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

Ladies and gentlemen, good day, and welcome to Maruti Suzuki Q4 FY '25 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Pranav from Maruti Suzuki. Thank you, and over to you.

Thank you, [ Sushri ]. Ladies and gentlemen, good afternoon, once again. Welcome you all to Q4 FY '25 Earnings Call. May I introduce you to the management team from Maruti Suzuki. Today, we have with us our Chief Investor Relations Officer, Mr. Rahul Bharti; and Chief Financial Officer, Mr. Arnab Roy. Before we begin, 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 risks that the company faces. I also like to inform you that the call is being recorded, and the audio recording and the transcript will be available at our website. Please note that in case of any inadvertent error during this live audio call, the transcript will be provided with the corrected information. The con call will begin with a brief statement on the performance and outlook of our business by the Chief Investor Relations Officer and Chief Executive Officer Corporate Affairs, Mr. Rahul Bharti, after which we'll be happy to receive your questions. I would now like to invite CRO, Mr. Rahul Bharti. Over to you, sir.

Thank you, Pranav. Good afternoon, ladies and gentlemen, and thank you for joining us. Before we delve into the details of this earnings call, let us take a moment to honor a visionary who has been instrumental in shaping India's automotive industry. In a tribute to our legendary leader, the late Mr. Osamu Suzuki, Suzuki Motor Corporation and Maruti Suzuki India Limited have proposed to establish the Osamu Suzuki Center of Excellence in India. It is proposed to be located in Gujarat and Haryana. It will facilitate the wide propagation of all those Japanese manufacturing practices that have held Maruti Suzuki successful for the past more than 4 decades. I have also a very heartful message that the Padma Vibhushan will be conferred posthumously on Monday, April 28, upon Mr. O. Suzuki. Today, I'll share the overview of the industry sales performance, followed by the business performance of the company. The [ PV ] industry clocked a sale of over 4.3 million units in financial year '25, a growth of 2.5% over previous year. As expected at the start of the fiscal, the growth rate had moderated sharply from 8.4% in financial year '24 to 2.5% in financial year '25. This was on account of high base, confluence of several external factors and affordability issues affecting the growth of entry segment cars. In terms of form factor, the industry saw a continued increase in consumer preference to SUVs and MPVs. SUV shares surged further reaching about 55% of total sales in financial year '25, while MPV's contribution increased to over 10%. However, the share of hatchback segment continued to shrink. In financial year '25, the share has reduced to 23.5% from a high of 46% in financial year '19. In terms of powertrain mix, the share of CNG and diesel power train was about 18% to 19% each. The share of hybrid vehicles was at 2.4% and EVs at 2.7%. Let me also share some of the major business highlights for the company. In financial year '25, the company could achieve several significant milestones. We achieved a historic production milestone of 2 million units in financial year '25. So far, the company is the only passenger vehicle manufacturer in India to attain this landmark. The company recorded its highest ever annual sales of 2.23 million vehicles, which includes highest ever export of 3.32 lakh vehicles, The company continued to be the top exporter of passenger vehicles in India for the fourth consecutive year. We surpassed the milestone 3 million cumulative exports during the year. We hope to continue the momentum in exports in financial year '26 as well and grow by at least 20%. In the domestic market, 7 out of top 10 models sold in the industry were from Maruti Suzuki. In financial year '25, the company launched 2 new models, the fourth generation Swift and the all-new Dazzling Dzire. These products, they've got an overwhelming customer response. In financial year '26, we plan to launch 2 new models: one, of course, is the e Vitara, which you're aware of, and another SUV. Maruti Suzuki Dzire topped 3 million production milestone in December '24. The company unveiled its first electric SUV e Vitara, which we just spoke about at the Bharat Mobility Global Expo '25. Built on the new dedicated ground-up e-HEARTECT (sic) [ HEARTECT-e ] platform, the e Vitara offers superior performance and excellent range with uncompromised comfort and safety. The company accelerated its captive solar power generation capacity to 78.2 megawatts peak capacity in financial year '25 from 43.2 megawatt in financial year '24. I'm happy to share that the company could achieve this target 1 year ahead of plan. In financial year '25, the company achieved a milestone of highest ever dispatches of over 500,000 vehicles through rail mode. With this, the share of rail mode in overall domestic dispatches has increased to 24.3% in this financial year as compared to 21.5% in the previous year. Coming to business performance in the quarter 4. During the quarter, the company sold a total of 604,635 units, the highest ever in any quarter. The domestic sales grew by 2.8%, while exports grew by 8.1%, resulting in an overall growth of 3.5%. Domestic sales stood at 519,546 units and exports at 85,089 units. In the domestic market, the company entered the quarter with a lean network stock. This helped the company to increase the wholesale dispatches and bring the network stock back to normal levels. However, given the demand situation, the company calibrated its wholesale while maximizing the retail sales. As a result, the growth in retail sales exceeded the growth in wholesale. Even for the full year, financial year '25, the company's retail sales grew faster than industry, leading to a marginal gain in retail market share. Rural markets continue to perform better both in quarter 4 and in the whole financial year. In exports, the company continued to maintain a healthy growth in sales volume. In quarter 4, nearly 1 in every 2 cars exported from the country was from Maruti Suzuki. The company commanded about 48.4% share of India's total passenger vehicle exports in the fourth quarter. Coming to financial results in quarter 4 of the financial year. During the quarter, the company registered highest ever net sales of about INR 388 billion as against INR 367 billion in the same period of the previous year. Net profit for the quarter was at INR 37.1 billion compared to INR 38.7 billion in the fourth quarter of financial year '24. On a sequential basis, since investors look out for a sequential comparison, I'll share. The overall sales volume grew by 6.7%. The net sales grew slightly lower by 5.9%, owing to product mix. Sequentially, the operating profit margin EBIT has come down to 8.7% of net sales compared to 10% in the third quarter of financial year '25. There were several adverse expenses. As you may be aware, the commercial production of greenfield plant at Kharkhoda Phase 1, having a capacity of 250,000 units per annum, has started in March '25. Being a new plant, it will take a while for the production to scale up. However, the overheads and depreciation associated with the new plant is getting captured in the P&L. The hit on the margin because of this is about 30 basis points. Commodities largely on account of steel were adverse by about 20 basis points. The mix was adverse by about 40 basis points. The advertisement expenses mainly on account of Auto Expo, the Bharat Mobility show, unveil of e Vitara and IPL, et cetera, were higher by about 30 basis points. The other expenses were adverse by about 90 basis points, largely on account of lumpiness and seasonality associated with expenses such as repairs and maintenance, CSR, digitalization initiatives and R&D, et cetera. These adverse expenses were partially offset by lower sales promotion expense of about 40 basis points and favorable operating leverage of about 40 basis points. ForEx was favorable in the quarter. It is to be noted that the bulk of benefit in ForEx of about 20 basis points is accrued due to hedging gain. And because of the nature of this income, this benefit is accounted in nonoperating income and is not captured in the operating margin. I would also like to flag for analysts that our subsidiary, SMG, has reported PAT, a profit after tax, of INR 150 crores, which includes an interest income on their cash of about INR 650 million at PAT level and some gains due to tax reversals. This is not accounted in our stand-alone PAT, but I thought it deserves a mention. Coming to the highlights of the yearly financial results. The company sold over 2.23 million vehicles in financial year '25. For the company, a modest domestic sales growth of 2.7% was compensated by a healthy 17.5% export growth, leading to an aggregate growth of 4.6% for the year. The company registered the highest ever net sales of about INR 1,451 billion in the financial year, a growth of 7.5% over the net sales of INR 1,349 billion in financial year '24. The company achieved the highest-ever net profit of INR 139.5 billion in the year, about 5.6% higher than the net profit of INR 132 billion in the previous financial year. In terms of dividend, the Board of Directors recommended all-time high dividend of INR 135 per share on a face value of INR 5 per share compared to INR 125 per share in financial year '24. We are now ready to take your questions, feedback and any other observations that you may have. Thank you.

[Operator Instructions] We'll take a first question from the line of Raghunandhan N. L. from Nuvama Research.

Thanks for sharing the impact on EBIT on a Q-o-Q basis. A follow-up on that relating to the other expenses item which went up 90 basis points. This is more lumpy and seasonal in nature, so ideally this shouldn't be continuing in the subsequent quarters? Would that be correct? And also on the commodity side, there was an impact of 20 basis points. And how do you see for the subsequent quarter how much can be the impact of commodity, given that there has been increase in steel prices and there is also the safeguard duty?

Thank you, Raghu, for your question. Let me respond to your other expense question first. As Rahul articulated during the opening presentation, there are a few elements on the other expenses which has impacted, like we had higher profit for the full year, corresponding the CSR expense was higher. There was also some repair and maintenance in some of our lines in the Manesar plant, which contributed. Also, we did a conscious digitization push, and there were some expenses on digitization which came in this quarter and some other miscellaneous lumpy expenses. So that's broadly the composition of the other expenses which is there. Your second question on the commodity. On a sequential basis, so if you look at it, it is predominantly impacted by steel, as you rightly pointed out. So that's, on a sequential basis is impacting on the commodity side.

Sorry, we missed your question on the safeguard duty, Raghunandhan.

Yes, sir. In fact, I wanted to request your thoughts and on a few important topics for industry and company. Can you talk about how you're seeing the impact of safeguard duties, these free trade agreement? Also, if you can talk a bit about CAFE norms and the hybrid potential.

Too many questions. Okay. See, safeguard duty on steel, we are extremely thankful to the government. They have found a way of minimum import price in which they have taken care of both the steel industry and the user industry, primarily auto. We just hope that the steel industry doesn't use it to raise commodity prices in the market. And we'll be monitoring the situation and reporting to the government if necessary. As of now, since our imports are above that particular threshold, so we are not affected directly. On FTAs, there are discussions happening -- there are three discussions happening at the moment. India-UK FTA, India-EU FTA and possible US BTA. So those discussions are being primarily led by Ministry of Commerce, and industry is in consultation with them. I'm sure the government will take a very calibrated call in the best interest of the country and of all industry and economy put together. The third was on CAFE. So we are expecting some kind of finalization of CAFE 3 soon, and industry is in discussion with the government on this with Ministry of Power, Bureau of Energy Efficiency. And they are seized of the matter, they have gone into great details. And I think the we are expecting the policy to come out in about a month or two.

Lastly, your thoughts on hybrid.

What thoughts on the hybrid?

How do you see the potential -- can we expect more launches from your end?

See, we are very happy that the sales of hybrid and the penetration thereof has gone up in this financial year, and some geographies are doing better than others for obvious reasons. And -- but it's an excellent technology. The customer response is very good. And we have also, as part of our CSR, introduced high-voltage courses and ITIs, et cetera, so that the serviceability of such vehicles remains high and customers always have a reason to feel happy. And many more states are responding positively. So I think it's a matter of chance both from all -- from all 3 sides, from customers, from policymakers, from industry. We hope to see a positive push from all 3 stakeholders for this excellent technology.

We'll take our next question from the line of Pramod Kumar from UBS Securities.

Rahul, my question is regarding the profitability because our volumes are -- have hit an all-time high for the quarter. But our EBITDA and per vehicle has kind of hit a 7-quarter low or almost a 2-year low. So how should one look at profitability on a per vehicle basis. I understand the percentage will get impacted because of the new plant being ramped up. But if you can just help us understand how should one look at the margins in the near to medium term when there is seasonality vehicle demand on a sequential basis. So how are you looking at profitability in terms of absolute vehicle per -- absolute EBITDA per vehicle or EBIT per vehicle, if you can share your thoughts on that.

See, Pramod, it's always very difficult to predict margins. It's the resultant of many, many factors. The volume is easier to predict. Margins depend on several factors. But what I can share with you is Maruti Suzuki has far many more levers than any other car manufacturer in the country to handle any kind of headwinds or any kind of impact on margins. So if you compare with other companies, in the other companies' best of times and Maruti's lowest of times, we are probably doing better than others. So we have to keep that in mind. And one phenomenon that we have to be conscious of, that the demand -- overall demand is not growing. And a large part of it is, as in the press conference, also our Chairman mentioned, that 88% of the country is not participating in the car growth story. That's because entry-level cars are just not growing. So we have to be conscious of that fact. And sometimes India will have to take a call how to address this, if manufacturing has to grow. Auto is a large part of manufacturing sector. So this has to take care of. One qualifier I'd like to put, one of the levers that I talked about was exports, and we have been talking about exports for a long time now. Fortunately, when the domestic growth is in very low levels, exports has cushioned the decline. And we hope to grow exports in a healthy manner in the future also in the medium term. Similarly, we have levers on decarbonization. So our cost of carbon reduction will be -- should be lower than others.

So Rahul sir, you talked about predicting volume has been easier. So how do you see the domestic volume market? Because you did talk about weaker demand. Maybe just quantify what does your economic model suggest as potential growth for the industry in FY '26? And also on a related note, exports, is it fair to assume that we should still aspire to do double-digit growth despite the global macro situation? And yes, thanks to the kind of order backlog we have on Jimny, so is double-digit fair expectation for FY '26?

Not just double digits. We mentioned an outlook of 20% growth for the coming financial year for exports.

That's good.

I took your second question first. The first one was on -- the first question?

Domestic growth, sir, as per your macroeconomic model.

[ Industry has ] forecast a very modest growth of between 1% to 2%. We should be doing better than that, and we have a couple of SUV launches this year. So of course, a lot depends on the -- how the whole organization responds to the customer. So we look forward.

And sir, a final one from my side. If I look at the opening remarks from the CFO, sir, and you, there has been some lumpy or seasonal items in the quarter. So if you were to all put together, how -- what should be the quantification of that [indiscernible] look at next quarter? Because next quarter, we'll also have seasonally weaker volumes. So I'm just trying to understand, how does the lumpy items kind of -- how much of that we kind of are able to shed in the next quarter to kind of offset the operating deleverage? So if you can just help us understand the one-off nature in 4Q in totality.

So if you see the opening remarks which Rahul did, there was a combination of positive and negative factors. So I think it will be fair to count both the positives as well as the negative factors. In terms of the factors which contributed downwards, as we articulated, there was a lumpiness on the other expenses. And I -- me and Rahul both quantified that, which is about 90 bps. But at the same time, there were some positive factors also, like the sales promotion was lower by 40 bps. So that also, we have to kind of take into account. Also if you see this particular quarter, the mix was slightly because of the smaller cars was lower, about 40 bps, which we again covered in the opening statement. So these are the 3 factors broadly we have to see on both sides, and that's how we have to take a calibrated view. It's not just we can see only the negative ones.

We'll take our next question from the line of Binay from Morgan Stanley.

Just taking on this point about mix being a 40 basis points or so headwind. Could you expand a little bit? Does it have to do with exports also? We saw export share being down this year. And if you could also share the CNG mix this quarter and last quarter. That's the first question.

So I think it has more to do with the smaller cars and the SUVs. So the hatchbacks actually moved. And there was an year -- you're referring to the quarter 4 or the whole financial year?

Just for fourth quarter. Like in your opening comment, you added that mix is a 40 basis point headwind. So I assume that you're mentioning sequential headwind of 40 basis points due to the mix. Because one of the things we see is also export share dropping quite sharply quarter-over-quarter, export share coming down. So...

So on a quarter basis, yes, you are right. There is a little bit of a lower export. But as we said, overall, if you look at the export outlook for the full year, we did a 17.5% higher than the previous year. And as Rahul said, for next year, also the outlook looks quite buoyant. We are projecting about 20%. So export is really not a thing to get worried about. It's actually positive. In terms of the car mix, yes, in this particular quarter, the small cars were lower, so which is kind of contributing to the adverse mix. But going forward, I mean, I think we'll have to observe the market and see -- I mean, we can expect a more calibrated mix going forward.

So another way of asking this question, next year, export as a percentage will go up. So is that a favorable mix for you or neutral, negative, positive?

What we have to look out for are more the segments within the domestic market. I'll give you an example. For quarter 4, SUV share sequentially came down from 39.7% to 36.8%, the UV share for Maruti Suzuki for quarter 4 versus quarter 3. CNG came down from 36.1% to 33.7%.

Okay. So CNG was also down.

Yes.

So in a way -- so all these three mixes in a way were moved adversely for you. Exports was down, small car share went up, SUV was down and CNG was down. So -- but in your view, mainly the domestic is defining the gross margin changes rather than exports share.

So this is the data that I shared. In fact, mini cars went up from 6% to 7%. Compact went up from 39% to 42.7%. So let's be conscious of those changes.

And secondly, we talked about a new plant ramp-up having some headwind. But is there any cost item which will not repeat next quarter? Anything which has to do with starting the plant? Because we understand staff and all will be more linked to ramp up of plant. But is there anything linked to this, which is only specific to the first quarter of a plant starting and won't repeat in this 30 basis point headwind?

Some part of it, obviously, since the plant started in February. So first 2 months, there is cost but not sales because it's the first 2 months. So going to the next quarter, you will have both sales and costs. So it will normalize as we go, and the gap will kind of even out as we -- and the plant is going to ramp up as we progress in the year. So yes, but this is something which, as [indiscernible] sir also said during the press conference that we are constantly keeping a watch how the capacities are moving for next year.

And just last one, will 7-seater Grand Vitara qualify as a new SUV in your view? Or is that a variant?

We keep hearing about such concepts and models about ourselves from the magazines and from analysts. So let's wait until the time comes. I have not heard of a Grand Vitara 7-seater internally at least.

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

Just sort of just going back to the margin queries. I know there have been quite a few. But this plant-related cost, just to be clear, the entire cost for the quarter has been taken into account, right? We shouldn't be looking for any increase from this INR 120 crore-odd number that we've accrued in this quarter?

See, whatever cost has been incurred in the next last 2 months, that has been taken into account. That's the right way of accounting it. As I said earlier also in the previous question, going forward, the plant will also start producing vehicles and selling vehicle. So there will be a more normalized effect of that as we go into next year. Of course, too early to say with the demand situation how exactly will be the capacity utilization that only the coming quarters will say.

No, sir, I was just trying to understand because it was -- you [ commissioned ] middle of the quarter. That doesn't matter. We've accrued the cost for the entire quarter, right? That's the fair conclusion then?

[indiscernible] we have accrued the costs. Cost will obviously start from when you start incurring the cost. From that point, we have accrued it.

Okay. Got it. And just another one on the cost side. Now we did see some RM pressure in this quarter coming from steel. But it looks like there is more to go given the safeguard duty and generally the increase that we've seen in the HRC prices. Is there anything that you can give us a sense on what sort of headwind is -- can come through on the steel side? And a little bit on the price hikes that we have taken. We had two announcements, one in Feb and then in April. What does this mean in terms of blended price hike? Did it reflect -- any of this reflect in quarter 4? And how much will it be for quarter 1 of fiscal '26?

Okay. First, let me answer your commodity part of it. I think as we clarified earlier also, thanks to the government safeguard for the grade of steels which we import, there is no significant direct impact. So that answers your first question. Commodity movement, yes. I mean, we are keeping a very close watch because we are all in a volatile world today. So we are keeping a close watch on all the commodities and progressing accordingly.

On the price increases, let us be just conscious that it is to offset cost. So there is no net effect. We try to offset cost and we pass on the rest of the -- to the market. So it is -- whatever cost is being incurred is being passed on to the market, most of it.

Okay. So the -- I mean, of course, the blended price hike would, on an aggregate, would be much lesser than the range that we announced. So I'm just trying to understand, is there -- can you quantify that blended increase? And I'm also -- the reason I'm asking this is there's also improvements that you're doing, like you called out 6 [ share buys ] in every car. So are these price hikes to cover up those costs? Or is it just the normal course of annual hikes that we take?

See, there are two parts to your question. One part to your question is what about regulatory hikes. The regulatory hikes, as we have clarified before also, it's a pass-through. And we will keep doing the pass-through. So that's one part of your question. And the rest of it, I mean, if it is a forward-looking, see, forward-looking, we won't be able to comment at this point. All we can say is that whatever is the regulatory hike, that will be a pass-through on cost.

Okay. Got it. And just second question on e Vitara. Can you just sort of refresh us with the time line? When do we see the domestic volume, say, launch? And again, on the export side, when do we see the exports beginning? Any time lines on price and [ rail ] and exports on e Vitara?

So today in the press conference, we mentioned. But we hope to do the start of sales within the first half of the financial year. And this year, we expect to do a volume of about 70,000, a large part of it coming from exports.

Okay. Got it. And can you just share the details for the quarter, the normal housekeeping numbers, retail and rural and urban growth numbers if you have them handy?

We'll come back to you very soon. Until such time, we'll take the next question.

We'll take our next question from the line of Jinesh Gandhi from AMBIT.

My question pertains to a couple of things. One is on the discount side, can you share the number? And secondly, when we talk of increase in cost because of new plants, our employee cost doesn't seem to have increased much in the last 2 quarters. So would there be further increase on that side? Or this is a reflection of the new plant as well, what we have seen in this quarter on the employee side?

See, if you look at on the discount of the sales promotion part of it, sequentially, quarter-on-quarter, we have a 40 bps benefit, which is reflecting. On your employee cost, I think it is more as a percentage to sales. It's stable. I don't think there is a major variation in that.

Right. That was my question. So is that going -- we will we see a step up there? Because it's a fairly large plant and then a new location. So should there be increase from where we are in percentage of sales on absolute basis?

I answered that question before because the volumes are also expected to come from the new plant. So...

Okay. Got it. And lastly, what kind of CapEx do we expect for FY '26 as against INR 10,000-odd crores at consol level FY '25?

Again, we answered this question during the press conference. So this year, our CapEx has been in the range of about roughly INR 8,400 crores. And the range we are expecting for next year is between INR 8,000 crores to INR 9,000 crores. So that's the range we are expecting.

This is including SMG or excluding SMG?

This is including SMG.

We'll take our next question from the line of Chandramouli Muthiah from Goldman Sachs.

My first question is just on capital allocation. I think we have potentially more than INR 60,000 crores of net cash on the books, almost 20% of our market cap. So just trying to understand over the next 2 or 3 years, are you thinking about returns to shareholders as a potential use of this cash on the books just in terms of your shareholder return and total return strategies?

So you would have seen our announcement earlier when we announced our results. So this year, we have a high stable dividend of INR 135 per share, which has been stepped up compared to INR 125 per share in last year. So that answers part of your question. On your bigger question, I mean, see, we have to keep looking for the market scenario and then decide accordingly. I think difficult to give a straight answer at this point. We'll keep looking at the scenarios.

Got it. That's helpful. My second question is just around the product pipeline for the next few years. You have said that you want to get to 28 models by the end of the decade. And there could be some consumption stimulus over the next couple of years in the form of the pay commission, both central and state pay commissions over the next 2 to 3 years. So just trying to understand, the previous pay commission, we had the benefit of the launches on Baleno and Brezza, which really helped the company's growth. So over the next 2 to 3 years, is that sort of compact SUV segment, maybe premium end segment something that we focus on in our new product launch plans, just to take advantage of some of the stimulus measures which might benefit market growth over the coming cycle?

So if there is a similar kind of increase in what the government had done as in the past, of course, the consumer response is expected. And yes, it favors those kind of segments, the compact car segments. So the quantum is -- remains to be seen how much is the quantum that happens. And the scale also, is it just on central and state government or extended quasi-government sectors also, PSUs, that remains to be seen. So of course, consumption goes up when such stimulus comes from the government side.

Got it. That's helpful. And lastly, just a housekeeping question. I think the retail number for the quarter was asked earlier, but just also wanted to check if you could share the export revenue and...

Sure. The retail was 400,000 units. It was in the fourth quarter. It was a growth of about 4.2% year-on-year. And on the whole year, we could grow our retail market share marginally. And we would also like to share that very soon, both as industry and as Maruti, we would prefer to shift to retail reporting because that's a true barometer of consumer activity.

Got it. Just the export revenue and the royalty number, please?

Export revenue was about INR 5,500 crores. Royalty, we have mentioned. It's around 3.5%. Gunjan had asked about the network stock. So we closed the financial year with about 28 days stock, which is quite healthy.

We'll take our next question from the line of Pramod Amthe from Incred Equities.

So the first question is with regard to sourcing. Post this steel protectionism or similarly the trade barriers which are going up in the globe, how do you looking at the sourcing of your current product mix? And also going into the EV space, any relook at the dependence on one nation, how you plan to reduce it over the next 3 to 5 years?

See, steel, we are fairly localized. A very large part of our steel, between 85% to 90%, is local. And none of -- the safeguard duty that was applied was neither on our purchases or our vendor purchases. So there was no direct impact, and we thank the government for it. I -- we just hope that the steel industry doesn't use the opportunity to raise commodity prices in the market, and we'll be monitoring that, I mentioned that earlier also. It's very difficult to predict the way the global -- the tariff wars and all, everything associated with it is going. But one thing that we have to watch out for is the supply chain for rare earth elements, and we'll keep a close watch on that. So far, by and large, things remain stable, but it's a dynamic situation as all of us know.

Okay. And the second one is with regard to the new plant which has come up. How do you see it playing out in your overall scheme of production planning, one? Second, similarly for sourcing arrangement within [ amongst those ] plants, what's the benefit it can bring on to the table?

So obviously, the economies of scale will accrue for all plants put together. The sourcing is common for all the plants, for components, whether they are used in Gujarat or Haryana or within Haryana, whichever plant. So economies of scale benefit us. In terms of production planning, increasingly, we are making our plants more flexible so that more lines can manufacture more models. And we are also taking care that the newer lines that are established can manufacture EVs also. EVs are, as you would be aware, they are far more heavier vehicles because of the battery weight and the bodies tends to handle that weight. So there is some difference on the production line on that account, but we are making it flexible, whether it is in Gujarat or Kharkhoda. The utilization is something that we have to closely watch. And the operating leverage associated with it, that is something we'll be watchful of.

Sure. And the last question, Rahul, is with regard to as EV comes into place this first half, how are you looking at its, I would say, the overhang in terms of profitability? Or it should be a headwind in profitability in the short term, one. And -- or should it be -- because it's export-oriented, you should be able to position it better and limit the impact? And second, how are you trying to mitigate this as it gets more and more domestic volume-centric on the EV? Are there any levers which you're looking at next 2, 3 years to neutralize it?

See, we have to be conscious that, by design, EVs will have a much lower profitability. And that's true for the entire industry. We can't expect EVs to have the same level of profitability as IC engines. And if they were, then the government probably doesn't need to have a 5% GST or so many schemes also many support policies on that. So we have to be conscious of that. Having said that, our efforts on decarbonization will be through multiple technologies, and we'll try to leverage all possible technologies to reduce carbon to supplement our EV efforts. Exports will obviously help us a bit as compared to a stand-alone domestic scenario because you get better economies of scale. And you may get some pricing power in some markets or others. So it remains to be seen.

And what's the progress on some of the PLI schemes which you have applied? Can it benefit you go as you go forward? What you expect there?

See, the government assesses the PLI after SOP because then only is your data getting verified. So it is slightly premature to be able to take a guess on PLI eligibility.

Thank you. Ladies and gentlemen, we will take this as the last question. On behalf of Maruti Suzuki, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.