Thank you very much, Sir. We will now begin with the question-and-answer session. We take the first question from the line of Mukesh Saraf from Avendus Spark. Please go ahead,

Sir, good evening and thank you for the opportunity. My firs t ques tion is on the export sales. We have seen exports d ecline 21% in this quarter. While you did kind of mention ed that there are certain globa l factors and the weakness that i s impacting exports. In some of the previous calls you had also mentioned that we have about a year of an order b ook, in terms of visibility and also that it is more like a substitute business that we are getting in a business that is basically moving out of getting manufactured and we see a lot of it is getting manufactured in Indi a. So, with these aspects, could yo u kind of provide us some more visibility on exports and is it just a temporary kind of a weakness until we have capacities coming in or is there something else happening here?

Let me take your question this way. As far as exports performance for the quarter is concerned, yes, there is a decline and when I compare this quarter versus the immediately preceding quarter, exports declined by about 14% and versus the same quarter last year, decline is close to 20%. Even in the last quarter also there was a decline in export market by about 11%. Then we did mention that we have the conditions in Europe and China , the current economic conditions are actually causing the downfall of the demand from this region and that has continued even for Q3. So, it will be the order position from, and I am talking about the orders which we had to get from Europe and China for deliveries in Q3. Those have been impacted and that is largely causing the decline in the exports. However as far as our long -term strategy an d long-term focus with regards to exports , that remains unchanged. Yes, you rightly mentioned, and we had talked in the last call as well that whatever strategic actions we have taken in terms of focusing Indi a for serving the world better in terms of our exports that remains unchanged. In fact, some of th ose projects are helping to mitigate some of the losses in exports and therefore the decline in export is around 15% or 20% in that range. Had that not happene d, this decl ine would have been even severe and that would have caused a significant dent as well in terms of the overall performance for exports. On the other side, we do expect that this situation may not last too long. Hopefully next year we should be b ack on track. I once again like to mention and that is what I also mentioned in the last call , that we have to keep also one aspect in mind that last two years we have grown in exports over 50%. Previous year we were 66% and prior to that 50%. So, in a span of two years, the export has already doubled, and we have reached a level from around 10% of revenue to close to 16% already in the last year. So, on that high base where we already realized the benefit of those projects that continues. We have not lost so much of revenue like we have gained in the last two years. The loss is because of the global conditions and yes there is a little bit of contribution from the mix change. But that is not significant. Major reason is the global economic conditions and there are no signs of clear improvement in the s hort-term, we hope situation would not remain like this at least one year or one and a half years from now.

Got it. Thank you for that detailed response, Sir, and just one follow up on that, if you could give some sense on the geographic expo rts, how it moved. I think you have given some color last time in about North America, Europe, and Southeast Asia.

The exports about 45 %, close to 47% in Europe, close to 30% or ar ound 30% to Asia Pacific over around 10% to 15% China and about 10% USA that is the geographical split.

Just the second question is on the mix itself. We have seen obviously the industrial business doing better this time. We have seen a signi ficant improvement there. So, would that have impacted our mar gins a bit, maybe some higher traded components within the overall revenue and if you could kind of comment on that?

Well, the current quarter margin level that we have been able to retain which was also the level achieved in the pre ceding quarter and then we mean margin, we are talking about EBIT. We earned EBIT of 16% in the Q2 and this quarter also around 16%.

No Sir, I a m not saying that the margins have de clined. I am just wondering if there has been some impact of higher traded goods?

What I want to first highlight is that we have been able to retain the margin despite conditions of the downfall in exports because of bett er mix in the domestic business and namely industrial business has grown in this quarter of around 9%. That is helping in terms of mix on the domestic side. However , there is no significant mix change between manufacturing and trading. Yes, there is some sort of a fix but not significant that can cause major impact on the profitability.

Got it. Great Sir. So, thank you so much. I will get back in the queue.

Thank you. The next question is from the line of Mr. Viman Goel from Alchemy. Please go ahead, Sir.

Thank you so much for the opportunity, Sir. On exports only, actually I had two questions. The first one on exports being - a factor that you are watching at or the lead indicator that you are watching at to sort of track the revival of this particular segment. That is question number one, and the second question is on the progress of our electric vehicle order that we had received a large 2000 crores plus EV order that we had received. If you could just share the progress of the same. Thanks.

Thank you, Mr. Goel, for the question. Let me take the first one and what indicators do we look for, for the exports? Obviously the first indicator is our own customers, and we are closely engaged with our c ustomers to understand how are their markets and the dem and proceeding there. So clearly as you kn ow our own export business, we sell it to our own entities in Europe and they in turn cater to the local market. So, we have regular calls and meetings with th em to understand the situation and so obviously that i s the first indicator that we get. Apart from th at, we look at some of the macroeconomic indicators which definitely tell us the direction as to how things can evolve, and this happens on a regular frequency. The third I would say is also obviously looking and keeping a track and monitoring the situation that develops the situation in the Middle East, which has started off as another impediment that has come in recently. The implications of t hat still not visible, but what i s more concerning is the news about Germany getting into a slow recovery in terms of the economic growth. Now that we are unable to tell , it is all the economic indicators that we have to watch. So that i s on the export business and the meanwhile what we can do and what we now control is to see can we leverage the capacity that we h ave to feed other markets and other segments with customers here in I ndia, which we are trying to do now. Coming to the second question on your electric motor s or the e-axle new business opportunity that we have won. I would like to state that we are working on a localization plan, it is going to take some time. However, the customer is evaluating our product and we have already submitted the samples. Now it is under evaluation and that is by far what I can express at this point in time.

I try m y l uck on asking further on the outlook for export. What gives us the confidence because you have clearly mentioned that we are not going to sort of reduce ou r capex in terms of localization plans for exports, but what gives us the confidence that these should be better and if at all it turns for the worse? Let u s saying like a scenario analysis if the export turns out to be worse. Will we still look to sort of stay the course in t erms of our capex plan? Thanks.

Two ways, one is what I would l ike to say is in terms of whether the export is going to change quickly, well your guess is as good as mine or vice versa. So, I guess we are all in the same b oat, but what I would like to say is on our strategy to invest in our capacity expansion continues because we are at Schaeffler India believe we are here for the long run. So, we will continue to invest and clearly our strategy is to stay in the range of 15%-20% of our business to be the export part of the business which we will continue to sustain. The re are many more product lines that we have to localize to feed even the Indian market s and we would like to leverage the cost competitiveness of the Indian ma rket here to also look at opportunities to export. So, our strategy remains strong.

All the best, Sir. Thank you so much.

Thank you very much for the opportunity, Sir. My first question is on the bearings business. Have we taken any pricing actions so far in 2023 on both sides either increments or the downward revisions for both the distribution business as well a s the OEM business. So, if you can give some flavor on the pricing which is prevalent in the mar ket in the light of the declining commodity prices, that will be very helpful.

Let me take first with the OEM side of the business. As you know, th e OEM side of the business is always indexed to the steel prices and steel being the biggest co mmodity in bearing. Obviously, that is set as the index against which all of us operate. So, as you are also aware that there has been no increases in the commodit y prices in the last quarters. So rightfully, we have not raised prices in the steel or in ou r bearings product going to the OEMs. Talking about the distribution. In this quarter, we have not done any price increases because normally we do that once a year, right at the beginning of the year and we will have to wait for the next cycle for the price increase.

My second question is on our industrial business. I think since past few quarters you have been very consistently highlighting the order wins in the areas of linear motion guides, ultra precision drives, gearboxes, condition moni toring products, so the nonbearing portfolio within the industrial segment. Could you give some flavor on what is the scale of this particular business within our overall industrial segment? Also a follow up to that would be which of these products that we have started making locally in India? So, are there any localization plans as well on this front?

So, let me approach your question with an answer w herein I would have to go back a little. As you know, we Schaeffler globally has been making some strategic acquisitions as a result of which these businesses have flowed into India because the business already existed and once Schaeffler made the global acquisitions they came within our portfolio. That said, we have increased our focus in growing these businesses as well. One such would be the Melior Motion acquisition we did three years back and more recently the Ewellix acquisition for linear guides. Wel l, I can say that post acquisition and are increasing the focus in India as well , we have sta rted to grow on the businesses here as well. We have started to increase our engagement and reach with many of our customers when it comes to these kinds of products , whether it is the linear motion guides, or the high precision ultra drive gear boxes that we make through Melior for that matter some of the other acquisitions that we have made and the launch of new products like the lifetime solutions as well. Obviously today with digitalization coming into our business, selling the pure mechanical products is no more. The customer wants more value coming out of supply partner and this is why we are in the digital space as well and with the number of digital soluti ons that we have brought in , we have continued and we are continuing to add more to the portfoli o we have clearly focused on growing this business and this is categorized as we call it the lifetime solutions, which we continue to grow, focusing primarily to day on the raw material sectors, but we obviously are expanding into the other application segm ents like food and beverages and we have started to do that. So, we will continue to do that, but I want to highlight also here that as of now, we do not manufact ure any of these products in India. What we have done is for some of the products we do bring them from Europe and try and customize the sizes here in India for the customers so that we are able to de liver with very short lead time. That is what we are going to do.

Understood. Thank you very much for answering my questions and all the best.

Thank you, Sir. We move on to the next question from the line of Mr. Nikhil Kale from Invesco. Please go ahead.

Good afternoon. Si r my question was I think you have mentioned about the strategic acquisition which Schaeffler has been doing, so just continuing on that part, Schaeffler has recently announced the bid to kind of merge with the Vitesco Technologies. So, over the next few years do you also see the possibility of the electric mobility side of things getting bolstered because of the capabilities of the Vitesco Technology . So, what could be the implications for us because of this merger?

Well, at this point in time, all I can say is that we have made an offering to Vitesco. So, it is too premature to comment on this at this point in time. So, at the appropriate time, certainly we will give you an answer on that. Obviously, if we are taking this step in this direction, it is with a strategic intent it goes without saying, so clearly rest assure d soon we will get to hear whatever is the outcome of this.

Thank you.

Thank you, Sir. The next question is from the line of Nirali Gopani from Unique PMS. Please go ahead.

Hi, thanks for the opportunity. Sir, to begin with, I just wanted to clarify the capex number that we have announced. So, we plan to do a capex of INR 500 crores each for calendar year 2023, 2024 and 2025, is that right, Sir?

Yes, we did mention, or we did announce d that we would spend about INR 1500 crores in three years. So, it might not be exactly INR 500 crores each year, but it would be around that. So, depending upon the projects sort of planning and also de pending upon certain conditions in the domestic export market, some a djustment would be done in th is and therefore yearly capex would not be exactly INR 500 crores, but overall capex would still be about INR 1,500 crores in three years.

Perfect. So, if I include calendar year 2022, we are roughly doing a capex of about INR 2,000 crores on an existing gross block of INR 2,000 crores. So, if you can highlight or on what kind of growth do we envisage over next three to five years, if you can qualitatively, I do not want an exact number, but with the exp ort opportunity, EV, aftermarket, if you can qualitatively talk about growth that you see over the next few years?

Very difficult to put a number to that. But we are target ing minimum double-digit growth, and capex would certainly enable this level of growth realization . Also, we have a good, sort of a ratio of capex to revenue and that has been proved whatever projects we have undertaken in the past. The past capex did deliver a better ratio of revenue an d we are expecting similar also in the future, but it would be dif ficult for us to tell you a part icular number of growth because of the capex.

I think it is important also to understand why are we doing this. Let me explain this a little bit. So, we are investing because of primarily two reasons. One , there is an organic growth in the Indian economy because there is a growth in demand obviously, we need to expand, and we keep adding the capacities. So that is one, second, we have been doing a lo t of trading business, bringing products from Europe and sellin g it here, which we believe to remain more competitive, it is good to make the product in India. So that is what we call as localization. Now these two obviously would require new capacity inve stments to be made here. So, when you look at it, the capacity investment does not necessarily mean that we are going to have an exponential growth in business. It is to make us more competitive , remain competitive or if not, take advantage of the competiti veness to grow the market share and you know how difficult it is to put a number to it at this poi nt in time, but the effort continues to remain that our strategy is very clear. The organic growth is something we have to address. The strategic growth is something we have to address. The localization, our customer wants us to produce the products and manufacture the products here and so we have to invest, we remain committed to our customer’s strategy.

Perfect. Thank you so much for the opportunity.

Thank you. We take the next question from th e line of Deepesh Agarwal from UTI AMC. Please go ahead, Sir.

Good evening, gentlemen. Sir, my first question is in the opening remark you mentioned exports are weak due to weak ness in the demand in Europe. However, if I see S chaeffler AG results, they have reported a constant currency growth of almost 9.8% on the second quarter or the September and even the export in growth in the Europe has been quite strong in that second quarter. So, Sir, are you able to reconcile the growth in S chaeffler AG is intend to grow why we are facing this struggle?

So, let me answer very straight to your question. The growth that Schaeffler AG showing is the total Schaeffler group revenue growth consist of all the countries of the world. That growth includes what we grow in India also for example our own growth has also been over 10% in India. Similarly, there is a growth in the domestic business in China as well, domestic business in quite many other Asia Pacific countries and likewise. So, it is not only the growth of Europe, it is t he growth of the world and that includes also the domestic growth of respective countries.

I was referring to the Europe growth, which they r eport separately, which was 10.8% in their second quarter.

I do not have the number in front of us, but I doubt if that is so for Europe and I will look into it and Gauri would come back to you, but I really doubt if that is the growth.

So basically, you are still saying that it is because of weakness in demand not because of the inventory related problem which you were highlighting earlier.

No inventory related problem is no more there. That problem was certainly there in Q1. So Q1 impact was not because of the demand co nditions, it was more of an inventory correction that lasted only for a quarter, but the subsequent quarter, particularly this quarter is because of the demand conditions and that is caused because of the downfall in the market in other regions, particularly in Europe and China.

Also, Sir, if you can share the growth rate nu mbers for railways, wind, EVs, two -wheelers MHCV that would be helpful.

You mean the revenue growth in these sectors, right?

Yes, revenue growth in this quarter.

We have grown by about 12% in railways that is 12% to 13% this quarter vis-à-vis the same quarter last year.

Wind and passenger vehicles.

We do not have a breakup into vehicle category. We have break up into our segments which are more like two-wheelers, and we have off road industrial, wind, the distribution, likewise.

We have a strong growth in di stribution. Distribution grew around 15%, power transmission, very strong growth, wind reasonable growth also in wind now, in this quarter wind growth is around 7% versus the same q uarter la st year. I would say except two - wheelers, all other segments have grown quite well in this quarter.

And last bookkeeping question, what would be our current utilization level because we are doing the capex and the demand has been little weak since last two, three quarters what would be utilization level?

So, our different plants have different structures of the product and different product profile therefore one plant is not comparable in terms of utilization percent to the other plant. But if I take the standard products and the v olume prod ucts which are in our industrial plants , particularly Maneja plant, that plant is utilized over 85%, the other two a utomotive plants, Pune and Hosur are close to 80% utilization.

Thank you.

Thank you, Sir. The next question is f rom the line of Ashish Shah from JM Financial. Please go ahead, Sir.

Good evening and thank you for the opportunity. Sir, you did just give the breakup region wise of the exports, any indication of the growth or degrowth in each of these geogr aphies, let us say Europe, Asia Pacific, China, what would have been the growth or the degrowth in these countries?

Yes, I repeat the same answer that I already ga ve for the four regions. Amongst those core regions, the degrowth is basically coming from Europe and China. Individual, I do not have the ready figures, but this too because other regions we have not actually encountered the degrowth. These are the two regions contributing largely to the decline in exports.

Sir secondly, you did talk about wind segment probably looking better in the second half of the fiscal year, I mean, for us it is a different way, but how do you see that coming up? So, you said fo r the last quarter the win d grew by 7%. Would you expect like a good double- digit growth in the quarters to come? Do you see a sizable pickup, or you think it is still somewhere in gray zone?

Well, as the wind was a sector which went down very badly in the second half of last year and the first half of this year it got worse. But from the last quarter, Q3 onwards, we have seen an upturn in the demand. Fundamentally, I guess this is coming on the back of all the inventories that were lying have been now cleared out with all the projec ts getting reactivated. So tha t is the main reason and what we see is in the third quarter when compared to Q3 2022 while it is a 6%-7% improvement. If one were to look at our own business in the third quarter compar ed to the preceding quarter which is Q2, we have seen good demand and we have been able to leverage a growth of 18%. So that itself is telling us that the demand has come back a little bit. But again, as I say we need to continue to watch this needs to sust ain. So, while overall at an annualize d level it is still nine-month period when you look at it, the wind is still in the negative zone compared to last year. However, the last two quarters have shown definitely some positivity there.

And one s mall thing if I may squeeze in, what i s the broad contribution of wi nd as a business to the industrial and any ballpark number, Sir?

Wind contribution in the industrial business, which is about normal because it was down by about, sorry nine months I would say it is about 7% that was at an overall level 15% in industrial business.

That helps. Thank you very much.

Thank you, Sir. The next question is from the line of Rishi Vora from Kot ak Securities. Please go ahead.

Thank you for giving me the opportunity. Just on the auto r eplacement side, I wanted to understand that on a Q-o-Q basis, we have seen a decline in revenues despite the acquisition of Koovers. So, is this a seasonal thing where we see a dip in 3Q over 2Q or are there any challenges in the automotive replacement market, which we are facing recently?

My answer to that would be, when you study the business cycle for us in the automotive aftermarket space, we a lways see that third quarter the demand is a little low in the automotive aftermarket in spite of the fact it being a festival season. We always see either it is flat, or it slackens a bit. We have seen the slackening this year as well, but the next quarter it bounces back very stro ngly and what we have also seen is the OES part of the business does well, it also grows well because I guess this is true in the market situation that customers prefer to take their cars and vehicles for servicing to the OEM. But we have seen this pattern come out very clear and so it has nothing to do with the acquisition of Koovers. Koovers is still running the same way and we have been keeping our strategy right now Koovers it is going through an integration into the company. So, they are totally two different things. So, we are not seeing any impact of Koovers acquisition on the demand.

Yes. I meant that despite merger of Koovers, the revenues were down. So, there should have been a positive impact because of Koovers financials as well. But yes, I understood that it is a seasonal phenomenon.

And secondly, on the automotive aftermarket, where we will we be in terms of l ocalization like it could be like 80%-90% given that recently over the past two years we have added a lot of new products. So just wanted to understand where we are in terms of localization in the aftermarket, automotive aftermarket segment?

Almost 100% because the products that we have brought in are not contributing in terms of volume so much that disburse the localization of aftermarket as a whole.

So, it is a very small portion right now the new product? Understood. Thank you.

Thank you. We will take the next question from the line of Sameer Panke from Centrum Broking Limited. Please go ahead, Sir.

Sir, I have a question on other income. We have seen in the last three quarters, the run rate for other income has increased for nine months in fact it is jumped more than 59%. So, on a nine-month basis we have a revenue growth of around 6% and bottom-line growth also in the single digit and other income has grown at very high rate. So, I am just wondering what it attributes to?

Well other income has grown. You a re right, it is above by INR 70 million as against INR 141 to INR 213 million. I do not have the split of that, but I can confirm that the re has not been any significant change in the structure of other income or a new income which was not there at entirely last year which is realized this year.

Your annual report if I open and look at the other income break up it is mainly int erest income that you generate out 80 % to 90% of th e other income is comprises of interest income.

So, I stand corrected because you are reading the published results probably and not the presentation that Harsha just now made. So, in the publi c results, yes, you are right, the other income includes interest income. Interest income has gone up this year. T wo reasons, one is that we had certain old refunds and that refunds come with also the overdue interest. So, we have collected interest on thos e refunds and second is the yield improvement on our cash position. So those are the reasons for interest income increase which is also part of other income. But if you look at the presentation that we have shown today, we do s how interest as a separate figure, and you can then really see the rest of th e other income as a separate line item.

I think we would like to clarify that there is no such thing as a plant relocation, we a re not talking about the plant relocation. What we talk about is investing in capacities for localization and plant construction locally in India. It is not like we are transferring a plant out of Europe here. That is not the thing, that needs to be corrected.

What we are currently doing is we are constructing a new plant near Hosur, and we are also constructing a new hall at our new location.

So, the capex that we have announced an INR 1,500 crores over a period of three years including this year. So broadly this capex will you bifurcate for which products or for which category that we are incurring, or we are going to incur?

No, we do not have such a breakup to provide you readily. The capex consists of capex for infrastructure, capex for building plant and machineries, capex for localization, capex for capacity, capex for certain type of new products, and al so the process improvements and related capex. So, it consists of all.

So existing capacity what we have at the moment, will get enhanced in the current prod ucts that we are manufacturing,

Yes, of co urse the capacity would get e nhanced quite significantly and large amount of capex is for capacity that much also we like to clarify it is not only for existing products, that is what I mentioned that capex also for the new products, also for the existing products, additional capacities because of the continuous demand and also for the localization as well as for quality, process and the infrastructure.

Last question is on Koovers, when we acquired Koovers, and we had a call in which you have alluded that further investme nts might be required for Koovers to take Pan India both in terms of technology platform upgradation and logistic backbone that we have to set up as we are planning to take it Pan India. So, any plans have been finalized I mean t his existing capex of arou nd INR 1,500 crores including the investments that we are planning for Koovers?

No, the INR 1,500 crores capex that we ha ve been talking about, that does not include Kovers because this investment we have been talking about no w almost 6 -7 mon ths, the Koovers acquisition happened just couple of months before. But the capex or let u s say whatever investments that we have to do for Koovers for the technological , particularly IT related development and also for the warehousing, that investment will happen. But it is too early to already say when and how much because we have just completed the acquisition and in the integration phase currently.

Also, I think there are a lot many softer things to be addressed and with tha t itself we ca n try and continue to sustain the growth , investments should be coming at the appropriate time.

Thank you.

Thank you. As there are no further questions, I would now like to hand the conference over to Ms. Gauri for closing comments.

Thank you, everyone. Thank you for joining us today. If you have any further questions, please do reach out to me at gauri.kanikar@schaeffler.com. We now conclude this call. Thank you and have a good day.

Thank you. On behalf of Schaeffler India Limited, that concludes this conference. Thank you for joining us and you may now disconnect your lines. (This document has been edited for improving readability) Registered Office: 15th Floor, ASTP (Amar Sadanand Tech Park), Baner, Pune – 411045, Maharashtra

Investorsupport.IN@schaeffler.com

Website

www.schaeffler.co.in CIN L29130PN1962PLC204515