Welcome you all to Eicher Motors Q2 FY 2022 Earnings Webinar. We regret the delay in commencement of the call. From the management team, we have Mr. Siddhartha Lal, MD of Eicher Motors. Mr. B. Govindarajan, ED of Royal Enfield. Mr. Kaleeswaran Arunachalam, CFO of Eicher Motors. We thank the management for providing us the opportunity to host the call. We request the management for opening remarks, which can be followed by Q&A session. Over to you, sir. Hi, good evening, everyone, and thank you for joining us for Eicher Motors Limited's Quarter Two, Financial Year 2022 call. We are discussing the financial and business performance of the quarter ending September 30th, 2021. Through this quarter, we've really remained committed to our long-term strategic objective of becoming the premium global consumer brand from India. While there's been a lot of disruptions, as all of you know, and lots of things going on in the world, things are starting to look up a little bit at this point. Especially so for us in our international markets, which we've been working on for many years. We registered our strongest ever performance in international markets for the second successive quarter this year, with more than 132% year-over-year increase. Our international sales and retail network have been consistently growing at a very good pace, indicating a growing resonance and preference for the Royal Enfield brand in global markets. We've really started establishing the brand, establishing our distribution, establishing our proposition, and growing in many international markets around the world. This quarter was also very important for Royal Enfield with the introduction of several new initiatives and, of course, most importantly, with the launch of the all-new Royal Enfield Classic 350. The Classic, which was launched originally in over a decade ago, has been the main product of Royal Enfield's huge growth over the last decade. This was an enormous endeavor for us to replace our most important product in our portfolio. I can tell you that through the launch in September, the Classic has had an exceptional launch and exceptional success from the launch. It is based on the new J-Series platform. Of course, it combines the timeless design and legendary characteristics of the classic motorcycle, which has been loved by so many people around, in India and around the world. We bring an entirely new refinement to the Classic experience with the all-new Classic 350, and that's what's really been appreciated tremendously. We've had tremendous reviews from customers, from dealers, from media, from around the community of Royal Enfield. We've seen a really good response. We're delighted that the most important product in our portfolio has been overhauled and entirely from scratch and relaunched entirely new. We're really seeing the benefits of that now with increased interest from consumers, increased inquiries. All of that is really picking up for Royal Enfield. On our commercial vehicle side, that's VECV, our joint venture with Volvo. With the second wave of the pandemic subsiding now, and business picking up, the CV industry is seeing a recovery and did grow significantly as compared to quarter one. We also marked the quarter with a strong performance in the light and medium duty, so that's 5-15 ton segment, with a market share of 34%, which is a very high share for the Eicher brand now. Our overall production, of course, both for motorcycles and for commercial vehicles, continues to be impacted in the last quarter due to ongoing global shortage of semiconductor chips. Recent lockdowns in certain source markets have impacted September volumes. However, slowly the situation is improving. By the end of September and through October, we've seen the situation has improved marginally, and we expect continued improvement in supply situation over the course of the next couple of quarters. It's a step-by-step improvement. It's not a dramatic improvement. We're working hard with our supplier base and others to continue to improve the supply side. An update on our financials. The consolidated financials for Eicher Motors Limited for the second quarter, the revenue which relates only to Royal Enfield business as opposed to VECV, which is separate. Those results will be separate. The revenue for EML consolidated is INR 2,250 crore, which is up 5.4% from same quarter last year. The EBITDA, we managed to maintain an INR 470 crore EBITDA versus INR 471 crore last year, so approximately the same level. While the sequential growth of EBITDA was at 29%, the EBITDA margin is at 20.9% now as compared to 22.1% last year. Sequentially, it has of course grown compared to 18.4%, resulting in a profit after tax of INR 373 crore. With this, I'd like to now invite B. Govindarajan, who's Executive Director at Royal Enfield, to take us through the highlights for the quarter for Royal Enfield. Govind joins us now for the first time in this meeting and since he's taken over the new role as the Executive Director of Royal Enfield. Govindarajan doesn't need much introduction because he's been with Royal Enfield for around two decades now, and in his previous role, Govindarajan was Chief Operating Officer at Royal Enfield, where he was leading the entire technical areas including product development, manufacturing, sourcing, quality, all of those areas, and has had enormous success in establishing the technology centers in U.K. and India, and in all the fantastic new products that have been rolling out of Royal Enfield. Now his new role includes the entire commercial area as well of sales and all the revenue areas, it's including the staff function. Govindarajan, with that, over to you to give us an update on Royal Enfield performance, please. Thank you. Thanks, Siddhartha. Hello, everyone. Delighted to join in this call with all of you. I'm extremely happy at this stage in leading this Royal Enfield when we are charting the new growth and the success story for the next one decade. As Siddhartha mentioned, we continue to work towards our vision of becoming the first premium global consumer brand from India. All our efforts are focused towards achieving that. We have a fantastic strategic business plan, passionate people, and the full lineup of new products, as he mentioned. All those things are intact, and now what we are looking at is in executing it to take it to the next level. Specifically coming to this quarter performance which is there, as Siddhartha mentioned, we sold about 124,000 motorcycles, which is actually down by about 17% compared to last year, the same quarter. You all know production has been impacted, let alone for Royal Enfield, for everyone in the automotive industry, is primarily because of the global shortage of the semiconductor chips. Personally, if you ask me, what's the situation? How is it there? It is improving. From the last week of September itself, the situation is actually improving. As mentioned, it is not a drastic improvement, which was there in September, but October we could see, the improvement have been slightly better. In November and December it has continued to grow in terms of supplies. That gives the confidence that in H2 we will be doing better. The supply situation has to be seen continuously on an agile way because it keeps varying depending upon the situations in various countries. The positive news is the supply started coming in in a linear form and the countries where it was having major issues because of the COVID, all those things have opened up and the supplies are also ramping up. As OE, we also have started looking at other ways of getting more semiconductor chips through working with other suppliers and all those things. To that extent, the quantity is going to be going up. All the actions which are required to increase the production are on way and we are all on the job continuously. That's about the domestic market. International market, we have a great success. As Siddhartha was mentioning, we have grown by almost about 152%. Last quarter, we sold around about 18,000 motorcycles, compared to the last year, which we sold only about 7,800 motorcycles. This is what actually looking at around 89,000 vehicles were what we were selling almost two years back. That's the full year volume, which we actually started selling in one quarter. Our international market is shaping up a great success story, which is going to be there for us. As far as the network expansion, we are continuing that. In India, the network expansion is actually to the deeper penetration into India by the studio store formats. In this quarter, net, we have actually added 14 new studio stores and 20 large dealership formats has been added into this. In the international market during this quarter, we have added new exclusive stores in Colombia, Philippines, Brazil, Mexico and in Latin markets, and three multi-brand outlets. As of now, we have almost about 150 exclusive stores and more than 650 multi-brand outlets outside India. Our growth story for the international markets with the fantastic new products which has been launched and the expansions which we have been growing systematically, and the acceptance of the product and the brand actually is showing us the path for the growth in international market. As Siddhartha was mentioning, during this quarter, we launched the all new Classic 350. Fantastic reception. Product has been doing outstandingly well. The inquiry levels are very, very high. This product, in fact, one such thing is the higher end of this particular vehicle to the Chrome version, which is getting accepted more and more, which also in the vehicle, we are giving the Tripper as an MiY option into that vehicle. Overall, when we are launching this product, one is about the product, a level with which we have to launch the product, which is what is an acceptance which is there. Along with that, we also came out with accessories. About 35 Genuine Motorcycle Accessories, which we also launched, which also has given the motorcycling experience, which is there, which has a very high traction. The earlier product which we launched compared to Classic is the Meteor. That's the J-Series transition work starting off. Meteor is actually a product like Thunderbird when we wanted to move on in the J-Series from the UCE engine. That's what Meteor is. Meteor has continued to impress us in terms of numbers. It is growing. Internationally also it has got accepted very well. In fact, it received the most prestigious MCN Awards for the retro motorcycle category. In every market where we are entering with this particular motorcycle, Meteor, the acceptance from the consumers and the enthusiasm with which people are actually wanting to ride the motorcycles has been very good. It continues to garner that sort of a more people coming in into this. That's about the motorcycle which we talked about. Now about this apparel, if I have to tell you what apparel initiative which we have done. We have extended the MiY program to a range of riding jackets with a focus on safety, comfort, and fostering spirit of self-expression. We joined hands with the TCX, among the world's best riding boots manufacturing company, in offering a range of CE certified riding and lifestyle shoes. In celebration of this 120th year, we unveiled an exclusive range of bespoke limited edition helmets, consisting of 12 designs, one for each decade of the brand legacy. These helmets retell the stories of the brand and the customers, and customers now have an opportunity to own a chapter from the Royal Enfield history. It has been a good success. It's being received very well. About the motorcycle rides and events in this 120th year, as it was being celebrated, we are set to undertake a first of its kind motorcycle expedition this year, which is 90° South. With the two Royal Enfield riders on our Himalayan motorcycle, they will actually be riding onto the South Pole, which is in the month of November. The flag off is by the end of November from Cape Town. This marked our foray into the major expedition which is going to be there. We also marked our foray into the track racing with the launch of Continental GT Cup 2021, in partnership with the JK Tyre Motorsport. We have concluded round one and conducted the 10th edition of One Ride, which is one of the world's largest curated single-day ride across 35 countries with a focus on encouraging responsible travel amongst the global rider community in a bid to leave every place better. With all the recent launches and the platform changes which has been already done, and the expansions footprints which we have been talked about, and our continued focus on all the other initiatives which we have put it into the strategic business plan, we are very excited about our growth journey, which is going to be there in time to come. Compared to Q1, Q2, the next quarters are going to be better because of the supply situation which is becoming better. Now I will hand over to Siddhartha Lal to take you through the VECV performance. Over to you, Siddhartha. Just one second. I'm just bringing it up. As you said, the CV industry is looking up somewhat since all the pandemic related issues. From a financial perspective, the revenue of VECV, which is our joint venture with Volvo, the revenues were at INR 3,153 crores for the quarter, up around 80% from same quarter last year. EBITDA was at INR 170 crores, up 44%. EBITDA margin at 5.4% of sales versus 6.7% last year. There's a minor profit after tax of INR 18 crores up from a loss of INR 7.2 crores in the same quarter last year. Overall sales were at over 15,000 units, up 85%. The economic recovery from the COVID wave two is underway and sectors like construction, mining, e-commerce, CNG have witnessed growth in the last quarter. There's a general improvement in a lot of segments. Industrial goods segment has also picked up now. We've had particular success in CNG trucks which have been growing rapidly and therefore our light and medium duty trucks, we have witnessed a shift of almost 50% to CNG because of rising diesel prices. The Eicher truck and bus brand is very strong in CNG as well. We've been benefiting from that. In the last quarter, we expanded the network and have 26 new aftermarket touchpoints. We've expanded and been addressing a lot of underrepresented territories, including in the east of India and some other parts. We continue to build a strong and agile network, which is certainly aided by our own established company-owned, company-operated establishments as well, which have been growing in numbers. VECV did record a strong growth in the quarter, outperforming the industry. The industry grew by around 85% and we had a stronger growth than that, resulting in a market share of 34% for light and medium duty segment, which is a very strong market share for VECV indeed. We've had some strong new introductions. We launched a new range of six heavy-duty Volvo FM and FMX trucks, which are the very high-end trucks, mainly for mining and other similar applications. These were launched in September. They come loaded with absolutely world-class, top of the line world-class features to boost productivity, improve safety, and enhance driver comfort. The trucks address many applications like mining, road construction, infrastructure projects, so very large projects and over-dimensional cargo. Our relatively new plant for commercial vehicles in Bhopal which caters largely to our light and medium-duty trucks was declared the winner in supply chain management category by The Machinist magazine. The bus plant, our Bangalore bus plant was awarded the Smart Factory of the Year by Manufacturing Today magazine. Again, lots of accolades and reflecting the quality and the supply chain improvements in VECV, which are absolutely top of the Indian leagues. Looking ahead, VECV continues to develop alternate fuel powered vehicles, investing in electric vehicles where we have a very strong nine-meter electric bus offering. We have other products in the pipeline in fuel cells and in other related technologies. The production-linked incentive scheme announced by the government supports investments in these new technology areas. The incentives announced will support use of advanced technologies by mitigating some of the initial costs of implementing such technologies. By aligning with existing schemes such as the Atmanirbhar Bharat and Make in India, the PLI scheme will support investments and growth in the Indian auto industry, particularly in commercial vehicle segment, which is recovering from the pandemic. With that, I'd like to thank you very much for joining Eicher Motors Limited's earnings call for quarter 2 of the financial year 2022 today. Thank you very much. Wish you all a very happy, prosperous and safe Diwali. We're still here for some questions that you may have. Thank you very much and over to you for question and answer. Thank you, sir, for the comprehensive opening remarks. We will be opening the Q&A session for participants. Anyone who has a question, please use raise hand option. Participants request you to limit your questions to two per participant. Once the participant name is called out, please unmute yourself to ask a question. As the question queue assembles, couple of questions from my side. Congratulations, sir, on good results. Firstly, can you provide some color on the order book considering the new Classic 350 and also considering that, supplies were lower than that of the demand? If you can give a direction as to how strong the order book is and what kind of strong visibility it provides for the future. Secondly, can you provide some more color on the level of penetration of MiY app? By how much has the accessories revenue increased for new Classic in comparison to the earlier version? For Meteor, I recall that it was 1.7x compared to the earlier version, which was Thunderbird. That's all, sir, from my side. Thank you. Thanks, Raghunandhan. I think, as a practice, we don't release the numbers on order book. At the same point of time, the response for Classic has been phenomenal. I think it has been a bottom-up built-up product. The all-new Classic has been very well received across. The initial bookings that we have received has been pretty encouraging. The transition planning that we did as part of amidst the semiconductor shortage has also helped us to ensure that good amount of retails have been completed and there are vehicles on road for the customer to come out with the review. That has been pretty well received in terms of the Classic launch. Sorry, what's the second question you had? It's in terms of GMA, right? The overall MiY penetration at this point of time is about 90%+. Our GMA penetration has already reached about 80%+ in H1. In terms of the absolute revenue per bike on overall basis, Meteor and other products put together, we are seeing close to 2 x increase in terms of the value per bike that has gone up. Classic, it's pretty early days right now. Maybe we should wait for one more quarter to see as to how much more we can do in Classic also. The success has been similar. Thank you, sir. Moving on to the participants now. Firstly, we have a question from Chirag Shah. Chirag, can you please unmute yourself and go ahead? Thanks a lot for the opportunity. Hi. Good evening, everyone, and wishing you all a Happy Diwali. My first question is to Kaleeswaran. On the ASP, if you look at it, there is a significant jump on realization. If you can throw some light because it is a strong Q on Q 25% jump. I presume there is a spare part revenue angle also in that. Yeah. Thanks, Chirag. I think it's been a combination of multiple factors, the ASP increase. I think over the last few earnings call, we have been consistently talking about the pricing journey and the pricing increase that we need to pass on considering the impact that we had on the material cost and commodity cost increases. About 2/3 of the ASP increase that you see is on account of pricing increase. The balance 1/3 is a combination of increase in international mix. We talked about the movement in international mix that we have seen, and it also includes increase on account of GMA and spares business also. I was referring more from Q- on- Q perspective because there's a 14% sequential jump. Right. Our international mix is largely stable, little bit here and there. On a Q-o-Q, it is largely the pricing action, Chirag. Between July to September, we have taken a pricing action in July across all models, and September, along with the new Classic launch, we have done one more round of price increase. Okay, this is helpful. If I can just squeeze in one more question. Just to understand again on the demand side, so looking at the tailwinds that we have, it should not be difficult for us to have an annualized volume number of 8.5 lakhs-9 lakhs, which we used to do earlier. Is it a right approach to look at assuming the supply bottlenecks get sorted out over the next three months or four months? Let's hope for that. We can achieve that 70,000-75,000 kind of a run rate. Is it a doable run rate on annual, on a sustainable basis? Chirag, the capacity built of Royal Enfield is known to you. Yeah. Today what is there is no investment which is required and wait for realization of the capacity or the delivery. It is all about the availability of the chips. That's the only thing which is holding. As I mentioned, from September third week onwards, the supply situation seems to be easing out. Any amount of the chips which are coming up, we are only ensuring in an agile supply chain that we will not hold any inventory. We'll convert it immediately and take it to the market because we have a healthy order book. I was more referring from next year perspective, FY 2023 onwards, where we should be able to do those kind of volumes. Yeah, Chirag, while we don't give absolute forward projections in terms of what is the number that we would land on, but the gradual progress on ramp-up of production is something you would have seen, from where we were in, say, August and September and how we have landed in October. We are slowly coming out of the semiconductor shortage. You will see gradual progress happening, and we'll move towards a run rate that we were delivering somewhere in Q2, Q3 last year. Sid, sorry, you were chiming in. No, I was just adding that, Chirag, of course, you know, the size of the market is important in terms of how the motorcycle market develops, and now we're a reasonable part of it. Especially the premium bike market develops. As long as we see some growth in that, Royal Enfield continues to hold an increased share. By that rationale, we should certainly grow. Also, of course, without talking about any particular numbers, there now I can say it because earlier you used to always ask, but now I can say it. There was certainly a bit of fatigue in the old Classic 350, right? There was a bit of waiting. People knew that there was a new Classic 350 coming. We couldn't say all this in the last quarter, for example. It's true. That does happen, you know, after a motorcycle's been around for 10, 12 years, in our case, the Classic 350. Certainly we are seeing a renewed interest in inquiries and all of that. How that translates and all of that's our work to be able to translate all that into good volumes. There is certainly tailwinds or good thought process from that side. There's no question about it. We've seen that in Meteor as well with the uptick compared to Thunderbird, for example. Yeah. Thank you very much. I'll come back for more questions. Thank you. Next we have a question from Vinay Singh. Hi, team. Thanks for the opportunity. Just to reconfirm to what Chirag asked. Is it fair to assume that you took a 14% price hike? Because you're saying that the entire ASP sequentially increase is driven by price hikes. Because our checks don't point to that level of price hike. Could you, sir, just confirm that is this all price hike? 70% of that is about price hike and balance is about non-motorcycle mix, Vinay. Okay. Secondly, you know, like if you- Also, I would add that, Vinay, we've been also, with the constraints we're able to sell higher, better within, let's say Meteor for example, we're able to sell higher value products, so that also gives us better margin. Product mix has helped a lot within a model and of higher margin models. That is helpful. Secondly, if we see the start of this slowdown was in a way marked by the insurance cost hikes that happened in 2018 towards the end. How do you see the customer acceptance of these price hikes? You know, because this is, you know, with emission changes and all, we've and now with commodities, we are seeing prices inching up across two-wheelers. Do you see this could have a dampening impact on demand or any anecdotal trends you are seeing in order books coming off after the hike? It's a very good question, Vinay. It's very difficult to respond to that. I mean, the suddenness of commodity pricing, commodity cost increases and therefore price increases has been difficult for consumers to bear. There's no question about that. It does affect the market, it affects us, there's no question about that. It's just we are assessing in many different ways, but it's very difficult to assess the exact elasticity because there is a supply constraint as well right now for most of the segment. There will be some elasticity, not inelastic, the demand, right? There will be some of that. Having said that, right now for us, the indicators are good in terms or reasonably good in terms of fresh inquiries, fresh bookings and other such things. There is no question if we were at older prices, maybe the inquiries and bookings would have been even higher. That's very possible, but we will never know about that. It's still at a good level. I think when you balance profitability and growth, I think we're hopefully, we believe we're at the right level where we're, you know, we've got a bit of growth, but we're still making money or potential growth once, we're able to make enough motorcycles. Thanks, team. I'll come back in the queue. Thank you. Next we have a question from Nitin Arora of Axis MF. You know, just again, sorry for asking the Classic response. You know, in the last year when we actually read out of the book implied that is gonna cross like huge numbers. December bike, there are a lot of people who don't as well. I don't think very short-term issues. I'm not worried about these kind of things because that'll even out and that always does. In the larger scheme, I think what you're absolutely right to try and understand, what you're also trying to understand is that where do things land once things are stabilized? I think for Classic, the crucial thing is that it is. Recording in progress. We have very strong order intake, but it doesn't mean we can't continue to improve it. We're approaching, let's say, improvement of order intake on Classic 350 is also from the front foot, not from the back foot. Also, we are not driving as hard as we could also possibly in terms of, let's say, marketing investments and other such things, because we have a lot of people who are inquiring, but they're just not coming in because of the delay, right, in terms of delivery. All these things need to be ironed out. Hopefully, I think it will take H2 for some of these things to get ironed out, hopefully going into 2023. Sorry, not 2023, financial year 2023. That means in six months timeframe, we should, things should steady up a bit. Govindarajan, any further reflections from your side on this? Yes. Let's just add, the question was also like, what is that after the Meteor, now the Classic, what's happening between this? Very clearly, the Meteor consumer profile and the Classic consumer profiles are different. The Meteor actually, which has in a way, evolved and then replaced the Thunderbird, the franchisee has actually doubled from the Thunderbird to now. Once we launched Classic, we were looking at how the Meteor is behaving because the new engine which is there in that is an engine which is getting accepted and all. The inquiry levels of both the products are continued to grow and the booking rates are also going up. It is not a concern at this stage. As Siddhartha was mentioning, the coloring as of now is fundamentally because of the chip shortage situation, what comes first and how is that and all those things. Hopefully within a quarter time this all will get settled. The good news is it is not, if you are looking at it, because of Classic coming in, Meteor volume is coming down. No. The good news is both our inquiry levels are going up and booking levels are going up. Getting it. Just one question to you only, why the staff cost is down so sharply? If you can help us, let us know on this. Nitin, staff cost includes one-off of some of the unvested ESOPs of about INR 40 crore. Okay. Getting it. I have few more questions. I think there are more participants. I'll come back in the queue and all the best team as always. Sure. Thank you, Nitin. Thank you. Next we have a question from Pramod Kumar, UBS. Yeah. Thanks. Thanks a lot. Festive season greetings to everyone. Siddhartha, kind of continuing with the questions on demand, and what's happening in the broader industry, right? We are looking at double-digit decline for the broader industry in the festive demand so far, and they're flushed with inventory, they're not able to sell. In that context, and especially given the price increases what you guys have taken. If you can just help us understand how you are seeing order intake at the dealership level? Because festive season, I think a lot of customers may not get the bike, but they may still put down a booking on the official date, right? If Govindarajan, you can help us understand how the booking trend has been on the ground so far for you? How does it compare to, say, last year or the year before? Because if there is great demand and our customers are waiting, I'm pretty sure there'll be many more who would like to at least put down a booking, especially given how meaningful improvement is there in the J platform. If you can just help us understand that. Also, is there an increasing fallout rate or a drop in conversion rate because of the price escalation as well? Because that's also been quite sharp, right? Thanks, Pramod. Govindarajan, I think you're best placed to answer. The first question which Pramod asked is about the festive time, how was that? But I'm sure more or less you'll all be tracking. The two-wheeler is down by almost about 17%. That's the first time in this particular area which has happened, I suppose. During this time, what has happened to Royal Enfield per se, if in case we look at the inquiry level which we are talking about and the booking rate is not the same drop. That gives us a positive indication that if in case the vehicle availability is there, we can convert more. That's a positive sign which is coming up into this. What's the second question which Pramod was asking? Pramod, what was the second one which you were asking? In terms of the bookings, overall on Y-O-Y, and also the price increase, if there is any pushback that you're getting from customers? From the customer, you know, generally, Pramod, there is, as Siddhartha was mentioning, there is a concern in the market about the price increase, right? Because the price increases primarily has happened because of the statutory compliances and because of the commodity increase. If it is a future driven price increase, consumer looks at it in a different lens. These are all the things which structurally gets in. With the right level of the price increase and the demand which has continued to grow, we feel that's, it is okay. It is not hurting us at this stage. That's not a proxy to tell you that whether it is really, there is an issue or not because of the pricing, which will take some time for us. I think this has to be looked at is from the financing, which is also be an enabler for this. If the financing is made around as an enabler to look at it in an EMI term, that's what the consumers look at it. If we can work around in ingenious way, that there are different ways by which we make them to feel on the total cost of ownership, maybe the number of months are increased so that the monthly EMIs are dropped off. These are all the things which will help them to see that the cost of acquisition is not very high. This all one will like to go and then spend more energy on all those things, provided if you have more motorcycles in hand. That's where we have to look at it. Post-COVID, you know, if I have to tell you, because all of us have been looking at what's happening between the inquiry levels and all. The walk-in inquiries are going up. For us, the walk-in inquiry when it's going up, the conversion ratio is also very high equally. The velocity is very high. When that shift is happening, we are just waiting, yes, the supply situation is easing, it is going to help us, and that will take us to an higher number, and we will be back to the higher run rate. That's what is the thought as of now from me. Yeah. Govindarajan, related to that, how is the first time buyers trend for Classic bookings? Because that's your recruit brand primarily. That's the brand which got the story going, right, to where we are. Are we seeing some bit of a replacement demand from existing Royal Enfield customers given how significant the improvement is versus the old platform versus the new platform, right? It's the same spec, same cc, but the performance is of a much higher level, right? Are you seeing that bit as well? It is too early, Pramod, to be honest, because for a consumer, our Classic UCE, which we have been adding up volume in the last four, five years, for him to have a replacement cycle which kicks in maybe in another about one, two years' time, that's the time probably they will be looking at this particular vehicle as in a replacement. Because it's a very refined in a different kind of a machine which is going to give him an outstanding experience. Whereas, this is also helping us to reach out to our CRM to the older consumers. The first time consumers percentage is actually coming up, to a rise even in the Classic 350, the new Classic 350. The reason I asked that, Govindarajan, was the increased prices of the product will generally have a positive impact on the resale value of the existing motorcycles, right? That can be used as a way to kind of get some of the replacement customers thinking about probably the value what they're getting is probably more than what they bought, say, seven to eight years back, right? That itself could be a good trigger for them to re-look. But thanks for that. Final question from my side on export. The momentum seems to be very strong given that we are approaching the winter season in many of the end markets, right? What explains the strong momentum in exports? Given the momentum going into December, should we expect once the riding season opens up, especially in North America by March or second quarter of next calendar year, are we looking at a much higher export or a run rate for us as a company on a sustainable basis? It is, Pramod, as I mentioned, compared to last year, two years back, as I mentioned, we were selling 19,000 for full year. Now we are talking 19,000 at one quarter level. You know, that's how the exports business is coming up. That hasn't come up just because some were not, right? Because systematically Royal Enfield has been working on it. As we were just talking about, on that, if you look at what is that we have done as a team, first we brought in our Continental GT and Interceptor at 650 cc, at a global product level and the quality level it got established. Then we brought in Meteor and now Classic 350 and the J-Series products which are there. That lineup is very strong. Second is all these products when we are launching, the acceptance is very well. They're also the other countries statutory requirement wise and environmentally Euro 5 compliant motorcycles, which is readily available when you get into this. Our establishment of the multi-brand outlets, our own exclusive stores, which I mentioned, as good as about 750 overall multi-brand outlets and our stores outside India. The brand full excellent product. We have the prescription for actually getting into to create a success story. From here, what we are looking at is our export story is going to have a big success story, which is what we can create, is what is our confidence, Pramod. Yeah. To add to that, of course, there is a large seasonality for exports, but that's also, we're able to manage that somewhat because we have enough warm countries that we're exporting to also. It's only the very cold countries where there's a very high seasonality. Having said that, actually starting December, January, February is where the most amount of shipments need to go to the cold countries, so in North America, Europe. The buying season is actually April, May, maybe June. That's it. You will see us, you know, it's really the last quarter where we will have to ship out all the vehicles for these countries. So there will be a pressure on us to get that. Because if you don't do that, you miss the entire summer season. The summer season is, selling is April, May, June. That's it. Thanks a lot. I wish the team all the best. Thanks a lot. Next we have a question from Arvind Sharma. Please limit to two questions per participant. Thank you, Raghunandhan. Good evening, sirs. Thank you for taking my question. First question would be on the platform. Now that the bulk of your volumes are on the J platform, is an inherent increase in efficiency as you move from an older platform to a newer platform? Just asking this question, because as we've been hearing about the margins part, is the platform shift and a better use of the new platform have a part to play in this profitability? Yeah. Arvind, new platforms are not always to be looked at like that. You know, when we sign up a new platform, we look at it. Because any platform, the actual product coming in is at least about, say, three and half to four years timeframe. When you do that, at that point of time when we sign up, we start looking at it down the road, three years, four years, what the consumer wants to have a real experience. So sometimes the platform actually comes from there. When we are doing it, what is required is some of the positive points have to be enhanced, some of the negatives of the existing one have to be knocked off. Net-net, on a total cost of ownership, it has to be looked at from a cost perspective, scale perspective, quality perspective, what experience we will give it to them, what performance we have to give it to the consumers. That's how the packages of any platform is done. If you're talking about is there any efficiency which will come up? Yes. At every stage when we are bringing in a new platform, actually we also go through what is the efficiency we can extract. Efficiency need not be always from cost angle, it can be from any angle as an experience which we have to give it to the consumer. Sure, sir. Thanks for that. Second on the order book that you have, given a lot of these orders would also be because of festive season, could there be some cancellations? In case, as you said, if Royal Enfield is not able to supply to all those orders, do you foresee any cancellations? The indication as of now is not so-so. The percentage of cancellations, which we have to track it. You know, cancellation is, in my opinion, I mean, which comes at a later point, right? If there is a shortage in the situation, the inquiries and booking will be the first point of a question. There we see a lot of positive traction. When somebody is seeing that, yes, there is a supply situation, there is a waiting period, but still the inquiry and the bookings are going up, it does mean consumers are willing to come and then look at Royal Enfield motorcycles and experience what the product can offer. Cancellation, once they are coming to us, the way we will engage with them, the way we will convert with them and all those things, it's a journey, the consumer journey. There we have to look at it, but as of now it doesn't show that there will be a huge cancellation. Sure, sir. Thanks a lot for taking my questions. That's all from my side. Thanks so much. Next, we have Gunjan Prithyani. Please note that this will be the last question for the day due to paucity of time. Gunjan, please go ahead. Sure. Thank you. Thanks for taking my question. Just two follow-ups. Going back to this whole margin, you know, margin performance this quarter. If I look at gross margin per unit, this is the highest that we have done. And if I were to look at the price increases that Kaleeswaran Arunachalam spoke about, it seems we have taken more than what the cost impact has been. I'm just trying to understand the sustainability of this, you know, INR 72,000 gross margin per unit. I mean, how should we think about it? Is it that, you know, because there was a shortage in this quarter, we tried to service more of premium product? I mean, is this kind of mix sustainable. Just some color on that will help. I think, let's take it in two or three parts, Gunjan. I think, let's start with first the international mix. I think we have seen a sustainable international run rate now for the last two or three quarters, clocking about 18 K-20 K. That mix is only positively improving and therefore the ASP and the gross margin realization that needs to have on that will continue. Next comes the non-motorcycle part of it. We talked about the investment around MiY, the results that we are getting on account of MiY and the average ASP increase on account of MiY. The penetration, more importantly, has gone up. Any activities that's going to help us in increasing ASP and GC on that also is permanent. Nothing is going to change. If not, we'll only see a similar traction of what we have seen in other products across the portfolio on MiY. Comes the mix. I think, some of the, product mix that we have, largely if you look at it, say about last year, we did not have a Meteor. It was largely a Classic mix, which was significantly higher. Now we have a Meteor, now we have a Classic, and the mix is only averaging out. I don't see an aberration in terms of how the mix can change. Yes, there could be a supply-led concern here and there, which could have helped us to move on to a premium, line within the same model. But that I would say it is pretty minimal and short-term in nature. In long term, the mix should continue to where we are. Okay, this is very helpful. Just, second question. On the product pipeline, you know, should we assume the most of the, you know, big action that were to happen this year have happened now, the focus is going to be on getting the supply in place? I know you don't talk about models, but general, you know, broad commentary will help us think about the product pipeline. Gunjan Prithyani, product pipelines are not to be seen only in the short term, right? Any product pipeline for an organization have to have at least for five years. What's the thought process? Specifically, if you are looking at all our actions are done, our major platform, the changeover which has to be done, that's completed. We are into an execution path. Having said, any products in the adjacencies which we have to come up with and any new products which we have to come up with for a specific set of consumers, which is possible for us to exploit, that also we are continuing. Our product pipeline is continuous activity. There's nothing called it is all done and dusted, now it is only an execution. No. We have to continuously keep coming out with the new products, which we are very clear what it is, how it is, at what point of time we have to come up with. Yeah. Okay. Obviously, one is of course from a COVID perspective, there was some changes. Second, even from a supply constraint perspective now, we have to consider, when to launch, what to launch. There are some evolutions to our original plans, which will always be there in a situation where, you know, parts are not available, et cetera. We do have a strong pipeline of product for the next few years coming up. That's all baked in already. Okay. Just, Kaleeswaran, one clarification. You mentioned that the ASP, because of MIY has been almost two times. Is that understanding correct? The overall bill value is about two times increase from a- No, two times increase for accessories only. That's right. For accessories. Yeah. Not for the bike. The accessories, because people are buying through MiY, they're actually purchasing more accessories. That's the Right. Maybe 100% more than usual, so. That's right. Through MiY. Okay. Got it. Thank you so much. Thank you. That brings us to the end of the session. Over to the management for closing remarks. Thank you, Raghunandhan. Thank you, Emkay Global, for hosting this and wishing you all a very happy Diwali. Thank you very much. Thank you very much. Wish you all a happy Diwali. Thanks everyone. Wishing you a happy and safe Diwali. Thank you. Thank you everyone. Wishing everyone a wonderful Diwali. Ending the session.