Ladies and gentlemen, good day, and welcome to the Hero MotoCorp Limited Q2 FY24 earnings conference call, hosted by Antique Stock Broking. 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 and then zero on your touchtone phone. Please note that this conference is being recorded. I now hand over the conference over to Mr. Varun Baxi from Antique Stock Broking. Thank you, and over to you, Mr. Baxi. Hello! Varun, we can hear you. Varun, you there? Let me take it up. Never mind. Thanks so much, Varun, for hosting us, Antique, for hosting us. Hello, and welcome everyone to the Hero MotoCorp investor call. It's a lovely season, the festive, and those of us who also follow cricket, it's just the right time to be to talk about the quarter and the festive. We have with us in the management today, Niranjan Gupta, Chief Executive Officer, Ranjivjit Singh, Chief Business Officer, India Business, and Swadesh, Chief Business Officer, EMBU. As usual, we'll begin with opening comments from Niranjan. Niranjan, over to you. Thanks, Umang. Welcome everyone to Hero MotoCorp's quarter two earnings conference call. Good afternoon, good evening, depending on which part of the world you're joining from. And greetings for the festive, as it's a festive season across India. You would have seen our results announced yesterday. Happy to report, we delivered a revenue of INR 9,445 crores, with our margins of 14.1%, which was up 260 basis points year-on-year basis. We delivered net profit of INR 1,054 crores, with a growth of 47%. The results, they reflect continued financial discipline, which we have been known for, and of course, the judicious capital allocation, along with continued investment behind growth priorities. Of course, the current margin shape provides even more headroom to deploy behind our strategic priorities that we have outlined earlier as well. Our win and premium journey has started off very well. We've been talking about this. Our strategy to address this on all fronts, product, portfolio, place, price, and promotion. As you would have seen on 15th October, we started the Harley-Davidson X440 deliveries across 100 stores all over India. We have delivered more than 2,000 so far. We have seen good trends in the bookings on the second window. We've already seen more than 2,000 bookings, so it still leaves our order book at 25,000 plus as earlier. The supplies are getting augmented as we speak. We expect to service the current orders over the next around four months or so. Of course, as the supplies get augmented, we'll be able to fulfill these orders even faster as we move forward. Karizma, again, we're delighted to note the bookings at 14,000. We did close the booking window, and as the supplies augment, we will open the booking second window again soon. That's about the product. We are addressing the place, the stores part of it very rapidly as well. We launched our first ever premium store, premium store for Hero, just a few days back, and we are scale, going to scale up rapidly. Over the next six months, we will get to 100+ stores. Similarly, the facelift of our current stores is on a very rapid path. From 20 in March, we are now at 200+ Hero 2.0 stores just in seven months, almost upgrading at the rate of 1 store per day. We plan to get to 500 in the next six months. It's a huge upgrade and a rapid scale up. Not just physically, you know, brick-and-mortar structures, but we are addressing the digital journey as well. Because the premium customer, the experience we provide is more a complete all-round physical journey and not just a physical part. So we are, we have done a complete revamp of our product website, our customer journey, one app, et cetera. So a lot of work happening on the digital front as well. And of course, last but not the least, a full revamp of service also is on the cards, on the premium part of it. There will be more models along the way, as we said, part of a portfolio strategy. Already we've got 4-5 models in market. There'll be more over the next 4-6 quarters as part of our strategy to have full portfolio. Very, very confident. We are very confident on our premium journey. On the EV front, we continue to expand the number of cities and dealers, along with the charging infrastructure, gearing towards a volume scale-up over the next 4-6 quarters. That's on the business front, broadly picking up a couple of highlights on that, where we are focusing on. As far as economy is concerned, we know about the global geopolitical issues that are going on. However, Indian economy continues to be resilient and is one of the fastest-growing major economies in the world. All the indicators are in the positive direction and in fact, very strong consumer confidence index. Of course, the while the monsoon has been patchy in parts, but if you see, the Rabi crops have been very good as compared to last year. The festive season has started off very well, and overall, we do see momentum building on demand side as we move forward. On that festive cheer note, let's open the floor for Q&A. Over to you, Umang. 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 use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. I request all participants in the conference, please limit your questions to one or two per participant. Should you have a follow-up question, we would request you to rejoin the queue. The first question is from the line of Chandramouli Muthiah from Goldman Sachs. Please go ahead. Hi, good morning, and thanks for taking my questions. My first question is on the electric two-wheeler business. Looks like in the month of October, we've now sort of breached into close to 2,000 units a month, sort of run rate there. So just trying to understand, going forward, where do you see the further inflection points in, in terms of your electric two-wheeler business build out? And any, any color there in terms of number of cities, for the current product, as well as just any color on supply chain commentary, as well as you sort of try to scale that up, would be very helpful. So look, I'll start off and then I'll hand it over to Swadesh, who's our Chief Business Officer for EMBU. We had outlined a plan to cover 100+ cities, and we are on track to move towards that. You're right in registering that we have breached the mark of 2,000. But that's just a start. From a production side, we are now clocking more than 1,000 per week in the last 3-4 weeks, and we're going to scale it up continuously as we move forward. More importantly, the infrastructure building is happening at a rapid pace, whether it is dealers, whether it is cities, whether it's charging, and therefore, all of that are getting ready for the takeoff and the scale build up in future. For more color on that, Swadesh, over to you. Thank you, Niranjan. Thanks for the question, Chandramouli. So, as Niranjan said, we have been expanding quite fast to increase our footprint, and we will be reaching 100 cities very soon. We are also expanding in terms of the way we serve the customers, so starting with our experience centers and now being in VIDA V1 as VIDA Corner, and also bringing our EV exclusive VIDA dealerships, starting from Pune. You'll see us being present in various formats. In terms of you know, getting our product in the hands of the customers, you saw that on October, the numbers are going up, and we just see that this is going to go up and up you know, from here onwards as we are present in all these cities. Everything else, in terms of our ecosystem, in terms of our production and the product acceptance, it is on the right track for us to get to leadership in the coming quarters. Got it. That's helpful. My second question is just on how we are managing the margin in the business. So it appears that the industry is in a slightly more favorable raw material environment, but Hero has been able to take more price hikes than maybe competition has been able to take. And it appears that some of those benefits are being reinvested into the business, which is potentially why the margin is slightly more flattish versus maybe some of the peers over the past few quarters. So just trying to understand, you know, the thought process around the various gives and takes, and also your thought process on sort of further price hikes potentially going forward. Yeah. So as far as our margins are concerned, see, why we say the industry is in a favorable mode, actually, it's, you know, if you take it back to 3 years or 4 years back, the industry has been hit by the commodity cost rise. And sensibly enough, in order to ensure that the customers are not getting adversely impacted hugely, what happened was the industry actually absorbed part of that in the margins, and we've been talking about that. And that recovery has happened. So that's where the margins have come back to the platform, which it was, as our guidance has always been, to be in the tramline of 14%-16%. Price hikes, no. Actually, we haven't been taking price hikes higher than industry. All our product positioning, all our price positioning, have been broadly in line with where it was, and therefore, that's been, again, a very sensible pricing plan that we have had. What this now allows, of course, the margin shape, and of course, as we move forward, the operating leverage will further kick in. But this will allow this to be deployed even more towards the big launches that we have been doing and are going to scale up, whether it is a premium or the EV business or digital, any other growth priorities that we have, we're going to deploy double down on those and deploy money behind those. So this is how we are going to leverage this to actually fuel our growth. Got it. That's very helpful. Thank you very much, and all the best. Thanks, Chand. Thank you. The next question is from the line of Jinesh Gandhi from MOFSL. Please go ahead, sir. Hi, sir. Congrats on good numbers. Quickly on the festive season, how it has started, what has been the industry growth, how Hero has grown during this initial part of the festive season? If you can throw some light on that. Yeah. Hi, Jinesh, this is Ranjiv here, Ranjivjit. You know, quarter two is all about preparing for the festival season, and we are prepared well. We anticipated a good bounce back of demand, and we have actually worked on our strategies across the portfolio. So, Niranjan already spoke to you in the last quarter about grow the core. And grow the core for us really means growing the market. And we've put our best foot forward to inspire and invite the entry level consumers to come in, into the market, and that's working very well for us. So at the entry level, HF Deluxe is doing well. It, that's itself in double digit growth. We are also seeing that the rural demand has picked up quite well, and that's always a good news for this industry when rural also kicks in. So we've seen that in the first 17 days of the festival. Then you move into some of the new product introductions that we have done, like Passion, which is a very loved million units a year kind of a brand. That form factor, that styling has definitely you know hit a home run. So it's doing very, very well in terms of the growth. It's at 2.5x in terms of the retail from our Passion family, compared to what it was last year. So that's also expanding the market and inviting more and more people to participate. In addition to that, we've also brought in, in the 125 cc and strengthened our portfolio with Glamour Classic. That's also taken on very well, and this is significant because, you know, it's markets like AP and Telangana and East, where Glamour has been very, very popular in the past, and that form factor, that's coming back and coming back very well again. So we are seeing the growth to be very, sort of spread out. For example, Rajasthan is leading the growth. Central zone is doing really well. We've also got north kicking in very well and south doing extremely well. East, back on the growth path. Portfolio is what's one part of it. Then all the other enablers that we put into the market, really the consumer demand, fulfilling that, the sales training, the, even the retail finance that we put in, all of that is helping us to get to a double-digit growth that we are seeing in the first 17 days of the festival. So we're quite, we're looking forward to a good festival season. Okay. And when you say double-digit growth, that's for Hero's portfolio, not the industry? Well, I'm speaking for the Hero portfolio, definitely. Okay. And industry also would be similar growth, would it be fair to say? I believe the industry is also doing quite well, although I would say that there's a lot more that we are doing in expanding the market and therefore I think we are on a strong wicket here. I think in overall, so far we have grown by 15% on the retail. Yeah, true. All right, just in case you don't take double-digit as 99% growth. All right. Sure. And in that context, even the 100 cc portfolio, which was the worst impacted for last 3, 4 years, that is also showing signs of recovery. That that's quite encouraging. Great. Yeah. And the second question pertains to the margin expansion, which we have seen in this this quarter. Would it be fair to say there was some residual benefit of commodity price correction which got reflected in 2Q, and from here on, there should be stability on the commodity price side? Yeah, we would expect. I mean, Jinesh, as you know, and I just mentioned earlier as well, that I wouldn't call it, you know, a windfall gain or something for the industry. It's just a recovery of margins, because industry had not passed on the cost escalation, inflation that had happened. And now we are back to a regime where the recovery of the price versus the cost have done a catch-up game, and therefore they are matching. So we are back to the even keel, which we were earlier. Moving forward, nobody can forecast the commodities, and I've been saying this earlier as well. We've got to navigate the path. And of course, world continues to surprise us. But right now, as you said, the catch-up game has happened. We're in a good space, from a P&L shape point of view, to deploy behind our growth priorities. Got it. Got it. The last question on EV. So what kind of order book do we have for EV, given that we are already producing 1,000 units a month? Do we have order book number for that? The EV, we will be s ee, we are more focusing on, as I said, I would not give a, a volume guidance right now. But the point is that, we are steadily on the path to create the right infrastructure, whether the number of cities, if you remember, we are in 3 cities by March, and we are aiming to complete 100 cities by end of this calendar year. We are well on our track. The number of dealers that we are opening will be 100+. Soon, all of them will have stocks as well. And the production is getting ramped up, charging infrastructure is getting built. So I think on all fronts, there's a lot of work happening in actually making sure that the buildup happens, and of course, numbers will follow. Got it. Got it. Great. All the best. I'll come back in queue. Thank you. Thank you very much. Before we take the next question, ladies and gentlemen, in order to ensure that the management is able to address questions from all participants in the conference, please limit your questions to one or two per participant. Should you have a follow-up question, we would request you to rejoin the queue. The next question is from the line of Kapil Singh from Nomura. Please go ahead, sir. Morning, sir, and festive greetings to you and the team. I just wanted your thoughts on the evolution of industry in the 100 cc and 125 cc segment. So are you thinking structurally the growth for 125 cc will continue to remain higher? And how are you planning for your product cycle? Or do you think 100 cc segment, which has shrunk quite a bit, could make a strong comeback. How and we can talk about next 2-3 year kind of outlook here. Hi, Kapil. See, again, I go back to, you know, what we have said, I think it is 3-4 years back, Oman, when you were talking about this, that India is always a story of many Indias. So therefore, it's not like one segment is eating into another segment. There's a class of customers which want affordable product at a certain price, at the entry segment. There's a class of product which want more upgraded products, and therefore, and then there are customers who are more aspirational and wanting premium products in terms of this. So it's not one segment eating into another, it's just that the different customer segments have taken, a different period of time, post-COVID, to come back to growth. And if you look at this across the categories, the premium segment has come back to growth much faster, which has been followed now by the middle segment. And of course, the affordable, which is the bottom of the pyramid, will follow soon, given a lot of CapEx, infrastructure, program, the development, all that is happening. So therefore, the income level, employment level, as they rise, you know, that class of customers will also start participating more and more. So it's not about one segment at the cost of the other. It's just a recovery in different segments has been happening at different periods of time. It's heartening to see that the middle and the upper segment recovering, already recovered, and the entry segment, which will recover soon. Over to you, Ranjit, for any more colors on this. Sure. You know, the 100 cc segment, the entry segment, when you look at it, it's really about inviting first-time buyers. And the two-wheeler penetration in the country still has huge headroom for growth. It's under 50%. And personal mobility continues to be a very basic need, a big requirement. And that's something that as leaders and, you know, as a brand like Hero, we take it upon ourselves to see how do we help the consumer with the kind of value propositions that we put into the market, with the kind of value that they find in our products, and be able to build that segment. So that's seeing a bounce back. I believe that consumers will, at times like this, trust brands, which, you know, have been around, that have a service orientation, that have the facility widespread across the country. All of those things will work towards our favor, and will continue to work to strengthen that. As far as the 125 cc is concerned, it draws from both sides, from the 100 cc, as well as from the 150, 160, its source of business. And we are seeing that there is a power there that is coming in, and we are very well geared towards, you know, even the launches that we have done, which I talked about, and the future launches that we're going to be doing, will further strengthen our position in the 125 cc and premium. We have already looked at in terms of, you know, our portfolio and the launches you've already been witness to. So across the board, we are seeing strengthening our portfolio and also taking on the role to expand the market. Sure, sir. Thanks for the detailed answer. Second, I just wanted to check on margins. Now, last quarter we mentioned that there was kind of 70 basis points drag, and ICE margins were higher at about 13.5%. Just wanted, color, if you could give us an update, where are the ICE margins right now? What I'm trying to understand is, as we move forward and we ramp up EVs, how would the margin evolution look like? Do you think that can cause some drag on the margins, or you have enough levers in terms of operating leverage and cost reduction for EVs, where this drag will not be there? Just some direction over there would be helpful. Right now, as far as quarter two is concerned, the ICE margins are close to around 15%, and around 90 basis points is what is deployed behind EV. As we move forward, what will happen, Kapil, is that, and you are right, so A, the commodity cost or the BOM cost, now, let's talk the commodity cost. The BOM cost reduction journey is well on the way as far as EV is concerned. So that will help, as we scale up and as we reduce the BOM cost in terms of intrinsically improving that and while deploying that back in building up the scale. So I would say broadly, around 100 basis points is something that one can factor in in terms of moving, and quarter two was 90 basis points anyway, which was deployed. Sure, sir. And, just to clarify, the EVs are, you know, still, on the gross profit basis, are we profitable at this point? No, not really. But I think as, as you know, all of the entire industry is working on the BOM cost reduction on products, which are engineered differently. So we move forward to that. Right now, it's a nascent stage. I think the more focus is honestly on building the category, building the right product portfolio across, in terms of putting the right cost structure. So the margins will follow, but right now we won't be too worried about the margin structure on the, on the industry level. Thank you so much, sir, and best wishes. Thank you. Thank you. The next question is from the line of Gunjan Prithyani from Bank of America. Please go ahead. Yeah, hi. Thanks, team, for taking my question. My first question is on this Ather investment that we made during the quarter. Anything that you can share with respect to where we are on the stake now? And also incrementally, how should we sort of think about this investment, you know, you know, any, you know, strategic synergies to be drawn with the way now we are starting to scale up our EV business? So some color around Ather investment. Hi, Gunjan. The Ather stake, right now, which we have is 37.5%. And of course, as you already have seen, there are synergies that we are working on. Maybe I'll ask Swadesh to talk about what we have done on the charging plan, also on the standardization of the chargers, a couple of points that you can mention. Yeah. Yeah. Hi, hi, Gunjan. Yeah, I think we are definitely leveraging the partnership we have with Ather. For example, this two-wheeler fast charger connector, which we jointly have between Ather and Vida, that has become the standard in the industry, and we expect that more and more OEMs will adopt that. So that will not only help build the category, it also bring a customer ease, you know, across the board. We definitely continue to look for other opportunities, whether it's supply chain or other areas, so that we can help together build the EV category in India. Is there a thought process to have a similar front end as well on, on, you know, maybe, you know, there are experience centers that Ather has, and your distribution is, of course, very sizable in, in their respect. So is that something which is also part of the strategic, you know, decision making while you look at leveraging, the portfolio? I think, Gunjan, I would say one step at a time. I think, you know, Ather continues to build excellent products. They're building excellent experience centers. The company is doing well. The product portfolio is well known for its premium, you know, aspirational image. So I think wherever we see that we see common synergies that both companies can leverage, and therefore benefit the shareholders both the companies continue to discuss on those terms. Sure. My second question is on the product lineup. I mean, of course, you all have been speaking a lot about, you know, so many launches coming through. If you can give us a little bit more color on incrementally next 6-12 months, where should we expect launches? And I'm more keenly focused on this 125 cc segment. I mean, clearly, Glamour and Passion have seen some uptick over the last 3 months. So, you know, how should this segment sort of scale up for Hero? Because it has been historically pretty sizable, right? I mean, you mentioned about 1 million, each of these models used to have. So, you know, a little bit more color in terms of model intervention and how do we see these two models sort of scaling up over the next 12-18 months? So Gunjan, as far as 125 cc is concerned, already, there are some actions that have been taken. As you know, Super Splendor XTEC, which was launched at the beginning of this calendar year, and then, Glamour, which has got revamped. So all of these will translate into higher volumes as we move forward over the next few quarters. Of course, we are looking at, you know, further augmenting this segment, with another model. Timelines we can't talk about right now, but that's something that we come up by probably in quarter four. And the other launches, which we have been talking about more and more on the premium side, you will see the launches over the next four to six quarters. I think the focus is, you know, on the 125 cc, on the premium in terms of new launches, and of course, some action on scooters also you will see. So you will see the lineup coming up. We will keep everyone excited every quarter. That much we can promise. Okay. Lastly, if you can share the channel stock number, and I'll, I'll join back the queue. Ranjivjit? Yeah, this is, like I said, we've prepared really well for the festival to make sure that, you know, in our widest distribution of 6,000 touchpoints, they have the adequate demand fulfillment possibilities. And so, when we come to the end of the festival, we'll be back to 4 to 6 weeks of inventory. Okay, got it. Thank you so much. Thank you. The next question is from the line of Raghunandhan N.L. from Nuvama Institutional Equities. Please go ahead. Thank you for the opportunity. Congratulations on good set of numbers. So firstly, given the strong response for Harley and Karizma brands, how are you looking at the production ramp up for these models in coming quarters? Secondly, in terms of 125 cc, just following up again there, within 125 cc, the premium category has been doing very well. That is price point of above 90,000 ex-showroom, and we have XTEC, which is benefiting in that category. But should we expect more launches like Xtreme 125 cc in coming quarters? And there have been a lot of spy shots also in the media. Okay, Raghu. So as far as Harley is concerned, yes, glad to note that, you know, we are very happy to see the response to X440, as well as Karizma. As I mentioned in my opening note, the current bookings probably we'll be able to serve for the next four months. Our supply chain is already, in fact, three months, four months back, et cetera, they have started ramping up the capacity. So we'll be ramping up capacity. At this stage, I won't be giving out any number, but we'll be ramping up capacity because we see very high level of bookings, and, and then we resort to closing the bookings at different points in time. On the 125 cc, I'll ask Ranjivjit to talk about the XTEC and how these have been doing and of course, it has had more excitement in this segment as well. So Super Splendor XTEC was introduced in the beginning of the calendar and really helped. I mean, when you look at the uptake that it had, not only its core markets of UP and West Bengal, et cetera, et cetera, but also across the country. So it really got a national footprint thanks to the tech upgrade, which that segment of consumers was really looking for. So, you know, the LED headlamps, the USB, all the other functionalities in terms of connect, all of that has helped. Then, when we look at Glamour XTEC, that continues to be there, but, as we are going forward, we are also working on something which Niranjan talked about. And so as you're coming into the quarter four, we should see some excitement here, coming from Hero, to address the segment needs of that, you know, power pack and tech advanced kind of portfolio. So we're very excited about what we are going to be introducing. Thank you, Ranjivjit. Just a clarification: how would be the XTEC share within Super Splendor and Glamour? XTEC is 22%, around 20%, in terms of, you know, overall, it's for the XTEC family is one third, around that much. It goes across Glamour, Splendor, Super Splendor, Passion, Destini, Pleasure+, Xoom. All of them have the XTECs. These are the ones that, you know, are a little bit more tech advanced. They have a clear competitive differentiation. Just for a little bit more, which the consumer is happy to pay the premium, then they get all these extra functionalities, like I said, about Bluetooth connectivity, the USB charger, low fuel indicator, et cetera. All of these things are very much for the younger generation, are very preferred. In fact, you know, like you picked up rightly, what this is doing, the XTEC, is actually just along with premium. Our journey on premiumization also has been equal focus as far as the rest of the categories are concerned. Thank you very much, sir. Lastly, can you share the sales number, if you have it handy? Yes. So we had a really good quarter in terms of parts, accessories and merchandise business over INR 1,300 crores, INR 1,354 to be exact, which is a double-digit growth over last year. The growth is coming across all parts. It's coming from the parts business, from oil, some of the new additions in terms of tires. All of that is working well. We are working on our strategy to continue to expand our distribution. So that continues well in terms of number of retailers that we cater to, the number of parts distributors and through our super stockist channel. We also are getting more and more extraction from each of these retailers, so that continues to be a key growth driver for us. Overall, it's a, it's a business that's coming in, a really strong and good growth. It continues to do well. Thank you so much, sir. sir. All the best. I'll get back to the queue. Deepak, just to add, Ranjivjit, from that, it'll be good to, you know, let people also know that October month, which you've just finished, we've clocked INR 500 crore revenue from PAM business for the month. Yeah, highest ever. That's true. Okay. Thank you, sir. Thank you. The next question is from the line of Praveen Motwani from BOI Mutual Fund. Please go ahead, sir. Hi, team. Thanks for the opportunity. We lost Praveen. Is Praveen still there? Mr. Praveen, are you there? I think he's got disconnected. Why don't we take up Binay next, and the moment Praveen comes in, let's take him in, yeah? Sure. Mr. Binay Singh, go ahead. I think even Binay is dropped, so I'll take the next question. Sure. Thank you. The next question is from the line of, Mr. Pramod Amthe from InCred Capital. Please go ahead, sir. Yeah, hi. Thanks for the opportunity. So the first question is with regard to the Passion. The way it has bounced back looks impressive. Would you give us some color in terms of, within that sub-segment, what market share it has been able to achieve, and what has been the cannibalization for some other brands of your own? It's an overall growth story that we've got on Passion. I think the market was really looking forward to this form factor, this brand, to come in. There was a lot of belief and love for this brand, and so it bounced back extremely well. You know, the growth is over 2x in terms of that. And that really helps the overall 100 cc segment to grow. No, it's not come at the cost of any other brand, at least within our portfolio. And that's because lot of the extra coverage that we've got in markets, where, for example, I was talking about South or East, Passion was at one time a big contributor to the overall volumes and revenues of our dealers. Coming back, it has only augmented and increased the amount of business that, that it has generated for it. Splendor continues to do extremely well. Always we're delighted with this power brand that we have. Of course, HF, like I mentioned to you, has also grown in double digits, thanks to the very strong rural uptick that we have seen during this festival season. I must say this, that our, our, our focus is on expanding the market here. In a way, we're, we're really bucking the trends. We are doing very interesting rural activations that are inviting our consumers to participate during this time. I think that's something that probably no other industry player is doing. We're quite happy with the way the teams are executing on this strategy. It is also your, the existing customers of Hero long back, they are upgrading towards Passion, or these are the new customers who are? You're absolutely right. There are a lot of customers who are holding on, you know, last many years, they were holding on to their Passion because they were just so, I mean, it's a question of love. That's why our campaign was also about first love. And they have come back. But not only that, I think there are many first-time buyers, as we see, as well. So it's coming back, exchanging, and we have a very robust and good exchange business that's also showing tremendous growth, so we are also stimulating that. And we've done that with Passion. We've done that with Glamour. There's a pretty good installed base that we have, that our customers come back to us, they get the exchange bonus, they're able to to do all that. We've got Hero Sure outlets, you've got the Wheels of Trust do-it-yourself app, that from wherever you are, you can get an evaluation of your current two-wheeler, and in seconds you get that. You literally walk into a Hero showroom, a dealership, and you also get brokers to participate and give you the best possible deal for your previous or older vehicle and exchange for a new one. So, you know, it's a very comprehensive strategy that we've got to expand the market, and that's what we're working on. Sure. And the second question is with regard to the scooter exports, which also seems to be again coming back in a big way. So which markets are these, which are driving this? And also, what's the runway? Any thoughts? Is it more driven by the new products you introduced those markets, or can you give some color and some medium-term targets there for specifically scooters? No, I guess I'll, we'll address this in overall global business volume, not in terms of scooter or the other, parts of it. Quarter two, we had 15,250 volumes, which sequentially is a very good growth because quarter one was only 35,000. So yes, the markets are coming back in parts, and we are looking at further scaling up of this volume in second half. Sure. Thanks, and all the best. Thank you. The next question is from the line of Praveen Motwani from BOI Mutual Fund. Please go ahead. Hi, team. Am I audible now? Yes, you are. Yeah. Hi, thanks for the opportunity. So my first question is: What is our production capacity for Harley-Davidson X440, and how do we see the ramp up over the next couple of quarters? So I mentioned earlier that, our current number of bookings that we have, we aim to serve them over the next four months, and the supply capacities are getting augmented for both Harley and Karizma. We will see that coming on higher capacities in quarter four of this year. Any, sir, any indication that what would be the production capacity number, you know, to understand our stand to address the demand that we will get for this product? Partway between Harley and Karizma, we are looking at to ramp up in the stage one to around 10,000 per month. Okay. Probably we could look at augmenting that even further as we move forward. 10,000 per month? Okay. And, and sir, any, if you can just also elaborate on the profitability front, specific to the Harley-Davidson, that would be really helpful. The profitability in this segment is quite good, and it builds up with the scale. So right now our focus is on ensuring that we win in this premium journey, and scale up and get a meaningful market share in every segment of the premium category. Okay. Okay. Okay. So, sir, In fact, you know, as we build premium portfolio, it allows us to, further expand our brand business more specifically on the merchandise part of it. And therefore, that's something that in future we will see as an additional revenue stream coming through. Okay. So when you talk about the better profitability in this specific thing, so can I assume that our like it would be better than the blended margins that we are doing right now? I won't get into more specifics here, but I think the portfolio shape will improve from a margin perspective as we move forward. Right now, our singular focus is building the shares in the premium segment across each of these segments within premium itself. Understood. Okay. Thanks. Thanks a lot, sir, and all the best. Thank you. The next question is from the line of Shree Kirloskar from BOB Capital Markets Limited. Go ahead, sir. Hello. Thank you for the opportunity. Yeah. Please go on- For the opportunity. My first question is, first, in our balance sheet, the vehicles have gone up sharply to around INR 4,300 Crores. So, any color on that, on what is driving the growth? Yeah, we couldn't hear you well. Could you repeat yourself, please? Hello, am I audible now? Yes, you are better. So my first question is on the balance sheet part. Our receivables have gone up sharply. So any color on that, on what is driving the growth there? So that's the usual bit that happens during festive season, because as the stock builds up, and that happens across the industry, we do provide extended credit to our dealers, which gets them wind down by the end of the festive.... I think unusual, I'm afraid to say. Okay, understood. Sir, my second question is on the volumes. You have been doing pretty well on the volume parts for, especially on the motorcycle segment. So is this something we are seeing as part of a pent-up demand which is going on or the normal streamlined ones? Ranjivjit? Yeah, I think there's a little bit of seasonality here as well. So when you look at, you know, the way we are shaping our portfolio, bringing in, of course, the volumes are going up. And the trend that we are seeing is pretty positive for the festival season. As we get into Q4, then also, and pretty much from November onwards, we will see the marriage season kicking in. So there also the demand is going to be positive. So we see that that the trend for at least our portfolio is continuing to be robust and strong. Okay, understood, sir. Thank you so much. Thank you. The next question is from the line of Hitesh Goel from CLSA. Please go ahead. Yeah, thanks for taking my question. Sir, my question is on the gross margin. If I look at on Q-on-Q basis, you've taken a 1.5% price increase, but the gross margin expanded by 80 basis points. There is also, precious metals have gone down quite a lot, right? I, I don't know what is the proportion in your portfolio, if you can specify that, because most of the companies are-- have got some RM benefits as well. So if you can just break it down on the gross margin side for us. Hitesh, we look at overall shape of the margin rather than the by elements. And I would broadly cover without getting into each component, that the benefits are accrued from, obviously, the catch up between price and the commodities. There is part of the leap savings that we continue to drive. There's also the mixed impact, because as we have seen, the 125 cc, the dealers, those growth have been higher than the entry segment overall as a composition, and therefore, there is a mixed benefit as well. It's a combination of all of that, that, that has actually helped in terms of getting the margin. And of course, when you look at you know, some bit of operating leverage as well. So the, the combination of all that which has resulted into, into the EBITDA margin. I won't get into each component wise, honestly, which contributed. Yes. Okay. So just a follow-up. On the other expenses, we have seen strong increase. So is it because of the launches, Harley launch or something, that, you know, the expenses have been higher, or this is a recurring kind of rate we should assume? So I think, as I've been saying, other expenses, we should always look at, you know, a rolling four-quarter basis, and that's the best way to look at, because quarter-wise, based on the launches, we will always have an uptick. And of course, the margin shape that we have, which is why I keep going back, to the overall margin shape, it allows then us to deploy more and more behind the launches, whether it's a Harley launch or whether it's Karizma launch, and there'll be more launches to follow. So we'll have that trajectory behind those, which is the right investment for growth. Great. Thanks. Thanks, Niranjan. Thank you. The next question is from the line of Mr. Pramod Kumar from UBS. Please go ahead, sir. Yeah, thanks a lot for the opportunity. Sir, two questions. One is a clarification on the receivables. Normally, these kind of receivables also generate interest income, right? It's not like you're gonna be funding or extending credit for a limited period without any interest costs or interest for the dealer. Is that understanding right? No, no, that's not. I mean, it's part of the entire extension of credit that we do, and the interest is only if it becomes overdue. So that's the, you know, that's the usual way that happens. It's just that we allow extended credit during this period of time. Which is a nd, sir, where do you recognize if there's an overdue and there's an interest, which you, which you, which is kind of you receive from the dealer? Where exactly in the period, does it come in the other income? Yeah, yeah. Beyond the due period, which again, it gets into the other income, Pramod, you are right. Other income. Thanks a lot. That's not a big portion of the other income- It's not income. Yeah. Which you see. Yeah. Yeah, yeah, yeah. No, that's good to hear. On the EV side, sir, because what you're seeing is that demand continues to be pretty resilient. Even in the festive season, EVs are holding a 5% volume share, which is pretty encouraging. Yeah. Which probably points to increasing adoption of EVs even in the rural and the festive markets. Right. Given the fact that you have a really differentiated product, because if you look at all the other major players, they have a handicap, where the battery is a fixed one, right? Yeah. You are the only one among all the leading players who have a differentiated product approach, and honestly, which should give you a very good right to win. Yeah. But I'm just trying to understand, what is kind of, is it supply chain which is constraining you? Because otherwise, with this kind of a product, the position where you are really taking charging out of the equation altogether, practically. The constraints are on charging. So why are we not seeing a much sharper surge in volumes or what am I missing here? Yes. Because this is something really differentiated versus everyone else in the market. So, Pramod, you are absolutely right. I'm glad that you picked this up, that the product is differentiated. It's being marketed, the brand is being marketed as a very differentiated marketing proposition, as you would have seen the creatives. On the place part of it also, we have advantage, given that we can leverage, the Hero distribution network, which we've started leveraging. Plus, of course, exclusive stores, which actually are now coming more and more on ground, which is the, with the hubs that we talk about, which will bring the imagery part of it. So I think all of these are right ingredients in place, Pramod. So it's only a question of time when we actually put out the scale. As you said, that, you know, as of the last two weeks, we already started producing at 1,000 per week. Of course, as we move forward, we'll continue to ramp it up. It's important to get the ingredients right, which you're rightly saying, and then thereafter, the scale up is only just a function of time. So Swadesh, you want to add just couple of points? No, I, Pramod has picked up the right, Pramod, you picked up the right, USPs, and in fact, that's where the answer lies as well, that we are very confident about this product, and the customer feedback is very, very positive. It is our responsibility to make sure that we set up the right ecosystem, the foundation, for growth and all the support, structure which the customer needs once they own the product. So we are building all of that. We know that we have a well-differentiated, product. We have the best range, removable battery, charging infrastructure, you know, differentiated, connected features. So we know that we're gonna, you know, be ramping up volumes very fast. Also, Pramod, you know, and you know, I mean, it's, it's very important that at the initial stage, one doesn't get too perturbed about, you know, how much volume you're selling, 1,000, 2,000. It's important to build the right, infrastructure in place. Plus, in fiscal year 2025, we're going to expand the portfolio in terms of price points. So there'll be mid and then more affordable price point. Affordable, but not cheap product. The product will still, be a class in itself. So that's where the focus will be. And I think with all this, we will obviously see a scale-up happening. Not worried about that, Pramod. Great. Great, Niranjan. Thanks a lot. Season's greeting, and best of luck. Thank you. Thanks. Season's greetings to you as well, and everyone. Thank you. Thank you. The next question is from the line of Mumukshu Mandlesha from Anand Rathi. Please go ahead. Thank you for the opportunity, sir, and happy festivals to the management. Sir, can you provide update on the export volumes expectations ahead as the demand is gradually improving? And can you indicate what are the, sort of major countries, contributing to export volumes, and how are you seeing the currency availability in those market? So for us, obviously, the top few markets, you know, whether it's Bangladesh, whether it is Colombia, and then of course, in the prospective markets, we have Nigeria, we have Mexico, we have Turkey. Of course, in Nepal, we have some significant volume. So these are the markets where we will see volumes, in terms of moving forward. Our quarter two sequentially has been good. Second half, we expect, the volumes to also pick up. Having said that, we know that world is also going through geopolitical issues. So we'll need to watch this space, but we will be building up the global business gradually. So we are more looking at medium to long term point of view. Got it, sir. And as you mentioned earlier, that the entry buyers are coming back to the market, and I think the earlier it used to be like a 75% of the Hero demand is from entry buyers that has fallen to 60%. So how has that changed, sir? If you can indicate, sir. Yeah. So entry is definitely has a good uptake. I'm not sure about the 75-60% that you are referring to, but typically, you know, the urban/rural split has been a little bit more in favor of urban in the last couple of years. Now, during this time, when we look at the source of business for our of the festival season, it's become. It's evened out, and that's really a very good trend for us to see that rural is also participating. And I believe that they have confidence in HF Deluxe, and you know, the proposition that we have there with the financing schemes, with the activations that we have done in the rural markets. So I think it's seeing a good uptick, and it augurs well for the overall festival demand and the results that we are seeing so far. Thank you so much. Thank you. The next question is from the line of Jyoti Singh from Arihant Capital Markets Limited. Please go ahead. Thank you for the opportunity. Sir, my question is on the CapEx side. So, like, are we still adhering to the previously guided CapEx, that is INR 1,000 crore, or have there been any changes in that regard? Yeah, Jyoti, we are sticking to the same guidance. And as we had mentioned earlier, while we continue to, the point is that the shaping of the capital allocation is moving more towards premium, EV, premiumization, but the overall capital guidance remains the same. Okay, great, sir. And sir, my second question on that, voluntary retirement side, like, we incurred, approximately INR 160 crore last quarter. So can you please provide an update for this quarter? So that is closed. So that was closed and done with, and the numbers were factored in quarter one. Yeah. Okay. Thank you so much. Thank you. The next question is from the line of Kapil Singh from Nomura. Please go ahead. Yeah, sir, just one follow-up on the battery technology that we are going to use going ahead. Do you think that this swappable battery is the way forward, given the conviction you have or the feedback you have? Or, going ahead, you know, we will be investing in fixed battery kind of solutions also. Just, if you could just compare and contrast the advantages and disadvantages and where you would invest more energy going ahead. What you mean is removable battery versus fixed battery, right? That's right. That's right. Okay. Swadesh? Yeah. Yeah, I think, you know, we heard from earlier on the call itself that our removable battery is a major USP, and we are highly differentiated from other players and products in the market. We continue to see that our customers are heavily using that feature. So we see that we will continue to rely on this aspect of our battery. But having said that, I don't think one can tie up to, you know, one type of fulfilling the need of range anxiety just by saying it'll always be removable. We have to see for each segment what the customer needs are, what the use cases are, and we'll have to have the right battery for that. If a certain segment requires, doesn't require a removable battery, and I can give a much simpler product, I think it depends. So I don't think I would say that one would assume removable battery for all products, but wherever we are present, we see the benefit of it in terms of the customer experience. Yes, so, if you could just explain us, like, in which use cases do you think the fixed battery work, works better? And, you know, is there a higher cost in case of removable? You know, just to help us understand the variable basis which, you've taken the decision. Yeah. So, see, there are use cases where, you know, the customers have the opportunity to charge very easily the scooter itself, right? Or once the fast charging network is available and the speed of charging is to an extent that you don't really need... You can quickly top up 50%-60% of the range required. In those use cases, you don't really need to be available with removable battery. Also, when there is a very captive use between point A to point B, very reliable, sort of predictable use. So, you know, we can sort of take this up, you know, it's a longer debate, but, as I said, there are use cases where you probably don't need the removable battery. But for the, as we continue to bring down the cost of the vehicle and the battery, and continue to provide this, three ways of charging, which is the scooter, the battery, and the fast charging, we see that it will cover majority of the segments as we go forward. But I don't want to say that this is needs to be for 100% of the products. Thank you, sir. Thank you. That, that's all from my side. Thank you. Thank you. We will take the last question from the line of Abhishek from Dolat Capital. Please go ahead. Thanks for the opportunity, sir. Sir, what was the retail number in last festive season for Hero, and what is your target for this festive season? And, how much peak festive season volume for Hero? Do you expect this, you would be able to surpass in this season, that numbers? So our last year festive season, we were around close to INR 1.2 billion for the particular year. And because, and recall that is the only the end customer retail. I won't give a target right now. We have said that we expect industry to grow double digits, and we already talked about the festive. So far, we've grown 15%. Okay, sir. And, my last question on the scooter segment. We are much behind versus our peers. So what is your plan to regain the market share in scooter segment? Yeah. Thank you for the question. You know, in the two segments, the 110 cc segment, we're in fact gaining market share thanks to Xoom. Xoom is doing very well. In a number of markets, it's become the number two brand. And that's really, really incredible for such a short period of time for the brand to become so accepted in the marketplace. It's a mini industry first, like the corner bending lights. It has good and wider tires. It's really got a zippy acceleration, so all of that is good. As far as the 125 cc segment is concerned, we're in a period of transition as we phase out a couple of products from our, you know, like Maestro Edge, et cetera, and we bring in some new. We've already brought in Destini Prime in the 125 cc, and this is again transitioning into a really good path as we go forward. So 125 cc, we will continue to strengthen as we go forward. 110, we've already done some interventions there, and overall, we'll see us growing in this overall scooter market. Thank you. Happy festive season to everyone. Yes, sure. Thank you, everyone. Thank you for, well, thank you for listening to us. We look forward to keeping in touch, and enjoy the rest of the year. See you soon. Thank you. On behalf of Antique Stock Broking, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.