U.S. Markets closed

Edited Transcript of CUMMINSIND.NSE earnings conference call or presentation 29-Jan-20 4:00am GMT

Q3 2020 Cummins India Ltd Earnings Call

Pune Feb 5, 2020 (Thomson StreetEvents) -- Edited Transcript of Cummins India Ltd earnings conference call or presentation Wednesday, January 29, 2020 at 4:00:00am GMT

TEXT version of Transcript

================================================================================

Corporate Participants

================================================================================

* Ashwath Ram

Cummins India Limited - MD & Executive Director

================================================================================

Conference Call Participants

================================================================================

* Abhishek Puri

Axis Capital Limited, Research Division - Executive Director of Capital Goods, Infrastructure and Power

* Amish Shah

BofA Merrill Lynch, Research Division - Director

* Bhavin Vithlani;SBI Mutual Funds;Senior Analyst

* Fatema Pacha

ICICI Prudential Life Insurance Company Limited - Assistant VP & Fund Manager – Equity

* Kunal Sheth

Batlivala & Karani Securities India Pvt. Ltd., Research Division - Research Analyst

* Nitin Arora

Axis Asset Management Company Limited - Equity Research Analyst

* Pulkit Patni

Goldman Sachs Group Inc., Research Division - Equity Analyst

* Puneet J. Gulati

HSBC, Research Division - Analyst

* Renjith Sivaram

ICICI Securities Limited, Research Division - Assistant VP

* Renu Baid

IIFL Research - VP

* Sandeep Tulsiyan

JM Financial Institutional Securities Limited, Research Division - Senior Research Analyst

* Sumit Jain

ASK Investment Managers Limited - Portfolio Manager

* Venugopal Garre

Sanford C. Bernstein & Co., LLC., Research Division - Senior Analyst

================================================================================

Presentation

--------------------------------------------------------------------------------

Operator [1]

--------------------------------------------------------------------------------

Good morning, everyone. I'm Harpreet Kapoor, the moderator of this call. Thank you for standing by, and welcome to Cummins India Limited analyst call. (Operator Instructions). So I would now like to hand over the proceedings to Mr. Ashwath Ram, Managing Director, Cummins India Limited. Thank you, and over to you, sir.

--------------------------------------------------------------------------------

Ashwath Ram, Cummins India Limited - MD & Executive Director [2]

--------------------------------------------------------------------------------

Good morning, ladies and gentlemen. I'm Ashwath Ram, Managing Director of Cummins India Limited. Thank you very much for participating in this call. I would like to convey the financial results of quarter ended December 31, 2019, through this call.

The financial results with respect to the sequential quarter, our total net sales stood at INR 1,428 crores, improved by 11% compared to the INR 1,285 crores recorded in the preceding quarter. Domestic sales stood at INR 1,058 crores, improved by 12%. Exports stood at INR 370 crores and grew by 10%. Profit before tax and exceptional items at INR 254 crores, higher by 20% compared to INR 210 crores recorded in the preceding quarter.

For the quarter ended December 31, 2019, with respect to quarter ended December 31, 2018, i.e., the previous year, our total net sales stood at INR 1,428 crores, declined by 2% compared to the same quarter last year; domestic sales stood at INR 1,058 crores, improved by 4%; export at INR 370 crores, declined by 16%; profit before tax at INR 254 crores, a 6% lower as compared to INR 270 crores recorded in the same quarter last year.

And moving on to the segment-wise breakup. To give you a sense of the sales breakup segment-wise, in the domestic market, industrial domestic business sales were at INR 267 crores, which is a 8% growth over last year. Powergen domestic business sales were INR 380 crores, which is a 12% drop over last year. Distribution business sales were INR 415 crores, which is an 18% increase over last year.

In the exports areas, High Horsepower exports were INR 208 crores, which denote a 2% decline over last year; and Low Horsepower sales were at INR 144 crores, which denotes a 27% decline over last year.

The Cummins India financial guidance is what I'm going to speak about next. In terms of sales outlook for the full year 2019, '20, we would like to maintain the target at 3% to 5% growth for Domestic and negative 20% for the Exports business. The current sluggishness in the Indian economy, led by various factors, including liquidity crunch, delay in awarding of infrastructure projects, constrained bank funding have all resulted in reduction in demand across all our key segments in the Domestic business, and this is likely to continue further for a few quarters and gradual revival is likely to happen as the government measures to address these start to kick in and positively boost the economy. So we are on a wait-and-watch mode here to see how the infrastructure kind of spending happens.

Export markets have continued to display softness in recent quarters. This is arising from global economic challenges. In this quarter, we also experienced decline in certain markets within the global Power Generation business, based on difficulties that some of these economies are now experiencing.

We have initiated internal actions to curtail overall spending to essential only. We are also focused on improving on the efficiency of our internal processes and product coverage. We are working on creating a strong environment of cost consciousness. We continue to be positioned to outperform in our industry and continue investing judiciously in product enhancement on increasing our customer focus, on improving productivity, maintaining high-quality and we will continue delivering value to all our stakeholders.

With this, I would like to open the session for questions. Thank you.

================================================================================

Questions and Answers

--------------------------------------------------------------------------------

Operator [1]

--------------------------------------------------------------------------------

(Operator Instructions) The first question of the day we have from Sandeep Tulsiyan from JM Financial.

--------------------------------------------------------------------------------

Sandeep Tulsiyan, JM Financial Institutional Securities Limited, Research Division - Senior Research Analyst [2]

--------------------------------------------------------------------------------

The first question is pertaining to the Distribution segment, that you mentioned in the press release that there were execution of certain contracts, which led to this jump of 18% in the revenue. So what I want to understand is what is the quantum of these certain contracts which got executed in the current quarter? And if you could also explain the nature of these contracts. Are they going to spill over to the next quarter? Or are they more going to be ongoing in future or not going to be upgraded in the future? That's my first question.

--------------------------------------------------------------------------------

Ashwath Ram, Cummins India Limited - MD & Executive Director [3]

--------------------------------------------------------------------------------

Yes. So to answer that, these were contracts we executed in the Bus market segment. These were gas engine products, and the impact of that is roughly about INR 70 crores of order execution that happened. These orders are now executed and completed, so they will not spill over into additional quarters. And as you are aware, some of these technologies are changing from April. So they will take a different form in the future, but they are not going to have impact in the current quarter.

--------------------------------------------------------------------------------

Sandeep Tulsiyan, JM Financial Institutional Securities Limited, Research Division - Senior Research Analyst [4]

--------------------------------------------------------------------------------

Understood. Second question is pertaining to more from the long-term growth guidance. You did mention the current year's growth guidance has been maintained. But if you go through the earlier releases, you had mentioned that Exports should grow anywhere between 0% to 5% on a 5-year cycle and Domestics around 9% to 11% which leads to a blended growth of about 7% to 8%. Given we have seen such a sharp decline in the current financial year, would you stick to the same guidance over the next 5-year cycle? Or would you want to have a fresh look at that?

--------------------------------------------------------------------------------

Ashwath Ram, Cummins India Limited - MD & Executive Director [5]

--------------------------------------------------------------------------------

We continue to remain optimistic about the long-term cycles. We have seen these trends multiple times and in multiple markets. So we would like to continue to maintain that outlook.

--------------------------------------------------------------------------------

Sandeep Tulsiyan, JM Financial Institutional Securities Limited, Research Division - Senior Research Analyst [6]

--------------------------------------------------------------------------------

Got it. And last question is on the Railways business. If you could quantify the impact -- the amount of growth that you see in that particular segment in the current quarter. And also given the government's drive on electrification of railways, what kind of impact it could create on the overall business pie for Cummins India?

--------------------------------------------------------------------------------

Ashwath Ram, Cummins India Limited - MD & Executive Director [7]

--------------------------------------------------------------------------------

So the Rail business has been good for Cummins India. And if you see, as compared to the last quarter, we actually declined by 4%, but it's still very, very strong performance as compared to the previous year, we have grown by almost 49%. And we continue to maintain our outlook in this segment at this kind of performance level.

--------------------------------------------------------------------------------

Sandeep Tulsiyan, JM Financial Institutional Securities Limited, Research Division - Senior Research Analyst [8]

--------------------------------------------------------------------------------

But given the government's drive on electrification?

--------------------------------------------------------------------------------

Ashwath Ram, Cummins India Limited - MD & Executive Director [9]

--------------------------------------------------------------------------------

Yes. So the areas where we are selling these products are -- have limited impact of the electrification. Some of that electrification is likely to come in a 2- to 3-year time frame and -- for which we are already developing alternate products in our pipeline to be able to compensate for those sales with new products.

--------------------------------------------------------------------------------

Operator [10]

--------------------------------------------------------------------------------

Next, we have Renjith Sivaram from ICICI Securities.

--------------------------------------------------------------------------------

Renjith Sivaram, ICICI Securities Limited, Research Division - Assistant VP [11]

--------------------------------------------------------------------------------

Congrats on good set of numbers given the overall environment. Sir, when we see the raw material to sale, that hasn't improved significantly despite so much of increase in distribution business, which we believe has higher margins. So any particular reason for that?

--------------------------------------------------------------------------------

Ashwath Ram, Cummins India Limited - MD & Executive Director [12]

--------------------------------------------------------------------------------

I think it's primarily because Exports business continues to be weak and also Power Generation is slowing down. And so whatever improvement we got, we got in the Distribution businesses offset. We did get a little bit of positive impact, but not significant enough to overcome the decline in the other areas.

--------------------------------------------------------------------------------

Renjith Sivaram, ICICI Securities Limited, Research Division - Assistant VP [13]

--------------------------------------------------------------------------------

Okay. And is there any one-time or something like kind of a ForEx loss gain under the other expenditure because that has significantly come down too? So is there anything there we should be aware of?

--------------------------------------------------------------------------------

Ashwath Ram, Cummins India Limited - MD & Executive Director [14]

--------------------------------------------------------------------------------

Yes. I think this has got to do with dividends. That is the primary reason for that difference.

--------------------------------------------------------------------------------

Renjith Sivaram, ICICI Securities Limited, Research Division - Assistant VP [15]

--------------------------------------------------------------------------------

No, other expenditure?

--------------------------------------------------------------------------------

Ashwath Ram, Cummins India Limited - MD & Executive Director [16]

--------------------------------------------------------------------------------

Oh, other expenditure? In other expenditure, I think the biggest area is royalty, and that is the difference between the previous quarter and this quarter. There was -- this quarter, we got roughly a INR 10 crore kind of benefit in that area.

--------------------------------------------------------------------------------

Renjith Sivaram, ICICI Securities Limited, Research Division - Assistant VP [17]

--------------------------------------------------------------------------------

Okay. So is that kind of a continuous trend? Or is it pertaining to this particular period of point?

--------------------------------------------------------------------------------

Ashwath Ram, Cummins India Limited - MD & Executive Director [18]

--------------------------------------------------------------------------------

Yes, it is pertaining to this particular period and it is -- is likely to go back to the similar kind of numbers, which we saw in earlier quarters, which are closer to the INR 160 crores kind of number.

--------------------------------------------------------------------------------

Renjith Sivaram, ICICI Securities Limited, Research Division - Assistant VP [19]

--------------------------------------------------------------------------------

Okay. And sir, if you can share the breakup of your Powergen in terms of HHP, MHP?

--------------------------------------------------------------------------------

Ashwath Ram, Cummins India Limited - MD & Executive Director [20]

--------------------------------------------------------------------------------

Sure. So -- yes, just a second. So in this quarter, High Horsepower was roughly around INR 170 crores, Medium Horsepower was roughly around INR 120 crores and Low Horsepower was about INR 90 crores.

--------------------------------------------------------------------------------

Renjith Sivaram, ICICI Securities Limited, Research Division - Assistant VP [21]

--------------------------------------------------------------------------------

And mid-range?

--------------------------------------------------------------------------------

Ashwath Ram, Cummins India Limited - MD & Executive Director [22]

--------------------------------------------------------------------------------

So if you look at the break up there, mid-range was roughly about INR 110 crores.

--------------------------------------------------------------------------------

Operator [23]

--------------------------------------------------------------------------------

Next, we have Renu Baid from IIFL.

--------------------------------------------------------------------------------

Renu Baid, IIFL Research - VP [24]

--------------------------------------------------------------------------------

Sir, few questions from my side. First, just wanting to understand as an Exports, you mentioned good growth coming in, and LHP has seen some recovery. And still, you have maintained your annual guidance of 20% drop, which implies that fourth quarter we might be close to just INR 280 crores to INR 290 crores, significantly lower from whatever we've seen in the past few quarters. So are we missing something in terms of any one-offs in this quarter? And overall, how has been the bucket of outlook within the LHP portfolio and HHP for us? Because HHP has been pretty much steady at about INR 200-odd crores for the last couple of quarters. LHP has seen some recovery. So if you can share some comments in terms of market-wise performance and what were the tales in this particular quarter? And broadly, what is the outlook for CY '20 on the Export side?

--------------------------------------------------------------------------------

Ashwath Ram, Cummins India Limited - MD & Executive Director [25]

--------------------------------------------------------------------------------

Right. So most of the recovery that we saw was on the LHP side. And as I mentioned in my outlook, in the last quarter, we thought the LHP was close to bottoming out, and we did see some positive impact from certain markets, but those are just pockets of markets in certain regions around the world, like we got some special orders from areas like Egypt, et cetera. But we don't -- overall, when you look at those markets, they continue to slow down. And so we are forecasting that the next quarter is likely to be closer to the Q2 kind of numbers rather than the Q3 kind of numbers, mainly because we continue to see those markets consolidate and attempting to reach a bottom.

--------------------------------------------------------------------------------

Renu Baid, IIFL Research - VP [26]

--------------------------------------------------------------------------------

Sir, probably a run rate of about INR 330-odd crores is where we are looking the Exports to be in the near quarter?

--------------------------------------------------------------------------------

Ashwath Ram, Cummins India Limited - MD & Executive Director [27]

--------------------------------------------------------------------------------

Yes. That's a very, very fair kind of assumption.

--------------------------------------------------------------------------------

Renu Baid, IIFL Research - VP [28]

--------------------------------------------------------------------------------

But it's slightly longer view [a intake] of 12-month time frame now that we are entering calendar '20. So are then Exports probably look to have bottomed at INR 320 crores, INR 330 crores average quarterly run rate. So are we seeing any positive tails anywhere, where we could see 5% to 10% or even at least marginal growth of 5% in the Export portfolio if not declining further? Or probably, we think it will be flattish for some time before the growth reverts back on this side of the business?

--------------------------------------------------------------------------------

Ashwath Ram, Cummins India Limited - MD & Executive Director [29]

--------------------------------------------------------------------------------

Yes. So almost for the last 12 months, these markets have been steadily declining. And typically, these markets are cyclical markets. So these cycles last anywhere from 18 to 24 months. And so we are expecting, at least for next couple of quarters just to be flattish before things start picking up. We are, though, going to be very aggressively pursuing market share growth. Now, exactly how much time that takes for some of that to happen is difficult to predict at this time. But we remain seriously committed to this business and attempting to grow this. So our longer-term outlook, I wouldn't say it's 6-month out, but I would say longer term we are bullish that we will be able to grow this market well. The globe is dependent on the product out of India for this. So it's not like we are being replaced by any other products. And as the -- 18 to 2 years outlook is extremely bullish, mainly because they're also introducing new technology products in conjunction with the CPCB-4+ which will happen in India. All of those bode well for this -- these products out of India.

--------------------------------------------------------------------------------

Renu Baid, IIFL Research - VP [30]

--------------------------------------------------------------------------------

Okay, sir. Probably, we will see probably more of electronic-based engine platforms and advanced portfolio coming to Cummins India Limited for manufacturing?

--------------------------------------------------------------------------------

Ashwath Ram, Cummins India Limited - MD & Executive Director [31]

--------------------------------------------------------------------------------

Absolutely. There's no doubt about it, especially with the timing of CPCB4, which is still not announced. So we are working through those. But yes, certainly, that is in the plan.

--------------------------------------------------------------------------------

Renu Baid, IIFL Research - VP [32]

--------------------------------------------------------------------------------

And these will be largely in the -- as in Mid-range Horsepower HHP or largely in the LHP part of the portfolio? Which part of the Exports portfolio are we talking about?

--------------------------------------------------------------------------------

Ashwath Ram, Cummins India Limited - MD & Executive Director [33]

--------------------------------------------------------------------------------

It will go all the way up to almost 800 horsepower because that's the notification of CPCB-4+. It is 820 kilowatts and below. And so all the products to meet the emission challenges, you will have to go to electronic on those products, and so that portfolio will then become available for us for export as well.

--------------------------------------------------------------------------------

Renu Baid, IIFL Research - VP [34]

--------------------------------------------------------------------------------

Yes. No, I was actually referring on the export side. As you mentioned, there could be some positive tails and new portfolio being added. So within the Export bucket, we are looking for new nodes being added on the LHP, HHP bucket? Which side of the business are we looking at?

--------------------------------------------------------------------------------

Ashwath Ram, Cummins India Limited - MD & Executive Director [35]

--------------------------------------------------------------------------------

Yes, so that's what I was trying to say is that the entire domestic portfolio will have to be upgraded all the way up to 800 horsepower, which means it spreads across LHP, MHP and the lower end of High Horsepower. So all of those nodes will then become opportunities for export to markets, which currently don't buy leading emission products from India.

--------------------------------------------------------------------------------

Renu Baid, IIFL Research - VP [36]

--------------------------------------------------------------------------------

Sure. And sir, my second and last question would be to understand a bit more on the Domestic Powergen industrial segment. They have been a bit of mixed performance. So where do we see the growth bottoming out and recovery to set in for this portfolio? And also, if you can highlight what was the sales mix of the Industrial segment for 3Q '20 in terms of compressor, construction, minerals, metals, mining?

--------------------------------------------------------------------------------

Ashwath Ram, Cummins India Limited - MD & Executive Director [37]

--------------------------------------------------------------------------------

Yes. So actually, the Industrial business has -- we have managed to hold out despite all the infrastructure and other slowdown reasons that India has faced. So despite all those factors in this quarter, we grew by -- the Industrial business by about 25%. And most of that growth is coming mainly from -- actually, this -- last quarter, most of the segments performed well. Rail maintained its performance; compressor grew a bit; construction, which we think has bottomed out in Q2, has started to slowly turn and we'll have to see how much it recovers based on some of the announcement we hope to see in the budget; marine is a very small business for us, but we had some year-end execution, which was -- which went well for us, so that performed okay. So that's the rough breakup of why we did better.

--------------------------------------------------------------------------------

Renu Baid, IIFL Research - VP [38]

--------------------------------------------------------------------------------

Sure. Any numbers that you can share here possible?

--------------------------------------------------------------------------------

Ashwath Ram, Cummins India Limited - MD & Executive Director [39]

--------------------------------------------------------------------------------

Not at this time. All I can tell you is that those segments that I mentioned have all done -- had done better and we continue to be optimistic that this portion of the business is -- will maintain its performance.

--------------------------------------------------------------------------------

Renu Baid, IIFL Research - VP [40]

--------------------------------------------------------------------------------

Right. And sir, there's a small clarification. We mentioned in other expenses the INR 10 crore savings on the royalty side helped to reduce other expenses. But was there any impact also of the cost rationalization and the tight budgets that were running through, which will help contain the other expenses between INR 150 crores, INR 160-odd crores in the coming quarter or probably in the current -- next financial year as well? Or how should we look in terms of cost actions there?

--------------------------------------------------------------------------------

Ashwath Ram, Cummins India Limited - MD & Executive Director [41]

--------------------------------------------------------------------------------

Yes. So cost -- the cost actions have been going on for some time. But the real impact of those cost actions will -- you will see more in the next financial year.

--------------------------------------------------------------------------------

Operator [42]

--------------------------------------------------------------------------------

Next, we have Bhavin from SBI Mutual Funds.

--------------------------------------------------------------------------------

Bhavin Vithlani;SBI Mutual Funds;Senior Analyst, [43]

--------------------------------------------------------------------------------

So I have a couple of questions. Could you give us some color on the market share in the Power Generation market and breaking up into the different nodes of High Horsepower, Ultra Horsepower, Medium and Low?

--------------------------------------------------------------------------------

Ashwath Ram, Cummins India Limited - MD & Executive Director [44]

--------------------------------------------------------------------------------

Sure. So in the -- let's start off with High Horsepower, and that is a segment where Cummins has the largest market share. And we continue to maintain at -- our market share at roughly around 65%. In the Medium Horsepower segment, we did almost maintain market share. We are at 48%. In the Low Horsepower space, we have improved market share a bit and gone to 38%. And in the very Low Horsepower space, where we are not a significant player, we have lost a little bit of market share at 18%.

--------------------------------------------------------------------------------

Bhavin Vithlani;SBI Mutual Funds;Senior Analyst, [45]

--------------------------------------------------------------------------------

Okay. And what would be the loss in market share?

--------------------------------------------------------------------------------

Ashwath Ram, Cummins India Limited - MD & Executive Director [46]

--------------------------------------------------------------------------------

The loss in market share is in the smallest nodes, and that loss is about 4%.

--------------------------------------------------------------------------------

Bhavin Vithlani;SBI Mutual Funds;Senior Analyst, [47]

--------------------------------------------------------------------------------

Okay. Second question is on the Exports. A couple of quarters back, you mentioned that there's a new policy that you're starting with 1% commissions to the sales team, and the dealer distributor network. Could you give us some color on update on that? And is that helped you to actually pep up this exports that we have seen and so we can put more legs to it?

--------------------------------------------------------------------------------

Ashwath Ram, Cummins India Limited - MD & Executive Director [48]

--------------------------------------------------------------------------------

I won't comment on percentages, et cetera. All I can say is that we continue to be very aggressive in trying to gain market share and grow in all our exports markets. India is the significant provider of product for Cummins globally in those markets, and we continue to aggressively try to pursue market share.

--------------------------------------------------------------------------------

Bhavin Vithlani;SBI Mutual Funds;Senior Analyst, [49]

--------------------------------------------------------------------------------

What would be our market share? I know we are addressing multiple geographies. But if you can give us some broad color on Cummins' market share within the geography that we are addressing? And how large can we become -- you mentioned a couple of times that you have lot of headroom to grow market share in the Exports market. And what are the efforts that we are taking to gain market share? Will it be price action? Will it be certain reach that is deficient that we are trying to address? So some color on that will be helpful.

--------------------------------------------------------------------------------

Ashwath Ram, Cummins India Limited - MD & Executive Director [50]

--------------------------------------------------------------------------------

Yes. So we will use all aspects of -- in our -- available in our hand, which is certainly, we will use price judiciously as necessary. We will use positioning of Cummins with its technology, its brand. We will use the reach. Cummins is present in 120-plus countries, and we will -- we are using more reach to try to get to more people. And the biggest area which we work on, of course, is the product. Cummins is a product company. And so the way we win most easily is when we -- our products are focused towards certain markets and are differentiated and better than other suppliers there. And we are working on all of those 4 areas to try to grow the business.

--------------------------------------------------------------------------------

Operator [51]

--------------------------------------------------------------------------------

Next, we have Abhishek Puri from Axis Capital.

--------------------------------------------------------------------------------

Abhishek Puri, Axis Capital Limited, Research Division - Executive Director of Capital Goods, Infrastructure and Power [52]

--------------------------------------------------------------------------------

My most of the questions have been answered. Just on the exports part, continuing a bit further on. Are there any specific segments where we are global cost leaders and, hence, that segment is exported out of here? Or in terms of the approach? Or is it like the capacity filling approach that the local geographies, capacity is full and then we are kind of exporting from here?

--------------------------------------------------------------------------------

Ashwath Ram, Cummins India Limited - MD & Executive Director [53]

--------------------------------------------------------------------------------

I think we are -- we have the greatest cost advantage all the way in the low and medium horsepower products. And so -- that is why we are the major supply chain hub for the world for these products.

--------------------------------------------------------------------------------

Abhishek Puri, Axis Capital Limited, Research Division - Executive Director of Capital Goods, Infrastructure and Power [54]

--------------------------------------------------------------------------------

But that's the segment that I've seen the maximum curtailment in terms of revenue growth over the last few quarters. So that is related to demand. It's not related to the capacity coming up elsewhere in the world, and hence, our exports have reduced?

--------------------------------------------------------------------------------

Ashwath Ram, Cummins India Limited - MD & Executive Director [55]

--------------------------------------------------------------------------------

No, it's completely related to demand. And that's why the earlier comments on what we are trying to do even in this global slowing market scenario for Powergen to try to get back some growth through gain in market share, et cetera.

--------------------------------------------------------------------------------

Abhishek Puri, Axis Capital Limited, Research Division - Executive Director of Capital Goods, Infrastructure and Power [56]

--------------------------------------------------------------------------------

Right. And secondly, in terms of the distribution and spares business, I mean you mentioned that one of the contracts has obviously led to that impact. If we take that out, do we have steady state of business here where we have contracts to ensure that we get about INR 330 crores, INR 350 crores kind of a run rate? Or is it that you have to go out and win that business on a regular business?

--------------------------------------------------------------------------------

Ashwath Ram, Cummins India Limited - MD & Executive Director [57]

--------------------------------------------------------------------------------

I mean you always have to go out and win business in these markets. But this business, when you look at it even over the last 3 to 5 years, has been able to grow steadily from -- between 6% to 8% annualized. And we think we can continue that kind of trend and focus our energies on doing better.

--------------------------------------------------------------------------------

Abhishek Puri, Axis Capital Limited, Research Division - Executive Director of Capital Goods, Infrastructure and Power [58]

--------------------------------------------------------------------------------

Despite the slowing economy, I think this is surprising the way this kind of growth is coming because one would have expected that the -- in slowing growth trajectory, the people tend to cut back on their expenses as well. So I mean, just a thought from your side if -- on this point.

--------------------------------------------------------------------------------

Ashwath Ram, Cummins India Limited - MD & Executive Director [59]

--------------------------------------------------------------------------------

Yes. So we do see these markets slowing down as well. But what happens is when people stop purchasing new equipment, the base level of work in the economy continues, and so they maintain their equipment, they continue to service their equipment. So the distribution business is not as strongly impacted as the other sides of the businesses. But the growth rate certainly is under pressure, even now as we speak.

--------------------------------------------------------------------------------

Operator [60]

--------------------------------------------------------------------------------

Next, we have Fatema from ICICI Prudential.

--------------------------------------------------------------------------------

Fatema Pacha, ICICI Prudential Life Insurance Company Limited - Assistant VP & Fund Manager – Equity [61]

--------------------------------------------------------------------------------

Sir, I have query on the steel price benefits that we should have had as a company over the last 9 months. And you're seeing how the steel prices are turning. So considering we've not had a lot of benefit from the steel price cut, would it be fair to say that the reverse also it might not be as much, because at the margin you have helped your vendors?

--------------------------------------------------------------------------------

Ashwath Ram, Cummins India Limited - MD & Executive Director [62]

--------------------------------------------------------------------------------

Yes, I think that's a fair statement that we have not been impacted significantly by the steel commodity fluctuations. I think it's -- overall material margins have remained pretty steady. So the other side of it [with us] should not impact us significantly. And we do have a lot of cost reduction projects going on in parallel to offset any increases.

--------------------------------------------------------------------------------

Fatema Pacha, ICICI Prudential Life Insurance Company Limited - Assistant VP & Fund Manager – Equity [63]

--------------------------------------------------------------------------------

Okay. And sir, on the Powergen side, is it fair that at the margin the government spending and all pickup is there. So going forward, at least this pace of decline will not be there in Powergen? Or at least, we can start seeing growth going forward in CY 2020?

--------------------------------------------------------------------------------

Ashwath Ram, Cummins India Limited - MD & Executive Director [64]

--------------------------------------------------------------------------------

It all depends on the way infrastructure spending actually happens. So as you have seen in the rest of the economy in India, when the production rates are all down and business is not growing, their use of power reduces and when use of power reduces, you sort of make do with whatever they have and don't buy new equipment. So if that cycle were to change, certainly, we are the primary beneficiaries of that kind of infrastructure improvement. So we are optimistic, but you know, it's better if we are -- we tend to be cautious about the future before we start seeing it.

--------------------------------------------------------------------------------

Fatema Pacha, ICICI Prudential Life Insurance Company Limited - Assistant VP & Fund Manager – Equity [65]

--------------------------------------------------------------------------------

So in January, at least the month so far, you're not seeing any pick up which you'd see seasonally, generally, when Jan, Feb, March ramp up begins?

--------------------------------------------------------------------------------

Ashwath Ram, Cummins India Limited - MD & Executive Director [66]

--------------------------------------------------------------------------------

No.

--------------------------------------------------------------------------------

Fatema Pacha, ICICI Prudential Life Insurance Company Limited - Assistant VP & Fund Manager – Equity [67]

--------------------------------------------------------------------------------

You're not seeing any initial signs of that?

--------------------------------------------------------------------------------

Ashwath Ram, Cummins India Limited - MD & Executive Director [68]

--------------------------------------------------------------------------------

Not at all.

--------------------------------------------------------------------------------

Fatema Pacha, ICICI Prudential Life Insurance Company Limited - Assistant VP & Fund Manager – Equity [69]

--------------------------------------------------------------------------------

Okay. And sir, on the Export side, is U.S. doing much better, because all data points from U.S. [order] continue to be very strong. So why isn't the acceleration on the HHP export side, I understand it's flat and that's a big thing because your exports have been declining, but no ramp up there expected considering last 1-year U.S. has not been doing that well. But at the margin, last 2, 3 months, the data points from U.S. has started to look good and with the QE and everything, you don't believe the industrial pickup in U.S. will be strong, which will help HHP exports?

--------------------------------------------------------------------------------

Ashwath Ram, Cummins India Limited - MD & Executive Director [70]

--------------------------------------------------------------------------------

As a matter of fact, last year the U.S. did extremely well. The first half of this year also the U.S. did reasonably well. But the second half of the year, they have started seeing a significant drop off. So we are seeing great trends of slowing down significantly and -- which is why Cummins has announced cost reduction actions globally based on these trends.

--------------------------------------------------------------------------------

Fatema Pacha, ICICI Prudential Life Insurance Company Limited - Assistant VP & Fund Manager – Equity [71]

--------------------------------------------------------------------------------

Okay. What are our takeaways from the cost-cutting measure, as in what -- what is the kind of mandate like, we have seen other MNC companies come out with margin aspiration target? Do we have something like that based on the global guideline?

--------------------------------------------------------------------------------

Ashwath Ram, Cummins India Limited - MD & Executive Director [72]

--------------------------------------------------------------------------------

We are focused on controlling the costs. And we have undertaken what we call "Rings of defense". And in Rings of defense, we first target all aspects of cost, the discretionary spend like travel, technology costs, facility costs and then we move on to the next lever, which is people. So we have already gone through the first couple of layers of our Rings of defense, and now we've also taken the people actions. But we will see the benefits of many of those actions only in the next financial year.

--------------------------------------------------------------------------------

Operator [73]

--------------------------------------------------------------------------------

Next, we have Deepak from Goldman Sachs.

--------------------------------------------------------------------------------

Pulkit Patni, Goldman Sachs Group Inc., Research Division - Equity Analyst [74]

--------------------------------------------------------------------------------

Sir, this is Pulkit. Sir, given the fact that we have done a VRS this year and even your overall commentary that will sound very optimistic. Just wanted to get a sense that because we've done quite a lot of CapEx in the last few years, how should we look at the next couple of years of CapEx for the company? And which segments particularly do you think would be focus area, if at all we have to do any expansion?

--------------------------------------------------------------------------------

Ashwath Ram, Cummins India Limited - MD & Executive Director [75]

--------------------------------------------------------------------------------

I think the biggest spend is going to come in the technology areas for moving to CPCB-4+ in the Powergen space. And in the CEV-BS IV and BS V, which is -- that is going to happen in the construction of highway kind of spaces. And those are significant upgrades to the technology, and they are likely to happen over the next 3 years, based, we are still working out the exact details of that, but there are significant investments we are planning to make to upgrade those technologies and get a significant distance in the market as compared to competition.

--------------------------------------------------------------------------------

Pulkit Patni, Goldman Sachs Group Inc., Research Division - Equity Analyst [76]

--------------------------------------------------------------------------------

And sir, would that entail a lot of CapEx? Could you tell what your CapEx guidance for the next couple of years would be?

--------------------------------------------------------------------------------

Ashwath Ram, Cummins India Limited - MD & Executive Director [77]

--------------------------------------------------------------------------------

We are still finalizing those numbers. So I will not be able to disclose those amounts. All I can tell you is, they are pretty significant because the technology change is a quantum difference between what we have been doing in the past.

--------------------------------------------------------------------------------

Operator [78]

--------------------------------------------------------------------------------

Next, we have Nitin Arora from Axis Mutual Fund.

--------------------------------------------------------------------------------

Nitin Arora, Axis Asset Management Company Limited - Equity Research Analyst [79]

--------------------------------------------------------------------------------

Sir, my first question is that when we looked at the distribution orders, how much it contributed to your margin? So just wondered if you can make toward steady-state margins.

--------------------------------------------------------------------------------

Ashwath Ram, Cummins India Limited - MD & Executive Director [80]

--------------------------------------------------------------------------------

So distribution plays its role in the overall margin picture, but I cannot really quantify the exact details of how that plays into the overall margin picture.

--------------------------------------------------------------------------------

Nitin Arora, Axis Asset Management Company Limited - Equity Research Analyst [81]

--------------------------------------------------------------------------------

Sir, I'm talking about only a particular INR 70 crore contribution to the EBITDA, because your Powergen is down 11%, your Exports are down. So just wanted to understand the mix that has changed? How much is the steady-state margin you would have done in this quarter, if I remove that distribution?

--------------------------------------------------------------------------------

Ashwath Ram, Cummins India Limited - MD & Executive Director [82]

--------------------------------------------------------------------------------

Yes, I can't quantify that granular level of detail.

--------------------------------------------------------------------------------

Nitin Arora, Axis Asset Management Company Limited - Equity Research Analyst [83]

--------------------------------------------------------------------------------

Okay. Second thing, sir, on the CPCB norm 4 where you look pretty excited with this part, with respect to the technology angle. And when we saw in the last emission norm, what has happened in the market, there was just a 4%, 5% pre-buy that just happened because of the technological change. There are lot of people over engineer team -- engine and then bring - brought down the cost. What is going to change this time where the company is very excited that technology will lead to the end market sale, if you can quantify that?

--------------------------------------------------------------------------------

Ashwath Ram, Cummins India Limited - MD & Executive Director [84]

--------------------------------------------------------------------------------

Yes. So it -- the -- when we went from CPCB I to CPCB II, it was possible to continue to use the mechanical products and with very, very limited after treatment, still meet the emission norms. And that is why we didn't see the kind of growth in technology on the products that we were anticipating. When we go to CPCB-4+, these are the tightest emission norms in Power Generation in the world, which means even the United States with Tier 4 final has got slightly lower emission standards than what India will have. And to reach these emission standards, which are over 80% improvement in NOx and hydrocarbons and similar kind of improvement over 40% improvement in particulate matter, you're going to have to, one, move to complete electronic engines, and second, you're going to have to put in a significant amount of after treatment, things like SCR, et cetera. And Cummins has already invested in all of these technologies in India and has been leading in these technologies around the world where we have been able to gain market share as well as improve on pricing, et cetera. So that's why we are so excited with this change. It gives us an opportunity to differentiate from people who could just use the previous technology with minimal modification. Now everyone will have to make significant investments in areas where we have already made investments.

--------------------------------------------------------------------------------

Nitin Arora, Axis Asset Management Company Limited - Equity Research Analyst [85]

--------------------------------------------------------------------------------

Why I was asking because the auto industry went through the same technological change, and even the Indian vendor done that. So generally, against that, which is the lower end than the auto engine, when the technology becomes available what we have seen even in the previous changes, so that's why I was asking that. Just lastly, 1 clarification. When you said that you will -- you didn't have a commodity impact in this quarter, why would you have a commodity impact, when actually commodities are down till December? So just need a clarification on that. You would have benefited from that, right?

--------------------------------------------------------------------------------

Ashwath Ram, Cummins India Limited - MD & Executive Director [86]

--------------------------------------------------------------------------------

Yes. So I'll answer your first question. One is, even in the auto space, the auto space went through 2 changes in the last 4 years. One is, it went from BS III to BS IV, and now it's going from BS IV to BS VI. And in each of those emission changes, the technology has gotten upgraded significantly and Cummins has done much better in the market because of those changes. So it's -- actually it proves the point I'm trying to make that when technology becomes more complicated, Cummins wins because we are leaders in that technology. The second point on impact on -- of commodities. For us, these commodity settlement and changes don't happen month-on-month, it happens over a longer period of time. And so with the pluses and minuses, you sort of -- at least in this period, we have seen it averaging out. So despite the commodities going down in certain commodities, certain other commodities have actually gone up, so we see more of averaging out. But all positives and negatives in this area, as we get adjusted over a slightly longer period of time for us.

--------------------------------------------------------------------------------

Operator [87]

--------------------------------------------------------------------------------

Next, we have Amish Shah from Bank of America.

--------------------------------------------------------------------------------

Amish Shah, BofA Merrill Lynch, Research Division - Director [88]

--------------------------------------------------------------------------------

I just wanted to understand that over a long period of time, like, let's say, 3 to 4 years, how do we see some of these disruptions to the industry, like, let's say, solar, including with batteries, may get economical; railways is moving towards electrification, which may impact some of our diesel loco side of the business; power capacities in India is improving, which may reduce the base load requirement from -- apart from the gen set earlier? So if you can just give some perspective over a longer term, that will be useful.

--------------------------------------------------------------------------------

Ashwath Ram, Cummins India Limited - MD & Executive Director [89]

--------------------------------------------------------------------------------

Yes. The first is that, Cummins doesn't consider itself just a diesel company. We are a complete power solutions and powertrain company, which means we are fuel agnostic. And whatever is the right fuel availability in a particular market, we have the appropriate technologies to play and win in all of those. To give you an example, we are leading players in gas products in markets such as North America and China, where there is availability of gas. We have made significant investments in electrification and in batteries and integration of electrical technologies. We have acquired many companies. We are now a large player in the hydrogen space, having recently acquired one of the leading hydrogen and fuel cell providers, a company called Hydrogenics. So we see ourselves as a player in multiple fuels to power the needs of the customers.

Now based on the availability of the right fuels in this market, we feel, we have the right kind of technologies to -- which are available with us, which in -- at short notice, we can introduce in the market. We are working very closely with the various planning commissions, the Niti Aayog's of the world to try to understand what the India fuel road map and the technology road map and to help define that, and then use the appropriate technology to ensure that our business continues and our business continues to grow. We have leading technology in all the areas you mentioned, including in Rail, including in Power Generation, and we intend to use those as appropriate to keep growing the business.

--------------------------------------------------------------------------------

Operator [90]

--------------------------------------------------------------------------------

Next, we have Sunil Gulati from HSBC.

--------------------------------------------------------------------------------

Puneet J. Gulati, HSBC, Research Division - Analyst [91]

--------------------------------------------------------------------------------

Can you give some color on what you are seeing on the working capital side? Any cash collection issues, any deferments?

--------------------------------------------------------------------------------

Ashwath Ram, Cummins India Limited - MD & Executive Director [92]

--------------------------------------------------------------------------------

Although we have had very steady performance -- improving performance in that area, working capital is an area where we focus very strongly on, and I'm happy to report that, that's an area where we are doing quite good.

--------------------------------------------------------------------------------

Operator [93]

--------------------------------------------------------------------------------

Next, we have Sujit (sic) [Sumit] Jain from ASK Investment and Management.

--------------------------------------------------------------------------------

Sumit Jain, ASK Investment Managers Limited - Portfolio Manager [94]

--------------------------------------------------------------------------------

Sir, you spoke about Railways. And when railway group electrification in 2 to 3 years, you said there'll be alternative products that you can introduce. Can you elaborate more on this?

--------------------------------------------------------------------------------

Ashwath Ram, Cummins India Limited - MD & Executive Director [95]

--------------------------------------------------------------------------------

These are all highly proprietary confidential and intellectual property covered technologies. They are in the stage of development and introduction into various markets around the world. So I will not be able to comment about details on that at this stage. All I can tell you is there is public information available about the kinds of investments Cummins has made and some of the markets, including Rail that Cummins already is winning business around the world.

--------------------------------------------------------------------------------

Sumit Jain, ASK Investment Managers Limited - Portfolio Manager [96]

--------------------------------------------------------------------------------

And sir, when do you expect CPCB-4+ norms to, based on your intelligence in the market, to be implemented from? Would it be March '21 or March '22?

--------------------------------------------------------------------------------

Ashwath Ram, Cummins India Limited - MD & Executive Director [97]

--------------------------------------------------------------------------------

There is lack of clarity at this stage, but somewhere within that time frame, somewhere between April '21 to April '22, and we are ready to deal with either of the dates.

--------------------------------------------------------------------------------

Operator [98]

--------------------------------------------------------------------------------

Next, we have Venugopal from Bernstein.

--------------------------------------------------------------------------------

Venugopal Garre, Sanford C. Bernstein & Co., LLC., Research Division - Senior Analyst [99]

--------------------------------------------------------------------------------

On CPCB4 norms, just wanted to understand how different is it from the BSX diesel norms for auto sector? And more importantly, since these technologies, to a large extent, are already been developed, so what is the nature of CapEx that you're talking about that you need to do in the next 2 years? Is it R&D related or is it actually physical capacities that you need to set up?

--------------------------------------------------------------------------------

Ashwath Ram, Cummins India Limited - MD & Executive Director [100]

--------------------------------------------------------------------------------

It's mostly R&D related, and the technologies are similar in certain aspects and little different in many aspects because one is at a -- is a variable engine and the other one is a fixed speed kind of engine. So that is what causes the difference in the technologies. But when we look at the BS VI guidelines and the CPCB4 guidelines for output out of the engine, it's very close.

--------------------------------------------------------------------------------

Venugopal Garre, Sanford C. Bernstein & Co., LLC., Research Division - Senior Analyst [101]

--------------------------------------------------------------------------------

Okay. So given that in the auto market, we've seen when demand is weak and the economy is weak, such emission norm changes due to price hikes and that tends to impact demand. Is there any sort of push or lobby the industry can do to actually push out these norms by a year or 2 because it could be detrimental demand? Or you think you would really have not much of a say, and this will happen as per the time lines, whatever the time lines are?

--------------------------------------------------------------------------------

Ashwath Ram, Cummins India Limited - MD & Executive Director [102]

--------------------------------------------------------------------------------

Yes. I think this is driven more by the environmental mandate of having cleaner emissions, et cetera. So I don't think there is too much of an audience to say we want to push things out for the sake of demand.

--------------------------------------------------------------------------------

Venugopal Garre, Sanford C. Bernstein & Co., LLC., Research Division - Senior Analyst [103]

--------------------------------------------------------------------------------

Okay. One more question on the export side. I do remember a couple of quarters back to -- you had taken some price actions. I think -- I remember it was more about your team mentioning that you're also probably given slightly higher distributor margin or something like that in the MENA region, probably. So I just want to understand, you mentioned earlier in the call that price actions is one of the strategies that they would use. I want to check, given the price actions may have already been taken and still exports are broadly in the similar range, is incremental price action actually beneficial at all to volumes? Or it's better not to take price actions?

--------------------------------------------------------------------------------

Ashwath Ram, Cummins India Limited - MD & Executive Director [104]

--------------------------------------------------------------------------------

Yes. So it all depends on that particular market and that market segment each. Each of those regions work differently. And so certainly, we will not be taking price actions that is not resulting in either market share or growth in demand. And to that point, your statement is right. So we will not take price action if it is not resulting in further growth or further improvement in market share.

--------------------------------------------------------------------------------

Venugopal Garre, Sanford C. Bernstein & Co., LLC., Research Division - Senior Analyst [105]

--------------------------------------------------------------------------------

Sir, lastly, if I may ask, which -- can you mention specific geographies where you have the impact, if you've seen on exports being weak in the last couple of quarters being fairly intense even now? And what is those -- what are those geographies dependent on -- in terms of underlying economy for them?

--------------------------------------------------------------------------------

Ashwath Ram, Cummins India Limited - MD & Executive Director [106]

--------------------------------------------------------------------------------

Yes. So I can say that Middle East and Africa is the most significantly impacted. And you can see from the economies of -- in those countries, why? They have a huge -- country itself has huge -- some of those countries themselves have got huge payment problems, and so the priority is not on gen sets, but on buying food grains and things like that. So those are the areas which are most significantly impacted. But the Rest of Asia, Mexico and even Latin America is -- continues to remain weak.

--------------------------------------------------------------------------------

Operator [107]

--------------------------------------------------------------------------------

Next, we have [Ankush Sharma] from HDFC Life Insurance.

--------------------------------------------------------------------------------

Unidentified Analyst, [108]

--------------------------------------------------------------------------------

Just 1 question, again, on the margins. Clearly, we've seen this big jump in spare revenues this quarter, and that's kind of been offset by the fall in Powergen business and Exports, but since we got gross margins have even remained flat in Q3, now I'm just wondering, given the fact that as we go into Q4 and onwards, the distribution jump may not be there. So sir, can we expect, therefore, that gross profit could actually come down directionally going into the next couple of quarters?

--------------------------------------------------------------------------------

Ashwath Ram, Cummins India Limited - MD & Executive Director [109]

--------------------------------------------------------------------------------

Yes, we are expecting gross margin to be down in Q4 as compared to Q3. And -- or in line with what we saw in Q2.

--------------------------------------------------------------------------------

Unidentified Analyst, [110]

--------------------------------------------------------------------------------

But sir, actually flattish sequentially, as well, right? I think Q2 was also around that 34.9? It is flattish in Q2 and Q3, right, it's been the same number?

--------------------------------------------------------------------------------

Ashwath Ram, Cummins India Limited - MD & Executive Director [111]

--------------------------------------------------------------------------------

We did see a little bit of improvement between Q2 and Q3. And we are currently thinking based on the numbers we are seeing, it'll be flattish to Q2 and slightly below Q3.

--------------------------------------------------------------------------------

Unidentified Analyst, [112]

--------------------------------------------------------------------------------

Okay. All right. Understand. And sir, just on the Powergen business, I think in response to one of the participants, you said that you still are not seeing any kind of a pickup, even going into January. If you could just talk about how has been the industry growth or de-growth YTD? And also what are your expectations for FY '20?

--------------------------------------------------------------------------------

Ashwath Ram, Cummins India Limited - MD & Executive Director [113]

--------------------------------------------------------------------------------

Right. So as far as this quarter is concerned, we are seeing that the channels have a lot of inventory and there is poor demand from the market, and that's why we are not very bullish that the market is going to improve. As a matter fact, it's going to continue to de-grow a little bit. When you come -- when you look at the full year, the Powergen market as compared to last year will be about 6% below last year. That's the kind of slowdown we have been able to anticipate.

--------------------------------------------------------------------------------

Operator [114]

--------------------------------------------------------------------------------

Next, we have Kunal from B&K Securities.

--------------------------------------------------------------------------------

Kunal Sheth, Batlivala & Karani Securities India Pvt. Ltd., Research Division - Research Analyst [115]

--------------------------------------------------------------------------------

My question is relating to our margins. I just wanted to get some sense from what is the steady-state margin we can work with given the backdrop that we are also working on cost optimization. So what should we -- how should we think about margins next year?

--------------------------------------------------------------------------------

Ashwath Ram, Cummins India Limited - MD & Executive Director [116]

--------------------------------------------------------------------------------

I think margins will -- just one second. So for next year, based on our estimation that unless something significantly happens in the economy, that the market will continue to remain weak. So we are anticipating margins to be at the Q2 levels that we saw this year.

--------------------------------------------------------------------------------

Kunal Sheth, Batlivala & Karani Securities India Pvt. Ltd., Research Division - Research Analyst [117]

--------------------------------------------------------------------------------

Then this is for next year you're talking about, right?

--------------------------------------------------------------------------------

Ashwath Ram, Cummins India Limited - MD & Executive Director [118]

--------------------------------------------------------------------------------

Yes. Yes.

--------------------------------------------------------------------------------

Kunal Sheth, Batlivala & Karani Securities India Pvt. Ltd., Research Division - Research Analyst [119]

--------------------------------------------------------------------------------

Okay. At the Q2 levels? Because -- sir, why I'm wondering is that because we're also talking about slight recovery in Exports, and Exports generally are better margin business. So should that -- and also, there has been cost optimization programs that we are talking about. So should that not help margins next year?

--------------------------------------------------------------------------------

Ashwath Ram, Cummins India Limited - MD & Executive Director [120]

--------------------------------------------------------------------------------

It could, but we are not saying that Exports are going to recover immediately. So we said, exports would take at least a couple of quarters to start recovering. And we are still not sure how much further slowdown is expected in our local economy. So considering those 2 factors, both being slightly unknown at this stage, we are not optimistic to say that just because we have curtailed cost that margins will improve significantly.

--------------------------------------------------------------------------------

Operator [121]

--------------------------------------------------------------------------------

So this was the last question of the day. I would like to now hand over the proceedings to Mr. Ashwath Ram for the final remarks. Over to you, sir.

--------------------------------------------------------------------------------

Ashwath Ram, Cummins India Limited - MD & Executive Director [122]

--------------------------------------------------------------------------------

So thank you, everyone, for taking your time to talk to us and ask us a whole bunch of interesting questions. Cummins has celebrated its 100th anniversary as a global company last year, and we are almost 60 years in India. So all the decisions that we take and that we do, we do it from a long-term perspective. We continue to invest heavily in India and use India as a base for lot of our global demand. We continue to invest strongly in India to upgrade all the technologies and bring in new technologies. So we remain optimistic that the investments we make -- made in India and continue to make in India are the best thing for the company, and we are optimistic about the future of the company. Thank you.

--------------------------------------------------------------------------------

Operator [123]

--------------------------------------------------------------------------------

Thank you so much, sir, for addressing the session. Thank you participants for joining in. That does conclude our analyst call for today, you may all disconnect now. Thank you. And have a pleasant day.