Ladies and gentlemen, good day, and welcome to the TVS Motor Company Limited Q4 FY24 Earnings Conference Call, hosted by Batlivala & Karani Securities India Pvt. Ltd. As a reminder, all participants' lines will be in listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, 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 for his opening remarks. Thank you. From Batlivala & Karani Securities India Pvt. Ltd. Thank you, and over to you, sir. Thank you, Sejal. Good evening, everyone. On behalf of B&K Securities, welcome to quarterly FY 2024 conference call of TVS Motor Company Limited. I also take this opportunity to welcome the senior management team of TVS Motor Company Limited. We have with us today Mr. K.N. Radhakrishnan, Director and Chief Executive Officer, and Mr. K. Gopala Desikan, Chief Financial Officer. I will now invite Mr. K.N. Radhakrishnan for his opening remarks to be followed by question and answer session. Over to you, sir. Good evening. Thanks for joining. Thanks to all of you for joining today. First of all, we are extremely happy to inform you that the company has won top honors in almost all categories in J.D. Power 2024 India Two-Wheeler Initial Quality Study and APEAL. And we are extremely thankful to all our customers for their trust, encouragement, and securing the top positions across multiple product segments consistently for several years demonstrate the customer confidence on our products. This is also a year, last year, 2023, 2024, was the year where we achieved significant milestones in terms of sales, revenue, and profit. First time, we have surpassed sales of over 4 million units of two-wheelers, posted all-time highest revenue of INR 31,776 crore, profit of rupees two hundred and seventy, so INR 2,781 crore, despite many challenges in the international market. Now, let me, let me give you first about the full year results, and then I'll talk about Q4. As I highlighted, the revenue from the operations grew by 20%, from INR 26,378 crore to INR 31,776 crore. Domestic ICE two-wheeler sales numbers grew by 19%, as against the industry growth of 13%. EV volume has doubled from 97,000 during last year to 1 lakh ninety-four thousand this year. ICE two-wheeler sales declined by 3.3% over the last year, as against industry decline of almost 5%. In terms of profits, our operating EBITDA improved by 100 basis points, from 10.1% during last year to 11.1% during this year under review. During the year, the company posted the highest ever equity, a growth of 39% at INR 2,781 crores as against INR 2,003 crores during last year. Profit after tax for the year grew by 40%, INR 1,491 crores to INR 2,083 crores. During the year, company generated an operating free cash flow of INR 2,259 crores, as against INR 795 crores during the previous financial year. Net debt on 31 March has come down to INR 1,028 crores. On Q4, during the quarter, company's operating revenue grew by 24%. We are at INR 8,159 crores as against INR 6,605 crores during last year, Q4. The domestic ICE two-wheeler market company sales grew by 18% at 7.5 lakh units as against 2.36 lakh units during Q4 of last year. In the international two-wheeler market, the company's sales grew by 47% at 2.36 lakhs, as against 1.61 lakhs during Q4 of last year. We sold 49,000 units of electric three-wheelers against last year's 43,000 units of EV. The total two-wheeler sales grew by 23%, 10.32 lakh as against 8.39 lakh. The three-wheeler sales grew by 4%, 30,000 units as against 29,000 units last year. Profit for the quarter, the EBITDA grew by 36% at INR 926 crore as against EBITDA of INR 688 crore during Q4 of last year. The EBITDA margin for the quarter is 11.3% as against 10.3% during Q4 of last year. PBT for the quarter grew by 23% at INR 672 crore as against INR 547 crore during Q4 of last year. PBT for the current quarter includes the fair valuation loss of INR 47 crore as against the gain of INR 62 crore during the fourth quarter of last year. Profit after tax for the quarter grew by 18%, INR 485 crore as against INR 410 crore during Q4 of last year. On industry and the performance of TVS, you know that the EV vehicle industry grew by 32% over last year. The full year penetration was at 5.4%, as against 4.7. Government incentives have been scaled down significantly, but originally, INR 51,000 per vehicle in the previous financial year to about INR 22,000 in June 2023. Further, it has come down from April 2024. The same scheme has moved into the new EMPS scheme, and this is valid till 31st of July 2024. TVS was able to absorb a major portion of this reduction through the cost reduction initiative, scale benefits, and commodity cost reduction. We believe the industry will continue to grow and with the support from the government and improvement in the infrastructure. During last year, the EV volume grew by 100%. TVS iQube established as a very strong brand in the EV segment, with its technology led features and best-in-class quality. TVS iQube, I'm extremely happy that we have crossed now cumulatively 300,000 customers in India. We also expanded network. We have moved now to almost 712 touch points in India. We are happy to inform you that during the month of April, the company was awarded PLI scheme for its current two-wheeler in EV portfolio. Some of the EV product planned pipeline are in the final stages. We will be seeing new launches in the upcoming quarters, which is appealing to various customer segments. We are also extremely happy that we will be announcing multiple options in TVS iQube, to provide appropriate range and price combinations with different battery capacity to our customers, because this is very, very critical. This is also our insight from our customer understanding. All of you know that TVS X was a premium electric scooter, which was a crossover, which would be technologies, including cutting-edge connectivity, which was showcased in various international markets. We are reaching out to those who booked, and they are very excited with the ride experience they have got, and we are starting deliveries in the next few weeks. As you are aware, during this year, we have started exporting TVS iQube to few ASEAN markets and Asia markets. We strongly believe that India will emerge as a major exporter for two-wheelers, and TVS will expand its EV product range to both developing and developed countries. With a well-planned product lineup on EV from TVS, the continuous improvement in the EV supply chain and infrastructure, we are confident that we will continue to be a strong player in the EV segment. On TVS Credit, during the last financial year, TVS Credit achieved a significant milestone. With over 1.3 crore customer base, book size crossed INR 25,000 crore, grew by 26%, now it is at INR 25,900 crore. TVS Credit PBT for the year grew by 49% from INR 512 crore during the financial year 2022-23 to INR 763 crore. All of you know that company raised external funding during the year, demonstrates strong financial position of our company. Various digital transformation projects helped the company to provide superior customer experience. Now, TVS Credit now offers products in expanded portfolio, financing for used cars, consumer durables, new and used tractors, used commercial vehicles, and now we have started loan acquisition two-wheeler and three-wheeler financing. When we look at 2024, 2025, India GDP growth is anticipated to surpass initial estimates, with expectations of around 6.5%. India will be one of the major economies in terms of the growth. The growth is underpinned by the key socioeconomic fundamentals and proactive and consistent policy by the Government of India and RBI. We are expecting that the monsoon this year is likely to be normal. The ongoing geopolitical issues may affect the supply chain. Presently, we are not envisaging any major disruptions due to this. In the last three years, we have seen some of these disruptions in supply chain, and we were able to alleviate most of these constraints. The company manages a diverse, multi-source global supply chain to counteract these risks. We are expecting this year, the two-wheeler industry will have a healthy growth. We expect the growth to come from urban, and rural start improving this year. During the last financial year, the products whatever we have launched has helped us to significantly grow better than the industry, primarily led by TVS Raider and many, many products like Jupiter 125. We are very confident that the growth momentum will continue this year. After two-wheeler market, we anticipate to see certain level of recovery in this year. Some of the major African markets are showing some recovery, some continue with challenges. We continue to upgrade our product portfolio with a lot of customer attractive features, best-in-class quality, and this will further strengthen our position in the international market. This year, you will see new products from the company, both in ICE and in EV. Coming to EV, we are expecting three-wheeler, EV three-wheeler, we are expecting, Africa to have neutral growth in the first half and expect recovery during the second half of the year. We could see positive momentum coming from LatAm and Southeast Asian markets. On EBITDA, I am very sure all of you would have seen during the last five years, company was able to consistently improve EBITDA from 2019, 2019-20, EBITDA was at 8.2%, and now this quarter we are at 11.3%. Continued focus on cost reduction, continued growth with new products, premiumization, strong brands, and all the strong brands and EV has helped the company to achieve. Company has invested in various digital technologies, software, electronics, and innovation across areas to improve customer experience, retail and service management, manufacturing, supply chain, best-in-class features to all our new customers and new products. On commodities, last year, we could see softening of commodities. There are some increases during this quarter. Pretty confident that with the kind of product range, what we have, and sustained focus on better product mix and cost reduction initiatives, we are confident that our EBITDA journey will continue to improve quarter after quarter. Ownership experience, product quality, cutting-edge technology, and the customer delight factor coming from J.D. Power. We are very, very confident that with Apache, Jupiter, Jupiter 125, iQube, Raider, NTORQ, and the Star range, and HLX, and TVS King and Ronin, we will continue to grow faster than the industry, both in domestic and international. Thank you. 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 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 questions. 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 the PLI scheme comments that you had made in the prepared remarks. So it appears that, across the industry, there's been between 3%-4% price hikes after the FAME II subsidies have been reduced. And now that you are eligible for PLI scheme subsidies, potentially, you know, 13%-15% subsidies going forward, and there's more iQube products on the way in terms of leveraging the EV platforms. Just trying to understand what sort of time frames you have in mind for a potential positive EBITDA or EBITDA breakeven in the electric two-wheeler business, just keeping these factors in mind. There are two important points in the EV space. Thanks to the PLI scheme, I think that will definitely help the company. We are also now, based on our learning in the market, the iQube will have more multiple options to the customers with the different battery capacity to provide appropriate range and price combination to our customer, because that is very, very critical. This is one. Second, as I told you, we are positive in contribution. At this point of time, since we are investing in many new products, I think we need to continue to invest in R&D technology and digital analytics in this area. But I'm pretty confident that the new products with domestic and then going into the international market, both developing and developed, systematically, we can increase the EBITDA, and we can first move into a positive territory. But what is heartening is the positive contribution. Got it. That's helpful. My second question is just on the comments you made on, more options to be available to customers on the iQube. So just, I think in, in the past 2-2.5 years, we have spoken about rough run rate of potential 1 new launch or 1 new product refresh on the two-wheeler side per quarter. So is that the sort of run rate we have in mind for FY 2024? And if you could just, give us some color on, on what to expect, for customers from TVS in FY 2025, on both the ICE premium as well as the electric two-wheelers pipeline. See, the more options on the current iQube will be available very shortly. The new products, whatever I highlighted, the new products, definitely you will see in this financial year, both in ICE and EV, okay? They are in advanced stage. Got it. That's helpful. Just lastly, a couple of housekeeping questions. If you could just explain the negative other income this quarter, where that's coming from, and then also just the spares and the exports revenue for the quarter, please. Thank you, sir. ... See, sorry, I just didn't understand the question. See, the negative INR 46 crore is mainly because of a notional loss on fair valuation of investments held by the company. In the past, the fair valuation gain was accounted in the last year, and if you see the last quarter, the other income was positive at INR 70 crore, where we had a realized gain on sale and the notional gain on fair valuation of investments. And this quarter, there is a loss, which is absolutely notional with regard to INR 46 crore of fair valuation of an investment held by the company. Got it. Just the spares revenue and the exports revenue for the quarter, please? Just, just a minute. Just a minute. Spare parts and then exports? That's right. Correct. I think the international business is about INR 2,038 crores. Spare parts, just a minute. Spare parts for the quarter is about INR 815 crores. Got it. Got it. Thank you very much, and all the best. Thank you. Thank you. Thank you. The next question is from the line of Amyn Pirani from J.P. Morgan. Please go ahead. Yes, hi. Thanks for the opportunity. So my question again is on the EV side, but, you know, on a potential launch timeline for the three-wheeler EV, because I think that is also something that we have been working on. So can you give any, you know, timelines as to by when we are thinking of this launch, and whether this will be mostly a domestic-focused product, or are there, you know, plans to export that also whenever we do launch it? It is also in that one stage, and these products on EV will be not only for India, but also for many other markets and international markets. Okay. So this financial year, should we expect the three-wheeler EV, sir? Yes, yes, yes. Okay. Okay. Secondly, on the ICE side, a two-part question. The hundred... While scooters, while ICE scooters as a whole have still continued to grow despite EVs, how is the difference between the 110 cc and 125 cc? Are we starting to see some pressure on the 110 cc scooter, and what's your expectation going forward? And secondly, you know, over the last few years, you have launched quite a few ICE products and, you know, addressed a lot of the white spaces. So when we are thinking of more ICE launches, is there any specific segment that we are looking at, for the next, say, 12-18 months on the ICE launches? I'll go step by step. I think overall, scooters, according to me, in the industry, the segment share of scooters will go up, because scooters have got its own advantage, and we should know that the current 32% will go up. So expansion in the scooter category will definitely happen, okay? And that will have both ICE and EV. This is number one. Mm. Number two, the customer, you know, when we, when people have 110 and 125, according to me, both will grow. The reason is there are many, see, two-wheelers have got the unique advantage, and especially scooters have got the unique advantage of both men and women, and both urban and semi-urban. And it's also now getting to rural, because the road infrastructure definitely in India is improving now. Mm. So that is one of the critical reasons why scooter category is growing ahead of any other categories, is number one. Number two, new, the thanks to the population and the demography, I think those people who are in 110, they want to upgrade, and they will move to 125, okay? And this is now natural, okay? But more people will get into 110, because there are enough young people who want to start the, the two-wheeler experience. And two-wheeler, you know, because the public transport challenges and India growing with the population, and you know, the flexibility what a scooter provides, even in urban cities. So I am of the view that you will see growth in both 125 and 110, okay? Because of the customer segment, demography, and the opportunity to grow, and flexibility what it offers. I hope I have answered you. Yes, sir, that's, that's very helpful. And sir, if you could, you know, shed some light on potential launches on the ICE side. Is there a particular category that we should be looking at? The opportunities are there. Significant opportunities are there, I can tell you, and we constantly look at the white spaces, and, this will be, 2024, 2025 will be a very, very exciting year. That's why I said you will see both in ICE and in EV, you will see launches from the company, which are fairly in that final stages. Great, sir. Thanks for that. I'll come back in the queue. 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. And my first question is more of a follow-up on spare parts, because we've seen that despite having probably the fastest revenue growth or volume growth in the industry for last 5, 10 years, your spare parts growth is not that what do you say above the trend line, because we've seen some of your peers grow the spare parts exposure from like 8-9% to somewhere like 14-15% of revenue. But for you, spare parts is still well below the 10% and which is average. So, is there a is there something which you're leaving on the table here in terms of potentially doing more spare parts which can help the business? I'm just trying to understand or reconcile the divergent trends on spare parts in the last three, four years between you and the peers. So if you can just help us understand this aspect better. I don't always. I respect my competitors, because I learn from them quite a lot. On our end, I always look at, you know, we have hub-and-spoke model, and we look at the primary sales, secondary sales, and the stocks, so based on that, when we look at it, I'm not saying that we are meeting full demand, but our service levels, I don't think our customers have to wait for spare parts. So we look at what is appropriate in the market, and we are able to grow. Hmm. Maybe there are opportunities to grow, but, you know, we will always keep the retailers and the authorized parts office and our dealers with the right kind of stock, because it's very, very critical that we should not overstock the people and, it should, it should work as a pull system. That is what we focus on. Okay? When opportunities, definitely the opportunities are there to grow, but we are not missing from the customer satisfaction point of view in terms of the spare parts. Thanks a lot, sir. Second question on the electrification strategy, because what we see is like your competition have done multiple launches, multiple round of price cuts, discounts and all of that, and you've been far more disciplined in that sense, and the market share has also had a much more better than what one would have feared, given the competitive landscape. So how, what explains this, and how should one look at the kind of addressable market expansion which you can aim for with new launches, what you're talking about? Related to that is on the three-wheeler opportunity, because more than 90% of your three-wheelers are exported, and domestic three-wheeler ICE standards have not been that great. How could that change with the electrification shifts, and also, if you can confirm whether you're gonna be foraying into cargo three-wheelers as well, with the electrification, e-three-wheeler platform launch? The e-three-wheeler will definitely give us an opportunity in the domestic market, and there is a great opportunity for us in the domestic three-wheeler space. On the overall EV strategy, we always look at the customer, and we can give them. That's why I said, you can look at what kind of options, multiple options with the different battery capacity on TVS iQube, and appropriate range with price combinations. Because it is very, very important that the customers respect the brand. They look at the overall engagement with the company and overall going forward. So, while there may be challenges, we believe that it is more important to build the brand in a big way, and we are on the right track. However, from the learning in the market and the customer requirements, I think we will have more, variants and multiple options for our customers. That is the way we look at it. From the three-wheeler side, sir, domestic, how big that opportunity could be? Because you've done very well on the export side, taken market share meaningfully. So how big could be the three-wheeler domestic opportunity here, sir, on EV? It's a very important area. We will definitely focus this year to improve our presence in the domestic market with the new product launches in EV. So we will definitely focus on that. So last question to Desikan sir. Sir, you on the recent non-convertible debenture, if you could just help her understand the thought process behind that, because you do have INR 1,400 crore of debt on the balance sheet when you're committing to a large payout. So how should we, as analysts, look at this commitment, and, and, and also on the cash flow implications. So if you can just help us understand the thought process there. Sure. So before getting into this specific question, let me just try to give you an overall picture. Last year, we have generated an operating free cash flow of around INR 2,300 crore, and after meeting the CapEx and the investments, whatever we have done overseas, I have reduced my debt by INR 1,000 crore. So the first important point that after considering the CapEx, after considering my investments, I have repaid, reduced my debt by INR 1,000 crore. This is the first thing. Now, coming to what we are talking about, this NCRPS, non-convertible, redeemable, non... Sorry, non-convertible preference shares, as a bonus shares. What we are contemplating is an issuance of around INR 1,900 crore, which carries a coupon of 6%, and this is subject to an NCLT process where approvals will be obtained. And it is, it is, bonus. We do have sufficient reserves, and this is payable after receipt of NCLT order 12 months after that. Therefore, this outflow is expected to happen 18-24 months from now, and we are very confident of generating cash flows, which will be met out of the free cash flow generated by the company, and this is, this is, a bonus to all the shareholders without exception. sir, what is the implication on your CapEx and investments for FY 25? And also, if you can talk a bit more about your subsidiary performance, ex of financing, basically Norton and the European operation, as to how are they shaping up? Because we are losing money there. And so how, what is the outlook, going forward there for FY 25, sir? ... See, what is most important, is to look at the Norton, which I highlighted. We are designing, developing, and please understand, in this financial year, last financial year, we have invested almost INR 88 crore on design and development, which is completely considered as an expense during Q4, you know? So, these investments, I am very, very sure that we will have a series of products which will, you know, which will definitely is going to help Norton. It's a brilliant brand. And once we have the clear product pipeline, and I'm very sure that you will see this product hitting the market during 2025, 2026, towards the, towards the 2025, 2026 financial year. And, kindly give us a few more quarters, because very, very critical in the premium and super premium to have good set of products. This is number one. The other subsidiaries, like, European E-bike company, all of you know that Europe's economy continues to have many challenges, which is affecting all industries, including our SEMG and other companies. Okay? And, you know, the selling season has started, okay? And, we are, we are very sure that this year the losses will come down comparing the previous year. But these are investments for future, so we have to look at it in a comprehensive way. And, sir, and to sum it all, do you still expect to continue to improve your profitability, with all these, headwinds and tailwinds, what you talked about, going into FY 25, 26? You have seen our EBITDA journey from 8.2% to 11.3%. Yes, sir. You have seen our top line growing, you have seen our market share, market, the overall volumes growing ahead of the industry. Definitely this journey will continue, and the way we have continued to invest in our people, in software, in electronic, digital, analytics, I think these are all investments for the future. We will continue to invest in the right areas, including the brands, yes, grow our EBITDA. Thanks a lot, Sanjeev. Wish you all the best. Thank you. Thank you. The next question is on the line of Gunjan Prithyani from BOA. Please go ahead. Yeah, hi, team. Thanks for taking my questions. Just following up on earlier question itself, can you share, you know, guide, what will be the CapEx and investment needs for fiscal 25, you know, including Norton, and the European bicycle business as well? CapEx? CapEx will be around. I think we are investing next year, this year, sorry, 2024-2025, we are investing. CapEx will be around INR 1,000 crore because this is including all our ICE and EV and all the new products. Our investment outflow will be slightly lesser than the last year, maybe around INR 1,100-1,200 crore. Which includes previous years also, we will be investing slightly higher than what we said. We may be investing about INR 300-400 crore because there are some latest changes in the capital adequacy ratio and norms prescribed by RBI, so for unsecured lending, so right, Desikan? Correct. Absolutely right. There's a recent circular where we need to have a little more capital requirements with regard to the unsecured lending. So this has necessitated an additional investment of INR 200 crores-INR 300 crores overall, not additional, overall investment this year, INR 300 crores. Okay. Okay, got it. And, sir, is it possible to sort of... You know, we know the performance of TVS Credit, and of course, it's doing very well. You pointed INR 500 crore on PBT. But is it possible to sort of also give us a breakup of how much is, you know, the loss in Norton, which I, you know, which you said that there will be a product cycle which hits in fiscal 2026. So I think that we are very comfortable with, that, you know, there will be a product coming through. So in this previous Singapore, the loss does seem very big, but if you can split it between Norton and the rest of the subs, it will help us, you know, gauge, you know, what is the impact of Norton and which will reverse going ahead. Hello? Yeah, yeah. Just a second. Sorry, I mean- Yeah, yeah, sure. Norton- Sure, I thought I lost the line, yeah. No, no, no. Norton was around INR 80 crore for this quarter. As explained earlier, all these have gone only for development-related expenditure. Though for accounting compulsion, it is accounted as a loss, but otherwise, all the efforts, resources, and money are spent only for the development-related expenses, which, as what KNR explained, in the 4-6 quarters, things will settle down with the product launches there. That's how it is. Got it. And second question, sir, is on Apache. Now, you did speak about 125 cc Raider and all have done really very well, but Apache seems to be losing little bit in the premium segment. You know, what is the thought process there? Are we looking to sort of launch more variants in that segment as well, or do some intervention? Any thoughts around that? ...One correction, Apache has done extremely well. Unfortunately, Vahan doesn't give category-wise split. But if you look at overall, Apache, you know, has done extremely well. You would have seen our even in April last year also, we have done extremely well. Apache is a very well-respected brand today. So we are happy, and you will definitely see, you know, these are brands where definitely you will see new variants, new products, because one of the strengths of TVS is to constantly give a you would have seen RTR recent. So definitely you will see the new products and new variants. Okay? Closer to the launch only I can give you exactly split, but that's why I said 2024, 2025 will be an exciting year in terms of total EV and ICE launches. Okay. And lastly, sir, any comments on the rural, on your moped portfolio? Because you did sound a bit more optimistic on the industry in your initial remarks. So are you picking up anything on the rural side or lower end, you know, bottom of the pyramid recovery? Rural, slowly and steadily changing. I'm able to see some recovery happening. Okay? I'm hoping that this year, even though we are all going through very, very high temperatures, severe heat waves, I'm expecting this year monsoon to be normal. I think that will definitely help and help the rural to move much faster. So 2024, 2025, we are hoping that you will see better recovery from rural, unlike what we have seen in the last years. Okay. Thank you so much. Thank you. The next question is from the line of Kapil Singh from Nomura. Please go ahead. Yeah, good evening, sir. I just wanted your thoughts on EVs in terms of the operating environment and also profitability. On one side, we are seeing a drop in costs, at the other side, we are also seeing market pressures. So how has your profitability evolved through the year? Is it on an improving trend? Is it steady? If you could give some color? See, what is most important is what I highlighted. TVS iQube is one of the preferred choices by the customer, and it is definitely, the customers are extremely happy, especially the owners are extremely happy. This is number one. Now, we are also planning to come with variants depending upon the customer usage of multiple, you know, multiple choices to the customer, because there also, customers have got different range requirements, battery capacity requirements. So, this is also second. Third, we will also come back with the new product this year. And as I highlighted, we have started now exporting last year. I am overall very confident that the top line will systematically go up. Of course, there are headwinds in terms of, unprecedented discounting, but we want to be very steady, and we will look at the customer. We are looking at, you know, very smooth transition of putting more products, looking at the customer segment and growing the market. Okay? I'm very sure that, to 2024, 2025, you will see more of that, and we will systematically build up. Is it profitable, sir, or at this point, it is diluting the margins? I told you, it is an investment. I don't look at it as a dilution at this point of time. Any investment, initially there will be challenges, but the good news is, in contribution wise, it is positive. Sure, sir. The investment behind, you start looking at the new products and you start growing the top line. Also we are investing in many of the technologies which will also be useful for ICE. For example, whatever I spoke about, the digital connectivity, many of these things are required for the customer, whether EV technology or ICE technology. These are all investments not only for EV. In my opinion, this will also help our ICE portfolio. Overall, whatever we are investing in software or in electronics or digital or connectivity or any kind of such new technologies, will be definitely useful to delight the customer in the overall portfolio of TVS. Understood. Sir, you are also observing the customer behavior very closely. Just wanted your view, like over the next, let's say, five years, do you see a point where ICE scooters as a market starts to decline and it starts shifting to EVs? Or do you think even in five years, both EVs and ICE scooters will continue to grow? My first opinion is this 30% or 32% of the scooter category will further expand. Okay? It will definitely go to 35% and maybe 40%, in the period what we are talking. So according to me, there is a great opportunity to both grow ICE as well as EV, because customers will choose the technologies, and depending upon their convenience and comfort, they will choose whichever technology. According to me, customers are not, they are agnostic to the technology. They have usage, usages. Depending upon the usages, some people will prefer the EV, some people will prefer the ICE. So we should be investing in both and making sure that we capture or keep this opportunity on both EV and ICE. Sure, sir. If you could give just finally some data points on price increases taken in Q4 and Q1, and also the direction on commodity price movement. Q4, I don't think we have taken any price increases. Just a minute. Just give me a minute. I don't think we have taken up any prices in Q4. We have taken some marginal price increases, I think, in the month of April. I think about 0.3%, something like that, we have taken up, because there are some increases in some of the commodities, not so high, but very, very mild. So we have taken about 0.3%. Thank you, sir. That's all from my side. Have a good evening. Thank you. Ladies and gentlemen, you may press star and one to ask questions. The next question is from the line of Raghunandhan NL from Nuvama Research. Please go ahead. Thank you, sir, for the opportunity. Sir, with FY 25 expected to be a healthy growth year in domestic market, wanted to get a little more sense on the rural side. How do you see the rural recovery to pan out, and how would that help the entry-level segment where you have products, like the Star City? Would you expect that segment on a low base to see a similar growth compared to industry? Or would you still feel that scooters and premium executive motorcycles will do better than the overall industry growth? First, I will answer about rural. Like I said, rural, definitely, we are able to see some positive momentum. My assumption is this year, the monsoon is likely to be normal. That will help in more positive confidence in the rural market. Already, there are no, you know, closures. Now, it is the activity levels are far, far higher, and rural is more self-employed, if you look at it. And their self-employment is moving up now. And if you look at the post-COVID, the customers were postponing the buy. I think they will come back. That is one key hypothesis this year. But please understand, rural doesn't mean that only entry-level, okay? Today, rural India, if you look at smartphone, you compare, so you can't say rural means entry-level. They are also, they are very aspirational, and they will look at products like Apache or Raider or NTORQ. I think they are very aspirational. There are set of customers who are budget customers. They are very clear. They look at the price tag, and they will look at only that. And if it is more of entry-level and people look at for self-employed, then they use it for utility purpose. But please understand, they are young generation in the rural, they want only aspirational products. So it's not, according to me, appropriate to say that rural means entry-level, okay? So this is my understanding of the customer segment in the rural. Thank you, sir. And roughly, how, how big would be the rural portion? Retail financing also making huge, huge impact in ability of these customers to look at, you know, little bit higher priced, better in terms of aspirational products, even in the rural. Got it, sir. And, so that premiumization helped by retail financing, how would be the share of rural in your overall domestic sales? Broadly, would it be 45%-50%? And also, if you can share the financing ratio. The financing ratio currently is around, just a minute, is around, 56%. R-RF penetration for TVS Motor is about 56%. This is organized. I think there will be some local financing also happening on top of it, which is, depending upon the dealer and the local financing company. But 56% is a healthy number, and I think rural also similar, in terms of, financing. Got it. And, the share of TVS Credit? TVS Credit is about 40% into. Got it, sir. Rural share in your domestic sale, would that be in the range of 45%-50%? Yeah, around that. Around that. Around that. Because, like I said, the rural, the composition of our premium product scooter, we are also seeing they are also moving well. And, the infrastructure investments in the rural is also helping us. Today, the number of good roads, what you see in the rural, and the speed at which it is getting implemented is also improving. So that is also helping two-wheelers. Got it, sir. And sir, like, on the executive premium side, you have done very well, and one of the lucrative segments for the industry is cruisers. Ronin is selling about 2,000-2,500 units every month. So how do you see or how do you target improving position in cruisers in terms of products, network, riding ecosystem? Would you bring more new products under the Ronin platform or Norton brand in FY 25? Sorry to interrupt you, sir. May I request you to join the queue for your further questions? Yeah, that was my last question. Okay. Ronin, Ronin has started doing well, and we are very confident that it will go further. These are opportunities for TVS, because this is space where we have just started, okay? And there is great opportunity in this, in this category. Got it, sir. Thank you so much. Thank you. The next question is from the line of Sonal Gupta from HSBC Asset Management India. Please go ahead. ... Hi, good evening, sir, and thanks for taking my question, and congrats on your consistent performance and improvement over the years. So just on trying to understand on the EV side, right? Like, like you mentioned, that there is clearly a very aggressive price competition happening in this space, and that has sort of dented your market share as well, although, I mean, I think it's still a respectable performance. But just trying to understand, if the environment was to persist like this, then, I mean, how do you plan to address this? Will you be addressing this through your variants which narrow the price gap, or, I mean, like, what is going to be the strategy for TVS in terms of the EV two-wheeler space? Two things I wanted to highlight. If you look at our March and April, the FAME ll went into the EMMS, and we were very clear. So we moderated our supplies into the market because we don't want any of our dealers to be under pressure. And post that, April, you have seen our dispatches, and now the transition is almost done, and our market share are almost every day, you will be seeing our market share going up. Okay, this is number one. Number two, based on the customer understanding, we want to also offer at whatever I highlighted, you know, multiple options with the different battery capacity, and that will also help the customer with appropriate range and price combination. That is the second strategy. Third strategy is the new product. Fourth strategy, we are also going to step-by-step increase the availability in India, overall India. And fourth and fifth strategy is going to be getting into many developed market and developing market. So it's a very systematic approach, you know, how we are going to build it up. And we are investing behind technology, people, software, and many of the things are completely designed and developed over here. So we are pretty confident that this is the right way to build it up. Got it, sir. Sir, just on the CapEx and investment side, because this has consistently been at a fairly high level of around, like, INR 1,000 crore for the last few years, and again, investments in excess of INR 1,000 crore. So could you give us some more sense, right, like, how much of this CapEx is product development versus, I mean, like, capacity enhancement versus localization? I mean, just trying to get a more sense on where the money is going, right. See, most of them are in the new product development. Okay, because manufacturing, we did at the 4.2 million, and we have capacity up to 5 million, okay? But in the case of, for example, some of the EV, we have our battery management system, and we have the battery cell and battery management inside the company. So we have established lines there. So I would say that capacity enhancements related to the new product may be in totally about 20%, remaining about 60%-70% may be in the new product development. And also we are investing behind digital and technology. This is one area we are also focusing. So overall, if you ask me, more than 80% will be new products, digital, new technologies, okay? Maybe about 15% will be on the manufacturing line, because capacity is not the problem. But EV, there are investments on battery management systems, the line and, you know, the local TVS X, for example, we have a motor line inside. So I am giving you a broad estimate. Right. And similarly on the investment side, like, like you mentioned on the TVS Credit, is going to be about INR 300 crore and, maybe INR 300-INR 400 crore and is going into Norton as well, given the current run rate of loss that we are seeing. Absolutely right. So- Absolutely right. About INR 400 crore in TVS, maybe INR 400 crore on Norton. The other new, you know, projects, whatever we have started, they need some supplementing. So all put together about, you know, another INR 400 crore. So you can say INR 400 crore, INR 400 crore, INR 400 crore, something like that. Got it. And just lastly, like you've said, that, international expansion, like you're looking, like you've launched TVS X in Europe. So I mean, like, is that going to be a calibrated thing, or are we investing significantly for that as well, in terms of international and developed market expansion? At this point of time, we are starting with some of the new products, whatever we have. But more we get into those markets, we have to look at and understand, that we are trying to get good distributors there and then try to leverage the existing products. But going forward, maybe we may have to look at some new products, but we can always leverage our products from India. We can look at our EV, we can also look at Norton. So the range and the, you know, the kind of products what we can get from India, Indonesia, and EV, plus Norton, that is going to give us one of the best ranges and which we can look at going forward in the developed market. Okay, sir. Great. Thank you so much. Thanks for taking my question. Can we take the last question, please? Yes, sir. Thank you. The next question is from the line of Pramod Kumar from UBS. Please go ahead. Yeah, thanks a lot for the opportunity again. So just some clarification on the new electric two-wheeler launch. I just want to clarify that iQube is the existing product where you are launching the variants, and there will be another EV platform on for two-wheeler. Is my understanding right, sir, which you get launched this year? The iQube, I said, you will see more variants depending upon the customer needs or range, okay? That, that will be, you will see immediately. Hmm. But the new products, what I highlighted, is on both 2V, so that will be an EV and ICE. That will be during this financial year. Okay. So we're talking about two different product, products here. That's good. And sir, on CNG, any thoughts, sir, on the two-wheeler side? Because there is increasing CNG distribution, which is being focused by the government. And do you see an opportunity for CNG as a fuel on two-wheelers? I think we have to closely look at these are all opportunities, multi-fuel. You know, EV is one such option. CNG is another option. Already we are present in CNG three-wheeler, okay? And, flex fuel is another option. So we have to look at multiple options, okay? Once we are very firmed up, then I can share with you more details about which are the products and how we are looking at it. So, okay, just to understand, just to confirm it, you have the capability on the R&D side, but you will act on it based on how you see the customer response. Is my understanding right? The strength of TVS is strong R&D. You have seen the strength of R&D, and you have seen the kind of product design and development capabilities. The way we have launched the products and how they are successful, that's the capability of TVS. One question on the Raider side, sir, because you talked about increasing aspiration of rural customers. Is there a data available with you for the 40,000-odd Raiders what you sell? How many of them are actually first-time buyers of motorcycles or first-time buyers of a two-wheeler as a customer? See, my experience shows that their biggest challenge is the budget customer. They are not able to... They look at only the price tag. But there are enough proportion of customers are seeing more and more they look at the premium products. Mm. Okay? And the retail financing is one of the enablers which is helping them to look at definitely, for example, Jupiter 125, NTORQ, and maybe entry level Apache. You know, 160 2V, that kind of product. Okay? They may not look at a FZ initially, but they are able to look at products like Raider, definitely. Mm. That transition is happening in India. The transition is happening. So the comeback in the first time buyer may not necessarily be only in 100 CC commuter motorcycle. As and when the rural markets revive and demand coming back, you could see that coming, debuting even on the 125 CC product category also, right? Like what we think in cars. The best analogy I have seen is smartphone, you know? Mm. Yeah. So, India, India is really aspirational. Even rural is also aspirational. Sir, last one, request. Like some of your peers also call out the losses in the EV side separately, because it's an industry which is not going to be turning profitable anytime soon. So, yeah, splitting that out gives us a better visibility in your underlying ICE margins, where you have already expanded reasonably. But, and given the fact that this quarter you had elevated EV sales and higher discounts also towards March, if you can just help us understand, has ICE margins moved to the 12%-13% corridor as we speak? Because you do have reasonably high EV exposure. See, we look at EV as an investment, and totally, we have improved quarter after quarter, our EBITDA margin. Yes, sir. Our objective is to delight the customer. That is why you have seen the J.D. Power results. And quarter after quarter, you have seen with right investments behind products, brands, people, capability, technology, we are able to deliver consistently our EBITDA. So that is the way we look at it. Okay? Oh. Mm. Fair enough, sir. Thanks a lot, sir. Thank you all. I think I wanted to highlight that 2023-2024, thanks to all the customers, we have got the highest revenue of INR 31,776 crore, and highest profit of INR 2,781 crore. Our quarterly operating revenue grew by 24%, and with our unwavering focus on consumer quality, we are confident of continuing this growing ahead of the industry. We will continue to leverage scale benefits and focus premiumization and sustain material cost reduction, which will enable us to improve our EBITDA. Yes, we will invest in the right technology and people and products. We are very happy that we are continuously improving our EBITDA over the last three years. Thank you everyone for your confidence, and we continue to deliver consistent performance, top line and in EBITDA. Thank you. Thank you. On behalf of Batlivala & Karani Securities, that concludes this conference. Thank you for joining us, and you may now disconnect your line.