Morning.
Doing my best. Morning. Would have loved to do this face-to-face, probably at some point, probably fly over and meet for the first time. I think the big question I have about TVS right now is how we want to address the EV opportunity. I think I've been looking at TVS and how you guys have managed to take market share in scooters, bikes, and transition yourself, right? Margins were up when your volumes were down and raw material prices were up, and we had very tough times over the last one and a half years in terms of cost run, and we were able to deliver margins. I'm just trying to wrap around this probably two issues, right?
The big one is how we're gonna address the EV opportunity. From whatever I know, EVs are actually margin dilutive. From that perspective, how we think about margins over the next couple of years as we address the EV opportunity.
I'll start with EV, because that is a question you wanted to understand. The most important thing is we did start the EV product development. The biggest strength of TVS is very strong design and development and a complete team. We look at the customer. Any discussion, we keep the customer at the center place. iQube is really, really that the first product we have come out. Of course, you would have seen the new announcements from iQube. Now, the iQube comes with three variants. Okay? Including the iQube ST. Before coming to that, what is most important as far as iQube feedback in the market is we are present in 33 cities. Excellent, excellent feedback from the customers. Month- after- month, the booking levels are going up.
Okay, now we have more than 12,000 bookings at this point of time. The challenge has been the semiconductor issues in ramping up. We have been actively engaged with even tier one and tier two of the semiconductor companies, and we are also. They are also understanding us, we are also understanding. I'm pretty confident that soon we will reach the 10,000 mark and then go beyond. What is most important is we work as though completely the new vehicles are going to be EV. Okay? Which means we have to have a series of products which you will see in 2022, 2023. We have invested behind that. This will be based on different customer segments. You can take the analogy of our Scooty, then coming to Jupiter and NTORQ.
Even in time, you have 110, you have 125, then you have various limited edition models with so many features and different price points. Because at this point of time, I can't give you exactly what type of products and different customer segments we'll be launching this year. We will have a complete portfolio of two and three-wheelers in the range of 5-25 kW. All of which will be in the market in the next, in my opinion, about seven to eight quarters. Already you have seen the new iQubes. If at any point in time you people are visiting Bengaluru, do come here, we can show you and we can spend some time. You can see how the company, while we are focusing on EV, how we are completely transforming the existing facilities into EV.
The vision of electrification, we are also in addition to the product design and development, many things. For example, in iQube, the motor controller, the IVCU, completely designed by us along with our suppliers. Some of them, we tell our suppliers to manufacture it for us. The key differentiation vis-à-vis competitors is that the value add comes not by buying or importing some assemblies and kits and assemble it and leave it. If you have to really position yourself and deliver something new to the customer, you need to have the complete understanding of the design and development capability within you. Okay? That is TVS. We also have in our vision a wide and reliable range of charging infrastructure for EV customers across India.
We have collaborated with Jio-bp to access its widespread charging network for its customers. Also have Tata Power and CESL networks. Primarily, this is evolving, so you may not be able to completely predict the customer behaviors. Today, if I look at iQube, majority of the customers are doing home charging. Tomorrow, I think things could change.
Mm.
We should be prepared. On one side, you do whatever is your understanding, your learning from the customer side. On the other side, you invest in the bigger infrastructure in terms of charging and other areas. At this point of time, I agree with you. iQube first version, that was the starting point. The second version, we have moved to 21700, and we have very clearly understood the cost drivers. The first focus of the company is to really drive the customer satisfaction. Get the best customer satisfaction and customer delight on the electric products, because the kind of features, you know, connected features, 7 in TFT clusters, UI, infinite theme personalization, voice assist, you know, and intuitive the music control. I think many of the young customers look at digital, completely digital.
Whatever they get it from the smartphone, they expect the same things from the EV. Of course, the traditional customers look for the under seat size of the scooter.
Mm-hmm.
You need to balance.
Mm-hmm.
On one side, you have to give to the new customers. On the other side, for example, 32L of space, you know, storage space. Actually it is there in 125 Jupiter. Whatever we have to do.
Mm-hmm.
These two platforms are different. You know, many a times people think that they are the same platform. No. EV is completely a new platform and we are designing and developing that. So you will see lot of investments with respect to digital, digitalization and also connected clusters, voice assist. Many of the aspirations of the young customers who look at practically a smartphone on wheels, that kind of a thinking.
Mm-hmm.
At this point of time, iQube to these versions, we are improving in terms of the small profitability. It may not be still profitable in line with that, but I'm pretty confident once you get the customers happy, delighted, once you get the ramp up. Because today ramp up is the problem, not sales. The demand.
Mm-hmm
Pool is so huge.
Mm-hmm.
First we have to deliver 10,000-
Mm-hmm
We have to go to 25,000. Once the volume starts coming in. Volume, why I do say that is when the volume is there, it is good for the company, it is good for the dealer, it is good for online, it is good for the customer, it is good for the back-end supplier, because every cost depends upon the volume.
Mm-hmm.
Okay?
Mm-hmm.
I am pretty confident that in the next 24 months you will see EV also becoming really profitable. Okay? What is most important is the toughest portion we have got it right, which is customer delight and happiness. The second portion we are now trying to get it right, which is the ramp up and managing the semiconductor supplies. You will see the same thing.
Mm-hmm
In terms of the three-wheeler, because we are coming up with a brilliant model. Again, looking at the customer usage and their behavior and how it is going to be differentiated with the current three-wheelers which are available. This is broadly. Please understand, with these products we can go to every market in the globe. Every market.
Mm-hmm.
For your benefit, already BMW has announced, you would have heard that the new platform, completely EV, a cool vehicle, we have designed and developed for them, for the global market, for us also for the global market. I may not be able to share more information on that. Okay.
Mm-hmm.
It's not only in scooters. There are plenty of series of product we will come up with as though the EV is already 100% in the market.
Sorry, just to clarify that you are saying. Sorry, can you hear me?
Yeah.
Clearly? Just to clarify that we are, we have already, developed a two-wheeler product platform for BMW as-
I didn't say that.
Yeah.
I didn't say that, what type of product. I said it is a cool, two-wheeler. That's all I said.
Okay.
Okay? The design is completely ours.
2 two-wheeler products.
Okay?
Mm-hmm.
The conceptual thinking, the design, everything working with them, okay?
Mm-hmm.
It's completely co-created. This time the entire design responsibility is taken by TVS. They will have a platform of products-
Interesting
We will have a platform of products in the EV space. Okay?
Yeah. I recall that the relationship then was they were looking for you as a partner, right, to manufacture. Now it's actually adding that design element into this.
Absolutely. Absolutely.
Okay.
Now you have understood. Completely understood.
Yeah.
Earlier platform was.
Yeah
Their design was theirs, but development and manufacturing was ours. Now the design is also ours.
Mm-hmm.
Complete responsibility of design,
Okay
development, and manufacture. I can proudly say that completely designed and developed and made in India for the global market.
BMW just white-labels it and puts their blue badge on it.
Yeah, but their external.
They did tweak it a little bit for preference.
Their external, the styling and design will be different. They will have a character.
Okay.
Ours will be different. Definitely different. That will be TVS, that will be BMW.
Mm-hmm. Okay.
What was the second question you had?
Going back to the EV one, I think you mentioned product design and development strength of TVS, but maybe I want to go into more nitty-gritty details on that front. A little bit of context. When I look at some of the EV companies in China, right? To a certain extent, all these startups basically just find component suppliers, package them together, right? And say, "We've got an EV." Right? This is a four-wheeler which is relatively more complex product. When I think of it in a two-wheeler context, right? I think it's even more simpler, and we can see that in India, right? Where we have tons of people shipping in kits, right? From China, and then just launching a brand, and that's. It's so fragmented.
If I wanna go into the nitty-gritty details and say, what is it that we do, right, internally that's proprietary to us, nobody else does it, that makes our product different? At the end of the day, it doesn't matter, right? It is just the TVS brand, your distribution channel, your manufacturing, you know, the traditional, bike manufacturing competencies, right, that would make, a e-two-wheeler manufacturer successful.
A brilliant question. I think the same challenge we had. I'm taking it as an analogy when we went into international market. It really intensified our international market journey only after we came out of Suzuki in 2003, 2004. Unlike many of the Chinese or many other players in the industry, the first thing we said is, "We have to take care of the customer starting from the first service." Okay? Normally, in a typical two-wheeler I see the first service comes after 15 days, give it. Okay? About 5,000 km when you ride, okay, the first service is around 1,000 km. 1,000 km, even if somebody rides, let us say 50- 60 km a day, it will be in the 15th day or 20th day.
We said, unlike others, we will have proper service, facility, proper spare parts available. In fact, we send the spare parts much ahead of the product itself to the international market. Since you asked what is the difference between others and us is, we design, develop a durable product, but what is most important in a two-wheeler is the service. Because the first service comes after 20 days. At that time, you don't have the right oil, the kind of checking facilities.
Mm.
Kind of trained mechanics. All these are simple things, but simple things mostly people don't execute properly. You have to do it with every customer, every point, because that gives the confidence that, yeah, wherever I go, TVS, you know, service centers will be available. Now, coming to EV, I think what is most important is we have to really understand the customer usage and whether it is a battery, whether it is a BMS system or a control unit or IVCU or motors. I think these are all. Each one has got a particular character, and you have to integrate it properly and based on the customer usage. Please don't underestimate the temperature. How it will be managed in different temperatures within India, because India varies from market to market. The usage also.
It's not that everywhere it is very nice road and good road and, you know. It is. It's a combination of all type of usage. Even in EV, I think customer usage, maybe after some time when the common man starts using, the entire family will go. For him, technology is more important. The most important is his usage, you know. If the entire family of four will go in a two-wheeler, it should be able to go in any road, good road, bad road, any flyover, any type of usage, carrying load. At that time we can say, "No, no, this is a lightweight vehicle. Yeah, this is EV. In China it is like that." No. Also the durability.
India, people use it for seven years, eight years, and even they continue. That's why I said country by country you have to look at the customer usage, customer this one. It's not just buying some kits and assembling and giving it. Maybe initially there will be a lot of customers looking at it and buying it, but I am very sure in the next couple of years you will many customers will come back to those manufacturers who are focused on customer, who are focused on durability and reliability, who stand in for any kind of customer service. Okay. This is 100% going to happen actually.
If I were to go to some of your peers, right? The leading incumbents, OEMs, they'll probably say the same thing, right? When they design a product, they start off with local conditions and build it upfront.
I don't comment on my-
Mm.
Competitors, the startups. Each one has got a strategy. Okay? Some of them may be successful also. I don't deny that. What I know about TVS is you should be able to completely design in-house. Only you can give new technologies, whatever is available in the international market, whether what you see in smartphones or whatever you see, because this requires huge thinking. You cannot just buy some kits and you cannot be at the mercy of somebody from China or any part of the world, just assemble and give. You will not be able to provide any innovation and technology. Please tell me, why should they give it to you? If it is such a super technology, why should they give it to you? Because this is going to be used in a typical two-wheeler.
They will look at, you know, let me sell it to the car. Please understand, the voice assist, what we have designed and developed, it costs money. Okay? It costs money. Tomorrow somebody will say. I can give you great examples in initial navigation to our connected cluster today and tomorrow's connected cluster completely going to be upgrading to the customer may be equal to a smartphone. That requires lot of design and development capability. Already we have about 600, 700 engineers only working in this area. That is what is going to be the difference with respect to any of the competitor what you are seeing, who come as a startup and, just buy something and assemble and give it to the people.
Okay, okay.
Please understand.
Maybe from-
Customer expectations come not from, not necessarily from two-wheeler, EV two-wheeler.
Mm-hmm.
It comes from their online experiences, digital experiences, connected experiences in the smartphone space or any part of the world. If it is a techie company.
Yeah.
Is a techie customer, he will be traveling, and he will say, "I saw in this country, I saw this experience. Give me that.
Yeah. Okay. A lot of what we have mentioned is actually very good, where we are dealing with some of the intangibles, right? User interface, product design, and a lot of this actually depends on the user experience and ownership experience at the end of the day. From upfront, right? To hook that customer to say, just like our iQube, right? Where we are now at 140 km range, right? That spec would make a lot more people excited, right? There'll be a lot more people say, "Oh, Ola is at 100 km and TVS iQube is at 140 km. I should go and have a look at that." Do you have some of this more tangible, you know, metrics that can help hook the customer ahead of time, right?
I have only one request. I always believe and I respect competition. More than respecting competition, you have to look at the customer. For example, when we gave iQube, we have given about 75-80 range. Okay? Honestly, only 5% of the customers use that. Now I can talk because I have more than 12,000 bikes on the road. I get all the data.
Mm.
I agree with you.
Okay.
What they use and what they want are different. It is not that everybody wants 140 or 160. They think that let it be there, you know, let the range be there.
Yeah.
When I travel somewhere. Please understand, we have to look at what is the real customer usage. Because after some time, the same customer will say, "I don't want 140. I don't want 160. Give me 100." Even I'm okay to have 80, but I want these features and preferably this price. This is something like a trade-off, Kevin. That's why we have kept three products now. You want this, you take that. You want this, you take this. You want a lower range, you take it.
We can also suggest, for example, if somebody is a housewife, she wants to buy a scooter iQube, we strongly recommend her to take the minimum range because she will use to pick up the children or go to the bank or do something around, let's say, 10 km. She will never, ever use
Mm.
Many of our customers we studied. We saw that we charge only once in four days.
Okay.
Okay? Whereas if somebody is self-employed, I'm very sure, okay, there are many more customers who are self-employed, they will also look at EV. They may be traveling from place to place. They may be requiring something like 70 km, 80 km. Okay? Such people will say that, "Yeah, try 140 and see whether you can really use it to your full extent." Okay? Or charge once in two days. Okay? This is also something as a responsible company, we should guide the customer.
Okay.
So more than-
Yeah, go ahead, sir.
More than you know, looking at competition, we should use the prospective customer behavior through analytics and digital, and then say, "This profile of customer suggest them this." Okay? Or monitor them and advise them, "This is the way, this is the best for you." For those set of customers, you say that, "This is the one which best suits you," it helps them.
Maybe I push this a little bit more and try to understand. I was using range as like a hard metric, right? That a customer can use to make the decision up front. Because as we know now, right? There are only a couple of products on the market. To be fair, it's very hard to differentiate, right? Do you have something up your sleeve, right? Be it your touchscreen, your digital applications, software that would really differentiate compared to.
Just hold your breath.
Maybe the first one is to.
Just hold your breath. Okay. Maybe after six months when we catch up, you will say, "KN, I got the answer." Today, I may not be able to share
Okay.
with you, but I can give you. That's why I brought the analogy of the kind of products we have launched, whether it is in Apache, whether it is in NTORQ. The kind of,
Mm.
New variants we have given, the kind of technology.
Yeah.
We have given. Okay, I gave you that analogy at the beginning. You will say in the space. Okay?
Okay.
For us, iQube is the starting point, but iQube is not the end of everything.
Mm.
Okay? You will see definitely aspirational, much more aspirational for a very young guy. He will say, "Wow.
Okay.
This is something I never expected." You know? "This is fantastic.
Mm-hmm.
You will see that.
Okay.
That will happen this year.
Okay. The killer app, if I were to say for Tesla, was their full self-driving, right? Their autopilot, like, they like to call it, although it's not allowed now. The investor community then thinks about Tesla like a software company, that at some point they are gonna monetize the software in-house and then develop an entire revenue stream. When I think about the two-wheeler space, I think it's gonna be impossible to do autonomous driving for...
No, no, the other portion of what you said is.
Unless you-
No, no. The other portion what you said is absolutely right. We are investing.
Yeah.
Heavily in the software side. I think many things.
Yeah.
is going to move into the subscription model because
Mm-hmm.
That is going to give us huge benefit because every time. Please understand, Kevin, always there will be 5% of the customers who want something new, completely new.
Yes. Yes.
You know, they want to really show off, okay? That is the product you will get it in. I don't want to guide you again this year. Okay?
Okay.
It has got all the things what completely differentiates-
Mm.
-TVS vis-à-vis any competitors.
Yeah. If I were to just use that mindset, right, that Tesla has over the air updates, right?
You will be.
I'm sure we are doing that.
You will see exactly what you have seen in Tesla in a related two-wheeler context from TVS. I promise you in the next product.
Okay. I was gonna ask, are we gonna do something that the world has never seen before from Tesla?
Kindly, what do they say? Hold your breath, is what I said.
I'll suffocate. Okay.
No, no. It is not. You will not suffocate because I'm not going to make you wait for two years. It'll happen this year.
Okay. Fantastic. That sounds very exciting opportunity. I can get from you that your mindset. I guess you had enough investors asking you're a profitable company and you're gonna shift to something that's to launch a product that's not profitable, and you're gonna start bleeding on that front, right? That's one. I think the next question I have is, how are you gonna fund some of these expansion plans in terms of CapEx? Two questions there. The first one is basically, are you comfortable having reached high single-digit % margin and now you have to turn back down? Number one. If that happens, right, there's gonna be a lot of investments required into software, into new capacity, into batteries.
Maybe on the batteries front, I may want to find out what are your, what is your thinking about do you want to make your own batteries as well, right? To go being vertically integrated and having control of the entire supply chain that you always like to do.
See, most important, what I told you in the first line and the second line is very, very critical. You know, I can again take an analogy. When we went to Indonesia, first to make sure that it is almost 99% Japanese market. First is to succeed in the mindspace of the customer and then start selling more and more. Today, please look at Indonesia last couple of years, we are profitable. This year the volumes itself are likely to be more than 100,000. The most important according to me is get the customer delight, number one, and then volumes, grow volumes.
Mm-hmm.
I'm very confident that this year we will exit in two-wheelers more than 25,000 per month. That is the type of numbers we are looking at, and also three-wheeler, significantly. For that, you will have this range of aspirational products coming from TVS. These two, the moment it come, I think along with that, the losses will come down, the contribution, the gross margin levels will go up. Okay?
Mm-hmm.
Please understand, all these developments are in-house, so we know the drivers of cost.
Mm-hmm.
Very, very critical. The difference between when you just buy out a technology from outside, he's not going to share the cost even when the volume goes up. Because you are investing in your own design and development, you know which are the cost drivers and you know how much you can squeeze which area. I'm pretty confident that.
Mm-hmm.
You will see profitability coming up in a big way in the next 24 months. That's why I'm using the word 24 months. Most important is to get this product into the market and have market customers saying that, "Wow, this is brilliant.
Sure.
That is exactly what we have done in iQube.
Yeah.
You will see the most aspirational product coming this financial year. That's why we are not postponing. We want to deliver it.
Mm.
That will create the kind of capability and the technology's progress of TVS Motor. Okay. That will drive the cost. On the supply chain, please understand this is the time to look at the product right and the customer right and the volume right. Now, cells at this point of time, BMS is ours. Battery Management System is ours. The entire software related to is ours, but the cells we buy from outside. Once we get a volume, Kevin, the next question comes. Should we make it inside? Should we invest in that?
Mm.
Today, according to me, little far away we have to think about it. Not today.
Okay.
Okay? Some of the.
Is it a big one with the cell supplier?
Some of the, for example, today's approach has been we IVCU, we design and develop and tell some of the partner suppliers to give it to us. The 7 in-
Mm-hmm.
5 in, all are our design. Very good supplier who is partnering with us and delivering with us.
Who is the battery supplier that we're working with now? Korean? Chinese?
No, no.
Both?
We are not in China. That I can tell you.
Okay. Okay.
Durability, reliability, customer delight is always TVS Motors' most important motto and values.
Got it. Got it.
On the EV.
In terms of.
EV investments, you know, we have already announced a separate subsidiary. That is going to give us a lot of flexibility. But I'm of the view.
Mm-hmm.
We want to have even these capacities and these investments very productive. Any new business, whether it is Indonesia, whether it is three-wheeler, it has taken a couple of years to really start the profitability to come in.
Mm-hmm.
Same way, I don't see EV completely different to whether we go to Indonesia or we go to three-wheeler business, because every business requires that investment. EV also is an investment.
Mm-hmm.
We don't look at it as a cost and somehow we have to make money tomorrow. That approach will definitely look at, okay, buy something from outside, somehow sell some numbers. No, that's not TVS.
Right.
We look at sustained business success, and we want to assume that these products, unlike the ICEs, these are all available even for developing market and developed market globally.
Sure. I think a lot of this is also in your how you can manage your margins, right? If you really wanna go ahead, are you comfortable letting your margins come down sharply or you wanna, you know, manage it such that financially your profits and profitability will hold up?
We will manage our margins pretty well. I think you on your opening remarks itself you have said despite lot of headwinds, okay.
Yeah.
Consistently delivered margin in a sustained way. You know, we have not you know, we had a lot of challenges even last year, last quarter, this quarter.
Mm-hmm.
On an IC, also some of the premium products, we don't have semiconductor, but we managed.
Yeah.
On one side, lot of raw material cost increases, unprecedented. Unprecedented means really unprecedented.
Yeah.
We have not panicked.
Mm-hmm.
Saying that, "Oh, all this material cost increase, we have to push into the market." No. Always grow ahead of the industry.
Mm-hmm.
Okay? Make sure that your distributor, dealers and suppliers are happy, you are happy. Look at all the lines of the both variable cost and the fixed cost. It has been a last couple of years has been very prudent cost management, profit management, you know, and a combination of all this has delivered the profit. I'm very sure the same approach we will use it in EV.
Mm-hmm. Maybe on that comment I made, right, where you delivered high margins, any two or three big initiatives or anecdotes that you can share, right, just to let me crystallize what we have been doing internally, right?
I'll divide it into top-line management and cost management.
Mm-hmm.
Because in the top line, please understand there are premium products where the pricing opportunity is much higher and you get better margin.
Mm-hmm.
When I say premium products, the products include Apache, NTORQ.
Yeah.
The variants. See, one of the brilliant examples is, Jupiter. When we launched the Jupiter, we had only one basic model of Jupiter. Okay? It was positioned against Activa. We saw that there are very aspirational customers. We developed something called a ZX version. We made a classic version, then we made a Grande version. Okay?
Mm-hmm.
All these are priced much, much, much higher based on the kind of inputs or the technology, but pricing-wise gives you a better and better margin. Today-
Yeah.
Last quarter, 50% of our Jupiter sales has come from the variants which are on the aspirational side.
Mm-hmm. Okay.
By focusing on premium products, by focusing on the mix, that itself can improve your margins.
Also International Business came, huh?
Comes International Business. You look at International Business.
Mm-hmm.
International Business, practically you have a huge opportunity and benefit. We were doing 40,000, 50,000, now we are 100,000 consistently month after month. There also we have a combination of three-wheeler and Apache, and also many of the products like NTORQ, which are doing extremely well in this market. I want to bring your attention that six months back we have put Raider, Jupiter 125, brilliant products. Both works both in India very well, high margin, and also very well in the international market. Okay?
Mm-hmm.
This is on the top line and the product mix and country mix kind of a strategy. If you look at the material cost, significant focus on the material cost. How do we harmonize platform? How do we look at
Mm-hmm.
The part count? How do we look at, we had only one or two suppliers. With the volume going up, we brought in a new supplier. Always you get an opportunity when a new supplier comes, there is an increment. You can also tell them, "Look, I'm getting so much of cost reduction." It is leveraging the volume.
Mm-hmm.
Okay? Systematically, we looked at the weight, we looked at the part count reduction, we looked at alternate material. Okay. There's a very clear strategy of without devaluing the product, without affecting the durability, how do we cut cost? Okay.
Any more such runway down?
Huge opportunity. This is not one year. I think it is a very-
Mm.
Systematic approach. You keep looking at alternate material, for example. It's a huge opportunity, Kevin.
Mm.
Same way, integrated design. You may have 10 parts in a subassembly. You are able to come up with an idea with five parts. The same subassembly, maybe better features. Like that you can.
Mm.
These are all. I may not be able to articulate exactly what we have done, but I'm giving you broad examples, you know.
Mm.
This is a systematic way.
Okay.
of driving down the cost inside the company. You would have seen our marketing costs. We are more and more now digital.
Mm.
Okay? Thanks to pandemic, we have learned a lot. You know, earlier days people want offices, separate offices. Now practically everything is virtual. Okay?
Mm-hmm.
Even with the COVID situation in India much lower now, we may not completely go back to the old style of working. We may have a hybrid style of working. I think every element is helping us in terms of looking at whether it is a travel cost, whether it is a marketing cost, whether it is an employee cost, whether it is a material cost.
Mm.
Okay? On one side is maximizing the revenues and those products with better margins, with premiumization and IB, international business. On the other side, every element of cost.
From a cost perspective, do you tell your product managers or your factory floor KPIs is minus 5% every year, you know, 10%?
There is a target cost, Kevin.
Mm.
There is a very clear target cost based on the last three years of achievement level, and we look at what all things we can do.
Mm.
Definitely we want to take up this 10% to the next level, you know.
Mm.
We don't want to be stuck with only 10% EBITDA.
Internally, can you share what are we at the team?
I think when you visit here, I shall tell you.
All right. Yeah.
You are operating from there.
May-maybe-
Singapore or?
Singapore.
So you can-
I think the flights open up quite easy to fly in.
You tell us in advance, you can come here and spend a day. You will get a feel of the place. I promise you that.
Yeah. Yeah, Pramod was telling me it's like, after going to Mumbai, it's another one to two hours drive, right? To Hosur, if I got that.
No. See, you have a direct flight to Bangalore every day from Singapore.
Oh, okay. Okay. Yeah.
Every day there is a flight to Bangalore.
3.5 hours flight.
IT hub of India, Kevin.
Yeah.
Yeah.
It's just three and a half hours flight. Yeah. Yeah. I wanted to ask about capital allocation. We had a couple of investments overseas, Norton, the Swiss mobility company. I think Norton is, it's easy to understand the brand. The Swiss e-bike one is something that. Obviously I want to also understand when you think you can turn Norton around. The Swiss e-bike one, can you just help me understand how this fits into the jigsaw puzzle that you have?
See, e-bikes is one of the areas which are definitely likely to grow disproportionately going forward. SEMG we took over that company primarily because Europe there is a huge opportunity in terms of growth. I can just recollect some of the data what we gave all of you. I'm trying to just look at the data. The European e-bike market is growing at almost 25% year after year, CAGR. SEMG is a very profitable company. Last year, Jaseem, you can correct me, I think it is $100 million. Sorry, somebody's trying to reach out to me. Yeah.
Hey.
Last year it was $100 million turnover and a good profit last year. Okay? It's not that it's not a company which is not making money. It is already making money. Now, what is it going to help us is this is going to give us a huge opportunity to understand the European customers, their behavior, and also how this e-cycles. Today we don't have products in the e-cycles from India. This learning is going to definitely because we have now e-scooters from India and new two-wheelers we are going to make it from India. All these are going to help us going forward in our overall strategy. Because
Also SEMG is a omnichannel distribution. That's important, no? That's something which is-
Yeah. If I look at SEMG, they have strong omni-channel distribution of few brands. They have Cilo, they have Simple, they have Zenith. These are all different types of bikes for different application.
Mm-hmm.
So far, if you ask me, we don't know much about European market and customer segments.
Okay.
That's why we took over this company. You know, you will understand customer behavior, customer usage, products are all there. It is already a profitable company. We can always look at our design and development capability and say, "Okay, these models can be used in this markets globally." Okay?
Mm-hmm.
These products we can also supplement by our own design and development. Okay? Ultimately, we will look at the cost also in these products. On one side, we can, with our expertise, improve the features on quality, on durability. On one side, we can look at the cost. Look at the customer usage and say, this can be sold in many other countries. It's a very strategic investment. That is the way I will put it.
Mm-hmm.
Anyway, this whatever we are making the new platforms of e-scooters and the two-wheelers from India will be available in all these markets, Kevin. Some point of time we have to enter into the European markets. Okay?
Yeah.
That's why I said both the.
That's an easy win, right?
Yeah. Today, for example, our IB is only 80 markets, which are mostly developing markets. Mostly.
Mm-hmm.
Okay?
Okay. Okay.
So-
The easy win will be to push some of your iQube through SEMG into, like, Switzerland, Germany, Austria.
We can leverage. We have not put the entire strategy, but we at some point of time want to take the entire EV products.
Yeah
to global developed markets. How do we do that?
Yeah. It's
Which channels we should use? How do we sell it? How do we get the early understanding? All these are going to help us in Europe.
This is more like a market access strategy rather than a technology that they have that would supplement our capabilities.
See, we are a customer-driven company. In order to understand what type of technology works in which country, you need to have a deep understanding of the customers. I won't say it's only a marketing, it is also. It is a deep customer understanding kind of an exercise. Let me put it that way.
The other one was on Norton and the trend for that.
Norton brand fitting absolutely right. It is. It's a great brand. It's a premium brand. I think we have now completely systematically done the manufacturing, and we are also looking at the sourcing so that we can start looking at some of the products to be in line with the quality standards of the TVS. We want to give it to the market possibly this year. We will also have a cadence of product plan, which we have put now, and we will be designing and developing that with our expertise. You would have seen that the Solihull, you know, it has become operational now. There are the Cafe Racer, V4 SV, Commando 961.
These are some of the products which we are now trying to look at how do we start manufacturing to the global quality standards. Of course, we will also leverage the electrification capability of TVS in Norton as well. I think quite a lot of work is going on in Norton. Norton, the brand is super premium. I would say that. Unfortunately, the last 10 years or 20 years, they have not managed it well. Once you have that, the real Norton, that brand essence, somebody can deliver that, I think it can really do extremely well in the market, global market.
I mean, is there any thinking about bringing it into India as to target some of the, you know, our?
I think these are all opportunities, complete opportunities. I completely agree with you.
Okay.
These are all complete opportunities to look at which markets of the globe we can.
Yeah
Can give it to them. Okay. End of the day.
I-I-
Whether it is SEMG or Norton, they will only supplement to our product range. They will not compete with our product range.
Sure.
One is on the e-cycles, one is on the high-end, completely high-end.
Mm-hmm.
I hope I'm broadly giving you. I can't give you my strategy document, you know? I can give you a broad understanding.
Yeah, yeah.
of how we are trying to look at it.
I guess we've got an EV opportunity that I spend most of my time here discussing, and we've got a couple of other moving parts, right? I just wanted to assess where our focus is, where our priorities and time allocation, capital allocation is. It feels like it's due to the EV space.
I think the most important thing, see, in terms of if you look at really the maximum time is spent on the EV side, on the future mobility side.
Mm-hmm. Okay.
Because according to me, I see, my team members are very competent. I don't think they need any review. Okay. They know how to develop a new product, a new premium product, a new NTORQ or a new Jupiter 125 or a new Apache. They know very well. The full focus of the company is looking at EV type of investments and looking at premiumization. I think there is a huge opportunity to take the EV to the next level. Currently, we are operating around 100,000. There is a huge headway to grow it to the next level. Because every market-
Mm-hmm.
The customer demand is positive and the pull for our brand is also positive. There is a great opportunity to go to the next level of volumes, you know, in EV. If you ask me, first is EV, second is how do we grow our international market to disproportionate level in terms of market share and profitability. Okay? The third is how do we learn from this SEMG and then Norton? How do we look at the space where we are not operating today and how do we enter into the developed markets?
Yeah. Can I just go back the last two minutes on the traditional business, the ICE business. There are still. I don't know. There are still segments of the market, like from Royal Enfield up, that we are not covering, right? Where is our premiumization strategy on that front, right? Are we gonna attack all the segments or we say, "Let's put ICE on hold because EV is next, right? Let's focus on the next 10, 15 years and just get EV right and we are done. We don't need to go and address other ICE.
No, no.
No, no.
EV is run as a separate business. EV is separate, run as a separate business, separate team. ICE team, I never say that ICE is over. I never say that. Okay?
Okay.
ICE team, for example, last year we came up with Raider and Jupiter 125. This year also you will see very new products coming soon. Because opportunities are huge. White spaces are huge.
Yeah.
There is a great opportunity to grab more market share in the market. You know, there is a great opportunity to grow much faster than what we are doing today. We will continue to invest, but the management focus, okay, and our strategy interventions are more on the EV side. That's what I said.
Okay. You mentioned about 10,000 a month for EVs at something along during the discussion. I can't remember when.
Yeah, yeah. 10,000-
You keep highlighting chip shortage.
Yeah.
I mean, we saw what happened with Ola, right? They promised October, November, then December, and I don't know if people are still getting up, getting delays. I think that's what you said, customer comes first. Are you able to deliver that 10,000 confidently looking at supply chain now? Yeah.
Supply chain are definitely supporting us, and they are also having lot of confidence. They also visit us. They spend time. Seeing is believing. I'm very confident that you will see much better numbers this month, and you will see much, much better number next month. We will come closer to that 10,000 numbers as soon as possible. Next couple of months, you will see the number. Once you get that, then we have a plan to take it to 15,000, 20,000 and 25,000. Whatever I told you.
Mm-hmm.
Okay? Many of our suppliers are understanding us, and genuinely there are some shortages. It's not that, they're all saying for the sake of saying. When I say shortages, it's the combination of lead times as well as shortages. You know, you need daily supplies. There are today, thanks to the recent COVID issues in China, many things are delayed, many ships are delayed. You know, whichever part of the world material has to move in, it is not moving on time. Okay? There are plenty of challenges in terms of transportation and lead time itself today. Because some of the chips which are coming from Germany, some of them are coming from, let us say, Taiwan or Japan.
Material is there, but it's all in the ship, and ship is delayed by two weeks, three weeks, which means you lose that month.
Okay.
So-
Okay, okay.
The combination of challenges and the recent war is also creating some confusion and problems with respect to the lead times.
Mm.
Okay? I'm not talking about the costs.
But, but-
Cost itself, there are some challenges in the material cost, et cetera, et cetera, that we will manage. The lead time, so you put it in the ship, then we try to air freight it. Air freighting requires.
Sure.
They have to prepare a fresh batch. They are dependent on some raw material from somebody. They are in the shit. It's a tier one to tier two.
Understand.
You know? It's all linked.
for iQube in particular, right? I was trying to allude to misses by Ola, right? to a certain extent, this is a new supply chain for you, new product for you. I'm just wondering how confident are we of managing that situation?
We are pretty confident. See, there are the three important things we need to understand. Here also, we have leveraged as many existing suppliers as possible. Only semiconductors are. For example, when we went into BS6, that is the first time-
Yeah.
All our vehicles are EFI today. EFI has got lot of semiconductor and chips. In fact, Raider and Apache are going through similar kind of challenges because some semiconductors, some suppliers, some facilities, some transportation lead time. Our understanding of this area is also far better.
Mm-hmm.
You know.
How about BMS, right? The localization of BMS production, the localization of EV motor production. Is that already done in India or-
Done.
Are there international problems?
Done.
Done. Okay.
Done.
I think I'll leave it here. You probably have another full day of meetings ahead of you. Appreciate this, and I hope we get to meet face-to-face the next time.
Brilliant. Brilliant, Kevin.
Uh-
Brilliant, Kevin and.
Yeah.
All the colleagues who have joined from your company. Good to see you.
Thank you so much, Kevin.
Yeah. Thank you, sir. Thank you.