My first question is on the margins. While we've seen gross margin has improved sequentially, the EBITDA margin has kind of come off. So this -- we're seeing that employee costs and other expenses have gone up more than the increase in revenue. So could you give some sense on what has led to this increase in these overheads? Is there any one - off within these?

Hi Mukesh , good afternoon. So we implemented the annual salary revision of approximately 7% effective 1st of April. So you see that impact coming across when you're comparing it to the last quarter. And there was, of course, a onetime effect of the true downs due to differential ra te of discounting for the gratuity valuation on 31st of March. So when you are again comparing it to the previous quarter, it looks like it's disproportionately higher. However, this is in line because the gratuity valuation is a onetime exercise per year. So that's why the impact appears as the tax. If you compare it to the same period last year same quarter, the increment would be in line with the annual increments that have given.

And Okay. Within the other expenses as well, there's nothing to highlight as such.

Within the other expenses, no, there's regular warranty freights and so on. So nothing major as a onetime...

Got it. Got it. And second question is on the ESC, like you mentioned that from September, we are going to see an increase in volumes. Could you give some sense on how much of an increase this could be? What's the number of sets that we're probably supplyi ng now for buses on the ESC and how this could go up? And additionally, also for the hydraulic ESC, I think we were at about 400 units a month run rate. Could this also kind of see an improvement from September?

This is Shankar here. On the ESC, the pneumatic ESC, what we are currently supplying to OEMs, we see roughly the volumes doubling from about 1,500 to 2,000 pieces per month to about 3,500 to 4,000 pieces per m onth. That's the kind of numbers that we are looking at come September. We've already started seeing an uptick in the orders coming in from OEMs this month as they prepare for their body building and readiness of the vehicles for launch in September. So that's something that's already started. On the hydraulic side, the impact would also be there, but not to that extent because I believe that some of the school buses and the city buses are still exempted. So that growth is not seen to that extent in the Hydraulics segment. There is a small margi nal increase in the numbers that we see on the Hydraulics segment.

Got it. Got it. And in some of the previous calls, we have mentioned that the trailer ABS as well, we should start seeing an increase in adoption. While this was mandated many years ago, the adoption is quite low. And I think in some of the calls, it was m entioned that we should start seeing that from this year onwards, there's going to be some push from the ministry as well. So any update on that?

On the trailer ABS, we have a challenge because the enforcement is not there at the moment, though it has been mandated as part of the legislation, we find that the state transport authorities are still not mandating it. So we are taking it forward as a sa fety feature and also educating trailer manufacturers that these are the benefits that it can bring them and as well potential ROI and benefits that it can give them while they...

Sure, sure. And just lastly, if I may, any update on these -- on the draft regulation that we kind of have in place for the ADAS. I think it was next year, but we haven't got an update on that as yet as to when that final notification would come?

At the moment, it's still under discussion. As you know, after the draft legislation has come out, probably OEMs are also in discussion with ADMA. So there is a potential shift of the time line that we are expecting, maybe to the tune of six months to a ye ar is what we are expecting, but the exact details will be known once it's officially out.

The next question is from the line of Mumuksh Mandlesha from Anand Rathi.

I just had one question, sir, on the ADAS opportunity. We have been always strong in the heavy commercial vehicle. Now since the regulation is applicable to some part of LCV and ILCV portion, which is less than 15 ton and more than 3.5 ton. How do you see our position and presence for this part of the segment for the ADAS function? And also in earlier calls, we have indicated INR 65,000, INR 70,000 value for the ADAS content. Just wanted to check for the LCV part of the market, what -- how the content would be differ from the heavy commercial part?

On the overall ADAS portfolio, as you know, we are present in the pneumatic portfolio, very strong presence today. On the hydraulic portfolio, these are some of the products that we are trying to leverage from our parent company. At the moment, the products what we are -- have a challenge in terms of b eing cost competitive in the current market. The cost of the current products, which are expected to be are much lower than in the frame of mind. So that's something that we are trying to evaluate while we look at how the market would tend to take up this product as well. So once we have better clari ty on that, we'll be able to give that feedback.

Got it. So our presence would be more on the pneumatic portion of the opportunity for ADAS?

That's correct. That's correct.

The next question is from the line of Kush Purav Shah from B&K Securities. Kush Purav Shah : Sir, I had a couple of questions. First, sir, if you could give us the absolute number breakup for OEMs rep lacement and the export segment?

Sorry, could you repeat your question, please?

I wanted to know the absolute numbers for the quarter for the aftermark et, OEMs and the export segment?

OEM is INR 463 crores, aftermarket, about INR 135 crores and exports INR 245 crores .

Coming to the long - term outlook, what is our strategy which you are taking for mitigating the demand cyclicity of the CV industry?

Just repeat that again, please?

What strategies is ZFCV taking to mitigate or derisk their business from the Indian CV industry? I mean it's the slowdown...

So Kush, we typically would follow the demand cyclicity if this industry itself operates in a particular way. So from a domestic side, there would not be many opportunities to not operate within that cyclicity. Aftermarket is the only opportunity where we might be able to find certain segments where we could support even outside the cyclicity -- normal OEM large vehicle cyclicity.

All right. All right. Okay. And for this quarter, I think sir mentioned some new product launches. So if you could elaborate or give some more insights on that on the new product launches?

So on the new product launches, we have -- in Q1, we have expanded our presence in the e - compressors and the EBS systems. This is primarily driven from growth in electric bus segment. So in Q1, we have seen a significant growth in the electric buses, and t his is driven by independent bus manufacturers. And also, we are looking to expand our presence in the AMT segment and position ourselves for launch of new products such as exhaust brake wall, automatic traction control and further g rowth of ( ECA S)

The next question is from the line of Ankur Shah from Quasar Capital . Ankur Shah : Ma'am, just one question on the other income. Any specific reason why the other income was quite up this time?

Yes. There is a positive impact of FX movement. So the rupee has depreciated against the euro significantly in the last quarter. And since we are a net exporter company, we saw a positive impact on the euro FX.

So ma'am, will this impact continue to stay in the quarters going ahead or the pricing gets adjusted?

The pricing doesn't get adjusted, but we don't see this kind of a volatile movement in the upcoming quarters, unlikely to happen to this kind of volatility...

Sure. And second question is on the other cost. I think one gentleman did ask, but any specific reason why there was such a huge jump on other costs in spite of a 3% top line growth?

So there are a couple of components in the other expenses, one of which is the CSR expenditure. So when you compare it to last year, the CSR expenditure linked directly to the profitability. Due to the higher profitability, therefore, you see that componen t in the other expenses. The second bit is there are some previous period reversals that happened in the last year, which is making it look as if this year's other expenses is higher. So otherwise, it's mainly normal business as usual.

So ma'am, while we are modeling it out, shall we think of it that the quarters coming ahead will be without CSR and normalized for...

The CSR would be spent month - on - month. And therefore, the CSR is linked to last year's performance and would remain similar across the rest of the 3 quarters of this year. Next year's CSR amount will therefore get linked to this year's performance. Okay.

Okay. Got it. That is very clear. And sir, one last question for you. On the business front, a very maybe common question that with the clients from the US , because I assume that we were expecting some growth with respect to US exports and with whatever has come up as tariffs, do we hear from clients or the parent company about change in growth plans, about change in sourcing destination being India or some o ther market? Because now on a comparative basis, maybe European tariffs are quite lower than the Indian ones. So any thoughts over there?

Yes. We have already started working on this direction, checking at all our supply chain across world. So there were IC export from one country to other. So maybe certain actions like some additional value addition in US and other things can be one of the area which will be worked out. But as of now, I would say, if you ask me some concrete plans, including discussion with the customers is already being worked out. And I think it will take some more time to understand what are the overall stand being taken by our customers, global customers. So that will be -- and also being our safety critical part, it is sometimes very difficult to change the source very quickly. S o it needs a lot of time for reapproval by sourcing the part from other countries. So it's not so fast that one can do.

Sir, just one follow - up on that.

Sorry to interrupt, Mr. Shah, I request you to join the queue. The next question is from the line of Ajox from Sundaram Mutual Fund.

My one question is ZF winning three large test system orders for powertrain and tire manufacturing applications. How much of that will flow through to us? And what is the potential here?

Ajox those products that you are mentioning are not part of the portfolio of this listed company. Hence, we will not be able to comment on that.

The next question is from the line of Mukesh S araf from Avendus Spark. Mukesh Saraf : There was one more draft notification end of July, which specified that for haulage tractors, we should have the vehicle location tracking devices as well as the event data recorders with similar time lines, October 26 and April 27, respectively. So is the re an opportunity for us there as well? Because anyways, we will be kind of supplying newer components for the ADAS systems?

We do have our own solution, the vehicle fleet management solution, which is already in series for other OEMs. There is also a newly launched platform called Scalar, which is the global platform that is being used with all the various options that are avai lable, which can be used either as a data ingestion solution or as a hardware - agnostic option as well. So these are potential products that we could look at in the immediate term. So there is already ongoing engagement with each of t he OEMs to see which solution fits their price bucket today. Mukesh Saraf : Got it. Got it. And just lastly, the export revenues, could you give a mix of the country - wise exposure? And how much would US be now and Europe probably?

So typicall y, we export about 50% to the U S and 50% to the Europe. This time, the mix could be 55%, 45%, but not more than that for now.

The next question is from the line of Ankur Shah from Quasar Capital.

Just continuing on the export front, we keep hearing that the tariff, the customers may ask us to absorb some pricing. So any thoughts over there, sir?

See, we are at present, mostly we are supplying to our intercompany unit and the customer dealing is done by them. So I think if there are any thoughts, we will get that information. As of now, it is only internal discussions, and we are trying to calculate the impact . And how our customer will reimburse that I think that is to be concluded by our global team, and we will get to know in due course of time.

The next question is from the line of Lakshminarayanan from Tunga Investments. Lakshminarayanan : I just wanted to understand what would be your top priorities for ZF in the next couple of years? And second, you have been with Nor Bren also earlier. And after taking over ZF, what are the areas where you think ZF needs improvement?

Very difficult question, but I will answer it. Thank you for asking this question. It's almost 42 days I have joined, and I have gone through a visit of all my units, plants across -- spread across India, also visited most of the customers -- so collecting the data of what all the customer expectations are there. See, the auto industry, especially commercial industry needs agility and flexibility on the demand fluctuation. I think that is one area where every OEM is demanding this flexibility and every supplier is working towards that direction. I would say ZF is more, I think, tuned to this because of the multi - location plants near to the customer units. So every main custome r plant, we have our manufacturing unit next to them. So that makes us much more flexible to serve them as compared to our competitor who have units only in one particular or 2, 3 locations. So that is one advantage of ZF, which we would like to leverage. We are already leveraging it, and we will continue. And the second point for the growth is the change in the demand in commercial vehicle as more and more technology is being adopted. Definit ely, it is mostly driven through the regulations -- but there are some very good fleet companies who are demanding safety features. So our team is in touch with the fleet companies to promote parts, which give more safety efficiency. As Shankar has mentioned, we have telematics solution. We are also already having association with one OEM for uptime monitoring through the software - based solution. So these are various positive points for ZF to enhance the growth by giving not only brake system, we are now into transmission also. and this AMT and other products and then clutches. So many, many products are additional to as compared to the competitors, which you mentioned. Lakshminarayanan : Got it. And what would be your key priorities for ZF in the next few years as you have taken this leadership role?

Yes, that's what I mentioned that our manufacturing footprint, which we already have some footprint, we are studying how do we have more and more closer to our customer to offer the products at a fluctuating demand so that we don't lose any business to the OEM when the exponential growth happens. So for that, we are working on our portfolio management again. And technology is another area where our teams are promoting in order to ensure that going forward, our vehicle -- I would say, content per vehicle should increase with these launches of the ne w technology. For example, ADAS, the content per vehicle will grow exponentially when the ADAS like items are added into the vehicle. If you compare the content per vehicle of a European and U.S. vehicle, it is much higher because of various features which are being off ered. Even now the ADAS regulation is talking about five type of features, whereas globally, there are up to 24, 25 features. So once the regulatory requirements increase, we are having scalable ADAS system, and we are ready for the future. So I would say that next few years, any regulatory changes, ZF is having that technology already into our portfolio.

The next question is from the line of Harikrishnan Nair from Geojit Financial Services Limited. Harikrishnan Nair : I just want to know like what is the kit size value that you are giving to the OEMs right now? And could you give some growth projection on that? And my -- on a medium - to long - term basis? And the second thing is that other than the US and Europe, are you planning to expand your presence in other geographical markets?

Yes. Okay. I think, Shankar, you can take it.

So to answer you, today, we are somewhere hovering between INR 40,000 to INR 44,000 content per vehicle. And this is again depending on the model mix that we are having. Looking at variations of vehicle model mix, the VPV also changes. With potential new technologies that we are looking to launch in the market as well as upcoming IRAS legislatio ns, I think over the next 2 years, we can hope to grow all the way up to about INR 1 lakh. So that's the opportunity that presents itself with the technology that we have as well as the potential the market comes across.

Your second question with respect to export opportunity -- sorry?

Yes, sir. Yes, yes.

Okay. Your question with respect to export opportunities, we do have some small supplies to the Far East to Korea and Japan. And as the other countries mature, but these are still small quantities. And depending upon the global portfolio, we may be able to supply as the other markets mature.

As there are no further questions from the participants, I now hand the conference over to the management for closing comments.

Thank you very much for very relevant questions, and we are here to ensure that we grow as the market grows and also grow a little higher than the market. These are the targets which we are trying to take for ourselves, and thanks for your support always.

On behalf of Batlivala & Karani Securities India Private Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines .

Thank you.