Q4 20/21

May 6, 2021

Quarterly report

Ladies and gentlemen, good day and welcome to Hero Motocorp Limited Q4 FY 'twenty one Earnings Conference Call hosted by JM Financial and Institutional Securities Limited. As a reminder, all participant lines will be in the listen only mode and there will be an opportunity for you to ask questions after the presentation concludes. Please note that this conference is being recorded. I now hand the conference over to Mr. Vivek Kumar from JM Financial. Thank you, and over to you, Mr. Kumar. Thank you, Nirup. Good afternoon, everyone. Thank you for joining in. We thank Hero Motocop's management for giving us the opportunity to host the call today. We have with us the senior management team from the company. I will now hand over the call to Umerk Kurana, Head Investor Relations and Business Support. Thank you and over to you, Umerk. Thank you, Vivek. Thank you for hosting us. Good day, everyone, and trust everyone is keeping well and safe. We are delighted to have all of you on the call today for our quarter 4 and full year results. We have with us today Naveen Chauhan, who is our Head of Sales and Aftersales and Niranjan Gupta, who is the Chief Financial Officer. We'll begin the call with Niranjan's opening comments and then open You know the house for questions. Back to you, Neeru. Let's begin with Niranjan's comments first. Niranjan? All right. Thank you, Aman. Puman, the customary question first. Am I audible and clear? Yes, sir. All right. Welcome everyone to HERO Quarter 4 Investor Call. Good morning, good afternoon and good evening depending on which part of the globe you are joining from or simply namaskar to everyone that takes away the complication of morning, afternoon and evening. We hope and we pray that all of you, your friends, your families continue to stay safe and continue to Ensure that we come out of this crisis, which is prevailing today in India and some part of the world as winners on the other side. And there are no doubts and we are confident that together we can and we will. Coming to quarter 4 results, which we declared yesterday. Let me just talk about some of the key highlights. The first one, of course, as you would have seen is The market share gain, which is 140 basis points in terms of overall full year gain. And that gain has come after many years for us in Hero and a substantial gain. It's been powered by scooters, which is again a very delightful thing for us, where we've gained almost 2 70 basis points and we are back to around 10% market share. This is powered by our pledge and 125cc win in some of the key markets. Of course, the road is long, but we are very confident that we can take big strides now in the space of scooter. Similarly, the other highlight within market Premium, which has moved close to 4%. Remember that we were hardly present in premium segment and now on the back of Expulse and Extreme 160R, the market share has started moving up and we are sure as we build portfolio as we have already outlined as part of our strategy, the market shares in premium will keep moving up and will be a big growth driver for us moving forward in the medium term. The 3rd big highlight on the market share of the global business, which as we said, we have re strategized on focusing on few markets. And as we have learned, we are putting the right products, which are needed for the customers in those markets. You would have seen in FY 2021, we have grown at 8% versus industry decline of 6%, of course it's on a smaller base, but if you look at quarter 4 run rate that is closer to 300,000 annually, which is almost 50% higher than our worthwhile run rates, which are closer to 200,000. We are sure and confident that Again, global business will prove to be a big growth driver for us in the next 3 to 5 years. The 4th highlight on the top line is the parts business. As we had said earlier, the business is doing very well led by our micro marketing strategy, expansion of coverage on distribution part and this is the 2nd successive quarter when we have crossed INR 1,000 crores and in fact it is inching now closer to 10% to 12% of revenue on a steady basis and we are sure that this can be grown further. There are plans to this to this extent. Overall financials, of course, you have seen the margin in quarter 4 despite all the commodity headwinds and commodities having a steep rise as a margin on quarter 4 of close to 14%, which has been driven by a combination of the lead to savings program, which has delivered almost 300 basis points plus of course, judicious price increases that we have taken. And that has helped us deliver the margins that we are talking about. Just overall these financials as we have delivered in FY 2021 are after factoring in all the support that we've been providing to dealers, to vendors, to entire ecosystem, to employees because this was a pandemic year and therefore we needed to be supportive of All the stakeholders protecting payroll, everything, so not cutting corners, but obviously saving wherever opportunity to be had and that's reflected in the results and also our focus on creating value while ensuring that all stakeholders are also taken care of. And finally to cap it up, the cash flow, which is very, very important, as they say That top line is vanity and profit is sanity, but cash is reality. That's an old saying. And you can see the cash flow that we have delivered is upwards of INR 4,000 crores in the year, which will augur us well when creating the liquidity buffer. We declared a dividend Overall of INR105 per share, which comprised of INR90 normal and INR15 special dividend and that should Again, something which should be delightful for our shareholders. So that's the brief summation of our quarter 4 Hi, Alex. Let me now move to quarter 1. These are difficult. These are challenging times. The surge in COVID 2 point 0 wasn't anticipated, wasn't predicted by anyone. It is impacting life and Quarter 1 is not the quarter to count volumes or count money, but it is the quarter to help each other to save lives and to society. Profits and money will come later, but in this quarter, our focus is fully completely on that. And towards that, as you saw, we took proactive shutdowns of our factories to ensure that there is We've shutdowns of our factories to ensure that there is a breaking the chain that we can help with. There are multiple actions that we have taken in terms of whether it's medical that we have taken in terms of whether it's medical facilities, whether it's the vaccination drive or multiple PSR activities around oxygen cylinders, around helping out ambulances. So all our teams, which are not only us, but along with dealers and vendors in this time of crisis are doing their best to help out not only the employees that are associated with us, but also the community that are around us. We do expect that with medical facilities getting ramped up in the country and with vaccination drive, all of us should be past this entire tsunami very soon. There are predictions of middle of May being the peak and therefore end of May subsiding down and June could be a period of kind of coming back to stream on business and therefore that's how we see quarter 1. So therefore, quarter 2 is the quarter that we see that sanity to come back. And beyond that, The outlook remains positive as far as we are concerned, given that the underlying demand factor still exists completely whether it's monsoon, cross, mobility or need for mobility. The GDP projections for quarter 2 onwards are bullish, should be double digit or 10% plus as RBI governor has said. Of course, costs will continue to be headwind for a couple of quarters, but As you've seen from our results, we've been able to manage that and therefore we'll continue to navigate on that space. Within our own portfolio, Our outlook is positive beyond in medium and long term and also for the rest of the year starting from quarter 2. Our core brands have done well. As you saw, scooters are making big strides, premium we are building portfolio, global businesses started scaling up. We made big strides on EV as well, which will augur well for medium and long term and you've heard all the partnership that we have announced. And therefore, we should all the growth drivers that we had outlined taking more and more shape and contributing more and more to our top line and bottom line. And therefore we remain positive about our own market share and portfolio trajectory moving forward. So with that, Let me now hand it back to Thank you, Niranjan. Thank you for your quick update on the quarter and the years gone by. Could we now take questions, please? Thank you very much. We will now begin the question and answer 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 Goldman Sachs. Please go ahead. Hey, thanks a lot for the opportunity and hope and pray the hero ecosystem is holding up well during these tough times. Niranjan, my first question pertains to the commodity headwind. If you can just help us understand how much of the commodity headwind have we kind of And as you look forward to FY 2022, how should one look at the cost implications from further hikes and Play on profitability. So if you can just help us understand this. And of course, I'm not talking about 1Q here, but broadly for the year as a whole. If you can help us understand that. Right, Pramod. Pramod, again, I hope you and family and friends are all staying safe and staying strong to back to the current crisis that's happening on COVID. Coming to your question, Pramod, the commodity short answer is that the inflation takes full year. On inflation account, it would probably be close to around 6% to 7% that would have impacted the year. We've taken pricing over the year, full year around 4% and the balance 3% has been made up through the lead savings program. So that's the overall if I look at the totality of the program. So if you were to say that around 6% to 7% of inflation has been absorbed in these results. Moving forward, if you were to look at, Yes, commodities continue to be at a high, but at some time the supply should come in and cool off. Of course, it's very difficult to forecast commodities And maybe I can look forward to some of your reports coming out from Goldman Sachs to look at what the commodity forecasts are. But what we have done is that, of course, The last year FY 2021 was the 1st year with so much of inflation. Some bit of inflation would still come in into the FY 2022. But again, we'll continue to navigate with a combination of judicious price changes in line with industry and maintaining our product positioning as well as the leads to savings program, which again, full year basis, it gave us more than 200 And should continue to work for FY 2022 as well. So I think we should continue to navigate that part of it and maybe probably if there's an inflation around maybe 3% to 4% for the coming year, then couple of percentage can be made up From lease savings and other couple of percentage could be from the prices. So that I'm again, I'm saying promote not just the quarter, but a full year outlook that we have. That's fair enough, Miran. That's actually very comforting to hear on the margin side and the cost reduction side. So second and final question is on the Gogoro side. I think it's Yes, pretty interesting move and approach what you've taken. So if you can just help us understand by when what is the likely If I meant for you to go commercial here because technology readiness is pretty much there with Gogoro, so your time to market may not be that long. And how does it fit into your with your existing own EV plans in Germany, what you're running from the German unit? So is there any reason there? And finally, as it's current environment, there's a lot of hype about or a lot of talk about or worries from the startup ecosystem, given especially some of them have made some big bang announcements. So how do you see them from your vantage point? And how would you expect Just to kind of play out between the establishing incumbents and versus the startups who are making who are trying to break fresh ground in this industry. Thank you. Right, Pramod. Pramod, on EV, as you rightly said, our own centers in Germany along with our GEPU R and D centers I've been working on our own program. That program is primarily based on fixed charging system and that's not on a swap based system, while the Cogoro partnership will be on a swapping system. So therefore, and as you understand that which of these two systems will become dominant, Our view is probably both will work in parallel to each other given the entire appetite and the infrastructure that exists. So in that sense, it is complementary that our own program works on a fixed charging and then with Gogoro, then we've announced that we will work on swapping and that allows us to play in both the spaces. You're also right that so therefore it doesn't have any adverse impact if at all. It's a favorable impact Because some part of the Gogoro learning and the products which are there or some components we could actually build in into our own fixed charging program as well From a product side of it. From a swapping system, of course, like you said, Gogoro has got any technology, they've got proven technology. They know how it works and there's a lot of learning that has gone into it in Hi, Bhavan. So that helps us taking off ground very, very quickly. In terms of timeline, the timeline for both is next year. I would not say which part of the next year. Obviously, we are trying to accelerate as much as we can. But right now, I would say that next calendar year, you Can hope to see a lot of action on TV front from our side as well as hitting the market itself. And on the startup scene The challenge from the new Starbucks, Nirajan, any thoughts there? Right. Pramod, so I wouldn't comment on any specific Announcement, however, what our experience is that and you also know that any new category which is evolving, initially there will be many players who will come in And that's some way good for category as well because it allows the category to expand and explore and in a sense everyone brings to table some capability the other, But eventually then it leads to consolidation, because this is not a play, which is about an aggregation play or software play or maybe an app play. This is a hardcore serving the customer on the vehicle, on servicing, on after sales operationally and it's not easy and you would have heard even Tesla or Elon Musk saying recently That it's very easy to build prototypes and do a bit of stuff, but operationally, it's not that easy and that's in the event. And therefore, this is a hard thing that will go in. So at some stage, obviously, consolidation will happen. So we are not concerned about that. I think we are focused on what the needs are And then how do we fulfill them and that's how we are going about this. Thanks a lot, Niranjan. Take care and stay safe, sir. Thank you. Thank you, Pramod for the question. Thank you. The next question is from the line of Raghunandan Enel from MK Global. Please go ahead. Thank you, sir, for the opportunity and congratulations on good set of numbers given the circumstances. Sir, my first question was on the commodity part. You alluded to it and the wonderful performance there in managing commodity inflation. But approximately, can you give us an indication how much was the impact of commodity inflation in Q4 and approximately how much do you expect in Q1? My second question was on the market share. On a full year basis, company has done well and gained market share. But In the recent quarter, in 125 segment, there is some pressure on volume and market share. Is it due to inventory adjustment? Or are you seeing higher competition intensity in that space? And just third one, if I can squeeze, on Harley Davidson tie up. If you can give some details on plans of joint product development and any time line? Also, if you can provide details on margins for the distribution business? Thank you. You are testing My memory, my ramp space in my head. Anyway, I No, I'll try to. So on materials, since you are focused on quarter 4, you would have seen that our quarter 4 material cost on a per vehicle basis has gone up by around 4%, 4.5%, you've seen from the results. And out of that, you can say that parts have contributed to the parts percentage has gone up, that's around 2% and On 2 wheeler if you isolate, then it would be around net 2.5%. Now this net 2%, 2.5% is after factoring a leap saving of 300 basis Point in the quarter. So effectively the quarter core absorbs almost 500 basis points or 5% increase growth in the material cost. That's a better way to put it. And therefore, that is what gets absorbed in the results that you see. In terms of Market share, let me address the Harley Davidson first and then I'll give the market share question to Navin to answer. On the Harley Davidson tie up, as we have said, the distribution business has already started. So we are the exclusive distributors for Harley And that business has started around 14, 15 dealers have been appointed all from their existing system And the business is off to a start. Of course, the key part of the Harley Davidson tie up is the license to build The Midway segment, which is the segment which is a very profitable segment as you know and the lead player has the market share of around 90%. So there, this whole thing of developing the bike and putting out in the market, both under Harley name and hedon name, That is something which is the key part of the HD tie up and the teams have already started working and progressing on that. Navin, can you take up the question on the market share where the question was that the full year we have gained, but in the recent Times, a recent month or quarter, we would have seen some softening from our side. So what are we doing about it? And is that fundamental or otherwise? Navin, over to you. Yes. Thank you, and namaskar to everyone. Hope Everyone is keeping safe and sound. Now regarding the question, while Vedantin, you had in your initial address, you had Talked about the market share gains in different markets overall. I'll do a double click there and maybe that will have an answer to the question that has been asked. So while you talked about gains in scooters premium, on the overall market share, if I take a breakup of Arban and Rohrab gained in Arban. We hold on to our Rohrab market share. We've looked at the top markets and gained in the top market. Now what on the question coming to the question specific, at no point of And you will see quarterly quarter the market share would be running at a uniform level. They are a mix Our outcome of multiple factors playing in, which segments are doing better, both in terms of product segment or geographical. And also how are the various occasions? India, there's a lot of occasion buying that happens, right? And hence, how is the occasion fitting into various segments? So Q4 is an aberration. Q1 is what we are looking at, but you unfortunately, there is an impact of COVID, which has come in. But that's something that will manifest as the time comes. So for me, Q4 is an aberration, but there was a Specific question that was asked about 125cc also. 125cc, there is a sequential gain. Now 125C has got 2 strong products in terms of Super Spender and Glamour. We've seen some hit on the Glamour in its core market, but the When we conceptualize the product in the BS6 Aptar, it was to attract a new segment of consumers which were emerging as in a growing segment. We've gained Pan India except its core markets. There is a feedback that we've received from the consumers in the core markets. We're working on that. We've been agile in past. We are agile now. And quickly, you will see some action, which is coming up in the segment. Thank you. Thank you, sir. That was very helpful. Just a small clarification. For Q1, what kind of commodity impact you are looking at? Right. Let me take that up. So far as I said, it's very difficult to forecast the quarter by quarter commodity impact. And I did respond to Pramod on this question that maybe looking at what is going around that year, the full year may see an impact of around 4% inflation on the commodity because large part of the commodity inflation has come in, in FY 2021 and towards quarter 4. And obviously, we plan to then make it up so that the impact on margins is minimized. So therefore, partly through price increase and partly through savings program and a combination of all these things so that The balance between margin, market share and impact on customers is maintained. Thank you, sir. Thank you so much. If time permits, please come back in the question queue for a follow-up question. The next question is from the line of Nishith Jalal from Axis Capital. Please go ahead. Hi, sir. Thank you for the opportunity and for your patience on very, very good set of numbers. So my question is on the cost reduction side. Nilo has been in this tubular industry for quite long and a very, very well oiled machine on the hot side. I'm very surprised to see it positively You see this kind of 200, 300,000,000,000,000,000,000, which is kind of a cost reduction for the trades coming in just 1 year. So wanted to understand and get more color as to what is driving This cost increase, it's a very steep increase coming in an organization, which is already very cost efficient in just one year time frame. So some more details on this will be very helpful. Right. Nishith, thanks for the question. See, what happens is that whenever a cost base gets restated, which is what happens when we move from BS IV to BS VI, and you know in BS VI regime, the cost actually went up by between, I would say, 12% to 14% or 15% because of BS VI. So whenever a rebasing Cost happens, this again presents an opportunity to save on that. So that is why you see that if it was just BS4, probably it would not have been feasible to deliver kind of saving, but as the costs have got rebased, then the opportunities emerge because initially it was all towards ensuring that the products are robust and they are delivered in the market and they perform in the market. And now after that, just alongside R and D and sourcing and the entire system has started working on what we can save on top of that. So therefore, that's the program. And out of that, one of the major program is the precious metal, which is the CATCON and a loading reduction, a combination, as you know, there are 3 metals, which is rhodium, platinum and palladium. You can work with different combinations of those. You can reduce loading by adding something else. So those are the programs that have given Bulk, I would say 60%, 70% of these savings and other savings have come from different areas, but obviously as you go through a more Squeeze on margins or costs, then obviously you start looking at every angle once again and that is what we've been doing. So sir, what I understand is a bulk of the cost savings has come from fuel injection and the fact that the cost that we have started to put in after PS6, Right. And sir, these costs, these are kind of bought out parts that we are getting from suppliers, right. So if suppliers are doing these kind of cost reductions, should these benefits not flow to the entire sector or all the OEMs present? Or is it something really specific which Hero is doing at their end, which means that the benefit is only for Hero and not for the No, Neesh, this is not the FI system. This is the CATCON loading that happened in the product, which is combined of these three materials. So it is not a thought out part. So essentially you consume less of these metals, which is Platinum, palladium and rhodium. And the combination of those depends on your R and D, how you are able to size it up. So in a sense, I would call it flex formulation, where you can use a different combination of these to achieve the same results and same BS VI output in terms of emission norms. So it won't be same standard across for each of the companies or players, different players will have different solutions even between FI and COB, there will be different flexibilities Sorry to harp on this a little bit more. Sir, if I understand correctly, INR 200 to INR 300 bps Cost savings indicates almost INR1000 to INR1500 savings on a per vehicle basis. So what would be the Content of precious metals typically in my understanding was it was around INR 1500 to INR2 1,000 originally. Was it much higher ultimately? And you have brought it down significantly to get these kind of cost savings per bike or there is something else at heart rate as well? So I will now give out my entire form cost and details to you because obviously that's confidential and competitively sensitive information. But just to give you a hint that all the precious metals, their prices have gone up by 100%, 150%, 200%. So therefore whatever the cost was base was there itself has gone up. And then obviously through a combination of Flex formulation like I said, Then and that's an intense R and D program by the way. So it's not just bought out parts negotiation that happened. Offline, of course, you can talk to Manh more later. But obviously beyond a point, we will not give out sensitive details of that. That's a point. And so my second question is on the spare side because It's the 2nd consecutive quarter now where we have seen a significant growth on that front. So firstly, if you can share numbers of this quarter? And secondly, what are the structural factors or drivers which you are taking to bring this spare revenues higher? All is just a factor that in the 1Q and 2Q spare revenues were lower and that is the reason why we have seen much higher spare revenues in the second half. I'm just trying to assess what is more sustainable and what is more transient in nature on the spare side of the business. So let me take this first and then I'll ask Navin to supplement, which is as you would have seen, so if it was just 1 quarter phenomenon, you could have said that it is Transient, even that time we said that it is based on underlying drivers, which Naveen will spell out, But it is a successive quarter of INR 1,000 crores plus and we are now moving from what we used to have 7%, 8% of the revenue comfortably to 10% of the revenue And potentially to 12% of the revenue moving forward. But let me not steal the thunder from Navin. And Navin, you can outline this This entire story of how our parts growth is being driven and how sustainable it is and what our Over to you, Naveen. Yes. Thank you. Maybe I'll try and explain it in a simplistic fashion. The 2 areas wherein the transition is, one is our own capital market, which are our dealerships and authorized workshop And then the second part is aftermarket beyond our dealerships. For 2 years now, we've been running a program called NPS 60, which is to enhance our consumer satisfaction level and to take our net promoter level from 12, which was 2.5 years back to 60. So fundamentally making our processes and systems Very, very robust, very strong at our own blesses and hence retain the consumers and increase our space revenue and other consumer So that's one piece and this is going on and fundamentally it is on the right space. Also in terms of retaining and getting our lost customers back, We are reaching out. So there is a micro distribution of service. That's also a concept that we're working on. We've tested that in some certain select markets and It's giving results. So there is fundamentally the business grows in our Off-site segments and its contribution will go up. The second piece is which is aftermarket. Now aftermarket, around 3 years ago, we had a certain level of distribution system wherein we had Super Stock is kind of distributors, we've gone micro there as well. And hence, this customer intimacy, which is core to our approach in sales and after sales is being played out in the aftermarket spare parts domain as well. So we've got closure to our customers. We've got 100,000 technicians on board with us. The number of technicians who deal with us has doubled in last 1 year, Kevin in contact with us, number of retail points that's micro distribution further to the 3rd tier level that has also gone up fundamentally, right. So fundamentals are in place. Now distribution footprint is in place and I would say we've done with 70% of the market as yet. We are yet to do and we kind of because of the pandemic last year, we could not complete the full, so 30% still remains. The 70% is the kind of growth that you're seeing right now. So hence, there is an upside available in terms of that. So Broadly, the distribution and yes, there is a lot of work, which has stuck me getting into it. Thank you. Thanks, Navin. Thanks a lot. Just To add on, our teams are also working on expanding the accessories and merchandising, which is a very small business today, but a huge potential exists in terms of not only revenue, but also creating a branding through that. Thank you very much. The next question is from the line of Kapil Singh from Nomura. Please go ahead. Hi, sir. Congrats on a great And also to be heartened to see the kind of effort that entire management is putting in and in this tough time to take care of the community. So wish you all the best for that. Firstly, my question is On the export side, Niranjan, you alluded to the fact that export 100 is touching almost 300,000 numbers. So Just some thoughts on that. Would that be right kind of level to look at for next Here or would you look at even better numbers because there for few years, there are launches due for some of the key markets like So just some update on the timeline of new launches and the book trend that you expect? Thanks, Kapik for the question. Yes. What I highlighted was just extrapolating the quarter 4 and therefore our run rate because we don't want to take a month and extrapolate, but I think there was a quarter which you extrapolate and that's where it is. But yes, we would like it to be higher than this for sure. And there are as you rightly said, there are multiple launches which are planned, whether it's Nigeria, etcetera. As you know, we've opened up Mexico. The orders have started coming in. Mexico is a big market. Colombia, where we were stuck at around 4% market share for quite some time. In the last three quarters have moved to 6% market share and Colombia is again 500,000 market. So therefore, there's a big potential there as well. Bangladesh, the strategy has been reworked to increase market share. So there are honestly, there are multiple actions. And would the internal team be happy with even this run rate? My answer would be no. But then of course, you've got to build it and obviously we would like to come out with better numbers than these and then I'll delight you. Okay, that's great to hear. Secondly, I also wanted to check on this Gogoro tie up and the JV. Could you talk about What are the revenue streams that you can expect here? What is the kind of investment that we can expect because that is something probably will be a Capital intensive model as well, right. So what kind of investments have you marked for this? So, Kapil, the business case and the investment and in fact the business model itself is being worked out, yes. And therefore, once we do the business model, then one can work out which way it will be done. I mean, whether it will be entire capital intensive, whether it will be franchise, whether how does it dovetail With Spain, so etcetera, etcetera. And if you look at our strategy and again to just reiterate, The primary one thing was our teams are working on fixed charging. That also will have, which is our own product, which we are doing in Germany in combination with our own JEP with R and D as well that I just fixed charging, but gradually it will also have a swapping option. And now you have the Gogoro, which is a ready swapping Yes. So without waiting for a swap option to get developed on our own product, so you have a rating option with Gogoro as a swapping So I think all of these business models will get worked out and essentially Once it gets worked out and fine tuned, then we can come back to you in terms of what exactly the investments would be and the revenue streams would be. Sure. And sir, could you give the sales number for the quarter? I think you can give the number. Sorry? The sales number for the quarter? Yes, yes. Sales number for the quarter was INR10.50 crores For quarter 4, FY 2021, the Q4 FY 2020 was INR 751 crores and just the previous quarter, which is Q3 FY 2021 was INR1034 crores. Okay. Thank you, sir. On a full year basis FY 2021 was INR3,178 and full year 2020 was 2,896 crore, just to complete the picture. Thank you. Thank you. The next question is from the line of Mukesh Saraf from Spark Capital. Please go ahead. Yes, good afternoon and thank you for the opportunity. First question is on the EVs again. I mean, if you look at the Toyota TiO plus you're doing your own vehicle, plus you're also going to be participating via Ather. So could you give some sense on how are we What is positioning these 3 products? Would one be could the price points could you put some points on the price points So at least directionally, will be the other one be right at the bottom and then probably your own product and then Some sense on how you're looking at least the figures that you're now approaching this market? I think you will have to wait for the product to be launched for the pricing and the positioning to be revealed. And as I said, the launch Is next year and next is a calendar year. Of course, we are targeting, as you would have heard our CEO also say, targeting fiscal year 2022 launch itself. Yes, you will see multiple actions from us in 2022. Right. But I mean very qualitatively if you could give some sense because I mean, obviously, we will be finalizing your modalities, etcetera. But given that you've already entered these three way and looked at entering in these three ways, Nothing right now. So let the substance be there for some period of time. Sure, Sure, sure. Okay. And second question is, again, I mean related to this, we looked at the last year or so, you've had 2 global tie ups, 1 with HD and 1 with Gogoro. But when I look back, say, 10 years, post the split with Honda, we're not really high tuning of these JVs, while competition has been tying up with some of these M and Ts. Is there some change in thought process there? Have you kind of earmarked some investments towards JVs to address some of these areas that we've been lacking in the past? So Okay. Actually, we've already been tying up. So as you've seen, of course, you are right when you say last maybe a few years, 3, 4 years or whatever. But if you see, we are seeing where would a JV or a tie up make And what is our own M and A strategy and then we are going after that. So if you look at it, that's how in the premium segment, we tied up with Harley Davidson And that's something that obviously augments the entire premium strategy very well. We've tied up with Gogoro in EV. So you already see 2 big tie ups that we have done in very recent past. So honestly, we are doing what is actually required as a strategy for the business. Right. So it's not like a change in thought process because you've not been doing these tie ups all these years. So it's not like there's been a Change in charity internally and like we will set aside some bit of investments that we want to do towards some of these global deals. Well, tie ups always also depend on 2 parties coming together and also the Strategic direction. And third is that both parties should come to a commercial understanding, which is win win relationship. So many times you keep working on those and then the fusion happens at certain point in time. So it's not that we started working on these 6 months back and now it has happened. So it's not a change in big change in thinking. However, if you see our new vision and mission, which is be the future of mobility and mission being create, collaborate, inspire, clearly collaboration acquires a big space in our strategy moving forward. Sure, sure, sure, understood. All right, thank you so much. I'll get back to you. Yes. Thank you. The next question coming from the line of Bina Singh from Morgan Stanley. Please go ahead. Hi, team. Thanks for the opportunity. Congratulations for a very good quarter I missed challenging time. Most of my questions have been answered. Just 2, 3 follow-up from previous questions. One is, could you remind us What are the price hikes that you have taken this year? And secondly, could you talk a little bit about any update on the Harley Davidson side? We've talked About product development with them, like you said, the Gogoro model will be available in financial year 2023. When do we start seeing some sort of a product Along with Harley Davidson, which year would you cancel that and or any CapEx that you have allocated towards that? That's it. Thank you. So, Vinay, price increase, I think I already outlined, but just to repeat, over the year, we took price increase to the tune of around 4% combined all the quarters. If you look at HD, we won't be able to give out any Timing right now, but obviously both the teams have already started working on in terms of the product to be launched. And 3rd is on EV, as I said, not 2023, I said that TB 2022, which is the next calendar year, And we are trying to launch in fiscal year 2022 one of the EV products and you will see multiple actions, whether it is our own product or a swap Product, Rigogoro, all of those actions that you will see in the next calendar year. Great, great. Thanks a lot. Thank you. The next question is from the line of Rakesh Kumar from BNP Paribas. Please go ahead. Hi, good afternoon and thank you for taking my question. My first question was more of clarification. So have you started Booking revenue for Harley Davidson distribution network, which has gotten paneled with us? Yes, we have. So can you please quantify what would be for this quarter? That would be a small portion because Overall, in terms of the context of the sales that happens and the revenue that happens, it will not be a significant portion, but offline, Man can actually give you more detail. Sure. Thanks for that. My next question was more on the realization part. So from pre Fixed level to now, our realization has increased by 20%. What do you see its implication on the demand side? Because a large part of it is driven through the price increases and not much from the mix side. So how do you see implication on demand? Does that make our demand or growth much more volatile In times of weakness underlying and as a market leader, what are we going to mitigate that? So let me take 1st and then I'll ask Navin to something in my end. So firstly, I think it's not right to combine all the price increases because what happens is that, A, what is the price increase for and how it is communicated? What are the other industry players doing? And that's how we set the expectation. So if you look at BS IV to BS VI, which is the bigger one, which is around 15%, obviously the product BS VI is not same as BS IV. It was the FI system, new technology, better mileage, features. So in a sense that you are giving value to the customer and not just a regulatory change And that's how it was also communicated as well. Of course, after that, the 4%, 5% that has happened is on account of inflation. And it's got certain elasticity and demand impact. But then finally it comes down to fundamental demand drivers of the and the need for mobility solution. And what we are doing is that while we are trying to cushion the pricing impact, We are also trying to put affordable solutions. And let me now hand it over to Navin to talk further about it. Navin? Yes. So, Naveen, you've captured it very, very well. And we've been successfully been able to communicate the value story to the consumers. And right at the entry segment, if you look at the Stender and RHA, There is increase in market share that we have and it's primarily because in these segments we have given the value of the new technology to the consumer. So that has played well. And I think at this point of time, how do we make the affordable solutions For the consumers, they are in the hold the key for the industry growth. We've launched XMI solutions recently, wherein the EMI comes down by 30%. We are testing it in 7 select markets. We're going to go horizontal deployment to rest of the markets. In the industry still operates slightly on the higher side as well as the financing cost is concerned, that's one space to enter. So I think the solution For growing the segment and industry lies in the adjacent space and we're working on this. Got it. Thank you for that. I'll fall back in the queue. Thank you. The next question is from the line of Amin Barin from CLSA. Please go ahead. Yes. Hi. Thanks for the opportunity and congratulations on a good set of numbers. My first question was more on the year and now because obviously in the last one, one and a half months we've seen different states going into this lockdown phase in different times. So can you give us a sense of your most recent reading of how Kings were on the ground both in terms of demand as well as inventory levels and what we were seeing in terms of rural and urban because While we are at the same place like we were last year, same month, I think this time around the dynamics of rural and urban are different, at least that's what we understand. Any sense on that, Vivek? So, I mean, look, Yes, right. Like you said, we are facing not just similar times as last year, but actually Much more challenging times as we can see from the numbers, the infections and the consequences that are happening. And of course, more and more states are also going gone under lockdown. In fact, most of the states, I think, have announced already. So this would not be the time again to read any kind of underlying demand or inventory levels or rural urban. I think this quarter is about everyone coming together to help each other and get over and get over this humanitarian crisis. And then thereafter from quarter 2 onwards, as I said, the fundamental drivers of the demand would We don't see any underlying issue with any of the key factors that drive demand in 2 wheelers, whether it is monsoon, announced normal crop levels or fundamental rural income or need for mobility, I think all of those factors should I'm back. So I think that would really be the time, the quarter 2 time is that when you start looking at these factors again, Amit. Okay, okay. Thanks for that. And secondly, you're just going back to the EV question. So now obviously, you have a kind of A 3 pronged approach to this. You have Acer, you have your own products, you have Goboto. And almost every other legacy OEM also has Some products or the other out in the market and then we have the startups, one specific one who has made a big announcement. So According to you, when is the inflection point for EV 2 wheelers? Is it 6 6 months down the line, 2 years down the line in your best guess. And how prepared are you in terms of all See things coming together for you and is there a kind of volume that you are thinking from your side that you want to be prepared for if things daily take off In the segment. So, Anurin, look, right now to do a crystal ball gazing is very difficult because it's a category that's evolving. There will be an inflection point beyond which it can start growing much faster. And as you know, a lot of factors have to coming together also. And therefore, as a player, what we are doing is to accelerate our EV program and which is what you're seeing, where our own R and D is working On our own product, which will come under both options, which is fast charging, charging and swap in a gradual manner, Tied up is Gogoro, which gives a faster on the road shopping solution and of course invested in Ather. So I think this is a category which is where we have to put action on ground, which we have done. And therefore, I would say that we are well geared And moving towards that, of course, as you launch products as different people will experience, the customers and the customer habits and the learnings, This category is still going through a lot of evolution. So before it reaches any kind of saturation for it to or maturity level for it to then start growing on a steady basis. So I think it would be, I would say, wait and watch and we are getting fully geared up as you can see from the acceleration in the actions that we have taken. Okay, great. Thank you. I'll come back in the queue. Thanks, Amil. Thank you. The next question is from the line of Suraj Gupta from UBS. Please go ahead. Yes, hi. Good afternoon. Thanks for taking my question. This one was, could you sort of The other operating income for the quarter and then what is the CapEx that you expect for FY what was the CapEx in FY 2021 and what are you Yes. So the other operating Revenue as you can see, because you've given out the parts revenue and you have the overall for the quarter was INR 206 crores for quarter 4 and the quarter 3 was INR 192 crores and obviously the previous which is the Q4 of FY 2020 was INR 137 crores which was a truncated quarter. So that was the operating revenue. Sorry, what was your Sorry about the background noise, but I was asking about the FY 2021 CapEx number and what is the forecast for FY 2022? Right. So as far as FY 2021 is concerned, I I think we spent around INR 600 crores of CapEx, but offline, no one can give you more fine tune numbers is there in the cash flow statement. As far as next year is concerned, we are not outlining any numbers as of now. As you know, as far as quarter 1 is concerned, all of us are going through a very different level of crisis and challenges and then we recalibrate our CapEx and the cash plan there. Sorry. And just a follow-up on that. I mean like how do you think about like while you are taking these multiple projects on the EV side In terms of setting up any dedicated EV capacity or do you think one of our existing plants could Sort of repurposed to be a dedicated facility, how are you thinking about that? So again, this is something that our teams we have as we have announced long back EMBU, which is emerging mobility business unit And that business unit is looking at all aspects, manufacturing, sourcing, even selling and marketing. So a lot of work is happening on that other than the product work that I already talked about. Okay, great. Thank you so much. Yes. Thank you. The next question is from the line of Chirag Shah from Edelweiss. Please go ahead. Yes. Sir, I have a question on the premium motorcycle category. Sometimes we have articulated we are looking to have a book sale of I7, There are been a journey and that could include Harley as a part of that strategy. We have seen 2 launches, And a follow-up question, because of this uncertainty around COVID, Thanks, Chirag. As you rightly said, we have embarked on this premium strategy in terms of filling the portfolio right across all the TC and right across all the segments. You've already seen us coming out with Xtreme 160R, you've seen it coming out with Xtreme and you will see more and more products coming out every year. So that's where I would stop. In terms of launches, are we delaying launches? No, we are not. As of now, all our launch plans and pipeline plans, which are there for the next 3 to 5 years, they remain exactly as what they were. Yes. Thank you very much. And all the rest, Jagadish. Thank you very much. The next question is from the line of Janesh Gandhi from Moti Dallosol Financial Services. Please go ahead. Hi, sir. My question first, a clarification. The cost inflation number which you talked on savings numbers which you talked on leads, There on y way basis or quarter on quarter? Year on year basis, the 200 basis point Ape Saving program, which I talked This we used to have 60 basis points to 70 basis points, which is what we have been saying earlier. Sure, sure. Any sense On the RM cost and commodity inflation on Q3, this is how it could be? Very difficult, Janesh, to forecast everyone who has forecasted commodity, whether it is an up or down has been proven wrong. I think it's best to focus on Actual inflation in Q4 on QoQ basis? Yes, actually we talked about The material cost increase which has happened as you can see from the published results is 4.5% increase in material of which the 2 It would amount to inflation of close to around 5% on material in Q4. Okay, got 2nd question pertains to the Harley Davidson distribution income accounting. So we Just book the distribution margins in our revenues or how it works? No, it's a full revenue. It's a full P and L. As a distributor, we buy Ramhale and then we sell it onwards to our 2 to 3 years. So it's a full revenue that comes. Right, sure. And lastly, with respect to financing, can you give some flavor of how was financing in Q4 finance penetration and How did our Hitoken Corp perform for FY 2021? Yes. So our financing in 4th quarter, Janesh, was at 48% around, which went into financing and Fincorp share was 40%. Okay. And any sense on HFCA's financial performance? No, That's not a listed entity, but all I can say is that they are back in terms of their business And growing, and they are maintaining good capital adequacy and all the relevant issues. Okay, great. Thanks. Thanks and all the best. Thank you. Ladies and gentlemen, that will be the last question for today. I will now hand the conference over to Mr. Umang Khurana for closing comments. Thank you, everyone, for coming in. It's been a pleasure discussing our numbers with you. Please keep safe everyone. Please take care of yourselves. And hopefully when we meet after the quarter one results, We'll all be smiling even more. Keep safe, talk soon. Bye bye. Just the intervention, We have to keep smiling even now, so we know what this battle and I'm confident, not hopeful that when we have the next quarterly call, we won't be discussing COVID anymore. Got Thank you so much for that, Niravanshu. Thanks. Thanks, Vivek, JNF for hosting us. It's been a pleasure. Thank you. Thank you. Thanks for joining the call. Thank you. Thank you very much. On behalf of JM Financial Institutions Securities Limited, that concludes this Thank you for joining us. You may now disconnect your lines. Thank you.