Ladies and gentlemen, good day, and welcome to the Q3 FY 2022 earnings conference call of Maruti Suzuki India Limited. As a reminder, all participants' lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Pranav Ambaprasad. Thank you, and over to you, sir. Thank you, Margaret. Ladies and gentlemen, good afternoon once again. May I introduce you to the management team from Maruti Suzuki. Today we have with us our CFO, Mr. Ajay Seth. From Marketing and Sales, we have Member, Executive Board, Mr. RS Kalsi. Senior Executive Director, Marketing and Sales, Mr. Shashank Srivastava. From Corporate, Executive Director, Corporate Planning and Government Affairs, Mr. Rahul Bharti. General Manager, Corporate Strategy and Investor Relations, Mr. Nikhil Vyas. From Finance, we have Executive Director, Mr. Pradeep Garg, Executive Advisor, Mr. DD Goyal, and Executive Vice President, Mr. Sanjay Mathur. The con call will begin with a brief statement on the performance and outlook of our business by Mr. Seth, after which we'll be happy to receive your questions. May I remind you of the safe harbor. We may be making some forward-looking statements that have to be understood in conjunction with the uncertainty and the risks that the company faces. I would also like to inform you that the call is being recorded, and the transcript will be available at our website. I would now like to invite our CFO, Mr. Ajay Seth. Over to you, sir. Thanks, Pranav. Good afternoon, ladies and gentlemen. I hope you and your families are healthy and safe. The third wave of COVID is posing challenges for the country at large. We are following all government protocols and taking all precautionary steps in the best interest of employees' health and safety, including that of our value chain partners. Let me start with some highlights of our product offerings and our company initiatives. We exported 205,450 vehicles in calendar year 2021. It is the highest ever exports in any calendar year by the company. In the calendar year 2021, eight of the 10 best-selling passenger vehicles were from Maruti Suzuki. We are deeply grateful to our customers for choosing Maruti Suzuki as their most preferred passenger vehicle brand. One of the notable aspects in quarter three was the launch of India's most fuel-efficient small car, the all- new Celerio. We are witnessing a good initial response. The new Celerio has a fuel efficiency of 26.6 km/ L, and its CNG variant has a mileage of 35.60 km/ kg. Maruti Suzuki Baleno is the fastest-selling premium hatchback car to cross 1 million unit sales. Maruti Suzuki Super Carry, the country's most powerful mini truck, has recently achieved the record milestone of 100,000 units of cumulative sales in just five years of its launch. Maruti Suzuki's state-of-the-art online car financing solution has received a phenomenal customer response. Maruti Suzuki's Smart Finance platform has disbursed cumulative INR 65,000 million auto loans to over INR 1 lakh customers within nine months of its launch. Taking a step towards the circular economy, Maruti Suzuki and Toyota Tsusho Group. The group's vehicle scrapping and recycling unit commenced operations. The facility offers a hassle-free end-to-end solution for customers to scrap vehicles in a safe and environmentally friendly way with a capacity to scrap and recycle over 24,000 vehicles annually. Continuing on the path to promote the culture of safe and responsible driving in the country, the Institute of Driving and Traffic Research was inaugurated in Chhattisgarh. This was the eighth IDTR in the country, managed under our CSR program. Coming to the business environment that prevailed during the third quarter, the company continued to experience a shortage of electronic components, especially during by the quarter marked with festive period, when the demand for cars usually remains good. An estimated 90,000 vehicles could not be produced during the third quarter owing to the global shortage of electronic components, mostly corresponding to the domestic models. Though still unpredictable, the electronic supply situation is improving gradually. The company hopes to increase production in Q4, though it would not reach full capacity. The inquiry, bookings, and retail sales in the third quarter have shown an improvement sequentially. Enablers such as finance availability and interest rates continue to remain favorable. On the cost side, the commodity prices increased significantly over the course of the last year and have been the most adverse factor impacting the net profit. The company made maximum efforts to absorb input cost increases, offsetting them through cost reduction and passing on a minimal impact to customers by way of a car price increase. Overall, during the third quarter, adverse commodity prices, lower volumes, and lower non-operating income compared to the same period of the previous year have adversely impacted the profit performance. Coming to financial results. Quarter three, the company sold a total of 430,668 units, lower than 495,897 units in the same period of the previous year. In the domestic market, the sales stood at 365,673 units in the quarter against 467,367 units in quarter three last year. In the quarter, the company clocked the highest ever exports of 64,995 units as compared to 28,528 units last year, in the same quarter. This was also 66% higher than the previous peak exports in any Q3. During Q3 FY 2021-2022, the company registered net sales of INR 221,876 million compared to those of INR 222,367 million in the same period of the previous year. The net profit in this quarter came down to INR 10,113 million compared to INR 19,414 million in the same period of the previous year. Comparing nine months, the total vehicle sales during the nine- month period were at 1,163,823 units. This includes domestic market sales of 993,901 units and exports of 169,922 units. In the corresponding period of the previous year, the company registered a sale of 965,626 units, comprising 905,015 units in the domestic market and 60,611 units in the export market. During this period of nine months, the company logged a net sales value of INR 582,841 million compared to INR 436,035 million in the same period of the previous year. In this period, the company made a net profit of INR 19,274 million as against INR 30,636 million in the same period of the previous year. We are now ready to take your questions, feedback, and any other observations that you may have. Thank you. Thank you very much. We will now begin the question- and- answer session. Anyone who wishes to ask a question may press star and one on the touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to mute their handsets while asking a question. Anyone who would like to ask a question, please press star and one at this time. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Pramod Kumar from UBS. Please go ahead. Thanks a lot for the opportunity, sir. I have two questions. First is on the market share bit, and the second one is on hybrids. On market shares, I just wanted to understand whether we still kind of hold that 50% market share threshold that Suzuki has put out in their medium-term plan, and even for 2030. Does the market share target still hold good for us, given the market share we've seen, what we've seen in the last couple of years? That was, like, the first question on the market share side, sir. Yeah. I request Shashank, sir, to answer this, so he'll answer the question. Thank you, sir. Pramod. If you look at the figure for December, the market share for wholesale was 48.3%, and for retail it was 49.9%, very close to the 50% mark. However, if you look at the cumulative figures so far for the year, the market share is just around 44%. I think, judging by that, it does appear that while December market share is close to 50%, cumulatively, it might be difficult to reach that 50% at the end of the year, given the current production scenario. However, next year, in the years forward, I think it's still quite feasible for us to target 50% market share, and that's what we plan to do. The reason I ask that, Shashank, sir, is that there are meaningful portfolio gaps in the smaller SUVs, the midsize SUVs, and other categories. Given that you are pretty confident that 50% is quite feasible in the next three years, it's probably when Delta launches, and you may not be active. With all the portfolio gaps getting filled, is there a possibility that we could even breach that 50% mark in the medium term? What was the last one? Repeat. Breach the 50% market share. Oh, yeah. With all the portfolio gaps getting plugged. Yes, surely. If you, Pramod, look at our market share up till December for hatches, it is 67%. Yeah. If you look at the passenger cars, it is 62.5%. If we see the MPVs, where we have the XL6 and the Ertiga competing against Innova, Triber, et cetera, it is 64%. For the vans, it is 95.6%. Obviously, in all the segments, our market share being above 65% or thereabout, it's the SUV space that has pulled us down. As you said, while the entry SUV, which is 50% of the SUV market, we are the market leader because we have the Brezza. Yes, we have a weakness in the mid SUV segment currently, and we hope to address it going forward by expanding our portfolio in this very critical category. Shashank, and before I let you go, one follow-up. Is the general understanding that SUVs are inherently higher, have higher margins than other categories, given the pricing differential versus the equally spec-ed and equally taxed cars? Is this industry notion generally right, in India as well? Actually, I don't know the cost structure for other companies, but generally, that may not be true for any particular segment. It all depends on the competitive scenario and the pricing that we see in the industry. Fair enough, sir. Thanks a lot for that. The second one is on hybrids. Is there anything that you would like to share at this point in time? G iven the plans you have, it looks like you, as a company or organization, are kind of quite committed to that technology despite the lack of government fiscal support. In that sense, I just want to understand what the use case is for the consumer you see with hybrids, which is giving you that kind of confidence to kind of still pursue that technology, while practically everyone else outside of Toyota, Suzuki is pivoting towards EVs in a big way, even in the short to medium term. If you can just help us understand the thinking and the rationale behind that, it will be very helpful. Rahul, would you like to take this? Sure. See, while we'll be focusing on all technologies, including EVs, hybrids, and others that we have not discussed at the moment. However, given the high upfront cost of batteries, given the limited, you know, charging infrastructure network in the country, we do think that at least for the medium term, hybrids will be a very powerful solution. They are scalable. They do about 40% of the job of an EV in terms of CO2 reduction, in terms of energy efficiency, but they are probably 100 x scalable. In the medium term, they will be a good option. Of course, EVs also have to be pursued for the long term. All options have to be worked upon. Rahul, any timeline as to when you will debut the technology in the Indian market? I'm not looking for quarters. I'm like saying just- Let's keep the excitement. Fair enough. Thanks a lot, and wish you guys all the best. Thank you. Thank you. The next question is from Amyn Pirani from JP Morgan. Please go ahead. Yes. Hi. Thanks for the opportunity. My question was mainly on the raw material side. This quarter, we have seen a sequential decline in raw material sales, and even on a raw material per vehicle basis, the costs have come down. Can you help us understand as to any particular commodity that has helped or if there has been a reset in the steel or aluminum contract with the suppliers? There has been a marginal improvement in commodities compared to the second quarter, especially in precious metals, which have seen a decline compared to where they were in Q2. Although steel has shown some rise in Q3 as well. We are now hopeful that moving forward, we will see some correction in the steel prices, as well as the precious metals will remain at the levels where they are. Some impact of commodity reduction has come in in quarter three, and we expect some more to come in in quarter four if the steel prices come down, which we have witnessed in the month of January. That's the trend on commodities at this point in time. Can you remind us as to how often your steel contracts get renewed? Is it like six- monthly? Because while they fell in the December quarter, global steel prices are again up. You know, what's the lead and lag here, if you can help us understand? We generally do it for half a year. S ometimes, depending on the market volatility, we can do it for shorter periods as well. Okay. Understood. Just one more thing on the currency. Can you just remind us what your yen exposure is? Because obviously royalty is now fully in rupee. What is the yen exposure as we stand today? Our direct yen exposure is now reduced to about JPY 30 billion. From the vendor side, like you used to mention as a percentage of revenues, you know, what is the percentage? There, we have an exposure of about JPY 50 billion, thereabouts. Okay. 30 plus 50, direct plus indirect. That's right. That's right. Okay. Thank you. I'll come back. This is only the yen exposure. There would be some exposure, which is also on the dollar imports and the euro imports, which are not counted as a yen exposure, but they would not be as large. The euro, for example, the euro exposure is about EUR 68 million in our case, direct, and EUR 90 million in the case of vendors. Similarly, there will be some exposure on the dollar side also. That would be an offset on the exports, right? Exports are mostly in dollars. Now we have a significant natural hedge because exports have gone up quite a bit. On the direct side, we are virtually surplus on dollars. However, if we include indirects, then of course we have a bit of a deficit in dollars. Because a yen also has two legs. It's dollar/yen and dollar/rupee. So to that extent, we have a reasonably good hedging now, natural hedging now. Okay. Thank you. Thank you. The next question is from the line of Kapil Singh from Nomura. Please go ahead. My first question is on demand. If you could share the outlook for industry growth for FY 2023. I would also like some perspective on the medium-term growth, I mean, beyond FY 2011, whichever way you slice or dice the data, industry hasn't really grown much, you know. It's not even been a 5% CAGR, even, you know, whichever period we choose. If we take 2012-2018 or thereabouts. Once these base effects go through, let's say next year, you know, what is the kind of medium-term CAGR you are looking at, and why has it been below potential? Also, if you could add some perspective on the regulatory costs. We've also heard about six airbags becoming mandatory as a draft regulation. That would be my first question. If you, Kapil, thank you for that question. The CAGR, as you said, has been declining if you take the recent periods. You're right. It's not as if you slice and dice it at any time period; it's 5% or less. For example, if you take the last five years, it's 6.2%. Last 10 years, 8.1%. Last 17 years, 9.8%. It is, of course, it has come down in recent years, and I think we discussed this. In 2019 and 2020, when it had come down, the market had come down about 18%, it was largely on account of the cost of acquisition, which was because of the conversion, which happened because of many factors, including the regulatory requirements of BS4 to BS6 and safety requirements. It is that which had prevented the growth in 2019 and 2020. However, if you look at the future, which is the second part of your question, I think we can reasonably look at CAGR growth in line with the economy, which would be roughly 7%-8%. Thank you. Okay, sir. Thanks. Sir, the second question was on the order book. We mentioned that, you know, it's around INR 2 lakh 40,000 plus kind of order book. In October, we also mentioned, you know, it's more than 250,000. Could you give some perspective on whether the order inflows have been affected because of supply shortages, also? Because there's no growth in the order book, despite, you know, the production shortages we have. Actually, the pending order bookings is what is the figure you are quoting, 240,000 as of January 1, and currently 264,000. Of course, the booking inflow has been reasonably steady. Month-on-month, if you see the booking inflow, pretty steady, I would say. For Maruti Suzuki, I can give roughly figures of around maybe about 6,000 on average per day. A little bit less in January so far. The buildup of pending bookings happens because you don't have enough vehicles to retail. That's what we are witnessing. If you want an answer to whether there has been a shortfall in the booking inflow, the answer is no, there has been no shortfall in inflow. Okay, sir. Thanks. Yeah. Thank you. The next question is from the line of Gunjan Prithyani from Bank of America. Please go ahead. Yeah. Hi, thanks for taking my questions. The first question is about the news flow around this airbag regulation. Also, we do have the next set of CAFE norms. Could you just help us understand how much this will translate in terms of cost and where, you know, at what stage this regulation is? The CAFE norms, I hope we are aware that Maruti is in the best position in terms of CO2 footprint, whether on an absolute scale or a relative scale. We are already meeting the norm, which is supposed to come from April. The second is, on the airbag issue, we are in discussion with the Ministry of Road Transport. It's not just the cost, it's the feasibility also. Once we have a discussion, we'll be in a better position to, you know, share the result. Okay, got it. The other question I had was on the supply side. Now, you know, just trying to understand how much improvement we expect from where we were in the month of December. Also, you mentioned in the release that you know, we'll not reach our full capacity in Q4 as well. I just wanted to clarify, when you look at this full capacity, do you include the line three of Gujarat? Because you know- Yeah. -December- Mm-hmm. Okay. Our full capacity is approximately INR 5.4 lakhs, INR 5.5 lakhs per quarter, or about INR 22 lakhs per annum. While there is steady improvement in the supply situation, we still may not be able to reach full capacity because of electronic components. Of course, the general disclaimer holds true. It's always unpredictable, so we never know what is going to happen in this area. It's a global problem. Okay. The December run rate you seem to be sustaining still. There hasn't been any deterioration to that, right? Well, we are better in Q4 than we were in Q3. Okay. Lastly, could you just share the royalty discount and retail volume numbers for this quarter? The royalty discount. Royalty in this quarter was at 3.6%, and the discounts were at INR 15,200 in this quarter. What was the other information you wanted? The retail sales during this quarter. The biggest numbers you would have. Sir, the retail for Maruti Suzuki for this quarter, she wants, right? Yeah. Share. Q3 retail was 392,171 passenger vehicles, plus if you include carry, then it is 403,970. Okay. Thank you so much. Thank you. Thank you. The next question is from the line of Raghunandhan NL from Emkay Global. Please go ahead. Thank you, sir, for the opportunity. My first question, on CNG vehicles, can you share the volume number and market share for Q3? Can you talk about the future potential for CNG penetration, as an increasing share of CNG in the product mix should be market share accretion for the company? Yeah. CNG volumes for the April-December period so far are just short, just around 150,000. We hope to close the financial year around the 237,000-235,000 range. Last year, the similar figure was 160,000, and the previous year it was 106,000. The penetration of CNG for Maruti Suzuki is now close to slightly above 15%. For the models in which CNG is present, remember we have eight models that are in CNG, it is around 30%. Going forward, we do expect CNG to continue to find traction. For the next year, we also think there is going to be a good growth in CNG, judging by the order inflow, the pending bookings, and also the fact that the CNG network is expanding rapidly across the country, and the fuel prices at the pumps continue to be high for gasoline and diesel. Thank you, sir. That's very encouraging. My second question. The company is targeting to fill white spaces ahead, and some of the new products would be in collaboration with Toyota. In a scenario where the product is jointly developed, would both OEMs launch the product at the same time, or would Maruti get the opportunity to launch the product first? I was trying to understand whether the bulk of the new model volume goes towards the OEM that launches the product first. This is a very conscious, well-thought-out strategy where, you know, we look at our commercial benefits, and the opportunity of sales in the market, and then we time it accordingly. We'll get immense benefit from this alliance and the timing and the strategies thereof. Yeah. Got it, sir. Lastly, can you share the CapEx spends on a YTD basis and full year plan for FY 2022? Would it be possible to share the plan for FY 2023 as well? Thank you. CapEx? For the YTD. We have spent so far INR 2,233 crore. That we spent till December. The plan for the full year is a little over INR 5,500 crore. We are on target in terms of the plan for the year. There is an estimated expenditure of about INR 3,000 crore, which will be incurred in the next three months. Understood. Broadly, can you indicate the breakup, sir? That's all from my side. I don't have the exact breakup with me, but this is divided between the new models, R&D expenditure, facilities in the existing capacities that we have, and also the additional land purchase, et cetera, that we will do as part of our capital expenditure. Thank you, sir. I'll come back in the queue. Thank you. The next question is from the line of Pramod Amthe from InCred Capital. Please go ahead. Yeah, hi. This is with regard to new product launches. It seems that because of the semiconductor challenges, some of them got delayed to come through for the FY 2022 pipeline. In that context, how are you looking at your planned launches for the remaining products? Do you still maintain the timeline on yearly launches, or are you deferring the medium-term launch plans, considering that you need to maintain some gap and momentum to be built up on new launches? It's probably not correct to say that the launch plan itself has been affected by the semiconductor shortage. It is generally not true. We do not foresee that going forward we will change our launch plan based on this semiconductor issue. Sure. Thanks for that assurance. The second one is with regard to exports. Considering that this year we are seeing a sharp jump, I wanted to know what your medium-term plan is in terms of taking this as exports as a proportion of these sales. Also wanted to get your thoughts on whether you have also applied for Auto PLI. How does that fit in the overall scheme of things? Okay. We were able to clock the highest ever exports in this calendar year. The good part is that, from a demand perspective, it seems sustainable. We've gone into expansion of products, expansion of the network, expansion of the number of markets where we are present, and all have helped. It seems sustainable in the medium term so far, barring any surprises that may come about. The second question was on PLI. Companies have applied for the PLI. Of course, God is in the details, so there are lots of conditions, lots of thresholds,, and other parameters that will determine the total incentives to each company across each product. The good part is that many companies have applied, and to that extent, there will be increased localization and increased production in those technologies, the list of AAT, Advanced Automotive Technologies. Specific to you, yours is more focused on exports for PLI application or more about the localization because localization will come through foreign direct, right? The earlier format of the PLI scheme seemed to be towards encouraging exports. Now, the latest version in which form it came, was about import substitution or localization. It's about localization. Okay. Thanks, Rahul, for that explanation. Thank you. The scheme is neutral across exports and domestic sales. Okay. Thank you. Mm-hmm. Thank you. The next question is from the line of Aditya Makharia from HDFC. Please go ahead. Yes, sir. Just on the follow-on question, with you know, Toyota joint development. There is a lot of news about FY 2023 being a big year for Maruti because you will launch, you know, two to three SUVs. Now I know directionally you will not comment on exact models, but can we expect something quite sizable coming into next year? As I explained, yes, we have plans to further strengthen our portfolio in different segments, including the ones where we are currently weak. You can expect a good strengthening of the portfolio in the coming year. Okay. That's very encouraging to hear, sir. Just a second question is, you did mention that the chip shortage is now gradually easing. Is it totally gone now, and, you know, are we gonna be working at that 2.2 million annualized run rate if demand is there? Yeah. If you see, the chip shortage, everything, and I think Rahul explained a little bit, we have been experiencing a gradual improvement in the supply position. One small correction, it is not with respect to the capacity that we speak of, but with respect to the plan that we have, the production plan which we have. In September, we were just around 40% of our plan. In October, we were just around 60%. In November, we were around 83%-85%. In December, we were just around 90%. The situation in that sense is improving. However, it is still not 100% as you can see, and we are hopeful that in January, February, and March, we will continue to see this improvement, hopefully to be above that 90% mark. As we have mentioned in our press release, we may not reach 100%. When we will reach 100% is actually not clear at the moment because we cannot take a definitive view on that, because it's a very complex supply chain, which is involved, involving not just Maruti Suzuki, but all OEMs in India, and not just India, but across the globe. Thank you. Thank you. Sure. Sir, just the last question on market share, because you had lost market share in the first six months due to the chip shortage. Now we see Hyundai is really on the back foot on that count. Will that also enable us now to catch up on where we actually should be at the 50% mark? Yes, I did mention, you know, if we look at the segment-wise market share, I gave you the figures for passenger cars, it is 63%. For vans, it is 96%. For MPVs, it is 64%. Without the SUVs, we are around 65% of the market share. I don't know whether the chip shortage for other people is going to help us or not. We obviously are looking at our performance, and hopefully, like in December, our retail market share was close to 50%. We would try to maintain that mark going forward. Sure. Congratulations, sir, on a good result and a very positive commentary. Thank you. Thank you. The next question is from the line of Jinesh Gandhi from Motilal Oswal Financial Services. Please go ahead. Hi, sir. My first question is on the data on exports, and what was the Gujarat production? Export, INR 3,343 crores realization. Okay. Gujarat production in the quarter was approximately 142,500, approximately. Number of car units. Great. The second question pertains to the depreciation in this quarter. It seems to have come off quite a bit. Is there any one-off on this, or is this the new level of depreciation because capacity addition has been done at the Gujarat plant? The depreciation that you see is related to MSIL depreciation, and the other line item of SMG comes under the lease expenses separately. To the extent the assets have already lived their life, the depreciation of those assets would finish in that period. It is related. If you look at both SMG's depreciation and our depreciation together, it is almost similar as it was last year. About the same number that you see, INR 1,060 crore in Q3 last year, and INR 1,064 crore now. Not different. Even as a percentage of sales, it is at 4.8% in both these quarters. MSIL depreciation will be around this quarterly run rate of INR 650 crore in that range, and within INR 750 crore in the second quarter. Yeah, that's correct. The third question pertains to other income. We have seen a consistent drop in other income because of an increase in G-Sec yields. What should be the sustainable level of other income if G-Sec yields remain around 6.5%, 6.6%? Should we go back to INR 500 crore-INR 550 crore per quarter, or should it be lower than this? See, we have done two things to de-risk. One is that we have shortened our tenures. Earlier, we used to be between two to three- year papers. Now we are down to a one-year paper, so that the risk of mark-to-market is minimized given the fact that interest rates are rising. We are on a shorter tenure. Last year, we had significant mark-to-market gains because the interest rates were going down, and therefore, we were on two to three -year papers, and therefore, the gains were significant. This year we have, on the contrary, small mark-to-market losses. Average returns on a one-year yield are now between 4.5%-5%, depending on where the markets are. Effectively, all these are cash surpluses that we carry. You should see an income of anywhere between INR 450, or thereabouts, every quarter. Okay, got it. That's quite helpful. Lastly, sir, any Forex gains in royalty or RM costs in this quarter? Not much movement in foreign exchange. There is a slight improvement if you compare the two quarters. There's an improvement in this quarter by about INR 50 crores on the direct imports, so that's reflected in the material cost. Other than that, there is no significant change in foreign exchange. Okay, sir. Please. Thanks. I'll come back in the queue. Thank you. The next question is from the line of Kumar Rakesh from BNP Paribas. Please go ahead. Hi, good evening, and thank you for taking my question. My first question is on the commodity inflation side. How much of it is still under-recovered for us? In a scenario where commodity prices remain flat in the quarters ahead, will we be passing this on gradually to customers? We have been, you know, taking a series of actions internally with respect to the unprecedented commodity increase. We have worked very hard to reduce our costs. We have also been working hard to reduce the cost reduction exercises on the material side vigorously. There have been price increases that we have taken over the last year to offset the price increase. Although it's always a painful decision to take frequent price increases, given that the cost of ownership continues to go up. As Shashank mentioned, one of the reasons for the drop in industry in 19-20 was the cost of ownership going up. We have taken price increase actions, and the last one we took was in January, where we increased our prices. The impact of that will be visible to you in the fourth quarter. Discounts, fortunately, in this quarter have been much lower compared to last year, also because of the shortage of cars with the OEMs. I think all these factors will play out in terms of how the commodity price will be mitigated. How much was the under-recovery on the commodity side? Commodities have gone up on a sequential, on a last year average basis by about 10%, right? We have done quite a bit of price correction. There have been lower discounts in this quarter, and the impact of that is seen in this quarter as the operating margins have gone up. You will see the balance impact in the next quarter. Got it. My next question was about the market share. A lot of discussion has happened on this call as well, and outside as well. Mr. Srivastava also said that white spaces are one of the areas in which we can potentially work, especially in the SUV space, to get back the market share, the overall market share. Why don't we disclose the model launch plan, and not specifically models, but at least quantify that the number of refreshes or new launches that we are planning to do this year, or a longer duration of time, say five years, like many of our competitors locally and globally also do this. Can we get some indication about the model launch plan, not by disclosing any specific model per se? I have mentioned that we have always had a very strong product plan and a portfolio of vehicles, and we will continue to do that. I indicated the areas. The reason why we don't mention it specifically is that you know, we operate in all segments. It doesn't help by letting the market or anybody know which segments we are appearing in which models. There are, for example, if you have a full model change in a particular model, you would expect the current sales also to be affected. It doesn't help actually, and that's the reason why, as a policy, we do not disclose the models that we'll be launching in the future. We don't make any specific reference to new models. Got it. I was referring to just quantifying the number of models you plan to launch without disclosing which specifically, which- There is this question which will always be there because, you know, new models mean what? There are new brands for which you have absolutely no background or no past history. You could have a full model change, which we call FMC, or you could have a minor model change, which we call MMC. Which to consider where it is actually, you know, maybe if we give information, it might be misunderstood, and actually, the market may be misguided rather than being guided. Fair enough. One final question on the CapEx side. This year's CapEx is at a higher level compared to our recent trend, partly because we are going to make land purchases this year. Is that trend likely to continue in FY 2023 as well, or is this land purchase- related additional CapEx a one-off for this year? We are now working out our plans for the next financial year. This is the exercise of preparing budgets and then depending on the requirement in the plants between Manesar and Gurgaon and the new model launches, we'll decide, and then we'll communicate to you in terms of what the next year's plans are. Great. Thanks a lot. That answers my question. Thank you. The next question is from Joseph George from IIFL. Please go ahead. Thanks for the opportunity. A couple of questions. One is, I think, the commentary coming in from Sorry, your voice is not very clear, sir. Is it better now? Hello? Better. Would you like to come on the handset mode and go ahead with your question? Thank you. Sure. If you look at the commentaries coming in from a lot of, you know, companies such as two-wheeler companies or tractors or recently, you know, FMCG companies, there's a buzz that there is a lot of weakness in the rural markets, and we are seeing that in two-wheeler sales, tractor sales, et cetera. What are the things that you are seeing in the rural market? I mean, historically, rural areas have been growing faster for you compared to urban. If you can update us on trends there, especially in the context of what other companies are saying. Thank you. In our case, the rural markets still continue to have a strong run. If you see that, the percentage of sales in the rural areas has actually gone up a little bit this year. From around 41.5%, it has gone up to almost, I mean, just short of 43%. It does indicate the rural markets are still robust and going strong. I think there are reasons for it also, which we have been stating. The kharif crop has been a record. You have had good monsoons back-to-back. The rabi sowing this year has so far been very good. The MSPs have actually gone up. We consider that as a good sign for rural growth to continue. By the way, the tractor industry also, if you look at the calendar year, has actually grown on the back of some record growth last year. Last year's growth was 27%. Until December, the growth for tractors is around 1%. We expect the rural to continue to show strength. Thank you. Thank you. The next question is from the line of Ronak Sarda from Systematix. Please go ahead. Yeah. Hi. Thanks for the opportunity. Just a clarification first. What was the average price hike that we took in January? The weighted average is close to 2%. 2%. Okay. Thank you. The other question for you, Shashank. While there are, you know, gaps in the portfolio in the SUV space- How do you balance the equation between, you know, volume market share and profitability? Because as you mentioned, you know, as you go towards the smaller or the compact SUVs, the competitive intensity is higher and, you know, in a way we kind of the customer segment is someone who is, you know, buying a compact car or a bit of premium hatchback, where Maruti is already a market leader with almost 65% market share. How do we balance this in the entire equation of market share versus profitability, and what are your thoughts when the new product comes in? I don't think I understood the question fully. Probably what you are trying to say is that the profitability in the SUV segment is higher. Is that what you are saying? No. While there is a gap when we talk about a medium or a large SUV, when we talk about a compact SUV, you know, let's say in and around the Vitara Brezza range, we are, in a way, you know, targeting the customers who are buying a compact or a premium hatchback. You know, how do we see the overall equation? How do you balance the equation between, you know, market share and profitability? Because that segment is highly competitive and, you know, as you mentioned in a question earlier, the profitability will depend on, you know, a lot of different factors, and SUVs are not inherently profitable. How do we, you know, balance out the equation, and what are your thoughts on the new launches in that category? I think individually we have to look at model by model, and I had referred earlier to some questions that were raised. The profitability obviously depends on the segment you are operating in, the competitiveness of the segment, the number of models in that segment, our own cost structure, and the cost structure in the industry. It's a mix, which you cannot necessarily actually differentiate based on an entry SUV, or a premium hatch, or a mid hatch, et cetera. By the way, the most competitive segment in terms of the number of models is the SUV segment. There are about 45 models that compete in the SUV space, as against hatches, there are only 19. Obviously, there are pluses and minuses, and we have to look at the model- wise rather than looking at some overall profitability segment by segment. Sure. Thanks. A final clarification. When we say the order book is around 250,000 units, how much of this would be CNG? At the current 264,000, which is the total booking, CNG is 117,000. 117. 117. Sure. Okay. Thank you. Over to May I just, you know, explain what Shashank just mentioned about profitability and market share? What he's essentially saying is we don't accept that trade-off so easily and so early. I think the best thing that pushes the trade-off far away is excellent products. If you have excellent products, you will not face a situation where you have to choose the lesser of two evils, either volume loss or profitability loss. I'll give you an example. You know the Celerio, it has a fuel efficiency of 26.68. It's much higher than its nearest competitor. The CNG version has a fuel efficiency of 35.6 km/ kg. Now, fuel efficiencies in the zone of 30s are unheard of in India. It's only Maruti that's present in the 30+ km/ kg club. Similarly, you know, a higher network. If we have a higher volume, we can sell more of the same model as compared to our competition. These are the methods by which we push this trade-off away. We don't accept that there is a trade-off so easily between profitability and market share. Right. Thanks for that. Thanks for that clarification. Thank you. The next question from the line of Nitij Mangal from Jefferies. Please go ahead. Good evening. Thanks for taking my question. I want to ask you, what are the plans for the capacity expansion in Gujarat? I mean, what will make you comfortable or confident to go for the next steps? Thank you. In Gujarat, the third line is already operational, and it is, we have the option of two shifts also. With that, our total capacity is 2.2 million per annum. A little bit of productivity stretch is always possible. Right. I was just thinking, so let's say if you start the next line today, it will probably take another two and a half years. I mean, let's say in the next, whatever, few years, when do you think you'll have to start that expansion? You know, this is where our productivity stretch always helps. In the past, whenever marketing has required production, it has always risen to the occasion, and they have been able to deliver. This stretch also improves our operational leverage and our profitability. We keep doing that all the time across cycles. Okay, thank you. My second question is on exports. I mean, we have seen a very good, you know, increase in volumes over there. Last time, you also mentioned that this is something that should be sustainable. You talked about the Toyota network, et cetera. Let's say if you think of exports two, three years out from here, what is the potential in those markets? As of now, whatever steps we have taken, I mentioned the three-pronged strategy: more products, more markets, and more density of the network within those markets. They have generated good dividends, and it is sustainable, at least in the medium term. We have to keep in mind that global markets do have a sense of, you know, unpredictability and surprises. Sometimes, a country develops some protectionist measures, and some economies go up, or come down. We will go along the way, and we'll keep, we would like to keep increasing our exports. Okay. Thank you. Thanks for taking my questions. Thank you. Thank you. The next question is from the line of Ashish Jain from Macquarie. Please go ahead. Hi, sir. Good evening. Sir, my first question is on market share. Now, you know, if you look at the SUV segment in particular, you know, nearly 35%-40% of volumes at an industry level is actually diesel. You know, in that backdrop, how do we see our, you know, market share in SUVs even with the new launches? Is CNG a viable option within the SUV space at all, or do you think CNG will not work in SUVs? Yeah. As I explained, Maruti's market share, if I mean without the SUV, is 65%. Obviously, that is an area of interest for us if we have to maintain an overall market share 50% or thereabout. Talking about the diesel penetration. The diesel penetration currently in the industry is around 18%. But if you look at segment-wise, it's quite different. You're right, you know, passenger cars are just around 2%, and vans around 4%. If you see the SUV space, the entry-level SUV is only about 20%. It is actually in the mid SUV that you see some traction in diesel around 58% or thereabout. Remember when the Brezza came with that K15 petrol engine, the diesel share of even entry SUVs was about 88-89% just a couple of years back. In a couple of years, 88% diesel actually became just around 20% in the entry SUV. We would expect that going forward, if we have some really good products in the mid SUV, which are petrol, then you could also expect the sharp fall in the diesel percentage in the mid SUV space as well. Overall, in the SUV space, the diesel share is roughly about 37%, which used to be about 95% just a few years ago. By a few years, I mean about three to four years back. It has rapidly come down from about 95% to 37% and even more rapidly in the entry SUV segment. If you see some play in the mid SUV segment for a good petrol SUV, then you might find the same story being repeated there as well. Thank you. All right. Sir, is CNG even an option in SUV or? It is always an option, of course. CNG is an option in SUV as well. Sir, my second question is, on the airbags and all, can you give a sense of what will be the cost implications and all if the regulation goes through in the current form? As of now we are not getting too much into the cost. There's an implication of semiconductors, there's an implication of lead time of delivery. It is a comprehensive topic in itself. We are in discussion with MoRTH. At an appropriate time we'll share the findings. Thank you. Ladies and gentlemen, due to time constraints, that was the last question for today. On behalf of Maruti Suzuki India Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.