Eicher Motors Limited (505200) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Eicher Motors Q4 FY '20 and FY '20 Earnings Conference Call, hosted by ICICI Securities. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Nishant Vass from ICICI Securities. Thank you, and over to you, sir.

Thanks, Stanford. Good day, everyone, and thanks for joining us today for this call. From the management side, we are represented by Mr. Siddhartha Lal, MD and CEO Eicher Motors Limited; Mr. Vinod K. Dasari, CEO, Royal Enfield; Mr. Lalit Malik, Chief Commercial Officer, Royal Enfield. Now I would like to hand over the call to the management for their initial remarks. Over to you, sir.

Yes. Hello, and good afternoon, everyone. Good evening. This is Siddhartha Lal here, and thank you all for joining in for Eicher Motors Limited Quarter 4 Results and Year-End Results. So that's for year ending 31st March 2020. Just, of course, to give you some background, the coronavirus pandemic has, of course, severely affected our business and business activity and livelihoods around the globe. So Eicher Motors is equally affected. And of course, humanity is going through its worst crisis in recent decades and very sudden crisis. And at the outset, being committed to our responsibility, Eicher Motors, towards society and towards the nation and as a group -- as a group foundation, we pledged INR 50 crores towards various relief efforts and support measures for corona pandemic. These include providing food, provisions, sanitation, consumables as well as setting up sanitation facilities for underprivileged local communities in parts of several states across the country. So there's a lot of work we're doing towards supporting people. And of course, we will continue to extend support in even more ways and with any more capability that we have, we will extend further support. Now let me give you a quick update on the impact that coronavirus pandemic has had on our business activities. Of course, for both Royal Enfield and VECV, we have suspended all our operations at our offices, plants and dealerships in India from the 23rd of March 2020 onwards. Operations outside of India were also interrupted in most cases. And following government directives, we resumed business activities in May in a gradual manner. Therefore, for the quarter ended March 31, production and sales were impacted due to supply chain constraints and suspension of operations to a limited extent, of course, because this was towards the latter half of the quarter. And hence of course the business performance of that quarter should be seen in light of these developments. So just to give you a consolidated financial of EML for fourth quarter and for the financial year ended March 31, 2020, our revenue for quarter 4 stood at INR 2,208 crores, which is down 12% from INR 2,500 crores same quarter last year. And for the entire year, our [Technical Difficulty], INR 9,154 crores which is down 7% from INR 9,797 crores last year -- the previous year, sorry. Our EBITDA for quarter 4 was INR 432 crores, down 37% from INR 685 crores in the corresponding period previous year. And for the financial year, our EBITDA was at INR 2,180 crores, which is down 25% from INR 2,903 crores from 2018/'19. The EBITDA margin stood at 19.6% against 27.4% and largely due to the decline in volumes and -- with a 17% year-on-year decline in volume. And for the full financial year, our EBITDA was at, 23.8% versus 29.6% for the previous year. So -- and lastly, the profit after tax for quarter 4 was INR 304 crores, down 44% from INR 545 crores. And for the full year at INR 1,827 crores, down 17% from INR 2,203 crores last year. So that's the overview of the fourth quarter and the financial year. Now I'd like Vinod Dasari, the CEO of Royal Enfield, to take us through the Royal Enfield performance, and then I will come back with the VECV performance. Over to you, Vinod.

Thanks, Siddhartha. Well, let me give you an update on the performance of Royal Enfield for Q4 and the fiscal year. For Q4, we sold close to 163,000 motorcycles, which is down 17% from about 198,000 last year. But the exports were up 23% at 8,000 motorcycles against 6,500 that we did last year. And that was on the back of very strong response for our 650 Twins as well as network expansion in all our key markets. In India, the motorcycle segment for more than 125CC was actually down 33% year-on-year, but Royal Enfield sales was down, well, you can say only 18%. As a result, our market share improved from 25% to 30% in the large -- greater than 125CC segment. For the full year, we did just about 700,000 motorcycles, 698,000 to be exact, down 15% from 823,000 the year before. But the good news again is that the exports almost doubled, up 96% from 19,700 to 38,700 motorcycles. And in India, the market share in motorcycle segment, more than 125CC improved from 25% to 27%. Some time ago when we chatted, we talked about the network expansion that we had taken on this year. We now have 921 large-format stores in India. And we had added about 6 more during the year, large-format ones. But the focus clearly was on the Studio Stores. In the last quarter alone, despite March being largely hit, we opened 100 stores, taking the count to well past 600 till March for the year. We received very good response to both sales and service. It expanded our footprint in new geographies. Truly, at this COVID times, it's really helping because the cities are closed, but the outside city, there is a large degree of opening already. And it helps us run focused marketing and sales activities at some of these outside city locations. And international distribution network also have expanded. We almost doubled the exclusive store count from 42 stores in 18 countries to 77 stores in 21 countries. In fact, we added 10 stores during this quarter. Some of our key markets saw major expansions. Thailand store continue to go from 3 stores to 14 stores. In Brazil, we went from 1 store to 7 stores. And we entered new countries such as Korea, Italy and Belgium. So it's a matter of pride that Chennai, where we make our motorcycles, also has the largest Korean population, and we actually export motorcycles from here directly to Korea. Some of you had separately asked us about BS-VI transition and how that went. We very well managed. We successfully completed the BS-VI migration. We have already got the new variants of Classic and Himalayan that were done, and they are received very well by customers. Our BS-VI share of Q4 retail was greater than 60%. So almost 2/3 of the vehicles that we sold or the bikes that we sold in Q4 were BS-VI. And we were the first amongst the OEMs to completely sell off all of the BS-IV stock with no additional incentives. And we did that well ahead of the deadline of March 31, and we had no inventory that we had to worry about towards the end. Fortunately, that helped us with the COVID-19 situation also. We did do a end-of-production limited edition motorcycle called Classic 500 Tribute Black. It was launched online. I'm one of the proud owners also. We sold over 300 motorcycles in -- within 180 minutes of sale. We started; in 180 minutes, we were done, 300 were sold. So on the COVID stuff taking the cue from what Siddhartha mentioned earlier, resuming operations, we are seeing our entire business activities returning to near normalcy. We did a press release just a day or 2 ago saying 85% to 90% of the dealerships are open, and our bookings are now near pre-COVID levels. We've provided support to the entire ecosystem, including customers, workforce, dealers and vendors. Some simple things that we did is extended the free service and warranty till July, even if they expired during the lockdown. All the advanced payments from the dealers and any pending claims were cleared. We returned the advances to the dealers. We made payments to all the vendors as per the payment schedule and... [Technical Difficulty]

Excuse me, this is the operator. Participants, the line from Mr. Vinod Dasari has dropped. Please stay connected while we reconnect Mr. Dasari. Ladies and gentlemen, thanks for patiently waiting. The line is reconnected. Sir, you may go head now.

I don't know -- sorry about this. I don't know where we got disconnected. I was talking away merrily. But I just wanted to say that we -- during this downturn, we significantly enhanced our digital engagement, and we are now rated among the top 10 engaging brands in India, higher than even Amazon Prime, which was surprising. We launched a Slide School just outside of Bangalore, and that's showing very good results in the short run. So I'll hand it back over to Siddhartha Lal for now to talk about the VECV. Siddhartha, over to you.

Yes. Thank you, Vinod. And in case there's a -- operator, in case there's a problem one way or the other, you can transfer it to the other person. So if I get -- so you can get Vinod or me to talk instead. On VECV, we had -- to give you the overall financial and business updates, the revenue for quarter 4 was at INR 2,101 crores, which is down 35%. And for the full year, it was INR 8,524 crores, down 27%. Of course, some of this was due to COVID, but a lot of this was due to the general downturn in CV industry. The EBITDA was -- for the quarter was at INR 38 crores, which is down significantly 86%. And for the year, it is down 59% to INR 401 crores. So that's the EBITDA for the year of 2019/'20. Profit after tax, there was -- in the quarter 4, there was actually a loss of INR 26 crores. And for the full year, there was a profit of INR 58 crores, down 88% from the previous year. So we've just held our heads above water for -- in VECV for this year -- for the previous year. In -- total sales for quarter 4 was at 11,600 units, down 45%. For the full year, we were close to 48,700 units, down 1/3, so down 33% from 73,000 approximately last year. So that's -- we did slightly better than the 40% drop in the industry. So we were down 33%. But of course, it's a huge industry drop also, which is the reason for the -- main reason for the drop here. The CV industry was, of course, the worst hit in the entire automotive sector. And the outbreak of corona has further deteriorated the CV -- the situation for CV industry, which was already reeling under the impact of economic slowdown and change in axle norms and other issues that had come up. And there was also no meaningful additional demand or support to demand from pre-buying due to BS-VI transition. So we had expected some additional pre-buying because the costs were like -- were scheduled to go up in BS-VI, but that didn't happen either. On the BS-VI transition, in line with our endeavors of VECV, we have a very firm idea of modernizing commercial transportation in India and developing countries. So we -- our new BS-VI solutions, which is the EUTECH 6, is the most comprehensive and innovative solution for customers. We transitioned the entire portfolio from 4.9 tonnes to 55 tonnes. So our entire portfolio was transitioned to BS-VI, and the new platform combines VECV's Euro 6 expertise with the most reliable engine technology and fuel-efficient guidelines. We are very excited about it. Our inventory of BS-IV was managed optimally. Even despite the coronavirus issues, we were still able to have smooth liquidation and -- of the entire stock. In addition to that, in VECV, we've introduced uptime centers to enable -- improve productivity and increase fuel efficiency of our vehicles. These uptime centers provided 24/7 support in service, including remote diagnostics to offer superior uptime experience for Eicher customers. So we are using telematics. We are using remote sensing, et cetera, in order to do all this. We monitor vehicles, and we are analyzing the data to suggest steps to improve the efficiency also. And that really come in very handy, and the customers are really happy with our support on these matters. So that's, again, in our bid to modernize commercial transportation in India, which we believe is very far behind in modernity. Particular to the COVID update, VECV has provided support to all of our stakeholders in ways very similar to Royal Enfield. It includes extension of warranty, free service, annual maintenance contracts additional for 2 months across our product portfolio. We've provided support to dealers through the extension of credit period and suppliers by making payments on time to them so that they can survive really. And of course, the Eicher Group foundation, which I talked about in the beginning, it's part of VECV and EML, both contribute to Eicher Group foundation. So that work we're doing is joint from VECV and EML. To conclude, we remain optimistic and strong in the face of all the challenges that we have. We have built our business on extremely sound foundations. I'm talking about now EML as a whole. EML, as a whole, we've always been asked about this cash position that we have and -- but this extremely strong balance sheet that we've held in many years now, that has come to pay enormous dividends in times like crisis, which we have right now, where we are able to weather this storm without any problems, we are able to get pass it. Of course, we will take a hit in profitability, et cetera. But at least, there's no fundamental issues, there's no existential issues at all as far as EML is concerned. We can still look at -- we pay all our bills, and we can look forward and we can look at continuing investing in areas where I suspect some people are cutting investments where -- and we feel long-term investments are continued to be necessary. We have an extremely robust and tight business model where cash is kept very tight, and that helps us also tremendously in trouble times like this. We have an extremely focused approach in EML. And I can certainly say the best management team in automotive in India, there's absolutely no question about it. So with all of that, I think all these points have really helped us tremendously in being calm in these crazy times, in these -- with these storms, which can really hurt other companies perhaps, but we've really been able to face these challenges well and get our head to the ground, make sure things happen, make sure that we respond well and quickly. And it really gives us a lot of confidence that we will emerge extremely strong and much stronger from this crisis. So while there is enormous crisis, we're looking at how to do well and the opportunity in that. But before we start the question-and-answer session, I'd also like to make a quick announcement and introduction. As you know -- as all of you know Lalit Malik very well, and you've talked to him many times. Lalit has spent now 10 years as CFO of EML. And he's been by my side as -- and really helped in the entire growth story that we've had over the last 10 years. In the last year, Lalit has actually been playing 2 roles as both CFO and as Chief Commercial Officer of Royal Enfield. So he's taken over that mantle over a year ago. And that's a transition that we had planned. And now Lalit, as of today, he will -- he assumes full responsibility of business marketing as Chief Commercial Officer. And going forward, he will able to focus his energies on the commercial aspect of business development, marketing, sales, all the geographies come under him, of course, as they have been for a year now. And while we're doing that, we're really happy to welcome Kalees. Kaleeswaran Arunachalam is our new CFO of Eicher Motors. He's joined us recently and remotely have been working, but we've all got very integrated with Kalees. He has worked with a variety of industries in the past many years from retail to lifestyle to automobile, food and beverage. He's got a lot of width, and he's got experience of over 17 years. And he's been instrumental in transforming his last organization, Future Lifestyle Fashions Limited, as a market leader in its segment. And we believe it's a very exciting time for us at Eicher Motors, and we're really happy to bring Kalees on Board. Kalees, would you like to say a few words?

Thanks, Sid. Thanks for the introduction. Hello, and good evening to everyone. It's an absolute honor and a privilege in joining Eicher Motors as a CFO. I look forward to working with the entire Eicher leadership team and management and thereby contributing towards Eicher's journey in creating value for all the stakeholders. Thank you.

Thank you. So shall we start with the Q&A?

Yes, please.

[Operator Instructions] The first question is from the line of Pramod Kumar from Goldman Sachs.

My first question is directed towards Lalit and Kalees. As it pertains to the quarterly financials, I was just watching that between the March and the September quarter, the volumes were more or less the same, the revenue, the top line was more or less the same, but the margins are like 420 bps apart, with March being the much lower number. And I understand the BS-VI transition and the 200 bps hit to gross margin in percentage terms. But just curious, what is driving employee expenses up so much higher in a quarter like this? And same as the case with other expenditure. If you can just talk about that and whether this is a new level of expenses for staff and other expenditure going forward?

So Q4, Kalees had not joined, but -- so I will take that Pramod. So September -- not exactly the month of September, but pretty much after that, we began the progression towards the BS-VI in terms of model by model, SKU by SKU, the change kind of begin to happen. Now as opposed to the old UCE platform of BS-IV, the BS-VI gets -- there are some -- in terms of the pricing, the full impact of the BS-IV has not been transferred over here and going forward that will transfer over time. So that was the reason number one. Q4 specifically had a few one-offs. So number one, as you would have read over a few weeks back, we issued a press release talking about the recall of brake calipers in a few European -- in Europe and U.S., specifically, and a bit in Korea as well. And this is largely on account of Twins and Himalayan. So there is a bit of a provision over that. We do expect a large part of this coverage will come through insurance, but on our own we have taken a provision. We also in Q4 saw a lot of volatility in the foreign exchange in some of our existential geographies, particularly in Latin America and particularly in that Latin America and Brazil in which we have our own company, and therefore, these kind of exposures tend to be a little accentuated at times. So the impact of all these put together is about INR 50-odd crores, both these things I put together, and that's really one-off because foreign exchange will be moving up and down, but it moved quite sharply in Q4 for -- one of these [indiscernible]. So that's -- both the things are lying -- so both the things put together plus the general transition that we have graduated, we've decided to graduate the pricing impact of BS-VI in over time and not like one go. This is what we're looking at.

None of this would impact the employee expenses, I guess, right?

So employee expenses is a full-time impact of last year. We gave the ESOP cost to it and so on and so forth. So if you look at the number of employees, sheer number of employees, blue collar, white collar, these are all put together, they're actually coming down.

Okay. Okay. And so -- and the expenses, which you called out, the provision for the recall and also the volatility on ForEx is all in other expenditure side? Is that understanding right?

Yes. So -- yes, go ahead.

Because if I adjust for that, then the margins look much, much more better at 23.1%, even with the under recovery on BS-VI, which I'm pretty sure you took up prices up in April. And if you can quantify that?

Yes. So we did about INR 3,000 price increase in April. But that's price to the customer. So what we get will be slightly lower than that. So it doesn't fully cover for the cost, all put together.

Okay. Now my second question is to you, again, as a Chief Marketing Officer -- Chief Commercial Officer, sorry. If you can just help us understand on the demand situation because you did call out in your monthly release that towards the end of May demand or in terms of booking run rates were as good as the pre-COVID levels. But I guess that would be also because of the extended or the higher elevated voucher scheme what you were running. That has kind of come down now. So if you can just characterize how is demand looking post that. And if you can quantify the order book, what you're working with in the current environment? And general other broad demand trends, what you see with all your dealerships practically coming back online? So if you can just share some color on these points, Lalit.

Give or take, as you see, over 90% of the dealerships are like physically open. It doesn't mean everyone the customer walk-in is happening like in the previous days. Northern -- north zone and south zone are kind of back on track reasonably in these, but the west is still yet to pull-through. So Gujarat, Maharashtra and all are -- they're still lagging a bit. But India, all put together, we are doing, I think, reasonably well. Now how long the demand will last, pent-up demand is that, that's all speculative. But as we speak, I think reasonably pleased about the flow of bookings that right now we are measuring. So that's what's happening. The customer scheme is not really a giveaway. Basically, most -- large part of the scheme is built on extended warranty. So we want to give a double comfort to the customers on the buying of the product and all the stuff, so a few of them. All the platform moved to BS-VI. So that has, of course, been more than half now from June 1. So that scheme lasted only for like 10 days, 12 days. But even having more than half the scheme, there's no dip in run rate. And June is typically the weakest month of the year in terms of sales and so on and so forth. It's hot and all the stuff. So the walk-throughs are pretty low. Online inquires and online fulfillment has begun to pick up reasonably well, in fact, quite sharply. But even these are early trends. Who knows where it will last, till the end of June or next month and so on and so forth. But for now I think it's something to be reasonably satisfied about.

[Operator Instructions] The next question is from the line of Gunjan Prithyani from JPMorgan.

Two questions from my side. Firstly, just clarification on the margin. So you did mention that around 2/3 of the volumes are now coming from BS-VI models. So if I look into F '21, we still have some more impact from BS-VI yet to come. Is that a fair assumption?

No. The whole platform moved to BS-VI by the end of March. What Vinod was referring to is that 60% of the retails, but the wholesale number was slightly higher than that. But we moved entirely -- I mean, I think anybody in the country is selling any BS-IV now.

No, no. I meant from the wholesale perspective, the volumes that you would have done in this quarter, let's say, 70%, 75% would have been BS-VI. So if there is still some more impact that you see when the full transition in wholesale is fully reflected in F '21? I'm just trying to understand the [indiscernible] of margin, sir.

These are moving trends. These are moving trends. So the launch price of BS-VI was x. That launch price of BS-VI, and this is through the quarter, Q4. The launch price is kind of we upped it by INR 3,000 at the end of March, basically 1st April. So these are moving trends. So -- but have we -- so it will improve as time goes by is all I can say it's -- over the next few quarters and all. We are not too fuss about it, because with all the price increases this had and the other also, the demand has not ebbed a bit.

Okay. Got it. And the second question is more to get the color on the demand. I mean if you can share some sense on typically for RE, what is the mix like upgrade replacement in first time? Because given that we are coming out of such an uncertain environment to see bookings going back to pre-COVID levels is actually quite pleasing. I mean the general perception would be that this is an upgrade demand, which would come after some time or would get deferred. So what are your thoughts around? And if you can share the mix of the demand?

So we -- number one, our replacement demand is like -- the replacement numbers for all these years are very low. They are not even 5%. We are upgrading company. I mean people upgrade from wherever they are into us, the first time motorcyclist, that number is also shy of 10%. It's in singles. So really, the moving part of the company is coming from somewhere. So pretty much all the chat that you're speaking of right now, the customers who are booking and buying since the lockdown opened, very high percentage is upgraders.

Okay. And just one question to Mr. Dasari. Now given the whole environment being so uncertain, is there any review to the distribution expansion on the Studio Stores that we were -- we have been looking at for the last 2, 3 quarters? Any review to that Studio Store expansion program?

No. I think we will continue with that because those are relatively low cost -- I mean, Studio Store costs about 1/10 of what a large-format store would cost. So at times like uncertainty, if you can expand your network with relatively small investments, that's the best way to do. So I think we'll continue our journey of expansion of this.

So what would -- I mean we're still looking at the similar numbers that we were guiding to? I mean, 600 is what we finished the year with, right?

Yes, we added 600. And so I believe Lalit is planning to add at least that many this year. Correct, Lalit?

Thereabout. We'll keep you posted each quarter end. Don't worry about it.

Okay. Sure.

But the plan is to expand them. The plan is to expand them. We have not stopped or stalled it.

The next question is from the line of Jinesh Gandhi from Motilal Oswal Financial Services.

My question pertains to the demand environment, which you indicated, has seen a good recovery post-COVID. First is, what would be the status of our manufacturing operations in terms of the level of utilization you're operating? And in turn, would it mean that the supply side shortage will lead to a waiting period for next few months?

Vinod, I'll answer or you'll take them?

Yes. Go ahead. Go ahead.

So while there is a sharp increase in the demand for the bike, demand as in the booking for the bike and the whole commercial demand cycle, I mean, that's going on pretty well at this point in time. And like I said, no, who knows what happens over the next few weeks. On the supply side, things are all a little wobblier than this. The supply chain is still picking up. It's -- I won't say there is any degree of strong robustness build behind it. All the major auto hubs, Pune-Aurangabad belt, the NCR belt, Hosur-Chennai belt, I mean they are all shaping up, but it's not as strong. For a large part of the sales, we had to dip into the -- our stocks, which in any case were not very high. [Foreign Language] I don't think it's happening in a hurry. That will take time.

Okay. So we would be about 30%, 40% right now or lower than that?

We are about 40%, yes.

Okay. Okay. And second question pertains to our CapEx for FY '21, considering the product launches, which are -- which you plan over the next couple of years. So do you expect that number to be substantially lower than what you have done in FY'20?

Sorry, you said about CapEx?

CapEx, right?

It's going to be substantially lower. All the big projects are physically done. The Vallam manufacturing facility however, of course, we've done quite -- many years back, the UKTC and all that. So there's nothing more to be in the big capacity planning. But then, of course, there's other things to be done on the product side, supporting the product, the manufacturing link costs with respect to the new products. So some of that will come through. It will be marginally maybe lower than next year. But I think after that, unless the demand goes through the roof by the end of the year and there's no need for new capacity to be built up, unless that happens, assuming that is not happening year after, I mean, beyond 2021, so the year '21/'22, you can see the CapEx kind of going down.

Yes. So let's say, from a RE perspective, the majority of the infrastructure work is now behind us. There's some balancing stuff to be done this year to finish off some of that. But from a RE, from a headquarter perspective in Chennai, from a PD center in our U.K. from plants. I think we are, by and large, done except for some overflow, which has happened from last year. And now it's really largely on the product side. So the products is where the investments are going to come in. But the infrastructure part is largely over.

Okay. So FY '21 would be under INR 500 crores or thereabout?

It will be broadly in line with last year only, last year as in '19/'20.

Okay. Understood, understood. And lastly, the BS-VI related cost pass-through, have we entirely passed on the cost but without loading it to margins or how it is now?

So barring a SKU here and SKU there, largely the costs have been passed on. In most cases, cost plus has been passed on. So it's all very -- at a blended level, I still think there are some more opportunities left to pass on the cost to the margins.

Okay. And this is after the April price increase?

Yes.

The next question is from the line of Binay Singh from Morgan Stanley.

Just a clarification. When you said that sales are back to pre-COVID level, that comment is for national level sales, not regional. Is that correct?

Yes. It's sales -- but it's not sales. It's bookings.

Okay. Your bookings for June are similar to the bookings that you were having pre-COVID.

Correct. Given that in the last many months, pre-COVID and all, our sales was about 60,000 give or take.

Correct. Correct. So any comment on how the sales are?

So that's just -- no, no. So there's no problem there. There are no big cancelations on the bookings and all the stuff. So the sales is a reflection of whether the right SKU was there for the customer or was it somewhere else that had to be shipped from Chennai or some of the depots, those kind of things are kind of happening.

And in terms of the 2 expenses that you talked about, the recall and the currency impact, could you break that up into INR 50 crores? And how much was the recall and how much was the FX impact?

INR 50 crores, that should be fine [Foreign Language] breakup, I don't think I need to do.

Only my line of thought was that as the business will expand more and more into international markets, currency exposure like we've seen with Bajaj, it sort of plays out every once in a year, this always plays out. Whereas a recall kind of an expense is actually the more one-off expense for the business. But nonetheless, moving on to the new platform launch that is targeted this year, is that plan on track? Anything more that you can share about that?

All the plans were slightly delayed because of -- the first launch is slightly delayed, but that doesn't mean subsequent launches will be delayed. So it's delayed only because of the fact that of COVID. So we will start launching them from next quarter onwards or this coming quarter onwards. And we practically have a new product almost 1 every quarter.

Right. And typically, like in autos, in generally, when -- we've see that. When a new platform comes, then the cost of vehicle also ends up being higher. So is that -- any thoughts on how to think about margins for this year or EBITDA per unit, which I think is more relevant, given all the changes this year?

I don't agree that cost necessarily needs to be higher for new models.

Okay. Okay. So -- and that -- but any comments in general on EBITDA per unit for the year?

Sorry, EBITDA per unit?

Yes. In terms of profitability, anything that -- now we've taken most of the cost hikes. So to an extent, shall we assume that your EBITDA per unit should go back to pre sort of March levels in the coming quarters, if the volumes go back to the same level?

If the volumes go back to that level, I would assume so. And there's so many variables in that question. It's input costs. It's the volume levels. It's the mix. It's the pricing that if the demand is really good. So several elements to it. But if the volumes do go back up to previous levels, let's say, to March levels, then -- or just March quarter levels, then we hope that our EBITDA will also come back to that level.

Right. Thanks a lot for that.

So Binay, it may be boring for you, but this call was only for Q4 of last year. Q1, Q2, Q3, we'll talk [Foreign Language]. Hold on. Just keep your ears glued on.

The next question is from the line of Raghunandhan from Emkay Global.

Sir, firstly, on the -- based on the initial booking trends, which customer segments are doing well, farmers, self-employed, business community, salaried class? Any color you can provide? And also anything you can specify as to which regions are seeing the pickup and where there is a lag?

So let me discuss. Many times in the past, we look at customer segments into just 2. One is self-employed, so business clients, this, that and the other. And one is salaried class. Now both of them are doing well, in our case at least. On the regions we said, mostly stores opening, 90% have been opened now. So it's just a matter of time where we reach our normal levels everywhere. So there's nothing to differentiate, and there's no point of view over there is what I think.

Just one clarification on your earlier comment. Within the employee cost, like how much is the one-off? And what is the sustainable rate there?

There is no one-off. I mean, like I'm saying, our total and gross total of number of employees over the last year has come down, obviously, because there was slippage in the volume through the year, more towards the end of the year and so on and so forth. So you will see improved employee costs and all the stuff in the quarters to come. There's no like one-off. I don't think there's one-off over there. The one-off I have already spoken to you. They are more like in the overhead side.

Understood. Just one last question. So on the -- in future, product launches is one focus area. And one product every quarter for the next 3 years is the kind of expectation. Can you give some color on the upcoming products?

I mean, like Lalit said, this is about last quarter's discussion. So I don't think I should be talking about future products. You will get to see them.

The next question is from the line of Kapil Singh from Nomura.

Just one question on, if you do some crystal ball gazing over the next 4, 5 years, given you've talked about a lot of new launches coming up, if I were to talk of 3 broad segments, Bullet, Classic and more than 350CC, how do you think the portfolio evolves, taking into account the products that you're going to launch over the next 4, 5 years? Will it broadly remain the same? Or do you expect some one particular part of it to get bigger, in percentage terms?

You'll take that or Siddhartha or I will...

No. Go ahead, go ahead.

So our profile is, look, these are what we are, right? I mean the kind of motorcycles we made, we'll stick to that. The range -- the larger the range that we have spoken about so many times in the past, mid-sized motorcycles 250CC and 750CC, in that 10 years back, we had just one kind of motorcycle. Of course, there was Thunderbird and there was Bullet, right? And so more commuter-oriented bike one was that launched and then we moved on to all the other categories of motorcycling. Just look at the -- just look at where we have come from where from being a largely Bullet company in 2009, and Thunderbird was also there, but it was in lesser numbers, to then having, of course, a revamped Thunderbird, Himalayan you can call it whatever you want to call it in terms of the category of motorcycle, but it's really created its own market. I mean, that's the most important thing [Foreign Language]. Is the product in terms of motorcycling, in terms of the CC of the engine, all these parameters put together, is it just one of the many or is it create -- trying to create a breakthrough and create a opening for us in terms of the market? Who knew Himalayan will do so well outside of the country also. It was not even thought through that it will do in our neighbor country. So we'll cover all the stuff that we would possibly do over the 4, 5 years because as you know the long period of time. There is nothing over there in which our boundary -- within the boundary condition that we have of the brand and of CC range and so on and so forth, that we'll not do. And you'll see that in the next 2, 3 years. I think we will give you a pretty good indication that we're not missing out on anything that we believe Royal Enfield bike platforms can do.

Let me add in here. And this is -- so on the mid-size, that's pretty much for certain for the next 5, 7 years that we will remain in mid-sized category, which is what we are in right now. Again, all the other aspects, as Lalit said, are true. But in context, the back-end context of that is that a business model is such that, firstly, in India, we believe that people are moving up to mid-size, and people will, over time, increasingly move up to bikes that can do more than just commuting for them. So they -- we have tens of millions of commuters, maybe 50 million, 60 million, 70 million commuters in India on 2-wheelers. They will want to move up to beyond just commuting, and that's where we come in. So we're in the category which is just beyond pure commuting. So we're -- we'll provide much more than that. So that's what. And then from a business model perspective, we -- from our vision perspective, where we say we want to become a global motorcycle manufacturer, it always comes back to that we will make motorcycles that will be globally relevant, but they will also have to be relevant in India. We will never make a motorcycle. So for example, the Twins, they were 650 CC and not 1,000 CC, for example, largely because we will show that in India, 1,000 CC will not fly. It will not -- in very small numbers maybe, but not in anything, which will give us scale. So we are always after scale in any platform that we enter. And if you want scale, India has to be an important part for the next 5, 7 years to show. And that's why this whole product mix is geared there. It's also geared so that we create our own markets rather than trying to compete head on with other people because we like to move the market to where we are. So Himalayan is a case in point, which Lalit said, where people have -- where customers have moved to Himalayan because it was an open segment which we created. So we are seeing opportunities across the board in many different aspects where they're underserved, where there's a natural progression for people to come up and those are the markets we're serving. And fortunately, for us, those are working for us in India, they're working for us in developing countries, it's working for us in developed countries. So Himalayan is a case in point, Twins are a case in point. Classic was the original case in point where it had a relevance in multiple markets. So that's the sort of general outlook that we have. And it's a business-oriented outlook, but obviously, with margins, with the brand and everything else put together.

Ladies and gentlemen, that was the last question. I now hand the conference over to the management for closing comments.

Thank you very much. I think Siddhartha and Vinod in the opening comments covered it all. Thanks a lot for joining in. Take care.

Yes, thank you all so much for joining in, and all the best to you and your families. Bye-bye.

Thank you. Please stay safe.

Thank you very much, sir. Ladies and gentlemen, on behalf of ICICI Securities, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.