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TVS Motor Company Ltd
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Thank you, Lisa. Welcome all to TVS Motor Company 1Q FY '23 Post-result Conference Call. From the TVS management we have with us today, Mr. K. N. Radhakrishnan, Director and Chief Executive Officer; and Mr. K. Gopala Desikan, Chief Financial Officer.
I'll now hand over the call to Mr. K. N. Radhakrishnan for the opening remarks to be followed by a question and answer session. Over to you, sir.
Good evening. Good evening, everyone, and thank you for joining us today. I trust all of you and your family members are safe. God bless all of you and great health, lots of happiness, speed, prosperity. And definitely, this year, Diwali season should be a good season for everyone.
This quarter, Q1, company recorded the highest ever revenue, EBITDA and profits despite many challenges, especially shortage of semiconductors, which has impacted the production and sales of premium two-wheelers. Revenue for this quarter was INR 6,009 crores, and EBITDA was INR 599 crores. PBT is at INR 432 crores. All of you know that Q1 of last year is not really comparable because last year we had the wave 2.
When we look at the overall Q4 of last year to now and Q1, both we have done extremely well given the challenges. We sold INR 5.65 lakhs as against INR 3.29 lakhs, this is in the domestic market. And what is most important is as against the industry growth of 53%, we have grown much ahead, 70%, despite the challenges in the semiconductor availability. Our international business has also done well. We did INR 2.93 lakhs against last year INR 2.9 lakhs. This is also faster than the industry growth. Overall, we did 8.61 lakhs units against a 6.1 lakhs units against last year first quarter, much better than the industry growth.
The EV IQ in this quarter, we have done 9,000. But what is very good is month-after-month, we are able to ramp up. And the demand for this product is extremely good, thanks to all customers. The 3-wheelers, we did 0.46 lakhs against 0.39 lakhs during last year's first quarter.
Profit for -- EBITDA for this quarter is INR 599 crores as against INR 274 crores of Q1 last year, and we registered 10% EBITDA. In the last 4 quarters, we posted operating EBITDA 10% despite various challenges of semiconductor container availability, significant increases in the commodity costs. I think this was possible only because of the customer faith, the range of products what we have, our premiumization, our growth in the international market and, above all, the sustainable cost reduction. PBT for this quarter is INR 432 crores and last year, Q4 was INR 373 crores. Profit after tax is INR 321 crores as against last year's INR 53 crores.
On EV, we are extremely happy that we launched iQube Electric Scooter in 3 variants that comes loaded with best-in-class on-road range of 140 kilometers of a single charge. I think we are offering a host of intelligent connected including a 7-inch TFT touch screen and a lot of infinity personalization, voice assist and TVS iQube Alexa skill set, intuitive music player control, OTA, fast charging with plug and play. I think I can keep going on and on.
I think Indian consumers are going to see a host of benefit, host of features, connected features in addition to the biggest storage space of 32 liters. The response received from the customers are extremely encouraging. In Q1, we sold 9,000 EV scooters. In month of June, we sold more than 4,500 numbers. There are supply chain constraints in semiconductor components. But I'm confident month-after-month, you will see improvement in terms of the dispatch from the company.
Demand is very robust and we are currently taking booking in 85 cities in India. The company currently has a customer base of more than 20,000 happy customers of TVS iQube, thanks to all of them. As promised, we will be ramping up very shortly to 10,000 per month and progressively moving to 25,000 per month.
We'll be launching a series of new products focusing on different customer segments and with a complete portfolio of offerings in the range of 5 to 25 kilowatts. We said this will be done in the next 2 years. And our vision on electrification, we envisage a wide and reliable charging infrastructure for our EV customers. We have already partnered with Tata Power, CESL, and Jio-bp network. I'm very sure this will sustainably enhance the customer convenience and experience. Overall, I think the progress so far has been as per plan.
And in terms of the new product launches, you would have seen very recently the TVS RONIN. It is a perfect combination of style, riding comfort, technology for those who live the #Unscripted way of life. I think it comes with a lot of world-class merchandise, accessories, configurator and a dedicated experience program. It is going to create a new segment, I'm pretty confident about that.
In terms of TVS Ntorq XT, we launched with a never-seen high-tech features like industry first hybrid TFT console, TV Smart connect. And it has got 60-plus high-tech features, including SmartTalk, SmartTrack. The scooter also features with IntelliGO technology. And TVS Radio now comes with TVS IntelliGO, multicolor LCD screen displaying 18 different parameters and charging port of USB.
So overall, I think Q1 was a great quarter. When we look at Q2, we are extremely happy that the monsoon is satisfactory. We expect this year to have a normal monsoon, and this will definitely help the agricultural sector. The rural economy should definitely benefit from the global agricultural price trends, which promise encouraging returns for the farmer. I think we should all be respecting COVID. The good news is there is no hospitalization. Practically, it is negligible. Thanks to the government for the vaccination drive and the booster. Social distancing requirement is continuing. Definitely, I think this will help in growing consumer preference towards personal mobility. We are well poised with the kind of range of products offering what we have, we are confident that this is going to help us definitely better than the industry.
We are cautiously optimistic about the international market because some of the markets, some challenges in terms of affordability and some areas we are seeing some depreciation of the currency and a little bit of inflation. However, with the kind of product range we have, TVS have got, we are pretty confident on growth even in the international market.
The demand for the premium products is growing. We are aggressively working with alternative sources on the semiconductor area, and we are happy that those efforts, whatever we have put, we'll see good improvement in Q2. Already some improvement is seen in July, and we will see good improvement for Q2. And despite some challenges what happened in Q1, we were very happy the sustained material cost reduction and overall range and international business focus has helped us in achieving our EBITDA of 10%.
As I highlighted earlier also, we will continue to invest in new product development and technology and new features. We are planning a series of product launches in the coming quarters, both in ICE and EV. We have a very strong portfolio of brands, starting from the Apache series, Jupiter series, Jupiter 125, Raider, NTORQ, HLX, Star range, Radeon, TVs King and the recently launched new product, TVS RONIN.
We are very confident that our customer delight is going to help us and the rating is going to help us to grow ahead of the industry, both in domestic and international market. So the top line growth increased premiumization and the sustained cost reduction initiative both in material cost and in the fixed cost will confidently help us to lead a sustained EBITDA moment. And overall, this year, as you know, Diwali season is starting sometime middle of September and until end of October. We are very well poised for a good growth ahead of the industry.
Thank you.
Should we open up for questions?
Please.
[Operator Instructions] The first question is from the line of Pramod from UBS.
Congratulations, sir, for a pretty good set of numbers in our top environment. My first question is on the -- starting on the result side. I do note that based on the model mix data shared by SIAM, you did have a fair bit of constraint on Apache quarter-on-quarter in the domestic market because of semis. And even Raider did not do that well or contribute much to the production and dispatches. But despite that, you have seen a reasonably good traction on the ASP side.
So if you can just help us understand, is it led by our scooter pickup alone because that's the only category which has seen a marked improvement quarter-on-quarter? So I just want to understand how is the price and the premium mix in scooter working in terms of the variant mix? You did talk about and take some new variants and all, so just wanted to understand, is it just scooters which has helped you this quarter on a sequential basis in terms of the price, in terms of ASP improvements, what you're seeing?
Always we believed in scooter category to come back, Pramod and we have seen this quarter scooters are almost 32% of the category share in the Indian 2-wheeler industry, which is a very good news. And we have also significantly grown in the scooter category, thanks to Jupiter 110 and Jupiter 125 and NTORQ. So that is one of the categories which has significantly helped us in this quarter. And these kind of challenges we have always faced in the semiconductor, so I think we have taken some countermeasures and that is going to help us in Q2.
Equally, international business and 3-wheelers also have helped us. And what is most important on the EBITDA side is the sustained material cost reduction. And thanks to our strong brands, we were able to pass on price increases to the market. May not be fully, but that has also helped. So overall, it's a combination of overall sales going up, scooters going up, international business doing well and also the cost reduction -- sustained cost reduction from the company side, and on one side, the material cost reduction -- sustained material cost reduction.
We also took some -- because there were some challenges in availability of Apache and Raider, we also controlled the marketing expenses related to that. So overall, I think it was a very concerted focus, and that has helped the company.
Okay. So related to that basic concern, if you can share the breakdown of spare on international business in terms of revenues and the dollar rate what you realized for the quarter?
International, I think the dollar rate is INR 76.5.
INR 76.5, okay.
What we have realized. And the overall turnover from international, give me a minute.
And even spare, sir, if you have it handy.
Spare parts is about INR 620 crores.
So there's no big sharp spike because some of your peers had very sharp spike in spare contribution to overall revenue.
Yes, we are at the same level, same level. And internationally, it's about INR 2,174 crores.
INR 2,174 crores. So the second part is related to the export business. You did talk about some of the macro getting challenging. But if you can just throw some color on your position because you've been gaining market share in international markets from -- export from India for many years now consistently, so if you can just share how is TVS positioned amidst this more moderated demand environment. And whether you see growth in the IB side or the international business side for FY '23 for the company level, if you can just share? and also some color on the inventory situation in these markets, if possible?
See, we have a consistent inventory norm. We keep around 25 to 30 days of the inventory, plus the transportation time, especially in international. We have to provide the replenishment because the last thing we want is loss of retail. We never keep extra stock in any market because we believe that the customer should get a fresh vehicle. That philosophy will never change.
Now coming back to the international market, we have seen such challenges in some of the markets even in the past. So I'm pretty confident that this is only a small phase, even some of the markets in Nigeria or some other market in Africa, I think there is a strong brand pull for our products, and I'm pretty confident that overall the range of products what we have, we will continue to grow ahead of the market. And we are pretty confident even in Q2.
And so in a way, you're guiding for growth for TVS in international business for FY '23?
We will grow. We will definitely grow ahead of the market, I'm pretty confident. I think the kind of range of products what we have in terms of HLX series and HLX 100, 125, 150, plus our current models of Apache, NTORQ, Jupiter 125 and Raider, I think there is a huge pull for even Raider in the market.
So it's a combination of existing models doing well, customer satisfaction and also the new products whatever we have launched. So I'm pretty confident that we will continue to grow ahead of competition in the international market.
The next question is from the line of Raghunandhan N. L. from Emkay Global.
Congratulations on good numbers. Sir, couple of questions. Can you talk about how much was the commodity impact in Q1 and how do you see the impact in Q2?
See, commodity for Q1, I think there is a carryover of about 1%, and there is another 1%. So there was overall almost 2% impact in Q1. And we have taken up prices almost 1.5%. So I think -- plus the product mix and the combination of benefits we got in the sustained material cost reduction, I think that helped us to keep up our material cost almost at the same level or slightly better than last year in terms of Q4 to -- I'm saying, Q4 to Q1.
Commendable performance.
Yes. In terms of Q2, there may be small increases because there are some materials which are going up. But overall, if you ask me a trend, I think Q3 onwards you should see some softening in terms of material costs. Please remember that all the material costs are already at a very, very high level. And in terms of the numbers, vehicles, I'm talking for the industry, not for us, we are still -- in terms of the numbers, we are at least 3 years, 4 years back. So I am of the view that second half you will see a softening of materials.
Got it, sir. And sir, other income -- nonoperating income seems to be on the higher side this quarter. Is there any one-off or if you can elaborate on that?
Desikan?
Yes, the other income represents the profit on sale of our investments in intelliGO. It's more -- it is another income, not an operating income.
Got it, sir. And that quantum would be how much, sir, the profit on sale?
It's around INR 22 crores. We have not considered in our disclosures as the EBITDA calculations also. It's around INR 21.9 crores to be really precise.
If you add that, it is 10.3. So we have kept it outside the EBITDA.
The next question is from the line of Gunjan Prithyani from Bank of America.
Just a couple of questions. Firstly, on the EV business ramp-up, could you just update us where we are in terms of the monthly production because last time when we had spoken about, we were looking at about 10,000-odd units a month. So where are we on that?
Yes, we are -- for example, June month -- this quarter was about 9,000. But what is silver lining is month of June. We were closer to that 4,500 to 5,000, that number. And I'm pretty confident that July will be a better number, and August will be another number, a better number. So we are moving towards the 10,000.
We also wanted to reach it as early as possible because very good bookings from the customers. And as I highlighted, I think our endeavor is to -- the pull for iQube, all the 3 variants are excellent, thanks to the kind of features and the product, whatever we have delivered. So I think month after month, I'm pretty confident.
Now many of our suppliers, especially the semiconductor area is also supporting us. They understood the brand strength of TVS. So I'm pretty confident that month after month, we will see that going up.
And any order book that you can share that you have backlogs on iQube?
We have about 20,000 bookings.
Okay. And the rollout across...
Yes, we are now currently about 82 cities in India, 85 cities to be precise. And because our ramp-up versus the demand, there is a gap, we are also cautiously going because we have to satisfy the customers. That is very, very important.
Okay. And there was also this indication that you will look to raise money in this subsidiary to fund the expansion. So any update or when can we expect any progress on that front? Any color on that will help us.
So we'll come back to you. Still we are evaluating all options, and definitely, we'll come back to you on that.
Okay. Got it. And the second question I had was on the shortages in the premium segment because Raider, Apache, something that you've been calling out, have been affected. So are those concerns now behind? And in that line, if you can also share, is there any shortage on these models at the retail end? I mean, the inventory levels in the channel, if you could give some update on that?
Yes, we -- definitely, the Raider and Jupiter did affect the rate budget, did affect the retail also, the customer retail also. Unfortunately, we had 3 months, April, May, June, where we had serious problems in both these models.
But the good news is we are having some alternate suppliers which have started supporting these models. With the current supplier and the new supplier, I'm pretty confident that you will see a much, much better number in Q2.
Standing inventory, sir, that's the last thing?
Standing inventory, we always believe in less than 25 days, maximum to 30 days in any model. But these models did affect -- that's why I said that, the stock levels were very, very low in the market for these 2 models in April, May, June. April was okay, but May and June definitely we have suffered loss of retail as well. But I'm pretty confident that going forward from July, you will see improvement in that.
The next question is from the line of Chandramouli Muthiah from Goldman Sachs.
First question is that despite a fairly challenging chip supply situation, TVS has been able to supply Jupiter scooters, I think, 25% Q-o-Q growth in volumes. But just trying to understand what are some of the measures that you've been able to take as a company to pull this off.
I think working closely with the suppliers because it's not that the suppliers also -- ultimately, the suppliers also lose huge profit because premium products, it's very, very critical. In the case of Jupiter, we were able to work closely with the supplier. Here also, we worked, but unfortunately, sometimes their tier 1 in certain locations had some problems and challenges.
But in the case of Jupiter, that did not happen, so -- and our -- see, we work very closely with our tier 1 and some of the tier 1 also works very closely with the semiconductor supplier. So certain things did not work for us in April, May, but we were able to come up very quickly with alternatives for these 2 models, and that will definitely help in Q2.
I think this is something we have to be constantly at it because, thanks to the EV sector, we are learning a lot on the semiconductor industry and what kind of challenges and the lead times. So I think this learning helps us to prepare very -- preplanning. Practically, you have to plan 52 weeks ahead, so that kind of planning. So I think the combination of this learning has helped us for Jupiter.
Got it. That's helpful, sir. Just as a follow-up, a few quarters back, you had given us some color on the number of pending orders for premium motorcycles, including Apache and Raider, so if you could once again give us some color on those 2 products, especially what are the pending orders on those 2 models?
See, pending orders, normally, we don't book. Only in the case of EV, we book because this is a very, very new model and the new set of customers. Other models, normally, we have very healthy demand in the market. Both Raider and Jupiter, I think we have lost retail in the month of June, May middle onwards. I don't want to put a quantification to that because what is most important is taking countermeasures so that we don't lose the customers, okay?
And there are some customers who are still rating because they love this brand. Most importantly, what is liking to me is Apache and Raider customers still wait, and we are fulfilling the demand this month. So I'm very happy and thankful to those customers.
Got it. That's helpful, sir. And last question is on how management is looking at the future prospects of the moped category. Is there any plan to introduce electric moped also over time?
Moped has got a purpose, and we are extremely happy the way moped is moving. I think these are set of customers really brought about the pyramid. They had a lot of challenges. If I look at it in the last 2 years, I think the biggest challenge was the lockdowns. And all of us know that there were a lot of challenges in terms of -- as a category itself.
But we should always remember, I gave the statistics. If I look at moped, moped has declined by 38%. But if we look at the entry-level motorcycles, okay, it has declined by 50%. So it's not related to moped, it is related to the entry-level consumer not having ability to buy or they had -- thanks to the lockdown, they are daily wage earners, they are self-employed, if they don't go out, they don't earn. I think thanks to, again, the booster and other vaccination drive, I think today, the fear of hospitalization is slowly moving away in COVID.
You will see the rural -- once the rural starts picking up, the bottom of the pyramid will start picking up. I'm pretty confident. But this is 3% to 4% of the category because they have a purpose. So that purpose will continue to be there, and we will definitely fulfill that. That is the role of moped.
Got it. And just on electric mopeds, is that part of the company's plans over time?
Again, we have a range of products which we are planning to come back on EV. I don't want to specifically say these are the kind of products. I gave you, from 5 to 25 kilowatts, and we have a very clear range. We have iQube now, iQube, 3 versions are there. I think quarter-after-quarter, I think you can see something coming from TVS to delight the customers.
We'll move on to the next question. That is from the line of Mukesh Saraf from Spark Capital.
My first question is again on EVs. This is more towards the low-speed EVs that we see getting imported from China. So the question is, basically, we're seeing a lot of those slow speed EVs in the form factor of a moped. These obviously don't require any license nor it requires registration. So do you see that already back on moped or some kind of entry level segment for the industry as a whole? Or these are hybrid operator sellers and they'll probably not survive for too long, what's your take on this low-speed segment as a whole?
See, these are products which we have to respect from the market side, the low speed. But I think what is most important is the customer usage. We always believe that any product, there is a particular type of customer you see. I don't think customers look at the technology. If somebody wants to buy a scooter, he wants it to be going in good roads, bad roads, it should be able to climb any kind of flyover, it should be able to carry whatever required; and normally, if you look at it, husband, wife, children or they should be able to carry whatever they require for the normal household work. .
I think somewhere, if there is -- and of course, safety. And if -- and overall total cost of ownership, if these criteria is not met, I think they will reject that category. That is our belief. That's why I always say that put the customer at the center and keep working on whatever is required for the customer. Whoever works for the customer understands the overall total cost of ownership and the usage pattern, they will succeed in the long term. Otherwise, there will be many, many products which will be coming. This is not only applicable for 2-wheelers. In my view, it is applicable for any category.
Sure, sure. But are you seeing any impact at all, sir, from these low-speed vehicles on especially mopeds?
I told you about moped. Moped is a big problem in the bottom of the pyramid because of the last year and last couple of years of real, real COVID -- thanks to COVID, their income level got completely, completely affected. And they had a lot of challenges. And all of them are self-employed and lot of challenges. It's not only for moped, I highlighted the entire entry level. You look at the motorcycle entry level. Moped declined only 38%, and entry level motorcycles declined by 50%. So please look at it in a greater perspective.
Got it. And again, I mean on electric vehicle itself, on electric 3-wheelers, sir, what's the take there? Are we seeing enough takers for that in terms of EBCO? How are we looking at the electric 3-wheelers?
Electric, we have -- this is going to be a key strategy of TVS Motor Company. We see there is a great opportunity. I think our full focus is on giving the best to the customer. In terms of usage, you have seen already in iQube. Now the new 3 variants, I think they will definitely delight the customer. It has got all the features what I explained, and there are 3 versions. And I'm pretty confident that, that is going to delight the customer.
So sorry, my question was more towards 3-wheels. I mean, especially compared to CNG, are we -- how are we looking at that as a market? .
Which one you are asking?
Electric 3-wheelers as a market?
Three-wheeler, you will be seeing our 3-wheeler coming soon into the market. I think the CNG 3-wheeler is also very good in the market and also petrol. I think alternate fuel, I think it will say, again, TCO, customers look at the usage, they look at the TCO. I think whoever is able to manage that, whoever is able to satisfy the customer requirement, they will succeed.
The next question is from the line of Siddhant Behera from Nomura.
Sir, my first question is on the export market. So you indicated that the outlook is cautious, but we still expect to outgrow the industry. So just some of your thoughts on which will be the top few countries for us and how we'll be positioned in terms of market share in those countries, just to understand the scope of market share gains in some of these regions.
See, we are currently exporting to 80 countries. And Africa, Asia, LATAM, Middle East, these are all the countries. We have an excellent range of products, starting from HLX to the recently launched Raider. And please remember that we also export from Indonesia our [indiscernible]. So overall, the product portfolio is excellent, and the customer delight is also excellent from these markets.
Now we have also seen in the past, currency challenges, availability challenges, depreciation challenges, okay? Overall, there are some markets where we feel that there are some challenges in terms of little higher inflation and also currency availability. But I think a couple of quarters, it should ease out because the basic mobility needs are there. The purpose of these products for mobility is there. African market predominantly is a taxi market. The need for taxis are there, okay? Predominantly, this is the mode of employment there. So I think couple of quarters you moderate yourself and you can always -- and we always believe in very lean stocks in the market. We go by pull in the market. So that is definitely helping us. So I'm pretty confident that we will be able to do extremely well in coming quarters in IB.
Got it, sir. And in terms of the currency rates, you see currently dollar value is hovering closer to INR 79 and INR 80 level. So do you think you will be able to retain the entire profit or you will plan to probably pass on to some of that to push demand?
I think these are strategies of the company. We constantly look at -- what is most important is you have to give value to the customer. And the moment you give value to the customer and customer sees the total TCO superior to the competition, they will start preferring you, okay? Each country has got their own currency, their own challenges. India has got our own challenges. I think these are all part of day-to-day planning and overall strategy of the company.
Okay, sir. And lastly, sir, if you can share the CapEx and investment plan for the year?
This year CapEx is about INR 750 crores. This is all in '22, '23 CapEx.
And the investment in subsidiaries, that will be how much?
What's the question? I couldn't get you.
Investment in subsidiary is one of the questions.
Yes, yes. We will have to invest in TVS Credit Services to maintain the capital [indiscernible] in line with what we have done in the last year. For Norton, as we've explained, if they require CapEx program is happening, there will be investment. Other than that, I don't foresee any investments.
About EV, if you want to highlight this again, they have done extremely well.
Yes. Their performance has been extremely good. Their book size has crossed INR 15,000 crores now. We are at INR 15,400 crores is the book size. The gross NPA is the lowest at 3.1%. And the collections have been extremely good, better than the pre-COVID levels today. The profit for Q1 is PBT is -- INR 111 crores is the PBT. In all parameters, they have done exceedingly well.
So put together, sir, the amount will be closer to INR 300 crores, INR 400 crores or probably more for this subsidiary?
Around that. Around that.
Yes. Yes, around that number.
We'll move on to the next question. That is from the line of Amyn Pirani from JPMorgan.
Sir, can you hear me?
Yes, we can hear you.
Yes. I joined a bit late, so sorry if I'm repeating the question. You have invested some INR 114 crores in Roppen Transportation Services. What is this entity?
This is Rapido.
Rapido. Okay.
We have invested 2% of -- yes. And as you know, they are -- this is basically to leverage their synergies of their respective business in the fast-moving mobility market in India. So this is going to definitely help us benefit for TVS Motor, also TVS CS because it will help us in the delivery of vehicles, also credit and financing solutions. I think it is going to definitely support overall TVS. That is why we have invested in Rapido.
Understood. And to cater to this category, because you announced a tie-up with Swiggy also and now this investment in Rapido, will we be seeing a different kind of a vehicle compared to what you have in the iQube going forward?
Again, we always focus on the customer segment. So you can definitely -- whatever is required for the customer segment, we will invest behind that. That is the strength of TVS. We have a dedicated team of R&D, and we look at the customer segment. And segment-by-segment, we will give solutions to the customers so that they get delighted.
Sure. Looking forward to that product.
The next question is from the line of Noel Vaz from Asian Market Securities.
Congratulations on launch of the iQube. I just have one question, which is relating to the iQube launches. How exactly does the company see the iQube and the investments and the whole recharging network? How do they plan to exactly take it up going forward? That's my only question.
Once again, can you repeat the question? One question is related to iQube and second one is?
No, actually, sir, the thing is that right now, the company has launched the iQube on the product side, but I presume that all the investments in Rapido and the tie-ups with the Tata Power and the other power distribution companies is to grow the charging network, I suppose. Right, sir?
Absolutely. Absolutely. I think if you start integrating the investments we have made in the charging infrastructure partners like Tata Power, CESL, Jio-bp and product on the other side, I think you will be able to say that how we are -- we have a very clear strategy behind the product and also the infrastructure for supporting. Ultimately, we are looking at how do we enhance the customer convenience, how do we provide depending upon the customer segment, starting from home charging, fast charging to the public charging. So I think there is a very clear strategy.
As we go quarter-after-quarter, I think you will be able to understand what is the overall strategy of the company. But we are putting all the elements of the strategy closer to every product launch. And these launches we will be able to share in more detail.
Okay. So from what I can understand is that maybe in the quarter from now, we can expect more definitive milestone in the...
It is a part of our overall strategy, which is thought through -- very well thought through and we are putting step by step in investments behind each of these partnerships also in the product and customer segments, okay? That's why I said, next 24 months are very, very important in terms of both customer segment, product delivery and also the variance, what we will be giving to the Indian consumers and definitely leveraging these products for the global market as well.
The next question is from the line of Ronak Sarda from Systematix.
Sir, first question is on the electric vehicles production ramp-up. Sir, if you can also help us understand how are we tying up on the battery cells because I think that's even a more critical challenge with semiconductors currently. And in terms of new products, are there different technologies on the sell side which we are working on? So that's the first question.
I think EV is a very, very important strategy for the company, and we are building up long-term relationships with many of these supply chain providers. More details I can tell you as we proceed quarter-after-quarter. As of now, we are moving in the right direction. Month after month, we will see the ramp-up going up.
What is most important is a very, very healthy booking from the consumer side. The 20,000 customers are giving very positive about TVS iQube. And you are seeing the new 3 variants in the market. And again, you will see a series of products getting launched on one side.
On the other side, we are very systematically working on the ramp-up. Month after month, you will see the improvement. And we are also having very good relationship, many of the new suppliers who are supporting us in the EV space.
Great. And sir, a couple of housekeeping questions. Can you share what was the export revenue last year same quarter for June '21 and what was the price hike in Q2, in July, if any?
Last year, Q1 export was INR 1,830 crores. And price hike, you are asking July?
Yes, June, I think quarter 1, you had indicated...
Last quarter, I said about 1.5%.
1.5%. Anything in July?
July, I think you have to give me some time. Let me check.
We'll move on to the next question. That is from the line of Pramod Kumar from UBS.
My question was related to Norton because you have talked about a launch on this side very soon. So if you can help us understand, will the launch -- is the launch expected in the fiscal '23? And if we can throw more color on what is going to be the volume strategy here in terms of what kind of volume levels are you looking at for this particular -- these launches, what you're going to do? And also related to that is EV, premium EV also part of the pipeline for Norton for the future date?
I'll start from the last question. I think EV is going to be across. I think we have to look at -- that's why I said there is a very clear segment-wide product strategy. And quarter-after-quarter, you will see how companies are planning the investments and how we are planning to deliver the product.
Now Norton is a very, very special and very, very premium brand. And a lot of work has happened and in the new headquarters in Solihull, we have really made excellent, high-quality manufacturing facility, assembly facility, I think a lot of work is going on there.
I think you have to give me some more time. The strategy is very clearly worked out now which products and which quarter. I can assure you that there is an investment which you will see significant returns going forward. My analogy is always Indonesia, okay? You invest -- and we are very serious about these investments, whatever we make. We have to give some time because when you invest in the right segment and right business and focus on the customer, we are pretty confident that we will deliver good performance in the future. It's exactly TVS has stood for, and you have seen in TVS CS, you have seen in PT TVS, okay? And quarter after quarter, you can see our strategy. We are focused on the segments, and we will invest behind the right thing.
Fair enough. Sir, second question is on EVs broadly. There were other -- a couple of participants including Chandu who asked about the moped side. So my simple question is like if the customer -- you can see at the customer level if there's a demand for electric cargo vehicle on the 2 wheels. Is that -- if there's a demand like that, will you be kind of exploring that? Because you always say that you kind of look at what the customer wants and put customers at center. I think I'm just trying to understand if for lot of the urban, semi-urban and rural customers, if there is demand for low-cost cargo movement on electric vehicle format. Is that something that you're open too as a company as a product which you can explore?
We have a very clear customer segment-wise product strategy, okay? And you will see which product, which customers segment. And there is also a rationale on the sequence of these products, okay? So closer to launch, I can share more information about which products, which segment, how we are planning to.
Now you have seen -- we have 3 variants. I think at this point of time, I want to delight the customers who have booked and we have not delivered, okay? So what is most important is these are all concurrent, okay? We have to concurrently work on the products, okay? And we have to keep delivering that.
Fair enough, sir. And related to that, on the 25,000 capacity what you're talking about, this would it be across how many -- and does it include fees here? And does it go on across more than one model? Like iQube, it can just throw -- what are the kind of segments you are trying to cater to with the 25,000 capacity by the year-end?
We are ramping up. First is to reach 10,000, then go to 25,000 month after month. What is most important is we are delighted that the customers are showing lot of confidence in iQube, okay? I think we are very, very focused on looking at month after month delighting the customer, giving variance to the customer, giving the best features, best technology and being standing with the customer.
And I know you don't comment on initial launch response, but given the response to RONIN, how would you -- how would that compare with your RONIN internal expectations, sir, the response from dealers so far and the customers so far? If you can just say whether it's kind of tracking your expectations or is it something which can get better, if you can just share qualitative color on that because you talked about 10,000 number here per month?
RONIN is modern retro. It's a new category for us and the more new category for the industry. I'm pretty confident that the customers will be delighted, okay? And again, we invest in the new products. We wait for the customers. Month after month, we see -- all that what I can say is TVS will delight the customer.
And finally, questions -- 2 housekeeping questions for Desikan, sir. Any update on SEMG in terms of the financial performance, if you can share broad revenue numbers and the profitability numbers? And also, there is a separate disclosure about divestment of shares in a material subsidiary in the U.S. side, which I think is related to the stake in the Sundaram Auto Component or Sundaram -- the plant along with Sundaram-Clayton. So if we can just talk more about that, whether it will be cash transaction or will there be a share swap or something like that, sir? I'm just trying to understand the resulting cash goes for TVS Motor?
I'll try to answer the last question. Yes, there is a proposal for divestment of the investments in material subsidiary. The sale will happen through Sundaram-Clayton, which holds the balance 49.5%. By this process, Sundaram-Clayton will become 100% owner of the Sundaram-Clayton U.S.A. company. It is a cash transaction, and the money will be received post the roll of the shareholders by the subsidiary of TVS Motor Company namely Sundaram Motor Companies.
And SEMG?
As far as SEMG is concerned, K.R., would you like to say something or...
Yes, SEMG, as you know, it is one of the leading providers of e-mobility solutions in the DACH region. And this year, there are some supply chain issues this year. And also, there is a little bit of on slowness in Europe as a whole, but we are really confident that this product and the demand will be good. Already we are seeing some improvement in the month of July, so we are very confident about SEMG doing extremely well this year.
So would you expect that, not on a quarterly basis but on the longer term, they should hold that 8% PAT margin what they had in the previous fiscal or probably get better as volumes or revenues kind of rebuild?
I think these are investments into the complete category. I think if you look at our investments, whatever we have done in the e-mobility area, especially in the e-cycle, I think TVS has got about certain products, this e-mobility is on the one side and the Norton on the other side. So you are seeing a huge range of products for both developing and developed markets. But this also gives us a great learning opportunity about Europe and the consumer in Europe.
So these are investments which are definitely going to yield very good returns in the future. I don't want to give any guidance on what exactly will be the kind of return. But these are going to be the strategic investment which is going to definitely help the company in the long run.
Can we take the last question, please?
Sure, sir. We'll move on to the next question. That is from the line of Mihir Jhaveri from Avendus Capital.
Sir, 2 questions. One is on the demand side, sir. Are you seeing -- are you witnessing the demand in terms of retail a bit of a slowdown? And what's your outlook there? You said that you will be doing industries -- more than industry growth, but how are you seeing the coming quarters? Along with what is the inventory level in our system, will you be filling up inventory channel for the festive season? That's my first question.
And second question is on the raw material basket. You highlighted that H2 onwards, you would have the benefit. So just wanted to understand that is it safe to assume that from hereon, there will be -- from the current levels quarter-after-quarter, we can see some bit of margin improvement? Is that fair to assume? These are my 2 questions, sir.
See, on the first question, with the COVID situation what it is today, I'm pretty confident that this year Diwali season will be a good season. Rural, thanks to good monsoon, I think rural will do well. I'm talking about domestic, okay, domestic market. I'm expecting that the rural market, even now, thanks to the vaccination drive, I think the number of incidents with COVID is becoming like a flu now, 3 days, 4 days and no hospitalization. Still, I think we can be a little bit more disciplined in wearing the mask and social distancing, I think it can help. But I'm very positive about August, September, October this year because I think many of the areas there are no lockdowns expected, number one.
Number two, rural will do well. Number three, the urban markets will do well. Schools are opened. Everything is open. And I told you that already scooter category is almost 32%. And Scooter will continue to grow because of its inherent benefits. The positivity according to me, the bottom of the pyramid also will start seeing some traction because last 2 years, they had very limited income and mobility needs are there. Thanks to the investment by the government on the infrastructure, there is definitely mobility needs are there. The 2-wheelers will continue to do well.
It may take the CAGR of 10% what we have seen about 3 years back, it may take maybe another couple of quarters or 3 quarters. But overall, I'm very positive about Q2 and Q3, you will see much, much better year overall. This is on the industry side.
From our side, we always keep very lean stock, okay, 25 days to 30 days, season, no season. We look at the retail. Again, from the customer point of view, you have to give the fresh vehicle. That is our philosophy. And that philosophy will continue. All that what is required is we should not lose a retail, okay? That is the focus. So for that, you look at the lead time. We have fortunately 3 plants, one in Hosur, one in Mysore, one in Himachal. So between these plans, we look at what is the best opportunity to deliver to the consumer, to the dealer. And we make sure that stocks are available so that we don't lose the retail. And we will never increase stocks beyond this 25 to 30 days, okay? Because that has been the philosophy, and same philosophy will continue even in the international market.
On the raw material front, sir, on the margin front, if you can...
Raw material, we can only -- at this point of time, as I said, already it is in the peak, okay? And we have already seen Q2 maybe some more increases may be there. But the Q3 onwards, you should see some -- the raw material to be stable or slight reduction, these are the things we are expecting in the market. So we'll have to see quarter-by-quarter.
And we are not so much worried because this is something we have to go product by product, brand by brand. And thanks to the customer confidence on the brands what we have, we are able to pass on some cost increases, some we are able to reduce through our overall cost reduction, sustained cost reduction. We are also focusing on premium category. So I think the range is helping us. The demand is helping us. And our overall approach of looking at giving value to the customer through features, attractive quality and total cost of ownership, I think that will definitely, definitely help us in going forward, in growing ahead of the industry.
Thank you, everyone. Thank you, everyone. So I think the Q2, Diwali season, Puja season, okay, the kind of products what we have, and I am very confident that we will be able to ramp up iQube much faster this quarter, July, August, September. And overall, the sustained cost reduction, the focus of premiumization, international business and the range what we have, we are confident that we will deliver continued and sustained EBITDA improvement along with gain in overall growth ahead of the industry, both in domestic and international. Thank you. Thank you very much.