Ladies and gentlemen, good day and welcome to the TVS Motor Company Limited 4Q FY 2023 conference call hosted by Batlivala & Karani Securities India Pvt. Ltd. As a reminder, all participant lines will be in the listen-only mode. There will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Annamalai Jayaraj from Batlivala & Karani Securities India Pvt. Ltd. Thank you. Over to you, sir. Thank you, Darwin. Good evening, everyone. On behalf of B&K Securities, welcome to 4Q FY 2023 Q4 conference call of TVS Motor Limited. I also take this opportunity to welcome the senior management team of TVS Motor Limited. We have with us today Mr. K.N. Radhakrishnan, Director and Chief Executive Officer, Mr. K. Gopalakrishnan, Chief Financial Officer. I'll now invite Mr. K.N. Radhakrishnan for his opening remarks to be followed by question and answer session. Over to you, sir. Good evening, everyone. extremely happy to share the overall performance of the company for the year 2022-2023. Company achieved significant milestone both in terms of revenue and profit. Company posted a revenue of 26,378 crores and a profit of 2,003 crores despite various headwinds. All of you know we had challenges in semiconductor shortages during the H1 of the year, challenges in the international market during the H2 of the year. Company crossed 3.5 million units of two-wheeler sales, with retail sales growing ahead of the industry, both in domestic and international market. We are also pleased to inform you that the company has over one lakh delighted EV customers now. This outstanding performance was possible with the best-in-class quality product, superior customer experience and customer delight. Let me now get into more details about the full year numbers and then quarterly results. In terms of overall, the revenue from operations grew by 27%. Last year was INR 20,791 crores and this year, INR 26,378 crores. Domestic ICE two-wheeler sales numbers grew by 23% against the industry growth of 16%. Domestic EV sales dispatches were at 97,000 as against 11,000 during the last year. Three-wheeler sales remained flat during this year. Profit. The operating EBITDA for the year is higher at 10.1% compared to 9.4% of last year. During the year, company posted the highest ever PBT with a growth of 61%. INR 2,003 crores as against last year's INR 1,243 crores. Profit after tax for the year grew by 67% from INR 894 crores to INR 1,491 crores. Talking about the quarter, revenue from the operations grew by 19% in this quarter, INR 6,605 crores during this quarter as against INR 5,530 crores during last year's Q4. Two-wheeler domestic ICE sales grew by 19% compared to Q4 of last year as against the industry growth of 4%. Wagon shares, wagon sales have grown ahead of the industry. Two-wheeler international market industry declined by 36% compared to Q4 of last year due to increased inflation, currency depreciation and inadequate currency availability. The company ensured that the customer retail is higher than the dispatches, moderating the stocks with the channel partners. The total two-wheeler ICE sales declined by 2%, to last year's, as against the industry decline of 6%. EV two-wheeler sales is sequentially growing quarter after quarter. During this quarter, the sales was at 43,000 as against 29,000 what we have seen in Q3. Total sales of three-wheelers in this quarter is 29,000 as against last year's 42,000. last year's last quarter number. Profits for the quarter, EBITDA is at INR 680 crore, grown by 22% over Q4 of last year. We continues our focus on premiumization, cost reduction initiative. This helps the company to improve the EBITDA. For this quarter it's higher at 10.3%. PBT for the quarter grew by 47%, INR 547 crores as against INR 373 crores during Q4 of last year. PBT for the quarter includes a fair valuation gain of INR 62 crores on the equity share held by the company. Fair valuation gains shown as other income. Tax for the quarter is 49% growth at INR 410 crores as against last year's INR 274 crores. Now looking at the performance of TVS Credit. TVS Credit has done extremely well. The book size is now INR 20,500 crores. Portfolio is well diversified, covering tractors, used vehicles, consumer durables, MSME besides two-wheelers. Overall, for the year, TVS Credit posted a PBT of INR 511 crores as against last year, INR 151 crores. For the quarter, the PBT was INR 140 crores as against INR 75 crores, up with respect to last year, Q4. The collections are robust, warranting minimum provision. PTTVS continued to perform well. For the year, it posted USD 5 million PBT as against USD 3 million during last year. Coming to EV, you have seen a significant change in the EV growth for TVS Motor Company. During the year, domestic, the EV two-wheeler industry saw robust growth, almost 3.1x. The growing sensitivity to climate impact and improved total cost of operation proposition so accelerated consumer interest. Thanks to government, the FAME-II enhancement, PLI, state subsidy, and other EV related infrastructure initiative of the government reinforced consumer faith in the segment. During Q4, we delivered 43,000 numbers resulting in a share improvement quarter-on-quarter. Presently, our order book is close to 30,000 units. We are present in 235 touch points across 135 cities. We will be launching, as promised, new series of new products focusing on different customer segments with a complete portfolio in the range of 5-25 kilowatts in the next 9-15 months. Electric three-wheeler, both passenger and cargo, are getting ready, will be launched in the upcoming quarter. TVS EV customers presently have access to more than 2,000 charging points with various charging network players. We have partnership with many network players. On TVS iQube AIS-156 phase II, we have transitioned successfully and the production of April 2023 were constrained due to the changeover and some supply chain challenges. We are pretty confident that we will start ramping up much faster in May. The order book for TVS iQube continues to be very robust and we will retain the growth momentum. Regarding FAME, we have fully complied with all requirements laid down under the FAME policy documents and CMVR. We would like to reiterate that TVS is fully committed to Government of India's vision to promote electric mobility and fully supports the Government of India's initiative to enable faster adoption of electric mobility, development of electric vehicle ecosystem. In spirit of Atmanirbhar Bharat, all the electric development happened in-house. TVS would like to submit that we are fully committed in building the electric vehicle ecosystem in India and always willing to render all necessary cooperation assistance to the Government of India. In order to improve the customer charges on charging time, we gave off-board charges from May 2022 when we launched our current variants of TVS iQube. Due to ambiguity in the interpretation, effective 2023, we offer charger as a part of the overall price of the vehicle. We said, as we said, as a goodwill gesture and show appreciation to our customers who purchased TVS iQube from the period of May 2022 until April 2023, TVS will implement a benefit scheme to its customers who have paid over and above the threshold limit fixed by FAME. Just to clarify, in some of the cities our prices including chargers are within the threshold limit specified by FAME. In some cities or specific models, we are slightly higher than the threshold limit of FAME. The average refund is about INR 1,700 per vehicle. Over the next two to four weeks, company will be reaching out to customers who are eligible to refund, for this refund. The overall impact, cost impact is less than INR 20 crores. For industry outlook 2023-2024, we are expecting the GDP growth to be around 5.5%. Urban recoveries are visible. However, rural recovery is slow, but we are expecting that it may take little more time. What is most critical is monsoon. The improving road infrastructure, economic environment with our current mass transit system will drive the demand for mobility for masses. The growing population with young demography will support sustained industry growth, especially for two-wheelers. The mobility demand is best served by the two-wheeler category. I'm pretty sure that in the medium to long term, India is expected to witness a double-digit CAGR on two-wheeler. Majority of the international markets will likely see growth during especially the H2 of the year. EV industry will continue to grow rapidly as consumer interest is buttressed with active policy support from the central and state governments through PLI, FAME-II, and specific support from the state policies. On plans for 2023-2024, we will continue to invest in new products and you will see many new product launches in ICE and EV segment, both in two-wheeler and three-wheeler this year from the company. All of you know that in the recent J.D. Power syndicated study, TVS products are rated best in class both in iQube and appeal. This is the 8th year in succession. Last two years, if you know, due to pandemic, the study was discontinued. Thanks to all our customers for having full faith in TVS and TVS products. Customers of TVS Raider, TVS Jupiter 125, TVS Ronin are extremely delighted, and volumes of these products will further enhance this year, both in domestic and international markets. International markets, we are also having plans to expand in Latin, Middle East. The expecting for premium models, Apache series continues to maintain growth momentum. Scooter category consisting of Jupiter 110 and NTORQ will also see further growth. As you know, company delivered over 10% EBITDA during 2022-2023. Sharp focus on premium products, material cost reduction, optimization of fixed costs. We are confident that the same intensity drive will continue in 2023-2024, and we will further strengthen to deliver better EBITDA in the year 2023-2024. Our complete product portfolio, unwavering focus on the consumer, quality, new products with attractive quality and technology with features, the company is confident about outperforming the industry both in domestic and international markets. Thank you. Thank you very much. May we proceed with the question and answer session? Yes, please. Thank you. Ladies and gentlemen, we will now proceed with the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Chandramouli Muthiah from Goldman Sachs. Please go ahead. Hi, good evening, and thank you for taking my questions. My first question is on iQube. We've done well on electric scooter volumes, up almost 40% quarter-on-quarter. You have spoken of some supply chain shortages in April. If you could elaborate a little on this, maybe what the kind of components where there is volatility in supplies, is it limited to a small group of suppliers? What is giving us more clarity that ramp-up is visible in May, that would be helpful? There's a small set of suppliers both on the electronic component side. The transition of this AEF was also happening. What is good about is more than 30,000 bookings are there, and we are strengthening our ramp-up. You would have seen last year, this year, April, May, Jan, February, month after month, we were improving, and you will see the momentum from May in terms of delivery of better ramp-up and better delivery to the customers going forward. That's helpful. Thank you. My second question is on IC scooter and premium motorcycles. There has been a noticeable improvement in mix of IC scooters and 125cc plus motorcycles, both in domestic and export markets. Could you share some color on the factors that helped the company achieve this improvement in product mix? Is this current mix sustainable in our view? Finally, if you could just share the exports and spares revenues and the Ronin volumes for this quarter, please. See, overall, we are seeing, like I said, urban, we are seeing very good pickup. I think the challenge is in the rural, but overall, you know, if the monsoon is likely to be better this year, then we will see orders coming back, the sentiments coming back. All of us know that this is the first year with lesser challenges on the semiconductor. In the Q1 last year, we had serious setbacks. From the consumer point of view, 125cc segment in the market is doing extremely well. As an industry, I'm saying. Okay? You know, Raider is very much welcome in the market and customers are delighted with Raider. Jupiter 125 is also very much liked in the market. NTORQ is in the 125 segment. Overall, I think that is the place where we have very hit products, and we are confident about growing ahead of the industry there. On premium, Apache continues to do well, and Ronin, as you know, it's a, it's a special category. It has started doing well in many markets. Average, we are doing about 2,000, 2,500 every month, and it will continue to go up in the coming months. Got it. Just the exports and spares revenues, if you could share those numbers, please? Spares revenues, is around for the quarter, it's about INR 667 crores, about 10% of the overall revenue. Overall, I said year also, INR 2,640 crores, about 10%. The export revenues are for the quarter? Just give me a minute. Sure. Export revenue for the quarter is about INR 1,366. Got it, sir. Thank you very much, and all the best. Thank you. Thank you. Thank you. The next question is from the line of Pramod Kumar from UBS Securities. Please go ahead. Thanks, sir, for the opportunity, sir. Sir, first question on the domestic front. If you can talk a bit more about how Raider and Jupiter 125 do, because generally the feedback from the market is that, you know, the demand continues to be ahead of supply. We've seen that on model-wise volumes, Raider has started to do 30,000+ volumes. I'm just trying to understand, will we see an inflection point here where you will see a step up in capacities for Raider and also for Jupiter 125? And because of the fact that 125cc as a segment is also doing very well. If you can make any comments on volume targets or production targets, what you have for these brands for FY 2024, sir? See, Raider, when we started, all of you will recollect, we started with 10,000, then we increased to 15, went to 20. Now, last quarter, we have done almost 30+. We are constantly looking at market demand. What you said is absolutely right. The demand has to be much ahead of the capacity and production so that we are able to fulfill the demand. We are also getting better capacity utilization. Raider, we are constantly reviewing and supporting the market, Raider is a great brand, both in domestic and international. When you look at Jupiter 125 also, it has also grown month after month. Now average, we are doing about 25,000+, and there is good headroom to grow. Put together, these two products are likely to grow further in the, in the, in the future. Like I said, industry is also doing extremely well in the 125cc. One 125cc is a welcome change in the industry and the market, and TVS has got two great brands. NTORQ is a great brand, as you know, and NTORQ also has done well. Between Raider, Jupiter 125, NTORQ, I think company will further strengthen the 125cc. Sir, any production numbers? Like, is there an expectation that you can take Raider to 50? If I'm not wrong, you're not even doing any marketing or no launch. Still it's ramped up to 10% plus of the category. We closely monitor, and we will keep constantly. We improved from 15%, 10% to 15% to 20% to 25%, now it is cross 30%. There is a constant effort to look at, you know, which products are doing well, and we constantly look. Same in Jupiter also, we started with 10%, then 15%, now 20%, now 25%. We will continuously monitor this and start investing behind. The supply chain is also fully supporting. Markets are supporting. Customers are supporting. That will be the strategy of the company. I don't want to give a guidance on the numbers going forward. We will constantly look at the requirement with the demand, and we will keep constantly upgrading the capacity and production. Thanks for that. Sir, on EVs, is it a fair understanding that with improving volumes, your unit economics on EVs should be getting better and better, and the drag on the margins or overall, should actually... Or rather, let me put it this way. Are you sensing that breakeven for EVs at the EBITDA level is around the corner for you? See, I always believe that what is most important is delighting the customer. I want to thank all the TVS iQube INR 1 lakh customers who have stood with the company. If I say, if I speak, if there are more than 30,000 customers who have booked, I think that is the credit I would like to give to the product and the customers who have got faith in the company, number one. Number two, we are continuously looking at how do we start increasing the capacity and how do we get the supply chain supporting us fully. Number three, we wanted to also get into international markets. The moment the top line starts coming in, every element will start following. I said, as I said, it is making positive contribution. Okay, these are the. Once you grow the top line and once you start getting the positive contribution, that is the time you should start looking at all our costs. This is the investment time, both in the products and in areas of investment in terms of marketing, in terms of people, in terms of every element of that. We are extremely happy on the progress of EV. We want to now launch many products in the EV segment, including the three-wheeler. This year is going to be a very important year, 2023-2024, because we will also start looking at some of the international markets. This year is going to be another milestone year in the EV segment. I would like to say that. Sir, finally on export, sir. I understand the macro is very dynamic. There's not much of visibility on when things will improve. Can you just make some color on your export market share progress in key markets? Because we don't get the data very easily. Every OEM claims that they're protecting market share. If you can just help us understand how is your market share trends in key markets in Africa and LATAM on both three-wheelers and two-wheelers. Any color which you can share on these markets will be, like, really helpful. How are you doing there on the market share front? Thank you. See, the principle of the company, we always believe in keeping the right stocks. Okay. If you look at domestic, we keep neither between 25-30 days stock. Same principle we use, plus whatever is the transport time, sea freight time. You know, then there are distributors there, dealers there. Depending upon that, we will look at. Because from the customer point of view, if you keep around 30 days plus the logistics and distribution time, that will be fine because they will get a fresh vehicle. That is number one. We have seen last year the industry degrowing in a significant way, especially in African market, some other markets like Bangladesh. We know this area. Other than some of the ASEAN markets like Indonesia or Philippines, most of the markets, lot of geopolitical challenges and availability of, you know, currency devaluation. One of the countries, demonetization. Overall, I think it was going through some difficult times. If the retails are much higher than whatever we dispatched. When this decline happened, decline happens very sharply. Immediately we look at maintaining the momentum of retail, customer retail, equally correcting the stock levels at each of the country. That's why you have seen our dispatches has been moderate. Now we are little bit stabilized. Going forward, month after month, you will see improvement in terms of the dispatch. Okay. However, there are markets where we have to closely watch, especially African markets. The recovery we have to closely watch. But we should understand that any of these markets, taxi is the mode and two-wheeler taxis are very, very critical for their livelihood. So I think that the local markets and the governments also will support that. And if you look at even the three-wheeler, again, taxi segment is the biggest one. So overall, I'm of the view that we have seen it in the past also. I think we have to be little bit more cautious. We have to be looking at it month after month and take the plans as we go. Thanks a lot, sir. That's all. Thank you. Ladies and gentlemen, in order that the management is able to address questions from all participants in the conference, we request you to please restrict your questions to two per participant. The next question is from the line of Kapil Singh from Nomura. Please go ahead. Good evening, sir. Firstly, I wanted to understand the margin outlook. If you can comment both on pricing movement in Q4 and beyond that, and also, on the cost movement that you saw in Q4, and what do you expect beyond that? See Q4, we took up prices. Just a minute, I'll tell you. The Q4 price increases was almost 0.5%. Equally, we also got the commodity costs little bit soft. That has helped with about 90 basis points. However, all of you know that the EV international market, we have to also moderate our dispatches. Normally, you know, EV turnover will be around INR 1,800 crores-INR 1,900 crores. This quarter it was only INR 1,300 crores, INR 1,400 crores, that range. Primarily because we started looking at the retail, customer retail industry and then we started moderating. Overall it was a healthy quarter, plus all of you know that we have EV, significant proportion of EV here. Overall we have managed our raw material costs and price increases well. My opinion, I think, there are opportunities. We look at very closely the commodity cost this year also. As we look at the rating and also the new products with features, we will review the prices. Constantly, we will review the prices. Has there been any price increase post the implementation of OBD2 now and any cost increases? There were some price increases we took in April. Just give me a minute. I think first week of April we did some price increases. Also on the cost, if you can. Yeah. I think end of March. It is not first week of April. We took about a 1% kind of a price increase for this quarter. Because many of the OBD2 changeover happened in March. Along with that, you know, we took up some prices. This month also we have taken some marginal price increases in certain models, around, you know, 0.8% to 1% kind of price. Sir, what is the cost outlook now? Are you seeing any increase in commodity costs or they are stable? My opinion, I think co-commodity costs will be around the same level or slightly softened because there is no logic of commodity prices going up. But we have to constantly look at it because if every industry has got their own challenges. There are some requests in certain areas, the commodity cost increases. We have to constantly look at it and see, but I don't think there will be sharp increases in commodity. There may be some moderate increase that is available to it. Got it. Sir, secondly, on the, just the difference in profit between standalone and consolidated, you know, talk us through what really is happening there because the gap looks like about INR 75 crores this quarter, and it's been increased slightly from last quarter. Just what is the outlook here? Also on CapEx investments, last few years has been around INR 2,000 crores. Is it, is it a steady run rate to assume for next, one or two years as well? See, two things. One, whether it is the subsidies like Norton or ACMG or the BOAG, I think these are all future investments. Maybe ACMG and BOAG, if the situation in Europe, you know, you can't predict the geopolitical challenges what Europe has seen. That has little bit affected ACMG and BOAG. I am pretty confident that these are all future technology. Norton, you know, we are definitely investing in engineering development and supply chain capabilities we'll be leveraging. And Norton will be a super premium category. I am pretty confident that these investments will start yielding very good results going forward. Your other question was what? Can you repeat the other question? The CapEx investment. On the CapEx investment. Last few years has been about INR 2,000 crores. TVS always, including our EV plus ICE, we always believe in investing in products, Raider or Jupiter 125 or iQube, and you will see many more. Between ICE plus EV will be close to INR 900 crore-INR 1,000 crore. Sir, investment? Investments, uh, will be... Just a minute. Investments will be to the tune of, uh, uh, about, about, uh, uh, seven hundred crores. Okay, sir. Thank you so much. Thank you. The next question is from the line of Gunjan Prithyani from BofA Securities. Please go ahead. Yeah, hi. Thanks for taking my question. I just had follow-up on Kapil's question. If I look at the investments in this quarter, can you just give us, there's one investment that you've done in TVS Credit, but there's also in this TVS Singapore, what is this for? If I look at the whole of F23, you know, if you can just give us an idea overall, how much have we invested in these subs, break up around that as well. These are investments in ACMG, ION Mobility, Norton, GoAG, TVS Digital. These are primarily the investments we have made. I just wanted to only highlight one thing. All of you would have seen TVS Credit performance and PTTVS performance. For the investments whatever we made, I don't think these companies would have done so well. Okay? You have seen the overall results of TVS CS. We have posted INR 511 crores profit, and the book size is already over INR 20,000 crores. We will grow much faster here going forward. I know you have seen PTTVS now, PBT is almost $5 million for the last year. These are the investments which are helping us today, but they were invested five years, seven years back. We have invested in people in terms of products, in technology, in capability. That is what is giving us the results. I'm pretty confident that whether it is Norton or ACMG or GoAG, definitely it will all start giving us very good returns going forward. Jesian, you want to add anything? Sir, I'll just add. All these have to be viewed more as an investment. Unfortunately, the accounting compulsions makes us to write off. All these expenses are only, incurred on development of technology, investment in technology, and therefore, that should be viewed more as a strategic investment, and 100% it will be rewarded. I just want to reiterate to all of you that TVS normally looks at domestic and developing countries. Now, with these products, we are already in the developed countries. With EV, we will be entering into many developed countries. TVS will become a global brand with these investments and the new products, whatever we are looking at the EV. It is going to be a milestone in terms of building TVS brand globally. Okay. Sir, TVS Credit, we have invested almost, I think, INR 600 crores this year. I'm just wondering, is this something, you know, there was always, you know, a thought process that we could bring in external investors. I mean, are we still pursuing it or we are okay to internally keep funding this, you know, from the stand-alone balance sheet? As informed earlier, we are exploring various options. Therefore, at an appropriate time, we will definitely come back and inform you also. Okay. Just moving to the other question on EVs. You know, thanks for clarifying, you know, all the issues around FAME. If you can just give, you know, color on, you know, what is happening to these subsidies which have been accrued. Are we, you know, are we starting to get that? If, you know, is that a really big amount to get worried about? A broader level question that, you know, when FAME starts to run down, going by the current timeline, of FY24, we still don't have much progress on the PLI. How do we really bridge the gap in terms of pricing? If you can just, you know, talk a little bit around how should we be thinking about the whole EV scale-up aspiration, you know, after FAME, you know, runs down. At the same time, we also need to defend this double-digit EBITDA margin, what you all have been guiding for. See, we are fully committed in building the electric vehicle ecosystem in India and always willing to render all kinds of cooperation and assistance to the Government of India. As you know, we are complying with all rules, and we are confident that the claims will be settled by government at the earliest. In terms of FAME. FAME has definitely any new technology we have seen, government interventions will be there to build the technology. We have seen that not only today, even in the past. When exports from India was very, very limited, we have a lot of incentives on export. I can recollect 14%, 15% kind of an incentive. Today, there are many companies like us, Bajaj, who are doing extremely well in international market, especially building TVS brand two-wheelers globally. That is definitely a positive thing. Over a period of time, these incentives have come down. Okay, all of you know that. I'm of the view that these incentives will help customers to look at this technology. Over a period of time, government also actively involved with OEMs and understand how to look at it, how to take it forward. From the OEM side, what we need to build is scale and customer satisfaction. For that, we need to invest. That is why we are planning a very clear strategy on having a series of products, not only iQube variants, plus many other products which are relevant to various customer segments. Okay? Increase the scale. That is number one. Number two, when scale comes, we can always look at reducing cost because supply chain will have benefit. Okay? I'm pretty confident that going forward, we will have many variants. Whatever we do on the two-wheeler i-Space, we will do it in that space. Please understand, this is a great opportunity for somebody like TVS to really get into developed markets. Okay? Today, we are not able to. There is very good demand from many of our international distributors for iQube, but I want to satisfy the demand in Indian market. By end of this year, maybe Q2, we will start Q3, we'll start international business as well. Overall, I think we have to look at the profitability of this will come in terms of volume, scale, variants, premiumization, exports, cost reduction. I think that is the way we have to look at it. There will be... You know, government will also seriously look at how to take up FAME or other benefits over a period of time. I am of the view that thanks to government, they are taking the right steps. I think we will definitely demonstrate how this can become a successful business in terms of TVS EV delivering very good profits in the future. Sure. Thank you. Thank you, sir. Just last question, where and when is the electric three-wheeler launch expected? Any timelines around that? I think, very close to the half, I will give you more update, but it is there. In this financial year, it is there. Okay. Thank you so much. Thank you. The next question is from the line of Amyn Pirani from JP Morgan. Please go ahead. Yes. Hi, sir. Thanks for the opportunity, and congratulations on yet another great quarter. Just going back to the investments bit. Sir, on Norton, is there any operational update that you can provide in terms of whether you have launched the product or what is the timeline of launching the product and, you know, what is the kind of ramp-up that we can assume, you know, over the next, say, one to two years? That would help us, you know, give some context to, you know, the investments that you're doing there. We are investing in the engineering side, development side, supply chain side, and the products are getting developed. All of you know, when we took over Norton, after the acquisition, quite a lot, only the brand was there. You know, practically products were not there. It's like building up from practically the zero base. Okay. The right talent pool we have now got. We have got capabilities in India. There is a lot amount of work which is going on. Okay. I am pretty confident that you will see products coming out of that brand in the superior premium category. I don't want to give any guideline on the timeline at this point of time, but it will be yet another success story in the history of TVS Motor, I can promise you that. Okay, sir. Surely we look forward to that. Sir, related question, I think, you know, the question on investments keeps coming back because if I look at the last two years, despite a very strong operational performance and, you know, record profits, you know, post CapEx and investments, the free cash flow is negative. I think the concern or question that most of us have is that when I look at, you know, FY 2024 and potentially FY 2025, you know, should we expect positive free cash flow, or will we remain in this investment phase, you know, beyond the EV and ICE which we are doing? I think some color there would help us, sir. I think the major investment of this has gone into the company which is most successful, which is TVS ESG. Mm-hmm. Okay? TVS ES, you have seen the kind of results. Last year was 151 crores, this year is 511 crores. You will see disproportionate growth there, number one. Number two, PT TVS, we have seen how it has scaled up. Yeah. Okay. Norton and SCMG and OAG, these are the investments where. Please understand, I told you about SCMG and OAG. I think last year to this year, there are unprecedented geopolitical challenges in Europe. I think it will improve as we go, and it is a, it's a new area of e-cycle, and e-cycles are going to be order of the day. When it starts, when the market starts changing, whatever the difficulties we have seen in the geopolitical situation in Europe will also change. I'm pretty confident that we are investing. We have the right technology, right areas, right products, making the scale better, making the company to take it to many developed markets, which TVS has never done so far. I'm pretty confident that you will see these investments starting yielding very good results and cash flows becoming much positive. Sure. Thank you, sir. Just one last question, if I may. We are already seeing significant success in almost all ICE categories, and even in EVs, we are now, you know, the number 2 brand. One category where we are still, you know, a bit behind is the 100-110 cc motorcycle segment. That category is not growing also, but it's still a large category. Is there some plan, say, in the foreseeable future for some product intervention there? Is there a thought process around that? We are closely monitoring. I think I agree with you. I think this is a segment where we have our products, okay, and we have a good opportunity there. Please understand, I'm pretty happy that many other areas we are practically either number two or coming closer to a number one, okay, whether it is the Apache, whether it is now the Raider or in scooters. Okay? I think this gives us a lot of bandwidth to also focus on the entry-level commuter motorcycle. I think you will see some response from TVS. I can't, I can't disclose what kind of plan of action we have. Definitely one positive thing is the Raider 125 cc, both scooters and motorbikes doing extremely well for us. Please understand, in the international market, the same taxi segment, HLX is doing the best in the international market. We have crossed already three million in HLX. Sometimes you have to be patient, okay? Because, you know, sometimes you have to wait for the opportunity, and we will do that in the commuter segment in India, especially in the entry level. We won't give up. That I promise you. No, thank you. Thank you, sir, and all the best for the future as well, sir. Thank you. We have the next question from the line of Pramod Amthe from InCred Capital. Please go ahead. Yeah. So the first question is with regard to the AIS upgrade. What is the extent of cost increase you have incurred, and what changes you have made in the battery system to comply with the norm? Has it been all passed on to the consumer? I didn't get you. What was the question? For the EVs, the upgrade for the new standard for EV, what is the upgrade made in the batteries, and what is the cost increase, and has it been completely passed on? No, no. New AIS standard we have already implemented. I think you know as per the standard, we are completely. We are a proactive company. We have been implementing many of these standards much ahead. We had only one challenge of certain supply chain because there are some modifications required. You have seen our product, which is whatever we produced in the month of April, we have already given into the market. Pricing and cost, I think this we will be closely monitoring and we will look at what kind of. Our strategy is very simple: grow the market. Okay? It will get huge benefits in terms of cost, supply chain cost. Okay? We have to always look at pricing very carefully because this is one area where the volume is very, very critical. The growth is very, very critical. As I told you, we are a positive margin. No, the reason I was asking you is considering your number two, are you getting the pricing power now to pass on at least the incremental cost on the EV upgrades? See, if you look at our variants, our variants are priced higher. The products what we are going to see launching this year, you will see how we are planning to launch and, I may not be able to give you a guidance now because we have just one product and a few variants on that. Sir, being a number two in the two-wheeler space, how do you see the supply chain improving, especially with sales? Are you getting more confidence, post the PLI that you will be able to procure them in a year's time and hence be able to localize better as you go forward? Or you still have to rely substantially on imports next two, three years as a large player in two-wheelers? Absolutely. Absolutely. Volume is critical. Once you have volume, there are many people who are investing locally, localized cells. We are partnering with many of them. It's, it's a question of volume. Once the volume starts coming up, I'm pretty confident over a period of time you will see India becoming self-sufficient in many areas. Okay? I'm pretty confident. What is most important is volume. Most important is release of product. Most important is customer delight and satisfaction. Indian brands can do very well in the international market. That's what we have learned in our journey in international market. It's very, very critical that we invest in the product, we invest in right technology, we invest in the people, the supply chain. Okay? Over a period of time, I think it will, it will help India. That's why I said Atmanirbhar Bharat will definitely... It is design and development and, you know, complete supply chain solution. Sure. Thanks a lot. Thank you. The next question is from the line of Hitesh from CLSA. Please go ahead. Yeah. Thank you for taking my question, sir. Sir, my question is also on EVs. We've recently seen price cuts by competition, especially Bajaj Auto and Hero has also taken. Can you give us some sense if you have taken price cut? If, you know, is this more of a pass on of cost reduction as scale increases or is it just a heightened component intensity? What's your view on that? I normally don't want to comment about competition. They have a strategy that I appreciate their strategy. As far as we are concerned, I told you, we have now transitioned into the new phase of AIS and you have seen the variants from the company. There is a very clear product launch plan this year. We'll continue to launch products in various segments. And we will also start international business. We are pretty confident. Okay, whatever strategy we have used in ICE, you will see TVS also looking at in EV. Have you taken any price cuts or not in the EV segment, in iQ? I think I've already answered. I think we have transitioned, we have put our products and we are looking at new products to be put and variants. These variants will have better features, better, depending upon the customer segment that you will be able to price, you know, little better. It is opportunity from the point of view of the customer. Okay. Sir, on the Just on follow-up on that. On the Is it right to say that on gross profit, actually the company would be making money on EV right now, given where the ASPs or prices of the scooter, right? If I go by the raw material cost. There could be EBITDA loss because of the marketing and the employee expenses that you have. Is the understanding correct? I'm not asking for a number, but just. I don't want to give any guidance on that. I wanted to talk about investments and any technology when you invest. I have given this kind of an answer even before TVS, years when we invested or when we went into Indonesia. I think initially there were challenges, but we believed, we stayed there. Today it's a $5 million profit in Indonesia, and it will, you know, it will grow much, much ahead. Thanks to we stayed there, thanks to the products what we put. I think these are investments. This should not be looked at as cost. Okay. The kind of software engineers whom we have hired or electronics, they are all our investments for not only for EV, even for ICE, even for future technologies like flex fuel. In my view, investments are for future, and you have to go through some initial period of investments and the returns may be low there, but they are what is going to help you in the next three to five years. Sir, I would appreciate if you can give us some sense on the, you know, break even in the EV business, because that will help investors, right? I understand the investment strategy, but in terms of what volumes will you break even? You know, some sense. You have seen our overall performance. With overall volume, we are still better than EBIT of 10.3%, better than last year of 9.4%. We have done almost 97,000 EV, so that you can understand. Sir, most global companies and good quality companies give some guidance on the new vertical. I understand that you've done well and you're scaling up in the EV segment, but you are becoming a leader now in this space. It would be appreciative if you can give. We will continue to do better in EV. We will continue to do better in the overall EBITDA, continue to grow ahead of the industry. That guidance I can give you. Okay, sir. Thank you. All the best. Thank you. The next question is from the line of Aniket Mhatre from HDFC Securities. Please go ahead. Hello, sir. Thank you for the opportunity. Sir, just wanted to check, in terms of a subsidy, we were supposed to put the EV business in a subsidiary. Where are we in that scenario? Tell me. Oh, the subsidiary on EV. Yeah. Preetika? We have it still continues to be in the parent only. We will keep you posted. We do have a subsidiary created for this purpose, but not yet taken any call or decision on transferring the related business and asset to that EV business. Once it's taken, we will keep you posted. Sir, just to, sorry to harp on this. Just to understand, the PLI incentive, also requires us to put the EV business into a subsidiary. Is the understanding correct? PLI has got certain guidelines. I don't think there is any specific guideline that it has to be a separate subsidiary. Okay? I think like that. Yeah. Okay, fair enough. Just one final thing. On the what is the amount of subsidy that is stuck up with the government so far for us? If you could help us understand that. Subsidy, like I said, government is processing that, and we are expecting it very early, as early as possible. Could you give us a sense around what is the quantum that is stuck with the government at the moment? I'll check, and I'll come back to you. Okay, sure. Thanks, and all the best. Thank you. The next question is from the line of Kapil Singh from Nomura. Please go ahead. Yeah, sir. Just on the PLI, wanted to understand when will we start getting the inflow from that? You know, is it FY 2024, or will the product get approved in FY 2024 and therefore it will flow from FY 2025? See, PLI, the final discussions are going on. Once we have full clarity, we will let you know. There is substantial support from the government in this area. Okay? The government is also working actively with many OEMs, and we will let you know once it is concluded. Sir, would you use, the incentive in PLI to also, you know, in pricing the product better for the customer, if the same subsidy were to discontinue? I already told you, the subsidies are to support these technologies to the customers. Okay? It is in the interest of the customer and the company. We have to first build scale and volume. Once you have huge volumes and you are present in various segments, that is the time you can also come up with lot of products, various segments, you can price it differently. In the EV, one of the best advantages I see is international market, especially developed markets. Okay? It's a combination of product range, pricing on the variants with technologies, international market, both developing and developed. I think most importantly, this gives us a huge benefit. Once the volume starts coming up, and all of you know the kind of localization drive which is happening on the supply chain, I think it is going to definitely help EV businesses and brand India. I think we have to, we have to wait for a couple of years when the entire ecosystem of supply chain. But for supply chain, they need volume. That is the reason I always believe in customer satisfaction, customer delight on the product side, which the OEMs have to take lead. Second, build the volume. Significantly build the volume. Supply chain will start completely supporting. That is the time we can also look at more and more localization. Okay, there will be huge liberating of cost. Sir, any volume level at which you think, you know, we will start to see inflection in this thing? EV we have crossed is 25,000. We will scale up. That's why I said 2023, 2024 is going to be a milestone year. Okay. We want I already gave you how I think we are, we are present only in 235 touchpoints in 135 cities. We can further expand in India. Very much interest in the international market on our products. It's a. Most importantly, we have an opportunity to scale up to much higher capacity. We are also entering into new products and new segments. I think it's a question of product we have got it right. Now we have to get the new products also right, scale up the capacity, supply chain. We start looking at international badly. It's, it's going to be a very, very good year, 2023, 2024 for TVS. Quarter after quarter, you have seen last year how we have scaled up. You will see the same thing in Q1 of this year, Q2 doing better than Q1, Q3 doing better than Q2. That kind of timeline we have put. More and more, I'll update you every quarter. Sure, sir. We look forward to that. If on the exports also you can comment, you've mentioned that the retail sales are much better than wholesale. Yeah. Any indication you can give? Like, we have been doing about, let's say 70,000-75,000 in the last couple of months. How much would be the retail sales? We are doing better than that. Is it- After dispatch, I always believe in keeping the right stock in the industry. We have moderated our dispatch depending upon whatever is the retail, and you know the industry decline numbers. Okay? We are better than that in terms of the retail. We always moderate. Going forward, at some point of time you will see the numbers becoming, the dispatch numbers becoming better and better. Sir, understand. Just trying to understand if you are still correcting inventory or inventory correction phase is over? Most of the phase is getting over. Okay. Thank you very much and all the best, sir. Thank you. Thank you. Can I take the last question? Yes, that was our last question for today, sir. I would now like to hand the conference over to the management for the closing comments. Thank you. Thank you very much. You have seen 2022, 2023 highest revenue and highest profits. With our product range and customer delight, quality and the plans on new products with attractive quality and technology and features, both in ICE and EV, our plans to go for more premium products and focus on the international market, both developing and developed, our initiatives with scale, continued cost reduction, we are pretty confident that we will outperform the industry both in domestic and international market, continue to improve our EBITDA. Thank you. Thank you very much. Thank you. On behalf of Batlivala & Karani Securities, that concludes this conference. Thank you for joining us. You may now disconnect your lines. Thank you.