Mahindra & Mahindra Limited (MM) Earnings Call Transcript & Summary

Okay. It's 9:29 still. So yes, start now. Okay. Anish, over to you.

Thank you, Swati, and good morning, everyone. Right in early on Monday morning. And today, we want to talk about milestone in our journey. And let's first go back a little in time to talk about what we've done over the last 5 years. We started with a very strong focus on capital allocation. And that included an exit of multiple businesses, turning around many businesses and putting in a structure for disciplined capital allocation going forward, a structure which still stays very strong today. We then pivoted to growth, and you've seen significant growth in many of our businesses, including what we call growth gems. And that growth is being accelerated now as we get to the third phase of our journey, which we call delivering scale. We've talked about the fact that we want multiple businesses to be at a much larger scale over the next 5 to 10 years. We've talked about our growth gems growing at a target of 5x over the next 5 to 7 years. And in that context, we have a very interesting opportunity. But before we go there, let's talk about what we mean by disciplined capital allocation, it is investing in businesses that have a strong right to win, a meaningful potential where we can make them large businesses, where we can achieve market-leading returns as we do today in many of our businesses and sectors and a very strong ability to execute. So if we can deliver all of these, we should see the kinds of returns that we get in our current businesses as we invest in newer businesses, but in most cases, our newer businesses will be ones that we have already that we have certain strengths in, and those we can then take forward to grow significantly. So let's look at our market leadership in the auto and tractor space. SUVs, we're #1 now. The 23% revenue market share, up from 12% 5 years ago. In tractors, also #1, a 43.3% market share, up from 38% to 39% 5 years ago. LCVs 51.9% market share in the low 40s 5 years ago. So again, a significant increase there. And electric 3-wheelers is a space where we really had a very small business in ICE 3-wheelers with a single-digit market share. And here, we have 43% market share today and are the #1 player as well in an ultra-competitive market. But as we look at greater than 3.5 tonne commercial vehicles, we're #5 with a 3% market share today. And we always talked about focusing on specific areas, doing them well and then moving on to the next area. And as we have done well in multiple spaces in this industry, we are now looking at the greater than 3.5 tonne space. And that is what we feel we can play very well in. It's a business we have looked at very closely over the last 5 years. It was under the scanner of capital allocation 5 years ago and the business we decided we had a lot of strengths we could turn around. It has done very well over the last 5 years in line and slightly higher than our expectations as well. We've got a very strong team now and a good product portfolio. Rajesh will talk about the details of the business, and then we'll have Vinod up here as well to answer questions that you may have. But this is a business that we really like and we feel can do a lot, and which is where we got the opportunity of an acquisition, which we feel will position us very well, an acquisition, which we feel is an appealing one and a very strong strategic fit. So with that, let me invite Rajesh to come up and talk about some of these details.

Thanks, Anish. So we've just announced on Friday evening, as you know, the acquisition opportunity of SML Isuzu as it's called. We're looking at buying 59% stake of SML at INR 650 per share. Sorry, the 59% stake includes a stake from Sumitomo and Isuzu both. There will be an open offer that gets triggered based on the regulation and that will be for up to another 26%. And the average price of that works out to INR 1,554.6 per share. So that would be an outlay of another INR 585 crores. So before I talk a little more about the business and the opportunity and how we are seeing it, we thought we'll take a couple of minutes and show you a video about SML. It's a corporate video we put together, which just gives you a look at products, facilities, all of that. We've tried to put that together in as shorter form as possible. So can we have that video, please? [Presentation]

So you can see there's a strong association in a manner of speaking. It's life coming a full circle. This was a part of what was Punjab Tractors Limited of one time. We've spent many, many years with the Swaraj tractor business. We know the ecosystem in which this company operates. And there are going to be a lot of synergies apart from everything else that we talk about around the Swaraj tractor business because we have a very strong presence in that ecosystem. So where are we today by way of our presence in this segment? Anish spoke about the 3% share. So we have a 3% share in F '25 of the overall trucks and buses business. This share like-to-like in F '19, just to give you a context, was close to 5%, about 4.8% for a period of 2 to 3 years. As a context, we actually lost share through COVID, because as the transition to BS-VI was happening and stocks and spare parts were not available or parts were not available, we actually have to deprioritize product, and we lost share through a 2-year period. Over the last 2 years, we've been working to get share back and we've already climbed 0.6% or 0.7% share over the last 2 years. So today, we are at a market share of about 3.2%. Having gained back some of the share that we lost during the post-COVID period. Our aspiration is to get to 10% to 12% market share in the next 5 years. A lot of the share gain is actually going to come out of the LCV and the ICLV segment. We are mindful that we should have realistic expectations on the shares that we gained in the MHCV segment. In the MHCV segment, currently now, that includes buses where we don't have a presence in the MHCV segment. Our combined market share, which was 3% has -- is now at 2%. We believe that it's a reasonable assumption for us to increase that to 5% over the next 5-year period. So a lot of the growth in market share will actually come out of areas of strength for us, which is LCVs and ILCVs. One of the strengths of SML Isuzu is their strength in the bus, which is the LCV bus segment. The market share that they have in that segment is close to 16%. When we add the Mahindra market share to that, that takes that share to 21%. So a very, very strong presence in a subsegment of the market, and we expect that segment to grow with time as there's going to be greater movement of people and mobility as the economy grows. So to summarize where we are today, combined market share 6%, a revenue of INR 5,000 crores plus. This combined entity is not the right word, but combined two segments would give us a #4 position in the trucks and buses market, which is the greater than 3.5 tonne commercial vehicles. We see lots of opportunities around cost, around platform synergy, aggregates, other areas of operations, especially network and supplier synergy and I'll talk a little about that. I spoke about the strong presence in the bus segment where a combined market share would be 21%. SML Isuzu has a very strong bus building capacity in-house, and they have alternate fuel range and aggregates, especially CNG. We've listed some key industry success factors. It's around differentiated products, comprehensive product portfolio range, manufacturing supply chain excellence, financial performance, talent, brand and network strength and a customer base, especially the fleets. Where are we today or where will we be as a combined entity? The MTBD buses and trucks have a very, very good reputation, especially BLAZO and now FURIO, around fuel efficiency, reliability and a customer response time. On the product range with SML coming in, we would see a significant strength coming in buses. The one segment we were not playing in is the electric bus segment. And as you saw in the video, SML Isuzu is already at an advanced stage of development on electric buses. We believe that with the expertise that we have on electric through multiple segments now, we can strengthen that proposition and probably improve costs over what they have. A lot of opportunity to synergize and as I mentioned earlier, especially around leveraging the Swaraj tractor ecosystem, which is very local to the area around SML Isuzu. Between the two companies, there's very good talent available. The one area which we will significantly gain is network, because today, both players are small. There's an opportunity to synergize on the network. And that, we believe, will give the scale that the businesses need each individually. And the access to fleets, especially for buses, bus is a big segment, as we said, for SML will give us, again, access overall to both the businesses to grow. So just to summarize, we believe this is an appealing deal with a very strong strategic fit. We have strong growth ambitions, but they're realistic. They're based on our understanding of where our core strengths are and where we can gain. We are mindful that the MHCV segment is a very competitive segment, and we've been very realistic about the growth aspirations we have in that segment. The overlap or the overlay with our core auto pickups, spreading over to LCVs is a more realistic ambition. And that's where the strength of SML Isuzu come in as well. Immediate synergies, as you can see, are the company we are acquiring is profitable, very frugal manufacturing. We've seen that core strength in the Swaraj tractor business as well. We see a lot of similarity of the same kind of frugality that is there in SML Isuzu, and ability to leverage the ecosystem for scale and a significant value unlock for both the players. So with that, we move into the Q&A. Swati? Thank you.

Thank you, Rajesh. Thank you, everyone. Yes, we'll just start the question-and-answer session. [Operator Instructions] We'll try to capture as many questions because we have actually just 15 or 20 minutes to take this. So we'll start now. So Ankur, yes.

Ankur Mishra from ET Now. One of the things which has been the talking point after you have announced the deal is a price where the deal has been broken through. And we all have seen it is much lower than the current market price. I want to understand that how long the conversations were underway. And with the price you have negotiated, I mean, what kind of background dealings if you can give some details, I know these are price sensitive matters. But Apart from that, one more thing is the synergy you talked about and the kind of ambitious goals, you said these are realistic targets, till FY '31, you have doubling and then until FY '36, also, you have given targets. I want to understand that after this deal has been announced, have you also thought about the kind of investment you would like to make in this particular segment in both the -- once both the synergies are finalized and what are your investment plans in this sector?

Okay. Lots of questions in one question.

So I'll start with both and then I'll request Rajesh to add to that. So we have been looking at this for a while. And as we've said, we've always had a very structured approach to business, which is take a few areas, grow them well and then look at the next area after that. We also have a very structured and disciplined approach where if we're getting into something and acquiring something, it has to make sense for us overall. And which is why we've been looking at it for a while. We have not moved forward until it made sense. It makes sense now. I can't respond to many of your other questions that you asked around how that happened. But I would just say that it is one where we feel that this is an appealing, but a fair deal overall and one that positions the business well to grow. In terms of investments required, the business will generate a reasonable amount of cash and we feel is self-sufficient for the investments that are needed. We had planned certain investments in our trucks and buses business, which we have shared as part of the overall auto investment over the last couple of years and more recently over a 3-year period as well. There may actually be some synergies in that and we may have to do a little less. So we may have to do a little more. So basically, we don't have a final answer on that as yet, but it is not going to be anything meaningfully different from what we have planned so far. And we feel that these two businesses coming together will bring a lot of synergies that will help us, and that will position both our trucks and buses business and SML better in the marketplace. Rajesh?

Just to add a couple of comments. The reason we showed that video even though there was very little time is just being alive that SML Isuzu has a very strong product portfolio. They've already made significant investments over the last 4 years in their product. They have leveraged the overall technology association and have good quality offerings. The first look at the plant gives us an impression that it is a very well-run frugally design factory. It does need some investments, but nothing dramatic. Most of the investments, if at all, will be needed as we ramp up capacity. But there's enough space there for capacity to go up. So overall, as Anish said, we believe that most of the investments would be funded out of internal cash accruals of that company. And the investments needed in trucks and buses were already factored into the plan. And we were looking at trucks and buses anywhere as a growing segment. If you go back to the last few media analysts quarters we've been talking about. We have been talking about our ambitions to grow in this segment, and we had factored most of that CapEx into our 3-year cycle.

I, first, would like to understand what's the plan -- what's the plan to ensure the smooth transition for employees? And if there's a plan to integrate the management in. Apart from that, you mentioned cost efficiencies. If you could give us a peek into how big is this cost opportunity?

Rajesh, you want?

Yes. So the answer to how big is the cost opportunity is a little premature. But what we have seen is that one of the strengths of SML Isuzu a lot of the aggregates are made in-house in that plant. And typically, that enables a better cost structure. So that's the advantage that is there in SML Isuzu and there could be cross-sharing of aggregates. The strength that comes into the Mahindra portfolio or engines. So we have good quality engines and at good costs, which there could be some cross deployment around that. So I think, the estimation of cost needs to be defined. I also mentioned that there could be synergies around the Swaraj tractor supply ecosystem, because a lot of our sheet metal and all of that in Swaraj, we procure locally in the Punjab ecosystem. So that is a benefit that would spill over. It's too early to say what that could be. On the -- I think you had a question around the employees.

Employees and the management, how are they going to be integrated.

Yes. So the -- on the employees specifically, I don't think there'll be any need for uncertainty, because we are looking at a growth trajectory. And on both sides of the business, hopefully, this is going to lead to a win-win where we go in with a growth mindset, which is good for employees and I don't think we need to worry about what we will do. We may have to move a few roles around, but there's no question of a retrenchment or anything of that kind. So this should be actually very fulfilling for our employees that we're going to come in with the strategy for growth. Around management, I think, it's a little premature. We need to understand the strategic priority before we decide what and how to do it. Just want to emphasize that we don't expect an impact really on anyone because, we are in a growth mindset for both companies, and that's a positive thing for everyone involved.

A couple of questions from analysts as well since it's a combined meet. So we've taken two media questions. From analysts, if there's somebody here or I have already some questions coming in. So all right. Yes, please. Mic to him.

My question was on the legal entity. So how would you plan to keep the structure of the organization? You already have a commercial vehicle business under Mahindra and this is a separate entity to maximize on the synergies. Do you want to integrate this business going forward and any timeline that you're working with? And also as per the listed entity, would you keep the listed entity separate or you would want to spin off the commercial vehicle business entirely into this entity eventually?

Rakesh, we'll have to work through all of that. Clearly, there is a benefit of having a listed entity that separate and we'll have to work out what is optimal. We don't need to wait for entity rationalization for us to be able to realize some of what Rajesh had laid out. And I want to emphasize again one of the points Rajesh made, this deal isn't about taking cost out, right? This deal is all about growth that combined business brings together. And again, for that, you don't necessarily need entities to be rationalized to get there. You'll need to rethink how you're looking at distribution. You might need to rethink how you are optimizing that. You might need to rethink how you approach fleet owners. Those don't necessarily require you that what they will be looking at is the product portfolio across both not necessarily which entity that can be worked out fairly easily. So that's -- that's the way we are approaching this right now. I don't think there is any specific plans to move quickly towards any kind of entity changes.

Yes. Just maybe the specific one we can answer is around it will stay the listed entities.

Yes. Yes. So our intent, as you can see from the open offer is to go in for 26%. And as you know, regulations will require if we do go above 75% that we bring it down to 75% within a year's time. So that's the intent. It is lower than 75%. It really doesn't change the strategic objective or what we're trying to accomplish here.

Okay. Shelly?

Would you retain the brands, Swaraj, pretty much the way you did it for the tractor acquisition? Or how will that play out?

So Shelly, interestingly, the SML does not have the right to the brand Swaraj anymore. It's -- that's why I called SML Isuzu. The rights to the brand Swaraj went away when we acquired Punjab Tractors and acquired the right to the brand, Swaraj. And since this wasn't part of that deal, the company does not have the right to use the brand Swaraj. We don't intend to use the right, the Swaraj brand here. SML is a very strong brand by itself now with time, and we would retain the SML brand.

Okay. Yash, and then Ketan.

And congratulations for the announcement of this transaction. It's been awaited. It's been looked forward to. A couple of questions as far as the valuation part of the deal is concerned. SML Isuzu as a part of its business transformation plan earlier had alluded to this particular transaction. They were intending to execute this transaction. And looking at the size, do you think because it was already on the business plan for the company, the valuations have worked out in favor of Mahindra in terms of negotiations? Second thing that I wanted to understand I think from, of course, the shareholders of the company, the valuation is about INR 627 -- INR 650 a share. For your open offer acquisition, it's about INR 1,555. What explains the gap? And if you get 26% stake in terms of open offer, I think the average valuation that the price that comes to is about INR 927. What is the right or the fair value? Is it INR 650, INR 927 or INR 1,555?

Well, the old saying is that the value is in the eye of the beholder. But for us, as I've said earlier, we wanted to ensure that it's fair overall, and it's a valuation that makes sense for us to invest in as well. I'm not sure whether the open offer will be subscribed or not. That is up to the shareholders to decide. We obviously have a lot of confidence in this business going forward. And for us, it meets the thresholds that we have. If it hadn't met the thresholds, we wouldn't go there, right? So that's about all I can answer on that question, yes, because what happened behind the scenes, what the discussions were is really something that we cannot share at this point in time.

I think Anish, part of the question was the calculation of the open offer price. So that is -- that's based on the formula.

That's purely, it's like a formulaic SEBI mandates, a certain requirement there, and we have followed the formula there.

That's based on average price over the last few years.

Average daily volume. If that is assumed to be the fair price, because that's a SEBI mandated formula. Then I'm assuming the first part of the transaction went in your favor in terms of the valuation.

I think, to Anish's point, we don't want too much speculation around what behind and what the motivation is. Just one of the things you have to be mindful of in a thinly traded stock like SML Isuzu, market price is not always representative of the value, because you have to look at EBITDA multiples, you have to look at some of the growth prospects, a lot of factors. And I think both parties have a very good understanding. You know these are not small companies that are transacting. So they have a very good understanding of value. That's how I put it, right? And, nobody is lost out in the deal.

Yes, Ketan?

You're covering enough analysts, right?

How do you view [indiscernible] business now? And is M&A a critical part of your future thought process as well? I mean, there was a review on the business a few years back, then you reinforce your confidence in the business. And now we can clearly see that you are wanting to expand it aggressively. What's the future of MTBD, from an M&M standpoint? And would you continue to look at opportunities like these to build spaces of excellence and build the capabilities?

So Ketan, the way we think about it is, a business has to earn the right to be able to do more. And you're correct that we had it on a scanner 5 years ago. We had outlined what the business needs to do from a turnaround standpoint. If the business meets that, then it could take the next step. If it did not meet that, then we would look at an exit, which is essentially how we think about it. The business has met it and actually has done very well in the last 5 years, which is what allows us to take this step. Now with this, we've outlined a certain set of goals for the business. It again is up to the business to first be able to prove that it can meet that. And if it does, then yes, we will look at the next set of opportunities. But if the question is, is there another acquisition we're looking at in the near term? The answer is no. At this point in time, we would want the business to focus on execution. And if it executes very well, and it gets to the kind of aspirations we have, then at that point, we will look at things beyond it to grow it further.

How do you see MTBD in the midterm, say 3 years from now? How do you see the business evolving and some of the KRAs you had set for individual businesses, where does -- where is it in its journey at this point in time, MTBD in 3 years from now, anything that you could share with us?

So from -- as we look at the business overall, the keys for us were, one, it has to have a very strong product portfolio that the market really wants because that is where the right to win comes in. Second, from a financial standpoint, it has to meet certain metrics, and it has met and exceeded those metrics. Third is, there have to be a number of other areas where we've got a strong foundation that's built that we can continue to be able to further enhance and get greater share that is in place as well. So these were the things we looked for in the business over the last 5 years. As we think about the next 3 to 5 years, I'll hand it to Rajesh or Vinod. And before Vinod comes in, I just want to introduce him for those who might not know him. Vinod, again, is one of our strongest leaders. He was Head of Purchase or Sourcing for our strategic sourcing for both the auto and farm businesses, and we have moved him to a smaller set of businesses where we feel there's very high potential for growth. That is the mindset we have. Take some of our best leaders, move them to businesses which have the greatest potential for growth and which is why he's here.

And I'll add a minute to that, which is he comes from a strong truck and -- truck and buses background with most of his career in one of the key players in that segment. So he is actually the expert leading this transformation. Vinod?

Thank you, Rajesh and Anish. So Ketan, starting with the industry outlook, last 3 years has been stable and with all the growth in the economy and the construction and mining GDP, which we are seeing, along with the replacement demand, we have a very positive outlook for the industry. Truck and bus, we have had a proposition that we have to differentiate our product and give a reason for customers to buy. We have been doing it very successfully till BS-IV, where we were telling customers that whether it is our BLAZO or some of our LCV SUV, you get at least 7% to 8% higher fuel efficiency and which more than negates some of the disadvantages like resale value, and we even went out and gave the guarantee. Post that, as Rajesh explained, during COVID times, we had certain challenges. The good thing is that we have got all of that back. And today, we are staring at a fuel efficiency, which is with the proposition of almost INR 5 lakh to INR 7 lakh saving in a matter of 2, 3 years for anyone who buys our product versus that of competition. And with that, we are going very aggressive when it comes to MTBD. We have launched or relaunched our new range of buses, which is very different from -- we invested very heavily on our new bus platform during the COVID time. And now we have come up with a new range of buses with the Cruzio brand, which is very different than what it was pre-COVID. Our FURIO range of LCV ICV is now taking shape. We have just launched the FURIO 8, which again promises 8% to 10% fuel efficiency improvement. And now with SML, we get a very strong brand, when it comes to school buses, staff versus neither SML nor MTBDs into MCE buses and that we don't intend focusing these are SDU versus or large luxury intercity buses. We are not getting there. But school staff executive coach, put together, we are around 21%. We are actually becoming #3, and we are higher than some of the brands or known brands, which are there in the industry. So LCV ICV buses. LCV, ICV trucks are going to be the major focus with both SML and MTBD put together. And as Rajesh explained, with BLAZO, we are doing a lot, but we know that HCV industry cracking it takes time. We had reached a level of 5% in HCV and overall close to 4% in M&HCV. We came down to around 2.5% to 3%. We are back to 3%. And there, we have just around aspiration of increasing to 2%. If you do the arithmetic of what I just explained, that actually take 6% to 10% to 12% in a 5-year time frame, which we are talking about. And with all the brand power of the two and also all the synergy benefit of whether it is platform sharing, some of the aggregate sharing. For example, just to tell you, SML has a very strong CNG range. MTBD is still not there. we were trying to develop one. Now all that are the area we can optimize in terms of sharing each other's aggregates each other's cabin, FURIO is a very modern cab. SML cabin is a bit dated. Can we look at something like that? EV is another area where SML is working. We have not worked. So a large amount of cross-platform sharing, which will be there, including aggregates. And even if I may add the sourcing question, which came to Rajesh, since I was CPO, I can tell you that because of the joint sourcing of what AFS does, we bring a lot of value when it comes to common suppliers across our businesses. But then, there is a -- there are some unique suppliers which are specific to the business, like for MTBD, there are CV supplies, which supply only to CV players. There, the negotiating part does not become very high because of the combined AFS sourcing. But with SML getting added, we now have doubled the sourcing with those suppliers. Second, when it comes to SML, the sourcing, which they were doing for common industry aggregates like tires, batteries, FIPs. We bring the M&M sourcing power over there. So we believe that these are some of the initial thoughts. But as we dig deeper and based on the due diligence, we have already identified a lot of opportunities where we can bring value to both the brands. But needless to say, the big focus is going to be in the marketplace with all the differentiated products with the both the brands have, especially in LCV, ICV trucks and buses to do what we are intending to do.

A few questions from the analysts.

I just mentioned Vinod that there is also across the group, like, for example, XLO, will look at this very closely, right? There is also that, which is not necessarily in the case of business case that Vinod will run. But from a group standpoint, we also have to look at the value creation there.

Great. A few questions from the analyst that's coming in as we speak, and thank you for those questions. Dealer network for SML and M&M currently, [ Vimoksh ] from Anand Rathi and many others have asked on the dealer network. Can we give some clarity.

So actually, that's one of the very immediate area, which we'll look into because both the brands have very good products. But amongst the challenges which we face in the market is compared to market leaders, we have a network which is not as good. Both the brands put together have, say, 100-plus dealers and 200 each touch points, which include service centers. To begin with, that's one area where we want to focus, where complementary network can be given to each other's brands, especially when it comes to aftersales service. When it comes to the sales part of the brand that has to be looked at very, very carefully market-by-market, geography-by-geography, city-by-city. But we will certainly -- we certainly see the ability to give customers of both the brands, better service, better parts availability through the combined aftersales network and better reach in the sales front wherever the network complementaries can be added. But this is one area we certainly feel both the brands will be getting benefit.

Jinesh Gandhi from AMBIT Capital has a couple of questions. Buses segment is moving to EVs on M&HCV buses. While SML may not be the relevant player in the segment, how is it prepared for the electric buses for any threat to EVs going forward? Does SML continue to get technology support from Isuzu and for how long?

Yes. I think, on the bus question, Vinod clarified that MHCV buses is not the area of focus. So we were not looking at that in the short run, right? And we're not looking at any continued support from Isuzu. All the IPs are owned by SML right now. And it hence has its own R&D and technological capability built into the company.

And would you be looking to run this as a separate entity? Or will it be merged in M&M after the acquisition? This is from Bharat Bansal. Amar, do you want to take that?

I think, we answered this before for now. There is no plan to run as one -- the business as one will be run operationally as one, but entity rationalization is not part of the game plan right now.

And just to add to the other part of Jinesh's question on electric preparedness, how are we prepared for electric. You may just want to answer that.

Yes. So in fact, Swati, if it permits after the Q&A, you can play that video. But SML is actually at a very advanced stage of preparation for launching their EV bus when it comes to staff and school segment and executive coach. As Rajesh said, we are not looking at intercity and STU buses, that's not the area of focus for either of the brands. But electric buses for staff, school and executive coaches is something which SML has started working on. In fact, in Bharat Mobility, they had done a showcase of -- also of that bus. And as Rajesh said, bringing the power of AFS in all the electric range which we have developed right from our Jeeto and Veero, which is under development and as well as SUVs, we have a whole supplier ecosystem, which can help SML launch those buses faster and in a very cost competitive place. So that certainly will happen.

Sure. Any questions from here? Anybody else?

What was the investment plan for MTBD over the next 5 years? And as a result of this acquisition, does that change significantly?

I think, we answered that , which is the investment plan for MTBD was built into the auto numbers. When that was done, we had already factored in that MTBD, we would look at a growth trajectory. So we've adequately provided for the multiple product initiatives that Vinod spoke about within MTBD. So we're well covered. And Anish, I think responded by saying we don't see that go up, but this, in fact, the synergy may lead to some rationalization based on some things which get carried over. But at this point of time, we don't see the MTBD CapEx go up over what we had provided for in the 3-year cycle.

Okay. Okay, Ketan.

Is it the right time to kind of integrate all your CV arms? We have the last mile mobility business as a separate profit center. Then we have up to 3.5 tonne integrated into the automotive business, which is with SUVs. Then we have the MTBD, and now we have the SML Isuzu as a separate entity. When you combine all of them together as one legal entity, then there's one big probable benefit? Or why aren't you doing it? I mean, is there a thought process behind letting each individual entity operate separately?

Yes, Ketan, that's primarily because the buyer segments are very different. One is the MTBD or the LCV 3.5 tonne has a lot of fleet buyers, very little single market operator buyers. Last mile mobility has a very different buyer. It's e-commerce, quick commerce, some market operators, but not that high. The pickups, as we call it, which is the LCV, less than 2 to 3.5 tonnes again, operates very differently, very different customer segments. It's dairies, fruits and vegetables, FMCG. So very different customer segment, and that is integrated very closely into the auto business. . Manufacturing facilities are common, many aggregates are common, engines, so on and so forth. So it sits best where it is. So there's a logical reason why we don't use the word CV loosely.

All right. I think a minute to go, if you have questions. Okay.

Just one question, I mean, quite on SML Isuzu itself. In the last 3 years, the revenues have tripled in that sense. For you, when now you enter the company, is there any revenue milestone or profitability milestone, which you've kept for the next 2 to 3 or 3 to 5 years for the company?

The revenues are not tripled. The revenues are not tripled.

Revenue tripling is more because SML has come -- has a very strong play in buses. And after COVID, the bus industry literally crashed, because there were no companies running and employee transport was at -- and even school buses demand had just evaporated. So industry has literally crashed. And hence, what you're seeing tripling if you go back, pre-COVID, it does not appear like that. So bus industry, the good part about bus industry is that unlike the goods part of the CV industry, which is hugely cyclical. And I keep seeing that the cyclicity in CV industry in trucks is directly proportional to the GVW of the vehicle. The bigger the vehicle, the bigger is the cyclicity. But when it comes to the buses, it's a very stable market. And it does not grow very significantly. It does not crash also. So that's actually having a high share of bus, which SML provides also helps in derisking the business model.

And the overall target we do have for the combined business is to get to a 10% to 12% share by 2031 or fiscal '31. And Vinod explained where exactly we're going to get it from and the path that we're going to take for that.

Thank you. Before I...

Just one. Can you just deep dive me for the buses will -- what will be the brand?

SML is the brand of the company and will stay that. Yes. But the company name will change, of course, because Isuzu will get off the company name.

So the vehicles will bear an SML brand?

Yes, that's how it is right now and that will stay.

And before I close the last question from Swaraj, who joined online, at what level are the SML plants operating right now? And how do you plan to improve that considering you might be looking favorably at exports as well? What's the view there?

So, Swaraj, so we have sufficient demand right now in our SML factory. I mean, if I have to say approximately it's around 65% to 70% capacity utilization. So we don't anticipate any significant investment at least for next couple of years. Of course, when the market goes up, and as we plan growth, we'll be more than happy to increase capacity if the demand is there. Export is an area where we see as Swaraj getting active in some of the markets, we'll have to better understand how both the brands can leverage on that.

All right. Thank you very much.

And in closing, I just want to say that we are acquiring a company that we have a lot of respect for. They have done very well in the marketplace. They have created a huge product affinity with their customers. And the management team and the people there we have a lot of respect for. So this is one that is a huge plus for us, and that's something that we look forward to integrating that into our family and taking this business forward.

Okay. With that, it's a wrap. Thank you very much, everyone, for joining us here live and on the web. It really means a lot to us, because you all made it early in the morning. And thank you, everyone, here at the stage for being very patiently responding to all questions. If there are more questions, please feel free to write to us. We'll respond to. Thank you.

Thank you.

Thank you.