Mahindra & Mahindra 144A

Good afternoon, everyone. Good afternoon, good evening or good morning from wherever you are joining me. Welcome to M&M's quarter 2 to FY22 earnings call.

We are indeed glad to have you all on this call today. Just before beginning a safe offer statement, certain statements on this conference call with regard to our future growth prospects are forward-looking statements which involve a number of risks and uncertainties that could cause actual results to differ materially from those in such forward-looking statements. Now, I would like to welcome our senior management. We have with us today Dr. Anish Shah, Managing Director and CEO, Mr. Rajesh Jidurikar, Executive Director, Auto and Farm Sector, Mr. Manoj Bhatt, Group CFO, and also other senior management from both auto and farm team, and also the investor relationship. With this, now I hand over the conference to Dr. Anish Shah for his opening remarks, and then follow up with presentations by Ajay and Manoj. Over to you, Dr. Shah. Greetings everyone. It's a pleasure to be back with you today. We're going to talk about some very strong results despite some challenges that we will outline. I'm going to outline or start with a framework that you've seen before. But we're starting to really look at our businesses as core, growth camps, and digital platforms. And we will talk about the progress on each of those. So the key messages for today. are that our core businesses have really seen a resilient operating and financial performance, despite some very significant headwinds for both commodities and supply chain. Our new product launches have been very well received by the market, and we'll talk about that, the XPV700 in particular, but it's not just that, it's the set of products that has been leading up to that as well. And we've seen a very strong recovery from our group companies, Mind the Finance in particular, but also some of our other group entities. And we've got all our group companies really starting to position themselves very well and deliver results. On growth skills, we've seen a higher level of profitability from both the listed and unlisted entities. And we've seen tangible examples of value creation at a digital platform that we talked about earlier. So for today, I'm going to give an overview Up to which Rajesh and Manoj will take me through the details. Let's start with the numbers first. On a standalone basis, Pat before EI is up 29% at 1687 crores. Pat after EI is up almost 9x at 1432 crores. If you were to look at consolidated. Here we see Pat before EI at 1,975 pros, up 43% after we restate Sanjong as a discontinued operation. But what we announced last year when we gave our results was 906 pros, which included Sanjong at that point in time. So if you look at it versus 906, it's effectively a 2x return. And similarly on Pat after EI, It's going up from 6.15 to 19.29, which Zangang has discontinued. But based on what we reported last year, it's really going from 1.36 to 19.29. And that also shows the result of the hard calls we've taken with regard to capital allocation. I referred to the headwinds. They're essentially in three categories. Significant increases in commodity prices, which I'm sure you're seeing across the board. the semiconductor shortage issue and freight costs. We have taken significant actions around that, increasing selling price, aggressive cost-free engineering, looking at rejigging of production, commonizing some components within auto, though that does take some time, looking at route optimization for freight and so on. So those have helped us, but this has had an impact. And as we look at the next page, What you see is on the farm business, revenue is up 4%, but PBIT is down 14% despite almost a 2%-ish point gain in market share. And that really is driven by the commodity price inflation. What I'm also very happy to say is our international subsidiaries, where we've seen significant concerns in the past, have turned around. The actions people from category A, B, and C have really worked out well. So, the category A and B companies that we continued with have demonstrated a PBIT of 105 crores for this quarter, a second consecutive quarter greater than 100 crores, and a fifth consecutive quarter of being positive. We are starting to see a real turnaround on that front, and that really leads us to the conclusion of a focused and robust operating performance in the face of some very significant events. Again a similar story, much stronger growth in revenue here at 23% and PBIT is impacted not only by commodity inflation but in this case by shortages on semiconductors as well that resulted in a volume loss of 32,000 units that obviously impacted operating leverage and thereby PBIT is lower. But what we are really excited about here is my earlier comment on HPV700 The bookings are reflective of the quality of the product and the four consecutive blockbuster launches from the XTG300, Bolero Neo, TAR and 700. We've seen some very strong response on the market. The best was in the 700 obviously and what we are looking forward to now is the launch of the new Scorpio and we hope to make it a fifth consecutive blockbuster launch. which positions us really well to regain leadership in the 4SE space. Let me talk about my reference, because this is one that did concern us last quarter. And what we had at that point indicated was, based on history, it was a temporary phenomena that would get reversed in the following three quarters. And what we have seen is that reversal is well on track. P&T is up from negative 1,500 to positive 1,000. In this case, we are not looking at year-over-year. We're looking at the previous quarter because we do want to show a story from the previous quarter as to what happened. So, you effectively have a 2,504th swing on the profit side. That is driven by G&TA, down 2.8 points, though we do expect it to go down further as we go along in the next two quarters. And that has resulted in a very significant swing with regard to provisions. and we had taken a provisional rate of 2500 crores last quarter, 7663 of that has come back and based on what the microfinance team has outlined for the census, the rest will come back, or 80-90% will come back in the next two quarters. So a little more of a deep dive on GNPA, just to give a little more flavor of the numbers behind microfinance. Stage 3 contracts have come down from 294,000 at the start of the quarter to 216,000 at the end of the quarter. As a reference, in March, they were 194,000. So we're getting fairly close to the March numbers, which is what we wanted to get back towards. A lot of Stage 3 rolls into Stage 2 first, and therefore Stage 2 hasn't seen much movement, or has seen no movement in fact. It's gone from 402 to 404, and that is also almost the same number that we had in March 2021. So what we need to do is work on phase two next and start moving that down to phase one or current. And those are the efforts that the team is focused on over the next couple of hours. TechEmp has great momentum. Profits are up 26% driven by large deals, by 5G, by DCV being doubled in its target on rate, free tax flow, and 15,000 associates higher the last quarter. So, a very strong momentum for Tech-M and that's something that we've seen going with the tailors in the industry as well as the performance by the company. Let's look at the listed growth gems. Logistics has seen some strong progress this quarter, even as we see the profit number down 37%, that's driven by some one-time items. But revenue is up 22%, multiple business wins, And it's positioned very well in the industry that has a lot of payments. Hospitality, we're seeing a significant growth in profits. Occupancy getting back to pre-COVID levels. Resorts in Finland are operational. And a fairly bold approach to driving growth in hospitality. Similarly, in real estate, and we're seeing that bold approach starting to pay results. Profits again showing a significant uptick. Focused executions. and proud to report that he has the only real estate sector to publish a sustainability report. So that is one that's a huge plus among some various actions on the ESG front. So overall, our listed growth teams have seen some very strong traction and profitability. We're not going to go through the unlisted ones today, but we'll do that in future conversations as we start highlighting some of them. But let me talk about our digital platform. We mentioned this before. And we mentioned the fact that first try was at a $1.7 billion valuation. And it was a result of merger with Bob and me and first try. And it's along this exponential curve that we've shown. But beyond first try, we've got first price views, which is the regression that started by really coming up strong. A fundraiser is underway right now. And we do expect to see some good numbers there in terms of market valuations. What I really want to talk about today is Porter. Porter is a business in infrastructure logistics. The latest round values the company at 3,750 crores. This company was set up with a merger with SmartShift. SmartShift was a startup that was set up in M&A with an investment of all of 23 crores. And SmartShift became the second largest in the industry, merged with Porter. At that point, we put in an additional 70% to the company. Overall, we put in so far about 100 to 120 crores or so, somewhere in that range. And the valuation today is 3,700 crores, where our share would be somewhere in the 25 to 30% range. The significant valuation, you start seeing the impact of the exponential curve catching up here, valuations up 4x in the last 24 months. M&M still is the largest shareholder, but this company is positioned very well in interest Beyond this, we're going to look at, just moving back to the previous slide for a minute here. We are looking at the digital spring code that we have put in place now. A good team is already driving action in that space. We're looking at AgriTech and Receivable as two more digital platforms. And there will be a couple of other ideas that we're going to put on the table. But we're starting to see real value creation for our shareholders without having to invest significant money into it because we are looking at external investors coming in to many of these companies where over time we will take a minority stake. So with that, let me hand it over to Rajesh to go through details on auto and farm. Rajesh, over to you. Hi everybody, good to be with you this evening for us and like Sriram said, morning or evening for you all. I'm going to break my presentation into two parts. Talk briefly about the quarter that's gone by. and then focus more on the path forward, which is the growth and return journey. So, on the quarter that's gone by, as you can see here, the standalone revenue grew by 15% and the consolidated revenue by 13%. And for the first half, the 46% and 41% respectively. This clearly is an indication of the fact that H1 was slow because of the COVID lockdown, and we saw some of that effect this year in the way quarter 2 got depressed as quarter 2 last year had got a carryover of the quarter 1 of S21 into the numbers. Next slide a minute. When we look at our PBIT, you will see that standalone PBIT has come down by 29%. But again, I'm just reinforcing that quarter 2 last year was an exceptionally high rate. So, this here, the quarter crew in FES, even though you see this degrowth here, is actually our second highest ever quarter crew PPIT. And it is our second highest ever quarter crew domestic volume and second highest ever domestic volume. So, it has by itself been a very strong quarter. You just have to keep in mind that what we are comparing is on an exceptionally high base on volume and on margin. Next slide. When you look at the photo, you can see that the standalone PBIT has gone up 37 and the consolidated PBIT has gone up by 73%. Next slide. Anish spoke about the turnaround in the international sub of FEI. That has been a major task in front of us. performance. See from here it is 5 qualitative quarters now of profit and 2 qualitative quarters of profit more than 100 crores. Clearly setting us up for enable very strong launch of UoTech on the farm side feature-packed product well priced exports I spoke about and what we believe is a strong margin performance in the context of the environment 18.7 is a very healthy margin the capital has been used to margins in the region of 18-19 percent last year was an aberration as I said with exceptionally high margins driven by volume that you know based up into quarter 2 and of course, the operating leverage 15 and commodity inflation have not yet kicked off. A strong price increases have been taken 88 percent overall and material cost is not yet fully passed on. However, you have managed margins by keeping fixed cost under control. Next, on the auto side a very very strong launch of 70000. booking. And as you all would have read, 50,000 of them happened in three hours, 25,000 in the first hour on day one, 25,000 in the second two hours on day two. And that takes the total cumulative open booking across all our products including 700 to 160,000. Strong export performance. And we have been talking about the fact that three-wheeler electric It is at an inflection point and you can see that play out now. Very strong growth of 318%, but more interestingly, a 68% share of market. Establishing the first mover advantage that we had and now beginning to leverage that as we set that business up for a strong growth project. The auto margins have been under pressure. Clearly, commodity price inflation has hurt us. We've lost about 32,000 vehicles due to the issue shortage in the quarter. And we've taken aggressive price increases, not enough to cover the material cost increase, but a 7% increase over the last year. I'm now moving on to the second phase of my presentation, which is how do we drive growth as we think about the future. We've built a strong base. It's time for us to now focus on growth, but growth with financial support. By the year 2025, we will look at a candor of 15 to 20%. Tractor market share would grow to 40% plus levels. I'm going to spend some time talking about farmer's share because we have been talking about that as a growth engine and we are talking about a 10x growth and we will talk about why we think this works. We would like to be number one in the 4 SUV sector. I'm going to take a minute to talk about what we mean by core SUVs. As we've been talking about the fact that UV is a very broad category in the way IAM is defining it, and that has its relevance. We've defined core SUVs in a way that it doesn't make it too restrictive and too niche. So the definition that we're using includes 70% of the UV industry. Our definition is based on bringing alive the SUV character. So a high ground clearance and a high seat position reflect an SUV character. And we've defined that by distance of seat point to the ground. And if that's greater than 660 mm, we believe that is something we can call a 4 SUV. The other is the capability to go anywhere. Capability to go anywhere is defined by the tire outer diameter. which if it's greater than 660 mm we consider it as a 4 SUV and an engine capacity equal to greater than 1.5 liter or the engine is turbocharged. So basically combination of the perceived look and the capability but we try to keep the perceived look parameter or the parameters here completely measurable. There are several SUV characters as a part of design language but we intentionally not putting that out there because that's driven by subjective judgment. All of these are very measurable parameters and hence clearly allows us to segment the market in a way which we think is the universe we want to compete in and that's 70% of the UV industry. We are number one in the LCV less than 3.5% segment and we would like to stay that way. Next slide. So, I am taking some illustrations of business segments. where we'll talk about how we're thinking about the future growth strategy. Farm, SUVs, LCVs, last mile mobility, and just a slide on capturing the autoelectric waveform. Next slide. This is the way we define the purpose of the farm. It's about transforming farming and enriching life. Our people are here to enrich the lives of farmers by providing easy access to affordable and innovative technology solutions, enabling them to rise. I'm going to talk about exciting new tractor platforms inside the pipeline. I'm going to talk more about the 10X by 2027 and 15 new products that we see coming along the way for that. This is the product portfolio that we are building on the tractor site. Brand Mahindra and Brand Swaraj. A lot of these are underway and we will start seeing them from next year to 2025-2026. significant part of it is the K2 platform which we have spoken about. That's 4 new platforms, 37 new products. But that's not the only thing because there are multiple new products on the Swaraj site all in work and we expect to hence have a very strong solid portfolio of tractors to keep our edge and to keep increasing our market share. Next slide. Here's the logic behind the farm machinery story. The domestic industry today is 5,000 crores. 18 to 20% stagger will take it to 12,000 crores by 2027. Our market share today is less than 10%. Our tractor market share is more than 40%. We do believe that with everything that we're going to be doing in the next five years, our farm machinery market share should be 30% plus. which is basically 4,000 crores of a 12,000 crores protected disaster. And 1,000 crores of exports from India of farm machines will take us to a 10x growth. This doesn't improve farm machinery revenue to our global subsidies. How are we going to make this happen? A very strong product pipeline, which some of which I've alluded to, leveling our capability out of our global centers of excellence. exploring partnerships, alliances, acquisitions. We're setting up a manufacturing facility in-house at Geetampu, which will be ready next financial year. Expanding our network by three times for the next four years. And most importantly, increasing access. Growth of farm nationality is going to come out of access. Use of finance, the financial packages, leasing model, and rental model. So while this may seem a stretch when we talk about MX, we think it's doable. It's doable because we are a very, very strong rural and farm equipment-driven company. And with the right product portfolios and the right go-to-market strategy, there is no reason why we can't leverage the opportunity. It is what it is around the world. And as we've often said in the past, India is structuralized, not mechanized. And there is a big opportunity ahead for us as leaders to drive that phase of mechanization. Next slide. This is what the 15 products look like. This is an illustration of products which are tractor mounted or tractor trailed and products which are test prepared. These will come out between now and 2025. Next slide. Moving on to SUVs. And really what we are trying to do in the SUV portfolios to build a strong and authentic SUV brand. What does that mean? means creating sophisticated authentic SUVs with an unmistakable presence. Products which are advanced by way of adventure-ready capability. We don't say that authentic means SUV. You have to be a 4x4 to be an authentic SUV or that you have to be only body or frame. What we really mean is how do we create products which are adventure-ready. And our whole portfolio is going to be about that. And which is why we would like to measure ourselves with a relevant size of business, and that's what we're calling a core S&P business. We're planning 30 new launches by 2027. A very important part is our whole brand transformation exercise. You've seen us do that over the last year and a half. First with the launch of the SaaS, now with the launch of the S&P 700. We moved to a new visual identity, the 20-piece logo. for the SUV business. We are revamping our dealership's finances to bring alive this new imagery. And these are our four key focus brands that we'll build on. We may look at creating a new electric brand as well. So here's a strategy about focus, differentiation, transformation. And we believe, based on all the research that we've done, that there are a large number of consumers who are very excited with the proposition of what our brand offers. at the proposition of buying an authentic through core HE. This is what a showroom could look like by 2027. 15 new products. A large number of them are going to be electric. A lot of work is happening on electric. I'm sure you'll have questions and I'll talk a little more about it, but more over the next year. The XUV400 here may make you wonder what that is. We may name that XUV400, the electric version of CWO. We believe has an opportunity to be named differently. This is still a code name, but just to differentiate it from the CWO, you see an XUV400 of that. Next slide. The proposition here is around exploring the impossible. That's a bad idea. Four key brands doesn't mean we discontinue the others. One new electric fan, 13 new launches out of which eight will be electric. And we believe we should be prepared for at least 20% of the UV volume being electric by 2027. Let me move on to LCG. In the LCG space, we already are leaders. Planning to strengthen our position with 17 new launches by 2027. Eight of them will be electrics. there will be 12 TNG options available. A lot of these products are underway already. A new pickup range starting from early next year. And some new platforms that we are working on and a very exciting product portfolio in the last mile mobility side. Moving on to the last mile mobility vertical. We are number one in the month of quarter two actually. We had a 68% market share. We believe the penetration in this is going to happen very rapidly and we would expect a 30% plus penetration by 2025 in the electric three-year space. We would like to stay ahead by launching five innovative products and suddenly a partnership that will be rich in sales efforts. Moving on to one slide around the electric, auto electric, Turkish as you may call it. We have been in this segment for 10 years. We have a cumulative 340 million kilometers on growth. Lots of learnings out of that. These learnings are going to be spread in to create in our portfolio of So eight new SUVs, eight new LCVs, and number one in the electric industry. We will talk more about the details of our strategy. I'm sure you have questions on, you know, who are going to be our partners, where are we going to get batteries, but that's not for today. We will talk about that during the course of the next calendar and share with you as openly as we have been for the last two quarters, what our thinking around this is. With growth has to come strong returns and ROC of 18 plus plus is what we started. We are working and we have been very strong in managing our working capital. CapEx, which is focused around segments in which we want to play and win and complexity reduction through platform synergy and platform commonality. As a part of driving returns, management of our OPM is going to be critical. We've hence taken upon ourselves targets to reduce cost to the percentage of revenue by 3% year-on-year. This will happen by way of driving material costs down. A lot of work happening around it, parts from an LFE platform. On the fixed cost side, we look at new age marketing. We've already seen that. We've launched both Thar and SQT 700 with a fraction of the marketing budgets that we have in the past. That's what new age marketing is about and we believe that because the products are so differentiated and unique, it allows us to do that more than . Drive manufacturing conversion cost down, logistics cost down, . So, broadly as we think about the future, we believe that there is a uniquely based very, very strong pillars to build on or to drive growth and deliver very strong .

Thank you, Rajesh. I think most of you would have seen the numbers. I'm going to run through this pretty quickly. I think if you look at the standalone revenue growth of 15% within that auto segment showed a growth, but farm showed a slight decline because last year farm was a very strong year for farm and so there are two mixed trends in here. Coming to the EBITDA, at an absolute level, there was a 19% decline because of some of the reasons which were discussed by Rajesh and Anish in terms of the commodity cost increase. And so the margins have gone down as a percentage and also in absolute terms. Go to the next slide. However, at the PAT level, I think our returns from our group companies are increasing. So Our dividends are increasing and many of our group companies have given dividends this quarter. Most notably TechM, that was a large component of this. That's why over on Pat, before EI grew above 29%. I think Pat after EI was a 9x growth. I think the main reason for this difference between before and after EI was some of our capital allocation decisions last year. which has resulted in certain write downs, which are not there. During the current quarter, we have an EI of about 255 crores, which is embedded into this number.

So that's the gap between 1687 and 1432 in the current quarter. Can you go to the next slide please? I think this just illustrates what I was talking about.

I think those farm and auto, I think because of the commodity cost treasures, I think we have seen an absolute decline. However, group companies largely led by dividend increase have contributed to a growth in profits leading to an overall growth in the past before EI at a standalone level. At a consolidated level, auto led the growth, I think 23% growth year on year. Farm at a consolidated level including domestic and international is growth while group companies and this is across multiple sectors grew by 11 percent. So, I think good all round growth which we are seeing across multiple companies in terms of revenue growth. If you look at excuse me if you look at past before EI I think there is a 43 percent growth And the SYNC effect which Anish was mentioning, I think that is, that is, if you have taken that into account, it's a growth from 906 to 1975.

Similarly, I think there's a 9X growth coming on Sondervan because from 136 to 1939. I think, can we move to the next slide?

Just splitting that up into The pattern around domestic auto and farm, I think we are seeing the same pattern as in the standalone, there is an absolute decline. However, international software, there has been a lot of effort in terms of metric improvement. That's a positive contribution of about 200. And finally, group companies. Within the 776 number of group companies, the positive impact of MMSSL is about 411. And the remaining is coming from some other group companies. So, Overall, I think the bridge here is that while the domestic auto and farm business is under pressure because of some of the reasons, but we are seeing good growth in terms of profitability in international subs as well as the group company performance. I think that's all I have in terms of the slides and back to you, Anish. Yes. Thank you. Thank you, Anish, Rajesh and Manoj.

We now open the floor for questions and answers. Just as a reminder, please use the right hand up and you will be unmuted for your call when your turn comes.

First question we have today from Pramod Kumar of UBS. Pramod, would you like to go ahead?

Hello. Hello.

Yes, please go ahead.

Yes, sorry. Thanks for the detailed presentation. Before I start off with my question, just a clarification on slide 42, where you mentioned 3% cost reduction as a percentage of revenue. Just wanted to clarify, is it auto plus farm and also the timeline for the same?

It is auto plus. That's Ramos, right? Yes, sir. Ramos, right. Yeah, Pramod. So that is auto plus farm. That was a common strike. All the financial strikes were common for auto and farm. And timeline again? Yeah, so the timeline for the ROC is 2025. That's where we are putting the revenue and that doesn't mean it won't happen before. But really when we say year on year, it starts now. Okay, great. Year on year. Okay. And my first question, Rajiv. I didn't want to clarify, but to clarify, it is as a percentage of revenue.

Yes, yes, yes. That makes it quite impactful, actually. That's why I want to clarify that.

It may not always be absolute. I just want to clarify this percentage of revenue.

Yeah, yeah, yeah. Thanks, Rajiv. And the first question is actually on the EV strategy. You've seen off late a lot of transactions on EVs, a lot of appetite, in fact, to participate in the India EV story.

And given that the wide EV mobility platform what you have and reasonably good capabilities already in terms of bond electric platforms, I'm just wondering, are we still open to partnerships? Because we had this thought a couple of years back, then we moved the EV substrate into the main business. So what is the thinking going forward? Because you seem to be having a very busy launch pipeline across both auto, farm, non-farm and and amidst all this uh uh is there is there something which you can benefit from by partnering with someone uh so just just wanted to understand your thoughts on that yeah promote i hope you mean busy in a positive sense yeah of course and if you want to take that first i'll take that first so promote uh we are looking at leadership in the easy space as we write it Let me answer your question first. Yes, we are open to partnerships. We are open to investors coming in as well. We had Mindre Electric set up as a unit which was doing some very specialized things on the ED fund, but we need to go broader than that. And that's the reason we've merged in fact with the company right now. We will look at all potential options of the partner coming in. But where we stand today is dealership in three vehicles, as Rajesh has talked about, 68% share in a market which is moving to EV very quickly. I have said earlier that there are three drivers of EV, cost of ownership, range anxiety and infrastructure. All three have been met for the three-wheeler space. We are not quite there for the four-wheeler space as an industry and therefore volumes today are very low. But as volumes pick up, we will be a big part of that and we have got a range of products coming up for that as well. So EV is going to be a big part of our story going forward and we are open to all options and all the partnerships and investments.

Thanks, Anish. Second question is more towards Rajesh. Rajesh, between XQV, Thar and some other products, you have like over 150,000 bookings and I am pretty sure with Thar you did get a lot of new customers. So between Thar and XQV where you have like 70,000 bookings, if you can help us understand how has the customer profile changed for Mahindra compared to the previous products? Because what I'm trying to get at is, we had a very strong positioning in certain pockets of the country, certain product categories, and I'm just trying to understand, are we seeing a change in customer profile which could benefit more and more as we launch Copio, for example, which is historically a

semi-urban rural kind of a product not seen so much by office-going public in Mumbai, for example. I may be wrong, but that's my general understanding. But just trying to understand, are we managing to attract more new customers who were not the typical Mahindra customers historically? I'll give you a data point which will make it very illustrative of the fact that we are getting a very different target audience. Thar is 50% auto-transmission. uh just a very clear indication there's a very different profile from what we have had before even xuv500 which was a micro driven product had less than i think 10 or 15 percent auto transmission so when we launched heart fire has gone in with 50 auto transmission and 25 capacity as we've got into xuv700 of course it's a number of 50 plus but ax7 and ax7l are in the range of 65-70% right at the top and 95% of the portfolio is AX and just 5% is the MX portfolio by way of booking right so you can clearly see that this is a very very different segment and hence sets us up and that exactly was our intention because brand transformation exercise is about attracting new different usage segments and just going back in time 20 odd years When Scorpio was launched, it was a very marketable product. And you did see it a lot in cities. It's just that with time, as new products have come in, Scorpio became more a, you know, semi-urban rural product and lost traction in the cities. I'm sure as we launch the Z101, we're going to come back very strongly in cities. Now, that is not going to say that XTG700 or Thar are not selling in our strongholds. What we are doing is a completely different base on top of what we have. We're not doing anything by which we're isolating or losing our space. And actually, anecdotally, this holds true even for NIO. NIO is starting to sell in Delhi and CR, which Bolero narrated, and starting to sell in South. So, we are clearly opening up new markets, new segments with our new markets.

And Rajesh, before I go, excuse me, 400, I see the timeline on the slide as 2426. Is that understanding right? I thought you told us a little longer.

No, I mean, see the timelines here on a slide like this have to be a little loose by way of bank. It will be much earlier. Thanks a lot and wish you all the best. Thanks a lot. Thank you. Thanks a lot.

Yeah, next time. Thanks, Pramod. The next question is from Kapil of Nomura Securities.

First of all, I appreciate that the management has laid out an impressive vision for both EVs and farm machinery. Thanks very much for that. That was a key ask from us. My first question is on EVs. Again, you know, we've executed very well in case of SUVs, though we are yet to see the fruits of that. When you envision this number one position in SUVs as well, and also E3 does, what are the capabilities required for the same in your view and there is M&M on that what are you doing to get there also if you could talk about external funding requirements and whether you are exploring that or not that is correct yeah I think Anish you answered the first question second question Kapil asked which is around funding requirement yes we are open to any form of funding that may come in to enable us to achieve the objectives that we want. So we're not at all closed for that. The first point around what capabilities we need is what I would like to take a few months before we can come and share with you. We will want to do a very specific easy-based communication around how we have prepared and building of competencies. So we are at that stage of defining what we want to do ourselves, what we want to get into partnerships on and who that partnership and what that partnership ecosystem will look like. But we wouldn't want to share that in an ad hoc manner like this. It's not a 30-second answer. So we will come back sometime in the next calendar year with a comprehensive plan. Anish, you want to add on to that, please? I just want to touch upon the three-wheeler EV that you mentioned, Kapil. From that front, we do have clear market leadership today with a 68% share. We have all the capabilities required for that. It's been driven essentially by our experience in electric vehicles over the last 10 years because it's the same battery that's really being used for this. We've had vehicles driven over 340 million kilometers and a lot of expertise in battery packaging and other areas that are required for it. So, on the three wheeler front, we are well positioned today. We need to demonstrate more on the four wheeler front, which is what we are focused on.

Kapil, do you have any follow-up questions?

Okay. Thanks, Kapil. The next question is from Pramod Amte, Incred Capital. Pramod, you can unmute and go ahead with your question.

There seems to be mixed signals on the rural demand environment. Will you give some thought process in terms of how rural shaping up for your products or overall scheme of things for the next six to nine months? yeah uh yeah so promote the two things to consider one is for most products rural is on a very high base uh because as we all know last year when urban was very slow rural had really taken off of course for tractors but we've also seen it in all our auto products and i think it was visible across categories rural was extremely quiet as we've come into this year so we have to keep in mind that All categories are on a very high basis. The other thing to keep in mind is rains have got delayed this year. Slowing happened late to begin with and then rains have flown into or carried over into the so to say festival season. And it's been particularly bad in the east. That is UP, UP Bihar, West Bengal kind of rains. South summer, southern markets Telangana, Andhra have been slow as well for the same reason. My kind of take would be at this point of time, and, you know, these are things that will evolve as we get a deeper understanding with time. But my current take is fundamentals of rural economy are very strong. Prop outputs are very good. And overall, we see buoyancy going into rural over the next six to nine months. But there is going to be a base effect. And any time we look at rural, we have to keep in mind that we are comparing on a very high basis. Does that answer your question, Prabhakar? Kind of answer your question, right? I'm sure it doesn't fully answer your question. Prabhakar, can you talk? There seems to be something... He's gone on mute. He's gone on to mute. I think somebody... Yeah, I think there seems to be some technical issue with the new WebEx. This mute, unmute seems to be a little bit of an issue. Can you... Prabhakar, can you... Unmute from our side. And let's do that for a couple of days where I don't know whether he will... Yes, I will write. Thanks for unmuting. Yeah Rajesh, that helps to answer the session to a degree. Second one is with regard to the new model launches. Good to see that you guys are back on successful new launch successes and garnering a good amount of bookings. Two questions related to the same. One, looking at the aggressive pricing stance which you are taking, it looks like that till the time your cost structure comes into place, we have to assume these lower margins for automotive division to continue for some more time to come. That's one. Second is looking at your execution capabilities, challenges in some of the responses like cars. How do you plan to successfully address it in the future models? Like, we have never seen you guys hitting 50,000 plus type of bookings. And how are you planning to ramp up your supply chain so that you can deliver these customer expectations? Thanks. I just want to be sure it's Pramod, right? Yeah, Pramod. Yeah, Pramod. Yeah, okay. Pramod. So the first question is, I guess, around pricing of new products and the overall margin story. And they are connected and they are not connected. So firstly, when you look at our auto business right now, the margin is a blend of multiple categories. It's a blend of SUVs. It's a blend of LCV less than 3.5 tons. It's a blend of trucks and buses. So what you are seeing is a blended margin and each of these have different factors at play. What we have seen right now is an unprecedented commodity price inflation. And when you look at our margins today, they are still best in class. Way above all our peers who may have higher volumes than us as well. So we have been aggressive in taking our prices up and While of course margins have dropped, they are still way better than others. So I wouldn't right now at this moment read new product pricing into margins that we are seeing in Q2. Not to say that it won't make a difference. Just to give you an example, we did not take Thar prices up for many months because we wanted to protect customers who had booked Thar in the early months. We could have easily taken it up, but we felt it would be very non-customer centric. somebody who's booked the product in 15 days or 20 days uh to get a product at a significantly higher price even though we always capture that in the booking form so we have taken some of these calls to protect interest of customers we learned out of that in xpv 700 we did two rounds of pricing uh so we did 25 000 bookings we stopped and we changed the price we knew upfront that if we don't do that we'll get locked into the same situation as that uh so So, these are some things you learn out of these things. And as you see the XUV700 profile of bookings as I just mentioned is highly skewed to the topic. So, I won't necessarily read too much right now into new product pricing. Not to say that new products are not going to be aggressively priced. They will be aggressively priced. We know that's the way to win a good product. And we know that in the past, whenever we've succeeded, the ability to take prices up is seamless. So, we believe that there will be some play that we will put in in the short term to get the right prices out for all our losses. And we will be able to take them up to success. We've done that in the past. We've taken a very aggressive price increase, which has come into play now in the government. So, and that hasn't affected the booking momentum at all. So, that is I think the question on margins is the mix of commodities which is very aggressive. We think commodity will see a down cycle in the next 2 to 3 years period has to. All past evidence is whenever you see an increase of this kind it does correct and you cannot say when it will correct, but it will definitely correct in 3 or 6. Now, the point on execution I am guessing is to do with what kind of capacity we are setting up for and you know we have set up TAR. for 2,000, 2,500 kind of capacity. We are now at 4,000. Our capacity is ready for 4,000. However, it is constrained continuously to availability of ECUs and sometimes the infotainment. So, the constraint is not our capacity planning at the moment. It is the semiconductors. And we have already triggered investments to take that 4,000 upwards substantially. Likewise, 700, we are ready with a very, very good capacity. We were prepared with the strategy of MX and AX variant that we would see a very strong demand. But again, we are constrained by multiple semiconductors that impact us. The AX7 variant, I think, has over 170 semiconductors. That's the extent of technology that's there in that product. So these are things that we're going to have to navigate with. Some of them are environmental. Some of them we are learning out of. And with every new launch, we learn something new and we factor that into . Pramod, does that answer your question? Thanks, Pramod.

Thanks, Pramod. We're bringing back Kapil. I think we lost Kapil earlier. Kapil, you are back online.

Thank you. Thanks for bringing me back. Firstly, just on clarification on the product launches on EV side, How many are you launching by FY23 end and in terms of chronology is E700 coming earlier or is E400 coming earlier? E400 is coming earlier and that will be the first launch and that will happen in financial year F23 probably towards quarter 4, calendar 23. And I because I see EKU is there as well. Yeah, EKU we may lead as a primarily export product with maybe little bit of plain domestic. KUV 100 is a very strong export product. North Africa, countries like Tunisia, South Africa and so on. Also some neighboring countries like Nepal. So we may use that more as an export. Got it. The second question was on palm machinery. So when we have So then we are looking at this 10x growth. Can you talk about what are the kind of innovations you are thinking that could disrupt or help us grow at that pace? And would the export play be much higher in the long run in these kind of products? Okay, the first part of the question is clear. I'm not sure about the second part. When you mean export play would be higher, would you mean higher than what? You may hire the thousand or I'm not sure what you're comparing. Okay. A request to the participant is during the, you know, when you are asking the question, please go and unmute it. Then we need to unmute it again. So that's taking a lot of time. So when you are asking the question, please go and unmute it. Dejan, can you unmute Kapil again? Yeah, that's what I meant, that in the long run, could this 1000 crores could also be a multi-fold opportunity with these products beyond 2025. Okay, so the first part of your question, Kapil, is around what innovations. I think innovations are going to be multi-fold. There will be product innovation because in this category you have to have hyperlocal delivery. Products will perform differently in different soil sensations around the country. How do we create a scaled up model which allows hyperlocal customization? Second part of innovation is going to be around logistics. Logistics slash localized production facilities. The third part of innovation will be around access, finance, vision, and truth. So there are a bunch of areas we have to look at by way of innovation to enable this kind of a growth. At the end of the day, what we're looking at is creating a category, and category growth will come out of innovation on multiple fronts, not just one. The second part of your question I think is very interesting, and we strongly believe that India can be a global center of manufacturing for commerce. we have everything to enable that to happen. And potentially as things pick up, we could look at a greater than thousand crore revenue. Also, many of our subsidies have a very large farm machinery presence. So in Magna, you know, almost 30% or 35% of the revenues come out of farm machines. And some of them we may make in India, which are currently being made in the U.S. or other parts of the world. So there could be an upside on exports, but too early to talk about. Thank you very much. I wish you all the best. Thank you, Kapil. Since there are many more questions, I would request each participant to restrict to only one question per participant.

Next question is from Gungan of Bank of America. Gungan, can you please go ahead? Yes. Gurjan, can you unmute?

Okay. If Gurjan is not online, then you can go to Jinesh.

Nitin, can you unmute Jinesh? Yes, sir. I am here, too.

Yes. Hi, am I audible now?

Yeah, Jinesh.

Yeah, hi. First question is on clarification on the exquisite 700 capacity. What was the number you shared, Rajesh?

That's a good catch. I didn't share the number.

Any number which you can put to that? I mean, the capacity which you are talking about?

Yeah, I don't want to put that right now, Rajesh. then it's not for any other reason but it's going to lead to speculation of what's going to be the waiting time and that's going to create a lot of discomfort among customers who are already speculating so the way we are dealing with this right now is addressing each booking phases so we right now have given out a delivery schedule to the first 15,000 people we would do that very shortly for the next group so we complete the first day 25,000 booking and put out the schedule for them And then we are going to put out a schedule for the balance 25 and so on. The reason we are not putting out a number on our capacity because right now the continuing capacity is going to be the ECUs and not necessarily the our own capacity. And putting out a number of what our capacity is not relevant because if you don't have the ECUs, you are not going to be able to leverage that capacity. And everybody is going to get into projecting what their waiting period is going to be. That waiting period is also going to be very dependent on which wells in their water. Because there are multiple semiconductors that are at play, like I mentioned earlier. So, there is just a simple example is wireless charger needs a semiconductor. That's in shortage. Now, we have to probably create an alternate variant to give customer a choice if they want the 700 without a wireless charger. So, there are multiple such things that we are working on. GeneXus is Bear with us a little bit. We don't want to jump the gun and put out something right now which, you know, creates discomfort amongst people. I hope you understand. That's the reason.

And on the semiconductor part, what's the visibility you have now given that there is some improvement on the supply side? And secondly, can you update on the chapter-level sales for the industry? How were they? Whether they were down or flat on my rotation?

Yeah, so... The semiconductor question, I mean, to be honest, it continues to be dynamic. We would know now, about now, in a few days, what December of electricity is going to be. So, it's really a month-to-month thing. And like I said, it's not just engineering, it's multiple things. So, at the end of the day, you know, it's very dynamic production planning of the kind I don't think any supply chain people have ever experienced. So many moving parts all the time, continuously for over a year. Really, the work planning has very little relevance in the current context. But as we said earlier, the last year has been hit by multiple extraneous factors. You know, there was a semiconductor factory in Japan which had caught fire, and they were down for almost a month. Malaysia was hit for almost a month. There were some storms in the U.S. a few months back, and some capacities have got, you know, out of commission. There have been multiple extraneous factors. Hopefully we won't see more of those and then it's going to be a normal demand supply gap and that's not going to be as bad as what the last few months have been. So that's on the semiconductor question. Your question was on, the next question was on the tractor Diwali sales. I don't want to put out a number yet. Because right now our view is that Diwali sales are going to spill over into parts of Nagarjuna. Because of, you know, delayed sowing, delayed rains and, you know, buying is extending beyond the festival time. So, we are just going to wait and watch how November goes rather than conclude that Diwali was the end of winter. We are seeing postponement in the market, not buying. So, it's just better to wait out November. Just to add and listen to Rajesh's point of semiconductors, the two factors driving it were COVID and the supply-demand gap. COVID really caused a much bigger disruption, and that's what we've seen. Hopefully that's behind us, unless COVID rears its ugly head again somewhere around the world in a much bigger way. So if that's behind us, then things should be much easier to manage going forward. Yes, there will be a supply-demand gap, but it'll be much easier than what the COVID issue was. Thanks, Dinesh. The next question is from Sonal Gupta, L&T Mutual Fund.

Hello. Yeah, Sonal. We can hear you. Yeah, thanks. So, just a few financial related questions. So, could you sort of tell us what is the other operating income in this quarter and what is the corresponding number in Q1? For a square,

So, the other operating discount is what we showed it was about 850 to close a visit and I think it will be effective. What was the other question?

I will come back to this. I will give you the exact number. No, no. And I was asking the corresponding number for the first quarter as well. And my other question is, is lower employee cost in this quarter, you see, sequentially, is there a one-off here, or how do you see?

Yeah, so there are some swaps in terms of our performance pay, et cetera.

So I think that's an impact of about 30 crores, which should be normalized. It's lower by about 30 crores.

Got it.

I'll come back on the other operating income.

Sure. Would you be able to share the absolute EV number, EV three-wheeler number for this quarter?

You mean EV three-wheeler volume?

Yes.

Rajesh? Rajeev, do you have that readily available? But I do remember the last couple of months have been in the thousand plus range. range so we did 2000 in October 2000 plus 2000 in October yeah and that includes the e-rickshaws as well the e-alpha e-alpha okay so okay sir Rajiv do you want to add anything Rajiv if you are on I think Rajiv is not so worried yeah Maybe you can share it.

Rajesh, we did 1600 in September and over 2000 in October. And that has basically around 1200 numbers of CEOs and 800 number odd of EL families.

I have that answer on the other operating income, the dividend 58 crores in Q1 and 852 crores in Q2.

No sir, I mean the other operating income which is the incentives etc. from the government etc. which would be coming above the EBITDA line.

Okay, so let me come back to you on that. Sure, thank you. I think Manoj, last year in auto we had One time extra. One time of IPS which is incentive, promotional incentive and this year we gained.

Yes, sir. The 60 crores was one time last year. Yeah. Because 80 years which was pertaining to the previous year which is F. This time, there is no one time.

But what would be the number overall? Are they operating?

We are just talking about auto. So, Manoj, we can give you a confidence.

After the call, I will give you a number on that piece.

Sure. Thank you so much. Okay. And The next question is from Amin Kirani of JPMorgan. Amin, go ahead.

Hello. Yeah, Amin. Thank you. Thank you. My question was with respect to the specific guidance that you have given on LCD market share and LCD market share.

Now, on the LTV side, you know, for a very long time, we've seen that the number one position between zero and Tata is determined by whether the zero to two turn is doing better or the two to three and a half is doing better. So, when you're talking about leadership, should we expect that the two to three and a half turn will keep getting better or are you going to do some product interventions on the lower zero to two turn where you are relatively weaker?

You did see that chart out there, and we did talk about a new platform, and that's what we'll take on the lower segments. So, yes, it will include both.

Okay. And just on the SUV market share, so you mentioned that, you know, you want to be number one in the core SUV, which will be like 70% of the SUV market, which will effectively place you like a number one or a very close number two in overall SUVs also. So, again... So, should we expect that because you've stayed away from that small, you know, crossover car like SUV. So, again, are we expecting that the market will now start shifting towards the mid to larger size SUVs and that's how your dominance in that category will lead to a higher market share?

Yeah. So, 70% is based on full age market composition, not a future, not a projected market composition. So, it is 70% today, the way we are defining it. And we have been very mindful to define it in a way that, you know, you don't come back and tell us that you have defined a category to suit your convenience. So, we are not saying the market is for Thar and Scorpio kind of products and we are going to be number one in that. We have seen the bulk of the market only excluded clear outliers which are, you know, either completely NPV or Thar crossovers. And really as per us should not be counted as SUVs. And we are hence keeping a very reasonable size. So the 70% is based on today's vehicles in the market, not based on a projected conversion.

And your market share there right now would be number one already or you would, according to your own calculations?

No, we are not number one and we are not measuring our market share in a context that we are supplying so badly. So let's just play out a few months before you see the real value of what we are.

Great, great. Looking forward to that.

Thank you. Thanks Amit. The next question is from Yogesh Agarwal of HSBC. So, just quick clarification Rajesh, you talked about this growth expectations for the next three years 15 to 20 percent but you also talked about this base effect in rural India. And all of us are expecting a bit of moderation now in tractor cycles next two, three years, but likely, right? So the bulk of that 15, 20% will be driven by non-farm business, non-tractor business, one could expect, or our assumption for farm business is softer. Okay, so let me answer this question by saying two things. A lot of global players in the farm equipment space always talk about mid-cycle and you know we tend not to do that and we are actually thinking that maybe at some stage we need to talk mid-cycle rather than you know point in time because it's such a cyclical industry right so if we say we are going to be something in 2025 that may be a year in which the industry has crashed and then you say okay whatever happened to everything that you said and a lot of people correct to take an average or take a mid-cycle so You know, there will be ups and downs, but we've consistently maintained that we expect an ongoing CAGR for tractors to be in the region of 7 to 8 percent or 8 to 9 percent. We believe all the fundamentals are right for that. So, you will see years when there are 20 percent, 27 percent growth as it was last year. And that is going to see, you may see two such years and then it will correct, or you may see one year and it will correct and it will come back. But, you know, as you look at data over the last many, many years, you will see that a 7% to 8% category is a very, very reasonable assumption to make for tractor growth. And we believe that that's still possible. Okay. Okay. Thanks, Rajesh. Just another quick one. And you talked about it, this farm mechanization 10 times growth. Is there a change in farmer behavior economics as well around implements? they cost a lot and historically they have been sharing, right? So what will change the mind of a farmer to start buying it or buying it from you versus a local unorganized guy? That's a great question, Yogesh. I'm kind of going back to the comment I made earlier on innovation needed in multiple fronts. Clearly, you have to think about access. Access may come out of rental models, may come out of leasing models, enhancing models as one key area. you know, competing with local players is going to need a different supply chain structure. You can't make a one-place product of this kind and supply around the country. We will probably have to have different manufacturing hubs closer to market. So there are multiple such things that we are looking at putting into play. So it will have to be innovation at multiple levels where farmers don't, where you're converting unorganized to organized, you have to have a cost structure or a finance package to compensate for. Let me just add here that if I were to look at the macro view, we said this before, globally the farm machinery or implements segment is 2x factors. In India it's a fraction. So that in itself gives us a significant level of opportunity. Now all of that is not going to happen overnight. But that will require a new set of products. It will require working with farmers to have them execute products. But the positive here is we are seeing greater affluence for farmers. And that's going to drive behavior towards getting some of these implements that make their life easier. And you will see from us a set of innovative products that come out as well that will be better than what farmers use today as implements and make their life much easier. And that will drive this demand. So that's the market we are going after when we talk help offset some of the slowness that you might see across the industry for taxes and stuff. Thank you. Thank you. The next question is from Gunjan. Gunjan, you can go ahead with your question. Hello. Hello.

Okay, Gunjan you are coming over via audio. Are you connected?

This is Mihir from Avengers. Yeah, go ahead. Yeah, hi. Sorry, thanks for the opportunity. We have two questions. One is on the factor side you said that you will wait for a month. So, just want to understand what's the inventory situation out there given that given by what sir you have said that it looks like the details would be negative so where are we in terms of inventory position in tractors and what is the short cycle guidance for this year in terms of do you have any guidance for this year in terms of the tractor growth which you see that's my first question and my second question is with relate to partnerships so we have We have seen competitors doing this in a manner where they have got their products and the market share in the IC space and also launching the EG products and then starting for investments and partnerships. We have had a mixed view. view in terms of having partnerships be it with Ford or be it with Renault. So are we looking at differently where we launch new products given that in 2027 you have a targeted EV launches which will be there. So you will be launching new products and then looking at investments or how are you looking at? So these are my two questions if you can answer. Thank you. I'll take the first one and Nishant will take the second one. So, here on the tractor stock, you know, we always realize that when the industry is going through volatility, we have to watch for stock. In the month of October, we already initiated downstocking. We are amongst the people who had started the process of downstocking in October. And we will be correcting stock in November as well. So, whenever we talk projections, we realize that It is about upstocking and downstocking in the sector industry. So when we say industry grew 27%, almost half of that is, or let's say X percent of the inventory pipeline built. When you start seeing a down cycle and you say there's a minus growth of 20%, X percent of that is because you're correcting stocks because at the end of the day, billing number. So the billing number always adjusts for what's happening to retail and we start correcting our stocks Our anticipation is that by December, January, we would be back to our normal stock. So, as things stand, we are factoring that into our projections. We have a specific question on how this industry grows for this year, for the full year. We would stay within the flat to low single decision. and that's what we've been saying from the beginning of the year and many of you have been saying how can that happen if quarter one grew so much and we have been saying consistently we are on a very high base in the balanced part of the year and we're not going to get growth on that base. So, we stay with the flat to small single digit for the industry and from our standpoint that includes stock correction and it, yeah, Yeah, so nothing more to add to that, Neeraj, unless you have a follow-up. Anish, you want to take this question? Yeah, Neeraj, partnerships are a share of defaults. First is, we are very open to partnerships, as long as there's a clear objective that's shown between both partners. When we look at partnerships that we referred to, Renault and Ford from 20 years ago, they were very successful in terms of partners achieving their objectives, which is where we looked again at Ford in a recent partnership, And there I would say that we have tremendous respect for Ford and the leadership team there. It's a great group of people. It was just where we found more recently that our objectives were not fully aligned. And that didn't make sense to then get into a partnership where you have different objectives. We are today focused on the future of auto. We are focused on EV. We are focused on growth, driving that space. And those are areas where you can look for partnerships where we have a full alignment of pictures.

okay thank you uh the next question is from venice venising of market standing very nice going ahead uh if you could talk about two things one is that uh we will see product except about uh xqb 700 So will that put pressure on margins? And secondly, the leverage gains. You know, when you look at automotive runway significantly lower than what you used to do at the peak. So if volumes were to normalize, what kind of leverage gains can we see on the automotive side in the margins?

Thanks. Yeah, I kind of answered this question earlier. So, you know, Anish, there are lots of questions. I don't want to be very long in responding to that. But the Margins are driven, like I said, by multiple things. Firstly, we have multiple businesses in the auto portfolio. There's SUVs, there's the SUV-less than three and a half tons, there's trucks and buses. So, you see a blended margin across the different. Within the portfolio of each, of course, there are multiple margins. Then there's the evolution of new products, which obviously we are going to price aggressively in early phases. And as I said earlier, when we create success, we are able to take prices up and margins improve. And we are seeing an unprecedented cost cycle at the moment. Commodity, trade, everything is on an up cycle. So, over time, we believe that commodity will correct. Our ability to take prices will go up and we are going to improve our business unit and model mix portfolio. So, when we talk about an 18% plus ROC over a three-year period in auto, we are factoring in the fact that we will improve our margins much further.

Any comments on the operating leverage point? Because that also would have been a significant hit to margin today, right?

It is. It is. It is a hit to margin because, you know, volumes are nowhere near what we want them to be, unfortunately. So, there is a clear upside that's going to come out of operating leverage as we significantly improve our cost structure. So, when cost structure has improved so dramatically, we're going to see upsides as volumes pick up. On that concept, should I also add that But as you look at what's happened there, we effectively raised prices twice in two days. So we started with a certain price for the first $25,000. We had a higher price for the next $25,000. And then after that, there's a higher price that will be applicable when the car is delivered. So if you look at that journey, combined with the fact that the model makes an XPG700 is also geared very much towards the high end. And there's operating leverage that comes in with that. I think we will have some good numbers overall in terms of margins for new vehicles as well.

And with that, will it also be fair to, could you comment on the ASP expansion that we saw in the automotive side? We've seen quite a nice jump in automotive ASPs on a sequential basis. Any sort of one-off you would call out and how would you look at it going ahead?

Manoj, would you take that? You mean automotive ASPs?

Yeah, I have a sales price.

So, it's probably a mixed thing which is impacting in terms of the pricing. Yeah. uh yeah it is i i guess it is mixed uh and the fact that you pick on price increases so uh and the price increases are probably more aggressive on the iron model Manoj i don't know if you want to add anything no Rajesh i don't have anything to add great thanks i'll follow up thanks Vinay the next question is from Kirak Shah of Edelweiss Kirak

Chirag, you can speak.

Okay, if Chirag is not ready, then the next question is from Nitin Arora of Access. Can you take Nitin online?

Yes, Nitin is online. Question. And I'm sorry, Rajesh, if I ask you again on the auto business, you know, because my question came late. But, you know, great question.

You know, you're trying to, you know, I'm asking this question because of very nice visibility beyond the 525, 527. I understand there are changes, there are challenges right now. But in the auto business, you know, there was a tweet in the morning saying that my entire supply, 14,000 SUVs. in January itself. So, you know, the question is more because when we look at your strong backlog today, you know, a company which has 15-20,000 units on a monthly basis standing on a 1,50,000 backlog, you know, optically once the paper thing comes to the execution, your market share will look very big. So, the question more is that is there any other challenges are you facing apart from the supply chain on the ship side because

some of the OEMs and the OEMs or the Japanese OEMs are still improving day by day on the fixed price. So what I wanted to know is, you know, the visibility for the next six to eight months time frame in terms of execution, number one.

And number two, street belief that you will not make money on these backlogs because these are very aggressively priced products. So I understand you've given us FI 25, 27 visibility. is it possible to guide how the margins of an auto business will look like in the next one year? Because you have the booking in your hand, you know which products people have booked with you, and then you do the exhibition, I'm sure you would have the certainty on that. So those are the two questions, very straightforward. Thank you so much. Okay, Nitin, I'm going to try and give you as straightforward an answer as I can. We are making positive margin on the exhibition. It's not price too So now how that is comparable to the rest of the portfolio is not something I'm going to be able to get in today. But it is a positively priced, positive margin product. And so are all our other brands and products. What we are, I would kind of go back to, you know, what Anish has been talking about over the last year, which is delivering ROC. And ROC is a function of multiple variables. I mean, we just had a discussion around operating leverage. So, at the end of the day, we are going to have to balance margins, volumes, market share gain, ROC, right? So, the two things we are focusing on at the moment is how do we deliver market share, which gives you confidence that we are playing a game to success. And, you know, we've heard over the last few years consistently that we are not able to execute a successful TV strategy. Now, you see that play out. There is a successful SUV strategy. We've got four very, very successful launches in the last year and a half or two. And we are going to have a system which is only very successful as well. The critical thing is now, okay, so that's one step to put in. The second is to manage our costs to optimize margins. And it is an exceptionally bad commodity situation. And you're seeing everybody's margins, whoever are published. And our margins are much better than that. And then how are we going to optimize capital in a way that we are able to give the right return? It's a function of these three things. And at the end of the day, we should be clear which of these three we want to prioritize, what we are prioritizing in market share analysis. Yeah, I would just add that if you feel very comfortable around where margins will be, though there are many variables that do not allow us to give a direct answer to what that number is. But if I were to just build a little more on what Rajesh said, Our 700 pricing started with positive margins in the first instance. They were further and hence we increased pricing for the next 25,000. And they were built based on a commodity price that was extremely high because this is more recent. So this was not pricing that was done in the past. So given all of those things when you combine operating leverage with that and what the product is and what it will deliver, our sensitivity right now is it is going to be a very profitable product. Now what those numbers are We will have to wait to see what happens over time. But I just had multiple questions on pricing of XU7W. So, what to invest is very good.

Thank you. Thank you.

So, with that, we come to the end of this conference. Thanks a lot, all the participants, for taking their time and being here. And I also thank Rajesh and Ismanuj and others for making two long days of back-to-back meetings.

And thank you for doing it the evening of the, you know, second day of the board meeting. Thank you all and stay safe.

Thank you everyone.