Earnings Call Transcript - XNSE:AUTOAXLES 2026-11-13

Operator

Ladies and gentlemen, good day and welcome to the Automotive Axels Ltd. Q2FI27 Post Result Earnings Conference Call, hosted by 361 Capital Market Private Ltd. As a reminder, all participant clients will be in the LinkedIn-only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal for an operator by pressing star then zero on a touch-tone telephone. Please note that this conference is being recorded. I now hand the conference over to Mr. Anand Darshan from 361 Capital Market Private Limited. Thank you, and over to you, sir.

Anand Darshan, Head of Investor Relations

Thanks, Sharia. Good morning, and thank you, everyone, for joining Automotive Access Q2 FY2027 Earnings Conference 12. From the management side, we have with us Mr. Nagaraja, President and Whole-Time Director, Automotive Access Limited. Mr. Rahman K., Chief Financial Officer, and Mr. Kishan Kumar, Whole-Time Director, Militar HBS India. Now, I will ask Mr. Nagaraja for his opening remarks, post which we will have open for Q&A. Over to you, sir.

Anjeev Nagaraja, Other

Thank you. Good morning, all. This is Nagaraja Gargeshwari. I warmly welcome all of you to this investor call. Firstly, I would like to congratulate Mr. Rahman on being appointed as full-time CFO for Automotive Accels. We had a very good quarter. We were able to grow both our top line and bottom line. Our investment in capacity is, you know, kind of getting realized now. More work to do there. However, we also have headwinds with respect to certain commodity supply chain constraints, which we are addressing as we speak. I firstly request Kishan Kumar, Director of MHVSIL, to give a quick market update and followed by Raman sharing the financial results for the quarter. Over to you, Kishan.

Kishan Kumar, Other

Thanks, Nagaraja. Good morning, and I hope all of you had a good Diwali. To start with, I think all of us are experiencing probably all the right things happening in the country with respect to the overall economy. So the Q1 was a very strong performance in terms of GDP with a very high 7.8% and followed by Q2, even though it was slightly downward from the earlier, but it started with a strong base. So, it was a 7.35 estimated. Even though the inflation was slightly higher in August, I think overall resilient market and domestic consumption actually is helping the economy. And to add to that, all the infrastructure projects, the high industrial production rate, freight activities, and the surprise factor was monsoon. It was probably better than what it was forecasted earlier. So all these things are actually helping the overall economy and also our industry. And in addition, specific to our industry, what we should notice is the replacement cycle for the vehicles. There is a large volume of vehicles which were sold between 2018 and 2020, which are now 6 to 9 years old. And if you remember, that was the BS6 launch, so there was a lot of pre-buy that happened. All those vehicles now are getting old, and the replacement has kicked in. I would say the GST 2.0 started the momentum. It carried forward with all of the positive sentiments. The replacements are happening. As a result, I would, you know, the result is very clear. The Q1 was record high compared to the previous year. The Q2 also had a pretty high volume based on the previous similar quarters previous years. So with all that, the industry volume compared to the last quarter was also the highest ever. And we see this momentum going forward as well. So the replacement is still happening. There are certain regulation changes expected. There are certain pre-buys that we expect to go until April of next year. Overall, the sentiments and all the right things that I mentioned happening is giving us a very confident market outlook. And how this will pan out beyond April up to September, that is a little bit of a watch right now, but we are confident that overall the market would pan for this year plus 500, which is again a record because the previous highest was in 2018, 480,000, which you already did last year. So this year, crossing 500 is very much in the horizon, and we are confident the market will put a very strong performance. So, with that, I am here to take any questions later. Nagaraj over to Raman.

Rahman K., CFO

Thank you for your pleasure. Thank you all gentlemen for joining. I'm going to present the Q presence for Automotive Accels. So our revenue from operations was $6,625 million, which is up 28% quarter-over-quarter and 43% year-over-year. This has been our strongest ever Q2 revenue, thanks to the market being very favorable, as Kishin mentioned. And overall, our total income stood at $6,709 million. Compared to previous quarter, which was at 5,271, this represents close to about 27% growth per quarter. Year-over-year, the growth stood at 42.6%. The reason why revenue to this, there is a marginal difference is because of the other income, because Our treasury income was slightly on the softer side this time. Last quarter, we had some one-offs that we had realized because of a very poor Q4. So that kind of flattened out in Q2. So I think that's a very small impact. Overall, 20-27% QOQ and 42% here on the income side is the growth. On to the cost, I think we were very efficient in managing our costs, though there are a lot of advance that are happening in the market with respect to the conversion cost increases. On account of fuel, as well as some of the raw materials that are coming from the other global markets, we are very watchful, and we were able to kind of, you know, get the best out of what is available in the market. And overall, our metal cost for the quarter stood at 66.2%, and all our other overheads are slightly lower in terms of percentages, thanks to the higher top line of 28%. So we did get a lot of absorption benefits. So that leads us to EBITDA of close to about $910 million at 13.7%. So last quarter, we reported 13.6% EBITDA. This time, we are slightly above that. In spite of the higher raw material costs, quarter-to-quarter, which is on account of some mix and also some escalations that are there. Our EBIT stands at 812 million at 12.3%. As compared to last quarter, we are about 31 bps more. And our PBT stood at 807 million. And again, close to 30 bps more quarter or quarter. And our EPS for the quarter stood at 39.8 rupees. Again, that also represents a similar 30% kind of a growth when compared to last quarter, and year-over-year, it's a 67% jump. Also, moving on, this being half-year ended, we also have the half-year results. So, our revenue was about $11,793 million, and a total income of $11,981, which is kind of a year-over-year growth of 23.6%. And metal costs, again, you know, remain more flattish year over year as well. So I think in line with the top line growth, our metal costs have also, you know, moved on the same lines, nothing significant there. And we were able to get some efficiencies on the cost. So thereby leaving EBITDA of 1613 million, which is at about 13.7%, as against 12% last year. So close to about 167% expansion year over year. And our PHE for the half year, overall is at 1057 million at 9%, up again, 143 BIPs year over year, which was 7.5% last year. So there's a 143 BIPs expansion. So H1 EPS, we are ending up at 69.9 rupees, again, up close to 47% year over year. So I think those are the financial set of numbers. I'll be happy to take any questions that we may have later in the call.

Anand Darshan, Head of Investor Relations

I'll hand over it to Nagaraj for the comments.

Operator

No, thanks, Ramon.

Anand Darshan, Head of Investor Relations

Thanks, Kishan. So probably we'll take up the call if there are any questions now.

Operator

Thank you very much. We will now begin with the question and answer session. Anyone who wishes to ask a question may press star and 1 on the touchtone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handsets while asking a question.

Operator

Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Sakit Kapoor from Kapoor & Co. Please go ahead. Mr. Kapoor, kindly unmute your line and proceed.

Anand Darshan, Head of Investor Relations

Mr. Kapoor?

Operator

As there is no response, we move on to the next participant. The next question is from the line of Sumert from Janak Mojim Securities. Please go ahead. Saman, please go ahead with the question, please.

Anand Darshan, Head of Investor Relations

Do you have any issues on the bench?

Operator

No, sir. I think the participants are not responding. Samad, sir?

Operator

Are you able to hear me? Yes, sir. Please go ahead with the question.

Sumert, Analyst — Janak Mojim Securities

Am I audible?

Operator

Yes, sir. Please go ahead. Yes, sir. You're audible. Please go ahead.

Sumert, Analyst — Janak Mojim Securities

So, sir, three questions from my side. First is, is there any change in product mix for this quarter which has resulted in the margins being on higher side? Second is, have we got any traction on the export business? And the third question is, your largest customer is now moving in. They have started accepting air suspensions. Globally, we have this product. So, any plans to get in this? Thank you.

Anjeev Nagaraja, Other

Okay. So, I'll take the first two questions, and then probably Kishan will talk about the product air suspension. So, our product, you know, whatever the product we introduced about two or three quarters ago, those volumes are going up, which kind of helping us. But generally, this is the product mix, you know, we have been telling the market that, you know, what we are, what customer wants and what we have already developed, Thank you. So, on the export front, right now, the capacities have been stretched to even meet the domestic market. While we're still, you know, exploring, you know, the potential export opportunities, we continue to serve the current business, whatever is there. But we'll continue to, you know, explore additional opportunity now that we have putting in additional capacities. And, Kishan, can you take up the last question?

Kishan Kumar, Other

Yeah, sure. So, specific to the air suspension, we are not into that category of suspension, even in India and also globally. But our products are very well proven, because in the Western world, the axles that we sell in India, they all go with the air suspension mostly. So, our products are very well proven, and those vehicles which you mentioned, they already have our axles, and the required customization for that type of a suspension is already done. So we are well protected that changeover, shiftover will not impact us in terms of our share of business.

Anand Darshan, Head of Investor Relations

Thank you, sir.

Operator

Thank you. The next question is from the line of Sakit Kapoor from Kapoor & Co. Please go ahead.

Sakit Kapoor, Analyst — Kapoor & Co.

Hello.

Operator

Yes, sir.

Sakit Kapoor, Analyst — Kapoor & Co.

Thank you for the opportunity. Namaskar to the team, and it should be probably to everybody. So, firstly, if you could just give us an understanding of how are we prepared for our capacity augmentation exercise, and I think so the closing capital work in progress is closer to 27 crore. So, going into the second half, what kind of additional capacity are we coming up and what's the roadmap ahead for us? And I think so, in our earlier conversation, we have spoken about 5,000 crore of top line closer to 2030 year. So, if you could just give us some more color, how are these numbers indicating to the trajectory that we have articulated earlier?

Anjeev Nagaraja, Other

Thanks for your questions. So let me take the first part and then Raman can address the other one. Yeah, like I mentioned, you know, the capacity, what we have put, what we anticipated, even though there was a bit delay in, you know, realizing those capacities, now they are in place. We are still, you know, kind of fine-tuning everything and putting it in place because as we're trying to meet the customer demand and manage the supply chain constraints, so we are working on that. So with this phase one capacity expansion, we should be good with the current market demands. So we are also kind of exploring how the future scenario, Whether this particular market is a short-term spike or it is going to sustain. So we do continue to evaluate that, and then, you know, we are working on our phase two strategy when it comes to, you know, capacity. So with respect to top line, probably, Raman, do you want to take that?

Sakit Kapoor, Analyst — Kapoor & Co.

Sir, just to add, so we have not added, no new capacity has been augmented as of for the first half. And for the second half also, do we have plan to, for any incremental capacity that gets capitalized? Because we have some, yeah, yeah, please.

Anjeev Nagaraja, Other

Yeah. See, right now, you know, if you had not invested in the capacity, we would have been having a big challenge in meeting the customer demand and then achieving this kind of a top-line growth. So we started investing in our capacity, you know, to enhance it by at least 20 to 30 percent, which we are getting realized now. Not completely, but we will be completing it by next quarter. So we are going to have the required capacity in place for a market of this size. And from there, whether we need to add the capacity in what specific areas we need to add, that we are working on the strategy. So once we get a confirmation from the board, then we'll be sharing with you. So, woe to you, Rama.

Rahman K., CFO

Yeah. So, you touched upon the 26 crores of work in progress, right, as Nagaraj mentioned. So, this represents the final phase of the last previous 120 crores that we had committed. So, because it is more towards the final stages of implementation. So, and there is, as he mentioned that, you know, that is to meet the current demand. So, yes, we have, we have a line of sight of, sorry, rather what we presented was a 5,000 pro top line by 2030. So, we are looking at areas where we need to invest. And what sort of product line, you know, that is going to fetch us there and what sort of technology that we need to invest. So that is a strategy, as Nagaraj mentioned, that we will be working with the board and taking their, you know, consensus and then we'll be investing over the next few years.

Sakit Kapoor, Analyst — Kapoor & Co.

So just to conclude, so we are currently prepared with a 5 lakh tonnage market in the MSTV segment. So as you mentioned earlier that we have aligned our product profile in a way that we can service market up to that tonnage. So 5 lakh number. So that understanding is correct that we are fully geared up with our portfolio to cater to what the current market opportunities are.

Anjeev Nagaraja, Other

Yes, like I said, yeah, go ahead. So, yes, your understanding is correct. This capacity, what we are there, we should be able to, you know, manage these peaks. But like what Raman mentioned, we are also looking forward and, you know, to the earlier question, exploring more and more export opportunities. So as we kind of finalize that roadmap, we'll be going and, you know, looking at adding additional capacity where it is required.

Sakit Kapoor, Analyst — Kapoor & Co.

Two small points, sir. Firstly, how are you seeing currently H2 looking up? Although you gave some color of how the current entering quarter is shaping up in the demand scenario, but how do you see H2 shaping up in terms of the EBITDA margin trajectory and also the incremental volume, if any? And secondly, sir, there was some state regulation pending for some floor meter height for the buses, for which our Excel were developed, and we were in the process of, even the OEMs were preparing themselves for the launches. So where are we in terms of the regulatory part, and are we supplying those Excels currently, and if you would just give some color on the screen.

Anjeev Nagaraja, Other

I'll take the first question, and Kishan will probably answer the preceding questions. So, the... While we don't make the forward-looking statement, we feel that the market is going to hold at least for the next couple of quarters. And as we have demonstrated in Q1 and Q2, when there is a market demand, we'll be able to convert it very strongly. But having said that, I already mentioned that there are quite a bit of headwinds out there, both in terms of the price increase and the supply chain constraints. And while we are working, you know, engaging with them and trying to, you know, make the best out of it, we feel confident that, you know, we should be able to convert any of the, you know, potential demand or, you know, market opportunities, we should be able to convert it very positively. Kishan, can you take the other question?

Operator

So, gentlemen, gentlemen, Mr. Keshin, we're not able to hear you.

Anand Darshan, Head of Investor Relations

Hello, I'm audible now?

Operator

Yes, sir. Please go ahead.

Kishan Kumar, Other

Yeah, sorry. So, I was mentioning there were two accesses specifically to the bus market. One was the coach axle, which we have already launched for the 13.5 and 15 meter two quarters ago, that is in production. The second one, which you specifically are referring to the regulation related. The regulation as such doesn't impact our axle. It was more of how the OEMs want to take that regulation and configure their vehicle. So that development of that new axle that is still in progress, we have slightly slowed down for the reason that the current demand that we see is forcing us to develop alternate suppliers, and all these alternate suppliers have to go through certain validation. So we are freeing up our lab capacity to support that, which is the need of the hour, and when the time is right, we will launch the bus axle, which is almost ready. I would say 90-95% on the validation is done. We're just looking at how the overall market is behaving, where the demand is. And right now, the demand is in the heavy-duty segment, heavy-duty truck segment. That is where our focus is to ramp up that product, which we launched a couple of years ago. And the second product, which we launched for the heavy-duty segment, the tandem axle, which will get into production and we will get into a ramp up by Q4 of this year.

Sakit Kapoor, Analyst — Kapoor & Co.

Right, sir. And last point is on the income tax paid part in the cash flow. We see 31 crore being the amount paid, but it is mentioned as net of refunds. So, can you quantify what has been our payment towards the advanced taxes for the first half?

Rahman K., CFO

So, it is as per our estimated profits for the year. So, as per the statutory limits, you know, we have paid 45% of what was. It's supposed to be paid, so it kind of represents, it represents, you know, there, thereabouts, anyway, we have a limit of minimum 80%, right, so I think we have, we are well within that limit.

Sakit Kapoor, Analyst — Kapoor & Co.

Okay. And, sir, can investors look forward for a plant visit at our Mysore unit? Are we entertaining any requests? We as investors can...

Anjeev Nagaraja, Other

Yeah, I think you can. Yes, you can do that. Please reach out to, you know, our company secretary, and then, you know, he'll be able to arrange for it. You're welcome to visit our plant anytime. Okay.

Sakit Kapoor, Analyst — Kapoor & Co.

Right. Sir, I am joining the queue, and these are really very encouraging set of numbers. I think so, queue on queue, twice, quarter on quarter, we are delivering on the expected line. All the best.

Anjeev Nagaraja, Other

Okay. Thank you very much. Thank you.

Operator

Thank you. The next question is from the line of Lakshmi Narayanan. From Tonga Investments, please go ahead.

Lakshmi Narayanan, Analyst — Tunga Investments

Yeah, thank you. Perfect questions. In the first half, can you just help me understand what is your product mix in terms of domestic and exports? And second, what is the mix of different type of vehicle categories? And the third is, what's the type of product mix in terms of actions and various other things?

Anand Darshan, Head of Investor Relations

I don't think that.

Rahman K., CFO

I don't think yes.

Anjeev Nagaraja, Other

Yeah, sorry, go ahead.

Rahman K., CFO

Yeah, sorry, Mr. Lakshman, thanks for the question. So, our export has remained consistent in the same levels as what we had last year. So, and the main focus is, as Gishan, as well as Angie mentioned, is The domestic market where there is a lot of traction happening, so we are servicing that. But at this point, no, we are maintaining our share of business owner exports. Over to you, Angie.

Anjeev Nagaraja, Other

Yeah, I think, you know, we don't, it's very difficult for us to change, you know, share those things, you know, in terms of product mix. But generally, Kishan mentioned that, you know, there's a big demand in the heavy-duty segment, so there are a lot of tractors and tipper volumes are coming along with, you know, some air suspension models. I think that is the product mix, you know, which has been kind of predominant in the last couple of quarters. But, again, it is very difficult for us to kind of predict what kind of product mix, you know, going forward. But we are ready to, you know, sell the customer depending upon what they need. So right now we don't have any major consensus with respect to the product mix.

Lakshmi Narayanan, Analyst — Tunga Investments

I understand that there is a movement towards higher tonnage, and also there is a movement towards tractor-trailers, right? And the third, there is also a change in various regulations like... So, electronic suspension or data and all those things, right? So, these things, all of them come in. One is regulation-driven, safety-driven, and also there is a tonnage increase, and the way in which the haulage is done is also changing. How our product mix would actually change and how fast we can actually maneuver ourselves to kind of capitalize on all these underlying opportunities. Can you just help me understand that? Ishan, will you take it?

Kishan Kumar, Other

Yeah, I can. So, I don't want to downplay what's happening in the Indian regulatory system. I think we are probably the only country right now catching up very fast. We see every year there are multiple regulations coming in the TV industry. All are in the good, with the good intention and the right direction. But what we have to remind ourselves is specifically for a company like us, where we have a very large footprint outside India. And these Western countries have already gone through most of these regulations, barring BS7 or Euro 7, that is still pending. But all the others, what we are talking about right now in terms of safety, ABS, EBS, suspension, these are already done in the rest of the world and they have been there for the last 20 years. And the products that we have in India, they're already proven for those. And there are next generation axles which are yet to come to India, which will be focusing on efficiency. We are already talking to some of the customers and OEMs here. How do we get into the market as a first player? So, mostly we are ahead of the curve in terms of technology and product availability, thanks to our global portfolio. And when the Indian domestic market catches up, we are ready with that. The best example is the 185, where it is getting into high numbers now, but the product was available with us three, four years ago. And we anticipated the high tonnage, high power HP shift to tractor trailer will happen in India with all the right indicators of better infrastructure, better roads, and the regulation. So we are very closely monitoring, and our product portfolio for the next three to four years is protected for that.

Lakshmi Narayanan, Analyst — Tunga Investments

Got it. And two things, and I also hear that the planning cycle, you know, at least among the Indian OEMs are very, very volatile because they themselves are unable to really predict down demand. And how you are looking at it to ensure that there is no whiplash effect on us, either in terms of we are running out of capacity or we are actually have, I mean, have more materials and we are unable to, I mean, the demand suddenly goes down. That is how you're improving the predictability of your business. And second, in the last six months or so, steel prices have actually gone up in high double digits. So if you look at your business, how much of the revenues have been accounted by sheer metal price increase, and if you can just help me on these two things.

Anjeev Nagaraja, Other

Okay. So, first of all, you know, you are right. You know, sometimes the forecast is kind of a volatile. And also, we have been very – we are having quite a lot of variance to cater to the customer requirements. So, we have been very prudent in terms of planning our material. Thank you. So, again, obsolescence is always a challenge, but we also have a very good understanding and agreement with the customer where we do not inventarize, you know, slow-moving or non-moving material. So, it is a challenge. So, that is where we are also kind of finding some constraints because, you know, some of the materials like gates, they may have anywhere between, you know, kind of six to eight weeks of lead time from getting the material, you know, steel all the way to, you know, finishing those parts. So it's challenging, but I think we have a very capable team, and also we continuously engage with the customer to ensure that, you know, how the product mix changes and how we can react to that. The capacity is one thing, you know, we knew that, and we wanted to put in for this kind of a market. We will try to bring in as much as productivity so that, you know, we can not only turn around in a good time, but also optimize our inventory.

Lakshmi Narayanan, Analyst — Tunga Investments

I got it, sir. And in terms of the metal price increase in terms of contribution to our revenues in the first half?

Anjeev Nagaraja, Other

Yeah, you know, it is like, again, those are all too much of details based on the product mix. A lot of things can change. What I would say that, you know, we always have any material or commodity increase back to back with the customer. That arrangement is there, which is pretty much standard in the industry. So that way, unless and otherwise, you know, if something else is happening, you know, we are covered for that because it's back to back with both customers and suppliers. So, for us, the impact is neutral. Got it. Thank you. Thank you.

Operator

Thank you. Just a reminder to all the participants to press star in one for more questions. The next question is from the line of Akash from ADD Capital Group. Please go ahead.

Akash, Analyst — ADD Capital Group

Hi, sir. Am I audible?

Operator

Yes, please go ahead.

Akash, Analyst — ADD Capital Group

Yeah. Sir, firstly, congrats on a good set of numbers. Just wanted to be double sure on one thing that we have capacity in play to be able to onboard 20% higher volumes than what we handled last year in H2. Just wanted to be sure on that.

Anjeev Nagaraja, Other

Again, it's a little bit tricky question. So I think, you know, when I look at it, the overall things, there are two things which will impact our performance. The first one is in-house capacity. Like I mentioned, we have been putting in the capacity. A portion of that we are already getting realized. And like I said, by early next quarter, we will be having the required capacity in-house. But having said that, there is also, you must have heard in the market, you know, the scarcity of availability of steel, and then also the, you know, capacity constraints at the supply chain. And just now the other gentleman asked about a sudden product mix change. All those things can have an impact on overall performance, but we have been very positive in engaging in each one of these, you know, both the challenges and opportunities to make the best use of it. So the rest assured we are having capacity for this. Is this kind of a market? And, you know, like I said, you know, as we continue to work on the, you know, constraints, we should be able to convert or we should be able to meet all the customer demands.

Akash, Analyst — ADD Capital Group

Thanks, sir. And second, my question will be on the margin spend, sir. This time we see both our gross margins and EBITDA margins going sequentially as well as YOY basis going up. Do we expect EBITDA margins could increase even further from here given our execution rates and capacity everything has increased?

Rahman K., CFO

So I'll take that question. So currently, at these revenue levels, right, so you also have a lot of absorption benefits where you build in efficiency. So that's where you're seeing the margin expansion. So like, again, so it is all linked to how the market performs in H2 and going forward. But, you know, our endeavor is to ensure that, you know, we remain lean and ensure that, you know, we protect our margins.

Akash, Analyst — ADD Capital Group

I'm sorry sir, I actually did not, I'm not sure whether my question got addressed here.

Rahman K., CFO

No, I was saying like the margins, the expansion of margins is also, there are two three reasons, right? One, how our product mix works. Second, you know, how efficiently we are, you know, able to convert the higher revenues that would also give us a margin expansion. So, as I said, right, if the market remains consistent, we'll be, you know, in a position to deliver the similar margin levels, but again, it is all subjective to how the market performs over time.

Akash, Analyst — ADD Capital Group

So, given the current market, sorry to interrupt, given the current market conditions, if the trade is more in favor of the heavy duty side, does it, is it favorable for our margin is there?

Rahman K., CFO

See, again, as NG mentioned, right, there is quite a few of product mix that we have, even within the heavy-duty axles. So, yeah, that will determine, you know, how our margins will be there in the upcoming quarters.

Operator

Do you have any follow-up questions?

Akash, Analyst — ADD Capital Group

Actually, I genuinely did not understand my answer to the earlier question itself. I just wanted to be sure that, you know, if the tilt is more on the heavier side, heavier axis, my understanding is that the margins, it should be favorable for our margins.

Anjeev Nagaraja, Other

Sir, I mean, I... So, again, we don't want to dwell too much upon the margins based on a particular product, but, yeah, I think, you know, probably it makes sense, bigger axles, you know, not just a margin, but also how efficient we are in converting it, okay? So, like I said, there are commodity headwinds are there, and our overall performance, inventory management, everything will contribute for it. What I can say that is... You know, as we are putting in our capacity, as the market demands are very strong, we should be able to, you know, perform pretty well, convert more efficiently wherever the opportunity is there. So, that's how I would like to summarize.

Akash, Analyst — ADD Capital Group

Go ahead, sir. That's it for my time. Thank you. All the best. Thank you.

Operator

Thank you. The next question is from the line of Lakshmi Narayanan. Satonga Investments, please go ahead.

Lakshmi Narayanan, Analyst — Tunga Investments

The question is that, you know, as there is movement towards electric buses and electric commercial vehicles, et cetera, and also this emission change now that is coming in, how those things would actually increase the value of components which we actually supply? And also, is there something like the, you know, smart axles where there is some kind of information that actually flows from the axles to the control systems? And, you know, is it something which is prototyped in India or is it something which we can work as and when the demand comes?

Kishan Kumar, Other

Thank you. I'll take that question. This is Kishan. I will answer the later part first, which is the smart axle. So, globally, there are projects, and even in India, we have done certain projects on telematics, which will provide data to the cabban or the vehicle system, vehicle level system, in terms of the axle health. But as a feature, even though it is available, this is not something the OEMs are focusing today. I think there is a lot more that is happening in the safety and the engine itself, right, emission systems. So the entire focus is there. And globally also, these are the last, probably the last piece of technology that would be on the vehicle, depending on what the end customer will see or perceive it as a value. So, yes, the answer is yes. There are solutions available, but whether they are marketable and commercialized today, probably no. Even in the Western world, that's not happening. But there are multiple solutions available, and Smart Axle is a very large area of many different things that we can do within the Axle's architecture. Now, the first question, which is more specific to, you know, the regulations or in general what is happening in India, emissions per se, we do not have any impact on both axles and brakes. It is more towards the engine only. But what will happen, which we are already seeing is with higher HP, our engine, our vehicle platform or axle platform will change. Like, we have already shifted to the largest capsule available in the portfolio today. There are next two levels or three levels of products available, which we will evaluate and get in. What actually will be a game changer in terms of technology or need in the market is axle efficiency. Today, there is no real norm or regulation that is asking OEMs to demonstrate. But in the Western world, this is already there. So we have to declare our axle efficiency to the OEMs, and in some cases, OEMs also declare the axle efficiency and vehicle efficiency together. That regulation norm is not yet in India. When that norm comes, The overall look of the axle may not change, but how we design some of the aspects, for example, the gears and bearings, they will be different. They will be high-efficient or more lightweight. So there are a lot of other technology that we already have demonstrated in the global market that is available to us when the Indian market is ready. We'll be ready to launch them. It's not that the Indian OEMs are not interested. Right now, I think the focus is elsewhere, which is where the entire industry OEMs are focusing on in terms of how to address those regulation changes and ensure that we have a long-term product strategy or overall vehicle strategy available with us. To align with the regulations whenever they come into place. I hope that has answered your question.

Lakshmi Narayanan, Analyst — Tunga Investments

Just one follow-up question on that. So, you know, as an organization, you know, I understand that we do a lot of innovations in R&D, and I want to understand, you know, what is your – how do you benchmark or how do you measure your innovation, either by new product development or so, and if so, what has been the number for whichever way you track for the last six months? And also, you know, we go deeper in the existing relationship and give more products, and we also identify new customers in general. So what is our, you know, tilt in terms of or the measure towards existing products with existing customers, existing products with new customers, and new customers with new products? Some kind of picture would be helpful.

Kishan Kumar, Other

Sure. I think I missed one part of your earlier question, the EV. You mentioned about EV. As we speak, in the EV space, the architecture is central motor or remote motor and regular powertrain. So our current product portfolio and also the next generation product portfolio within the mechanical traditional axle is protected. So I just wanted to answer that as well. Now, moving on to your next question in terms of innovation, some facts. Cummins Meritor or Meritor Assets globally. We are the number one independent drive axle manufacturers. Globally, I'm talking about. Even in India, being here for the last 40 plus years, we still hold that position. It's not just because of the innovative products. It's also our ability to cater to the market what it actually needs. Like Nagaraja mentioned earlier, in India, we like varieties. So for one OEM, we may be having under one actual platform 20 to 30 varieties, variations. So that is what is helping us to cater to the dynamic requirement of the market and ensure that we have slicing of products available across 7 to 60, 70 ton of, you know, GBW. That is probably I would say is currently more important for India. Next is innovation where, as I mentioned, giving some of the examples, we already have these innovation or technology available. And usually in every region, we are the first one to introduce a new product. We talked about SmartAxel. We had introduced SmartAxel 20 years ago. Right. But the market readiness and acceptance that is different in each region. It is Europe is totally different. North America is different. India is different. India is more inclined towards following the Europe regulation, but then at the same time, very cost sensitive. So our innovations are addressing both. So I can't put a number to that. But we know from the track record, what we have, we are usually ahead of the competition when it comes to medium and heavy duty vehicles.

Lakshmi Narayanan, Analyst — Tunga Investments

Got it. So is it, I mean, from our new products, which are the new, I mean, you're straddling from six, sorry, from seven gross weight to higher, is it almost like a fifth of the products which you have in the market right now didn't exist, you know, in our portfolio a couple of years back or some kind of a number would be helpful?

Kishan Kumar, Other

Probably I'll take 2020 as the timeframe. So, 2020 to now, we have launched four products which were not there before, and they are all addressing the shift that we are seeing in the market. And even for the EV, which I mentioned, which are remote mount, there are specific design changes in the previous generation of product, which we are now refining. So, 2020 onwards, there are four to five new products which were not there earlier because the market has also shifted. There are other factors that influence these changes. But all these four or five years ahead, the competition is now catching up.

Lakshmi Narayanan, Analyst — Tunga Investments

Okay. Thank you. Thank you.

Operator

Thank you. This is a reminder to all the participants to press star and 1

Operator

on the touchstone telephone for more questions. As there are no further questions from the participants, I now hand the conference

Operator

over to the management for closing comments.

Anjeev Nagaraja, Other

Okay. Once again, thanks, everyone, for joining this conference. As I mentioned, The team at Automotive Access is fully prepared to meet the customer demands. Just to summarize, as we're kind of realizing the capacities where we have made an investment and the market demand being strong, we should be able to continue to cater to all the customer And hopefully the H-2 will be as strong as H-1, and we should be able to convert additional opportunity, if any, with a higher margin. Once again, thanks for having confidence in automotive axils. Have a great day.

Operator

Thank you. On behalf of 360 Capital Market Private Limited, that concludes this conference. Thank you for joining us. You may now disconnect your lines.

Anjeev Nagaraja, Other

Thank you. Thank you very much. I appreciate it. Thank you, everyone.