Ladies and gentlemen, good day, and welcome to the Hero MotoCorp Limited Q4 FY23 Results Conference Call hosted by Axis Capital Limited. As a reminder, all participant lines will be in listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Nishit Jalan from Axis Capital. Thank you, over to you, sir. Thank you, Aman. Good afternoon, everyone. Welcome to Q4 FY23 Post-Results Conference Call of Hero MotoCorp. Firstly, I would like to thank the management for giving us this opportunity to host this call. Without further ado, I would like to hand over the call to Mr. Umang Khurana, our Head Investor Relations. He will introduce the management and take the call ahead. Over to you, Umang. Thank you, Nishit. Good day, everyone. Welcome to the quarter four and full year FY 2023 investor call. We have on the call with us today, and it is my pleasure to have Niranjan Gupta, Chief Executive Officer; Ranjivjit Singh, Chief Growth Officer; Swadesh Srivastava, Head of Emerging Mobility Business Unit. We will begin the call with opening remarks from the CEO. Over to you, Niranjan. Thanks, Umang. good afternoon, good evening, depending on which part of the world you're joining from. I hope you, your families, and colleagues are staying healthy and doing well. I'm privileged to participate in this call as CEO of Hero MotoCorp. I'm sure you will continue to give your support as you always have as we craft the next chapter in this journey of our great company. You would have seen our results announced yesterday evening. Our revenues grew by 12%, EBITDA by 31%, and profit after tax by 37%. Our margins have recovered to 13% in the quarter, improving by close to 200 basis point on year-on-year basis. Our focus on non-product revenue streams will continue leading to PAM business registering highest ever quarterly revenue of INR 1,271 crores at 15% of the revenue. We registered full year revenue of close to INR 5,000 crores at growing close to 25%. We are excited about the coming fiscal and expect to build on our market share and margin recovery. We have host of new launches lined up. We will be launching new products every quarter in this fiscal. We've already announced our accelerated plans to roll out Vida across the country with an aim to cover 100 cities in current calendar year. At Hero, we have the widest and deepest distribution system in the country. We will be leveraging the same to ensure our reach on EV business. Indian economy continues to be resilient, as we have seen, and is one of the fastest-growing major economies in the world, despite confronting challenges as financial sector inflation and geopolitical issues. All the key indicators are moving in the right direction, and we expect the economy to outperform most other countries. Buoyed by the economy and the other trends that we see, we do expect two-wheeler industry to clock double-digit revenue growth this year. On that note, let's open the floor for Q&A. Over to you, Umang. Aman, let's begin with the Q&A, 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 their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to limit their question to two per participant. If time permits, you may join the queue for any follow-ups. Ladies and gentlemen, if you will wait for a moment while the question queue assembles. The first question is on the line of Gunjan Prithyani from Bank of America. Please go ahead. Hi. Thanks team for taking my questions, and congratulations, Niranjan, for on your new role. Firstly, you know, could you just you know, talk us through what's really been happening in terms of underlying trends, you know, rural versus urban? How did recent festive Navaratri go? Entry versus mid. You know, some color on what's really been happening on the underlying retail demand. It does seem going by, you know, FADA comments that the channel is a bit under stocked. Could you also talk, you know, indicate as to where our channel inventory is and what's the thought process on restocking? Thanks, Gunjan, and thanks for the wishes. As far as underlying trend is concerned, what we have seen is you have seen the overall double-digit growth happening in the two-wheeler sector in fiscal year 2023. We expect the trend to continue. Of course, premium is growing much faster than the commuter, but we do expect commuter sector also to come back. The initial sense of the recovery is good in terms of the rural as well, and we do expect the government's plans on the CapEx spending and the actual CapExes to actually come into results as far as employment and income, and accordingly, the spends are concerned on the rural sector. Let me just hand it over to Ranjivjit Singh to elaborate on this further on the underlying trends. Sure. Firstly, on, you know, it's really good to see the industry bounce back to growth. The overall two wheeler industry has had a good growth. In quarter four w e grew faster than the industry. We grew 3% market share quarter-on-quarter and over 2% year-on-year. That was good. Overall, our share in motorcycle was 51%, that was a excellent recovery that we've had. We had also talked about in terms of segment, 125 cc, we have increased our market share in Q4 to 22%, which was earlier around 14%. It is a great bounce that we've had now. I'll talk a little bit maybe later on in terms of the underlying reasons for that. In entry, again, we've had a good improvement in our market shares. We saw an uptick in rural in March, thanks to the festival season. We see that continuing even now, as we've got into the marriage season. Overall, it's a broad-based growth that we're seeing across entry, deluxe, 125 cc included in that, as well as scooters and premium. It's looking quite positive right now. Anything on channel stock? As far as channel stock is concerned, we continue to be around the same zone of six weeks of the future sales as the inventory. My second question is on this Vida. Clearly, there seems to be some change in the strategy with the price adjustment that we have done. Could you give us the rationale as to why did we change the pricing? Is there, you know, Are we looking to get more aggressive from a you know, scaling this business now versus earlier indication that we are more in a test mode, so, you know, some thought process around that? Gunjan, this repricing is across the industry. Definitely, the repricing helps access to more customers in terms of the EV category, and that's what we've highlighted that this should enable faster EV penetration in the scooter category. Swadesh, would you like to add something? Yeah. Thank you, Gunjan, for that question. As Niranjan said, for the EV category, this is a good change. As you also have seen in our announcement that we're going to under cities this year, and with the new pricing, we expect to grow really fast through our, you know, strength in the distribution network as well. It's a good thing for the category as a that much I can say. Okay. Got it. I'll join back the queue. Thank you. Thank you. The next question is from the line of Amyn Pirani from JP Morgan. Please go ahead. Yes. Hi. Thanks for the opportunity, and congratulations, Niranjan, on the new role. I think my first question is, you know, a bit related to that. I mean, you know, I think this is the first time in Hero's history where we have, you know, an outside professional holding the role of CEO. Can you know, give us some broad idea as to I think you've announced, you know, a VRS, you know, at a non-worker level. I mean, I don't know if this is the right forum, maybe you want to do this at a different forum, but is there something that you can tell us, you know, in the is there any new formation around strategy, you know, for the next two to three years? How are you thinking about it? Is there something that you would like to, you know, guide us from medium-term point of view rather than just the quarter or the year? Amin, thanks a lot. Like what you have said, it probably calls for a for a different forum to outline the overall roadmap. However, I just want to share a couple of thoughts. Look, finally, the focus on customer is what is going to create the market cap. The very simple philosophy being that customers love translates to more products being bought at a higher price premium and for a longer period of time. That with a viable business model creates the market cap. In the end, that's going to be the focus. Of course, the road to that will be accelerated, and we'll be looking at various parts of our strategy in order to achieve that goal. More about that later, and thank you for this. Sure. Hope to hear more of that maybe at a later date. Secondly, you know, on the near-term market share and volume trend. Yeah. I mean, like it was widely pointed out, you know, this in the fourth quarter, you did see a market share improvement. If I look at on a full year basis, you know, there was still losses both on an overall basis as well as motorcycle. At least April is just one month, maybe you should not extrapolate, but it has started off a slightly relatively softer note for you compared to the other players. What should we think about in terms of launches? Because while Splendor is a great product for us, and it continues to be a great product, it has become a very large proportion of our volumes. You know, now how should we think about launches and segments and market share as we look into the 12 to 18 months? Amin, let me start and then I'll ask Ranjivjit to add on. Yes, if you look at a full year basis, there is a loss of market share. If you look at the trends, not four, five months trend and not dispatch trend, but actually if you look at the Vahan retail market share trend, the trends have been on the improvement. Yes, there are things to be addressed, and you rightly pointed out. We have plans to ensure that we do have product other than Splendor in that segment. Ranjivjit will talk about that. Even beyond that, not just that, we are going to focus, as we said, in recovery, accelerated recovery in 125 cc segment. We have launched various XTEC variants. You will see a lot of them resulting in full year volumes and therefore growth in the year, which is what gives us confidence. You will see a lot of launches in the premium segment in the coming year. While I can't specify the dates of those, but just watch out for those. There will be big launches that will come up in this fiscal year, which will then ensure that we can build the right premium portfolio and get our market share on that. We have, as I've said in my opening comment, we'll have product launches every quarter of this coming fiscal year. Probably this fiscal, we'll see the maximum number of launches that Hero's ever seen in its history. That's what. Watch out the space. I'm sure we are excited, and when you come to know the details, you will be excited as well. Let me just hand it over to Ranjivjit to talk about how we are going to flank Splendor and the plans for that. Let me just start with the entry level HF Deluxe. We continue to add value to this beautiful product. We've introduced the Canvas, and we've added features like tubeless tires and the USB charger. Customers are loving it, that's also become a brand of choice and a product of choice in rural markets as well as in urban, semi-urban markets. We're seeing a lot of great traction coming back into HF. If you flank further over Splendor, the Super Splendor XTEC. Again, some great features we've brought in, like LED headlamps, Bluetooth, USB, digital speedometer. Customers are loving it. It's off to a really flying start in Uttar Pradesh, Bihar, West Bengal, the marriage markets are taking it up very, very well. You then move to Xoom, which is our scooter, which has industry first and segment first features like the corner bending lights, as well as wider, bigger tire, and it has the fastest acceleration. That's something that we've been really surprised by the demand for it. We have ramped up our supplies. We are on to a better level now. We've added market share already in the 110 cc segment, and as we improve our supplies, which have already happened, we will see a dramatic improvement in that segment as well. If you then look at flanking Splendor, we're working on something for a launch within this quarter, a brand which is really one which is most loved, one of the highest selling, the Passion Plus is something that we will see a lot of excitement around soon. I'm sure everyone will get excited by the volumes that will get in. Like Niranjan said, we have a pipeline, a very exciting pipeline. We will have more news to share with you as we go along, but, literally FY 2024 is gonna be a great year. Great. Great. Look forward to it, and I'll come back in the queue. Thank you. Thank you. Before we take the next question, I'd like to remind the participants to please limit your question to two per participant. If time permits, you may join the queue for any follow-ups. If you wish to ask a question, you may please press star and one at this time. The next question is from the line of Chandramouli Muthiah from Goldman Sachs. Please go ahead. Hi, good afternoon, and thank you for taking my questions. Congrats, Niranjan, on your additional responsibilities. My first question is on pricing. We have been disciplined in passing on price hikes to consumers over the past 18 months. As you build out your EV franchise starting FY 2024, is it possible that price hikes on the ICE two-wheelers could help cross-subsidize the higher proliferation of electric two-wheelers, which maybe take longer to attain profit breakeven? Any color here would be very helpful. Hi, Chandramouli. Thanks a lot, and look forward to meeting you soon. In terms of the pricing on cross-subsidy for two-wheelers, firstly, you are right. The industry, us, we've been very disciplined, very judicious in terms of the price increases, ensuring that we accelerate our savings program so that the entire burden doesn't get passed on to the customers. Moving forward, as far as commodities are concerned, we don't expect the escalations in the commodity like we have seen in the past, that definitely provides some headroom, whether you call it for recovery, further recovery in margins, or whether you call it, you know, funds being available to kind of plow behind the growth engines, whether it is growth within ICE or growth EV. I wouldn't say so much of from a cross-subsidy point of view, but the environment definitely provides some headroom of recovery and boosting the P&L moving forward. EV, as you rightly said, is going to be cash burn for a while. The important thing in EV, in our view for success is probably not to look at so much at what's happening on the cash burn, but to stay ahead of the market, of the competition on the cost curve. Because players who can actually deliver the EV in the most cost-efficient manner are the ones who are likely to be winner fasters. Which is where our teams are working on that. In fact, at this stage, let me just ask our Chief Procurement Officer, Ram Kuppuswamy, who is here with me, to just say a couple of minutes on overall how we are focusing on the cost reduction journey on the EV part of our scheme of things. Ram? Lovely to speak to all of you today. We, at Hero, we take cost reduction very, very seriously. There is a rigorous program called Leap that we follow to drive this across the ecosystem. There are three aspects of it which I'll highlight today which drive the results that these programs deliver. The first is across the entire ecosystem, from partner through the customer service centers, all the different stakeholders in this value chain contribute ideas which are then rigorously vetted and put through a funnel-based process to ensure that we are looking at efficiencies at every step of the chain. The second aspect of this is no idea is too small. We look at every aspect of cost in this overall value chain, and we attack it to ensure that we are driving the right level of efficiency. Lastly, I think we also take a regular look at our competition. We look at similar products. We do tear downs to ensure that we are understanding what the market is doing, what the rest of the world is doing, we use that to inspire ourselves in terms of ideas that we should be looking at a lot more closely. That's, you know, a strong program that we're able to run continuously through the and drive efficiencies back into the business. Thanks, Ram. back to you, Chandramohan. Got it. Got it. That's helpful. My second question is on the rural consumer, which you have touched upon briefly earlier in the call as well. There seems to be some diverging commentary. Consumer discretionary companies are talking about an emerging pickup, in the rural consumer cohort, but some of your two-wheeler peers, are saying it's not visible yet. Just from your vantage point, what is the urban versus rural market footfall and then maybe dispatch momentum in your showrooms? Any color here would be very helpful. Lastly, if you could just share the spares revenue for the quarter and the export revenue for the full year please. All right. Ranjivjit, if you could comment on the rural urban quickly. Yeah, sure. you know, we've seen this little bit of a sinusoidal kind of a curve on rural urban. What I said earlier is that in March we saw with all the festivals, the Pongal, Ugadi, Padwa, you know, the demand really went up in rural. It is, it would be a mixed bag, I can understand for the industry, because people at this time are careful with their money. They will go with brands that they trust. There are brands that have a customer service which is really deeply rooted, such as ours. we have the widest, the best dealership network that we do. HF Deluxe, Splendor are also working very well. The other thing which is there is due to inflation, you know, there are some resistance. What we do to overcome that is the retail finance penetration, which has gone up dramatically, from already to about 59%. There, there are steps that we have taken to make that very simple and easy for our customers to buy. When it comes to the uptake in terms of marriages or festivals, we definitely see an upswing there. The underlying growth, it was not only in March. We also see that now in April and May, and the marriage season will continue in June. With the effect of the harvesting, the rains, everything, we still think it's going to be a well-balanced growth that we will see. Chandramouli, on the parts revenue of our Pan-India business that you talked about, for the quarter, as I mentioned, we did INR 1,271 crores, which just in the previous quarter, Q3, was around INR 1,250. But year-on-year basis, if you look at it, was INR 1,151 crores for Q4 FY 2022. And full year was INR 4,835 versus INR 3,934, which is a growth of around 23%. As far as the global business revenues are concerned, we delivered INR 1,150 crores revenue for the fiscal year 2023. Got it. Thank you very much, and all the best. Thanks, Chandramohan. Thank you. Next question is from Kapil Singh from Nomura. Please go ahead. Hi. Good afternoon, sir. Can you share some details on how many new launches and refreshes we are planning this year? Also on Harley-Davidson launch, should we expect it this year? We saw some very interesting, exciting images in media. Anything you can share over there would be helpful. Hi, Kapil. Kapil, in terms of the launches, while I will not specify the numbers, but a couple of comments I can make. One, every quarter we will have a new product launch. The year we will see maximum number of launches that we've ever seen in the history of our company. You can add up the numbers and come closer to the numbers that we'll launch. As far as Harley-Davidson is concerned, yes, the product we will launch in this fiscal itself. It will be soon. And you will see the timeline and the plans coming out. Just watch this space. Okay, great. Great to hear that. On the cost side, could you give us some update how much cost, decrease you or increase you saw this quarter, and what are you expecting going ahead? Also on the pricing front, what was there in March quarter and for the June quarter with, you know, OBD-II norms, what has happened on pricing? Kapil, as far as cost is concerned, you've seen that our margins have recovered by 200 basis points year-on-year basis, of which around 70, 80 basis point is coming through the leverages on the other expenses. The rest is a combination of the commodity costs as well as Leap savings. Moving forward, while I've always said that it's very difficult to forecast commodities, overall, if you look at the scenario, it's unlikely that the inflation in the commodities will be of the order that we have seen in the last two, three years. That does provide headroom, whether in terms of containing the price at the current level or actually deploying mild price hikes and deploying back behind brand and marketing spends. As far as price is concerned, overall, cumulatively, if you look at fiscal year 2023, we took close to around INR 4,000 increase. April 2023, the increase that we took amounted to close to around INR 600 per vehicle basis. Okay, sir. Thanks. Thanks a lot. I'll come back and meet you. Yeah, Kapil. Thank you. The next question is from the line of Pramod Kumar from UBS. Please go ahead. Pramod, your line is unmuted. Please proceed with your question. It seems there is no response from the line. Try the other Pramod. He logged off. Just try him again, please. Yes, sir. Sure. Are you being back? Can you hear me? Yeah. Can you hear me now? Yes. We can hear you from line two, sir. Yes. Yeah. Great. Thanks a lot. Apologies for the confusion. Niranjan, congratulations. I think another set of congratulation for the result as well. My first question, Niranjan, is on the 125 cc side. Because you did say that 4Q, you have seen some market share gains kind of coming back, but we are still a long way off from where we used to be in terms of the market share, like closer to 50% couple of years back. If you can help us understand on 125 cc, A, and then the scooter segment as to what are the kind of numbers or targets which you would be happy with or kind of market share gains which you'll be happy with. It kind of gives us a visibility on the runway for these brands making a comeback. That will be the first question. Thanks, Pramod. As far as 125 cc is concerned, absolutely right you are, that our path to recovery will not stop here. We need to get back to what the market shares were. Actually, we see that as an opportunity overlaying on where we are today, that that's the roadmap that we have in the recovery. You will see, backed up by a lot of actions over the next couple of years to actually get back to the shares that we were. As far as scooter is concerned, we are. As you know, scooter, there is an EV penetration also that's happening faster. Therefore, the way we are looking at the scooters is on a combined portfolio basis, which is not just the scooter on the ICE or the scooter on EV as well. That's the best way to look at the scooter on EV. Clearly, you've seen our plans, which we outlined, that the initial three, four months were more of a setup, and now it's really more of a scale-up, which is where we have said that we go to 100 cities plus, leveraging our own distribution system. Let me now hand over to Ranjiv just to talk a bit more about the 125 cc, the actions that we have taken and how we are confident of recovering market share moving forward over the next two years back to our highest ever that was. Yeah. Glamour XTEC is on an upward trend with the campaign that we have with Ram Charan. The consumers are really loving the XTEC features, the LED headlamp, the styling, all of that is working very, very well. We also have the Super Splendor XTEC, which has got off to a really great start. We will have more action in this segment as we go along, but, and what we see is it's going to be broad-based across the nation, across the country, that we will see the recovery is happening and we are looking at building up the momentum as we go along month on month for the 125 cc. That's something I wanted to just put out there. Absolutely. Pramod, let me also now call upon Ms. Reema Jain, who's our Chief Information and Digital Officer to talk just a couple of minutes because you talked about 125 cc. Not only that, we have a lot of connected features that we are bringing in our product on our path to the entire digitization, not just of processes, but of the products as well, which gives us the confidence to ensure that our recovery path on the market shares and refreshment of the products is stronger. Over to you, Reema, to talk about how we are building all these connected things in the product processes and digitization map. Hello, everyone. nice to talk to all of you. As we're bringing a new set of our bikes, most of them are coming with connected features. What we mean by connected features is there is a new experiences which we are creating for our users so that they can interact with the bike much more effectively. That, you know, they can really, you know, the bike, they can use that as more of a smartphone on the wheels. That's something which we are seeing that our customers are loving. We are seeing the highest number of install ever for our app, which is our Hero App. There is a great amount of, you know, overall active users on a daily basis on our app. That's something which we're really seeing a great interaction from the customers. Thanks, Reema. What happens, Pramod, is that we continue to talk about products and products, but all these connected features that come on the products, whether it is on ICE or of course EV far more, allows us in future to not just focus on getting revenues on the product, but actually monetization of all these services that you overlay on these, including the one app, especially given the huge customer base of 110 million that we have. Hope that answers your question, Pramod. Yes, Niranjan. The second question, Niranjan, is on the your approach as a leader of the organization now. As to how do you see when you look at the next five years for the organization, what are the things which are like the key priority for us, right? We've seen market share loss, we've seen margin erosion, we've seen some segments where Hero could have done much better as a franchise, right? Given all that and the electrification, which is a parallel run, a pretty disruptive one, what are the priorities for you? As in, is it volumes or success in some segments? How do you see margins in that context? EV ramp-up is definitely can't be accretive for the near term. How should one, or rather, how would you look at this, from your vantage point, Niranjan? Interesting question, Pramod. As I said to Kapil as well, that it does require a separate, specific forum to outline so that we can share thoughts, exchange inputs, and then you can get more view on our longer term, refreshed strategy as well, which is work in progress. Having said that, let me just again share a couple of more thoughts on this. You talked about margins. We have seen the margins are on the path to recovery, and we've been very sensible about deploying the price increases versus the margin recovery in terms of ensuring that there is a top line, bottom line. Eventually it's about profitable growth. It's not about one or the second, which is it will need to be about volume or this one. I mean, you got to, you got to breathe, you got to walk, you got to work, you got to sleep. All of it's about how do you balance these factors in terms to ensure that your profitable growth journey as you move forward. Shares, yes, as you have said, there are citadels where we are strong, where we have maintained our strength. There were segments that we had lost shares, some couple of years back. We have actually strongly defended those and that you have seen. There are opportunities. The way we see is that where we are standing today, there are big opportunities for us in the premium segment. There's a big opportunity for us in ensuring EV leadership. Remember our scooter portfolio in the ICE segment, we have a market share of 7%-8%. Any EV or electric penetration that happens is accretive to our overall market shares. You have seen the plans on the outline. On the geographical concentration, clearly, we have work to do on scaling up the global business. Of course, as we have always said, that we will not shy away from any kind of opportunities on the M&A front in order to increase our top line in line with the strategy. That's a very, very brief outline. We will be obviously focusing on prioritization and choices and of course, accelerating and moving the wheels faster, so to say, as we move forward. For the time being, this is all I can say, and more as we meet on different forums, Pramod. Great. Great, Niranjan. Wish you all the best, sir. Thank you. Thank you. Thank you. Next question is from Arvind Sharma from Citi. Please go ahead. Yeah, hi, good afternoon, sir, and thank you for taking my question. The first question would be on Vida. We've seen price corrections. Is there any aspirational volumes that you have in mind? It could be break even. It could be your, you know, the first milestone for Vida. Could you comment on that, please? let me ask Swadesh to take that up. Swadesh. Hi, Arvind. Thanks for the question. Yeah, you know, as we announced already, the last few months have been a set up month for us, and we have done very well in the initial three cities. We're already live in eight more cities, Pune, Ahmedabad, Nagpur, Nashik, Hyderabad, Chennai, Calicut and Kochi. We will be going over 100 cities in this calendar year. With that, you'll see fast expansion as we are going to utilize our distribution strength. You know, I won't be giving a prediction, but you'll see a very fast increase of our volumes as well across these cities. If you could just share the current production capacity that you have for the Vida. If possible to share that. Our capacity is quite fungible actually on the vehicle side. We have, you know, enough and more capacity to flex as the demand shapes up. We have done a similar exercise on our battery capacity as well. Good thing is, Arvind, that which you have outlined earlier as well, that we've got plants. I mean, EV is getting manufactured in our Tirupati plant. Therefore you have the infrastructure, you have the utilities, you have everything, you have the suppliers. In terms of the capacity ramp up, it can always happen in line with the demand. We don't have to buy a new land. We don't have to actually buy new utilities or new t herefore, it will not be a constraint as we grow. It's more about our strategy to move. In that, we have made, we have pivoted already as far as distribution is concerned, which you can see very clearly that our focus on leveraging our current distribution, which is to the nooks and corners of the country, places us in a strong, advantageous position. Sure. Thanks for this. Second question would be on the ICE motorcycle portfolio. I understand that, you know, a lot of focus on the 125 cc. I just want to gather your thoughts on the even higher, the Xtreme and the Xpulse brands. Are there any, you know, new products or new variants coming there? Because that is where there was a big growth and over the past few quarters it's been slightly on the more sluggish part. Is there any new product enhancement that's happening there or any other focus on that? I'm talking about that 150 cc and above category. Yeah, absolutely, Arvind. As we had outlined that we would be covering the premium segment across the cc or the engine capacity as well as across the product segment within premium, which is the 150 cc-450 cc that you're talking about. I did talk about some of the new launches that we will do in the upcoming year, and you will see that a few of them will be in the premium segment, which are in the higher cc. Won't give out any more details, but clearly it's not the 125 cc is the only focus. 125 cc is about recovery of market shares. Premium is about building portfolio and which is where you will see the new launches, coming up, across the higher ccs, including the ones that we just talked about earlier in the call. Ranjiv, if you want to supplement something on this, on the, our focus on the premium and how we are addressing that in the coming year. Sure. Firstly, Xpulse is, you know, in the off-roading adventure segment, is already the leader, and it's doing very well. It's become a favorite, not only in niche and pockets, but now the popularity is growing across the country. As we bring in more and more products To represent the aspirations of the premium consumer. I believe that's how we're going to really build up our position in that space. Overall, I think, you know, we're gonna be well-positioned in FY 2024. There's a lot of excitement that you're going to see in this space. Thanks, Ranjivjit. Thanks, Aman. Thank you so much for taking the questions. Thank you. Bye. Thank you. The next question is from Rakesh Kumar from BNP Paribas. Participants, please enter star and 1 if you wish to ask a question. Hi, good afternoon. Thank you for taking my questions. First of all, congratulations again, Niranjan, on your promotion. Would highly appreciate to hear your medium-term plans on a separate platform. We already see change in EV ramp-up plans. Looking forward to hearing more of such moves. My first question was on the demand side. For the last two years, unfortunately, we have gone into festival season with a lot of optimism around demand, and post-festival season demand typically hasn't stood up to those expectation and has softened down. What are the drivers which we are seeing this time around that gives us hope that the demand hopefully will sustain at strong levels? Or there is still some level of uncertainty on demand sustaining? Thanks, Rakesh. And certainly, you know, we will have a platform where we'll share more. You've already seen a couple of things which have come in the market, some of which you pointed out. On the demand side, you're right. The post-festive probably wasn't as the expectation. Having said that, if you really look at some of the. Let's look at on a macro basis. The CapEx spending of the government of INR 7.5 lakh crores and then moving up to INR 10 lakh crores this year is a huge amount of money. Now, by nature, the impact of the CapEx spending always comes with a lag. Therefore, that's a big factor which we see which will actually boost the demand moving forward. The second factor is we're already seeing the spending in different sectors. If you look at whether it's the hospitality sector, whether you look at across the board, the consumer spending is going up. Of course, post-COVID, there was an adjustment in the categories where customers would open up their wallet to certain categories first and certain categories later. Again, the consumer confidence curve also, if you see, has been on the move. We've seen the key indicators, whether it is the GST collection, whether it is the inflation, which is kind of fine. We have seen the central bank monetary policy, which is now broadly on a pause mode. The Forex has held stable. A lot of headwinds which other countries see, we are not seeing. When you overlay these along with the underlying need of penetration in the, in this two-wheeler category in India, that's very, very clearly an opportunity that we see will translate into demand sooner rather than later. We've already seen that demand translating in the mid and the premium segment. If you look at in the premium segment, which is 150 cc and above, the motorcycles have grown by 28% in fiscal year 2023, compared to the overall 14% growth of the total motorcycles. You can already see that one part of the India started growing and started spending and being more confident about it. It's only a matter of time when the other part starts participating in this category. Ranjivjit, a little bit more color on the drivers of the demand that we see and why we are confident about rural demand coming back. Like I said, the green shoots we've already witnessed, you know, for the full year, of course, 14%-16% was the industry growth. Q4 was about 5% for the industry. We did better than that. That's really something that we are again seeing in April as well, that we have had a pretty good balanced growth coming in relative to the market, relative to the industry. When we look at May and June, the number of marriage dates that there are, and that also then drives buying in this season, we see that opportunity going out. If you remember last year during the festival season, we led the industry growth when it came to the festival demand. We grew by about a 20%. That was pretty good. We've had a good Q4 as well. If, you know, with this kind of a widespread sort of a demand growth coming in with the macro and the other things that Niranjan spoke about, we see no reason not to have a good sort of a balanced demand coming through for two-wheeler industry. Back to you, Rakesh. Yeah. Thank you. My second question was about two quarters back, Niranjan, we had discussed about how Hero's headcount has been divergent from the production that the company has been doing. Now I see you have announced VRS scheme. Can you please share some detail around how many employees you are expecting to participate in this scheme, or how many employees are eligible to participate in this scheme? I see that your headcount, at least the permanent employees this fiscal year, have been largely flattish YOY, so they would be around slightly above 9,000 and possibly another 19,000 odd on the temporary employees as well. Total headcount about 29,000. What kind of reduction you would be looking at? Rakesh, a couple of things. One, of course, in the journey, we do believe that, you know, VRS is a process of ensuring that you refresh the talent, refresh the people, and of course, you know, every four to five years there's always needs in the organization. That's part of the continuous process, which is there. The second thing is that the current VRS's focus was focused on the staff, where the headcount overall average around out of the permanent, which you talked about 9,000, it's around 4,500, the staff cadre. This was focused on the staff cadre, not on the worker cadre. And which is where we are focused on. Quantification, we will give in the upcoming quarter results, and not right away. Can safely say that whatever the overall we would have expected as a churn, the scheme has resulted in impacts. Sufficient to say that and therefore we continue to focus on not just the cost aspect of the manpower. It's about the entire capability. It's about the talent, it's about succession planning, it's about diversity and inclusion. On the manpower front, cost is just one simple item. I mean, eventually, it's about the productivity, and productivity is not just cost as a% of revenue. Productivity is about the composition of the manpower, the right org structure, the right people in right places, capabilities that you have, the org structures that you have. There are multiple things that go into that, and we are focused on all those drivers to ensure our people productivity is at the highest level. Thanks a lot, Niranjan, to answer that. I'll fall back. Thank you. The next question is on the line of Nitij Mangal from Jefferies. Please go ahead. Hi, good afternoon. Heartiest congratulations to you, Niranjan, and my best wishes. Nitij, request you use the handset, please. You're not very clear. Hello? I'm able to hear Nitij. Nitij, go ahead. Nitij, go ahead, please. Okay. firstly, heartiest congratulations to you, Niranjan, and my best wishes. I would like to hear your thoughts on the competitive intensity in two-wheelers. On one side we're seeing companies reporting their highest ever profitability per vehicle. On the other hand, we have instances of companies bringing down their brands to lower cc categories, like the recent launch in a 100 cc category by a competition. How do you see this evolving, and especially on the 100 cc category side? Do you think there is a risk of a price discipline breaking at some stage if this continues? Thanks, Nitij. Looking forward to more discussions. As far as price discipline, profitability, like you rightly highlighted, that's been pretty good. We actually delivered, if I am right, the highest EBITDA per vehicle in this quarter. Probably I should have highlighted in my opening comment, but thanks for picking that up. In terms of the competitive intensity, I would say, look, this is not like, you know, it's a departure or a new feature. I think wherever any player finds a space or an opportunity to improve or to grow as a growth driver, this will continue to happen. We've seen that in entry segment over the last four or five years, and I'm not going to explain. We all know that. Therefore, it plays out that every it's fine. I think eventually competition, what I see is extremely good for the customers. It's also good for the industry because it challenges the industry to do more innovations, to do better, to deliver more value to the customer. Eventually, it's not about just taking the slice of the cake from each other. I think the focus of the industry has to be on expanding the size of the pie rather than picking cake from one another. I think to that extent, the more competitions, the more competitive intensity drives innovation and more value. Price discipline breaking down, I don't see that because more and more we have seen, at least the last six years that I've been, we've seen enough instances that in the two-wheeler, in this industry to win, you have to compete on the product and not on the price. Understood. Also, if I understand this, it also suggests you don't necessarily think you need to do anything specific in the 100 cc category for this new product that has come in. Nitij, while we'll not lay out the plans, but these are always continuous actions that we take, where we look at mapping out what's happening on that space, competition space, and how do we flank our products. It's never about that, you know, you got to take one product and say that on that product launch, how do we counter that? It's about our own strategy of actually segment-wise, that there's a customer need which is there. How do we fulfill the customer needs better than anyone else can? That focus will continue, and that's where we will continue. It's never a product against a product because it's not about one product getting launched, and then we react to that, Nitij. It's about a continuous process of, as I said, to win in the segment. Ranjivjit has already talked about the Passion Plus, which is one such thing. It's been on the pipeline, so it's not a reaction or a response to any of the new launches. This is an example that we'll continue to look at all of these spaces, Nitij. Okay. Got it. Thank you very much, and, all the best. Thank you, Nitij. Thank you. The next question is from the line of Manish Mandhana from Anand Rathi. Please go ahead. Thank you so much for the opportunity, sir. Niranjan, sir, congratulations on the new role. Sir, my question on the gross margin improvement which we saw this quarter. Can you talk about the factors driving that margin and quantify the impact of the price hike and the better mix? Also, sir, was there any impact of the yen in this quarter, sir? I'll probably comment more on the EBITDA margins like what I did earlier. We see around close to 200 basis point improvement year-on-year basis. Of which around 80 basis point you can see the leverage coming from other expenses as a percentage revenue. And of course, when you look at the rest of the part, there is a mix which is PAM is contributing. There is commodity cost saving, commodity cost reduction, which is there, and there is LEAP savings as well, which is forming part of that. These are the combinations and of course, I'm sure offline, if you connect with Umang, he will be able to share more details. On a high level picture, they are the key drivers, which are there in the numbers. Sure, sir. Can you talk about some of the sales promotion or incentives planned to grow the volume in executive premium scooter segments? How would you plan to support those segments, sir? As far as that is concerned, Lufeek, we have our continuous programs on our marketing and sales side, which is based on the launches. Clearly, the new launches, like every year, are the focus that we'll get in terms of the go-to-market strategy and the spending. We won't be able to outline the details of the schemes. Rest assured, that we will leave no stone unturned to back these launches to their success path. Thank you so much for the opportunity, sir. Thank you. Next question is from Jyoti Singh from Arihant Capital. Please go ahead. Yeah, thank you, sir, for the opportunity. first question, mine was on VRS, which sir already answered. second question on the margin and, revenue front. sir, I just want your guidance, going forward, what we are expecting. Jyoti, thanks for the question. As you know, we do not provide any short-term guidance. Our longer-term guidance of being in the tramline of between 14%-16% on the margin, that tramline still remains, and we've reiterated that tramline even when we got down to 11% margin, and you see it getting recovered to get into that tramline once again. That remains. From a portfolio perspective, our portfolio moving forward, if you look at medium term, one shouldn't look at 1 quarter or two quarters. Clearly, as we move forward on more premium underlying, the portfolio should be more margin accretive. Other than that, of course, the scale as it continues to play out in terms of volume growth, and the savings that we do, should provide the tailwinds to offset any of the headwinds that may present themselves in future. Okay. Sir, currently, how many days inventory we are maintaining? We continue to maintain around six weeks of inventory of the future sales forecast that we have. Okay. Sir, on the VRS front, there's one curiosity I have. Because of the VRS, you know, initiative, did we, you know, gain any growth going forward on the revenue front, or it's just the initiative? Jyoti, as I outlined earlier, that it's a part of the continuous process of refreshing talent. Of course, one of the outcomes of that is a reduction, an immediate reduction in the manpower, and therefore the manpower cost that comes down. We will be quantifying that in the upcoming quarter, in terms of the impact. It's an overall, if one has to look at the overall people side, refreshing the talent, like what I talked about earlier in detail. Okay. Thanks a lot. Thank you. Thank you. The next question is from the line of Arvind Sharma from Citi. Please go ahead. Yeah. Hi, sir, thank you for taking my question again. It's on the industry guidance that you gave double-digit revenue. If I may just ask, you know, what is the breakup between your absolute volume expectation and the pricing? Because I believe there would be a fair bit of pricing as well. Is it possible to elaborate on that? Arvind, look, let me just give an overall answer for that. We won't be able to quantify in terms of the numbers. We won't be able to give the numbers in terms of what is the underlying volume and underlying price that's built into this. Having said, it's always, again, a combination. One sees that how to balance that off, and that depends on several factors. It depends actually on how the commodity costs play out, how the competition scenario plays out, but our judgment overall and on how the mix plays out. Overall, if you look at, you know, the real GDP growth forecast of 6%-7%, which is what various industries, various analysts and economists have been talking about. If you overlay an inflation of around, country inflation of around even 5%, that means that the nominal GDP itself would grow in double digits. In fact, probably around 11%-12% of the nominal GDP growth. Given the pent-up that we have in the two-wheeler category as we have seen, there's no reason to believe that the two-wheeler revenue growth would not be upwards of 10%. That's the overall high-level answer. Between the combination of volume and price, it's always a dynamic thing that plays out. Sure. Thank you, sir, and congratulations for the designation. Thank you so much. Yeah. Thanks. Thanks, Arvind. Thank you. The next question is from the line of Basudeb Banerjee from ICICI Securities. Please go ahead. Thanks for taking my question and congrats to Mr. Gupta. Sir, a very follow-up question, sir. Like, if I look at the business keepers now, where one is expecting inclusive growth beyond just the premium bikes, but also rural inclusive growth. Exports bottoming out, margin drivers coming back in place, EVs scaling up. Amidst all these things where CapEx is under control, we can see that the valuations of Hero have been stagnating or in fact lower than where it was exactly 12 months back. Whereas all the PS-based two-wheelers who might also be suffering from rural two-wheeler weakness have moved up either through buybacks or whatever way is possible. Looking at your balance sheet health, are you thinking of enhancing payout ratio further or doing buybacks like your peers in order to look at the valuation aspect down the line? Thanks, Basudeb. Interesting question. And good to hear from you, Vasu. We don't usually see you asking question and would like to meet and maybe we can connect a meeting. Vasu, on the capital allocation, you've seen that our payout ratio has been one of the highest in the industry. We've been very disciplined about the way we pay out on the dividend. I think we've paid out between 60%-70% of the profits in the last four or five years. Clearly, we also keep an eye on the per share dividend. Overall, the dividend per share for this year is INR 100, including interim and final, which pays out around 70% of the profits. Like you rightly said, that we have a very disciplined CapEx model. We have the scale-up that's happening on the EV, the growth drivers on various things. Yeah, I mean, in terms of all of that, and we have negative working capital as well, so the more business that we do, it generates more cash. In terms of capital allocation, of course, you've seen in the past, we've also invested or deployed capital behind the right opportunities. For instance, we invested in Ather. We continue to partner in Ather. We hold close to around 35% shareholding in Ather, which is doing well. We invested in Zero Motorcycles, which is from a future perspective, we've invested in the NBFC, which is, you know, Hero FinCorp, which is doing well. We continue to do these capital allocations. It's a continuous evaluation by the board where the money is required. Of course, all the other options, like you mentioned, are always on the table, but they are part of the continuous evaluation. I would say that once we do the right things, and get the right results, the market cap would take care of itself. Really I wouldn't talk more about market cap, but yes, take your inputs and your suggestions very clearly. As I said, rest assured, we continue to evaluate all the options of capital allocation in the interest of the shareholder in the long-term business. Simply, sir, to summarize, like in a broader way, one of your key peers who suffered massively from, exports deterioration... Yeah. in fact, is 10% higher than the levels it was a year back. You also suffered from exports, but that is a very small part of your business. In fact, your domestic volume grew. Despite that, you are almost 15% lower than the level. From that disparity aspect, valuations are like from a dividend yield perspective, if you look at. I just look forward to some steps from the management to enhance valuation, whatever be possible, just beyond the earnings and revenue and EBITDA. Sure, Basudeb. We take your inputs, and accordingly, we will incorporate that and feed that back, into our stakeholder relationship committee and our board discussions. Thank you. Thanks. Thank you. Next question is from the line of Kapil Singh from Nomura. Please go ahead. Yeah. Just one aspect, if you could cover on export as well, what really is happening there? More from Hero's aspect because, you know, we have, you know, a lot of ground available to cover even if the market conditions are tougher. What are the plans for next three to four years? You know, we've not seen much success in last three to four years. Just if you can give some color as to what really didn't work, what are you trying to change? Kapil, thanks for the question. Look, I'll just address this again from an opportunity point of view. Rightly, also, but evaluating based on performance on the numbers for the last five years probably would not be the right thing to do because setting up businesses in each of these countries itself requires huge efforts. As I've always said, we are in now 40+ countries. Clearly it's an opportunity. Overall industry, if you look at it, like you have rightly said, 25% of the volumes come from global business. As far as we are concerned, probably we are more closer to around 5%. We got to scale it up to around 10%-15% of our revenue in the medium term coming from global business. We are putting actions in place. Some of the actions which are there, which are put in place, will take time to actually fructify. Rest assured, we are focused on this part of their geographical diversification to get to our rightful share in our portfolio of revenue. Okay, sir. Thank you and wish you all the best. Thanks, Kapil. Thank you. Ladies and gentlemen, that would be our last question for today. I now hand the conference over to the management for their closing remarks. Thank you. Over to you. Thank you, everyone. Thank you for coming in. It's been a pleasure. Happy to connect, individually as well. Have a good day. Thank you very much. Ladies and gentlemen, on behalf of Axis Capital Limited, that concludes today's call. Thank you all for joining us, and you may now disconnect your lines.