Maruti Suzuki India Ltd

NSE:MARUTI

Earnings Call Transcript 2020-Q4

[Operator]

Ladies and gentlemen, good day, and welcome to the Maruti Suzuki India Limited Q4 FY '20 and Full Year FY '20 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded.I would now like to hand the conference over to Mr. Nikhil Vyas. Thank you, and over to you, sir.

[Nikhil Vyas, Head of Corporate Planning]

Thank you. Ladies and gentlemen, good afternoon once again. May I introduce you to the management team from Maruti Suzuki. Today, we have with us our CFO, Mr. Ajay Seth; Executive Director, Marketing and Sales, Mr. Shashank Srivastava. From Corporate, we have Executive Director, Mr. Hideki Taguchi; and Executive Vice President, Corporate and Government Affairs, Mr. Rahul Bharti. From Finance, we have Executive Vice President, Mr. Pradeep Garg; and Vice President, Mr. Sanjay Mathur.The con call will begin with a brief statement on the performance and outlook of our business by Mr. Seth, after which we will be happy to receive your questions. May I remind you of the safe harbor. We may be making some forward-looking statements that have to be understood in conjunction with the uncertainty and the risk that the company faces. I also like to inform you that the call is being recorded and the transcript will be available at our website.I would now like to invite our CFO, Mr. Seth. Over to you, sir.

[Ajay Seth]

Thank you, Nikhil. Good afternoon, ladies and gentlemen. Financial year 2019/'20 began amid considerable challenges with sluggish economic growth in India and the world. In India, the issue of inadequate credit availability driven by challenges in the financial sector was one of the important reasons for moderate economic expansion. Consequently, the [indiscernible] in consumption affected the overall demand environment and investments in the economy. To bolster the economy, both the government of India and RBI took some bold measures. With significant measures, the economy started to show early signs of improvement in the latter part of financial year '19/'20. However, at the end of the year, the outbreak of COVID-19 brought the economy to a screeching halt.For the auto sector, the financial year '19/'20 can best be summarized as the year when all negative factors struck simultaneously with full force. Over the last 2 decades, the auto industry has not witnessed such a huge demand contraction. The slowdown was broad-based with all the segments of auto industry with a significant decline.Major factors which affected the sales were as follows: Increase in selling price due to introduction of regulations, increase in insurance vehicle premium and increase in road taxes in some of the states affected the demand, especially of entry-level cars. Issues related to vehicle financing by credit availability and increased downpayment requirements also affected demand, especially when over 80% cars are sold on credit. Uncertainties in the mind of customers like anticipation of GST rate reduction, [indiscernible] to choose between BS IV and BS VI technology, expectations of higher sale of BS IV vehicles, et cetera, kept customers deferring purchases. Slowdown in rural economy also contributed to decline in sales of passenger vehicles. At the end of the year, COVID-19-related disruptions brought down the sales to a halt.Amid weak market demand with fewer walk-in customers to the showroom, the company increased its efforts to reach out to customers. The targeted digital campaigns through hyper local activity were stepped up to identify potential customers. The inquiries for new cars car-buying through digital platform witnessed multiple increase during the year. Given the issue in credit availability in both working capital financing for dealers and retail financing for consumers, the company established tie-ups with leading dual commercial banks, NBFC and regional rural banks in order to ensure the credit availability at competitive interest rates with low downpayment requirements.The company tied up with 30 finance companies like Bank of Baroda, Kotak Mahindra, HDFC Financial Services, Federal Bank and Tata Capital. [ Besides ] the company successfully managed the transition from BS IV to BS VI vehicle technology, given the wider portfolio of the company, the introduction of BS VI vehicles had to be done at the right time with meticulous planning in order to ensure that the dealer partners are not burdened with any unsold stock of BS IV vehicles. The company has sold around 8 lakh BS VI vehicles during the year.In a weak demand environment, it is necessary to create excitement in the market by offering new products with relevant technologies with the support from Suzuki Motor Corporation in providing the necessary platform and powertrain technology. The company launched 2 new models, XL6 and S-PRESSO, just before the festive period in order to cater to the growing interest of consumers in the UV space. The company launched its flagship model, Vitara Brezza, with a bigger engine and host of other features. This created excitement in the market and helped improve sales. The shift towards petrol vehicles is more evident now with share of diesel vehicles for the industry falling from 20% in quarter 4 2019/'20 -- falling below 20% in quarter 4 in 2019/'20. For the company, the contribution of sales from petrol vehicles stands at 93% in quarter 4 2019/'20.Seven out of the top 10 best-selling models in India came out -- came from the company. Maruti Suzuki has been leading the green mobility initiative in India by providing the factory-affiliate S-CNG technology. During the year, while overall sales of the company in domestic market declined by 18%, S-CNG sales grew by 1%. This clearly indicates the growing interest of customers in CNG vehicles.On export front, the company exported 102,171 vehicles to over 100 countries, registering a decline of 6%. The economic and political uncertainties and increased protectionism in some of the export markets affected the sales. Both domestic and export markets put together, the company registered an overall volume decline of 16.1% in financial year 2019/'20.Being capital as well as labor intensive, the passenger vehicle industry has higher fixed cost, and capacity utilization is one of the important levers of profit margins. With a decline in volume on one hand and capacity addition on the other, the capacity utilization fell much below that of the previous year. Weak demand condition kept sales promotion expenditure at an elevated level. These 2 factors, that is reduced capacity utilization and higher sales promotion expenses alone significantly impacted the profit margins. Moreover, due to weak market situation, the company could not take adequate price increases to neutralize the increase in input costs. The company could partially offset the impact of unfavorable factors by stepping up cost reduction measures.The company sold a total of 1,563,297 vehicles during the year, lower by 16.1% over the same period previous year in the domestic market. The company -- in the domestic market, the company sold 1,461,126 vehicles. Exports were at 102,171 vehicles. The company's net sales stood at INR 716,904 million in financial year 2019/'20, lower by 13.7% over the same period previous year.Net profit for the year stood at INR 56,506 million, lower by 24.7% over the same period previous year on account of lower sales volume, higher sales promotion expenses and higher depreciation expenses, partially offset by lower operating expenses, cost reduction efforts, higher fair value gains on invested surplus and reduction in corporate tax rate.Coming to quarter 4 of this year, the company sold a total of 385,025 vehicles, lower by 16% over the same period in previous year. In domestic market, the company sold 360,428 vehicles, and exports were at 24,597 vehicles. In quarter 4, the company registered net sales of INR 1,71,857 million, lower by 17.1% for the same period in previous year.Net profit in quarter 4 stood at INR 12,917 million, lower by 28.1% over the same period previous year on account of lower sales volume, higher sales promotion expenses, which was partially offset by lower operating expenses, cost reduction efforts and reduction in corporate tax rate.We can now take your questions, feedback and any other observations that you may have. Thank you.

[Operator]

[Operator Instructions] We take the first question from the line of Yogesh Aggarwal from HSBC.

[Yogesh Aggarwal, Head of India Research and India Tech Analyst]

Just a couple of questions from me. Firstly, sir, can you talk about the treasury -- your treasury investment? What is the yield you expect going forward? And if -- what is the profile of investment? And if there is any risk around any kind of debt funds?

[Ajay Seth]

So on treasury, most of our investments are all on AAA portfolios, and we are very careful in terms of choosing our investments on underlying papers. There are certain negative sectors where we make sure that we do not have any investments. So far, amongst all the problems that you have seen in the debt mutual fund industry, we have not -- we were not invested in any of such papers. So therefore, we've had no write-offs that we had to take on account of these underlying papers.The returns so far have been good. In fact, this year, the returns are fabulous because there were significant mark-to-market gains in the investment that we have made. However, moving forward, with the interest rates going down, the accrual of next year is going to be lower. And also, capital gains that we had accrued this year may not continue the same way next year.So treasury income to the extent of capital gains that we accrued and the lower interest rates that we are now witnessing will have an impact on the numbers. So to that extent, the interest income may be lower, but we do not anticipate any risk on account of bad papers, and we are very careful in terms of managing risk in these areas.

[Yogesh Aggarwal, Head of India Research and India Tech Analyst]

Great. And sir, secondly, is there some change of accounting? Because last quarter, like some of the stuff has moved from COGS to other income for last quarter and the previous quarter, around purchase of stock in trade.

[Ajay Seth]

No, I'm not able to get your question. What has moved from stock in trade to?

[Yogesh Aggarwal, Head of India Research and India Tech Analyst]

There seems to be some restatement costs move from COGS to other expenses last quarter and the fourth quarter of last year.

[Ajay Seth]

Can you just refer this question to me off-line, I'll answer that. I will have a look at the details.

[Yogesh Aggarwal, Head of India Research and India Tech Analyst]

Okay. Okay. And sir, just last question I have is just the picture on demand. I mean we all know what's going on, but you look at this year volumes, it will be from -- I mean FY '21 industry could actually be almost similar to FY '11, so 10 years of no growth. So do you believe there is some pent-up demand, at least from an upgrade perspective itself that should be -- FY '11 should itself [ give ] the FY '21 volume. So what do you expect for -- starting maybe from festive season and for next year?

[Ajay Seth]

Shashank, can you please take this question?

[Shashank Srivastava, Head of Marketing & Sales]

Yes. So actually, this is a very difficult question to answer because of the large number of uncertainties which are prevailing, it is difficult to give a forward guidance of when the market will pick up. As you know, car-buying is a discretionary purchase. It depends a lot on sentiment. And sentiments can be very transient. So we expect that if some good news continues on the front of COVID or any other measures which might be taken by the government or such other measures, then maybe sentiment can change. But very difficult. And I think going forward, maybe in the next couple of months, would make it much clearer what the ultimate demand is going to be. Thank you.

[Operator]

We take the next question from the line of Raghunandhan from Emkay Global.

[Raghunandhan N. L., Senior Research Analyst]

A couple of questions. Firstly, in terms of customer psychology, would you expect customers to downgrade given the mindset could be towards cash conservation? Also, do you expect a shift from shared mobility and public transportation towards car ownership?

[Ajay Seth]

Please go ahead, Shashank.

[Shashank Srivastava, Head of Marketing & Sales]

Yes. I think this is one of the most common questions being asked. And our interaction with customers and all possible researches, it does indicate that there would be -- we expect a shifting down, what is known as a transfer of demand across segments. So the upper segment, the demand comes a little lower -- to the lower segment, and lower segment for further lower and so on and so forth. But yes, that's true. It might be -- the trend might be towards the smaller car. Initially, inquiry levels, which we have seen this month from the showrooms which have opened, suggests that trend, but I think it's just too early to say that the trend is definitive.On the second question about availability of the finance. Yes, given the uncertain income level that some of the consumers may have, the -- there would be a tendency to, again, put the purchase towards the lower side.Second, on the question of shared mobility. Yes, I think all researches indicate very clearly that people would prefer personal transport over public transport. And going forward, we see that becoming a trend definitely as far as this year of COVID remains. And our projection is that it is going to remain for quite some time.

[Raghunandhan N. L., Senior Research Analyst]

One last question. What supports your confidence on sustenance of market share in light of absence in diesel vehicles and new products by competition? In this regard, can you provide any update, if any, on BS VI diesel cars or any other new products by Maruti?

[Shashank Srivastava, Head of Marketing & Sales]

Yes. So I think in the last con call, also we had a similar sort of question. If you look at the trend of diesel percentage in the industry, it has been coming down. Last year, it came down from about 37% to about 29% in the industry. However, if you look at figures in March and February, it is less than 15%. So the share of diesel percentage has been coming down. And one of the main reasons why this is happening is because the fuel price difference between a liter of diesel and a liter of petrol has significantly come down. In fact, if you remember, just a few days back, Delhi government announced increase in diesel prices of INR 7.10 and increase, I think, of INR 1.60 in petrol, significantly reducing the gap between diesel and petrol to less than INR 2.So that, along with the initial cost of acquisition of diesel, of BS VI being very high -- because remember, BS VI diesel, the conversion cost is much more for a diesel than a gasoline. So seeing the big difference between the initial cost of acquisition, which is now close to INR 150,000 for most cars, or INR 150,000 to INR 180,000 range, and the decrease in the difference between the -- for the running costs, I think either way, it looks as if the diesel percentage is going to further reduce.The only segment where it has been reduced -- mind you, while we talked about 14%, 15% in February and March, actually, if you look at segment-wise, in the smaller car, it is less than 5% now. It's only in the SUV category that there is -- and that too in the mid-SUV and upper category of SUV that there is a significant percentage of diesel. But the initial demand for the new launches of the competition for -- in the SUV category also indicates -- whether it's Seltos or whether it is Hector or even Creta, it does indicate that there is a lot of traction for gasoline even in those segments. So going forward, that is what fuels our optimism that the diesel percentage in the industry will further come down.

[Operator]

We have the next question from the line of Pramod Kumar from Goldman Sachs.

[Pramod Kumar, Executive Director]

Sir, my question remains on the demand track. I just wanted to understand if you can share a broad breakdown of your customer profile, like you've already said that close to 39% of your demand comes from rural. On the same end, if you can just share how much of your customer comes from the government and the SOE-related factor and how many are like professionals or self-employed and the business community. So if you can just help us understand the customer profile will be great.And also I heard you talk about consumer sentiments more than affordability while answering the previous questions, like -- so in your view, do you think that customer affordability in the current scenario is not going to take a big hit and it's more a matter of sentiment which should heal? And if so, if you can just explain a bit more about that too also because generally, the perception is that affordability is taking a bigger hit here because of the economic dislocation.

[Shashank Srivastava, Head of Marketing & Sales]

Yes. So I'll take the second part of your question. Actually, the affordability part also is a big part of the sentiment. So it's not as if they are mutually exclusive. A lot of sentiment is obviously affected by the employment opportunity or loss of it or the salary levels or the loss of income otherwise. So I think these 2 are related. And obviously, and I think I mentioned it in one of the questions asked earlier, that the -- there will be effect of lower income levels, not only on sentiment but also on the affordability. And this was a question -- this was an answer I gave in response to the question where the people will go down in terms of their choice of their car as far as segment is concerned. So I think both are not mutually exclusive.The reason I mentioned sentiment more was because it's very transient, and sometimes it has a very disproportionate effect on sales. And second, that it is also can change to be for the better, just as it can change for the worse. So that is the thing, and the reason I mentioned sentiment first was regarding the uncertainty because it's transient and it also gives a very disproportionate effect on the sales.As regard to your first question about the consumer profiling, and of course, you mentioned about rural and urban division. So rural is roughly 38.5% -- last year was 38.5% as against the urban of about 62% or so. So that is one way of profiling. On the other part which you asked about salaried or business or self-employed, et cetera, roughly, I can give you the figure. Salaried is roughly about 45%, 46% of our missing. People with businesses are about 35%, roughly, 33%, 35%. Self-employed are about 11% to 15%. And the rest, about 9% or 8%, are others. Others include people who are retired or housewives or things like that. And within the salaried, 45%, the rough division is 50-50 for government and private. That is the customer profiling that you referred to. Of course, there are other ways of profiling, whether it is by gender or by marital status or whether it is a first-time buyer or additional car buyer or exchange -- that is a replacement car buying, but I have restricted my answer to the questions specifically to the salaried, business and self-employed because that's what I thought you wanted to know. Thank you.

[Pramod Kumar, Executive Director]

Yes, sir. Yes, sir. And then last question is based on the upstream and the downstream, like basically, there is expected to be a big dislocation on the supply chain side across the industry, not particular to Maruti, but you will have exposure to vendors who have exposure to other companies, which may not be doing that well, and to the Tier 3, Tier 4 suppliers, therefore. And similarly, on the dealer side, your dealer community remains one of the most resilient.So what is the broad take at the industry level? That what is the risk to the upstream part of the supply chain and the downstream, which is the dealer franchise or the dealer identity? Because there's been a lot of media reports about stress at both ends after the [ dip ]. So if you can just share your thoughts on that. And how could it play to -- either to your advantage or you don't see it as a relative advantage for you going forward?

[Ajay Seth]

Rahul, can you take the supplier piece first and then Shashank can answer the dealer piece.

[Rahul Bharti]

Sure. So the upstream part where our suppliers, we have about 400 Tier 1 suppliers, about 3,000 for Tier 2 and an unknown thousand number of Tier 3 suppliers. We are spread across -- these suppliers are spread across mostly 9 states. And at any point of time, there are about 20 or 30 of them who are -- who fall in some kind of restriction or the other. However, with the recent speech of the Prime Minister, we are hopeful that there are signals that economic activity and industrial activity will be opened up. We are also giving confidence to the government, giving very strong safety protocols where the risk of operation and the risk of spread at the workplace is minimal.So we have some kind of optimism that this -- the upstream supply chain will be able to very slowly and gradually start delivering components to the plant. For -- our Manesar plant has started production yesterday. Gurgaon should follow suit maybe in the next week -- month. Gujarat, we are still -- there are lots of doubts because there are many cases around the -- COVID positive cases around the plant, so Gujarat continues to be in a doubt. So slowly and gradually, we should be able to raise our industrial -- and the level of production. However, this is subject to further spread of the disease and any further news flow on that we make here. So we'll keep updating you along the course.On sales and service, Shashank, kindly brief.

[Shashank Srivastava, Head of Marketing & Sales]

Yes. So I think regarding the prospects -- the financial prospects of the dealers going forward, one of the major concern areas is, of course, the cash flows because since the lockdown, there has been no retail, except that in the recent -- very recently, we started opening the outlets. We have actually more than 1,000 outlets now open, and we have delivered close to 2,500 cars already. So the views of cash flow have started moving. But yes, going forward, this is an area of concern. And that's the reason why we have been supporting the dealers with their cash flows by way of support on their stock and also by cash transfer of incentive, the dealer reserve funds and so on and so forth. Going forward, I think it will clearly depend on how quickly they can do the retail because there is part of the expense which is fixed, which includes wages and rents. And I think that is where the key is, how quickly the retail can happen. And going forward, I think Maruti Suzuki people are in a much better -- dealers are in a much better position because of the very robust business model that we have built over the years, which includes the revenue streams not only from car sales but also importantly, from service, from extended warranty, Maruti Insurance, finance and accessories.And I think some of these have actually flourished even in the month of April. If you see the Maruti Insurance renewal we have done from the web, in fact, more than INR 3 lakh renewal, this thing leading to income levels of almost INR 30 crore for the dealers So I think the robust model which we have built over the years is -- will be very significant competitive edge for us going forward, especially in stress situations like we find today.

[Operator]

We'll take the next question from the line of Amyn Pirani from CLSA.

[Amyn Pirani, Research Analyst]

My first question was on your -- how much digitization have we been able to build into the sales process in the sense that what were the things that were already possible online before COVID? What are the things that you have managed to take online and what is the way forward? Because I guess for every OEM, I think that is the way forward. So just would like to hear what -- where are we placed on that journey currently.

[Shashank Srivastava, Head of Marketing & Sales]

Yes, again, very topical. And I think very often asked questions these days. Actually, we have been doing this research on consumer buying process for the last -- I mean from the point of view of digitalization for the last 3 years. And we have identified that, actually, from the time a consumer decides to buy a car till the time we take the delivery, there are 27 or 28 touch points that he has to go through, which means he has to visit a showroom, then he has to look at the brochure, he has to ask for a proposal [indiscernible], do a test drive, go to the bank, get financing and so on. So there are some 27, 28 touch points.So of the last 3 years, we have worked very hard on the digitalization. Of course, we didn't know the COVID will come. So 21 points are already digitalized. Of course, it varies, I think, from 17 to 21, depending on the level of digitalization a dealer has. But the balance which are remaining, and I think your question pertains also to -- touched upon that aspect is largely the financing part and the test drive part. So test drive, of course, is something which has to be physical and the final delivery, which is physical. In between, you have some points of financing, which are still not digitalized. And we are working on it. Hopefully, very shortly, we'll be able to do that as well.As regards to delivery and the test drive, we have now been able to schedule things digitally, but of course, the actual delivery has to be physical. Even if it is at somebody's home, at consumers' home and as much contactless as possible as we are trying to do in the current COVID situation, it will still be physical. So I think of the remaining 5, 6 touch points, we are on our way to digitalize 4 of them. Hopefully, going forward, we'll have some such bigger digitalization projects like a virtual test drive and so on and so forth going forward. This is the state of digitalization as far as Maruti Suzuki is concerned. Thank you.

[Amyn Pirani, Research Analyst]

And my second question is I think Chairman made a comment that there has been no salary revision as of now. I just want to understand, as far as the factory workforce is concerned, I think around 40% to 50% of that is contractual. So given that capacity utilization remains very low and is likely to remain quite low for the next few weeks at least, how does the payment of contractual workers work? I mean, I'm assuming that permanent workers will continue to be paid even if there is no production. But is there a reduction in contractual workers which happens automatically? Is the lesser pay that you have to give them? I just want to understand from your cost -- monthly cost cash flow kind of point of view.

[Ajay Seth]

So see, the way it works is that we have a permanent manpower and we have a temporary and contractual manpower. And the reason why we have this is that the production has seasonality, and therefore, it varies month-to-month. And therefore, you have to adjust it based on what adequate -- what manpower is adequate for that particular period. So this is an ongoing thing. So whenever we have lesser production, obviously, the manpower to that extent is adjusted.Now being force majeure this time around, we had to accommodate everybody. But as we move along, the salary would -- the total headcount will depend on what is exactly required in the factory in terms of the production. And this is not a case now. This has been the case for many years that we've been working.

[Amyn Pirani, Research Analyst]

Okay. Okay. And sir, just one last question, if I can squeeze in. I think there's an announcement on the reduction of CapEx also for FY '21 to something like INR 29 million. So if you can just update us what was the final spend in FY '20? And what are the areas in FY '21 where we are reducing the spend? That would be helpful.

[Ajay Seth]

The spend in '19/'20 was INR 3,248 crores. So INR 3,248 crores. And FY '20/'21 will be about INR 2,700 crores of cash flow that we're going to -- obviously, we are not sacrificing any of our long-term plans. But whenever we think that the expenditure would have been deferred, we'll defer. But no plans with project-related plans, which are long term, are being deferred. I think that's something that Chairman mentioned in his press conference also that the focus and the confidence in the economy remains intact over a longer period of time, and therefore, we'll not forgo something that we think is doable from a long-term point of view.

[Operator]

[Operator Instructions] We take the next question from the line of Binay Singh from Morgan Stanley.

[Binay Singh, Executive Director]

In the press release, you said that in the fourth quarter, you had BS IV discontinuation costs. Could you share that and the discount number? And secondly, like we've seen discounts have been quite high in the last 3 quarters, while visibility on FY '21 is low. But how do you see discount trending from current period?

[Ajay Seth]

Can you speak a bit louder? We are not able to hear the first part of your question.

[Binay Singh, Executive Director]

I'll repeat my question again. So firstly, could you share with us what was the BS IV discontinuation costs in the March quarter and the discounts in March quarter?

[Ajay Seth]

So the BS IV discontinuation costs, we had taken a write-off of about INR 125 crores, which is including vendors and the stock that we had in-house. So that's the obsolescence that we had on account of the BS IV stock components that we had in the company. And on discounts, quarter 4 discounts were at INR 19,051, which compares to INR 15,124 same period last year.

[Binay Singh, Executive Director]

And the BS IV discontinuation cost is in other expenses?

[Ajay Seth]

Yes, discontinuation -- one moment, one moment. It's basically material costs. So that ratio of material costs will reflect the cost of obsolescence of stocks.

[Binay Singh, Executive Director]

Right, right. And just could you comment a little about how do you see discounts going ahead, at least for the visibility that you have near term? Because we've seen very elevated level of discounting because of one sector or the other in the last 2, 3 quarters.

[Ajay Seth]

Shashank, would you like to take this?

[Shashank Srivastava, Head of Marketing & Sales]

Yes. Again, as I said, this is obviously depending on the market situation. Going forward, there are some -- I mean on the supply side, there is likely to be some constraint going forward until it becomes normal, both from the supply chain perspective and production perspective. However, on the other hand, we also have about some stock and the dealership. So I think this is a fine balance currently. It all depends on how the demand pans out going forward. And that part is, of course, uncertain. But of course, I think the discount level will obviously vary from region to region, from model to model. And let's see how it goes from here. At this moment, it's very difficult to say whether these discount levels will come down or go up.

[Binay Singh, Executive Director]

Right. Can I just take one, like [indiscernible] on the Toyota Brezza. So Brezza going to Toyota. Any time line on that, that when does Maruti start dispatching the Brezza?

[Ajay Seth]

Rahul, can you take this? Rahul?

[Rahul Bharti]

Sorry, my line was muted. Binay, we'll take this off-line because for some time, we've had daily management meetings, but some projects, we've not been able to cover in the lockdown. So we'll answer you off-line this.

[Operator]

We take the next question from the line of Kumar Rakesh from BNP.

[Kumar Rakesh, Analyst]

My first question was for Shashank. We understand it's difficult to give a near-term, medium and long-term guidance on demand part. But it is around 10 days since some of your stores started opening up. How are you seeing initial trends over there? Are there higher-than-usual cancellations? Or there are signs of pent-up demand showing up and lower-than-usual cancellations or higher inquiries? So how is the initial trend so far?

[Shashank Srivastava, Head of Marketing & Sales]

Yes. So trends are -- as I said, most of the people who have taken deliveries are people who have either inquired about the car, booked the vehicle because they wanted to take the delivery in March or April but missed out because of this lockdown thing. But at the moment, I think the only -- because remember, it's only fifth or fourth that we started in some of our stores. And now slowly, the number of outlets which are opening are going up. As I mentioned, it is about 1,100 now.But I think the only trend which seems to be -- as far as inquiries state is concerned is that the demand for the lower-end hatches seem to have a higher percentage -- in percentage terms, a higher demand as far as inquiry levels are concerned. So it's very, very early, and therefore, I'm so hesitant to talk about any patterns, which we see in the demand. So also, some of our markets like Mumbai and Chennai and all are a little muted because of this COVID thing. So I am sorry that I'll not be able to give you a clear trend. But the only trend which seems to be significant is the demand towards the lower side of the spectrum.

[Operator]

[Operator Instructions] Next question is from the line of Gunjan Prithyani from JPMorgan.As there is no response from the current participant, we take the next question from the line of Sonal Gupta from UBS Securities.

[Sonal Gupta, Director and Research Analyst]

Sir, just a couple of housekeeping questions. First, I wanted to get a sense of what is the royalty rate for the quarter and what was export revenues for the quarter.

[Ajay Seth]

The royalty rate was 5.4% for this quarter, largely because the exchange rate was unfavorable by the end of March. So that's the reason. But for the full year, royalty is at 5.3%. Export realization this quarter was at INR 17,186 -- sorry, INR 1,119 million. So -- crores. Sorry, INR 1,119 crores.

[Sonal Gupta, Director and Research Analyst]

Okay. And sir, Mr. Srivastava, sir, just wanted to understand how -- I mean like for FY '20 as a whole, how have we seen the movement in first-time buyers and what percentage of demand is actually coming from first-time buyers? And just you could throw some light there.

[Shashank Srivastava, Head of Marketing & Sales]

Yes. So first-time buyers actually have remained remarkably consistent across the last 10, 12 years, actually. So in the industry, it is roughly varying between 45% to 47%. Yes. For Maruti Suzuki, it is a little bit higher, but it has remained remarkably consistent.

[Operator]

Next question is from the line of Ronak Sarda from Systematix Shares.

[Ronak Sarda, Vice President of Auto, Auto Ancillary]

The first housekeeping question, the other expenses line item looks to be significantly higher. In fact, there is a quarter-on-quarter jump in absolute amount as well. Any one-offs there? Or...

[Ajay Seth]

There's a little bit of regrouping that has been done. The royalty that's paid by SMG, it used to be part of the deal cost. So that is regrouped into other expenses as part of royalty. So I think that's a regrouping change. So the royalty now gets a rise in terms of both SMG and MSIL. So the increase that you're seeing is because of the regrouping.

[Ronak Sarda, Vice President of Auto, Auto Ancillary]

And that has been then across the 3 quarters which are presented this time?

[Ajay Seth]

Yes, that's right.

[Ronak Sarda, Vice President of Auto, Auto Ancillary]

Okay. Sure. And the second question is on the new launch pipeline. I mean, given how the demand scenario is, are we -- what's the kind of new launch pipeline we are thinking of right now? Any delay there? And secondly, there are a lot of news items on Suzuki Jimny, which is supposed to be manufactured in India. Any response there?

[Ajay Seth]

Shashank?

[Shashank Srivastava, Head of Marketing & Sales]

Actually, I'm sorry, we don't give forward guidance on our product plans. However, one thing which we have already talked about, the auto expo, we were to launch the BS VI petrol as crossed in March, which because of the lockdown, has got a little postponed, as you know. So apart from that, regarding the Jimny, I'll not be able to comment. We are not allowed to talk about forward -- give forward guidance on product. Thank you.

[Operator]

Thank you. Ladies and gentlemen, that was the last question for today. On behalf of Maruti Suzuki India Limited, we conclude today's conference. Thank you all for joining us. You may now disconnect your lines.