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Edited Transcript of EICHERMOT.NSE earnings conference call or presentation 6-Feb-20 10:30am GMT

Q3 2020 Eicher Motors Ltd Earnings Call

Feb 11, 2020 (Thomson StreetEvents) -- Edited Transcript of Eicher Motors Ltd earnings conference call or presentation Thursday, February 6, 2020 at 10:30:00am GMT

TEXT version of Transcript

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Corporate Participants

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* Lalit Malik

Eicher Motors Limited - CFO & Chief Commercial Officer of Royal Enfield

* Siddhartha Lal

Eicher Motors Limited - MD & Executive Director

* Vinod Kumar Dasari

Eicher Motors Limited - CEO of Royal Enfield & Whole Time Director

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Conference Call Participants

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* Aditya S. Makharia

HDFC Securities Limited, Research Division - Analyst

* Binay Singh

Morgan Stanley, Research Division - Executive Director

* Chirag Shah

Edelweiss Securities Ltd., Research Division - Research Analyst

* Gunjan Prithyani

JP Morgan Chase & Co, Research Division - Analyst

* Joseph George

IIFL Research - Assistant VP

* Kumar Rakesh

BNP Paribas, Research Division - Analyst

* Nishant Vass

ICICI Securities Limited, Research Division - Auto and Auto Ancillary Analyst

* Pramod Kumar

Goldman Sachs Group Inc., Research Division - Executive Director

* Pravin Yeolekar

CIMB Research - Analyst

* Ronak Sarda

Systematix Shares & Stocks (India) Ltd., Research Division - VP of Auto, Auto Ancillary

* Sonal Gupta

UBS Investment Bank, Research Division - Director and Research Analyst

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Presentation

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Operator [1]

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Good day, ladies and gentlemen, and welcome to the Q3 FY '20 Earnings Conference Call of Eicher Motors Limited, hosted by UBS Securities.

(Operator Instructions) Please note that this conference is being recorded.

I now hand the conference over to Mr. Sonal Gupta from UBS Securities. Thank you, and over to you, Mr. Gupta.

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Sonal Gupta, UBS Investment Bank, Research Division - Director and Research Analyst [2]

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Thanks, Margaret. Good afternoon, everyone. I welcome you all to the Q3 FY '20 Results Conference Call for Eicher Motors Limited. We are very happy and delighted to have with us the senior management team from Eicher Motors, led by Mr. Siddhartha Lal, CEO and Managing Director; and Mr. Vinod Dasari, CEO, Royal Enfield; and Mr. Lalit Malik, CFO and Chief Commercial Officer.

I'll now like to pass the floor to Siddhartha for his opening comments. Over to you, Siddhartha.

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Siddhartha Lal, Eicher Motors Limited - MD & Executive Director [3]

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Yes. Good afternoon, and thank you very much, Sonal, for hosting this. Good afternoon, everyone, and welcome to Eicher Motors Limited's quarter 3 results.

I'm going to update you on the financials first. So at a consolidated level for Eicher Motors Limited for the quarter ended -- the third quarter ended December 31, 2019, we had a revenue of INR 2,371 crores, which is up 1% from last year; and EBITDA of INR 592 crores, which is up -- down 13% from last year; and an EBITDA margin at 25% against 29% from last year, resulting in a profit after tax of INR 499 crores, which is down 6% from last year.

So that's on the overall financials. I'll hand it over to Vinod Dasari to tell us about the updates on Royal Enfield business now.

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Vinod Kumar Dasari, Eicher Motors Limited - CEO of Royal Enfield & Whole Time Director [4]

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Thank you, Siddhartha. Good afternoon. The total sales for Royal Enfield for Q3 in terms of motorcycles was 189,000, down about 2% compared to last year. But our exports were up significantly to 8,400, which was triple of last year as both our 650cc Himalayans -- Twins and the Himalayan are doing very well.

If you look at the motorcycle segment higher than 125 engine size, the entire motorcycle segment was down 23%, but Royal Enfield actually was down only 5%, and hence, our market share improved from 26% to 32%. Actually, if you look at sequentially, [Eicher] significantly outperformed the industry. We are up 20%, while both the industry and the [PST] segment, the highest [SI] segment, is down 7% to 8%. So that's on the overall sales picture. And I think this was led largely by 2 things: One was the network expansion that we had done. We continue to add large format stores. We now have about 940, roughly, and we opened a whole bunch of Studio Stores. By December, I think we would have crossed well over 500. We'll [add] probably 750 by the end of the year. Very good initial response and almost all the stores have achieved breakeven point.

Equally, we continue to grow internationally. We've added 10 more exclusive stores in markets like Brazil, where last year, we just had 1 store, now we will have -- by the end of this year, we'll have 10 stores. Overall, I think we have nearly 675 touchpoints outside of India. So we are just as many touchpoints -- growing touchpoints as fast as we are growing in India.

Equally, just like we did the network expansion for accessibility, we also launched bikes like the Bullet X and the Classic S, which makes bikes more accessible. And we allowed the customers to have more personalized and customized things rather than just stock bikes. And building on the success of Bullet X and Classic S, we also launched what is called Make Your Own, which was a first-of-its-kind initiative, allowing the customer to build their own bike using whatever array of paint colors that we have to, accessories and so on, so that they don't have to waste time or money doing it in the aftermarket. So this is what helped us. Equally contributed was the continued success of the 650, which seems to have won every possible award in the World Bike of the Year by Motorcycle Cruiser, Naked Standard Motorcycle of the year by Motorcyclist Magazine and so on.

We were very successful with our Rider Mania. This time, a record turnout of 8,000 people who were paid participants, and we used the opportunity to announce the launch of a Slide School, which we'll be launching in Bangalore, hopefully sometime in a month or 2. Lastly, we're completely ready with BS-VI. We have launched all the models in BS-VI, except Bullet, which we will probably be launching in the next couple of weeks. We did launch the Tribute Black, the last of the 500, as a special series, which will -- the sales will go on Monday, I think, here. So initial response is quite overwhelming. We are very excited by just a special edition that we are doing, and we hope to turn this around overall market sometime soon.

So compared to last year, I mean, yes, the volumes are down by 2%, but sequentially, there has been a little bit of growth, and I hope that this trend will continue. I'll hand it back to Siddhartha for comments on VECV.

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Siddhartha Lal, Eicher Motors Limited - MD & Executive Director [5]

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Thank you, Vinod. As you know, the commercial vehicle industry has been extremely weak for some time now. So I'm going to give an -- run an update on VECV, our commercial vehicle joint venture with Volvo.

So for the quarter, the revenues were down 23% to INR 2,164 crores. The EBITDA was at INR 133 crores, which is down 28%, and the EBITDA margin was at 6.2% versus 6.6% last year. That's despite a 27% drop in the volume. So overall PAT is at INR 30 crores, which is down 60%, and total sales were at 12,400 units of trucks and buses, which is down 27% from last year's approximate 17,000 units that we did. But the 27% drop is against an industry drop of 37%, so we've actually dropped less than the industry and therefore, of course, marginally increased our market share also as a result. So yes, overall, VECV industry has been extremely bogged, medium and heavy duty, in particular. And -- but some segments are starting to show a little bit of sign of a pickup on account of pre-buying due to BS-VI transition.

Having said that, there's also a lot of turmoil in the industry in order to get rid of BS-IV vehicles and to ramp up for BS-VI. So there's a lot of work being done by all the teams, and we're absolutely ready and -- for that. But it takes a lot of effort and energy in the company to get that going and to make sure that the 0 stock of BS-IV after -- from 1st of April onwards.

We have had -- we've had an amazing launch of our new Eicher Pro2000 series, which is our new light-duty platform with 1.8 and 2-meter wide cabins with -- and while it's doing its duty as a -- the first concept is from light duty, which also goes up to now medium duty, all the way up to beyond 12, maybe even to 14 tonnes segment. So this is a really new competitive and state of the art platform and cabin and chassis and engines which are -- which have come in and will be available. So they've been in the market now for a few months and been doing extremely well. And of course, it will be ubiquitous from BS-VI onwards, covering the entire range of light and medium duty for us. So we're delighted about the new platform of trucks that we've got.

In addition to that, on the bus side, and traditionally, Eicher has been very strong in the light and medium duty segment, which is now the bigger part of the bus market compared to even heavy duty, so we've been extremely successful in school buses and have a very high market share there. In the last decade, we've also become very successful in the staff segment. And we've now just launched a new bus for the Route Permit segment, which is the more rigorous of all of these applications. The mileage is much higher and the weight is much more. And there we have a -- we've built a much stronger and high-durability bus, which we believe will give us another huge leg up on the Route Permit segment in the coming years, next year and subsequent years. So we're excited about that.

And overall, we are ready with an extremely robust lineup of BS-VI engines and vehicles across all categories and segments of BS-VI products. We are in the process of rolling them out this quarter. We'll have an extremely wide range of BS-VI engines in India with 2-liter, 3-liter, nearly 4-liter, 5-liter, and 8-liter diesel-powered engines as well as 2 CNG-powered engines, and we believe that this is going to be a shifting point for both the commercial vehicle industry and for the Eicher brand of trucks and buses, in particular, where the opportunity is there to leapfrog in the industry, whereas we've been making Euro 6 engines for Volvo for many years now, and we've made hundreds of thousands of these Euro 6 engines. We have an understanding and knowledge of the manufacturing, and also from our partners, we have a knowledge of the field-related areas that we need to look out for. So as a result, we're extremely well prepared, and I believe much better prepared than our competition for introducing this extremely complex new technology of Bharat Stage VI, both from the industrial side and from the field side, and we believe that will give us a great competitive advantage in the coming year and in the years to come. So that's all about B series and commercial vehicles.

And so yes, overall, just to repeat the financials, we've had a -- our revenue has been INR 2,371 crores and a PAT of INR 499 crores in the last quarter.

So back to you, and over to you for some questions now.

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Questions and Answers

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Operator [1]

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(Operator Instructions) The first question is from the line of Kumar Rakesh from BNP Paribas.

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Kumar Rakesh, BNP Paribas, Research Division - Analyst [2]

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My first question is around the export market. We have seen some volatility in the volume, which you have been discussing. Although you had highlighted in the last earnings call that sequentially it will come down. But can you [check] us what would be a more sustainable number? Is that September quarter number were reflecting off some of the new store ramp up and hence dealer inventory build-up in that? Or is there some seasonality which we are looking at in the export market of Royal Enfield?

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Lalit Malik, Eicher Motors Limited - CFO & Chief Commercial Officer of Royal Enfield [3]

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Mostly. That has [been there] forever. Because what happens is that our big markets right now [we're in] clearly the -- some of the largest volume markets, which is Europe and America, USA, those slow down tremendously at this point in time, from October to December. Because the season [just shuts up]. You can't ride in the very cold weather at this point in time. It will begin to pick up sometime in Feb and March again when the -- buying by the dealers, not so [into] the customer at that point in time, but by the dealers, definitely tend to happen at that point in time because they want to be ready for the season to start. So that's a pattern we have been seeing for years and years. So there's no volatility at all, there is seasonality.

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Kumar Rakesh, BNP Paribas, Research Division - Analyst [4]

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Got it. My next question is around the BS-VI transition for the Royal Enfield part. So can you help us understand how do you plan to plan your production? Have you completely shut down your BS-IV production and completely moved to BS-VI? And how do you plan to prepare yourself for any pre-buying demand which comes in? So how are you going to manage your retail, wholesale and production that -- these 3 bits in the coming 2 months?

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Lalit Malik, Eicher Motors Limited - CFO & Chief Commercial Officer of Royal Enfield [5]

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Kumar, this question is slightly late in the day. So all the planning and all has been done. We have moved 100% of our Himalayan Classic to BS-VI, so large -- and the [Twins], so a large part of the portfolio has already moved. The rest will move by the end of the month. This is a new supply chain in terms of some of the BS-VI parts, so that will take a little bit of time to stabilize. Not necessarily at our end, but at the vendor end. But generally -- so it's all in there now.

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Vinod Kumar Dasari, Eicher Motors Limited - CEO of Royal Enfield & Whole Time Director [6]

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Equally, our inventory level was brought down substantially back in October itself. So it wasn't like we had to do a huge cleanup or anything like that. We had steadily brought down inventories from April to October. We had less than 3 weeks of inventory now -- or 2 weeks inventory, so -- and that's including the entire pipeline. So we can just react or respond to it, whichever way it comes.

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Kumar Rakesh, BNP Paribas, Research Division - Analyst [7]

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Yes. So exactly on that, essentially, so what I was trying to understand was that, given that your inventory was very low, unlike for other OEMs where the retail and wholesale could be disconnected, at least in the instruments, should we expect that your retail and wholesale would largely be reflecting of -- be very connected and not reflecting of any disconnect? Given that the BS-IV inventory is likely clear, and...

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Lalit Malik, Eicher Motors Limited - CFO & Chief Commercial Officer of Royal Enfield [8]

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Frankly, in January, we were a little stock out at quite a few places around the country. Because like I said, the BS-IV stock we had just whittled down over the last many months. And the BS-VI is yet to kind of fully take steam. And that will happen, right? I mean, so the emission of this enormity -- the change of such enormity will lead to those problems. But as far as in the next couple of months, they'll all get ironed out, unless there is a major China disruption. There's that and the others. So there is -- it's all in the works.

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Kumar Rakesh, BNP Paribas, Research Division - Analyst [9]

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Okay. And finally, my question is on the margin front. You had talked about 25% to 30% margin guidance, that holds for the BS-VI transition items. Is it right?

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Lalit Malik, Eicher Motors Limited - CFO & Chief Commercial Officer of Royal Enfield [10]

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Yes. The guidance -- this is not a guidance. We don't give any. But in the past, when somebody asked me that, at the peak and not so peak, where does the margin lie, so my general sense and this is about a year back, so good that you just remember these numbers, was in that range. Well, the BS-VI, as you know, some of the precious metals have just skyrocketed, and not for us only, for everybody. So some of that cost management, ways to tackle that cost, what to do internally and all the stuff will happen in time. So will we protect our margins in percentage terms? The answer in a very short term [while] is no. And that's a job to be done, right? And the last major regulation changes happened, as far as we know. So now is the time to, over time, claw back to some of the other margin ranges.

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Operator [11]

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

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Pramod Kumar, Goldman Sachs Group Inc., Research Division - Executive Director [12]

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My first question pertains to the demand situation, just extending on the point you made that you had stock-out situation. So if you can just help us understand what was the kind of order intake, what you had in the month of January? Because we did hear from dealers that there has been a short supply from the company side. And also related to that, how has been the acceptance of the higher-priced BS-VI variants across different models? And also provide some color as to how strong the demand pipeline is in terms of whether do we have more orders than what we can produce for the next month or so? If you can just provide some color on that.

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Lalit Malik, Eicher Motors Limited - CFO & Chief Commercial Officer of Royal Enfield [13]

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Well, we're definitely not carrying a 30-day order book at this point in time. So -- but has the pricing action that we have taken because of the BS-VI change necessitated by BS-VI? Answer is 100%. Have people accepted that pricing? Yes, I have not heard of a single comment over there that it was too high or whatever, any reaction to that. So in that way, we are very pleased about. Otherwise, it's on a roll. I mean, there's not -- like the normal month of January, which -- a big spike used to happen, if you look at the past trends, I mean, that has not happened. We are still in a subdued environment, in that sense. But January has been promising. I mean it could have been far worse.

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Pramod Kumar, Goldman Sachs Group Inc., Research Division - Executive Director [14]

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Okay. So well the -- was the total order intake or the customer bookings in the month in January at the dealer end higher than your dispatches nationally?

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Lalit Malik, Eicher Motors Limited - CFO & Chief Commercial Officer of Royal Enfield [15]

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Yes, yes. Like I said, we were in a stock out position also. So definitely, they were carrying more orders than we could service.

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Pramod Kumar, Goldman Sachs Group Inc., Research Division - Executive Director [16]

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Sounds good. And second question relates to the 650 performance. I think we had a spectacular start. We ramped up to almost 4,800 domestic plus export. And thereafter, the volumes have kind of eased a bit. And last month, of course -- a couple of months, it's been because of the exports, the seasonality, but even domestic numbers have been cooling off. So if you can just throw some color there as to where do you think the sustainable run rate for the 650 Twins is? Because if I recollect, at some point, we were looking at capacity constraints and you are planning to increase capacity for the 650?

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Lalit Malik, Eicher Motors Limited - CFO & Chief Commercial Officer of Royal Enfield [17]

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So look, last few months have definitely because -- because of this whole BS-VI transition. And also, we definitely -- I mean, we don't want any dealer to have any BS-IV bike at the end of the quarter. But if we had a bike, then the last thing you wanted is to have a tow ride, because it's so expensive. And you know, the newer approval is something which we don't want to do to sell off that bike, higher discount on that or any other. So the sharp fall in the production, if you look at the numbers, for Twins and Himalayan, that happened from the month of say, mid-November or so. So we did choke down Twins and Himalayan quite a bit.

But I have to say, the Twins have just launched like a few weeks back, but Himalayan was launched, BS-VI, it was the middle of last month. They have shown extremely good traction.

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Pramod Kumar, Goldman Sachs Group Inc., Research Division - Executive Director [18]

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So where do you think, Lalit, the sustainable run rate could be for the 650, all-inclusive? And what capacities are we sitting on in terms of monthly run rate?

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Lalit Malik, Eicher Motors Limited - CFO & Chief Commercial Officer of Royal Enfield [19]

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Just go quarter-by-quarter. This quarter only the 2 bikes been kind of relaunched in terms in that BS-VI avatar. Let's discuss in next May, how they have done in Q1 -- Q4.

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Operator [20]

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The next question is from the line of Gunjan Prithyani from JPMorgan.

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Gunjan Prithyani, JP Morgan Chase & Co, Research Division - Analyst [21]

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I just needed that clarification that you said that inventory levels are 3 weeks or 2 weeks. I'm not sure if you can clarify that, where we are on the inventory level? And assuming -- since you mentioned that we had these BS-VI launches early in Jan. So is it fair to say that the -- a large part of this inventory also was BS-VI in the market now?

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Lalit Malik, Eicher Motors Limited - CFO & Chief Commercial Officer of Royal Enfield [22]

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No, no. Not a large part, because the BS-IV inventory is quite low. It's actually less than 10 days in the entire pipeline from...

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Vinod Kumar Dasari, Eicher Motors Limited - CEO of Royal Enfield & Whole Time Director [23]

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From factory to dealer.

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Lalit Malik, Eicher Motors Limited - CFO & Chief Commercial Officer of Royal Enfield [24]

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From the factory to the dealership. So it's that low. But because that is low and the BS-VI has not happened like commensurately in that -- in that pace, because of like of -- few issues I spoke about. So therefore there is a -- there are a few entry signs we have around the country.

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Gunjan Prithyani, JP Morgan Chase & Co, Research Division - Analyst [25]

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Okay. And the total number you mentioned is 2 weeks at the dealerships, right?

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Lalit Malik, Eicher Motors Limited - CFO & Chief Commercial Officer of Royal Enfield [26]

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Oh, no, no. Not even that.

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Gunjan Prithyani, JP Morgan Chase & Co, Research Division - Analyst [27]

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Okay. It's less than 2 weeks -- two weeks at the dealership?

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Lalit Malik, Eicher Motors Limited - CFO & Chief Commercial Officer of Royal Enfield [28]

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Yes.

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Gunjan Prithyani, JP Morgan Chase & Co, Research Division - Analyst [29]

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Okay. And the second question is on the Studio expansion. You mentioned that we've reached 500 by end of December, and we'll accelerate this further. And putting this together with the breakeven thing, I'm assuming that most of these stores are selling near about 10 or higher than that. Are you seeing that there has been a fair bit of cannibalization at the main stores because we are seeing acceleration on the Studio Stores, it should also -- you know, the growth should have been even higher? And secondly, what has been the response that you're getting? Because it's been now a couple of months that we've had these formats, like from the -- from your channel. How are they -- I mean, what are the advantages of this? What kind of models are doing well at these stores? If you can share some insights into it?

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Vinod Kumar Dasari, Eicher Motors Limited - CEO of Royal Enfield & Whole Time Director [30]

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For the Studio Store -- let me give Lalit a break for a second. The Studio Store, the breakeven point is roughly only about 7 or 8, depending on the location. So even if we take all 500 of them, that's 3,500 a month extra. So it's not huge amount yet, but what it does is -- I remember visiting one Studio Store of a rural part of UP. And I saw one old guy brought his bike. He was literally dragging that bike in. So I sort of felt bad and I apologized as to what happened and he said, "Look, nothing wrong. I wasn't riding my bike because there wasn't a Royal Enfield nearby. I didn't want to go to the main city to get it serviced. Now that there is a Royal Enfield nearby, I'll get to ride it. All I need is my battery charged up." So that's the flip side benefit. Now if you're spread out more often in more places, then people get to ride, and the more they ride, the more they enjoy Royal Enfield, and that helps our sales. So it's direct a result of this is there, as I told you, in the numbers. But there's also that indirect benefit is the vast effect of this as you penetrate deeper into the country.

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Gunjan Prithyani, JP Morgan Chase & Co, Research Division - Analyst [31]

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Okay. Service is something you can value, really see that that's been a -- the proximity to people has been a big help for this format?

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Vinod Kumar Dasari, Eicher Motors Limited - CEO of Royal Enfield & Whole Time Director [32]

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Yes.

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Gunjan Prithyani, JP Morgan Chase & Co, Research Division - Analyst [33]

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Okay, okay. And just last question, if I can squeeze in. There was -- of course, I know you guys haven't commented on it, but there was this expectation that there will be a new platform rollover or a new product portfolio rollout along with BS-VI. Any comments on the -- is there a platform rollover that you can comment on when it happens? Or anything on the new launch pipeline from you guys?

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Vinod Kumar Dasari, Eicher Motors Limited - CEO of Royal Enfield & Whole Time Director [34]

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We don't want to comment on our future product pipeline. As of now, we are focused on transitioning everything to BS-VI, and we'll let you know as soon as possible.

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Operator [35]

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The next question is from the line of Joseph George from IIFL.

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Joseph George, IIFL Research - Assistant VP [36]

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So my first question was on how you look at volumes next year. And -- so under normal circumstances, if there was a big price tag related to BS-VI, it would have been normal to assume that volumes would take a beating. But given that we have taken a hit in terms of volumes, not only for you, for the industry, in FY '20 itself on that lower base of -- for instance, your average is about 60,000 when I look at FY '20. Do you think it'll be a struggle to grow next year? Or do you feel relatively confident?

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Vinod Kumar Dasari, Eicher Motors Limited - CEO of Royal Enfield & Whole Time Director [37]

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It's very difficult to predict what will happen next year. I think the first half will slightly be a little bit tight because of the changeover to BS-VI. But I think the market -- the sentiment should come back in the second half, and I expect the market to actually grow by roughly about 5% overall. That's my guess. 1 year ago, somebody had guessed for this year, nobody would've predicted a 15% downturn, but that's what happened. So we are in a volatile market. We have to continue to do what is the right thing for our customer and for our channel. We have to continue to bring in new products and expand our new solutions offering as well as grow into new markets outside India. And that's what we're focused on. We're not looking for very short term, what'll happen next month kind of figure.

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Joseph George, IIFL Research - Assistant VP [38]

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Sir, the second question that I had was on how you look at passthrough of BS-VI cost. A couple of OEMs indicated that given the environment, it'll be very difficult to charge a profit margin on the BS-VI costs, and hence, the percentage margin may come off purely because of that denominator effect. Do you see a same -- I mean, is that how you're also thinking about it? You know, easy to pass the cost, but difficult to pass a profit margin on the additional costs?

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Vinod Kumar Dasari, Eicher Motors Limited - CEO of Royal Enfield & Whole Time Director [39]

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In some cases, we can pass it on where possible. And in some cases, we can't. But, yes.

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Lalit Malik, Eicher Motors Limited - CFO & Chief Commercial Officer of Royal Enfield [40]

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So obviously, it's going to happen. I mean, we're going to be a little selective or choosy about the kind of platform and SKU and all that stuff. So it's not going to be very easy to pass on cost plus margin. That's for sure. I mean, how much can you pass on, you have to kind of test the market and find out.

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Joseph George, IIFL Research - Assistant VP [41]

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Okay. And the last question that I had was the relatively lower-priced variants that you launched, for the Bullet 350 and the Classic 350. How has been the customer adoption there? Have you seen your normal Bullet 350, Classic 350 customers shift en masse to the low-priced variants? Or is the mix still in favor of the older ones?

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Vinod Kumar Dasari, Eicher Motors Limited - CEO of Royal Enfield & Whole Time Director [42]

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I mean, this was to make the bikes more accessible. They come to the store, and you obviously have to upsell it. In the end, I would say the Bullet X model that we launched was maybe less than 10% of our sales, right? So -- and Classic X was actually not margin dilutive at all, because it was directly a result of cost reduction. So what it does is offers a lower-priced entry for the customer who walks into the store. It doesn't necessarily mean that he buys just that bike. So we did not see -- in fact, the entire Bullet franchise actually went up in overall, and the Classic remained where it was. So that's why, probably, our market share went up.

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Operator [43]

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The next question from the line of Chirag Shah of Edelweiss.

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Chirag Shah, Edelweiss Securities Ltd., Research Division - Research Analyst [44]

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Sir, just a -- first a basic question on gross margins. Did we see raw material benefit in the quarter? Or it's likely to come in the ensuing quarter? Because our gross margin versus the -- your peers, be it in 4-wheelers or 2-wheelers, we are in a different trend where everybody is seeing some benefits that we have not seen in the reported numbers.

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Lalit Malik, Eicher Motors Limited - CFO & Chief Commercial Officer of Royal Enfield [45]

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So there was -- it was a mix of both. In case of some commodities, there was a bit of a benefit. But generally, I would say, now and for the next few months, it's going to be adverse only there, with the precious metals going the way they are going.

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Siddhartha Lal, Eicher Motors Limited - MD & Executive Director [46]

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Exactly.

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Lalit Malik, Eicher Motors Limited - CFO & Chief Commercial Officer of Royal Enfield [47]

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There's the China issue. China has shut down most of its manufacturing for the next few days, and let's see, when they open up also. I don't see any relief over there. So what others are [upholding], I don't really understand. But like I said, to each his own. The way they source and the way they book orders, so it could be a function of that. But we are not seeing any tremendous benefits there, to be honest with you.

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Chirag Shah, Edelweiss Securities Ltd., Research Division - Research Analyst [48]

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Yes. And the second question was on 650cc Twins. Is it possible to indicate what is the current production that you are doing? Any other capacity that you have? Because we are looking to scale it up to upward of 5,000 units at some point of time. So are we there? Or we are at higher levels of production capacity?

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Lalit Malik, Eicher Motors Limited - CFO & Chief Commercial Officer of Royal Enfield [49]

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No, no, no. We are still at 5,000 capacity -- from a capacity standpoint, at 5,000 only. Like I said, there was a huge surge and it started all of a sudden. The market also took its toll. The more expensive, the more higher it was, the bigger will be the hit on you. So we are still in that phase. But some normality -- normalcy has now come in because the BS-IV have gone away and the BS-VI have come in. So we'll see from a trend perspective how it behaves, because there also it's gone up by the way.

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Chirag Shah, Edelweiss Securities Ltd., Research Division - Research Analyst [50]

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And just a follow-up on the earlier question on the platform side. So why not -- what was the thought process behind not introducing a new platform along with BS-VI, because that would have really bring a notable amount of excitement? Is it more to do with costs? It's more to do with demand environment? Or how do you look at that part? And when can we expect you gaining confidence that this is a time to launch new platforms or transition to new platform?

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Lalit Malik, Eicher Motors Limited - CFO & Chief Commercial Officer of Royal Enfield [51]

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I don't think my [quarters] have anything to do with launching of a new buyers to a new kind of platform. But like we've said, given the product pipeline that we have, the product thinking that we have, and I'm going with many years now, we're saying that we have a plan for the next 5, 7 years. In that whole scheme of things, you sort to understand the first one off the block. Then you see the risk as we have, kind of, comes along. It's absolutely -- it's silly to talk about new bikes, new platforms, when and all the stuff. When it happens, I hope we convince you that these are damn good bikes.

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Operator [52]

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The next question is from the line of Pravin Yeolekar from CGS-CIMB.

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Pravin Yeolekar, CIMB Research - Analyst [53]

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Sir, my question was specific to Classic 350 BS-VI. Now in Classic 350, we have provided a better value proposition to customers with the alloy wheel and (inaudible) cost to make was around 18,000 to 17,000. So is it -- just wanted to understand, so is it just we have passed on the -- it is fully passed on? Or it's just a cost -- we have absorbed some of the costs initially?

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Lalit Malik, Eicher Motors Limited - CFO & Chief Commercial Officer of Royal Enfield [54]

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So you know, it's not about [passing], but the portfolio as a whole, the intention is to pass on a large part of our cost. So that's where it stands. So like I said, within Classic or X or Bullet, there are many SKUs. So some we'll pass on cost plus a few margins. Some we'll pass on costs. So therefore, as a portfolio as a whole, we will pass on the cost.

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Pravin Yeolekar, CIMB Research - Analyst [55]

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But is it right understanding that this is the initial pricing and going forward we will just raise it as we go ahead? Considering a better proposition to...

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Lalit Malik, Eicher Motors Limited - CFO & Chief Commercial Officer of Royal Enfield [56]

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It all depends on how the commodities are behaving, and how our own internal cost structures are kind of going through. So that's really a #1 function of that.

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Pravin Yeolekar, CIMB Research - Analyst [57]

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Okay. And my second question was on 500cc product portfolio. So how do we look at that? Because it's not doing well. I mean we have seen a large part of decline in that portfolio. So considering the basic challenges, so how are we going to -- ahead with this in BS-VI?

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Lalit Malik, Eicher Motors Limited - CFO & Chief Commercial Officer of Royal Enfield [58]

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I think we did announce last week, including with the press releases of 500 portfolio in India will be discontinued, it's not going to BS-VI, because we have our 650 Twins which will do this job in an exceedingly better manner.

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Pravin Yeolekar, CIMB Research - Analyst [59]

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Sure. And sir, what was the proportion of BS-VI in our Jan dispatches?

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Lalit Malik, Eicher Motors Limited - CFO & Chief Commercial Officer of Royal Enfield [60]

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In Jan...

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Vinod Kumar Dasari, Eicher Motors Limited - CEO of Royal Enfield & Whole Time Director [61]

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1/3.

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Lalit Malik, Eicher Motors Limited - CFO & Chief Commercial Officer of Royal Enfield [62]

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1/3.

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Operator [63]

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The next question is from the line of Aditya Makharia from HDFC Mutual Fund.

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Aditya S. Makharia, HDFC Securities Limited, Research Division - Analyst [64]

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That's not right. This is Aditya from HDFC Securities. Just wanted to clarify, when you mentioned that, obviously, the price tags on BS-VI are difficult or may not be passed on entirely. So do you think your margins would now be in a band lower than 25%?

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Lalit Malik, Eicher Motors Limited - CFO & Chief Commercial Officer of Royal Enfield [65]

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I think we'd rather not answer all these questions, and we're only going to tell you in retrospect what's happened, not in forward. So please don't -- I think there are many questions coming today about what future margins is raised. We're not in a position. We're not -- we don't answer forward questions. So sorry about that. We're not going -- I'm just going to tell you -- I'm just telling generally everybody, otherwise we're going to keep getting such questions.

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Aditya S. Makharia, HDFC Securities Limited, Research Division - Analyst [66]

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Okay. Fair point. And just secondly, in terms of your engine, you're using this air-cooled technology. Do you think you would be planning to move to a liquid cooled at some point of time, because most of the industry seems to be on that?

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Lalit Malik, Eicher Motors Limited - CFO & Chief Commercial Officer of Royal Enfield [67]

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We are doing exceedingly well with our air-cooled platforms, and we are able to meet all our regulatory requirements absolutely. We're able to meet our consumer requirements absolutely. So -- and we believe it's a great differentiator in the market to have an air-cooled product because there are certainly some benefits for that, and there's a differentiation as well. So as of now, we're absolutely on air-cooled technology.

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Operator [68]

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

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Ronak Sarda, Systematix Shares & Stocks (India) Ltd., Research Division - VP of Auto, Auto Ancillary [69]

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Sir, first question on Royal Enfield. I mean we highlighted when we were cutting down inventory post the festive season. But I mean, was there a demand for some -- was there a pre-buy demand for BS-IV vehicles? And because you highlighted the customers have accepted the price increase. But was it a possibility to have some more wholesales or some more retails for BS-IV product? I mean have you taken a call to transition to BS-VI early? Or was it a technical challenge, and it had to be done from January itself?

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Lalit Malik, Eicher Motors Limited - CFO & Chief Commercial Officer of Royal Enfield [70]

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Because of the entire enormous supply chain complexities, we've decided not to try and cut it too fine, that means to try and build BS-IV only till the last date of 31st of March and then move to BS-VI. That was not -- the possibility of enormous losses from unsold stocks and mismatch of stocks was very high. So we've decided to take a more phased approach and introduce BS-VI, and that's -- I believe that's working for us. Sure, maybe there were some opportunity which we've lost on selling some lower-priced product. But I believe, overall, we took a call to go in this direction so that we don't have to have any, let's say, useless inventory of bikes. And yes, overall, the market has accepted it. It's not a -- I don't think there's a material change in volumes that may have come.

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Ronak Sarda, Systematix Shares & Stocks (India) Ltd., Research Division - VP of Auto, Auto Ancillary [71]

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Okay, okay. And sir, second question on the commercial vehicle business. Are we now seeing the axle load norm has got -- it has got normalized? The impact of axle load norms with this sharp fall in commercial vehicles the industry also has shifted towards ICVs from HCVs. Do you think that shift is behind us and industry can see some normalization in FY '21, maybe in the second half?

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Lalit Malik, Eicher Motors Limited - CFO & Chief Commercial Officer of Royal Enfield [72]

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We really hope so. I mean, again, it's out in the future, and it's only opinion that you can ask us because we don't know obviously. Yes, I mean, obviously, that part is settled now. I mean, the axle load norms have settled down. And obviously, that's if -- I mean, it was really in a sense of a sop to truck owners to take extra load on their trucks, which softened, let's say, the higher prices of trucks as it were. So what happened was the existing fleets of trucks, that means the wheels of trucks that are on the roads or whatever, they -- so the capacity of -- and this actually grew without selling more trucks. So that's obviously affected also -- amongst other things, including economic downturn, that also affected truck buying. So probably truck buying was even lower because that. So -- but I think that's all normalized now. And hopefully, with -- and of course, there's going to be some turmoil. In VECV we're very well prepared. Let's say at an industry level, there'll be a bit of turmoil before -- while BS-VI switch over. And after that, the first half is expected to be -- because of higher prices, et cetera, it's expected to be a bit flattish, and hopefully after that if economic indicators look up, we should see an upturn. But it's not -- I mean, it's still lying low for the next few months or so.

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Ronak Sarda, Systematix Shares & Stocks (India) Ltd., Research Division - VP of Auto, Auto Ancillary [73]

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Okay, sure. And last question, again on Royal Enfield. Our configurator website went live last quarter. Can you just help us with how is the response? And any numbers which you can share? How things panned out there?

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Lalit Malik, Eicher Motors Limited - CFO & Chief Commercial Officer of Royal Enfield [74]

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So, you said -- could you repeat the first part? Who?

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Ronak Sarda, Systematix Shares & Stocks (India) Ltd., Research Division - VP of Auto, Auto Ancillary [75]

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(inaudible) configurator.

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Vinod Kumar Dasari, Eicher Motors Limited - CEO of Royal Enfield & Whole Time Director [76]

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Make your own.

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Lalit Malik, Eicher Motors Limited - CFO & Chief Commercial Officer of Royal Enfield [77]

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Well, you know, I think we did a soft launch. We just did very few options and accessories. Just in the last 1 month, I think we did about 600. It's very encouraging. We wanted to do this to test the system to see does it work all the way, including up to the back end? Because these vehicles are not made to stock, they are made to order. So the customer places an order and provides the advance, then it's -- within 24 hours we manufacture it and start dispatches. So you will agree that that's a huge change so -- in the entire system. So we wanted to test that, and I think it has doubled every month in the last 3 months. So I think we will have lot more going forward.

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Vinod Kumar Dasari, Eicher Motors Limited - CEO of Royal Enfield & Whole Time Director [78]

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And it's only launched in the big cities only. So I mean, from a potential standpoint, it's still very, very large. It's very untapped at this point in time. But I just wanted to [chip] in there.

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Ronak Sarda, Systematix Shares & Stocks (India) Ltd., Research Division - VP of Auto, Auto Ancillary [79]

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But the lead time is just 24 hours, you mean from the placement of order to manufacturing?

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Vinod Kumar Dasari, Eicher Motors Limited - CEO of Royal Enfield & Whole Time Director [80]

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Order to manufacturing time.

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Ronak Sarda, Systematix Shares & Stocks (India) Ltd., Research Division - VP of Auto, Auto Ancillary [81]

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That's a very -- the manufacturing is...

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Lalit Malik, Eicher Motors Limited - CFO & Chief Commercial Officer of Royal Enfield [82]

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From order to manufacturing. Yes, you're right.

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Ronak Sarda, Systematix Shares & Stocks (India) Ltd., Research Division - VP of Auto, Auto Ancillary [83]

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So I mean, so it doesn't increase complexity in a way or doesn't disrupt the usual manufacturing operation then?

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Vinod Kumar Dasari, Eicher Motors Limited - CEO of Royal Enfield & Whole Time Director [84]

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No. It doesn't increase complexity, but it increases the number of choices to the customers by order of magnitude, several orders of magnitude.

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Lalit Malik, Eicher Motors Limited - CFO & Chief Commercial Officer of Royal Enfield [85]

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Yes.

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Operator [86]

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The next question is from the line of Nishant Vass from ICICI Securities.

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Nishant Vass, ICICI Securities Limited, Research Division - Auto and Auto Ancillary Analyst [87]

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Sir, first on Royal Enfield. Just wanted your views on, say, would you, and the last cycle has been down cycle, have you witnessed any observations on customer profile across your brands and specifically, 650? So if you can shed some light, say, on demographics and income structure, anything that you've seen which is starkly different between, say, high-income states, low-income states on this side?

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Operator [88]

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Ladies and gentlemen, we seem to have lost the line for the management. We would request you to stay connected while we join them back to the call.

Ladies and gentlemen, thank you for patiently waiting. We have the line for the management reconnected.

I would request Mr. Nishant Vass to please repeat your question.

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Nishant Vass, ICICI Securities Limited, Research Division - Auto and Auto Ancillary Analyst [89]

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Yes, sure. Sir, my question was primarily on customer profile and your observation in the last, say, 12 months, when you've seen the down cycle across your brands and, specifically, on 650cc. So could you shed some light in terms of, say, demographics or income structure and, specifically say across regions, high income, low income? Are you seeing any different trends there?

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Lalit Malik, Eicher Motors Limited - CFO & Chief Commercial Officer of Royal Enfield [90]

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No. I mean, change because of what? I mean, these were the trends that kind of began to emerge, and we've been able to see them very clearly about over 2 years back that pretty much anybody who's a little aspirational in terms of his riding process is buying us. So age-wise, take-home versus-wise, income-wise, and any other issues have been quite well established at this point in time. With the Studio Stores we've gone, kind of, quite deep into our, whatever -- from a description-plus standpoint. So we're tapping the customers who are here, kind of, one step away from buying us because of proximity or because of income levels and any other scenarios. Everything is a little -- it's not clear now. I mean, I don't think there's any group, specifically, 1,2,3,4 who's left out when he's not considering and buying.

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Nishant Vass, ICICI Securities Limited, Research Division - Auto and Auto Ancillary Analyst [91]

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Okay. And sir, on 650 in specific, I remember when you initially launched the vehicle, you had highlighted about the upgraders from the non-RE category. So could you update us in terms of what is the percentage today in terms of the guys who're upgrading from non-RE bikes to 650?

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Lalit Malik, Eicher Motors Limited - CFO & Chief Commercial Officer of Royal Enfield [92]

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So the latest number, I don't have. But till a few months back, a good 60% is still trading up with the Royal Enfield, and the rest are -- comes from outside.

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Nishant Vass, ICICI Securities Limited, Research Division - Auto and Auto Ancillary Analyst [93]

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Okay. So this number has just marginally come off from the initial number?

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Lalit Malik, Eicher Motors Limited - CFO & Chief Commercial Officer of Royal Enfield [94]

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It's around the same number, yes.

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Nishant Vass, ICICI Securities Limited, Research Division - Auto and Auto Ancillary Analyst [95]

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Okay. And sir, on exports of Royal Enfield, you've rapidly expanded the touchpoints. So just wanted to understand -- I presume this will continue next year as well. So what kind of feedback is helping you to be so confident in terms of expanding stores? I know you had highlighted earlier in your event as well, but anything incremental?

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Siddhartha Lal, Eicher Motors Limited - MD & Executive Director [96]

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Well, both are new platforms or relatively new platforms. The Himalayan and the Twins are on the back of, let's say, a distribution that we've been growing over the last 5 years. In strategic key markets, the new motorcycles are doing exceptionally well. And as a heads up, the Twins, for example, are extremely highly worthy now and absolutely in the right sweet spot of the market. We've had -- as Vinod Dasari said earlier, we had outstanding reviews, won every kind of award in all sorts of countries around the world for our Interceptor and our GT, for example. So the Himalayan was a surprise win for us in a lot of markets. It was more made for India. But even in U.S., Europe, Brazil, we had very good [ambiance] for that -- Colombia. But the Twins, of course, were made with that -- those markets and international markets in mind. And it's early days. I mean they're doing exceptionally well. The growth you're seeing -- 120% growth in the first 9 months or maybe 3x growth in the last quarter, that's directly as a result of the efforts that we've put into distribution in the last few years and new products which have come on top of that distribution and all the investments we made. I mean you had questions a few years ago about all the investments we're making, the teams we're hiring in places like U.S., Europe, Brazil, Thailand. All of these are now sort of paying the bills, and...

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Vinod Kumar Dasari, Eicher Motors Limited - CEO of Royal Enfield & Whole Time Director [97]

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Channels also.

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Siddhartha Lal, Eicher Motors Limited - MD & Executive Director [98]

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Yes. And the channel has, of course, responded. And because of our (inaudible) in the beginning where we were (inaudible) adding the dealers, focused on (inaudible) the dealer, in Brazil for example where we have only one dealer to start with and we focus on profitability. And once we expand this, so now we've been able to add a lot of dealers (inaudible) pockets like Brazil and Thailand that (inaudible) dealers to (inaudible) new market like these that we expand and flourish. (inaudible) very soon. So that's the extent that we pick up in international markets and (inaudible) last year we did 1 billion in Brazil and this year at the end of the year. So we're fully prepared (inaudible) dealers next year. So that's one example of one market.

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Nishant Vass, ICICI Securities Limited, Research Division - Auto and Auto Ancillary Analyst [99]

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That's really heartening to hear. Siddhartha, if I can just -- I don't know, I'm trying my luck. A few years back here, you'd put out an aspirational target for exports at 10%. And now you seem to be, I would say, a lot more positive about it. Do you think you would like to reassess the target and probably give us a time line?

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Siddhartha Lal, Eicher Motors Limited - MD & Executive Director [100]

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Firstly, I've never made a target like that. I think it is...

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Nishant Vass, ICICI Securities Limited, Research Division - Auto and Auto Ancillary Analyst [101]

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Aspirational, I mean.

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Siddhartha Lal, Eicher Motors Limited - MD & Executive Director [102]

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I don't remember doing that either, in any case. Also because -- but the only thing I've ever said is that I don't have a percentage target to expose because that in fact [games] us in our thinking, right? Why would I want to do that? The idea has always been to become a strong player in every market that we are in and not just a fringe player. So we want -- perhaps it was 10% market share in markets that we were talking about or something. But certainly, that's the intention, to become a strong player in the midsize market in Brazil, Thailand, in Europe and in U.S. And then to become a top 2 player in midsized, and then become a leader in midsize and then to grow the market midsize. That's the intention and direction we're going with. It's absolutely focused on becoming a relevant player, and then growing the size of the midsize segment. And therefore, having enough, I would say, scale in that market to be a relevant player, and therefore, to be able to invest in that market to grow. But I mean, honestly, right now, maybe after a business planning cycle, we'll see if there's any change. But right now, there's no -- I don't think we have a percentage target because India has come off. So the percentage has risen, but that's not the way we want to rise -- raise our percentage, right, of international sales.

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Nishant Vass, ICICI Securities Limited, Research Division - Auto and Auto Ancillary Analyst [103]

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Absolutely. If I can squeeze one last question. This is on VECV. You highlighted the BS-VI -- extensive benefits of BS-VI you will have from a manufacturing and learning perspective. So if any -- can you throw some light on any suggestive differences in terms of the fluid efficiency or TCO that you could see, that your customers could see between BS-IV and BS-VI?

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Siddhartha Lal, Eicher Motors Limited - MD & Executive Director [104]

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It's a very complex question because it differs from vehicle to vehicle. We have now nearly 6 engines or categories, and it's really a very -- it's difficult. Now traditionally, a lot of other players are having trouble in maintaining -- if you see it, rather than fuel efficiency right now, you're talking about fluid efficiency because it means fuel plus, what you call...

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Nishant Vass, ICICI Securities Limited, Research Division - Auto and Auto Ancillary Analyst [105]

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Adblue.

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Siddhartha Lal, Eicher Motors Limited - MD & Executive Director [106]

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Adblue, that's the word I was looking for. So we are able to now maintain fluid efficiency, and even in some cases, increase it, because of all the advance work that we've been able to do on BS-VI. So I think firstly, we'll have an enormous competitive advantage, just from that angle, which is -- which will help be free, let's say, some of the additional costs that will come into the BS-VI. Second, our product profile in heavy duty, for example, has changed tremendously. Whereas our Pro 5000 was the mainstay till last year, right now the weight of that has shifted to Pro 6000, which is a much higher value segment and which is much more futuristic. And therefore, our confidence that as the value segment grows, as opposed to the basic segment in heavy duty, we will emerge much stronger post-BS-VI and we expect that the value segment grows a lot more.

And that's been a major shift in our portfolio. We've reduced our dependence on, let's say, some of the [cowl] models, et cetera, and we've increased our percentage of Pro 6000, which is the higher-value segment. And of course, the big one is Pro2000, which is going to be our mainstay for light and medium duty trucks, which is still the majority of our sales. And that, for example, from a single cabin, which is a 2-meter cabin in Pro 1000, we'll now have 2 cabins. A smaller, lighter cabin for Pro 2000, 1.8-meter, 4.9-tonne. That helps us get into segments and areas that we were not able to get into, or we didn't have much success in, like, for example, in Kerala and the narrow roads, they're looking for a narrow 5-tonne [tipper] vehicle. We were just too wide for those roads. And we will have a much better segment -- in some of the hilly segments, we'll have much better.

So we're really able to -- and with newer engines and better displacement engines. Again, the whole, I would say, product mix, we've been able to make much better. As a result, we expect market shares to grow because of better value being provided to customers and more segments that we're able to reach more efficiently. So we're very excited and bullish about our BS-VI plans for VECV.

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Operator [107]

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

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Binay Singh, Morgan Stanley, Research Division - Executive Director [108]

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Actually I joined the call a little late, so some of these questions may be already asked. Could you talk a little bit about the new platform? What is the timing? Will there be a price hike when you launch bikes on the new platform?

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Vinod Kumar Dasari, Eicher Motors Limited - CEO of Royal Enfield & Whole Time Director [109]

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You're talking of Royal Enfield or truck?

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Binay Singh, Morgan Stanley, Research Division - Executive Director [110]

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Royal Enfield. Royal Enfield.

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Vinod Kumar Dasari, Eicher Motors Limited - CEO of Royal Enfield & Whole Time Director [111]

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The new platform, I think you know it better than we do. We have not talked over the new platform. We just -- right now, in the next few months, it'll only be transitioning to BS-VI. (inaudible)

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Binay Singh, Morgan Stanley, Research Division - Executive Director [112]

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Anything on the new models that you want to talk about, anything that you are planning on that side?

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Vinod Kumar Dasari, Eicher Motors Limited - CEO of Royal Enfield & Whole Time Director [113]

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(inaudible) right cost, right performance, the right [assignment]. That's what we've been working on. So (inaudible). The new products right now are all about refinement in the BS-VI.

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Binay Singh, Morgan Stanley, Research Division - Executive Director [114]

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Any volume target you would like to give for next year? (inaudible) really good year this year. How do you see tax playing out and similarly any views on domestic for next year (inaudible)?

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Unidentified Company Representative [115]

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(inaudible) forward-looking targets and (inaudible)

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Binay Singh, Morgan Stanley, Research Division - Executive Director [116]

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I just ask about currency or like I think I missed that point but (inaudible) 10% off your volumes, 10% of overall sales of (inaudible) and 10% of (inaudible)?

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Binay Singh, Morgan Stanley, Research Division - Executive Director [117]

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And lastly now on the (inaudible). What is the (inaudible) that you have for (inaudible)?

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Unidentified Company Representative [118]

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(inaudible)

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Lalit Malik, Eicher Motors Limited - CFO & Chief Commercial Officer of Royal Enfield [119]

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[And the cost shouldn't -- I mean, just -- yes.

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Binay Singh, Morgan Stanley, Research Division - Executive Director [120]

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Like to (inaudible).

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Lalit Malik, Eicher Motors Limited - CFO & Chief Commercial Officer of Royal Enfield [121]

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You missed a lot of the conversation, because we've said that we're not giving any forward-looking targets and directions. So sorry about that.

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Binay Singh, Morgan Stanley, Research Division - Executive Director [122]

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Okay then, I'll ask about the current thing only. Like -- I think I missed the point. But Bullet X, when you said it's 10% of your volume, that is 10% of overall sales of Bullet X? Or 10% of Bullet sales is Bullet X?

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Lalit Malik, Eicher Motors Limited - CFO & Chief Commercial Officer of Royal Enfield [123]

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No, no. This is like 10% of the Bullet franchise.

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Binay Singh, Morgan Stanley, Research Division - Executive Director [124]

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Okay. And just lastly, what is the inventory now on the Royal Enfield side?

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Lalit Malik, Eicher Motors Limited - CFO & Chief Commercial Officer of Royal Enfield [125]

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Sorry?

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Binay Singh, Morgan Stanley, Research Division - Executive Director [126]

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What is the inventory like? Sir, what is the BS-IV inventory that you have for Royal Enfield?

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Vinod Kumar Dasari, Eicher Motors Limited - CEO of Royal Enfield & Whole Time Director [127]

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All put together, like in the plant, in transit, in depos, all put together is little to none. BS-IV inventory, yes.]

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Operator [128]

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Ladies and gentlemen, due to time constraints, that was the last question. I now hand the conference over to Mr. Sonal Gupta for closing comments.

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Sonal Gupta, UBS Investment Bank, Research Division - Director and Research Analyst [129]

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Yes. On behalf of UBS Securities, I'd like to thank the Eicher management team for taking out the time to discuss the quarterly performance, and thanks for giving us the opportunity. And thank you, everybody else, for joining. Thanks a lot.

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Siddhartha Lal, Eicher Motors Limited - MD & Executive Director [130]

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Bye-bye.

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Lalit Malik, Eicher Motors Limited - CFO & Chief Commercial Officer of Royal Enfield [131]

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All right. Thank you.

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Vinod Kumar Dasari, Eicher Motors Limited - CEO of Royal Enfield & Whole Time Director [132]

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Thank you.

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Operator [133]

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Thank you. On behalf of UBS Securities, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.