Which reported an inline set of March quarter results. The company has issued a robust topline growth guidance of 25% for FY27. We've got Mr. Baba Kalyani joining us, Chairman and Managing Director of the company on the phone line. Mr. Kalyani, great to have you with us here. Thank you very much for joining us. Could you just run us through the auto and the non-auto, sort of defense business? What are growth projections for FY27 in each of these segments?
I think the automotive segment including the industrial part of the...
Mr. Kalyani, we're losing you. The line seems to be dropping a little bit. Could you speak up, sir?
Are you able to hear me now?
I said the automotive segment that includes also the industrial segment. We are likely to see a growth of almost 25% plus.
Yeah. Go on sir. 25% automotive.
Including the industrial side of the growth and the defense business, we are likely to see a growth of about 50%.
Got it. Could you, you know, what are you seeing out there in the environment, sir, which gives you the confidence? Our analysts internally are pointing out that expectation was that you'd guide for something in the region of 15% as far as growth is concerned. Could you give us a sense of, I mean, arguably you would agree that there is a fair bit of geopolitical headwind and input prices, energy cost shock, all of that stuff, right, which perhaps takes away and doesn't add to any business per se. Where are you seeing this growth, sir?
Well, as far as the automotive and industrial business is concerned, there's a strong growth in the US truck market. That's one part. Second, there's a strong growth in the data center business, especially people who supply standby power equipment to data centers. We are a big supplier to all those companies for components. So that's growing at an extremely rapid pace. So we see tremendous growth in that. There's also a good growth in the Pascar business on exports that's also increasing at a very rapid pace. So every segment of our business we are seeing substantially higher growth than what we have seen before.
Sir, I know you're more indexed to North America and the trucking market, but do you think your growth would have been higher than 25% if it were not for the Middle East crisis? I mean, in some way have you toned down your expectations because of the lingering stress related to that? And secondly, if you could just tell us, right, all the companies we speak to on the automotive side are talking and complaining about the raw material cost pressure. You are talking about a commensurate increase in EBITDA, so what's that based on?
Yeah, as far as raw materials are concerned, it's a direct pass-through, so it's not a problem for us and our customers understand it, we understand it, so that's not an issue. Second, I think using a lot of technology including a lot of AI and digital technology, we have been reducing our cost quite substantially. So you know, all that kind of levels out, but we are seeing very strong tailwinds in terms of demand in North America. We're also surprisingly seeing it in Europe and of course in India.
In Europe you did mention exploring alternate business opportunities. I mean you've scaled down there. Could you talk to us about what are the opportunities being evaluated?
You know, it's a bit early to really tell you what the alternate business opportunities are. Maybe next board meeting I'll be a lot more clear. But yeah, we are exploring a lot of new things. I think there are a lot of opportunities that kind of fit the ecosystem that we have here, the talent that we have here and the talent that we have in Europe. So let's see, something will come out of that.
This is, but which segment broadly, sir, would you be able in a position to...
This will be obviously, this will not be in the automotive segment. This has to be in the high-end segment of stuff because you know there's nothing in the automotive segment left in Germany.
What's the extent of cost saving on account of AI? Have you been able to quantify?
We are targeting by next year, we are not now, but by next year we are targeting at least a 5 to 7% cost reduction. But more than cost, what is happening, we are using a lot of AI and digital technologies to design our new product, especially in the defense sector. So that is cutting down our time to market at a very rapid pace. What normally would take two to three years to make, we are able to make it in less than one year. So it's a lot of advantage if you can get these technologies to work for you.
Right. Sorry. Got that and it's good to hear. You said there's no automotive sort of left in that sense in Germany. So I'm assuming this is going to be what you're planning in Europe is in Germany. It's in the defense arena, sir, what you were alluding to?
No, I think I don't want to, look, I don't want to, you know, get into details on what we are planning. But allow us three more months and we'll be far more clear. But definitely not in the automotive space.
Got it. All right. Hi Mr. Kalyani, good afternoon. Good to see you. This is Nigel on this side. I think you've answered most of the queries with regard to the operational performance. I want to ask you about inorganic growth. So let's get straight to the point. You know, in the past you've spoken about BML. Are you having a relook at that business?
No. BML is off the table. Right now, the last inorganic transaction that we did was recently with a company in NASC.
That makes connecting rods, a specialized company.
Okay. And they are very good at it and we have taken a stake. And we have also, we have an opportunity to increase our stake if we need to. But right now I think that's what it is. We will look at inorganic growth largely in the defense and aerospace sector going forward.
All right, so that brings me to the next question, sir. There is some buzz that possibly Bharat Forge and their defense side of the business is looking at a listed company, Premier Explosives. Any truth or you want to deny that?
