Ladies and gentlemen, good day and welcome to Hero MotoCorp Limited Q4 FY 2021 Earnings Conference Call hosted by JM Financial Institutional Securities Limited. As a reminder, all participant lines will be in the listen only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Vivek Kumar from JM Financial. Thank you, and over to you, Mr. Kumar. Thank you, Neerav. Good afternoon, everyone. Thank you for joining in. We thank Hero MotoCorp's management for giving us the opportunity to host the call today. We have with us the senior management team from the company. I will now hand over the call to Umang Khurana, Head of Investor Relations and Business Support. Thank you, and over to you, Umang. Thank you, Vivek. Thank you for hosting us. Good day, everyone, and trust everyone is keeping well and safe. We are delighted to have all of you on the call today for our quarter four and full year results. We have with us today Naveen Chauhan, who is our Head of Sales and Aftersales, and Niranjan Gupta, who is the Chief Financial Officer. We'll begin the call with Niranjan's opening comments and then open the house for questions. Back to you, Vivek. Or let's begin with Niranjan's comments first. Niranjan? All right. Thank you, Umang. Umang, the customary question first. Am I audible and clear? Yes, sir. All right. Welcome everyone to Hero quarter four investor call. Good morning, good afternoon, and good evening, depending on which part of the globe you are joining from or simply [Non-English content] to everyone. That takes away the complication of morning, afternoon, and evening. We hope and we pray that all of you, your friends, your families, continue to stay safe and continue to ensure that we come out of this crisis which is prevailing today, in India and some part of the world, as winners on the other side. There are no doubts, and we are confident that together, we can and we will. Coming to quarter four results, which we declared yesterday. Let me just talk about some of the key highlights. The first one, of course, as you would have seen, is the market share gain, which is 140 basis points, in terms of overall full year gain. That gain has come after many years for us in Hero and a substantial gain. It's been powered by scooters, which is again, a very delightful thing for us, where we've gained almost 270 basis points and we are back to around 10% market share. This is powered by our Pleasure and our 125cc segment in some of the key markets. Of course, the road is long, we are very confident that we can take big strides now in the space of scooter. Similarly, the other highlight within market share is premium, which has moved close to 4%. Remember that we were hardly present in premium segment. Now on the back of XPulse and Xtreme 160R, the market share has started moving up. We are sure as we build portfolio, as we have already outlined as part of our strategy, the market shares in premium will keep moving up and will be a big growth driver for us moving forward in the medium term. The third big highlight on the market share is the global business, which as we said, we have restrategized on focusing on few markets. As we have learnt, we are putting the right products which are needed for the customers in those markets. You would have seen in FY 2021, we have grown at 8% versus industry decline of 6%. Of course, it's on a smaller base. If you look at quarter four run rate, that is closer to 300,000 annually, which is almost 40%-50% higher than our erstwhile run rates, which are closer to 200,000. We are sure and confident that again, global business will prove to be a big growth driver for us in the next three to five years. The fourth highlight on the top line is the parts business. As we had said earlier, the business is doing very well led by our micro marketing strategy, our expansion of coverage on distribution part, this is the second successive quarter when we have crossed INR 1,000 crores. In fact, it is inching now closer to 10%-12% of revenue on a steady basis, and we are sure that this can be grown further. There are plans to this extent. Overall financials, of course, you have seen the margin in quarter four. Despite all the commodity headwinds and commodities having a steep rise as a margin on quarter four of close to 14%, which has been driven by a combination of the Leap-II savings program, which has delivered almost 300 basis points. Of course, judicious price increases that we have taken. That has helped us deliver the margins that we are talking about. Overall, these financials, as we have delivered in FY 2021 are after factoring in all the support that we've been providing to dealers, to vendors, to entire ecosystem, to employees, because this was a pandemic year, and therefore, we needed to be supportive of all the stakeholders, protecting payroll, everything. Not cutting corners, but obviously saving where there were opportunity to be had, and that's reflected in the result, and also our focus on creating value, while ensuring that all stakeholders are also taken care of. Finally, to cap it up, the cash flow, which is very, very important. As they say that top line is vanity and profit is sanity, but cash is reality. That's an old saying. You can see the cash flow that we have delivered is upwards of INR 4,000 crores in the year, which will augur us well when creating a liquidity buffer. We declared a dividend overall of INR 105 per share, which comprised of INR 90 normal and INR 15 special dividend. That should be, again, something which should be delightful for our shareholders. That's the brief summation of our quarter four highlights. Let me now move to quarter one. These are difficult. These are challenging times. The surge in COVID 2.0 wasn't anticipated, wasn't predicted by anyone. It is impacting lives. Quarter one is not the quarter to count volumes or count money, it is the quarter to help each other, to save lives, and to save society. Profits and money will come later. In this quarter, our focus is fully, completely on that. Towards that, as you saw, we took proactive shutdowns of our factories to ensure that there is a breaking the chain that we can help with. There are multiple actions that we have taken in terms of whether it's medical facilities, whether it's a vaccination drive or multiple CSR activities around oxygen cylinders, around helping out ambulances. All our teams, which are not only us, but along with dealers and vendors, in this time of crisis, are doing their best to help out not only the employees that are associated with us, but also the community that are around us. We do expect that with medical facilities getting ramped up in the country and with vaccination drive, all of us should be past this entire tsunami very soon. There are predictions of middle of May being the peak, and therefore, end of May subsiding down, and June could be a period of kind of coming back to stream on business. That's how we see quarter one. Therefore, quarter two is the quarter that we see that sanity to come back. Beyond that, the outlook remains positive as far as we are concerned, given that the underlying demand factors still exist completely, whether it's monsoon, crops, liquidity, or need for mobility. The GDP projections for quarter two onwards are bullish, should be double-digit or 10%+, as RBI governor has said. Of course, cost will continue to be headwind for a couple of quarters, but as you've seen from our results, we've been able to manage that, and therefore, we'll continue to navigate on that space. Within our own portfolio, our outlook is positive beyond in medium and long term, and also for the rest of the year starting from quarter two. Our core brands have done well. As you saw, scooters are making big strides. Premium, we are building portfolio. Global business has started scaling up. We made big strides on EV as well, which will augur well for medium and long term, and you've heard all the partnerships that we have announced. Therefore, we should see all the growth drivers that we had outlined taking more and more shape and contributing more and more to our top line and bottom line. Therefore, we remain positive about our own market share and portfolio trajectory moving forward. With that, let me now hand it back to Umang. Umang, back to you for opening the floor for questions. Thank you, Niranjan. Thank you for your quick update on the quarter and the year gone by. Could we now take questions, please? Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the 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. Participants, you may press star and one to ask a question. The first question is from the line of Pramod Kumar from Goldman Sachs. Please go ahead. Hey, thanks a lot for the opportunity and hope and pray the Hero ecosystem is holding up well during these tough times. Niranjan, my first question pertains to the commodity headwind. If you can just help us understand how much of the commodity headwind have we absorbed and passed on to the customer? As we look forward to FY 2022, how should one look at the cost implications of some further hikes and its play on profitability? If you can just help us understand this. Of course, I'm not talking about 1 Q here, but broadly for the year as a whole. If you can help us understand that as well. Right, Pramod. Pramod, again, I hope you and family and friends are all staying safe and staying strong to battle the current crisis that's happening on COVID. Coming to your question, Pramod. The commodity short answer is that the inflation take of full year on inflation account, it would probably be close to around 6% - 7% that would have impacted the year. We've taken pricing over the full year around 4%, and the balance 3% has been made up through the Leap savings program. That's the overall, if I look at the totality of the program. If you were to say that around 6% - 7% of inflation has been absorbed in these results. Moving forward, if you were to look at, yes, commodities continue to be at a high, but at some time the supply should come in and cool off. Of course, it's very difficult to forecast commodities, and maybe I can look forward to some of your reports coming out from Goldman Sachs to look at what the commodity forecasts are. What we have done is that, of course, the last year, FY 2021, was the first year with so much of inflation. Some bit of inflation would still come in into the FY 2022. Again, we'll continue to navigate with a combination of judicious price changes in line with industry and maintaining our product positioning, as well as the Leap-II savings program, which again, full year basis, it gave us more than 200 basis points and should continue to work for FY 2022 as well. I think we should continue to navigate that part of it and maybe, probably if there's an inflation around maybe 3%-4% for the coming year, then couple of percentage can be made up from Leap savings and other couple of percentage could be from the prices. That, again, I'm saying Pramod, not just the quarter, but a full year outlook that we have. Fair enough, Niranjan. That's actually very comforting to hear on the margin side and the cost reduction side. Second and final question is on the Gogoro side. Yeah. I think it's a very interesting move and approach what you've taken. If you can just help us understand what will be the likely timeline for you to go commercial here, because the technology readiness is pretty much there with Gogoro, so your time to market need not be that long. How does it fit in with your existing own EV plans in Germany, what you're running from the German unit? Is there any rethink there? Finally, as it's current environment, there's a lot of hype about, or a lot of talk about or worries from the startup ecosystem, given especially some of them have made some big bang announcements. How do you see them from your vantage point? How would you expect this to play out between the less established incumbents and versus the startups who are trying to break fresh ground in this industry? Thank you. Right. Thanks, Pramod. Pramod, on EV, as you rightly said, our own centers in Germany along with our Jaipur R&D centers have been working on our own program. That program is primarily based on fixed charging system. That's not on a swap-based system. While the Gogoro partnership will be on a swapping system. As you understand that which of these two systems will become dominant, our view is probably both will work in parallel to each other given the entire appetite and the infrastructure that exists. In that sense, it is complementary that our own program works on a fixed charging. With Gogoro, we've announced that we will work on swapping. That allows us to play in both the spaces. You're also right that, therefore, it doesn't have any adverse impact. If at all, it's a favorable impact because some part of the Gogoro learning and the products which are there, or some components we could actually build in into our own fixed charging program as well from a product side of it. From a swapping system, of course, like you said, Gogoro has got ready technology. They've got proven technology. They know how it works, and there's a lot of learning that has gone into it in Taiwan. That helps us taking off ground very quickly. In terms of timeline, the timeline for both is next year. I would not say which part of the next year. Obviously, we are trying to accelerate as much as we can. Right now, I would say that next calendar year, you can hope to see a lot of action on EV front from our side as far as hitting the market is concerned. On the startup scene, or the challenge from the new startups, Niranjan, any thoughts there? Right, Pramod. I wouldn't comment on any specific announcement. However, what our experience is, and you also know that any new category which is evolving, initially there will be many players who will come in, and that's somewhere good for category as well, because it allows the category to expand and explode. In a sense, everyone brings to table some capability the other, but eventually then it leads to consolidation. This is not a play which is about an aggregation play or a software play or maybe an app play. This is a hardcore serving the customer on the vehicles, on servicing, on after sales operationally, and it's not easy. You would have heard even Tesla or Elon Musk saying recently that it's very easy to build prototypes and do a bit of stuff, but operationally it's not that easy and that's it. Therefore, this is a hard thing that will go in. At some stage, obviously consolidation will happen. We are not concerned about that. I think we are focused on what the customer needs are and then how do we fulfill them, and that's how we are going about this. Thanks a lot, Niranjan. Take care and stay safe, sir. Thank you. Thank you, Pramod, for the question. Thank you. The next question is from the line of Raghunandan N L from Emkay Global. Please go ahead. Thank you, sir, for the opportunity, and congratulations on good set of numbers given the circumstances. Sir, my first question was on the commodity part. You alluded to it and the wonderful performance there in managing commodity inflation. Approximately, can you give us an indication how much was the impact of commodity inflation in Q4, and approximately how much do you expect in Q1? My second question was on the market share. On a full year basis, company has done well and gained market share. In the recent quarter, in 125 segment, there is some pressure on volume and market share. Is it due to inventory adjustment, or are you seeing higher competition intensity in that space? Just third one, if I can squeeze on Harley-Davidson tie-up, if you can give some details on plans of joint product development and any timeline. If you can provide details on margins for the distribution business. Thank you. You are testing my memory or my RAM space in my head. Anyway. No. I- One by one. No, I'll try to. On materials, since you are focused on quarter four, you would have seen that our quarter four material cost on a per vehicle basis has gone up by around 4%, 4.5%. You've seen from the results. Out of that, you can say that parts have contributed to the parts percentage has gone up. That's around 2%. On two-wheeler, if you isolate, then it would be around net 2.5%. This net 2%, 2.5% is after factoring a Leap saving of 300 basis points in the quarter. Effectively, the quarter four absorbs almost 500 basis points or 5% increase growth in the material cost. That's a better way to put it. Therefore, that is what gets absorbed in the results that you see. In terms of market share, let me address the Harley-Davidson first, and then I'll give the market share question to Naveen to answer. On the Harley-Davidson tie-up, as we have said, the distribution business has already started. We are the exclusive distributors for Harley, and that business has started. Around 14, 15 dealers have been appointed, all from their existing system. The business is off to a start. Of course, the key part of the Harley-Davidson tie-up is the license to build the heavyweight segment which is a very profitable segment as you know, and the lead player has the market share of around 90%. There, this whole thing of developing the bike and putting out in the market, both under Harley name and Hero name, that is something which is the key part of the HD tie-up. The teams have already started working and progressing on that. Naveen, can you take up the question on the market share, where the question was that the full year we have gained, but in the recent times or recent month or quarter, we would have seen some softening from our side. What are we doing about it, and is that fundamental or otherwise? Naveen, over to you. Yeah. Thank you. [Non-English content] to everyone. Hope everyone is keeping safe and sound. Now, regarding the question, while Niranjan, in your initial address, you had talked about the market share gain in different markets overall. I'll do a double click there, maybe that will have an answer to the question that has been asked. While you've talked about gains in scooters premium, on the overall market share, if I take a breakup of urban and rural, we've gained in urban. We've held on to our rural market share. We've looked at the top markets, we've gained in the top market. Now, on the question, coming to the question specific. See, at no point of time, you will see quarter on quarter the market share would be running at a uniform level. They are a mix or outcome of multiple factors playing in. Which segments are doing better, both in terms of product segment or geographical. How are the various occasions. India, there's a lot of occasion buying that happens, right? Hence how is the occasion fitting in into various segments. Q4 is an aberration. Q1 is what we are looking at. Unfortunately, there is an impact of COVID, which has come in. That's something that will manifest as the time comes. For me, Q4 is an aberration, but there was a specific question that was asked about 125cc also. 125cc, there is a sequential gain. 125cc got two strong products in terms of Super Splendor and Glamour. We've seen some hit on the Glamour in its core market. When we conceptualized the product in the BS-VI avatar, it was to attract a new segment of consumers, which were emerging as a growing segment. We've gained pan-India except for its core markets. There is a feedback that we've received from the consumers in the core markets. We're working on that. We've been agile in the past. We are agile now. Quickly you will see some action which is coming up in the segment. Thank you. Thank you, sir. That was very helpful. Just a small clarification. For Q1, what kind of commodity impact you are looking at? Right. Let me take that up. As I said, it's very difficult to go past quarter by quarter commodity impact, and I did respond to Pramod on this question. That maybe looking at what is going around that year, the full year may see an impact of around 4% inflation on the commodity because large part of the commodity inflation has come in FY 2021 and towards quarter four. Obviously we plan to then make it up so that the impact on margins is minimized. Therefore, partly through price increase and partly through savings programs and a combination of all these things so that the balance between margin, market share, and impact on customers is maintained. Thank you, sir. Thank you so much. A request to all the participants. Please restrict to two questions per participant. If time permit, please come back in the question queue for a follow-up question. The next question is from the line of Nishit Jalan from Axis Capital. Please go ahead. Hi, sir. Thank you for the opportunity and congratulations on very good set of numbers. My question is on the cost reduction side. Hero has been in this two-wheeler industry for quite long and are very well-oiled machine on the cost side. I am very surprised to see, positively, to see this kind of INR 200, INR 300, this kind of a cost reduction benefits coming in just one year. Wanted to understand and get more color as to what is driving this cost increase. It is a very steep increase coming in an organization which is already very cost efficient in just one year timeframe. Some more details on this would be very helpful. Right. Nishit, thanks for the question. See, what happens is that whenever a cost base gets restated, which is what happens when we move from BS -IV to BS-VI, and you know in BS -VI regime, the cost actually went up by between, I would say, 12%-14% or 15% because of BS -VI. Whenever a rebasing of cost happens, this again presents an opportunity to save on that. That is why you see that if it was just BS -IV, probably it would not have been feasible to deliver this kind of saving. As the costs have got rebased, then the opportunities emerge because initially it was all towards ensuring that the products are robust and they are delivered in the market, and they perform in the market. Now after that, just alongside R&D and sourcing and the entire system has started working on what we can save on top of that. Therefore, that's the program and out of that one of the major programs is the precious metal, which is the catcon and a loading reduction. A combination, as you know, there are three metals which is rhodium, platinum and palladium. You can work with different combinations of those. You can reduce loading by adding something else. Those are the programs that have given bulk, I would say 60%, 70% of these savings and other savings have come from different areas where obviously as you go through a more squeeze on margins or costs, obviously you start looking at every angle once again and that is what we've been doing. Sir, what I understand is a bulk of the cost savings have come from a fuel injection and the catcon costs that we have started to put in after BS -VI, right? Sir, these costs, these are kind of bought out parts that we are getting from suppliers, right? If suppliers are doing these kind of cost reductions, should these benefits not flow to the entire sector or all the OEMs present or is it something really specific which Hero is doing at their end, which means that the benefit is only for Hero and not for the others? No, Nishit. This is not the FI system. This is a catcon loading that happens in the product which is combined of these three materials. It is not a bought out part. Essentially you consume less of these metals, which is platinum, palladium and rhodium and the combination of those depends on your R&D, how you are able to size it up. In a sense I would call it flex formulation where you can use a different combination of these to achieve the same result and same BS -VI output in terms of emission norms. It won't be same standard across for each of the companies or players. Different players will have different solutions. Even between FI and carb, there will be different flexibilities existing. Okay. Sir, sorry to harp on this a little bit more. Sir, if I understand correctly, 200 to 300 basis points cost savings indicates almost INR 1,000-INR 1,500 savings on a per vehicle basis. Sir, what would be the content of precious metals typically in a bike? My understanding was it was around INR 1,500-INR 2,000 originally. Was it much higher originally and you have got it down significantly to get these kind of cost savings per bike or there is something else to it as well? I wouldn't now give out my entire BOM cost and details to you because obviously that's confidential and competitively sensitive information. Just to give you a hint that all the precious metals, their prices have gone up by 100%, 150%, 200%. Therefore whatever the cost base was there itself has gone up and then obviously through a combination and flex formulation like I said, under the intense R&D program by the way so it's not just bought out part negotiation that happened. Offline of course you can talk to Umang more later but obviously beyond a point we will not give out sensitive details of that. Got the point. The second question is on the spare side because it's the second consecutive quarter now where we have seen a significant growth on that front. Firstly if you can share numbers of this quarter and secondly what are the structural factors or drivers which you are taking to bring this spare revenues higher or it's just a factor that in the 1Q and 2Q spare revenues were lower and that is the reason why we have seen much higher spare revenues in the second half. I'm just trying to assess what is more sustainable and what is more transient in nature on the spare side of the business. Let me take this first and then I'll ask Naveen to supplement, which is, as you would have seen, so if it was just one quarter phenomenon, you could have said that it is transient. Even that time, we said that it is based on underlying drivers, which Naveen will spell out, but it is a successive quarter of INR 1,000 crore plus, and we are now moving from what we used to have, 7%-8% of the revenue comfortably to 10% of the revenue and potentially to 12% of the revenue moving forward. Let me not steal the thunder from Naveen, and Naveen, you can outline this whole entire story of how our parts growth is being driven and how sustainable it is and what are our plans. Over to you, Naveen. Yeah, thank you. Maybe I'll try and explain it in a simplistic fashion. The two areas wherein the consumption is, one is our own captive market, which are our dealerships and authorized workshop, and then the second part is which is aftermarket, beyond our dealerships. For two years now, we've been running a program called NPS 60, which is to enhance our consumer satisfaction level and to take our Net Promoter Score level from 12, which was 12 2.5 years back, to 60. Fundamentally, making our processes and systems very, very robust, very strong at our own dealerships and hence retain the consumer can improve our sales revenue and other consumers. That's one piece, and which is going on, and fundamentally it is on the right track. Also, in terms of retaining and getting our lost customers back, we are reaching out. There is a micro distribution of service. That's also a concept that we are working on. We've tested that in certain select markets, which is giving results. There is fundamentally the business grows in our off-site segments and its contribution is going to go up. The second piece is which is aftermarket. Aftermarket, around three years ago, we had a certain level of distribution system wherein we had super stockists kind of distributors. Hence, this customer intimacy, which is core to our approach in sales and aftersales, is being played out in the aftermarket spare parts domain as well. We've got closer to our customers. We've got 100,000 technicians on board with us. The number of technicians who deal with us has doubled in last one year, getting in contact with us. Number of retail points, that's micro distributions further to the third tier level, that has also gone up fundamentally. Fundamentals are in place. Now distribution footprint is in place, and I would say we have done with 70% of the market as yet. We are yet to do, because of the pandemic last year, we could not complete the full, 30% still remains. With 70%, the kind of growth that you're seeing, it's giving right now. Hence, there is an upside available in terms of that. Broadly, the distribution, and yes, there is a lot of work which is structurally getting into play. Thank you. Thanks, Naveen. Thanks a lot. Just to add on, our teams are also working on expanding the accessories and merchandising, which is a very small business today, but a huge potential exists, in terms of not only revenue, but also creating a branding through that. Thank you very much. A request to all the participants, please restrict to two questions 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 Kapil Singh from Nomura. Please go ahead. Yeah, hi, sir. Congrats on a great set of results and also pretty heartening to see the kind of effort that entire management is putting in these tough times to take care of the community. Wish you all the best for that. Firstly, my question is on the export side. Niranjan, you alluded to the fact that export run rate is touching almost 300,000 numbers. Just some thoughts on that. Would that be a right kind of level to look at for next year, or would you look at even better numbers because there, for fiscal, there are launches due for some of the key markets like Nigeria. Just some update on the timeline of new launches and the output run rate that you said. Thanks, Kapil, for the question. Yes, what I highlighted was just extrapolating the quarter four and therefore our run rate, because we don't want to take a month and extrapolate, I think there was a quarter which you can extrapolate, and that's where it is. Yes, we would like it to be higher than this for sure. There are, as you rightly said, there are multiple launches which are planned, whether it's Nigeria, et cetera. As you know, we've opened up Mexico. The orders have started coming in. Mexico is a big market. Colombia, where we were stuck at around 4% market share for quite some time, in the last three quarters have moved to 6% market share, Colombia is again a half a million market, Therefore, there's a big potential there as well. Bangladesh, the strategy has been reworked to increase market share. Honestly, there are multiple actions. Would the internal team be happy with even this run rate? My answer would be no. Of course, you got to build it and, obviously, we would like to come out with better numbers than these and then delight you. Okay. That's great to hear. Secondly, I also wanted to check on this Gogoro tie-up and the JV. Could you talk about what are the revenue streams that we can expect here? What is the kind of investment that we can expect because battery swapping probably will be a much more capital-intensive model as well, right? What kind of investments have you earmarked for this? Kapil, the business case and the investment, and in fact, the business model itself is being worked out. Yeah. Therefore, once we do the business model, then one can work out which way it will be done. I mean, whether it will be entire capital intensive, whether it will be a franchise, how does it dovetail with FAME, et cetera. If you look at our strategy, and again, to just reiterate, the primary own thing was our teams are working on fixed charging. That also will have, which is our own product, which we are doing in Germany in combination with our own Jaipur R&D as well, that we started fixed charging, but gradually it will also have a swapping option. Now you have the Gogoro, which is a ready swapping option. Without waiting for a swap option to get developed on our own product, so you have a ready option with Gogoro as a swapping option. I think all of these business models will get worked out, and essentially, once it gets worked out and fine-tuned, then we can come back to you in terms of what exactly the investments would be and the revenue streams would be. Sure. Sir, could you give the sales number for the quarter? I think you didn't give the number. Sorry? The sales number for the quarter. Yeah. Sales number for the quarter was INR 1,050 crore for quarter four FY 2021. The Q4 FY 2020 was INR 751 crore. Just the previous quarter, which is Q3 FY 2021, was INR 1,034 crore. Okay. Thank you, sir. On a full year basis, FY 2021 was INR 3,178 and FY 2020 was INR 2,896 crores, just to complete the picture. Thank you. Bye. Thank you. The next question is from the line of Mukesh Saraf from Spark Capital. Please go ahead. Yes, good afternoon, and thank you for the opportunity. First question is on the EVs again. If you look at the Gogoro tie-up, plus you're doing your own vehicle, plus you're also going to be participating via Ather. Could you give some sense on how are we positioning these three products? Could you give some sense on the price points, at least directionally would the Gogoro one be right at the bottom and then probably your own product and then Ather? Some sense on how you're looking at these three ways that you're approaching this market. I think you will have to wait for the product to be launched for the pricing and the positioning to be revealed. As I said, the launch is next year, and next is the calendar year. Of course, we are targeting, as you would have heard our CEO also say, targeting FY 2022 launch itself. Yeah, you will see multiple actions from us in 2022. Right. Very qualitatively, if you could give some sense, because obviously you will be finalizing your modalities, et cetera. Given that you've already entered these three ways and looked at entering in these three ways, some sense? Nothing right now. Let the suspense be there for some period of time. Sure. Okay. Second question is again, related to this. We looked at the last year or so, you've had two global tie-ups, one with Harley-Davidson and one with Gogoro. When I look back, say, 10 years, post the split with Honda, we've not really had too many of these JVs while competition has been tying up with some of these MNCs. Is there some change in thought process there? Have you kind of earmarked some investments towards doing to address some of these areas that we've been lacking in the past? Mukesh, we've already been tying up. As you've seen, of course, you are right when you say last maybe few years, three, four years or whatever. If you see, we are seeing where would a JV or a tie-up make sense, what is our own M&A strategy, and then we are going after that. If you look at it, that's how in the premium segment we tied up with Harley-Davidson, and that's something that obviously augments the entire premium strategy very well. We've tied up with Gogoro in EV. You already see two big tie-ups that we have done in very recent past. Honestly, we are doing what is actually required as a strategy for the business. Right. It's not like a change in thought process because we've not been doing these tie-ups all these years. It's not like there's been a change in strategy internally and like you have set aside some bit of investments that we want to do towards some of these level JVs. Tie-ups always also depend on two parties coming together. Also, the strategic direction. Third is that both parties should come to a commercial understanding, which is win-win relationship. Many times you keep working on those and then the fusion happens- Sure. ... at certain point in time. It's not that we started working on these six months back and now it has happened. It's not a big change in thinking. However, if you see our new vision and mission, which is Be the Future of Mobility and mission being Create, Collaborate, Inspire, clearly collaboration acquires a big space in our strategy moving forward. Sure. Understood. All right. Thank you so much. I'll get back to you. Yep. Thank you. The next question is from the line of Binay Singh from Morgan Stanley. Please go ahead. Hi, team. Thanks for the opportunity. Congratulations for a very good quarter amid challenging times. Most of my questions have been answered. Two, three follow-up from previous questions. Could you remind us what are the price hikes that you have taken this year? Could you talk a little bit about any update on the Harley-Davidson side? We've talked about product developments with them. The Gogoro model be available in FY 2023. When do we start seeing some sort of a product action along with Harley-Davidson? Which year would you pencil that in? Any CapEx that you have allocated towards that? That's it. Thank you. Binay, price increase, I think I already outlined, but just to repeat, over the year, we took price increase to the tune of around 4%, combined all the quarters. If you look at Harley-Davidson, we won't be able to give out any timing right now, but obviously both the teams have already started working on in terms of the product to be launched. Third is on EV, as I said, not 2023, I said that it will be 2022, which is the next calendar year, and we are trying to launch in FY 2022, one of the EV products. You will see multiple actions, whether it is our own product or a swap product or with Gogoro, all of those actions that you will see in the next calendar year. Great. Thanks for that. Thank you. Thank you. you. The next question is from the line of Rakesh Kumar from BNP Paribas. Please go ahead. Hi, good afternoon, and thank you for taking my question. My first question was more of clarification. Have you started booking revenue for Harley-Davidson distribution network, which has gotten empanelled with us? Yes, we have. Can you please quantify what would be for this quarter? That would be a small portion because overall, in terms of the context of the sales that happens and the revenue that happens, it will not be a significant portion, but offline, Umang can actually give you more details. Sure. Thanks for that. My next question was more on the realization part. From pre BS -VI level to now, our realization has increased by 20%. What do you see its implication on the demand side? Because a large part of it is driven through the price increases and not much from the mix side. How do you see its implication on demand? Will that make our demand or growth much more volatile in times of weakness underlying? As a market leader, what are we doing to mitigate that? Let me take it first, and then I'll ask Naveen to supplement. Firstly, I think it's not right to combine all the price increases. What happens is that, A, what is the price increase for and how it is communicated, what are the other industry players doing? That's how we set the expectation. If you look at BS -IV to BS -VI, which is the bigger one, which is around 15%, obviously the product BS -VI is not same as BS-IV. It was EFI system, new technology, better mileage, lot of features. In a sense that you are giving value to the customer and not just a regulatory change, and that's how it was also communicated as well. After that, the 4%-5% that has happened is on account of inflation, and it's got certain elasticity and demand impact. Finally it comes down to fundamental demand drivers and the need for mobility solution. What we are doing is that while we are trying to cushion the pricing impact, we are also trying to put affordable solutions. Let me now hand it over to Naveen to talk further about this. Naveen? Yeah. Niranjan, you captured it very well. We've successfully been able to communicate the value story to the consumer. Right at the entry segment, if you look at in Splendor and RHAs, there is increase in market share that we have, and it's primarily because in these segments, we have given the value of the new technology to the consumer. That has played well. I think, at this point of time, how do we make the affordable solutions for the consumers, therein hold the key for the industry growth. We've launched EMI solutions recently, wherein the EMIs comes down by 30%. We are testing it in certain select markets. We are going to go horizontal deployment to rest of the markets. Two-wheeler industry still operates slightly on the higher side as far as the financing cost is concerned. That's one space to address. I think the solution for growing the segment and industry lies in the adjacent space, and we're working on those spaces. Got it. Thank you for that. I'll follow back in the queue. Thank you. The next question is from the line of Amyn Pirani from CLSA. Please go ahead. Yes. Hi, thanks for the opportunity, congratulations on a good set of numbers. My first question was more on the here and now, because obviously in the last one and a half months, we've seen different states going into this lockdown phase in different times. Can you give us a sense of your most recent reading of how things were on the ground, both in terms of demand as well as inventory levels and what we were seeing in terms of rural and urban? While we are at the same place like we were last year, same month, I think this time around the dynamics of rural and urban are different, at least that's what we understand. Any sense on that will be very helpful. Look, like you said, we are facing not just similar times as last year, but actually much more challenging times as we can see from the numbers, the infections, and the consequences that are happening. Of course, more and more states are also going under lockdown. In fact, most of the states, I think, have announced already. This would not be the time, again, to read any kind of underlying demand or inventory levels or rural/urban. I think this quarter is about everyone coming together to help each other and get over this humanitarian crisis. Thereafter, from quarter two onwards, as I said, the fundamental drivers of the demand would return. We don't see any underlying issue with any of the key factors that drive demand in two-wheelers, whether it is monsoon, announced normal crop levels, or fundamental rural income or need for mobility. I think all of those factors should come back. I think that would really be the time, the quarter two time is that when you start looking at these factors again. Okay. Thanks for that. Secondly, just going back to the EV question. Now, obviously you have a kind of a three-pronged approach to this. You have Ather, you have your own product, you have Gogoro. Almost every other legacy OEM also has some products or the other out in the market. Then we have the startups, one specific one who has made a big announcement. According to you, when is the inflection point for EV two-wheelers? Is it six months down the line, two years down the line, in your best guess? How prepared are you in terms of all three things coming together for you? Is there a kind of volume that you are thinking from your side that you want to be prepared for if things really take off in the segment? Look, right now to do a crystal ball gazing is very difficult because it's a category that's evolving. There will be an inflection point beyond which it can start growing much faster. As you know, a lot of factors have to come in together on this. Therefore, as a player, what we are doing is to accelerate our EV program, and which is what you have seen. Where our own R&D is working on our own product, which will come under both options, which is fast charging and swap in a gradual manner, tied up with Gogoro, which gives a faster on the road swapping solution. Of course, invested in Ather. I think this is a category which is where we have to put action on ground, which we have done. Therefore, I would say that we are well geared and moving towards that. Of course, as you launch products, as different people will experience the customers and the customer habits and the learnings, this category will go through a lot of evolution. Before it reaches any kind of saturation for it to, or maturity level, for it to then start growing on a steady basis. I think it will be, I would say, wait and watch, and we are getting fully geared up, as you can see, from the acceleration in the actions that we have taken. Okay, great. Thank you. I'll come back in the queue. Thanks, Amyn. Thank you. The next question is from the line of Sonal Gupta from UBS. Please go ahead. Yeah, hi. Good afternoon. Thanks for taking my question. One was, could you sort of give the other operating income for the quarter, and then what was the CapEx in FY 2021, and what are you expecting for FY 2022? The other operating revenue, as you can see, because we've given out the parts revenue, and you have the overall, for the quarter was INR 206 crore for quarter four, and the quarter three was INR 192 crore, and obviously the previous, which is the Q4 of FY 2020, was INR 137 crore, which was a truncated quarter. That was the operating revenue. Sorry, what was your next question? Sir, sorry. Sorry about the background noise, but I was asking about the FY 2021 CapEx number and what is the forecast for FY 2022. Right. As far as FY 2021 is concerned, I think we spent around INR 600 crore of CapEx. Offline, one can give you more fine-tuned numbers. It's there in the cash flow statement. As far as next year is concerned, we are not outlining any numbers as of now. You know, as far as quarter one is concerned, all of us are going through a very different level of crisis and challenges. Then we'll recalibrate our CapEx and the cash plan based on that. Sorry. Just a follow-up on that. How do you think about while you are taking these multiple pronged approaches on the EV side, in terms of setting up any dedicated EV capacity? Do you think one of your existing plants could be repurposed to be a dedicated EV facility? How are you thinking about that? Again, this is something that our teams, we have, as we had announced long back, EMBU, which is Emerging Mobility Business Unit. That business unit is looking at all aspects, manufacturing, sourcing, even selling and marketing. A lot of work is happening on that, other than the product work that I already talked about. Okay, great. Thank you so much. Yes. Thank you. The next question is from the line of Chirag Shah from Edelweiss. Please go ahead. Yeah. Thanks for the opportunity and congratulations for the numbers. Sir, I have a question on the premium motorcycle category. Sometime back, we have articulated we are looking to have a bouquet of five, seven, eight products, and that's how we are looking at the premium category. Where are we in that journey, and that would include Harley as a part of that strategy. We have seen two launches, so more launches likely to happen. A follow-up question, because of this uncertainty around COVID, are your product launch timing, the schedules getting altered or postponed? Thanks, Chirag. As you rightly said, we had embarked on this premium strategy in terms of filling the portfolio right across all the CC and right across all the segments. You've already seen us coming out with Xtreme 160R, you've seen us coming out with XPulse, and you will see more and more products coming out every year. That's where I would stop. In terms of launches, are we delaying launches? No, we are not. As of now, all our launch plans and pipeline plans, which are there for the next three to five years, they remain exactly as what they were. Yeah. Thank you very much. All the best. Thanks, Chirag. Thank you very much. The next question is from the line of Jinesh Gandhi from Motilal Oswal Financial Services. Please go ahead. Hi, sir. My question, first clarification, the cost inflation numbers which you talked on savings, numbers which you talked on Leap, they are on year-over-year basis or quarter-over-quarter? Year-on-year basis, the 200 basis points Leap saving program which I talked about, which we used to have 60- 70 basis points, which is what we had been saying earlier. Sure. Any sense on RM cost and commodity inflation on Q3 basis, how it could be? Very difficult, Jinesh, to forecast. Everyone who's forecasted commodity, whether it is on up or down, has been proven wrong. I think it's best to focus on- Actual inflation in fourth quarter on Q3 basis. Yeah, actually, we talked about the material cost increase, which has happened, as you can see from the published results. It is 4.5% increase in material cost, of which the two-wheeler is 2.5%. If you really gloss it up for the Leap savings for the quarter, it would amount to inflation of close to around 5% on material in Q4. Okay. Got it. Second question pertains to the Harley-Davidson distribution income accounting. We just book the distribution margins in our revenues or how it works? No, it's a full revenue. It's a full P&L. As a distributor, we buy from Harley, and then we sell it onwards to the dealers. It's a full revenue that comes. Right. Lastly, with respect to financing, can you give some flavor of how was financing in fourth quarter, finance penetration, and how did Hero FinCorp perform for FY 2021? Yeah. Financing in fourth quarter, Jinesh, was at 48% around, which went into financing, and Fin Corp share was 40%. Okay. Any sense on HFCL's financial performance? No. That's not a listed entity. All I can say is that they are back in terms of their business, and growing. They are maintaining good capital adequacy and all the relevant ratios. Okay, great. Thanks and all the best. Thank you. Ladies and gentlemen, that will be the last question for today. I will now hand the conference over to Mr. Umang Khurana for closing comments. Thank you everyone for coming in. It has been a pleasure discussing our numbers with you. Please keep safe, everyone. Please take care of yourselves, and hopefully when we meet after the quarter one results, we'll all be smiling even more. Keep safe. Talk soon. Bye-bye. Umang, just an intervention. Yes. We have to keep smiling even now to win over this battle, and I am confident, not hopeful, that when we have the next quarterly call, we won't be discussing COVID anymore. God willing. Thank you so much for that, Niranjan. Thanks, Vivek, JMF for hosting us. It's been a pleasure. Thank you. Thank you. Thanks for joining the call. Thank you. Thanks. Thank you very much. On behalf of JM Financial Institutional Securities Limited, that concludes this conference. Thank you for joining us. You may now disconnect your lines. Thank you.