Q1 20/21

May 27, 2021

Quarterly report

Good evening. Good evening, ladies and gentlemen. Regret the delay in commencement of the call. On behalf of MK Global Financial Services, I take the opportunity to welcome you all to Eicher Motors Q4 FY 2021 and Full Year FY 2021 Earnings Call Webinar. From the management team, we have Mr. Siddharth Lal, MD of Ayesha Motors Mr. Vinod Dathari, CEO of Royal Enfield Mr. Kalishwaran Arunachalam, CFO of Ayesha Motors, will thank the management for providing us the opportunity To host the call, we request the management for opening remarks, which can be followed by Q and A session. Over to you, sir. Hello. Good evening, everybody, and sorry for holding up this call. Thank you very much, MK, for having this call. And I hope all of you are safe and healthy and your families too. And welcome to the Q4 and FY 202021 earning call for Aixa Motors Limited. After a soft start to the year, the automotive industry did witness a good pickup in demand as the economy started opening up and the COVID situation began to ease during the latter part of the year. Buoyant demand both from rural And urban segments also supported by preference of personal mobility helped the motorcycle industry registered strong growth of 20% in the second half of twenty twentytwenty one over the same period in 20 nineteen-twenty. A faster recovery in demand and Excellent response to the launch of our all new METEOR 350 resulted in a very strong order book for Royal Enfield. Our international markets too showed good recovery as the Americas Region recorded a double digit growth in a very tough year. The truck industry also showed equal resilience with great recoveries seen in the latter half of the year. BCD, our joint venture with Volvo, Gained market share across segments. In the heavy duty segment, we grew by 6% in 2020, 2021, while the industry declined by 21%. And we achieved a highest ever market share of 7% in the heavy duty segment. Now in the wake of The emergence of the 2nd wave of COVID in India. We expect the near term demand and supply situation to be volatile in the industry. We continue to monitor the situation. Overall, we are confident of our strong business fundamentals to be able to withstand such headwinds. Last year, we committed INR 50 crores for COVID relief and rehabilitation, and we've committed an additional INR 20 crores recently. We are working with state governments, district administrators and hospitals to provide medical equipment, medicines and other medical consumables to aid quick An update on the financials for the Q4 and for the financial year ended March 2020 March 21. We're happy to report good quarter with significant growth across key financials. Our revenue for quarter 4 was the highest ever revenue for EML at INR2940 crores, up 33% from INR 2,208 crores last year. For the full year, our revenue was INR 8,720 crores, which is down 5% from INR9154 crores last year, largely due to a very curtailed Q1 due to the first COVID situation. Our EBITDA for quarter 4 was at INR 6.34 crores, up 47% from INR 4.32 crores last year. And for the full year, our EBITDA was at INR17.81 crores, down 18% from INR2,180 crores last year. EBITDA margin for quarter 4 was at 21.6% against 19.6% last year and 25% year on year increase in volumes. And for financial year, it was 24% against 23.8% last year, which is a which was due to the 13% decline in volumes. Overall, our profit after tax for quarter 4 was at INR 5.26 crores, up 73 percent from INR 304 crores. And for the financial year, our profit after tax was INR 13.47 crores, down 26% From 18/27 crores, Arshil. So that's the overall financials and update. I hand over to Mr. Vinod Dassri, The CEO of Royal Enfield to give an update on Royal Enfield. Thank you. Thank you, Sudhak. Let me give you an update on Royal Enfield Q4 and for FY 2021. In Q4, we sold 203,000 motorcycles, which is up about 25% over last year. Exports were up 72% at 13,700. It's got strong response across the geographies, The launch of Meteor Health as well as the network expansion. In India, the demand momentum continued to be strong across the country and Meteor Significantly helped create an uplift in the market. For the full year, we sold 609,000 motorcycles just about down 13% from 698 that we had done last year. Exports were down 8% at 35,700. Americas region however performed extremely well. You'll remember that there was lesser lockdowns in America, Where there is significantly higher lockdowns in Europe, we had double digit growth in Americas. Demand also swiftly came back In India, as total bookings compared to year to year, we almost made up actually exceeded the number of bookings for the full year. Our sales were little lower due to the gradual ramp up and the supply chain constraints that we faced. Overall though, in production in Q4, our production run rate remained quite steady. With the great demand that we were seeing for BTO, we ramped up the production and it helped reduce the waiting period, which has gone as higher 6 months now, it has come down a bit. Supply situation of certain electronic parts, which you've been reading across the industry in Certain commodities remain quite volatile. Prices of some of the commodities including precious metals Has put some pressure on the profitability for sure. We work with suppliers to secure availability of parts To ensure continuity of production, we continue to produce at a decent pitch, not where we want to be, but not completely shut down either. We've taken about a 3% to 8% price hike across models since January and we'll continue to look at that and if more needs to be done more will be done. In India, we expanded our network significantly. We added a total footprint now is about 1500 stores, 1200 cities. We had so now we crossed over 2,056 stores. We added 104 large size stores. So our large stores itself is more than 1,000. You recall, we launched the studio store concept just a year ago and we're happy that we've crossed 1,000 overall. We added 430 Just in the last one here despite all the lockdown. Outside India also, we continued our rapid expansion in international markets with Exclusive store count now going from 77 stores in 21 countries to 132 stores in 26 countries. And we saw a lot of expansion in France, Thailand, Brazil, Argentina. Equally, we entered new markets. We became the first Automobile company from India to have a store bang in the middle of Japan, Tokyo, Cambodia, Costa Rica, Dominican Republic and And we opened a CKD facility in Argentina. The biggest story of last year, of course, was METEOR, In line with our plans to expand our product portfolio in the global middleweight segment, this was perfect for it. We launched it last November 2020, it has won almost every single award that is there that I can think of in the auto industry And it's won India's most prestigious award in Motorcycle of the Year. We won the best classic Award in Highland and Bike of the Year awards. It's truly a next generation platform in the cruiser segments, redefines the riding experience, Received fantastic response and feedback from customers and community on the level of refinement that we have done in the engine and as well as the riding comfort. It's launched now in U. S. And UK and Europe, Indonesia Pacific and now it's coming up in LatAm. It's truly helped us expand the cruisers segment in India and it's growing our presence in global markets as well. But it's not just what we launched, it's also how we launched With Make It Yours, that became an industry first or was an industry first, it became an industry leader, Creating a paradigm shift in the customer purchase journey. It allows customers to personalize and expand And accessorize the motorcycle to their desire from 100 of 1000 of potential options. All of our 2,000 plus stores are now MIIY enabled as we call it Make It Yours. And a large portfolio of our MIIY is now Moving to MII with Classic, Michio, Himaly and the Twin. And slowly we have seen that penetration of MII is now as high as 80%, indicating that the customer loves these additional choices. And the added advantage is because of this MII, The accessory level that we used to be at about 30%, 40% penetration is now as high as 70% penetration of accessories. Equally on the after sales, we are focused on providing a smooth and hassle free riding experience. We created better access through service CE is a service intervention, the launch of service on wheels, which has more than 800 of them, a new Ali mechanic app that we When we launched the Meteor, 13 mobile service trucks tied up with a leading See bike company so that we could offer pickup and talk to the all these have really helped Enhance customer satisfaction and gives the customer a peace of mind. We launched the Himalayan as a refresh in 3 new colors. The host of upgrades including the Tripper navigation, in short span of 5 years, Himalayan has opened up a whole new category in the global adventures arena. It's now one of our top 5 top selling models in Europe, not just for us, it's among all top selling models it is in U. S. And Europe. And Pretty simple, versatile bike, which is true of all Royal Enfield, it's authentic and simple and pure. Equally, we launched new colors on the 650 twins. As we introduced EMIY, we launched 9 new colors On the interceptor and the Continental. And along with that there's a whole bunch of accessorization options that are provided so that it helps the customer Personalize it as much as we can. We continued our process of the significant and substantial digital transformation With the pandemic, I think has really given this a boost. We expedited some of the work. We now have Almost 8,000,000 strong vibrant online community, the share of online inquiry increased over 2.5 times And the share of online bookings has gone up over 5 times given the conversion rate increase also that we see. Website visits have gone up to almost 66,000,000 in 2021, imagine that was 29,000,000 just a year ago. Royal Enfield share In the of voice in the 125cc and higher segment has gone up by 6% to about 29%. But nurturing the speed, the true spirit of motorcycle, pure motorcycling and self expression that has been our constant endeavor. And to celebrate the spirit of customization, we introduced new initiatives, especially the Build Your Own Legend And the style your own initiatives that work for next generation of designers and motorcycle enthusiasts. And so in our endeavor to Build the riding culture globally, we launched our 1st over Riders Club of Europe and this club shares programs, rides everywhere, Brand experience. But all involved, we were very focused on making sure that not only us, but our entire community of riders suppliers and dealers who supported well with the COVID-two initiative. So reiterating Zidar's point on the reoccurrence of COVID-nineteen led disruption, We'll continue to monitor the situation as it evolves and try to mitigate its impact. We'll continue to focus on providing the care and support to our employees, our dealers and our supply The first half of this year is expected to be soft because there is lockdowns everywhere in the country as you are aware. And The second half hopefully, I think the curves will flatten out by about June, middle of June or end of June. Already you're seeing improvements in Delhi and Mumbai. So hopefully from July onwards or the latter part of June, it should start to come back strongly. So with that, I'll hand over to Sidharth. Hi, again. I just want to cover the financials and business update of our joint venture with Volvo, that's We Commercial Vehicles Limited. The revenue for quarter 4 was at a high Amount of INR 3,602 crores. So that's up 71% from INR 2,100 plus crores last year. And for the full year, it was at INR86176 crores, up 2% from last year. The EBITDA for Q4 was at INR320 crores, which is up again substantially from the INR 37 crores last year. And for the financial year, the EBITDA is at INR 5.92 crores, up 43%. Overall, the EBITDA margin for the quarter was at 8.9% versus 1.8% last year. And for the financial year, it's 6.8% versus 4.9% in the previous year, largely due to improvement in realization and cost reduction measures that we're able to do. The profit after tax for Q4 was at INR 127 crores against a loss of INR 26 crores last year. And for the full year, The profit after tax is at INR57 crores, down 2% from INR58 crores last year. So Overall, the sales units for the quarter were at 18,200 trucks and buses, up 56% from last year. And for the full year, we were around 41,300 units, which is down 15% From the previous year. And that downturn, I will say that the 15% decline in BCB was actually much better than the 30% decline in the industry, thereby gaining VCV substantial market share in trucks and buses. BCE's export volume was up by 10% year on year as against a 29% drop in overall exports in 5 ton and above Segment from India. So again, increase in export quantity share. The 4th quarter did Started actually on a positive note with more normalization of economic activities, we witnessed a significant recovery in the truck segment. We gained market share in FY 2021 across all segments in LMD From 29.8%, that's light and medium duty trucks to 30.6%. In Heavy Duty segment, including Volvo Trucks, so that's I Share plus Volvo Trucks, from 5.9% to 7.9%, and that's getting to a very substantial or reasonable volume market share in India and heavy duty trucks. We're very proud of that. And in bus segment from 14.1% to 19.9%. Our outperformance in market share was driven by Successful introduction of BS VI range including industry leading product quality and focus on aftermarkets and parcel availability. So BS VI has really been an absolute standout range of products and we've managed that I believe much better than other Manufacturing and as a result, we've been able to really gain share post BS VI introduction in India. We've also significantly enhanced our customer connect to both digital platforms and physical meetings. So there's been a lot of Interaction actually happening now with our customers. We've got In the industry's first uptime center and resulting in a much higher uptime of trucks and buses on the road. And that's been an enormous advantage now for BECV. The new range of trucks and buses is 100% connected. They're connected vehicles. They're connected to our servers. So we're really able to monitor on a real time basis what's going on, on all new BS VI trucks and buses. That's an enormous industry shift and change as well. Well, again, we currently experience the impact of the 2nd wave of the pandemic with local lockdowns and increasing restrictions. We're confident that as the economy recovers hopefully soon, the situation will normalize and forecast of a Good morning, sir. Government's focus on infrastructure and positive, let's say, policy stance should Support the demand the increased demand for commercial vehicles in the coming period. So that's all from us at EML. Back to you for questions. Thank you. Thank you, Sidharth. We will be opening the Q and A sessions for participants. Anyone who has a question, please use As the question queue assembles, A couple of questions from my side to the notes. Firstly, can you give some color on current production situation, Easing of lockdown should drive a recovery as you said from July onwards. Can you talk about the ramp up of production in coming quarters, whether it can move to over 80,000 per month in second half of the year? My second question is on the product pipeline, if you can provide some color, It will be helpful. Media reports highlight new generation Classic Hunter, Roadster, Shotgun, all of these seem extremely appealing. Thank you, sir. Thank you. I think there are 3 types of Supply chain concerns that we are facing, one is the global chip shortage that you heard about from other sources also. This is slowly but surely improving. There is also lockdown related supply chain disruptions from Pune and Delhi Belt that we were facing earlier. And the third, of course, was the sudden lockdown that was there in Tamil Nadu, which was expected, not sudden, I should say. But there were some still wanted auto industry to continue, but suddenly they said 2 wheelers are not allowed, only buses are allowed. So while we were able to handle it, of our vendors were not able to handle it and we also felt it was the right thing to do to shut down our plant. So we shut it down for Just 3 days, Thursday, Friday, Saturday, we'll be open on 31st. As I mentioned earlier, we have enough backlog of demand that demand is not an issue. I think by the time production comes back, the demand will see a significant pent up demand. So I'm hoping for much better things. Getting back to 80,000 is not an issue at all. I think we'll easily get there. As soon as some of these supply chain issues No, I don't. I think we will be get back to 80,000. As far as new models are concerned, as I mentioned earlier, we have several new models being planned once Every quarter. I love the names that you are coming up with though and the media keeps coming up with newer and newer names. Even before we name them, I think we Hear names from the media. So I can't exactly talk about which models and what names will come, but We have a very exciting pipeline. In fact, if I may say so, this year will be probably the highest number of New models that you've ever seen from Royal Enfield that being launched in a year. And that's the beginning of the pipeline. There's a whole bunch that is happening and we are truly excited about it. Thank you, Vinod. Hoping to see those models. Next, we have a question from Kapil Singh of Namura. I'll just pick on what you mentioned. You mentioned highest number of new models. You've been talking about 1 per quarter. So what should we expect for this financial year? And second, just on the production side, I mean, is there a thought here because last year we were struggling all through the supply that during the period when we are not able to retail, We produce a bit extra and then sort of retail it. So even if retail network is not open, you sort of produce more. And thirdly, just on the other expenses, if you can give some comments because it's a bit on the higher side, if there were anyone else? That's it. So I captured 3 questions. One was on product. Yes, we will continue to have 1 new model every quarter just because there is a delay Due to COVID right now, I don't think we'll squeeze everything, but there are some very big models coming in. We are very excited about it. You have to do all the marketing and go to market preparedness for that. As far as getting back to 80,000 per month, When you just look at our Q4, we were we almost produced what 210,000, 220,000 at that point. And that was despite having some supply chain difficulties and all that. So getting back to that level or even higher It's not an issue as far as I'm concerned, especially on some of the models where we used to have difficulty like Twins and Himalayans, which do exceptionally well overseas. We've added capacity even on Meteor, our capacity was what about 8000 to 10000, we updated about 15,000 and we are able to meet that quite well. So I don't think once this lockdown is over the production constraints will be visible. We will be able to produce as much. And fortunately, We have a backlog, so we can continue to produce. And by the time and just to get rid of the backlog or just to not get rid, but Just to deliver as per the backlog, it has at least 2 or 3 months. And by that time, I'm sure There is significant demand that will come back up. As far as overheads are concerned, Kailesh, you want to comment on it? Yes. Thanks, Balok. So as of the overheads are concerned, yes, there is about INR 50 crores of on offhand. On a steady state basis, we see overheads To run around roughly INR290 crores, which is in line with our Q3 run rate and lower than Q4 of last year versus the cost initiatives that we have taken. Recent was a one off largely is on account of, 1, we had a ForEx difference in Brazil. Going forward, we are planning to set off this loan and pay off that the ForEx difference would go away. Brazil was a volatile country for various reasons and that's the call that we took by Q1. We should be able to pay that off. The second is a provision that we have made for one of the vendor advances due to on a conservative basis because the vendor has filed for grafting CRT. So excluding that, the run rate is pretty much in line with Q3 and slightly lower than Q4 of last year. Okay. Thank you. That's all for my question. Thank you. Can we have the next Question from Tomoko. Thanks a lot, Raghu. And before I start the question, congratulations Sadat Great turnaround of BCD. I think all the things you've been talking about with the technology shift on BSS literally playing out both in terms of market share and margins. So congrats on that count. And moving on, my question is pertaining to Royal Enfield Nazzi. And just want to clarify, Talith, You said to see close one off in other expenditure line this quarter, right? Am I right? Did I pick that right? Yes, you picked it up right. Okay. And most of them should kind of not give us out from next quarter onwards. That's right. No, okay. That's good to hear. And firstly, if you can just help us educate on the precious Because I believe your precious metal intensity will be much more higher than a conventional 2 wheeler company or a small displacement company And I will have literally gone through the roof. So if you can just help us understand how is the precious metal situation for you? And for POQ perspective, how much of the current spot or where are where was POQ in context of the current spot prices on precious metals? And is there any scope for further optimization of precious metal where you can probably bring on rhodium and make to do with other cheaper metals? So if you just help us understand the pressure a little bit, Halish. Sure. Pramod to start with, I think the journey of precious metals started via the transition that we made from BS IV to BS VI. The consumption as such if you look at say a bike that is at 150cc are lower displacement compared to ours. We are about 30%, 35 percentage more due to the segment that we operate, which is around 350 cc to 650 cc. So there is 1, a 35 percentage increase in consumption and that 35 percentage line share is attributable to 1 metal, which is rhodium. And if you look at rhodium specifically, the cost of rhodium from where it was about a year back to now has not stopped by almost 10x. So that's where you see the pressure on precious group of metal continues to be high in terms of cost, which is impacting the margins also. So if you see from a Q4 perspective, the incremental trends have continued, but not as being as severe as we have seen in Q2 and Q3. But at the same point of time, other base metals have caught up. So, Steve Krish, can I add on the precious metals, please? Sure, Shavino. I was just going to add that while you're absolutely right that we were about 35% higher than the normal bike over the last 9 months or so we worked significantly on Our engine submissions and how we place the exhaust, how we do the coating, how we do Lots of other things, I don't want to get into the technical details. We did 2 projects and together we were able to reduce the amount of rhodium consumption by over 66%. And as a result, if you measure rhodium usage by Royal Enfield per cc, we are one of the industry's best Global benchmark. So that's a recent achievement. It's not in the past, but it will come in future engines we will have lesser amount of rhodium. Yes, I thought I'll add that. Thanks, Suraj. So that's the value engineering that I wanted to add in terms of what we have done on the precious group of metals. Price from an industry perspective, we see it going not worth only at least from a near term perspective. So if I look at say next to 9 to 12 months both Base Metals and Precious Group of Metals will continue to go up. But having said that, if you look at a year that has been significantly tough from an external environment, We have been able to pass on the entire cost increase to the extent that is feasible. So in the year, if you look at from an ASP to material Almost $12,000 increase on material cost has been passed on. On a like to like basis to be where in YTD 1920 2 where we are. Coupled with the value engineering that we have done on PGM, plus in case, say for example, Q3, Q4 onwards, if there is A little bit of softening on commodity cost. We should be able to see benefits accruing, but that's something we have to pocket for another day to see how does it move on. Thanks, Talith. Second question is more for Sidhartha and Kino. Let's see, We have seen a substantial increase in the ASP overall in field. Lot of this is cost pressure, right, from ABS to FY, precious metal now. But we just wanted to Think as to when you think you reach a point where pricing action incrementally could kind of bend demand because the reason why I'm asking this is That lot of the customers who buy a Classic 350, which is our Recruit brand, a lot of them are probably moving from a 150 cc and the kind of price gap has been widening, right. And what we've seen is like with the 6 50 quids, for example, a phenomenal value proposition if you compare the pricing of those products with anything else in the market. But we are struggling to sell more than 1300 units per month in the domestic market with a phenomenal value proposition. So I'm just trying to understand, Is there a point where you will have to probably start absorbing the cost inflation within so that you don't end up pushing the price too hard Because part of this will reverse out with commodity easing eventually, whereas reversal of price increases is not something which companies normally do. So how do you think about this contrary? Because And personally kind of disappointed by the sorry, apologies, limited volume success is what you see with the 650 twins despite the phenomenal performance and the value proportion what they offer. So sorry for the long question, but if you can help us understand this. Thank you. To answer your question directly, the 650,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000 There is a seasonality of when you can export the U. S. And Europe because of the winter months. So we exported significantly more. So We have a big backlog on twins and I don't want to specifically comment on how much, but demand still continues to be there. And once we get the refresh And with MYY, there seems to be continued interest in twins. Sir, do you want to add something to that or? Sure. Promote very wise questions of course because That's obviously an enormous area of debate in the company in terms of What is the elasticity of the price, right? And we're right now battling really Yes, unprecedented commodity cost increases. And obviously, that's an enormous question in the company and in all companies these days see how much you can pass on, how much you can absorb, how much value engineering we can do. So all of that is being dealt within a very Systematic in a very scientific and in consumer understanding type of way to see that we can Pass on the right amount of costs, which the company has to bear. So that's really You're absolutely right. That's a crucial thing. What that point is difficult to say. Of course, we find ways to try and proxy that and see whether we're not Breaking back right of demand. So till now it's I think we're progressing in the right way. In terms of being able to balance I said the cost and the pricing, so it's not substantially hurting us Or hurting us from the perspective that the customer just says, oh my god, okay, this is now just way too much and then the demand falls off of this. That's not happened at all. On the 650s, we know they said it all, but I'll just add one more point is that We are really long term players also. So yes, there is increasing and we're improving and You've got some order book. But as you saw the Himalayan also, we had a couple of years, quite a few years of sort of Let's say, not as per our expectation the volumes, right? It was not as much as we wanted. But we stuck with it. We did Lots of things. In that case, it was a lot of product improvement also. In Twins, that's not required. It's absolutely spot on in every aspect Require. But it takes time for consumers to rise up to bigger capacity bike as well. So we're going to continue to invest in the brands, we're going to continue to invest In becoming the absolute no questions asked biggest let's say premium motorcycle. So talking about twin this premium and upper premium really. We've captured the entire market. I mean, we're entire means above 500 cc, I think we're Most of the market already. So all the international players have come in, they're struggling. I think largely because of us also because we just Actually given such an amazing value and such an amazing motorcycle. So more so we're going to continue to press on and continue to And we have 4,000,000 or 5,000,000 customers on the roads. And those customers are certainly going to they are looking at upgrading. Now Sometimes the upgrade happens immediately and we are seeing upgradation to 640, but it will also take more time. But we have the consumer base, we have the brand and we're certainly on the right track for that. Thanks a lot, Sid. Take care and all the best. Thank you. Thanks, Pramod. Next, we have a question from Janesh Gandhi. Janesh, can you go ahead? Yes, thanks. So my first question is to primarily on the price increases which you have taken. So, Kanish, can you clarify this 12,000 increase which you're talking of is that this is since Jan 21 or This is for the financial year as a whole? This is for the financial year as a whole, Janesh. Okay. And any sense on price increases since Jan? So we have done couple of increases between Jan to March also and there has been bond that has been done in April too. Okay. And what will be quantum for that? So that gets included in 12,000, right? That's right. And 12,000 is not MRP, I was talking about the ASP. So that has happened over a period of time in last year. Right, right, right. Understood. Okay. Second question is for Vinod. So you talked about order backlog of 2, 3 months in the sense that you said it will be cleared in next 2 to 3 months. Would it be fair to say this is Largely for mature and the new models because classic feedback from the ground is it was readily available or waiting of week 10 days. Can you show some color on what would this order by the backlog be made up of? No, we don't like to give our model wide backlog, but I must at least tell you that This 2, 3 months or more backlog that I said is spread across several models. I can't see any model which is not on backlog. Okay, okay. Right. And lastly, with respect to the supply side issues, you talked about chip shortages. Hello? Can you hear me? Yes. Yes. So the supply side issues, you talked about chip shortage getting addressed slowly, but some other issues coming in. So would it be fair to say when you say supply your new model launches are on track, this is After factoring in for the shortages or there could be some influence of shortages on new launches? No, no. I think we will still Models new model launch development takes about 3 to 4 to 5 years depending on the complexity of the vehicle. So the models are ready. I want to be able to have a clear visibility of the supply chain, so I can launch it in enough quantity and not be short of supply. So may delay by a month or so, but I don't see any massive changes because of that. Got it. Thanks. I'll come back in queue. Thanks, Janesh. Can we have Pulkit Singhal next? Pulkit, please go ahead. Yes. Hi. Thank you for taking my question. So the first question is just trying to understand the Consumer sentiment impact that COVID could have this time because it is a lot more widespread And there have been lot more people have passed away, etcetera. So and people have had to spend a lot more on medical expenditure also this time. So can you help us understand whether this whole premiumization thing could get impacted because of COVID in your view? And have you seen any kind of Regional variations in terms of either order cancellations in areas where there has been higher COVID impact etcetera. First of all, it's absolutely terrible, the kind of impact that COVID had had this time or even last time. This time because For all of us, it seems like it hit home. Every one of us has lost a colleague or a family member or something like that or somebody we know. It's absolutely terrible. Good thing is that it's going away. People are getting vaccinated even in Tamil Nadu which was the last of the places there it was still growing. I think the curve as of this morning was that it finally hit its peak and it's coming down. So hopefully in the next 2 to 3 weeks it will go away. It's too early to say what is the impact of COVID because markets have not opened up. Maharashtra, Delhi, all of them still continue to be in lockdown, so our dealerships are all closed. So we don't know as of yet. I don't think it will have that much of an impact. In the end, while there is a lot of grief and despair, There's a lot more people who will continue to want to travel by motorcycles rather than take share taxis or buses. Right, right. So second question and last one is on your distribution expansion strategy. I mean given your experience of the 2,000 So currently, how do you look at expansion further on from here for the next 2, 3 years in terms of studio and large stores? And if you could share some of your learnings as well from the past expansion? I think there is a combination of big stores and small stores depending on the Capacity of that region to take it, our focus is more on international expansion. The pace of Panshu, the percentage growth is happening more in going to be happening much more internationally. So if you see that we had About 900 big stores and we went to about 1,000, 1056 or something. We had 0 studio stores, we went to 1,000. So now we have a good combination. And other than maybe one state, We are practically covered with our network expansion plan that we had. We will continue to do that as and when we create new models and there is more Demand created from certain pockets, we'll continue to add that. Equally, slowly but surely, there is a change happening that I People want to buy directly from the company, directly delivered to whom. So in the long, long run, I'll have to say, you'll have to relook at The distribution strategy overall. Got it, sir. Thank you and all the best. Thanks, Priti. Next, can we have Ramod Amte? Yes. Hi. Thanks for the opportunity. First question is with regard to the production challenge or the supply chain challenge. It looks like as you alluded that COVID-two is much worse than COVID-one. And so I want to get your last 6 months experience structurally, what have you changed in terms of managing supply chain so that you can give a confidence that This time, we will be able to ramp up much faster than the last year issue as demand seems to be still better, but the supply chain, both domestic And international is much worse in this year. And the name of the game seems to be the quicker ramp up anybody can do. So can you give more confidence and more color structurally how you're trying to address it? On the supply chain situation to put it Put some just on it is what you say it's like kabikushi kabikam, but you deal with a new thing every day. Why do I have confidence that we'll come back strongly? Because we have experience from the past. Even last time we came back very strongly, we know which Suppliers are going to be affected more. We used the last 1 year to create alternate source. We used the last 1 year to move those suppliers closer to us. Yes, there are some structural problems like the global chip shortage and whatnot. But overall, I think we have delist our supply chain to some extent, brought them closer to us. And as and when it opens up, we should be able to bounce back very fast. Also I should add that over the last 5 to 10 years, there's a great deal of in sourcing that oil and field has also done, which has helped. Sure. Thanks. And the second one is with regard to the earlier question by somebody participating on Twin. Can you give some color in terms of Ezeq, the category itself as Shankh, because it was a new territory you were embarking on Or it's just a supply chain issue? And the second, is there any read through for Sorry, I didn't understand the question. The twin products? Yes, the Twist, I had said earlier that it was merely the fact that we were allocating more to international than to domestic market that it caused I showed lower numbers in India. Or is there anything more to read for your new products, how you want to position them and how fast you want to refresh? Or it's just the or is there a category related issue? No, no, no. I think Twins continues to win awards everywhere. It continues to do exceptionally well in overseas markets. It continues to be a good demand even in India, which we are not able to meet. So we are actually enhancing the capacity of the Twin Zhang Himalayan. Both of them have now achieved the top 10 models in most countries of the developed markets as well. Sure. Thanks and all the best. And sorry, just to add, actually, you see the 500 plus cc segment 3 years ago and today it grown tremendously as a percentage. It's still not a huge part of the Indian motorcycling industry, It has grown a lot as a percentage and the entire growth has come from Royal Enfield. And we are clear leaders with I don't know the exact number of hand, but I would say 2 thirds of the market at least belongs to us. So it's we have grown that segment. We're continuing to grow that segment. We're Absolutely, let's say, determined to grow that segment over the course of time. We know the market the same way that we grew the market for 350s And also now the Himalayas, we know that that segment will grow over the years. There's no question. We just want to continue to build the Story, the brand, improve the products and make sure they're relevant to customers. Sure. Thanks and all the best. Thanks, Pramod. Can we have the next question from Arvind Sharma? Arvind, please go ahead. Yes, hi. Thank you so much for taking my questions. Two questions from my side. First on the numbers, The installed capacity at all, I believe, is around 100,000 bytes a month or say 1,200,000 bytes a year. But we are But we are seeing numbers which are somewhere around 70,000 to 80,000. In the last Q4, you value digits because of the difference in the mix Demanding and the mix produce. When do you think that the numbers will match up to the installed capacity? Or in other words, out of the 100,000 installed capacity, what is the maximum that oilfield can produce and sell? I don't know when the supply chain issues will be resolved, but I hope sometime this year we will start to pick the run rate Or something like 100,000 even in 1 month if the supply chain helps us we should be able to hit. But remember 100 Housing is an esoteric number. It is we never said that we have a capacity of 100,000 hence 1,200,000. This has become keep coming back in the media and enough number of people say it, so it becomes like it's our capacity. I believe we can achieve 100,000, but that 100,000 if I make it a one model. Remember, we have a limited capacity of material, we have a limited capacity of Himalayan. So I can't just make something extra Even though the demand is here, just because our capacity is here. So I believe that combination of these we will be able to perfect When everything lines up and all the stars align themselves, we hopefully will hit that level of production sometime this year. Sure. Thank you so much, sir. And the second question more on the poultry numbers. This 50 crores of 1 off, Is that captured in the standalone or in the consolidated numbers? Because the 2.90 crores of steady state, It means that 50 crores is I believe it's consolidated, but Kailesh can answer that better. Yes, it is consolidated. So how much would that be in the stand on numbers, sir? Standalone will be roughly about INR25 crores. All right. Thank you so much for taking my question. That's all from my side. Thank you, Harveen. Thank you. The next question is from Chirag Shah. Please go ahead. We'll circle back to Chirag. The next question is from Hitesh Goyal. Dipesh, can you please go ahead? Yes. Thank you. Thank you, Raghun Anil. So my question is on this sorry to have more on the commodity cost front, But can you give us the what is the total commodity cost as a percentage of your ASP in a bike, Including the precious metals. And I just couldn't hear properly. You said you have taken a total INR 12,000 From April last year to April this year in terms of price increase, right? Did I follow that right? Yes, it is. You followed it right. It is from April last year to March this year. So it's for the financial year of FY 2021. So roughly, if you look at our material cost, We have appeared about, say, 55 percentage. Yes. No, no. So that includes actually the vendor Fixed cost, vendor margin, everything, right? I'm only talking about the metal part, which is pressure, metal, steel, aluminum As a percentage of ASP. So generally, in auto companies, it varies between 50% to 25%. I believe for Royal Enfield, it will be slightly lower because of the ASP being higher. So if you can give me that ballpark number. I don't have it handy. I can just come back to you. I can just have a look at it like that. Yes, absolutely. And we're not and honestly, we don't even give individual line item of commodity and all that. Okay. So let Yes, let me ask the question again then. What kind of price hike is required to offset the commodity costs increase which has happened in 4th quarter? So I don't think so it is a straight match to say what is the cost increase that you'll be able to convert into price increase and pass on. So it's going to be a combination of as we talked about there is a pricing framework that we operate, how much of price that we can pass on to the consumer. 2nd is what are the cost projections that we have in terms of the metals and commodities and how will that move? And third is what is the kind of value engineering that we need to do? And net of that, what is the price increase that we need to take for a particular model or an SKU? That's how the model operates. And as of Specific price increases, you will hear about it as and when the action comes in the respective quarter. So allow us not to comment on the future on that. Okay, great. Thank you. Thank you. Thank you, guys. All the best. Thanks, Suresh. Next we have a question from Chirag Shah. Chirag? Yes. Thanks for the opportunity. Sir, I have a question on price laddering. Given the way cost inflation that we have witnessed over the last 2 years, is there any thought internally on What should be the starting point as far as private lettering is concerned for the product? Is there a rethinking or revisiting to that thought process On 5th laddering the entry point? So Chirag, we are trying to do completely opposite to the typical concept of card slathering. You're putting the decision in the hand of the customer. I'm not saying I sell this and this is at this price and I sell this, this is at this price. Here is the base motorcycle, you choose the model and on that you could have multiple additions, multiple options like Meteor comes in 3 different base models, right? And you could choose up to 500,000 combinations and you choose your price laddering, you choose how you want So that the price is defined by the customer then. And the second question on the 650 Right. Do you think there is a need for additional model or a product over there? The way we have in 350cc where we have And I'm including 400 also the part of 350 where we have 34 offering. Do you need think that 650cc at this point of time needs more Addition or Chirag, you have a very cleverly worded question to try and eke out of me what is our product plan on 650. I know you for many years you are too intelligent a guy for me, but the answer is yes. Okay. Yes, there is a need to think about every platform, Jirad. Why shouldn't we be thinking about other why only on twins? Why not on Himalayan? Why not on meteor and classic or whatever? So every platform we should think about how we can meet other kinds of We should think about how we can meet other kinds of customers' requirements. Okay. Thank you. And all the Sid, do you want to add something to that? No, I was saying well said that we think of them as platforms And to exploit as much as possible in as many ways as possible. But of course, there's a business case for everyone. So if there's Just very small incremental sales, that's not interesting for us. But if we find that there is a potential of much larger incremental sales, Of course, we try to exploit our platforms to the maximum. Having said that, to the earlier point, while we are launching a lot of new products, we are also very controlled. As Vinod said earlier, our product development process is 3 to 5 As Vinod said earlier, our product development process is 3 to 5 years, and we are very, very rigorous. I mean, for a full new product, It could even be 4 years or something, so and beyond. So we're extremely rigorous. We don't launch just Off the cuff something interesting, let's quickly try and do something, no shortcuts, nothing and that's what you've seen. I think all of you've seen and hopefully appreciated that All the new products that have come out of Royal Enfield are seen and are absolutely world class. They are equivalent to Japanese, German offerings. And that's our ambition to get to that level of product finesse or product quality. And I believe that's where we've gotten to the last couple of products. And therefore, it is while we're coming out with quite a few new products, it is still very deliberate and not And over proliferation, let me go to that. So that if you permit me, I think you compared us to Japanese and European, somebody made a video comparing our 650 to an engine and we were actually better than them. Yes. We have to try harder because we are starting from behind. We have to try harder and we are better I think in many ways now for the kind of offering. A lot of them look at the let's say mix size segment as Not so important. They are much more focused on the heavy duty segments. So as a result, there is Effort and focus on these areas, much less. Our products, you're absolutely right, I believe are way, way better. And that's why there is outselling Even Europeans and Japanese and all of those, absolutely. Well said. Any other questions, Rahul? Yes. Yes, we have many more. I'll take the last few. Next, we have Satyam Thakur. Satyam, can you go ahead? Yes. Thank you. Good evening, everyone. Thanks for the opportunity. So, could you please share how the situation on financing is? Like one gathers from ChannelCheck that there It's probably a meaningful drop in the collection efficiency of lenders in the cooler industry in April May. So would you have a sense of how are our Customer squaring and how much offer drops in collection agency lenders would have seen, our lending partners would have seen. And plus We have not heard anything like that, Satyam. And in fact, Royal Enfield is probably the best customer in anybody's portfolio. So, we have not heard of any testing. Okay. That's great to hear. I think the delinquencies, I don't know The latest numbers I haven't talked in the last few months, but typically, delinquencies are a fraction of other 2 wheelers. Yes, it is the lowest in the industry. Okay. That's great to hear that April May has been Decent as well. And the second question on CV side, could you share what the industry has seen in terms of the discounting in the CV industry in the March quarter Compared to, say, December quarter, what would have been the trend? I can't say offhand really, to be honest. I mean, it continues. There's no serious abatement of discounts, but I can't say offhand whether marginally higher or lower, but it's similar levels, I'm assuming. But I think BEC has actually not only increased market share, but also increased margins because they didn't play the discount they gave. Yes. So the general market is still suffering from that. But yes, we're Absolutely right. We've really been able to draw back and sell based on total value, as Vinod was saying. And I think we've succeeded and especially in HD where we were a much smaller player, we've been able to grow and do well and Profitably as well. So yes, absolutely. Okay. Thank you and all the best. Thanks, Satyam. Given the positive of time, we come to the end of the On behalf of MT Global, we thank the management for the opportunity and request management for closing remarks. Well, thank you all. Stay safe. I think while everybody thinks that this COVID is over and the things are back to normal, My wife is a doctor and she tells me it's not over. I know people and friends who've got taken 2 doses of Covishield and still getting it. So please stay safe, don't relax, mask up, stay social distancing. I think the supply chain problems, these are all short term. They will all go away once we put this COVID behind us. And I think if we stay safe for at least another 2 to 3 weeks, we put this largely behind us. And then we use that window before wave 3 for vaccination and I think India will be safe. That's the message that I want to leave with All my team members have been there and for all the well wishes as well. So wish you all the best. Thank you. Likewise, Thank you very much and stay safe. And as Vinod said, all of that Which is still short term in nature. And just to we show that at ISO Motors and with whether it's VCV and of course, Ari, Royal Enfield, which you're talking about. We continue to stay exceedingly focused. There's a huge amount of management attention on The tiniest of details and that's what really makes this company what it is. It's all about focus, it's all about therefore being able to React quickly because we are sharp. We've got a small product portfolio. We've got a small footprint and we can really move things when we need to. So That trend absolutely continues even now. Thank you very much. Thank you, folks. Stay safe. Bye bye.