Q1 21/22

Aug 12, 2021

Good evening, ladies and gentlemen. On behalf of MK Global Financial Services, I take the opportunity to welcome you all to Eicher Motors Q1 FY 2022 earnings call webinar. From management team, we have Mr. Sridhar Lal, MD of Eicher Motors Mr. Vinod Asari, CEO of Royal Enfield Mr. Kalishwaran Arunachalam, CFO of Eicher Motors. We thank the management for providing us the opportunity to host the call. We request management for opening remarks, which can be followed by Q and A session. Over to you, sir. Yes. Good afternoon, good evening to everybody and welcome to the Axure Motors earnings and quarterly call. Before I get into the financials and business update, I just want to You would have seen the announcement that we know Dastri has decided to leave Royal Enfield and To start I mean, not to get into early. He is continuing with his own hospital project that he has been working on and his wife has been working on. So I just want to take the opportunity to tell you that Vinod is going to be leaving and this is his last call at Aisha Motors. I want to wish him all the very best and we'll ask him to say a few words after this. I just want to also confirm that B. Govindrajan, who has been with Royal Enfield for over 20 years and who is currently the Chief Operating Officer, will be taking over as Executive Director in charge of all Royal Enfield Business after Vinod leaves. So Vinod, would you say a few words first and then we can get on to the business update? Thank you, Sidharth. I appreciate the kind words. I think it has been a fabulous Those short journey at Royal Enfield. We had many external challenges like COVID and all that. We came through all of that and continued on our path to what we wrote down as RE 2.2 goals, which was to grow significantly India, which was to grow significantly in non motorcycle, it was to substantially expand our digital Transformation, all of that we did quite well. And I think the long term plans for the company are solid. We as a company have always thought very long term. So I'm super excited about the future of Royal Enfield. It's just that Many years ago, we moved back to India and we wanted to do something for the society. My wife was running a charitable clinic for quite some time. And we she was not able to serve the purple completely because we didn't have a hospital. So we invested What we saved into a hospital and when we built this thing, she realized that she can't run it herself and it's a not for profit hospital and Well, I said not just to correct you, it's not a hospital I built. My new boss will be quite upset. It is something that my wife built and I'm going to be working closely with her and trying to at least bring this Not for profit hospitals, but sustainable things and all your best wishes will certainly be useful. Yes. I'd like to thank you very much for all your tremendous We will certainly take on from there and myself and Mohan and the team And we'll make you proud. Moving on to the financials for and business update for I guess, the motive is limited. The Q1 of this financial year, light last year, was impacted by the pandemic, with the 2nd wave of COVID running through most of April May and some parts of June, our manufacturing and retail Operations were affected due to lockdown and other restrictions. We've continued to stay resilient and deliver on all our focused areas And underscored by our best ever quarterly performance in export markets, we've actually had an absolutely stunning From export perspective, we delivered a very large number of motorcycles across The world, including the Americas, Europe, Asia, we saw 4 fold increase year on year and around a 28% increase from the previous quarter, that means the quarter ending March 31st. And if you remove COVID comparisons, because they are low base to base, We actually had an 83% increase over Q1 of FY 2020. So it's still the Very large increase from pre COVID. And of course, even in the domestic market, we had a good growth of 91%, but that was on a very low base of last year. On the VCB side, the trucking industry has witnessed an extremely tough quarter 1 after a relatively decent performance in Q4 last year. But despite that, we see we registered a year on year growth of 167% in domestic market and 189% in International Markets, again on a low basis as previously. And overall, as the economy recovers from the 2nd wave, We do foresee the challenges easing out in this quarter already and in H2. The supply of parts and components and the growing pressure of escalating commodity prices continues to be an issue, Particularly, the semiconductor shortage, which is continuing to affect us across the board. We are we have lots of action plans for that. We are working steadily towards improving the situation. Our suppliers are working towards that. We have ordnance sources also in the works. So there's a lot of action In the works, but that is still one of the bottlenecks because our demand position is strong on motorcycles for sure. And now we have to the suppliers to meet the demand. The Financials, the consolidated financials for EML for the Q1 are, we had a revenue of INR1974 crores, which is up 141 percent from a new base last year. We had an EBITDA of INR363 crores against INR4 crores last And the EBITDA margin was at 18.4% despite, of course, a much lower volume because of COVID situation and resulting in a profit after tax of INR237 crores this year against a loss last year. So that's our overall background and business update and all, let's say, the overall update. But now, Vinod, you could maybe give us a full overview of Royal Enfield and its Q1 of this financial year? Thank you, Sudhak. As far as Royal Enfield is concerned, we sold 122,000 motorcycles, was more than double of last year where we had 58,000 motorcycles. Highest ever exports, as Sid mentioned, in the quarter, increase of more than 400% at 17,500 motorcycles. In India, sales were impacted due to the nationwide lockdown, COVID wave 2 and all. But our market share remained at about 28%, similar to where we were the year before at about 30%. But, Arun, we significantly enhanced our focus on non motorcycle business, apparel, accessories and spares delivered tremendous growth. And we are on track to achieving our objective of increasing the share of non motorcycle to total revenue by 2 20%. As Sid mentioned, the international success shows continuous progress on our vision of becoming a global motorcycling brand. We had a fourfold increase in exports year on year, but more than 28% increase sequentially and an 83% increase in compared to Q1 of FY 2020. The solid performance In Americas is what supported the overall growth, but even in U. K, Royal Enfield topped segments in for Two segments for June, both in customs as well as the modern classic, where the Meteor did very well on the customs segment and the Interceptor did very well on the modern classic. We were the top selling motorcycle brand in New Zealand in June and we are among the top 3 motorcycle brands in mid sized segment in Thailand. As you might have seen in the news, we commenced local assembly operations in Colombia. It's the 3rd biggest motorcycle market in Latin America. And with a dedicated unit in Angiocco. This is our 2nd CKD plant in international markets after Argentina and we'll continue to work towards more. To begin with, the plant will locally assemble the Royal Enfield Himalayas from this month. As far as production is concerned, it was impacted due to the lockdowns and the supply chain disruptions. As you might have heard, the ABS and the semiconductor shortage continue to affect the ramp up efforts. We're working towards quickly resolving these issues with our partners and we are also finding some alternate sources. On the retail network, though, we continued our domestic network expansion plan. Over the last 2 years or so, we have more than doubled our network We are now more than 2,000 stores. International, we continue to expand in international markets with an addition of 8 exclusive stores and 19 new multi branded outlets. With this, the total exclusive Stores outside India is 140 and we have 650 multi branded outlets. In all this, MYTHIORE continues to be a tremendous success. It was launched in U. S, UK, Europe, Asia Pacific and LatAm after the successful launch in India last year, which has got great reception and strong Q1 performance across Europe And Americas, it's won almost every award that you can think of, including International Motor Show Award in Indonesia, Motoring World Awards and Bike India Awards and so on. And it does deliver on our commitment to grow and expand the size of motorcycles. So We're truly excited because it's not just a motorcycle, but a whole platform that we are launching. And along with this platform, we had for the first time launched On the Make It Yours digital platform, it was an industry first personalization where people can design their motorcycles and we make it specifically for them. They can design it on their mobile phone and place the order. And complete paradigm shift, nobody had to go to the stores anymore and so on. So all our 2,000 stores are now MY enabled. And MYY adoption has the parallel benefit of all the accessory penetration going up significantly. 80% of our bookings now for a METEOR, Classic, Himalayan and Twins are now coming via DMIY. And we are going to upgrade this I'll take it to the next level in near future as we with future launches. We slowly started coming back to the rides As we continue to nurture the spirit of pure motorcycling to enable stronger connect between riders and their machines, Royal and Field Got the top two places in the inaugural races of the DIRT Track Riders Association in UK. And we've our first ever mile half mile win at American Flat Track in Lima, Ohio, half mile race. And to encourage more and more enthusiasts from diverse backgrounds to embrace Riding. We introduced the 2nd edition of BTR or Build, Train and Race. This is our women's only racing program in the U. S. A. The market recovery has started well. With the market share recovering from the 2nd wave of pandemic, We foresee the situation with production and supply chain constraints to be slowly coming back. It will persist for a little bit, but it will come back. We continue to be on track with our expansion plans and product related initiatives. None of our long term plans got affected by all this pandemic. Continue to work hard at it. In fact, it gave us an opportunity to accelerate several things. We expect the production to scale up and the sales to improve in the second half of the year as the chip situation starts to improve. Over to you, back to you, Sidharth. Yes, thanks. I'll just give you an update on VCE Financials Business performance, the revenue from BACB was INR1639 crores, which is up 156 percent from a low base last year. The EBITDA was at INR18 crores versus a loss of INR 72 crores last year with the resulting in a 1.1 EBITDA margin and profit after tax, there's a net loss of INR 72 crores against a loss of INR 120 crores last year. The total sales were at 5,800 units, up 173% from last year. Of course, the 2nd wave has impacted business a lot, SCV. Quarter 1 was challenging. However, with the improvement in COVID situation and the economy looking up, we are certainly seeing An improvement in the entire CV industry and in VCV performance as well. We are expecting that already in Q2 and beyond. We've been working closely with partners and suppliers and customers in various ways, Whether it's in extending warranties for our customers and supporting our dealers and with medical support and financial support. So there's been a lot of work going on To get everyone back on stream, we have had a few very successful product launches in the meanwhile as well. The Asia Skyline Ambulance Let's come into the market with very good life saving features etcetera. We've also introduced the Ayesha Pro 3,015 XP, which is India's first 17.5 ton truck, which expands our light and medium duty product range from earlier 15 tons to now 17.5 tons. We also have been doing very well on CNG because the opportunity is very strong in light and medium duty trucks on the CNG side. And because of support from government and very good cost economics and BCB has really strengthened its position in the CNG segment through a wide range of offerings now. So that's the overview for VECD, for Royal Enfield and for EML as a whole. Now On to question and answer. Thank you, Sudhak. We will be opening the Q and A session for participants. Anyone who has a question, please use the raise hand option. Participants request you to limit your questions to 2 per participant. Once the participant is called out, please unmute yourself to ask a question As the question queue assembles, a couple of questions from my side. Firstly, can you give some color on current production situation? Can you talk of ramp up of production in coming quarters in light of the semiconductor shortages? Media reports today are indicating revised production schedule or target of 6,050,000 to 6,090,000 for FY 2022? My second question is Mr. Dasari's exit has come as a surprise considering various strategic plans, how do you see the smooth transition process? Thank you, sir. Maybe I'll take the sorry, sir, go ahead. No, you can do that, Shailesh, if you could just answer it. On the first question, Raghu, typically We don't give a full year plan of where do we land on the volume etcetera. But having said that, there has been constraints that you have seen on account of COVID and then on account of the chip shortage that has been coming in. You would see there are plans that we are working on to see what are the opportunities on alternate vendors, how the existing vendors can scale up over a period of time. As an output of that, you would see the supplies gradually resuming back and coming back to its original levels. Q3 of last year, you would have already seen we That's the peak of about 80 or 1000 in terms of production. So we are moving in the there are challenges at this point of time, But we are confident that as the long term it will get addressed and our plans are intact for the long term. Sid, you may want to add and take up the second question. Vinod, you could start and then I can take on the rest of the second part of the question? Well, Ravi, as I had said that earlier, we as a company always take long term decisions in long term strategic calls. In some cases, we made substantial progress, whether it was international growth or digital transformation or the non motor I'll take a portion of the growth. Sid likes to refer to me as a pinch hitter in cricket. So I came and played my Harik Pandya innings or Something like that and got things moving. And I think that COVID was in a way a sort of a blessing, but we were able to accelerate lot of other things that were otherwise stalled. And now we have a fantastic team. I mean, I was there merely for 2 years. This is a fantastic company. It's got an amazing track record of success. And these short term things like chip shortage and all are not going to burden this company. They have Strong clients, a very strong team, an excellent brand and they'll go forward and make success a habit again. Yes. So absolutely, thanks for that Vinod. I think in the last couple of years, Vinod has made some Absolutely tremendous contributions at Royal Enfield and put us on a very good track. Govindrajan, who's been the CEO for since 2013 is now taking over running on the business at Royal Enfield. And I will of course continue to work with him and directly and work on All of our plans in Royal Enfield. So we are very confident of our future, of course, and we wish We know all the best. Thank you, sir. Moving ahead to the question queue. First, we have the first question from Vinay Singh. Vinay, please go ahead. Hi, team. Thanks for the opportunity. Best wishes to you, Vinod. It's been a long time since we've been interacting with you. Best wishes for the new venture. I'll go back to the question that Raghu asked. There's a very specific number given in the article today in media that the company is talking about 650, targeting 650,000 to 90,000 units production this year. Are you denying that? Are you as per your internal estimate, is it going to be higher than that? Because it's a very specific number given out. So which is why I do appreciate your comment that production will improve from here on. But then how would you look at it in terms of range that is being commented? Vinay, firstly, sorry, we don't give forward guidances. So whatever you're hitting is Speculative. It's not come from us. And therefore, we've been I mean, there was that certainly hasn't come from us Directly. Yes, I mean as we see it, we have a strong demand position. We've got an order book. We've and now we've and as you can see our exports is really Flying high and we've got a lot of export orders as well. So really it's all about improving our production and Honestly, the real the one bottleneck I mean, there will be smaller bottlenecks, but it is extremely turbulent time. So it's not business as usual at all in any Respect as you can understand. But the main bottleneck I would say to increasing our production is semiconductor shortage. We are working on it on many different fronts. We've got a lot of actions going on in order to improve that position, whether it's with our current suppliers, where there's also traction of improvement in By the end of the quarter perhaps and certainly in H2, but it's not a straight, Let's say increase, it's more of a step increase that we're going to see over the next many months. And we also been working Over the last year, in fact, on alternates as well. So we could see traction there. So we are all hands on deck in getting Our production numbers as high as we can at this point. Thanks for that, Sadat. My second question is on the gross Profit per unit, as per my estimate, it seems like Royal Enfield has posted an all time high gross profit per unit this quarter. I assume it would have come from combination of factors. So could you talk a little bit about the export number that we are seeing almost 18,000 a Is it sustainable? And secondly, linked to that, Vinod talked about accessories reaching 20% of the target. Is that already becoming sizable that it's contributing to this gross profit? So could you talk a little bit about that? Thanks. So, Vinay, in terms of gross profit, as you rightly said, it's a combination. So, partially, the gross profit has improved on account of international mix being higher and also on account of model mix that has happened in India. And most importantly, the pricing actions have also started in the results in terms of at least getting back to our margin trajectory that we wanted to. So it's a combination of all the 3. We do see our export business as a sustainable one. The demand has been quite good. And as we move forward, we should see good And on apparel and accessories, the growth has been strong. Post MII, we have seen our GMA business growing up Significantly. The long term targets that we always been discussing about as a range, I think we would be able to achieve that both on exports and in non motorcycle. Great. Thanks for that. Thank you. Next, we have a question from Janesh Ghandi. Janesh, please go ahead. Thanks, Rahul. So my question pertains to Apprails and Accessories. So while our target is 20%, Where we are currently with respect to those numbers? That's my first question. And second question pertains to the order book, which Sure. Sudhak was referring to, so what level of order book we have currently? And lastly, with respect to the new classic launch, if you can share the timelines Given that it has been getting deferred because of unforeseeable circumstances? Yes. So, Jinesh, unfortunately, I think questions have got numbers, which typically as you would know, we don't discuss. But at this point of time, the non motorcycle business is Pretty small in terms of size, but we are seeing significant progress in terms of let it be the penetration of GMA or the average bill value going up. So we do see that to sustain over a period of time driven by MYY coupled with the new launches that would come in. We don't talk about our new product launches in Yes. Again, we don't call out specific numbers on order book. We have a healthy order book at this point of time. We would see as to how do we cater that link to production as we move forward to the 3rd quarters. Okay. Thanks. Thank you. Next, we have a question from Tapil Singh. Please go ahead. Hi, Vinod. Wonderful initiative. Wish you all the best for the same. May I clarify if the company plans to hire anyone in the CEO position? We are not hiring anyone in the senior position. Govind is taking full charge of Royal Enfield Business and I plan to work very closely with Govind On everything and the same management team continues. So there's no new hires planned At the senior level, it will be for the CEO. Sure. Sid, I have two questions. So firstly, can you please comment on the demand environment currently? Because we are not able to see the real volumes because of these shortages. So where is the underlying level of demand right now? If there were no production constraints, what would you be shipping? So that's the first question. And second is on electrification, how do you think about electrification in your segments in the long run? Is it very far off? Or do you it could happen in next 5, 7 years. So on the demand side, I think it's a mixed pack to comment as to what has caused what. So even as we speak right now, there has been intermittent lockdowns that you're seeing in many states Karnataka is into a weekend lockdown and a night curfew. Tamil Nadu has got a lockdown after 5 p. M, etcetera. So I think wherever we have opened, the traction has been good. And it will be linked to production as to how do we cater to the demand as we move forward. On the EV side, from a business strategy perspective, both on the product and business development, we have got our teams in place. Having said that, for the segment that we operate, specifically, which is a midsize, we think it will be a slightly a long term process in terms of when EV would rectify when the vehicle would be on But we are not leaving any stones unturned from our perspective in strategizing and operationalizing our EV business model. Shubh, if you like to add anything? Yes. Just to reiterate, of course, demand position is continuously improving as The 2nd wave is going down in the country in India. And as you've seen in international markets, It's very healthy for us. So again, I can't give you we can't break out numbers, but it is growing well. We have a strong order book and we're And it really all focuses on production at this point. I like the way you framed the EV point. You said is it a long term or 5 to 7 year? I really like that because those are the kind of timelines we're looking at. It's not in our opening? Next year or the year after. That's not when things will happen in our opening. Of course, there will be product, there will be ups and downs, there will be Some headway here and there. But we are really focused on the long term and that's 5 to 7 years and beyond. We've taken the opportunity to take many steps back to look at a clean sheet of paper and we've been doing that for 3 years. We've got a Very good team, capable EV team working on the consumer side, working on the technology side, working on the business side. And we are really confident of our approach to EV. Having said that, we are extremely deliberate. As you've seen in the last many years, It's not the number of launches which is as important as the quality of the motorcycles And the precision of the motorcycle in terms of being able to penetrate the market and to take share And to the market in our case, because in India we are not really taking share much from people, we're just growing the market. So even in EV that's very much the approach, which is that we are forming the product strategy, the game plan, we are working on technology, we are Putting all those things together, it will be a few years before you see anything from us. But that's because it's a very deliberate plan because when we do come with The motorcycles at the right time, because I think you also insinuated that we Market is not really ready in India for sure from a price value equation. Currently, it's way off. An equivalent EV is maybe still double the price if you were to be if you were to sell it with Any margin than an equivalent petrol bike. So it's really not the right time to make a big entering to the market just because the economics don't work for consumers even with all the benefits and other things. So we will Hopefully, time it right so that we're not in a position where we have to lose so much money or anything of the sort. But we are working tremendously on EV. We are Extremely bullish about our own EV strategies and but it is in the 5 to 7 year horizon where A lot more will happen in Royal Enfield on the EBIT front. Thank you. Great answer. Thank you. Next, we have Gino Gopal Gare. Please go ahead. Hi, thanks a lot. Firstly, best of luck, Vinod, for your New initiative. I have just 2 small questions. One is on the product launch cycle. Given the challenges you're seeing on the supply side, The last launch, Parul, was probably around 11 months back. So I'm assuming that given that you had a fairly healthy pipeline, 2 things might be happening. 1 is bunching up of products. I'm assuming you would want to still keep some gap between 2 launches. And number 2 is With the shortages on the supply side, how does it sort of alter your next launch or the launch which is probably imminent? That's the first question. Yes, there is of course that issue. I mean, if you're not able to produce enough, it's So we can't really launch a product. You need enough stock to launch a new product because there's in our case now we've seen that there's enormous demand In the early stages and if you can't fulfill that, it really sort of it could even have detrimental effects on the new product. So But that's only a couple of months here and there. It's not the biggest issue. We want to make sure that we do it right. So that's the approach you've seen from Royal Enfield in the last many years that No shortcuts, good absolutely right. And we believe that's really helping us in every single way possible. There will be some bunching up, but we are well aware of that. I mean, there will be some pushback in other such things. But really I think as we hopefully if there's no other major situation as we move forward in the next few months, The supply side as you talked about will also certainly improve. And then our product cycle should get back on track. There is no question because of the severe lockdowns that we faced also in the last few months that there has been some Pushed back by a few months, but it's only a couple of months at most in most cases for our new product. Thanks, Silat. The second question is, see the chip shortage part, sorry for asking this again, but Is it worsening compared to what it was earlier? Because it's not related just to you. We understand that other auto companies are also I've been highlighting that fairly vocally for a long period of time now. So is it worsening compared to earlier? Number 2 is when I speak to semiconductor companies, which we have done over the past few months as well. They do indicate that usually auto companies do get an advanced alert because it takes about a few months of production cycle for the product to come out. So in that sense, what you're seeing today, does it really surprise you in terms of the shortage that You're getting hit right now? Well, the thing is it's very turbulent, Venpa, because there's Things have been evolving a lot. So while some parts of the supply chain have improved, other parts and this is For chips, unfortunately, this is not at all under our control. It's not even in India. We're reviewing it recently. In some cases, there's 7 different countries, 3 different continents where the thing is processed before coming into our shows in Chennai. So it's quite complex. It is turbulent. So one day we'll get better news, the other next day we'll get worse news. But the general trend now as we're seeing is that there will be step by step improvements, Not one day enormous improvement over the next few months, but there's going to be small step by step improvement in supplies. For us, I'm talking about particularly in Royal Enfield. We've also activated over a year ago, additional Tires and other things for different components that we have. So we should be making use of that as well in the coming months. So We do see a better situation in the coming months, but it's still a bit cautious because it's not I would say for the next many months, we're not going to get our peak requirement. So whatever our peak requirement is, that's not going to come yet. But it will be a step by step improvement over the, Let's say course of the rest of this year. Hopefully by the end of the year, it should be nearly at the right level. Yes, that's all it is. Thanks, Anant. Next, we have a question from Punjal Pratyani. Please go ahead. Yes. Hi. Thanks team for taking my questions and The best, Vinod, for pursuing this noble cause. Two questions from my side. Firstly, Harish, if you can talk about the kind cost headwinds we are seeing going into the next few months? And what kind of price increases We have taken in this fiscal, is there still a case of under recovery on the cost side? That's my first question. I'll get to second after that. Sure. I think as of late, including the price actions we have taken in July, Gunjan, it has helped us to protect The gross margin that we have been running at last year level last quarter level to be precise. Going forward, we do see commodity headwinds continue, but may not be to the extent that what we have seen in the last 2 quarters, Q3 and Q4. So accordingly, we may have to review the situation and take Pricing actions as we move to the coming quarters between Q2 to Q4? So if I get it right, until now, we are fully covered up For all the cost inflation we've seen. And from here on, we do anticipate further pressures going into the September quarter. Is it possible to give us some quantification of that? Pretty difficult to predict that, Gunjan, at this point of time. I think you have seen Q3 Up to Q3 last year, the inflation was almost nothing. And in December, everyone saw almost 80 percentage of the commodity inflation hitting in there. The only thing is that kind of spike, we don't envy such. It could be in low single digits at this point of time. We will get into details as we look at the specific quarter. Okay. My second question is a little bit broader level. When I go through your annual report, you do touch On a point that we've seen some decline on the financing side in the industry. Is that It could be explained by the way we've seen the asset quality deteriorating with the NBFCs and the banking sector. Could you just talk a little bit about it? Is that a real concern for the industry, particularly at a time where we are seeing such a steep product inflation as well? Difficult to comment it on the industry level, but let me restrict it to Royal Enfield. Our penetration post COVID, which had hit us somewhere around last year Q1, we continue to be around 45% to 47%, which is in the range. So we have not dropped significantly. In terms of asset quality and risks, Royal Enfield is probably one of the lowest in terms of delinquency ratio at the industry level. So we don't see that as a significant challenge for consumer. We are working on ways how can we improve the user experience and customer interface when he goes through financing comes to us across models and across other financing opportunities through existing and new banking partners. That's what we are looking at. Okay. Got it. Nagu, can I pitch in 1, if it's okay? I would suggest you come back in queue. Okay. Sure. No worries. Next, we have a question from Manoj. Please go ahead. [SPEAKER SRINIVASAN VENKATAKRISHNAN:] So just back to Anshansid, maybe we can understand that near term challenge is. But if we have to look from a maybe little mid to long term perspective, And we have indicated both in terms of new launches as well as the way the export is very shaping up now. So from a mid to long term perspective, how should we look at the overall growth in the franchise? Sorry, there was a disturbance. Can you just Yes. Sorry, I repeat my question. Yes, please. [SPEAKER SRINIVASAN VENKATAKRISHNAN:] Yes. So, Sid, one, obviously, like we have seen a very, very strong traction in the export business. And would just like to pick your mind in terms of The way we have spoken in the past and I think some of the strategies which we have implemented are now obviously giving us The kind of results. So maybe from a little mid to long term perspective, how do we see this export business? And particularly, If one would like to focus in terms of your Southeast Asian market and the LatAm market? Yeah. We took a call many years ago that from Being an opportunistic exporter, let's say, we want to become a truly global truly global motorcycle brand. So, all of this is emanating from that concept because we truly believe that there is a gap out there in the world of Motorcycling in mid size market. And therefore, we Strategically set up, the infrastructure as you can see. And for us the infrastructure was about the right distribution, The right aftermarket support and all and we have very strong teams in markets around the world. So we have our own teams in Across the world. We have very clear plans to become global leader in the mid sized market and to grow the mid sized market the same way as we've done in India. So in India also we pretty much from scratch we were able to grow the market towards Nearly at least pre COVID was around a million level, the size of the market and growing. So that's really the track we're on. As you can see, the products that we launched have also been with a global The first truly global product in our portfolio was the twins, which were developed, launched and the Success has been really strong. The Himalayan has also been extremely strong and now the METEOR, which is in the old Yes, people would say, well, the 350 is not really relevant for international markets. It's doing exceptionally well around the world. It's been made with the global market in mind, Doing absolutely exceptionally well. It's so we are extremely determined. I mean, our ambition is to be the In fact, the 1st global consumer brand outside of from India. And we're on track towards that. And The results in the last quarter are maybe I would say a good glimpse into what we're planning in the future. There's A lot of new product as we've talked about in our portfolio. We're doing a lot of work on continually expanding our distribution and reach. Across the world, we are seeing that the best dealers around the world are now are coming to us and wanting our business. Earlier we had to fight to or let's say we had to plead with dealers to keep our bikes. Now it's the other way around because they're in the traction of Royal Enfield around the world. So it's a strong virtuous cycle. We are able to take the advantage of our enormous And our scale is unparalleled in the motorcycle industry in the mid size market and our strong home market advantage and able to have very strong product at the right price in markets around the world and that's what's And with a very strong brand story. So it's not just a commoditized product, it's a brand story that's also selling and that's also helping us get Much higher margins as you can see. So, yes, this is certainly our future. I think Royal Enfield is going to be a global brand and we are working well towards that. You're right about asking about Asian and LatAm markets because even in our Initial assumptions on international markets, we said we want to make a lot of Southeast Asian and LatAm markets like our home market because there's a strong commuter base which is upgrading and that is absolutely on track. We're able to crack the commuter market in these countries and have them upgrade like we had them do in India. So we are very successful in that. Having said that, what has actually positively surprised us tremendously is the enormous traction we're getting in richer countries as well, such as Europe and U. S. And Japan and Australia and New Zealand, Korea, because There is a huge amount of spending power in these countries. So if something clicks, that means there's a motorcycle that catches your fancy, $4,000 $5,000 or $6,000 is really not much at all for consumers in these markets to even do an impulse purchase nearly as it were. And I mean maybe it's not as impulse, It's nearly like that. So that's the direction we're heading in. We're actually getting enormous traction in Europe and Americas as well, which is Very positive for us. So, yes, I'd say it's the international business is really panning out strongly and we're seeing what it could be in the future, which is very exciting. Thanks for very, very detailed answer. And second, Sid, just would like to understand your thought process for elevating Mr. Govind Ajay, Executive Director and CEO, while obviously he has been in the company for so long and that he has done extremely, extremely well with regard to manufacturing and other functions. But as a CEO, obviously, there are multiple other responsibilities each one need to take care. And given that he doesn't come from the background of sales, marketing and other activities, do you think probably he is getting into the shoes of Mr. Tassari and taking the companies to the next level? Well, hopefully, you'll have an occasion to talk to him also at some point. But Govind is one lesser known fact is that as COO For a few years, he was also heading the India business. So he has had 3 years. So we keep circulating and keep, let's say, Giving opportunities to people to develop. And I did at one point when I was the CEO, give him the opportunity to run the India business for 3 years. So, he understands that. He is extremely methodical and detail oriented and he's able to understand that he's got an excellent rapport And you can say relationship with dealers. He knows everyone in the company very well. He's traveled across So we're meeting our distributors and team members. So he has got a lot of exposure in that area. But of course, like you said, his scent isn't but again, even though he was from manufacturing, he was given the in charge of product development when he became CEO in 2013. And he's absolutely been instrumental in overhauling product development of Royal Helping, the new product introduction as well. So he is able to take new tasks and or new areas which are the bottleneck of the company and Take it to much higher levels. So he has that experience in sales marketing. He has a very strong team within in sales marketing and I'm also there to work with him and support him on the commercial areas, which I can also certainly support him in. So I don't see that as a challenge at all. In fact, I think it's a strong succession that we've been And has come into place. Thanks and wish you all the best and best wishes to be with you. Can I just make a comment on the one of the checkpoints that came up saying why am I so quiet? Have I given up or no? Absolutely not. I mean, I'm going to be keenly watching this company go from success to success. In my short term, I've been able to contribute in whatever little way that I could. I don't want to talk about the future. It's up to Sid and Kalish and the rest of the team do be talking about the future. So since most of the questions are about the future, I'm staying out of it. If the question was about the last one quarter, I would have answered it. So please don't take my silences like I've given up. I still own shares of Ayesha and I'll continue to Thanks, Vinod, for that and wishing you all the best for the noble endeavors ahead. Next, we have a question from Chirag Shah. Chirag, Thanks for the opportunity. And as of us know, that's one question I have is, On the production side, so what level of production? Am I audible? Yes, I can hear you now. Just speak up a bit. Hello. Am I audible now? Hello? Yes, Shiraz, I can hear you. We can hear you. So my question is what level of production will give you comfort to start the new model cycle or the launches that you are planning and which have got postponed, is there a particular level of volume like 60,000 or 70,000 a month kind of Visibility of production will give you confidence that we have the required requisite supply in place to launch the model. Is there any kind of thought process In my when or let me ask you other way around, what will give you comfort to start the model cycle, say, tomorrow, whatever launches you wanted to plan, plan it tomorrow itself? It's a good question, but it's not about Production level as such, it's about, as you can appreciate, there's 2 parts. 1 is When the factories were down, you can't really do much. When the shutters are down for the stores, There's no point in really launching a new product even if only half the shutters were down. So, and So the real question is the and like I said, you'll appreciate that for a new product, getting the requisite parts As it were, for that product, it's a new product. So even the suppliers are maybe not used to it at this point as So, it's easier to get the old product parts as it were. So, The only thing, Chirag, that we were that we've been waiting on any new product is to get the requisite Parts available because all the validation work, everything, all of that, let's say, is behind us, then it's only a buildup of parts for the new products. And once we have the right buildup of parts for the new products so that we can Not only supply the initial quantity to dealers to sell, but also follow it up with quantities in the coming months. We don't want to be caught flat footed that we don't have the old product or we don't have the new product, right? So it's a bit of that that we're doing. But there's no level at such that it needs to be 50,000 or 80,000 units per month only then we'll be ready. We can be ready at any point. That's not the constraint, the factor. But yes, I mean, by and large, we are seeing now that Things are starting to grow. So we are on good track for any new launches that we may have. Yes. This was really helpful. Second question is on the export market, especially Continental and Himalayan. In the locations where you have presence in a reasonable long time. A brief about customer profiling and how it has expanded over a period of time, it would be helpful. So let's go back a few years. When we were when our mainstay was Classic 500, our customer was on an average over 50 years old. And looking at a vintage replacement type of motorcycle, That profile has changed tremendously over the last many years. Of course, in developed countries, you still have a slightly higher proportion. You still have a higher proportion of older motorcycles, which is great. I mean, they have Great disposable income. They're very interested in coming into new bikes or into A lot of people who've ridden a sports bike, let's say, in their 20s, 30s now want to sort of take it a bit more easy, right? They want to sort of have a nice upright bike. So that's certainly an audience in the 40s that we're getting. But of course, I'm still talking about developed countries. As you go into Developing markets, we're getting a large number of upgraders like we have in India. And there the Average ages are younger just because these are people who have been commuters and now they want to upgrade to something more Special. So it's all working out in terms of actually a relatively broad variety of customers. Himalayan is clearly a young audience that we're selling to across the world compared to let's say the Twins also, but it's a very good spread. I think it's a very good spread now that we've got. Thanks, sir. Given the paucity of time, we come to the end of the call. On behalf of MK Global, we thank the management for the opportunity and request management for closing remarks. Thank you very much. It's of course, as you know, been a Tough year and a half for everybody. I just want to reiterate that at Royal Enfield, we And at ISO Motors, we keep our ear very close to ground. We're a super focused company. We don't do too many things. So we have all our attention on our core business and on the entire value chain around it. So we're able to put enormous managerial attention behind the smallest of issues and concerns. And that is really, I would say, what we continue to do, which is to keep our ear on the ground and just keep moving forward. I'd of course like to thank Vinod once again for his tremendous contributions to Royal Enfield as like I've been saying as a pinch hitter who's come in and really Showed us a very good direction at oil and field and a good pace of working. I'd like to thank him tremendously and maybe give him the opportunity to give the last remarks. Thank you, Sidharth. I appreciate that. I'm trying to thank all the participants on this call For all their support in all my corporate roles. And I hope that you don't need my services because I'll be running a hospital or a healthcare initiative. So If you're ever in Chennai, let me show you something that is truly close to my heart. And I with all your best wishes, I hope I can do much more service to the Thank you very much and wish you all a safe and healthy year going ahead. Thank you.