Yes sir. Just on this new Talegaon plant, as you mentioned, after it becomes operational, what would be export strategy? As domestic growth would be single digits, to make or to reach certain optimum utilization to make it profitable, our export needs to be much higher. So, what would be our strategy there?
This is Unsoo. In terms of export, HMIL is the largest exporter since 1998 cumulative. Also, we have a healthy and balanced mix of domestic and export volume which give us not only good profits but also natural hedge against the market fluctuation and foreign exchanges. As we see the domestic market is increasing and also, we see the export market increase. So, with the expansion of our Pune plant, we will meet both the demand. During the quarter, the geopolitical issues continued to impact the export volumes. The risk was mitigated to some extent by increasing volume to other region, like Africa. But we have a very unique product portfolio and model mix in the emerging market. We launched a new range of SUV like the Exter and Alcazar facelift last year. And also, HMIL has access to export ecosystem of HMC in more than 80 countries. Also, we are the manufacturing hub for emerging markets. So, going forward, we expect sustainability in the export volume in the near term with demand improvement in the mid to long-term.
Okay, understood. And sir, just on the export side, if you could give some more color, you mentioned that there has been impact of Red Sea crisis. But when we look at some of your competitors, exports have not been impacted that much. So, any comparison you can share like what is the reason that our exports are impacted and if there is any sign of improvement in outlook or any easing of the problems that we are facing?
So, Kapil, like we mentioned, look, it also depends on, of course one, which are the markets you are exporting. As you know that Middle East was affected much more. At the same time, like we mentioned earlier, that new model cycle is going to come. For example, Exter left hand drive could be a big opportunity for us going forward. So, I think, we just have to be a little bit patient. And you can see, in fact, the cycle turning already, probably from Q4 of this financial. And then going forward, we believe that the effect which we suffered probably is now being mitigated to a large extent. K S Hariharan added on the export side - right from the time we started our operations in India, we've been strongly focusing on the export front. The current decline is more to do with the geopolitical issues like the Red Sea and the issues in Latin America. But on the demand side, it is very much stable. We don't see any problem on that front. We have launched even during last year some of the products in the overseas market like Creta, Alcazar, and even Exter in South Africa. We have been getting very, very positive response from the overseas market. Even on the EV side, we are evaluating on the export possibilities, even to start with Creta Electric.
Okay. That's good to know. And just lastly if I can squeeze in one more question. On the domestic side in terms of model launches, I know you cannot go into specifics, but we've already seen the Creta Electric in calendar'25. Is there a broad number of launches that is ICE plus EV that we can expect for the remainder of the year? If you can give some broad indication?
I think we need to be patient. We will, at the right time maybe, give this information. So, my request is that please be patient. We will be announcing. MD already mentioned along with the Pune plant, you will see a lot of launches. But how many in calendar '25? How many in '26? Please wait for the right time. I think we will be announcing.
Got it. And lastly, any comment on Creta EV, given that it's almost 10 days since we launched, how is the response of any booking numbers which you can talk about?
Yes. So, Creta EV response is good. It's too early to talk about but what we feel is that broadly what we had announced in the Bharat Mobility was that we believe that 10% of the Creta volumes could come from Creta EV. Going forward, I think we should be in line with that broad number going forward and that will help us as a lever for our market share as well as for volume.
Okay. Got it. And anything on the outlook for exports for next fiscal? I mean I get that it can be a very big growth driver from a mid-term perspective but more trying to get sense on next 12, 18 months?
Look very difficult to give an outlook but I can only say that things look positive. And Pune plant with the end of this year coming in, like I mentioned, along with domestic we have those opportunities in export. For example, you mentioned 12 to 18 months. Definitely, before 18 months, Exter left hand drive will be up and running. That should be a big driver. We are expecting stability in other markets as well. So, very difficult to give whether it will be 10% or 8%. I can only say probably it appears that the worst is behind us, and we should be able to get into a growth cycle in exports. So, we will definitely, I mean definitely we cannot say, but we will have a growth in calendar year '25 over calendar year '24, at least in the business plan. That is what we are aiming at.
Sir, my first question is on growth outlook for passenger vehicle industry for Q4 and FY'26. As there has been lot of uncertainty recently in terms of huge difference in growth among the players, if you can give more detail on the Q4 particularly and what could be the FY'26 domestic PV industry growth. And at the same time also, we would be happy to understand your market share strategy as our shares have declined marginally in first nine months. So, what strategy will you use to regain it?
So, if you see nine months, the TIV has grown by 2.2%. So, we have been maintaining this that after those high growths of 23% and 9% which we all saw post COVID, obviously some kind of a moderation was expected, and this is absolutely in line with this anticipation. Going forward, there are some positive factors as well. One, yesterday RBI infused liquidity. Very clearly this is a precursor to lowering of interest rate because now it is two-three years since the interest rates have been very high. We believe that inflation also has probably peaked out. The monsoons were all over the country, were normal to excess. And we are seeing a positive offshoot on rural. By 1st of January, Hyundai took the lead by increasing the price by almost close to 1%. And we can see that many other players have followed. Although the exact forecast probably SIAM has announced that 18th of February, we will have a looking ahead conclave and there we will be announcing industry forecast. But it appears broadly when we talk to other players that probably low single digit in '25, considering all the positive as well as challenging factors, appear to be in order. As far as Hyundai is concerned, some of the levers we are looking at, of course, is electric. As you know that today we have almost 0% market share in electric because Ioniq 5 is in the niche segment. And now that Creta EV has come out with a very strong force, we believe that even if the industry, say from 2.5% reaches say about 3.5% to 4% in '25 or early '26, even if we can target a 10% market share, it will give us 0.3% to 0.4% positive market share in the overall scheme of things. So, we believe we will be in line with the industry growth going forward in '25. K S Hariharan added that HMI is always known for the strong premiumization strategy - SUV penetration has been consistently growing and on the mid to high end trims like Sunroof penetration went from 47% in Q3 FY24 to 53.5% in current year same quarter, ADAS from 3.4% to 12.9%. These strategies helped improve domestic ASP by more than 2.5% during this period.
I just wanted to ask on the cost items, how are cost items looking for the future in terms of commodity costs, and as well as the fact that we are starting a new plant next year. So how should we think about the impact of that on margin? Also, these staff costs for the quarter were up significantly. So, if you could give some color there and you know, whether this is a sustainable level or how to think about that?
Hi, Kapil. So, your first question on the commodity. See, commodity was more or less stable during this quarter. And second thing on the staff cost which you asked, there was a one-time impact which we have disclosed in the IPO prospectus time itself. This is basically kind of reward which has been announced for all the employees. So, that is reflected in this Q3 period. And as far as Pune is concerned. We will be starting this Pune facility by end of this calendar year. Of course, all the activities are progressing in a fast pace. As far as margins are concerned, as you know this is a significant capacity we'll be getting. 170,000 is the plan we are having and of course, with all the model launches we have planned going forward, we are very confident that, whatever is the investment we are making into the Pune plant, with our clear strategy, which we are having on the product side, we can secure the margins going forward.
Okay. Sure, sir. And just to clarify this one-time staff cost is only in 3Q, or it will come in future quarters or years also?
No, this was only in Q3. That's all. This is one-off expenses.
Yes, hi and thanks for the opportunity. Just continuing on the export aspect. I think in the initial remarks there was one comment that to offset the Middle East and Latin America weakness, we have increased exports into Africa and maybe that has led to some increased discounts and ASP issues. So, broadly can you just help clarify whether Africa is generally a lower ASP and lower margin geography and that has, maybe, impacted our overall profitability?
Yes, Amyn, Hariharan here. See, as we mentioned, the increased level of discount is something which we have to do because Africa is a region where we had actually increased our volumes more than the original plan. And of course, when we have to push for some extra volumes, we need to give some additional price support. That is one. And second is that even from the product perspective, for example, when we export some product, we need to make some adjustments also to meet their requirement. So that is something as an additional factor which we need to take care because for example, when we export Exter as a model, we need to make some adjustments to meet their requirements. Obviously, we need to support with some additional price incentives. But that said again, as I mentioned, on the demand side overall for export, it is very much intact. Going forward, we expect stability.
And just on the Creta Electric as an export opportunity. Again, just want to understand, is the Creta Electric exclusively made in India or is it made in other geographies also?
This is Unsoo. Creta Electric is unique for our Chennai plant. We are basically targeting for domestic, but we are exporting to neighbouring country first. And then, if possible, with some emerging market infrastructure or government policy if favourable to us, we will export Creta Electric too.
What was the impact in staff cost in this quarter and how much were discounts in this quarter?
See, on a year-on-year basis, the staff cost has increased by about 0.6% on the revenue. That is one. And as far as discount is concerned, there was some discount, as we have mentioned, because of the volumes we need to increase to Africa region. So, there was some increased level of discounts on the export side and domestic side also there has been some increase in the discounts on a sequential basis. That is most to do in line with the industry scenario. But still our discounting was very much below the industry average as far as domestic is concerned.
Yes. I mean 2Q was 1.9% of sales was discount. 3Q would be 2.5~3%, any indication?
So, as a percentage on ASP for domestic, the discount was 2.6%.
2.6%. Got it. And royalty would be stable Q-o-Q at 2.6%, or that had also gone up?
Royalty was almost similar to the Q2 level. During this Q3, it was 2.7% on the revenue.
Yes, hi, thanks for taking my questions. I just had a quick follow up on prior questions. Just, firstly on Exports. Could you give us some sense on what is the geo-mix in this year fiscal 25, particularly I'm interested to know how big is Middle East for us and again Africa, where has it gotten to? And on the exports again like you mentioned for domestic expecting a low single digit growth for industry, market share should be stable. If I were to think of exports, do you think in fiscal '26 the growth can be better than this low single digit that we're seeing in domestic or it's going to be pretty much in the same zone?
Hi, Gunjan. See, as far as the geo mix is concerned during this quarter, yes, Middle East was impacted. So, there was a drop of about nearly 10% for Middle East volumes. On the other hand, because, as we mentioned, Africa we are focused. We have seen a growth of nearly 15% in Africa as far as volumes are concerned. Tarun Garg clarified the question was about contribution, not volume. K S Hariharan continued: The Middle East would be around roughly 37% during Q3 of this year and Africa would be close to 28%.
Okay, no, that's good to hear and quite helpful. My second question again a little bit of bookkeeping is on the Tamil Nadu Government State incentive that we get. If you can just share what is the magnitude and how does it get accounted, if you can give some color on that?
So, yes, Tamil Nadu incentive for us, normally every financial year, more or less it starts from the Q3 onwards. So, roughly we can say, on a monthly basis it would be roughly around ₹30 crores kind of a range. So even this quarter we had, all the full 3 months impact. It has been reflected in our Q3 P&L as well.
So, this will be part of operating income roughly around ₹90 crores in Q3?
Yes, this is part of the other operating revenue. That is how we are showing in the P&L. See more or less, it follows a trend basically. Obviously, there can be some impact because of the product mix and other things. But more or less it follows a similar trend and Q3, as to be precise, the amount was ₹101 crores. That was the impact reflected in the P&L.