Analyzing...
Thank you so much. Have a good evening. Thanks,Kapil.Next,wehaveaquestionfromRaghunandan.Please unmute yourself. Good evening Sir. Thanksfortheopportunity.Firstly,ontheBullet volumes, there has been some decline YTD. How do you see the improvement here in the future? New generation Bullet, how are peopleacceptingtheproduct?Arethereanyworriesrelatingtohigher pricingofthenewgeneration,removalofkickstartorthedesign?Just trying to understand what is restricting the acceptance here? Raghu, for Bullet, when we launched, there were always these discussions,whichwouldcomeandwelaunched.Itreallyhadavery goodstart,andithadagoodacceptanceofthenewBulletinSouth, East,Central,andWestregions.Thereareafewregions,whichused tobethebastionmarketfortheBullet.There,wesawalittlebitof slowness in the growth ofBullet,becausethat'swheretheBulletis very important also for us. Then we did adeepdiveandweunderstoodthatthereisaproduct intervention, which is required for those sort of bastion markets, whichwehavealreadystartedworkingon,anditwillallbetherewell before the festive seasoninthosemarketsalso.Soyouwillseethe Bulletalsopickingbacktothegrowth,whichwelaunched.ButImust tellyou,Bulletinthemarket,whichwasnotdoingwell,especiallyin UP,Maharashtra,wherewe'vereallywantedtogetacceptance.Ithas really increased and acceptance has been very good. Andontheexportsoutlook,whichregionsarecurrentlydoingwellfor youandwhichregionsareyettorecover?Andalso,ifyoucanremind the broad breakup of exports across Europe, North America, and Asia? In the international markets, especially LatAm is doing very well becauseourCKDplantisalsofullyinoperation.AndEuropestarted showinggoodsigns.That'sanotheronemarket.APACisjustpicking up. Individual areas, we can send youthenumbers,butourmarket shareinthoseareas,asImentioned,retailshavebeenverygood.It's in the high-single digits, and that is continuing. Andweareseeingagreenshootintheinternationalmarkets.Andalso in the international market, I have to give you a bit more
understanding for everyone is what happens is, in fact, our Super Meteor, which we launched almost about a year back, we are just launching in a high number markets like Brazil and all, because it takestimeforthehomologation,differentthingswhicharethere.We havetotimethemarket.Thereisaridingseason,non-ridingseasonall together. So our products will be entering into those markets only from now on. So to that extent, the international market, I see the growth is going to be better in this year. Thankyou.ToVinod,ifyoucantalkabouttheCVindustryvolume outlook, Q1 had some impact ofelections.Howareyouseeingthe demandfortherestoftheyear?AndEicherhasbeendoingwellon themarketsharepart.Howdoyouseethefocusonmarketsharegains and also your thoughts on the current level of discounts? VinodAggarwal: As far as the commercial vehicle market is concerned, Ithinkfirst quarterandfirst,youcansay,Julymonthandaswellasthismonth alsobecauseofthemonsoons,marketisrightnow,notdoingsowell. Eveninthefirstquarter,eventhoughthegrowthlookedgoodat10% inthefirstquarter.Butthatalsowehavetoseethat.Lastyearinthe firstquarter,thenumberswereverylow;basewassmall,becausewe hadjustmovedtoOBD2,andtherewasalotofpreponementofsales to quarter four of you can say 22-23. Soduetothat,thegrowththatyoulookatinquarteronealso,Iwould notsayagoodgrowth.AndJuly,ofcourse,themarkethasdropped. However, going forward, we are very positive. The fundamental reasonsareveryclearthat,firstly,theeconomyisexpectedtodowell. Wearestilltalkingof7%plusgrowthinthecurrentyear.Andthen huge money is allocated for capital projects, ₹11.11 lakh crores. And we should also note that due to elections, nothing much has happened on the investments on the capital spends from the government.Andofcourse,nowitwillalsobeachallengethatthey willhavetodothisentirespendintheremainingpartoftheyear.So therefore,still,nevertheless,thegoodspendwillhappeninthebalance part of the year. And then, of course, September onwards, there will be the festive seasonstartingandreplacementdemandisexpectedtoremainstrong. Sotherefore,I'mverypositiveasfarasthebalancepartoftheyearis concerned.Commercialvehicleindustryshouldcontinuethegrowth. Andeventhoughthegrowthmaynotbeverystrong,becausethereare alsoalotofstructuralchangeshappening.Forexample,inheavy-duty trucksalotofmigrationishappeningtowardshigherpayloadtrucks. That also results in reducing the number of trucks.
Butontheotherhand,forallotherfundamentalfactorswhicharein place, the industry should be doing well. Now as far as we are concerned, you have seen that we have been outpacing the market consistently.AndeventhemonthofJuly,alsoourlightandmedium duty truck market share was 38%. And in fact, we're consistently improving our market share and heavy-duty trucks also, we are continuously improving our market share. Busesalso,wearegettinggoodgrowth.Sotherefore,Ithinkweare expected to continue to do like that because one is that we are expanding our dealer network. We are opening more and more dealershipsacrossthecountry,andthatisalsohelpingustoenterinto the territories where we hadbeenweakearlier.Sotherefore,thatis also helping us. And then, of course, we are also continuing toexpandourproduct range.Sowe'regettingintomoreandmoreapplicationsandmoreand moresegments.Sotherefore,weareexpectingthatweshoulddowell. As far as the discounts are concerned, of course, there have been improvements.Wehaveseentheresultsoftheothercompanies.They have shown better margins.Even,infact,ourmarginsarestilllow. They are continuing to bealmostatthesamelevelaswewerelast year. Ithinkthereasonisthatmyownbeliefisthatwhentheheavy-duty trucks go up, the competition improved margin because they are making better money in heavy-duty trucks. So that is the reason. Otherwise, I thinkthediscountsalsoshouldcomedown.Soweare verypositivethatpricemanagementisgoingtoplayaverybigrolein the improvement of margins in theentireindustry,andwearevery optimistic. Raghunandhan: Thanks for the comprehensive answer,wishing you all the best. Thanks,Raghu.Next,wehaveaquestionfromJinesh.Pleaseunmute yourself. First,clarificationonGuerrillavolume.Soyousaid“wehaveshipped 6,000unitssofar”-ThisisreflectinginJulyorthisisstartingfrom August? Itwillstartreflecting,partialquantityinJuly,butitwillstartreflecting more in August.
More in August. Got it. And you talked about auto replenishment model-shifttothat.Socanyoutalkabouthowitwasearlierandwhat changesanddidithaveanyinfluenceinourwholesalesintherecent months? Yes, Jinesh, I think you've got it. Auto replenishment is on a replenishmentmodel.Soearliernormallyisalmostabouttheforecast model.Sotherewillbeadealerforecast.Therewillbeasalesforecast and everything gets aggregated for anMRPrun,andthat'showwe used to do the entire production. The production planisagainstan indent.Sonowwhatwe'redoingisthatallhavetogoawaybecause nooneknowsexactlyatwhatmodelisrequiredatwhatpointoftime and the dealer profitability to be protected. So what we have done is we have gone in for the theory of constraint-basedreplenishmentmodel.Thatiswhatweimplemented insparepartsasabusinessalmosttwoyearsback,whichhasshown usextensivegainasabusinesstousandtothedealerpartnersalso.So tothatextent,ithadsomeimpactonthewholesalebecausewenever wanted anything which is left on an indent based. Otherwise, what will happen is the motorcycles have to be moved fromoneplacetoanotherplace.Sotoavoidallthosethingswhenthe replenishment model was being cutoverasasystem,wewerealso cautious about building the inventory there by the wholesale. Okay. And what kind of impact would it have on the recent one wholesales? Percentage term, I will come back to you because we are still assessing abouttheavailabilityofthemotorcycleatthatplace.And becausethefestiveseasoniscoming.Asaresult,therewillbealways amultiplierforfestiveontheinventoryholding.Wearejustdoingit. Buttheinterventionwhichwehavetakenthatinventorybuildshould not happen. And we maintained our dealer inventory only within abouttwo,threeweeks.Sowehaven'tincreased,youwouldhaveseen inthechannelcheckeverywhere.Wehaveactuallylookedatkeeping the inventory in the check during this time. Got it. And Vidhya, you talked about 60 basis point benefit of commodity. This is on Y-o-Y basis or on a Q-o-Q basis? Vidhya Srinivasan: Yeah, Y-o-Y basis. Q-o-Q,woulditbelargelystableortherewouldbesomebenefiton Q-o-Q as well?
Vidhya Srinivasan: I think largely stable, I wouldsay. Okay.Andyouexpectthistogoupgivencommoditypricesforsome of the commodities have been changed? Ithinkitwouldtakeabraverpersonthanmetopredictcommodity prices right now. I think aluminium is showingabitofapressurepoint.Butwhatis happeningiswehavelaunchedalltheplatforms.SotheJplatform,K platform, P platform, all those things which are launched. So the VAVEwillstartkickingin.Soitwillalsohelpusovertheperiodof Gotit.Andgivenwearelookingatbrandactivationacrossmodels, shouldweexpectamaterialincreaseininvestmentinmarketingand branding going forward? Whichisactuallyplanned,Jinesh.Sothat'sallplannedinourP&Lfor thewholeyear.Soyouwillseeourinvestments,whichwillbethere, but there will be an increased spend on the marketing and brand building to build strong awarenessoftheproductswhichwetalked about. That's also part of our rebalance, which we mentioned, the growth is the mindset with which the organisation has to go. And that'showwewillseemoreactivities,whichwillbetakingplacein Jinesh Gandhi: Thanks and all the best. Thanks,Jinesh.Next,wehaveaquestionfromAmyn.Pleaseunmute yourself. Yes.IjustwantedtogobacktotheHimalayan.Whileyouaredoing-- andthisismoreregardingthedomesticmarket,youaredoingcloseto 3,000amonth.IfIseethenewHimalayanisdoingasmuchvolumes as the older Himalayan was doing. So my question is, A, is this something that you were anticipating? Are there any reasons why despiteacompletelynewHimalayanandamuchimprovedproduct, the volumes are still flattish compared to the outgoing model? Amyn,theHimalayanasImentioned,inthesixmonths'timeofour launch,wehavealmostcrossedabout32,000,includingdomesticand international.Inanewproductlikethis,becauseit'sanewplatform forus,okay?Whenitislaunchedandtheexisting411whichhadbeen thereinthemarket,peopledogetit,it'sanevolution,butthemarket
willalwaysbelookingatinitiallyhowtheproductbehaves.Howisit getting accepted? Andconsistently,thegrowth,asyou'realsomentioningreachingthe oldernumbers.Andnowfromtheretogo,initialconsumershaveto beveryhappy.Thatwaythisplatformhasgotverygoodacceptancein the market. Theproductgotverygoodacceptance.,andeverybodycouldableto link and desire to ride the Himalayan at the Himalayas and it is catching up. It's a Bruce Lee intheadventuremotorcyclecategory, which people are experiencing. So that's how the growth will take place. It's on the right track. Let me put it like that Amyn. Okay. Thank you. And just going back to the Hunter, I think you earlierinthecallmentionedthatyouweregettingadecentamountof first-timebuyers.SoIjustwantedtoclarify,whenyousayfirst-time buyer, are you saying like first-time two-wheeler buyer because... Yes. Okay.BecauseHunterisstillexpensivelypriced.Imeanit'scheaper than your Classic and Bullet, but it's still a very expensive product. Yeah, Amyn. Broadly, what proportion of Hunter would be -- I mean, first-time buyer, if you can give us a sense. First-time buyers, maybe about 13%. 12% - 13% roughly in the portfoliolevel,andHuntermaybeslightlyhigher,maybeabout19to 25 percentage level first-timebuyers.Butthereareplayerswhoare actually looking at upgrading because they want to own a Royal Enfield,whichisacoolbrandtohangoutwith.Andthatway,itis really helping us to get the younger customers to our fold. Amyn Pirani: Okay, that's helpful. Thank you. Thanks. Thanks, Amyn.Next, we have a questionfrom Prashant. PrashantKothari: Justgoingbacktotherecentkindofvolumetrends.Ikindofhearthat maybe there is some confusion in the marketplace about different optionsthatthecustomershaveandifthevolumesarelow.ButifI weretokindofthinkaboutwhatwashappeninginasimilartimelast
yearwhentherewereactuallylauncheshappening,alotofaroundtwo new competitors coming in and that we launched even then our volumeswerenotkindofflatlikewhatwehaveseennow.SoI'mnot abletofullyappreciatetherationalethatyouaregettingontheselow volumes. If you can explain it. And maybe theotherreasons,othercompaniesaretalkingaboutall reasons like electionsandheatwaveandwhatnot,theotherreasons for the lower offtake that you are seeing? Prashant, I just have to give it in a slightly elaborate way. In the middleweight,ifincase,it'snormallywesaywhat?Middleweightis at a particular price point, people have inclination to upgrade, inclinationtobuybecausethepricepointissomethingthere.Ifyou actuallylookatwhohasgained,Idon'tthinkanyonehasgained.So where are the customers? Sobecausewehave7.5millionuniquecustomerswhoactuallycome and visit Royal Enfield website every month. So when we start looking at the leads and then trying to figure out even in all the marketswestartedlookingatwhereexactlytheconsumer,whyisit not getting converted? And we go back and then start checking, everybody starts saying, "Yes,Iconsiderit.ButnowIthinkI'mclear.Iwanttocomebackto Royal Enfield. So that's the confusion which I was talking about. Everybody was actually given a lot many options directly against RoyalEnfieldandallthosethings,thatisIwouldsayit'sadeterrentin decision-making,andthatiswherewefeltisamajorissuethere.Itis subsiding, and that's how we are seeing walk-in inquiries going up. Eventhough,Imean,Imusttellyouheatwaveandelectionshashad its own impact. I'm not saying no to that. Our walk-in was lower duringthatparticularpointoftime.Buttheconversionratehasgone up.That'swhyretailhasbeengood.Wehavegrownretailinasingle digit.Primarilytheconversionhadbeenverygood.SoasImentioned, theconfusionintheconsumer'smind.Intheconsumer'smindwhen the clarity is therefordecision-making,especiallyformiddleweight categories, it actually helps. Asthatissettlingdown,itwillhelpustocomebackbecausewhoever hasclimbedveryhighvolume.Noonewasbeabletoactuallygarner volume and our retail has been very good. Prashant Kothari: Okay. All right.Thank you very much.
Thanks.Duetotimeconstraints,thiswasthelastquestion.Sooverto BGR sir and Vinod sir for the last closing comments. Thanks. Vinod, anything from you? No, I think thank you very much. Thank you very much for taking time and attending our question-and-answersessionsalsoforthisquarterone.Allthebest.I look forward to seeing you soon at the Motoverse. Thanks. We can close the call.