Uno Minda Limited (532539) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Q1 FY '27 Earnings Conference Call of Uno Minda Limited. This conference call may contain forward-looking statements about the company, which are based on the beliefs, opinions and expectations of the company as on the date of this call. These statements do not guarantee the future performance of the company and may involve risks and uncertainties that are difficult to predict. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Sunil Bohra, Group CFO. Thank you, and over to you, sir.

Thanks, Anil. Good evening, everyone, and a warm welcome to all the participants. On the earnings call today, I am joined by my colleague, Ankur Modi. We have uploaded our financial results and investor presentation for Q1 FY '27 on the stock exchanges and our company's website. We hope everybody had an opportunity to go through the same. I will begin with a brief overview of the macroeconomic environment, followed by the current trends in the automotive industry and then our financial and operational performance for the quarter ended June 2026. Post that, we will open the floor for Q&A -- talking about the global economy and current landscape. The global economy so far in 2026 has been navigating a complex and uneven landscape. Global GDP is projected in the range of 2.5% to 3% range, resilient but below historical averages as the world contents with persistent geopolitical tensions, elevated trade and policy uncertainty and energy price pressures that continue to fuel inflationary headwinds. Two powerful forces are shaping the global outlook, and they are pulling in opposite directions. On one side, the conflict in the Middle East is acting as a negative supply shock disrupting energy markets, elevating freight costs and injecting significant uncertainty into global trade flows. On the other, the world is experiencing an extraordinary positive technology wave driven by the accelerating deployment of AI and the broader digital transformation of industries. The net impact of these 2 forces varies significantly across countries, depending on the energy dependence, geopolitical exposure and position in the global technology value chain. Simultaneously, the restructuring of global supply chains driven by economic security concerns and geopolitical fragmentation is redrawing international trade patterns, creating both meaningful opportunities and challenges for businesses that are prepared to move with agility. India in this context stands out. Having closed FY '26 with robust GDP growth of 7.7%, India enters the current fiscal year with strong foundational momentum. The external environment has introduced some moderation and GDP growth for the current year is projected in 6.5% to 6.9% range. Yet even at this pace, India remains firmly among world's fastest-growing major economies, supported by resilient domestic consumption, a thriving services export sector and sustained government capital expenditure that continues to catalyze private investment. Looking further ahead, the trajectory becomes even more promising. Anticipated trade agreements with the U.S., U.K. and EU are expected to significantly enhance trade flows, attract long-term private investment and strengthen India's structural growth prospects in ways that extend well beyond any single fiscal year. For Indian manufacturers with capabilities, the scale and the technology credentials to compete globally, this is a moment of genuine and historic opportunity. Moving to automotive industry overview for the first quarter of FY '27. Indian automotive industry entered Q1 with powerful momentum, delivering one of its strongest quarterly performance in recent memory. Total automotive production reached a record 96.9 lakh units, a growth of 22% year-on-year, reflecting healthy domestic demand, improving exports and resilient consumption across both rural and markets. While elevated commodity prices and global supply chain disruptions created some input cost pressure, these headwinds have begun to moderate with OEMs partially offsetting the impact through calibrated pricing actions. Export performance was equally strong. Total vehicle exports rose nearly to 20 lakh units during the quarter with robust demand from Latin America, Europe and Japan driving growth in 2-wheelers and utility vehicles, demonstrating a broad-based recovery in global competitiveness of Indian automotive manufacturing. During the quarter, 14.5 lakh passenger vehicles were produced up 17% year-on-year. The electrification, dihumidi-fication and SUV-fication of the Indian market continues unabated. Each PV registration grew an impressive electric passenger vehicle grew an impressive 54% year-on-year to 84,000 units with EV penetration reaching 6.8%, a meaningful inflection supported by a widening product portfolio and accelerating consumer acceptance. 2-wheelers posted production of 2.5 lakh units, up 23% with scooters leading at 32% growth versus 18% for motorcycles. Exports reached a record high of 15.5 lakh units, up 37%, driven by strong demand from Latin America, South Asia and Africa. In a landmark milestone for the segment, E2-wheeler registrations crossed 5 lakh units for the first time in a single quarter, a clear signal that mass EV adoption in 2-wheelers has moved from aspiration to reality. CVs produced 2.9 lakh units, up 15%, backed by continued replacement demand and strong activity in the mining and cement sectors. CV exports grew 43% to approximately 3.3 lakh units, the highest Q1 exports ever recorded for the segment. Looking ahead, following this period of strong volume expansion, the market is expected to transition towards more stable technology-led growth driven by continued EV adoption, supply chain localization and the premiumization of the vehicle mix. The sector's improving fundamentals, balanced demand environment and accelerating technology transition position it well for sustained long-term growth. And for a company like U powertrain agnostic portfolio and growing systems capabilities, this environment presents an exceptionally compelling opportunity. Moving on to financial and operational performance for the quarter. You may refer to Slide #7 and #8. We reported another strong quarter where we have continued to scale new heights once again surpassing our previous peaks to achieve our highest ever quarterly revenue. Our consolidated revenue from operations for quarter 1 FY '27 stood at INR 5,557 crores, representing a robust 26% year-on-year growth as against INR 4,420 crores, excluding prior period income of INR 69 crores in Q1 FY '26. This growth was broad-based and high quality, driven by value-added features and volume expansion across our core product offerings, including switches, lighting, alloy wheel heating and our rapidly scaling EV systems and alternative fuel divisions. On the profitability front, EBITDA excluding exceptional income in the previous year grew by 21% year-on-year to INR 572 crores with EBITDA margins of 10.3%. Three factors weighed on the margins this quarter. First, commodity and gas price inflation created input cost pressures that could only be partially recovered during the quarter through price adjustments. Second, even as the commodity price increases are systematically recovered over time, pass-throughs occur on an absolute cost basis without any markup, resulting in mathematical margin dilution. In our case, the impact was 40 basis points due to this margin dilution. Third, minimum wage across multiple manufacturing states, increasing the employee costs. Importantly, a large portion of these headwinds were offset by operational efficiencies and operating leverage. We remain confident in our annual EBITDA margin guidance of 11% plus/minus 50 basis points with a bias towards the higher end. Depreciation increased by INR 17 crores to INR 177 crores, reflecting the capitalization of new facilities, including our 2-wheel alloy wheel expansion at Supa, our new plant in Indonesia and Phase 1 of our Kharkhoda 4-wheel alloy wheel facility. Finance costs remain tightly controlled, rising only INR 2 crores to INR 46 crores as majority of our expansion program continues to be funded through healthy internal accruals, a reflection of strong cash generation. The share of profit from associates and JVs remained stable at INR 48 crores from INR 47 crores in the prior year. The profitability of some of these entities was impacted by commodity pricing pressure, which is expected to ease with recoveries in subsequent quarters. PAT attributable to shareholders grew 24% to INR 296 crores compared to normalized PAT of INR 239 crores in Q1 FY '26. Coming to business segment performance, starting with switches, you can refer to Slide #11. Our switching system vertical, the largest vertical in the Uno Minda portfolio delivered another strong quarter. Revenue reached INR 1,335 crores, up 20% year-on-year, contributing 24% to consolidated turnover. Growth was driven across both 2-wheeler and 4-wheeler switch business. In 2-wheeler switches, sustained domestic volume growth was complemented by consistent export upward growth trajectory, reflecting the global recognition of our quality and technology standards. Our 4-wheel switch business under Uno Minda continued to outperform the industry, growing 24% to INR 525 crores. The transition of our facility to expanded [indiscernible] plant is progressing well with completion expected in second half of the fiscal year. The Lighting System vertical reported revenues of INR 1,153 crores, up 14% year-on-year, contributing approximately 21% to consolidated revenues. The 2-wheeler lighting portfolio anchored growth supported by sustained market share gains and rising EV pet remains a leading supplier to multiple electric 2-wheeler OEMs. Looking ahead, we expect meaningful market share gains over the next few years, supported by the significant new order of approximately INR 450 crores of annual peak value announced last quarter, equivalent to nearly 25% of the current 2-wheeler lighting revenues. I'm also pleased to share two new strategic wins this quarter. First, we received a business nomination from a global OEM for domestic 4-wheel lighting supply in India, a strategic entry into a new customer that opens up the door to incremental customer share and cross-selling opportunities. Second, interior ambient lighting is gaining commercial traction with positive customer decisions that open an entirely new avenue of growth for our lighting portfolio. Indonesia, following commissioning of our new 4-wheel lighting plant, we have already secured a second customer order with SOP expected in Q2 FY '28, validating our international manufacturing strategy. The transition of our existing plant to new facility is expected to be completed by end of FY '27. The consolidation of multiple 2-wheel lighting facilities in North India to Kharkhoda expected to start in H2 FY '27, bringing automation benefits, cost efficiencies and capacity to win both domestic and export programs. Moving to casting business. The casting vertical was our fastest-growing vertical this quarter. Revenue reached INR 1,090 crores, up 32% year-on-year, which also includes higher base raw material prices. The casting material has contributed approximately 20% to consolidated revenues. subsegments drove this performance. heel business revenue grew to INR 56 crores, supported by ramp-up of recently commissioned Phase 1 at Kharkhoda. -- some temporary moderation in alloy wheel in the last few quarters. However, we are seeing early signs of penetration inching up again. Our new 6000 line at Kharkhoda expected to be fully ramped up from Q2 FY '27. We also expect another 300 line at Kharkhoda commission in second half of current fiscal, which will support the growth. Two-wheeler wheel grew to INR 284 crores. This business will receive significant boost with the commissioning of a B plant, where 4 of the plant 6 production lines are expected to go live in H2 FY '27, adding approximately 1 million units of annual capacity. This will also mark our entry into HVDC alloy wheel manufacturing casting exception 6% growth to INR 248 crores, driven by capacity enhancement at both our and Hosur facilities. The structural growth drivers for this business, lighting, EV platform requirements and domestic content mandates remain firmly intact. Near-term headwinds for this vertical seem to be receding and is expected to return for another. The structural growth drivers for alloy wheel remains intact, supported by industry volume expansion and expected gradual but consistent increase in alloy wheel penetration across vehicle segment. Moving to Seating business. Seating system vertical continued its strong upward trajectory. Revenue reached INR 408 crores, up 28% year-on-year, contributing approximately 7% to consolidated revenues. The quarter's performance reflected strong growth across our customer base and importantly, a significant acceleration in international revenues. Exports reached INR 72 crores this quarter, growing consistently quarter after quarter and will continue to be a major growth driver, supported by the landmark export orders of approximately INR 390 crores of annual peak value from 3 new customers across Europe and North America communicated in last quarter. During the quarter, we also announced entry into the 4-wheel passenger vehicle seating systems segment, one of the highest value product categories in the automotive supply chain. To support this new product line, the company's Board of Directors had approved the setting up of state-of-the-art greenfield manufacturing facility in [indiscernible] with a proposed investment of approximately INR 320 crores. The facility is expected to commence operations by Q2 FY we have already secured business from an anchor customer. It is a strategic that substantially increases our vehicle value potential and deepens our footprint in a segment that is central to the premium vehicle experience. Moving to the next segment. The newly constituted green mobility vertical achieved a robust 78% year-on-year revenue growth in Q1 FY '27, reaching INR 542 crores and contributing 10% to the company's total consolidated revenues. Within this segment, alternate fuels led the quarter with INR 184 crores, followed by -- followed closely by UNO Minda EV System at INR 186 crores, reflecting strong adoption trends across the electric mobility ecosystem. UNO Minda Automation contributing INR 123 crores, while EV business controller contributed INR 3-wheeler charger programs are now being executed through the EV division as against control division it is prudent to look at aggregate revenues of Uno Minda EV Systems and controller for like-to-like comparison. The aggregate revenues increased to INR 218 crores, registering a growth of 24% as against INR 176 crores in corresponding quarter. This growth was driven by both vehicle segment, which is 2-wheeler and 3-wheelers. The 3-wheeler EV charger business was supported by new 3-wheeler charger programs. The increasing penetration of e-3-wheeler reaching more than 60% has been supporting this growth. The 2-wheeler EV business growth was contributed by multiple drivers. First, SOP of a new program for DCDC converter electric motors as well as RCD cable through the share in revenues though the share in revenues remain relatively smaller than EV charger, which has been our mainstay. EV charger contributed to growth through higher volumes and increased penetration with existing customers and higher share with newly added customers. We have also commenced supplies of charger to a new incumbent OEM. The rising penetration of 2-wheeler has been driving growth. During the quarter, we had received PM approval for our proposed JV with Innov. However, as was advised earlier, the joint venture will also require approval in the host country China. There have been recent regulatory changes in China, tightening the norms for such technology partnership. Innov is reviewing the revised guidelines and seeking clarifications for next steps. configured portfolio continues to reflect steady operational performance. The vertical reported revenues of INR 1,029 crores, registering a robust 21% year-on-year growth and contributing approximately 19% to company's consolidated top line. Contribution during the quarter remained distributed across remaining core and aftermarket verticals within the portfolio. Sensors INR 250 crores followed by acoustics at INR 225 crores. Glow and the non-EV roller business accounted for INR 125 crores and INR 80 crores, respectively. The remaining revenues were driven by the aftermarket segment, including batteries along with external sales from [indiscernible] as planned commission expected by the end of FY '27. Ahead of commission of our first, we are pleased to inform of having added a new OEM customer for sunroof INR 130 crores of annual peak order value. We have also secured order for electric roller ships for INR 40 crores. Together with these orders, our total sunroof order book have crossed INR 500 crores. Moving to the aftermarket and industrial revenues, you can refer to Slide 13 for the quarter ended June 2026, after reported revenues of INR 36 crores, completing approximately 6% of [indiscernible] division which is considered as part of segment revenues stood at INR 254 crores. Combined the aftermarket and channel revenues of INR 590 crores, represent 11% of our consolidated revenues. International business contributed around 9% of total revenues during Q1 FY '27. This performance was driven by improved export traction, particularly in the 2-wheel switching and seating segments. Exports from India stood at approximately INR 228 crores during the quarter as against INR 141 crores in the corresponding quarter. Looking ahead, we remain constructive on the outlook for the automotive industry and continue to expect healthy growth during the remainder of FY'27. At Uno Minda, our growth strategy remains unchanged. We expect to continue our outperformance as compared to industry volumes through market share gains, increasing content per vehicle, rapid localization of advanced technologies, expansion into new product categories and continued investments in capacity and R&D. We are also encouraged by the strong order pipeline across several emerging technology platforms, including EV powertrain systems, lighting, seating, sunroofs, infotainment and advanced electronics. These platforms provide excellent long-term visibility and reinforce our confidence in sustainable growth. With this, I would like to now open up the floor for questions.

[Operator Instructions] First question comes from the line of Chandramouli Muthiah with Goldman Sachs.

My first question is just around the Seating segment. It's a white space for the company, new area of business. So I just want to understand if you could give us some details around the competitive landscape, which 4-wheeler segments you look to participate in? Is it more SUVs? Or are you looking at small cars as well? Are you looking at CVs as well? And also some color around the market size and the opportunity size the way it looks from your vantage point? The second question is just around, I think, your comments around focus on continuing to outperform the industry in terms of growth. I think the back half of the year, the industry will possibly be up against a high base, but it looks like there are about 7 plants that you're onboarding in FY '27, some in the first half, some in the back half. So just want to understand in the back half of this year when the base is high, are there some additional products that launch? Or will you have some Innovance products also that start SOP, which will help the outperformance of the industry? I think you did mention that you still have to wait for the Chinese regulations to clear the Innovance technology licensing. So is that going to hold up any Innovance product SOP in the back half, which was earlier expected? And third question is just around the Green Mobility segment. So now it looks like the Green Mobility segment is almost half the size of your core segments in Lighting and switches and alloy wheels. So is it at a critical scale where you think it's getting closer to profitability of the corporate average? Just want to understand that. And if you could give us some color on CapEx for this year and next year now that we have renewed CapEx plans to drive the growth? I'll just pause. Thanks, --

So a lot of questions. Let me start on the same sequence. So first of all, starting with Seating. [Foreign language] So details on competitive landscape. I think we all know that this business has been something we have been looking for past almost 4, 5 years since we formed this JV with AS. The landscape remains very, very highly competitive. we have been able to get into business nomination for starting with model, we are already talking of some second model and so on. But in terms of vehicles and the categories, I'll not be able to share much information as of now because these models are also the new models which will get launched. So we can't share any such information until the vehicle gets launched. In terms of opportunity size, yes, it is very big. And as you all know, the seating as a product has consistently been adding a lot of value. It's going up to almost INR 30,000, INR 40,000 kind of kit value per car. So the opportunity is growing by the way. And as I also mentioned, this will be one of the largest kit value product in the group or maybe even bigger than the alloy wheel in terms of car. In terms of second half, as you rightly mentioned, there are multiple plants which are coming on stream, some of which are the Phase [indiscernible]. So definitely that will add a lot of what we call delta in terms of industry growth, but there are some businesses which will support the growth, as I said for wheeler plant when it gets commissioned, it will support the increased demand or increased application, which, as I also mentioned, we are currently seeing that shift again in terms of increased application of alloy wheel versus steel wheel. The trend is now again moving favorably as we move forward, which is the indication we are getting from our customers. So there is a mix of both. There are certain businesses like say, in the Minda is moving from Farukh Nagar to Manesar. It is going into a larger plant. So there might not be immediate delta in terms of just shifting to a bigger plant, but obviously, it will enable the growth as we move forward. So -- and similarly, there are other products like as we mentioned, sun roof and all which will gradually come on stream as we move forward. In terms of [inaudible] there is no holdup. Our plant construction goes on as scheduled and even the supplies to our customers. And the endeavor is that we have to ensure that the business goes uninterrupted. And that's where both the partners are completely aligned in terms of making sure that we continue to secure business and the customer supplies should remain unimpacted. So as of now, there is no holdup. In fact, both our plants work is going on. The first plant at City, the work is going on as scheduled. And the plant which you have to construct on that is already on the drawing board and will be hitting the ground in the next couple of months. In terms of green mobility, yes, you are right. And that was the key reason why we have it out last year to show separately because there was businesses are actually going as part of others. So they are not getting that clear visibility as well. And that is the whole reason we have what we call combined. So there are certain businesses which are actually maybe doing better than the group profitability. Certain businesses that just started, obviously, they are lower than profitability. But as we have said, our endeavor always has been in the third full production, we should achieve our target profitability. So businesses which are new, obviously, we won't expect to achieve the third profitability once we start. So that obviously is a journey we have to go through. In terms of Capex plan remains same, what we have shared in the last call of around INR 1,750 crores for the current fiscal year total announced which is almost INR 3,800 crores in pipeline of INR 1,400 crores is already spent till date. So at the current pace, the delta of INR 200 crores is going to get spent over the next 18 to 24 months or so. So we are very comfortably placed in terms of the CapEx.

The next question comes from the line of Raghunandhan N.L. with Nuvama.

Congratulations sir on numbers, especially Q-o-Q revenue improvement despite the drop in the production Q-o-Q. First question, within the green mobility business, based on the capacity and the order book, how do you see the ramp-up for electric 2-wheeler and 4-wheeler business? And specifically, if you can talk a bit more on the traction motor and e-drive, how do you see that ramp-up happening this year and next year? Apart from that, the other question I had was on margin. How do you see the recovery towards 11%, considering the price hikes from customers on commodity and wage inflation? Given the minimum wage hike impact, by when do you expect customers to compensate? Would you be able to pass on 80%, 90% of impact to customers there is a Q-o-Q drop. There is seasonality that always happens that Q1 is lower than Q4. Can you explain why that is the case?

Yes. So thanks for the compliments. In terms of green mobility, you asked how do you see the ramp-up of wheel to wheel. We won't comment on the sales because the volumes are not in our hand. So as the volume grows, we are gearing up to make sure that we are able to meet the supplies. The growth has been definitely more than at least we have expected internally when we have started the year in terms of our budgeting cycle, which is a very, very good position to be in teams are working to see that we meet all our customer demands and build capacities on a much faster pace and capture or capitalize on the opportunity which market is growing up. In terms of traction motor, as I mentioned, as of now, it's a very small business. It's already started. There are 2 OEMs whom we are supplying. The volumes are not that meaningful, honestly. In terms of margin recovery, as I said, we normally and always not normally always give the annual guidance and Q1 tends to be lower. This time, it has been impacted also because of the high commodity prices. And as I mentioned, the commodity price even assuming 100% has passed through that itself has diluted by almost 40 basis points. if these prices remain that impact is going to be there for the rest of the year. But despite that, we are holding on to our mining margin guidance, and we have been able to take a lot of actions in terms of the automation or in terms of efficiencies, in terms of productivity, and we've been able to absorb a large part of the wage increase as well. And for commodity also, as the cycle goes on, on a quarterly, half yearly basis, the price anyway gets adjusted. In fact, we have a customer who has also given in 1 or 2 of the commodities in the monthly sort of price, which we have also mentioned in terms of our last call. So that's a very good thing. Customers has been also conscious of this fact. And we have also seen some of the customers already announced some sort of price hikes to absorb these kind of cost increases. In terms of depreciation, quarter-on-quarter drop Q1 to Q4 largely happens because in our casting business, which is a capital-intensive business, there is a method of depreciation. So once the new starts, you start with a lower base. So that is one of the reasons why your depreciation in Q1 normally is lower in that business from Q4 to Q1. So I hope I have answered all of your questions, Raghu.

The next question comes from the line of Mumuksh Mandlesha with Anand Rathi Institution Equities.

Sir, just on the 4-wheeler INR 3.2 billion CapEx, how much revenue potential the plant can generate? Secondly, on the seating side with this order and also export order, just indicate how the time lines will be there in terms of ramp-up of those orders? And similarly on the sunroof side also with the INR 500 crore order, if you can help understand how the ramp in FY229,30? And finally, sir, on the JV side, this quarter was flat on Y-o-Y basis. Is it largely driven by the commodity side?

You understand what happened in the JV 4-wheel seating business, the 3.2 billion CapEx can do revenue of more than 2x as we speak. And I'm sure as we move forward, once we do CapEx on incremental CapEx further, the potential is normally more. But to answer to your point, it is more than 2x at this stage. Export order in terms of the time lines. So the part of the export orders, it's a 2-year cycle. So you will see impact coming in from end of FY '28 and the last part will come fully in '28, '29. Same will be in the sunroof business also. So the business will start from it, as I said, end of FY '27, is somewhere in March, April of FY '27 and you will have a ramp-up phase for that year and then realize sal229s. In terms of profit being flat, your point is right. It is actually a commodity impact, which we could not recover in the quarter. So obviously, once this price gets adjusted as for next quarter, we should be able to start bridging that gap from Q2 onwards.

[Operator Instructions] The next question comes from the line of Siddhartha Bera with Nomura Holdings.

Sir, first question is on this for the lighting segment for 4-wheelers. Some assessments are how big can this opportunity be maybe in a few years in terms of revenue potential? And do you need to invest further for catering to this OE? Second question is on the exports. So exports, we have seen that has started going well. If you can highlight what has been the number for last year or last Q1 or Q4 for the total exports? And in the medium term, where do you see the exports potential in terms of segments where can we reach? And lastly, sir, on the cost side now given that you mentioned that a couple of customers have started giving monthly price hikes gross margins going down. So does that lead to some normalization in the gross margins at a faster pace.

Thanks, and thanks for the complements. In terms of OMES, the new customers definitely is a global customer, and this is an entry. And we are working with them proactively in terms of seeing possibility if we can sort of build on that. But good news is as of now, it's an entry with decent volumes, order value. Opportunity can obviously be very big even within India itself. And then if everything goes fine in future, maybe there may be possibility of exports, but I'm not sort of betting on that. We are not betting on that as of now. But locally itself, there is a large opportunity. Do we need to invest on this for this trend? This is what we have received. As of now, we don't because the plant which we have set up in trade, there might be the investment only to the extent of lines and tools, et cetera, but nothing in terms of large CapEx might be required at this stage. Exports has been growing well, yes, thanks. And what has been our Q4, et cetera. So last Q4, our export was physically from India was INR 141 crores. And this quarter it was INR 228 crores, so almost like 50%, 60% increase in Q4. Where do we see exports moving forward as you also highlighted some of the new business which we have secured, specifically almost INR 400 crores of new business plus some new business in switches and labs. Definitely, our endeavor is to grow significantly from where we are today. And gross margin, as I also mentioned initially is that while on one hand, assuming that we recover full commodity price, the increase this quarter itself is like diluting 0.4% of the gross margin. And some of the new business which we are adding on the electronic side, there the gross margin obviously is lower. So that also plays a part in terms of gross margin. But in terms of profitability, because there you have better asset turn, it does not impact much on the EBITDA side or the -- so while we might see some small movement here and there for GRM, ideally, that should offset at EBITDA margin level.

The next question comes from the line of Rishi Vora with Kotak Securities.

Just on the China JV, the comment which you made, can you just elaborate on what is the current status? So are we able to import the EXL today? So is there a restriction over there or there are no restrictions? And in the future, how do you think this pan out? And in a worst case, because in some of the battery technologies, Chinese government has restricted. So if we do restrict then what would be our strategy in kind of increasing our presence on the 4-wheeler EV business?

Sure. So Rishi, in terms of any restriction for Ex, as of now, there is no restriction, and we don't see possibility of any restriction on import of E-Axle as of now. And you shared in terms of somebody else facing technology challenges, et cetera, et cetera. Obviously, one can't rule it out. But as I said, we are currently in discussion with our partner, they are also in discussion with the local stakeholders. The whole endeavor is to ensure that whatever investment we have done, we are able to utilize that investment and we are able to gradually localize the product as we have laid out original which they remain pretty confident that they should be able to find a solution to this problem. But as I said, this is just early days. Hopefully, in next quarter or so, we should have some better clarity.