Ladies and gentlemen, good day, and welcome to TVS Motor Company Limited Q1 FY25 post-results earnings conference call, hosted by Batlivala & Karani Securities India Private Limited. As a reminder, all participant lines will be in the 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 from Batlivala & Karani Securities India Private Limited. Thank you, and over to you, sir. Thank you. Welcome to TVS Motor Company Q1 FY25 post-results conference call. From TVS Motor Company management, 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 hand over the call to Mr. KNR for the opening remarks, to be followed by questions and answers. Over to you, sir. Good evening, everyone, and thanks for joining us today. Q1 of 2024, the company continued its growth trajectory, posted its highest revenue, EBITDA, and profits. This was possible through continued improvement in sales, better product mix, and sustained cost reduction initiatives. When we look at Q1 quarter, the company's operating revenue grew by 16%, INR 8,376 crore, as against last year's corresponding quarter, INR 7,218 crore. Two-wheeler domestic ICE sales grew by 14% compared to Q1 of last year. We grew ahead of the industry in retail. Two-wheeler international market, company sales grew by 16% over the last year. On ICE, total two-wheeler ICE sales grew by 14% compared to last year Q1. EV two-wheeler sales is at 52,000 units, as against last year Q1 of 39,000. Total sales, three-wheeler is at 31,000, slightly lower than first quarter of last year. On profits, during this quarter, the company registered highest ever operating EBITDA of INR 960 crores, with a growth of 26% as against EBITDA INR 764 crores during Q1 of last year. Kindly note that we have not recognized PLI incentive in this quarter. The company's operating EBITDA margin improved by 90 basis points at 11.5%, as against 10.6% during last year, first quarter. And as you know, Q4 last year, financial year 2024, was 11.3. Company posted its highest ever profit before tax of INR 783 crore, recording a growth of 28% during this quarter, as against INR 610 crore in the first quarter of last year. PBT for this quarter includes 28 crore towards fair valuation of the investments held by the company. Profit after tax grew by 23%, INR 577 crore as against INR 468 crore during the first quarter of last year. Q4 the tax was INR 486 crore. On TVS Credit, TVS Credit continued to do very well. We have more than 100, 1.5 crore customer base. Book size crossed already INR 26,000 crore. Now, the book size is INR 26,351 crore. Books grew by 20% over last year Q1. TVS Credit PBT for the quarter grew by 19%, INR 187 crore as against INR 157 crore during Q1 of last year. TVS Credit Services, by leveraging cutting-edge technology and analytics, offers products and expanded portfolio financing for used cars, consumer durables, new and used cars, used commercial vehicles, with corporate loans, gold loans, apart from two-wheeler and three-wheeler financing. Regarding Norton, we are planning to launch already six new products over the next three years. The first of these models will be available end of next year, and it will also go on sale in India soon after the international launch. The new range of motorcycles will be more affordable than the current lineup, while still retaining the premium positioning that TVS has seen for Norton to command. As you know, Norton is super premium, and this brand has got great value. On EV, TVS iQube established as a very strong brand in the EV segment in its technology, like, features, destined as quality. During this quarter, company introduced new variants to the iQube portfolio for making electric mobility accessible to everyone. TVS iQube is now available in three battery options to choose from 2.2 kW, 3.4 kW, and 5.1 kW. TVS iQube now offers an array of five variants available in vibrant 11 colors, making this one of the largest and most attractive EV portfolios in the market. The feedback from the market and the customers are very positive. As you know, we have a well-planned product lineup for electric mobility, and you will be witnessing some of the launches soon. Last year, we started TVS iQube to few ASEAN and Asia markets. We'll expand EV product sales to both developing and developed markets. We strongly believe that India will emerge as a major exporter for two-wheeler EV. 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 outlook for Q2, I think the recent budget laid by the Government India focus on employment generation, continued higher commitment to infrastructure and rural economy adds to the present momentum. We are expecting rural to recover. With expected normal monsoon, we could witness robust growth in Q2. For the first time, we are seeing rural doing slightly better than urban. The improving road infrastructure and economic environment will drive the demand for two-wheeler mobility, and two-wheeler has got a huge opportunity in the medium and the long term, given the challenges in mobility, as well as also investment from the government on the infrastructure and road development. During this first quarter, the ICE vehicle industry grew by 13% over the first quarter of last year. I think this is an excellent comeback on the vehicle growth. On international business, there were some challenges in Red Sea that is affecting the transit times and increased also timely availability of vessel containers is a concern. We had some challenges in our dispatchers in Q1. We have taken enough countermeasures to mitigate these challenges, and situation is likely to improve in Q2. During this quarter, we added HLX 125 5 Gears to our portfolio. The new motorcycle offers features that are powerful yet efficient. It has best-in-class durability, requires minimal maintenance, has a superior engine, provides excellent mileage and performs across terrain. This will definitely further strengthen our international product portfolio. Certain select African markets are facing challenges due to currency devaluation and persistent inflation. However, considering the base effect in our assessment, the possibility of further decline in Africa is low. We feel that we will be doing better in Africa this year. LATAM gives us a huge opportunity. We have started exporting to LATAM. Asia, we are seeing some challenges in Bangladesh, but we are hopeful that things will settle down soon. Middle East also a huge opportunity for TVS, and we are strengthening this area. Our upcoming launches, I want to highlight that there will be one product in ICE and one product in EV, which will be coming soon in this quarter, and that will strengthen, further strengthen our excellent range of product portfolio. Our strong product portfolio, our unwavering focus on the consumer, quality, new products, and attractive quality and technology with features, we are confident that we will outperform the industry both in domestic and international markets. Extremely happy that EBITDA has already crossed 11.5. We will continue to leverage scale benefits, better product mix, and sustained effort on cost reduction. This will enable us to further improve our EBITDA going forward. We are very confident that all the product brands, portfolio of brands, just starting from brands, starting from Apache, Jupiter, Jupiter 125, iQube, Raider, Ntorq, the Star range, HLX, Radeon, TVS King, TVS Ronin. We are very confident that we will do better than the industry in both domestic and international, across ICE and EV segments. 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 a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Chandramouli Muthiah from Goldman Sachs. Please go ahead. Hi, good evening, and thank you for taking my questions. My first question is just on the other expenses line this quarter. Seems to be about 11.4% of the total top line. The last time we had other expenses this high in ratio versus top line was around the June 2020 quarter during COVID. So I just want to understand, is there any one-off in the other expenses line item this quarter? Because we've seen 3% QOQ revenue growth, but other expenses has grown much, much higher. The other expenses, we are comparing Q1 of last year to this year's Q1? I'm just saying the 11.4% other expenses ratio versus top line is not been this high- There are three important things. One is one variable nature, packing, freight, everything has gone up. It's about INR 60 crores, okay? Just primarily because of the increase in turnover. And also the investment in brand building activities, which has resulted in increase in marketing expenses, almost INR 87 crores. Okay, and as I have highlighted earlier, we are investing in digital technologies and innovation. That is another INR 35 crores. So effectively, it is between variable expenses of almost INR 60 crores and brand building and marketing, about INR 87 crores, and digital and another innovation activity is about INR 35 crores. Got it. That's helpful. Second question is related to the PLI incentives. So just want to understand, I think some of your peers, most of your peers in the two-wheeler industry are already booking the PLI incentives, and you are also eligible. So I just want to understand, what the thinking is behind holding back from booking the PLI incentives in our accounts, and how to think about as and when we book, will it sort of be lumpy for the whole year in a particular quarter next year? One is as informed by KNR, we have not recognized the PLI in the reported numbers. Our products are eligible and are certified, and we meet all the requirements of EBITDA. Only recently, the government has issued an SOP in this regard. We are in the process of finalizing a revenue recognition for this purpose. Conservatively, we have not recognized PLI incentive in Q1. Second question you have asked that as and when you recognize it, we, bumpy number. The answer to that is, that is, we will clearly give a note that what is relatable to this quarter and what is relatable to the previous quarters as and when we recognize. Got it. That's very helpful. And my last question is just around, if you could give us the export revenue for the quarter, the spares revenue for the quarter, and also if you could roughly indicate what is your current annual exposure in volume terms to Bangladesh? Bangladesh is very, very okay, as far as we are concerned, because there were some modifications and structuring we were changing in the Bangladesh, numbers are very, very small. In terms of IB total revenue, INR 1,963 crores for Q1. What was your other question? Parts? Correct, correct. Yes, correct. correct. Yes, correct. Parts is about INR 846 crore. Sorry, sir, could you repeat that? 800 and...? 46 46. Awesome. Thank you very much, and all the best. Thank you. Thank you. Thank you. The next question is from the line of Kapil Singh from Nomura. Please go ahead. Good evening, sir, and congratulations on a strong performance. Can you talk about, we had a good approval, the gross margins, for the quarter. The operating sales ratio seen a significant drop. So was there softening of commodities, price increases, if you could give how much, yeah, you know, the, and how much? So between Q1 to this year, Q1 to Q4, primarily it is sustained material cost reduction initiatives and, product and geography mix. That is the reason of about 1.4% benefit. Of course, there was a small selling price increase, and there was a commodity price increase. I think the selling price increase was about 0.2%, and commodity price increase was, cost increase was also similar. So primarily it has come from the material cost reduction and, the geography and better product mix. We started last quarter, I think, there was a price increase of about 0.5%, but there was a strong material cost reduction and also commodity softening when you compare last year's Q1 to this year, Q1. Overall, these are the key reasons. Okay. So staff cost has also seen a strong growth. So is this sustainable level of staff cost, or there are any lumpy items here? Which one? The staff cost. Yeah, staff, staff cost, like I always highlighted, you know, the significant increase. There are three or four components in that. One is performance appraisal. Approximately about 10% is performance appraisal cost. And there were the other additional increases because of the digital and EV and software-related, electronics-related. We have definitely increased the strength there. So significant increase has gone to only additional people. In ICE, we have not added people, okay? And for small increase in the production, there are some small numbers, but that will not cost more than INR 5 crore. Sure. Sure. And sir, lastly, just want to check on the, you know, CapEx plan and investment plan for FY 25. And also, you know, we saw some increases in, you know, the loss for Swiss E-Mobility and also Norton. So just some color, if you could share, like, what, what is the operating environment, in, in both of these companies? And how should we think about evolution of these, losses? Because you're going to launch a few more motorcycles in Norton, for example, will the losses increase a little bit before they start coming down? And similarly, on Swiss E-Mobility also, if you can share how the business is doing and, you know, what is the growth plan? The majority of the investments in Q1 were credit services, about INR 300 crores. Norton was about INR 100 crores, and the electric EV, EV cycle business was about INR 30 crores. So, and some small amount in TVS Digital. So significant proportion has gone to TVS Credit Services and about INR 100 crores for Norton. I'll just repeat the question. Basically, I'm looking for the outlook on CapEx and investment for FY 25. Oh, outlook on the CapEx. I think CapEx plan for this year will be about INR 1,100 crores. I think that number remains around that. And, investment? ... Investments also will be of the same order, slightly maybe higher, the total investment. Sure, sir. I was referring to, also I was referring to the full year performance of Norton and Swiggy Mobility. If you could share some outlook, in terms of, because we saw a loss of INR 240 crore for Swiggy Mobility and, close to INR 400 crore for- No, Norton, we are now designing and developing, like I said, you know, significant proportion is going on in investment design, design and development of the product. So the kind of investments whatever we are making, all are towards, the engineering, development, product, you know, all technology investments, so everything related to product is the investment there. On E-mobility, as you know, Europe has been very slow, this year economy has been very slow. And, what we have seen is, the stock levels in the industry has also gone up substantially, so the discounts in the markets are very, very high. So that is the biggest reason. But we are pretty confident that, you know, things will be better off possibly in a year's time. So we may have to have, you know, patience this year, because EV cycles are definitely going to be very good for the future. The market size is big. But unfortunately, you know, this year, given the challenges of Europe, what it is going through, I think that is the biggest problem. Sure, sir. Thank you so much, and have a- Thank you. The next question is from the line of Gunjan from Bank of America. Please go ahead. Yeah, hi, thanks for taking my questions. Just, you know, just, continuing with the same, you know, Norton, in the earlier question. I see that you've mentioned that there will be still eight quarters of investment yet. So is it, you know, how should I think about revenue, contribution from Norton, you know, starting to kick in? Should we expect FY 26 is when the product monetization happens, or if it's FY 27? And when you look at this eight quarters, is it possible to quantify how much more investments in Norton? See, next year, by last quarter, you will start seeing the changes, because we are looking at end of 2025. Then after that, possibly every quarter or every two quarters, you will see the launches in a series. And investments, similar amounts will go up because till we come up with the first model, the revenue will start kicking in, and then possibly we will see how to cut down the investment. But six models we are looking at, and they are going to be completely new. Okay. And, sir, how much has been invested so far in Norton? Can you share that number? Just a minute. Just a minute. Gunjan, I will come back to you on this in a minute or so. If you have any other question, you can ask or others can... I will come back to you on this. So on Norton only, sir, just, you also mentioned that, you know, it'll eventually be brought to India. So if, you know, if you can share your thoughts, how should we be thinking about the brand, in terms of bringing, you know, introducing it in India, and, you know, are these six products relevant for India as well? See, India is a huge market, and, as you know, India has got super premium customers. So we are very confident that which product, which are applicable to which market, closer to launch, I will share with you. But I'm very sure that, we will be launching some of these products in India, because they are applicable to Indian market, and we are also looking at this as a huge opportunity in India. Mm-hmm. Okay. And the second question is on the electric pipeline. You did mention, you know, in the near term, you'll, you will have two launches, one electric, one ICE. Is the electric launch on the two-wheeler side or on the three-wheeler side? Because three-wheeler was also something that you'd spoken about, is due for, you know, this fiscal year. So any color on that? There is a two-wheeler, there is a three-wheeler, there is another ICE two-wheeler. Okay. All you will see between 2022 and 2023. Okay. Got it. The Norton investment is around INR 1,200 crore. INR 1,200 crore? Yes, yes, INR 1,200 crore. Okay. And lastly, on, you know, this whole CNG, you know, as a launch option or as a powertrain, is that something we see viable? Is there a use case and, you know, any thoughts that we could see you guys also looking at a CNG product development? See, we always worked on multiple technologies, okay? We have flex-fuel, we have EV, we have a CNG three-wheeler now. See, what is most important is we look at, there is a product plan and a delivery plan. Okay? Since we have the capability, we will study that and we will look at it as and when it is required. So it is more on, at appropriate time, we will look at it, what is required. But there is a very clear product calendar and the launch plans we have already planned. Okay. So it's fair to assume that it'll be EV as a priority for now in terms of product pipeline, and CNG is something that, you know, we have the capability, but we'll revisit at a later time? ... I didn't say anything like that. I said there are, there are multiple technologies where we have a very strong R&D, and there is a very clear product plan we have, and we would like to adhere to the product plan and deliver the products to the market, because these are all based on the customer understanding and white spaces in the market. Like I already said, there is CNG three-wheeler, so we look at, fossil fuel, we look at flex fuel, we look at EV, we look at CNG. So, as and when it is appropriate, we will, we will look at the market. Okay. Got it. Thank you so much, sir. Thank you. Thank you. The next question is from the line of Pramod Kumar from UBS. Please go ahead. Yeah. Thanks, sir, for the opportunity, sir. So, before I start the question, just a clarification, I missed that part when you talked about the timeline of the first launch. Was it end of which year, sir? Fiscal year 25 or 26, sir? 25, 25. Fiscal year 25, is it? Okay, that's good to hear. And, sir, by, first- Calendar year of 2025. Yeah, calendar year of 2025. For them, yeah, it is last quarter of next year. Let's put it that way. Last quarter of next financial year. So that it would be FY 26, right? Yes. Yeah. Yeah. 2026. Okay. Thanks, thanks for that, sir. And, the first question is on the, you made a comment on the, there is marketing expense are being higher by a significant amount. Just want to understand, does it include international markets in terms of your, marketing plans there and launches and pouring into new markets? Or is it, is it predominantly for domestic? These are all investments done for future brand building and some of our product-related mark brand building. So- Including international. I always say that anything on marketing is an investment. I don't consider it as a cost because we have to build brand. Yeah. Okay? Like, on one side, we invest behind R&D and technology, we invest behind marketing expenses. So, but this includes international markets as well? Yeah, yeah. It, it's total, total. Okay, okay. And, sir, on the... You talked a lot about digital efforts and the R&D efforts. So can you just help us kind of get a size of kind of investments you made in terms of headcount, what you've added, or how big your digital endeavors are in terms of manpower? How big is your software team right now? Because we don't hear other OEMs talking about software investments. So if you can just help us, so that we get to know that what the kind of areas where the kind of capabilities you are building in terms of team strength. So if you can just help us navigate that- Digital analytics team, we have more than 200 people. Software, we have more than 150 people. Electronics, we have similar numbers. So all put together, I would say that 450-500 people in the new areas of technology we have added. Okay, okay. And, a lot of these, hiring and even software EV development parts are largely, expensed, given because your average capitalization rate is only 30%-33% of R&D. But, how would... Would that be the case even with EV investments? Because some of the other companies have different, capitalization than it. So I just want to understand, how does your EV and software investment capitalization rates compare to your, normal R&D expenses, sir? No, no. We, we strictly follow the accounting standards for whether it is revenue recognition or accounting of expenses. We don't unnecessarily capitalize, or we don't unnecessarily charge. We strictly comply with the accounting standards. Okay, fair enough, sir. And, sir, on the, on the, you talked about multiple launches, but on radar, the general feedback from dealers is that there are more variants required because our product is already at a pretty good premium to the underlying competition in terms of price point, and even the variants start at a much elevated level in terms of features. So is there any plans of doing more variant mixes there to make the brand more accessible? And also, do you see a necessity for an ATF choice for the 125 cc motorcycle category? Currently, we don't have it. This is part of our always we look at variants. We look at, you know, depending upon the customer segments. So, I think this is part of our design and development thinking process. So we will gather Radeon is a great brand, and we will continue to look at, you know, variants and appropriately applicable to the market and segments, customer segments. Sir, final question on EVs. If you can help us understand where our reach is now, because some of your competitors have gone kind of similar distribution strategy and gone pan-India, with a lot of the dealers already selling. But where are we in terms of reach on EVs on iQube? And, how should one look at the distribution and consequently, the market share aspiration as go pan-India? If you can just help us understand the timeline and the expected delta to market share, and how is the demand for the overall EV basket? Because generally we've seen price drops and discounts and freebies and schemes driving sales for the industry. In that context, how does our pricing and demand equation work out, sir? See, we have all of you know that currently we have about 750 dealers, okay? And who are giving iQube. Okay, this is covering about 450+ cities. And what is most important is we have also come up with variants, and I already highlighted that we have now three variants which are added in iQube. And each one brings certain specific customer value, okay? And that is very, very critical. And the price points are based on the critical value what we had. For example, starting from 2.2 kW, 3 point kW, and 5.1 kW. iQube is a very strong brand, and these brands, depending upon the type of the customers, type of the, you know, usage, these are price position well. I'm very confident that this will do very well to our customers and the market. We want to continue to be a strong player in the EV market. ... Sir, and by when will you be pan-India, and in terms of the delta, in terms of addressable market, what you will achieve by doing so? No, month after month, we are reviewing, and then we are supporting this with the current network. We have a strong network of main dealers and sub-dealers in India, so we will keep expanding that. The current demand versus supply, sir, are we in balance now, or are we currently, because of the new variants, we see higher demand than supply at this, in the, at this point in time? Capacity is not a problem. Capacity is not a problem. Only thing is, it may... Now, when you have three variants, you have to look at, there are a lot of common parts, so but we have to look at wherever the delta is going up, but it's not a challenge. Okay. Sir, other expenditures as a percentage, how would you—how should you see that, or model it in? Because there will be investments which is all required for the future, but as a percentage, do you expect that to be kind of getting better or getting favorable from here on? See, we treat all these are investments, whether it is, marketing investments, other than the variable nature, whatever I highlighted on packing and freight, because that is proportional to the turnover. Whether it is marketing expenses or digital investments, okay, I'm very sure you must be happy with 11.5% EBITDA. Okay? We don't look at each and every item and try to optimize each and every item, because many of the investments which are going into marketing or, digitization, the benefits of that will come in the future. Yep. Very well, sir. Thanks a lot, and best of luck, sir. Thank you. The next question is from the line of Arvind Sharma from Citibank. Please go ahead. Hello. Good evening, sir. Thank you for taking my question. Sir, is it possible to share the impact of EVs on the margins in the quarter? No, we looked at only consolidated between the ICE and the EV. Overall, you know, our profitability has moved to 11%, right, which is one of the best, okay? Thank you. Most importantly, please understand EV has got positive contribution, which I have highlighted, okay? But there are investments on product, technology, software, CapEx, okay? And, many of these are very, very clear investments for the future. Sure. Thank you, sir. Just one more question, more of clarification on two cost items. First is on depreciation. The expenses seem to have gone down quarter-on-quarter. Any special reason for that? No, probably some of the 100% depreciation item, because we go strictly by the capitalization and, the depreciation percentage is what we consider based on the economic life of the asset. Some of the, in Q4 of last year, we had a write-off of some of the slow-moving model tools to the extent of, around INR 15 crore. Therefore, that is a one-off item. Even otherwise, some of the 100% depreciation, so some slight increase and decrease is bound to happen. All right, sir. And this is, this is the run rate that one should expect over the coming quarters as well? No, it depends on the, it depends upon the capitalization, what we do going forward. We cannot take static number. Sure, sir. One final question. This, the fair valuation gains, which exact entity are these gains from? Once again, once again. We invested in TVS Supply Chain. I think the fair market price has gone up between last quarter and this quarter. All right, sir. Thank you so much for taking my questions. That's all from my side. Thank you. Thank you. The next question is from the line of Amyn Pirani from J.P. Morgan. Please go ahead. Yes, hi there. Thanks for the opportunity. Most of my questions have been answered. My question was actually on the EV exports bit that you mentioned. Now, the ASEAN market, you know, is a region where, you know, most Indian two-wheeler exporters have not had a lot of success because the Japanese OEMs dominate that market. But you have a local presence in Indonesia. I think you've also, you know, started some new entity in Vietnam. So, can you give a broad sense as to, you know, maybe three years down the line, what is the level of exports of EVs that we can expect? And in these markets, would you need to have local production of the EVs to sell them in a meaningful number, or can you export from India? See, as far as we are concerned, you know, we will definitely start exporting our EV products to, ASEAN markets. And, already some advanced testing and everything is done there, so it will start. Number two, fortunately for us, there is our own plant- Yeah. - and we have some local sourcing, so we don't see, foresee a problem, because the moment you have in Indonesia, then there is an, ASEAN FTA, so that will, that advantage will help us. So I cannot be able to give you a three-year roadmap, but we will definitely leverage our EV products, from Indonesia to other markets. Sir, just as a follow-up to that, if I can ask, would you have to make significant upgradation to your Indonesia facility to achieve that? Or is your Indonesia facility also, you know, at a level where it can, you know, manufacture EVs as well? ... So we have a good, good plan and facilities are there. There may be some specific investments related to EV, but on the, you know, the other basic chassis or other, other things, there may not be a big challenge. So unique to EV, if there are something required, we will definitely look at it. Okay. Thank you, sir. I'll come back to you. Thank you. The next question is from the line of Mumuksh Mandlesha from Anand Rathi Institutional Equities. Please go ahead. Thank you, sir, for the opportunity. Sir, firstly, on EV two-wheeler market, growth has slowed down in recent times, despite the new affordable models in the market. Just want to understand how the customer is looking at the EV products, despite the better price points. What are the challenges you are seeing for the EV penetration? See, EV, we have to always look at medium to long term, okay? Any new technology, initially, there will be a quick uptake, okay? And thanks to the government, there are a lot of benefits also given. But in my opinion, EV will continue to slowly and steadily grow, okay? Because EV has got some unique advantages, but equally, other technologies are also having advantages. So in my opinion, EV will grow, okay? And government is continuing to invest and supporting many of the initiatives in the EV. So I'm pretty confident that I know there are some challenges in the last one year in terms of, you know, suddenly the same benefits significantly come down, okay? So there is little bit of slowdown. But these are all... Any new technology, you know, beyond a point, I always highlight that we cannot be dependent on huge investment from the government. But they have done the right thing in terms of supporting the initial period, and there is also PLI. So what is most important is, we have to show a little bit of patience, because EV technology, EV products, customers will start liking it, the TCO will support, and overall it will grow. But please remember, I always believe that all these technologies are going to be available in India. It's not that, you know, you will see from. I always look at from the customer point of view. You know, customers are technologically agnostic. They will look at the product, they will look at the benefits, what they are getting and the usage. Depending upon that, they will use whether it's ICE or CNG or ethanol or EV. It's, it's a combination of things they will look at it. So that is the way I look at it. Got it, sir. So secondly, you mentioned the rural doing better than urban markets. Also, if you can share some thoughts on how the first time and the replacement buyers, additional buyers are doing, and also if you can share the full year domestic volume guidance. See, so far, first quarter, I have seen the Vahan. So thanks to Vahan, now we know exactly what is happening in terms of the sales and the registration. First time we have seen a double digit, okay? I'm a strong promoter that given the kind of demography, given the kind of infrastructure what government is trying to build in terms of roads and other connectivity, and also the public transport to population itself, given that, I think the single most, you know, vehicle for mobility is two-wheeler, okay? So two-wheeler will grow. Till 2019, we have seen a CAGR of close to 10%. I am of the view that medium to long term, that kind of a growth you can see. Currently, first quarter was 13%, this year could be more than 10%. First important positive thing I am seeing is slowly, first quarter, for example, while I said 13%, rural growth has been 17%, okay? This is the way the Vahan classifies as rural, but some of the classification may not be, may be semi-urban, okay? But I'm saying from the RTO, when I look at the rural, urban, it is 17%. So even now, even if you take urban as urban and 12%, and let's say you moderate the rural to some semi-urban and some rural, I am of the view that first time we are seeing the rural becoming better. Two reasons. According to me, the confidence on the rural side, the overall, you can look at rural, urban in India, 50/50, okay? Rural side, the sentiments are positive. We had a very, very bad summer, but the rain, the monsoon seems to be normal. Of course, another three more months are there for monsoon up to September. October, you will see monsoon in India, and some part of South India, it will go up to even November. So I'm of the view that the self-employed category in the rural are slowly now looking at new products. When I say new products, they were extending the existing product by service. Now they are looking at some replacement, some new products. While I may not be able to give you exact proportion, but I'm of the view this is a good sign. Because India's strength is rural, okay? I'm not saying that urban is not our strength, but definitely rural India has to fire for overall economy to do well. Early signals are seen now. So would it be fair to say with the higher rural demand, the first time buyers are also seeing better traction from those customers? We have to closely watch it, but according to me, you will see the better and better rural demand going up. I think it will happen. Got it, sir. Just lastly, sir, is there any plan for doing some production for the e-bikes and the Norton in India, sir? Because we have very good supply chain in India. Is there any plan to do that, sir? We will always, always, evaluate, you know, depending upon the volume, demand, strong supply chain. Of course, India has got very, very strong supply chain. Thanks to our, our, you know, the relationship with BMW, all, most of the, most of the suppliers are from India, so I think we can leverage that. So we will evaluate based on which is the best, which is the best quality, and we look at, you know, which is appropriate depending upon the market. So this is something we constantly evaluate. Thank you so much for this. Mr. Mumuksh Mandlesha, does that answer your question? Yeah. Thank you so much. Yeah. Thank you. The next question is from the line of Jinesh Gandhi from Ambit Capital. Please go ahead. Yeah, hi, sir. Firstly, on the commodity cost, are you seeing any signs of inflation going forward? There had been plenty demand for last few quarters, but are you seeing inflation in any of the key commodities and it resulting in impact on our gross margin going forward? See, we saw some impact in the Q1. I am of the view that you will see some commodities, there could be some slight increases. See, we saw aluminum going up in Q1, but we saw some softening in other material and the precious metals. So I think it will be a mixed view in my opinion. It may not substantially go up, but there could be some marginal costing increases going forward. Okay, okay. In that context, have you taken any price hike in first quarter and second quarter so far? What is that? Have you taken any price hike? Yeah, we took about 0.2% in quarter one. And some small increases we have taken in quarter two, which is also similar to quarter one, about 0.2%. Hello, can you hear me? Sorry to interrupt, sir. The participant has left the queue and has got disconnected. The next question is from the line of Raghunandhan N.L. from Nomura. Please go ahead. Thank you, sir, for the opportunity. Congratulations on strong numbers. Sir, firstly, Q1 EV volume was strong at 52,000. Revenue could be around INR 600 crore-INR 700 crore, assuming 13% PLI rate. Would INR 80 crore-INR 90 crore be a fair estimate for PLI incentive? I mean, you have not booked in first quarter, but, you know, would that be a fair calculation? No, no. Once we make the judgment, like Jessica said, we will come back to you. Whatever is the Q1 PLI benefit and what will be the next quarter benefit. But only one thing we want to tell you that only two of our products are now approved. Significant volume products are approved. So we will come back to you when we plan to put our PLI. Got it, sir. So secondly, on the exports. Exports have done well with double-digit growth YTD. With the growth expected in Latin America, Asia, and flat growth in Africa, can we expect double-digit growth for full year FY 25? See, this year, like I said, the worst is over is my estimate, because we went through some tough times in Africa, which is our strong area. So that, I'm of the view that you will see some improvement going forward. And, maybe little bit challenges may be there in Bangladesh, which is very, very small in terms of overall volume. We are happy that our Middle East is doing better. It's a big market. LATAM, we have started doing better than the industry. So I think going forward, we will further strengthen Africa. We'll start you know, investments in LATAM, and we'll start build it. Middle East is in between, so we can, we can take it to the next level. Maybe Bangladesh in couple of months we will... Asia, you know, you know, Sri Lanka just started, little bit of exports. So Nepal is also already doing well. So Bangladesh may take little time, but I am, I am very confident that these are very strong markets for TVS. Okay, ASEAN might take little time, but, please always remember that I'm of the view that sometimes you have to be patient, you have to stay, you know, and if you stay in the market, keep giving the products to the customers, very confident that you will also at some point of time you'll start succeeding in ASEAN. Got it, sir. And, sir, also, you are working on improving position in Europe. If you can share your thoughts and strategy there? See, Europe, we have started now, Italy. We are also now discussing, you know, some of the markets in Europe. Okay, I think it will, please remember, these are developed markets, and we have to be showing some patience because customers need to understand us. So far, in all these developed markets, we are present through BMW, the relationship, the platform, whatever, the 300 cc, the 310 series, whatever we are selling in every developed market. Now, first time, we are also putting our products into this market in TVS branding. So I'm very sure, again, these are investments which will take place between next quarter. Definitely, these two-three quarters, you will see some changes in terms of investments and products going there and start identifying dealers and sales.... Okay, so it is. It should be treated as a big investment and going forward and of course, we will be liveraging our EV product as well. Got it, sir. Thank you. Just on the housekeeping side, basically, sir, if you can share the other operating income for Q1 and also TVS Credit net worth for March 2024? Sure, sure. One second. Let me give the net worth of TVS Credit Services. As of March 2024, it was INR 3,865 crores, and we are at INR 4,333 crores now, as far as net worth is concerned. What was your next question? Other operating income for Q1, if you have it handy? Other operating income is around INR 84 crore. Got it, sir. Yes. Thank you so much. Thank you. The next question is on the line of Jinesh Gandhi from Ambit Capital. Please go ahead. Yeah, hi, sorry, my line got disconnected. Second question was on Star City. So we had seems to have stopped production of Star City, so is it for an upgrade or we think that pace will not be growing at a reasonable pace? No, we did not stop Star City. I think we were changing over to certain specific reasons. Okay, so Star City is a very strong brand for TVS, and we are present in the market, you know, and there is nothing new. But the new Star City, I won't say it is a new Star City, the same Star City, because the overall customers in the market is huge for Star City. So we plan to do a little bit of certain improvements and changes that have been incorporated, and it is back. Okay. Okay. Customer side, customer side, there is no gap. Practically, it is, it is there every month in, most of the markets. Got it. Got it. And, on the EV side, e-two wheeler side, currently we have a reasonable spread of product portfolio covering from, mixed, city speed to, high speed. What are the gaps which you would like to cover with the upcoming product launches? I think you, you wait for the launch, and I can tell you what type of product it is going to be, because we believe in looking at the customer segments and delivering products for each of the unique customer segments, because that is, that is, that is what is very, very critical. So possibly in between 2022 and 2023, you will see some of these best launches for TVS. Got it. Got it. And last year, Mr. Krishan, can you share your USD-INR realization for the quarter? What is the question? Exchange realization or the- Exchange, yeah. Yeah, it's 83.2. Okay, great, sir. Thanks, and all the best. Thank you. The next question is from the line of Mukesh Saraf from Avendus Spark. Please go ahead. Yes, good evening, and thank you for the opportunity. While most of my questions have been answered, this question is on your upcoming EV launches. Could you kind of share some aspects about these, the new generation platforms? So basically trying to look at how are you looking at insourcing versus outsourcing of some of the key components, and would the new design or the new platform be, you know, a lot more cost effective in terms of your contribution margins, assuming everything else kind of stay the same? First, we look at the customer, customer segments, and then we look at what kind of, pro- platform and the products are required. Mm-hmm. Then, thanks to India, there is a very strong supply chain, so we decide what could be done inside. Sometimes we do inside as well as, you know, both make and buy. So these are all strategies depending upon the volume, scale and, you know, how it is going to be played with. Okay? And, definitely, I will tell you closer to the launch what kind of products we are looking at in the EV space, in the two-wheeler side. I am very sure it is going to be an exciting product to the market. Sure, sir, I understand that. So what I was looking for is, versus your current iQube platform, how would the new generation platform be different? In terms of, say, would it have an integrated motor controller, or could there be some other such aspects which could probably, you know, be reducing our costs in the future? It will be exciting, I can promise you, and it will connect with the customer segment. Okay, closer to the launch, I will give you all the details. All right. All right, thank you for this. Thank you. The next question is from the line of Viraj from SiMPL. Please go ahead. Yeah, just two, three questions. First is, you know, you talked about product mix and customer mix as one of the key driver of gross margin expansion. Can you elaborate a little bit more on this? You know, what elements in customer mix or product mix and geography mix has aided this, and how should one understand the sustainability of this margin? Margin will be sustainable because there is a very strong focus on the product mix. We also look at the sustainable cost reduction, a big initiative. So these are the two levers which are giving a significant benefit. And based on the commodity cost increase, plus, minus, we also constantly look at, given the strong brand presence, we also look at our selling price increase. So it's a combination of the product mix, you know, which is fairly good and geography mix. And material cost reduction, I think it is sustainable because that is, again, volume dependent. Also, I have given you that when the volume goes up, we can always look at, one supplier to two suppliers. So the same drive on looking at multiple suppliers, looking at share of business, looking at the product mix, looking at the volume scale benefits. So all this combination come in the material cost reduction. And- Yeah, I understand. Yeah, I Yeah, I understand that. Part on the measures taken to reduce raw material consumption. What I'm just trying to understand is a little more granularity on the product mix and the geographic mix part. So would it be right to think that large part of the improvement would be because of product mix and geographic mix? These are these RM cost reduction measures or it will be by equally? Equal. Between the product mix, geography mix, and the material cost reduction is almost equal. What do you mean by product mix and geography mix? Can you elaborate more? Product mix, we have starting from moped to Apache, okay? So, each product, we look at the total portfolio, okay? And, the pricing, and even, even in the pricing we have also varying. For example, Jupiter, we have an entry product, but we have variants like the Jupiter Grande. Starting from the entry-level, ZX, Grande, so there are three variants on the higher price, okay? So depending upon that, you know, and we always look at while there are certain customers who look at the entry-level variant, but there are many customers who look at the proportion of ZX and connected variants and Grande, so like that. So we always constantly look at, for example, how do we sell more on the variants which are connected, which are ZX, which are Grande, because that gives us better margin. But equally for the budget customers, we will look at the entry-level model in... I'm giving you one example. Sir, second question is on the investment. I think in last quarter you talked about, you know, us making a one-time further investment in TVS Credit Services to meet the regulatory norms. Sorry, you are not, you are not clearly audible. Please. Yeah. I am audible now? Slightly better. You should be clear about, you know, As, you know, making a one-time investment to meet the regulatory capital requirements in TVS Credit Services. So since that is now done in Q1, do you see any further capital requirement, you know, infusion from our side to TVS Credit Services? No, no. TVS Credit Services, as of now, this year, we may not invest further because the capital adequacy norms, we are at 18.9%. There are, as of now, no plans for further infusions. But the company is doing extremely well. They are doing, they are growing, and profitable. The parent, you know, also acquired another NBFC in consumer durable space. Just trying to understand, you know, from your perspective, what's the thought process behind having two NBFCs, you know, competing and, you know, how should one look at in the structure between the two? Now, as of now, we have, we are waiting for the regulatory approvals for that, new acquisition. It's a small NBFC with INR 5,500 crore book size. They are not competing with each other. It's a different segment in which they operate. It's a small ticket size, where they have a strong markets in the areas where TVS, the credit services, has not all that presence and a little presence there, and therefore, they will not compete with each other. Compete with each other, and then actually, the book size is going to significantly grow with that, addition. Sorry, can you repeat that? With that, with that addition, the overall book size will significantly go up. No, I was just trying to understand, you know, why you have two NBFCs, you know, from a parent point of view. I think the similar acquisition could have probably been through the previous credit services as well, you know, given the kind of balancing they have, they could have easily funded it. So just the thought process, so yeah. It's a decision of the holding company board to buy that company being a CIC company to house the group-related investments there, the new acquisition. We're waiting for the regulatory approvals, and we will wait for the approvals for the next stage of action on this. Okay. Just last question. You know, you mentioned that you also made an investment of INR 35 crore in the e-bike subsidiary. Given the losses we have been incurring now, I understand that demand is weak and there are challenges in terms of pricing and discounts and all. But on the cost side, you know, how are we looking at it? You know, still bulk of the production still based in those European territories. Is there an avenue where we can kind of shift the production to more centralized setups in India? Any thoughts you can give how you're looking at in the cost part? See, these are investments. Unfortunately, I told you, Europe is going through some difficult times or challenging times because of the economy and the other pressures. But I'm very sure that in these businesses, you know, one year, one and a half years, this could go through this way. But we have always been on a medium-term point of view, things will come back. Okay. Thank you very much. Thank you. Thank you. Thank you. Ladies and gentlemen, due to time constraint, we have reached the end of our question and answer session. I would now like to hand the conference over to the management for closing comments. All of you have seen. Thanks for joining us in this call. All of you have seen a very strong Q1. Company continued its growth trajectory, recorded highest ever revenue, EBITDA, and EBIT. The quarterly operating revenue grew by 16% over last year, and we are at INR 8,376 crores. And with our unwavering focus on consumer quality, we are confident of continuing to grow ahead of the industry, both in domestic EV, across ICE and EV. We will continue to leverage scale benefits, focus premiumization, and sustain cost reduction, material cost reduction, and this will help us in focusing on EBITDA. But equally, we will invest in technology, we will invest in marketing, we will invest in building the brand globally. We continuously look at, you know, the last five years, if you look at our EBITDA margin, significantly it has gone up, and it has given all the benefits, okay? And, I am very sure some of you would have heard the 32nd AGM of the company, okay? As the chairman highlighted in his speech, we are gearing up for exciting times ahead as we are transitioning to a high-tech, global, and smart mobility company. We have, that have the ability to delight the new age customers. We have fostered a passionate, motivated, and aligned team, dedicated employees, partners, stakeholders, working towards one goal. Again, once again, thank you. Thank you everyone for joining for this meeting, this call. Thank you. Thank you. On behalf of B&K Securities, that concludes this conference. Thank you for joining us. You may now disconnect your lines.