Should we start here?
Hello everyone. Good afternoon, good evening. For those who are joining from the U.S. and Canada, good morning. Welcome to M&M Q1 FY 2023 earnings call. We are indeed glad to have you all on this call today. We'll follow our regular format of presentations by management, followed by Q&A. During Q&A session, please use the Raise Hand option, as there will be an opportunity for you to ask questions after the presentation concludes. The safe harbor statement, you know, I'm just leaving it on the screen.
Now I would like to welcome our senior management and thank them for taking the time for this call. We have with us today, Dr. Anish Shah, Managing Director and CEO. Mr. Rajesh Jejurikar, Executive Director, Auto & Farm Sector. Mr. Manoj Bhat, Group CFO and other senior management, including the IR team. Now, I hand over the conference to Dr. Anish for the management presentation. Over to you, Anish.
Thank you, Sriram. Good evening, everyone. It's great to have all of you here today. Thank you for taking your time to be with us this evening. I'm gonna just cover a few key messages and then hand it over to Rajesh to take us through the details. He's done some fantastic work in both the auto and the farm businesses. Then, Manoj will walk through the financials, and we'll open it up for Q&A. In terms of some of the key messages, at a standalone level, you see a revenue up 67%, driven by both auto and farm. At the standalone, PBIT level, Q1 is down 120 basis points, overall, driven largely by farm.
We haven't seen the benefit of commodity prices flowing through the numbers as yet, which we should see soon. That has been offset by a very strong operational performance in auto, with volumes really driving operational leverage and therefore the PBIT there is up 400 basis points. At the standalone PAT after EI level, it's up 67% as well. Again, driven by combination of operating leverage and cost control, and offset to some extent by commodity price increases versus last year at the same time. Consolidated PAT after EI, you see a very significant increase at 5.2 times last year.
Just to be very transparent on this, a lot of it is driven by the Mahindra Finance phenomenon we saw last year, where we had high provisions in the Q1 , and they were reversed in the subsequent three quarters. Therefore, we are also showing numbers excluding Mahindra Finance, which is up 1.7 times, which is in a sense a more reasonable number to compare with, just because of the volatility of provisions that we saw for Mahindra Finance last year. As you see on the numbers here, revenue up to INR 19,600 crores, which is up 67%. Profit after tax, after EI, at INR 1,430 crores, up 67% as well.
Consolidated profit after tax, after EI, including Mahindra Finance, which is the reported numbers, at INR 2,196 crore, up 5.2x. But a more reasonable comparison, excluding Mahindra Finance, is at INR 2,071 crore, which is up 1.7x. Across the four segments that we've been reporting now, core auto and farm is up 56%. Tech M and Mahindra Finance, you see a negative last year, which was driven largely by Mahindra Finance, up to a significant positive this year. The growth streams actually have a good story, and they're starting to fire up really well. From INR 8 crore PAT last year, they're up to INR 132 crore. Investments does include Forex and others.
While you see a significant change from INR -19 crore to INR +184 crore, we just want to highlight that INR 163 crore is a one-time Forex mark-to-market gain, driven a little by the volatility in exchange rates and some of the hedges we put in. It's overall, we got some gain there, but the real number to look at there is INR +21 crore as compared to INR -19 crore last year. Across the board, we see good progress on our businesses as we're driving scale, driving growth, driving profitability. With that, Rajesh over to you.
Greetings all of you. Morning, evening, wherever you are. Good to connect with you again, on the back of a good quarter. Let's go to the next slide. So let me walk through the farm part of the business first. We gained 0.9% market share in Q1 . This was the highest domestic volume with a volume of 112,000, and that was a growth of 18% year-on-year. This is the highest ever export volume, with a volume of 5,000 and a growth of 26.7%. The second highest ever quarter profit, PBIT, and that number INR 1,074 crore. Again, continued positive profits by our local subs. On the auto side, we delivered a strong market share.
We measured our revenue market share, where we were number one with a market share of 17.1%. This was also the highest ever quarterly volume for both SUVs and pickups. We again continued our number one position in last mile mobility electric three-wheeler business with a 74% market share. The highest ever quarterly three-wheeler volumes of 6,500. Of course, a very strong booking pipeline of 25,000 within the first minute, 100,000 within 30 minutes, representing a booking value of about $2.3 billion that is attributable to the Scorpio N. This slide captures the auto and farm revenues. In Q1 , the standalone revenue grew 67%. The consolidated revenue grew 57%. Next. The quarter profits, PBIT, grew 50% standalone and 43% consolidated.
You could see the big kick in on the auto side, which is the INR 103 crore going to INR 704 crore for our auto standalone. Next slide. I'm now getting into the farm equipment business. On the farm equipment business, the sequential performance has represented a 55% growth in revenues standalone. And a margin improvement compared to Q4 of 15.7% going to 16%. The absolute profit went up by 58%. The news on the monsoon front is good, though there are deficits in some states that you see out there, UP, Bihar, Jharkhand, West Bengal. The acreage is by and large similar to the same period last year, so that's not something which we are concerned about at the moment. Next slide.
The reservoir levels are reasonably healthy, higher than the average by 39%. That is typically good news. You know, even if the monsoons are delayed a little bit, the reservoir levels do kick in to help create positive sentiment. Some of the key levers we have, as you see here, we've covered this in the past. Strong fortress in domestic business, the aggressive growth plans we have in farm machinery, global expansion and greenmenting our cost structure. We launched the Mahindra Yuvo Tech+. That's doing very well in the market. With the brands Swaraj and Mahindra are well positioned, gives us a gain of 0.9% share. The channel number of tractor dealers continues to be strong, and we continue to have a strong channel presence.
The export volumes have been growing consistently, and we've continuously been delivering on a strong profit performance for these global hubs. Specifically by way of global hubs, I'd like to highlight the performance of Brazil, where volumes are up 46%. We now have a 5.2% market share in less than 100 hp, and this has been the highest quarterly PBT at Brazil. Turkey's done well. Market share is up at 7%, and it's also the highest quarterly PBT for both the tractor business and the in Turkey. Next, please. On the automotive business, we've been talking about delivering and creating a strong brand. Multiple actions have happened over the period of the last 1.5 years to create the strong brand value.
We are working on a platform strategy with great commonality and also an EV strategy. We're working on transforming our customer experience, de-risking our supply chain, and also continuing to optimize on costs. This slide represents where we are by way of open bookings and current level of new bookings coming in per month for our portfolio. Without the new Scorpio N, the open bookings is 140,000, out of which 79,000 is on the XUV700. In spite of a very long wait period, the new bookings continue to pour in at a level of 9,000 to 10,000 more per month. Next, please. I think I'm gonna skip this to save time and give more time for question answer. This is a launch video.
It'll be on the site, so if you like, you can take a look at it. It just captures some moments around the launch. The blockbuster launch of the Scorpio N, we've covered that a little earlier. Again, this is a forward passing on the slide. Next. This is new data that we're putting out today. The online bookings have kept going up over time. Versus the launch of Thar, it was 5%. With XUV700, it was 13%. On the 100,000 bookings that we've had on Scorpio N, 26% were online. Interestingly, the first 25,000 bookings, in that 72% came in online. That really represents a very strong impact that digital is creating in the way customers are booking and buying a vehicle.
At the bottom, you also see that the Scorpio N has got stronger by way of its representation in the South. The current Scorpio, which is the black bar, was almost insignificant in South and very strong in East. We can see that shift is happening by way of the new Scorpio being more South focused, which really opens up new geographies. You can see that as well by way of the urban penetration for the new Scorpio as compared to the old Scorpio. Next. You know, we know you, all of you have a lot of questions on our EV strategy, and we've been holding on to our responses, wanting to make it more comprehensive. We will be revealing more about our strategy on the 15th August.
It will be at 5:00 P.M. Indian Standard Time when we'll have the webcast. As a lead-in to that, we have two teasers on currently, and I would like to play those for you. With that, I'd like to hand over to Manoj to walk us through the presentation. Thank you.
Thank you, Rajesh. A warm welcome to all the participants, and thank you for joining the call. I'll just quickly cover some of the key numbers. I think the revenue growth of 67% is driven by auto. I think the revenue growth there was in excess of 100%, and the farm division grew about 26%. At the EBITDA level, again, while farm was flattish, I think we did see very good growth coming in the auto part of the business. At the PAT after the EI level, again, we are seeing a multi-fold jump in auto profits, while farm has been growing about 7%. That's a quick breakdown of the numbers. Moving to the next slide.
If you look at the consolidated view, again, the auto is leading about 102% growth. The farm FES grew about 17%. I'll spend a little bit more time on the group companies, but multiple group companies have shown very good growth. I'll talk about a few unlisted ones. We saw very good growth in our MFCW CarAndBike franchise. I think that grew almost 2.5 times in terms of revenue. We saw very good growth in Accelo, which grew about 88%. Our listed entities, I'll talk a bit more, but I think this quarter we have seen very, very strong growth and strong rebound in revenues across the group. Anish touched upon it.
I think in terms of the reported numbers, while it's 5.2x, I think if we exclude MMFSL and the adjustment bar you see there, that takes the revenue, the PAT to INR 1,251 crore if I exclude MMFSL, because there was a loss booked due to the exceptional provision. Looking at that number, it's a 1.7x growth in profits. I'll dive a bit deeper, and this is more from a perspective of what to expect in the coming quarters. On the left-hand side, you see the provisions we took in MMFSL, and as we took the INR 2,500 crore provision in Q1, we did recoup it over the next three quarters.
What happens is, as we pick up the PAT on the consolidated books, I think we will see the impact of this coming through. What would happen is that the PAT from MMFSL will grow significantly as we go into the future quarters. The growth numbers, I think when we say 1.7x, I think we have to keep that in mind. That's more from a perspective of transparency and disclosure. We are very happy with the performance of MMFSL, and I'll talk about it a bit more. I think first on farm overall 17% growth. At the EBIT level it was flat, and the market share was up 90 basis points to 42.7. I think the margins have taken an impact because of the lag impact on commodity prices.
I think even in April and May, they were higher than the previous quarters, and we have not been able to pass on the margin on the commodity through the price hike. All of that have impacted margins. The market share growth has been very, very healthy. If you look at auto, again, at the cost of repetition, a very good growth in revenue and a multiple improvement in profits. Rajesh did cover some of this, so in the interest of time, I'll just move forward. I think coming to Tech M, from a revenue perspective and a deal momentum perspective, it was a very strong quarter. TCV wins of $800 million-plus, which is at the top end of deal wins if I look at the last few quarters.
The attrition also started to moderate quarter-on-quarter, and off-shoring is on the rise. But the margin pressure was due to the supply-side headwinds, in terms of both usage of going outside for talent on subcontractors as well as the increasing wages for the employee population. There is a measure on to drive the margin expansion and drive cash conversion up, and those operational excellence measures will bring up the margins as we go forward. MMFSL, I think, if you look at the disbursement levels, I think they compared to last year's same quarter, I think they are up almost 2.5 to 3 times, and they continue an upward momentum even sequentially, going from INR 90 crore to INR 100 crore to INR 9,500 crore approximately.
The GNPA, which was very high at 15.5, which is why there was a huge provision we had to take. I think that has moderated down to 7.7 in Q4, and we continue that lower level at about 8%. That means if you look at the profit after tax, I think what was a loss has converted to a profit of about INR 223 crore in Q1 FY 2023. A little bit on our other subsidiaries. I think in logistics, we did complete the Meru acquisition, so these numbers incorporate those. On the revenue side, we saw very strong growth because I think across the board, the exposure to auto and farm, both M&M and others that drove the growth in terms of revenue.
In terms of costs, I think there is a lot of initiatives on to bring up the profitability of the business, and that will play out in the coming quarters. Hospitality, while Q1 FY 2022 is probably not very comparable because of the COVID wave, I think what we are seeing is very, very high occupancies, almost record occupancies across resorts and driving resort income as well as memberships. I think the HCRO, which is our European business, has also started seeing occupancies improving, and the cash position continues to remain strong. From a real estate perspective, while last year was impacted, but this year we have seen a rebound in profitability. The main factor here is, of course, that from a realization and rate perspective, we have seen a good improvement.
That's also led to some reversals of impairment provisions which we had taken in the past. That's also contributing to the profits. On the business side, I think the IT business delivered again, both in Jaipur and Chennai, a very strong growth. We launched Mahindra Eden, which is India's first net-zero-energy residential project, which saw a very, very good response. Summing it up, I think, if you look at the journey from INR 424 crore to INR 2,196 crore, I think auto and farm contributed INR 512 crore. Tech M and MMFSL was about INR 882 crore, and I did talk about them separately. Our growth gems was INR 124 crore. Our investments was about INR 204 crore, and I think we covered it that there is an element there of Forex and others, which is also embedded.
There was a lesser EI this quarter, which is contributing to an INR 50 crore increase. Thank you, and I'll hand it back to Sriram.
Thank you, Anish, Rajesh, and Manoj for those presentations. We now open the floor for questions and answers. Participants are requested to limit their questions to one at maximum. If there is any follow-up, please do that. You may come back in queue for the questions. We already have some questions lined up. We will first start with Gunjan Prithyani of Bank of America. Gunjan, can you go ahead with your question?
Yeah. Hi. Hi. Thanks, team, for taking my questions. Congratulations on the Scorpio N launch. It's really impressive to see these numbers. The first question from my side is essentially on the capacity for UVs. Now, clearly, there are order backlogs, and if I look at the bookings run rate, it is still running ahead of the capacity number for XUV700 as well as Scorpio N, which we, you know, spoke about at the time of the launch. Realistically, can you give us some sense as to how do we think about the scale-up of the volumes? How soon can it happen? You know, just in terms of trajectory, how, where do we get from this 28,000 run rate? What is the real bottleneck? Is it supplier ecosystem? Is it the bottlenecking at your end?
Is it, you know, semiconductor? What is it really that is needed to scale this up?
Rajesh?
Yeah. Gunjan, thanks. You know, we are struggling to answer this question which is coming to us from all of you. Let me try and build some more detail into this response. We have two sets of issues. One is, what current capacity is running into short-term bottlenecks, which is mainly supplier ecosystem, including at the moment, in Q1 , all the challenges that we've had out of the lockdowns that China went into. That in a way is ability to meet current requirement. When I'm talking about current requirement, I'm adding the fact that most of the booking that came in for the highest end version. The level of electronics needed in the higher end version is much higher.
As you know that, we've shared earlier as well, even on XUV700, 95% of the bookings came for the AX series, which has a SmartCore. Seventy percent of the total bookings were on AX7 and AX7L, which are the highest end two versions, which are above AX3 and AX5. So that has put, in a way, you know, restrictions on being able to fully leverage the ecosystem. So that's, you know, one part of it. I don't think at the moment we are losing too much by way of.
Ecosystem not delivering, but my guesstimate will be because of all the China lockdown and so on, maybe 10% of our volumes are getting impacted because of short-term shortfalls. Once that's taken care of, then the question is by when do we have multiple new capacities coming in? That, as we've shared last time, have all been triggered. They will start coming in phases. At this point of time, we had not planned to share what is going to be the phasing at which new capacities are building. But maybe in some appropriate forum in future, we can build in a little more clarity around how we are seeing the ramp-up of volumes through the calendar year 2023.
Basically in the short term, the way I would think about it is we are constrained because of managing the ecosystem, including semiconductors, China lockdown, logistics challenges, so on and so forth, to the extent of maybe 10% of what we are doing, which means that 27,000 can be 30,000 plus. It does not fully solve the issue that we have at the moment of demand being so much higher than our supply capacity. You know, I'm not sure what exactly is gonna be needed to be able to ramp up to that level, because with, let's say 70,000 plus open bookings of XUV700, there's a huge backlog there. That itself is almost 10 months booking.
Every month we are increasing the backlog, because we're getting more bookings for the current capacity, and that's coming in even with a two-year wait period. Really, what would we desire? We would desire to not have a wait period more than three months or four months. If you were to kind of set out and say, you know, what is it that we think is acceptable from a customer satisfaction point of view, three months would be the outer side of what customers would accept. That's where we are at the moment. That being said, we also have to be very mindful as we build...
Sorry, I'm just Gunjan, doing a little longish answer to this because I know this is a question which is going to come in, you know, as in the mind of many, many participants on this call as we've been getting early inputs. I'm just trying to build on this so that, you know, you get a more, everyone gets a more, comprehensive response. We also have to be very mindful as we build capacity that we get the balance of EV and ICE right. Again, that's something we do keep at the back of our mind in the way we are thinking about building capacity.
We are doing that balancing act by way of, you know, the EV portfolio, which you will see more of coming in on the 15th August, where we will put out a schedule. In a way, we will, you know, manage our demand in future through a combination of EV and ICE. These are all things at play, but there's a reasonably aggressive capacity increase plan, and sometime in future we'll try and be more specific.
Got it. No, this is very, very clear, to be honest. Just to be, you know, just at, in terms of numbers, when I think about it, you mentioned 27,000 can be 30,000, and 30,000 plus six can be Scorpio. Is that the fair way to think about it? Because 27,000 doesn't include Scorpio yet.
Yeah, that's reasonably a good way to think about it, though there are parts which are common between XUV700 and Scorpio N. For example, the AdrenoX system is a common part. Now, that has itself a large number of chips. You know, till that ramps up, we kind of burn our CapEx available on that. You know, there are issues of that kind. It's not all exclusive parts that are on Scorpio N, and it's not completely from a supplier ecosystem standpoint, not completely unconnected to XUV700 because of the AdrenoX. Just taking that as one example.
Okay. Okay, got it. Just second question, Sriram, if I may. Second question to you on the performance of these subs. You know, clearly there has been great outcome in the last two, three years. When I look at the specifics that came through in the annual report, the two which stood out to me in terms of still having losses, it's Peugeot and Pininfarina. Could you share your thoughts as to how are you thinking about those two? Is there a rethink in terms of classifying them in category C or, you know, I mean, just some thought process around those two subs.
Sure. Gunjan , on PMTC, we had initially classified it as category A, which is we felt that it would get on a path to 18% return in a reasonable timeframe. What we've seen is that COVID has hit it fairly hard because of various challenges in Europe, challenges in China, the freight from China to Europe. All of those factors have resulted in performance being worse than what we had planned for. The milestone that we had outlined as we had done for all our A category companies were not met, and therefore it is under review right now. We are going back and reviewing it, saying, "Should we change it? Should it be A or C?" We will come back with a final answer on that once we complete the review.
On APF, it was very clear that we were not investing a lot more going beyond the Battista. The Battista, as we've talked earlier, has been reviewed by Top Gear of the U.K. as Hypercar of the Year. It's actually come out as a very nice car. Sales for that will start shortly in the next couple of months or so. As sales start, we'll see, funds flowing in. The investments we've had to make were to get this up and running, but beyond that, we have publicly stated we're not investing any further in the next set of models. We will,
Look for potential investors and work with investors who can take this company to the next level. No change on the APM front. What you see is the numbers are as a result of the Battista sales not starting as yet. Once they start, we start seeing APM getting back on a much stronger footing. That will not change our investment plan.
Got it. Thank you so much.
Thank you, Gunjan . The next question is from Jinesh Gandhi, Motilal Oswal. Jinesh, go ahead, please.
Yes, Sriram, can you hear me?
Yes, Jinesh, we can hear you. Go ahead, please.
Yeah. So a couple of questions. One is, can you talk a bit more about our product launches on the ICE side over the next 12 months from the SV portfolio? And, secondly, the EV teaser which you showed, suggested that we are getting into the coupe range with electric. How does that fit in our strategy of focusing on true SUVs? Thanks.
On a lighter note, Jinesh, before Rajesh addresses this, we've had five blockbuster launches. How many more do we want? Rajesh, go ahead.
Yeah. Jinesh, I think your question was specific around what are the new SUV launches in the next 12 months and SUV ICE launches. There aren't too many SUV new ICE launches in the next 12 months. As Anish said, you know, right now these are all new launches. We've had three in the last 18 months, plus you know, which is the fourth, plus XUV300, which is not that long back. It's a fairly refreshed new product portfolio, which is very attractive. The other things that we are working on, which we've shared, which is expanding the Thar portfolio, so on and so forth, making it more affordable, accessible, to increase the size of the franchise. There are multiple other things that we are working on.
Of course, we are gonna launch the Scorpio refresh, which is gonna be called the Scorpio Classic, very soon in the course of August, this month. There are multiple other launches on the ICE side, which is a new pickup and so on, and you'll hear more about that as we go through. On the question on coupe versus born EV, do wait for more details. No, we're not going away from our core. We will be very SUV-ish. But electric and SUV is not exactly the same as electric and ICE. You know, which is the reason we are teasing to give you a sense of what's coming, but we're not moving away from our core of SUVs.
Sure, thanks. I have a few more questions. I'll hand it back to you.
Yeah, thank you.
Thanks, Jinesh.
All right. Thank you, Jinesh. The next question is from Kapil Singh of Nomura. Kapil, go ahead.
Hello, can you hear me?
Yes, Kapil. Go ahead, please.
Yeah, hi. First of all, congratulations on the wonderful launch of Scorpio N. You know, what I wanted to understand is, from a, you know, Rajesh, you've talked about capacity, but just, you know, how you are thinking about it, as we head into the next financial year. Because, you know, eventually we may have 50,000 bookings or 100,000 bookings. It won't matter if you're not looking at a big capacity expansion, right? Will it be in periods as, you know, supply unlocks, that, you know, there'll be a 10% increase or something like that? Or next year sometime you're looking at, you know, setting up a, you know, additional line or something where there'll be a big jump that is there.
The reason to ask this question is if I add up your bookings, you are already at about 34,000 a month kind of bookings you're getting without the Scorpio N. You know, maybe, I don't know, you can give some color as to post the launch of Scorpio N, you know, how many bookings we are getting for Scorpio Classic as well. Just some thoughts around that would help.
We are looking at a step jump increase in capacity. There are specific step jumps that are gonna happen. For example, engine capacities are a constraining factor at the moment because, you know, the new lineup of engines is going in the whole entire new portfolio with the new lineup of engines. At our end and with suppliers, we are doing that as well. The constraints that we have are less with us, more with one is, of course, the whole engine portfolio, both gasoline and diesel. Then the supplier ecosystem around the engine and aggregate portfolio. We don't have to do any significant investment at this point in our own plants.
It is more tooling, investments and some investments in aggregates and capacities thereof. The next phase of investments, and some of you were in Chakan during the Scorpio launch, you've seen we've just got a new paint shop going. The next round of investments in manufacturing capacity. We can wait for a couple of years and, you know, we are of course planning for that because that's needed even for the EV. That can wait. At the moment, that's not the constraining capacity. Our capacities are not as much a constraining capacity except for engines. Does that, Kapil, answer your question on how we are thinking about capacity?
I also wanted to know about Scorpio Classic. You know, what kind of demand are you seeing post the launch of Scorpio N over there?
We've actually not launched Scorpio Classic yet. We, you know, Scorpio Classic is a refreshed version of Scorpio. The Scorpio Classic will be launched later in the month. At this stage, we're just basically playing down the inventory of the old Scorpio.
Okay.
Towards the middle of August to end, more details on pricing, et cetera, towards the end of August on the Scorpio Classic. As I, Kapil, sorry, I'm just taking a second more to respond to your question. As I shared earlier in the data, a lot of the current Scorpio volumes come from the east, which is, specifically Bihar is a very big bucket. As you saw the skew, booking skew for Scorpio N is northwest and south, and not relatively as much, east. We are seeing current Scorpio move through in markets of its stronghold base. It's not like as we're liquidating the old Scorpio, they're stuck.
Okay. Thanks. The second question is on margins. In two parts. One is that in terms of, you know, if you could talk about the price increases we have taken in the Q2 in both the segments, auto and farm. Do we start to see the commodity benefit from current quarter? If so, have you, can you quantify and what range will it be? The second part is that auto margins are at about, roughly about 6%. How do we, how do you think about the evolution of these? Because you, on one side you will be launching a new product, Scorpio. On the other side, volumes will go up, and maybe some commodity benefit would also kick in. How do you see the evolution of margins from here on for autos?
Yeah. A lot of the commodity benefit will spill over, we are hoping into Q3, because, you know, we have contracts, we have some inventory which was already on order, so on and so forth. Really the correction started maybe like May, June. We're not gonna see too much effect of that we think right now in Q2, and we really think the effect of commodity benefit will be more in the H2 . At this point of time, that's the view that we have on how commodities will impact us. Commodity itself is pretty volatile and, you know, fundamentally the corrections should be more than what we are seeing at the moment, is our hope.
The corrections right now are pretty insignificant compared to the kind of hike we've seen in commodity prices over 20 months or so. On the question of margins, you know, of course margins are not at the level at which we want because we've not really yet been able to pass on even the full cost of commodity increases. Of course, in both the businesses there is the impact of margin not passed on, what we internally call a numerator denominator effect, which becomes pretty significant. Even as we have done, you know, BS VI, and we've spoken about that, we were able to pass on the material cost increase of BS VI, but we were not able to pass on the margin on the material cost of BS VI.
That itself, you know, led to a decline of 1.5% or 2%. You know, there is right now a huge cost escalation and, you know, when we're looking at margins, we have to keep in mind that we are not able to pass on with such steep escalation margin on cost. We're just about able to pass on cost. At the moment, in both the businesses in Q2, we've taken up between 1.5% and 2.5% price increase depending on the market.
Okay, thanks. I have one more question, but I'll follow up in the queue.
Yeah, thank you.
Yeah,
thanks.
Thanks, Kapil. The next question is from Pramod Kumar, UBS. Pramod?
Of course, but, best of luck as well, handling those elevated customer expectations given the bookings. Rajesh, first question on farm equipment. We're gonna be around 900,000 as an industry this year, if everything goes fine. What do you think will be the ramp for this particular sector as a whole? Because 900,000 per se is not a small number, when you look at it in absolute volumes or when you look at it in context of what passenger car, right? Any long-term analysis or data what you crunch which kind of gives us a bit more color on the longer term, sustainable CAGR for this industry, right?
If you can help us on that will be great. I have a question on automotive.
Okay. Pramod, our outlook for tractor industry this year is in the region of 3% to 5% growth, which doesn't quite take us to 900,000. It falls a little short if we get in that range of 3% to 5%. You know, if your question was around ramp up and supply chain, I think that's reasonably covered, for that level of volume. I think your question though is more around what is the implication of that on longer term growth and tractor penetration.
Yeah.
We keep updating our analysis on this issue because it's of course very important for how we see the future. Typically the modeling that we do is what's the total area that's to be sowed, how much is mechanized today, what needs to be mechanized as we go forward, including you know tractor park. Hence, what's the unsaturated demand. Our sense is that with volatility which this industry will continue to have, 7% to 8% CAGR over the next seven to eight years is a reasonable expectation based on this penetration gap.
Okay, that's great to hear. Rajesh, second is on automotive. From given the EV transaction, what we've done and the incremental funding, how we wanna raise there, and the ICE portfolio kind of more or less in terms of new brand platforms being kind of played out for the medium term, because I guess the extended version of Pav won't cost you a lot of money. So given all that, how are you looking at automotive cash flows? Because historically, that's been a cause of concern in terms of whether can we go beyond being self-sustaining and then start generating healthy free cash flow for the company? Because [audio distortion] .
If you can just share what is your broader thinking, given the response you're getting, and the kind of margins what we already achieved and where the margin ramp could be. How should one look at the cash flow, cash flows on the automotive segment? Because that could be a key-
You are Manoj Bhat
Linked to that, Anish, on the implication for dividend payouts from the standalone business. Sorry for that. If it's kind of a bit more longer than what you expected, but yeah.
Pramod, we do see more robust cash flows, obviously driven by the stronger operational leverage. CapEx will move to EV, and that's part of what we've shared so far as well, which is also why we've shared that we feel comfortable with regard to the plans for EV that we have and the CapEx we need for it. After that as well, we will have excess cash generated by the auto business, and as we have talked about earlier, we will not be using cash from auto and farm for investments. We will generate cash from investments for further growth there, and therefore that will free up greater cash for dividends and potentially return back to shareholders in various forms. It is consistent with what we said so far, no deviation from there.
As we look back over the last couple of years, our first focus was to clean up all loss-making entities. Our second focus was to put us on a path to 18% ROE. Our third focus was to drive scale, growth and profitability. The fourth one is to start returning cash to shareholders. I think the first two we've done well, the third one is well underway, and the fourth one will start as it does, as it begins to.
Anish, no timelines as such even, like, say, medium term, anything, on the fourth part?
What I would tell you is we gave timelines for the first one, we met them. The second one, we gave a three-year timeline. We are close to 18% ROE right now, and we should be able to get that completely closed as well. On the third part of scale and growth, that will be ongoing. From that perspective, it's not a timeline where I would say we would sort of stop and say we've sort of gotten to a point we want because we will continue to want to scale and grow faster. Exports and becoming a global auto business will be a big part of the future, and we can talk about that in more detail.
On the fourth part, which is timeline for returning more cash to investors, I would say within the next three years, it may be faster.
Thanks a lot, Anish, and, best of luck to the team. Thank you.
Thank you.
Thanks, Pramod.
Thank you, Pramod. We have question from another Pramod Amthe from InCred Capital. Pramod, can you go ahead?
Thanks for the opportunity. First question is with regard to urban pickup truck in the coming future. Just wanted to know what's your thought, because you are a leader in the overall pickup segment. What is the opportunity size you are looking at, and what do you plan to do there? That's first. Second, with regard to tractors, you have talked about with the implements and new technology coming, interestingly, there is more disruption and competition expected in the tractor industry, which is contrary to the belief that it's a very low-tech industry and hence least of the threat for a leader. Would you like to elaborate what are you seeing in these two sub-segments?
I missed, Pramod, the first part of the pickup question. Can you just repeat what you said in the beginning?
Sorry. The first question is,
I heard the pickup truck part, but I just missed the opening line, opening words.
You say you have talked about a urban pickup truck, right? You plan to launch a urban pickup truck. So what is the opportunity you see there? Why you feel there's a specific model required? And what type of a business opportunity makes sense? Because considering that you're already a leader in pickup trucks.
Actually, you know, I read about the urban pickup truck, like you maybe in the Mahindra Logistics. We haven't really said we're launching a separate urban pickup truck. Our pickups do sell in urban areas today, and we are capitalizing and building on that. We also have a separate portfolio, Pramod, of pickup trucks like Scorpio, which gets exported in multiple markets, including South Africa, Chile. It does very well. At some stage in the future, we would look at, you know, upgrading or updating that portfolio to create what we may call a global lifestyle pickup. That if we're doing is more for, you know, our global markets, and it will of course have some spillover benefit in India. That's not a primary part of our pickup strategy.
Our primary part of our pickup strategy is what I've played out is upgrading our current pickup portfolio to make it more tech. We'll talk more about that. You'll hear more about that through the month of August as we do the first of that. Pramod, are you there? Could you-
Yeah. About the tractors, the second question, you have talked about.
The farm machinery and implements and the role of tech and competition, right? I would compartmentalize these into two different buckets. One is, what's the opportunity on the farm machinery side, and we really think that's a big growth opportunity. We've spoken a lot on that in the past. We're doing multiple things to strengthen our farm machinery portfolio. On the specific question on competition and tractors, certainly it's not low tech. I don't think it ever has been. We continuously, you know, our platforms, Yuvo, Novo, Jivo, and the K2 that we are working on are all pretty evolved, very strong platforms doing well around the world, the current platforms, including North American markets. They are well developed, designed tech products.
We don't think that we are behind the curve at all in the tech evolution on the tractor side. You'll see many things coming out, you know, as we also start launching the K2 platform over the next year or two.
Sure. Thank you.
Manoj, do you want to add something on the tractor piece?
I think you covered it well. Nothing else to add.
Thanks, Manoj.
Thank you. Thank you, Pramod. The next question is from Binay Singh of Morgan Stanley. Binay?
Just a few follow-up questions from some of the earlier questions on booking. With regard to booking, looking at the data, do you have any insight into, if at all, if there's any double booking or overlapping booking, a customer who's getting one year waiting in one brand shifts on to the other one? Any sort of insight on that? And secondly, in the last call, we talked about 10% to 15% cancellation rate in booking. Any update on that side? And the last question is just on the automotive margins. I think in November last year, we had talked about almost 300 basis points of expansion room in the automotive margins from the levels at that time, which was around 3.7% or so. Since then we've seen commodities actually moderating, but volumes going up.
Any sort of aspiration on the automotive margins?
I'll probably take the auto margins question first, and Manoj, step in if you want to add something more to that. When we are saying commodity prices cooling off, it's a very relative term. It is cooling off from the escalation that happened in Feb, March post the Russo-Ukrainian War. It is nowhere near cooling off compared to the kind of escalation that we've seen over the last 18 to 20 months. You know, this is published IM data, so you know, that's very accessible. You can see the shape of the curves for the critical commodities. You know, there may be sharp corrections in commodities which don't have a very significant part of the bill of material of automotive.
In primarily what's going into automotive, steel and so on and so forth, the corrections are not that high. There is also of course a dollar exchange rate, which is not favorable to anything that is imported at the moment. You've also seen an adverse impact on foreign exchange at the moment on material costs wherever there are anything that's coming getting imported. That being said, there is a very sharp focus on improving our cost structure. We have shared earlier in the year FY 2022 compared to FY 2019, we brought our fixed costs down in auto and farm by about INR 900 crore in absolute terms. It's not a, you know, system cost percentage impact. It of course is very significant, but in absolute terms, we brought that about INR 900 crore down.
In Q1 this year, again, compared to Q1 of FY 2019, we brought absolute fixed costs down. We're comparing FY 2019 because, you know, we in a manner of speaking that, it was one year where everything was steady state, before COVID kicked in or BS VI transition started coming in and so on. Again, we've reduced over INR 200 crore of fixed costs, on Q1 of FY 2019. There is a very significant correction that we've done on the fixed costs. A lot of work is going into improving or doing value engineering of our current models. You know, the overall cost structure is continuously improving, and that was the 3% that we had spoken about earlier, which is strengthening our cost structure. That makes the business leaner and fitter.
At some stage, the commodity cycle will significantly correct, and I guess that's when we'll start seeing the upsides, real upsides translate into margin of all the actions that we're taking. Manoj, you want to add on?
No, Rajesh, I think you touched upon the fact that we had mentioned 300 basis points in the medium term. I think there are multiple pulls and pressures. From our perspective, it is important that we will look at what can be done in this area. As and when I think there's a revised view on margins, I think we'll come back and talk about it. As Rajesh mentioned, I think the first half of this year, I think considering our current contracts and other factors which are a lag, I think we will probably look at the second half in terms of what can be done in terms of margin improvement. At this point, I think we'll remain with what we have said.
Yeah. You know, I just want to add to the point on M&M auto margins. You know, this whole thing, in some of the negative comments that we get around our pricing policy, there are a few people who do recognize that we are being very transparent and being very clear about the price protection that we are announcing and offering. You know, the second round of XUV INR 25,000 is still getting completed, right? Now once we've committed to protecting INR 50,000 at a certain price, that does have an effect. And as soon as that corrects out and we complete that, then we move on to price prevailing today. You know, there are all of these. We went through that on Thar as well, where we protected price for a very long period of time.
We're doing that on XUV700 as well. In the case of Scorpio N, that's not coming. We're still learning out of each experience that price protection is only the first INR 25,000. Hopefully, we'll be completing that by the end of the calendar.
Right. Yeah.
Can I take your first two questions? I'm just gonna connect the two, which is the double booking and cancellation. I don't think double bookings is very prevalent in cities which don't have multiple dealerships, so that's not so common. That is there to some extent in metros where, you know, customers will be booking in a couple of places. Typically, I'm now connecting this to cancellations. The cancellations rates remain the same, which is in the region of 10% to 12%, depending on the model. Now, when that's the cancellation rate for the period of time as new bookings are coming in, to our mind, if there was a lot of double booking, we would have by now started seeing much more cancellation. Our sense, I'm sure there's some double booking.
I mean, that's to be expected. I don't think that's gonna be very disproportionately high percentage. If I was to just throw a number, there's no real way to verify because we do get a KYC of each and every booking. So every booking has a KYC against it, not a random booking. For every booking there is a KYC, so there is a genuine customer Aadhaar or whatever else against the booking reference. So we don't think it'll be more than 5% to 10% of the total if there's at all a double booking.
Oh, okay. Thanks for that, Rajesh.
Yeah.
Thanks, Binay. The next question is from Chirag Shah, Edelweiss. Chirag? Chirag, we can't hear you. Chirag? Okay, then probably we'll go to the next question from Jay Kale from Elara Capital. Jay?
Hello, am I audible?
Yeah, Jay.
Yes, go ahead please.
Yeah. My first question is regarding the tractor margins. If you see, we are probably at, you know, Q1 is at life-high volumes. Historically, we've seen as for life-high Q1 volumes, not necessarily entire any quarter volumes. We've seen historically that we've been able to protect our tractor margins quite well in that 19% to 21% odd EBIT margins range. This time, despite the industry being at such healthy levels, we are, you know, hovering around that 16.7%, odd 16% margins. How do you see that going forward? What is the pricing power that the industry has currently with such high volumes? How do you see the path going forward to, say, around back to 19% to 20% EBIT margins?
Yeah. Jay, two parts to the question. I think part of the question is also related to the sequential margin where, you know, we've shown some improvement, but there may be a view that why would that sequential margin growth not be higher. Couple of points to think about. One is, we are going through the effect of the margin not passed on even in between Q4 and Q2, and that alone on Q1 has a 0.5% impact. That is one factor. The other is we have, of course, not yet, even in Q1, been able to pass on all the material cost increases that happened in Q4. You know, they've rolled over into Q1, which is impacting us.
The model mix in Q1 was not as positive, so there was a negative model mix impact as well. That's just explaining, you know, and by way of three levers, what's happened to margin in Q1. Going forward, we really have to see what's gonna happen to commodity prices because in a way with the kind of increases that have happened in the last 12 to 15 months, we've lost more than 3%, 2% and 2%, more than 2%. If we just to compare FY 2022 to now, we've lost 2% on margin not passed on. If you were to reconcile, you know, 4% margin, 2% of that is just the numerator denominator effect.
The rest of that is, actually the inability because of timing or whatever else phasing to not be able to pass on all the cost. Is that margin lost because of the numerator denominator effect? Gonna back at what stage? I think we have to wait and watch to see how much commodity price comes down. Because if there's a sharp decline in commodity prices over the next 12 months, then you know the margin will kick in because obviously you don't take price reductions at the same pace as you're not able to take price increases at the same pace, neither will you bring prices down at the same pace, and then your margin very quickly starts going up.
You know, it's not as direct an answer as you're hoping for, and we really have to see. I think to get margins back to the levels at which we were as a percentage, we will have to see a much bigger correction in the commodity cycle. Margins would improve in the second half, as I alluded to earlier and Manoj has been talking about as well. To come back to the earlier levels, commodity cycle needs to correct much more. Absolute profits of course, you know, we are seeing, as you saw even in Q1, we are able to churn out very good absolute profits and this was the second highest absolute profit for FES.
Got it. Great. Thanks and all the best. That's all from my end.
Thank you, Jay.
Okay, thank you. I understand, we have three questions in queue, Sriram. While we are scheduled to end now, why don't we take the three questions and shall end after that, please.
Thanks. Thanks, Anish. The next question is from Hitesh Goel of CLSA. Hitesh, can you go ahead?
Strong performance. My questions are basically twofold. First is actually on the commodity price. Sorry to harp on this again, but if I look at the spot commodity price, spot steel price, which is a main component in tractors, right, also in SUVs. If you look at that, cost, it is at least 15% to 20% below the contract prices of the auto companies which they have seen in this quarter as per the steel companies. Even if I look at international steel prices, they are significantly lower than the Indian spot prices also. I'm quite surprised that companies are not talking about a big jump in margins from Q3 onwards when the contract comes in for renegotiation.
Is it because that you guys are looking at macro situation and maybe looking to pass it on? Or you're seeing pressure in the industry because of competition? Can you just talk about that? My, just on the second question, can you give us some sense on the farm implement revenue in this quarter and FY 2022 revenue? Because that is a piece which you are really focused on, and that could grow multiple fold. We don't talk about it much, so if you can give some color on that also.
Yeah. Manoj, do they really have the figure of farm machinery? I can just open it up, but last year was in the region of INR 400-odd crores. Do we want to share quarter-wise or?
I think we'll give an update at the end of the year. That's what we've been doing. Unless Anish, if you want to expand a bit more or you wanna expand on the strategy a bit.
Yeah. I would just say on farm machinery that we are looking at a significant growth from where we are right now. In this quarter we are on track in terms of where we want to be. I'll leave it to Manoj as to when and how he wants to share the numbers. He does it consistently across. Maybe we should not wait for the full year, maybe at least do it at the six-month mark so that we can start giving a progress update on this as we go forward. If required, look at doing it every quarter as well. At this point all I say is there is significant opportunity. A lot of actions have been taken. It's moving on track. There is a lot more work to be done.
Yeah. I'll just add that quarter-on-quarter we grew about over 35% in the farm machinery business. Multiple things at play in farm machinery business. Rotavators we are doing very well. We're gaining market share very rapidly. A critical revenue driver in the farm machinery business is what's called tractor-mounted combined harvesters, acronymed as TMCH. That has been extremely slow because of, you know, the situation in Andhra, Telangana, so on and so forth. That fresh season starts in August. We'll see, you know, how that will play. Farm machinery being sum of multiple smaller sub-segments, it sometimes there is a slowdown for a given sub-segment of farm machinery, so it becomes very difficult to generalize when we're looking at farm machinery numbers.
We have a very aggressive plan for this year, and as Anish said, we are broadly on track for that.
Hitesh, there was a prequel to that question.
Yeah, on the commodity prices, if, you know, I think Manoj can answer on the steel prices, how do you looking at, because is there a difference between auto steel and the spot steel price that we're looking at? Because I believe there's a significant improvement expected on margins.
I think broadly speaking, I think in Q2 the prices will come down. I think as I've mentioned before, I think we are looking at the situation in terms of the various pulls and pressures. If I look at the margin equation, number one is if I look at the new models and there is the XUV700 which is coming out of pricing which will be better for the H2 . The second is there is a Scorpio N which has been launched. The first 25,000 will be at a lower margin.
When we are saying all this, that's why we are saying that we will probably update at the end of the next quarter in terms of our guidance of that 300 basis points. We don't want to change it every quarter. If the commodity prices continue to remain low, I think, as we mentioned before, I think the second half will be better margins.
300 basis points from current margins, right? That is what you're saying.
No, no. 300 basis points is what we had said at that point when the margins were about 3.5%. So that's the baseline, right?
Okay. Finally on, sorry, just on the farm equipment side, have you given a figure of 10x increase in revenues in four, five years in farm implement space somewhere? Where somebody told me about it, so.
We have talked about that as a growth number which we would like to target, given that the market is today not organized. Globally, I think the ratio of farm equipment to tractors is much different. That we have spoken about as a target or aspirational number.
The industry size is INR 7,000 crore. Am I right now? Including organized.
I think the
Yeah. It's about that.
Great. All the best, guys. Thank you very much.
Thank you.
Thank you. The next is Amyn Pirani from JP Morgan. Amyn?
Did you want to get Chirag back?
Yeah. Next is Chirag, Rajesh. After this Chirag, we'll close with Chirag. Yeah. Kapil wanted to come back as well. Why don't we add Kapil as well then?
Yeah, sure. Okay, go ahead, Amyn.
Hi. Yeah, sorry. I actually dropped off in the middle, so I'm just going to ask a question, maybe it has already been asked. Regarding your tractor guidance for the year, because there are a lot of volatile moving parts, what could go wrong? I mean, obviously, sowing is a bit slow, but rainfall is okay. You know, reservoir levels are fine. What are the risks for this year, you know, for the remainder of the year, even though the ask is not very high? How do you see, you know, the demand? Obviously, you've talked about medium-term growth, which is still quite healthy. What are the risks that we should watch out for the remainder of the year? Thank you.
Two things. One is what we often call terms of trade for farmers, not favorable at the moment. The input inflation is for farmer higher than the output inflation. That's one thing we are closely tracking. The other is the government spending in agri and rural has come down significantly over the last few months, and that is a key parameter as well. These are the two risks that we would watch for. Keeping all of that in mind, we believe the industry growth for the year will be in the range of 3% to 5%. Something changes positively on either of these parameters, then of course it's different. There could be an upside.
Sure. Thank you. Thanks a lot.
Okay. Chirag, I think your line is unmuted now. Can you go ahead?
Yeah. Thanks a lot for the opportunity again. Two questions. One, on the international farm subsidiaries that we have now, if you look at over last few quarters, our revenue number as well as EBIT number is largely in a range. What is the way ahead and what will it require for growth or margin expansion or both? What is the timeframe that we have set internally for yourself to achieve those targets?
Chirag, in the short run, actually this is a very good performance given all the challenges that international markets are facing. In the last six to eight months, there's been huge escalation in freight costs. I mean, you're tracking that, and that has significant impact on the ability of each of these companies. You know, we ship tractors from Japan to U.S. We ship tractors from Korea to U.S., from India to U.S. We've seen huge freight increases everywhere. That is one adverse factor right now in the global scale, which prevents a very quick ramp up. Some downsides on the Sampo business because of the current European situation of operating in some parts of the world, which we've kind of constrained ourselves around.
You know, these are a couple of things that we keep at the back of the mind. Mitsubishi was affected by China lockdown because they do get some portion of their parts from China. While each of the businesses are still doing well, and you saw, you know, big upside in Brazil, where it is doing extremely well, some of the larger businesses are not able to get the upside because of inflationary pressures.
Okay. The second is on hybrids in the EV space. Your views and are you actually working on it? You may not be that positive as a space, but you are developing a product as a plan B if it does well in India, delivering their capabilities. Any thoughts on that? Because a large competitor of yours is betting big on hybrids. It's very interesting that two different participants of industry are thinking differently.
We are at the moment very focused on our EV strategy, Chirag. We are not working on a plan B for hybrid at this stage. Not commenting on the moves of our competitors. You know, they will also look at where they are investing and what technologies globally. What we are responding to is what we've seen is a very strong focus on the government of India to move towards a high level of electrification of fleets, including three-wheelers and, in our case, SUVs. That's the part that we are staying focused on and delivering outcomes in. Anish, I know you would want to add on this.
Yeah. I would just add that in most global markets as well, there is a very strong trend towards EV. EV really solves the problem around a greener environment. Therefore, our approach also is follow what's happening in global markets, what the government is pushing, and really have a solution that is a full solution, not a partial one.
Yeah. Thank you very much. All the best.
Thank you, Chirag.
Thank you, Chirag. Last question is from Kapil. Kapil, can you unmute? Okay. Maybe Kapil has dropped off.
Yeah. No, no, I'm there.
Okay.
Thank you. Rajesh, my question is to you. Just wanted to understand that BS VI Phase II will be coming up next year. So in terms of costs for any of your segments, is there any disruption that could be there for, let's say, segments like diesel or petrol? If you could just give thoughts for LCVs, SUVs. That's the first part. Secondly, in terms of what we are seeing is CNG costs going up substantially now. So do you think there's a potential for much faster transformation towards electric in, say, categories like three-wheelers or pickups, and how are you preparing for that?
Kapil, on the first. Let me take the second question first. The CNG is clearly, you know, that it's so cyclical that three months back everyone was scrambling to build all the CNG capacity it was needed. The market was moving so rapidly towards CNG, and that slowed down dramatically, like you rightly said, because the price cost parity equation has changed in the last month and a half or two. It would strengthen the EV story in the commercial vehicles as well. So yes, we see that as an upside, but that being said, you know, this equation can change or reverse again. We have to keep our EV strategy, I mean, sorry, our CNG strategy intact, as we prepare for the future.
You know, we have to juggle on both the fronts of keeping EV going, but also being ready with changes. We are ready with changes. It just becomes harder for suppliers because there's so much volatility and uncertainty around the supply side. Kapil, do you mind repeating your first question? I've not completely got that.
What I wanted to know for, as we move to BS VI Phase II, which is real-world driving emissions, will the cost increase be substantially higher for diesel segment? How are you prepared for both SUV as well as the pickup segment?
We are prepared well, Kapil, from a readiness point of view. The cost is not abnormally high. We've shared that last time as well. We will be able to, you know, handle the cost issue. The key thing is the number of new regulations that come in, you know, BS VI.2 is one of them. As we prepare for that, and if there's a legislation around mandated six airbags, all of these are adding to the overall cost pressures in the market. If we are able to pass these on, then the margin on that doesn't become so easy to do. You know, this has been happening continuously over the last one out of three years, which is creating margin pressure in the industry as a whole, where there's multiple causes of inflationary pressure.
While we do try to pass on the cost, the margin doesn't get passed on, and then that drops the overall weighted margin of the business. That's one of the challenges that we'll have to grapple with as we move. If this cost comes in, you know, commodity pressure comes down significantly, then it becomes very easy to pass it off as well, because then, you know, customers got used to a certain price point and you're able to absorb it. It's when all inflationary pressures are happening at the same time, that's when these costs are becoming a challenge.
Sure.
Does that make sense, Kapil?
Basically, what I'm trying to understand is the cost increase in diesel going to be so large that hybrids become viable?
No. No.
Okay.
No, it's not, it's not that much, Kapil. It's not gonna make any difference from that perspective.
Okay. Thank you.
Okay. Thank you. With that, we come to the end of the conference. We thank all the participants, especially since we do the Q1 calls late in the evening since we have the AGM in the afternoon. Thank you for participating in large numbers, and also thank the management team here for you know, making time and being here at the end of the second day of continuous board meetings. Thank you. Thank you, everyone. Have a good evening.
Thank you.
Thank you, everyone.
Thank you.