Ladies and gentlemen, good day and welcome to the TVS Motors Limited Q1 FY 2024 post-result conference call, hosted by Batlivala & Karani Securities India Private Limited. 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 and then zero on your touch-tone phones. Please note that this conference is being recorded. I now hand the conference over to Mr. Annamalai Jayaraj from Batlivala & Karani Securities India Private Limited. Thank you, and over to you, sir. Thanks, Darwin. On behalf of the Karani Securities, welcome to TVS Motor Company, 1Q FY24 post-result conference call. From TVS Motor management, we have with us today, Mr. K.N. Radhakrishnan, Director and Chief Executive Officer, Mr. K. Gopalakrishnan, Chief Financial Officer. Mr. K.N. Radhakrishnan will make an opening remark on the results and the business outlook, to be followed by question-and-answer session. Over to you, sir. Good evening. Good evening, everyone, and thanks for joining us today. This quarter, company continued its profit growth trajectory and posted its highest EBITDA and profit. This was possible through a continued improvement in market share, sustained cost reduction initiatives, despite a few challenges in the international market. Let me give you more details about the first quarter of this financial year. During the quarter, company's operating revenue grew by 20% at INR 7,218 crores, as against INR 6,009 crores during last year, first quarter. Two-wheeler domestic ICE sales grew by 23% compared to Q1 of last year, against the industry growth of 10%. Two-wheeler international market industry declined by 31% compared to Q1 of last year. Month after month, we are witnessing improvement in the customer retail, and we are expecting this will be seen in the dispatches going forward. The total two-wheeler ICE sales grew by 3% compared to Q1 of last year, against the industry growth of 0.5%. We are ahead of the industry. EV two-wheeler sales during this quarter is 39,000 units, as against 9,000 units of Q1 last year. The total sales of three-wheeler is at 0.35 lakh. On profit, during this quarter, the company registered highest ever operating EBITDA of INR 764 crores, at a 27% growth as against last year's EBITDA of INR 599 crores of last year Q1. The company's operating EBITDA margin is at 10.6%, as against 10% during Q1 of last year. Company posted its highest ever profit before tax of INR 610 crores, according a growth of 41% during this quarter, as against the INR 432 crores in the first quarter of last year. The PBT for this quarter includes INR 55.6 crores towards profit on sale of investment. Profit after tax grew by 46%, INR 468 crores as against INR 321 crores during the first quarter of last year. TVS Credit, the book size, is continuing to grow, and it is presently around INR 22,000 crores. Its portfolio is well diversified, covering tractors, used vehicles, consumer durables, MSME, besides two-wheeler. The PBT for this quarter is INR 157 crores, as against last year's INR 111 crores. TVS has entered into an agreement with PAI for capital infusion of INR 480 crores into the company, is subject to regulatory approval. TVS M holding in TVS Credit, post infusion of capital by PAI will be around 81%. On EV, TVS iQube continues to receive very positive customer feedback across all markets and continues to improve sales and market position consistently over the last four quarters. April 2023, company implemented the AIS 156 phase II norms. Production of April 2023 were little constrained due to this changeover, and we also had some supply chain challenges. All of you know that FAME reduction from 1st of June affected the industry penetration. Post FAME reduction, customer prices have increased partially, while the company is absorbing the balance. While there are many short-term challenges in EV penetration due to the reduction in FAME incentives in the medium to long term, industry will continue to grow. We are ramping up iQube production, and we are confident of reaching the 25,000 the month of August. Booking continues to be healthy for TVS iQube. We are expanding availability of TVS iQube in India. We have added 74 more touch points last month, and we are now at almost 309 touch points, and this will grow to almost 600 touch points by end of this year. During Q1, we have also started selling iQube in international market. We dispatched iQube to Nepal first. It has started retailing. As highlighted, we will further expand this to the many more international markets this year. As informed earlier, we will be launching a series of products in the range of 5 kW to 25 kW. You will see some of the launches in this quarter itself. EV three-wheeler is getting ready and will be launched in the upcoming quarter. All of you know that BMW unveiled their latest EV product, CE 02, the cool two-wheeler. Excuse me. Sir, we've lost the audio for you. Ladies and gentlemen, please stay connected while we resolve the issue with the audio for the management. Sorry, there was some sudden disconnect we could see. I'll repeat. I'll start from BMW on EV. BMW unveiled their latest EV product, the CE 02, a new kind of mobility that provides great riding fun for youngsters in an urban environment. The product platform was designed, developed, and manufactured by TVS for worldwide sales, working jointly with BMW. As highlighted earlier, in addition to the product, TVS is investing progressively in the ecosystem. As you know, during this quarter, on the space of last mile delivery, we added strategic partnership with Zomato to deploy 10,000 TVS electric scooters over the course of next 2 years. All of you know that we are already having partnership with Swiggy, Amazon, Rapido and other few that we have already started. These vehicles will contribute towards revolutionizing the last mile delivery, enabling reduction of carbon footprint for our partners. We are continuing to invest in improving charging access for TVS EV. Our customers presently have access to 2,000 plus charging points with various charging partners through TVS iQ mobile app. In the last couple of years, with the efforts from both government and private players, infrastructure availability is continuing to improve for EV vehicles. I'm confident with growing EV ecosystem, safe, reliable, superior quality products, technology advancement, EV products will deliver growth. With the product lineup planned from TVS, we are confident that we will be a strong player in the EV segment going forward. When we look at Q2, 2023, 2024, the improving road infrastructure and economic development with our current mass transit systems will drive the demand for mobility for masses. The growing masses with the young demography will support sustained industry growth. All of you know that the mobility demand is best served by the two-wheeler category. All of us know that there was a delayed start of monsoon, which was a big worry, but the current prognosis is likely to be normal. There is a challenge of uneven distribution is a concern. Government support on increased MSP will definitely help in higher realization to the farmers. We expect industry, given the kind of monsoon improvement, I think should be moderate in the rural growth. Urban looks promising. In the international business, Q1, we witnessed growth in retail over last year Q4, and we expect recovery going forward from Q2. From H2 onwards, we expect many markets will come back to normalcy in international markets. Given our product range, we are pretty confident that we will continue to grow ahead of the industry in IB. The customers of TVS Raider, TVS Jupiter 125, TVS Ronin are extremely delighted, and the volumes of these products will further enhance our market share, both in domestic and international markets. We will continue to invest in new product development, and we are planning a series of product launches in the coming quarters, both in ICE and EV. Our complete product portfolio and unwavering focus on the consumer, quality, new products with attractive quality and technology with features, we are confident that TVS will grow faster than the industry, and we all outperform both in domestic and international markets. During Q1, including EV business, company has improved EBITDA from 10% to 10.6%. We will continue to leverage scale benefits, focus premiumization, sustained effort on the material cost reduction, and we will enable us to further improve EBITDA going forward, and we are pretty confident on that. Thank you. Thank you very much. Thank you. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press star and one on their touch-tone 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 Gunjan Prithyani from Bank of America. Please go ahead. Hi, thanks for taking my questions. I have two questions. Firstly, sir, on these investments, if you can still, you know, give some clarification as to what is this INR 400 crores invested in TVS Singapore? You know, what business does this pertain to? We had invested in this quarter about INR 200 crores in TVS Credit. Coming to Singapore, it is SEMG. We have invested about INR 186 crores. Norton and other TVS Digital, these are the areas we have invested. You know, only one second. On the SEMG, we bought the 25% stake from the other owners. Earlier, we had invested 75%, now it has become a 100% subsidiary, this INR 186 crores is only that representing acquisition of the balance 25%. Okay. Sir, I'm just trying to understand how, I mean, how should we think about these investments? Because, you know, this is a pretty sizable magnitude for one quarter. you know, these, some of these businesses are actually loss-making. I mean, SEMG, if I look at F-23, actually had about INR 90 crores odd loss. you know, if you can just give us some ballpark numbers as to how much will go in, you know, incrementally into these businesses as investments. Because if I recall, couple of quarters back when we spoke about Norton, I remember you guys had mentioned that, you know, a lot of investment is already done. we continue to still see investment in Norton and now these, you know, European, you know, e-bicycle businesses. I'm just trying to get some handle on how should we think about investments in these subsidiaries? These are investments which will definitely yield very good returns going forward. If you look at SEMG and the e-cycle business, we are pretty confident. Unfortunately, all of you know that Europe is going through some tough times, okay? In terms of numbers, we are able to see slight pickup now, and we are confident that going forward, the numbers will come up. e-business, e-cycle business, it's actually because of the it's beyond your control. Mm. Okay? The overall losses, if you look at it, is coming down quarter after quarter. We are expecting significant improvement going forward. This is on the e-cycles. Norton, as you know, that, we are investing in the product, and all the development work is going on. Mm. Okay? These are different like I always explain, like the kind of investments we have done in TVS Credit Services or PT TVS, many of the investments are definitely going to yield very good results. I think what is most important is, these are all for the future, okay? Medium-term, definitely we will see a quick recovery in these investments. Sir, I mean, any number you will put that for the remainder of the year, are you expecting or any commitments that are pending for these subsidiaries? What is most important is you look at the way overall as a company, we are growing ahead of the market. These are the investments, for example, I can again repeat, whether it is TVS Credit or PT TVS or many other investments, whatever we have done. Couple of years, there will be challenges because you have to structure everything, you have to invest in product development, okay? There are some challenges in the industry as well, in terms of the kind of geopolitical challenges, whatever we have seen. That is beyond your control. Relatively, if we can look at the volume to grow, and it will happen, okay? We are confident that these investments will start yielding very good results going forward. Please understand, Norton requires a series of products, okay? Those products require investments in design, development, and we have to be little patient there. Okay, got it, sir. Just moving back to India on the EV electric bus, iQube business side. There's been a lot of changes in the regulatory landscape and, you know, we took the price hikes, but still, I don't think it fully covers up the subsidy reduction. You know, you also gave that price protection to the customers who had booked. How are we now? You know, one, how has that price protection, how will that be booked? Have you accounted for that already, and how big is that number? Secondly, how should we think about the profitability of the business now that, you know, there's more cost absorption that you have to take because of subsidy reduction? See, it is positive. The margin in EV business continues to be positive despite the kind of two challenges what we have seen. One is the FAME change, plus the goodwill refund, because we, as a company, we had almost 30,000 bookings. Mm. We have to do something because we are a highly customer-oriented company. Put together, if I look at it, this is one time of almost 0.2%, we have absorbed in this quarter, 0.2%-0.3%. Going forward, we are confident because we peak. We have again, booking of 30,000 customers, okay. There may be some slowness in the market in penetration, but we are confident that we will move to that 25,000, whatever we have committed earlier. Again, when the volumes start growing up, with the kind of improvements, whatever we have done in the supply chain and the kind of cost reduction, what we are looking at. Okay. We are confident of coming back in a big way in terms of our positive contribution. Okay, got it. Just last one, export revenues, if you can share. I'll join back the queue. Export revenue, you have to give me a minute. It is our INR 1,665 crores. Okay, got it. Thank you so much. Thank you. Thank you. The next question is from the line of Pramod Kumar from UBS. Please go ahead. Yeah, thanks a lot for the opportunity, sir. My question is on other expenditure and also staff expenses. Both have outgrown the revenue growth on a quarter-on-quarter basis. I think you kind of touched upon some absorption of 30 bits of revenues as a one-time cost for EVs or goodwill measure and all that. Can you just explain a bit on that? And also if, basically, I can also explain staff costs. Is it the new recurring run rate, or is there higher provisioning? If you can just help us understand these two line items better, sir. The other expenditure is variable in nature, okay? This includes packing, freight. You know, the overall turnover has gone up, okay? There is an increase of almost INR 87 crores. Out of that, predominantly it is coming from packing and freight. Also, please understand, last year to this year is not a real comparison, because last year we had a lot of challenges in Raider and Apache. This year, the marketing investments, given the opportunities, has also gone up by almost INR 15 crores. We believe in good investments in R&D, product development. They're also another INR 15 crores. Overall, it is in variable nature of packing, freight, and marketing, and towards R&D. Okay? The other. What was the second question what you asked? Sir, you touched upon some 30 bits hit because of some EV-related, you absorbed some EV-related bits, right? As in, is it also sitting as the investment? Yeah, we gave a. You know, there were 30,000 customers who had booked. When suddenly FAME got reduced, we said we will give them something, a special, as a respect to those customers. Yes, sir. That is changeover. All put together, there was almost 0.2%-0.3% in the overall material cost or the contribution. That is what I said. Oh, that's in the raw material side, is it? Yeah, no. It is in the contribution side. Revenue side. Contribution side. Okay. Yeah. Yeah. You may probably, you can reduce that revenue number by that amount, right? 0.2%- 0.3% towards the EV goodwill measure. Is that right? Absolutely right. staff expense, is it the new recurring run rate, or why is it that such a sharp jump? it's up, like, in a big way on a y-on-y, quarter on... This is salary cost went up by almost INR 40-45 crores, primarily because of the appraisals. Okay? First quarter, we had the appraisals, the first of April. Okay? You should know that for the EV and the other areas, we have also recruited new people in the software side, EV side. Okay? Put together, this is the increase in the cost. These are all investments for future. Okay, this can be the sustainable recurring run rate in a way. There's no provisioning related one-off or anything like that, right? Yeah, what is most important is we invest in people, okay? We invest in technology, we invest in innovation, we come up with products which are really delighting the customers. All this requires competent people, Pramod. Yeah, fair enough, sir. Fair. I was just trying to understand that. On the export side, sir, sorry, is there any number which you'd like to quote or just help us understand better on the retail, on-the-ground situation in Africa particularly, and also in Latin America? How is retail traction? Where are we on inventory? When do you expect near normalization of demand here? Also on the iQube export side, any initial feedback you have, and what is the future scope for iQube exports from India, sir? The iQube, I'll start first. I think we have started in April. The initial feedback is very positive, but we have to closely monitor, and we are looking at making iQube available in many markets this year. On inventory management, the same principle we use, we will have at the distributor level, 30 to 35 days, plus whatever is the transit time, the freight time. That is a kind of... Because we don't want to lose any retail. That is the principle. In line with whenever the industry last, if you look at nine months or almost 12 months, we have seen because of geopolitical and also the economic slowdown in many of these countries, the industry has come down. In line with that, we have managed our dispatches, but I am pretty confident month after month now you will see retails are also already growing, and our stocks are in right shape, so we can start seeing that from months from now. Okay, finally on the EV monetization, there were some new media articles saying that you guys are putting the plan on hold or scrapping it altogether. Any comment you have to offer there as to what is the thinking, and because you've done the monetization of the financing arm. Any thoughts on the EV potential monetization, sir? In fact, we are extremely consistent on this. We were only exploring various options. Nothing was decided. It's all only media report, and that's all I can tell at this point of time. Still, we only evaluate various options for funding. Basically, sir, finally, guidance on CapEx and investments for the year? CapEx is, which we have already, one second. It will be around INR 1,000 crores, including EV. INR 900 crores-INR 1,000 crores, yes. Investment, sir, which, including what you've done already in the first quarter? One second. Overall, I think we have done around INR 400 crores till now. Yes, sir. Overall, for the year will be around INR 850 crores-INR 900 crores. INR 850 crores-INR 900 crores. Including this. Including? INR 400 investment. INR 400 already done. Okay. Fair enough, sir. Thanks a lot. I'll fall back in the queue. Thank you. Thank you. We have the next question from the line of Ganesh Singh from Morgan Stanley. Please go ahead. Hi, team, thanks for the opportunity. This is Ganesh. I'm just continuing from some of the earlier questions. If you look at the EV business, how will the profitability of electric vehicles do today versus any FAME subsidy reduction? Overall, I'm trying to assess if you passed on the entire subsidy to the consumer, or is there still some absorption left? See, EV is going to be the future business, okay. Some of you have heard in the AGM, where our chairman very clearly highlighted, EV is going to be the right technology, and you will see the total cost of ownership, becoming better and better, and going forward, the penetrations will grow. Okay. Our first objective is to make sure that our customers get delighted with our product, which iQube has done. We will continue to invest and make sure that we will have a series of products in the range of 5 kW to 25 kW, and we will be catering to various segments, and it will be not only for domestic, for international market. What I highlighted is we are making a positive margin. Okay. It is an investment for future. Like I highlighted those other investments, whatever we are making, I'm pretty confident that these are contributions which will go up quarter after quarter. What is most predominant is customer and volume growth, and present in every category and also make, you know, you start an international business, both in developing and developed markets in a big way. Right. Sir, have you passed on the entire FAME subsidy reduction fix to the consumer? Yeah, FAME is cut down. FAME is completely cut down from, if my memory is INR 52,000 to INR 22,000. That is immediately passed on from first of June. Okay. that there is no sort of. No, but it is not fully passed on in terms of price increase. That's what I highlighted during my speech. I think we have to balance it out, given our aspirations on growth in the top line in terms of numbers. Some we are absorbing, but this absorption is going to be an investment. Please also understand, thanks to the government, we cannot expect this kind of sin, subsidies to last long. I think government has done a bit, whatever is required from their side. It is for the manufacturers to invest in technologies and really look at how to build the business in terms of products and technologies and connectivity and infrastructure. Okay? That is the part we are now doing. There will be some challenges, but we are here to, you know, go through the challenges. When the top line starts growing up, every other line will grow. I'm pretty confident because we are starting with a positive margin, quarter after quarter it will improve. Also, I heard you correctly, right? You're talking about 25,000 unit ramp up by August, right? Yeah. Yeah. When do the PLI gains kick in? Like, any idea on the PLI quantum of incentive? PLI discussions are going on with the government, and I'm expecting very good support from the government as well. Hello? Hello? Sir, the current participant seems to have dropped from the queue. Okay. I was a little worried that we got disconnected. Sorry, sir. No. We will proceed with the next participant. Yeah. The next question comes from the line of Kapil Singh from Nomura. Please go ahead. Good evening, sir. Just, you know, getting more details on the PLI scheme, you're expecting that benefit to start flowing from the current financial year? We'll come back to you. That's what I said, the discussions are going on very well with the government. I'm expecting a positive result. Okay. Just on the EV side, it's quite interesting that, you know, the FAME subsidy has come down, but you are still expecting, the sales to hit 25,000 per month. Just if you could share some perspective here that, how that is happening that with, you know, with a reduction in subsidy, also the sales, targets are, you know, holding on. Just some color there would be quite helpful. Most important thing, if your product is really delighting the customer will buy. That is exactly I always believe in, and that is what is happening. Second, we are also now making it available for more customers, more towns, okay? Like I said, please understand, now, last year we have more than 100,000 customers. It is a positive word of mouth from them, and more and more customers are considering iQube, okay? We will be also coming up with new products this year for various segments. I think it is a combination of everything. We, I told you, we have just started in Nepal. Okay, I'm pretty confident that 25,000 will happen next month, and we have a healthy opening booking. Okay, that's great to hear. Secondly, just on the overall pricing and cost outlook, if you could share that, how much is the price increase you have taken in second quarter so far, and both in international and domestic? What is the cost outlook that you have going ahead? You're asking Q1 or Q2? Q2. Q2, we have taken a moderate price increase of about 0.5%. IB so far nothing. We are closely monitoring, and, we will take a decision based on overall cost situation. Okay, sir. What is the cost outlook that you have? What is that? Cost, raw material cost, outlook. Have you seen? Raw material. Yeah, raw material, unlikely to increase this quarter. Possibly, there could be some benefit. Okay. Okay, understood. Sir, if you could also share the spares revenue, please. Just give me a minute. Spares is about INR 717 crores for this quarter. Okay. sir, lastly, just on the premium segment, you know, more than 200 cc, you know, what is the outlook there? Because, you know, we had launched 1 product, but we have not really seen significant volume. Just some color there as to, you know, Do we need more products in that segment, or how should I think about it? More than 200 cc, we are doing well, and we will continue to do well. What is most important is we have to show a little bit of patience, and which TVS will always stand by. If you stand there, I think month after month, you will see improvement in the number and in the volume and the market share. We are pretty confident that we will do very well, beyond the 200 cc. My question was specific to Ronin, actually. What is the volume we are doing currently? Ronin, we are doing close to 3,000 numbers per month. Okay. Okay. Do you have an order book there, or, you know, do we need more variants there to build up market share in that segment? Just that is what I was trying to understand. These are areas where we'll continue to invest, because we always believe in delighting the customer with the new technologies, new variants, new products. I think that is strength of TVS. Okay, sir. Thank you, and wish you all the best. Thank you. We have the next question from the line of Raghunandhan NL from Nuvama Research. Please go ahead. Thank you, sir, for the opportunity. Congratulations on a great set of numbers. Sir, firstly, on the commodity cost, recently there has been reduction in base metals, a significant drop in precious metal, and some drop in the crude derivatives. So, given that, all these commodities are moving favorably, Q2- Q3, do you think there can be a significant benefit for us? I mean, taking a lag of one quarter and doing some calculations, roughly it shows the benefit can be in excess of 100 basis points. Any thoughts you can share around that? I, like I said, we are seeing, slight commodity softening, but I don't have a number or a guidance on exactly how much it will be. I think what you said is absolutely right. There is a lag factor, but, commodities, looks like Q2- Q3 may not be very certain. That is the generic guideline I can give at this point of time. Got it, sir. On the EV side, I mean, given that FAME incentives have reduced, there is a need to improve the cost of ownership for customers. Would it be fair to expect that upcoming products, you'll try and make it more price competitive, you know, hence, triggering that cost of ownership being favorable for customers? Please understand, price is only one element in the overall package to the customer. Customer looks at many factors. They look at the product, they look at the total cost of ownership, they look at the features, they look at the digital, they look at the usage, they look at how it is superior or, you know, the basic things, whatever they see nice, they want to see that. Plus, they want many things when you look at the EV. It's a package, and the TVS has been so far successful in looking at the overall package and delivering the best value to the customer. That principle will continue, Raghunandan. Got it, sir. Sir, lastly, in terms of, what are your thoughts on how you can use the Norton brand in India? I mean, I think, recently, as per the trademark journal, Norton Combat name was registered in India. Any thoughts there? See, these are investments, whether it is Norton, SEMG or the e-cycles, I think, globe is the market. You know, developed markets is a great opportunity, developing markets is a great opportunity, and India, TVS is very well known. It's a timing, it is a strategic investment which we will leverage, you know, depending upon our next three-year plan. Thank you, sir. Thank you so much for the thoughts. Thank you. The next question is from the line of Jinesh Gandhi from Motilal Oswal Financial Services. Please go ahead. Hi, sir. Firstly, can you talk about your USD INR realization in the quarter? Will it be 82 or higher than that? You are asking the. Dollar realization. Rupee is about 82+. Okay. Secondly, you talked about EV products being positive on margins. This, are you referring to EBITDA margins or contribution margin? I'm only talking about contribution. Contribution. At this point of time, we should look at only volume, customer delight and volume. Thank you. You have to be positive in margin, because fixed costs are not going to disproportionately go up. As the volume goes up, the scale benefits are definitely going to come, plus the material cost can come down. Please understand, the cell, which is the majority, there will be cell chemistry improvement, there will be volume benefits. I think everything will fall in line once you have the customer delight and the top line coming in. Sure, sure. Which is a fair point. You also talked about your partnership with last mile delivery players, including Zomato and Amazon. This will be not for iQube, right? This will be for other products you should be launching in due course. It will be for a combination of products. We will leverage the products what we have now and what will be the future product launches. Okay. Okay. Depends upon the segment. It all depends upon the segment, you know? Right. The at least the current partnerships will be for iQube, and then depending on which products we launch, there could be further more partnerships. Got it. Last question to Mr. Jayarajan. We have seen a sharp increase in interest cost on standalone basis, so is there any one-off there or that is normalized run rate for our interest costs? There are two reasons. One is, the effective rate of interest have also gone up by 0.3%. That has also contributed to the increase in cost. Additionally, we have the borrowings have gone up by around INR 400 crores. 250, sorry. The borrowings have gone up by INR 250 crores. That is the one contributory. The other contributory is, the effective interest costs have gone up by 0.3 basis points, 30 basis points. Okay. Got it. Okay, sir. Thanks. Thank you. We have the next question from the line of Amyn Pirani from JPM organ. Please go ahead. Yes, hi. Thanks for the opportunity. Actually, my first question is on the, you know, the deal which was announced in TVS Credit. Congratulations on the value creation opportunity. As per the release, it mentioned that PI is going to invest some money into TVS Credit, and you mentioned that, you know, your stake will come down to around 81. There was also a mention that they will be acquiring more stake from the existing shareholders of TVS Credit. Are we to assume that you will not be participating in that? Yeah. As far as, the capital infusion into TVS Credit Services is around INR 480 crores. Overall, they will be investing around INR 750-800 crores. This secondary sale is not from TVS Motor Company, but certain other shareholders are participating. TVS Motor Company share, which is around invest stake, which is around 86%, coming down to 81%, is only because of the infusion of INR 480 crores they are making into the company, and no secondary sale from TVS Motor Company. Understood. Understood. Once this money infusion comes into TVS Credit, I mean, can you give us a sense as to... Because you've been investing, you know, money into TVS Credit every year. You've also invested some money in OneQube. After this infusion comes in, I mean, can we say that maybe for this year and maybe potentially next year, you may not have to invest money at least in TVS Credit, or how should we think about it? That's very difficult to answer, but one thing I can tell you, this INR 480 crores, it will definitely, is going to improve the capital adequacy of the company. This year we have already invested our planned investments. What is most important is the book size has been growing healthy. Mm-hmm. The bottom line is also very healthy. What is we need to look at how the returns are coming and invest in the right area. I think that will be the strategy of the company. Right, Mr. Jesegan? Yeah. Again, straight to answer your question, this year's planned investment is already done. Understood. That's helpful. Just lastly, on Norton, any update on, you know, when would you be launching the new products in UK? Because I think you already have an order book, and I think, you know, you were spending some time, you know, getting out the newer products. Any update on that, any timelines would be very helpful. Closer to the launch time, I'll let you know in detail. Okay. Okay. I'll just try. Rest assured, we will make Norton very successful in the super premium category. Okay. Okay. Okay, sir. Thank you. Thanks a lot. Thank you. The next question is from the line of Nishit Jalan from Axis Capital. Please go ahead. Yeah, hi, sir. Congratulations on good set of numbers. I have two questions. One, as of last year, you had around INR 450 crores of EV subsidy receivable from government. Just wanted to check, has that money started to come through or, and what would be the situation now? Number two, can you give us some details on the how is the equity or basically the book value of the financing subsidiary Credit Services? The same subsidy has started coming to company. I think there are one good proportion has come, we are expecting government is moving very fast now, and we are expecting this to be completed soon. Yeah, as far as credit service is concerned, the book size is close to INR 22,000 crores. Company is doing extremely well. We reported a profit of INR 157 crores this quarter. All other norms with regard to capital adequacy or debt equity or gross NPA are all well under control. The collections have been extremely good. We have collected close to INR 5,000 crores as against last year's INR 3,800 crores. The net worth is around INR 3,000 crores now. Okay. sir, of the loan book of INR 22,000 crore, how much would be to finance the TVS vehicles, and how much would be non-TVS business? TVS vehicle business is around 20%-25%. The rest are other lines of activities. The other segments, where, we are investing, TVS is investing, is growing substantially. Got it. Thank you so much. Thank you. The next question is from the line of Pramod Amthe from InCred Capital. Please go ahead. Yeah. Hi, sir. Post this FAME subsidy reduction, which is now almost like two months, what is the customer talking about in terms of moving down the configuration, or what type of response you are getting so that you can plan your products as to the customer response? Can you give some color on that? See, there are two important things. Now, with the FAME, when you see 100,000, I'm only talking about TVS, 100,000 vehicles on the road, especially in the urban area, customers are definitely the word of mouth and the positivity, they are coming for more and more EV, okay? This is one. Number two, the FAME reduction. I think, last month we saw some decline. This month, there is small pickup. I'm talking about the industry, okay? I'm talking about the industry. Mm-hmm. I'm of the view that possibly by second half, last quarter, I think it should come back to the normal situation. When I look at the medium to long term, next to 3 years, 4 years, I think EV will be the area where the penetration will go up. That's why I said price is only one element. All the support is only one element. People look at a package, and people look at a relative package vis-a-vis other products. Given this is all about industry. Coming back to TVS, I said about iQube. I think we had some challenges because of the AAS transition, and then this June, the FAME withdrawal. Now, the slowly the booking has again picked up, and our demand is again going back to the olden days, and we are also expanding the touchpoints in the market. I am pretty confident that the market will come back for TVS, because product is key, customer delight is key, okay? Price is only one element, that we all need to understand that. The second related question is, with the now the subsidy proportion is lower, and since the earlier qualified norms to get the subsidy were really tough, do you see a scenario where now the competitors are going to buy out internationally and so that the cost of procurement can be lower instead of the requirement to make it local and avoid PLI of industry, I mean? I do not know about competition. I can talk about TVS again. I think we are looking at different market segments because it's not that every customer is looking at a economy product, okay? There are different customer segments. Whatever we see in ICE, you will see in EV also going forward. You need products like iQube. iQube, I relate to something like a Jupiter, you know? Jupiter is not a entry-level product. It is a commuter product which is liked by urban people, okay? You will see products on the premium side, you will see products on the lower side. I think you need to have products for different segments of the customers. If you have a product range, that is what is going to help you grow the business. I was just looking from the competitive landscape, the envisaged that and how to tackle it. Competition is only one reference. I always look at the customer. You have to be aware of competition, but more look at customers. That has been TVS philosophy always. Sure. Thanks a lot. Thank you. The next question is from the line of Basudev Banerjee from ICICI Securities. Please go ahead. Sir, thanks, sir. Just wanted to understand, if I look, last 8 quarters, around 10% EBITDA margin with rising iQube volume. First leg of subsidy cut, where price hikes were not commensurate to the subsidy cut, and also the looming risk of subsidy going out fully in next couple of years. How should one look at overall portfolio profitability with the EV portfolio as a good package, as a good product, but as a hurdle to overall EBITDA margin? How to look at that from a two, three-year perspective? Look at our 10.6 with volume of EV, with practically significant reduction of FAME in June, we have delivered this 10.6. I already told you. From 10 it has moved to 10.6. I am pretty confident with the overall EV and ICE product growing. We are pretty confident that the EBITDA will continue to grow. Coming back to EV, again, I highlighted that, you know, EV margins are positive. When the volume starts going up and you are present in various segments, that is the time you will get pricing power. You will have a higher volume, means your scale benefits will rope in. If see, when volumes go up, including cell with a new chemistry on the other side, other parts like motors, controllers, you know, you can look at, instead of just a single source, you can look at multiple sources. There are many other principles what we look at in overall volume growth. All this will help in bringing down the material costs. All the other fixed costs, please understand, the volume is the only way by which you can get the scale benefit in all the other fixed costs. I am pretty confident that going forward, quarter after quarter, you will see better and better performance on EV contributions. We have to be a little patient because first is to deliver the products into various segments, and that will help us to build the bottom line. Sure. Recent things are like, if I look at, brand-wise, volume Apache per month is back to 40,000+, which, it used to do at the best of days in between, went down to sub 30,000. Now, how do you look at, brand Apache moving up beyond 40,000, with chip issues getting resolved and, premium bike acceptance, by the market being pretty robust? Apache is a great brand. Unfortunately, last year, if you look at it, practically, production got affected because of semiconductor, and we took many actions. Now we have multiple suppliers on the semiconductor side, and that is helping us. It is liked by the racing enthusiasts, both in India and globally. Apache is a brand which everyone loves, and it is going to grow in market share and stature going forward. Last thing, sir, if you can highlight on the health of exports revival, where destocking of inventory across exports market, the commentary was there for last couple of quarters. Now how you look at the monthly volume spending of the exports in next three, four, six months going ahead? I think we have corrected all the. See, the industry has been declined because of many geopolitical, economic, availability of availability, and some countries, we are now demonetizing. There were multiple factors which affected many of these countries. We have corrected our stocks in line with our principle. Going forward, you will see the retails have been higher, and you will see quarter after quarter our dispatches going up in IB. Please understand, even during this time, we have done better than the industry growth in IB. Sure. Will it be right to assume monthly export volumes are already bottoming out and it should only improve down the line? Absolutely. Absolutely. Absolutely. Absolutely. Okay, that's great. Thank you. Thank you. The next question is from the line of Kumar Rakesh from BNP Paribas. Please go ahead. Hi, good evening. Thank you for taking my question. My question was more to understand the strategy we'll be having on the EV side now. As you pointed out, that part of the FAME incentive reduction is something which we have passed and part of it we have absorbed. In a scenario in the near term where the demand could be challenged, do we want to push a push strategy at this time, or would we want to adjust our volume based on where the demand stabilizes and build, at the same time, start looking at more profitability of the business instead of just focusing on pushing the sales? Just to put it in a different way, are we looking at investing in the business to build a holistic ecosystem around EV business, such as on the battery side? We have already partnered on the charging side as well. How are we going to transition in the intermediate part, where the demand would be far more volatile? I think the question, answer in your question itself. I think we are partnering with the EV is going to be the technology for the future. Please, I am not using the word push. We never push any products into the market. We create the full system. That's why I said even despite this FAME reduction, we have come back to a healthy booking pipeline in the market. Okay, what is most important to us is the full system. The full system means customers delight, then only they will come and buy the product. For that, one product is not good enough. iQube alone is not good enough. I think we have to create a series of products because customer segments are different. The analogy is ice. You know, you have to have, on one side, you have to have Jupiter, you have to have Jupiter 125, you have to have NTORQ, you have to have, in a motorcycle, I can give you Raider, you have to have Apache. Even in Apache, you have to have various variants. Analogy is same, because consumers are consumers. What is most important is, we have already set a tone for our EV transformation, and we have expanded the coverage of iQube. We are now putting the new product. We are looking at, you know, entering into both the developing and developed markets. EV is going to be the strategy of the company, okay? We are also partnering with last mile delivery partnerships, and we are investing in charging access for customers. Creating that ecosystem and creating the kind of new technology, and also we have invested in people. Last time also highlighted, we have got digital analytics and software specialists. Significant proportion we have added in that area. These are all investments for future, which is definitely going to stay. What is most important is, all this will translate into new products, all this will translate in increase in volume, and we will get huge scale benefits, and we will have benefits of premiumization here also, cost optimization, and both in supply chain and material. The most important is cell cost, which is the main cost rate of EV, will also come down with increase in volume and new cell chemistry. Overall, I think we have started the right way. Positive margin, but delighting the customer iQube. With many models, if we can continue, we will continue the same strategy, we will disproportionately grow our top line. Thanks for that. I just needed a clarification. On this call, multiple times you referred about battery chemistry and technology. Could you just give us some highlight on what you are working on those areas? Are you working on new chemistry on the LFP side? How are you going to compete with the work which the competition is doing, especially on the vertical integration or the technology side? We invest with the right partners, and the strength of our company is many of the things, whatever you see in iQube, is designed and developed by us. We partner with the right technology partners, and in the cell area, we moved from 18650 to 21700. This journey will continue, okay? This journey will continue. Closer to the launch of the new product, I will tell you what kind of technology, what kind of chemistry we are using in the products. Great. I'll wait for that. Thanks a lot. Can we take the last question, please? The last question will be from the line of Ashish Jain from Macquarie. Please go ahead. Hi, hi, sir, good evening. My first question is on, you know, input costs for EV. What kind of, you know, trend we are seeing on, you know, battery costs going down, given some of the input costs for cells have gone down quite materially? No, overall cost is coming down, but, please understand it's all related to volume, okay? While you see overall costs coming down, but we have to look at how the volume commitments are there. Most important driver is the top line. If the top line is there, then, you will have different contracts. Right. Sir, as of now, we haven't seen any correction, you know, battery cell sourcing cost, you know, especially given the input cost, like I said, has come down quite materially in the last six, nine months. It is a journey, yeah. It is a journey. We have just started the journey, okay? When I look at INR 25,000 is the first milestone, then we have to take it to the next level. It's a beginning of a. Just one clarification, you know, I did not get. Earlier in the call, you spoke about 20 to 30 basis points impact, because of, you know, one-time impact due to EV. Could you just elaborate on that? Is that booked in revenues or in some other cost item? I don't know. It's in revenue. These are. See, when the overall frame got reduced, we had a booking. At that time, for the customers who are booked, we have to do something as a company because we believe in customers. Right. All that impact is already there in OneQ. There's nothing more. Yeah, yeah. Okay, okay. Got it, sir. Thank you so much. Thank you. Thank you. Thank you very much. Thank you very much to all the participants. As I highlighted, during Q1, with EV business, company, including EV business, we have delivered the kind of product portfolio, what we have, we will grow better than the industry in all segments, including international, and we will leverage the scale benefit, premiumization benefit, sustained effort on material cost, and we will continue to grow on our EBITDA as well. Thank you. Thank you, everyone. Thank you. Thank you. On behalf of Batlivala & Karani Securities, that concludes this conference. Thank you for joining us. You may now disconnect your lines.