Eicher Motors Limited (505200) Earnings Call Transcript & Summary

Good evening, and Happy Dhanteras to all the participants. Thanks to Eicher Motors management for giving us the opportunity to host the Q2 fiscal '24 post-result con call. We have with us the senior management represented by Mr. Siddhartha Lal, MD and CEO of Eicher Motors Limited; Mr. B. Govindarajan, CEO of Royal Enfield; Mrs. Vidhya Srinivasan, CFO of Eicher Motors Limited; and Mr. Ken Trolle, CFO of VECV. So over to you, Siddhartha for your opening remarks.

Thank you so much, and welcome to all of you for our quarter 2 for the financial year 2023, '24 earnings call for Eicher Motors Limited. I hope you're all doing very well. This has been an excellent start to the new financial year for us, and we continue to hit new milestones in Eicher Motors Limited. But before delving into our quarterly updates, I'd like to thank all the shareholders for the very strong support towards the resolutions that we presented during the AGM and the postal ballot recently. We really value our long relationship with all of you and with the shareholders and look forward to a robust trust-based partnership between us and continuing our journey towards enhancing our corporate governance and working closely together. With this -- with the new additions, the EML Board now comprises of our Chairman, Mr. Sandilya, Independent Director; Govind here and myself as Executive Directors; Vinod Aggarwal who is not here with us today. He is normally here, but he's been represented by Ken, but Vinod Aggarwal is the non-Executive Director and non-Independent Director of the EML Board. And we have 4 other Independent Directors, Manvi Sinha, Inder Mohan Singh. Mr. S Madhavan and Mr. Tejpreet Chopra. So that's the new constitution of our board of 8 members. Now let me begin by sharing a few business highlights for the quarter. We've had our highest ever volumes, revenue, EBITDA and profit after tax for any quarter. In September, we had a spectacular launch of our new Bullet, celebrating the 90-year-plus legacy that we have for Bullet brand, probably the longest-running of any automotive model. And this time in its new avatar on a super refined J-Series engine. With that, we've also transitioned all our high-volume models from UCE model platform that we've developed in 2010 -- '09, '10 to J-Series, which has been extremely well received as is the motor cycle. Very importantly at the -- very recently, last week concluded EICMA Motor Show in Italy, which is the largest Motor Cycle event or Trade Show in the year. We showcased the all-new Himalayan with absolutely spectacular response from global audiences. The new Himalayan is an evolution of our first adventure tourer bike that we launched in 2016, which is the Himalayan 411. As customers have evolved and markets have evolved, terrains have evolved. For us, it was really important to create a motorcycle that retained the DNA of the original Himalayan, which had a lot of success but we wanted to give it a lot more power, torque, refinement, both on and off-road. So that's what the promise of the new Himalayan is. It's based on our -- it's the first motor cycle that's based on our all-new Sherpa-450 engine. This is the first liquid cooled, dual overhead camshaft engine from Royal Enfield. We also -- Govind, myself, our management, we also hosted the World's automotive experts in Manali just 2 weeks ago, journalists, content creators and others, what a thrilling adventure really it was and ride experience in the mountains on this new Himalayan and the response and feedback that we got from them was absolutely tremendous. I mean people are calling it absolute best-in-class, they are calling it as a global disruptor, the best value adventure tourer by a mile. And all the embargo was lifted today at noon. For the reviews -- the reviews have started coming out today at noon, so just a few hours ago. I encourage all of you to go and have a look at the reviews from both the Indian and the international journalists and content creators. I've been going through them as much as I can in the last few hours, and it's game changer, this new Himalayan. It's a very, very, very strong motorcycle from our side and has the potential to be a world beater so it's for markets around the world. On the -- at the EICMA show, we also unveiled a special project, which we call as the Electric Himalayan Testbed. It's a new expression of our sustainable exploration for the future, and it's a concept right now of what Royal Enfield electric adventure tourer could look like. So it's a concept motorcycle, it's not meant for production necessarily, but to get more interest, feedback and understanding from our side. But it is the motorcycle that we -- it is a laboratory of a sense, more than a concept because we have actually used this motorcycle and prototypes like this in the Himalayas, we've done a lot of testing, a lot of validation, and we plan to continue to evolve it. This is not going to be the final guise of what we come out with and -- if we come out. But again, it's to show all of you also what an electric adventure tourer from Royal Enfield could look like. Coming to VE Commercial Vehicles, our joint venture with Volvo Group, we have really enhanced and fortified, I would say, our market share across all categories in light and medium duty trucks, heavy-duty trucks, buses, we have had excellent market share gains in all of these areas. And we've delivered our best ever second quarter in terms of units sold across all 3 categories. The parts and powertrain sales clocked a strong growth as well in the first half. And once again, VECV has been ranked #1 commercial vehicle manufacturer for the third successive year and as a dealer satisfaction survey conducted by FADA, which is the Federation of Auto Dealers Association, again showing our extreme support work with our network, channel partners, which are really important to delivering customer satisfaction to our dealers. Also -- VECV also continued on the sustainability journey by delivering electric trucks and buses to customers in various applications, and we're developing long-term partnerships with leading logistics and bus operators for this area. And today, we have Ken Trolle, who is here, the CFO of VECV, he will take us later through more details about the commercial vehicles. Right now, moving to the financials for quarter 2 for the FY '23, '24. At a consolidated level for Eicher Motors Limited, which does not include VECV, for the second quarter, our revenue is -- for the seventh successive -- consecutive quarter, we have marked our highest ever revenue for EML this time at INR 4,115 crores for the quarter, up 17%. EBITDA is our first -- fourth consecutive quarter marking highest ever EBITDA for EML, this time crossing INR 1,000 crores once again. I think it was the second time if I remember at INR 1,087 crores, up 32% from last year. And our profit after tax, it's our fifth consecutive quarter marking the highest ever PAT for EML at over INR 1,000 crores this time, so INR 1,016 crores, up 55% from Q2 last year. So absolutely stupendous financial performance also. And now I hand over to Govindarajan who will us through the business highlights for Royal Enfield. Over to you, Govind.

Thank you, Siddhartha. Hi, everyone, hope you guys are doing well. At Royal Enfield, and we have been continuing our journey in the top gear and we have registered a highest over H1 volume. The momentum is very good. It's very strong. It's an exceptional performance in the second quarter. In this quarter, we sold about 2,09,700 odd vehicles -- motorcycles in the domestic market, which is almost about 14.6% growth from last year's same time about 1,83,067 motorcycles, which we sold. We have had a very strong growth in the sales of our motorcycles during the festive period and see the momentum continuing. Launch of all new Bullet 350 as Siddhartha mentioned, it's -- it marks the completion of transition to the J platform. And I'm very happy to share with all you people, the traction is very good. The new Bullet has received an overwhelming positive response from experts and from consumers. This will get launched, the all new Bullet will get launched in the international markets also over the coming months because it's Euro 5 compliant, so it can be sold in other markets also. In the international markets, we sold almost about 19,780 motorcycles in Q2, which is a growth of over 9% over the previous quarter. We have maintained our market share in our key markets. RE is a leading middleweight brand in the U.K., and among the top 3 in Europe and almost 9% market share in this region. In Americas, we have around about 7% market share. And in the Asia Pacific region, we are currently at the most about 8.9%, 9% market share in the middleweight segment. In the international markets, our retails have been clocking very well, that's a good sign for us which I wanted to share with you people. In addition, we announced the results of dealer satisfaction survey by the Federation of Automobile Dealers Association, FADA. Royal Enfield emerged as the first runner-up in the 2-wheeler OEM category, we moved substantially in the list, the score increasing by about 96 points. What Siddhartha mentioned about the all new Himalayan, it's a global media first ride of the global unveil, which we did at EICMA. This is a motorcycle, which has been built by the Himalayas, the all new Royal Enfield is inspired also by Himalayas, and that's how all our motorcycle are and engineered for a real-life adventures. This is with a more power, more torque, using the long-stroke design to give an excellent low RPM performance, which is what is Royal Enfield is addressing in the motorcycle. And that's the whole DNA also as a Royal Enfield feel. When we were doing this closer to the launch, we also decided that it was a time for us an ultimate journey. The epitome of adventure motorcycle riding. So we actually took the finished motorcycle which is there for the market. And one last time, we should do a test from our factory Oragadam, we call it from sea to the summit Chennai at about 22 feet sea level to 19,024 feet Umling La. We tested the motorcycles and that's what's its proof that this is a motorcycle, which is inspired by Himalayas, built by the Himalayas. We wanted to do the final test also in that Himalayas. Now the motorcycle is fully ready, and that's what we unveiled at EICMA. We also celebrated our global marquee ride, the One Ride where we see the participation of more than almost about 28,000 motorcycling enthusiasts from 58 countries and about 300-plus cities in India who came together for the largest cause-led ride which India has seen so far. Also on the sustainability front, which I wanted to share a few points. We have been improving a lot, around 1/3 of our manufacturing is done through green energy in all of our facilities. As I earlier also shared with you people, all our plants are water positive. Now it is almost 2 times. So more and more recharges is taking place into this and all our the plants are zero discharge. We are gearing up to the next edition of Motoverse, which is in this month on the 24th. And I'd like share that lots of exciting updates and where entire motorcycling community will be there, look forward to see you all people also in the Motoverse. With success of launches and the new platform launch, which we did on the Himalayan, we are well on our way to ride ahead on our strategic goals. The new launches which are on the lineup, which are already there in the pipeline. And we are prepared for our growth journey in India and across the other global markets. We are very excited about what the future holds for us. Now I will hand it over to Ken Trolle to take you through the VECV performance and updates. Over to you, Ken.

Thank you. Good evening, everyone. Another solid quarter for the commercial vehicles. We had the highest ever second quarter sales of 19,551 units. On the heavy-duty truck side, highest ever second quarter with the sales of 5,291 units. On the LMD side of the business, Light & Medium Duty side, highest ever second quarter with 9,571 units. On the Bus division, highest ever sales of 3,214 units. Also as Siddhartha mentioned, highest ever quarterly part sales. It grew 29% over the same quarter last year. Also our Powertrain Unit, we sold 14,834 units, which is also the highest. And as also mentioned before, we won the FADA Dealer Award the third consecutive year. Moving over to some financial highlights. Revenue ended at INR 5,129 crores, up almost 22% compared to last year. EBITDA of INR 404 crores and the EBIT margin of 7.8% versus 5.8% for the same quarter last year. Profit after tax, INR 186 crores, up from INR 81 crores last year. And with that, I hand over back to you, Siddhartha.

Yes. Thank you very much. That's all from our side. We've had really cracking, let's say, quarters both at RE and VECV, so at EML combined and the festive season is on us, things are going well. So yes, thank you very much, and wish you all a very happy Diwali, and we look forward to your questions. So over to you for questions now, please.

[Operator Instructions]

We'll take first question from the line of Pramod Kumar.

Can you hear me?

Loud and clear, Pramod.

Great. And I think congratulations on a good set of numbers. I think there's a beat there on operational performance. But I'm more interested in Himalayan, Siddhartha and what the Sherpa-452 to do for us because the reviews have just started dropping in today, looks really great. I think a lot of -- I can see the lot of hard work that you guys have put in. So if you can just help us understand from where Himalayan 410 was and where 452 is the kind of transition what you've done. What does it potentially mean for the company in terms of the kind of addressable market here, both in the domestic and the international side because the segment is clearly doing extremely well, even in domestic. And this product looks pretty good. So if you can just to begin with help us understand what could be the volume opportunity here. And what will be the brand opportunity more than that because this product can take you to many new markets, many new terrain in that sense. So, yes, Siddhartha to begin, to kick it off, I probably will start with that.

Sure, Pramod. I think it's very pertinent because we really do believe that this can be a big -- huge growth driver for us, both in numbers and in stature and in many other ways. The first Himalayan, which we came up with 7 years ago, was really a domestic market product. It was meant for India. It was meant to test the market. I mean, of course, we were all in on it. But it was -- the segment didn't exist. So it was really a stab at what we thought the segment would like. So it was a full-on adventure bike. But it was our first attempt at it and it was -- it did really well. I mean, it sold over 200,000 numbers globally since then. So it's been a great run. But we've got a huge amount of confidence from what people loved about the previous Himalayan and a lot of learning. So we have put all that into the new Himalayan. So as a result, for example, just on the spec side, we've got -- it's -- I mean conceptually you could say okay it's gone up from 410 to 450, so only 10% increase. But really, the -- for example, the power has gone up by 65%, I think. The torque has gone up 25%, 30%. The -- it's got a water-cooled engine, so it revs higher. It's got -- we've kept a large part of the ergonomics because that's how -- that's what people loved about the bike. The accessibility, it's got the lowest seat height configuration can be just over 800 millimeters so 80 centimeters. So really someone who's even, let's say, 5 foot 3, 5 foot 4 is -- can get 1.5 feet on the floor. So it's stable, it's good. It's accessible. We've taken the -- I mean, the engine I told you, it's anyway it's super refined, gone up, it's ride-by-wire. So the exact configuration we can give it, the exact, let's say, the nature of fueling and response is absolutely magic. The chassis is also of totally a next level. So our previous one is really good at off-road, this one is even better off road but has excellent on-road manners as well. We've got SHOWA suspension, which you can see the reviews, people absolutely love it. They think it's fantastic both off road, on road. Our TFT screen is breakthrough. I mean nothing -- even bikes 3x the price don't have that kind of a technology now on their instrumentation. And it's got -- we insisted we only have Google navigation on it, no third-party other navigation because people only trust Google in navigation, and we had to have that. So it makes life really nice and simple on our screen. And so we've pulled out all stops. It's been absolutely fantastic. It's -- for us, the ambition is that we really believe that this motorcycle -- earlier, we were making motorcycles with our twins and other motorcycles that were getting to and had become world-class, right? We were -- previously, we were not 10 years ago. But then after the twins, we were getting to world-class type of bikes. We are now saying this is and what you hopefully will hear from the press also this is world-beater. So this is setting the standard. It's better than -- it's not just better, it's head and shoulders better than anything else in the world. There's a potential for changing the entire -- I mean in the best case scenario, I can't say it will, but in a best case scenario, our ambition is that it will actually shake up the entire adventure touring segment in the world. Even -- I mean people -- we want people to question themselves that should I really be buying this motorcycle, which is 3x, 4x as expensive, when I get every single thing I want out of the Himalayan, and it's better at certain things. To -- honestly, to go off road, it's even better, okay? In some -- in an Autobahn in Germany going at 160 kilometers, maybe on the margin that we have a bike, which is 3x more expensive, which is better. But other than that, one very peculiar scenario, which not any of our customers are mainly doing regularly, it is a better bike than bikes 3x its price and size. So we're really, really confident that we've taken all the inputs we've done everything we can to make it really a world leader. So that's on the Himalayan. Anything you can add to that, Govind.

No I think, the only thing which I can tell you is it is with our decade experience of riding in Himalayas and about 2016 to 2023, so 7 years of riding the Himalayan 410 across the globe, the extreme terrain. And so we retained some of the DNAs of that Himalayas, which is required. Then we had -- because of the evolution, we spoke with explorers, globetrotters and to the people who are athlete just to get what all required here to be the world-beater as Siddhartha was mentioning, all those things are incorporated, which we tested. That's where the confidence is that it will actually create one more movement in the entire adventure tourer motorcycling.

And Govind, just to push that a bit on the volume context, if you could just help us understand what are the volumes of the outgoing platform on a steady-state basis? And what could be the potential here? If you can just help us there quantify this opportunity.

Well, I think, Pramod, from a motorcycle in which, the adventure motorcycle had been heavy, intimidating, not accessible, so we launched the Himalayan in 2016, we changed the game. That's why it created a movement for becoming an accessible motorcycle. Here is a new motorcycle which we just launched about 3 days back, and the reviews are just out today. As I mentioned, with all the bristled DNA of Himalayas, the Himalayan motorcycle with the 7 years of riding that across the globe and incorporating all the best things which are required for future. So obviously, this motorcycle will create one more wave. How much is that, what it is, let's wait because it's -- there's a good response, the reviews are outstanding, everybody sees it. It's a very different motorcycle, which is very accessible, not at all intimidating, which inspires confidence. And as Siddhartha was mentioning, it has a full-blown navigation system, which is there. And the suspension is so well tuned for the extreme conditions like off-roading and also to use on the city rides [Foreign Language]. So to that extent, the motorcycle is well thought out, executed, tested, as I mentioned, very well, the place where it belongs to. That's why we did a last test also from 22 feet of Chennai, there are some good roads for 5,000 kilometers. And then we also took it to the Himalayas to see whether the motorcycle is really behaving the way we want it, and it all has turned out to be very good. So it's a winner product in hand, it will over a period of time will certainly grow, how much we'll wait for some time.

Second question is on the...

Pramod, I'm sorry can you come back in queue, we have a long queue and we have a hard stop. Next question is from the line of Kapil Singh.

I just wanted to ask about the new Bullet. We had also launched that. So what kind of response you have got for that? And also if you could share what kind of growth are we seeing in the festive season so far?

Look, I think the Bullet 350, 90 years of legacy from 1956 in India, which we have been manufacturing, was the last transition from the UCE platform to the super refined 350 J platform. So that has been done. It got accepted very well. I can tell you with respect to the UCE, which we had Bullet to now, the traction is higher than very certainly the way we were expecting. It's really got accepted very well in the market.

And festive...

Okay, and festive season -- overall festive season growth so far, what kind of trends we are seeing or any numbers if you can share so far in the last 20 days.

You would have actually tracked the numbers by now, but is still to just say, we also grew fairly well, almost 14% is the range compared to last year, which we grow in the same window. But this year, you know, festival is not in 1 month, it's in 2 different months. But I can tell you that the festive season was very good for us. It's a happy window for us in terms of retail.

Okay. That's great to hear. And second, on exports, if you could talk about, we've seen a bit of volatility in the numbers. So is there something there that's surprised you negatively or things are going as per plan? If you -- or what's happening in the market? If you could just share about the context over there?

On the international markets, as I mentioned last time also, the macros -- are we completely insulated? No. Is it affecting this to our market to a major extent? There are 2 things, which we have to communicate to you people. On the retail, it has been clocking very well. So that extent, we have been holding the market shares almost about -- in all the markets like APAC, Europe and in North America and in Latin America, our market share is it's intact. We haven't lost market share. The market -- and the new products are just coming in, for example, Super Meteor, it just launched only about 2 months back in the United States. So it's all getting into the market. On the wholesale front, as I mentioned last quarter also, we are not aggressively looking at wholesale because normally what happens is for the season, you'll go build the inventory and keep it because that's why in some of the markets where the season had to be served. This year because of the macro conditions, we are going cautious in building those numbers. That's why you will see a wholesale number is slightly lower. But the good news in the international market is the retails are clocking very well and the new products are also coming into the International market one after the other.

So can you share what is the average retails we are doing per month? Because some months, we see 9,000, 10,000 also and wholesales and some months, we see 3,500. So just any number you could share or growth that we should expect for full year?

We don't actually give the market-wise retails and all those things. And I'll also tell you a couple -- when I was saying that the market share is kept intact, market share, we will share it with you because that's what we normally share that. And so there is a traction in this. Even though there are macro situations and all those things, for us, on the ground motorcycles, which have already gone are all moving off. So it is -- the floor is getting vacated, but we don't want to actually inventorize that place over, and we are going cautious in this. So you will see this normalizing within few months.

[Operator Instructions] Next question is from the line of Chandramouli. [Operator Instructions] We will take the next question from the line of Omkar.

Hello, can you hear me?

Yes.

Yes, this is Chandramouli, sorry. If you can hear me now, my first question is on just the gross margin line this quarter. It looks like quarter-on-quarter, we've had relatively flat volumes and maybe slightly inferior mix in terms of just export volumes this quarter versus the previous quarter. But in spite of that, it looks like we have seen a pretty healthy gross margin expansion quarter-on-quarter. So just trying to understand what were the factors that might have contributed to that. Is it good mix in domestic market? Was there any pricing opportunity that we saw?

I think it's a combination of everything. One is, of course, there's been a material cost savings where we have had an impact of about 1% in terms of that. Apart from that, the remaining part of it is a combination of mix as well as the price increase we've taken in May, which fully impact of that is coming through in this quarter.

Got it. Got it. That's helpful. And my second question is just on the 452 cc Sherpa engine. So congratulations on the successful good reviews for the Himalayan 452. Just trying to understand over the next sort of 12 to 18 months, when we might sort of put that engine into maybe a roadster or a cruiser, which might potentially address sort of a much larger market opportunity set for us. And then that seems to be where maybe 350 cc engines might be heading in terms of market segment as well over the next few years. So just trying to understand your thoughts on how you're thinking about that as well.

See 452 cc, liquid cooled, the platform is an all new platform, which we are bringing in now. We all know, we are a company which we will have that platform, and we will start looking at various genres of motorcycles, which gives a different experience to the consumers. It's time to come. Herein now, if I have to tell you the all new Himalayan, which is unveiled about 3 days back, it's been received very well, and we have to give some space to this to get matured into the markets and at an appropriate time, we will talk about all other products, which are coming up on that platform, yes?

Next question, we'll take from the line of [ Omkar ].

Hello, am I audible?

Yes.

Yes. My question was regarding what's the yearly production capacity which you currently have?

Oh, that's very nice, sweet. So we've said the build capacity of both the plants together is almost about 1.2 million. And that's why we said we don't need to look at any investments herein now, but all of our lines are modular, and we can enhance the capacity whenever it is required. So the flexibility is herein built into that.

Okay. So the -- if you look at the volumes, say, from last 4, 5 years or last financial year, you just crossed the volumes you are generating in FY '19. So 823 and you crossed 823 last financial year. So any aspirations you have of targeting around 1 million sales.

[ Omkar ] you know, we don't give forward-looking guidance yes so it would not be...

Yes, yes since you have so many launches.

Sorry?

Since you are targeting so many launches and so many upcoming products are coming up, so just wanted to have a sense of that.

Yes, yes. So just to add, as Siddhartha was mentioning, [ Omkar ], we are a company -- we're a very long-term ambitious company. If you look at anything here and now because we understand then you tend to make a lot of mistakes because that's how you see through the very short-term window. We saw it always, any product comes, in any platform comes in, we see it as a long term and we are not a company we will be very positive here -- long-term I think. We don't do anything here and now. So you will see how we grow also over the period of time. So the numbers are, in my opinion, by product of what we are knowing is it the right thing, all our products are getting accepted. That is what we have to look at it, and that's what we are doing.

Okay. The second question is on the competition. Bajaj and Hero, both of them have launched new premium vehicles with their global tie-ups. So any primary on-ground situation, you can tell about the competition, what kind of competition you are facing from these products?

Again, as a rule, [ Omkar ], we don't like to talk about others. You please do your assessment of others yourself. We will talk about ourselves. It's not fair for us to talk about what other people are up to and all of that. I can just say that look, what we have at RE is -- I mean, of course, we've been doing so well for so long that all these chaps or let's say, competitors have been trying to come into our segment. Till now, at least till recently, they've not been successful. And of course, there will be some successes, some failures that's part of the game. What you perceive that we have an exceptional brand, exceptional distribution, exceptional community, exceptional new products. You've seen the new Himalayan also, the Himalayan, I mean, somewhere, you've seen the reports and oh, it's a response to person x or y. I mean it's been in the works for 5 years. So it can't be response to something which came out few months ago, right? So we anticipate, we understand, we've got a lot going for us. At best, we see that if there is a couple of competitive bikes that are not as shabby as they've been previously, then maybe they'll help us grow the market. And we are a 90% player in this 250 cc plus market. So I think, hopefully, in the positive case for us, the increase in competition will mean growth in market size, which will in fact benefit us even if we lose a couple of points of market share because when you are 90%, eventually, there's only one place you can go. It's not that we're going to give up market share but at 90%, we are not going to gain too much market share let's put it that way. So we've got a hell of lot going for us. We have -- and we work very hard on customer experience on all of these areas in addition to amazing bikes that you see. So we're not worried, let's put it that way, and we're very bullish, let's put it that way.

Just a small question on EBITDA margins...

[ Omkar ] I would request if you could come back online. Next question, we will take from the line of Raghunandhan.

My first question was on the accessory side. What would be the current number in terms of accessories per vehicle? Would the blended accessory sale per unit would it have gone up after the recent Bullet 350 launch? Just wanted to get your sense on the trends you are seeing here.

Raghunandhan, looking at per motorcycle and all those things are in my opinion is metric for just to see how it is going in certain [ state ]. What primarily we look at is, in the accessories, we have almost some 587 accessories, which are coming up one after the other. And it is to give an experience to the people. What we look at is, how many people who are actually buying the motorcycle are actually happy with our, generally, motorcycle accessories, what's an adoption. If I have to tell you, almost about 89% to 90% of the consumers who are buying our motorcycles, they also buy our accessories because that's what is an experience, which we wanted to give to that accessories and the business is growing.

Got it, sir. Sir, in terms of the festive season, if you can share some trends in terms of regions? Which regions have done well? And also, if you can talk about how the urban/rural markets have done?

Overall, trend during the festive time, as I mentioned, I think we grew almost about 13%, 13.5% compared to last year. We look at top 10, top 20 cities, how it is and all those things and all the areas across there has been a good growth compared to last year barring few regions. But I think what happens is Diwali in some regions will be very good. Navratri, in some regions will be very good. So there will be a slight variation because compared to last year, which was both in 1 month this year, Navratri and Diwali is actually in 2 different months. To that extent, we will see other regions also coming up. But overall, during the festive season, the retails have been very good, and it was a happy note for all of us.

Very helpful. And lastly, do you expect the adventure tourer category to expand given that you pioneered the segment and now Himalayan 450 is receiving a very good response?

Yes. I think category will go when you have new products which are coming in. When we brought in the Himalayan at 2016, that actually created a good movement fundamentally because it was a more successful adventure tourer at that point of time and a new Himalayan on the 450 cc, as I mentioned, is holding the DNA of Himalayan plus with our inputs from the globetrotters, with our inputs from athletes, from our inputs from riders, communities, we as a riders. So it is plus, plus with as Siddhartha was mentioning about, higher power, torque, which is required, the consumer changing. The motorcycles is also there for that, the evolution. And there's the TFT, that's the full navigation along with Google. So it's a good motorcycle. Obviously, it will -- and the reviews are very good. So it will grow over the period of time.

Next question, we'll take from the line of Nitij Mangal.

My question is on your product portfolio. If you looked at how you have evolved over the last 5, 7 years, you've clearly from a very long way, both in terms of the number of products and the quality of products. When you look at the next 3 to 5 years, what do you think are the biggest opportunities on the product portfolio? Is it more products, more use cases, more refinements? How do you think of that over the next 3, 5 years?

Product portfolios normally are listed for 5 to 7 years window, Nitij Mangal. So obviously, what we look at is that the platforms have to be thought through. Based on the platforms, what sort of an experience which we can offer to the consumer, because if a consumer wants a different kind of a motorcycle, whether the platform can lend to those sort of motorcycles, which we can make and give you a differentiated experience. And that's what we know better and our focus also will be like that. So the core platforms are done, there is a twin which is 650 cc platform, which is a global product, which is very successful, super-refined J platform, which is a 350 cc, very well accepted. Now there is a 452 cc liquid cooled, new Sherpa engine platform. So the platforms are selected as an engine level, you will see products, which will be actually evolved around that.

Yes, and my second question is on the VECV. Well, the company has gained quite a bit of market share over the last few years. So I remember about 5 years back when you had launched the Pro Series, there was an expectation of market share gains and seemed didn't happen immediately, but now over a period of time you have. So what's really helping you in gaining these market shares in VECV?

I'm sorry, was the question of what the endgame is when it comes to market share?

How did you gain market share.

How we have gained market share? Of course, over time, we have launched new products. And also, of course, we have put a lot of effort into our retail network and growing that and that we are continuing to do it. So both, you can say, from the product side, adding more products and driving the longer retail network. And as you saw there, we also have awarded for being #1 for the year when it comes to -- from the dealers' survey. And so this is important for us.

Next question is from the line of Anuja Chauhan.

Sorry, this is Gunjan. I just had -- just shifting the gears to the unveil that you made on the EV in the recent EICMA. Can you talk a little bit around that, is there a strategic change there in terms of accelerating the launches on the EV front? And is it something that we're expecting that this category can see some change -- can probably see faster shift towards EVs than what we were calling out earlier?

Gunjan, I would say not really, that's -- I mean on the bigger motorcycle segment, it's still a while out where the curves will cross because with the range requirements that we have, the battery size, weight, packaging is still a big issue. So it's not a resolved issue. A motorcycle like the Electric Himalayan Testbed, we call it, because it's more than a prototype is indeed, what it is. It's a prototype. It's a testbed. It's a concept. It's not for production. It's to understand, it's for us to work on stuff so that when the time is right, we have done all the homework and background work. But we don't think it's ready for prime time, right? So -- because even if we were to make an excellent bike like that which we believe we can and no problem. It will cost maybe 3x of what current Himalayan costs, and it's not going to be that much better. So why would people buy that, right? So it's -- the economics don't work yet, but very much -- this is to give a glimpse, a flavor, a taste of what we can do, what we're working on. It's only one idea. We have many ideas that we work on. But because we are showcasing the new Himalayan, we'll also showcase the Electric Himalayan also just to say that, guys, we're there. We got lots of things brewing, but we'll come in the market where we think the time is right.

Okay. And any -- I mean, I'm just -- besides this, I'm just trying to understand, if I look at the cc category, now we've got like these various platforms, 350, 450 and then the Interceptor and all. Is there anything else when you look at the entire product spread that we think it's a whitespace and we would want to go up or down in terms of our product segmentation?

We haven't moved, Gunjan, because all of the side, we said middleweight is a focus, and we determine middleweight also at a point of time, and our focus will be on the middleweight segment because we see there is a huge potential in that. And when people are looking at a higher cc motorcycle, and our platforms are very good, as you also mentioned and called out very nicely, super refined J engine, 350 cc, it's accepted across the globe very well. Now 452 cc, which is a new platform, liquid cooled with a different power and torque ranges and the 650 cc which became a -- gave a global recognition as the best quality product. So we have platforms which are very good. We will focus on the middleweight wherever there is a space we will start working on.

Okay, lastly, just if I can get the CapEx or product development spends maybe for this year and how we should think about it over the next 2, 3 years?

I think roughly, we spend somewhere between 2% to 3% as far as CapEx is concerned and we really can't give you a guidance on how it's going to shape up for the next 2, 3 years. I think we will see on -- as our product portfolio develops and matures, we will invest what we need to absolutely.

Next question we will take from the line of Jinesh Gandhi.

Congrats on great set of numbers. Two questions from my side. One is with respect to electric motorcycle. So given that our focus is on middleweight category, which we defined by ccs, how do -- how does electrification change that? In the sense, does it open up new opportunities where middleweight is, we can define it in a different way now? How do you see that as an opportunity?

Look, I think the middleweight which you talked about is in the internal combustion engine. On the electric vehicle, today, the combination is on the motor power, range, the weight of the motorcycle, there are a few combinations which are there and the experience which we can offer to. So the definition of the electric vehicle portfolio can be a bit different. But that's not to say, will you make 100 cc equivalent in the electric vehicle, that may not be the focus. So our focus will be there at a particular range.

Yes. Yes, so I think what Govind is saying that we never be in the -- not never, never say never but in the foreseeable future, we don't plan to be in the -- in any basic commuter, basic that kind of stuff. So we're not in a game for basic mass product. We always aspire to be a premium product, a product that gives -- which has a lot more meaning than just commuting to an individual. So people want the cheapest motorcycle in the segment, there will be other chaps to go for. We will always be in a premium segment situation, and that goes for electric vehicle as well.

Actually Siddhartha, where I was coming was from that in ICE, we were very clear that we don't want to get into 250 cc or so. But in EVs, can we look at 250 cc equivalent just to bring in a, the cost of EV to be slightly lower than what it could have been if we were targeting similar equivalents in terms of 350 cc? Is that the way you look at it? Or that is not the consideration set?

Yes. So look in -- honestly, in EV, it's an open book for us, right? We can do anything we want and -- I mean we can do anything we want in ICE also, but we have chosen not to. So yes, it is an open book. We can -- we do look at everything clean sheet of paper, where can we make a difference. The parameters there, like I said, are that we -- after having thought through, I mean and this is for years, I'm not talking about it right now, I'm talking about for many, many years we have been working on this after having thought through that we will be premium. We will not be mass. We will do very interesting things bikes that are -- have huge desire, et cetera, et cetera. So -- but we're not specifying right now, whether there will be any power category, cc category, we'll find out as when and things happen. But yes, it is a more open book for us, let's put it that way.

Got it. And second question pertains to the number of platforms which we have now with Himalayan 452, so it's 350, 450 and 650. And if we continue with 400, then effectively we have 4 platforms. Do you see gaps on the platform side on the engines for RE or effectively these are the 3, 4 platforms which we work with for more products.

On the 350, 650 cc platform itself, there are new products, variants which as an organization, which we are working. That's why we said that there is a slew of new products, which are -- pipeline is full. We are all working on it because we see a lot of potential there itself. And the 450 is -- 3 days back, we just unveiled it and it has to go to the market. And I'm sure everybody will love it because the reviews are so good. The platform development takes a longer period of time. But we said middleweight is the focus. In that middleweight, wherever there's a space, if there is a platform requirement, which is there, we'll actually be doing this. Because we are not going into the extreme of commuting where there's a platform that has to be developed, that's not what we are. The middleweight, where we are committed, whichever is required, that's what we will focus on and do.

Got it. Just to clarify, whether we will continue with 400 cc Himalayan? Or it will be replaced by 450 cc one?

One platform, the scale benefits, it actually helps. But there will always be a transition, but the Himalayan is moving into the 450 cc. Other products in this 410 cc will -- transition will take place over the period of time. But here and now, the focus is about the new Himalayan and the platform, which is liquid cooled, well refined, fantastic power and the torque that's the focus as of now in the platform.

We'll take 1 last question from Pramod Kumar.

This is my second question. Going on the festive demand, you talked about growth. And last year, we had Hunter already in the base by this time. So if you can just help us understand on Classic, particularly where there's a lot of focus given what's happening in terms of the choice of the customer has incrementally. How is Classic as a brand done for you? Because that's like bulk of our volumes? And we've seen some bit of a fatigue in the Classic volumes because of the price inflation, all of that. But if you can just help us understand how Classic on a stand-alone basis is doing during the festive retails, Govind?

Excellent. I think, Pramod, first and foremost is as you already pointed out, last year, during the festive season, Hunter was just new type, right, it's a new product, which has come in. So that's a base which got set. So this year, during festive season, with that increase to base, the growth has been good. So for every one of you who are asking how is the festive. And as I mentioned, the festive has been very good. It is fundamentally because there have been orders. With that Hunter base, we really do very well. Classic, is on highest growth during the festive season. If that's what I get challenge with you people is that, here, we were looking at maybe which product will grow and all those things, the Classic across India, the growth had been good during the festive time.

Anyhow, we have lots of exciting plans for Classic as well. So stay tuned and Happy Diwali. Well, that's it. Closing remarks. Happy Diwali, thank you so much and yes, have a lovely time with your families and talk to you next quarter. Thank you all very much.

Thank you.

Thank you.

Thank you.