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Edited Transcript of BALKRISIND.NSE earnings conference call or presentation 15-Nov-19 10:30am GMT

Q2 2020 Balkrishna Industries Ltd Earnings Call

Thane Nov 30, 2019 (Thomson StreetEvents) -- Edited Transcript of Balkrishna Industries Ltd earnings conference call or presentation Friday, November 15, 2019 at 10:30:00am GMT

TEXT version of Transcript

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Corporate Participants

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* Basantkumar G. Bansal

Balkrishna Industries Limited - Director of Finance

* Rajiv A. Poddar

Balkrishna Industries Limited - Joint MD & Executive Director

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Conference Call Participants

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* Abhishek Kumar Jain

Dolat Capital Market Pvt. Ltd., Research Division - Analyst

* Arvind Sharma

Citigroup Inc, Research Division - Associate

* Ashish Shah;Tara Capital Partners Inc.;Portfolio Manager

* Ashutosh Tiwari

Equirus Securities Private Limited, Research Division - Research Analyst

* Bharat Gianani

Sharekhan Limited, Research Division - Analyst

* Hitesh Goel

Kotak Securities (Institutional Equities) - Associate Director & Automobile Analyst

* Mithun Soni;GeeCee Investments;Research Head & Fund Manager

* Nishant Vass

ICICI Securities Limited, Research Division - Auto and Auto Ancillary Analyst

* Nishit Jalan

Axis Capital Limited, Research Division - Executive Director of Auto

* Pawan Parakh;Renaissance Investment Managers Private Limited;Senior Analyst

* Pravin Yeolekar

CIMB Research - Analyst

* Puneet J. Gulati

HSBC, Research Division - Analyst

* Rajesh Kothari

AlfAccurate Advisors Pvt. Ltd - Founder, MD & Director

* Ronak Sarda

Systematix Shares & Stocks (India) Ltd., Research Division - VP of Auto, Auto Ancillary

* Shradha Sheth

Edelweiss Securities Ltd., Research Division - Research Analyst

* Shyam Sundar Sriram

Sundaram Asset Management Company Ltd. - Research Analyst

* Siddhartha Bera

Nomura Securities Co. Ltd., Research Division - Associate

* Vimal Gohil

Union Asset Management Company Private Limited - Research Analyst

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Presentation

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Operator [1]

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Ladies and gentlemen, good day, and welcome to Balkrishna Industries 2Q FY '20 Earnings Conference Call hosted by Kotak Securities 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 are not the guarantees of future performance and involve risks and uncertainties that are difficult to predict.

(Operator Instructions) I now hand the conference over to Mr. Hitesh Goel from Kotak Securities. Thank you, and over to you, sir.

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Hitesh Goel, Kotak Securities (Institutional Equities) - Associate Director & Automobile Analyst [2]

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Thanks, Suman. I welcome all of you for the second quarter FY '20 earnings conference call of Balkrishna Industries. I also welcome the management on the call. Today, we have with us Mr. Rajiv Poddar, Joint Managing Director; and Mr. B.K. Bansal, Director of Finance of Balkrishna Industries.

I would like to hand over the call to Mr. B.K. Bansal for opening remarks, and then we can start with the Q&A.

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Basantkumar G. Bansal, Balkrishna Industries Limited - Director of Finance [3]

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Thank you, Hitesh. Good afternoon, everyone. I also welcome you all to the Q2 FY '20 earnings call of our company. I'm joined by Mr. Rajiv Poddar and Shogun from SGA.

First, I will talk about performance. So the market continues to remain challenging due to unfavorable environmental condition in Europe and unfavorable macroeconomic situation across the globe. At BKT, we continue to focus on growing our reach across markets and across segments, particularly in the nonagriculture market, where we have a small market share. We are witnessing encouraging response in Indian market. Considering this, we remain optimistic to outperform the industry.

I will now talk about our CapEx program. So the CapEx for Phase 1 of Carbon Black plant with a capacity of 60,000 metric tons has already been commercialized during last quarter. The product quality has been well-accepted. We expect full benefit of the Phase 1 to acquire in H2 FY '20. The second phase of 80,000 metric tons is expected to be commissioned by FY '21. All other CapEx projects in India are progressing as per schedule. We expect them to start contributing from FY '22 onwards. As discussed in the previous quarter, we continue to invest in branding initiative across geographies to strengthen the BKT brand. We strongly believe that this initiative of brand building are necessary to reach the next level of growth and gain market share across geographies.

With this, I'll now move on to performance highlights. Our sales volume for the quarter was 45,169 metric tons, reflecting a de-growth of 14% year-on-year. For H1 FY '20, the sales volume was 96,473 metric tons, reflecting a de-growth of 12% Y-o-Y. Our standalone revenue for the quarter stood at INR 1,107 crores. This includes realized gain on foreign exchange pertaining to sales of INR 36 crores. For H1 FY '20, the standalone revenue for the quarter stood at INR 2,325 crores, which includes realized gain on foreign exchange pertaining to sales of INR 60 crores.

On the EBITDA front, for the presentation purpose, we have shown the interest income from investment and unrealized gain/loss below the EBITDA while realized gain have been shown above EBITDA. Accordingly, the standalone EBITDA for the quarter was at INR 309 crores with a margin of 27.9%. The standalone EBITDA for H1 FY '20 was at INR 604 crores with a margin of around 26%.

Other income for the quarter stood at INR 81 crores, which includes net gain on foreign exchange to the tune of INR 55 crores and other income from investment of INR 26 crores. For H1 FY '20, other income stood at INR 152 crores, which includes net gain on foreign exchange to the tune of INR 97 crores and other income from investment of INR 55 crores.

Coming to the net Forex items. For the quarter, we incurred a net Forex gain of INR 55 crores, which includes realized gain of INR 41 crores and unrealized gain of INR 14 crores. For H1 FY '20, we incurred a net Forex gain of INR 97 crores, which includes realized gain of INR 69 crores and unrealized gain of INR 28 crores.

Profit after tax stood for the quarter was reported at INR 291 crores, while for H1 FY '20, it was recorded at INR 467 crores. The Q2 PAT was higher on account of deferred tax credit. Our tax rate going forward will be 22% plus surcharge, amounting to 25.17%. We are a 0 long-term debt company. Our cash and cash equivalents were INR 1,207 crores, implying net cash position even on short-term side.

The Board of Directors have declared a second interim dividend of INR 2 per share in addition to INR 2 per share paid during first quarter FY '20. At the start of the year, we had guided for 3% to 5% of volume growth for the current financial year. The first half of the year has been challenging, and our volume on half year basis has seen 12% de-growth from 109,093 metric tons in H1 FY '19 to 96,473 metric tons in H1 FY '20. We believe the second half to be better. However, it will be difficult to recover fully the lost ground of first half based on the current run rate. Therefore, we expect to end the current year with minor de-growth.

That is all from my side. And I now leave the floor open for the question-and-answer. Thank you.

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Questions and Answers

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Operator [1]

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Thank you very much. Ladies and gentlemen, we will now begin the question-and-answer session. (Operator Instructions) First question is from the line of Puneet Gulati from HSBC.

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Puneet J. Gulati, HSBC, Research Division - Analyst [2]

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Just trying to understand what really changed over the quarter. What segments surprised you in terms of volume demand?

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Basantkumar G. Bansal, Balkrishna Industries Limited - Director of Finance [3]

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I think this time, it was across the segments. So apart from agriculture, the downgrade was seen in the OTR segment as well.

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Puneet J. Gulati, HSBC, Research Division - Analyst [4]

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Okay. And within the regions?

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Basantkumar G. Bansal, Balkrishna Industries Limited - Director of Finance [5]

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And within region also, it was across geographies.

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Puneet J. Gulati, HSBC, Research Division - Analyst [6]

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Okay. And this wasn't anticipated? Because I presume we will have some sense of what the quarter is going to be before the start of the quarter.

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Basantkumar G. Bansal, Balkrishna Industries Limited - Director of Finance [7]

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Right.

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Puneet J. Gulati, HSBC, Research Division - Analyst [8]

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And so basically, whatever your partners ordered, they didn't offtake as much or has something else happened?

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Basantkumar G. Bansal, Balkrishna Industries Limited - Director of Finance [9]

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To that extent the orders were also placed lower only.

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Puneet J. Gulati, HSBC, Research Division - Analyst [10]

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Okay. Okay. Second, if you can give some color on how is the CapEx plan getting along? And in what quarter of FY '21 would you expect to commission various capacities?

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Basantkumar G. Bansal, Balkrishna Industries Limited - Director of Finance [11]

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So like this Carbon Black project is expected during first half of next financial year.

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Puneet J. Gulati, HSBC, Research Division - Analyst [12]

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Okay.

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Basantkumar G. Bansal, Balkrishna Industries Limited - Director of Finance [13]

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It may also be completed a little earlier, but that is the raw time line. And the CapEx on Bhuj is also expected during the next financial year.

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Puneet J. Gulati, HSBC, Research Division - Analyst [14]

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Will it be first half oriented, second half?

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Basantkumar G. Bansal, Balkrishna Industries Limited - Director of Finance [15]

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CapEx should be completed before end of next financial year.

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Puneet J. Gulati, HSBC, Research Division - Analyst [16]

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Okay. Okay. Okay. So by next financial year, all your CapEx will be done then?

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Basantkumar G. Bansal, Balkrishna Industries Limited - Director of Finance [17]

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Yes. Yes.

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Puneet J. Gulati, HSBC, Research Division - Analyst [18]

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How is the Carbon Black first facility behaving? Is it giving you the expected benefits?

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Basantkumar G. Bansal, Balkrishna Industries Limited - Director of Finance [19]

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Yes. Yes. Yes.

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Puneet J. Gulati, HSBC, Research Division - Analyst [20]

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Both in terms of margins and efficiency?

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Basantkumar G. Bansal, Balkrishna Industries Limited - Director of Finance [21]

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Margin and quality-wise, it has been encouraging, and we are getting the expected return from it.

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Puneet J. Gulati, HSBC, Research Division - Analyst [22]

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Okay. Okay. That's good. Also, if I look at the numbers, it looks like you took some minor price increase. Is that understanding correct?

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Basantkumar G. Bansal, Balkrishna Industries Limited - Director of Finance [23]

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Sorry?

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Puneet J. Gulati, HSBC, Research Division - Analyst [24]

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It looks -- from numbers, it appears that sequentially, you took some pricing increase. Is that understanding correct?

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Basantkumar G. Bansal, Balkrishna Industries Limited - Director of Finance [25]

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No. No. No. We have not taken any price increase. This increase in ASP is on account of better currency realization during the quarter.

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Puneet J. Gulati, HSBC, Research Division - Analyst [26]

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So what was the realization?

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Basantkumar G. Bansal, Balkrishna Industries Limited - Director of Finance [27]

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So in terms of euro, it was around INR 80 as against INR 78, INR 79. And in terms of dollar, it was around INR 72 as against INR 71.

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Puneet J. Gulati, HSBC, Research Division - Analyst [28]

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Okay. I thought last quarter was also INR 80 only?

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Basantkumar G. Bansal, Balkrishna Industries Limited - Director of Finance [29]

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No, no, no.

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Puneet J. Gulati, HSBC, Research Division - Analyst [30]

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Last was INR 78?

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Basantkumar G. Bansal, Balkrishna Industries Limited - Director of Finance [31]

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Yes.

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Puneet J. Gulati, HSBC, Research Division - Analyst [32]

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Okay. And INR 71 for dollars?

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Basantkumar G. Bansal, Balkrishna Industries Limited - Director of Finance [33]

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Yes.

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Puneet J. Gulati, HSBC, Research Division - Analyst [34]

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Okay. So that's the difference. So from margin front also, it's pretty much similar to what you saw in 1Q?

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Basantkumar G. Bansal, Balkrishna Industries Limited - Director of Finance [35]

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No. From Q1, margin is better.

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Puneet J. Gulati, HSBC, Research Division - Analyst [36]

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Yes. Correct. Slightly better; yes, 10%-odd better. That's right. Great.

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Operator [37]

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The next question is from the line of Arvind Sharma from Citi.

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Arvind Sharma, Citigroup Inc, Research Division - Associate [38]

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The first question would be on your raw material prices. As price per ton has reduced quite a lot, anything that explains that?

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Basantkumar G. Bansal, Balkrishna Industries Limited - Director of Finance [39]

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See, it includes the benefit on account of Carbon Black also, okay? And otherwise, the raw material prices have been on declining mode. So that is why this kind of benefit has been reflected during this quarter.

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Arvind Sharma, Citigroup Inc, Research Division - Associate [40]

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Almost 11% kind of a benefit. So I was just wondering, have rubber prices fallen that much? Or is it only (inaudible)?

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Basantkumar G. Bansal, Balkrishna Industries Limited - Director of Finance [41]

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It's not only rubber, even the crude derivatives have also fallen off. And as I said, there is a benefit of Carbon Black also.

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Arvind Sharma, Citigroup Inc, Research Division - Associate [42]

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And do you expect this strategy in terms of price per ton to continue for this year?

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Basantkumar G. Bansal, Balkrishna Industries Limited - Director of Finance [43]

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Difficult to predict because it all depends on the raw material prices. But most of the raw material reduction have already been priced in.

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Arvind Sharma, Citigroup Inc, Research Division - Associate [44]

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Okay. But this gross margin -- coming to the gross margin, this gross margin should sustain under, say, some big increase in cost. Is that sense correct?

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Basantkumar G. Bansal, Balkrishna Industries Limited - Director of Finance [45]

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Yes. Broadly, you can say, but it is subject to raw material prices remaining at the same level, currency also remaining at the same level.

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Arvind Sharma, Citigroup Inc, Research Division - Associate [46]

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Right. Sir, just one more thing. Will it be possible to share the percentage of the revenue from various geographies and the volume, if possible? If not volume, at least the revenues?

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Basantkumar G. Bansal, Balkrishna Industries Limited - Director of Finance [47]

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Not revenue, but I can give you geography-wise mix in terms of percentage. So Europe is around 50%. America is around 19%. India is 20%, and balance is the rest of the world.

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Arvind Sharma, Citigroup Inc, Research Division - Associate [48]

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This is the volume breakup?

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Basantkumar G. Bansal, Balkrishna Industries Limited - Director of Finance [49]

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Volume, volume.

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Operator [50]

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The next question is from the line of Pravin Yeolekar from CGS-CIMB.

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Pravin Yeolekar, CIMB Research - Analyst [51]

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Just couple of questions. So first, as you have indicated that India business has seen increase in performance. So could you just elaborate on that? How is your progress in the India OTR segment and especially in the mining tires?

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Rajiv A. Poddar, Balkrishna Industries Limited - Joint MD & Executive Director [52]

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So overall, India showed good results for us, as you mentioned. And in the mining sector also we are making good headway. The tires are performing well and being accepted. So there's a good [report] there. So we're quite positive and hopeful on this -- in this area.

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Pravin Yeolekar, CIMB Research - Analyst [53]

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And sir, could you just help us to understand what will be your target 2 to 3 years going ahead in terms of mix of the geography?

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Basantkumar G. Bansal, Balkrishna Industries Limited - Director of Finance [54]

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(inaudible) it's currently 20%. Going forward 2, 3 years down the line, it can increase to around 24%, 25%. And all the geographies are increasing. So broadly, the mix would be almost similar. There will not be any significant shift in next 2 to 3 years' time frame.

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Pravin Yeolekar, CIMB Research - Analyst [55]

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Okay. Sure. And last question on India business only. For the current quarter -- for the first half of FY '20, have we seen any market share increase in the farm tire segment or in the overall off-highway tire segment? Can you just...

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Rajiv A. Poddar, Balkrishna Industries Limited - Joint MD & Executive Director [56]

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No. We have -- nothing significant to report. But yes, we are making headway, and our numbers are growing. Market at the moment is huge, and we are too small to really show significant gain in market. So maybe in a couple of years, we would get there and then we can tell you.

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Pravin Yeolekar, CIMB Research - Analyst [57]

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And sir, this mix what you said just, 20% to 25%, so this will be driven by -- largely due to OTR segment?

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Basantkumar G. Bansal, Balkrishna Industries Limited - Director of Finance [58]

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OTR as well as agriculture farm tires.

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Operator [59]

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The next question is from the line of Siddhartha Bera from Nomura Securities.

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Siddhartha Bera, Nomura Securities Co. Ltd., Research Division - Associate [60]

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Sir, on the commodity side, I mean we have already 2 months in the quarter. So just wanted your thoughts on how are you seeing the commodity prices. Are they similar to what you had realized in Q2? Or have they actuality eased up slightly? What is the feedback?

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Rajiv A. Poddar, Balkrishna Industries Limited - Joint MD & Executive Director [61]

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So the prices, we're expecting it to be at these levels only. We are not seeing much increase, and so it should be stable.

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Siddhartha Bera, Nomura Securities Co. Ltd., Research Division - Associate [62]

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Okay. Okay. And sir, if you can guide us on our hedge book and what is the hedge rates we have taken for the medium term.

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Basantkumar G. Bansal, Balkrishna Industries Limited - Director of Finance [63]

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It is around INR 79 to INR 80.

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Siddhartha Bera, Nomura Securities Co. Ltd., Research Division - Associate [64]

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INR 79 to INR 80.

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Basantkumar G. Bansal, Balkrishna Industries Limited - Director of Finance [65]

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For euro.

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Siddhartha Bera, Nomura Securities Co. Ltd., Research Division - Associate [66]

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For euro. Okay. Sir, dollar, I would believe has a natural hedge, right?

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Basantkumar G. Bansal, Balkrishna Industries Limited - Director of Finance [67]

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Yes. Yes. It is generally converted at the spot rate.

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Siddhartha Bera, Nomura Securities Co. Ltd., Research Division - Associate [68]

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Okay. And how much of our exposure is hedged? At least, what is the hedge book, if you can give it to me?

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Basantkumar G. Bansal, Balkrishna Industries Limited - Director of Finance [69]

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For next 1 year requirement, around 70% to 75%.

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Siddhartha Bera, Nomura Securities Co. Ltd., Research Division - Associate [70]

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70% to 75% is hedged at around INR 80?

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Basantkumar G. Bansal, Balkrishna Industries Limited - Director of Finance [71]

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Yes.

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Siddhartha Bera, Nomura Securities Co. Ltd., Research Division - Associate [72]

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INR 80, euro.

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Basantkumar G. Bansal, Balkrishna Industries Limited - Director of Finance [73]

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In terms of euro, yes.

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Siddhartha Bera, Nomura Securities Co. Ltd., Research Division - Associate [74]

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Okay. Okay. Got it. And sir, lastly, on the CapEx side, we have seen already close to INR 400 crores of CapEx being done in the first half. So you had indicated INR 600-odd crore CapEx for this year. So if you can guide us the total number you are planning for this year and next year and the breakup.

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Basantkumar G. Bansal, Balkrishna Industries Limited - Director of Finance [75]

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So last year, we spent around INR 700 crores. This year, I said it would be again INR 600 crores to INR 700 crores. And remaining INR 600 crores will be spent in the next financial year. So first half year, we spent around INR 430 crores. So now in the second half, it will be around INR 250 crores to INR 300 crores.

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Siddhartha Bera, Nomura Securities Co. Ltd., Research Division - Associate [76]

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Okay. And next year, it is around...

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Basantkumar G. Bansal, Balkrishna Industries Limited - Director of Finance [77]

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It would be balanced expenditure. So it could be around INR 500 crores to INR 600 crores. So in a span of 3 years, the total CapEx would be around INR 2,000 crores, including maintenance CapEx.

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Siddhartha Bera, Nomura Securities Co. Ltd., Research Division - Associate [78]

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Okay. Okay. Got it, sir. And lastly, sir, if you can share the mix for the agri OTR and OE replacement also (inaudible)?

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Basantkumar G. Bansal, Balkrishna Industries Limited - Director of Finance [79]

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Sure. Sure. So agri is around 60%; OTR is around 36%, 37%; and balance is other [nominal] guidance. And replacement is 73%; OEM is 25%; and off-take is balance 2.5% to 3%.

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Operator [80]

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The next question is from the line of Hitesh Goel from Kotak Securities.

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Hitesh Goel, Kotak Securities (Institutional Equities) - Associate Director & Automobile Analyst [81]

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Sir, my question is related to the second half. Your outlook suggests that you're building a growth for second half on a Y-o-Y basis. So can you give us some sense where you're seeing some green shoots either in OTR, agri segment or how should we look at it? And second question pertains to this marketing -- additional marketing expenses that you spend this year in 1H. Is this going to be ongoing trend in FY '21 also? And what benefits are you getting with geographies? Are you spending this amount, so if you can get some sense to us?

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Rajiv A. Poddar, Balkrishna Industries Limited - Joint MD & Executive Director [82]

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So regarding the -- I mean overall, we have seen the market being stable, but there are some areas like India and Eastern Europe, America, where we see some green shoots. So that's why we see the market to bring us back to the level that you are talking about in the numbers.

And as far as the second question is concerned, regarding the -- so these marketing expense will go on for some time, and it's going to be a continuous sort of arrangement. And of course, we are seeing some benefits for what we did last year and where we started. So the brand started to get more recognition, and we are hopeful that by the end of this cycle, we should achieve our objective.

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Hitesh Goel, Kotak Securities (Institutional Equities) - Associate Director & Automobile Analyst [83]

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So this run rate of marketing expenses should continue in FY '21?

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Rajiv A. Poddar, Balkrishna Industries Limited - Joint MD & Executive Director [84]

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Yes. Yes.

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Basantkumar G. Bansal, Balkrishna Industries Limited - Director of Finance [85]

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That's what our...

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Hitesh Goel, Kotak Securities (Institutional Equities) - Associate Director & Automobile Analyst [86]

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And sir, one more thing. On this Carbon Black that you said that a major benefit has come -- some benefit has come through in RM because of Carbon Black. What is the kind of benefit that has come through in RM? Can you suggest that? And what is likely to come through in future quarters?

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Basantkumar G. Bansal, Balkrishna Industries Limited - Director of Finance [87]

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Yes. So it is in line with what we had projected. In the current quarter, the amount is around INR 10 crores to INR 12 crores. And on the full utilization basis, on a turnover of INR 5,000 crores, the benefit from the Carbon Black should be around INR 50 crores.

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Hitesh Goel, Kotak Securities (Institutional Equities) - Associate Director & Automobile Analyst [88]

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Which will fully get realized next year?

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Basantkumar G. Bansal, Balkrishna Industries Limited - Director of Finance [89]

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Yes.

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Hitesh Goel, Kotak Securities (Institutional Equities) - Associate Director & Automobile Analyst [90]

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Okay. And sir, my final question on this U.S. and China, they are talking about that agri, China will take more agri products from U.S. That was discussed in their negotiation they are doing. Does that impact any which ways your volumes in Europe because in Europe, we used to send agri products to China. Any major impact because of this trade [solution]?

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Basantkumar G. Bansal, Balkrishna Industries Limited - Director of Finance [91]

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If this dispute is resolved, then definitely it will improve the overall business sentiment and will help all the industries.

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Hitesh Goel, Kotak Securities (Institutional Equities) - Associate Director & Automobile Analyst [92]

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No. No. I was saying because Europe was sending agriproducts to China, but now China is saying we'll take additional products from U.S. And you being more heavier in Europe and lesser market share in U.S., does this impact your business or it doesn't?

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Rajiv A. Poddar, Balkrishna Industries Limited - Joint MD & Executive Director [93]

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Not at this moment. We don't see it as a major problem as of now.

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Operator [94]

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(Operator Instructions) The next question is from the line of Ashutosh Tiwari from Equirus.

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Ashutosh Tiwari, Equirus Securities Private Limited, Research Division - Research Analyst [95]

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Firstly, on the -- like, sir, you've seen 12% decline in volumes in the first half. Can you provide some color on -- is it also related to distributor destocking still continues in 2Q? Or I mean, I wondered whether retail sales are better than what we are reporting in the numbers.

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Rajiv A. Poddar, Balkrishna Industries Limited - Joint MD & Executive Director [96]

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I think it's a mix of both. The retail numbers also are a little low, and there's some destocking because overall market sentiments are not very positive. They are challenging. So it's a mix of both.

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Ashutosh Tiwari, Equirus Securities Private Limited, Research Division - Research Analyst [97]

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So do you think that actually, distributor destocking will probably stop in third quarter because we probably started seeing the volume downtick from third quarter last year?

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Rajiv A. Poddar, Balkrishna Industries Limited - Joint MD & Executive Director [98]

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No. I mean we'll have to wait and watch -- but I think another quarter or 2, and then we could probably get a better picture on that.

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Ashutosh Tiwari, Equirus Securities Private Limited, Research Division - Research Analyst [99]

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Okay. And secondly, on taxation, basically, if you look at the tax rate in the first half, it's around 8.4%. So what will be full year tax rate for us?

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Basantkumar G. Bansal, Balkrishna Industries Limited - Director of Finance [100]

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No. No. Full year tax rate would be 25.17% only. This is the reversal of deferred tax liability.

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Ashutosh Tiwari, Equirus Securities Private Limited, Research Division - Research Analyst [101]

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Okay. So second half, the tax rate will be 25.17%.

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Basantkumar G. Bansal, Balkrishna Industries Limited - Director of Finance [102]

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Yes. Yes. Yes. In fact, for the full year, it will be -- I mean except this deferred tax adjustment, tax rate would be below 25.17% only.

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Ashutosh Tiwari, Equirus Securities Private Limited, Research Division - Research Analyst [103]

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Okay. And lastly, if I look at the large size mining tires, so I mean can you provide some color on what kind of volumes or contribution to (inaudible) that provides now -- contributes now?

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Basantkumar G. Bansal, Balkrishna Industries Limited - Director of Finance [104]

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We do not have separate number for large size mining tires. But it is on the increasing trend only and yet the contribution from them is very, very small in the overall scheme.

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Ashutosh Tiwari, Equirus Securities Private Limited, Research Division - Research Analyst [105]

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And which are the key geographies we are supplying this tires to as of now? Which markets have become good market for us from (inaudible)?

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Basantkumar G. Bansal, Balkrishna Industries Limited - Director of Finance [106]

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India, U.S., Canada...

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Rajiv A. Poddar, Balkrishna Industries Limited - Joint MD & Executive Director [107]

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Australia.

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Basantkumar G. Bansal, Balkrishna Industries Limited - Director of Finance [108]

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Australia.

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Operator [109]

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(Operator Instructions) The next question is from the line of Abhishek Jain from Dolat Capital.

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Abhishek Kumar Jain, Dolat Capital Market Pvt. Ltd., Research Division - Analyst [110]

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Sir, what is current market share in agri and OTR segment? Is there any improvement in last 1 year? And what sort of the changes coming in the competitive landscape and technology in this segment? And how is your pricing compared to your competitors?

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Basantkumar G. Bansal, Balkrishna Industries Limited - Director of Finance [111]

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No, nothing has changed in last 1 year. Everything is same. So our market traded also broadly at the same level. On overall basis, it is around 5%. In agri, it would be around 8%. And in OTR, it will be 2% to 2.5%.

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Abhishek Kumar Jain, Dolat Capital Market Pvt. Ltd., Research Division - Analyst [112]

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And how is your pricing compared to your competitors, because you have not taken any price hike in last 1 year?

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Basantkumar G. Bansal, Balkrishna Industries Limited - Director of Finance [113]

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Yes.

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Abhishek Kumar Jain, Dolat Capital Market Pvt. Ltd., Research Division - Analyst [114]

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So are you facing some pricing pressures there?

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Basantkumar G. Bansal, Balkrishna Industries Limited - Director of Finance [115]

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No, no, no. We have taken some price reduction in the first quarter, in line with the reduction in raw material prices, and still the gap between us and the peers would be in the range of 10% to 15%.

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Abhishek Kumar Jain, Dolat Capital Market Pvt. Ltd., Research Division - Analyst [116]

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Okay. And as you know, sir, CEAT is also adding capacity in the OTR segment. How this will impact your volumes?

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Basantkumar G. Bansal, Balkrishna Industries Limited - Director of Finance [117]

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We do not know what kind of capacity they are adding. So it would be difficult for me to comment on that.

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Abhishek Kumar Jain, Dolat Capital Market Pvt. Ltd., Research Division - Analyst [118]

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Okay. And sir, my last question is related with the channel inventory. How this is placed in a different market, especially in the Europe?

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Basantkumar G. Bansal, Balkrishna Industries Limited - Director of Finance [119]

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You know the channel inventory is in line with the procurement cycle. And in a buoyant market, we create more inventory, which is not happening currently. So everyone is maintaining inventory according to his procurement item.

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Abhishek Kumar Jain, Dolat Capital Market Pvt. Ltd., Research Division - Analyst [120]

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So what is your updated guidance for the second half of FY '20?

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Basantkumar G. Bansal, Balkrishna Industries Limited - Director of Finance [121]

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So we said that overall, there will be -- there can be a minor de-growth. So second half would be almost flat.

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Operator [122]

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The next question is from the line of Vimal Gohil from Union Mutual Fund.

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Vimal Gohil, Union Asset Management Company Private Limited - Research Analyst [123]

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Most of my questions have been answered. Could you -- but I missed the geographical split of your volumes. Could you just repeat that, please?

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Basantkumar G. Bansal, Balkrishna Industries Limited - Director of Finance [124]

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So Europe is around 47%. And America is around 18% to 19%. India is 20%, and balance is RoW.

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Operator [125]

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The next question is from the line of Mr. Nishit Jalan from Axis Capital.

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Nishit Jalan, Axis Capital Limited, Research Division - Executive Director of Auto [126]

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Sir, I have 2 questions. Firstly, just wanted to check on the mining side when we have entered, obviously, in agri, we had well entrance and we have a good distribution. How are we placed on the mining side now? Because I understand that we need to expand our reach with mining service providers quite extensively to get a gain share over there. So where have we made good progress? And what are the areas where we still need to do a lot of work? Anything on this front?

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Rajiv A. Poddar, Balkrishna Industries Limited - Joint MD & Executive Director [127]

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So basically, on the mining side, as I mentioned the tires are performing well, and we're getting good response from the end users. However, it's initial steps, and we are working closely to make ourselves a strong player in this. We are increasing our product range. We are increasing the capacities and strengthening our distribution. So I think we will -- for the work to be completed, we are -- it should take a few years before we become a big player in this field as well. But it is -- we are in that direction.

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Nishit Jalan, Axis Capital Limited, Research Division - Executive Director of Auto [128]

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So U.S. is still a work in progress in that sense and we need to expand our distribution significantly?

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Rajiv A. Poddar, Balkrishna Industries Limited - Joint MD & Executive Director [129]

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Now our distribution has got established in the U.S. But we are -- as and when the product goes, gets tested, gets used, more and more people are coming back to reuse, and that's what I meant by strengthening the distribution, giving them more confidence in that product.

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Nishit Jalan, Axis Capital Limited, Research Division - Executive Director of Auto [130]

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Okay. And sir, just one more thing. I was just looking at the financials of your global peers as well like Titan and Trelleborg. We have seen that their margins have come off quite significantly as well in this quarter. So just wanted to get a sense, are you getting any sense in the market that competitive intensity is coming down? Or basically, at least that the benefit that are there from the raw material prices, that will not get passed on to the customers? Are you seeing any signs of any improvement in pricing in the end market?

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Rajiv A. Poddar, Balkrishna Industries Limited - Joint MD & Executive Director [131]

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So I don't think there's increase. Nobody is taking an increase in the marketplace. I think everybody is waiting and watching what -- to go. However, we are evaluating. And as and when there's any opportunity, we will see that.

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Operator [132]

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The next question is from the line of Mithun Soni from GeeCee Investments.

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Mithun Soni;GeeCee Investments;Research Head & Fund Manager, [133]

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Yes, I think most of the questions have been answered. Just how are you seeing the players -- competitors in the Europe market behaving, in the sense that are they looking to play a pricing game to increase their business? Or are they being more aggressive? And what is going to help us to differentiate ourselves? Well, we have been always having that price gap. But what are the other things we need to do to increase our market share over there compared to them?

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Basantkumar G. Bansal, Balkrishna Industries Limited - Director of Finance [134]

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So fortunately, there is a good pricing discipline in all the markets. So nobody is going out of the way to gain the market share. Everyone understand that the overall market is difficult, and they are enjoying their respective market share. So fortunately, we have not seen such kind of trend or behavior in the market.

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Mithun Soni;GeeCee Investments;Research Head & Fund Manager, [135]

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Okay, sir. And sir, how can we further increase our market share? Let's say, today, we are -- as you said, it's about 8-odd percent. What is our aspiration in the next 3 years? And what are the steps we will need to take to reach there?

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Rajiv A. Poddar, Balkrishna Industries Limited - Joint MD & Executive Director [136]

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So our aspiration is to be a 10% -- around 10% mark, and we are working towards that. I think already, we've talked about marketing expenses, which we are going to build the brand and create more awareness of it. We are working with our distributors closely to see how we can penetrate markets much more. And these are some of the activities we are doing to really gain more market.

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Operator [137]

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The next question is from the line of Raj Koradia from Edelweiss.

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Shradha Sheth, Edelweiss Securities Ltd., Research Division - Research Analyst [138]

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This is Shradha here. So just one question from my side. I just wanted to get the sense on the outlook because another peer last week, they said there's no improvements happening in North America also. And in fact, there is additional weakening happening even beyond North America. And as you also said, even in the construction market now that slowdown has started percolating, which has led to the OEMs also now going below the retail demand level. So what is the outlook? And can it take longer than expected, because now we are seeing this is down even in the construction side? Geographically, what is the outlook? And also segment-wise, what is the outlook?

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Basantkumar G. Bansal, Balkrishna Industries Limited - Director of Finance [139]

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Yes. So your understanding is absolutely correct. The overall outlook is challenging. And that is why we have said that probably we can see some de-growth in the current financial year. So earlier, it was confined to agriculture segment, mainly due to environment-related challenges. But now overall, macro environment has not been very supportive. So we are seeing softness in the OTR segment also. So industrial, construction, mining, everywhere, there is a slowdown.

And in terms of geography also, the slowdown is seen across the geographies. And that is what we saw this time during the second quarter, even India, which was doing well. So we have seen the softness in India sales also. So it will take some time. It's very difficult. Things are so volatile that it is very difficult to give any time frame as to when they will improve. So that's why Mr. Rajiv also said that we are in wait-and-watch mode how things pan out.

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Shradha Sheth, Edelweiss Securities Ltd., Research Division - Research Analyst [140]

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And this OTR cycle has turned after how long? I mean it was in a positive run for almost, I think, 2 years or so, right?

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Basantkumar G. Bansal, Balkrishna Industries Limited - Director of Finance [141]

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Yes. So 2 years, it was good. And now -- until last quarter, it was good. It was not as bad the agriculture segment was. But from this quarter, we have seen softness in the OTR segment also.

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Shradha Sheth, Edelweiss Securities Ltd., Research Division - Research Analyst [142]

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So it is a similar decline across segments you're seeing?

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Basantkumar G. Bansal, Balkrishna Industries Limited - Director of Finance [143]

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Yes. Yes. Yes.

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Operator [144]

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Next question is from the line of Hitesh Goel from Kotak Securities.

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Hitesh Goel, Kotak Securities (Institutional Equities) - Associate Director & Automobile Analyst [145]

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Sir, just wanted to get a sense. I was looking at 1H '20 and 1H '19 relation per kg. That is down around 5.6% on a Y-o-Y basis. I understand there's some impact of currency, maybe around 2%. Can you just tell us -- and your OTR has done better than agriculture segment. So how much is due to this price reduction? How much currency? And how much mix? Can you give us some sense of that?

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Basantkumar G. Bansal, Balkrishna Industries Limited - Director of Finance [146]

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So price reduction is around 4%.

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Hitesh Goel, Kotak Securities (Institutional Equities) - Associate Director & Automobile Analyst [147]

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So it's mostly price reduction and 2% currency?

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Basantkumar G. Bansal, Balkrishna Industries Limited - Director of Finance [148]

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Yes.

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Operator [149]

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The next question is from the line of Pawan Parakh from Renaissance.

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Pawan Parakh;Renaissance Investment Managers Private Limited;Senior Analyst, [150]

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Sir, you said you expect H2 to be flat Y-o-Y?

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Basantkumar G. Bansal, Balkrishna Industries Limited - Director of Finance [151]

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Yes.

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Pawan Parakh;Renaissance Investment Managers Private Limited;Senior Analyst, [152]

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That means like about a 6%, 7% decline on a full year basis?

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Basantkumar G. Bansal, Balkrishna Industries Limited - Director of Finance [153]

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Yes. I mean, that is what we said that around 5% kind of de-growth. Difficult to quantify it. But directionally, it looks soft.

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Pawan Parakh;Renaissance Investment Managers Private Limited;Senior Analyst, [154]

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And sir, specifically, I mean, mining will be what percentage of our volumes now?

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Basantkumar G. Bansal, Balkrishna Industries Limited - Director of Finance [155]

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Mining would be around 10% to 12%.

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Pawan Parakh;Renaissance Investment Managers Private Limited;Senior Analyst, [156]

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Okay. And what would have been the growth in only mining, say, H1 versus H1 or Q2 versus Q2?

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Basantkumar G. Bansal, Balkrishna Industries Limited - Director of Finance [157]

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H1, there has been a decline. And quarter-on-quarter also, it has been declining.

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Pawan Parakh;Renaissance Investment Managers Private Limited;Senior Analyst, [158]

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But sir, I mean, as we said, we are expanding our business. We are a very small player. So we should have seen growth at least in this segment, right?

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Basantkumar G. Bansal, Balkrishna Industries Limited - Director of Finance [159]

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Yes. So this is -- when you see the things in the relative terms, you will find out-performance on our side. So while there is a minor de-growth, but if you see the industry trend, I think the de-growth would be in the range of 20% to 25%. So with that sense, there is outperformance that we are not down in proportion to the overall decline in the industry.

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Pawan Parakh;Renaissance Investment Managers Private Limited;Senior Analyst, [160]

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And what could have been the similar industry-level growth in agri?

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Basantkumar G. Bansal, Balkrishna Industries Limited - Director of Finance [161]

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Now this time, there is no growth. There is a decline.

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Pawan Parakh;Renaissance Investment Managers Private Limited;Senior Analyst, [162]

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So I mean what is the decline at the industry level in agri?

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Basantkumar G. Bansal, Balkrishna Industries Limited - Director of Finance [163]

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In agri also, I think the decline is around 20% to 25%.

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Pawan Parakh;Renaissance Investment Managers Private Limited;Senior Analyst, [164]

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Okay. And sir, so obviously, on a low base, we should obviously see a better FY '21. So what are the key things to watch out for FY '21 for us for a better volume?

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Basantkumar G. Bansal, Balkrishna Industries Limited - Director of Finance [165]

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So the one thing is the environment, weather condition in the Europe, the overall macro environment, commodity prices, the food inflation, I think these are the key parameters you can track to get some sense that directionally where we are positioned.

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Pawan Parakh;Renaissance Investment Managers Private Limited;Senior Analyst, [166]

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And finally, you said advertisement or promotional spend will continue. So the absolute amount will continue or that you see as a percentage of sales?

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Basantkumar G. Bansal, Balkrishna Industries Limited - Director of Finance [167]

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No, it is absolute amount. The percentage will vary.

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Operator [168]

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

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Shyam Sundar Sriram, Sundaram Asset Management Company Ltd. - Research Analyst [169]

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Sir, how is the go-to-market opportunity -- go-to-market approach different in mining vis-à-vis agri, if you can just talk about that a bit?

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Basantkumar G. Bansal, Balkrishna Industries Limited - Director of Finance [170]

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No. I didn't get your question.

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Shyam Sundar Sriram, Sundaram Asset Management Company Ltd. - Research Analyst [171]

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How is the go-to-market approach different in the mining segment vis-à-vis the agri segments?

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Rajiv A. Poddar, Balkrishna Industries Limited - Joint MD & Executive Director [172]

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So basically the market on the ag side is more towards end users, farmers. Whereas on the mining side, it's more towards corporates who are running the fleet. In that sense, that's the difference. And also, the product is different. The requirements of the product are different, service requirements are different. So it's a totally different go-to concept.

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Shyam Sundar Sriram, Sundaram Asset Management Company Ltd. - Research Analyst [173]

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Okay. Okay. Okay. Understood, sir. Understood. So over a period of 2 years, assuming global conditions remain as is where is, how do we look at growth in the OTR and agri segments for us, if you can give some color? You did point out some lead indicators. But from our perspective, given that you have been outperforming the industry by a wide margin, can this kind of outperformance sustain over the next 2 years as well?

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Rajiv A. Poddar, Balkrishna Industries Limited - Joint MD & Executive Director [174]

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Yes, we are working towards that. I mean that's our goal and objective, and we are working towards that. And at the moment, we are confident that with the steps that we are taking, we should be in that direction.

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Shyam Sundar Sriram, Sundaram Asset Management Company Ltd. - Research Analyst [175]

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Understood, sir. Sir, one last question, if I may. Given the RM benefits that we have from the -- our own Carbon Black facility, do we have further scope to reduce prices and gain market share? Will -- is pricing -- can that be a lever to gain market share in this scenario?

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Rajiv A. Poddar, Balkrishna Industries Limited - Joint MD & Executive Director [176]

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So we have never been in the market to reduce prices. We hold our position. We hold the prices. We do that. So -- and at the moment, we are at par with our peers, where we want to be positioned in the marketplace because of our pricing. So we don't want to drop the prices and take the market at this stage. We want to hold on to that.

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Basantkumar G. Bansal, Balkrishna Industries Limited - Director of Finance [177]

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Sir, we have seen that by reducing the prices, it is not going to help us. We are already down by 10% to 15% from our peers. So that gap is already there and which is already helping us to gain the market share. By further reducing the price unnecessarily, we will be positioning our brand to a lower level. So in the long run, it will not be a good strategy.

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Operator [178]

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Bharat Gianani from Sharekhan.

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Bharat Gianani, Sharekhan Limited, Research Division - Analyst [179]

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My question is on -- you have been indicating that you would be increasing the marketing spend to capture growth opportunities in the markets. So basically, I was just trying to understand that the -- on one side we have the benefit of the captive Carbon Black that we have, that you have guided for. And so just want to understand that structurally from if you see from a 2- to 3-year perspective, would you like to place any comment on your margin trajectory. So what I was trying to understand is that basically do the marketing and the promotional expenses increase to such a level that structurally, you see the margin going down? Or any comment on that would be really helpful.

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Basantkumar G. Bansal, Balkrishna Industries Limited - Director of Finance [180]

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We have been telling that our margin range is 25% to 28%, which we are still maintaining, and we have a strong visibility of falling into that range. So incremental marketing expenses, et cetera, will be well taken care of, and we will be well within this margin range.

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Operator [181]

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Next question is from the line of Rajesh Kothari from AlfAccurate.

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Rajesh Kothari, AlfAccurate Advisors Pvt. Ltd - Founder, MD & Director [182]

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Satisfactory performance considering challenging macro environment. I don't know if you already answered this question. But can you tell us little bit breakup between U.S. and Europe? And how the U.S. market -- what kind of growth you've witnessed in U.S.A. second quarter and in first half?

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Basantkumar G. Bansal, Balkrishna Industries Limited - Director of Finance [183]

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This time, every geography has been challenging. So U.S. has also been down. But comparatively, Europe was more down because of the environment-related challenges.

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Rajesh Kothari, AlfAccurate Advisors Pvt. Ltd - Founder, MD & Director [184]

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Okay. And if I look at your last 5 years, I mean Europe has been always -- I mean I'm seeing from the industry perspective. If I look at the agri growth, if I look at inflation, if I look at the food inflation, it has been kind of stagnant, if I broadly look at 5-year CAGR from the European market perspective. But of course, in that challenging time, despite that, we kept doing very well. So is it at times maybe the inventory issue, at times maybe something a more market share and more products and so on and so forth? So if you see from next 2 years perspective, can you little bit further give some insights in your strategy which you've mentioned on Slide #14, market reach, penetrate Americas, product portfolio expansion, Indian market and utilization. So if you can give some more insight that therefore what kind of growth that can result into and what basically you are doing to improve your growth numbers? Because Europe was always struggling market from the growth perspective from last so many years.

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Basantkumar G. Bansal, Balkrishna Industries Limited - Director of Finance [185]

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No. It was not giving trouble. It was -- in fact, it has been very supportive market and very stable market. It is only in last 2 years we have seen challenges, which is because of the environment and which also we have seen for the first time in our history. So otherwise, Europe has been a very stable market. The agriculture segment has been very stable. And this environment things were never envisaged. But unfortunately, it has been happening for the last 2 years consecutively. So that is the thing. Otherwise, it is a very stable market.

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Rajesh Kothari, AlfAccurate Advisors Pvt. Ltd - Founder, MD & Director [186]

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I see. So if I really -- Caterpillar, for example, the recent transcript, they've been sounding a little bit positive from inventory perspective and from growth perspective. So can you give your insights into how you are reading and how you are able to forecast kind of the outlook?

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Basantkumar G. Bansal, Balkrishna Industries Limited - Director of Finance [187]

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We have already said that the outlook is not very strong. The overall business environment is challenging. And so we do not see any strong visibility in terms of demand across geographies and across product segment.

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Operator [188]

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Our next question is from the line of Nishant Vass from ICICI Securities.

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Nishant Vass, ICICI Securities Limited, Research Division - Auto and Auto Ancillary Analyst [189]

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So first, from a new market perspective, remember when you were evaluating the U.S. investment, one of the associated markets that we were trying to explore was Latin America through it. So now how are you guys thinking about that market? Because that's a large ag market per se. So first, your thoughts on that. And then I have following questions.

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Basantkumar G. Bansal, Balkrishna Industries Limited - Director of Finance [190]

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No, we are already present over there. We are already supplying over there. We were thinking that, that plant could help us in terms of increasing our competitiveness by avoiding the duty. But still, we will continue to grow over there through various steps like better warehousing from there. And in any case, even if the plant would have come, we never planned to start supplying everything from there. It was only the exigencies or emergency requirement of the customers which we were thinking to meet through that plant. Otherwise, most of the requirement we were planning to meet through our India operations. So from that perspective, we are not seeing any significant difference by dropping that plant. And overall strategy and the working would be same to gain the market share.

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Nishant Vass, ICICI Securities Limited, Research Division - Auto and Auto Ancillary Analyst [191]

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Okay. Just because looking at the brand investments that we are making and we are making it significantly in Europe, but Latin America doesn't seem to be like figuring high on the agenda as from a brand investment perspective.

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Basantkumar G. Bansal, Balkrishna Industries Limited - Director of Finance [192]

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No. Not at this stage. We will evaluate in the future. And if required, we will do the needful. But even though we are spending money on the various sponsorship activities in a particular geography, the benefit of that is accrued across the world because those exposure we've seen across the world, and we automatically get benefit of that.

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Operator [193]

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The next question is from the line of Ronak Sarda from Systematix.

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Ronak Sarda, Systematix Shares & Stocks (India) Ltd., Research Division - VP of Auto, Auto Ancillary [194]

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Sir, first question, if I just look at this ETRMA database which has come for the quarter and for 9 months, so the de-growth which they are highlighting in replacement market is 6% to 8%, while our decline has been (inaudible) -- so -- and our de-growth has been slightly higher than that. So how do you read this data?

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Basantkumar G. Bansal, Balkrishna Industries Limited - Director of Finance [195]

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I have not seen those data. So I'm not in a position to comment on that.

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Ronak Sarda, Systematix Shares & Stocks (India) Ltd., Research Division - VP of Auto, Auto Ancillary [196]

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Okay. So it just came out yesterday.

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Basantkumar G. Bansal, Balkrishna Industries Limited - Director of Finance [197]

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You can discuss with me separately, off-line.

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Ronak Sarda, Systematix Shares & Stocks (India) Ltd., Research Division - VP of Auto, Auto Ancillary [198]

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And sir, second question is the CapEx amount. I joined the call a bit late. Sorry if you had answered this. Can you highlight what will be the CapEx amount for this year and next year?

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Basantkumar G. Bansal, Balkrishna Industries Limited - Director of Finance [199]

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This year, it is around, again, INR 700 crores, out of which we have already spent INR 430 crores during first half.

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Ronak Sarda, Systematix Shares & Stocks (India) Ltd., Research Division - VP of Auto, Auto Ancillary [200]

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Yes. And next year would be...

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Basantkumar G. Bansal, Balkrishna Industries Limited - Director of Finance [201]

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Next year would be around INR 600 crores.

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Ronak Sarda, Systematix Shares & Stocks (India) Ltd., Research Division - VP of Auto, Auto Ancillary [202]

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Okay. Okay. Okay. And the last question is on the raw material side. Can you share what was the raw material pricing for the quarter? And how they are looking in second half right now?

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Basantkumar G. Bansal, Balkrishna Industries Limited - Director of Finance [203]

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So second half, I think more or less, it would be similar. Now I'm seeing that some spike in the crude price. So there can be some increase in the crude derivative prices. But looking at the demand synergy, I don't see any significant increase in the raw material cost. It will be in a narrow range only.

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Ronak Sarda, Systematix Shares & Stocks (India) Ltd., Research Division - VP of Auto, Auto Ancillary [204]

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And sir, quarter-on-quarter, we have seen a really sharp benefit on the...

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Basantkumar G. Bansal, Balkrishna Industries Limited - Director of Finance [205]

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Yes. That is because of the Carbon Black benefit which is being captured in the RM cost.

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Ronak Sarda, Systematix Shares & Stocks (India) Ltd., Research Division - VP of Auto, Auto Ancillary [206]

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The in-house production you mean?

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Basantkumar G. Bansal, Balkrishna Industries Limited - Director of Finance [207]

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Yes. Yes. Yes.

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Operator [208]

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The next question is from the line of Ashish Shah from Tara Capital.

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Ashish Shah;Tara Capital Partners Inc.;Portfolio Manager, [209]

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How has been de-growth across geographies? Have you seen any pressure in any particular geography, more like -- we said that Europe, you are up ahead more in fact versus U.S.?

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Basantkumar G. Bansal, Balkrishna Industries Limited - Director of Finance [210]

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Yes. So Europe is, for the last 2 years, facing challenges on the account of unfavorable weather conditions. In the U.S., it is mainly trade war driven and also some bit of environment-related challenges because U.S. has also witnessed flood in some part and some other challenges. So overall, things have been very related from environment point of view. And the macro has also not been in shape.

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Ashish Shah;Tara Capital Partners Inc.;Portfolio Manager, [211]

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So what I'm trying to understand is that in Q2, would it be fair to say that the financial de-growth in Europe would be about our average de-growth, say, maybe around 15-plus percentage de-growth in Europe and other geographies were relatively better?

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Basantkumar G. Bansal, Balkrishna Industries Limited - Director of Finance [212]

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Difficult to say this way. I mean we have guided that, that full year basis, there would be some de-growth. So second half, that rate would be almost flat.

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Ashish Shah;Tara Capital Partners Inc.;Portfolio Manager, [213]

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Okay. Okay. Sir, I was just trying to understand from a geography perspective, like, I'll tell you what I am coming from. I just wanted to understand if there's a 15% plus de-growth and has been -- how do we stand in market share, especially in Europe because if we are de-growing by 15%, so is there any impact on the market share?

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Basantkumar G. Bansal, Balkrishna Industries Limited - Director of Finance [214]

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So there is an overall industry de-growth of around 20% to 25%, and we are seeing de-growth of 15%. So this is outperformance on our part to the extent of 10%.

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Operator [215]

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Thank you. Ladies and gentlemen, that was the last question for today. I now hand the conference over to the management for their closing comments. Thank you, and over to you.

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Basantkumar G. Bansal, Balkrishna Industries Limited - Director of Finance [216]

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So I thank you all the participants for their valuable time, and have a nice weekend. Thank you.

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Operator [217]

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Thank you very much. Ladies and gentlemen, on behalf of Kotak Securities, that concludes today's conference. Thank you all for joining us, and you may now disconnect your lines.