Thank you. We will now begin the question and answer session. The first question comes from the line of Gunjan with Bank of America. Please go ahead.

Yes, hi. Thanks for taking my question. My first question is on the defense business. You know, there have been quite wide-ranging wins in the last quarter, right? Small guns, the carbine, then unmanned systems or drones, and then even the marine one came throu gh in the last couple of months? So it clearly the product capabilities is far wider than the guns and the portfolio is expan ding, right? So I'm just looking to get some sense from you as to how do we think about the scale -up of this business in the next two, three years? Yes, of course, there's one way that we look at order book and execution of order book, but it does seem like some of the newer opportunities are adding in. So some thoughts on how do we think about this business from a two, three year perspective?

Yes, sure Gunjan. I think you have to look at our defense business the way you look at our overall company. We will de-risk defense from any one vertical. We will have multiple verticals. We will have verticals that will have continuous business. We'll have verticals that will have lumpy business. And we will look at global opportunities for all the products that we make. It's very clear that unmanned systems and drones are a very big opportunity. These are definitely both complementary and supplementary to manned systems. So we have to have a play there and we are there both in the water domain that is un derwater and in aerial domain. And we are building the capability not just for the product , but also for the payload. So that is one way to look at it. And these are products that can be ranging from few crore rupees to many, many million dollars. So there's a wide range of products within that also. So we believe that once you become a defense player and especially in a network -centric battle environment or defense environment, you need to have all the network products that become a force multiplier for an y of your products.

Got it. If I were to like just sort of think that defense is about roughly about 10-12% or even less than 10% order of your revenues right now. With these new opportunities, order book conversion, I mean, just directionally, ho w do you think this , how significant can this be? I'm just trying to get the scale of this business maybe three years down the line, maybe five years down the line, the way you internally sort of look at the evolution of this?

See realistically, defense has the opportunity to become as big as our business today is , overall business is today , if we look at global opportunities. You know, if we look at the budget of Europe, European defense budget is going from EUR 350 billion to 800 billion. India's defense budget is growing by 21% this year. So overall, there is a huge growth taking place in these sectors. So it depends on what we play in, what role we play and what we win. But clearly, 10%, 11% will definitely be more like closer to 18-20% if things go right, could be even more than that.

Got it, 18%-20% in two to three years. Is that how I should take it?

I think let's look at 20%, 30%.

Okay. Got it. Second question is on this tariff, clearly you guys navigated it really well with pretty modest hits. I'm just trying to get a color on what does the deal do beyond the easing of margin pressures? Is there fundamentally something you see has shifted and which can put us in a better place as a supplier ecosystem from India, some qualitative thoughts around that?

Yes, so look, obviously, it puts us in a better position than certain other countries which have a higher tariff than us. So that's one thing. Okay. Second is , the tariff deal being done and the punitive 25% being removed means that , we're in a differentiated position than others plus the new product development will start again with all our customers , not that it had stopped , but there is more confidence now to go full steam ahead.

Got it. And last question just on Europe restructuring. Again, trying to get your thoughts on, you mentioned that you'll give an update by the end of the year, but any color on how, what is it that we are looking to do? Is it looking to wind down the business? Is it looking to shift it to India? I mean, what sort of restructuring...

I can't say anything more than what we've already said. But you know, like I said, we have to make a profit or, we have to take some decision. So we have to see what to do.

Okay. All right. I'll join back the queue. Thank you so much.

Thank you. Next question comes from the line of Amyn Pirani with JP Morgan. Please go ahead.

Yes, hi. Thanks for the opportunity. Actually, my first question was on the announcement of the Premji investment in JS Auto. So my question was that, given that you are, probably the experts on the manufacturing business that it is, and given that , balance sheet is not really a constraint for you, what is the value that this investor is bringing in and how does this change the scale of operations which maybe you couldn't have done on your own?

No, there's nothing that we couldn't have done on our own. I just think that sometimes having, a few more, let's say a slightly different perspective is always good and having more, what do you call it, bandwidth to think about things and they also have a lot of connect globally. Plus, we want this business to grow fast. We want it to grow both organically and inorganically. And now we don't have to worry about putting any more money into it.

Okay. Understood. Fair enough. Secondly , just following up on the Europe question. So interestingly in the last two, three quarters it looks like the numbers have already started to move up. So just trying to understand if are there already some things that you are doing in the business or we still have to think about , a kind of big restructuring w hich you had indicated like , few quarters back.

So look, we're trying to do a lot of things. We're reducing a lot of cost, but it's not easy. It's every day there's something new happening in Europe. So we're trying to do the best we can. We are putting a lot of improvement measures, etc etera. We just have to see how effective they are. Whether one is internal, the second is external. We also need to see whether whatever we are doing, the external landscape and the market is big enough and is there to take advantage of. So it's not just one way. Europe, I think, is in a secular problem and we don't know where it's heading. So we have to see.

Okay. Fair enough. Thank you for this and I'll come back in the queue.

Thank you. Next question comes from the line of Kapil Singh with Nomura. Please go ahead.

Yes, good afternoon, sir. So I wanted to check firstly your thoughts on the defense business profitability. Would it be comparable to the auto business over time? How should we think about that?

Yes, I would expect it to be, profitable equivalent on an EBITDA basis generally speaking. And you know, I think the ROCE should be better because we don't have the same amount of capital employed. Also it will have a long tail because there will be constant MRO and support income coming from everything that you sell.

Okay. And sir, this order book that we have, what period should we look at for the execution? Also we had a small arms contract order for carbine...

I think the small arms is five years, the rest would be between mostly four years.

Okay, okay. And sir, also on the outlook for particularly the global truck business, has it already bottomed out as you mentioned, but when do we start to see the upcycle? Are there any signs visible? What is the outlook for next 1 year? Not just asking for 1 quarter?

Yes, I'll let my colleague Subodh answer that question. Subodh Tandale: Well, you've seen the incoming orders in the US for class 7, 8 in the last 2 months, they've been on the upside. And generally, there's a sense of confidence just given that all the uncertainties of the last year, the things would be better. So we are hoping that things would be better than last year and hopefully things would be stable as well and growing. So that's what we are planning for. It's not going to be steady -- it's going to be steady, but on the positive side is what we expect.

Okay. And sir, can you comment on the passenger vehicle exports as well?

So we continue growing our passenger car exports. Again, we are engaged with all the major players in the world. And Yes, I mean, we have lot of opportunities on the table. So all of them are being addressed.

Okay. Thank you. Thanks a lot.

Thank you. Next question comes from the line of Abhishek Shah with Valcore Capital. Please go ahead.

Hi sir, thank you for taking the question…

Mr. Shah, sorry for interrupting, your voice is breaking. Can you come in the range and talk?

Yes, hi. Is it better now? Hello?

Yes, please go ahead.

Yes. So sir, I -- this is regarding a news article and somewhere we've been reading online that Kalyani Group as such has been, granted by Odis ha Government, we are planning to set up a project of INR17,000 -odd crores. Just wanted some more clarity on this. I mean, the project, what our understanding was, it will be implemented by three companies of our group, Bharat Forge, Kalyani Steel and Saarloha. So maybe if you can give us some more understanding on, you know, what will be the split, who's spending how much and what is this project about and maybe tentative timelines for the same?

So the first part of the project will be a specialty steel plant, which will be set up by Kalyani Steel. That will be coming up in -- I mean, once the EC and everything happens, they will break ground and start work. That will be about 700,000 tons of steel, specialty steel. Then the second part will be a super alloy plant which will be set up by Saarloha to make aerospace and other super alloy grades, including tool and die steel etc. And the third will be a forging, machining, potentially also casting facility by the relevant companies, including JSA if needed, if there is an opportunity to do a further expansion of our own existing products and certain new products using the raw material and the overall advantage that we'll get in that location.

So what will be the tentative capex split between the three?

No, no, in the sense out of 17,000, how much are we going to spend? How much is Bharat Forge going to spend, sir?

So Bharat Forge, we have said up to INR3,000 crores.

Okay. Got it. And sir, tentative timelines for when we start our capex, I mean, I'm talking from Bharat Forge's perspective and how does it link to the group basically?

This will be the next growth phase after our existing expansions in Baramati, etc., over.

So nothing in the immediate 1 or 2 years as such…

Not in the next 1 year.

Okay. Got it. Okay, sir. That's all from my side. Thank you.

Thank you. Next question comes from the line of Nitin Jain with Fairvalue Equity Advisory. Please go ahead.

Yes, congratulations on the excellent quarter. I have just two questions. If yo u can talk a little bit about your defense order pipeline. Now I'm asking this because Q-on-Q itself our order book has grown more than INR1,500 crores. So where do we expect to end this year and what kind of bid pipeline we have for fiscal '27?

So we have increased our order book by two things. One is the CQB Carbine and some of the EP orders that we got. Okay. Now we have a lot of other things that are in the pipeline. There are lot of new programs that we're working on, lot of new products that we're developing. I don't want to talk about any of that right now. Once we place -- once we make the bids, we can talk about them.

Right. So do we expect any of these to materialize by fiscal '27 or they're still time to go?

See, as you know, the whole defense procurement process is being overhauled and being speeded up. The new DAP has come out which is very, comforting that it is focusing more on Indian development and design products and Make in India a lot more. So I think we are quite bullish on this whole sector growing for India. There's also a global opportunity to be a supplier both of systems and components into Europe and many other parts of the world. So overall, I think this is a market that's going to grow, this is a sector that's going to grow, and a business that's going to have a long-term strong future for us.

Also recently one of the Indian forging companies, they were inducted into the NATO supply chain for high precision defense components. So , like, this is considered positive for their business. I just wanted to know if we also share any similar credentials or we are vying for the same?

First of all, I would say please validate what you're saying because -- okay. And second, we already are supplying into -- we're already exporting into large quantities in this area.

Great. And lastly, any development on the server business? Last we had heard from the company was that it tied up with a few global leaders. If you can make us aware of any product?

Its still in the development phase.

Okay. Thank you.

Thanks.

Thank you. Next question comes from the line of Aakash Javeri with Time & Tide Advisors. Please go ahead.

Good afternoon, sir, and thank you for the opportunity. My first question is how has the acquisition of American Axle been performing and what is our view on this segment?

The acquisition has performed well. Our margins have grown by almost 200 basis points. And I expect that this sector will do well. This is a high growth sector and we're already winning quite a lot of new business from Indian OEMs. So this has been a good acquisition for us and we expect this to turn out to be a very positive step for the company.

Sure. And the group also has taken Automotive Axles. So how are we looking at these two companies in similar segments?

So I'm not personally involved with Automotive Axles individually because of the same reasons. As you know, Automotive Axles is a investment of the Group for a very long time. It has its own position in the heavy axle sector. And this is another player in the axle sector. So I think each will find its own niche and where needed they will also compete.

Sure. And my last question is, has American Axle been gaining market share?

Has been what?

Gaining market share.

Yes.

Has been gaining market share?

Yes, it's been getting a lot of new business. Yes.

Okay. And any way to quantify that?

I think next quarter we'll talk about that.

Thank you. Ladies and gentlemen, as there are no further questions, we have reached the end of question-and-answer session. I would now like to hand the conference over to Mr. Amit Kalyani for closing comments.

So, ladies and gentlemen, thank you very much for your time and interest and your questions. You know, as always, it's a pleasure interacting with you. Thank you for your positive comments and feedback. And we look forward to remaining engaged as we continue the growth journey of our company over the next many years. Thank you. Bye, bye.

Thank you. On behalf of Bharat Forge Limited, that concludes this conference. Thank you for joining us. You may now disconnect your lines.