Schaeffler India Limited (SCHAEFFLER) Q4 2025 Earnings Call Transcript

Good morning, ladies and gentlemen, and welcome to the Shaffler, India, Q4CY25 Earnings Conference Call. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing star, then zero on a touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Ms. Gauri Kanikar. Thank you and over to you, ma'am.

Thank you. Hello and welcome to Shackler India Limited's earnings conference call for the fourth quarter and 12 months ended December 30, 2025. We have with us from the management today our Managing Director and Chief Executive Officer, Mr. Harsha Kadam, and our Director, Finance and Chief Financial Officer, Ms. Hardevi Vazirani. Mr. Kadam will first take us through a short presentation of the results, after which we will open the floor for questions. Thank you, and over to you, Mr. Kadam.

Thank you, Gavri, and good morning to all of you. A warm welcome to this morning's call. I have with me my CFO, Ms. Hardevi Wazirani, as well. So, let me straightaway get into the floor. So, let me take you through the brief presentation that has already been uploaded. So I draw your attention to slide number two, and I always begin my presentation with some success stories, and success coming from the customer speaks high about the good work that we as an organization, as a motion technology company, have been striving to do over the years. Now, that said, I'm on slide number two, and in the quarter Q4-20-25, as you can see, we have been awarded a few awards, three coming predominantly from the customers, one from each of the business divisions that we play in, and two of the awards coming for our CSR effort that we undertake as well. Let me start with the first award coming from Voight. We were awarded from our industrial customer, Voight, for the best performance and continuous commitment to excellence, fundamentally coming on the back of zero quality compliance in the last 12 months. This has been a commendable win, particularly based on the fact that we started business with VoIP a couple of years back, and our commitment to deliver the best quality products remains on top, and we have lived up to the expectations of the customer. The second award I would draw your attention to is from Aisha Motors. And here again, this is awarded in the aftermarket space, fundamentally because of our outstanding contribution in supply chain transformation, wherein we have made investments to ensure on-time deliveries to our customer there. And this, too, has been recognized for our performance in the quarter for the entire year, 2025. The third award is from our esteemed customer, Mahindra and Mahindra, again, here. And this, again, is coming for on-time deliveries for the engine systems, which we have consistently maintained month after month, and we were recognized for this as well. Moving on, you know, we were awarded in-appropriate social responsibility initiative. So, Doing Good for Bharat Awards, which was held at South Asia's largest CSR and ESG summit in New Delhi. Now, this event focused predominantly on women and inclusion, employability, and livelihood, which highlights impactful projects driving social change. Our project, Women's Skill Development and NITARA, which was showcased on the 10th of October, 2025, reinforcing our commitment to empowering women and also fostering inclusive growth. And the last award that I wanted to share with you has been a consistent winner for us of Water Conservation Project. The Jal Samruddi won another award under the Beyond Defense category. And this was at New Delhi again. Fundamentally, this is about water absorption trenches, the recharge ponds, the drainage line deepening and check dams that we have invested in building in an arid region. And also couple that with solar power pumps, with drip irrigation systems that we have been able to consistently invest over the years, which has eventually enhanced water harvesting capacity of almost up to a height of 1.04 meters above the groundwater levels. This has impacted almost 2,500 people in the village around, and we are very proud of this corporate social responsibility projects that we remain committed to and we remain focused on. On that good note, let me now move to throw some light on the economy, and I move to slide number four. So, as you can see from the GDP growth in India, India's momentum reflects a combination of domestic demand resilience, structural reform continuity, and a clear growing role in the global supply chain. Now, obviously, it goes without saying that a combination of the policy rate cuts, the regulatory relaxation for the banks, and to some extent, even the weaker exchange rates, they all eased the financial conditions in India. And not to mention, of course, the softening of the income tax and the booth services tax cuts supported a kind of nascent recovery in our urban consumption. And while the rural consumption was, recovery was also sustained. What is important to note is the inflation, which was significantly lower in 2025. And as you can see in the chart down below, the overall average for last year 2025, the inflation has been averaging around 2.2%. And especially in Q4, as you can see, has recorded the lowest inflation ever at 0.8. So, however, the core inflation on higher precious metals inflation, mainly on the gold and silver, still remains high. The real private consumption showed a recovery as such and overall you find that has been a very substantial sound fundamentals within the Indian economy. When you look at the index of industrial production too, you do see that in the quarter there has been a further appreciation to an extent of 5 percentage point over the preceding quarter which used to be at 3.8. One of the hallmarks for last year, and that was specifically for Q4 last year, has been the GST 2.0 reform, which has been a big boost for the automobile industry, and the government's push for GST 2.0 reform, which is a landmark step towards simplifying compliance as well as fueling economic growth. And particularly what this meant for the automobile sector, obviously, streamlined tax structures and, you know, lower cascading costs in manufacturing and even after sales, and obviously resulting in an increased affordability for the vehicle consumer. Now, that said, overall, the automotive production growth in the quarter has been pretty strong comparatively, which began to see a strong uptick. Now, talk about the consumer price index, too. The full inflation moderated. The core inflation stayed soft. Energy prices remain stable. Overall, all the indicators for a very sound growth in GDP for the country. I would like to throw some light on the core sector performance, and to that, I ask you to look at slide number five. Now, what you see here is the specific industrial sectors, and as you can see, month after month, compared to the preceding years, every sector has posted pretty strong improvement and strong productivity growth as well. Cement production has been very strong, which contributes to 5.4% to the economy, as you can see, has grown 10% overall. Steel production close to 9% overall, and mining and coal has been muted a bit, but still in the positive range. Energy, which is clearly an indicator of the production and the manufacturing activity in the country, also has remained more or less stable, has not seen any decline, so to say. So all said and done has been pretty strong on the industrial sector. And if I were to move now a little more specific on the automotive sector to slide number six, what you get to see is all the sectors have grown strongly, obviously riding on the back of the, you know, the GST 2.0 reforms that I earlier referred to. If you look at the two vehicles, as you can see, in the quarter, we had a strong growth month after month compared to the previous year, and growing at an average of 8.6% at an annual level. Passenger vehicles, again, at 8%, strong growth. Commercial vehicles, too, which was sluggish last year, has come back and has posted about 8.4% growth there again. Tractors, again, a very strong growth at 17.2%, as you can see. All in all, the biggest beneficiary of the GST 2.0 reforms clearly is a good indicator of a strong rebound in the automotive sector performance. Now, if one were to look at the production numbers that have been registered, you know, passenger vehicles almost, even the export markets have posted a strong growth, while the production numbers grew at 8%, the export numbers or export sales went up to 16% in passenger vehicles. Look at the commercial vehicles. There again, it was a hoping 58% improvement for the entire year, January to December, in the export market for commercial vehicles. And talk about two-wheelers again, there we have seen a 24% increase in exports for the full year compared to the last year. So, all in all, very strong performance on the domestic sales at single-digit, 8-9%, but on the export side, definitely double-digit growth. All attributing, and this is something that as Shackler India, we were able to leverage the growth in a very efficient and agile manner, which the numbers, as I move into the next slide, will tell you. I move on to slide number 8, wherein I want to throw light on the quarter 4 performance, and as you can see here, the revenue, we closed the quarter at 2,643 crores, which was a clear 26.9% better than Q4 2024, and also a 12% increase over the preceding quarter Q3 2025. This volume growth also resulted in a strong EBITDA, as you can see, bringing in 505.6 million rupees and resulting in an EBITDA margin of, which is a clear increase of 19.1% over the Q4 of 25 and the preceding quarter an increase of 20%. So, strong bottom-line performance as well, which ultimately resulted in a profit after tax of 328 crores in the quarter. One of the highlights has been the strong focus on free cash flow generation, which, as you can see, we have been able to bring in 254 crores into the kitty. And this has helped us to also shore up all the spending and expenses that had to be, you know, aligned with and decided in this quarter, which I think I'll share in the subsequent slides. On this back has been a pretty sound and good financial performance of the organization in the quarter Q4. Q4 has been one of the highest performances in the last four quarters. For the entire year. Now, while the market did enable our growth story, however, it's also I would like to attribute that of continuous preparedness in terms of acquiring new businesses also contributed equally strongly to the growth story. I draw your attention to slide number nine, where are sustained business development activities in terms of new business wins? Whether it is in the automotive technology space, we did have some good wins again on passenger vehicle clutches and the dual mass slidings. We had new business wins in the hydraulic clamp phases as well, and we also had some clutch win businesses in the light vehicle category as well. Even on the vehicle lifetime solutions, we had some strong wins on the front-end auxiliary drive mechanisms, the timing kits for the passenger vehicles, And we continued our focus in adding more products to the portfolio as more and more borrowed six-stage vehicles started to come back for repairs. Lastly, on the bearings and industrial solutions too, we did have significant business wins, particularly in the product lines of ball bearings, needle roller bearings in the two-wheeler sector, and quite a lot in the needle bearings as well. And some of the industrial applications on the sphericals, the four-row and the two-rows, cylindrical roller bearings and the paper roller bearings, specifically in the cement and the steel sectors as such. So this has been our endeavor continuously to ensure that we have pipeline of business and convenience So that we are ever prepared to capitalize as the market begins to, you know, the demand begins to show more traction. With that, I now move to the third part of the agenda, which is the financial highlights. And I draw your attention to slide number 11, revenue from operations. And as you can see, and as I mentioned earlier, when you look at the top chart and you look at the 2035 bars, you will find that quarter on quarter we have been able to demonstrate a sustained growth and the last quarter views what has been a significant increase, as you can see, in terms of the revenue. At an annualized level, we have closed the year with 9,395 growths as turnover. And if one were to look at the Q4, the quarter-on-quarter growth has been at 12%, and the year-on-year growth of 26.9%. So, very strong top-line growth that we have demonstrated. Now, where is this coming from? And if you look at the table at the bridge below, you will find that the automotive brought into the system for the quarter, 270 crores, aftermarket too, contributing 43 crores, bearings in industry resolution also bringing in 120 crores, and our export business also did bounce back very strongly in the last quarter, and that came in at about 128 crores. All in all, helping us to close the quarter with 2,643 growth for Q4, which is a clear 12% better than the preceding quarter and the 26.9% better than the same period compared to last year. Now, that said, obviously, our mix, how is that looking now? And as you can see, we still continue to sustain a pretty balanced mix of automotive, OEM business, and our bearings and industrial business at 35% and 39% respectively. The aftermarket, too, has performed much better and registers 11% share of the total sales mix with our exports sustained at 15%, which is exactly in line with our land and such. That said, I move to the earnings quality slide, which is on slide number 12. And here what you see is the EBITDA performance for the quarter, once again demonstrating that every quarter on quarter we have been able to increase our EBITDA numbers. And as you can see, while at an annualized level, we were able to deliver 19.6%, what you see is a quarter on 6.2% better than the preceding quarter, bringing in 525 crores into the kitty. Now, the bridge clearly explained the has to where did this come from. And obviously, the gross margin contributed with a blend of mix and volume effect that is coming in. And we did have some expenses related to employee costs and some of the other income and expenses that were there. But all in all, strong bottom line performance, and this has resulted in a strong profit after tax, which is clearly visible in the third bar chart that you see down there. I would also wish to point out that there were some special or exceptional expenses that were coming in, and we have ensured that the impact has been absorbed, impact coming due to regulatory changes on the labor code, which was attributing almost 0.8% for the quarter, and which we have already absorbed that in the results that you see. So, with that, in spite of the absorptions, we have been able to post a strong profit after tax, as you can see, at 12.4% compared to the 12% of the preceding year, Q4 of last year. I now move to the working capital and the CapEx spend on slide number 13. And here again, our commitment to continue to invest in our CapEx. The journey continues. While it may look that we are spending lower CapEx than what was spent last year, Yes, that's because we have now started to leverage and ensure the sweating of the assets that we have already invested in last year. So we have judiciously started to adjust our investments in line with the demand and in line with the capacity that we have already installed. However, as a percentage to sales, we continue to operate at about 4% of sales in the last quarter, as you can see. We did have some good control on the working capital management, and in the quarter, we were able to manage and get the working capital as a percentage to sales down to 17.9% in Q4, which is definitely much better than the 19% which we were there for the same period last year, or even on the preceding quarter, which was at close to 19% again. So that said, I did talk about the strongest performance also has been on free cash flow generation. And as you can see, the year-on-year change in the quarter, 56% improvement in the quarter itself has been a clear demonstration of the effort, sustained effort of the entire team to ensure that we bring in the cash to run the operations in a smooth and an efficient manner. With that, I move to slide number 14, which talks about the key performance indicators, and I did already talk about the revenue in the quarter coming in, and at an annualized level, closing the year with 9,395 grows, which is a clear growth of 16.3% over the previous year. EBITDA at 19.6, which definitely is better than the 18.5 that we delivered last year, resulting in an EBIT margin of 16.1, again better than the previous year's 15.2. Profit after tax of 12.7 percent, which is better than 12.1 last year. And obviously, the free cash flow has been strong as well, comparatively, in this 12-month period, as you can see. I move to slide number 15, which gives you the consolidated picture of our own subsidiary as well, the KRSV Innovative Auto Solution, Private Limited. KRSV, or COURS as we call it, also have been able to generate a revenue of 81.5 crores in the quarter. Although we still have some way to go in the bottom line performance, all I can say is that the performance of COOL or KRXV is exactly in line with our plan. And at a consolidated level for the Q4, the revenue stands at 2,724 crores with an EBITDA of 18.4% consolidated, resulting in an EBIT before exceptional items at 15%. And with that, I now move to another important subject, which is the dividend payout on slide number 16. Yesterday, we concluded the board meeting and the board of directors have approved and recommended and approved 35 rupees dividend per share payout, which is well within our This is our targeted dividend payout ratio, which we try and keep it between 30 to 50% of the net income. And I'm happy to say that this has been finally approved per equity share of Rs.35. And this is something now that will result in the execution of it going forward as well. With that, I also want to draw your attention to another milestone that we crossed on slide number 17. I must say that we are extremely proud that we have been now evaluated by S&P Dow Jones Sustainability Index, and we came out with flying colors, and Shattler India Limited has been ranked first First in India, and incidentally, Shatla India has been ranked 7th globally as well. Now this to us is a very important step, clearly demonstrating a focus on sustainability focus and the ESG targets that we have set for ourselves. And post the evaluation, the overall CSA scores stood at 76 out of 100, which was a clear We have a 40-point increase from the earlier evaluation that we did, and clearly this is very motivating for us. Looking at all the three areas of environment, social, as well as governance, we are happy to see that we have continued to establish strong credentials and build the confidence in the stakeholder community And we will continue to work on whatever little gaps do exist. We have clearly identified action plans to that effect, and we will continue to work towards that. I move to slide number 18 to summarize, and we continue with the clear double-digit growth momentum, which we have delivered every quarter, and we have sustained that on a much stronger footing in the Q4, as a result of which the volume growth or earnings quality also has improved, With managing our capital efficiency very well, and clear focus on our localization, which we continue to march ahead, and we have managed in the quarter to take up the localization percentage as well. CapEx, as I already mentioned, that we continue to keep the focus and watch the market development and accordingly keep adjusting of sales when it comes to CapEx, as well as leverage the already installed capacities that we have put in our plants. I'm happy to say that the last quarter of the capacity utilization in our plants have been pretty robust and we have all the plants running well above 85% capacity utilization. Yeah, and on this note positive traction in the marketplace, sound footing, the fundamentals being strong, our focus clearly on growth, pipeline generation, and managing the cost elements within our operations. We enter 2026 and we look forward to a sustained growth and continue to deliver the strong results that we have, much to the expectations of all our stakeholders. Thank you very much. I hand over the call now to Gavri.

We can now begin the question and answer session, please.

Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on the touchstone 74. If you wish to remove yourself from the question queue, you may press star and 2. Participants, you are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question can be assembled. We have the first question from the line of Mukesh Sera from Evander's Park. Please go ahead.

Yes, sir. Good morning, and thank you for the opportunity. I'll just get the bookkeeping question out of the way first. On the other expenses, this quarter we've seen that rise to about 400 crores. Is there any lumpy item that you'd want to call out within that?

Yeah, just give me a minute.

Yeah, sure.

So, it's for the quarter, that means quarter vis-a-vis quarter. Yeah. Quarter vis-a-vis quarter, we have other expenses in total increasing by 72 crores.

Right. Right.

And within this 72 crores, we have certain services and true-up of costs for which the bills for the previous quarters were received in Q4.

Okay. Okay. Okay. So, there's no one-off as such. It's just timing of certain costs that are bunching up this course.

Absolutely.

Got it. And now, on the business itself, we've kind of seen that there's a large plant of the competitor on SRBs, CRBs for the industrial segment now beginning operations. So, I mean, have you started seeing any increase in competitive intensity, say, for segments like iron and steel, cement, etc., on the SRB, CRB bearings, given localization has increased within the industry? So, anything that you could highlight there? Yeah, Mukesh, so, rightfully, our strategy is very clear. We keep increasing our localization content, I think. Last quarter, we reached a percentage of 78 direct localization, or that's 78%. So, clearly, we will continue on this journey to continue to localize, and predominantly, our focus is on the spherical roller bearings, Where we see a lot more potential to continue with localization. Okay. So the other part of your question, is there, you know, increased activity in terms of competition? Well, competition always exists in the market, and we acknowledge the presence of the competition. However, all focus on having our own growth strategy, we continue to do that. Got it, got it. And secondly, your automotive technology's growth is quite strong. And I think in the past, you have kind of mentioned that you have decent supplies for strong hybrids. So have we started seeing any benefits? Because I think we've seen one launch, one mass market launch on the hybrid side from a large OEM. And we also noticed that a lot of the other OEMs are talking about a lot more hybrids, say, in the next coming year or so. So one is, have you already started seeing some benefit? And secondly, are you seeing significant increase in activity levels with respect to hybrid powertrains? Let me treat that. There are two parts to that question. In one, yes, we already have a businessman on the hybrids, which we have started the series production, as well as supplies from our Indian plant. Certainly, there are a few more projects in the hybrid space with some of our esteemed customers that we are working with, correct? And they have to go through the homologation and the validation process, which is work in progress. I'm sure we will sustain that as well. Regarding is there an increased, you know, interest from our OEM customers, I guess we will have a wait and watch because, yes, hybrids, too, has become very attractive for our OEM customers. So while the battery electric vehicles also have seen an upsmeet, we are also seeing attraction on the hybrid technology. I think we will, we believe that both these will coexist as well.

Right, and the CPV, the content for us is higher in hybrids vis-a-vis C&I.

Yeah, obviously, because the hybrid technology, what we deliver is at a module and a subsystem level. So the value of this is definitely much higher, which obviously raises content per vehicle. That's number one. Number two, the hybrid product or solution that we offer is an add-on to the IC engine technology.

Great, great. Thank you for this. I'll get back to you.

Thank you. We have the next question from the line of Abhishek Ghosh from DSP Mutual Fund. Please go ahead.

Yes, sir. Thanks for the opportunity. Sir, in terms of Vitesco, if you can just help us understand where are we in terms of the integration? Are the benefits of that already occurring in terms of…

Yeah, can you come closer to the mic?

Yeah, your question was not so audible, please. Is it better now? Is it better?

Yeah, that's better. Yeah. So my question was around Vitesco. Where are we in that journey in terms of the integration of the operations? Are we already seeing some benefits of coming through in terms of new wins or the margin profile? Just a thought on the Vitesco integration. Thanks.

Yeah, as we already have concluded the merger of the Vitesco, So, in front of the customer, there is only one brand that is represented, and that is Schaeffler. Yeah, and regarding your question as to whether we have new businessmen, of course, we do have new businessmen. We have a lot of businessmen in the BMS or the battery management system, as we call it, particularly in the battery electric vehicle space with a couple of our OEMs. And I think our designs have been approved, and that's something we foresee. So, surely there's a lot of offerings since it's in the electronic and hardware space, coupled with the software that we give. I think we are seeing very good response, and we believe that we can definitely leverage the offering going forward. We have started to consolidate and grow our offerings with many other OEMs as well. So surely the Tesco portfolio is very complementary to our, you know, mechanical product offerings that we have been giving all these years, and we now are on a stronger footing to give a much higher value add to our own customers, and we see that already represented in the new business wins like the BMS that I talked to you about.

Okay, sir. That's helpful. Sir, just in terms of the exports, we have seen very strong growth coming in there as well. So, is it base catching up? Is it, again, you know, from a particular region, are you seeing good demand from wind or any particular segment which is driving? If you can help us with that, sir.

I mean, so far as our exports is concerned, the numbers that we report does not have wind in it.

Correct.

Our sales to the wind customers is in our domestic sales who onwards export their products. If we talk only about our own exports, we have seen the growth coming from all the regions, mainly from Europe and Asia Pacific.

Yeah, there are two parts that Abhishek was asking. One is our own exports to our sister concerns across the globe. Wind, since you touched upon, our own wind business has grown quite significant. At an annualized level, we have already grown at 17 to 18 percent over the last year comparatively. Even in the quarter, while the quarter was a little lower compared, you know, Q4 over the same period last year was just about 4% growth, but Q4 over Q3 was still a 15% double-digit growth that we have registered. So, a strong performance in the quarter from our wind business. And as Adhiv was already explaining, we don't bracket or categorize the wind sector business under exports. All customers would be exporting those equipments, but that we don't treat as export for us. It's a domestic sale.

Got that, sir. So one last thing is you called out your utilizations are north of 80%. How should, and you are, you know, continuing to grow at a much higher pace, and you also, you know, largely in the CY25, you have moderated your CAPEX. So how should we look at your CAPEX from a two-to-three-year perspective, given that your parent has also, you know, rolled out a five-year strategy for you all? In this light, sir, how should we look at it? Will growth get compromised at any point in time because of capacity constraint because your pace of growth is far higher than the underlying industry? So that was the last question.

Explain your question in two parts. Yes, our capacity utilization is over 85%. However, the plants continuously work on improvement of productivity and OEE through some small measures, so they can still absorb much better capacity utilization. The second part is, yes, we had moderated our capex in the year 2025 deliberately because we wanted to focus on utilization and capital efficiency. However, talking about 2026, we will be stepping up again to the average of previous three years levels over 500 crores. To begin with in 2026, the numbers which were announced by Mr. Rosenfeld, our group CEO, are for the period of 2026 to 2030. And beginning 26, you will see the capex scaling up.

If I may add, Abhishek, if you look at our performance, we have strived to always deliver a double-digit growth rate. And clearly on a mid-term frame, as Hattievi pointed out, we want to sustain a double-digit growth rate. And if we have to do that, obviously, it goes without saying, commensurate with the growth rates. We'll have a continue of capacity investments as well. We will continue to do that. What we want to do is also look at the market dynamics and bring in the appropriate products into India for localization, not do some things in a hurry, and then we realize that the market has changed. So, it's important that we align our capacity investments in line with the future product demands that are very specific to India needs. So, hence, we would moderate at times. However, we might even accelerate at times. You will see this happening.

Great, sir. Thank you so much for answering my questions. Wish you all the best. I'll come back in the queue.

Thank you. We have the next question from the line of Mahesh Bindri from LIC Mutual Fund.

Hi, sir. Thank you so much for the opportunity. I have one question. Sir, India and the European Union is expected to sign a trade agreement shortly, a detailed one. So, will there be any benefit come on our way?

Benefits coming our way, specifically when we talk about import of raw materials and components, the child part, there we expect. However, the further details of FTE are not announced. Currently, we are paying duty in the range of 7.5% to 15% on import of raw material, but the new rates have not been announced as yet. Talking about import of finished goods, yes, as a group, we will be benefited, but even there, the rates have not been announced. On exports to Europe, the import duty is already in the range of 0% to 2%. There we do not see any major benefit or change.

Also, I think it's pertinent, Mahesh, to also factor that, you know, some of the component level imports that we do is because we do not have suppliers locally. So, while we have strived to localize the development of these components as well, now with the FTA getting signed, obviously, it is important for us to revisit those strategies as well, because if it is now competitive to continue to import the components, should we go for localization? That is something we will definitely take cognizance of.

Sure. Thank you so much, sir.

Thank you. We have the next question from the line of Bala Subramanian from Arihant Capital. Please go ahead.

Good morning, sir. Good morning, madam. Thank you so much for the opportunity. Congratulations for a good setup from us. My first question mentioned wind business growth rate 70% to 80%, but if you look at last quarter, some sluggishness because of timing differences in project-based sectors like wind and railways, I'm trying to understand in the Q4 improvement, it's simply the realization of those delayed projects, and we could give some updates on the railway side. And it's only because of the wind or we have seen improvement on the railway site also.

So, Mr. Balasudramaniam, you have asked that. We look at all the sectors that we operate in and do business in. You know, some of the sectors also have a business cycle. They are dependent, time dependent as well. So in the fourth quarter of last year, for us, the railway and the wind actually posted lower numbers. But it was definitely not in the negative range. It was better. But then compared to the other sectors such as power transmission or the raw material sectors or industrial automation or even the aftermarket business, What we see is that while all these sectors registered a very robust growth, there were a couple of sectors which showed a little weaker growth, and I would say this is only due to either it's a timing issue or some of them are tender-based businesses, so tender is not forthcoming. So this is what I would talk about the railways as one of the sectors and the wind energy. Yeah.

I mean, having said that, as Harsha said, that full year growth was very impressive. Very impressive. If we look at quarter-on-quarter change, there are a few changes we have to end up late.

Got it, Madam. My next question on that KRSV side, we have seen the losses has been widened nearly 18.3% to 14.7% in this quarter. What are the specific milestones for CY26 to get a track for 2027 breakeven? And our current strategy is basically dark store expansion is majorly prioritizing top-line growth at the cost of higher expenses. When will the focus will shift into profitability?

So, we have done quite a good infrastructure setup of dark stores and hubs now, and this particular growth will now moderate in 2026, and more focus will be on the channel and product mix from now onwards because we have now sufficient dark stores and hubs in place. So, more focus will be on channel mix. So, we have three channels there, wholesalers, retailers, and workshops. And so, we will be balancing our channel mix there, as well as we will be looking at the product mix based on different geographies. So, moving forward, you will see that also the financial parameters will start improving.

Also, if I may add, all the last two years, we've been investing in establishing the infrastructure base, which we have done. And now the focus is on, we have a very clear plan when to break even. Now, what is important is to stay focused on the services mix that we have, the product mix that we have, as well as increase the efficiency of the processes that we have put in place. So the focus is on how do we increase the business and sales to happen in each of the locations that we have started to operate in. And we have started to keep the focus high on deliverables from each of the places where we have started to invest in. So, the last quarter performance clearly indicates that we are well on track to deliver the numbers. In fact, we did see some better improvement in profitability as well going forward. I'm sure we will be able to register or sustain the same momentum and deliver in line with a plan that we have set for course.

Thank you so much for the detailed explanation. Thank you.

We have the next question from the line of Raghunandan NL from Nuama Research. Please go ahead.

Congratulations, sir, once again for the stellar number. Specifically, sir, on the Shoolagiri plant, can you indicate how the capacity ramp-up is expected to pan out in future? If possible, can you indicate the investment in CY25 and CY26 and how you see the capacity utilization in CY26?

Utilization in all of our plants is over 85% currently, and this year's CAPEX was in the range of 375 to 400%. We will be, again, scaling this up in 2026 in line with what we did from 2022 to 2024, the technology that the market is expecting.

Noted, ma'am.

On relocation of the cloud, the work in progress, the stocks are going to be at the relocation.

Noted, ma'am. Thank you for that. On the E-Axel, can you indicate how the program, how are you expecting a very large automobile pair?

So let me start on the E-Axel with the numbers that we had projected for 2025. I'm happy to say that we have exceeded those numbers, which is very encouraging for us because we have started to invest in the next phase of localization of the production itself, Which is going according to the plan that we have already laid out. That said, and looking at the all-customer vehicles winning in the marketplace, we are now seeing more traction for new platforms as well, which we have started to engage with other customers. So, rightfully, as and when we have the new business that come up, we will get to hear in the future earnings call as well from us.

Thank you, sir. On exports, can you indicate how do you see the demand conditions in key geographies? And recently, there was this news on the ROD-DEP scheme where the incentive has been reduced by half. So, would you be able to quantify how much was the ROD-DEP export incentives for CY25?

We see that the order book for 2026 is in line with last year. That means 2025. In 2025, we already saw the demand coming back, but moving forward, we don't see that the same momentum of 30-35% will continue. Now, it will moderate. Based on the economic growth projections, specifically of Europe and Asia Pacific, we do not see that it will be more than 5% to 10%. So, that is going to be the export scenario in 2026.

Thank you, ma'am. And would you have it handy the RODEP export incentive for CY25?

No, I will let investor relations retoke.

Noted, noted. Thank you so much. I will come back in the queue.

Thank you. We have the next question from the line of Harshit Patel from Iqvaris Securities. Please go ahead.

Thank you very much for the opportunity. Sir, my first question is on the BIS segment. We have posted a very healthy growth on both YOI as well as POQ basis after a few relatively muted quarters. What changed in this particular quarter? You have highlighted the timing of projects in railways and wind as one of the reasons. Could you also highlight other factors, and do you believe that the current revenue run rate will further accelerate from here in the second?

So, Harshit, is your question towards the other sector performance?

In Q4.

Q4, I know. Yeah, if one were to look at Q4 performance compared to Q4 last year, you would see a double-digit growth in all the other sectors on the industrial space, which is a clear indicator that obviously the market demand had a positive traction, which we were able to better leverage. So, as I already mentioned, some of the weaker performance was from the wind and rain, but however, all the other sectors registered a very strong performance in the quarter.

Right, I understand. Secondly, on the automotive technologies, we have posted a growth of almost 42% by a while, which is significantly ahead of the automotive production volume growth in the country. Obviously, we have mentioned some of the key business rooms that we have registered for the past several quarters, and that would have definitely contributed. But would you say that the majority of the growth in this particular quarter will have come from the ramp-up of the EXL project? Would that project have the highest share of the growth that you have posted? And we will see, I mean, obviously the benefits could moderate from this very high level, but should we continue to see the high peak kind of growth in the automotive technology segment ahead?

So let me clarify that while what you said about the e-mobility business growth being very strong for us, yes, it's a fact, as our customer models are living in the market, and so we are riding on their success. And it goes without saying that we will continue to increase our competitiveness here by way of the localization phase two that is currently ongoing in the production lines for our E-axis. However, I must also point out that even in the internal combustion application, the IC engine applications, we have registered pretty strong growth, whether it is in the clutch applications or in the damper systems. So engine and transmission applications also, we have registered pretty strong wins. As I already pointed out, we continuously strive to secure new business wins, and we had very strong book-to-build ratio going forward, and we remain focused on ensuring that we continue to create the pipeline and accordingly also make the appropriate investments in production capacities, even for the IC engines, as we believe. That in the midterm, we still see growth happening in the IC engine applications as such. So it goes without saying that even if it were to grow at a 4% to 6%, GST 2.0 reforms notwithstanding, it is a clear indicator that we must continue to invest if we want to sustain the growth and also capitalize the market opportunity that we see. So, there have been areas like wild train systems as well. We have started to focus. The numbers are small, but we're confident going forward. The belt and chain drive systems. So, all the application and the products that go in and around the IC engines, we continue to keep our focus. And what you see in the Q4 is exactly that. The focus has helped us to grow at a very strong double-digit growth rate in Q4, even in the IC engine application also.

Understood, sir. Thank you very much for answering my question in all the way.

Thank you. We have the next question from the line of Sagar Parikh from Renaissance Asset Managers. Please go ahead.

Yeah, good morning, sir. I think you've answered my question, but essentially, I just wanted to understand this. FTA with EU, just I'm reiterating what you said. So you said that on the export side, there is no impact because the rates are almost 0 to 2%, right? Correct. And on the import side, you're still waiting for the rates to be seen. We pay right now 7.5% UD. If that goes down, then we can see more imports from EU. Right, understanding? Okay, perfect. And anything on the USFTA where we can see some momentum or nothing there?

No, there is nothing else.

Also, you know, the USFTA clarity is still to come, correct? The commodity or an item level is still not being ready. So, yeah, but I think our exports to U.S. is also not very big, so I don't think that should be...

But can it become meaningful if there is some material changes in the rates?

Well, again, I guess the similar pattern would emerge where the import duties would have to come down because the amount of contention is what is imported into India, right? What goes out of India, obviously, if the export duties were kept at zero, or rather import into US, they were kept at zero, we don't see that any differentiation there as such. So we believe that, yes, our export business would strive purely on our own competitiveness in the Indian market space when looked at globally. So I guess that's the only differentiating factor that we have.

Thank you very much. Ladies and gentlemen, as there are no further questions from the participants, that concludes the question and answer session. I now hand the conference over to Ms. Gauri Kanikar for closing comments. Thank you and over to you, ma'am.

Thank you, everyone, for joining us today. If you have any further questions, please do reach out to me at gaudi.hanikaretshaffler.com. With this, we conclude the call and wishing you a good rest of the day. Thank you.

Thank you. Thank you all.

On behalf of Shaffler India, that concludes this conference. Thank you all for joining us, and you may not disconnect your life.