TVS Motor Company Ltd Q1 2024 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Pramod Kumar - UBS Investment Bank, Research Division - Analyst : My question is on other expenditure and also staff extensions. Both have outgrown the revenue growth on a quarter-on-quarter basis. I think you kind of touched upon some absorption of 30 bps of revenues as a onetime cost for EVs for goodwill measure and all that. Can you just explain a bit on that? And also if Desikan-sir can also explain staff costs, is it the new recurring run rate, or is there a higher provisioning? If you can just help us understand these two-line items better.

Question: Pramod Kumar - UBS Investment Bank, Research Division - Analyst : You touched upon some 30 bps hit because of some EV related -- you absorbed some EV-related bps, right? As in, is it also sitting at the... REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JULY 24, 2023 / 12:00PM, TVSM.NS - Q1 2024 TVS Motor Company Ltd Earnings Call

Question: Pramod Kumar - UBS Investment Bank, Research Division - Analyst : That's in the raw material side, is it?

Question: Pramod Kumar - UBS Investment Bank, Research Division - Analyst : So you may probably (inaudible) that revenue number by that amount, right, 0.2% to 0.3% towards the EV (inaudible), is that right?

Question: Pramod Kumar - UBS Investment Bank, Research Division - Analyst : And sir, staff expense, is it the new recurring run rate? Or why is it there such a sharp jump, because it's up like in a big way on a Y-o-Y on the quarter end.

Question: Pramod Kumar - UBS Investment Bank, Research Division - Analyst : Okay. So this can be the sustainable recurring run rate in a way. There's no promising related one-offs or anything like that, right?

Question: Pramod Kumar - UBS Investment Bank, Research Division - Analyst : Yes, fair enough sir, fair. I was just trying to understand that. And on the previous -- on the export side, sir, sorry. Is there any number which you'd like to quote or just help us understand better on the retail on the ground situation in Africa, particularly and also Latin America, how is retail REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JULY 24, 2023 / 12:00PM, TVSM.NS - Q1 2024 TVS Motor Company Ltd Earnings Call traction? Where are we on inventory? When do you expect near normalization of demand here? And also on the iQube export side, any initial feedback you have, and what are the future scope for iQube exports from India, sir?

Question: Pramod Kumar - UBS Investment Bank, Research Division - Analyst : And okay. And sir, finally, on the EV monetization, there were some media articles saying that you guys are putting the plan on hold or scrapping it all together. So any comment you have to offer there as to what is the thinking? And because you've done the monetization of the financing arm, so any thoughts on the EV potential monetization, sir?

Question: Pramod Kumar - UBS Investment Bank, Research Division - Analyst : Okay. Desikan-sir, then finally, guidance on CapEx and investments for the year?

Question: Pramod Kumar - UBS Investment Bank, Research Division - Analyst : And investment, sir, which including what you've done already in the first quarter? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JULY 24, 2023 / 12:00PM, TVSM.NS - Q1 2024 TVS Motor Company Ltd Earnings Call

Question: Pramod Kumar - UBS Investment Bank, Research Division - Analyst : INR 850 crores to INR 900 crores.

Question: Amyn Pirani - JPMorgan Chase & Co, Research Division - Analyst : Actually, my first question is on the deal which was announced in TVS Credit. So congratulations on the value creation opportunity. So as per the release, it mentioned that PIA is going to invest some money into TVS Credit, and you mentioned that your stake will come down to around 81%. But then there was also a mention that they will be acquiring more stake from the existing shareholders of TVS Credit. So are we to assume that you will not be participating in that?

Question: Amyn Pirani - JPMorgan Chase & Co, Research Division - Analyst : Understood. Understood. And once this money infusion comes into TVS Credit. I mean, can you give us a sense as to -- because you've been investing money into TVS Credit every year. So -- and you've also invested some money in 1Q. But after this infusion comes in, I mean, can we say that maybe for this year and maybe potentially next year, you may not have to invest money at least in TVS Credit? Or how should we think about it?

Question: Amyn Pirani - JPMorgan Chase & Co, Research Division - Analyst : Understood. That's helpful. And just lastly, on Norton. Any update on when would you be launching the new products in the U.K.? Because I think you already have an order book, and I think you were spending some time and getting out the newer products. So any update on that? Any timelines would be very helpful.

Question: Amyn Pirani - JPMorgan Chase & Co, Research Division - Analyst : Okay. Okay. Okay. I'll just try...

Question: Pramod Amthe - Incred Research Services Private Limited - Analyst : Post this FAME subsidy reduction, which is now almost like 2 months, how -- what is the customer talking about in terms of moving down the configuration or whatever response you are getting, so that you can plan your products as to the customer response? Can you give some color on that?

Question: Pramod Amthe - Incred Research Services Private Limited - Analyst : And the second related question is with the now the subsidy proportionally is lower, and since the -- earlier qualified norms to get the subsidy were really tough, do you see a scenario where now the competitors are going to buy out internationally and so that the cost of procurement can be lower in sort of the requirement to make it local and (inaudible) or not?

Question: Pramod Amthe - Incred Research Services Private Limited - Analyst : Now just looking from the competitive landscape, do you envisage that and how to tackle it?

Question: Ashish G. Jain - Macquarie Research - Analyst : My first question is on input cost for EV, what kind of trend we are seeing on battery cost going down given some of the input costs for cells have gone down quite materially? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JULY 24, 2023 / 12:00PM, TVSM.NS - Q1 2024 TVS Motor Company Ltd Earnings Call

Question: Ashish G. Jain - Macquarie Research - Analyst : Right. But sir, as of now, we haven't seen any correction in battery cell sourcing cost, especially given the input cost, like I said, has come down quite materially in the last 6, 9 months.

Question: Ashish G. Jain - Macquarie Research - Analyst : Right. Okay. Sir, secondly, just one clarification. I did not get -- so earlier in the call, you spoke about 20 to 30 basis points impact because of onetime impact due to EV. Could you just elaborate on that? Is that booked in revenues or in some other cost items?

Question: Ashish G. Jain - Macquarie Research - Analyst : Right. So all that impact is already there in 1Q. There's nothing more expected to come into 2Q and all.