TVS Motor Company Limited (532343) Earnings Call Transcript & Summary

Morning, Kevin. How are you?

Morning, morning.

Doing my best. Morning. Would have loved to do this face to face, probably at some point, probably fly over and meet for the first time.

I think the big question I have about TVS right now is how we want to address the EV opportunity. I think I've been looking at TVS and how they have managed -- how you guys have managed to take market share in scooters, bikes, and transition yourself, right? Margins were up when your volumes were down and raw material prices were up and we had very tough times over the last 1.5 years in terms of cost run and we are able to deliver margins. So I'm just trying to wrap around -- there's probably 2 issues, right? The big 1 is how we're going to address the EV opportunity. And from whatever I know EVs are actually margin dilutive. So from that perspective, how we think about margins over the next couple of years as we address the EV opportunity?

So I'll start with EV because that is a question you wanted to understand. The most important thing is we did start the EV product development. The biggest strength of TVS is a very strong design and development and -- completely. And we look at the customer, any [ discretion ] we give the customer we have to set in place. iQube is really, really that -- the first product we have come out. And of course, you would have seen the new announcements from iQube. Now iQube comes with 3 variants, including the iQube ST. So before coming to that, what is most important as well is iQube feedback in the market is we have presented in 33 cities. Excellent feedback from the customers. And on that month, the booking levels are going up, okay. Now we have more than 12,000 bookings at this point of time. The challenge has been the semiconductor issues and ramping up. We have been actively engaged with even Tier 1 and Tier 2 of the semiconductor companies, and we are also -- they are also understanding, we are also understanding. So I'm pretty confident that soon, we will reach the 10,000 mark and then go beyond. What is most important is we work as though completely the new vehicles are going to be EVs, which means we have to have a series of products, which you will see in '22, '23. We have invested behind that. And this will be based on different customer segments. You can take the analogy of our Scooty then coming to Jupiter and NTORQ. And even NTORQ, you have 110, you have 125. Then you have various limited edition models with so many features and different price points. Because at this point of time, I can't give you exactly what type of products and different customer segments we'll be launching in this year. We will have a complete portfolio of 2- and 3-wheelers in the range of 5 to 25 kilowatts, all of which will be in the market in the next, in my opinion, about 7 quarters to 8 quarters. Already, you have seen the new iQubes. At any point of time, when people are visiting Bangalore, we'll come share, we can show you and we can spend some time. You can see how the company, why we are focusing on EV, how we are completely transforming the existing facilities into EV. The vision of electrification, we are also in addition to the product design and development, many things. For example, in iQube, motor controller, the IBCU, completely designed by us along with other suppliers. Some of them, we tell our suppliers to manufacture it. So the key differentiation vis-a-vis competitors is that the value add comes not by buying or importing some assemblies and keep them assembled and then give it. If you have really, really positioned yourself and delivered something new to the customer, you need to have the complete understanding of the design and development capability within you, okay? And that is TVS. We also have, in our vision, a wide and reliable range of charging infrastructure for EV customers across India. We have collaborated with Jio-bp to access its widespread charging network for its customers. Also have Tata Power and CESL networks. Primarily, this is evolving. So you may not be able to completely predict the customer behaviors. Today, if I look at iQube, majority of the customers are doing home charging. But tomorrow, I think things could change. So we should be prepared. On 1 side, you do whatever is your understanding, you're learning from the customer side. On the other side, you invest in the bigger infrastructure in terms of charging and other areas. At this point of time, I agree with you. iQube, first version, that was the starting point. But the second version, we have moved to 21700, and we have very clearly understood cost drivers. The first focus on the company is to really drive the customer satisfaction, get the best customer satisfaction and customer delight on the electric products because the kind of features, connected features, 7-inch TFT clusters, UI infinite theme personalization, voice assist and intuitive music control. I think many of the young customers look at digital -- completely digital. Whatever -- they get it from a smartphone -- they expect the same things from the EV. And of course, the traditional customers look for the undersize of the scooter. So you need to balance. On 1 side, you have to give to the new customers. On the other side, for example, 32 liters of the space, storage space. Actually, it is there in 125 Jupiter whatever we have to do. But these 2 platforms are different. Many times, people think that they have the same platform. No. EV is a completely new platform, and we are designing and developing that. So you will see a lot of investments with respect to digitalization and also connected clusters, voice assist. Many of the aspirations of the end customers who look at practically a smartphone [ or leaf, ] that kind of a thinking. So at this point of time, iQube to these version, we are improving in terms of the small profitability. It may not be still profitable in line with that. But I'm pretty confident, once you get the customers happy, delighted, once you get the ramp up -- because, today, ramp-up is the problem, not sales. The demand pool is so huge. So first, we have to deliver 10,000 and then we have to go to 25,000. So once the volume starts coming in. Volume, why I do say that is when the volume is there, it is good for the company, it's good for the dealer, it's good for online. It is good for the customer. It is good for the back-end supplier because every cost depends upon the volume, okay? So I am pretty confident that in the next 24 months, you will see EV also becoming really profitable. What is most important is, the toughest portion we have got it right, which is customer delight and happiness. The second portion we are now trying to get it right, which is the ramp-up and managing the semiconductor suppliers. You will see the same thing in terms of the 3-wheeler because we are coming up with a brilliant model, again, looking at the customer usage and the behavior and how it is going to be differentiated with the current 3-wheelers, which are available. So this is broadly -- and please understand, with these products, we can go to every market in the globe every month. And for your benefit, already BMW has announced, you would have heard that the new platform completely EV, a cool vehicle, we have designed and developed for them for the global market, for us also for the global market. I may not be able to share more information on that, okay? It's not only in scooters, there are plenty of series of products that will come as though the EV is already 100% in the market.

Sorry, just to clarify that, you're saying -- sorry, can you hear me clearly?

Yes.

Just to clarify that, we are -- we have already developed 2-wheeler product platform for BMW.

I didn't say that what type of product. I said it's a cool 2-wheeler. That's what I said.

Okay. Cool 2-wheeler product.

The design is completely ours, okay? Conceptual thinking, the design, everything working with them, okay? It's completely co-created. But this time, the entire design responsibility is taken by TVS. And they will have a platform of products and we will have a platform of products in the EV space, okay?

Yes. I recall that the relationship then was they were looking for you as a partner, right, to manufacture. So now it's actually adding that design element in the...

Absolutely, absolutely. Now you have understood, completely understood. Earlier platform was their design was theirs, but development and manufacturing was ours. Now the design is also ours. Complete responsibility of design, development and manufacture. So I can proudly say that completely, completely designed and developed and made in India for the global market.

And BMW just white labels it and put their blue -- their badge on it.

Yes, but their external styling and design will be different. They will have a character. Others will be different, definitely different. That will be TVS and they will be BMW.

Okay. Okay.

What was the second question you had?

Going back to the EV one, I think you mentioned product design and development strength of TVS. But maybe I want to go into more nitty gritty details on that front. A little bit of context,, when I look at some of the EV companies in China, right, to a certain extent, all these start-ups basically just find component suppliers, package them together, right, and say, we've got an EV, right? This is a 4-wheeler, which is relatively more complex product. So when I think of it in a 2-wheeler context, right, I think it's even more simpler. And we can see that in India, right, where we have tons of people shipping in kits, right, from China and then just launching a brand and it's so fragmented. So if I want to go into the nitty-gritty details and say, what is it that we do, right, internally that's proprietary to us, nobody else does it that makes our product different? Or at the end of the day, it doesn't matter, right? It's just the TVS brand, your distribution channel, your manufacturing, the traditional bike manufacturing competencies, right, that would make an e 2-wheeler manufacturer successful?

Brilliant question. I think the same challenge we had -- I'm taking it as an analogy when we went into international market because we really intensified our international market journey only after we came out of Suzuki in 2003, 2004. Unlike many of the Chinese or many other players in the industry, the first thing we said is, we have to take care of the customer starting from the first service. Okay? Normally, in a typical 2-wheeler IC, the first service comes after 15 days, even okay? About 5,000 kilometers when you ride, the service is around 1,000 kilometers. 1,000 kilometers, even if somebody writes let us say, 50 to 60 kilometers a day, it will be in the 15th day or 20th day. So we said, unlike others, we will have proper service facility, proper spare parts availability. And in fact, we sell the spare parts much ahead of the product itself to the international market. Since you asked what is the difference between others and us is -- we design and develop a durable product. But what is most important in a 2-wheeler is the service, because the first service comes after 20 days. And that time, you don't have the right oil, kind of checking facilities, and trained mechanics -- all these are simple things, but simple things, mostly people don't execute properly. And you have to do it with every customer, every point because that gives the confidence that, yes, wherever I go, TVS service centers will be available. Now coming to EV, I think what is most important is we have to really understand the customer usage and whether it is a battery -- whether it is a BMS system or a control unit or IBCU, or motors. I think these are all -- each 1 has got a particular character and you have to integrate it properly and based on the customer usage. And please don't underestimate the temperature, how it will be managed in different, different temperatures within India. Because India varies from market to market and the usage also. And it's not that everywhere, it's a very nice road and good road, it's a combination of all types of usage. And even in EV, I think customer usage maybe after some time when the common man starts using, the entire family will go. So for him, technology is not important. The most important is its usage. The entire family of 4 will go in a 2-wheeler. It should be able to go on any road, good road, bad road, any flyover, any type of usage, carrying load. At that time, we can say no, no, this is a light vehicle, yes. This is EV. In China, it is like that, no. And also the durability. India people use it for 7 years, 8 years and even they continue. So that's why I said, country by country, you have to look at the customer usage, customer dispatch. So it's not just buying some kits, assembling it and giving it. Maybe initially, there will be a lot of customers looking at it and buying it. But I'm very sure in the next couple of years, we will -- many customers will come back to those manufacturers who are focused on customers, who are focused on durability, reliability, who stand in for any kind of customer service. Okay? This is 100% going to happen, Kevin.

But if I were to go to some of your peers, right, the leading incumbents OEMs, they would probably say the same thing, right? When they design a product, they start off with local conditions and build it upfront.

I don't comment on my competitors, the startups. Each 1 has got a strategy, okay? And some of them may be successful also. I don't [indiscernible]. But what I know about TVS is you should be able to completely design in-house. Then only you can give new technologies, whatever is available in the international market, whether what you see in smartphones or what would you see -- because this requires huge thinking. You cannot just buy some kits and you cannot be at the mercy of somebody from China or any part of the world just to assemble and give. You will not be able to provide any innovation and technology. And please tell me why should they give it to you? If it is such a super technology, why should they give it to you? Because this is going to be used in a typical 2-wheeler. They will look at, let me sell it to car. But please understand the voice assist, what we have designed and developed, it costs money. It costs money. And tomorrow, somebody will say, I can give you a great example, the initial navigation to our connected cluster today and tomorrow's [ connecting host ] are completely going to be upgrading to the customer maybe equal to a smartphone. That requires a lot of design and development gains. Already, we have about 600, 700 engineers only working in this area. That is what is going to be the difference with respect to any of the competitors what you are seeing, who come as a startup and just buy something and assemble and give it to the people. And please understand customer expectations come not necessarily from 2-wheeler, EV 2-wheeler. It comes from their online experiences, digital experiences, connected experiences in the smartphone space or any part of the world. If it is a techy company, if it is a techy customer, he will be traveling and he will say in this country, I saw this experience, give me that.

Yes. Okay. Okay. A lot of what we have mentioned is actually very good where we are dealing with some of the intangibles, right? User interface, product design, and a lot of this actually depends on the user experience and ownership experience at the end of the day. But from upfront, right, to hook that customer to say, just like our iQube, right, where we are now at 140 km range, right? That spec would make a lot more people excited, right? There'll be a lot more people say, "Oh, Ola is at 100 and TVS iQube is at 140, I should go and have a look at that." Do you have some of these more tangible metrics that can help hook the customer ahead of time, right?

I have only 1 request. I always believe and I respect competition. But more than respecting competition, you have to look at the customer. For example, when we gave iQube, we have given about 75 to 80 range, okay? Honestly, only 5% of the customers use that. Now I can talk because I have more than 12,000 bikes on the road. I get all the data. But I agree with you: what they use and what they want are different. So it is not that everybody wants 140 or 160. We think that let it be there. Let the range be there when I travel some and so. But please understand, we have to look at what is the real customer usage because after some time, the same customer will say, "I don't want 140. I don't want 160, give me 100. Even I'm okay to have 80, but I want these features and preferably this price." So this is something like a trade-off, Kevin. That's why we have the 3 products now. You want this? You take that. You want this? You take this. You want that overlay? You take it. And we can also suggest, for example, if somebody is a housewife, she wants to buy a scooter iQube, we strongly recommend her to take the minimum range because she will use to pick up the children or go to the bank or do something around let's say, 10 kilometers. She will never ever use -- many of our customers we studied, we saw that recharge only once in 4 days, okay? Whereas if somebody is self employed, I'm very sure, okay, there are many more customers who are self-employed. They will also look at EV. They may be traveling from space to space, they may be requiring something like 70 kilometers, 80 kilometers. Such people will say that they are trying 140 and see whether you can really, really use it to your full extent, okay, or charge once in 2 days, okay. So this is also something as a responsible company, we should guide the customer. More than looking at competition, we should use the prospective customer behavior through analytics and digital. And then say this profile of customers suggest on this, okay, or monitor them and advise them this is the way, this is the best for you. For those set of customers, we say that this is the model which best suits you. It helps them.

Maybe I push this a little bit more and try to understand. I was using ranges like a hard metric, right, that the customer can use to make the decision upfront. Because as we know now, there are only a couple of products on the market. And to be fair, it's very hard to differentiate, right? Do you have something that's up your sleeves, right, be it your touchscreen, your digital applications, software, that would really differentiate compared to...

Just hold your breath.

Maybe the first 1 is to...

Just hold your breath, okay. Maybe after 6 months when we catch up, we will say, okay, now I've got the answer. Today, I may not be able to share with you, but I can give you -- that's why I brought the analogy of the kind of products we have launched, whether it is an Apache, whether it is an NTORQ, the kind of new variants we have given, the kind of technology we have given, okay? I gave you that analogy at the beginning -- you will see in this space, okay? For us, iQube is the starting point, but iQube is not the end of everything okay? You will see definitely aspirational, much more aspirational for very young guy. He will say, wow, something I never expected. This is fantastic. You will see that, and that may happen this year.

Okay. The killer app, if I were to say, for Tesla, was their full self-driving, right, the autopilot like they like to call it, although it's not a lot now. And this -- the investor community then thinks about Tesla like a software company that at some point, they are going to monetize the software in-house and then develop an entire revenue stream. So when I think about the 2-wheeler space, I think it's going to be impossible to do auto self driving for...

No, no. The other portion, what you said is absolutely right. We are investing quite heavily in the software side. I think many things is going to move into the subscription model because that is going to give us huge benefit because every time as we understand, Kevin, always there will be 5% of the customers who want something new, completely new. Because they want to really show off, okay? That is a product you will get it in -- I don't want to guide you again this year, okay? And it has got all the things what completely differentiates TVS vis-a-vis competitors.

Yes. So if I were to just use that mindset, right, that Tesla has over-the-air updates, right? I'm sure we are doing...

You will see what you have seen in Tesla in a related 2-wheeler context from TVS, I promise you, in the next product.

Okay. I was going to ask, are we going to do something that the world has never seen before?

You will -- kindly I would just say -- hold your breath is what I'd say.

I will suffocate.

No, no, you will not suffocate because I'm not going to make you wait for 2 years. It will happen this year.

Okay. Fantastic, fantastic. It sounds like a very exciting opportunity. So I can get from you that your mindset -- I guess you had enough investors asking you, you're a profitable company and you're going to shift to something that launch a product that's not profitable, and you're going to start bleeding on that front, right? That's one. And you're going to have to -- I think the next question I have is how are you going to fund some of these expansion plans in terms of CapEx. So 2 questions there. The first 1 is basically, are you comfortable having reached high single-digit margin, and now you have to turn back down, number one? And if that happens, right, there's going to be a lot of investments required into software, into new capacity, into batteries. And maybe on the batteries front, I may want to find out what are your -- what is your thinking about? Do you want to make your own batteries as well, right, to go being vertically integrated and having control of the entire supply chain that you'll always like to do?

See, most important, what I told you in the first line and the second line is very, very critical. I can again take an analogy, when we went to Indonesia first to make sure that it is almost 99% a Japanese market, first is to succeed in the mind space of a customer and then start selling more and more. Today, please look at Indonesia last couple of years, we are profitable. And this year, the volumes itself are likely to be more than 100,000. So the most important according to me is get the customer delight number one, and then volumes, grow volumes. I'm very confident that this year, we will exceed in 2-wheelers more than 25,000 per month. That is the type of numbers we are looking at and also 3-wheelers, significantly. For that, you will have this range of aspirational products coming from TVS. These 2, the models we've got, I think -- along with that, the losses will come down, the contribution, the gross margin levels will go up, okay? And please understand -- all these developments are in-house. So we know the drivers of cost. Very, very critical. The difference between when you just buy out the technology from outside, he is not going to share the cost even when the volume goes up. Because you are investing in your own design and development, you know which are the cost drivers. And you know how much you can squeeze which area. So I'm pretty confident that you will see profitability coming up in a big way in the last -- next 24 months. That's why I'm using the word 24 months. Most important is to get these products into the market and market customers saying that, "Wow, this is brilliant." That is exactly we have done in iQube, and you will see the most aspirational product coming in this financial year. So that's why we are not postponing. We want to deliver it. And that will create the kind of capability and the technology prowess of TVS Motor, okay? And that will drive the cost. And on the supply chain, please understand this is the time to really get the product right and the customer right and the volume right. Now cell, at this point of time, BMS is ours, battery management system is ours. The entire software [ related, too, is ours, ] but the cell we buy from outside. Once we get a volume, Kevin, the next question comes, should we make it inside? Should we invest in that? Today, according to me, a little far away we have to think about it. Not today. For example, today, the approach has been BICU, we design and develop and tell some of the partner suppliers to give it to us. The 7-inch, 5-inch all are our design, very good supplier who is partnering with us and delivering with us.

Who is the battery supplier that we're working with now? Korean, Chinese?

No, no. We are not in Chinese, that I can tell you. Durability, reliability, customer delight is always TVS Motor's most important motto on battery system. Then on EV investments, we have already announced a separate subsidiary. That is going to give us a lot of flexibility. But I am of the view, we want to have even these capacities and this investment is very productive. But any new business, whether it is Indonesia, whether it's 3-wheeler, it has taken a couple of years to really, really start the profitability to come in. Similarly, I don't see the EV completely different to whether we go to Indonesia or we go to 3-wheeler business because every business requires an investment. EV also is an investment. We don't look at it as a cost and somehow we have to make money tomorrow. That approach will definitely look at, okay, by company from outside somehow sell some numbers, no. That's not TVS. We look at sustained business success -- and we want to assume that these products, unlike the ICs, they are all available even for developing markets and developed markets globally.

Sure. I think a lot of this is also in your -- how you can manage your margins, right? If you really want to go ahead, are you comfortable letting your margins come down sharply? Or you want to manage it such that financially, your profits and profitability will hold up?

We will manage our margins pretty well. I think on your opening remarks, you said it yourself. Despite a lot of headwinds, okay, consistently delivered margin in a sustained way. We have not -- we had a lot of challenges even last year, last quarter, this quarter, on in IC also some of the premium products, we don't have semiconductors, but we managed. And on one side, a lot of raw material cost increases, unprecedented. Unprecedented means really unprecedented. But we have not panicked saying that, oh, all this material cost increase, we have to push into the market. No. Always grow ahead of the industry, okay? And make sure that your distributor dealers and suppliers are happy, you are happy. Then look at all the lines of both variable cost and the fixed cost. So it has been -- last couple of years has been very, very prudent cost management, profit management and a combination of all this has delivered the profit. And I'm very sure the same approach we will use it in EV.

Maybe on that comment I made, right, where you delivered high margins, any 2 or 3 big initiatives or anecdotes that you can share, right? Just to let me crystallize what we have been doing internally?

I'll divide it into top line management and cost management. Because in the top line, please understand there are premium products where the pricing opportunity is much higher and you get better margin. When I say premium products, the products include Apache, NTORQ and variants. See, one of the brilliant examples is Jupiter. When we launched the Jupiter, we had only 1 basic model of Jupiter, okay, and it was positioned against Activa. But we saw that there are very aspirational customers. So we developed something called a ZX version. Then we've made a Classic version, then we made a Grande version. And all these are priced much, much, much higher based on the kind of inputs on the technology. But pricing-wise, gives you a better and better margin. And today, last quarter, 50% of our Jupiter sales has come from the variants which are on the aspirational side. So by focusing on premium products, by focusing on the mix, that itself can improve your margins.

Also international business came up.

Then comes international business. You look at international business, international business, practically, you have a huge opportunity and benefit, and we were doing 40,000, 50,000, now we are 100,000 consistently month after month. And there also, we have a combination of 3-wheeler and Apache and also, many of the products like NTORQ which are doing extremely well in this market. And I want to bring your attention that 6 months back, we have provided Jupiter 125 -- brilliant product. Both works both in India very well, high margin and also very well in the international market, okay? This is on the top line and the product mix and country mix kind of a strategy. And if you look on the material cost, significant focus on the material cost, how do we commonize platform? How do we look at the part [ tower ]? How do we look at -- we had only 1 or 2 suppliers. With the volume going up, we brought in a new supplier. And always, we get an opportunity when a new supplier comes, there is an increment, you can also tell them look, I'm getting so much of cost reduction. It is leveraging the volume, okay? And systematically, we looked at the weight, we looked at the platform production. We looked at alternate material, okay? There is a very clear strategy of without devaluing the product, without affecting the durability, how do we cut cost.

Any more such runway down?

Huge opportunity. This is not 1 year. This is not 1 year. I think it is a very systematic approach. You keep looking at alternate material, for example, it's a huge opportunity, Kevin. They may integrate a design, you may have 10 parts in a [ subversively ] you are able to come up with an idea with 5 parts. The same [ subversively, ] maybe better features. So like that, you can -- these are all -- I may not be able to articulate exactly what we have done, but I've given you broad examples, you know? It's a systematic way of driving down the cost inside the company. And you would have seen our marketing costs -- we are more and more now digital okay? And thanks to pandemic, we have learned a lot. Earlier days, people were in offices, separate offices. Now practically, everything is virtual, okay. Even with the new -- with the COVID situation in India, much, much lower now, we may not completely go back to the old style of working. We may have a hybrid style of working. So I think every element is helping us in terms of looking at whether it is a travel cost, whether it's a marketing cost, whether it is an employee cost, whether it is a material cost, okay? So on one side, it's maximizing the revenues and those products with better margins, the premium business and IB, international business. On the other side, every element of cost.

So from -- maybe from a cost perspective, do you tell your product managers or your factory floor, KPIs is minus 5% every year, 10%...

There is a target cost, Kevin, there is a very clear target cost based on the last 3 years of achievement level, and we look at [ what all things being new. ] And definitely, we want to take up to 10% to the next level. So we don't want to be stuck with only 10% EBITDA.

Internally, can you share what are we thinking?

I think -- when you visit here, I'll tell you, when you visit here, I'll tell you.

All right. All right.

You are operating from where? Singapore or?

Singapore. Singapore. So I think the flights open and it's quite easy to fly in.

You tell us in advance, you can come here and spend a day, you will get a feel of the place. I promise you that.

Yes. Yes, Pramod was telling me like after going to Mumbai, it's another 1, 2 hours drive, right, to [indiscernible] if I got the...

No, see, you have a direct flight to Bangalore everyday from Singapore.

Okay, okay. Yes.

Every day there is a flight to Bangalore. IT hub of India, Kevin.

[indiscernible]

Yes, yes. I wanted to ask about capital allocation. We had a couple of investments overseas, Norton, the Swiss mobility company. And I think Norton it's easy to understand the brand, the Swiss e-bikes one is something that -- obviously, I want to also understand when you think you can turn Norton around. But the Swiss e-bikes one, can you just help me understand how this fits into the jigsaw puzzle that you have?

See, e-bikes is 1 of the areas which are definitely likely to grow disproportionately going forward. And SEMG, we took over the company primarily because Europe, there's a huge opportunity in terms of growth. I can just collect some of the data that we give all of you, I'm trying to just look at the data. The international, the European e-bike market is growing at almost 20%, 25% year-after- year CAGR. And SEMG is a very profitable company. Last year, this again, you can correct me, I think it took $100 million -- sorry, somebody is trying to reach out to me -- last year, it was $100 million turnover and a good profit last year, okay? So it's not that -- it's not a company, which is not making money. It is already making money. Now what is it going to help us is this is going to give us a huge opportunity to understand the European customers, their behavior and also how they are going to -- how this e-cycles, today, we don't have products in the e-cycles from India. But this learning is going to definitely -- because we have now e-scooters from India and new 2-wheelers, we are going to make it from India. So all these are going to help us going forward in our overall strategy. Because...

Also SEMG has an omnichannel distribution, that's important. That's something which is...

Yes. They have -- if I look at SEMG, there's strong omni channel distribution of a few brands. They have Cilo, they have Simpel, they have Zenith. These are all different, different types of bikes for different applications. So we are able to really -- so far, if you ask me, we don't know much about the European market and customer segments. So that's why we took over this company. So you will understand customer behavior, customer usage, products are all there. It is already a profitable company. then we can always look at our design and development capability and say, okay, these models can be used in these, these markets globally, okay? These products, we can also supplement by our own design and development. And ultimately, we will look at the cost also in these products. On 1 side, we can -- with our expertise, we can improve the features on quality, on durability. On one side, we can look at the cost and look at the customer usage and say this can be sold in many other countries. So it's a very, very strategic investment. That is the way I put it. Anyway, this -- whatever we are making the new platforms of these scooters and the 2-wheelers from India will be available in all these markets, Kevin. Some point of time, we have to enter into the European markets. Okay, at some point. So that's why I said both of them -- yes, today, for example, our IB is only 80 markets, which are mostly developing markets. Mostly.

So the easy win will be to push some of your iQube through SEMG into like Switzerland, Germany...

We have not got the in-depth strategy, but we -- at some point of time, we want to take the entire EV product to global developed markets. How do we do that? Which channels we should use, how do we sell it, how do we get the early understanding? All these are going to help us in Europe.

So this is more like a market access strategy rather than a technology that they have that would complement our capabilities.

Technology -- we are a customer-driven company. In order to understand what type of technology works in which country, you need to have a deep understanding of the customers. So I won't say it's only a marketing. It is also -- it is a deep customer understanding kind of an exercise. Let me put it that way.

Okay. Okay. The other one was on Norton...

Norton, what you said is absolutely right. It's a great brand. It's a premium brand. I think we have not completely, systematically done the manufacturing, and we are also looking at the sourcing so that we can start looking at some of the products to be in line with the quality standards of the TVS, and then we want to give it to the market possibly this year. Then we will also have a cadence of product planned, which we have put now and we will be designing and developing that with our expertise. So you would have seen that the Solihull, it has become operational now. There are the Cafe Racer, V4SV, Commando 961. These are some of the products which we are now trying to look at how do we start manufacturing to the global quality standards. And we are also now coming up with -- of course, we will also leverage the electrification capability of TVS in Norton as well. So I think quite a lot of work keeps going on in Norton, but Norton, the brand is super brilliant, I would say that. Unfortunately, the last 10 years or 20 years, they have not managed it well. So once you have that, the real Norton brand essence, somebody can deliver that, I think it can really, really do extremely well in the market, global market.

So I mean is there any thinking about bringing it into India as to target some of the...

I think these are all opportunities, complete opportunities. I completely agree with you. These are all complete opportunities to look at which markets in the market -- which markets in the globe we can give it to them. End of the day, whether it is SEMG or Norton, they will resupplement our product range. They will not compete with our product range. One is on the e-cycle, one is on the high-end, completely high-end. So I hope I'm broadly giving you -- I can't give you the strategy document. I can give you a broad understanding how we are trying to look at it.

I guess -- we've got an EV opportunity that I spent most of my time here discussing and we've got a couple of other moving parts, right? So I just wanted to assess where our focus is, where our priority is and time allocation, capital allocation? It seems like you view the EV space...

I think the most important thing in terms of -- if you look at, really, really the maximum time is spent on the EV side. On the future mobility side. Because according to me, I see my team members are very competent. I don't think they need any review. Okay? They know how to develop a new product, a new premium product, new NTORQ or a new Jupiter 125 or a new Apache. They know very well, okay? So the full focus of the company is looking at EV type of investments and looking at premiumization. I think there is a huge opportunity to take the IB to the next level. Currently, we are operating around 100,000. There's a huge headway to grow it to the next level. Every market, the customer demand is positive, and the pull for our brand is also positive. So there is a great opportunity to go to the next level of volumes in IB. So if you ask me, first, is EV. Second is how do we grow our international market to disproportionate level in terms of market share and profitability, okay? And the third is how do we learn from this SEMG and Norton? How do we look at the space where we are not operating today? And how do we enter into the developed markets?

Yes. Can I just go back to the last 2 minutes on the traditional business, the IC business, there's still I don't know -- there are still segments of the market, like from low end to up that we are not covering, right? Where is our premiumization strategy on that front, right? Are we going to attack all the segments? Or we say let's put IC on hold because EV is next, right? Let's focus on the next 10, 15 years and just get EV right and we are done. We don't need to go and address other IC...

No. No. No. EV is run as a separate business. EV is run as a separate business, separate team. IC team I never say that IC is over. I never say that. IC team, for example, last year, we came out with Radeon and Jupiter 125. This year also, you will see very new products coming soon. The opportunities are huge, white spaces are huge. And there is a great opportunity to grab more market share in the market. There is a great opportunity to grow much faster than what we are doing today. So we will -- we continue to invest, but the management focus, okay, and our strategy interventions are more on the EV side. That's what I said.

Okay. You mentioned about 10,000 a month for EVs, something along -- during the discussion, I can't remember when, but -- and you always -- you keep highlighted chip shortage.

Yes.

I mean we had -- we saw what happened with Ola, right? They promised October, November, then December. And I don't know if people are still getting delays. I think that's why you say customer comes first. And are you able to deliver that 10,000 confidently looking at supply chain now, yes?

Supply chain are definitely supporting us, and they are also having a lot of confidence -- they also visit us, they spend time. Seeing is believing. So I'm very confident that you will see much better numbers this month, and you will see a much, much better number next month, and we will come closer to the 10,000 numbers as soon as possible. In the next couple of months, you will see the number. Once you that get, then we have a plan to take it to 15,000, 20,000 and 25,000 whatever I told you, okay? Many of our suppliers are understanding us and genuinely, there are some shortages. It's not that they're all saying for the sake of saying. And when I say shortage, it is the combination of lead times as well as shortages. You know, you need daily supplies that are today, thanks to the recent COVID issues in the China, many things are delayed. Many ships are delayed whichever part of the world material has to move in, it is not moving on time, okay? So there are plenty of challenges in terms of transporting and lead times sales today, because some of the chips which are coming from Germany, some of them are coming from, let us say, Taiwan or Japan. Material is there, but it's all in the shipment -- ship is delayed by 2 weeks, 3 weeks, which means you lose that month. So this is a combination of challenges and the recent war is also creating some confusion and problems with respect to the lead times, okay? I'm not talking about the cost. Cost itself, there are some challenges in the material cost, et cetera, but we will manage. But the lead time, so you put it in the ship, then we try to airfreight it, then air freighting it [indiscernible] they have to prepare a fresh batch. They are dependent on some raw material from somebody there in the ship. So it's a tier 1 to tier 2 to tier 3 to -- it's all linked.

But for iQube in particular, right, I was trying to allude to misses by Ola, right? And to a certain extent, this is a new supply chain for you, new product for you. I'm just wondering how confident are we of managing that situation.

We are pretty confident. See, there are 3 important things we need to understand. Here also, we have leveraged as many existing suppliers as possible, only semiconductors -- for example, when we went into BS VI, that is the first time -- all our vehicles are [ EFI ] today, okay? [ EFI ] has got a lot of semiconductors and chips, okay? In fact, in fact, Radeon and Apache are going through similar kind of challenges, because some semiconductors, some suppliers, some facility, some transportation lead time, okay? So we are now today, our understanding of this area is also far, far better.

How about BMS, right? The localization of BMS production, the localization of EV motor production. Is that already done in India? Or are there international problems?

Done. Done. Done.

Done? Okay. I think I'll leave it here. You probably have another full day of meetings ahead of you. So I appreciate this, and I hope we get to meet face-to-face the next time.

Brilliant, Kevin. Brilliant, Kevin. And all your colleagues who have joined from your company. Good to see you.

Thank you so much, Kevin.

Yes. Thank you. Thank you.