Hyundai Motor Company

Ladies and gentlemen, good day and welcome to the Q2 FY25 earnings conference call of Hyundai Motor 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 conclusion of presentation and management remarks. 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. Saugata Basu from Citi. Thank you and over to you, sir.

Thank you, operator.

Thank you. Good afternoon, good evening and good morning to everybody. We welcome you all to this Q2 FY25 earnings call from Hyundai Motors India. I am Saugata Basu. I head cash equities in Citi and today we are pleased to have with us I would like to inform you that the call is being recorded and the audio call and the transcript will be available at the company's website. K.S. Hariharan, Head of Investor Relations from Hyundai Motor India.

Over to you, sir.

Thank you, Swagato. Good evening, everyone, and welcome to the Q2 FY25 earnings call. Before we begin, I want to 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 risk that the company faces. The conference call will begin with a brief presentation by me on our second quarter results and then remarks by our MD on the performance and outlook, after which we will be happy to receive your questions. Let me start with the key business highlights during the quarter. At Hyundai Motor India Limited, we are committed to enhancing customer experience through our diverse and versatile products. providing customers with exceptional mobility experiences. We remain dedicated to listening to the changing consumer needs while continuously evolving to exceed their expectations. The bold new Hyundai Alcazar is a testament to this commitment. We launched the product in September 24 which has been receiving phenomenal response from the customers since the launch and we see that it has also played a pivotal role in driving up our average ASP in the domestic segment during the quarter. The new Hyundai Creta continues to fulfill dreams of those seeking a contemporary and adventurous SUV, thus making India live the SUV life. Launched in January this year, this undisputed ultimate SUV crossed the 1 lakh sales milestone in just 6 months since its launch, reaffirming its strong fan following in the segment. The new Creta has also won the India's Best Design Projects Award at IBDA 2024. The new Hyundai Creta was the top selling model across all segments in July 2024. It was also amongst the top three selling models in S1, FY25. The Venue Adventure Edition, which was launched in September, brings out the outdoorsy spirit for adventure seekers who love to explore and embrace new experiences. We also introduce new variants in venue in Exeter with electric sunroof to cater to the needs of aspirational customers. Strengthening our commitment to innovation and providing sustainable mobility solutions, we launched the dual cylinder technology in Exeter and Grand Iter Neos, providing energy comfort and convenience to the customers with ample boot space and great fuel efficiency. Our popular entry SUV model XR has surpassed the milestone of 1 lakh sales in India within a year of its launch. This exclusively made in India model is now being exported to South Africa, being one of the important export markets for HMIL. XR is Hyundai's 8th model offering in the country. As India aims for greater adoption of electric mobility, it is equally important to bolster the EV charging infrastructure to counter range anxiety and build customer preference towards adoption of electric mobility. By engaging in a strategic partnership with a local charge point operator, we are moving towards strengthening HMIL's EV charging network with 100 Hyundai dealerships now to be equipped with DC 60kW fast chargers. We are also proud that we have been recognized as Top Employer 2024 in India by the Top Employers Institute. This prestigious recognition underscores our unwavering commitment to creating a better world of work through exceptional HR policies and people practices. Now moving on to the sales performance for the quarter. HMI recorded total sales of 1,91,939 vehicles in second quarter of current financial year as against 2,09,777 vehicles in same period last year. The impact on volumes is mainly attributed to the domestic industry slowdown and geopolitical factors. Domestic sales for the quarter came in at 1,49,639 vehicles as against 158,772 vehicles in Q2 of last year. The subdued demand in domestic sales is reflective of the cyclicality and seasonality in the industry. On a sequential basis, however, the domestic sales has shown an increase of 0.1%. Exports, on the other hand, stood at 42,300 vehicles as against 51,005 vehicles in same period last year. the impact on export volumes is mainly attributed to the Red Sea issue impacting or exposed to the Middle East region. Despite the headwinds in the domestic market, we continue to grow stronger on premiumization through continuous growth in SUV contribution. During the quarter, we sold 1,2636 vehicles in SUV segment, which accounted for nearly 69% of the overall volumes once again highlighting our strengths in this segment. Further, the contribution of higher trims with aspirational features like sunroof and ADAS continues to remain healthy. Our sales under hatchback segment was 29,668 vehicles, down 2% in terms of contribution to our total sales, reflecting the industry trend of consumers moving to SUV segment. With a sales volume of 17,335 vehicles during the quarter, sedan segment contributed around 12% to the total sales. Our technology agnostic approach allows us to adapt to evolving consumer needs and regulations effectively. Our consistent efforts have led to increasing contributions in the CNG segment with Q2 FY25 The highest contribution so far in our total sales supported by strong customer response to our dual cylinder technology. Let me now share the financial numbers. Our revenue from operations during the quarter stood at Rs. 1,72,604 million as against Rs. 1,86,597 million in same period last year. During the quarter, EBITDA was Rs 22,053 million as compared to Rs 24,400 million in Q2 FY24. EBITDA margin was at 12.8% as compared to 13.1% in the same quarter last year. EBITDA was Rs 16,868 million in Q2 FY25. as against Rs. 18,834 million in Q2 FY24. EBIT margin was 9.8% as against 10.1% in the same quarter last year. Despite many headwinds during the quarter caused by domestic industry slowdown and geopolitical factors, we were still able to maintain healthy EBIT and EBIT margins led by our premiumization strategy and cost optimization activities. Tax for the quarter stood at Rs. 13,755 million as against Rs. 16,285 million in same period last year. Tax margin was 7.9% as against 8.6% in Q2 of last financial year. Profitability during the quarter was impacted on account of the domestic industry slowdown and geopolitical challenges. However, the favorable mix we had in domestic due to premiumization focus and aggressive material cost reduction due to localization and value engineering efforts extended positive support to the profitability. Our material cost reduced by nearly 2.3% during the quarter as compared to same period last year primarily due to decrease in price of certain raw materials, coupled with our localization strategy and efforts in developing alternative vendors for raw material supplies. Coming to the financial results for H1 FY25. During the first half of the year, the company sold total of 383,994 vehicles as against 393,180 vehicles in same period last year. the company registered revenue of Rs. 3,46,046 million in H1 of current financial year as compared to Rs. 3,52,832 million in H1 of last financial year. With our continued focus towards operational and cost efficiencies, we were able to significantly improve our EBITDA and EBIT margins during this period. Our EBITDA during H1 FY25 period was Rs. 45,456 million as compared to Rs. 44,373 million in same period last year. EBITDA margin in H1 FY25 improved by 50 bets to 13.1% as compared to 12.6% in S1 of last year. EBIT margin on the other hand improved by 70 bets to 10.1% as compared to 9.4% in H1 of last year. Further, despite the challenges we had in Q2, we were able to sustain our tax margin at 8.2% in first half of this financial year, strongly supported by our premiumization and cost reduction initiatives. Thank you. This concludes my presentation. And now, I would like to invite our MD, Mr. Anshu Kim, for his remarks. Go to you, sir.

Thank you, Hari. Good evening to everyone on the call. Thank you for joining us today. It is my pleasure to be hosting you all on the first earnings call of Hyundai Motor India Limited as a listed entity. First of all, I would like to thank all our investors for believing in our growth story and for trusting us. HMIL maintained healthy margins in the first half of the financial year with our proactive and continuous cost control measures. During the second quarter, we had challenges on volumes due to the domestic and geopolitical factors impacting our margins. The Indian auto industry is a cyclical in nature and has its ups and downs. After the phenomenal growth in last two to three years due to the pent-up demand post-COVID, the current demand moderation is very natural. However, in the mid to long term, we are confident of a sustained demand momentum in the industry. Despite the current slowdown in the overall sales volumes for the industry, HMIL continues to focus on quality of growth by maintaining an optimum balance between the volume, market share, and the margins. Our SUV portfolio during the quarter accounted for a substantial 68.6% as against the industry penetration of 54.9%. In September, we introduced a bold new Hyundai Alcada, which redefined the benchmark of an aspirational 670 SUV. This, along with the strong performance of Creta, Venue, and Extra, propelled HMIL to its highest-ever monthly SUV contribution of 70% in September. As part of our premiumization strategy, we continue to innovate and bring forth high-tech features to excite and engage our customers. Further, the dual-cylinder CNG option, which we introduced in two of our models, Neos and Esker, is giving customers the convenience of a CNG without compromising on any feature and space. We are witnessing good traction over these new variants, which has helped us our overall CNG penetration increase to 13%, in the second quarter of financial year 2025. On exports, the company witnessed growth in almost all regions in the first half of financial year 2025 as compared to the second half of the financial year 2024, in particular Africa, Mexico, and Latin America. However, Middle East continues to face the headwind due to the Red Sea crisis. We will be closely monitoring the situation and will also plan to mitigate the risk by focusing on other regions. While the macroeconomic environment is expected to remain challenging for the auto sector in the near term, we plan to focus on our strength and don't want to lose out on any potential opportunity to improve our volumes and profitability. In the first concluded festive month of October, We have recorded a double-digit growth in inquiry and retail over last festive season and witnessed a good traction for our models. The strong SUV demand, along with the marriage season kicking off in November, gives us confidence of a stable third quarter. In the last quarter of this financial year, we will be launching our Quest EV, for mass market. We believe Crest EV could be a game changer in the Indian EV market. The construction activity at our Hoonet plant is progressing in full swing, and the plant is expected to have a start of vehicle production by third quarter of financial year 2026. We strongly believe that the planet plant and the localization of its ecosystem will further enhance our arsenal and our competitiveness in the market. Our business fundamentals remain strong, supported by a clear strategy to drive growth and create long-term value. We are confident in our future growth trajectory driven by our competent team and the continued commitment to excellence. Also, in order to enhance the shareholders' value, we will be coming out with the appropriate dividend payout policy by benchmarking with industry best practices at the earliest possible. Thank you for listening.

Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on their touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handsets while asking a question. Please note that management might use English-Korean translation for better communication. Hence, there could be a slight delay in the responses. Please note the management line will be on mute mode till then. We'll take our first question from the line of Saugata Basu from Citigroup. Please go ahead.

Yeah, thank you, operator. And thank you, Mr. Kain. And thank you, Mr. Hariharan, for the detailed overview of the quarter. Well, Mr. Kain, you spoke about double-digit festive season growth in October, which is extremely encouraging to hear. What I think investors would also like to hear is some trends around pricing, around inventory, as we have heard a lot of your peers throughout this quarter.

So if you could throw some light on how you saw trends from your side as well. Thank you, Savata, for your question.

I don't decide. So, as we had mentioned earlier and Mr. Kim also mentioned, our strategy on premiumization continued even in this tough macroeconomic environment. And I'll support it by giving you some data points. So, sunroof penetration in first half of last year, 23-24, was 47.4%. It has moved to 53% in this half. of this financial year 24-25. The automatics have moved up from 23.2% to 25.3%. The ADAS has moved up from 3.3% to 14.4%. In terms of CNG, we introduced dual cylinder CNG and let me share with you some numbers. For example, in Exeter, In quarter 1, CNG penetration was 18%. In quarter 2, it moved up to 22.2%. In fact, in October, it moved up to 28.4%. You can see how the dual cylinder CNG has really helped us to improve the CNG penetration and obviously taken the ASP up as well. Even in NEOS, In quarter 1, CNG was 17.2, moved up to 18.6 in quarter 2 and moved up to 20.2 in October. So, very clearly the premiumization strategy is working. Number 3, if you see SUVization, in fact in September, we reached a high of 70%. Last year, our SUV was 60%. This year, January to October, we are at 68.6%. So, very clearly the SUVization is also improving and with the Alcazar facelift, which we had last month, and the Creta EV going up in January. Again, the SUVization, we feel there is still more headroom towards SUVization. In addition to that, we also introduced new variants. For example, new sunroof variants in the Venue. We introduced a night edition in the Creta. We have now introduced in the Verna a spoiler edition. So, what we are doing is, we are adding more and more value to the customers so that this effort towards ASP increase continues. Also, you know, to manage, if you would have seen, unlike the competition, you know, there was a lot of price war happening. We were able to not join that price war and really keep our prices you know intact even in this S1 of this year including the Q2 of the last Q2 of the financial year 24-25. So, we believe this strategy has worked you know for us and we intend to continue on this strategy of premiumization, on the strategy of SUVization, on the strategy of new variantization and of course cost optimization as well. Thank you. Hope I have answered your question.

Yes, thank you Mr. Jha.

I will go back and see.

Thank you. We'll take our next question from the line of Kapil Singh from Nomura. Please go ahead.

Thanks for the opportunity, sir. Firstly, just wanted your view on the demand conditions and the industry growth outlook and how Hinda is placed to grow in context of the market, both in domestic as well as export. I read some comments that you know company is committing to making India the export hub so if you could elaborate on that as well please.

Yes, this is Anshu. As we earlier announced, we are planning, we are positioning the HMI as a production hub for emerging market. We are manufacturing and exporting our cost optimized vehicle to the emerging market. As you mentioned earlier, we have a very healthy and balanced mix of domestic and extra volume, which gives us not only good profits but also a natural hedge against any market fluctuations. Currently, from the last year, we are seeing the domestic volume is increasing, demand is increasing. Expo market is also increasing. And then we have a very suitable product lineup for emerging market. Our product lineup is very suitable for emerging market. To meet both domestic and export, last year we acquired the Pune plant. So, after operation of this third plant, our capacity will reach 1.1 million units. It will cover all the domestic and export demand. So, we are very confident to meet both market and both market also very promising. India is very promising, exciting market. Also, our export market is emerging market in the Middle East and Africa and South Asia and Latin America. We will see our export market very positively. We will meet both demand. I hope I answered your question. Thank you.

Kapil, just to add a little bit on the domestic demand, as Mr. Kim mentioned, and of course, you know, in October, we had a very strong growth in registrations, close to more than 30%, and which has brought the inventory down for us to less than 4 weeks. And of course, the alters are facelift, all these new variants which we have added, the 3K EV is going to come. So we have been maintaining that this year the industry would see a low single digit growth on a very high base of last year which of course came up with a growth of 8.5% and before that 23%. So we believe that you know it's a very good place to be. At the same time we will not lose focus of this premiumization so that the value enhancement continues to happen just in addition to what Mr. Kim said. Thank you.

Thanks sir. And just also wanted to check on your views on the powertrain mix for Hyundai because you are now adding CNG as well and the parent company is fairly strong in hybrid and electric as well. But for India, what is the outlook? You mentioned also that the Creta EV could be a game changer. So just your thoughts in terms of what attributes are needed for success of EVs in India? And how are we positioned to do this cafe for past and future years?

This is Eunsoo.

Thank you for your question. Earlier on our roadshow, we mentioned that India is in the early stage of electrification. India EV market is expected to grow strongly by 2030 led by government-owned industry and many OEMs EV focuses. HMI has very access to the essentials of global EV and the factory technology so we are well positioned to launch the EV ecosystem in India. We are developing our EV ecosystem in India. As we earlier mentioned that we are planning to launch 4 EV model including the Creta EV and we are also the localizing EV supply chain like the factory pack, driver train and the factory shell. and also we are investing in infrastructure as well so this kind of government strong incentive to customer and the PLC came to OEM and our localization effort and our 4 EV model will reach the enormous volume this kind of things will help our productivity also And then in terms of the hybrid, as you mentioned that HMC has a variety of power train technology, not only the petrol, diesel, CNG, but also EV and the hybrid and the political hybrid and even hydrogen vehicles. Currently, HMC, our parent company, is very strong in hybrid sales globally in the U.S. market and our Korean market. So HMIL has access to all kinds of HMC touchline technology, and we are well positioned to launch a new model with these hybrid touchlines. based on the customer demand scenarios. So, currently we are monitoring the customer preferences for power train. Just to add a couple of things here.

One is CAFE. You asked 23, 24, we met CAFE. 24, 25, we are on course to meet CAFE. We don't see any problem in 25, 26 going forward as well. On the other powertrain, CNG, like I already mentioned, a great traction has been seen, you know. I mean, frankly speaking, dual cylinder CNG, extra going up from 18% in Q1 to 22% in Q2 to 28% in October. is a testimony to how well it has been executed. So, we believe that in the less than 1 million rupees segment CNG will continue to play a very important role and that is a very critical part of our strategy and in the activity segment of course petrol and diesel, diesel continues to be very strong and then going forward E-lease because as Currently, we are only in the IONIQ 5, but like MD mentioned, Theta EV will be a very strong model push, you know, because it's a very strong brand and then three more EVs coming in will help us to really reach a good market share even in the EV segment. So, we believe that having this kind of a product mix and a powertrain mix would help us not only to meet all the regulations, but also take care of all the customers in different states, you know, which have different preferences towards petrol, CNG and diesel. Thank you.

Thank you for the detailed answer, sir. I will call back in the team.

Thank you. We'll take our next question from the line of Gunjan P. from Bank of America. Please go ahead. Hi, thanks, Tim, for taking my question. Just a couple of follow-ups. Tarun, with regard to your comments on premiumization, I'll be keen to know how the trend of first-time buyer and rural-urban mix stands in the portfolio. And any call-outs on demand difference between urban versus rural?

Thank you for your question. Oh, sorry. Just wait.

Yes, so on the urban versus rural, very clearly last six months we have seen, in fact last one year we have seen that rural demand continues to be very strong. In fact, the rural penetration has gone up to 21% for us now. You know, it used to be 20% last year. Before that, it was 18.5%. Before that, it was 16.5%, 17%. So, a good monsoon this year would help it further. I believe the crop is very good. So, going forward, we believe that the rural will continue to play a very important role. And accordingly, we are also adjusting our network strategy with a big thrust on the rural area. That is point number one. Regarding the first-time buyers, it continues to be very strong. In April to June also, the first-time buyer penetration for us was 38%. And in July to September also, it was about 36.5%. So, the first-time buyer percentage is very, very strong as far as Hyundai is concerned. And like we had mentioned in the roadshows, this has in fact gone up from 31% in 2019-20 to 36-37% now. So, we continue to attract first-time buyers. which tells us that, you know, the future growth prospects are good because these first-time buyers especially are moving directly into the venue and the crater segment. For example, for crater, even in quarter 2, the first-time buyer percentage is 40%, sorry, in venue. And in crater, it is 28%. So, which is very, very good because, you know, this means that these customers are directly bypassing the hash and straightaway going into the venue and the crater segment. with August very well for Hyundai and it has resulted in our SUV penetration reaching 68.6% in the January to October period and 70% in fact for the month of September. So, I hope we have answered your question. Thank you.

Got it. Thank you so much. My second question is on the model cycle. How should we think about that? Clearly, you did allude to four years in total in next two, three years. But if you can share a little bit color on the ICE model cycle as well, that are there any white spaces that you're looking to plug? How should we think about the evolution? I know maybe you don't share the specifics, but just the segments that you look to target with the ICE launches and what will be the intensity of launches there?

So, as you know, HMI has always been ahead of the curve, you know, in terms of launching new products, not only in terms of the model cycle, which is five to six years for us, but also in introducing new models in whatever segments we believe there is a demand. Extra was a very good example last year. Varna full model change was a very good example. This year in January, we had a Crata facelift. And you know that what has happened, you know, Crata continues to be on a double digit growth path. Alcazar test strip has happened so going forward while we have already clearly announced four EVs including Creta EV we have not given a guidance on the IC models but what I can tell you is that wherever we are seeing opportunity and of course more so in the SUV segment as Indian market gets more and more segmented we believe new and newer segments are emerging so we will continue to explore these areas now with the Pune plant coming in kicking in with the quarter three of financial year 26 the capacity will also be there so we believe that you know we can marry the new model introduction with this new capacity so that we can do justice to the demand which these new models will create i think at this point of time this is the best i can do in terms of these questions and please look out for announcements from us in terms of new models. But we will not, we will continue to pursue this path of, you know, looking for opportunities and filling them up. Thank you.

Okay, fair enough. And just bookkeeping, if you can share the royalty number for this quarter and I'll join back to you.

When it comes to our royalty, our royalty rate was around 2.6% on revenue from operating during the quarter. Actually, our royalty is calculated at 3.5% on net sales after adjustment of cost of certain materials procured from related parties. Any change in such amount will accordingly impact the effective royalty rate. Okay, nevertheless, our actual royalty amount is 2.6%.

Okay, got it. Thank you so much. Thank you.

We'll take our next question from the line of Rishi Vora from Kotak Securities. Please go ahead.

Mr. Rishi Vora, your line is on talk mode now. Hello, can you hear me? Yes, please go ahead.

Yes, I can hear you. Yeah, thank you for giving me the opportunity and congratulations on the listing. I think my first question is, you know, well, the premiumization wave that we have captured very well. But if we look at, you know, first half numbers, most of our growth is only driven by Creta. Obviously, Exeter has grown, but, you know, in 1Q of FY24, we hadn't launched the model yet. So, is there a strategy where we are thinking about reducing our dependence on Creta? Because incrementally, our domestic portfolio has almost become 33%. And in value terms, it would be even higher. So, you know, any thought process around, you know, our increasing dependence on Creta?

Thank you.

Yeah very good and I think this is very important and we continue to look for opportunities to diversify our portfolio. Recently last month we introduced the Alcazar facelift which has received a very very good response you know and we are already now clocking 2200, 2300 numbers from the 1000 odd numbers which we were clocking say before the facelift. Of course, we have the extra launch, which is now adding clearly 7 to 8000 per month. Going forward, like I said, I cannot really comment on the exact nature of the new models, but we fully understand the opportunity which exists. The mid SPV segment is growing very fast. There are opportunities in the other segments as well. So, we will really look at introducing new models as well as the phase shift of the other models, you know, as the 5 to 6 year model cycle, you know, continues to evolve. So, we will look at all those things to see that we, you know, all the models do well and just for your reference, Even this year, even Aura has shown a growth. Of course, Exter has shown a growth. The Creta has shown a growth. Last two months, we have introduced so many new variants. Venue, for example, again touched 10,000. Please note that after a long time, Venue again touched 10,000 because we introduced two sunroof variants in the Venue. then the dual cylinder CNG increase our NEOS numbers back to more than 6000. So, I think we are doing a lot of innovations in the other models also so that we can continue to sustain as well as grow the numbers. So, the endeavor is of course to have a very strong crater at the same time other models as well. Thank you.

Thank you, Karim. And my second question is regarding 2Q performance. So, on a sequential basis, Our gross margins have declined by 70 basis points. So what would have resulted in a decline? And if you could share, you know, first quarter and second quarter discount numbers, if you check, that would be the last question from my side. Thank you.

So, let me share the domestic discount numbers.

Of course, it has to be understood in the context of what is happening in the industry. But first let me give you our numbers. In quarter 1, the domestic discount number was 1.5%. In quarter 2, the domestic discount number is 1.9%. So, when you see in the context of the other players as well as in the context of the overall pricing, you know, strategies which have been followed, you can see that the strategy of balanced growth or quality of growth has really helped us to manage the discounts very well and we, you know, and that is the whole idea, you know, not to join any kind of price war and to pursue that path. On the first part of your question, I will request Mr. Sabanan to answer.

Yeah. Regarding the declining box rate, sir, to the reduction in the volume and because of the geopolitical situation there was some reduction in export numbers as well. So, however, we could manage with the better cost saving on the material front and the better cost saving measure and the better capacity utilization we have reduced the impact of the volume reduction and we could maintain the margin at an appropriate level.

Mr. Vohra, does that answer your question?

Yes, thank you.

Thank you. We'll take our next question from the line of Jinesh Gandhi from Ambex Capital.

Please go ahead.

The participant has left the queue. We'll take the next question from the line of Aniket Matre from Motila Losal Security. Please go ahead.

Hi, sir. Thanks for the opportunity. Just quickly, just following up on some of the various topics you picked, you mentioned that margins are down due to reduction in volumes. But, you see, even a decline in margins at a gross margin level, when you, you know, let's say it's minus the raw material, that is also decline. And that won't be because of volumes. Just trying to understand what are the reasons for decline in gross margins this quarter on a frequently basis?

Yeah, actually because of the selling pressure on both domestic and export side, so we need to consider some kind of incentives. So in case of domestic, you know the market is sluggish, so we have to follow what the market practices are there to some extent we have to support with the additional incentive. And that is one reason for domestic. As far as exports, because of geopolitical situation, we need to focus on different markets by pushing our products into a different market. Obviously, we need to support with an additional incentive. That has actually reduced the gross margin. Hope I have answered the question.

Yes, thank you for that. And my second question was around your export opportunity. You have mentioned in the presentation about extra landing in South Africa. Could you help me understand what kind of, you know, what kind of opportunity can you expect in export in the foreseeable future?

To start with about 1000 per month is what we are looking at but this is only of course you know South Africa we are looking at other markets as well very difficult to give exact guidance on that and of course going forward like we do for all the other models we look at left and right also which will really open up many more markets so I think in line with our strategy right from the time we set foot in India, where we have focused big time on exports, I think Excerpt is going to be a very important tool for us in the future for Excerpt. I hope I have answered your question.

This is just one quick follow up. Like you have the Native India Excerpt, would you have any other specific model in mind that you would look to export going forward, especially in Native India, going to export markets?

we are into uh we are we are exporting all models you know so it's not as if extra since you are asked about extra that's why we say Now, we are exporting to 80 plus countries, you know, we are a hub for the emerging markets. Now, Alcazar facelift has come in. So, the plan always is that first we start domestic and then we start export, you know. So, the Varna goes very strongly in the Middle East. So, we export all the models, we have been doing it for the past 25 years and we will continue to, you know, focus on because this is a very, all these countries, Middle East, Asia, if you see Africa, Latin America. I think the preferences are very close to what the Indian customers want. So, our strategy has always been to introduce a model, get success, get economies of scale and of course, you know, look at the export markets. And like Mr. Kim mentioned in his opening remarks also, India is for HMC, India is the hub of production hub for all these emerging markets. So, I think we will continue on this path in the future as well. Thank you.

I hope I have answered your question. Thank you. Thank you.

We'll take our next question from the line of Ashish Jain from Macquarie. Please go ahead.

Hi, sir. Good evening. Sir, my first question is on CNG. So, you know, as of now, we have, you know, three model options, three models with a CNG version available. How do we see that, you know, shaping up given the traction we have got, especially for extra CNG? And secondly, you know, earlier in the call, you alluded to, if I got it right, rural being around 21% of day sales. Can you, you know, share the industry number on a like-to-like basis? And, you know, apart from, you know, apart from new stores, what are we doing to kind of increase that traction in rural? Do you think pricing or a premium strategy is a bit of bottleneck for that or the acceptance is equally good in rural as well?

Okay, yeah.

So, on the TNG, yes, you're right. Now, if you see Hyundai's strategy, we believe every segment, customer key buying factor is very different. So, at the entry level, we are offering petrol and CNG to the customer because that customer price is very important, you know. Fuel efficiency is very important and we offer Exter, Neos and Aura and it is doing very well. I already mentioned about the dual cylinder percentage, I will not repeat. But in Aura, where we do not have a dual CNG but the CNG penetration is already 85%. So, going forward as well, we believe that in the less than 1 million segment, entry level segment, CNG would continue to be a good tool. At the same time, we don't think that CNG is a good solution for the SUVs because that customer's key buying factor, he does not want to compromise on the initial task. So, in the Creca, we have a diesel, you know, which is contributing 35 to 40%. In the Alcazar, we have diesel. Then in the Tucson, we have diesel. In the Venue, we have diesel along with the petrol. This strategy is working very well. So, this is the second part. The third part is, of course, on the sedan segment where we are offering Varna, turbo as well as petrol. So, that is also doing very well. So, my point is that a single solution cannot work for a country like India where customers are very different. The other thing is, even when you see geographically, different states are also behaving very differently. For example, in UP and say Maharashtra, CNG is very strong. In Delhi, in Northeast, petrol is very strong. In Punjab, in Telangana, in Andhra, in Rajasthan, diesel is very strong. So having all these powertrain options in our portfolio helps us to target these states equally well At the same time, it is a very good hedge that tomorrow if there is any geopolitical situation or if there is any price increase or price cut, we can quickly leverage and even change our strategy to a different powertrain and utilize it. So, I believe this kind of a technology agnosticity is a very good risk hedge and a very good in terms of opportunity leveraging as well. So, we intend to continue the same kind of strategy. Thank you. And on the rural, in addition to the network, sorry, I'll just complete this. On the rural, in addition to the network, you know, we are also doing a lot of mobile service ramps. Like, for example, we have more than 100 mobile service ramps which are exclusively for the rural network. That helps the customers to get a service on the roadstep. At the same time, we are also doing a lot of, you know, grameen mahutsav because the branding is also very important, you know, to give the customer that confidence. So we are doing that. Also, in terms of district coverage, we are continuously enhancing the district coverage. You know, we are currently at about 84% district coverage. We were at about 70-75%, you know, a couple of years back. So, we intend to really continue on this path of more and more districts, more and more hotels, more and more mobile service vans, more and more branding with the rural executives, you know, to educate them so that they can further educate the customers. And the road infrastructure which the government is focusing on is really helping us, you know, in enhancing the rural sales along with the great monsoons, you know, which has happened this year, you know, which should really help the rural going forward. Thank you. Hope I have answered your question.

Yeah. Sir, just one follow-up. Like the 21% number which you said is rural for you, what was the corresponding number for the industry?

So, actually these numbers are not shared, point number one. Point number two, every company has a different way of identifying rural. Like, for example, in HMI, what I say rural is, my rural sales outlet, what is their sales? That is rural for me. And today, out of my total network, 40% is in the, in form of rural sales outlet. And they contribute 21% to my sales. But for some other company, it could be a different formula. So, like to like is very, very difficult, you know, to make. Because there is no proper forum where, you know, there is a proper rule where this is rural and this is urban.

Thank you.

Thank you.

Thank you. Ladies and gentlemen, we'll take that as the last question for today. I now hand over the call to Mr. Saugata Basu for closing remarks. Over to you.

Thank you, operator. Ladies and gentlemen, that was the last question for today. With this, we conclude today's conference call. Thank you to the entire team of Hyundai Motors India and on behalf of them and Citi, we thank you for joining us and we may now disconnect. Thank you.

Thank you all.