Balkrishna Industries Ltd
NSE:BALKRISIND
Earnings Call Analysis
Q2-2024 Analysis
Balkrishna Industries Ltd
The company grappled with external challenges, including intense heat waves and trepidations about an impending recession in the export market, which moderately dampened the confidence across distribution channels. Although these concerns have eased to an extent, a full recovery in sentiment is yet to materialize.
In a significant strategic move, the company decided to forgo the planned expansion at Dombivli and instead establish a new 300-crore mold manufacturing plant at Bhuj, which is expected to be operational by Q1 of FY '25. This decision will result in an increased CapEx of approximately 900 crores for FY '25, up from the prior estimate of 600 crores.
Q2 saw a volume of 70,585 metric tons, leading to a standalone revenue of INR 2247 crores, inclusive of a forex loss. Despite a marginal expected degrowth in FY '24 volumes due to the first half's struggles, the outlook is stable, with an anticipation of a stronger second half.
European sales contributed 45% to the total, with India following at 29% and Americas at 17%. The replacement channel was the largest contributor with 71%, while OEMs made up 27%. The agricultural sector accounted for 58%, with the OTR and industrial construction segment at 39%.
The company's EBITDA stood at INR 548 crores at a margin of 24.4%, with profit after tax recorded at INR 335 crores. The company announced a second interim dividend of INR 4 per share, in addition to the first interim one.
Looking ahead, the company aims for a 10% global market share, aligning with its aspirations in the vibrant Indian market. Execution of brownfield expansions in Bhuj within 15-18 months is a step towards achieving these growth targets.
The company sees immense potential within India, backed by governmental investments in infrastructure and agriculture, and is focused on translating this into tangible growth. The Indian operations, contributing sizably to the overall sales, are envisioned to climb towards a 10% market share.
Despite the origin of sales and effects of labor arbitrage, the company has managed to secure similar profitability from both Indian and international markets. The notion that the increasing Indian sales may impact margins negatively due to lack of labor arbitrage was dispelled, with the achievement of comparable realizations.
The firm is dedicated to maintaining its EBITDA margins between 26% to 28%, a promise that aligns with their reputation of financial resilience and operational efficiency.
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Ladies and gentlemen, good day and welcome to Balkrishna Industries Limited Q2 and H1 FY '24 Earnings Conference Call. This conference call may contain forward-looking statements about the company which are based on the beliefs, opinions and expectations of the company as on date of this call. These statements are not the guarantees of future performance and involve risks and uncertainties that are difficult to predict. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Rajiv Poddar, joint managing director from Balkrishna Industries Limited. Thank you. And over to you, sir.
Thank you, Nida. Good morning, everyone, and thank you for joining us today. Along with me, I have Mr. Bajaj, Senior President, Commercial, and CFO; Mr. Ravi Joshi, Deputy CFO; Mr. Sushil Mishra, Head, Accounts; and SGA, our investor relationships adviser. Let me begin with performance updates. In Q2, we faced challenges on account of heat waves and recessionary fears in the export market. While the inventory-related challenges in the international markets have normalized, the confidence levels in distribution channels is moderate, leading to gradual and slow improvement. India markets continue to perform relatively better. The volumes in Q2 were partially -- the volumes in Q2 were partly contributed by the inventory created in June '23 but could not be shipped out due to the Biparjoy disruptions. Q2 also saw normalization of raw material cycle, which is evident in the improvement in our margins on a Q-on-Q basis. As guided in the previous call, we had estimated a CapEx spend of INR 600 crore for financial year '24. Out of this, routine maintenance CapEx was estimated to be at INR 250 crore to INR 300 crore. Given the aspiration of growth and better control over quality, the company has decided to set up a new mold manufacturing plant at Bhuj. Rather than expanding the plant at Dombivli, we have decided to put a new capacity at Bhuj. This will be a stand-alone new project entailing a CapEx of INR 300 crores. This will get commercialized by the end of Q1 FY '25. Accordingly, the CapEx should -- spend should be approximately INR 900 crores for the financial year '25. On volumes front, we expect stable trajectory to continue and a better H2 of financial year '24. However, given the first half of this year's related challenges and volume performances, we expect the financial year '24 volumes to degrow marginally. With this, I now move on to operational highlights. For the quarter, our volume stood at 70,585 metric tons. Our stand-alone revenue for the quarter stood at INR 2,247 crores. This includes realized loss on ForEx, pertaining to sale, of INR 21 crore. For the first half of this year, financial year, 45% of sales came from Europe. 29% came from India and 17% came from Americas. The balance came from rest of the world. In terms of channel contribution, 71% was contributed from replacement. OEM contributed 27%, and the balance came from offtake. In terms of category, agriculture contributed to -- 58%. OTR industrial construction contributed 39%, and the balance came from other segments. The stand-alone EBITDA for the quarter was at INR 548 crores, with a margin of 24.4%. Other income for the quarter stood at INR 52 crores. Coming to the net ForEx items. For the quarter, we had a net ForEx gain of INR 55 crore, which includes realized gain of INR 30 crores and unrealized gain of INR 25 crores. Profit after tax stood -- for the quarter was recorded at INR 335 crore. Our gross debt stood at 2,833 crores at the end of 30th September '23, of which about 75% is relating to working capital debt. Our cash and cash equivalents were at INR 2,283 crore. The Board of Directors have declared a second interim dividend of INR 4 per share in addition to the first interim dividend of INR 4 per share paid in the last quarter. With this, I conclude my opening remarks and leave the floor open to Q&A.
[Operator Instructions] The first question is from the line of Mumuksh from Anand Rathi.
Sir, in the first half, working capital has improved by 340 crore. What would have led the improvement, sir?
Normalization of inventories.
Got it. So basically, the inventory holding, we have normalized it to normal levels. And there will be no further correction from -- going ahead from here.
No, should be -- this is the level we expect to maintain.
Okay. And sir, realization has improved by 2% sequentially. Would it be a mix impact? And going ahead, how do you see the [ realization trends ]? And also how do you see the increase of [ fuel ] prices impacting the RM going ahead, sir?
So realization was basically on account of better hedge rate and also some product mix improvement, so that is there, but we expect the realization to be stable at around these levels. On the RM, the fuel cost, I mean, the oil prices are going up, so we are waiting and watching the -- how it will move, but at the moment, we are expecting it to be stable or minor increase in the coming quarters.
Got it, sir. Just on -- what would be hedged euro rate for the Q2, sir?
[ 88, 89 ].
Sorry. [ 89 ]...
[ Yes, 89 ], approximately.
Next question is from the line of Siddhartha Bera from Nomura.
Sir, first question is on the demand side. So you indicated that the year might be a marginal decline implies that, second half, we might see some growth, so now given the capacity of 360,000 which we have and...
Siddhartha, sorry to interrupt you, but you're sounding very soft.
Okay, [indiscernible], yes. Is it better now?
Yes.
Yes. So given that now we are likely to enter into a growth trajectory and with the capacity of 360,000 tonnes, do you think at some point you need to sort of start looking at a new brownfield? Or you think that this is sufficient for the next couple of years.
So we've -- as we've mentioned earlier as well, we'll be doing, over a period of time, smaller brownfield expansion at Bhuj. And that will be taken up in due course, so that, we will make the announcements when we have something more concrete, but it will be through brownfield projects and small batches at Bhuj.
Sir, what is generally the lead time before which you need to sort of start the brownfield, depending on your visibility on the volumes?
So as because they are brownfield, we're expecting it to be between 15 to 18 months.
Okay, okay. And second question is on the India business side. We have now seen nearly 2 years of very strong growth in the market, so can you share some thoughts about what is the market share? How are the volumes, the -- how is the growth here coming very strong? And visibility you have going ahead.
Our market share in India market will be similar to our global market share, which is about 4% to 5%, so that is what is there. There is a huge opportunity in India with the government spends on construction and infra development and, of course, agriculture also. We are amongst the largest economies for agricultural, so a lot of scope over here. And that's where we are focusing. And you can see the numbers are contributing towards the growth of that. And every year, we are getting good growth from India.
Sir, any color of -- about how much you can inch it up to -- say, in the next couple of years given the addressable market which you have because you are more towards the higher [ tire ] segment? So any thoughts there? And will the India business profitability be similar compared to global businesses, or will it be different?
So on the profitability, will -- it will be more or less similar to the global market. On the visibility front, our vision is to be 10% market share globally. Even for India, we hold and aspire to be a 10% market share in the first phase. That's where we are working towards and that's our immediate target.
Next question is from the line of Jinesh Gandhi from Motilal Oswal.
Sir, continuing on the India business. So the strong growth which we have seen, is that not leading to improved market share? And particularly considering that, unlike the global market where [ competition ] is very different and, well, far more fragmented than in India, the 4% to 5% market share in India looks quite low for us. What am I missing over here?
So that's our estimate, but we should be quite accurate on that. I mean we may be a percent off here or there, so it's not that we will be drastically out of the number that I've mentioned to you.
Okay. And the growth which we are seeing of -- strong growth that you are seeing, is that leading to market share gain? Or market also is growing quite strongly.
Market share gain is definitely part of it.
Okay, okay. So secondly, on the mold CapEx which we have announced, can you talk a bit more about it? Is it primarily replacement CapEx which we are doing for the mold capacities? Or this is totally new for the new SKUs which we are adding. If you can throw more light on that.
[indiscernible]...
So [Audio Gap] and also, yes, it's basically for new molds and new growth aspirations that we have. So to keep that in-line, we will be going on new SKUs, as we mentioned, solid tires, bigger OTR tires, the tracks. So we'll be making all those SKUs, so we need the back end for that.
And I mean this kind of CapEx of INR 300 crore. Can you give some sense on what kind of SKU addition that can happen or what kind of revenue generation we can do from this kind of INR 300 crore kind of CapEx [ or more ]?
There will be no revenue because this is a service that we are doing for our tire business. So there is not going to be a sell-and-buy scenario, so there will be no revenue. It will give us better control over quality for our finished products and also give us -- make our -- reduce our lead times to go to the market with any new product.
Okay, okay, got it, but this is largely for the OTR segment, not for the agri segment.
No, no, everything, all segments, so agri, OTR, solids, everything [ can be considered ].
Next question is from the line of [ Garvit Goyal from Invest Analytics ].
My first question is on Europe demand side, so how Europe demand for tires both for [ agri ] as well as OTR is shaping up. Is the worst over? Or headwinds are still there.
So the demand is -- I mean the -- we believe the worst is over, but with the new geopolitical scenario, there is again doubt of uncertainty cast over the end users and distributors. So the way it would have responded, it will take a little longer because of the new scenarios that we have been witnessing over the last 3 to 4 weeks.
[ Sure ]. And sir, you mentioned India is doing well. So how much are volumes, India, [ will be ] this quarter, both [ Q-on-Q and Y-on-Y ]?
So as I mentioned, it's India contributed to -- about 29% of our sales.
And sir, you mentioned to the earlier participants regarding the brownfield projects, like small brownfield projects we are looking for, but our total capacity is 3 lakh 50,000. And we did somewhere around 3 lakhs in FY '23, so are you seeing any kind of [ relief ] going ahead because any kind of slower growth in India tire industry going forwards?
No.
No, not in the Indian tire industry, no.
Next question is from the line of Binay Singh from Morgan Stanley.
Just looking into the annual guidance we've given which broadly implies 10%, 12% sequential growth in the second half; and then taking into account all the 4 segments that broadly we do on the export side, if I was to divide replacement, OEM and then OTR, agri U.S., Europe. Which are the pockets where you think growth will lead on growth; where when you see from the next 6, 8 months, you are seeing the maximum demand traction? And which are the ones which are looking more -- weaker? So if you could comment on that. That's the first question.
So I can comment on that geographically. So export overall has got uncertainty going through because of the geopolitical scenario. In the India front, we're seeing strong demand, so which should hold. So that's on the geography front. I think, on the product mix, the categories of agri, OTR, wherever the demand is strong, it is not -- I mean this is not the end user demand which has moved. It is the confidence which is not there in the system. So overall, it is affecting all the segments on that basis. That's why internationally we are facing some uncertainties.
And sir, in the opening comment, we added that, in June, we had shipped some units, so that got reflected in sales in this quarter. So then retail sales for the quarter would be slightly lower than -- like, than the dispatches. Or the dispatches...
Yes. You're right...
Marginally lower.
Marginally lower, yes.
And sir, just lastly, on the pricing side, we've seen commodity pressures again inch up, so in that light, do you -- how do you see the margins in the near term? Or will they be sustained at these levels? And also in these markets do you see OEMs will be able to pass on these hikes to the consumer?
So we believe the EBITDA margins would sustain. And as we've always mentioned, that we take -- our endeavor is to maintain it between 26% to 28%, and we are working towards that.
Next question is from the line of Raghunandhan N. L. from Nuvama Research.
Can you give some more color on your efforts as to how in the medium term you look at the achievement of 10% market share?
So basically we have identified pockets where we have potential to grow, segments which we have potential to grow. So that's for geographies and segments, so that's what we are working on. As we -- I mentioned earlier, in my call last quarter, we are looking at new products like solid, tracks, et cetera to be added to the product basket to help us get there as well. So it's a mix of everything that we will be doing to help us reach this market share.
And on the carbon black sales to third parties, broadly, what would be the revenue from that category? Even if you can quantify in terms of percentage in terms of revenue, that will be helpful.
6% to 7% of the top line would be coming from that revenue.
Got it, sir. And in terms of euro rates for FY '24 and first half of '25, how are you looking at that?
So '24 full year, this '23, '24 full year, will be [ 89, 90 ] approximately. And for next year, it should -- we have covered 25%, 30% only, which is around [ 93, 94 ].
[ 93 to 94 ]. One last question: In the recent Volvo results, the global Volvo indicated that there is a weak outlook for the OEM segment for construction equipment in North America and Europe. Compared to the weak underlying industry demand, Balkrishna always does better in terms of market share gains, so just any color you can share on how you are looking at the industry and how the market share gains are happening?
So we are also seeing similar trends.
Next question is from the line of Pramod from Incred Capital.
Sir, the first question is with regard to India. I think there is a disparity in terms of your market share by region, so what will be that and how you plan to cover up that market share gap in the other regions? Because if I understand, with develop markets like Punjab, Haryana and all, your products are well accepted and you have a superior market share, but what is your plan for other markets [ and hence ] the medium-term volume projection for India?
I don't -- I think we have a good reach across pan-India. And it's not that we don't have a good market share in other regions. Everywhere, we have a good market share and we are working to grow on that. So the foundations have been laid and the results should be coming in the next few years, which is why we are quite confident of our number that we are telling you.
And if I'm not wrong, you are #2 in replacement market now in the tractor. Is that a fair assumption?
No, I don't have that detail.
Okay. And the second question is with regard to the mold CapEx. So is it fair to understand: You always procured molds internally, right...
Yes. We already have our mold shop in Dombivli, and now we are expanding it. And instead of creating it in expansion in our existing plant, we've done it in Bhuj because that's where our -- current 60% of our production is. And going forward also, that will be where we will be doing expansion, so we will have the logistic benefits of placing it over there.
And considering you are setting up a new facility for molds, I understand it is with your growth ambitions which you have in plans. Does it also mean your maintenance CapEx will drastically go up, as compared to what you guided for INR 300 crores?
No, no.
Because you are setting up a new division for the industrial mold. Hence, I wanted to just check on that.
No, no. It will be in-line on -- even currently the mold shop is already there, the CapEx is very negligible. So the maintenance CapEx is negligible, so it should be similar to that.
Next question is from the line of Ankit Kanodia from Smart Sync Services.
So on the point of market share in India as we talk about. So if you do just "back of the envelope" calculation: We did about 137,000 metric ton total. And 28% of that comes to about 38,500, but when we look at the Indian market units, so it -- as in the volume number doesn't come in metric tons while we share it in metric tons, but what is available online or outside is basically in million units, so would you be able to share more color on that, as to how much metric ton leads to one unit on an average? That will help us to...
Because we -- no, no, no. So we cannot share those details because we are making tires' weights from 2 kilos a unit to 6,500 kilos a unit, so it's very difficult to give numbers. We've always spoken in metric ton and we will continue to do so. So units, in our case, will not be a true representation because of the weight differences...
Right. So my follow-up question with this is 4% to 5% sounds that is too low for Indian market because I -- [ are there competitors staying ] which are there in the export market when we look at the Indian market? Do we have the same competitive intensity here? Do we have the same...
We started India market only in the last 6 years, so which we have been growing and which we will continue to grow. Our estimates are these are our volume share and this is where we stand, and we aspire to reach a 10% market share. That's what is -- we are working towards.
Next question is from the line of Abhishek from Dolat Capital.
Sir, how much current inventory at a dealer level in export and domestic market, sir...
It's at -- can you hear us?
Yes, sir, yes.
It's at normalized levels.
So it is at 2 months or 3 months, sir...
Between that 2 to 3 months range.
And as -- there's an expectation for increase in RM basket, so in this case, can we see a higher inventory buildup by dealers in coming days? And that's why dispatches may see positive momentum.
We don't -- we are not very sure because of there is uncertainty in the market because of the new developments on the geopolitical side, but we'll wait and watch. We are ready in case if it comes up, but we'll wait and watch. We are not very sure at this stage.
Okay, sir. And my last question, on the competition side, as few Indian players are being aggressive in export and increasing their capacity in the OHT segment. So how do you see competition from the Indian players in export market?
We have our vision. We have our mission, and we are working towards that. We are only 6% of the global market share, and our intent is to reach 10%. We are focused on that. There is a huge market available for players to come and go. There is currently 94% market available. And going forward, this will become 90%, so there we have focused on that. And we focus on our vision. That's our way of moving ahead for -- with our teams.
Next question is from the line of Joseph George from IIFL Securities.
A couple of questions. One, when the RM market was coming off the last 2 or 3 quarters, you had cut prices to pass on some benefit. Now that RM basket is starting to inch up again, are you likely to increase -- or have you already increased prices? Or are you likely to increase prices, effectively a reversal of what you did when the basket was coming off?
So there was a lag that time as well and we are seeing a lag here. We've not taken any price increase. And we are not in the -- in this quarter, looking to do any price increase, but we will wait and watch. Let's see. If there's some sharp movement, we may go back to the drawing board and take a call, but at this stage, nothing is [ pinned ] for the very short term.
Okay, understood. The second question was in relation to the advanced carbon black project. When is it likely to be commissioned? And I'm guessing the entire output is going to be for external sales, third-party sales, that is not so captive. And whenever it ramps up to 80%, 90% ideal production, how much can it add to revenue?
So as we had mentioned, that it will be done in the second half of next financial year. We are continuing with that position. As of now, it is progressing well. It will be -- yes, you are right. It will be 100% third-party sales. On the revenue front, it will contribute -- this one [Audio Gap] So [Audio Gap] revenue from that should be around 400 crores to 600 crores, [ considered at ] full capacity, yes.
[indiscernible].
Next question is from the line of Lokesh Manik from Vallum Capital.
[ Rajiv, team ], my question was on the CapEx on the mold capacity, so if you could throw some light on a few fronts. One is do we expect the number of SKUs to go up from 3,200. What are you targeting there? Secondly, what is the cost saving that you are expecting from this expansion? And the last one is historically how have we accounted for the mold expense. Is it through [ stores ] and spares directed to raw material or through maintenance CapEx? Just some clarity on that front.
So we've -- I'll go backwards if that's okay to your questions.
Sure, sure, sir, yes.
So we capitalize cost of it. Mold plant -- your second question was what is the cost saving that you get. I don't think we are looking at it as a cost-saving mold but better control over the quality of the mold, which will have an impact on the end finish of the tire. So that's what we are looking at.
Okay. And number of SKUs, sir...
The number of SKUs, we will continue to grow up. This will only accelerate the speed of -- which is there. And also it is in line with our -- whenever the brownfield projects come up, they will need molds, so we will have to not look and wait for third party, but we can do it in house.
But some number, 5,000, 6,000, you have in mind, increase the number of SKUs...
No. We don't have that in mind because generally we are adding close to 100-odd SKUs every year, which we will continue.
Understood. Would this increase the costs of mold? Because we've had somewhere around 5 lakhs, 6 lakhs [ per ] mold, so any -- do you see that happening on the cost front?
So it depends on the size of the mold, as -- because, as I mentioned earlier, we made tires for ATV and go-karts which are about 2 kilos, and going up to the larger tires which are 57 inch and weighing 6.5 tonnes. So very difficult to give you cost of the molds.
Next question is from the line of Chirag from Keynote Capital.
Most of my questions are answered. I just want to have a couple of -- more. One, sir, I just wanted to know what contribution from carbon black that we have in this quarter.
Roughly 6% to 7%.
Secondly, sir, on Indian market, I just want to know. What is our strategy? Is it like similar to pricing strategy of international markets? Or it is like...
Yes, yes, it's similar. It's similar to the international markets.
The next question is from the line of Meeta from Circulate Capital.
I have one question, and this is on the EPR for tires. What are your thoughts on...
I'm sorry to interrupt. Your voice is not coming clear.
I have a question on the thoughts on EPR on tires and...
[indiscernible] from a tire...
We lost the line for the participant. We move on to the next participant. Next question is from the line of [ Sugan from Ambit Investment Banking ].
Sir, I just wanted to know. After quarter 1, we had guided that the realization for this year would be -- around [ 300 ] is what company was targeting. Now looking at the last 3 months, would we still maintain those kind of numbers?
For remaining quarters, as we told earlier, the 23% to 25%, we should maintain the EBITDA margin.
Right, sir. And sir, sorry. I joined a little late. If you could just again repeat the volume guidance for this -- for FY '24, sir.
So we have not given volume guidance, but what I've said -- I'll just read out the exact statement that I read. On volume front, we expect stable trajectory to continue and a better H2 financial year '24. However, given the H1 FY '24 related challenges and volume performance, we expect, the whole financial year for this year, volumes to degrow marginally.
Next question is from the line of Meeta from Circulate Capital.
I hope you can hear me now.
Yes.
Yes.
Yes.
Yes. I want to get your thoughts on the extended producer responsibility which is coming into force and also reclaimed rubber getting into the tires.
For reclaimed rubber, whatever percentage is possible, we are already using it. And for others, we are working with our supply channels -- channel partners how we can do the better and on sustainable basis.
But the EPR law states that the amount of reclaimed rubber to be used is pretty high. And going ahead, wouldn't that be a challenge?
Yes, it will be a challenge because we have to maintain the quality. We can use only certain percentage, not above that.
How much is percentage that you're using today?
We don't have that detail of...
And how are you building your supply chain? Because building supply chain, you can only use commercial vehicles reclaimed into the new tires, right?
Ma'am, this is a work in progress. We may not be able to share details of it online, so we'll -- I'll request you to wait and watch -- once we have more concrete things to announce on this.
Next question is from the line of [ Deisha Seth from Anwal Shares and Stock ].
Yes. Sir, this might be a part of a repeat question. I just wanted to confirm on the same sense. We can see a quarter-on-quarter improvement on sales number, so can we expect: From here on, we can expect things to improve quarter-on-quarter [ and year by end versus over ]. If you can...
We are waiting and watching. We are hoping for that. We are ready. On the volume front, we are [ listening ]. And on the EBITDA front, as my colleague mentioned, we are estimating some improvements to come in. And this is what we have always -- mentioned in the last quarter call as well.
Okay. And sir, as India volumes are growing -- now it is around 30% of sales. So if -- as it grows faster than Europe and U.S., so -- it may affect the margins because we will not have that labor arbitrage which we have in export market. So if you can throw some light.
So firstly, this 30% is a base effect of the European market slowdown because, once that comes back, those markets, those volumes will also come back. So that is why it may not give you a true reflection of this. As far as realization is concerned, regardless of the effect of labor arbitrage [ or not ], we are getting similar realizations from India and overseas, so we are not too bothered about where those markets are -- where the products are being sold. Because for us both markets are giving us similar realizations.
Next question is from the line of Jinesh Gandhi from Motilal Oswal.
Sir, quickly, I want to check on the CapEx part. We have already spent about INR 595 crores in first half and we are guiding for INR 900 crores, so is the large part of project has -- been largely done given balance is just about 300 crore for second half?
Yes, most of the CapEx is -- and we've already completed the cycles. And that's why this is reflecting in the numbers.
Okay, okay. And secondly, in this quarter, if I look at the gross margins, they were broadly stable on Q-o-Q basis. And this was despite better euro-INR realization and probably some savings on RM costs and better mix in form of higher OTR. So why -- margins are stable on Q-o-Q basis. Any sense on that, gross margins? Yes, I was referring to gross margins.
Margins have -- gross margins will remain stable, so -- because most of the items where the cost was getting impact was on freight and all which is -- which comes below after gross margin.
Okay, but higher OTR and euro-INR would have some benefit on gross margin, right? Or that gets...
[indiscernible].
[Operator Instructions] The next follow-up question is from the line of Mumuksh from Anand Rathi.
Sir, rest of world is also declining for last few quarters. What are challenges in those market? And over a medium term, how do you see the market share improving there?
So as we've been mentioning, that the overall international market is going through uncertainty and a lot of headwinds. So we are [ fighting on those ], and we are waiting to see how it progresses.
And how do you see the market share there, sir, in the rest of the world regions? Which markets do you see large potential, sir?
All over there. As we've mentioned, it is in the CIS countries of Europe, the Americas put together and also some parts of Asia.
Next question is from the line of Abhishek from Dolat Capital.
Sir, how is the current situation in -- of export in CIS countries? I know it was impacted badly due to the Russia and Ukraine tussles. Can we expect that second half will be better in these geographies?
It's too early to comment because the geopolitical tensions in this region are not yet over, so we are waiting and watching. We have put our distribution network and all is in place, so we'll wait and watch. We'll come back with more clarity towards the -- next quarter.
And sir -- and how do you see the potential of Australian and Brazil market and especially in the terms of OTR segment in the coming days? What kind of the -- volumes are you projecting there?
So I mean we are working normally. For us, we are seeing some growth. And we are waiting in -- I mean we are pushing in those regions as well.
Thank you very much. I now hand the conference over to the management for closing comments.
So we thank you, everybody, for taking time out and coming to our call. We'll see you in the end of Q3. Thank you. Have a good day.
Thank you, sir. Thank you very much. On behalf of Balkrishna Industries Limited, that concludes this conference. Thank you for joining us. You may now disconnect your lines. Thank you.