Ladies and gentlemen, good day and welcome to Q3 and nine months FY2024 earnings conference call of Hero MotoCorp Limited, hosted by Prabhudas Lilladher Private Limited. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star, then zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Himanshu Singh from Prabhudas Lilladher. Thank you, and over to you. Call of Hero MotoCorp. Sure, sure. You are not audible. Can you please repeat? Can you hear me now? Yes, yes. Please go ahead. Thank you, everyone. Thank you, Yash. Good morning, everyone. Welcome to Q3 FY24 post-results conference call of Hero MotoCorp. I would like to thank the management for giving us this opportunity to host this call. Now I hand over the call to Mr. Umang Khurana, Head Investor Relations and Risk. He will introduce the management and take the call ahead. Over to you, Umang. Thank you. Thank you, Himanshu. Thank you for hosting us. Good day, everyone. Welcome to the quarterly call post-results investor call at Hero MotoCorp. Thank you for sharing your Saturday morning with us. As usual, what we have today is we'll start with our CEO, Niranjan Gupta, sharing an update. We also have with us today Swadesh Srivastava, our Head of EMBU Business, and then fronting for Ranjiv is Ashutosh Varma, our Head of Sales specially as well. We'll open with Niranjan with his opening comments, and we'll take it from there. Niranjan, over to you. Thanks, Umang. Welcome again, and good morning. It's a Saturday, we know, but I'm sure that you will be excited seeing you would have been excited seeing our results, and we're more pleased as we go through your questions and our explanations on those. As you would have seen the results, we delivered a top-line growth of 20% and a PAT growth, profit growth of 50%. This allows, as I've been saying earlier, our profit shape now allows to deploy more aggressively behind our growth priorities. We also declared interim dividend of INR 100 per share, which includes a INR 75, which is normal, and INR 25 as a special dividend. Coming to the actions that we've been taking, and you've been seeing us, a lot of action in the premium segment. Our early success that we have seen on Harley X440 and Karizma continues. We've launched two more products, as you saw, in Hero World. Thank you to those who were able to come to Hero World. I'm sure that you looked at our entire portfolio and liked it. We launched Mavrick 440, which, as we said, the bookings will commence in this month, and deliveries will start in April. That will be boosting further our premium portfolio, which is already looking very, very formidable. We also launched Xtreme 125R in the 125cc segment to strengthen our 125cc portfolio, and you will see deliveries starting on that as well. In terms of EV, we've been creating all the right infrastructure. We've collaborated with Ather Energy, creating one of the widest charging infrastructures in the country. We've been expanding our presence to cities, to dealers, apart from creating dedicated VIDA Hubs as well. You will see a lot of action on the EV portfolio very soon in the coming quarters. While we've been driving premium and our EV, and of course, strengthening our 125cc portfolio as well, we've been focusing on the non-product revenue streams as well as part of that. You've seen the growth that we have seen in the parts, accessories, and merchandise business over the last 3-4 years. It's got an annualized revenue of INR 5,500 crores, and therefore, we decided to put an investment of INR 600 crores behind this, which will be spent over the next two years, which will take the capacity of the PAM business, as we call it, to INR 10,000 crores plus. So that's the news on the business front. There is more, but I would like to leave more time for the questions from you all. Just wrapping up on the economy front, it is heartening to see that even though it was vote-on-account, the government continuing to be there on the path of the long-term growth, and therefore, the CapEx provision of INR 1,100,000 crore is fantastic in terms of the numbers. And on back of the 2-3 years of INR 800,000-INR 1,000,000 crore of CapEx, it means that this will trigger the job creation, employment, and income opportunities at the bottom of the pyramid. Overall, and that, of course, the government has also ensured the fiscal prudence. Therefore, that means that inflation will continue to be in control. Therefore, we are very optimistic and confident about the economy in general and, of course, the prospects of the auto sector in particular. Let me now hand over to the floor for questions. 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 touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. In order to ensure that the management is able to answer queries from all participants, kindly restrict your questions to two at a time. You may join back the queue for follow-up questions. We'll take a first question from the line of Gunjan Prithyani from Bank of America. Please go ahead. Yeah, hi. Good morning, team. Thanks for taking my question. My first question is on just trying to understand the demand better. I'm really keen to hear from you on what is the confidence around the sustainability of demand for the two-wheeler space going forward, and what are we seeing on the ground, rural, urban, pent-up demand? And the reason I ask this is because if I go through what's been coming as commentary from the other consumer companies or financiers seem to be suggesting there's a lot of weakness in the lower end of the market, while two-wheeler certainly seems to be in the bright spot. So just trying to understand what is the divergence, what are you picking up on the ground, and how confident are we of this sustaining over the course of the next 6, 9 months? I'll start with you. Gunjan, thanks for the question. As far as the demand is concerned, as we have been saying, we do expect the industry to grow double-digit on revenue in the coming year, at the least. You've seen also the similar commentary coming from other players in the two-wheeler space. Fundamentally, as far as the and premium has been outstripping the growth because India is a story of many Indias. Gradually, you see upper premium, middle premium. You see even in 125cc, if you segment it into two, which is a premium 125 and, let's say, a non-premium 125cc, then that's also growing. So you've seen every segment, you kind of see premiumization, and that's growing. So it's not just about the top end of India, which is growing. You can see aspirations of people growing. At really the bottom of the pyramid, as I just said earlier, the heavy CapEx spend that's been happening, the digital inclusion that's been happening, the hospitality industry that you can see clearly, which is lifted up, is actually lifting the sentiment of the consumers at the bottom end. That will get manifested as consumption in different categories at different points in time, and which is why you see this divergence. We clearly see the positive signals, which are emanating from the rural sector as well. We will see in the coming quarters growth picking up from that segment. Anything that you can share in terms of how the growth rates are varying between rural versus urban for your portfolio? No specifics, Gunjan, but if you look at it in the festive, for instance, we had a higher contribution coming from rural versus urban if you compare to the preceding few months. Even if you look at the latest in the inquiries, which we track, for instance, overall, the mix of the inquiries, if you see, they were in the last, let's say, quarter two, quarter three, quarter four of fiscal year 2023, it would be around, let's say, 40% inquiries coming from rural and 60% from urban. Now, that seems to be going up to 50%-55% inquiries coming from rural. Now, therefore, as the inquiries are starting to pick up, that will manifest in the consumption moving forward. Okay. Got it. The other question, Niranjan, that I had was that this financing, which seems to have certainly gone up a lot on the two-wheeler side, and that's something which is very specific to two-wheelers within autos. It was much less penetrated a couple of years back. Is that something which really is a pretty strong lever in terms of reviving the market? Any thoughts around that? Absolutely, Gunjan. If you go back to our earnings call, we have been calling this for many years now, that financing is going to be the big driver. If you remember, even when it was 40%-45%, 50% penetration, and that definitely is a big driver, not just now, but moving forward. I would even say the next three years, the single biggest driver from the industry point of view will be the finance penetration down to the lowest strata, while from the economic point of view, it is a CapEx spend, but from the industry point of view, it is the finance penetration. And finance penetration in terms of the entire ease of financing, the convenience of financing, and the cost of financing, and the width of financing, the entire bit. And that we've been working with all the finance players. In fact, we have piloted our eFin platform very recently that will be scaled up moving forward in the fiscal year 2025. Now, what that does is aggregating all the finances on one platform and makes the processing of loans much faster and very convenient for the customers. So it's just got piloted. It will be scaled up very soon, but clearly, finance is the big driver for the next three years because that's where it's not the ticket price, which plays a big role. It is about the ease of financing and the cost of financing. Okay. What is the financing penetration, if you can share that, and I'll join back the queue? Sure. The financing penetration, as far as the overall is concerned, is close to around 60%-65%, and FinCorp is close to around 30% of that. Okay. Got it. Thank you so much. Thank you. We have a next question from the line of Chandramouli Muthiah from Goldman Sachs. Please go ahead. Hi. Good morning, and thank you for taking my questions. My first question is on the pricing environment. We seem to be heading into a slightly more benign commodity price environment, but I think Hero has been pretty proactive in taking opportunities to raise price maybe a little more than peers in the industry over the past couple of quarters. So just trying to understand, have we sort of covered for most of the commodity inflation we've faced over the past couple of years in terms of passing on price hikes, or is there a little more to go? And also just related to that, have we been able to take any price hikes so far in January and February? Thank you. Hi. I'll just get into, we've not been taking prices more than overall what gets justified, yeah, as a market industry because our product and price positioning, we have ensured that we maintain, and we keep evaluating this every quarter in terms of the product positioning in the market, and we keep adjusting it for the future enrichment that we are doing. So like for like, if you see, it's very similar. On the second question on the inflation cover, yes, all the inflation that you saw, and therefore and that time, also, we said that we got to be sensible, and therefore, we took partial hit and partial pass on, and now that's all got covered. And yes, the commodity environment currently is benign. Got it. That's helpful. My second question is on the electric motorcycle plan we recently shared in Jaipur at the Hero World event. It appears that we are going to start maybe with performance motorcycles, then premium, and then slowly go on to mid over time. So just trying to understand the thinking behind that, given that we've historically been very strong at the entry level, and with electric motorcycles, we seem to be looking to start with performance and premium. Yeah. The thinking behind that is very simple, which is that if you look at the cost of putting EV in a commuter and lower segment, it will become hugely unaffordable because for a motorcycle, the distances that you need to cover and the power that you need means that you need twice the battery capacity on a like for like, at least, compared to the scooter. Already, the scooter TCOs are still not at a level where it is viable, and therefore, you see OEMs having cash burn or cash investment, you may call it. So therefore, it makes sense to start at the performance motorcycle where the customers can afford that price, and gradually, as the technology evolves and changes and continue to learn and gear up, but clearly, the EV next few years is going to be about scooters until the technology for battery changes. Let me ask Swadesh Srivastava, our Chief Business Officer for the Emerging Mobility Business Unit, to talk more about the Zero collaboration and our thinking behind starting from the performance EV motorcycle. Swadesh, over to you. Yeah. Thank you, Chandramouli, for the question. Niranjan clearly covered why it's going to be a little while before you see EVs coming in the commuter motorcycle segment. I think the industry is moving from high-performance scooters to now affordable scooters. That's the story. We need to make sure that we are leading that. On the Zero collaboration part, we are aggressively working on getting the high-performance scooter and also working on the higher end of any new technology and a new product allows you to then make sure when you come in the affordable, you're much more prepared from technology and cost point of view. So that's another reason to start from the top. Got it. That's helpful. Thank you very much and all the best. Thank you. We have a next question from the line of Jinesh Gandhi from Ambit Capital. Please go ahead. Yeah. Hi. Niranjan, you talked about rural markets. You are seeing some positive signals from the rural markets. So can you elaborate further on that? What are those signals? And also, more importantly, post-festive, how have been the retail trends and inquiry trends in the rural market on the entry-level side? Jinesh, your voice is a little muffled. Maybe you want to try again? Yeah. Is it better? Please use your handset mode. Yeah. Is it better now? This is better, Jinesh. Yeah. So my question was on the rural markets. Gunjan talked from the rural market, so if you can elaborate on that. And secondly, with respect to the retail trends, post-festive in the rural markets, are they holding up and growing on the low base of last year? Has that been visible on the ground? All right. Jinesh, firstly, congratulations on your move to Ambit Capital, and I hope you've settled well, and Ambit Capital will get the benefit of your years of experience that you've had at Motilal. Jinesh, on the rural side, as we said, see, I think we make too much out of the rural demand signals. So if you look at the structure of the industry, if you look at even within rural, you have more aspirational, more urbanized class. So it's not two-wheelers. It's stopping to be about only rural and rural only. So I think that's the part of it. And as I said, that we take our cue more from the inquiries that are going up. From around 40%-45% of the inquiries coming from rural, now the percentage of inquiries have moved to 50%-55%. Now, clearly, therefore, people are willing to buy coming forward. That coupled with, as the income level expands with all these CapEx going in and the finance penetration, this is just a start. Therefore, because the appetite or the underpenetration is very, very clearly there in terms of demand to be translated. On the festive, post-festive, yeah, the season in December typically is soft. It has started picking up already post January 14, and you will see it going up. Actually, we are not worried about the month to month or a few days here, a few days there, but the fundamentals of demand actually continues to be there. In fact, in the festive season, the rural contribution to retail actually increased by 100 basis points as we had said earlier, and therefore, it will continue moving forward. Got it. And second question pertains to the commodity cost influence in 3Q. We had seen a further increase in gross margin. So are we seeing this trend to continue, or now stability in commodity prices is there, and a large part of the benefit is fully reflected in numbers? I think broadly, I would say that the commodity is stabilized, and the margin improvement is not just reflective of the commodity cost. If you see, we've done a lot of premiumization across our portfolio, so it has a mixed element to it, and it's got LEAP savings benefit into it. And of course, it's got partially the commodity benefits as well. In fact, our ICE margins are now close to 16%, and this quarter, festive quarter, we did pump in a lot of money behind EV marketing to create our brand awareness. I asked Swadesh to talk about the VIDA brand awareness very soon, and we invested around 200 basis points in our EV business, taking the margins overall to 14%. So I think we are in a good space where we are able to invest more behind our growth priorities. Swadesh, would you like to talk about how we have used this to increase the brand awareness scores of VIDA in this quarter? Yeah. Thank you, Niranjan. Yeah. So VIDA, coming from the house of Hero, obviously, there's already a strong backing, but for a new brand, we have to make sure that people are aware that VIDA EVs are coming from the house of Hero. And we have partnered with the key cricket properties. We've partnered with key TV properties. We have been very aggressively going on social media and local print ads, and we have really seen the jump up in the last 3-4 months on what our awareness scores are. It is still early times. India is a large country, and many Indias as Niranjan always talks about, so we'll continue to build on it, but we are on a good trajectory. Got it. Continuing on the EV side, so how have we seen our expansion and our touchpoints on the sales side, and how do we plan to expand it further? Thanks for that question. Yeah. This year has been incredibly good for us in terms of expansion. Once we start putting our expansion action in place, we have been growing almost a city a day. Now, we are 100+ cities, 150+ dealers across 3, 4 formats. We started with experience centers. Then we are present in Hero 2.0 stores across these 100 cities. We have close to 18 hubs already, VIDA hubs, which are exclusive small format exclusive dealership, and we plan to really take it up to 100 hubs next year. And we will be present in maximum Hero 2.0 as that is also scaling very fast for the next year. And at the same time, we are also present in premium. So you'll see these multi-store formats will be present across. With our increasing portfolio and accessibility at every point, we definitely will see a huge scale-up in FY25. Got it. Thanks and all the best. Yeah. Thank you. Thank you. We have a next question from the line of Kapil Singh from Nomura. Please go ahead. Hi. Good morning, sir. My first question is on you've talked about the fact that we will now be using the margin shape to fuel our growth in the future. So if you could just elaborate how you are thinking about this, what is going to be the strategy? Should we expect 100-200 basis points kind of investments to fuel growth? And particularly for EVs, what we noticed is that there has been some discounting in the industry recently. So just an industry-specific comment, is it that you are noticing that demand for EVs has softened, or is it that profitability with these discounting is coming under pressure? So just some color on that. Yeah. So on the EV market side, as we have mentioned earlier, EV is in a huge transition right now. I think it's moving from the early adopters to early majority, and the early majority is definitely going to look for upfront price parity between EV and ICE products. They don't want to compromise on their charging requirements. They don't want to compromise on their service requirements. So any serious player is going to make sure that they are playing at the right price points, at affordability of these scooters, and making sure their charging infrastructure and service network is up to the best level. Now, your observation about these price wars or discounting, I think that's just a reflection of when some of the players are not ready with the products that are there. They might be trying to play a price discounting game. But as we have always said, that we are here for a long run. EV is a marathon. We don't want to get caught up in a short-term price war. We want to make sure we have the right products at the right price points and closer to the customers. And we know that with that strategy in place and our heavy cost reduction roadmap internally, which we have, we will ensure that we have the right product in the hands of the customers. So we are not too worried about it, but your observation is right. The industry is going through a price war. Swadesh, you talk about are we launching in quarter one? Yes. Yes. Yes. Thanks for adding that, Niranjan. So as we have said that we are coming at we're going to be playing in three price points within the quarter one of FY25, which includes our affordable and the mid-segment with a very competitive offering in the market. So with that in place, we definitely see that we'll have the right positioning to scale up fast in FY25. So Kapil, in short, you will see our price action combined with the product action and not as a standalone and expansion of the portfolio. Coming back to your first question, which you talked about, the reinvestment, see, it's a dynamic margin management. So you deploy behind growth priorities, and you've been saying this. The trend line for ICE margin is 14%-16%. And consistently, we've been saying that we've been on that path. We've ensured that we put the savings in, premiumization in, the premium products in. So you will see the investment, the deployment of CapEx, of OpEx, more and more going towards premium, going towards EV, going towards our digital priorities, which you've been talking about at various forums. So it is the rigid resource allocation, which is key to growth. The good thing is that we have cash earned, which we can fund with this. We don't need to be in a cash burn scenario. Thank you. We'll take a next question from the line of Pramod Amthe. Please go ahead. Yes. Sorry. Sorry. Mr. Pramod Amthe? Yes. Can you hear me? I'm listening to your question. Yes. Sure. Yes. Yes. Considering that the government pushed for alternative fuels and also one of the competitors are talking about. Pramod, do you want to get closer to the phone or pick up the handset, please? Can you hear me now? Mr. Amthe, please use your handset mode. Give me one second. Pramod will come back to you. Let's go on, please. Sure, sir. We'll take a next question from the line of Mumuksh Mandlesha from Anand Rathi. Please go ahead. Thank you so much for the opportunity, and congratulations on continuing seeing good gross margins improvement despite the festive sales during the quarter. So we had partly talked about earlier on the demand side, but can you share more thoughts on how do you see the growth in the subsegments of the motorcycle and scooters for next one-year perspective? I mean, in the context of that, premium and scooters have largely recovered in comparison to FY19. So how do you see in the next one year the growth between the subsegments? Let me ask Ashutosh, who's our national sales head, to throw some more light on growth moving forward without, of course, Ashutosh giving that exact number, right? Okay. Hi. Good morning. I think from the subsegment level, we would see the 125cc motorcycles continue to drive the overall motorcycle growth portfolio. That's a segment that's been doing very well this year, and we expect that to continue for next year as well. Also, from a premium perspective, we've been seeing that the segment greater than 200cc is the one that's driving the growth. We expect good double-digit growth there to happen as well. Of course, it's been fueled by a lot of new launches. We've been a part of it too with our launches in X440, Karizma, and the upcoming Mavrick. So this is where we feel that there will be a lot of traction. Of course, on the scooters, 125cc, that's another segment that has done well this year, and we expect the growth momentum to continue and overall lead the industry to the growth numbers that largely everyone has been predicting for. Got it, sir. So lastly, are you making large investments in the parts center? So how do you see the pace of the growth in the parts and accessory revenue ahead? So you're already seeing that our growth in the parts and accessory merchandise business, and that was led by the micro distribution strategy, which is going more retail on the similar lines of the FMCG that we talked about. So overall, if you see from a time of around we used to have a business of around close to INR 3,000 crore revenue, and that's now clocking INR 5,500 crore as an annualized revenue. This has happened over the last three to four years, the growth that has happened. And therefore, we are putting this investment. This investment will take up our capacity to INR 10,000 crore annual revenue equivalent. And the capacity this year, we're putting up in our Tirupati plant, which is already there. So land is there, so the capacity will be coming up there. Within the parts, accessories, and merchandise, so we continue to see that double-digit growth for the next few years. In fact, within this segment, there is a focus that we are also going to provide disproportionately on the accessories and merchandise part because we do see a lot of potential on the accessories as customers as you say, customers are becoming more aspirational. And when they buy a product at that time itself, they want to fit some of the premium accessories so that every product starts looking more premium. And that's the aspirational India that we are talking about. And then the merchandise, which now is the right time for us given that we now have a robust premium portfolio. On the back of that, whether it's a Harley-Davidson X440 or Mavrick 440 or Karizma, we're going to launch our range of merchandise moving forward and therefore creating this as a business itself. This will be rubbing off on each other. On the back of the premium portfolio, we'll be building our merchandise business, and the merchandise business will then rub off further on the premium imagery of our portfolio. Therefore, in terms of our, it becomes more like an adjacent business, and there are premium dealerships as well, which are there. Therefore, all of this comes together to then power our merchandise business and providing more premium imagery to our entire portfolio. That's the entire plan for the parts, accessories, and merchandise business. Thank you so much for the answers, sir. Just only what would be revenue for the parts saving this quarter? Thank you. Revenue for the parts in the quarter that just finished, INR 1,426 crore in the quarter that finished. The corresponding period last year was INR 1,259 crore, and just the preceding quarter was INR 1,354 crore. Thank you so much, sir. Thank you. We have a next question from the line of Pramod Kumar from UBS. Please go ahead. Yeah. Thanks a lot for the opportunity. Niranjan, I just wanted to understand the launches, what we've done over the last 2, 3 years. If you can just help us understand what is the kind of brand introductions what we've done. The reason why I ask this is despite multiple launches in segments, the market share somehow is not kind of adding up. I understand the efforts all put in in the premium side and the scooter side, but individual category market share and even the overall wholesale retail market share doesn't reflect that efforts, what you're trying to put in, and all that. So I'm just trying to understand how long do you expect these kind of things to play out? To begin with, probably, if you can just help us understand the number of brands, what the company has put in over the last 2, 2.5 years because I understand some of the launches take time to play out, and the investment needs to be done on the ground. So if you could just help us understand the brand action taken so far in the last 2, 2.5 years, and what is the kind of brand action one can expect over the next 1 year, sir? A lot of actions, Pramod, on this brand. You know very well that when you launch a new model, a new brand, you have to invest behind those to build a market share. They don't come overnight, which is what we've been doing. If you look at the launches that you've done, Xtreme, in the premium segment earlier, now, that is going to get bolstered by the stores because we didn't have at that point in time the upgraded stores. We've now upgraded 300 stores in 300 days. By March end, we'll have 400, and next year, we'll cross 500 2.0 stores along with 100 premium stores. All of this, Pramod, then provides the necessary arsenal for the premium portfolio to grow. And the next thing is, which I've been saying always, is that when you create a portfolio, when you create a win in premium, you need a full portfolio because we always had the commuter portfolio, which is where now, with Karizma coming in, with X440 coming in, with Mavrick 440 coming in, the portfolio is becoming very robust. And this will have a rub-off on our previous launches as well. And therefore, you will see the market shares moving forward. Be a bit optimistic. Be a bit more positive. And you can see the early successes in the recent period, whether it's the bookings of the X440, bookings of Karizma. And then we're going to impact the Harley bookings across 30,000. And our order book is almost now 3-4 months. The capacity, we are ramping up to 10,000 of the 440 and the Karizma segment that I talked about earlier by March. The more work is in the play. So I think you've got to have confidence in our strategy. I think most people have that. We do have. We are very confident in playing it out. Each of these brands are new brands, power brands being built. Our profitability, our fund position allows us to deploy and accelerate that moving forward. Excellent, Niranjan. And if you just can help us understand at the current level, how much of the volumes for you or the revenue split is coming from, say, premium scooters and exports, assuming that exports will revive and it's a high-growth category. So this high-growth category and focus areas for you, how much is the revenue contribution currently, say, for this quarter? That's irrelevant. That's irrelevant, Pramod, right now. As I have said, that we will build this portfolio moving forward. So therefore, the contribution to talk about at this point of revenue is completely irrelevant. I think businesses are built on the long-term strategy and not on the short-term looking at that. Yeah. And then, in that case, the ambition—what do you have the three-year, five-year view as to where you as a CEO where would you like to take this part of the business? Because that will give you the due share of the industry? Pramod, that's a right question, that's where we would want to take it to 3-5 years' time. Clearly, we want to win in premium. You can see that with the players that we're having in the next 5 years, we would like to have a meaningful market share of the premium segment. Fair enough. And revenue, did I hear the 10% growth kind of a forecast for next year at the start of the Q&A, or is it revenue growth you're referring to for FY25? Yeah, Pramod. So that is the industry growth that we have said, is that we expect double-digit revenue growth for the industry moving forward for fiscal year 2025. And obviously, on the back of all our launches that we have done and more launches to follow and investment behind those, we would expect, therefore, our growth to be higher. And that means the market share gain. Thank you. We have a next question from the line of Pramod Amthe from InCred Equities. Please go ahead. Yeah. Hi. Thanks for taking my question. Considering the government of India's push for alternative fuel and one of the competitors talked about CNG variant, and you're also alluding to the fact that EVs may take a longer time to enter the what has been your R&D efforts here, and what's the outlook you have in that space, especially for motorcycles, CNG, or any alternative biofuel? Yeah. So our R&D center has been working. First of all, we've been continuously investing behind research and development. In fact, our investment in our R&D is almost twice that of our nearest competitor if you look at the last 5 years because we do believe in investing behind technology, investing behind brand. And that's what exactly we've been doing. So our R&D is working on the flex fuel, as well as not just that, but also from the point of view of even within EV, on the technologies, on the battery technologies. So there's a lot of work that's happening on the technology side. In fact, if you look at on the ICE side with the BS6, which is also a big change, the SOX and NOx emissions have come down by almost 90%. Then, of course, we are improving our mileage, which also means that less fuel consumption. That goes absolutely aligned to the government's focus on less dependence on the fuel part of it. Flex fuels are also on the work. That's what we would like to just talk a bit about in terms of in the technology side, what we are doing on the battery technology and the R&D side, just a flavor of that. Yeah. Thanks for the question, Pramod. As Niranjan said, we have been pumping a lot of money in R&D. And across the flex fuels and the battery side, we're looking at various chemistries, various form factors to make sure that whatever the need of that segment of mobility is, whether it's battery-driven or flex fuel-driven, we are ahead of the game. And we are not going to slow down on either of the two because both these sides are very, very important. And with our expertise at CIT in Jaipur and also our tech center in Germany, we are looking and, in fact, working very closely with some of the external partners on keeping tabs and experimenting around new battery technologies as well. So for us, both are important and we'll continue to make sure we are leading the way. In fact, if you had come to Hero World, you would have been able to see the entire CIT and what we are doing on flex fuel. I think your associate, Ravi, would have seen what we are doing on the flex fuel part of it. Thanks. So, extending the theme, when you see the commercializations for these because that's where I put the question, competition is talking about it. Does it still make a commercial sense for you guys to adapt it, or when you expect it, not next year, maybe two years down the line? Any thoughts on that? It will come in a phased manner because you would see overall different kinds of fuel, different kinds of powertrains operating in the next 5-7 years. It's not about transitioning portfolio from A to B, but it's about providing these alternatives and the options. Obviously, finally, a customer is the king. Customer will make a choice in terms of what type of vehicle and what kind of fuel makes commercial sense from a customer point of view. We are ready. Sure. Thanks and all the best. Thank you. We have a next question from the line of Raghunandan N.L. from Nuvama Institutional Equities. Please go ahead. Thank you, sir. Congratulations on strong numbers. Sir, firstly, on the upgraded 2.0 outlets, how has been the experience so far, the response from customers? How is it supporting bookings of premium vehicles and VIDA? Also, if you can share some thoughts on the initial response for Xtreme 125R, any bookings numbers you can share? Yeah. Absolutely, Raghu. And thanks for complimenting on our strong results. Let me ask Ashutosh to throw some light on the Hero 2.0 and the Xtreme 125R early indication. Yeah. Thanks, Raghu. One, the number of Hero 2.0 stores, the pace at which we are putting it in place is phenomenal. I guess this is the fastest ramp-up in the industry. It's also delivering a very unique customer experience if you compare typical NPS scores, what industry has versus what, let's say, EV stores are developing. These are far higher. And we know that the customer service is top-notch. Customers are appreciating that quite a lot, leading to higher conversions as compared to our normal outlets and also as compared to the industry. This, of course, is just one part. I mean, we are also setting up premium stores, which are even higher and better NPS scores. We are getting good traction around, of course, in these premium stores, we have all the new 160 cc and above models that we are selling from here. We are getting good traction there in terms of overall bookings that we are servicing for the models that we had launched in the previous quarter. On Xtreme 125R, the early indications, Ashutosh? Oh, yes. On the Xtreme 125R, since the launch, we have been getting a lot of inquiries. In fact, the booking numbers are a little early to share. But just to tell you, the overall search query volumes are much higher than the VIDA brand in the 125cc sporty segment. And we are confident that as soon as it gets in the market, it will get that response that we are seeing in the initial inquiry traction. Thank you. Thank you, sir. Wishing all the best on Xtreme 125R. The product ride was amazing at Hero World. My second question, sir, was on other expenses, 200 basis points of EV marketing, brand-building expenses. There was also Cricket World Cup. Going ahead, given that the World Cup is behind, so the investments or marketing efforts, should that kind of reduce on a quarter-over-quarter, trying to understand how much would have been the additional expense in Q3 and by how much it would kind of reduce in Q4, and also trying to understand the triggers for margins further scaling up, given that the company always had the target of 14%-16% margin band? Right. So in terms of, yes, Q3 was the festive season. So clearly, the A&P spend rate elevated. And then they come down in Q4. I think for an indication, while I won't give out a number, but what you can look at is a 9-month of the other expenses for a trend line because that absorbs the highs and the lows of the quarter. In terms of the margins, I would just talk about the shape of the margins. So the 14%-16% trend line, the ICE margins are at 16%, allowing us to invest even more behind the growth priorities. Our shape of the portfolio in the next five years is changing. Clearly, if you project from today to five years down the line, you would see more of premium there in the portfolio, whether it is scooters premium, whether it is EV premium, whether it is the normal ICE premium. So clearly, structurally, the margin shape will be moving upwards. But of course, it will follow with the scale that we achieve in these segments moving forward. Got it, sir. Just a last question. On the EV production ramp-up, given that the product is being made available in more cities and Q1, we should see more launches, should we expect that 10,000 per month mark to be achieved by then? Thank you. Well, let me ask Swadesh to answer that, Swadesh. Yeah. We have been ramping up our capacity quite aggressively, not just in our Tirupati plant but also across the supply chain. And we are well-placed to how we need to sort of ramp up from FY2024 to FY2025 onto the sales numbers. And yes, across all the three segments and across the total capacity required for battery, we will be very well-placed to scale up fast in FY2025. Thank you, sir. Wishing all the best. Thank you. Thank you. We have a next question from the line of Prateek from Nippon AMC. Please go ahead. Yeah. Hi. Just one question. You called out 2% of your sales being invested in the EV division, which if I annualize, is close to INR 800 crore. Could you just talk a bit about or split this into how much of it is going into product development, how much of it is discounts, marketing, network expansion, supply chain management, etc., please? Sorry. I didn't get the question. What is INR 800 crore? No. So you said 200 basis point is the drag, right, of the EV portfolio? That is for the quarter. Yeah. If I annualize that, that's close to INR 800 crore. Maybe it could be close to INR 600 crore. Yeah. Overall, for the year, if you look at it, it's close to between 125-150 basis points where the quarter's EBITDA is elevated because of the A&P spend of the festive. So if you look at it, while we'll not give out a split of this, but it is going behind, obviously, there's a product because the unit cost, unit margins in the industry are low, meaning negative. And then thereafter, there is obviously marketing spend being done to build VIDA as an aspirational brand. Of course, on the CapEx side also, we are investing behind EV on the R&D side in the technology. There's a lot of action happening on achieving cost leadership, on reducing costs of how we make because that's what will determine. So that's what we'd like to talk about first that we are doing on production in the cost of the products. Yeah. I mean, quickly coming into the cost piece, but obviously, one other area where we are putting investment is building the very strong charging infrastructure because we want to make sure that for the long run, we have all the building blocks for faster adoption. And with us being the leader in those ecosystem pillars being there, more and more customers will adopt VIDA as their choice. On the cost side, we are definitely looking at everything from design, localization, simplification of the product, and obviously, economies of scale. All of these have been aggressively worked between the product team, the R&D team, and the supply chain and production team. And we are looking at a significant reduction in the coming year. And that will place us to play even more aggressive in some of the segments. Got it. Got it. The second question was, Niranjan, look, the ball is well set, right? Next year will be very strong for you in terms of premium. You yourself have called out premium is outperforming the industry growth in subsegments or overall. In terms of execution, what are you really doing so that you don't lose this opportunity? I mean, I understand in terms of upgrading network. But apart from that, just from an execution perspective, because within the industry, if I see you are the only player which has had such a strong model lineup and filling of white spaces, how should I think about, let's say, execution of this such that you don't lose this big opportunity? I think it's a good question. Let me just elaborate on this. You're absolutely right. I think in the industry, now with our launches which are there, we have the strongest model lineup in the two-wheeler segment. What we are doing, you can see, it's not just been about product. There are product launches which have happened, the model. First is we are ensuring that each of our models has some first-in-class and some best-in-class features. I think that's the one part of it, not just launching products which are just me too or exactly the same. One part. The second part is the marketing investments behind these where we are going a combination of the digital and traditional marketing. You can see, actually, when you go to our digital marketing, our social media, what's the effort that we are doing. There's a very dedicated effort behind that to make the customer journey very different. That's the second part of the execution. The third part of the execution is the stores. And that's why we've been harping on that a lot, that if you were to launch these models with the same store profile that we had, then we would not meet with the success. And that's why you see in parallel. So these are not different activities. These are execution activities because execution means, finally, we have to realize and extract, like you said, the potential of these models. And that's where the stores come into play, Ashutosh explained. Within the stores, what we are doing is dedicated sales executives because that's part of execution. So for all these premium model lineups, we talked about premium. We talked about EV. Both these, we'll have completely dedicated sales executives who are trained for that. And therefore, that's another execution part of it which is there. And then on the marketing side, apart from what we talked about, the traditional marketing, digital marketing, what we are doing and you would have seen is the rides, the entire Xtreme Drags, all of these, the test rides, that is getting ramped up big time, the test rides. And there are, of course, the rallies and the rides that we have. So from entire perspective, if you look at execution, all parts of what you require to execute on these models, they are in place. So that's why we are confident. Essentially, if you look at the product, the positioning, the placement, the pricing, the marketing, all of that is, and it's part of the entire game plan so that it's not just that by launching models that we will get success, which is what we call it. It's a complete all-round strategy and execution in place for that. Sure, sir. Thanks. Thanks and best wishes for the future. Thank you. We have a next question from the line of Mihir Jhaveri from ASK. Please go ahead. Yeah. Thank you for the opportunity. Just one quick question. Sorry if I missed it. What is the inventory situation right now, if you can share? And also overall, are we seeing some moderation in retail demand, or the retail trend continues to remain buoyant? These are just my two questions. Thank you. Yeah. As far as the inventory is concerned, our range of inventory is 4-6 weeks. And it continues to be in that range. And the retail demand I talked about is picking up. I mean, in a sense, it never went down. The festive saw the demand picking up. Post-festive is usually a bit sluggish. Now, post-middle of January, it's picking up. So the underlying tone of the demand is strong. And therefore, we will see that momentum building as we move forward. Thank you. Thank you, Ranjiv, from my side. In fact, just on the inventory, overall for the year, if you look at it, we have reduced our inventory. So from a beginning inventory to an ending inventory, we have reduced the inventory in terms of the absolute levels. And that's why our retail market shares are higher than our wholesale market shares. Yeah. Thank you. Thank you. We have a next question from the line of Abhishek from Dolat Capital. Please go ahead. Thanks for the opportunity. Sir, what is your plan for gaining market share in ICE scooter segment and export? So I'll talk about the global business. And then I'll ask Ashutosh to talk about the plan for increasing market share in scooters. A lot of excitement with the new products that are coming. On the global business part of it, what we are doing is we'll be disproportionately investing behind the top 10 markets, which include the markets like Mexico, markets like Nigeria, like Colombia, like Bangladesh. So while we have the footprint across almost 50 markets, the focus will be on accelerating growth in these markets. There's been a change of distributors that we announced already for Nigeria and Nepal. And there are launches which are planned in the global business as well. Ashutosh, can you talk about these scooters, the excitement that's going to come? Hi, Abhishek. Thank you for that question. In fact, if you look at this year's performance, we are the only OEM to have gained in the 100cc scooter market space. So we've done well there. And with that sorted out, I think the job for us is the 125cc. And there, we have a lot of exciting products lined up. For For next year, we are augmenting our portfolio, which will improve the market share there. Already in this category, we've launched the Destini Prime this year, which later part of the year, and that has met with some phenomenal response. It's a great value proposition story. And we expect to build on to all these next year. In fact, just to add, I think we should be able to launch the 125 and 160cc in the first half of the fiscal year 2025. Okay. So what is your growth target for the scooter and export segment for the next two years? As you know, I would never give out a number. But the efforts which are there are very concentrated. And therefore, you see scooters which have launched 110 have received big traction. And then the 125, 160cc, again, are differentiated products with first-in-class and best-in-class features, the larger wheels. So you will see them. I mean, you would have seen some of you who came to Hero World. We've seen these products. And as these products come in, the scooter growth will rebound for us as well. Sir, in ICE, margin is around 16%, as you mentioned. It means that we have lost around 200 basis points because of the EV segment. So how these losses will reduce in the coming quarter? So we've not lost. I will just correct a bit. We've invested 200 basis points behind EV because of festive. The investments are obviously elevated. And this margin allows us to invest. So we've got to build premium. We've got to build EV. And while building that, we've delivered a profit growth of 50%. Okay, sir. Thank you. We have a next question from the line of Kapil Singh from Nomura. Please go ahead. Yeah. Hi, sir. Just a follow-up. You had talked about launching products in these affordable and mid-segments. Just curious to understand, how do you define these segments in terms of price points? Right, Kapil. Let me ask Swadesh to talk about this. Yeah. Thank you, Kapil, for the question. So right now, if you see the market is sort of divided between products being upwards of INR 1.4-1.5 lakh. There are a few products between INR 1.25-1.5 lakh and then fewer between INR 1-1.25 lakh, right? And then some products are going to come under INR 1 lakh as well. So we believe that affordable is going to be closer to INR 1 lakh, like INR 1 lakh or below, right? Mid is going to be another INR 20,000-25,000 on top of it. I think the idea is that people need to be able to buy these products very close to an equivalent ICE product, right? And we need to make sure that the right value proposition on those pricing are available. But overall, INR 1 lakh or slightly below INR 1 lakh and then another INR 25,000-30,000 on top. So actually, the operating prices for some of the premium scooters have come down more in the mid-range, right? Would that be a right observation? Kapil, see, this is all short term. So what we are talking about is in a stable scenario. There will be months here and there where there are some offers that come down. But like what Swadesh has said, if you have to very broadly look at the three price points, not just from our perspective but from a customer perspective, it's 1, 1.25, and 1.5. Give or take a few thousand here and there. That doesn't matter. But broadly, there are three differentiated price points. And importantly, what's going to happen is it's not just a price point. Eventually, it's the cost leadership that will determine the winners because there will be a limit to what a player can bleed or get a hit on the unit cost. And that's where we are focusing apart from portfolio. And also the whole package. Ultimately, EV is still not just a product game, right? So with our charging infrastructure, which is our expanded service network, which is already on top of how EV needs to be serviced, I think you have to look at the whole package. Yeah. Thank you. Ladies and gentlemen, that was the last question for today. I now hand the conference over to the management for closing comments. Over to you, sir. Yeah. So thank you for attending the call. And as we said, the quarter has been good with 20% top-line growth and 50% profit growth. Our models are there. We have the strongest model lineup in the two-wheeler industry. We have all the raw materials and the ammunition and the fuel for powering growth as we move forward. Thank you. Thank you, sir. On behalf of Prabhudas Lilladher Private Limited, that concludes this conference. Thank you for joining us. You may now disconnect your lines.