The following is excerpted from the question-and-answer section of the transcript.
(Questions from industry analysts are provided in full, but answers are omitted - download the transcript to see the full question-and-answer session)
Question: Pramod Kumar - UBS Investment Bank, Research Division - Analyst
: Sir, I had one question on the business side. Before that, I just wanted more clarity on this transaction with Ohm Global Mobility. So can you please
throw some light on this? And just clarify whether this is a sale to a promoter entity? Or is it still going to be under the Ashok Leyland? If you can
just clarify and throw some light on this transaction.
Question: Pramod Kumar - UBS Investment Bank, Research Division - Analyst
: I'm sorry, Gopal, sorry to interrupt. But ultimately, this won't come back to Switch, but 20% ownership will still depend on the promoters. So why
go through this route? Switch Mobility is Ashok Leyland's subsidiary, the [directors] could have happened to them. So I'm just trying to understand,
Gopal, is there a regulatory requirement you need to route it like this? Or...
Question: Pramod Kumar - UBS Investment Bank, Research Division - Analyst
: No, no, no. I'm not doubting that, but I'm just trying to understand the logic here. Nothing -- but anyway, I think you're going to share more details
on this at a later stage, right?
Question: Pramod Kumar - UBS Investment Bank, Research Division - Analyst
: Okay. So wait for more details on that, Gopal. And going back to the question on the demand side because the CV cycle was expected to be much
more stronger. And I think some of your peers have made statements to the fact that the industry is going to be marginally positive on second half
of this year versus last year. So I'm just trying to understand, while the economic actually is looking up -- all of that is great, but it's not exactly
translating into great demand for CV volume.
So even in that context, is there something which you are missing out in terms of impact of the GST plus the tonnage increase and the consequent
drop in utilization rates? And if you can help us understand, where is utilization rates right now as a fleet? And where do you think is -- what is the
threshold which it needs to be before replacement market? And also some comments on [B2C] as to how we are tracking it. And related to CNG,
if you can talk about how much is CNG as a percentage of industry volumes and what are Ashok Leyland's plans in more detail.
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NOVEMBER 15, 2021 / 4:00AM, ASOK.NS - Q2 2022 Ashok Leyland Ltd Earnings Call
Question: Pramod Kumar - UBS Investment Bank, Research Division - Analyst
: Gopal, steel.
Question: Pramod Kumar - UBS Investment Bank, Research Division - Analyst
: Gopal, on the CNG side.
Question: Amyn Pirani - JPMorgan Chase & Co, Research Division - Analyst
: Just some clarifications on the EV business transfer to Switch. So you have transferred this business to Switch India or Switch U.K.?
Question: Amyn Pirani - JPMorgan Chase & Co, Research Division - Analyst
: I know, I know, I just -- people say a lot of acronyms there, so I just...
Question: Amyn Pirani - JPMorgan Chase & Co, Research Division - Analyst
: No, I appreciate that. And I don't want to ask about Ohm right now. But you also mentioned in the press release that the EV business of Ashok
Leyland which has been transferred to Switch has been done for a consideration of INR 240 crores. Is this cash? And if that is the case, I mean, how
is your step-down subsidiary paying you cash? Just want to understand that.
Question: Amyn Pirani - JPMorgan Chase & Co, Research Division - Analyst
: Understood. And just for lastly, so you -- Optare plc is a subsidiary of Ashok Leyland. Switch U.K., I mean, not the legal name, but Switch U.K. is a
subsidiary of Optare plc. And Switch India is a subsidiary of Switch U.K. Is that understanding broadly correct?
Question: Pramod Amthe - Incred Research Services Private Limited - Analyst
: Gopal, this is with regard to the Switch India transaction, which you discussed. Considering the value creation which is happening in the EV space,
wouldn't it have been right to swap this amount for a stake instead of getting a cash in hand?
Question: Pramod Amthe - Incred Research Services Private Limited - Analyst
: And second one is on core business of CVs. Considering the amount of headwinds on product mix and the cost structure, how do you see the
margin recovery profile in this up cycle? Will it lag substantially as compared to historical cycles? If that is the case, how you plan to address it better
so that you remain ahead of the EPS in terms of margin management?
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NOVEMBER 15, 2021 / 4:00AM, ASOK.NS - Q2 2022 Ashok Leyland Ltd Earnings Call
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