On the domestic market - we've seen EV 3-wheeler, CNG 3-wheeler and 2-wheeler EV scooter launches. In motorcycles, anything you can look forward to in the next 12 months? Any specific category motorcycles you are targeting?
TVS always believes in investing behind technology, coming up with models that delight the customer. This is our focus for growth ahead of the industry. Last year you've seen iQube, RTX, Orbiter V1 version and 3-wheeler. We started with passenger EV, then cargo, then CNG cargo. So we completely believe in investing behind products and our strength is R&D, software, digital, connected services. We will continuously invest and drive. That's also why capex is pretty high - we don't stop investing. These are medium to long-term strategy. On top of it, Super Premium Norton. Products are getting ready in our Hosur plant and Solihull. So we are very excited about '26, '27. It is going to be a key turnaround year for the next phase of growth for TVS and Norton.
Looking at elevated and extended cost inflation, how much more price increases are you planning to take to sustain FY '26 level margins?
Normally, I don't give you any guidance on margin. Because we don't look at -- pricing is a strategy. Pricing is only one element. We always look at the value we are giving to the customer in terms of TCO, attractiveness, technology, connectivity. We also use varianting strategy. When you grow top line ahead of the industry, that is going to give you many benefits. In terms of cost inflation, this 3% to 5% is quite significant. We constantly look at what type of opportunity is given to us in terms of variant and pricing. Our endeavor is to grow the top line and continue the momentum. We don't look for one quarter another quarter. We always look at trajectory. When we started the growth momentum, we were at 6.5% in EBITDA. This quarter, we are closing at 13.1%. We always look at the direction. With our product portfolio, focus on product mix and the combination of 3-wheeler, premium, international business - all these are going to strengthen our realization per vehicle. When you have realization per vehicle going up, you can always leverage cost. We can amortize our fixed cost over a larger base. So the growth momentum and the EBITDA journey will continue. We should not be so much worried about one quarter, two quarter.
In the export market, would you expect growth to be higher than domestic market in FY '27? And within exports - packing order: Latin America followed by Africa and Asia?
If you look at many of these international markets, India has got a huge opportunity and the investments government has done on infrastructure, roads, and thanks to the consumer class of 1.4 billion who definitely looks at 2-wheeler as a great category for income generation and commuting. I'm very sure the growth momentum will continue. Thanks to GST, the entire scenario got changed when government reduced 28% to 18%. It's not only on 2-wheeler. This war situation has put a little bit of challenges, but the need for commuting will continue in India. Growth - I said about a strong single digit. It could even - if things go better in the second half, you can see something becoming better also. But we have to be cautious from the industry point of view. Coming to international, last - if you look at '21, '22, '23, we saw a lot of challenges and it went to the bottom. Now all these international markets are coming back. Last year, we saw a good growth. I'm very sure this year also, you will see a similar growth and momentum will continue. LatAm went down. Africa went down. So we are pretty confident the momentum will continue in international market. For TVS, the product pool is very good.
Ronin model has done extremely well, monthly volume crossed 8,000 in domestic market. How do you see the potential for this product in domestic and exports? And how does this help your premiumization play?
Ronin is a great brand. We started with 2,000, went to 4,000, 8,000. I'm telling you shortly, we will cross 10,000, and it is great pool in India in every state. It is yet another brand like Apache. I don't want to give you any guidance on the volume because we are building it. Pull has started already in Indonesia and international markets, every market wherever we operate. So it is going to be a long-standing, very good brand for the super-premium customers.
On investments - you said fiscal '27 investments will be INR 500-600 crores lower. But I thought bulk of Norton investment is behind us. Can you give color on where INR2,000 crores investment will be spent in fiscal '27?
No, the investments will be lower, but it will not be zero. Product development is still continuing because we can't have only a few models. We have to have in all segment models for Norton, but it will be lower than this year. And other investment where we are investing this year, some of them will continue. Some new investments will be there, which closer to the investment, we will let you know. It may not be in Norton and the current investment because we constantly look at the opportunities and we will be doing that. But overall, at this point of time, it will be 70% of the current year, somewhere around that.
When you say new investments, will it be something outside Norton plus Dubai plus credit services? Can it be something outside these 3 as well?
We always look at new opportunities, and we want to see these opportunities. So closer to - when we decide, we will let you know.
Just wanted to understand the strategic rationale behind the Hyundai TVS partnership in the 3-wheeler EV segment. And what is the expected timeline for commercialization and product launches under this partnership?
All of you know about Hyundai, their capability in terms of ability to design, R&D capability, advanced mobility technology, very clear understanding of human-centric approach country by country. We want to completely leverage that. On the other side, we have excellent leading edge electric platform. We have the 3-wheeler engineering expertise, deep local understanding of Indian market, international market. So we will look at how we use this - both companies leveraging the strength and how we come with a redefined mobility in the 3-wheeler category. I can give you so much now. Closer to the launch, I can give you more details, including the lead time.
Extension to this question - how should we think about revenue contribution and profitability potential from this partnership over the medium term?
What we have to look at is overall how the company is moving, and we have done extremely well, how we moved from 6.5% to 13.1%. Whenever we look at, we look at portfolio, we look at every product and every project. And overall, we look at the performance of the company, and I'm very confident this also is going to help us in improving our EBITDA journey.
On growth outlook for domestic and international for FY '27 - what kind of growth are you expecting? And any color in-between motorcycles, ICE scooters and EV scooters directionally?
We are expecting a good single-digit growth on the industry this year. EV is doing extremely well, and we have 2 good brands, iQube and Orbiter. On scooter, Jupiter 110 and 125 is doing extremely well. EV will be very good. Scooters will be very good. Super premium category is also likely to do very well. The challenge will continue in the economy category. For TVS, SSP including EV scooter category share is almost 38%, likely to go over 40%. We have strong brands of Jupiter, Ntorq, 125, 150 and the response of 150 is outstanding. On EV side, Orbiter outstanding response. iQube continues to do very well. Premium Apache and Ronin doing extremely well. So overall, very good portfolio. EV will grow well, scooters will grow well, premium and super premium will grow well. International market demand is extremely good and momentum from Q4 will continue this year.
On commodity side, how much commodity inflation are we expecting in Q1 and how much price hike have we taken? Also similar numbers for Q4 FY '26?
The commodity, I think this is unprecedented. It is around 3% to 5% because as we speak, there are challenges, but we were able to increase prices 35% of the price increases we were able to offset by increasing prices. We are closely monitoring the situation, both in domestic and international, we have passed on price increases. The product mix is going to definitely help us. The leverage in the top line is going to help us. So it will be a combination of cost reduction, product mix, growing the scale benefit and looking at appropriate price increases in the right model.
Just to clarify, this 3 to 5 percentages is - as a percentage of the revenue, right? And how much was PLI for the quarter?
Revenue, revenue, revenue. Yes. PLI is about 0.9%.
On production capacity - in FY '26 we manufactured close to 5.9 million vehicles. What is the rough range of 2-wheeler and 3-wheeler production capacity, and what proportion of addition can we expect over the next 12 to 24 months?
Immediately, we are looking at increasing the capacity by another 1.5 million, to go to somewhere around 8.3 million because the demand is good and first time we have to add significant capacity in the next 12 months. Work has already started in the last quarter of last year -- last financial year. This financial year is going to be very important. Quarter after quarter, we are reviewing. And possibly for '28 and '29, we are also thinking about which -- what kind of capacity additions we need to add. But one thing we are very clear, we want to be ahead of the industry growth. And for that, we will make sure that capacity will not be a constraint, and we will be investing behind us.
On supply chain challenges - you mentioned gas, raw materials. Rare earth has been up and down. Across some of your key materials including manpower, where are the challenges and how do you see them progressing?
Supply chain was something unique we had in the last April and end of March. It all started post the geopolitical unrest. Gas prices going up and other energy costs going up affected the commodity prices but sometimes commodity availability. We don't keep more than 30 days of stock with our dealers in India - normally 21 to 30 days maximum, all cash and carry. Our retails are extremely good. Across India, we are seeing some challenges with respect to labor. It is not only unique to South, but many, many areas, especially the Tier 2 suppliers. Tier 1 is able to manage, but many of the Tier 2, they have serious problems. So we are supporting them. Month of May, we are much better than April. Hopefully, end of this month, we will come out of it. That's why I'm confident about Q1, we will be very, very confidently growing ahead of the industry in totality, both in retail and in dispatches.
Just a bookkeeping question - where is the channel stock for domestic versus normal channel stock and for international business as well? And if you could share exports and spares revenues for the quarter?
Channel stock has started improving this month because we were able to produce much better in the first 10 days of May. By end of this month and first week of June, it will come to the 21 days to 30 days range. Every product is under high pool. Q4 international business revenue we're at almost INR3,000 crores -- INR2,999 crores. And overall spare parts is about INR1,122 crores.
Going back to your comments about being cautious for next 1-2 quarters - is it more cost headwinds, supply disruption, or price increases that could risk demand?
We are confident about the demand. Thanks to customer delight, the products and product range, we are very confident on demand side. The uncertainty is on raw material availability, timely availability. The costs are high, but a couple of days delay here and there is one worry. Another worry which we are getting over completely is the supply chain tier 2 disruption, but that we are coming out of it fully. So I'm very confident by end of a couple of weeks' time, we will be completely out of it. We are closely monitoring the overall situation in terms of what is happening on the geopolitical situation because this is not only for us, it is for the entire industry. So we have to be very cautious about that. Maybe in 2, 3 weeks, we will come out of it.
Can you share more color on the investments made this quarter of INR 700 crores? Subsidiary losses were also higher this quarter. And a guide for fiscal '27 investments in capex?
The overall investment - it is more for the overseas subsidiary. We spent about INR 2,400 crores total for the year. Predominantly it is for Norton. Norton products are getting ready and many of the products are going to be seen in Q2 of this year. About INR 200 crores is in TVS Credit Services. We also have put a strategic investment in Dubai to have significant focus on international markets - about INR 300 crores we have invested. So all put together this year was INR2,400 crores. Next year, the investments will be much lower. It will be maybe another INR500 crores, INR600 crores lower than this INR 2,400 because we are very confident that many of the investments are going to start yielding better revenues. On capex - our focus on product development continues, around close to INR 2,000 crores. Additional investment is for adding another 1.5 million of capacity, that will be about INR1,000 crores plus. R&D investment continues. So all put together, the capex for next year for TVS Motor will be likely to be around INR3,500 crores.
On EV capacity - what is the EV capacity on a monthly basis right now? Where do you see capacity unlocking happening given the rising demand? And any plans to leverage EV products in international markets?
Asian market the response to iQube is very good. We are now starting our Orbiter. So Asian markets have started a good proportion of our EVs. Currently we are doing about - last year if you look at our average was about 32,000. Around 30,000 to 32,000. We have now moved maybe around 40,000 and we will soon move to 50,000 per month. So that is the kind of direction we are looking at in EV. We will definitely be ahead of the industry. We are constantly looking at our capacity versus demand and expansion in the network. And we will grow ahead of the industry.
On exports - we are seeing a lot of strength but near-term challenges. In Africa, LatAm and South Asia, are we seeing inflation or fuel availability issues similar to India? Some geographies have announced work from home, rationing of fuel. Any worries?
These are things we have to constantly look at. But the strength is we have a very strong product range of HLX series 100, 125, 150. The demand is so high for us, we are not able to meet the demand today. Country by country, people are loving our products in African markets and many other markets. Our endeavor is to significantly and proportionately increase. The challenge according to me is delay in container availability and 15% increase in lead times. When the distributor plans with his money and dealers, they need to have this plan. 15% is another 10 days delay. So we need to plan and support them with possibly higher capacity, higher production. But inflation, prices of energy, local challenges, we always constantly look at because we are now talking about this war situation.
Just a clarification - will you be manufacturing these initial Norton products in India as well?
Yes. Solihull is looking at one model in the high end where we will be making there. The other models are going to be made here. And we will also look at what type of models in Solihull, what type of models in India. But we are leveraging India, especially the Hosur plant in a big way.
What has been the impact on rural sales due to El Nino as per your earlier years assessment?
One is monsoon. As we open this year, the reservoir water level is 16% higher. So it is definitely good for the Kharif season. However, El Nino risk could moderate the rainfall, so we have to be constantly watching that. The reservoir water levels are very critical going forward. So that is very critical for looking at, in my opinion, Q3 and Q4, which we will very closely look at.
Just a housekeeping question - can you share the EV revenue for FY '26?
EV Revenue. You have to give me a minute. About 5,000 crores.
On export volumes - while we have done a phenomenal job, our volumes are still more skewed to Africa. From the next 2-3 years point of view, do we see an opportunity to gain substantially in LatAm? How has the experience been there?
Africa, we invested long back, and I'm extremely happy the way TVS brand is preferred in Africa. It takes time to establish your brand - the HLX series, HLX 100, 125, 155 is the most preferred brand. Asia is very strong for us. Africa is very strong for us. And I completely agree, LatAm we are growing ahead of the industry, which means we are gaining market share year after year. LatAm is going to be the focus for TVS. But you have to give 2, 3 years' time because we need good distributors, very good investment behind brands, visibility in the market. There is huge headroom in Africa and Middle East. So we want to further strengthen Africa and Middle East and put a strong foundation in LatAm. LatAm will be the focus.
Just an extension - shall we think LatAm journey will be more through Apache and Ronin or much wider, including entry-level products?
All products. Every country I have seen, there are proportions of premium, super-premium and executives and entry-level. So every - these are all developing countries. So we have to play with the portfolio even for the distributor and dealer productivity and their profitability. So we will play in the portfolio. Sometimes you can also design and develop something unique for this market. The Indonesia products are also doing extremely well. Last year, we did average of 17,000 per month. Now we are getting into almost 20,000 plus. And the Bebek & Skubek are also in many of these markets doing very well. So the portfolio what we have, we will leverage that. And country-specific certain products also we will design and develop.
Last question - how do you think about international growth potential for the EV scooters?
That started well, especially in the Asia market. We are also entering into many markets where we are present. I'm very positive because whether it is iQube or Orbiter, it is loved by the customer. But each country is specific, each country is unique. We need to be very closer to the customer in understanding what needs they are expecting. Sometimes we may have to come up with a new model, even in electric because the customer preferences we have to understand, and that is the strength of TVS. We invest behind - for example, HLX whatever we are selling in Africa and LatAm, we don't sell even one number in India. So we constantly believe in looking at the customers, coming up with the models which are unique to the customer and the usage.