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

This is the moment, please, Pramod.

Yes. Yes. Pramod is my boss.

Pramod is my boss, everybody came for you.

Sorry Pramod, I missed your call. I was in some other meeting this morning.

Not a problem, sir.

Basically I visited the plant, they had some questions about the ICE side. Now we are on the EV side. So you can...

And before that, just a quick introduction, this is Vivek from SBI Mutual Fund, shareholder, and Sakshit, he is just starting to cover the sector through MS. So he's replaced Jatin, who's left the organization that they miscaptioning and then you have Harsha, he is from Karma Capital. I think they're also holders.

We are also holders.

Holders. They are also holders. And last is Nikunj, he works with me. We work together at UBS. And basically, he is actually the group CFO. And so you've been with TVS group for how long, sir?

Yes. 3-plus decades now.

3-plus decades. Can I have yours?

Yes, he is senior to me.

Yes.

38 years. Yes, hitting 40 soon. So we are -- please, over to you.

So probably around a question of the EV transition.

EV transition, how we approved?

I think you asked a question about EV. So what we are trying to do is, those employees we saw in the short floor, guess, what is their education? Just guess.

It must be 12th or more.

Maybe ITI or some basic engineering.

Bachelors.

Bachelors?

Bachelors. They're all 8th, 10th failed people. It's not designed by KNR, Chairman's father, Mr. Venu Srinivasan's father, he said there is something called learnability. Yes, skill will, we need people with tremendous will to succeed. Skill you can import. So he said select those people who because of their vulnerability to study, they failed but attitude is really good, take such people and more rhythm. That's exactly new term. Now many of those people are now trained for EV, okay? So however, when I say that, however, there are areas where we need to invest and build capabilities. Okay, also price hikes and managed software is one area, motors, controllers, IBCUs. Those areas we are taking high-quality talent laterally in the company, especially in the area of product development. And equally, we are also looking at some other suppliers, okay. Backbone there is no problem. But if you look at BMS, or if you look at the motors, controllers, many of the semiconductor areas, I think we are now trying to inject new suppliers. And internally, also, we have a structured training program to look at what are the elements of EV. And fortunately, our company has been always investing in, tie-up with some universities and professors or a group of people sending them there. Completely getting them transformed or designing and developing something for companies like BMW and where there's strong working together. So there is a lot of ways of acquiring the new capability.

Actually I heard from my matter that in the past, actually, TVS hardly used to recruit some IITs because they used to leave in 1 year or so. But suddenly, this issue increased intensity out there in terms of hiring people and also paying up quite a bit is that again for EV specifically or else?

See, one fortunate thing is if I look at our company, we recruited toppers from Level 2. We take good people from Level 1 also, IAMs, IITs, IIFCs. But we have a -- after 2 years there is a preliminary assessment on their potential. And those people who we feel that they are going to be the hypos, we sponsor them for higher education, masters, PhDs. And I can say that every year, almost 100 such people are sent abroad or sent to some of the best institutes in India for master's program or PhD program. It again depends upon the type of professors, the type of specialization what we want, now quite a lot is happening on the EV side. This has been happening, I don't know, for so many years.

Yes, it's part of the program.

It's part of their people development program.

And you yourself would have attended many such programs.

I was -- '86, I went to management education program in IAM, 6 months program sponsored by the company. '87 to '88 that period. Couple of years. First 2 years, we decided.

That's great. Right as a start, as in, right?

First 2 years, you give them a complete development assessment center. They will go through the assessment centers, and we know these are the people who are going to be the future leaders for the company.

And this is all Venu's vision. And even on EVs he's quite -- he's been very upfront then.

Yes. Yes. People, technology, he spent a lot of time. Off late we are spending a lot of time on bottomline. Thanks to Venu.

That's the outcome, sir. That's outcome, right.

What is the managing point, what is the checkpoint, you do the right thing in regional spending of the pressure then profit is an outcome.

Good thing what I see is like even when you were under pressuring margins, you never did something to please the margin and sacrifice.

No, never. Actually, that's why I can tell you we are very, very company which believes in sustainability.

Long term.

Long term. Long term.

Don't mortgage the short term.

No.

Unfortunately, we can't show our war rooms how we manage the cost. Once you get into that, you will really realize that they are all fundamentally very strong views and strong ideas, which are sustainable. That's the reason why we have been maintaining our margins in the last few quarters consistently.

Yes. Yes. But I'm very happy because the best of the company comes out when you have huge headrooms.

Yes. Yes, exactly. That's the true characters come out way, our strength.

Yes. Yes.

Sir, on the EV side and the motor side, there's a difference between us and our competitors, let's say, we are using. Sir how does it create the difference? And like what -- in terms of quality or let's say, product? And are we planning to shift to Natraj Motors or like, let's say, in future products or EV is it part of our strategy because it is important?

See, there are different types of motors. I think what you said is absolutely right, there a hub motors, there are wheel-based motors, there are new technology motors, I tell you. And there are different vantages, different applications of these motors. What we believe in is you understand the character of the customer usage. For example, I told you iQube is focused on the commuter type of customers in India, including the design itself. It's not like NTORQ. It's something which is going to be huge volume, they have huge aspirations to exit this year. The moment we get support from the semiconductors, you will see that. So based on the customer requirement, you decide that. So we don't prejudge competition is using this competition. That is only a reference for me. And manier times, we also say that from the customer point of view, usage point of view, these are the right steps that we use. And manier times, we do design inside itself, saying that no, none of these are going to satisfy us. I think we have to completely design something of our own. It may be costing a little bit higher. It may take a little longer lead time but it will have flexibility to look at the future product platform building it up in a nice way.

So you have the bell try when other technologies like but what is apt for iQube you are doing this right?

I don't want to say whatever technologies we have, whatever is appropriate for a customer segment like iQube, we have.

Okay, let me ask it this way. Is your in-house development and IP higher in EVs compared to ICE?

ICE is not a comparison. This is over a period of the last 40 years and the things we have done, and we are extremely happy. But the rate of pace has changed what we have seen in ICE in the last 10 years, that is definitely helping us in looking at facing this opportunity in the EV series. According to me, EV is a huge positive, positive opportunity, both in developing markets and developed markets. But you need strong engineering products.

Just to tap point to your point as well. In the annual report that just came out , it said it's just 600 people in the EV R&D team. Is it just EV R&D or I mean? And how big is the total R&D?

No, simply EV.

I thought the entire R&D team was around 600, 700. So it's almost 100% is it like?

We have added quite a lot from outside, some areas like motors, controllers, electronics, software. I'm not going to give you how many in each area, never also I'll give you that.

No, but incrementally it gives us an impression that most of our dollars, incremental dollars are going into the EV side.

Only to EV. I think -- and majority of the time we spend only on the EVs.

And some of them were repurpose to EVs or like 600 seems like a big number already. So they were repurposed or they were all organically?

It's a combination, it's a combination. See there are -- what did I say, I gave you an example of learnability. We want people who are learnable and attitudinally high will. We don't want people with high skill, but very poor ability. They will be a burden for the company.

Actually, since we are on the topic, I just wanted to pick on the news article that came out today that in that concept of raising $650 million or close to INR 4,000 crores to INR 5,000 crores for the EV subsidiary.

Honestly, I don't know.

We don't know. We don't know. Even I saw the article this morning. We are exploring various opportunities, various options very seriously it's in a very advanced stage. That's all I can say. We don't want to comment on that. I don't know from where they got these numbers. And yes, I also saw the article.

Okay. Let's assume that article is not true but is that a scale of investment.

No, no, we did not mention anything of the past. Those numbers is for -- get me some buttermilk or [Foreign Language] and they asked them to get to lunch for them. Otherwise, I have another meeting at 2 O'clock, you only organized here, do I have a problem? Yes. So we have to close before 2, and I have to finish lunch also.

Sir, along with the EV also I was taking ultraviolet. So I mean, how is the collaboration between that company and your EV.

I also told them, we have the best range from moped to scoop back and none of you are asking the wrong question, let me tell you. When we went to Indonesia, many people asked scoop back you are investing, you are creating this. But is it profitable. Last 2 years, we are profitable, and I can tell you there's a huge headroom to grow there. Huge means really huge. Because we had your own design and product, there are a platform there, you can grow. I said the e-cycle, look at Europe as a case where we'll understand the market, and we are also invested in somebody who has got a omnichannel, who has got all the experience of certain products, and we will understand deeply the customer on one side. On one side, we have a super premium called half calendar figure. So I look at the kind of -- I can't give you extra strategy of what we are trying to look at. I can give you a broad indication from there, you're all intelligent. Same way now you put the UV into this puzzle. You know what UV is making, where this puzzle can fill, how we are going to leverage, you will get answer.

To that point, we have been quite strong in R&D. So I understand acquiring omnichannel experience.

Sometimes what happens is, you can do everything in-house, but I gave you two indications. One, it takes extra time, it takes extra investment. Nothing wrong in sometimes tasting such. So we are trying to understand the customer, sometimes understanding the customer requires a certain time. And the best way to understand a customer is to really, really give some products and see how they are using it. What are the likes, what are the dislikes instead of just believing on McKinsey report or BayInc report or somebody's report. It is possible to get a report. They will come and present it also very nicely but we are in execution. How will you learn?

Also learn about start-ups, how they work.

And it is a profitable company. So you may not -- a couple of years, you will completely understand. And who knows, some point of time, these products can be in India. It may not be every part of India, maybe in urban India.

Sir, just a question on the IC part. I mean we have had a good success in the Apache range. Any plans from your side to go further up in the strategy say, go to the Royal Enfields of the world? Any thoughts on that?

Royal Enfield, I told you I respect Bajaj, I respect Honda, I respect Hero, I respect Royal Enfield, I respect Ola, Ather, there are some 200 names I can continue to say because there is something to learn from each one of them. We look at which of the spaces which are likely to grow in the future. Where is the strategic fit of the company, we look at it and then we come up with the products. And there will be product economically, which type of product, which brand, where we are going to position, time will tell you.

Got it. The next 8 quarters?

Next 8 quarters will tell you.

And sir, exports, what's the -- I don't spend too much on that. You're doing well. But just want to understand, do you see export as a market growing in FY '23, given the growth? Because some of your peers have started warning about some struggle there.

No, no, we haven't seen such. See unfortunately, what has happened in Nigeria, you must be knowing this -- some of the applications are these taxi customers. We have caught our drivers, they drive very fast. I traveled with them in the bike and the three-wheelers. It's faster than you take off in a runway, okay? And they put, three people, four people, roads are not as comfortable. Sometimes, accidents happen. Unfortunately, so there will be some ban and some short-term challenges, et cetera. But please understand, this is a huge employment area in such countries because two-wheeler taxies are the starting point for many self-employed. I don't think there is any other alternative, but to support these people. Maybe they have to bring in certain even in India, you look at some of the 3-wheelers, how many people -- I've sat in -- I remember I sat in an ambassador car when I was a student, some 12 people were there in one ambassador car. At that point of time, I don't think people looked at safety. They looked at mobility environment. Fortunately nobody hits that car, okay. So -- and you look at some of the areas, I used to look at the three-wheelers and so many people and overloading primarily because we are all developing economies, the money is not there. So this is a journey. So what is more important to us is, in my opinion, next 10 years is going to be Africa. People are talking about 5 to 10 years. Education levels are going up. Investment in infrastructure is going up. Beautiful country. Whatever be the reason, resource -- a huge resources, but they don't utilize their resources unfortunately or somebody else uses their resources. So I think all these are -- with the education literacy levels going up, things will -- you will see the change.

In fact, just to answer your question Pramod, see, we had lots of problems in the past also on availability of money in some of the countries, and we had a very good presence in Iran, Sri Lanka. Now with all that not being really there, still, we are growing new markets, new penetration in the existing markets. So we will -- with products -- with full portfolio, we will continue to grow.

I think your ability to navigate challenges and headwinds is probably better because you've come from that...

No, one of the things is you keep the strikes stop, you don't -- you look at the customer retail, you focus on the customer retail. That customer retail journey or every dealer, every distributor is thanking us saying that, oh, we never knew that Vahan is going to report, okay? The moment Vahan started reporting, everybody starting caring. All of you know the exact number every day, right? None of you are going to ask what is the stock level. You immediately put a simple thing between a trend analysis of the Vahan. You know what is the stock.

And exports is easy to hide inventory.

So in my opinion, why get into all that, you be transparent, you run in a way that customers should get the best.

Now the same transparency in the export market.

Same thing, same TVS.

You can't be different.

We are not making product from some other company and sending it to exports. Philosophy, principle, values are same. Always same.

Sir, just on this Africa question, I mean, we have done well, especially against the Chinese competition, which we have an advantage of even lower cost of sourcing and everything. Despite that, I think we have done really. I mean I speak for the industry of an -- Indian industry, and we have been a big part of that. But do you see like as Africa evolves and improves its infrastructure, the EV thread can potentially bring back the Chinese to a board level competition? Or do you think by that time, we would be equally put out EV and therefore, we will not see that much of charisma?

See Chinese...

However Chinese have been higher than the EV side.

No, no, Chinese have been very strong in ICE in Africa. And we had a huge headwind in terms of pricing. Every time you go there, people will say that $350. But we said, there is a threshold price at which we will give, but we will never compromise on durability, quality, parts availability. We started with our own network for parts, service, focus on service, it took time. People -- the users understanding the total cost of ownership versus the initial buying price, initial buying price was running in their mind. But the same market you go there today, they say, no, no, no. So when you get in to the country, you have to add value to the customer. You won't just be blindly following competition, whether Indian competition or competition coming from any part of the world. Chinese is going to be there. Today, significant proportion of India's EVs are from China. Value addition from many of our start-ups are zero. But I don't want to react to that. What did I say? We have learn -- we have many things to learn from Chinese. The speed. India can't stand the speed. So I think we look at the positives. I always believe in that. All of us sitting here five of us, six of us are there. If I start focusing on, there are two options, I can focus on looking at areas of development, or I can focus on areas of strength of people. I always focus on the areas of strength. You have this strength, you have this strength. This is same debate we can have on our weakness, this weakness. The moment you look at the areas of strength, then we can develop something, which is something unique to you. That should be the plan of action of any company.

Sir, for the next 1 million units in exports, what could be the time frame like it took us so long? I mean, this is an inflection point is what I'm trying to figure out.

Today -- no, no, it's easy to ask, you want to ask me a simple question. When are you going to be INR 125 lakhs, when are you going to look at on INR 150 lakhs, INR 1.5 lakhs, it happens. I'm not stressed. I always tell my friends that please do better than the industry. But you cannot dump, you grow your retail and refill the retail. And people are doing it, it will happen. I'm telling you when we were doing 25,000, many people asked me will 50,000 happen? And 50,000 happened people ask me, what is the next move. Now we are at average. So it will happen. I'm very, very confident.

In fact, internally, our MIS, we don't track the billing at all, we only track retail. What is retail today. That is how we track.

And currently, what is -- because semis and various other shortages, what is the gap between where demand, domestic plus exports could be over how much you could do better?

Exports, I won't say too much of issue.

Container freight?

That is there. Containers, there are some challenges. There are some challenges on certain parts. But I think predominantly the issue is in Raider and Apache.

And how much is the gap then like 20, 30, 40 hours? How much are we missing out generally?

Raider, in April was zero, May was zero.

So that is the segue?

Easily, we could have done 50,000 at least, 25 plus 50,000.

And Apache is another shock?

Apache easily we could have done 30,000, 35,000.

So you're missing out reasonably good numbers on the Raider and Apache.

Unhealthily. So what are you expecting domestic or exports?

Domestic only.

Domestic only right.

Exports Apache revenue has send me so much.

This is BS-VI and all our EFI system.

Yes, Bajaj was blaming semis for export when they had a bad number. But then they went up to 3 lakh growth on exports for a month now down to 160, and they're saying we'll go back to 200,000. That's why it looks like the target where they will settle. That is like amazing.

You cannot get any answers from me that using Ola, Bajaj, I believe in our team. I believe in our customer. I believe in our strength. I respect all the competitors because there's a lot to learn from them.

And decisions financing answers that monetization should, you publicly stated you want to do it. So anything on there in terms of...

I mean, the process has just started. So the initial interest is extremely encouraging. We'll come back with more details, just started the process. This was indicated in one of the investors call also, we are exploring various options and opportunities just after.

And with the financing, potentially happening and you exploring ways on 2-wheelers on the EV side. Ideally your CapEx intensity on these areas should moderate a bit?

Of course, the investment requirement of TVS CS will come down once I complete the process. You're right as well as for EV.

Do we also -- will we also need a significant CapEx to scale up the exports business?

The overall CapEx will be about INR 700 crores. Don't ask me a split between, but majority will be on the EV side.

So we're already doing something like INR 500 crores in R&D itself, right? And I'm assuming that will only go up from current level as of now?

Overall CapEx will be INR 700 crores and majority will be on the EV side.

So when an EV subsidiary happens when you move the money out there to the asset, so the parent business will see a lot of the assets and CapEx moving to the EV after that?

INR 700 crores, majority on the EV. Let the subsidiary happen, at that time, we will share more information. Correct, Desikan?

Absolutely.

Desikan, really are the coaches for me, what I should say, what I should not say.

Yes, what I'm asking is, I'm trying to get a sense of even with the EV investments, which are quite significant and software, you need to write off in 3 years, right, compared to other uptakes where you take 7, 8 years for amortization.

We are very prudent in our financial.

You are very conservative, that's a very good thing.

We are prudent, I will never use the word conservative. If somebody is conservative, you will not see so many products coming out, so many technologies.

On accounting, it's good to be conservative, right? So I think Desikan effectively when the -- when you move the stress and the expenses from the parent book, the parent margin is automatically looking better than what it was before.

You start eating. You start eating, so that we can answer.

No, see you're asking a very obvious question. When EV is pushed to the subsidiary where the margins with the parent will go up, it's quite obvious. Does it require any explanation or answer. On your first question, whether some of the assets will be moved there, those things, those structurings are happening. See what sort of -- whether the existing assets to be moved or not, we will come back to you with. But going forward, where the CapEx will be incurred in the parent or subsidiary, again, the answer is quite obvious, it will happen only in the subsidiary. Whether the existing resources of EV, whether it will be moved out or not, we are discussing, the structuring will decide.

So just on the EV subsidiary part, is it right to assume that the range of magnitude of investment that is required could be in that range of INR 3,000 crores to INR 4,000 crores?

Difficult to answer now. And only I can tell you we are -- from what was disclosed to you last time as a discussion point, we have advanced on that piece. But with more details on the amount of fundraise, the banker or the valuation, we will come back to you. But we are progressing in the very right direction there.

And if had to just exclude the probably -- I don't know what kind of profits or losses we made on EVs for FY '22. Is there an impact on margins that you could have quantified because if there were no I think that you assumed?

No, last year was a very miniscule number. So -- but going forward, you will see a difference. Obviously, all of us know that in EV, the margins are not there. We are not making profits there. All of us know that. Once that business is moved out, obviously, the margins will go up.

But you intend to hold on the 10%, no matter what, even the EV ramp up you're comfortable with the margin journey, margin trajectory.

No, we have never said, indicated any number the growth -- whatever KNR has committed that we will work on the EBITDA journey is the answer. I'm not committing a number. But again, unfortunately, we don't generally take you to the war rooms. Once if you happen to see that, probably you'll get that comfort. I was just telling KNR -- sorry.

No, no, you go ahead, sir.

No, no, sorry, KNR, I was just telling them about what will be the margins of the ICE business, once EV is moved out. I said, obviously, will go up. Because all of us know that in EV, we are incurring -- all of us are incurring a loss today. Once that is moved out, the ICE business margins will go up.

But the same principle, same principle. I think technologies -- don't get confused with the technology. Whether we went -- I always repeat the same thing in terms of the 3-wheeler we put a Himachal plan, we put a Mysore plan, we put Indonesia. There is an investment, and in any investment most important thing is customers should love your product. If customer starts loving, your top line starts coming in. The top line doesn't come in, you can jump up and down, nothing will happen. So this is exactly what we focus. Even also in the EV, we missed it, product did it right, and more and more people start buying the product. It's a question of when profit will come. So it's nothing new. Don't get disturbed by EV, EV, EV. It's like any investment, anything you put, there is a payback, there is a time.

So this INR 700 crores includes the investment that might be requiring some of the subsidiaries that we have or?

No, no, this INR 700 crores is only for CapEx. SEMG or that kind of investment, you have seen, it's separate.

That's already happened.

Yes, that is buying complete business.

But this is -- although the investments should be behind us, the big investments are behind us in terms of Norton or SEMG and all that.

SEMG, you're right, but Norton may require some support and investment. The product range and everything is going as per plan, but they may require some amount of investment.

Actually something very interesting that you did with iQube. I think it was the brilliant strategy to come up with a larger battery because that gives -- that kind of the biggest issue that maybe in the trend. And it's quite a good thing to have, especially in the current trend, benefit scenario where you actually get almost subsidized for much of the battery cost. But once these payments have kind of go away, given that we are actually a larger batteries, what has to happen to make sure that it doesn't eat away into our profits, like costs have to come down meaningfully, our volumes have to go up or what exactly can we do to actually offset?

Please understand similar type of subsidies. Subsides are support from the government for certain investments to be encouraged or certain initiatives to be given a special focus. I think any intelligent businessmen should assume that very clearly that at some point of time, it will take or that we have incorporated in our business plans. When, how that is the company's capability to look at how are we dealing with that. All of us know that. There is no single subsidy, which has lived it's life within export benefit. Now it is in the form of ROTDB. Who knows, maybe after 2 years, 3 years, it will be completely different.

And export subsidy have come down materially, right?

Yes. It used to be -- if my memory is right, something like 13%, 14%.

Long time back, but it came down to 4% to 5%. Now it's much lower although.

Maybe it is 2%. So I think there is a purpose for every subsidy. So you heard me prudent when you prepare your long-term plan, and you should have some judgment how it is likely to move. Again, I cannot say this in other meetings. We have to be very, very prudent while budgeting.

And accordingly, as we just read into it, where the government can start subsidiary or you think that policy take?

I'm not a cabinet secretary. I'm KNR, working in TVS.

But when you interact with the industries, ministry, what is the -- they still committed to EV, like they're very comfortable that it's kind of taken off. So you can take up.

EV train has come to the station, it is yet to start the journey of EV. We have a long, long, long -- please understand today, the total EV sales is about INR 40,000 per month. In the industry of almost INR 13 lakh, INR 14 lakh per month. It's a journey by itself.

What are the things that I -- other than companies and some of the leaders and I did quite some extensive checks. See that entry-level motorcycle segment has been impacted heavily because price increase that is there. But I think there has been a really big impact also from these 25 -- low-speed electric vehicles. And it seems like the market, which some of -- none of us are actually focusing, except for Hero Electric, which is again assembly. And in fact, Pramod was also mentioning that he discussed with you that it seems like a good probably potential market to enter. Would that be something that would be interesting to complete the entire range, as you said?

Study the pattern over a period of time, you will get some answers. Please look at the customer. India customers, especially in the bottom of the pyramid, these are very, very important decisions in their life. Hard earned money, they are trying to invest in something. They expect certain returns. This is my second inference, okay? So please study how this trend is and don't only go by some of our dealers' prediction.

Because as we said, we need to have a minimum quality and everything right, the durability, which is as to come out of price.

That's something like a Chinese market. Would that be a good thing to study? I mean, just to see what exactly happened to acceptance rate. Like they have done phenomenally well and that [indiscernible].

See, their usage behavior is completely different to India. They throw it after 2 years or forcefully it will be tracked. Yesterday, or day before yesterday, I saw one announcement that IRDA -- they are also linking it with BS-VI. They're also linking it to the emission. Somewhere, I read it. So if you are -- your vehicle is not compliant with whatever the emission norm, then the consequences of that is going to be completely different. So there are many aspects according to me, how long and how much it will happen. It's not going to be -- it's not going to be that straight line is [indiscernible].

And unfortunately, a lot of customers will learn. A lot of customers who learn about this low speed EV limitations in the next 1 year or so. When the [ parts ] come get into trouble, there's no warranty. There is no replacement.

They're going to recycle itself.

I feel sorry for the customers, because honestly, the government policies have such a big loophole and I believe Hero Electric, the big reason for volumes to drop is not because of some production issues because they were taking subsidies, saying that it's localized, but it was entirely imported [indiscernible] some reagent. That's why the volumes were going then to 2,000, 3,000 and all that. And tax base money is funding the subsidy.

I don't want to comment anything related to that. All that what I want to, once again, request you to study the customer. You will see behavior, durability, quality. You will get an answer. Never take partners. If you take partner, but never compromise on the long-term durability, quality and usage -- customer usage behavior. I cannot put a comment on my -- [ base ] have only 1.5 people. And preferably, overall weight will not exceed 100. These are not customer language. Customer language, if there are 4 people, 5 people in the family, they should all be able to comfortably fit in the scooter, okay? They might even take some -- jackfruit season, they will take 1, 4 jackfruits also on top of it, okay? So gas cylinder, they will have possibly 1, maybe sometimes 2. I can't say don't take all this, okay. This is especially [indiscernible]. Customer usage, you cannot be on the point. You can tell them, "Hey, charge [indiscernible] , check the charge. Check your tire air." Safety point of view. These are the things you have to follow. That was all fine, wear helmet. Not only you. If I remember that [indiscernible]. We also encourage, "Hey, don't travel like this [indiscernible]" please don't travel that's also we tell that.

Again, I'm sorry to harp on this. Some of the acquisitions that we've done, smaller size one. So for example, SEMG is something that is a decent scale acquisition. And there seems to be a glide path around that. Then we also have done EGO Movement [indiscernible] recently with [indiscernible] passing. I just wanted to understand the small, small [ tech ] acquisitions. Where does that [indiscernible] order or scheme of things to understand [indiscernible].

I can give you a proof, I think their product range, usage range or geography range, you will get some answers.

So [indiscernible] very diverse in terms of the customers. So it's all basically understanding customers mainly at this point in time. Because I'm assuming, we can provide the R&D support and...

There is a purpose behind each and every acquisition, I promise you.

And will we continue to see such -- I mean even to understand customers, is that something that we should expect?

Definitely, you should expect. And definitely, you can also be confident that there will be return, there will be profit.

But maybe what I was trying to also understand is, will there be another big ticket acquisition which will happen on the e-bikes or you have enough now in terms of the geography, product range?

I can't give any kind of guidance like that. It's like product development, product investment, brand investment, looking at some white spaces is part of responsibility as a company. Tomorrow, there is some -- there's a sizable opportunity we see, this is going to be the future. We invest in the technology or in the white space. I told you, I'm -- we are not working for this quarter and next quarter. We are looking for our long-term value creation taking the company to global. TVS always done this way.

Sir, if you could give more details in the -- while you are talking to investors about what exactly are we looking more medium- to long-term perspective.

Nobody. You tell me one company who does it and share their company strategy. This is our 3 year plan, this is going to be our 5 year plan. We can give a direction. We very clearly said our maximum investment will be in the EV space. We'll be significantly looking forward in terms of growing the market much ahead of the industry. We'll be focusing on premiumization.

I mean more from a metrics perspective for example, if you have a philosophy that every time you make an investment, I want to achieve at least just level of ROIs -- ROCs or whatever. Given that kind of direction...

That is there. That is clear. As an internal company target, it is there. They're going to do that.

All investments are completely evaluated from all metrics and complete due diligence done. It's a process. Just like that, all the investments have not happened in the past. And then after due consideration with proper -- it's not so easy to get the approvals internally also. We have to satisfy all the stakeholders before we get into our investment process. So you can be rest assured, all these investments are profitable investments. Some take a little longer time because of the gestation period, otherwise, and all are related and relevant in today's context.

And when we spoke about double-digit EBITDA, is that a never clear plan of action.

That is daily in the standalone business, but when we keep doing these investments and they probably are not -- I mean, they are in the investment phase, the prolong period at the consolidated level, we may not be able to achieve the kind of profitability networks.

Consolidated, I can give you example of TVS CS. It's an investment we made. We got the kind of success we are having in TVS CS. Look at Indonesia today, I think these are the kind of commitment from the company. And if I look at my total investment of -- what all things we have done in the subsidiaries. This constitute over 60%, 65%.

Yes, yes. Absolutely. Again, I just want to tell you, even at a consolidated level, except Norton which will take 1 or 2 more, [ 1 year ] or few quarters extra. But others are only adding to the consolidated profit. You can be rest assured on that, whether it is GO AG or SEMG. Of course, PT TVS is already making TVS credits. So all these subsidiaries will only add. It's not that Norton will take some time because we are establishing a factory there. It's again a question of time, because we are 100% confident that Norton will be extremely profitable. It's just a question of time.

As for Norton, what's the strategy we're going to make the order types or do you want to -- I'm just trying to understand. Will it be like a very niche brand like Lamborghini or Ferrari, very limited volumes but very high exclusivity and very high pricing and [ active ]?

Most importantly, in such brands, the product makes almost the brand. Like I said, N equal to one. So full focus will be on that.

We don't have a ceiling on volumes like a couple of thousands, no. If the customer want you will produce more. But you will not -- it's not a push market any which way. It's not a push back, it's entirely pull back.

No, no. We've created it as a push back.

Yes. When you have cheaper one and India version.

[indiscernible] is super premium brand. It will have all the specs of a [indiscernible]. Look at Apache. We have never [indiscernible] it. Never. We have added value or we -- even if that -- when you look at the ride controls, you look at now SmartConnect. Some of the things what is there in the TFT cluster. So you will see Apache is like somebody who [ aspires ] for a 1200 cc but he has to settle down with. The customer aspirations we have to look at it and give him what he can't afford.

And if you had to share one of the friends in Germany, actually called me and told me that what is -- who is this company TVS who is actually coming up with this variable suspension for Apache 310, it was there in the news [indiscernible] in some magazine in Germany. Very quick call actually quite interesting as well. They said it's like -- that seems like pretty high.

We have build to order.

We do.

I said I'll try to give you 50 per month. Already 150 per month every month is there.

And I believe you're ramping up the numbers now for 3 months overall.

I'm not in a hurry.

You're not in a hurry, but then -- No, no, no.

There is a respect I give for the customer. And I don't want to force them. The moment it comes from within, we don't have to worry. Every month, 150 is better for me than 1 month 700 and next month zero from the Indian supply [indiscernible].

So BTO has become like 30%, 40% of Apache's 310 demand now.

I think what it shows is people are ready to invest if you give -- just between the variant, if I look at the Classic Plus the ZX [indiscernible] than they all put together is more than 50%.

And the price gaps are huge, right, for the BS variant to Grande, I think is only...

Absolutely. Absolutely. It means the brand. If somebody comes -- if it's a retail finance customer relation, I want to [ leave this ] . See, youngsters coming and negotiating with their parents. No, no, no. I don't leave it. For me, it's more than that customers say that here is a company which provides higher-end technology. Of course, at a cost.

Like the technology [ paper ].

High-end technology. It looks like, at this point in time, we are the ones who are giving everything to something like Norton and BMW. Is there any diverse learnings also that we are incorporating for some of these, as with...

No, there is always -- we partner with those kinds of partners. There is a mutual learning. Definitely, there's...

Something that we use for Indian products also.

There is a good mutual learning. Definitely, I told you about BMW. Their GS standard -- global standard. Outstanding. Never -- I think the value systems of TVS and BMW, star of the two-wheelers. They are the best in class quality. Best in class.

It's a combination of Toyota, TVS and [indiscernible] , because you have a lot of your internal efforts are [indiscernible] Toyota quality made in Germany.

We look at Toyota production system. We are, that way, Japanese.

Yes. So it's just Toyota meeting German, it's in the second [indiscernible], quality right. Toyota reliability plus German quality, done by an Indian company.

That way, I think when I look at the Japanese discipline, kind of focus they give to the customer, the way they leave it to quality, outstanding.

Explain me this and that. How does -- how come the Japanese manufacturers in the two-wheeler space are massively behind the cover of EVs. I heard Honda to evaluate -- finance the EV strategy. The India team in Japan to finalize a strategy. They didn't come down here to see the market, the product, the customer needs. How does this work, sir? This is amazing for you because it opens up the space for you.

Honestly, none of these, I know, okay. You are very well informed.

Sir, why [indiscernible] they don't have long-term.

I don't know. I don't think there is anybody behind the curve. They have their products in Japan.

But see, we see the [indiscernible] 150 variant.

The question is, expensive, inexpensive is the next question. Company in China will be talking about TVS products are expensive. Sounds great to you. But the capability to produce the product, customer liking the product, is it there or not is what we have really, right.

We see different batteries coming up [ podium ] and different product specifications. Do you see that risk that before the volume numbers come in this technology might be obsolete and they might be shift to another technology.

See, this is -- this is part of like we spoke about innovation, we spoke about value engineering, value analysis. Technology, also new technologies will come. What are they trying to do? They look at the customer, what are the benefits? Overall cost, time to market. Even in lithium itself, there are NMC, [indiscernible] there are so many, so many. I can -- cylindrical pouch. So each one is trying to justify. This is the positive. These are the things we want to focus. So that will happen 100% it will happen. That's where you have to -- iQube what you are saying, we started the journey 10 years back. So somebody asked at that time, we're investing in electric.

You were. You were testing the lithium battery technology. Right, I agree. I think that was.

Life is like that. You have to -- the role of top management is to focus on what is going to be the likely future. And it's not that every future is going to happen.

Yes. That explains why you have the capability and the resources now and other companies have the balance sheet and the cash because they never invest in, right?

All these investments, you will see the returns coming disproportionate way, in a sustained way, going forward.

Yes, I know. So I know it. They -- because all the companies have not been entrepreneurial enough in terms of chasing opportunities or exploring.

I never [indiscernible].

No, I'm not...

Pramod as usual, really provoking that others have not invested, you have an investment though you will be good, better next year, they will not be -- he wants an answer from you [indiscernible].

Well, that's what it is, sir. I have company management telling me that we'll do anything to -- I would do anything to get TVS success rate in new models. And there's a company which has done investments, right? I'm not talking about Bajaj. They made investment. Unfortunately, they don't have the R&D culture, they don't have the experience and the timeline, right, to do this. And that there [indiscernible] are stuck in the marketplace. But if you...

I have no comments from my side. I only believe that focus on the customer future, I think I'm still, this pandemic when you work from home. I've seen my kids, everything is online. The speed at which they buy, the speed at which they reject, amazing.

Replace and [indiscernible].

Reject, okay. If this is going to be the orientation of the customer, we can't change their thinking.

Sir, is there opportunity for subscription service for premium bikes?

I don't know. So this is something -- constantly, you have to look at it, okay? Saying that what is their thinking style? Why are they thinking like that? Some of my friends in the software industry tells me that getting people -- we never had this problem even pick of pandemic our production was working, people who used to be here. But in software industry in India, I believe getting people back to from the office is a challenge. Maybe a new way of working is evolving. One of my colleagues told me that Wednesday, they will be all there together. Two more days, they can choose. But Wednesday, everybody has to be there. But there are some people say no. So I think the customer usage, the behavior of the people is something we need to constantly look at, what is the logic. Why are they behaving the way they are not behaving. It is something interesting.

So what will help us protect, let's say, an initial investment or initial strategy from someone who can replicate at a later date.

The only way is -- but please understand, I can give you a lot of analogies in IT. That will give you understanding. When we -- see, we were the first to put the external fuel tank. When you look at our scooters earlier, you have to lift the scooter. All that, when we interacted with the customer, we were saying it's a big pain, you have to get down everywhere. And again, even if you lock, it gives an opportunity for somebody to steal it and I said, okay. What -- why not give something similar to a car or something that's the genesis of the external fuel tank. So we gave the external fuel. Many people copied it. You can't say that no, no, no. Nobody can copy it. You might create it, to a large extent you can do that. But there are -- there are customer experience areas you can't beyond a point, keep on saying that others will not copy. Now somebody said, then again, we study. No, no, no its the rear. Why don't you give it to the front. Why? Because I have to looked at it and I have to look at the meter. In his mind, sorry to say, 90% of the customers believe that all the petrol pumps are [ cheats ].

And especially this fuel price, okay?

So they want to keep looking at it. And you have to look at here, I said why don't be in the front because I don't have to look at as I can normally look at, okay, we will do in the front. Customer requirements are simple, but moving the petrol tanks from the rear to the front and making all the arrangements related to that, completely different, and that requires products. I can't guarantee that tomorrow nobody will do it, okay. So you keep on innovating. Don't say others are copying, others are copying. This is like somebody asked me, "hey, you are doing so much of training and coaching, your people you are having" when they go out, what will happen? I'm very happy they will improve India. I can't say I will be a zero attrition company.

You haven't lost much on the EV side, right? Start-ups.

Even if you miss. You don't. You protect your critical cohort. I can't say that every employee I will make sure that they will only part of TVS. I can't guarantee that.

And related to that, sir, how do you ensure that the same culture [indiscernible] so new employees are coming into the EV side lateral [indiscernible] because you are -- you forced to hire laterally quite a lot, right? How do you value -- ensure that the value system continues? Because you've been here for almost 40 years, Desikan for 30 years plus.

When you come up to our company, you have seen, you come inside the company, you see the display.

Yes, I see it.

It is a part and parcel of grooming, everyday grooming.

But laterals is difficult to groom.

Even laterals, we will groom. Can you tell them, this is the way we behave. And you [ walk the top ].

And in a way, it's probably entering process and you ensure that there's [indiscernible].

Once you [indiscernible] every time you come.

Sir, have you noticed, we were the only set of people who are working on the road. No one is walking on the road.

Okay. You have your car. If you don't have your car just because you're a director of the company, you can enter your office. But yes, my belief is, today, because we [indiscernible] meeting is there, I arranged, otherwise I would have taken you, all of us eat the same food, all of us watch the same, okay?

I've been coming for a year from in 2017.

Just because I go there, I don't have a special meal. 90% of this is given to everybody.

This is the first time you got treating [indiscernible] this. I don't know.

You are important people. We're getting some sweets also today. I said, some sweet people are coming.

And I want [indiscernible] sweet, please.

It is part of the meaning [indiscernible].

[indiscernible].

No, no, no. it is there.

Sir, you have any [indiscernible] swapping technology? I mean do you think it makes sense?

Again, these are all very generic questions. Purpose, what is the purpose of swapping? Who will use swapping? Suppose you buy a car will you take swap the batteries.

No one most likely.

Insurance, who underwrites the insurance for [indiscernible].

See, as long as the quality is assured, as long as the safety is assured, yes, we will use it. Otherwise, we don't want to compromise. Correct? But maybe somebody in [ Swiggy ].

Yes, he will love it.

He may not be the owner, but he may look at -- but even their owner whoever is invested, he will say no. I can't have every day somebody having problem with my scooter. So I want certain standards. I want certain standard batteries to be used. So otherwise, it's a very unfortunate what has happened in India. You tell me which countries are swappable batteries are used.

China and Taiwan. Taiwan. Small geographical footprint.

They're not swappable. It's removable within the ecosystem of -- it's not that Gogoro you use, ABCD you use that is not swappable.

Which country does it? China does it, sir? No, I don't know.

Kind of. Kind of.

I have seen in China the batteries getting swapped, but I'm not sure whether this was the same battery.

We will go a little deeper into this technology we have? Otherwise, there are plenty of questions people want to ask.

And you are stuck on a particular battery technology, right? Now you're likely we will have the battery technology very easy, right?

My view is there an opportunity for swappable battery, maybe opportunity. But it all depends [indiscernible].

I can't. I'll tell you later. You're going to [indiscernible] Okay. I love coffee. I need to -- otherwise I will follow up late now.

These are all home made for your sake.

But I can't -- I am off sweets, sir, anything which is, I just had a [Foreign Language] of my father-in-law for 2 days, I didn't touch any sweets.

I don't know. I'm giving you sweet, which is made in our canteen with IS [indiscernible] standard quality [indiscernible] anything else.

And for not having in father-in-law's house may have several reasons. Even for that occasion I didn't have it.

If it's not health related reason, it's okay. If it's health related reason, I will not say anything.

I'm really missing the sweet. I love my [indiscernible] I'm missing the sweet and my factory food. Very tasty to just [indiscernible] you don't get it [indiscernible]

[indiscernible] better one. Slightly better one, right?

No, no, no. [indiscernible] And on Apache, I want feedback, sir, generally...

That I can tell you, since we are all focusing on bottom line, it may not make a huge difference. Many times people tell me, why don't we ask your partner or suppliers or dealer to come have meetings before lunch, post-lunch. No, no, not lunch. Before lunch much before lunch. So I don't have any meeting after 11. Same way, I have meetings only after 2:00. Why? Because you can save lunch. Because our canteen so many people go, so when I -- and I said, it's a good idea, yes, somebody is really, really thinking about cost per meal so much money, et cetera. One driver told me that I love coming to TVS, your food is extremely good. And you treat as human beings, the drivers. We will not be give them a different food. That day I said don't cut down. EBITDA, there's a opportunity to improve by points because there are [indiscernible].

Don't do that. You lose the [indiscernible].

Yes. I'm not joking that our company in India make sure that no one is [indiscernible] in this period. Again, that is not TVS. People who look at EBITDA, they look at every cost as -- every part of spent of money as cost, we're not like that. When somebody says that, it's a goodwill somebody wants to come here and eat, it's a goodwill on TVS. And he says the same thing, that I treat him like a human being, not like a driver.

And on Apache, general observation that you have fairly high brand equity and volumes in North India and South investors are more higher premium and highest -- you have market share, but I think there is a pretty good gathering rather than anybody, there's a lot of potential for market share gains in South and West part of the country.

When 10 years back me and Murali used to go, Apache was nothing. Now the problem is, we are #1 and super #1 in North and Central and East. Yes, South and [indiscernible] will happen. Anything is the issue.

It's a potential.

If you do well also, it's an issue. I'm yet to see somebody is good in math, somebody is good in chemistry, somebody is good in physics, somebody is good in biology, somebody is good in English, somebody is good in local language yet to see. So we have to be in 360 degrees every [indiscernible] we have to be #1.

Talking about opportunity. I also wanted to check 3-wheeler for example, electric three-wheeler in the domestic market. That's still a level playing field.

That's an excellent market. I completely agree with you because so far what we are talking about permit system, quota system, and the deep relationship, I think, is there. As of now. We are really, really looking forward to that space. Any fair competition, we are game on.

Sir, we should [indiscernible] you have already mentioned in the call.

It's there in that product range.

Sir, 5:30 flight. 5:30, right? 5:50. They should be good, if they leave by 2:30, right, to the airport. Should be comfortable, right.

Yes, very comfortable.

The Bangalore has become really, really bad season.

It shouldn't rain, that's it. We just pray that [indiscernible].

See, there's a problem with Bangalore is if it rains, it's a mess unlike...

Unpredictable rains. You can't predict.

The biggest problem is there wouldn't be any police in the road. Everybody is having good cup of tea, they will be enjoying the weather. And everybody -- and most of the [indiscernible] created by educated people. They all want to come. So nobody will [indiscernible] -- Today morning, when I was coming one guy with no signal he crossed everybody's stuck on because he is trying to cross, the rest of the people doesn't allow him to cross, okay? He's indiscipline let him cross everybody will stand. So neither he will go, neither another area and some two people will get down and shout, shouting at him, he will also shout life goes on in this process, 20 minutes lost. Early morning, you have it.

One final.

Bombay, I find the police is so -- they will give you ticket.

Bombay is good. Bombay is more disciplined, very disciplined than definitely Bangalore.

That's correct where police is also at least what I have heard is not these -- because many times I tell the taxi driver 1.5 hours, sir, you can't jump the signal, he will say -- and they are very scared. I'm only talking about taxis because I have used only taxis in Bombay, especially. So police is very...

No, they have started that digital system, right. They hide the tree, if anybody breaks the signal, they take your photo and then there's a digital challan. So everybody is really scared of that path now.

Yes. So only one final -- just wanted to ask you all. There is one resolution, which is there on reappointment of Sudarshan Venu. So just wanted if you have not exercised or it's another 1 week because they have the OT, so I need -- I just want to [indiscernible].

I can tell you from our side, we have already voted for him.

But [indiscernible] has not come. Yes, it is next level person.

Well, I guess he sent a message that he is not able to join. He had sent me a message. He is not able to join.

[indiscernible] because next level people should come and see it, the only thing is your friend is not coming. That is the problem, I have. He promises me in every call. I think. he just, I don't know -- there's some long, long, long back.

Sir, we have new restrictions actually on 2 months. Like 9 to 3:30 they need to have a [indiscernible] so that's why [indiscernible].

That's not a problem. I'm saying once they come here, they see this, I think thanks to all of you, you have invested. I always see, you believe. So that is the reason we really appreciate that you believe us. But it will be good when people come here and share. So kindly pass on this message to [indiscernible] I've been waiting and waiting for [indiscernible].

[indiscernible] a company, right?

He has come long, long, long.

[indiscernible].

I can't even imagine.

Rajath has been the one who first invested then everyone else was added.

So thank you. Thank you for your time. There are 2 flights landing there. We've spent some time there.

Next time, Pramod, you have your meeting in Mysore. Mysore factory is also worth seeing.

Coming from back -- actually given that traffic from Bangalore to Hosur, I think Bangalore airport to Mysore is not a bad idea, I think.

No, but there are regular flights to Mysore .

I think Bangalore, Mysore also, I think flights are available. Chennai is there. I don't know from Bangalore. Visit our factory, it's a small factory. I mean, it will be very nice. Apache is manufactured there you can see.

Apache [indiscernible] good factory.

Good factory.

And here, people have not seen the [indiscernible] , right?

I haven't seen it so far in all these years.

No, no. I'll send somebody and see that 5 minutes. Very nice. Very nice. Beautiful, really beautiful, I forgot. I think I should have added that in your 5 minutes into your...

Thank you. Thank you so much. Thank you very much. Sorry, I'm not able to be there physically. Thank you so much for coming.

And anything you wanted to...

Yes, no, I will just ask, I think some have yet to vote, and we'll have to wait.