Ladies and gentlemen, good day, and welcome to the Q2 FY20E23 Earnings Conference Call Of Maruti Suzuki India Limited. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the CFO commentary concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Pranav Ambaprasad. Thank you, and over to you.
Thank you, Yashashri. Ladies and gentlemen, good afternoon once again. May I introduce you to the management team from Maruti Suzuki. Today, we have with us our CFO, Mr. Ajay Seth. From corporate, we have Executive Director, Corporate Planning, and Government Affairs, Mr. Rahul Bharti. General Manager, Corporate Strategy, and Investor Relations, Mr. Nikhil Vyas. From finance, we have Executive Director, Mr. Pradeep Garg and Vice President, Mr. Neeraj Mandhana. The con call will begin with a brief statement on the performance and outlook of our business by Mr. Seth, after which we'll be happy to receive your questions. May I remind you of the safe harbor. We may be making some forward-looking statements that have to be understood in conjunction with the uncertainty and the risks that the company faces.
I'd also like to inform you that the call is being recorded, and the audio recording and the transcript will be available at our website. Please note that in case of any inadvertent error during this live audio call, the transcript will be provided with the corrected information. I would now like to invite our CFO, Mr. Ajay Seth. Over to you, sir.
Thanks, Pranav. Good afternoon, ladies and gentlemen. I hope you and your families are healthy and safe. Let me start with some business highlights during the quarter. Maruti Suzuki celebrated 40 years of Suzuki's partnership with the people of India. During the event, Honourable Prime Minister laid foundation stone of Suzuki Motor Gujarat electric vehicle battery manufacturing facility at Hansalpur, Gujarat, and Maruti Suzuki vehicle manufacturing facility in Kharkhoda, Haryana. The company was incorporated to provide cars for the masses of India and also build a vibrant manufacturing industry in India. We are happy to share that the company has been true to its reason for existence even today. If we look back, one of the key success factors in our journey has been the strong focus on understanding and fulfilling the needs of customers by offering them relevant products, technologies and services.
Over the years, customers have evolved, and accordingly, our products, services, and business processes too have aligned, keeping the customer at the heart of it. The other factor has been how we have always thought of the long term in all our actions. All management decisions are based on the long-term interest of our stakeholders. Last but not the least, we have a very good blend of Indian and Japanese culture in our company. We were able to combine Japanese top-notch practices and discipline with Indian innovation and zeal in our operations. Our parent, Suzuki, has been a silent support, trying to look at the future from its global experience and carefully selecting the best technology and products for Indian customers. Coming to the recent new model launches, in September, the company started retailing its newest flagship offering from NEXA, the Grand Vitara.
With over 75,000 bookings in a short span of time, customers' response for Grand Vitara is overwhelming. The Grand Vitara is a multi-product offering with cutting-edge intelligent electric hybrid powertrain, progressive smart hybrid technology, and Suzuki ALLGRIP Select technology, is designed to appeal to a varied customer base and will revolutionize the SUV space in India. In August, the company launched a full model change of its iconic brand Alto. The all-new Alto K10 is loaded with a host of comfort, safety, convenience, and connectivity features. The company further strengthened its green vehicles portfolio by introducing S-CNG powertrain technology in Swift and S-Presso. With this, Maruti Suzuki now offers 10 vehicles with factory-fitted S-CNG technology. Maruti Suzuki's research and development facility conducts rigorous testing for its factory-fitted S-CNG cars to deliver unmatched safety performance, durability, and fuel efficiency.
Going forward, the company will strive to further strengthen its SUV portfolio to dominate the SUV segment just like all other segments. Coming to the business environment during the quarter. On the back of better availability of electronic components, the company reported its highest-ever sales volume in any quarter. The electronic component shortages are still limiting our production volumes. In this quarter, the company could not produce 35,000 vehicles. Limited visibility on availability of electronic components is a challenge in planning our production. Our supply chain, engineering, production, and sales teams are working towards maximizing the production volumes from available semiconductors. The supply situation of electronic component continues to remain unpredictable. Now let me come to the highlights of Q2 of this financial year.
The company sold a total of 517,395 vehicles during the quarter. Sales in the domestic market stood at 454,200 units. Exports were at 63,195 units. The same period previous year was marked by huge shortage of electronic components, and consequently, the company could sell a total of 379,541 units, comprising 320,133 units in domestic and 59,408 units in export markets. Pending customer orders stood at about 412,000 vehicles at the end of the quarter, out of which about 130,000 vehicles pre-bookings are for recently launched models. During the quarter, the company registered its highest ever quarterly net sales of INR 285,435 million.
During the same period previous year, the net sales were at INR 192,978 million. The operating profit in Q2 of this year stood at INR 20,463 million, as against INR 988 million in Q2 of the previous financial year. The operating profit in Q2 of last year had dipped sharply owing to steep commodity price increase and electronic component supply constraints. Hence, results of Q2 of last year are not strictly comparable with those of Q2 for this year. The company has been making simultaneous efforts in securing electronic components availability, cost reduction, and improving realization from the market to better its margins.
With this, the net profit of the quarter rose to INR 20,750 million from INR 4,753 million in Q2 of last year. Coming to the highlights of H1 for this financial year, the company sold a total of 985,326 units during the period. Sales in the domestic market stood at 852,694 units. Exports in this half year was at 132,632 units. During the same period previous year, which is H1 financial year 2021, 2022, the company registered a total sales of 733,155 units, including 628,228 units in domestic market and 104,927 units in the export market.
In addition to electronic component shortage, the sales in H1 of the previous year were also severely affected due to COVID-related disruptions. Hence, results in H1 financial year 2022, 2023 cannot be compared with those of H1 financial year 2021, 2022. The company registered net sales of INR 538,298 million in H1 of this year, which is the highest ever half yearly net sales. The net sales in H1 of previous year were at INR 360,965 million. The company made a net profit of INR 30,743 million in the H1 of this year, as against INR 9,161 million in the H1 of previous year. We are now ready to take your questions, feedback, and any other observation that you may have. Thank you.
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. We have our first question from the line of Kumar Rakesh from BNP Paribas. Please go ahead.
Hi. Good evening, team, and thank you for taking my question. My first question was around realization. Sequentially, we have seen an increase in the realization by about 2%. Now, this is quite noteworthy given that in the context of the volume mix which we had during the quarter, mini and compact segments mix had increased while UVs and export mix, the volume mix was lower. Also, discounting in September quarter usually is higher than what happens in the June quarter. Despite all of this, we have seen an increase in realization. Can you please help us understand that what led to this realization increase?
Sequentially, there is an improvement in realization, and this is attributed to the mix because the proportion of the. While you know, we had launched the new Alto and the price points of the old Alto and new Alto were different, so that's one part. Second, also, I think the proportion of the Brezza and other higher vehicles are higher compared to the Q1, which led to this higher realization. Also the fact that we had taken a price increase in the Q1, which was partial in Q1 and fully absorbed in the Q2. So that also had its impact. Discounts are more or less same in the two quarters. It's marginally higher in this quarter compared to Q1, not very different.
Got it. Thanks for that. My second question was how to look at now at the installed capacity that we have access to at Maruti, given that we'll also have access to Toyota's capacity. What number we should be looking at the installed capacity for us?
As of now, we have about 22.5 lakh capacity at Haryana plus Gujarat. Of course, production at Karnataka is over and above this. Whatever comes to Maruti, and in times to come, we are in process to working on the Kharkhoda plant, which will be up and running in the year 2025. If required, I think most likely we might have to add about 1 lakh capacity on a short-term basis in Manesar to meet the intermediate demand. Kharkhoda by April 2024 and Manesar....sorry 1 lakh might come by April 2024 and Kharkhoda the next year.
Understood. Okay, got it. I have more questions, but I'll follow in line. Thank you.
Thank you. We have our next question from the line of Pramod Kumar from UBS. Please go ahead.
Yeah, thanks a lot for the opportunity. Just on your opening comments, you talked about with future SUV launches to dominate the segment, unlike how you dominate the other categories. This is quite heartening because your current SUV market share, SUV plus MPV market share is 17 percentage points. If you can just help us understand between you and Shashank Srivastava as to, or even Rahul Bharti, as to what are the plans here, because the understanding is that it's a pretty competitive segment with very well-entrenched models, and Maruti is, you know, is coming late on the category.
If you can just help us understand what gives you that confidence that you will have a significant, you're talking about dominant, but even if it's significant market share, how, what are the plans and how do you get there, sir?
Pramod, I think let the excitement carry on for some more time because we have said that we are committed to address this SUV segment. Therefore, we have mentioned that there will be more launches in these segments. As you're aware that we don't give any details on the products, product plans and as such, there should be some excitement which should be visible to you as you saw in Grand Vitara, maybe soon you will see more excitement in the newer launches that we will have. Definitely, we are committed to the SUV segment, which will not only help us address the growing segment, but also help us address the market share loss that we have had in the past.
Sir, just one related to this, generally the automotive thumb rule is as the pricing of a category goes, pricing of a product goes higher, the profitability is generally better, of course, subject to scale and SUVs are significantly more pricier than a comparable product in every category. Is that understanding right that as you make this pivot from a hatchback-led portfolio to a higher priced SUV segment of your, there is no reason why you should be compromising your profitability, right? When you make this switch and transition.
Right. See, profitability is all dependent on what is your ability of pricing a product at a given point in time.
Yes.
You know, in the past, with our portfolio being smaller cars and we were not present in the SUV segment, and still our profitability was reasonably good. I think it will be a combination of what the market can absorb, where you can price your product and also, you know, when the product matures over a period and, you know, as you localize and cost goes down, things change in that interim period. It will be a combination of many factors. Giving an answer to that would be very complicated at this point in time.
Okay, fair enough, sir. The last question then is on the financials. On the other expenditure side, we have seen that it kind of outpaced the revenue growth quarter-on-quarter.
Go ahead please.
What is driving that, sir? If you can just throw more light on the sustainable number there, and even your growing expense has seen a reasonable jump. If you can just help us understand these two line items better, sir. Thank you.
Is it, you're talking of sequential or compared to the previous year?
Sequential, sir. Previous year, the base is impacted, so there's no point. I'm talking about Q2 over Q1.
Okay. Q2 . In sequential, one thing that's built in this is also other expenses is royalty. With the volume going up, the royalty also as an absolute value goes up, so there is an impact of that which is an increase from Q1 to Q2, that's about INR 150 crores. There is an increase in the advertisement and marketing costs. As you are aware that we've had launches, and also we mentioned in the previous call as well that we will be not shying away from investing in marketing spend, because that gives us a much longer visibility. That's gone up by another INR 150 crores. Also the manufacturing expenses have gone up because of the significant rise in the energy prices.
The power and fuel costs have significantly gone up. Also, you know, certain activities that we were scaling down earlier, we have started to now, in a normal situation, we have restarted that. There's an increase on that account as well. These are broadly the heads where it's gone up. There is a small increase in other heads, including the employee cost, which is a normal increase that you have on account of the normal increments, et cetera, that happens during the year. Other than that, I think there is no other factor of increase at this point in time.
Would you expect the marketing intensity to continue like this, or you would expect some bit of normalization? Or even on the royalty side, is there any launch related royalty payoff, one-off from when a new model is introduced?
No. There is no launch-related royalty that we pay. Royalty is basically linked to sales, and it will be based on the same formula that we have mentioned to you in the past. There will be no change as far as that is concerned. Marketing spend will depend on many factors. It's the visibility that we need for the new models, the kind of visibility that we need for existing brands and existing models. And also as you're aware we mentioned, that we'll be bringing in more new models, so obviously the spend will remain stepped up.
Fair enough, sir. Thanks a lot, and I wish you all the best. Thank you.
Thank you.
Thank you. We have our next question from the line of Amyn Pirani from JPMorgan. Please go ahead.
Yes. Hi, sir. Thanks for the opportunity. Just to go back to the question on discounts and royalty, can you mention the discount per vehicle number as well as the royalty number for the quarter? I know you answered the question directionally, but can you give us the numbers also?
Discounts in this quarter were at INR 13,800 per vehicle, and they were at 12,748 in the Q1. They are about INR 1,000 higher than the Q1. They were obviously much higher in the Q2 of last year. They were at about INR 18,500 in the Q2 of last year. That's on discount. The royalty percentage last year was at 3.5%. Now it is at 3.8%. The Q1 royalty was slightly lower than this because it was between 3.6% and 3.7%.
Okay. Thanks a lot for that. Secondly, on your CapEx, I see that in your cash flow, I think you've already spent INR 3,500 crores on CapEx for the H1. So, can you help us understand what's the full year expectation number and what are the areas in which these spends are going? Is most of it going towards the Haryana CapEx, or is there some other areas where you're spending this money?
We will be spending upwards of INR 7,000 crore this year, and this includes of course the Kolkata facilities, where we are now, we have started our construction work, et cetera. Also we'll have to place orders to various vendors. That will be one major portion of CapEx. Besides that, all the new model launches that we are doing, where we have to have the investment in tooling, et cetera, I think that will be the other large piece of CapEx. These are two areas where the CapEx will be maximum. You have the other routine capital expenditure on the other aspects of the business, which is R&D, the regular maintenance CapEx. These are the key areas where we will be spending.
Okay, sir. Thank you. I'll come back in the queue.
Thank you. We have our next question from the line of Raghunandhan N L from Emkay Global. Please go ahead.
Congratulations, sir. Thanks for the opportunity. Firstly, order book is huge at 4.1 lakh as of end of September and new products are 1.3 lakh. For the remaining portion, which is large at 2.8 lakhs, can you indicate which are the major models?
It's a mix, but mostly we have seen Ertiga has a high wait list and, anecdotally also you keep getting requests for early allotment. Of course, the new models we have discussed. The Baleno also has a high number. The other models, mostly equally spread.
CNG would be INR 130, INR 140?
Approximately, yes.
Sir, given the strong response for hybrid, there is a scope for launch of hybrids in other existing model. What are the thoughts here? Typically, what is the timeline required for introducing a new powertrain in existing model?
Yes. We are also happy and hopeful because it's maybe slightly premature, but the strong hybrid is getting a good response. In the Grand Vitara, almost more than 35% of the total bookings that we have today are of the strong hybrid. We'll watch this as it comes. We'll try to look at other options in other models also.
Thank you, sir. Lastly, the gross margin has improved 150 basis points quarter-on-quarter. Can you indicate what would be the contribution of JPY depreciation and commodity benefits for Q2?
From the sequentially, there has been a benefit on account of commodity because commodities have come off. And also, the element of the normal cost reduction that we do. Even on the exchange rates, we have gained because JPY, the JPY depreciation has been steep during the quarter. There are combinations of factors this time now which are all positive. One I said commodities, second I mentioned about the cost reduction, the regular cost reduction that we do.
The JPY impact, overall impact of the currency depreciation. All put together, you see a combination of these three are impacting the gross margins to improve by what you've seen.
How do you see the commodity benefits going forward?
Commodity benefits going forward is difficult to predict. It will depend on certain commodities have cooled off, and certain commodities are higher than, you know, the earlier period. It's a combination. For example, anything related to oil, energy, et cetera, is still expensive, which are, you know, where we've been shelling out more money than before. Things like steel and precious metals have shown improvement. Now, we will have to wait and watch in terms of how the future moves. I think it will at least remain steady in the Q3 , but the indication given by our supply chain is that there could be slight inching up in the Q4 .
Got it, sir. Thank you.
Thank you. We have our next question from the line of Chandramouli Muthiah from Goldman Sachs. Please go ahead.
Hi, good evening, and thank you for taking my question. The first question is on the Grand Vitara profitability. Could you maybe share any additional color on how long maybe you think this product could take to reach sort of corporate average EBIT margins? So from a percentage margin perspective, could you maybe see scope for this product to reach the corporate average EBIT margin over time? Or is the outsourced manufacturing arrangement likely to continue a shared margin structure with Toyota?
We do not comment on individual segment or individual product margins as such. You know, the largest benefit was that it's a premium offering in the SUV space. What we are excited about is that a fair percentage of the bookings are in the higher variants, and this is both for Grand Vitara and for the Brezza. A very good percentage of the bookings are from the upper of the top variants. That is positive. Once we have volumes and we have, you know, we have presence in these segments, profit automatically follows.
Got it. That's helpful. My second question is on the semiconductor situation. Despite still a bit of a nagging impact of semiconductor shortages, you seem to have hit record production and volumes this quarter. Just trying to understand, the few units that you are not able to produce this quarter, what is the typical model mix there? Is it on more premium vehicles or is it on CNG vehicles? Any color there would be very helpful.
No, it's not like that. It's basically most of the constraint is coming from one semiconductor, one electronics part manufacturer, and of course it is in some specific models. Hopefully going forward, you know, we hope that the situation eases, though it is very difficult to predict.
Got it. That's helpful. Lastly, I just have a housekeeping question. If you could maybe just give us the numbers on spare sales and export revenues for the quarter?
Export revenue was about INR 3,400 crore for the quarter. Spares, generally, we do not have a separate disclosure for spares.
Got it. Thank you very much, and all the best.
Thank you. We have our next question from the line of Jinesh Gandhi from MOFSL. Please go ahead.
Hi. A couple of questions from my side. First of all, are we seeing any material impact on CNG demand given the substantial price increases which we have seen? How do we see that segment, considering the price differential now?
Fortunately, till now, no. T here is a cause of concern, the high prices, and we have represented to the government that they should not b ut I have, we are informed that in the commercial vehicle space, there has been an impact. CNG for us this quarter was more than 20% penetration b ut we are engaging with the government to rein in the prices because this has nothing to do with Indian costs. It is only a global indexing, linked to a global index which has a force majeure kind of situation.
Right. Similarly, are we seeing any impact on the export demand, given that many of the end export markets are witnessing challenges on currency and similar macro pressures? Have you seen pressures in demand on that side?
Fortunately, nothing so far, but we are watching the situation.
Got it. Can you share our retail sales in the current quarter and volumes from Gujarat?
Actually, you know, this is a continuous period starting from the first Navratri till end of December. Some models are in transit, some are in, you know, some we have stocked up for some particular models. We are expecting that by end of December, you know, we'll be able to sell a lot of models and keep our closing stock low.
Sorry, my question was retail sales for Q2, FY2023.
Yeah, because part of it was in the festive period, so that's why.
Okay. Okay.
So rry.
Thanks.
It's better to club till end of December, which means club it till Q3.
Sure. Got it.
Then have a view.
And Gujarat production, would that be around that similar 31%-32% range or has gone up?
About 31%. We did about 152,000 from Gujarat, CNG.
G ot it. Thanks. I'll follow back in qeue .
Thank you. We have our next question from the line of Pramod Amthe from InCred Capital. Please go ahead.
Yeah. Hi, Rahul. Continuing on that, CNG question.
Yeah.
How has the mix of fleet versus personal buyers has changed in last two years? Can you give some color?
Yeah. Fleet versus personal buyers?
Yeah, for the CNG segment.
We have a very good response from the personal buyers within CNG. Generally what we have seen, for example, the Ertiga is a very hot seller. The kind of impression that we are getting is that WagonR and Ertiga. Ertiga is more than, I think more than two-thirds in CNG. WagonR also has a high traction. The models with a higher boot space, they are going very well on CNG.
You mean the commercial is relatively higher in these two segments? I was looking for more personal.
No, no. It is not linked with commercial.
Okay.
It is linked with, so if you have a bigger model and bigger boot space, the CNG acceptance is far higher.
The reason I ask you is that you said there is some pressure on demand on the commercial segment. Hence I was asking.
No, no. Oh, I'm so sorry. I'm so sorry. I, when I said that, I meant trucks. Commercial did not mean taxis, it meant trucks.
Okay.
When we discussed within SIAM, the commercial vehicle manufacturer, the trucks, they are, you know, concerned about it. They have some impact.
What's the industry for cars in the mix of personal and commercial for industry, for the car side, for CNG specifically?
I'm sorry. Could you speak louder, please?
Yeah. Sorry. I was saying for car industry CNG segment, what's the mix of fleet and personal?
I'll have to get back with the figure. Not readily available. There's a fair amount of spread across all models.
Okay.
Even for example, in models like WagonR, for example, we have a good level of penetration and Ertiga has very high level of penetration. Dzire Tour obviously, because in many places it is mandated that they need to run on CNG, so we have 88% penetration.
Sure.
Even the normal Dzire has about 35% penetration. The passenger, the non-taxi Dzire.
Sure. Thanks. Second one is with regard to the full hybrid, the strong hybrid which you launched. Can you give more details in terms of your cell or battery sourcing? What's the type of localization you have in that? And sustenance of the current pricing, do you have more visibility on that, considering that rupee has depreciated and the local content versus import content in those cells or batteries?
See, pricing is always a dynamic. We keep watching the market. It's a new product. Of course, we are very consumer-centric. We keep taking a view on the market on a regular basis. As you rightly mentioned, the factors can change. If we get any kind of cost reduction along the way, normally, we do consider it.
Any indication on localization, their current and how you look at going forward, the sales?
It is being manufactured at, in Karnataka. The local content will also depend on our OEM partner.
Okay. Sure. Thanks, Rahul. All the best.
Thank you. We have our next question from the line of Kapil Singh from Nomura. Please go ahead.
Yeah. Hi, good evening, sir. Firstly, I just wanted to check on the overall industry growth, what you're expecting for the full year. Given the situation on supply constraints, do you expect Maruti to do better than industry in this financial year?
Of course, your answer is linked to the supply of semiconductors. Given whatever we get, we should be able to produce and send to the market. The industry is expected to do about INR 3.8 million this year.
Okay. No, the question was just trying to understand that, you know, order book is pretty high, but, you know, the production has not matched the order book. If you could just help us understand why that is happening. That, you know, inventory has also increased. What is the technical issue here that we are facing?
Okay. Inventory. See, in the festive months we do stock and sometimes if you keep, if we instead of a shorter term, you keep the medium to longer term in picture, the total, given the total semiconductor supplies, you can maximize your production if you keep a slightly longer term in view. We are keeping a view till, let's say, end of December, by which time we should be able to get both wholesales and retails at a higher level, given the overall semiconductor constraints. The idea is to maximize within the constraint available if we improve the timeframe a bit.
Okay. Secondly, I just wanted to check, given your experience with strong hybrids and the kind of demand you are seeing, are you looking to add more models with strong hybrid option?
Slightly premature. Yes, obviously over a longer period of time, that would be the intent. But we will get more feedback from the ground, from the consumer level and from our manufacturing experience. Obviously, the effort will be in that direction and, because it helps majorly in CO2 reduction also. Nothing that we can immediately offer to comment on. Nothing specific, but that would be the direction in the future.
Okay. Thank you. I'll come back in with you. Have a good day.
Thank you. We have our next question from the line of Arvind Sharma from Citi. Please go ahead.
Hello. Good evening, sir, and thank you for taking my question. First question would be on the capacity expansion. You did mention something at [Karnataka] at Manesar and further at the new plant. Is it possible to share some timeline about the net capacity expansion, especially in the new plant? How much will it add? Because I believe it would be in lieu of something which will go away at Gurgaon. What would be the net capacity addition at the new plant?
We are not looking at any kind of reduction in Gurgaon. In fact, at least in the shorter term, we might have to increase production in Gurgaon. Kharkhoda plant, all plants generally, they are the optimum economic size is about 2.5 lakhs per annum. Our first plant should be commissioned by the Q1 of calendar 2025. I think we already have to start thinking on the second plant if demand growth continues in India. We are not looking at any kind of reduction in Gurgaon.
Sure. This INR 2.5 lakhs would be in addition to current and add to it, 1 lakh at Manesar, right?
Yes.
Great. Sir, second question, more for the current quarter. What are the FX gains? Is it possible to quantify the FX gains, and where do they reflect? Also as a corollary, what are the import content both for your production in Gujarat and Haryana? What are the import content for these two plants and these two locations and the FX gains this quarter?
Import content for both the plants would be similar. There is no difference because all the procurement is more or less same and on the same basis. Our total direct import content is about 4%, so it will fall in that category only for the plants. Similarly, I think the other thing is the indirect import content, which also would be in a similar category because the vendors are common and all the material that we are buying from the vendors are basically from similar vendors. There's no difference in terms of import content. In terms of Forex, I think between different currencies there have been gains, largely on the import and export side. On the dollar rupee exposure, we are naturally hedged. We use a natural hedge route.
On the dollar-yen, there have been maximum gains this quarter compared to last quarter and also last year because of the significant depreciation of the currency. The net impact of exchange rates have been about INR 158 crore of gain in this quarter compared to Q1 of this year.
This is the entire gain on the P&L, INR 158 crores?
That's right. There will be a different hedge.
Right. Sure. Sir, could you say the direct import content of around 4%. What would be the indirect import content, if you could share?
About 10%.
Between 10% and 11%.
10% to 11%.
Sure, sir. Thank you so much, sir. That was all from my side. Thanks so much.
Thank you. We have our next question from the line of Chirag Shah from Edelweiss. Please go ahead.
Yeah. Thanks for the opportunity, and congratulations for good numbers, sir. Sir, I have one very specific question on the SUV strategy. Are you looking to enter the compact car category? Because some of your peers, for example, Tata Punch, are trying to address that category with a SUV type or SUV feel model. Is that a part of your strategy, the SUV launches that you're indicating? And if you can elaborate on it would be helpful.
Sir, you mentioned SUV or XUV?
SUV type of a product like Tata Punch is a compact SUV addressing that, Baleno kind of a range in terms of price points.
As Mr. Seth mentioned some time ago, let's keep the excitement and, let's bring out products with which deliver pleasant surprises to the customers. You'll have to wait for some more months.
Sir, second question more on hybrid. If the strong hybrid, is there any restriction or technological limitation on the size of the vehicle to add strong hybrids? How much lower you can go in terms of technology today, in terms of size of the vehicle?
You are right. Strong hybrids, at the moment we have solutions in slightly bigger cars which have room in the engine room to accommodate both the powertrains. It becomes a bit of a challenge to bring them in smaller cars, but that is what Suzuki's competence is all about. We'll watch the market and, to reduce carbon, we have to adopt a portfolio of technologies. Each technology, each model will have its own context, its cost, its volume. It's a complex equation that we keep working on all the time. We'll keep watching how we can maximize hybrid volumes in the future.
Yeah. Thanks a lot, sir.
Thank you. Ladies and gentlemen, that was the last question for today, and with this, we conclude today's conference call. On behalf of Maruti Suzuki India Limited, we thank you for joining us and you may now disconnect your lines.
Thank you.