Thank you so much sir. Ladies and gentlemen we will now begin with the question-and-answer session. Anyone who wishes to ask a question, may press star and 1 on touchtone phone. If you wish to remove yourself from question que, you may press star and 2. Participant are requested to use ha ndset while asking question. The first question comes from the line of Mumuksh Mandlesha with Anand Rathi Institutional Equities.

Congrats on a good set of results. Firstly, just want to understand how the gross margin movement sequentially. So this quarter it's 51%, in Q4 quarter it's 42.5%. Can you just help understand what are factors that drive the gross margin? And on the commod ity inflation and price hike, if you can update how much was the inflation and price hike in Q1? And how much can we expect in the Q2 quarter as well?

Okay, thanks for your question. You see gross margin evolution, from March to June quarter, it has been impacted by mix factor which plays the role significantly. And second thing on the inventory revaluation, which also had an impact on the gross margin. Right, So if you mix sometimes also moves in terms of the seasonal impact also quarter -on-quarter, you see certain movement . But largely, it was the mix as well as the inventory revaluation impact, which -- because we follow the FIFO method of inventory, which has an impact. On -- what was your second question? Can you repeat?

Yes. On the commodity inflation, what we witnessed this quarter, how much price hikes we have taken? And for the Q2 quarter, how do you see this?

Yes. On price and commodity inflation, if you see our OEM contracts usually have a clause around the commodity inflation linked to the index in which we keep working along with the OEMs. And even currently, it's the work in progress for the recent round of commodity inflation. I mean I can't disclose the exact number of it, but that's a work in progress. We see certain effect of that even in the current quarter as well as we move forward. I hope I answered your question.

And just on the gross margin, just to clarify, what -- current Q1 quarter, is that the range one should assume for the full year range. Or is that...

Sorry, carry on.

Basically, this also will keep little movement based on the inventory revaluation?

Yes. See, even historically, this has been the normal gross margin range, right? It could be based on the mix or certain timing gap, due to which there could be certain movements within quarter because even what happens is when you see the commodity inflation realization, it doesn't happen immediately in the same quarter, right? If there is an inflation, the discussions with the customer takes some time and also depending on individual customer contracts, there could be a lag of 1 to 2 quarters. So that's why within quarters, you may see sometimes fluctuation, but this is kind of normal gross margin range, which has been there historically also.

Our next question comes from the line of Raghunandhan N L with Nuvama Research Management.

Congratulations, sir, for extremely strong numbers. Your growth is significantly better than peers for the June quarter. Thanks for sharing the segmental sales mix. It is very helpful. Within OEM space, can you indicate how has been the share for 2 -wheeler, 4 -wheeler, commercial vehicle and powertrain business?

Okay. So our OEM basically, it contributes about 62%, as you have seen it, out of which our 2- wheeler is about 54%, passenger vehicle is around 31% and commercial vehicle is about 15%.

Got it, sir. This is very helpful. Would you have the same numbers for last year? Broadly, I wanted to understand the growth.

It keeps changing. Maybe Girish, can you elaborate if you have previous year number?

Sure. It will be a range bound, Mr. Raghunandhan in the sense that with 2 -wheeler will be the largest and it is range bound between 48% to 52%, passenger vehicle is about 28% to 30%. And similarly, the commercial vehicle is at about 11% to 12%.

Noted, sir. And broadly, the growth will mirror the growth which is there in the underlying OEM production data.

Correct.

Noted. And in terms of export, there has been a strong pickup, Y-o-Y, it is remaining at 8%. But on a Q-o-Q basis from 6%, there has been a jump to 8%. And export is something wherein for us to track also, it is difficult. If you can indicate how you are s eeing the outlook for the export market and mainly which regions are driving growth for you? That will be very helpful.

So our main focus is on our domestic demand. Export is not a very big pie of our strategy also as of now. So it will remain in this range only, depending upon how some of the solutions where we are stronger or sometimes even the capacity shortage in other regions and they need some support from us. But by and large, the constant demand will be in this range only.

Noted, sir. And before I fall back to the queue, just a last question…

I'm sorry, sir, but can you please rejoin the queue?

I will do that.

Our next question comes from the line of Varun Pinto with Negen Capital.

So thank you, Varun, for asking this question. See, 27% is obviously very good growth, but we expect the revenue growth to be in the range close to 20%, right, much better than the 12% guidance we had given earlier, around 20% something.

Understood, sir. You had also said that like we are somewhere around 93% loading. So like we have enough capacity this year to achieve this 20%?

Yes.

So we are building capacity this quarter 4 also. So 2 ways of increasing capacity. One is by improving our cycle time and efficiency. We have already unlocked about 5 million pieces this year by doing some technological upgradation of our assets, which are in ramping up stage. On top of it, we are also putting channels in our Haridwar factory. So we hope so we can, we will be able to cover it up.

Understood, sir. Out of the INR500 crore s capex that we are doing about INR170 crores or INR180 crores is going to come online this year itself, right?

Correct. This is what I said just now that we are putting capacity in Haridwar.

Yes, sir. So this is a backward integration capex or is this growth capex for us?

So it is primarily for reducing our dependency on industrial, where we are trading some volume, but it will also be secondary, it's for our growth. But entire thing will not come in 2026. It is only Q4, this new capacity will just start. It will take some time for ramp up. So growth will start next year.

Yes. So next financial year, you will see the revenue impact of that.

Understood, sir. Lastly, this 17% margin that we are seeing, this is a largely normalized margin, right? This is the range in which we expect the margin to be for the next 2 years or so, right?

Yes, this is what we expect.

Thank you so much sir.

Thank you. Our next question comes from the line of Krupashankar NJ with Avendus Spark.

Thank you for the opportunity. My first question would be on the electric mobility side. We did highlight in the last conference call that we had won multiple orders on the electric mobility side. When do we see this ramping up over the medium term, sir, if you can give some guidance around that? That will be helpful.

Got it. And with respect to your profitability, just wanted to get a sense around the traded piece being elevated, right? So while we do see that there is a good portion of sourcing, which is also happening from SKF Industrial, can one expect that there wi ll be a transfer pricing mechanism on goods sourced from SKF Industrial and sold to SKF Industrial and that would be one of the reasons where margins can be relatively lower. Is that the right thinking?

See here, on trading parts, we have sales to SKF Industrial and we have purchases from SKF Industrial also. And as you rightly said, in the case of related party transaction, there is a certain markup which has to be applied. So once the capacity -- our capacity builds up and we have production, that will be positive for the margin.

Got it. And last on distribution business. I just wanted to get a sense around how do you see things progressing over there? Is there any new triggers per se? Because overall, I think from a disclosure standpoint, things have been looking relatively okay. So any comments arou nd that would be really helpful?

So vehicle aftermarket business has a certain different set of challenges. So far, it's kind of plateau or a small decline in our revenue. The next 5 months, we have some different strategy to cover up or recover our volume.

Got it. Pricing -wise, anything to provide inputs over there? Any price escalations you have taken?

We needed to give some discount in last 2 months, but which will not be continued now. So there will be no decline in price mix. It all depends on now how we will be able to pick up our top line.

Thank you. Our next question comes from the line of Rajit Aggarwal with Nilgiri Advisors LLP.

Good afternoon, sir. A couple of questions on the EV business. If you can possibly share the revenue from EV non-wheel bearings? And what will be the market share of ours, again, in the same space, specifically on non-wheel EV bearings?

As we mentioned, these are the businesses that are in the development phase. The full stream production ramp-up is expected across vehicle segment beginning '27 mid or so, and it will see a full, let's say, visibility of the business numbers sometime during 2028. So at this point in time, I think it is not, let's say, relevant to really quote those numbers, Rajit.

Okay sir. So as of now, there's no material revenue from that space?

It is in the ramp-up phase. They are in the development phase of all the samples and other things.

And out of the announced INR500 crores of capex, how much would be on EV bearings?

Okay, sir. Can I ask one more question?

Sure. Go ahead.

So in your AGM presentation, there is a mention here as part of your strategy slide, there is a mention of portfolio rationalization. Can you throw some light on it? Are we looking to reduce some SKUs? And what will be the revenue or volume impact in FY27 of that?

Okay. So portfolio rationalization, there are 2 parts of it. One is what we make and where we make. We have 3 factories. So to use economy of scale and bring some synergy, we just change our portfolio in different factories. That is one part of it. Another is, of course, our sales mix where there are certain businesses which are kind of not so profitable or loss makers, we would like to do something about it. That is what we mean when we talk about portfolio.

Okay, sir. So no major impact in FY27?

No.

No.

Next question comes from the line of Raghunandhan NL with Nuvama Research.

Thank you sir for the opportunity. On the sales to SKF Industrial, there has been an improvement compared to the last quarter and last year. How do you see the trajectory going forward? If you can throw some light on the products being supplied and also the growth prospects, which can be expected here?

Okay.

Yes, Shailesh, please.

So by and large, that is not our kind of a segment, okay? Our segment is purely automotive. Industrial, we are supplying where the industrial doesn't have capacity or something. But going forward, we would like -- it's not a kind of growth segment for us. Mayank, you can add.

Yes. When you see last year's growth, that's not comparable because industrial entity business was not carved out last year, right? It came into existence in December '25 quarter only. So as far as the volume is concerned, as Shailesh mentioned, it's not a priority for growth. This is something which over the next few years is expected to come down. And we focus that capacity towards serving our automotive customers.

Noted sir. Thank you for that. How much has been the capex spend in Q1? And what is the plan for the entire year?

Noted, sir. And by 2028, when you say the INR500 crores capex, it will ideally go up to FY29 or could it finish everything by '28?

Largely, if you look at FY basis, largely it would be over by FY28. Maybe some part could spill down to FY29, but largely it will be over by FY28.

Noted, sir. And just the last one on the vehicle aftermarket demand, generally, if I take a long - term average, the volume performance here will be in the high single -digit kind of range. How do you see the vehicle aftermarket growth? Are you seeing a higher growth because the share of grey market or the share of imports is reducing? How do you see taking the 3 -year, 5 -year perspective, how should be the growth in the aftermarket?

See, vehicle aftermarket, \we have seen some drop in the volume currently, right, obviously, the focus is on increasing the share, but also protecting the profitability. And vehicle aftermarket is a completely different game when compared to the OE market . You have a lot of competitors, you have the fake products also, and it works in a completely different way. So our focus is to protect the profit margins and then improve the volume. Right now, as you look at from last year, there is a slight reduction. But then we are focusing on improving the share.

Maybe just to add here, what will help us having our -- when capacity -- enough capacity will be there, then we'll do some -- it will help the vehicle aftermarket as well.

Thank you. As there are no further questions from the participants, I would like to hand the conference over to the management for the closing remarks. Thank you, and over to you, team.

Okay. Thank you very much for joining. Look forward for continuous engagement. See you next time. Thank you very much.

Ladies and gentlemen, on behalf of SKF India Limited, that concludes today's call. Thank you for joining us, and you may now disconnect your lines.