Hero MotoCorp Limited (500182) Earnings Call Transcript

Okay. So we get started in a few minutes and what we'll do is that to start with, we'll have a round of introduction of our leadership team and management teams present here. So we have Sanjay. You can -- Sanjay Bhan, the Head of Global Business. You have seen him also the Head of Domestic Business earlier. Suresh, General Counsel. He advises us on how to stay legal. Thanks, Suresh. Of course, you've seen Swadesh, the architect of VIDA, and he's going to tell us more about it. You've seen Arun as well. The person heading this beautiful center of innovation technology CIT, which is world-class and state-of-the-art R&D center. Thanks, Arun. Good job. Malo, you've seen Malo earlier guys, in Hero World 2020 when we had, and is a Global Product Planning, Strategy and Performance Transformation Head. Thanks, Malo. I am expecting -- I'm speaking on behalf of investors, we are expecting a lot of premium products from you over the next 2, 3 years. Yes, but we will talk about that. Mike, he is our Chief Operating Officer and CHRO. Mike, all manufacturing, sourcing people all rely on you. Excellence. Ram, he's the Head of Procurement, our Chief Procurement Officer, heads Strategic Sourcing and Supply Chain. So all questions you want to ask on cost leadership, cost reduction, cost advantage, cost competitive. And then chips, not the wafers and the Lays, but of course, the semiconductor chips, he's here to answer. Ram, thanks for coming. Rima, our Chief Information and Digital Officer. She is going to take us into the era of digitalized future. Thanks, Rima, for joining. We have Ravi, heading the plant operations. You know Ravi, all the plants, everything depends on him. Ravi? We've got to get this product delivered. What have you announced Chandru? where are you? December 10, 2nd week. So we need to get that going. He'll get that going. He'll give probably earlier than that. Thanks, Ravi. I'm missing, of course, Chandru, you've seen, EMBU team, he was presenting the fantastic features and attractive price. Shekhar, where are you hiding? He's also part of our EMBU team, he heads the Strategy and Corporate Finance in the EMBU team. We have Saurabh who is looking after the product planning part of EMBU. As you can see, we have tried to create dedicated Emerging Mobility Business Unit. Varun, why don't you introduce yourself? Correct. Charging should be louder. That's the key thing in the EV. And last, but not the least is Mahesh Kaikini, and why I kept him last is a purpose. He heads the quality, which is extremely important from customer point of view, and eventually cash point of view as well. Thanks, Mahesh, for joining. Talking about cash, we also have Anuj Chandra from finance team, he heads Treasury and Investment. If you want to blame anyone for any investment in Gogoro, Zero, you can blame him, not me. Yeah, where is Abhinav. No, he is not there. All right. And of course, we have other members of the finance team. We have internal audit, corporate finance, we've have planned finance, we've got a powerhouse here. Good, with that done.

So thanks, everyone, for waiting. Thank you for your patience, and I really regret the delay. Pawanji should be in shortly, but not using any more of your time, we will get started. The way we'll do this is, we'll have Niranjan first talk about the company and he promised he'll do 10 minutes. So we'll do that. And then hopefully, we'll have Pawanji in as well. And after that, Swadesh, man of the hour will talk about everything that's here. We'll do Q&A right after. Just give me a second, Niranjan it seems Pawanji is walking down.

Big round of applause for Dr. Pawan Munjal.

Good afternoon, Pawanji. You want to come right on the stage. Thank you so much. So we'll begin with Pawanji's few words, and then Pawanji will hand it over to Niranjan to take it from there.

As I was walking down, I thought this place is packed. Packed to full capacity. But when I stand here, it is not. Namaskar, once again. Thank you for being here with us today, which for us and the entire Hero ecosystem and our partners is a big, big momentous day. I don't really have to say much. You have seen with your own eyes. You've heard us speak. Well, actually, so much within me that I can say, as I said earlier, there's been a lot of information overload. I'm glad that information overload was sent across to all the audience, both within the dome, as well as to the larger audience who are watching us virtually, who are watching the live stream. That is what we are today presenting to the world. As I said earlier, not just another product launch, but this we all saw is the launch of an entire ecosystem around the product. If I remember correctly, Umang, this is where we had met physically, the previous time, Hero World 2020, in February of 2020, where we had presented lots of new ideas, concepts, products and services. That was clearly a landmark day as I also unveiled our new vision, be the future of mobility. Another landmark day for Hero, where the first glimpse of that future of mobility from Hero has been presented and provided to the whole world. Clearly, we have been pursuing our vision very aggressively. And I want to reiterate the fact that we could have done this earlier. We wanted to go through those 200,000 kilometers, 25,000 hours of test after test after test. I'm not a test rider, but I myself have driven this vehicle a number of times on our test tracks. I'm going to do that right after this once again. A very exciting vehicle to ride, and I'm sure many of you are going to do that post this discussion here. Let me also say here that about 10 days back, I went across to a few of our facilities. The CIT being one, another one being where currently, the battery is being manufactured and packed. I can tell you the amount of hard work, the amount of diligence, the amount of faith all the teams have put in into these parts and the vehicles is tremendous. I really don't want to take too much of your time. We have been leaders of 2-wheelers across the globe now for 21 years with our ICE vehicles. We intend to carry that leadership forward now with our EVs also. This is just the beginning. I heard Chandru say this a few times, just the beginning, not just in terms of a product, just the beginning of our entry into electric vehicles. And I can already clearly see lots and lots that's going to happen on the horizon for us, for our customers for the world at large. And I talked a lot about the greater good for humanity and the world today. I'm sure you will appreciate if you've seen the videos from March 3 in Dubai and today, and many other times. I've been focused hugely on sustainability, on green and clean mobility, and the climate. It's not lip service at Hero. We are extremely, extremely serious about what we've been saying and what we have been doing here. Again, Niranjan, as I said, I can go on and on, but I know that everyone's time is limited. There are other things that you have to do, and I'm sure many of you have flights back. So I'll let Niranjan among and rest of the team here, talk to you, interact with you. I'm sure you would have queries, questions of them. So I'm going to leave you in very, very able hands. Thank you, and enjoy the test rides. Thank you.

Thank you, Pawanji. Thanks a lot for coming Pawanji. We know you have a tight schedule. Right.

Perfect. With that Niranjan will get started.

Hello? Yes. Umang, we get started now? All right. You introduce me.

So thank you, everyone. And so we have our Chief Financial Officer, Niranjan Gupta. He's also my boss. So I do everything he says. He just said introduce me. You know him. He knows most of you as well. What we'll do is, while he does 10 minutes very quickly, recapping Hero, he'll then hand it over to...

I'm sorry. Go ahead .

Told you, I do everything he says.

Okay. So thanks. I hope you're not sleepy after a fantastic lunch that Umang and team arranged. You're awake? Because I'm going to reveal a lot of secret information about M&A, acquisitions we are going to make, about Zero. So if you sleep, it will be your loss. You see. So absolutely, absolutely. So again, good afternoon, once again. Good afternoon. Thank you. Just helps me energize until, where is Swadesh? Swadesh and Mr. Charger gives me the batteries. So thank you. And also, we are joined by many people across the globe. So good morning, good afternoon and good evening, to all of you who are joining from various parts of the world. I already introduced my fellow leadership to you. But again, I would like to thank them for taking time and then be here with us. I know today is about VIDA. Today is about EV, today is about tech, today is about platform, today is about services. But before we get into that I just wanted to do a recap of our journey so far, as to how we have traveled to our leadership position, and then we'll move on to VIDA. So as you can see, and Pawanji talked about this, we've been the leader for 21 years in row. And this has been made possible through various things that the team has done, various milestones that we have crossed and you can see, for instance, the O2 arena, the famous The O2 arena in London where the Hero brand identity was unveiled. And from then on, we've gone on from strength to strength. 2016, the birth of the R&D center within 6 years, it almost looks like an R&D center, which has 100 years of maturity. That's the state-of-the-art R&D that we have developed. Within the short time frame, we have also actually expanded to 40 countries -- more than 40 countries. And last year, we crossed 100 million milestone. What's more important is that out of that 100 million, and thanks Sanjay, for giving me the data yesterday. 65 million actually has come out after 2011, which means that after we became Hero as brand identity. So that's, I think, a great achievement, of course, and we are proud of that. And finally, this year, March and now today, which is where VIDA takes us into a leap into future. I'd like to talk about our strong ecosystem because that's extremely important as we build our EV moving forward. Our ecosystem has been developed around various pillars, whether it is manufacturing excellence, our extensive distribution network, our sourcing and supply chain, which is at scale, and I'll talk more about each of these. Very powerful brands. All of us know that. R&D I spoke, and last, but not the least, the talent powerhouse. Because without people strength, without an institutionalized talent powerhouse, none of this can be possible. Let me take one by one, each of these. So when we take our manufacturing excellence, we have world-class manufacturing facility. We are all aware of that. And we do sustainable practices. We ensure excellence in quality. We ensure these are benchmark leading processes. We moved from just being in the part of North India, to actually rest India, and now South India, which is Chittoor factory, and global, which is LatAm and as well as Bangladesh, which we've talked about. Each of these manufacturing facilities are at a scale, which allows us competitive advantage other than the quality that we manufacture. Moving on, of course, what you manufacture has to be at the right cost. It has to be cost competitive. I can tell you that's the only thing that will make a difference in the long term between winners and losers even in the EV space, because cash burn cannot last longer. And already we have seen that markets are moving from cash burn to our traditional cash earn, and multiples of those. Hence, the cost leadership becomes very important. We have been partnering along the way, as you can see, with lots of global suppliers and local suppliers. We've been ensuring that people, partners, vendors, supply chain partners, dealers, all they grow with us. We've been focusing on Make in India from long before this became a catchword. More than 90% of our sourcing actually comes locally from India, only less than 10% we import. And this is exactly what we are going to do moving forward as localization happens in EV as well. All these products, which are manufactured at our world-class facilities and at cost leadership are actually sold, as we know through the largest distribution network. Of course, we know it. But what's very important is that it's not only largest, but it's actually the deepest as well. We reach across if you see the map to every nuke and corner of India because we believe in meeting the underserved and unserved people of the society, wherever they are, we will reach them. Mobility is not a style or a fashion statement unlike developed world here. This is a basic necessity. And therefore, it's very important for people to be lifted from the bottom of pyramid to the upper strata through their income only through this mobility. And we've been playing that role along with growth of India as an economy. Of course, as we do that we are moving into the new age virtual showrooms, digitalizing, putting all modern ways, direct to customer, all kinds of things that we are doing, which is to embrace the way forward with the new gen as well. Of course, India has been our strength, but we're not going to rest here. We've already announced earlier that we have plans to get 15% of our revenue from global business. Today, we have around 7% of our revenue coming from global business. The industry has got 25%, so we can easily achieve 15%. We've got geographical footprint. We've got distributors. We've got partners who are actually very strong in each of these countries, and it's about scaling up, and that's going to be another growth lever for us in our traditional segment. All of this, we've done through a portfolio of strong developed -- brands, which have been developed over the years. What's important as you see this slide is, of course, the marquee brand all of us know. You can maybe develop similar features, maybe develop specs. It's a matter of time, maybe compete. People can compete with us, but you can't replicate the trusts and the emotional connect that our brands have developed over the years. That cannot be done overnight, and that's what Hero stands for. And that's why we have these powerful brands which have stood the taste of time. So that goes through our core philosophy of how we develop brands. And of course, the R&D that we spoke about, and Arun is here, we got -- 2016, just 6 years back, this center was put up. We expanded to Germany as a next center. We have now more than 1,000-plus engineers and we've got all the world-class tools and technology that we have. Since we are finance guys as a number, over the last 5 years, we have spent more than INR 3,000 crores as far as R&D is concerned, and this is by far, much larger than any other competition. As a capital deployment principle, we are very clear that -- as far as our brands and R&D is concerned, they'll always receive priority of capital allocation, come what may. Of course, as we do all of these, we've talked about manufacturing, products, brands, distribution, we've ensured that we are doing this with sustainable, sustainable processes, sustainability in mind. You would have seen our detailed sustainability report as well, and we have taken very ambitious targets for future, which are there in our substitute report. Yes, you met the leadership team. None of this can happen without a very experienced leadership team, which you can see, most of them are here. And we are governed by a very diverse and experienced board. And these are what makes us long-lasting company way forward into future. Finally, if I were to summarize. As Hero, we have developed a very, very strong ecosystem. It's built on foundation of relationship, foundation of years of work. We built powerful brands which are built through trust and emotional connect, which can't be replicated easily. We are, of course, strong in India. We are leaders in India, but we are ready to actually scale up our global business operation, and that will be our next lever of growth as we do geographical diversification. And as you were saying that we are very strong in Splendors and HF Deluxe, entry and deluxe of the world, but I can tell you that we are developing, perhaps Malo, if I may say, the biggest portfolio of premium brands that any company would have in India, at least, over the next 3 years. And you will see that coming quarter after quarter, coming year after year. Finally, as I wrap up, this is our journey of ICE. The journey is not ended, as you see. There's growth levers on global business on premium, underserved, unserved. All of that is there. As we write the next chapter of our company, taking a leap into their future, leadership, in emerging mobility, let me invite Dr. Swadesh Srivastava. I also need to take a PhD. I have a FOMO in missing out PhD today.

Thank you. Thank you Niranjan.

You need to connect your laptop? Okay. All right. He has some secrets, which he didn't give to us.

So welcome, all of you, to dear investors here in the room, and everybody else watching from across the globe. As Niranjan said, good morning, good afternoon, good evening from wherever you are joining. Really exciting day. It's a really exciting day, and I hope all of you enjoyed what you saw today. And the people who couldn't be in earlier, I'll share some portion of what came out. And obviously, happy to answer any other questions. As Niranjan said, we have decades of experience. We have a very strong foundation at Hero. So as we go into the emerging mobility, as we go into the EV segment, we have a strong foundation on which we're going to leapfrog and that's what Niranjan mentioned, leapfrogging into the emerging mobility, leapfrogging into the EV business. It all started, as you know, on March 3, with the announcement of the brand VIDA from the house of Hero MotoCorp. And as you know, Pawanji shared that VIDA is about creating new legacy. It's about the purpose of providing the right solutions for a sustainable and cleaner planet. And it can only happen. So as I said, it is with the purpose of providing the best solutions for a cleaner and sustainable mobility in the world. The personality, the ethos behind the brand is to be -- to become the global changemaker ourselves and not just that. Also whether they are our customers, our stakeholders, our business partners, helping them become that changemaker along with us. I think then only we can bring a big change in the world. In order to do this, we had to build a team, which is going to bring all the strength, all the diverse experience. All the new ideas and all the great strengths we have at Hero. I'm very excited to share that over the last 1 year, we have been able to build a really solid team for EMBU. You met Chandru, Shaker, Kuldeep couldn't make it, but he's our Chief Digital Officer, Varun and Saurabh. They are holding important pieces of the EMBU, from strategy, from product, to technology stack, to obviously bringing the best sales and after sales offerings, and some exciting marketing, which you have already seen, right? For me, they are the strength, along with all the stakeholders at Hero. With this strong team -- we have been able to put, as you saw today, a great product in front of the front of the world. VIDA V1 provides class-leading performance and specs. It provides the best in the industry acceleration of 3.2 -- 0 to 40 kilometers per hour in 3.2 seconds for Pro and 3.4 seconds for Plus and the industry-leading range of 165 kilometers at Pro and 143 for Plus. And many other industry first, whether it's cruise control, custom mode and a lot of digital features, which you saw today. Moving on. As you saw that today, we launched not just a product, but an entire ecosystem. And why did we do that? The only way to create this category, which is still very nascent, as you heard from Niranjan as well, is by providing the right solutions for each aspect of usership and ownership, it can't be just the product. And hence, we have put out, along with the VIDA V1, we have put out the VIDA platform and VIDA services, which is going to handhold the customer, whether they are in the digital space or the physical space going from discovery to purchase, to full life cycle of ownership. On the connectivity, as you know, EV is a connected device and with our VIDA Cloud behind it, we are providing amazing connectivity features, which could be around navigation, trip analysis, over-the-air updates, remote charging, monitoring, track my bike, geofencing and many more. In terms of services, as we mentioned, we have taken care of the hygiene, but we are providing some of the leading -- some of the industry first service offerings as well, for example, remote on site. Moving on. So I actually wanted to show you all a few more specs and features which was there in my new presentation, but I think we'll share that across. When I realize this slide has come that I now have to talk about medium to long term. Going with that. So as you saw today, we have launched the EV ecosystem with the product and the platform and the services, which is going to help the customer adopt into the new EV world. That is just the beginning. That is just the beginning. In terms of the product, today, we started with Pro and Plus, which are our premium offering in the EV world. But as Hero, we cover different types of customers, and we cover scale. And that is what you'll show in our product portfolio going forward. We'll have other forms of scooters, which will cover to different types of customers over the next few years. And obviously, being the motorcycle leader, how can we leave the EV motorcycle opportunity. We will be -- no, please go back. Please, we will be bringing EV motorcycles as well in the coming years. In fact, the work is already going on that. And while we solve for the scooter and motorcycle form factors, what we are also working very closely with obviously our R&D and our EMBU tech team is providing new forms of technology, not just into the vehicle, but also the corrected features across your mobile phone and through our services. That will only get better with the latest technologies as we adopt. On the platform side, as you saw, we have just started with our experience centers, pop-up stores and the digital media. We are going to take that forward. And over the years, over the next few months and years come out with different types of connectivity features and subscription features, which will be available to our customers. And taking that further with all the data we capture through the platform and through our vehicles, we are going to bring out new business models and service models, and get into a platform play and not just a vehicle sales play. And the same thing you'll see through the servicing as well. There is a huge opportunity out there in terms of mobility as a service. And I think the fundamental building blocks of providing that mobility as a service are the right product and the right platform. And on top of what we have built today, we're going to be -- going into the mobility as a service segment as well in the future. Moving on. So what you see here is, we also spoke about some of these offerings in the event earlier that with our portfolio of offerings right now, we are providing best in the market financing. You have different types of ownerships and usership possible, not just purchasing upfront, but also leasing and learning. We have exchange offer, which is again, industry best and also assured buyback, which Chandru talked about at 70% return value. We also, not just with the regular short-term test ride, we also are providing 3 days long-term test ride, which should definitely solve for the anxiety and the concerns that customers have before getting into purchasing an electric scooter. So with that, as you -- some of you heard today and for the others who haven't that we are starting our bookings from October 10 and the deliveries will start from second week of December. The VIDA V1 Pro is going to be available at an ex-showroom price of INR 159,000 and VIDA V1 Plus going to be available at INR 145,000. Along with all the sales and aftersales offering and the exciting features, which you saw on VIDA 1, we have also solved for flexibility of charging. VIDA V1 is going to be -- you can charge VIDA V1 at our smart fast-charging stations, and you can also charge at home with a portable charger. What you see is that we have also provided removal battery in both the models, so you can actually remove the battery and charge at home, at office, wherever you want. So we have really taken charge of charging. So the range anxiety doesn't exist anymore in our customers. Moving on. I think Arun would do much more justice to the slide, but I think we just wanted to show you how we are actually putting our best minds and actually developing the heart and the mind of the electric vehicle. The battery is assembled completely in-house. We are getting the best cells and designing the best BMS to be incorporated in our battery. There are various -- Arun talked about various safety features in the battery, which is obviously a concern in the minds of the customers these days. And that's what we have solved for by design, by engineering, and by testing. Moving on. And similarly, the other important piece of the electric vehicle is the motor. So what you see here is one of the industry-leading design of the motor we have, and it provides the best efficiency for best acceleration and credibility, which again Arun spoke about this morning. And at this CIT, at this R&D center, Arun and his team has really tested this product so that we can claim that it is built to last. It is strong, it is safe, and it is robust. Different terrains and different environmental conditions, it has been tested for a long time. And this is going to provide that worry free ride we spoke about to our customers. Moving on. I think we covered some of that already with our digital medium, how we are approaching the customers, so we can move to the next slide. And we spoke about this as well in the morning that how our EV ecosystem is built on a technology stack, which we have created from scratch. It is packing -- many of the new age technologies, whether it's AI, whether it's ML, whether it's augmented reality, and we have built a foundational operational platform, which is connecting the customers, the brand and all the stakeholders in the industry to provide a seamless experience across digital and physical assets. Moving to the next slide. And dealers. Dealers are the source of scale and strength at Hero. And we have made sure that in the EV business, the EV scale, they have a strong role to play here as well. So they will be helping us in our experience centers as well. And over the next course of months and years, we're going to be rolling out different EV dealerships as well. And even today, a lot of our existing dealers are going to have a digitally enabled pods, which will provide the information in an immersive manner to the customers about the brand and the product from the EV world. This is just a glimpse of our battery assembly line where we are assembling the batteries for the 2 models. Moving on. And now I'm sure you guys -- you all are waiting for what is our scale up and what is our expansion plan. So we started with 3 cities, Delhi, Bengaluru and Jaipur. As you heard, October 10, the booking starts for these 3 cities followed by another set of 8 cities in India and the booking for those 8 cities is going to start in December. Next year, FY '24, we're going to have expansion to many more cities in -- across India. And at the same time, we are going to start our global expansion to Europe and LatAm. Thank you so much. I've done a lot of talking today.

This is for the next round.

Thank you for taking care of me. And at the end, we can only win the emerging mobility space, the EV space, if we play on the 3 strengths of Hero, which is create, collaborate and inspire. You have seen a lot of things we have created, which by the way, we have created with collaboration with our stakeholders, supply chain partners and manufacturing partners. But we also have a host of other business partners and brands we are working with, as you saw some of the names over there. And last, but not the least, the combined innovation strength of various teams at Hero, which brings the inspiration to get to the next stage. With these 3 strengths, we are sure that we're going to win the EV world and we -- similar scale of leadership as we have in ICE. Thank you so much.

Thank you so much Swadesh. Thanks, Niranjan. We'll just take a couple of minutes of a break, set up the stage for the Q&A. And yes, we'll place that up. For the Q&A, I'll request Niranjan, Swadesh, Mike and Dr. Jaura to come on stage. Give us a minute, and we just request you to join up on stage.

Thank you, everyone. Thank you so much, and thank you, Niranjan. Thank you, Swadesh. Thank you to the EMBU team, and thank you for the leadership. Thank you, investors for coming in. What we'll do now is, we have time for Q&A. We'll begin with the over the audience here. Please do raise your hand and state your name and the name of your company and then go on to ask the question. Yes, so very happy to look for hands up. Right, on the right here, yes, you want to go first?

Thanks, Umang. And congratulations team for the great product. Best of luck. My first question is on the battery standards because as we know there are 2 phases of battery standards, which are coming in, AIS-156. Can you please help us understand how well prepared are we for that for both the Phase 1 and the Phase 2 because you're going live in December, so I understand Phase 1 should be fine. So if you can just help educate on Phase 2.

So yes, we are basically -- as of today, let's say [indiscernible] 156. We are complying with the standard. We have the amalgamation, et cetera, and that's how we are able to sell that. We're talking about the AIS-156. There's quite a few of the standards that the government rolled out, I think, 2 weeks ago. And for that, there is 2 phases that are here. Again, some standards you're going to meet by in the next 2 months and then the larger set of things, we've to meet by March 31, 2023, so as far as we are concerned, yes, we will be able to meet both these steps of standards.

Great to hear that. And to the product team, any numbers which you can help us in terms of what are the kind of targets that you have in the medium term to -- near and medium term on the EV volumes?

I think, look, EV is right now just an evolving category, right? Overall, I think the penetration is around 4.8% as of last count of the 2-wheelers. What it requires is, companies like us to bring out products, which makes sense, which appeal and ecosystem. So the focus is going to be products that delight the customers. It's not going to go out of volume, target or a market share. In fact, market share is a misnomer right now. You talk market share when actually you have a market, until then you talk about how to grow the category. So which is what we are focused on. And therefore, our focus will be to keep coming out with our product pipelines into the market. And, of course, keep expanding from the 3 cities to the next 8 and then beyond. That's where the focus will be. And then the volumes and the shares will follow. Because EV is not just going to go about volumes and shares, XYZ. It's about how do you have a competitive ecosystem completely and which is what we are focused on, and which is what the first half of the presentation actually focused on.

[Indiscernible] middle brown shirt.

Congratulations team on the launch.

Satyam, do you want to introduce yourself?

This is Satyam from Credit Suisse. So congratulations on the launch. My first question is on the entire suite of collaborations that you have. Could you help, kind of -- talk about how do you see all the collaborations with Gogoro and Ather and Zero and now with VIDA? Adding complementarity and kind of helping complete the entire, in its entirety, which are the parts which you will be addressing and how they all kind of complement each other. And the areas where overlaps will be there as well. For example, the price point today suggests that the Ather, for example, it's not really a different kind of customer or product that you are trying to out, but there is a lot of overlap as well. So what's the thought process on that?

Yes. That's a great question. As I also mentioned that we'll have to create, collaborate and inspire to really win the EV segment. And as Niranjan said, this category is very nascent. I think all of us combined, not just us and our partner brands, but also all the other players in the market, I think we have to grow the size of the pipe. So I don't think there is really a competition as such. In terms of our offering versus Ather's offering, I think it's the same thing I would say. I think the category will only grow when there are enough good options of products and services in the market. So I think we're all playing that role. When it comes to our collaboration with Gogoro, again, you must be aware that there are use cases which are very [shopping] friendly, and then there are use cases which are charging friendly. And as we expand to more use cases and more types of cities, though both of them do play a role. So there also, we see that it's another lever to grow the category. And our latest announcement with Zero. That also is going to play a complementary role in building a piece of the segment in the EV motorcycle. So I think all of this put together is going to collectively grow the market, grow the category and help us mark our share in the market.

Any timelines you would like to talk about for the Gogoro plans and the Zero plans?

Yes. I think some of those we have mentioned in the past, and right now, since we are launching our VIDA V1 Pro and Plus, I think it's important that we let the market understand those products and so can what -- problems they are solving before we put out more very quickly. So -- but in the FY '24, you'll see some of these coming up.

And the other question on -- if you could remind us all the cumulative CapEx and investment that has gone in across these areas, across product, across capacity creation that we've done so far. And any thoughts on that going ahead over the next few years?

Yes. So why -- obviously, I will not be giving out you specific EV CapEx, but as you would have seen that we are very efficient in capital deployment. On the ICE side, we are already fully invested on capacities. Typically, we are having around 1,000 crores of CapEx annually. That's been the broad guidance. So as we have moved forward in this year and a little bit of previous year and coming forward, what happens is that the similar capital gets deployed more in EV and premium because we don't need to raise capacity. Equally, even for EV, because the assembly lines are not very dissimilar. So on the same assembly lines with a little bit of speed difference, you can do ICE and EV both. And we've got clients invested. We've got utilities invested. We were land invested. So honestly, there's a lot of capital efficiency that we pay out, but effectively, broadly, we expect it to be within a similar range. Of course, the investments are on balance sheet, so that you can see how much we invested in a little bit into Gogoro and now in Zero that we have announced. As we move forward, as the team, as the game steps up, as the penetration moves up, accordingly, we will keep deploying more capital. But as of now, we expect that to be within our current capital guidance, except that the deployment moves more to the EV and premium.

For the online audience, we are streaming live. If you have a question, please raise your hand, and we'll take the question from there. Right top, Chirag, in the white shirt. Chirag, do you want to state your name, company?

It's Chirag [Indiscernible] from Edelweiss. I have got 3 questions. The first question is slightly broader one. Customer differentiation that you are trying to achieve and not just with V1, but in general over the next 3, 5 years as you launch more EVs. How do you look to differentiate yourself given the plethora of options available? And how big is the role of pricing in the differentiation that you are looking at?

Okay. So as you saw today, we have come out with class-leading premium offering in the EV segment. And that is necessary as we spoke about to create the category from scratch because you need to show the power of the technology behind EV. You need to provide those features, which are not just going to solve for the basics of the mobility, but also make sure there is enough safety, connectivity and delight as well so that early adopters are going into that. But as we go on further, as I mentioned, our midterm plan, that we are going to have scooters and motorcycles in different segments, and we will start moving towards the mass mobility where the basics of the features and the value for that those basic features have to be matched, and we will definitely be coming out with those offerings as well. I missed out on your second part of the question, if you could just repeat that.

Pricing, how pricing is an important parameter for you because the pricing that you have announced today is the [indiscernible] products availability. In a sense, it's a reasonably premium product that you have launched.

So I think, again, we mentioned that pricing should always be related to the value of the product and its associated services provide to the customer. What we have launched today is at the top end, as you saw of the industry. And hence, it demands -- it can demand that price because we are providing that level of value. And as I said, as we are going into the next few years and addressing different segments and types of customers, we will use the same principle. It is about giving them the value which is useful for their needs. And for that value, make sure we have a price so that they get more out of it than what they pay for it. I think it's going to be a similar principle there as well. Today, what you saw is top end of the market, and hence that value comes with their price.

Let me just add Chirag on your product differentiation part. Unlike an established category or any other category where product differentiation will play probably a big role in who wins and who loses, in our view, it will be about who is able to deploy capital and cash more efficient. A lot of players will actually just go out of system in the next 3 to 5 years. There will be a huge consolidation that's bound to happen. It's going to be people who are -- companies which are able to leverage their ecosystem, who are able to leverage their capital, deploy it more efficiently, have got customer connect, have got customer base. Those are the people that are going to rightly win. Of course, there are few start-ups as well. So I think it's more about how you differentiate your business model, your capital deployment model that will determine. Of course, product will play a role, but it's not going to be that alone. But right now, of course, you see a plethora of products which are there. The second one, again, building on the premium part of it. As Europe, we've always started with the bottom end of the pyramid, yes? And therefore, this time, we have decided to build VIDA as the aspirational brand coming from the premium end. And then thereafter, we will be, of course, launching products in different price segments because that's much easier to do and establish yourself as a premium offering them coming down. That's how the market is also evolving. So I think it's to do with the timing, the cost structure, the market, and how do you take the premium image and then move on first. So the different strategy that we are adopting.

And second question would be on capacity. So say, 12 to 24 months out, what kind of production capacity you are preparing yourself, if you can share some light?

Chirag, we'll not be sharing any number today, but all we can tell you is that in line with our city expansion plan and in line with how we see demand picking up, for us, it will be very easy to ramp up the capacity. Because on the manufacturing side, we don't have to look out for a new land, a new factory, assembly lines, putting up is easier, the suppliers that we are partnering with are scale suppliers. So it's not that you have to go to another supplier for a bigger scale. So honestly speaking, it is modular and can be ramped up. And which is where I come back. So very efficient capital deployment, unlike let's say, some players who would have to actually go with a small scale and then go and find land, find factory, then scale up, which consumes a year or 2 years or sometimes 2.5 years. So while you're not giving out any number, but we can match the capacity ramp up with the demand generation that happens. Of course, it has to be cash efficient and a cost-efficient way.

[Indiscernible], I mean, we are going to start off in Chittoor, and will be modular, but the manufacturing process and revenue team have put in place, we can modulize it in any our plants as we go forward to have that kind of flexibility depending on how we ramp up in terms of volume.

I have a question on -- from the audience on -- Saloni, do we have Kapil online? You want him to ask the question. Gunjan will come to you after, and then Rakesh as well. Kapil? Go on Kapil, unmute yourself , go on.

So my question is, firstly, just wanted to understand that VIDA will be selling direct to customers and not using existing dealers. Is that a correct understanding?

Yes. So actually, as you -- let me explain. The GTM is that we will be selling to the customers through our experience stores and the pop-up stores and the pods which are there in our existing dealers. The connect to the customer can happen through our website, which customers can browse on their own. As we're going through the purchase journey, they get routed through the dealers who are at the back of our experience centers and pop-up stores are connected to those experience centers. So what we have done is, we have actually made it digitally first and digitally enabled, but we are still using the strength of our dealers. And dealers have a different variety of roads to play like associated with our experience centers, pop-up stores and the pods which will go into the existing dealerships today. And as we also mentioned, going forward, we'll also be opening EV dealerships where our dealer fraternity will be able to definitely play a role and take part.

Just to add Kapil, as we go beyond these 3 cities like Swadesh has said, and you saw in one of the charts, I think, which said that there will be VIDA standard, specs and any dealership that's able to upgrade to that standard or measure up to that standard, including the new ones, is where, from where we will sell. Of course, there will be direct to customer line as well, which are digitally enabled, but that will be a portion depending on the customer preference. So we will have both the models, physical and digital, and of course leveraging our own dealerships as well.

Okay. And one more question I had on the profitability of EVs versus ICE. At this price point, is the profitability or the gross margins comparable, including the benefit that you may get from PLI.

Kapil, you know the answer, right? So obviously, it is not. And it's again, it's about -- which is where, which is where adding questions from Chirag also, which is there. Is that the cost structures have to come down because even after the subsidies, the companies will be broadly minor positive on gross margin level. But yes, as it moves on with the scale, we expect the battery cost to come down, the cost will be reengineered from -- by the OEMs as well. And as the market evolves then the efficient cost structure will allow the EV to be profitable. But at this stage, I would say that rather than profitability or being profitable, one has to focus on that, am I more efficient vis-a-vis others or not. I think as long as you are there, then you are ahead of the game.

We'll come back to the room, the young lady in blue in the middle. Gunjan?

Thanks for hosting us, and it's been a really good session so far and good to see that product coming from you guys. I had 2 questions. Firstly, on the EVs as such. I mean, consistent feedback that we get from people who are already in the industries, it's not an issue of demand. It's an issue of supply. So I'm just trying to gather from you as to what is the readiness in terms of supply chain tie-up, speed in terms, be it battery, be it chips, as well as what is the sort of production capability that we are comfortable at this stage? I understand you can't share the numbers, which Niranjan mentioned, but maybe give us some comfort around that. That's first. And the second one I had, if you could share a little bit more on this network of HPCL, BPCL that you've mentioned on the presentation, what is it? And how does it align with Gogoro swapping network? How should we think about these 2 charging networks.

Excellent. I think the first part of the question, Mike, if I could request.

Yes. Thanks for the question. We all know that there has been a significant chip shortages over the last kind of 12 months or more. And we see that going forward. Ram Kuppuswamy, he was introduced a little bit early, him and his team, we've built up a new team. So the first answer to that is the strength of the team in terms of how we're actually working towards it. The second part of that is the relationships that we've been building over the last 6 months, not just with the direct, but the second and the third tier. Direct relationships and I have to say, the number of miles that Ram has put on over the last 7 months to build that relationship. So we've also got some longer-term contracts already in place in terms of the sale. And so we have, I believe, all the necessary pieces of the puzzle to make sure that as the ramping up goes from the volume, we have got the necessary supply in place. Going back to the manufacturing, as we said, Ravi and his team have built a capability, not just on the battery size, that's modular, but also on the final assembly. As Niranjan said, we can utilize our own existing client assembly lines. We're also thinking about dedicated lines too, but we've got the capability of modulizing, building them as fast as the volume comes.

Yes. On our tie-ups on the charging network, so those tie-ups are of very different nature than what we are trying to do with Gogoro. As I mentioned earlier, there are different use cases for swapping and charging. And we would note -- we will need both types of options in the market. What we're doing with our partners, HPCL and BPCL is there -- obviously, they have huge presence across all cities and all the prime locations where they can be. And those are important locations for our charging infrastructure to be placed. So we are in tie up with them. So they provide us the prime locations. They provide us the on-ground support and through that we are able to put our first set of chargers in these 3 cities. And as we expand, we have that tie up to make sure that we are at all the prime locations and we have the necessary on-ground support and on ground infrastructure to be able to build our charging station. So these are 2 very different approaches and both would be required.

Just to add Gunjan to that, it goes back to what we spoke about capital efficiency and cash efficiency. So you've got real estate, you got -- customers are used to going to those places. That's the best way you leverage that ideal asset and actually at the HPCL and BPCL and put your own chargers and then allow customers to charge. So I think basically, again, leveraging what exists as an asset in the ecosystem.

Just a quick follow-up. Maybe I missed it. Did you share the battery sizes for both the variants, which were launched and if you can share that?

So 7p and 8p, we have 2 sets of batteries. So in the 7p, we have 3.44 kilowatt hours, and the 8p we have 3.9 kilowatt hour. Yes. And on the charger we have -- chargers that we have, we have DC as well as AC chargers. So just to build on what Niranjan said and Swadesh said, wherever you put these, and if you've actually been on the rides, you will see 2 receptacles that are actually there for the fast charging, and one is for the AC charging, 2 of them. And also, one of the USPs of our VIDA 1 is it is interchangeable at [indiscernible] internal charger.

I'm going to ask one question each for a bit now. We've got lots of hands going up. Kumar Rakesh, do you want to go? I will take an online question afterwards and then come back to you, Hitesh.

This is Kumar Rakesh from BNP Paribas. Given that I have only one question, so I'll try to understand your strategic thought process about EV space. So going by the price point at which you are launching the product and the ramp-up, which you have planned across cities, it doesn't seems to be that you're targeting a large volume over the next year or so. So what is the thought behind that? Are you expecting EV ramp-up to be pretty slow or you expect EV ramp-up to be higher, but waiting for the time when the cost moderates enough that you start seeing business case for aggressively launching products or expanding volume?