recognition has shifted from Q1 to Q2. This delayed revenue recognition is neither a loss of revenue, nor does it have any impact on cash flow. Second, one of our large global customers has seen a sharp decline in sales due to a slowdown in their demand. This EV customer has planned specific initiatives, which hopefully will lead to an increase in sales volumes in the quarters to come. Third, this again, all of you will be aware, since 8th April, China has stopped the supply of heavy rare earth magnets to India. This shortage of magnet has affected the production of EV traction motors in India. However, we have started working with alternative motor architectures that do not use heavy rare earth magnets. And we are also expecting a resolution soon on the heavy rare earth front. Hopefully, this should improve the availability of these magnets, but notwithstanding, we will have production using light rare earth magnets. Fourth, the uncertainties surrounding U.S. tariffs, particularly the frequent changes in both the rates and the implementation dates during the last quarter have led OEMs and Tier 1 customers to slow down their procurement processes somewhat and maintain low inventory levels. This situation, according to us, is not sustainable and should reverse fairly quickly in the coming quarters. So far as we see, it has remained what it was auto and auto components has been 25% since early April, and that's where it is even today. So what has happened is the combination of the simultaneous convergence of all of these 4 factors in one go has significantly impacted our performance in the last quarter. In our view, all, maybe most, but hopefully, all of them appear temporary in nature, and some of these issues have already started to reverse. And at the risk of sounding philosophical, I must observe that no matter how dark the skis, there are always a few silver linings at any time. So we've ended Q1 with our highest ever order book including the highest ever net order book for the automotive business. Last quarter, we received our single largest order in the past 2.5 years. And despite all the discussions around U.S. tariffs and electric vehicles in North America, we have successfully secured the significant order from a legacy OEM for the upcoming EV platform. We believe that this new EV platform is likely to be one of the most significant and successful EV launches in many years. We also completed the acquisition of the railway business and successfully integrated it on June 1. So we've had, I would say, around 3 weeks of revenue from the railway business in the current quarter also. As you would have also seen in the news in our release, we have recently signed a term sheet to form a joint venture with JNT in China to establish a local manufacturing facility for driveline systems in China. I will explain our strategic rationale for the JV in the next slide. So as you would have observed, and I've also wrote in our annual report, over the past 10 years, we've been primarily focusing on expanding our presence as well as our market share in the best in market, particularly focused on North America. Today, we are the largest supplier of EV differential assemblies in North America and rank among the top suppliers in Europe as well. Now while we continue to grow our market share in the West, we are also seeking to enter and expand our presence in Asian markets. Asian markets account for nearly 60% of global automotive production. And the fact that we have minimal market share there right now means there is a large area in which we could possibly expand. Our driveline manufacturing JV in China is aligned with this new look East and look West strategy. China, as you all know, is the world's largest automotive market, especially for electric vehicles. In 2024, annual EV sales in China reached 11 million. This is 2/3 of the global EV sales. So 2 out of every 3 electric vehicle that's sold in the world is actually sold in the China market. It is essential, for any company, aspiring to be a global EV supplier to participate in the Chinese market as well as its robust supply chain. Our joint venture partner, JNT, operates a world-class foundry that utilizes patented technology to manufacture complex castings and molds. JNT has a strong customer base that includes leading Chinese automotive OEMs as well as other global OEMs and Tier 1 suppliers. Sona Comstar will hold a controlling stake of 60% in the JV. Operations are set to commence in the second half of the current financial year to start fulfilling orders from both EV and non-EV automotive customers. Coming to the numbers. On a year-on-year basis, our revenue was lower by 5%, while EBITDA and net profit were lower by 19% and 12%, respectively. Our margins contracted quite a bit due to the adverse impact of operating leverage as well as significantly adverse product mix as like I said, we've also added railways, where margins are lower. We also had acquisition-related expenses, which have impacted net profit by INR 69 million. So if you were to take out that impact of that extra INR 7 crores almost, the decline impact would have largely mirrored the drop in revenue and not been so out to flat. BEV revenue declined by 25% and the BEV revenue share was at 28%, and this is mostly because of the factors are already enumerated. We move on to the update on our first strategic priority, which is electrification as always. So our BEV revenue share has decreased from 33% in Q1 of last year to 28%, and BEV revenue in rupee terms has declined by 25% to INR 2.1 billion. This decline, again, to repeat, for those of you who may have joined late, was mainly due to the 3 reasons mentioned before out of the 4, which is the change in supply term with an EV customer in Europe, a shortage of rare earth magnet, which is also, as you know, all for EV traction motors and lower sales from one of our major EV customers. These issues seem to be temporary in nature, and we anticipate that most will be resolved in the coming quarters. We continue to build on our EV order book. And at the end of Q1, we have 31 EV programs in production, 15 of which have fully matured and are completely ramped up and 16 are in the ramp-up phase. The remaining 29 programs out of the 60 you see on your screen are not yet in production and will start during this or the following years. We'll elaborate on our 2 new wins in the next slide, please. So the first one, and this is fairly exciting for us is a driveline program for electric passenger vehicles of an existing North American customer. This customer is a legacy OEM of passenger vehicles and electric vehicles. We will be supplying the differential assembly with the final drive gear for the customer's upcoming BEV platform from quarter 3 FY '28. This is our largest single order win in 2.5 years and adds over INR 1,500 crores to our order book. We believe this new EV platform is likely to be one of the most significant and successful EV launches in many years. The second one is the EV motor program. This is for electric 3-wheelers of an existing Indian customer. The customer is the legacy OEM of ICE as well as electric 2- and 3-wheelers. This program has added INR 260 crores to the order book and is expected to start quite soon actually in Q4 of the current financial year. This neatly brings me to our net order book. With the addition of INR 28 billion worth of new orders last quarter at the end of Q1 FY '26, our net order book has expanded to INR 262 billion, and the EV portion remains high at 75% of the order book. As I mentioned in my opening statement, this is our highest ever net order book even after excluding the orders from the railway business. The order book just for full transparency now includes customer orders from our railway business, which are obviously a much shorter duration and are expected to be executed mainly within the next 12 months. Moving on to our fourth KRA, diversification. On powertrain diversification, we've taken a slightly backward step on BEV revenue. The share has decreased to 28%. The reasons have been discussed earlier. The ICE dependent revenue share remains low at 9%, and we expect the BEV share to improve in the next few quarters. In terms of revenue segment, and we'll spend some time on this slide because there are quite a few changes, which are also integral to our strategy for the next decade. By geography, now India has already become our largest end market, accounting for 37% of our total revenue. North America follows as our second largest market, contributing 34% and to add, I mean, it's a small number, but if you look at how much it's jumped, the share of Asia, primarily driven by China, has increased to 8% from last -- from 6% last year. This quarter, our fastest-growing product segment was suspension motors. And second, it was hybrid startup orders. The railway business, which was consolidated just for 1 month and actually 3 weeks to be more precise from the terms of when we actually started registering sales because the first week was a transition period. It has contributed 8% to our overall revenue. When we look at market segments, the revenue share from nonautomotive sectors has increased from 10% to 20% compared to the previous quarter. The off-highway market has been a bit of a bright spot, which is the one another silver lining, if I could say, it has grown strongly in both North America and India, and we are expecting this to continue. We are expecting further diversification in our revenue mix starting from next quarter itself. The share from Asia, including India, obviously, will likely exceed 50% in the coming quarters, and we expect nonautomotive revenue shares to also increase to over 25%. Usually, our group CTO, Praveen takes this slide, but because he is traveling to the U.S., I will provide the technology update and his actions. I hope I will do a good enough job. I won't do it as good as Praveen, but I'll try to do a good job. So you know that in each call, we present our technology road map and many of you are now familiar with our approach to technology development. For those of you joining for the first time, the light blue part in the center is an apex of a pyramid, while the outline parts are more the base of the pyramid, and we try to work upwards from components to systems. That's the way we have structured this. The black circles, the products in the black circles are our legacy products that we have inherited or the company already had when we took over. The blue ones are the ones that have been subsequently added, while the white ones are those that we want to be -- we want to add in the future. This quarter, we've included our railway business products in this road map. We are the market leader in railway braking systems in India and supply complete systems for various rolling stock. This is shown in the black circle in the middle deck to the lower left. Additionally, we also are one of the leading Indian suppliers of couplers, dampers and friction products. Friction products are again related to braking, which are shown in blue circles. We are also in the process of developing new products, including automatic plug door systems for metro and semi high-speed trains, HVAC systems and electric control panels also for metro train sets. This is part of a deliberate strategy to have product diversification, add more revenue streams and target the upcoming semi-high speed and high-speed and metro trains. And in that sense, move away only from having Indian Railways as the customer. From a product perspective, our strategy is not very different from what we have always done. It will be the same as what we have historically achieved in the Driveline business since 2015, in the Motor business since 2019 and in our Sensor business since 2023, which is transformed the business from being primarily a single product business to a multiproduct business. As -- those of you who read our annual report will realize that our analysis has shown us that, that is the single biggest growth lever that has enabled us to grow our revenue by 10x and profit by over 20x in the last 10 years, because we are and will always remain a product engineering business at our core. Hence, developing new products is the only way that we can continue to grow and continue on our exceptional journey that we've had so far. Now I'll hand it over to Rohit cover the financial update.

Thank you, Vivek bhai. Good day to you, all. It's my pleasure to share our first quarter results with you. So first, we start with the financial summary. So we clocked a revenue of INR 851 crores during the first quarter, which is lower by 5% than the comparable quarter last year. Lower revenue was largely attributable to a 25% decline in BEV sales for the reasons which Vivek has already spoken about. Our EBITDA for the quarter was INR 203 crores, which is lower by 19% compared to the same quarter last year. EBITDA margin declined by 4.3%. That's a combination of adverse effect of operating leverage and adverse product mix. Our adjusted profit after tax was INR 132 crores, which was lower by 7% compared to the first quarter of last year. There is a positive impact from net finance income in this quarter, which partially offset the lower EBITDA and higher depreciation and amortization cost during the quarter. The adjustment to PAT is close to INR 7 crores. That's basically the post-tax exceptional expenses that we've in the P&L. Next one, please. This brings us to the final slide on our key ratios now. There's quite a bit of change here. So all the ratios have the impact of acquisition of railway business. And due to the different business dynamics compared to existing businesses, there are certain changes, but these are on the expected lines. I'll just explain a few cases here. So working capital cycle, for example, has -- working capital turnover has come down because the working capital cycle for our railway business is higher compared to the existing businesses. Similarly, fixed asset turnover ratio also had an impact, which is because of revaluation of railway business land as a part of purchase price allocation, which is part of the acquisition accounting. That has caused a pull down in the fixed asset turnover ratio. Our VA or employee cost, though still healthy at close to 5x, had an adverse impact mainly from changes in sales mix and operating leverage. This also had a small degree of impact coming from the railway business integration because that's an assembly business with a higher material cost and therefore, lower value addition. Our return ratios have largely been in the similar range as previously, whereas negative net debt has reduced largely due to discharge of purchase consideration for the railway business. This brings me to the end of the first quarter's earnings presentation. I'll now hand the proceedings back to Nomura team.

[Operator Instructions] We'll go to the first question, raised hand, from Aditya.

My first question is on the tariff. So now there has been a few months, what has been the discussion with the customer in terms of our ability to pass on or absorb? And how are we placed versus our peers, global as well as domestic? And related to this post the announcement, are we considering scaling up of our facility in Mexico? And attached to that, any differential in costing you can indicate on India versus Mexico? These question I understand on tariffs, but that would be my the first question.

So tariffs for automotive and auto components have been 25% from, I think, 5th or 6th April itself. So we've had a full quarter of it. We understand the impact better, but our assessment is the same as before. Aditya, if you can mute your line. I think there's something in the background. Yes, maybe you're watching television while asking your questions. We have nothing actually further to add from what we said last quarter that we see 3% to 4% of revenue impact could be there possibly. But as you know well, you've covered our sector for long enough to know that it happens in 12 to 18 months, even if it does happen. So has it yet happened? The plans for Mexico have been the same as they were before because they were for specific parts. So if you know the entire PPAP process and the process to go from planning to SOP is one that takes a lot of time. So there are no other changes. This new tariff that was announced a few days ago is relevant, but relevant to only the categories of auto components that are not already covered in the sectoral tariffs because this is the reciprocal tariffs. So that impact we will know when those customers reach out. So far, as you know, and we, I think, really said that the importers paid tariffs, not the exporters. So if you're exporting, it's not on you. We haven't seen much change so far. How it is being absorbed is an answer better given by our customers. But I believe there have been -- there is a scheme for the next 2 years for automotive OEMs in U.S. that the government will support them in absorbing these extra costs. So same situation as when you asked me this question a quarter ago, not much has changed, actually.

Yes. The second question, Vivek on the China JV. So congratulations on the JV. So initially, will it be a situation where we would be exporting differential gear from India to China? And then we will, over a period of time, as a volume scale up, we will ship the manufacturing of differential gears in China. Is that the thought process?

No. We will not manufacture differential gears in China. So that is -- it is certain. What we will start off by is supplying differential housings and other parts. We will add the next phase, which is not yet part of the financial planning right now, but we will in the next phase, export gears from here and assemble the final assembly there. If it does come with a final gear, we can do the final gear there, but differential gears will not be produced in the -- at least in the next few years that we can see anywhere outside India.

Okay. And the final question, if I can squeeze in. Any sense you can give us on the NOVELIC business development in terms of any order wins, geographic color, OEM, EV versus ICE? Any sense on NOVELIC?

Sure. So I think we updated a few quarters back. Next year, the sensor production will start actually. So the hardware parts will start rolling out, and there will be the first product supply starting. We are well on track. The product line will be in Chennai. We have a new SMT line setup, where I will actually invite you guys to come visit. It is genuinely world-class, you should come visit. The program -- actually, this is an in-cabin sensing. So it's agnostic to powertrain because this is an interior system product for sensing. But the first customer indeed is an electric vehicle customer, but that is not to do with the nature of the product. It happens to be an EV customer.

[Operator Instructions] I'll now go to the second raised hand from Gunjan.

Deeply sorry for your loss, Vivek, and lots of strength to the Sona family. From my side, I just wanted to hear from you on 2 things. I think both railways as well as the traction motor business. I think railways now under your fold, so it didn't really see much revenue growth last year, which is fiscal '25. If you can just sort of share a road map on how should we think about the growth of this business both as from Indian Railways as well as some of the new products that you briefly touched upon. So what sort of growth we should be thinking from this business? And secondly, again, traction motor, while you touched upon the shortages on the rare earth side, I mean you also have won a new program there, right, which is a little perplexing to me because we've seen a lot of delays in new launches coming through on the e-scooter side. So is it that we are seeing the resolution to rare earth that the new launches finally will start coming through in second half of this fiscal? So some color on how should we think about the business ramp up, both on railways as well as traction motor?

Thank you, Gunjan, and thank you for the condolences. And also, I think we take your question literally every quarter. So you don't need to thank me for that. I will answer the traction motor question. First, so the rare earth magnet shortage is real. It is an issue because the existing motor architectures that we have or were supplying were all using heavy rare earth magnets. Now heavy rare earth magnets are NdFeB magnets, but with a decent amount of dysprosium and terbium, that makes them heavy rare earth. Neodymium is a light rare earth. Can you substitute a heavy rare earth magnet with light rare earth magnet and develop new kind of motor? It is possible. There are some efficiency/cost trade-offs, but with increasing copper content, increasing the size of the light rare earth magnets, it is achievable, especially if it's, I would say, less than 15 kilowatt, it is achievable technically. The problem of the disruption was because it was so sudden to have a new motor developed, you have to test it, validate it, homologate it and only then can you launch it in a vehicle, which is why there has been time taking, but we'll be happy to note that in July, we will be -- we are back to our run rate of where we were in April, post -- previous crisis. There are still some motors that are being -- that are troublesome to make, like I said anything above 10, 15. As the power increases, the physics problem becomes more fundamental in nature and hence impossible to solve. But it is being resolved because, let's say, a new launch, which is coming in 2, 3 quarters, will be actually done with those kind of motors, right? So that's one. Second, there are alternative suppliers of light rare earth magnets in other countries, who have developed magnets, which are not very far in strength from HRE magnets. So we have explored those 2, and we are starting to get those from other countries. Both of those tracks are on. So engineering solutions to a trade problem, but I will complement Sat and his team on his agility on being able to solve it. And Sat, if you want to add some more color, please feel free.

No, Vivek, I think you covered very well. So we are addressing all the possible solutions, working on design, HRE-free magnets and different, different sources. So the other only options available, and we are exploring all those options, and we are working on all those options.

Yes, for the railway question, let me invite our new railway business CEO, Mr. Amit Mishra and kind of throw it to him rather than trying to answer it on his behalf. So Amit, over to you.

Gunjan, so in railway business, as we have discussed earlier, we are market leaders in brake systems in India. And other product areas that we have are couplers and suspension systems. All of them are complex and technology-intensive product with strong entry barriers. So while we are starting with this position, we have identified opportunities to add products within these 3 core segments as well. We can go further deep into these segments and add more products. At the same time, as Vivek explained in technology road map, we are working on several new products as well, which are in different stages of development. So these project -- products will come -- will come in production over the next few years. So we have a road map for the next 5 years, where new brake systems as well as the new products that we are working on should come into the revenue. In terms of end market, if you have tracked rolling stock production projections by the government, I think there is growth projected for next few years, which should be a tailwind for the business. At the same time, we are actively working on increasing our presence in metro segment and also in selected export markets. So yes, we do expect the business to grow well over the next few years. But as you know, we don't give any further guidance in terms of revenue, et cetera. But we do expect growth, given what we are doing on the products as well as tailwinds in the industry.

Thank you, Amit. First earnings call question that Amit has answered. Congratulations.

Next raised hand, Amyn Pirani.

Yes. Just a clarification on the rare earth comment that you made. So you mentioned that in July, we are already back to the April levels. So are you saying that this is because of the light rare earth magnet? Because of that, we have been able to that, or we have been able to figure out some solutions to the availability of the heavy rare earth magnets?

No. Mostly, it's light rare earth magnets. So we do not have any HRE magnet supply since 8 April, 0.

Okay. Okay. Okay. So -- and again, for the light rare earth magnet availability, are there risks to that also? Or -- because it's quite commendable that you're already back to April levels, which is great. So or -- so now it's a steady state from here? Or even on the light rare earth magnets, there could be some challenges in the foreseeable future?

I hope not, man. But these days, every day, I think this is the last challenge and I'll have next day as a new one. So I hope they don't because the ban is specifically for HRE magnets because even the light rare earth magnets, the source is China. So I hope they don't now come after this. I hope they go the other way. I like -- start giving out export licenses for heavy rare earth magnet that will solve a lot. But there is a constraint. See we are back also because we've had new orders also. Bigger motors are still a challenge. It is only our fortune that most of our business is 2-wheeler and even in 2-wheeler, less than 5-kilowatt motors, which has been helpful. As you go up, it gets harder and harder. That's basically the situation.

Okay. And just on the China JV. So first of all, congratulations on that. Is there any broad idea that you can provide as to what is the order book? Because obviously, right now, it's a JV, you're just starting off, and you said that you'll be applying EV and non-EV. I'm not sure if you can name the customer or customers. I guess that would be difficult. But any broad sense of what is the order book, which is there, that you started supplying?

So it's good question. It's a brownfield. We wanted to move with agility. Agility, as you know, is one of our core values, which is perhaps the reason that in 3 months, we've been able to come back and bounce back in EV traction motor production. So it would have taken a long time to do this greenfield. Second, China supply chain, while it is one of the, I'd say, most diverse and widespread supply chains, it is hard to navigate on your own, which is why you need a partner. So it serves both purposes. That's why we went into it. We have not yet started adding order book, nor will we guide on it. I'll tell you the reason because right now it's a term sheet. Until we sign all the binding documents and all the stuff is done, we don't want to start adding to our order book. The day we do it, we will start that.

Yes, there are some questions in the Q&A box. So I'll just take those Vivek. So one question is from Dinesh. Can you talk about the driver of increase in revenue share from China in 1Q?

Yes, suspension motors. That was our fastest-growing product. As you well know, there that is literally the one product in which the customer is also publicly known. So that is a Chinese EV customer, Neo, and that's where the growth came from.

Vivek on this, if I may ask, how far are we from the peak revenues that we are projecting. And how is this ramping up?

Sat, do you want to take this?

We are still in a launch phase, Kapil. I mean, we just launched the product. It's too early.

I think this quarter was literally the last -- March was the first. So we are still in early days. We will see.

Okay. Second question is, can you talk about the potential revenues from the China investment, the China JV investment? Would the Chinese do end-to-end manufacturing? Or would that be supplied from India? How would be the margin profile of this JV on full ramp-up?

So we can't, as you well know, we just signed a term sheet. Till an acquisition is complete, it's too premature to start talking about the revenue addition or order book, right? Like, if you realize railway order books, we announced it in September or October. We've closed it now, and first time we've added something to the order book because it's premature to do those things. We will, once it is final and everything is done. The modality, I think I've already -- when Aditya Jhawar asked me, I think I explained that, first, it will do mostly machined housings and some other parts. In the second phase, we will try and do full differential assemblies. But I will invite Vikram if he wants to add anything non-number to this.

No, I think, you answered it and the very idea of to get a good casting supplier and who has good connect with customers already is where we targeted. And that's why this brownfield.

On the margin profile, it is not going to be the margin profile of our business. That I can guarantee you, China is a very, very competitive market. It will be lower, but it is a large market. And as you all know, we are not obsessed by margin as a percentage. Absolute profit growth is what we want, and that's what we will face. For the largest EV market in the world, even if you get a small market share, it can be a significant term.

And one question is, is the company participating in development of humanoids by Tesla?

We never comment on customer-specific questions as you know.

Okay. Then some questions are answered. So I'll read just a part which is unanswered. Is the existing customer base part of the order book from the JV?

That's interesting. Yes, I guess, there will be some customers that would be our customers existing, but the orders would obviously be different because the product would be different and supply location will be different. Yes, somethings will be common. But automotive, if you take all the OEMs and all the major driveline Tier 1s, it's not that large number. You will always have the same customers everywhere. And all the large OEMs and all large Tier 1s are already there in China.

Okay. Then the other question has come on equipment. Are we planning to start commercializing in 2025 as per plan, considering rare earth magnets capacity?

Sorry, on?

Equipment.

No. That bigger magnet -- that big motor without magnet, no chance. I mean, I was talking about 10-kilowatt, they're talking about 350-kilowatt without heavy rare earth. No, next to impossible to solve that problem.

Okay. I think NOVELIC, we have answered, but anything on the order inflow that you want to mention here?

No. Anything -- I mean, there, of course, have been smaller order wins, but mostly in services or small POCs. Any large product win, we would obviously share in our earnings presentation.

And then there's a question asking what will be our new EBITDA and PAT margin guidance after incorporating the new division?

Good question. So let's just do the math. Our range earlier was 25% to 27% was the range we reiterated many times. How much as a percentage, Amit, would we expect railway to be since you're the CEO, you should tell me.

So if we look at last year, full year numbers, railway would be about 18% to 20% of consolidated revenue.

Good. So 20% is at 18% EBITDA, and 80% is 25% to 27% range. So if you do the math, you will get your answer, which is 23.6%, and 27 into 80 is 24.6%. So yes, 24% to 25% or 23.5% to 25% will be the new EBITDA range, I guess. But it's just mathematic. Do the arithmetic, you'll get the number.

Vivek, one question has come that could you provide some insight into the succession planning following the unfortunate passing away of Sunjay?

Whose succession planning, mine? No. Like what is the question towards because Sunjay was a Non-Executive Chairman. He has already been succeeded by Jeff Overly, who is our Lead Independent Director. So he's the now, again, Non-Executive Chairman. If it's about the management or executive role, I can answer because that is my purview. I don't choose Board successors. So that's not a question I can answer.

Sure. I think that's all the questions we've had. And the question is also on, who is the -- who is having the ownership of the company? That question has also come.

So the ownership of the company as a public listed company, I think it should be clear that the public is the owner. 72% of the company is held by our public shareholders, various FIIs, large domestic mutual funds and a small bit even with retail shareholders. I don't know the exact percentage, but 5% to 6%. 28% is -- was held by a promoter entity called Aureus Investment Private Limited. That is a fact since our IPO, that has also not changed. Yes, who owns Aureus according to the documents that have been filed with the exchanges with the registrar companies. It was held by RK Family Trust, of which there is one single beneficiary, which was Sunjay Kapur. We have not had any information after that from Aureus. But direct -- there was no direct shareholding of anybody else in the company from any promoter entity. If the person who is asking the question, these are all very well disclosed numbers. You can go to ROC, you can go on our website. Every single quarter the company is legally obliged to disclose its official shareholding. It's called the beneficial position of ownership as well as the ultimate beneficial owner. So perhaps what it is. And I think more than that is far more sensationalism around it than it affects anything. But just for actual genuine investors, this is the answer. Whoever controls the 28%, doesn't really have that much. So let's say, Aureus controls 28%, they can nominate like any large shareholder can, a member to the Board. The Board in its discretion can choose to either reject or accept that nomination. If the nomination is accepted, then it has to be further ratified by public shareholders and only 50 -- above 50% of the shareholders approve, would that person take that Board seat, which is of an additional Non-Executive Director. How one director's appointment out of a 9-member Board with 6 independent directors make difference to the running of the company is very bizarre to me, but for some reason, a press of India thinks it is a very pertinent question to answer. I don't know how it affects the company's growth, the company's operations or the management.

I had a couple of questions from my side as well. Firstly, on the EV industry globally and particularly in the U.S. market. We are seeing some pullback of subsidies and some changes in regulations as well. At the same time, there are markets like China where probably there may not have been that much support, but still electrification is growing quite rapidly. So do you think that kind of move will come in markets like U.S., Europe and India? Are we -- is there a line of sight now to that?

So Kapil, good question. My opinion, as you know, has not changed for the last 10 years. I think electrification is inevitable. The pace and things in the interim where it kind of goes slow are almost impossible to predict. There is a lot of policy play here. This is the same thing when it happened with renewable energy. Remember, it used to be $1 million per megawatt back in the day and nobody would put up a solar farm. And it was only regulation that was pushing it. And then it changed. As production increases, cell costs came down. I take the same analogy. Same analogy for cellphones also, by the way. When cellphones first came, people are like, who will buy, too expensive, batteries are too expensive. And it's almost always battery cells, which is the problem or the bottleneck of the whole growth area. I think battery prices will keep coming down. We are already at a stage where China has overcapacity and will have no other option, but to start exporting this overcapacity into other markets, making batteries smaller. The second trend that we are seeing is battery packs themselves are becoming smaller. Actually, range anxiety is fading quite fast. I was having this -- and this is anecdotal. I was having this conversation with a friend of mine, who just bought a battery electric car. So I asked him which model did he go for. He went for the lowest range model. And I asked him why? He said, lowest range is 400. When have I ever driven 400 kilometers in a day? I don't need it. I anyway put it to charge at night. If they made one with 250, I would go with that. This, if you were to take as analogous to the small engine revolution that came in the 1960s, '70s with the Japanese cars, suddenly, the auto market grew manyfold because people could buy much cheaper cars with much smaller engines, when people realize everybody doesn't need the massive engine with 70, 80 liters in the tank at all times because you don't actually use it. Asset utilization of passenger vehicles historically has been about 8%, 9%. As this trend increases and customer awareness increases, I think EVs will become cheaper and cheaper to a point. I think we covered it last quarter. They will be cheaper to manufacture and service and support than ICE vehicles. At that point, economics will start playing its part. And then subsidy, no subsidy, nothing will make any difference. China has already passed that point of no return. I think it's going to go 100% EV. Europe will follow and America will be last because of maybe 4 years of policy direction change. But it will inevitably come. I mean the legacy OEM who's announced this and who's given us this award, if you read what they're saying, they're saying after '28, '29, they will do this and it will be a pivotal moment for their entire company's history. Timing, like I said, may be slower, but the inevitability is undeniable. It is going to happen.

And what about Indian market? What are you seeing there?

India is obviously going to be slower. Our views of -- I mean we've answered this many times. We always believe 3-wheelers, buses, 2-wheelers, followed by passenger cars. That's the order of electrification. There is significant challenge because of the way our country is. Urban density is a challenge. Actually, we have a first mile mobility problem rather last mile mobility problem. And the first mile is actually the hardest to electrify. So I would still say it would be the slowest, but I think all of us can say we are impressed by how fast 2-wheeler, 3-wheeler and buses are growing.

And Vivek, the second question is we have quite a bit of order -- a very large percentage of the order book coming from electric vehicles. Now in between, we've had this problem, which seems to be resolving to a large extent. Do you see a much stronger launch pipeline happening in India and even maybe the global markets now this clarity is coming, maybe ex of U.S. How do you see the launch pipeline?

Actually, the launch pipeline is pretty good. The magnet issue may delayed by 2 to 3 months in this calendar year, but '26, '27 and '28, these 3 years, we have a lot of new launches and not small ones. Actually, all of them are the massive ones. There will be a lot of small ones in the interim. But the big ones over the next 3 years, there should be quite a few which are genuinely that size, INR 200 crores, INR 300 crores per year type of sizes of each program. There are quite a few of those coming in the next 3 years. Like I keep saying, the battery cost is going down every year and the battery pack size constraints are going down. The problem was always only solvable if you had between $20,000 to $25,000 cars were required to make electrification truly mass. China has been able to do it because of that price point card. Same thing will happen for the U.S. and Europe. India too will follow. I mean India, again, has that problem that they do not have enough inexpensive or economical battery making capacity yet in India. I think that too will change.

Sure. And some of the major order ramp-ups this year, when do you see that -- which quarter this year we would start to see that happening?

I would say Q4 would be the one in which will happen because a lot of them for this year were more around motors, where there is a month or 2 of delay already. Now there may be a little bit more delay because of that.

Sure, Vivek. That was the last question for today, given the time constraint. So Tina, I'll hand you back to close the call, please.

Thank you so much, ladies and gentlemen, for joining today's Sona Comstar call. If you have any further questions, do feel free to reach out to Kapil Singh or the corporate management. Thank you, and have a good day. You may drop off the line now.

Thanks, everyone. Thank you.

Thank you. Good evening.