Hyundai Motor India Limited (HYUNDAI) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Q3 and 9 Months FY '26 Earnings Conference Call of Hyundai Motor India Limited. [Operator Instructions] I now hand the conference over to Mr. Amey Dargude from AMBIT Capital. Thank you, and over to you.

Thank you. Good afternoon. We welcome you all to the Q3 and 9 Months FY '26 Earnings Conference Call of Hyundai Motor India Limited. Today, we have with us Mr. Tarun Garg, Managing Director and Chief Executive Officer; Mr. Wangdo Hur, Chief Financial Officer; Mr. Gopalakrishnan C. S., Chief Manufacturing Officer; Mr. Saravanan T, Function Head, Finance; and Mr. K. S. Hariharan, Head of Investor Relations from Hyundai Motor India. I would like to inform you that the call is being recorded. I would now like to invite Mr. K. S. Hariharan, Head of Investor Relations from Hyundai Motor India. Over to you, sir.

Thank you, Amit. Good evening, everyone. Welcome to the earnings call for the third quarter and 9 months financial year '25-'26. Before we begin, I want to remind you of the safe harbor. We may be making some forward-looking statements that have to be understood in conjunction with the uncertainties and the risks that the company faces. The conference call will begin with our MD and CEO remarks on the performance and outlook, followed by a brief presentation by me on Q3 and 9 months performance, after which we will be happy to receive your questions. Now I'm handing over to our MD and CEO, Mr. Tarun Garg. Over to you, sir.

Thank you, Hari. Good evening, everyone, and a very happy New Year to you all. I hope this year has begun on a positive note for all of us. Before I begin, I'd like to express my sincere gratitude to Hyundai Motor Company as well as to all our shareholders for the trust and confidence they have placed in me by entrusting me with this responsibility of being the first Indian MD and CEO of Hyundai Motor India Limited. I'm both honored and energized to lead HMIL at this crucial juncture, and I look forward to building further on the strong legacy that my predecessors have left behind as we move ahead together. Reflecting on calendar year 2025, the Indian automobile industry benefited from a series of supportive policy measures by the Indian government that strengthened consumer demand sentiments. 2025 started with government announcing income tax cuts, which acted as a direct catalyst for discretionary consumption. Further, the implementation of GST 2.0 reforms brought greater clarity and stability to the indirect tax framework. This, coupled with interest rate cuts, significantly improved consumer buying sentiments and brought in a renewed wave of optimism. Importantly, structural shifts in consumer preferences continue to strengthen with increased adoption of SUVs, growing acceptance of new technologies and a clear preference for higher-value and feature-rich products. HMI achieved a significant milestone for our iconic midsized SUV CRETA, which recorded its highest ever annual sales of 2 lakh units plus in a calendar year and reclaimed its position as the #1 SUV sold in India. This milestone translates to an impressive average of 550 CRETAs being sold every day, reaffirming the model's undisputed leadership and enduring popularity in the Indian automotive market. Overall, 2025 provided a constructive and supportive backdrop for the auto industry, creating a strong foundation for sustainable growth. HMI also took a significant step forward by entering the commercial mobility space with the launch of the PRIME taxi range. Built on Hyundai's core strength of trust, reliability, comfort and low cost of ownership, the initial customer response has been extremely solid. This reinforces our confidence in expanding our presence in this fast-growing and attractive segment. Moving on to domestic sales performance for the quarter, we delivered a healthy sequential volume growth of 5%, clearly reflecting a strong festive-led demand and sustained momentum following the GST reforms. The quarter was further strengthened by the phenomenal response to the newly launched Hyundai Venue. Customer interest has been overwhelming, translating into strong bookings of nearly 80,000 units, reinforcing our presence in the compact SUV segment. Rural markets continue to be a key growth driver for us. With sustained focus and targeted initiatives, we achieved our highest ever quarterly rural contribution to domestic sales, exceeding 24%. While our wholesale performance remained healthy, it was the underlying retail momentum that stood out in this quarter. Retail demand was particularly strong in December, delivering a robust 16% growth year-on-year. Importantly, the streamlined channel inventory, we have created adequate headroom for stronger wholesale volumes going forward in Q4 of this fiscal. Overall, the quarter gone by reflects strong demand momentum, excellent execution and the sustained relevance of our business strategies. Exports. Exports continue to play a pivotal role in supporting our overall volume and profitability during the quarter. We delivered a robust year-on-year growth of 21%, driven by sustained demand momentum across key markets. Our major export regions, Middle East and Africa and Latin America, recorded robust volume growth of 30% and 13%, respectively. Looking ahead, we remain optimistic about the export outlook and see exports as a meaningful growth engine, both in volume as well as profitability. We continue to deliver strong operating and financial performance across all metrics, including volumes, revenue and profitability. We achieved healthy top line growth of 8% in this quarter on a year-on-year basis. Our blended ASP this quarter improved by 5% year-on-year, reflecting our strong sales mix and prudent pricing strategy. Notably, the improvement in ASP was seen both in domestic and exports with a growth of 4% and 8%, respectively. Further, we were able to maintain our ASP on a Q-on-Q basis despite the seasonal nature of the quarter and competitive intensity with price wars prevailing in the industry. On the profitability front, we remain firmly committed to our quality of growth strategy. Despite costs associated with capacity stabilization and surge in commodity prices, we successfully maintained margins at levels comparable to last year without compromising on pricing discipline. Importantly, on a year-to-date basis, EBITDA margin expanded to 12.8% versus 12.5% last year. This was achieved through better sales mix and cost optimization measures, including our localization efforts. This underscores the resilience of our business and our ability to protect profitability while continuing to invest in long-term growth. Outlook. On the domestic front, we are well positioned to drive stronger wholesales in the coming quarters with optimum dealer inventory levels, driven by our disciplined approach and favorable GST tailwinds. The momentum is already evident, with January recording highest ever monthly domestic sales, registering a 9.5% year-on-year growth alongside highest ever total monthly sales, including exports with a robust year-on-year growth of 11.5%. On export front, while global uncertainties continue to evolve, our focus remains clear. By leveraging opportunities from the new Venue and exploring new markets, we are confident of sustaining growth momentum in quarter 4 and beyond. Complementing the positive outlook on both the domestic and export fronts, our margin trajectory remains on track. As iterated during our Investor Day, we expect to close fiscal '26 within the guided EBITDA margin range of 11% to 14%. Our continued emphasis on operating efficiencies, disciplined cost management, coupled with our quality of growth strategy, gives us confidence in delivering healthy double-digit EBITDA margins even in the upcoming years. Before I conclude, I'd like to highlight the recent visit of our Executive Chair, Mr. Euisun Chung to India, during which he reaffirmed Hyundai's commitment to pursue a home brand strategy in India, anchored in the belief that India will be central to Hyundai's global growth journey. In line with this long-term vision and supported by our strong investment plans in India, we are committed to further strengthening our on-ground capabilities, deepening local relevance and capturing the many opportunities that lie ahead. Thank you for your patient listening. And now I hand it back to Hari.

Thank you, sir. During the quarter, we witnessed various business highlights, as already mentioned by our MD and CEO in his opening remarks. Now I will continue with our sales performance during the quarter. We achieved total sales of 1,95,436 vehicles in Q3 financial year '26 as compared to 1,86,408 vehicles in the corresponding quarter, reporting a growth of 4.8% year-on-year. In the domestic market, we sold 1,46,548 vehicles compared to 146,022 vehicles in the same quarter last year. Exports played a pivotal role in overall volumes during the quarter. Our exports grew by 21.1% year-on-year, driven by strong demand in emerging markets. Sequentially, domestic volumes grew by 5%, driven by the positive impact of GST reforms. Exports contribute a healthy mix of 25% to the overall volumes in Q3 financial year '26. Moving to the domestic volume mix for the quarter, the SUV segment continued to witness strong momentum, led by the successful launch of the all-new Venue. Hatchback volumes declined on a year-on-year basis, while sedan volumes saw an increase. On a sequential basis, all segments recorded growth, supported by GST-related tailwinds. Turning to the fuel mix, CNG continued to see strong traction, contributing 16% to domestic volumes, while diesel penetration was at 21% during the quarter. Now coming to financial highlights for the quarter. Our revenue from operations stood at INR 179,735 million in Q3 financial year '26 as against INR 166,480 million in the corresponding quarter. EBITDA stood at INR 20,183 million as compared to INR 18,755 million in Q3 financial year '25. EBITDA margin was at 11.2% as compared to 11.3% in Q3 financial year '25. EBIT stood at INR 14,496 million for the quarter as against INR 13,482 million in Q3 financial year '25. EBIT margin was stable at 8.1%. PAT for the quarter was INR 12,344 million as against INR 11,607 million in the corresponding quarter with a PAT margin of 6.8% in Q3 financial year '26 as against 6.9% in Q3 financial year '25. We delivered healthy year-on-year performance in both revenue and profitability despite the impact of costs associated with capacity stabilization and surge in commodity prices. For the 9 months of current financial year, revenue from operations stood at INR 518,472 million as against INR 512,526 million in the corresponding period. EBITDA stood at INR 66,325 million as compared to INR 64,211 million in 9 months financial year '25. EBITDA margin expanded to 12.8% as compared to 12.5% in 9 months financial year '25. EBIT stood at INR 50,181 million for 9 months financial year '26 as against INR 48,462 million in 9 months financial year '25. EBIT margin improved to 9.7% as compared to 9.5% in 9 months financial year '25. PAT for the 9 months financial year '26 was INR 41,759 million as against INR 40,259 million in the corresponding period. We delivered a PAT margin of 7.9% as against 7.8% in 9 months financial year '25. Year-on-year growth across parameters was mainly driven by better sales mix and cost control measures. Turning to profitability drivers for the quarter, profitability was mainly impacted by increase in processing costs associated with capacity stabilization. On a sequential basis, profitability was further impacted by unfavorable mix and increased marketing spends during the quarter. However, on a year-on-year basis, through favorable export mix and prudent pricing, we were able to offset the impact and deliver profit growth during the quarter. For the 9 months financial year '26, increase in profitability on a year-on-year was driven by favorable product mix, export mix and cost optimization efforts, which helped overcome many headwinds during the period. This concludes my presentation. Thank you all for your time and attention. Now we open the floor for Q&A. Thank you.

[Operator Instructions] We take our first question from the line of Chandramouli Muthiah from Goldman Sachs.

I have three questions. The first one is just around the product mix. So post the GST cuts, you would have thought that the compact SUV segment should get a reasonably good flip. There seems to be sort of relatively flattish trend on the EXTER this quarter versus on the Aura, there's been meaningful growth both in domestic as well as export markets. So just trying to understand rationale behind that and what's driving Aura strength, but not so much extra strength yet in this environment? Second question is just around the comments you made around Venue. So venue seems to be doing in the domestic market close to about 30,000 units a quarter, and you've mentioned that you've got 80,000 bookings at this stage. And I'm assuming the Venue is being manufactured in the new plant. So I just want to understand, what the current quarterly manufacturing capacity is on the venue? And how long it might take to potentially clear out this existing backlog on the Venue orders? And the last question is just around gross margin. So this quarter, we understand there's been a pickup in commodity costs. And in your case, I think there's roughly 130 basis points contraction in gross margin versus 2Q. So if you could just help us understand what part of that is because of raw material pressures, what part of that is because of export mix being lower? And what part of that could be because of the Venue, which might have been launched at an introductory price?

So I think the first two questions, like you said, the Venue response has been fabulous. And as you know, Pune plant started operations on 1st of October. We launched the Venue on the 4th of November. So last quarter was all about Venue getting into the group. And in January, you would have seen the Venue has recorded the highest ever numbers. To answer to your question, almost 12,400 units were done in Venue domestic, so -- which tells you about the Pune plant's production levels. We are evaluating if we can further increase the production. So that is being done because the demand -- the response has been fabulous. On the Aura, again, a very, very good response is coming. And in fact, in January, 7,900 Auras has been sold. If you see the average so far has been about 6,000. And suddenly, we are seeing the response coming to Aura. GST has a lot to do with it. Plus also, as you know, on the 1st of January, we launched the PRIME taxi range. I think that is also helping the Aura numbers. So going ahead, we believe that Aura will continue to do well, and we are looking for opportunities to see if we can further increase the Aura volumes. On the EXTER, just 1 quarter of October to December wholesale numbers do not really justify. And let me give you a very -- because you talked about Q2 versus Q3, and this is for everybody's benefit, I think we have to understand the underlying nature of seasonality of the Indian market. This is, of course, my 33rd year in the industry. If you see October to December quarter, is all about retail, it is not about wholesales. So if you see even at the industry level, just to give you numbers, retail for the TIV was almost 15.69 and wholesale was 12.98. Even for Hyundai, retail was 1.71 lakhs and wholesale was 1.46 lakhs. So when you see the profit and you try to see the sequential, I don't think it is doing justice. That is why year-on-year is very important, especially for this quarter when all the expenses relating to sales promotion are on retail, whereas the profit is limited to the wholesales you do. And everybody tries to minimize their stocks because it is very expensive to sell the '25 stock in '26. So we also did that. We had a great retail in December, and that is why we were able to make room and we were able to sell in January a very good wholesale at a very less promotion expenditure as well. So I think this is inherent, and that is why you have to be very careful when you are doing sequential profit analysis. Over to Hari for the other part of the question.

Chandramouli, just to give some more clarity on the gross margin front. Year-on-year, actually, our gross margin has improved. This was mainly supported by favorable model and export mix and also to some extent, the price increase, which we did last year, January. But sequential, as Mr. Tarun has already explained, broadly, this is more of a seasonal nature we need to consider, not just for domestic market, even for export market as well because even if you see sequentially, the main reasons, one is the commodity inflation, which we have been seeing in the recent times; and export volumes also have come down sequentially, again, due to seasonality. And to some extent, I would say there is an unfavorable product mix also. So all these things put together have actually impacted the gross margins on a sequential basis. Commodity, of course, what we try to do, we try to absorb some of the cost pressure. But some costs, we have increased as we have done the price increase in January '26. And we will be continuously monitoring this commodity price trend. We will try to take all the cost optimization efforts to mitigate this impact on the margins as much as possible.

We'll take our next question from the line of Gunjan Prithyani from Bank of America.

Just continuing from the prior question, can you just give us a little bit more color on the margin bridge in terms of if you can specifically call out the impact of commodity headwind that you really saw in this quarter? What were the new plant start-up costs? The reason I'm trying to just get a handle on these numbers is because the new plant start-up cost is probably in the base now. And from hereon, we'll start to see the revenue realization and revenue ramp up as you sort of spoke about. So a little bit more color on margin bridge in terms of commodity headwind, new plant start-up cost and discount.

Gunjan, commodity impact during the quarter was roughly 40 basis points. And then you asked about the new plant cost. So the overall processing cost impact, both on a sequential basis as well as year-on-year, roughly 60 to 70 basis points. That is the impact. Discounts per se, actually, we have reduced the discounts sequentially. In Q2, our domestic discount was 3.2% on ASP. And now in Q3, we have already moderated to 2.6%.

Got it. And just on the plant start-up cost, the 60 to 70 basis points that you all have taken absorbed in this quarter, is it fully in the base? Or is there more cost to go in the coming quarters?

See, overall, if you see the plant, we have started commencing this operation from October. As such, currently, we are -- we have seen cost increase in labor, overheads and depreciation, right? And if you look at all these costs, most of the costs are broadly in line with the guidance what we gave earlier. Except that, there might be some increase in depreciation. As we ramp up the capacity and the operations in the near future, there will be some increase in depreciation expected. So broadly speaking, I would say roughly 100 basis points would be the impact from the Pune plant processing cost and -- which we expect should continue at least for a year period.

So 100 basis points of that 60, 70 is already absorbed in this quarter. That's the way to think through it, right?

Yes. Yes, yes, yes. Because the depreciation, we expect some increase in the near future.

Got it. And just last clarification on margin. I think is there anything to call out from a Venue launch costs, which were bunched up in this quarter and may not recur going into the next quarter? Any meaningful number to call out there?

Look, there are two issues here. One is, as you know, the launch cost, obviously, we -- as per our principles, the entire launch cost is taken up in that quarter, so which we have done. At the same time, you must understand the model life cycle. Whenever a model is launched, obviously, it is launched at the lowest level of profit, and then it continues to grow because we have then headroom to increase price, then we are -- more localization also happens. So I think we -- so this was the first quarter of the Venue launch, and introductory price was there. Already, we took some action on the 1st of January by increasing prices. Going forward, we will see the opportunities ahead. So I think we have to see from that perspective that yes, not only advertising, but also from a pricing point of view, the opening or the introductory price is always the lowest. And this is not only for this Venue, it has been there for all products across the industry.

Got it. This is very helpful. Now just again, your thoughts on Venue because in your opening remarks, you did mention that Venue will eventually start catering globally as well. Can you give us some color on what is the overall Venue sales globally? And is it fair to assume that a lot of that now will start coming to India for production because the new Venue has been launched first in India? So some color on numbers, how big Venue can really be outside of India as well?

Look, I mean, it's too early to say. Our principles have always been first, establish the product in the domestic market and then look at the export markets. We have already started -- the old Venue was exported to 27 countries. The new Venue, I think Chile and other markets, we are exploring maybe '30. But it will take time. So we need to be patient. And our first priority, of course, will be the domestic market, as we mentioned, because so many orders have come in, the waiting period is increasing, which we don't like. We want to really satisfy the customer. So we are really focusing big time on the domestic market. And slowly, gradually, you will see that opportunities of the export market will also be taken. But actual focus will be on the domestic market.

Got it. Just last question, Tarun, just trying to get your thoughts on this whole memory chip and RAM prices. I mean, they've just been a big talking point in the industry, given we do have a pretty high share of ADAS in our portfolio. Is that something that we should worry about in terms of either the availability or the price going through the roof and affecting the supply chain? Some thoughts around that will help.

Gunjan, generally, if you look at it from a supply chain point of view, we have been quite aggressive here in terms of localization. Even if you see during this quarter, our localization level is already at 84% as compared to 82% on a year-on-year basis, right? So I think there are many components, many high technology parts. We are continuously working for localizing these components. So I think with that, we feel that we can definitely manage the supply chain without any hindrance.

We take our next question from the line of Kapil Singh from Nomura.

And my best wishes for the CEO role that you have taken. May I know, sir, what would be the top three priorities for you now, as we look ahead over the next few years?

That's a tough one. Okay. So as you know, in the Investor Day, Mr. Jose, our HMC CEO, had already laid down a very strong 5-year plan for us to execute. That plan included, of course, a CAGR growth of more than 7% over the next 5 years, aiming for a market share of 15% plus, a INR 45,000 crore investment, 26 new products, hybrids, EVs, CNG. So there were -- so I think my job is, of course, to make sure that we execute it to perfection. The Pune plant has just started operations, how to stabilize the operations, how to make sure that we can leverage it. Then, of course, then Phase 2 will come in where the capacity will increase to 1.1 million. So I think we need to -- because the model cycle is coming up. We have seen what only a new Venue has done. So I know that the expectations are high. So we need to prepare well. So we need to really prepare well. And when I say prepare well, I need a preparation internally in terms of our employee capabilities, grooming them for quality and excellence. We need preparation in the network in terms of dealers. We need preparation in terms of our customer satisfaction to take it to the next level. quality. Pune plant also gives us a lot of opportunity to maybe look at some of the good things, not only good things carried over from the Chennai plant, but some of the good things which we learned in the Pune plant and then make sure that we invite them in the Chennai plant as well. So this is, I think, one of the main long-term issues, long-term priorities for me. The second thing in terms of short term, of course, is that there are some opportunities which have come up because of the GST 2.0. How do we leverage these opportunities? How do I make the organization more flexible and more agile. We have already seen in January, the kind of numbers we could get. And I think these days, it is more about really collaborating and looking at these new opportunities. which we can capitalize on. So I think as CEO, external as well as internal, I'd like to see how we make the vision of being a home brand in India, how we continue with our CSV activities, how can we really contribute meaningfully to the growth of the economy and the growth of the country and of course, lead Hyundai to be a smart mobility provider and look for really opportunities and continuously scan the environment for those new opportunities, which can come in. Of course, one very big thing which we have is leveraging the power of the group. Like, for example, you would have heard that from Mr. Jose that Hyundai Capital is coming in. How do we leverage those finance opportunities, which will come up and the other opportunities as well. So the legacy has already been set. This is our 30th year in India. Now my job is to ensure that how the 30 years have been very successful, how in the next 5 years, we prepare for the next 30 years so that they are even more successful and we lead Hyundai's second growth phase in India. I hope I've answered your question, Kapil.

That's a great answer. The second question I had was on growth outlook. When we look at the next year, what kind of growth, just a range if you are expecting? And within that, you had earlier predicted that compact SUVs as a category would probably benefit more, whereas some other expectations was that maybe hatches or entry segment cars could benefit more. So I'm hoping you have some data now or ground feedback. So as you look forward, first of all, between the segments, hatches, compact SUVs, large SUVs; how should we look at the growth over the next, let's say, 2 to 3 years? And overall industry growth and for Hyundai, how to think about growth for next year? And is the Hyundai portfolio aligned to this growth outlook?

Absolutely. I think if you see we had the SIAM Looking Ahead Conclave, where as an industry, the consensus was that next fiscal '26, '27, the growth could be 5% to 6% for the industry. We are well aligned to that as well. Answering your questions on the compact SUV. And just let me share with you some interesting data. So January to August '25, if you see hatches, hatch contribution was 22.4% to the overall industry. September to December, it reduced to 21.4%, this is a 1% reduction. And all this was taken by the compact SUVs because compact SUVs, January to August was 22.1%. And September to December, it is 23.0%. So -- and mind you, this was a time when Venue was changing. So we actually had -- we lost some of the sales opportunity. Despite that, this is what has happened to the industry. So very clearly, compact SUV with the Venue now coming in full force and of course, more and more models coming up, more and more facelifts coming up, it seems that this is a segment which will grow faster. Of course, the advantage of GST has been that all segments have started growing. Earlier, the hatches were degrowing, but now hatches are growing, but compact SUVs are growing much faster. Even mid-SUVs 12.8% contribution, it increased to 13.7% contribution for the TIV, January to August '25 versus September to December '25. So you can see that the more growth is coming in SUVs, and that is why overall SUV contribution has gone up from 54% in January to August '25 to 56.2% in September to December '25. So very clearly, higher growth is coming in SUVs, and we are well aligned to that. I cannot share with you all the models, but I think we gave you a very good flavor in terms of the 26 models, the segments, et cetera. And they are well aligned, and we are well on our way to year-wise meeting those numbers, which we had promised in terms of the models derivatives, facelift, et cetera, and the powertrains, which we had promised in the Investor Day. So we are well aligned to take care of this growth opportunity, which seems to be coming our way. And taxi and other segments have really helped us like Aura sales, like I mentioned, 7,900 Aura sales, frankly speaking, would not have been imagined in the previous era. So this is one to do with taxi and second to do with GST. So those opportunities also, we are not going to miss and capitalize on.

Thank you. Just lastly on the cost...

Kapil, I request you to join back the queue please as we have participants waiting in queue. [Operator Instructions] The next question is from the line of Amyn Pirani from JPMorgan.

My first question was on royalty. Could you help us with what was the royalty rate for -- or the royalty number for the quarter?

I mean, the royalty was 2.8%.

2.8%. Okay. Secondly, for you, Mr. Tarun, you talked about the taxi growth. And obviously, this is a category which has been growing and you are one of the 2 players which are doing quite well. Just wanted to understand for our sense, does it matter from a profitability or margin point of view if you sell a vehicle in the personal segment or in the taxi segment?

Look, I cannot give you the details, but I will -- there's not much of a difference. It's not much of a difference.

Okay. Okay. So this is also a profitable business segment even if it starts to grow. It is a...

Yes. It is a profitable segment, yes.

Okay. Okay. Okay. And lastly, obviously, in the Investor Day, you had laid out a year-wise as well as a product launch pipeline until 2030. Now in fiscal year '27, obviously, as per that presentation, we are expecting one new nameplate at least. And maybe it's early days, but any broad sense as to the timing? Like would it come before festive? Or would it come towards the end of the year? Any broad timeline, if you can help us with?

No. I mean we stick to the Investor Day. And like I said, we are fully committed to meeting all those promises. That I can assure you. We are fully on track for that. Beyond that, I would not like to give any further guidance.

Next question is from the line of Binay Singh from Morgan Stanley.

My first question is on capacity utilization. Hyundai has always had very high utilization rate of capacity. Now obviously, it has come off with the new plant coming up. How do you see that? Like how do you see -- when do you see Hyundai going back to the 90% kind of utilization rate? Because I assume as you hit there, a lot of the costs that we've talked about will get absorbed by then.

Binay, see, if you look at now the Pune plant, we have started in October, already we are having -- we are running 2 shift operations, and we are having more than 90% utilization rate. Of course, Chennai capacity utilization has come down a bit because we have shifted Venue to this new plant. See the thing is that, one is the existing models, we are continuously working to improve the volumes. Already January numbers, we have discussed. So this will be a continuous process. Second thing, when the new models start filling our product portfolio, I think that should also strongly support us to improve the capacity utilization at a healthy level.

Then the point that you made 100 basis points of hit coming from the Pune plant ramp-up and remaining there for a year, is that also linked to that, that in a way you guys are saying that in a year -- in the next 1 year, new models will come up, utilization rate will go up? Is that is why you said 1-year time frame for that cost to continue?

No. See, whatever is the margin impact, which I mentioned is basically to do with the overall operating leverage, how we can recover the fixed cost impact from the Pune plant? And also because Chennai capacity utilization is also down now, so there also, my processing cost has actually increased, right? So together, if you have to see in total, for me to recover the total cost, whatever I'm incurring from this new facility, I need to increase my volumes, both in Chennai. Of course, Pune is doing well already with the Venue, and that is not a major challenge for me. But mainly for Chennai, if you look at -- my existing models will start giving me additional volumes with all my efforts we are making, including the taxi segment as well. Plus, of course, the new models once it start coming, we have not announced the new models where it will come, Chennai or Pune. But hopefully, these new models, wherever it comes, it will support me at a total level.

And this 100 basis point hit lasting for a year, does it also include the second ramp-up in Pune plant for you to go up to 1.1 million because that will also be another layer of cost increase, right? So does this include that, that you guys -- in your calculation of incremental volume versus cost, you sort of believe this sort of balances it out?

No. As of now, the figure indicated it is mainly for the Phase 1 capacity only. Phase 2 still, we are some time away. So I think we can discuss that a little later only. But generally, at a broader level, again, if you understand, normally for the initial capacity expansion generally calls for huge CapEx investments, right? But the second phase ideally shouldn't incur that much of a CapEx, is a broader understanding. But anyway, as I mentioned, we are still some time away. We will come to know the details in due course of time.