Maruti Suzuki India Limited (MARUTI) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Maruti Suzuki India Limited Q4 FY '21 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded. I would now like to hand the conference over to Mr. Pranav. Thank you, and over to you, sir.

Thank you, Janice. Ladies and gentlemen, good afternoon once again. May I introduce you to the management team from Maruti Suzuki. Today, we have with us our CFO, Mr. Ajay Seth; from marketing and sales, we have Member Executive Board's, Mr. R. S. Kalsi; Executive Director Marketing and Sales, Mr. Shashank Srivastava. From Corporate, Executive Vice President, Corporate and Government Affairs, Mr. Rahul Bharti. From Finance, we have Executive Director, Mr. D. D. Goyal; Executive Vice President, Mr. Pradeep Garg and Mr. Sanjay Mathur. The con call will begin with a brief statement on the performance and outlook of our business by Mr. Seth, after which we'll be happy to receive your questions. May I remind you of the safe harbor? We may be making some forward-looking statements that have to be understood in conjunction with the uncertainty and the risk that the company faces. I also like to inform you that the call is being recorded, and the transcript will be available at our website. I would now like to invite our CFO, Mr. Seth. Over to you, sir.

Thanks, Pranav. Good afternoon, ladies and gentlemen. I hope you and your families are healthy and safe. The country is experiencing an unprecedented situation because of this pandemic. We pray for speedy recovery for the people who are battling with the COVID-19 infection. We will continue to observe COVID SOCs and precaution, be sensitive to the human and social elements, build an environment of positivity and keep working hard as our bit in these difficult times. May I start with the business environment that prevailed in financial year 2020-'21. '20-'21 began with a nationwide lockdown imposed by the government to keep the pandemic in check, resulted in no sales in April 2020. We used this time to help produce and donate masks, ventilators and PPEs, of which we had no past experience. The lockdown resulted in severe cash flow challenges for the company's suppliers and dealer partners. The company immediately provided cash flow support to wherever it was required for sustainability of our suppliers and dealer businesses. Many companies in the industry who did not have surplus cash could not take such remedial measures. When the operation began post the gradual ease of lockdown restrictions, the company faced the twin challenge of ensuring safety of health of all the people across its value chain and ensuring continuity of operations to put the business quickly back on track. It recorded utmost priority to ensure the safety of health of all the people across in value chain. The company collaborated with its stakeholders and jointly prepared detailed standard operating procedures catering to specific needs of every member of the value chain partners. The company increasingly adopted the use of digital technologies wherever possible. The company also faced business continuity challenges due to supply constraints caused by both local and global issues such as state-wise lockdown restrictions, global semiconductor shortages, natural disasters such as U.S. polar vortex and geopolitical tensions, among others. With meticulous planning, the company was able to manage the supply disruptions and could maintain the continuity of operations during the year. As lockdown restrictions eased, non-urban markets became bright spots of economic recovery and the company focused on such markets, leveraging the favorable conditions. The overall contribution of sales from the non-urban markets increased by 2.5% to 41% in year '20-'21. During the year, consumers' profiles also underwent some changes. Driven by the increasing need for personal mobility, the participation of first-time buyers went up. Also given the dip in economic activity and uncertainty about growth in incomes, customers continued to hold on to their existing cars, leading to lower replacement demand during financial year '20-'21. During the year, the customer acceptance towards environmental-friendly CNG vehicles increased. The increase in customer preference toward CNG-led technologies made the company extend its CNG technology in Celerio, S-Presso and Super Carry. Despite overall sales of the company declining in domestic market with 7.8%, the sale of CNG vehicles grew by nearly 50%. Consequently, the CNG vehicle share in overall domestic sales of the company has increased to nearly 12%. During financial year '20-'21, the company with the technological support from SMC, large new S-Cross with bigger engine capacity along with Suzuki's flagship, Smart Hybrid, powertrain technology. The company also launched a facelift of new Swift during the year with advanced powertrain and safety features such as electronic stability program with hill-hold assist function in the AGS variants. During financial year '20-'21, passenger vehicle market posted a decline, despite the recovery in sales volume in the second half of financial year '20-'21. The auto sector was witnessing a special slowdown even before the pandemic started. During financial year '19-'20, the passenger vehicle industry witnessed its sharpest demand contraction in the last 2 decades. During financial year '20-'21, the pandemic further accentuated the contraction in sales volume in the passenger vehicle industry. The passenger vehicle demand in financial year '20-'21 has just recovered to financial year '15-'16 levels. The company sold 29,556 units of Super Carry during the year, posting a growth of 35.7% in BS VI regime. The company launched India's first gasoline with CNG-powered mini-truck in the market, which is largely dominated by diesel vehicles. The customer like the higher power, low acquisition and maintenance costs offered by the Super Carry gasoline for the CNG-powered vehicles. As a result, the sale of Super Carry not only grew by 35.7% in '20-'21, but the company was also able to increase the market share in Super Carry segment by nearly 8% during the year. In export markets, the pandemic impacted the company sales during '20-'21. Export sales volumes declined by 5.9%. Further, during '20-'21, the company reached the milestone of 2 million units of sale in export market since its inception in January 2021. The start of export shipment of Jimny created positive consumer sentiments in many export markets. The prices of commodities such precious group metals, PGMs, as we call it, steel and others increased suddenly and steeply throughout financial year '20-'21. The ForEx movement also remained adverse during the year, given the fact that demand for passenger vehicles was not -- was just recovering in the domestic market and due to the uncertainty in the sustenance of the demand, the company undertook a cautious approach in raising the prices of the cars. In the second half of financial year '20-'21, despite favorable operating leverage driven by increased capacity utilization, lower sales promotion expenses, reduced overhead expenses and price hikes taken towards the end of the year, the quantum of increase in commodity prices and lowest foreign exchange movements still adversely impacted the operating margins in financial year 2020-'21. Let me now come to the financial results. The company -- for the quarter, the company sold a total of 492,235 vehicles during the quarter, higher by 27.8% compared to the same period previous year. Sales in the domestic market stood at 456,707 units, growth of 26.7%. Exports were at 35,528 units, a growth of 44.4%. It may be recalled that in quarter 4 of the previous year, there was a significant decline in the sales volume, largely owing to COVID-19 lockdown. During the quarter, the company registered net sales of INR 229,586 million, an increase of 36% compared to the same period previous year. The operating profit for the quarter was at INR 12,501 million, a growth of 72.8% over the same period previous year on account of higher sales volume and cost reduction efforts, despite steep commodity price increase. Net profit for the quarter stood at INR 11,661, lower by 9.7% compared to the same period last year owing to a couple of factors and lower nonoperating income owing to mark-to-market loss on invested surplus. Coming to full year, the company's performance for '20-'21 is reseen in the context of COVID-19-related disruptions. The company sold a total of 1,457,861 vehicles during this period, lower by 6.7% compared to the previous year and lower by 21.7% compared to '18-'19. In financial year '20-'21, the sales in the domestic market stood at 1,361,722 units, lower by 6.8%. And exports were at 96,139 units, lower by 5.9% compared to the previous year. During the period, the company registered net sales of INR 665,621 million, lower by 7.2% compared to that in the previous year. Net profit for the period stood at INR 42,297 million, decreased by 25.1% compared to that in the previous year on account of lower sales volume, increase in commodity prices, adverse foreign exchange movement and lower nonoperating income, partially offset by lower operating expenses and cost reduction efforts. In line with the financial performance of the year and considering uncertain business environment, the Board of Directors recommended a dividend of INR 45 per share. This is on the face value of INR 5 share for this financial year '20-'21. We are now ready to take any questions, feedback, any other observations that you may have. Thank you very much.

[Operator Instructions] The first question is from the line of Kapil Singh from Nomura.

Firstly, I wanted to know regarding current demand environment, because we have seen a substantial increase in COVID cases. Has that had any kind of impact on demand sentiment in your view? Or this is more only transactional issues because of the lockdown? So if you could comment particularly on rural and suburban demand sentiment also. And also, on the supply side, if we should expect any kind of disruption because of COVID or because of kit shortage?

Shashank, will you like to take this question on the -- the first question, please?

Yes, on the question of the current demand, so the current demand seems to be holding out as far as fresh bookings are concerned. We have also substantial pending bookings. But yes, on the retail front, because there has been a lockdown in 9 states, including Maharashtra, Delhi, Chhattisgarh, Jharkhand, MP, Rajasthan, Karnataka, Meghalaya and Mizoram, they constitute roughly about 35% of the presales. So in that sense, the retail might be a little affected in these areas. But as we go forward with the current levels of bookings and the inflow and the inquiries, it seems to be okay. Although I must hasten to add that the auto demand is very closely related to the sentiment being a discretionary purchase. And if this COVID thing persists for a longer time, then obviously, the sentiments of the consumer get negatively impacted. But we have to wait and see how long this situation continues.

And on the supply side, if you can comment on the kit shortage and any risk for production.

Rahul, go ahead please. Rahul, will you like to go ahead on the suppliers -- supply of semiconductor side?

Sorry, I was muted. So far, we are operating on full capacity. We don't have any problem. The supply chain is also working fine. And there is some -- so we'll keep monitoring the supply chain, because there are many, many factors, and we'll report as and when if we foresee any problem.

The next question is from the line of Pramod Kumar from Goldman Sachs.

And my first question is kind of continuing with what Kapil was asking on the demand side. Can you please help us understand where were you in terms of the order book from dealers and inventory at dealers before these local lockdowns kicked in? And any specific color if you want to share about performance of the semi-urban and the rural pockets, especially your extended sales outlets, how are they performing in terms of are they -- how many -- how much of your sales network is up and running at this point of time? So something -- some color on those lines, sir? That's the first question.

Shashank, please go ahead.

Yes. So I think the question on 2 parts, I think basically inquiring about the network stock and also the factory stock. I think that is the first question relating to. So the network stock at the beginning of the month was around 32,000. And currently, it is about 85,000, 90,000. So that is as far as the stock. It is still less than what is our normal stock, which is usually 135,000 to 140,000. Is that the question? Or is there some additional information that you wanted?

The additional information was, what is the current dealer order backlog what you're carrying? Because I...

So current pending bookings, which we have, is just above 200,000. On the rural/urban, we saw, and it was, I think, reported in the press conference also, the rural growth last year was about 7%. And therefore, the overall increase in the rural contribution to the total sale was about 2.5%. So from about 38.5%, it has now gone up to 41% in terms of contribution. Going forward, I think the rural demand is still going to be -- it continues to hold, although in the Q4 of last year, urban demand also came back strongly. But going forward, I think given the Rabi -- Kharif sowing being very good, the Rabi crop also being very good and the monsoons expected to be near normal, as of now, it appears that the rural would continue to see the upswing, which we have seen in the recent past.

And Ajay san, this question is for you. If you can just help us understand what has been the exact extent of price increases going to be taken in Jan-April? And how much of further commodity pressure is still lying with the company in terms of which have not been piled out yet to the market? And related to that is the cost reduction effort outside of commodity, what you're kind of undertaking. I'm pretty sure you're working on all of this. And if you can just help us understand how meaningful they could be and by when can we expect these cost reduction efforts to kick in?

So we took an increase in the fourth quarter, which was partial, because we've had some extension of price protection for some period. But we did have -- we did get an impact of some increase, but that was -- that increase was smaller. I think it was under 1%, about between 0.75% and 0.8%, something like that. And we've taken another price increase, which was recently announced in the week of April, I think, around 10th April. And that's -- price increase, as you mentioned, in the stock exchanges is 1.25% average. So that's what we've done so far. I think the impact of fourth quarter price increases will be fully also coming in the first quarter of the next year. And this -- the new price increase impact will also come -- not for the full quarter, but most of the quarter. So that's why -- commodity -- unfortunately, commodity increase has been very, very steep. In the fourth quarter, we've seen that kind of a -- and as earlier also mentioned in my last conference call that the bulk of the impact is going to come in the fourth quarter. So commodity impact, if we were to look at commodity impact, it's almost close to about 400 basis points in this quarter compared to last year same quarter. Even sequentially, the impact is quite big, because the impact was not so much in the third quarter as it is now. So even sequentially, the impact will be slightly under 3%. Now, obviously, there are various things that we would do. Price increase is what something we've done. But we are now working on our internal plan of mitigating the impact on seeing how we can reduce improvement of yield and how we can reduce consumption of some of these special metals and kind of make up there. Plus, as I mentioned, these 2 price increases also will help in partially mitigating the impact. So these are various action points that we are doing. And we are hopeful at some point in time the commodities will stabilize. And you might also start seeing some reversal as well where they can't indefinitely continue to keep rising. So -- and then we will take collaborated calls based on where we are at that point in time.

The next question is from the line of Kumar Rakesh from BNP Paribas.

My first question was for Ajay san. So on the margin front itself, so how much of commodity sequentially you said you have already come through? And more importantly, what is -- what appears so far is that our price increases have been trailing the commodity inflation, which we are seeing. And in the next quarter, we'll also have the ramp-up impact of the new plant in Gujarat. So would it be fair to expect that this decline in margin will likely continue at least for a quarter or 2?

It all depends on what the volume offtake is, because if situation continues like this and deteriorates, then, of course, there will be a definitely an issue of operating leverage, including the new plant that's going to come in. But the kind of hit rate that we were having in the fourth quarter, we are hopeful that we will be at least doing this. And we're actually running short of demand as we had very low inventories at the end of the year. So hopefully, I think if things don't deteriorate from here and they start improving thereafter, we may see things cooking up and operating leverage being much better. But if they don't, then, of course, there is this concern of the outlook. But it will also depend on one more factor that how much more headwind do we have on commodities. Because the onslaught has still not stopped. We are also seeing some rise in prices even in the first quarter. So if at some point of time, they stop, I think then you will start seeing that reversal. So it's difficult to predict at this time what will be the outlook. But margins can be volatile, at least in the first quarter and the second -- in the first half of this year.

Got it. My next question -- second question was for Shashank san. So have you done any study or you have any understanding of -- or your thought process around how do you take a call between price increase and its impact on the demand versus the profitability, which as a company you would want to maintain? So far, it appears that we have been very conservative in taking price increase looking at the demand. But what kind of impact that can potentially do on the demand? Do you have any price elasticity or some understanding of how that plays out vis-à-vis how much of profitability loss you're okay to take in this process?

Yes. So basically, when we look at the price side, we do a conjugation of mathematics and philosophy. So one, mathematics is obviously the elasticity of demand, which you mentioned just now. We have quantitative elasticity for different segments. So there's no different segments elasticity [indiscernible]. Secondly, we also have to look at the volume part, because there -- that is where the subjective judgment comes in. Because sometimes, when you assume a certain volume depending on the market situation, and there is no exact science to that, except that elasticity part on the -- if demand is only a function of price. So there, obviously, assuming a particular volume, then you -- our finance people tell us what the profitability would be. And there is always -- as you know, there is this always a debate between what volumes we can achieve and how much profit we should look at. And somewhere there is a consensus which emerges that this is what is important. Sometimes, the volume takes precedence. Sometimes, the profitability is also very important. But I think, given the sticky nature of the market in the last 2 years, we have been conservative in price hikes, mainly because we think, as a market leader, it is also our duty to kick start the industry overall. And that is why when the cost of acquisition has gone up in the last couple of months -- in the past couple of years, we have really been very conscious of the fact that we need to protect the volumes as well going forward, not only for Maruti Suzuki, for the industry overall as well.

The next question is from the line of Yogesh Aggarwal from HSBC Securities.

Ajay sir, you talked about operating leverage just now. But in the fourth quarter, volumes almost touched 2 million on an annualized basis. So do you still think there could be potential for positive operating leverage next year versus the fourth quarter?

No. What I'm saying is that you'll be -- if you are able to use the third plant also, volume, then you'll be able to absorb the cost -- the incremental cost that you're incurring there. So while we have this constraint in the fourth quarter, because we could -- otherwise, we could have produced more and we could have delivered more as our network stock was only 40-odd thousand at the end of March. So what I'm saying is that if there is this demand pool and we are able to produce higher quantity than the hit rate of the churn in the fourth quarter with the new plant coming in, then you can actually neutralize that additional impact that we've been talking about the fixed costs that will play in the current scheme of things. That's all, I think. Otherwise, I think operating leverage has seen its -- almost seen its peak in the fourth quarter -- third and fourth quarters.

Yes, yes. Sir, and the other thing is, just big picture, Suzuki talked about the long-term -- mid-term plan in February. They talked about double-digit volume growth, a lot more EVs in the next 3, 4 years, but flattish margins from last year to FY '26. So in context of everything, would you be able to provide some clarity on what are the plans for India? And also just smaller point to that, you're now selling almost 6,000 cars to Toyota. So how do we see this over the next 1, 2 years? And in terms of compensation, is there some sharing which can happen from the Toyota side in terms of larger vehicle with them?

Rahul, can you -- would you like to go ahead?

Mr. Rahul, if you have muted yourself from your device.

Sorry, I missed the question, please.

Yogesh, can you quickly repeat it, please?

Yes, yes. Rahul, I was asking that in light of the Suzuki's mid-term plan, which was disclosed in February around volumes, around EV push in the next 3 years, what are the underlying plans for India? And secondly, the Toyota sales is now almost 6,000 a month. So where do you see that going? And in terms of compensation, is there some plan to share a larger vehicle with them?

Okay. See, on the electrification and the net 0 agenda is a large agenda. It spans not years, it spans decades. So we have to configure our business according to that. As far as electrification is concerned, still, despite many efforts by many stakeholders, the penetration is very low. It is not even 1%. So the fundamentals have to be addressed first. And the fundamentals are localization of key components that go into the electric car or the hybrid electric car. So you are aware, we are working on such localization of parts. We have a battery, a lithium-ion cell plant. So we'll work on the fundamentals. And the moment we have a viable scalable option and offering, we will, of course, like to scale it up. As regards Toyota, so far, we are doing about 6,000 numbers. As and when we have more revenues, we will let you know. But what I can certainly tell you is the partnership is working well on exports. So we are able to leverage the network in Africa and countries like that. And our exports, you would have seen it in the numbers. And the future will -- should also be positive on this.

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

First question was to Shashank san. On retail market share, would it be over 50% in FY '21 if I also include the sales of Toyota? And also Global Suzuki had indicated in February that India market share, the aspiration is to hold on to 50% over the medium term. If you can add some color on efforts to sustain the market share? My second question is, can you share the first time replacement and additional buyer mix for FY '21? Also by when do -- by when would you expect some kind of recovery to pan out on the replacement demand side?

Fine. So on your first question on the retail market share, as you know, this data is generally shared across in the industry. There is -- it's not a definitive data. However, from the current available information, Maruti Suzuki's retail market share is just under 50% on its own. And yes, if you add Glanza and Urban Cruiser to that number, it does cross, in fact, 51% for the financial year 2020-'21. On the other question about the market profile as far as the first-time buyer and the replacement buying is concerned, the first-time buying, as we have been repeatedly saying, has gone up by about 3.5%. And for the replace -- additional car buying also gone up by almost the same percentage. It's about 3.6%. And the additional car buying is what has come down from, I think, 26% -- 26.4% to 19.5%. So the first-time buyer going up from 43.4% to 46.9%, up by 3.5%. Replacement buying coming down 26.4% to 19.5%, which is almost 7%. Additional car buying going up from 30.1% to 33.7%. There seemed to have been a little bounce back in Q4 for replacement buying. But we find, again, in this month, the replacement buying in that range of around 18%. So I'm not sure replacement buying is actually quite closely related to the sentiments, again, because people tend to hold back to their older vehicles and not upgrade if they are unsure of the situation. So I think it's difficult to predict when the replacement car buying will come down to the previous level. But I think we did find that when the things became a little more normal in Q3 and early part of Q4, the replacement buying was coming very close to that figure of 25%.

That was very helpful. I had also asked like Global Suzuki had indicated aspiration to sustain 50% share over the next 5 years. And in the February presentation, they had indicated efforts on SUVs, CNG and strengthening of sales infrastructure. So if you can add some color on efforts to sustain that 50% or the dominant mark over the medium term?

Yes. So I think that 50% is sort of a figure, which we look at whenever we're looking at industry size and how much the projections that -- what Maruti needs to do to attain that sort of market share. So if there is any indication, if you look at the figures for last year, for example, 2020-'21, the market share for Maruti Suzuki in the passenger car segment, which is the A segment, is almost 63%. In C, which is the van segment, it is now 97.3%, up by 7.7%. In NPV, the market share is 56.9%, again, up by 7%. So without the SUV, the market share is 64%. It's up by 1% over last year. However, when you look at the overall picture with the SUV, and that is where I think the issue is, our market share is just 13.2%, although we are the market leaders by far as far as the entry SUV is concerned. In the mid-SUV, I think the S-Cross' performance has been suboptimal. That is where our market share gets cooled down from 64% without SUV to 48% last year if you include the SUV. So I think it's clear, we need to focus on our product plan in that segment. And we are obviously looking at those white spaces and also those red spaces I keep talking about where our market share is low. But also continuing our dominance, including in the fuel efficiency and the part where CNG has come out as a very good option, as was being mentioned by Ajay Seth san in his opening remarks. CNG has also proved to be a great source of good market share for us. So I think these are some of the factors which we take into account. And obviously, it has to be backed up not only with product plans, but with our network expansion as well, which we continue to do. And in all in overall plan so that we keep the high market shares, which was indicated in the Suzuki's press conference.

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

First, can you share some data points on discounts, export and spares revenues?

Pradeep, can you give the numbers, please?

Yes. So discounts this quarter were at about 16,600. And export sales was at about INR 1,745 crores.

And spares?

Pardon me.

Spare parts sales?

Spare parts sales, just a second.

We normally do not give this guidance of spare parts separately, Jinesh. We've just got a consolidated number. The breakup is available in the annual report, so you can get an idea from there.

Sure. Sure. I'll wait for that. Sir, just to clarify, you said price increase benefit in fourth quarter was about 0.75% to 0.8%. So that is a volume-related price increase, which you are indicating for fourth quarter?

Yes. So I mentioned that this is the kind of price increase that will slip in into the next year. And this increase was partial in the fourth quarter. I think it was there for 2 months and not full 3 months. It's 2.5 months. I think 15 days, we had some price protection scheme that worked. So you'll get it for that period. And further to that, we have had another price increase in April. So that's in the vicinity of about 1.25%, as I mentioned, on an average.

Right, right, right. Okay. Got it. And lastly, with respect to the RM cost inflation, based on the current spot prices or residual impact which is still pending, what is your assessment of further impact, which could be seen in 1Q on RM cost?

We see some more impact in the first quarter, because the prices of both steel as well as rhodium and palladium are elevated from the levels that we have seen at the closing of the fourth quarter. Because please remember that our prices are in the quarter lag. So what you will see in the first quarter will be the fourth quarter prices and what you will see in the second quarter will be the first quarter prices.

Right. Right, sir. But would it be as large as what we have seen in...

No, no. It may not be as steep as you have seen in this quarter. This quarter was like absolutely unprecedented. But I think there will be some increase. We can't put a number to it as of now, but there will be some increase as indicated by supply chain that the steelmakers have far increased as well as rhodium and palladium prices have gone up from the levels where they closed last.

Okay. Okay. And lastly, any update on diesel, reentry into diesel?

Rahul?

Yes.

Rahul sir, any update on reentry into diesel, considering diesel continues to be preferred for SUV?

So we had always mentioned that we are keeping the flexibility of that option, depending upon the market conditions and how attractive it is. But let me caution you, the regulatory road map for diesel is going to be very, very tough and uneconomical going in the future. We had BS VI. After BS VI, we have RD. After RD, we have stringent and the conformity factors, which are getting more and more stringent. So we have to keep that in mind.

The next question is from the line of Pramod Amthe from InCred Capital.

This is with regard to the digital initiatives, which you have taken, considering that the COVID disruption seems to be more repetitive in sense. So where did you end the sales pull from the digital marketing? What proportion you have been able to source by the quarter? And also, are there any more initiatives expected in the coming year to make it more sustainable going forward?

Is this question -- sir, should I take this question?

Yes, please. Yes, please.

Yes. So as far as the total inquiry levels are concerned, the contribution last year was about 35% on the digital platform. The contribution towards booking and also in terms of retail was 8%. Going forward, we are expecting it to go up further. And as a result, we have been strengthening our digital platform exactly going by what you just mentioned. We expect not only this disruption to continue often, but also going forward, even after the disruptions are over, you will find that the consumer preference to come on the digital platform across the country would increase. So we see it as irreversible trend, and that is why we have strengthened it so much over the last few years.

Sure. And my second question is with regard to the chip challenges. Even though you guys have been able to manage the supply chain on the chip side, what is your outlook or what are you feeling in terms of the pricing trend for chips? And do you see a risk of that price hike coming through in the coming months?

So there are challenges, Pramod, on the chips, semiconductors. The situation is uncertain. We have taken whatever measures we could take in terms of ensuring alternate suppliers or redeeming the model mix, et cetera. Whatever was under our control, we've done that. But moving forward with the current condition of COVID, et cetera, how will it pan out, what will happen is difficult to predict. So far, we have been able to manage this. But it's very difficult to give you an answer or assurance on whether it will be seamless or there could be some disruption. So it will depend on how these suppliers will behave, because obviously, some quantity is getting shifted to priority, and therefore, the production has come down for auto. But -- I mean it started happening quite some time back. We have been able to manage it so far. Let's see. And if there is any problem, then, of course, we keep communicating from time to time.

The next question is from the line of Sonal Gupta from UBS.

I had a couple of questions. One was, could you share the retail volumes for the fourth quarter?

For Maruti Suzuki?

Yes, sir.

So of course, these are like shared figures. So these are obviously approximate figures. So this year, Q4, the retail for Maruti Suzuki was about 419,000 tonnes.

And sir, would you be able to share what was the share of top 10 cities and top 10 to -- 11 to 20 in the full year sales?

Yes. So top 10 cities, just give me a sec, because I have that data somewhere. It is, I think, 34% towards the top 10 cities, the share. So here I have. So city-wise, first to 10, if you look at the total retails in the industry, contribution of top 10 cities, it's 34.9%. For 10 to 20, it is 12.2%. For 20 to 40, it is 14.6%. And all the rest 38.3%.

Right. That's very helpful. And sir, just on the -- could you share what is now the -- how the overall customer mix has moved over the year? I mean, like what is the share -- has the share of salaried employees gone up, government employees gone up? So any share of the customer mix that you can give on how that has changed for the year?

Yes. So we did see the salaried customer going up a little bit, about 2 percentage points, largely the government salaried class going up. So if you look at the complete year, then I'll just give you those figures as well. By occupation, salaried customers for total -- for '20-'21 is -- yes, so salaried customers for -- went up to 45%, 46%, slightly up. The government was up a little bit. And over the years, if you want, then the salaried customers were roughly 44% 10 years back, but they had gone up to almost 47% in '17-'18. And last year, it was 49%. Government customers out of these, 25%, 10 years back, was about 22% '17-'18, 24% last year. So it was up by 3%. Private salaried customers were also up 2%. Business customers were down. So business customers, which are normally 33%, came down to 28% last year. [indiscernible] across all categories, trading, transportation, contractors. Self-employed came down 1%. But the others, which is basically retired and housewives and other people, they were consistent at -- in fact, went up slightly to 11%.

Okay. And just my last question on what is the investment in the third line at Gujarat? Could you sort of share that number?

Immediately, we don't have that information. We'll get back to you.

The next question is from the line of Ronak Sarda from Systematix Shares.

Sir, my first question is on the supply chain side. I mean I understand we are able to navigate purchase side. But the capacity constraints are impacting our wholesale or inflating to the increase in order book at the dealer level. So any thoughts on realigning the capacities to better selling models over the next 1 or 2 years? Or will that help us improve our retail sales versus the wholesale cost?

So the third plant at Gujarat has just become operational. And after the ramp up, it will be ready to generate about 250,000 per annum. And we'll keep watching the situation. There will be some productivity stretch also that might be possible. It's always a very difficult question. We have to balance between overcapacity and on-service demand. So the ideal condition, of course, is close to 100% utilization. But this plant will give us good volumes.

And have we decided, will this be mainly servicing towards Baleno and Brezza demand? Or I mean, can you highlight...

These days, plant capacity is mostly fungible -- flexible across models.

Sure. Sure. And the second question is to Shashank san. Sir, if understand it right, the Brezza -- Vitara Brezza is more of the real SUV versus the competition, which is more of a crossover or a car-like structure in SUV shape. One, does the customer understand the difference between riding real SUV versus if they were for crossover product? And second, is there a cost advantage to launch a product similar to competition. Does this -- does that take care of a price point at a lower level?

I'm not sure what you are -- what your question exactly is. Is the question about that -- can the customer distinguish between crossover and pure SUVs? Is that the question?

Right. So like Brezza is a derivation of the Grand Vitara. So the suspension or the ride feel is more like a real SUV or the larger SUVs versus, let's say, the competition.

Yes. So the short -- yes, that's right. So short answer is yes, I think the customer does distinguish between the 2. However, these SUV customers in India is a little different from what you find in Europe or Latin America or U.S. in the sense that ours is largely a 2-wheel drive. So it's not used really for offroading. But the stance of riding that it provides, the big ground clearance, the larger tires, those are the things, which a customer is looking for in an SUV. And I think he's able to distinguish between a crossover and the SUV.

Right. And so the related question is when do you see there is a price point to launch a more of a crossover product? Or -- I mean does that -- is there an opportunity to launch, let's say, similar-looking products at a lower price point, because you remove certain features of a real SUV? So is there a thought process to launch similar product?

So I think as far as product plan goes, the real saving in terms of entry SUV in India, whether it is a Sonet or a EcoSport or a Venue or a Brezza or a Urban Cruiser or XUV300 is really the size of the vehicle being 4 meters below rather than those other functionalities of SUV that you are referring to. And the second point, yes, as far as one of the product planning principles is, given a platform, you can actually -- if you can build SUVs-like vehicle, yes, there does -- the common components always lead to more localization and also bigger cost advantage. Yes, the opportunity does exist in that direction.

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

In the past call, we've often talked about SUVs. Suzuki has also talked about importance of SUV. Yet over the last 2 years, we see Maruti losing market share on that side. So could you talk a little bit about what are you planning on the product side? Do we see the company doing something to address that gap in this financial year? Or is it more like a longer-term aspiration to attract the SUV cap that something comes out in the next 3, 4 years? So could you talk a little bit -- I know you won't talk about specific products, but could you share something maybe on the time line by which you expect sort of a more fuller SUV portfolio?

So I think, yes, I did mention it that as far as retaining that large market share, one of the constraints seems to be our current market share in SUV segment seems to be low. However, I must say that if you further dissect that in the entry SUV, of course, our market share is -- we are the market leaders with Brezza.

Correct.

Yes. So it is a mid-SUV. Premium SUV segment is actually very small, contributing to just 0.8% of the overall sales, whereas the entry SUV and the mid-SUV, which are larger, 16.4% entry SUV and 14.7% mid-SUV. In the mid-SUV, our market share is actually quite low, even though Brezza is leading in the [ NP ] SUV. In the mid-SUV, we have the S-Cross, which we recently launched with a new engine in August. And I think we -- it has given us sub-optimal number so far, which we intend to increase in the coming years. Of course, as far as the overall product plan for SUVs is concerned, as I mentioned, we keep looking at those red and white spots. White, if we are -- if there is an opening. Red, where we are poor. So yes, we will have a product plan, but I'm really constrained to -- I really can't speak about the future product plan in that segment. But yes, we are cognizant of the fact, and we are looking at this segment very, very carefully. And definitely, we will see some action there.

Okay. And lastly, a question on -- like Rahul mentioned that the company, in fact, is working on localization -- localizing some of the battery parts on the hybrid or on the EV side. Could you give us a little bit of an update on when do we see the first set of battery packs coming from that facility?

The facility is already doing test production. So commissioning is over. It's doing test production.

So is it fair that this will basically first go into the hybrids that you will launch closer to the CAFE rollout?

See, we don't have much EV volumes as of now. So at least we have volumes in mild hybrids to start with. So it -- we have to maximize our volumes. So we'll work according to that.

Great. Great. No, we'll wait for any more updates on that side.

Thank you. Ladies and gentlemen, that is the last question for today. On behalf of Maruti Suzuki India Limited, that concludes this conference. Thank you all for joining. You may now disconnect your lines.