Good evening, ladies and gentlemen, and welcome to Bajaj Auto's conference call to discuss the fourth quarter and fiscal year 2021 financial results. We have with us Mr. Rakesh Sharma, Executive Director, Mr. Soumen Ray, Chief Financial Officer, Mr. Sanjeev Garg, Vice President, Finance, and Mr. Anand Newar, Divisional Manager in Investor Relations. My name is Nirav, and I'll be your coordinator. At this time, the participants are in listen-only mode. 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. We will wait for a minute till the question queue assembles, and we will start with the opening remarks from the management. Thank you, and over to you, sir. Good afternoon, ladies and gentlemen. This is Rakesh Sharma here. Thank you very much for joining the call. As we have moved from quarter four into the new financial year, the pandemic too has undergone a dramatic change. Many of our near and dear ones have been afflicted, and I wish them a swift recovery, and I hope everyone keeps safe. We will announce our fourth quarter and fiscal 2021 financial results today. I hope you have had the opportunity to have a look. I'm pleased to inform you that our Board of Directors has recommended a dividend of INR 140 per share, which translates into a dividend yield of 3.6% and a payout ratio of 90%, which, if you will recall, is in line with the dividend distribution policy that we had announced just last month. I will divide my opening comment into two parts. First, some highlights of our quarter four performance beyond what has been released. Since we have had regular interactions, I'm refraining from going into a commentary of the full year, preferring to remain with the recent most events. The second thing I'll close with is near-term outlook. Before I call out the highlights, it is useful to revisit the two-pronged approach the company has been executing since the beginning of FY2021. Which was, number one, to capture the recovery and demand, particularly in overseas markets, where it was expected to be quicker, through strong supply chain management and very focused engagement with the market. Second, to continue to drive premiumization within the segments and across the segments to ensure that in an uncertain demand environment, we are more than protecting our financial performance. Coming to the first part, which is the highlights of quarter four business. Let me make a few quick comments on our domestic motorcycles business first. The most noteworthy aspect of this view's performance is our share of the 125cc + segment. If I divide the demand pyramid of the country into two parts, the top half being 125cc + portfolio. Contribution of this part in our total business continued to rise from 46% in FY2020 to 60% in Q4. Now 60% of our motorcycle business volume comes from 125cc + bikes. Of course, this has been driven by the outstanding success of Pulsar 125, where in the space of 12 months, our market share has improved from 7% in FY2020 to 19% in quarter four. Indeed, we think we have strongly contributed to shifting the industry architecture itself as the 125cc segment has expanded by 4 percentage points over the year for the whole industry. In the top half, another noteworthy progression, though small in terms of volume, but big implications from a future development point of view, is the performance of the Dominar 250. It has made a very confident start, we are surely and steadily trying to build the quarter-liter class segment. In the bottom half of the demand pyramid, we continue to play out our strategy of introducing upgraded products and making better products more accessible to the customers there. Three upgraded variants of the Platina brand were launched with the electric start and with 110cc. As you recall, we had said we want to convert people who are using kickstart to electric start, people who are using drum brakes to disc brakes, and people who are using 100cc bikes to 110cc bikes. This segment required slow, short evolutionary steps rather than big leaps, and that is what we have been attempting. Of course, overall, the market share remained steady because of our seeding ground at the very entry-level, but this was by design, as we want to drive up our market share by upgrading the customer within the segment and across the segment. Coming to the domestic commercial vehicles business. The three-wheeler business started to make a promising return towards normalcy every month, climbing by 1,000 units sale, and we could see that the traffic had gone back to almost 85% levels by middle of March. Of course, April, again, we've seen a halt on that. It took a little bit longer, but it was heartening to see that the three-wheeler business had started to make a return. Even though the volumes are much lower in the quarter and across the year, there have been some very significant leadership changes. There are three segments in this market, the largest being the small passenger, which is the small autorickshaw, which is seen. The second one being the large passenger, which is generally used in smaller towns and suburban areas. The third is the cargo segment. We have always enjoyed a very high level of market share in the small passenger segment, 85% levels, and that is more or less intact. In the large three-wheeler segment, also now, we have established a sizable leadership share of 48%. We believe this is 12 percentage points ahead of the next competitor in quarter four. We are now a very clear leader in the small passenger and the large passenger segment. In the cargo segment, we gained 6 percentage points of market share, and we are a very strong number two now with a 34% market share in striking distance of leadership. Why I'm making these points is that when the business returns, this improvement in competitive position is surely going to give us a lot of benefit. Coming to the exports business. Exports business continues to perform robustly with a 200,000 volume performance every month. Q 4 was our finest ever Q 4 in our history, and it actually came on the back of a very high Q 3, as you know. Within the Q 4 in January, we had our highest ever sale month in January. As a result, we have been able to breach the 2 million vehicles export milestone despite COVID. Our market share in top markets have stuck in motorcycles and moved up quite significantly in three-wheelers. In exports also, our share of premium motorcycles, which is the Pulsar and Dominar brand, has moved up from 13% in FY2020 to over 16% in FY2021, further strengthening the financial performance. We continue to get over 80% of our revenues from markets where we are number one or number two. In fact, 77% of our revenues now come from markets that we are a clear number one. This is an important metric which we have been monitoring continuously for the last five years or so, as it indicates pricing power and our ability to manage competitive threats and actually shape the market itself. Our exports to KTM have grown at a significant pace of 60% +, powered by a surge in demand in the developed markets of North America, Europe, and Australia. Some other highlights, we faced strong headwinds of cost increases of up to 4%, of which we could recover only about 1.5%, keeping demand sensitivities in mind. I must add that we believe our price increases, both in India and particularly overseas, are mostly ahead of what competition has done. Supply chain demonstrated resilience in responding to various disruptions, though shipping issues, which is the frequency of shipping availability, still causes an almost 10%-15% spillover of the exports order book. Finance penetration, particularly from Bajaj Auto Finance, has improved in motorcycles and is a very supportive growth driver as well as an enabler in the three-wheeler space for us. Going forward, we will be leveraging this aspect even more. Coming to the second part, which is our immediate-term outlook. As we all know, the surge in the pandemic has again drawn upon us. We faced uncertainty. The demand situation in domestic has become ambiguous, it will jump symptomatically with the progression of the pandemic. While presently, we are not facing the nil scenario of last time, we must wait for some more time to understand the full impact of the current surge on the immediate retail environment of motorcycles and CV in India. Having said this, the supply chain disruptions, the vendor side or at our plant, are much better manageable this year than the previous year. A better local-level dialogue with the administration, learning from the past, and better preparedness of the vendors and our own teams are helping us deal with this much more confidently, we don't see this kind of interruptions on the supply chain impairing our ability to service the market. Additionally, going by the experience of the last time, we remain sort of optimistic that the demand should return swiftly as and when the pandemic is brought under control and the vaccination program advances confidently. We will monitor the situation very closely and respond to it. We think that the time might come around July, again, a lot of this is based on assumptions on how the pandemic moves. Irrespective, we will continue now again with our approach of driving the premium end of our portfolio, which is the 125 cc +, and even within the bottom half of the pyramid, continuously expanding to upgraded product. We have refreshed and launched a new color range of Pulsars in April. A new Pulsar 125 has been put out into the market as we speak. Upgraded versions of the CT 110 and Platina, a top-end Platina, are already being dispatched to the market, to the dealers in April. These, I believe, should hold us in good stead as demand recovers. We had planned these to actually be in position for the mini marriage season of the north, but that seems to be a little bit impaired now. As and when demand recovers, we feel that this will really make a very strong proposition to the customers. Internationally, we will continue our momentum and expect to hold the current performance level steady. Though we have encountered some new COVID-related demand issues in Bangladesh, but hopefully we will be over them, and presuming we don't have any more black swan events or there is no major surges of the pandemic, we think FY2022 will be our finest ever year for exports. On the cost front, there is an increase in raw materials. As you know, commodity materials in the coming quarter, we see about 3%, and should be able to recover at least 2% through price increases, and that has already been done. We will continue to work on cost optimization measures and calibrate further price increases based on response of demand over the next few months and quarters. In this regard, I hope the Government of India will make some announcements around rates and the outstanding MEIS. This will significantly help Bajaj Auto because of the large share of exports in our business. Finally, as you may have gathered, we had reopened our booking for the electric scooter Chetak, and we have received a resounding reception yet again. We had to close bookings yet again within 48 hours because we got a tremendous amount of interest. Some of our international vendor partners have told us that they should be able to give us some very clear visibilities of availability of components by May and June, based on which we hope that we will be able to maximize the potential opportunity for Chetak and widen our footprint to many, many more cities in this financial year. With these comments, we can now open the floor to the queue, to questions. Thank you very much. We now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Anyone who wishes to ask the question, you may press star and one. The first question is from the line of Hitesh Goel from Kotak Securities. Please go ahead. Thank you for taking my question. My question is on the commodity cost pressures that you are seeing, right? I think you talked about a 1.5% price increase that you have taken in the domestic and export markets, whereas the commodity cost increase has been around 4%, right? If you include the third quarter and fourth quarter. It's going to increase in first quarter. Can you comment on that? Also, if you can comment on the QoQ realization increase is 7%, how much is because of mix, how much price increase? If you can give the export revenues for the quarter. Sure. Over here, that's a lot. For cost, as we have mentioned and as Rakesh mentioned, we have seen sequential cost increase of between 6% and 7% between Q4 and Q1. I'm trying to make it simpler, three followed by three or four followed by three. The price increase that we have taken in Q4, blended, was in the range of about 2%, and we've taken another about 1.5%-2% in Q1. That is the kind of price increase that we have taken blended between domestic exports and the like. I hope that answers your first part of the question, which is your price increase and cost increase. As far as export revenue is concerned, this quarter we did a shade below INR 4,000 crores. It was INR 3,991 crores. Great, sir. If I can put in one more question. Can you get us some sense on the export volume outlook for next year? I mean, because you have pending orders as well. How should we look at the export volume growth FY2022 versus 2021? Any guidance would be very helpful. I think if you would have heard Rakesh mention, while he's speaking, he mentioned that we expect this year to be one of the best years, if not the best year of exports. He had already mentioned it in his commentary. Yeah. I mean, any guidance on the volume growth, in terms of absolute increase or range if you can give so that we can understand that? Do you really believe that sitting in April, I can actually give you a range of volume increase that will happen in the next year? We are saying that it will most likely beat the highest ever that we have done. Beyond that, I don't think in the first month of the fiscal I can really predict a number. Okay, sir. Great. All the best, sir. Thank you. Thank you. The next question is from the line of Raghunandhan N. L. from Emkay Global. Please go ahead. Thank you, sir, for the opportunity. Congratulations on good numbers. Sir, firstly, within models, there has been premiumization. The share of top-end vehicles has been increasing. What is your assessment on how the customers are looking at it? What is making the customer shift towards higher variants? Okay. If I could separate it out from economic context, and first, your understanding of that. What has happened is putting the pieces together even from other categories is, this last year has seen a considerable weakening of the bottom parts of the demand pyramid of consumer sentiment there, of purchasing power, et cetera. There is a certain dichotomy which is developing in the industry. Not just for our category, for many categories. We are seeing that the top half of the demand of the consumer, they actually have come out largely unscathed from the pandemic. The job losses have not occurred. There has been certain savings because the opportunity to spend was not there. A little bit of feeling of wellbeing based on stock market and savings going up has caused actually people to feel much better. That's also resulting in these, partly, the long waiting period for cars, et cetera. We are seeing that, in fact, in some of our bikes which are more than INR 2 lakhs, particularly the KTM varieties, where we are fighting to supply demand. Our strategy actually fell in place quite nicely because we started to focus on the 125cc + segments, and particularly the 125cc segment. We did feel that after ABS, the 150cc + will become a bit more expensive, so there may be a little bit of a drop-down. We wanted to upgrade the better off consumer in the 100cc, 110cc. This strategic approach coincided very well, if I can say that, though it's a bit unfortunate that one part of the economy has taken a big knock, but we were there with the product. If you see the Pulsar 125 is the most expensive 125cc. Still it does outstandingly well. Its market share has gone from 7% to 19%. If you see the later months, newer and newer variants are being introduced, expect this to definitely go into the 20s. The customer in that segment was not as badly impaired as the one just below that segment, and has given a big vote of confidence. That's the most significant explanation. Even on the bottom end of the pyramid, where it has been a little bit of a struggle because the bottom has really fallen out, fallen off. The cheapest products, whether it is us or competition, are getting a severe beating in the last six months or so, and particularly now. In that, our whole approach has been to give better products at similar or slightly higher price. Now, we could have taken the approach of giving the same product at a lower price and attract, but we've not got tempted by that direction. We have introduced some better products, whether it is more comfortable, more safe, even for the 100cc buyer and trying to attempt to upgrade them. Some of them may not want to go all the way to 125cc, but at least to 110cc, at least to a more comfortable bike, at least to a more safe bike, and start that journey. It's a more difficult play. We are encouraged by the results, but we have to wait a little bit more to see how it actually plays out. I would say that would be the sort of source of the progression in our portfolio. Thanks, sir, for the detailed answer. My second question was on RoDTEP. What kind of benefits are expected? How does it compare with MEIS scheme? Well, this one is really, you have to ask the finance minister because we keep hearing news, and anything I say would be speculation. What we are hearing directly and also through SIAM, is that it is very much there, and its announcement is imminent. Whether it will be completely offsetting MEIS, which I personally don't think it would be, but to what extent it would offset is something which we have to wait for the announcement. We have been hearing that it is imminent for a while now. Nobody in the ministries or anywhere, SIAM tells us, has said that this is not happening. The Pillai Committee has submitted its recommendations. They are with the cabinet. As soon as it gets cleared, I think we'll hear about it. Thank you. Thank you, sir. Thank you. A request to all the participants, due to time constraint, please restrict to one question per participant. The next question is from the line of Binay Singh from Morgan Stanley. Please go ahead. Hi, team. Thanks for the opportunity. My first question is that, when we look at other expenses as a percentage of sales for Bajaj, in fact, we even saw it for TVS, that the number has come off in the last three, four quarters. Because of COVID in FY 2021, were there some expenses for you which were lower than what normalized would have been, either on the sales promotion side or on the advertising side? Linked to that, do you expect them to sort of creep back in as the environment normalizes, or you think this is the new normal for other expenses as a percentage of sales? Thanks. Yeah, thanks. Sorry. Yes, other expenses has kind of come down as percentage of sales for the full year. Which is essentially cost control measures. At the same time, I must admit that Bajaj Auto finally is a very frugal organization. There was a slack to be cut. There are projects which have been deferred and all that. In all probability, they will come back to the previous levels. Anything on the sales promotion spending in particular or the advertising spending? Is that like when I look at the March quarter, is that now back to normal levels? I understand in December quarter, that spending was quite lean for companies. There are two parts of that spend. One part, which you don't get to see because it is netted off against top line, which is if you are giving a scheme for the customer. It's a little lopsided, and frankly, you will not be able to make it out from the results, because as per accounting standards, if you are giving a scheme which is an offer to the customer, it has to be netted off from income. That is why the yo-yoing happens. Coming to your question, whether Q4 is the right base to take, I would say no, because Q3 would always be the highest because not only do we have festive in India, but also some of our global markets, we have festive because of Christmas and all that. S o, Q4 is not the base which will be there for the next four quarters. In summary, you mean that it will go up from Q4 level because [coupon] is higher than Q3. On average, it will go up because as I mentioned, my highest is Q3. Yes, it will go up from the Q4 levels. Just linked to that, do you expect the industry also to be a little more aggressive on these spendings? You know, after wave one also, we saw two-wheeler was one category which did not really recover that sharply, unlike cars also. Now with wave two, do you foresee higher spending by the industry on these line items in the coming quarters? This is in the realm of absolute speculation about what the industry will do, I will try to answer this question since it has come up by logic. Various companies have got various kinds of cost increase numbers, everybody is saying that they are not being able to recover everything. In a scenario where the companies are not being able to recover their material cost increases, it will be very unlikely for anybody to go berserk on their promotion activity. What will actually happen, frankly, sitting here, I'm as wise as you are. No, this is very helpful. Appreciate the response. Thanks, Soumen. Thank you. Thank you. The next question is from the line of Jinesh Gandhi from Motilal Oswal Financial Services. Please go ahead. Hi. This question pertains to margin trajectory. We have seen benefit of our two-pronged strategy on product side. I mean, excluding this impact of RM cost, how do you see margin trajectory playing out over medium term, over next two to three years' time? See, the margin trajectory can only go up, and I will give you the reasons why. I think commercial vehicles will certainly recover from where it was in Q4. That will be an upside to margin, because I make more margin in commercial vehicles than the blended amount. The other upside should be a depreciating rupee. We have already seen rupee depreciate a bit in Q1. The third upside, as was discussed even in the previous question, the raw material will finally come. Now, whether it will recover all 2% of MEIS or it will do less, but there is something that will certainly come. These are the reasons why we believe that margins will go up. The only headwind of margins is motorcycle as a part of the mix was lower this year. If it was to recover back to growth of double digits, to that extent, mix can worsen. If I keep commodity cost aside, because as you rightly mentioned, Jinesh, that this commodity cost is a story of one or two quarters. It is not as if that every quarter commodity cost is going to increase by 4%, 5%, we might as well shut the company. That will plateau out over the medium term. Directionally, I should see benefits coming subject to competitive pressures. Right. What were your spares revenues in USD INR for the quarter? Yeah. The spares revenue for this quarter was about INR 1,089 crores. INR 1,089. Right. USD- INR? Pardon? Currency realization. USD- INR. Realization in USD- INR? Yes. This period in Q4, we earned about 72.9. Okay. Q4 blended average is INR 72.9. Sure. Thanks, sir. I'll come back in case I have any more questions. Thank you. Thank you. The next question is from the line of Kapil Singh from Nomura. Please go ahead. Yeah. Hi, sir. Just one follow-up on the spares. I think that the run rate for last two quarters has been pretty strong. Could you give some color that, are we doing something different over there that's helping us grow much faster? See, the pandemic does not impact the amount of spares that are required. And anyway, as you know, of the total possible sales of original spares, the actual sales of original spares is nowhere close to even 70%, 80%. There is a lot of headroom. Plus, there was a backlog where we did not supply, but in the industry, there was a depletion of stocks at the dealer distributor level. It's just a catch-up of that. As a matter of fact, if you look at the full year number, I have marginally declined. Last year I did about INR 3,100 crore. Just a little more than INR 3,100 crore. This time I'm a little less than INR 3,100 crore. Sir, directionally, should we work with a INR 1,000 crore kind of number, or you would have a sense of what kind of growth could be there? No, I think whatever we have done this year, you can take that as the normalized rate and then divide by four and consider. Okay. That's helpful. Full year. Yeah. Secondly, sir, could you also talk about KTM performance, because we've seen pretty strong profit contribution there. Is it sustainable and what's happening there? KTM performance. Yeah. The exports to KTM markets has been doing very well, as I mentioned. It's now running at an 8,000 units per month level, up from some 3,700 of last year. We are not being able to service the whole demand because of the semiconductor shortage and the large usage of electronics in these bikes. I would say we are falling short by 10%, 15%. At least by 15%, I would say. We expect this level of performance to continue. Okay. I was questioning regarding the profitability as well. That should also continue around the same way? No, you asked about KTM or profitability, which one? The profit contribution from associates, which is about. Contribution from associates. Sorry. Yeah, mostly I would like to believe that this is a steady state profit that they are doing. If you look at the full year numbers, they have dropped in Q1, but they have recovered very well. Q1, they have actually declared a loss. For a full year, they are almost back to what they did in FY 2020, but they've worked on calendar year. Yeah, I would like to believe that this is reasonably steady state. Okay. sir, lastly, could you also comment on the.... I'm sorry, there are a lot of people on the queue. Sure. I'll come back in the queue. Okay. Please. Thank you. Please. Thank you. Thank you. A request to all the participants, please restrict to one question per participant. If time permits, please come back in the question queue for a follow-up question. The next question is from the line of Chirag Shah from Edelweiss. Please go ahead. Hello. Am I audible? Yes, sir. Yeah. My first question is for Rakesh. Sir, my question pertains to domestic motorcycle demand. If you look at last four years. The domestic industry, in a sense, has been in a declining mode. We did around 12 million, 12.6 million in 2018, which went to 13.5 million in 2019, and after that we have been around 10.5 million-11 million range. How should we look at this demand? Can we scale back to the FY 2019 peak sooner, or that was a slight abnormality and the normalized growth over last so many years that we are seeing should be looked at the current day? How should one look at, because premiumization seems to be picking up, but the volumes are not really picking up the way that the general expectation has been. I must say the audio was not fully clear, but as I understood, you're asking about how we should look at how demand for motorcycles unfolds in India when in the last four years it has been on a continuously declining track. Yeah. I agree with you that the last four years have not been good for the industry because it has got hit by many things. If you recall, first there was the BS4 transition, and then there was the additional cost of insurance, and then the BS6 transition, and then, of course, COVID has caused disruption, which means that we are really back to four or five years ago as an industry. Fundamentally, the near-term outlook is not going to suddenly swing things dramatically. We would be happy if we are back at even FY 2020 levels. If you dive a bit deeper, I think the fundamental drivers of demand are still very much present. Some of these hurdles and roadblocks, actually, the industry needs a little bit of a smooth run, a little bit of breathing space, a little bit of stability without either regulatory Particularly, like ABS came and hit, CBS came and hit. Many things have been happening in the industry. Because of the fundamental demand drivers, whether it is the youthful population, whether it's the penetration of roads or Aadhaar card-led penetration of retail financing. Now, I would say certainly there is a need for independent mobility. All these things, when you put together, we definitely think over a period of three years, demand should rise. It will be a snake in the tunnel thing. It's not going to be a linear movement. As we have seen, the last two, three years have been very disruptive. Hopefully, some kind of environmental stability comes today and that will allow the industry to breathe easier and achieve its potential, which I think is not yet fulfilled. Yeah. Thank you very much. Sir, just a follow-up on this. On the new product or major upgrade, assuming this COVID scenario normalizes sooner, can you share some light how should we look at new launches or major upgrades or major platform change over next 12, 18 months? Are there any white spaces that you are targeting in domestic market? Now we are thinking that this is not a one-off thing. The pandemic situation is in maybe in a more muted form, but it's going to remain, this way of life is going to continue. We are accelerating our product program so that it recovers some of the lost ground of last year. We are going to continue with our strategy of putting out products irrespective. Yeah, there was a thought in our mind that April and May is not proceeding as well. Should we put out some new products? It's very difficult to time this now because there's so much of uncertainty. We are going to be churning out. We've got a full pipeline. I described to you that there are three introductions which we have made. A couple of them are absolutely new products, like the CT 110X and the Pulsar NS 125, which expands our 125 footprint. You will see in another, let's say six months, and within six months, we will be putting out newer platforms and newer variants. Not just variants, but new platform. This is going to be a very significant thrust for FY 2022. Sir, 125cc platform needs more expansion because Pulsar can do limited profiling. Do you need a different type of a profiling in 125cc to further take your market share up from, say, 19% to, say, as high as 35%, 40%? Is there a thought internally on those lines? Yeah, of course, because we are very encouraged by the response of the customer in expanding this segment. You are absolutely right that one brand cannot achieve everything. Particularly because, as you know, this brand is being drawn from the sports segment. We don't want to obviously stretch it too much to cover all types of sub-segments within the 125cc segment. Yes, we are very encouraged that there seems to be a very big potential for driving this growth in this segment. We are going to be looking at other pockets within the 125cc segment. We are also looking at building the 250cc segment because we feel that the quarter liter class is something which the 150cc customer is ready to move to. It'll take time, but slowly and steadily, we are attacking that as well. Thank you. Chirag, sorry to interrupt you. I'll request you to come back in the question queue for a follow-up question. Okay. Participants are requested to ask one question per participant. The next question is from the line of Amyn Pirani from CLSA India. Please go ahead. Yes. Hi. Good afternoon. Thank you for the opportunity. My question was actually on the Chetak. Just want to understand, you mentioned that the new orders were so high that you had to stop taking the orders. Just wanted to get a sense, in the cities that you're present today, which are, as I understand, two, what is the kind of demand that you're seeing and what is the kind of capacity that you have, in case, over the next 12 - 18 months, as we go into newer cities and as demand goes up, what is the kind of capacity that you have from your end to supply to this demand if the EV scooter market really takes off? Well, taking the capacity point first. Our capacity is really determined by the ability of the vendors, particularly the international vendors, to supply some components. A lot of these are on the electronic side. Okay. We are not capacity limited in our immediate system. It is from outside the system, particularly outside the country, that we are facing issues. More than issues, it's the uncertainty. We are not getting the guarantees of continued supply, which is the reason why we are not opening the bookings full throttle. On the demand side, in 48 hours, we had to close it because we can't supply enough. This is at a highest level of price. You see, we hardly faced any cancellations in the last 12 months. Yeah. I guess the precise answer will be really known when we go full throttle with supply and exhaust what is in the pipeline and make all efforts to seek more and more bookings, which will start to happen from July, August, September, I hope. That's the time when we will see what the limits are. Right now, we are not facing any issues. We are wanting to pick up our dispatches to four-figure numbers very quickly in May, June. Monthly four-figure digits kind of number. Amyn, we want to touch 1,000 unit deliveries immediately. Okay. That's clear. Just a question on the domestic motorcycle pricing in general. Even before the commodity pricing increased, we had seen a significant price inflation because of BS4 to BS6. At least initially last year, it seemed that the market was able to absorb it on an incremental basis, and almost all manufacturers passed on the pricing in a very judicious manner. Leaving the lockdown aside, is there any sense that you're getting from the ground in terms of how much of a price hike the customers are able to take? Is there a limit in your mind as to where does it become difficult going forward? Well, I must say that one of the features despite COVID, the features of the FY 2021 outcome is that the BS6 related price increases have been digested. Before COVID and before we entered FY 2021, there was a concern regarding the thing. As I said in my previous comments, we have not seen a wholesale down-trading- to the cheapest variant. In fact, I'm not speaking just for Bajaj, but for the industry also, you can see these numbers in the SIAM report, et cetera. The cheapest variants are the ones which are facing the biggest decline. That is because that section of the customer has got very badly hit. Whereas, the customer above that, in the top half of the demand pyramid, seems to be responding much better and is taking the price increases. There is no way the most expensive 125cc, which is there, why should that be the fastest growing? Of course, the proposition is strong, but it's coming with a price tag, and the customer has understood it. I feel that the customer is going to seek substantive value. They're not going to pay money for some paint and sticker job, but they want a substantive value. If the value is there, they will pay the price for it, is the takeout for us last year. Thank you. Sorry to interrupt you, Mr. Amyn. I'll request you to come back in the question queue. The next question is from the line of Kumar Rakesh from BNP Paribas. Please go ahead. Hi. Thank you for taking my question. My question was more around three-wheelers and especially the electric three-wheelers. Where are we right now on building our own product for that, and what is going to be our strategy in rolling out the three-wheeler? Will it be the way we have done it for two-wheelers restricted to few cities, or we go across the countries and start cannibalizing our own product? What is going to be our commercial strategy when we eventually start launching our own product? Well, as I said last time also, the electric three-wheeler is under development. The prototypes are being tested. We will put these out in the market. We feel that the business case, like for like, is not very supportive of a movement from ICE to electric. If there is regulatory support or if there is a subsidy support, the matter is different. Like for like, if I was a three-wheeler driver, I would not take the electric at this point of time. Having said that, we think that this equation will change because it depends a lot on how the battery costs move and whether there is some outside support from the government, whether in terms of regulations or creating a protected space for electric. We are going to calibrate the expansion of our business with how the industry unfolds. Our primary objective is to be in the absolute forefront of building capability for this business, but our objective is not to go out there and sell an electric three-wheeler at any cost. We want to be the most capable electric three-wheeler and electric two-wheeler manufacturer, and if that requires us to do a certain level of business, because this cannot be just theoretical, we will do it. We don't see any reason right now, primarily because of the underlying business case. We don't see any reason right now to move the needle artificially from ICE to electric. For example, we see the business case in moving the needle from 100cc to 125cc because we feel that it's something superior for the customer and there is some better margin for us. We will do in our power to move the needle in that manner. In electric case, we will calibrate the response to how the market unfolds whilst investing heavily into building capability and being ahead of competition in that respect. Rakesh, just for a clarification. Given that some of the unorganized players and smaller players have already created a large electric three-wheeler market, we don't intend to compete with them in that market, and also we don't expect a disruption by those players getting into the market in which we currently are? The market which they have created is in the lead acid-based battery powered three-wheeler. This is an area after due thought, we have felt that it is not really worth competing in because it's a substandard solution. This solution mushroomed more in response to two things, and less driven by technology. Those two things were that there was an artificial restriction placed on ICE three-wheelers in terms of permits. Second thing is the need for intra-city mobility was exploding. In this time, these ramshackle contraptions imported from China based on very poor battery technologies have made an appearance, and they are ferrying people around. This really is not the kind of solution, because we are not creating good assets over there for the drivers and the users. We evaluated that, we felt that our strategy will be built around the proven and the better lithium ion type of technologies rather than the cheaper lead acid ones. We have to just look at what has happened in China to the entire lead acid-based mobility industry and what kind of problems that has created for the country. We don't want to participate in making that happen out here. Thank you. Sorry to interrupt you, Mr. Rakesh. I request you to come back in the question queue. The next question is from the line of Sonal Gupta from UBS. Please go ahead. Yeah, hi. Thanks for taking my question. Good evening, everyone. Just, Rakesh, to follow up on Chetak, actually, just want to understand in terms of the pricing strategy, like you mentioned, you've taken a significant increase. I think there was a 15,000 increase, and then there was supposedly, I mean, from what I saw in an Autocar article, there was a 28,000 increase. We seem to have had a very attractive price at INR 1 lakh. That has substantially changed. Also in light of, we are seeing some of the newer startups which are looking to come in the market with an aggressive sort of pricing. I just want to understand your strategy in terms of the space. Also on the other side, while you've announced a new plant for advanced manufacturing, including bikes, we're not putting in a dedicated facility for EVs. Just putting all that in context, wanted to get your sense on how do you approach this pricing for EVs? I understand the volumes are currently very low, and therefore, obviously, it's not profitable. Maybe it's not profitable even at the current price that you're charging. Shouldn't we take a longer-term view and see that potentially this market could be half a million or a million in five years, and base our pricing on that basis? How do you think about it? Yeah, sure. In fact, that is exactly what we should be doing. We should zoom out, and we should take a longer term view and not just take a very short term view. If I today start selling the motorcycles at bicycle prices, the motorcycle market is going to explode. There is no doubt. Nobody will buy a cycle. People will buy a motorcycle, right? We are not doing that. I think we are not the complete players to decide the destiny of this nascent industry. I don't think anyone is. The key thing is that the battery technologies, the battery cost, the cell cost, are what is controlling the advancement of this industry. We are wanting to ride that. Now to artificially bolt ourselves onto something which is not in our control and try to do things, just to expand the industry is not what we are going to do. We feel that, yes, over a period of time, the battery cost will come down, and the industry will expand, and we want to ride that wave. Those costs are going to be the singular and fundamental driver of this industry. It is not range anxiety. It is not charging ecosystem. If the battery costs come down, the acquisition costs come down. There are enough entrepreneurs in the country and elsewhere to set up charging systems and offer and get consumers rid of this range anxiety. That will happen. We've seen it in [BCOs], mobile unit charging. We've seen it in e-rickshaw charging on roadside mechanics. That will occur. The fundamental thing is how the battery costs move. We want to wait for that. We want to ride that, and we know that we can't wait for that to occur and then start our business. Therefore, I said, we're going to be very aggressive in terms of capability building, but we're not going to take it on our shoulders as a missionary to go and expand the industry irrespective. Let the battery manufacturers and the battery technologies do it. Right. just on that, given that the government is giving a INR 10,000 per kWh subsidy, isn't that substantially reducing the burden of the battery cost? It is. Despite that, the architecture is such that despite that, the initial acquisition cost is very high, and it's the same arithmetic for everyone. At our level of players, there's a very marginal difference, little difference between what people are experiencing in terms of cost. The comment I'm making to you is, after factoring in the subsidy, and let's also be clear about one thing, that the subsidies may not remain forever. We all know the pressures which the government is under, the subsidies may not remain forever. The industry has to be able to deal over a period of time with the removal of subsidies and its impact on cost, price, and therefore, consumer demand. Okay, sure. Thanks a lot, Rakesh. Thank you so much. Thank you. The next question is from the line of Aditya Jhawar from Investec Capital. Please go ahead. Good evening. Thanks for the opportunity. Just some clarification. Soumen, on the OpEx side, if we see on a sequential basis, there has been an increase while the volume has come down on a sequential basis. Typically, discounting, as you also alluded, is relatively lower in Q4 versus Q3. Aditya, in Q3, I earned INR 73.6 to a USD, which has come down to INR 72.9 to a USD. Sequentially, the realization has come down. Okay. Fair enough. Just the final question. Some clarification, in the comment of our strategy of the economy segment, you mentioned that we are pushing the customer up the value curve. What we have seen in the last year that since we discontinued some SKUs in the economy segment, we lost some market share. You also alluded to the fact that the bottom of the pyramid is impacted because of the pandemic. Is there a thought process that the discontinued SKUs will come back and that will give us more power to get back the market share in the economy segment? Well, we are going to continue to attack the economy segment based on upgraded products. Because this strategy of offering a similar product at a lower price, it doesn't work for us and it doesn't leverage the innate capability which we believe, which we possess, which is around our R&D and our ability to turn out innovative, qualitative, differentiated products, which can bring some kind of a proposition to even the economy segment, whether it is in terms of styling, whether it's in terms of comfort, whether it's in terms of safety et cetera. Even when demand comes back, our attempt will be only to offer better product at similar prices. We have crossed 5:00 P.M., so we will take the last two questions and then we will wind up. Thank you. Sir, shall we move to the next participant? Yeah. Two more questions and then we will wind up. Thank you. The next question is from the line of Aditya from HDFC Securities. Please go ahead. Yeah. Hi. The steady set of results in this quarter. I just had a question that we are hearing of a slowdown in tractor sales. This segment is obviously very linked to rural. How do you see the recovery in two-wheelers this year in light of rural last year was a growth driver in that sense? Actually, rural was a growth driver only in the period, at least from our prism. We could see that it was only, I would say, end of June, July, that period, which is traditionally when it occurs. Otherwise, the recovery or the rebound which occurred, apart from the metros, it very much was right across the country. I would concede that, yeah, Delhi and Mumbai, the super metros, did have a continued run of depressed demand. Otherwise, more or less, in fact, it did well. Towards the end, in fact, I would say that the really agrarian rural towns were not performing well. It was the market town, the mandis and those areas of rural which were doing well. Even there are nuances. I think given the fact that there is a better monsoon, there is a reasonable monsoon expected, and on the back of hopefully better procurement prices, et cetera. We will see a repeat of last year. It should be quite evenly spread out. Okay. Just another question on EVs. We've seen the Ather 450X, which is really, if I may use the word, it could be the Pulsar of the EVs. You guys came in with the Pulsar way back in 2002, created a niche, and that's how our motorcycle story really began. In that sense, the 450X today is the fastest scooter around as compared to ICE and EV, and it's really created a certain halo around it. Do you think we may lose mind share? I understand volumes are not there, but in terms of mind share right now, it's all going to a startup. How do you see that playing out? Well, as the industry is very nascent right now for us to start sub-segmenting it and launching products for sub-segments. We deliberately took an opposite point of view. We felt that there are enough customers out there who would be attracted to elegance, style, and robustness. That's why an all-steel body and very classic design scooter, because we felt that was closer home to what the consumer was experiencing. As the industry unfolds and the electric side becomes larger, there is nothing to say that we will not address emerging sub-segments. As you know that we, on one end, are collaborating very closely with KTM to look at high-performance motorcycles, which can easily be platformed into the scooter space as well. That project is going on. They're going to take the elements of the Chetak and try to see what they can do with it in Europe. There is a very good collaboration going on, which addresses one end of the spectrum. You know that we have an alliance, we have an engagement with Yulu, which is into micro-mobility, which is into these sub 25 km/h speed, very light, short distance two-wheelers. That's absolutely the other end of the spectrum. We are collaborating with them to see how we can manufacture design codes and introduce stuff in that side. If you see from that end of the spectrum to the most powerful electric bike into the spectrum, we are trying to have a very broad interface. As and when it makes business sense and becomes meaningful, we will sub-segment the market, and we will launch products. Thank you. You are welcome. Very well, gentlemen. We'll take the last question from the line of Pramod Kumar from Goldman Sachs. Please go ahead. Yeah. Thanks a lot for the opportunity, and congrats on the good set of numbers, Rakesh and Soumen. My question is on the same lines. I think we've had too many questions on EVs, but Rakesh, just wanted to understand, there is a bit of a concern in the investor community and even analysts that startups like Ola could really end up disrupting the market of traditional volumes, and the fact that the traditional mainstream OEMs could be lagging behind, especially given the big announcements what they're making on charging infrastructure or capacities. Just want to understand your perspective because you're already dealing in, you're seeing good response with Chetak, you have global presence, so you're doing both the things at the same time. I wanted to understand how worried one should be from these kind of startups what threatening to disrupt the space, and whether the mainstream companies are going to be kind of handicapped like what happened in the luxury car market globally on the EV side, or do you see things differently? Well, Pramod, I don't think that the two-wheeler industry, which is us, and if I may say so, my colleagues in other companies, are going to face a Kodak moment. I think all of us have been educated quite well by the events of the disruptive changes, what's the consequence of disruptive changes and having a myopic view of markets. We have to also thank Mr. Elon Musk and what he has achieved with Tesla opposite the four-wheeler industry, and those case studies are all staring us in our face. I don't think it will be out of myopia that the existing industry will be caught with its pants down. I don't think that is going to occur. I'm sure our competitors also, our established OEMs, and certainly us, we are very serious about the advent of the electric business and the way it will transform, whether it is in manufacturing, it is at the dealerships, spare parts, service, how to engage with the customers, what customers will value. All those aspects we are very, very alert to and sensitive to. We have an existing business. There are people who don't have any business. That's why they have to make dramatic announcements. They have to invest. We don't have to invest because we have the capacities. We have the people. We have the R&D. We started investing in the R&D five years back on electric. We can't churn out the Chetak in 2020 within a few months. We've been working on it three years prior to that. We have been assembling teams, talking to vendors. I don't think people will be caught unawares. Everyone has moved past that. Of course, some of the startups are following a different business model, and we will have to wait and see. I would like to say here that we will not follow that business model, which is private equity-driven and et cetera. I would like to zoom out and I would like to say that the fate of this whole thing is not going to get decided in one quarter, two quarters, or three quarters. This is a change which will occur over a period of time, and battles will be fought. It is the same thing like in scooter to motorcycles. We are getting prepared for that. If there is a disruption, if there is a sudden explosion, if somebody wants to seize some eyeballs and all in a frantic manner, we will deal with that situation. We would like to deal with it in a way which is more sustainable. In the end, we win. In the end, we aspire for leadership. That is our viewpoint. We are quite aware that there may be a collision in the marketplace of two different business models, ours and the private equity-driven. There are other factors also which will decide success and failure, and this will have to be viewed over a period of time. One thing I can tell you that certainly at Bajaj Auto, we are very clear and keen that we have to have top-end capability. Rakesh, just last one. According to you, given the customer preparedness and the cost curve, the way it is expected to fall, what will be the period where you think we'll see an inflection point on EVs? Is it FY 2024, FY 2025? Where do you think is likely inflection point for EVs in India? It's, Pramod, very difficult one to answer because a lot of it depends on battery cost. A lot of the battery cost coming down depends on how much of supply is coming on stream. Right now what is happening is not only current demand is outstripping supply, but people are also placing future contracts, and I'm talking about four-wheeler manufacturers also, who are placed to, and they are slightly ahead on the curve in terms of the industry development of EV in their case. That is driving the overall demand side up. Supply cannot increase linearly, as you know. It happens in steps. It has been a bit slow in expanding because there are competing technologies. These things require huge investments, and the big battery technology, cell technology guys don't want to be getting caught on the wrong side. There are things like hybrids and fuel cells, et cetera, which are alternate technologies. Which is sort of impeding supply coming on stream. This matching of demand and supply has to occur before the cost come down. From, if I take a poll of polls as to what the consultants are saying, what different stakeholders are saying, it does appear that it may take about three years for a point of inflection to be truly reached, where this thing will acquire a very definitive momentum of its own. Till this, it will be more of feel and push and somebody will just try to do something artificially and push the agenda along. Generally, it is felt between three to five years is when. This is not Bajaj Auto view. Like I said, this is a poll of polls kind of a thing. Generally, people feel that in the motorcycle space or the two-wheeler space, it may take about three years for the point of inflection to be reached. Great, Rakesh. Thanks a ton for the exhaustive response and wish you all the best, sir, and take care. Thank you. Thank you. Thank you very much. Ladies and gentlemen, that will be the last question for today. I will now hand the conference over to Mr. Soumen Ray for closing comments. Thank you. Soumen here. Thanks a lot everybody for dialing in. As I say at the end of every call, Anand and myself, we are available, and Satyanagendra, we are available for any questions that you may have. I'd like to sign off with three, four things that I would like to leave you with. First, I think what holds Bajaj Auto in great stead is our ability to mitigate our risk through diversification. As you can see, export is coming to the party. In spite of all this pressure with domestic, we are still rock solid because of our mix of almost half coming from exports, and that also across multiple countries. In a year like that, like what has gone by, in Latin America, we actually sold more two-wheelers than we did in the previous year. That I think is a very important message. The next message I would like to reiterate is the dividend. We came up with a policy of up to 90% if we have more than INR 15,000 crore. We had about INR 17,500 crore. We've announced almost 90% dividend at INR 140 a share. That is how we would like to reward our shareholders, and this has been a question which we have often faced, and now we have replied it. The last bit is around margin, and I would like you to consider the facts. There is a RoDTEP, which as Rakesh explained, is going to come. When and in what shape or form, we do not know, but that will be a clear bolt-on. Forex rupee is a depreciating asset. We have baked in the costs, but obviously, the forex depreciation will help us deliver. Just to give you a sense, last year to this year, forex alone has added about INR 450 crores to the kitty between FY2021 and FY2020. That's a big plate. Commercial vehicles would improve, and that mix will improve, which will give us further headwind. With this, we do have a headwind, which is around that the cost increase in Q1 continues, which will be a dampener in Q1. In near future, I see our margins stabilize. In all of this, one must remember that it is very difficult when you are sitting at 18% to manage headwinds. It's much easier to manage headwinds when you are at a lower number. We have really stretched all our leverages, our procurement, our cost optimization, and that is how in spite of lower volumes, we have delivered a margin which is higher than last year. We continue to focus on margin. Yes, in the near term, there could be some headwinds. As I've said, between forex, RoDTEP, and CV volumes increasing, we should be directionally moving our margin upwards. With that, I wish all of you to be safe, and thanks a lot for dialing the call. Thank you very much. On behalf of Bajaj Auto Limited, that concludes this conference. Thank you for joining us. You may now disconnect your lines.