Investor/Analyst Call

Oct 12, 2021

Slides

Vehicle Business and Mr. Diman Gupta, Vice President, Treasury, Investor Relations and M and A. This will be followed by Q and A. So over to you Balaji. Sir? Firstly, thanks everybody for coming in at short notice, much appreciated. What we'll try and do today is to quickly run you through the business of EV, why we see potential in this business and why we are excited about it. And then we'll have a I'll quickly cover the business rationale as well as the team structure and then happy to take any questions. Without further ado, Shailesh, can I request you to talk about the business? Yes. Thank you, Badri. So let me take through the first section, which is around the EV industry. So let me first take you all through the PM and EV journey so far. Starting with the EV industry growth. We have seen that in the past few years, the industry has been growing at the rate of 1.5 to 2x every year since FY 'seventeen. And this year, we are expecting The industry to grow by 2.5x to 2.7x. And what is really driving this steep growth is the favorable government incentives, which is Not only the central government Fame II program, but also the state government incentives, which is a top up To the demand incentives being extended by the central government. The second reason is the launch of our more Credible, practical and aspirational mainstream EVs like Exxon. And the customers talking very positive about their experience, Which is really enabling the other customers to start considering electric vehicle. Also, we have been seeing that the ICE vehicle prices Have increased since the BS VI implementation, and it continues to increase with every initial norm change and Introduction of safety norms. And because of the steep increase in the fuel prices also and the inherent benefits that electric vehicles have As far as earning cost is concerned, it is also kind of creating a pull from a consumer perspective to consider electric vehicles. Thank you. A. Thank you. And over to you, sir. Thank you, Shailesh. It's great to be listening. Okay. So I hope you were able to see the earlier slide, but this is the growth that we have seen in the market share. This is Slide number Slide number 6. So if you see the market share growth, We started with 11% market share in FY 'eighteen, then we had just one product, which was the Tigor EV meant for the fleet segment, Government, Preet. And since then, we have been launching new products like Nexon EV in the personal segment. And since then, with the success of Nexon EV, The market share has increased to 71%. And you're also seeing the steep growth in volumes that we have seen. But this actually is limited to the supplies. The real potential is really seen in the right side, Which shows the growth potential of EVs. The dark blue line shows the cumulative bookings that we have been receiving, And the gray line is showing what we have been able to retain because of the lack of supplies. So there is a very steep increase that we are seeing in the demand, But we are fast trying to ramp up and catch up on the supply side versus the demand. I will talk about going forward, what is really going to drive the EV industry. 2 big factors. 1 is the government incentives. We have seen 11 state governments coming with very progressive EV policies, Which is, as I said, is topping up the demand incentives versus what is already available from the central government Presenters. Then the PLI schemes, which is focused on advanced cell chemistries as well as the PLI for auto is focused on EVs. So both these in combination is going to really drive the adoption of EVs. The other demand drivers that we see is, 1, The stringent emission norms from 2020 to April, we are going to see the introduction of CAFE, Which will drive all the OEMs more towards electric vehicles to offset the emissions coming out of the ICE. So that itself will create some push factor. The total cost of ownership is seen parity with respect To the ICE powertrain like petrol and diesel. And from next year onwards, you will see the profanity even in the personal segment. And this basically will be the tipping point in terms of driving the adoption of electric vehicles. Also, you have better customer options as OEMs are introducing the launch from long range EVs. Change anxiety has been one of the key bottlenecks So barriers to adoption of electric vehicles. And in the coming years, we are seeing manufacturers like us going for higher end products As compared to the medium range for us that we get today. So all these factors in combination is going to really provide a very exponential growth in the future. How Tata Motors is planning to lead the charge in this space on the back of this opportunity? As far as product is concerned, we have planned for introducing 10 electric vehicles by FY 'twenty six in the next 5 years, Which would be in different body styles, in different price points from affordable EVs to EVs with a higher range, More sophisticated technologies. And on the sales and marketing side, we are Also going to increase the micro markets that we are present today. As you saw that today, we are present in 60 cities, but we'll continue to expand every year Into more cities, also as we are introducing more electric vehicles and different models. Also, Awareness Station has been seen as the key enabler to drive the adoption of electric vehicles. We have been doing that for last 2 to 3 years. And as we open the new micro markets, we keep focusing on awareness station. Also, we are coming with more options to access The EDs through subscription model, which will allow those customers who are still willing to adopt a new technology an option to book for a 12 month or a 24 month subscription. Capability building, we are driving deeper localization, strictly following the Phase manufacturing plan As laid down in the same requirement. But now on going forward, we are also going to go beyond that and go for deeper localization, Focusing also on the localization of child parts and, of course, building the center of competence. Ecosystem has Being the biggest enabler in driving adoption, and this is one clear advantage that Tata Motors has by Tapping the growth companies who have domain expertise in different area of ecosystem, whether we talk about charging Insta Our sales, manufacturing, our different financing solutions. So this is also what we are going to extensively leverage going forward. So this is how we plan to really proactively win in the EV space. Over to you, Baranjit? Yes. Thanks, Haresh. What I'll try and talk about is the business rationale and how does it all come together. If you recollect that in the March 2020, the Board had approved the proposal to actually subsidize the PV business and which we are confirming that by 1st January next year, That will be fully operational. And that was done with a focus to actually to ensure that we are able to drive a differentiated focus between CD and PV. And at the same time, we would want to unlock the business for value and see if they're able to get partners to work with us on this area and drive operational flexibility. And it also improves the ability of PML to reward its shareholders. And that is the purpose which is currently being executed. Along with that, if I look at the PV strategy, which we've been consistently maintaining, the PV strategy is to win sustainably. And with that in mind, we had called out in our Investor Day as well that we definitely want to go after a double digit market share, which we're happy to confirm we are there. High single digit EBITDA, it is still a journey. We are progressing well. And we want to be a CF positive by FY 'twenty three, which again we are progressing well. And for this action that we have put in place was to reimagine PV, the front end execution. The whole SKU of products under Forever New, the full portfolio being refreshed and is doing very well for us. Leather is the Alpha and Omega architecture. We had the Alpros launch on And now we have the next product coming in, which is Punch. They're just launching as we speak. And on Omega, we had the Harrier and then we had the Safari coming in thereafter. So we want to leverage these architectures more and more. And existing assets are being really juice to the limit. Look at the factories, the production capacities, everything is being driven hard. It's very, very careful investment choices that we have made, all in the spirit of to win sustainably. Move on to EV. It started as a fledgling unit. And then we are very clear as we started experimenting with this, starting to understand it and starting to see the consumer react to it, Very clearly, we want to lead the charge in the Indian EV market there. And that's the reason the strategy was to win proactively. And here the actions are very dramatically different to the PV. We want to introduce 10 new EVs, capitalize the charging infrastructure, Invest proactively in drivetrains, products, platforms and the like. So there is a very inherent dichotomy between these two, And that is the reason when you look at the implications for it, when you look forward and say that it is the kind of potential in this country, We will need to really invest. And EV will require at least $2,000,000,000 of investments, dollars 16,000 crores plus kind of investments will be needed over the next 5 years. And PB will definitely be fund constrained. So the support order is relatively Aspirations. And therefore, the need to continue to and we are also clear that we need to continue to invest in EV in order to build momentum and retain the competitive advantage. And lastly, but equally importantly, EV Technologies are Still evolving, and hence, they are risky inherently. If this is the implication that we have, then the way we have to look at this business and the investor pool that we need to look at is going to be different. But it is a huge advantage going for EV that it has got a very clear net zero emissions as a fundamental call to it, which is fabulous. And therefore, we can then use this potential of EV business to tap into a different segment of investors We're focused on the long term, we're focused on a carbon free world and we have a very, very different outlook to investments in this space. And there is therefore potential to unlock significant value, at the same time, fund our growth aspirations in this business And move the and take the lead in moving the Indian automobile industry to a carbon free world. So this fits in very well here with our sustainability aspirations as well. With that in mind, there are 3 core aspects of EYR, which is the project name for this transaction. 1st, create a pure play EV company to focus on passenger mobility. This will be created as an asset light subsidiary of Tata Motors. We'll house all the dedicated EV talent and design capabilities of PMM, And we'll really aim to attract top notch global talent into this particular company. 2nd, we'll want to invest Step up the investments in EV and related technologies to greater than $2,000,000,000 over the next 5 years, as I already talked about. 3rd, We want to leverage the existing PV assets and investments to drive efficiencies as well as drive speed to market Because this is a we need to ensure that we stay ahead of the curve on this front. And PV the PV company will therefore be a tool manufacturer. We provide all the services to EV company to make it stand up on its feet. And 4th, onboard like minded investors who will be able to provide us capital, access to the global ecosystem that they already invested in and unlock value. And most importantly, this external scrutiny of an external investor will always ensure that we are on notice and will really sharpen our delivery focus. So those are the key aspects of CIOs. So this is a transaction structure, Slide number 12, where the Pbco will become 100% subsidiary of Tata Motors in Jan 1st. The EVCo is a new company. We have not yet named it. We'll find a good name for it in new course. We'll focus squarely on the future EV products. We'll build and own the future IPs of EV and we'll also capitalize the creation of the charging infrastructure in the country. And external investors will take 11% to 15% in that company. And we have Tata Motors, the Vistco, Having ownership of 85% to 89% in this company. And also, these two companies will pool their CapEx credits so that now that we have taken EV out of the PV company and put Out there in terms of all the revenues, etcetera, this will require carbon credits in the future. So that will be a pooling arrangement that will be pooling NPS. And this is where we're delighted to share with you the TPGRise Climate, which is a new fund of TPGRise. We'll be investing $1,000,000,000 at a valuation of up to $9,100,000,000 And this process obviously involved a selective outreach to marquee investors Over the last 2 months and that has now reached a conclusion now. And CPGRiseClimate will be the lead investor. And they are a $7,000,000,000 fund with a focus on investing in companies that enable carbon reduction in a quantifiable way. And ADQ will be the co investor. What are the key terms of the deal? It's a 1,000,000,000 equity funding, where TPG rises a commitment of INR 7,500 50% of this will come by March 22 subject of course conditions precedent being met and also of course the setup of the EV company is one of the conditions precedent as well. And the balance 50% will come by 2/3/22 on achieving go live actions. Basically, the EV company, the industrial local IT systems, everything for it order to be able to recognize revenue in that, we were expecting by Q3 'twenty two that will be done and therefore we can go live thereafter. And that will mean that is the time the next tranche will come in as well. The instrument is a CCPS structure and it converts into ordinary equity shares in the EV company Base is achieving revenue threshold. So the only constraint there is achieving revenue thresholds. The valuation will be up to 9,100,000,000 And depending on the ratchet moves from 11% to 15%, the maximum that TPGRise takes in the company will be 15% And minimum would be 11%. So that's how this will be working on. And these are all on a post-twenty basis. So that's what we have to say. There is additional material in the deck In terms of references on what are the drivers to growth, why has Tata Motors been doing well? That's available for you to read. I don't want to spend time on that. We request all the participants to please stay connected while we assemble the question queue. Thank you. Hello? Am I audible? Yes, ma'am. You have to withdraw. Okay. So the first question is from Jinesh Gandhi. He's asked So you know, quite a few questions. Maybe I'll read them out. So the investment plan of USD 2,000,000,000 would require further investments, possibly further dilution in Tata Motors' stake in EV Business. EV Investment Plan talks about investing in charging intra. Does it mean that the EV business would invest independently of Tata Power for charging infra? What level of EV penetration Tim, do you estimate in PVs by FY 'twenty five, FY 'thirteen? So maybe you can take these questions and there are another key. Yes. That's correct. So the first question, Sehav, was on no, Before you add on that, 2,000,000,000 2,000,000,000. Yes, further dilution. So I think firstly, I think this $2,200,000,000 of investment is over a 5 year period. And therefore, there's also business cash flow that is out there. And therefore, we will look at it at an appropriate time in terms of further fundraise if we need to do. So currently, the plan there's no plan for any fundraise at this point in time. This INR 7,500 crores that will be coming in will serve us well in the coming year as well to all the actions that we need to do. So we are there, 1. 2, with respect to charging infrastructure, if you notice, we have said catalyzing charging infrastructure. We have not yet had any conversation with startup power in terms of what structure that we need to put in place, if at all. So that is something that we work with them in the coming days to ensure there's a mutually satisfying outcome that comes out. So this is basically being Reserve here in terms of investments that if we need to do, we'll be happy to do it. And we want to co invest with them, we'll be happy to do it. If they want to take the lead in investments, we'll be happy that Any option is out there. All options are open. But what we have basically is, spirit business, you have done this deal is that nothing should come in the way of realizing the ambition that we have That's for ourselves in the EV world. And therefore, if it means we need investment charging in for us, we'll go ahead and do it. That's how we have looked at it. Yes, yes. It is connected, Dima. We can hear you. Can you hear us? Inva, the call is connected, right? Yes, ma'am. The call is connected. We can hear the management. Yes. Yes. And the investor is also connected. Okay. Yes. FY FY FY FY FY FY FY FY FY FY FY FY FY FY FY FY FY FY FY FY FY FY FY FY 'thirteen? And can you give a flavor of the current revenues, EBITDA pact for the EV business? So let me answer the first question. And I'll talk first about the industry. In the next 5 years, we are anticipating a double digit penetration as far as the Indian market is concerned. For Tata Motors, we have specifically taken a target of Penetration of 20% plus with the 10 products that we are planning to launch in the next 5 years. So that's the answer to the first question. On the revenues, currently, if you notice, we are selling about 1,000 vehicles plus every month. And overall, the revenue is in the range of the region of about INR 500 crores, and we aim to hit an EBITDA breakeven in this business next year. And obviously, since it is a focused investment, we obviously intend to invest move into an investment phase in the next 3, 4 years. And then subsequently, we expect those business should expect to go cash positive there onwards. The cash in few by when would the entire cash come into the company? And is the investment of 75 b Linked to any milestone? Or how would it be done over 18 months from the first tranche? Yes. I think the cash, as I said in my presentation as well, will come in 2 tranches. 1st tranche expected by March 'twenty two, once we conclude the transaction, CP is implemented, which we are confident of. And the second tranche will come in by end of that end of the next year, calendar year, By which time we should be able to get all our internal IT systems running to start recognizing revenue in that company, in the new company that we are creating. The receipt of INR7,500 crores, other than these two, there's no other constraints. So we will receive the full INR7,500 crores. The performance obligations go into the stake that is there, which could move from 11% to 15%. So the $9,100,000,000 that's why I've called out that up to $9,100,000,000 is basically 11% of the $1,000,000,000 that is out there. So that's how the calculation works. Hope that's okay. The next question is from Pramod Amte from Infra Capital. What are the terms of interest rate till conversion? And the time line for 1st conversion and last conversion? What is the investment Superbond rate on the CPPS are very, very nominal, nothing to write form about. As far as conversion itself, There is a the whole thing is by FY 'twenty seven is when after the contract, there is a conversion. And in case there is any capital raise and there are thresholds, then there is a possibility of a post conversion. But those are details. Most of it is confidential, so I wouldn't want to What is the investment tailgate in EV car specific projects? And What is the exit route planned for new investors in EV car venture? So I think the investment, as I said earlier, is close to about INR 16,000 crores is the kind of investments that we go into the new EV core. And as far as exit options are there, all options are available for the investor right from Tata Motors buying them out to 3rd party investor. We find a 3rd party investor for them or we swap it into Tata Motors or we merge it into Tata Motors or We IPO it out. So all options are available for us. It's a pretty flexible option structure that is there. We'll work together with them and make it happen. Is the plan for finding a partner in the car division complete with this transaction? Or would you be still looking for a conventional car partner? Currently, it's fair to say that's not on the front burner, but that doesn't mean we are not open to conversations. And we don't have to land this deal and take off on EV. So that's what our focus would be at this point in time. But we are not saying no to anybody who is interested in working with us. The next question, sir, is from Sonal Gupta, L&T Mutual Fund. He says, Hi, many congratulations to Tata Motors on the deal. Given that you've announced $2,000,000,000 plus investment in EVs under this company, will Tata Motors also infuse any capital Or will that be raised from other investors at a later date? I think, firstly, if you notice here, we are Incorporating the company from Tata Motors from where this dilution is happening. And therefore, we do not see a need for Any further capital to come in from Tata Motors? Instead, what is actually happening is a full access to the full PV ecosystem In terms of factories, in terms of sales points, management bandwidth, design, all that is going on there, brand nameplates, everything. So therefore, we are actually wanting to use everything that has happened in Tata Motors and give EV its full support To ensure that it is able to take off. That's how this deal is being constructed. Other than product and platform development, Are there any other areas where EVCo will invest R and D and build IP around it? Rajesh, do you want to take that? Yes. So the IPs will be built around primarily around products, that is for sure. And there will be additional capacities which will be needed to meet the aspirational numbers that we have set for ourselves. These would be the 2 primary areas which I said. And of course, since there will be localization of components, etcetera, this will be another area. And if there is a need, as Balaji said, for charging interest fee to invest to meet our aspiration, that is Something which we'll discuss with Tadapar. And that can also be one potential area if we have to really accelerate things. Thank you, sir. Next question is from Raghu from MK. His question is how was the pre money valuation So $8,100,000,000 arrived at? I think EV valuations globally work on a different logic. And we had Morgan Stanley and JPMorgan as our advisers. And we had put the overall business plan in front of them. And of course, there was a view in terms of what would be the kind of valuation that is there. Comparable multiples have been used. And if you look at this valuation to the if you look at the EV players in East Asia or EV In U. S, I think we compare pretty favorably to the East Asian peers who are out there. And with respect to the U. S. Peers, obviously, those are Premium OEMs, so therefore, it's not strictly comparable. But our call compared to East Asian peers, we are quite comfortable with the way it has played out. It's comparable there. The next question from Kapil Singh of Nomura. Can you please talk about the key terms and conditions of this investment. What does the range of valuation depend on? We just covered that. And how will the remaining amount be raised As we plan to invest USD 2,000,000,000 will the India PV business earn any manufacturing fee? So let me take a while just to go through the first piece, which is the ratchet, 11% to 15%. That is completely dependent on revenue realization by FY 'twenty seven. And obviously, the numbers I will not be in a B. Balaji:] But it is totally linked to only revenue realizations. So we are pretty confident of achieving those, 1. 2, with respect, There'll be 3 transaction agreements that the EVCo will enter with. Number 1, With CV Co. For a tolling arrangement to get access to manufacturing. So that CV Co. Will So we'll manufacture the cars that are there for EVCO. That is contract 1. And thus we'll all be answering standard related party transactions that are there, 1. 2nd transaction they'll enter into would be royalty and an IP agreement in order to access all the brands and nameplates, for example, the Nexon brand, The Tigor brand, all that the Harrier brand, all of them will be available in terms of everything that's created. Even the funds today are just getting lost. When that becomes really, that's also available for the U. S. Company to draw into. So therefore, that will be the second agreement that is going into. And that again will be standard related party transactions and clear on that. That is the second one. 3rd one will be There is normal shared services agreement for getting all the shared services from Tata Motors, Tata Motors PV in order to ensure that we don't do Traditional things like accounting, payroll, all that will be available from them. So they can get started fast. The spirit of these contracts is to get EV Out and running very fast. So they will not waste any time doing what others have already done. They They will take it on an indefinite license or they'll take it on an RPT basis and move. So that is the way that structure will be in What are the next question? Sorry, sir? Yes. Yes. Will the India PV business earn any manufacturing fee? Yes. So for the tolling arrangements, there will be a fee to pay for the PD company. For use of the brand and IPs, there will be a royalty and IP agreement for which there will be a fee that will be going in. And those are standard RPT transactions that are there. And it's not only to be to the extent of what they have used. If EV today creates a new brand, EV creates a new IP, they won't be paying for that on this TV company. So pretty actually very straightforward, simple arrangements. There's nothing complicated in that. Nothing actually even nothing interesting in that also. Next question from Gunjan from Bank of America. Can you talk about the back end supply chain in terms of battery cell tie ups? And what is the penetration that you expect in the next 5 years or so? So next 5 years, I already answered this question a while back. From an industry perspective, the EV industry in India He is expected to be in the, what would you say, early double digit penetration is what we expect. From a Tata Motors perspective, we are aspiring to the early production class. As far as batteries are concerned, right now, We have already localized the PAC and module in India, and this is being supplied to us by Taco. Going forward, as far as cell manufacturing is concerned, it's something also which is under consideration by the Tata Group. And that decision will be taken. If that's the case, then we'll source it locally. And as of now, we have arrangement with some of the international sales company To give cells to Taco, who in turn converts that into battery pack and gives it to us. There's no exclusive cell manufacturer whom we have tied up with as of now. Next question from Vinay Singh of Morgan Stanley. What are the revenue thresholds for conversion to equity? And what are your EV targets in volumes and revenues? As I said earlier, I won't be in a position to share that. That is confidential for obvious reasons. So all I can say is that we are pretty confident that we And therefore, it's our aim to max out the valuation, dollars 9,100,000,000 at 11%. That's what we are running after. And that's what even TPGRice is running off of. So therefore, both of us are aligned that we are to make land that's like that. Next question, sir, is from Pramod Kumar of UBS. How many of the upcoming 7 EV launches will be born electric? And related to that, what will be the launch pipeline for the ICE portfolio? Yes. In the next seven products, we could definitely be considering our dedicated born electric EV, But it is too premature to talk about it at this stage. We'll talk about it closer to the date, but it is definitely under consideration And in the plan, in the interim, we are also going to tap into the multi Rajeev platform architecture, which I talked about in my presentation, Which enables the current modern architectures in the PV side, which will be more electric ready, Enabling it to house more batteries and therefore higher range. So this is something which will be the next generation After the conversion products that we are doing. But in the next seven products, we are also consuming the 1 hedges also. How crucial is sustained higher government subsidies for meaningful EV adoption? And what would be the likely price increase for the Consumer, if subsidies were to expire? Yes. So Its subsidy is going to be important for the next few years. But this will be important as the Battery prices are at a certain level. Going forward in the next 2 to 3 years, the battery prices are also rapidly coming down, and there's a localization initiative also that we So the reduction on the cost that we are going to see will completely offset the need for any subsidies. So even if subsidies are going to go away, It will not take away in any manner the penetration levels that one is thinking of from EV Industry in India As well as from Tata Motors' ambition of achieving 20% trust. So even if subsidy goes away in the next 2 to 3 years, it should not impact because by that time, the cost structure would have come down significantly. The next question is from Prateek Poddar from Nippon India Mutual Fund. With a USD1 1,000,000,000 of funding, can we expect capital intensity in the standalone business to reduce going forward? And will the EV company eventually be demerged For value creation? I think as far as Capital intensity in the PV business is concerned. I refer back to strategy. We are very clear that we want to win sustainably. We are very clear that we want to be cash positive. That strategy continues. There's no change as far as that is concerned. And we'll definitely invest to ensure that we want to continue to grow that business. That business is not being made. That business being invested prudently. The reason why this EV investment, we actually want to step up our aspirations, and therefore, we want to drive investments there. That's the reason Kilios is being done. As far as destination, what happens is that time will tell. As the Chairman puts it, nice, we feel the stones in the water and then we will figure out where we go. This is the first step that we are taking and we believe it's a step in the right direction. And where will it take us? Time will take. Next question is from Chirag Shah of Edgewise. Based on business Plans and, say, everything goes as per plan. By when the CCPS converts into equity? And what are the key areas that you are looking to spend in the EV space. Yes. I think the latter part of the question I've already answered, therefore I'll skip that. As far as CCPS conversion As concerned, there are 2 thresholds. 1 is FY 'twenty seven, it will depending on the revenue that we achieve on that particular period, There is a floor of 11% and a cap of 15% as far as stake is concerned. That is the way in which it will convert, 1. 2, the other angle is that there is a if for any reason Tata Motors does a fundraise, primary or secondary, and that meets certain thresholds, Then there will also be a post conversion on that basis. So that is those are the 2 events and that can happen earlier than that. And therefore, that which Form it takes, we will see. But that's how those are the two things there. Next question from Satyam Thakur of Credit Suisse. What are the underlying EV volumes estimates by year that we have gone with based on which the valuation was based? And whether electric buses and LCVs will remain separate from this new entity? The first question I'm not in a position to answer. All we are saying is that we would like to there is an internal plan that we are working towards, which we believe is And we and PPG really believe that this is the kind of operation that we need to go in with. And that's how we are putting our steps jointly together on that one. As far as EV buses are concerned, that's outside the perimeter. And this is one piece there, be it LCDs, buses, they're all outside the perimeter. If for any reason there is a technology that EV company develops, which the commercial vehicle business wants to pick up But it makes sense for them to use that what is already being created, then that of course is something that they'll create a licensee and take that. That's for any normal OEM IP transaction that will be here in the last August. Next question is from Ronak Sarda from Systematics. What kind of assets and liabilities will move into the subsidiary? The presentation talks of an asset model, how does that work? And will the subsidiary be eligible for PLI scheme? A great set of questions. One is, as far as assets and liabilities are concerned, no asset, no liability moves from Tata Motors Pivico into EVCO. It's an asset light company. As far as So the second question, Nabilis? PLI. PLI. PLI team is something that has been announced. We welcome this team. We will approach this as a Tata Motors group because that gives us more degrees of freedom. And the payoff Obviously, happens for electric vehicles in passenger vehicles and commercial vehicles. And therefore, we will take the payoff in those investments. The threshold investments includes ICE. And therefore, it makes sense for us to go as a Tata Group, Tata Motors Group To invest in that. As far as battery PLI extension, that's another one. Those are on advanced chemistries. That's a separate discussion and Tata Motors participate in But we will look at it as a startup group and see what are the best way to leverage that particular opportunity. But for the automobile advanced technologies fees there, we will go and start a group, Tata Motors Group, And EV company will have a significant payoffs that will come into it going forward. The next question from Nitin Arora of Axis Mutual Fund. What is the total requirement for launching 10 EVs and would this Fundraising be sufficient? Yes. I think the estimation of the Investment size needed, right? And we already spoke about it is not only in the area of product manufacturing, etcetera. We have sized the need For the launch of 10 products, and this is the basis on which we have called for this kind of an investment. So it is absolutely taken care of. The next question from Rajesh, I know. What would be the CapEx planned for next 5 years and how much of it will be on product development? Yes. Maybe you missed the piece there. That's what we said. At least $2,200,000,000 of CapEx will be putting in the next 5 years. Wouldn't be in a position to split it up between each of those Obviously, we've been. We have another question from Jinesh of Motilal Oswal. What are the level of minimum revenue thresholds that the deal build in for? And what happens if those revenue thresholds are not met? Yes. As I said earlier, the cap of Takes that TPG rights will be able to pick up in the EV company. It is a max of 15% and a min of 11%. So therefore, those are floor and cap. And therefore, the valuation would be the revenue thresholds will move within that. And if for any reasons we do not meet the Revenue threshold, then their stake caps out at 15%. And if for any reason we dramatically exceed the revenue thresholds and their core, then the minimum stake they'll have is 11 So the valuation obviously caps out on that basis for this transaction. So next question From again, Satyam from Credit. How does profitability of the EV business compare to that of our ICE TV business at gross and EBITDA levels? And what scale do you envisage it would be necessary for breakeven? At this point in time, we are pretty confident that the EV business will get EBITDA breakeven next year. Its contribution margins are similar to what we are seeing in the PV business already. And therefore, we are confident we hit an EBITDA breakeven next year and take profit. Next question from Nitish from Jefferies. Would you be able to share some details on your EV For coming years, for example, what platforms and products, say, in the next 2 or 3 years as you walk the path to 10 EVs? And how do you decide what's the right pace of investment in EVs since it's a very nascent industry? Yes. So in one of the earlier questions, I had tried to answer this, but let me just give you once again answer that. So we are starting with the Gen 1 products, which are focused on pure conversion, which means that we are picking up a ICE product and Removing the ICE powertrain and packing the electric powertrain within the space which is there. And the limitation that you have is the range. You can't go for higher range products. Therefore, the Generation 2, which I talked about, is the multi energy platform Where we are adapting some of the modern architectures that we have like Alpha into a more electric ready platform, Which helps in housing more battery and therefore delivering higher range product. So and giving more body styles At different price points. So this enables us to tap the next level of demand as far as electric vehicles are concerned. And then the 3rd generation would more start shifting towards the bulk EVs. This is how will be the sequence in which Different levels of electrification in our products are going to come and how the upticks are going to shift from pure conversion to adapted platform to 1 This is how we are planning to go about. What was the second question? Products platforms and the journey for 10, how do you get 10 ks rights? Okay, Doctor. Li, the last question. So Sanjay Chawla from MK. How much of the current from Tata Motors, PB or the standalone entity would get transferred to the EV company? Can you repeat the question, Sheena? Your audio was bad. How much of the current Cost from Tata Motors PV or the stand alone entity would get transferred to the EV company. Yes. As we said earlier, the dedicated EV engineers are the ones that we get shifted to that. That cost is sitting within Tata Motors today, and these numbers are all going to get consolidated within Tata Motors. So therefore, there's no Delta costs coming in because of that, and we've been very careful that we leverage everything that is already there in TMN to make this happen. So there's no duplication of costs coming in. Therefore, I would rather look at this as transferring the requisite talent into EV and getting focused work around EV. That's how we are looking at it. So there's neither any cost savings. This has got there's no restructuring, nothing in this. It's a growth initiative that we are on to, Invest and grow. That's how we are looking at it. So Sumit, we have time for one last question. It's from Nishit from Access Capital. What is the cost of okay, this is being covered. Does Does TPG bring in any additional technical capabilities apart from the USD 1,000,000,000 investment into the company? And how do you look at working on new ICE platforms for TVs? Will the company look to do this? Or will the focus be exclusively on TVs in India? Let me split the question to 2. As far as TPGRise is concerned, I think there are a Huge network of highly valuable inputs that they'll be able to provide in terms of technologies, Connections, ecosystem. So we very, very carefully work with them so that we are able to plug into that That's a big benefit that's coming in. That's intangible for all practical purposes. But it's going to be a big one. 2nd also, we are really They will have a board seat. They will come on to the Board of the EVCo. And we also we do expect their valuable contributions in shaping the strategy and also, more Importantly, ensuring there is adequate scrutiny of the ED plans. So those are really valuable stuff that we're expecting, And I'm sure we work very well with them on that front. Your question on PV platforms, as I said earlier, There is no change as far as TV strategy is concerned because we believe India will still have a pretty sizable ICE The portfolio is a market that will be out there. And we will want to have our fair share in that particular market. So whatever the business needs, Only thing is strategy is different from EV so that I can again, I reiterate that point. That has to be winning sustainably. Therefore, they will have to ensure that they Deliver the cash flows and ensure that they live within their means, while PV is all about pushing it all out there and going Full class. That is the difference, but nothing is going to stop PV from investing. And as we speak, we are saying PV will go cash positive from FY 'twenty three onwards Yes, after considering the investment that is needed for making it. So it is all lights are green as far as PB is concerned on their growth I think with that, sir, we can conclude on the Q and A. If there are any, you can have any closing remarks, sir. Sure. So firstly, I'm a thanks everybody for joining a short notice. Since your apologies for the technical glitch. We had zero notice. We could obviously for obvious reasons, prepare for this particular call. We have to go on the flight. But I do apologize for the quality of the audio and the break in breakouts that were happening. We'll do a better job next time on that particular front. And thank you for joining the session and appreciate your continued support. Thank you. Thank you. Ladies and gentlemen, on behalf of Tata Motors Limited, that concludes this conference. Thank you all for joining us, and you may now disconnect your lines. We are very clear we want to be cash positive. So that strategy continues. There's no change as far as that is concerned. And we'll definitely invest to ensure that we want to continue to grow that business. That business is not being made. That business is being invested prudently. The reason why this EV investment, we actually want to step up our aspirations, and therefore, we want to drive investments there. That's the reason Helios is being done. As far as destination, what happens is that time will tell. As the Chairman puts it nicely, we We'll feel the stones in the water and then we will figure out where we go. This is the first step that we are taking, and we believe it's a step in the right direction. And where will it take us? Time will tell. Next question from Chirag Shah of Eddyweiss. Based on business plans and say everything goes as per plan, by when the CCPS converts into equity? And what are the key areas that you are looking to spend in the EV space? Yes. I think the latter part of the question I've already answered, therefore I'll skip that. As far as CCPS conversion is concerned, there are 2 thresholds. One is FY 'twenty seven. It will, depending on the revenue that we achieve on that particular period, There is a floor of 11% and a cap of 15% as far as stake is concerned. That is the way in which it will convert, 1. 2, the other angle is that there is a, if for any reason Tata Motors does a fundraise, primary or secondary, and that meets certain thresholds, Then there will also be a post conversion on that basis. So that is those are the 2 events and that can happen earlier than that. And therefore, that which Form it takes, we will see. But that's how those are the two things there. Next question from Satyam Thakur of Credit Suisse. What are the underlying EV volumes estimates by year that we have gone with based on which the valuation was based? And whether electric buses and LCVs will remain separate from this new entity? The first question I'm not in a position to answer. All we are saying is that we would like to there is an internal plan that we are working towards, which we believe is aspirational. And we and TPG really believe that this is the kind of operation that we need to go in with. And that's how we are putting our steps jointly together on that one. As far as EV buses are concerned, that's outside the perimeter. And this is one piece there, Be it LCBs, buses, they're all outside the perimeter. If for any reason there is a technology that EV company develops, which The commercial vehicle business wants to pick up because it makes sense for the users that what has already been created, then that of course is something that they'll create a licensee and take that as Any normal OEM, IP transaction that will be done. That's all it is. Next question is from Ronak Sarda from Systematic. What kind of assets and liabilities will move into the subsidiary? The presentation talks of an asset light model. How does that work? And will the subsidiary be eligible for PLI scheme? A great set of questions. One is as far assets and liabilities are concerned, no assets, no liability moves from Tata Motors Pivico into EVCO. It's an asset light company. As far as CLI scheme is something that has been announced. We welcome this team. We will approach this as a Tata Motors Group Because that gives us more degrees of freedom. And the payoff obviously happens for electric vehicles in Passenger vehicles and commercial vehicles. And therefore, we will take the payoff in those investments. The threshold investments includes ICE. And therefore, it makes sense for us to go as the Tata Group, Tata Motors Group to invest in that. As far as battery PLI is concerned, that's another one. Those are on advanced chemistries. That's a separate discussion, and Tata Motors participates in that. But we will look at it as a Tata Group And see what is the best way to leverage that particular opportunity. But for the automobile advanced technologies fees there, We will go and start a group, Tata Motors Group, and EV company will have a significant payoff that will come into it going forward. The next question from Nitin Arora of Axis Mutual Fund. What is the total requirement for launching 10 EVs. And would this fundraising be sufficient? Yes. I think the estimation of the investment size needed, right, and we already spoke about it is not only in the area of product manufacturing, etcetera. We have sized the need for the launch of 10 products, and this is the basis on which we have called for this kind of an investment. So it is absolutely taken care of. The next question from Rajesh, I know. What would be the CapEx plan for next 5 years? And how much of it will be on product development? Yes. Maybe you missed the piece there. That's what we said. At least $2,200,000,000 of CapEx will be putting in the next 5 years. Wouldn't be in a position to split it up between each of those for obvious reasons. We have another question from Janesh of Motilal Oswal. What are the level of minimum revenue thresholds that the deal building for? And what happens if Those revenue thresholds are not met. Yes. As I said earlier, the cap Of stake that TPGRise will be able to pick up in the EV company is a max of 15% and a min of 11%. So therefore, those are floor and cap. And therefore, the valuation would be the revenue thresholds will move within that. And if for any reasons we do not Meet the revenue threshold, then their stake caps out at 15%. And if for any reason we dramatically exceed the revenue threshold and their core, then the minimum stake they'll That is 11%. So the valuation obviously caps out on that basis for this transaction. So next Question from again Satyam from Credit. How does profitability of the EV business compare to that of our ICE TV business at gross and EBITDA levels? And what scale do you envisage it would be necessary for breakeven? At this point in time, we are Pretty confident that the EV business will get an EBITDA breakeven next year. Its contribution margins are similar to what we are seeing in the PV business already. And therefore, we are confident we need an EBITDA breakeven next year. Next question from Nitesh from Jefferies. Would you be able to share some details on your EV plans for coming years? For example, what platforms and products, say, in the next 2 or 3 years as you walk the path to 10 EVs? And how do you decide what's the right face of investment in EVs since it's a very nascent industry. Yes. So in one of the earlier questions, I had tried to answer this, but let me just give you once again answer that. So we are starting with the Gen 1 products, which are focused on pure conversion, which means that we are picking up our ICE product and Removing the ICE powertrain and packing the electric powertrain within the space which is there. And the limitation that you have is the range. You can't go for higher range products. Therefore, the Generation 2, which I talked about, is the multi energy platform Where we are adapting some of the modern architectures that we have like Alpha into a more electric ready platform, Which helps in housing more battery and therefore delivering higher range product. So and giving more body styles At different price points. So this enables us to tap the next level of demand as far as electric vehicles are concerned. And then the 3rd generation would more start shifting towards the ball EVs. This is how will be the sequence in which Different levels of electrification in our products are going to come and how the upticks are going to shift from pure conversion to adapted platform to This is how we are planning to go about. What was the second question? Products platforms and journey for 10, how do you get 10,000,000 rights? Okay. Back to you. Last question. So Sanjay Jay Chawla from MK, how much of the current fixed cost from Tata Motors, PB or the standalone entity would get transferred to the EV company? Can you just repeat the question, Seher, your audio was bad? How much of the current fixed cost From Tata Motors TV or the stand alone entity would get transferred to the EV company? Yes. As we said earlier, the dedicated EV engineers are the ones that we get shifted to that. That cost is immediately sitting within Tata Motors today, and these numbers are all going to get consolidated within Tata Motors. So therefore, there's no Delta costs coming in because of that. And we've been very careful that we leverage everything that is already there in TMN to make this happen. So there's no duplication of costs coming in. Therefore, I would rather look at this as transferring the requisite talent into EV and getting focused work around EV. That's how we are looking at it. So there's neither any cost savings. This has got there's no restructuring, nothing in this. It's a growth initiative that we are on to, Invest and grow. That's how we are looking at it. So maybe we have time for one last question. It's from Nishith from Axis Capital. What is the cost of okay, this is recovered. Does TPG bring in any additional technical capabilities Apart from the USD 1,000,000,000 investment into the company? And how do you look at working on new ICE platforms for TVs? Will the company look to do this? Or will the focus be exclusively on TVs in India? So let me split the question into 2. As far as TPGRise is concerned, I think there are a huge network of highly valuable Inputs that they'll be able to provide in terms of technologies, references, connections, ecosystem. So we very, very carefully work with them so that we are able to plug into that ecosystem there. That's a big benefit that's coming. That's intangible for all practical purposes. But it's going to be a big one. 2nd also, we are really keen. They will have a Board seat. They will come on to the Board of the EVO. And we also say we do expect their valuable contributions in shaping the strategy and also more importantly ensuring there is adequate scrutiny of the EV plans. So those are really valuable stuff that we're expecting, and I'm sure we work very well with them on that front. Your question on PV platforms, as I said earlier, there is no change as far as PV strategy is concerned because we believe India will still have Pretty sizable ICE portfolio, ICE market that would be out there. And we will want to have our fair share in that particular market. So whatever the business needs, what do you think is strategy is different from EV so that I can again, I reiterate that point. That has to be winning sustainably. Therefore, they will have to ensure that they deliver the cash flows and ensure that they live within their need, While PV is all about pushing it all out there and going full blast. That is the difference, but nothing is going to stop PV from investing. And as we speak, We are saying PV will go cash positive from FY 'twenty three onwards if after considering the investment that is needed for making it. So it is all lights are green as far as PB is concerned on their growth roadmap and investment roadmap. Right. So I think with that, sir, we can conclude on the Q and A. If there are any, you can have any closing remarks, sir. Sure. So firstly, thanks everybody for joining at short notice. Since your apologies for the technical glitch, we had zero notice. We could obviously, for obvious reasons, prepare for this particular call. We have to go on the flight. But I do apologize for the quality of the audio and the break in breakouts that were happening. We'll do a better job next time on that particular front. And thank you for joining the session and appreciate your continued support. Thank you. Thank you. Ladies and gentlemen, on behalf of Tata Motors Limited, that concludes this conference. Thank you all for joining us, and you may now disconnect your lines.