Q4 2021 Ashok Leyland Ltd Earnings Call Hosted by Axis Capital Holdings Ltd
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Good morning, ladies and gentlemen.
Our momentum moderator for the conference call.
Welcome to Q4, FY 'twenty 1.
For the school of shook Leland hosted by Axis capital.
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Thank you 1 of the call.
Good morning, everyone.
Welcome to the Q4 FY 'twenty 1 at the conference call of chocolate.
On the management team, we had because Mr between some of them.
Managing data credit.
Executive Officer Mr.
Mr. Gopal Mahadevan day.
Victor and Chief Financial Officer on the.
Ian Biology, Vice President corporate finance.
I'll now hand over the call for Mr depends on the what is opening the market of course, which we can move on for the Q&A well, what's the goal.
Mr. Conder Your conference is being recorded.
Thank you the thank you they should not must be in the.
Good morning to all of the viewers and all of the listeners. Thank you very much for being on the school.
Gives me tremendous pleasure to be in touch with you again until the supposed result comes.
Conference call of virtual Cleveland Tonight. Thank you very much again for the interest shown in the sugar and the much appreciated.
First of course, I hope all of you your family members of safe and healthy adult English challenging the pandemic situation, especially the second wave and it's true.
The important we don't let our guard down while enabling the vaccination process to be accelerated.
You're probably aware that the vision of shock linden's wish him is to be of top 10 global of the C V play of creating reliable and differentiated products and solutions, while delivering outstanding stakeholder value.
While we are focused to achieve our vision of.
Deep sense of social responsibility as many of you over the years with the C. D. And also lies at the heart of the showcase for them.
Firmly believe that the success of our business is in the inextricably linked to that of other stakeholders than for the over 70 as we work towards the goodwill of customers employees communities value chain thought of very importantly, the investors in these trying times will be no exception.
We have the show Cleveland remain committed to the prosperity of our stakeholders.
Sustainability is the foundation upon which the commitment will continue to be built.
In order to bringing the singular focus across the various sustainability initiative is going beyond the corporate social responsibility, which we had already of doing we've carved out the separate environmental social and governance.
The G commodity you're all familiar with ESG and he is the committee of the board headed by an independent director I've talked recently concluded board meeting.
The role of his board committee would be to provide the appropriate oversight and guidance in the company's journey, an organization wide ESG initiatives priorities and leading ESG practices.
I'll now run you through the quarter for the full year performance.
After witnessing volume the growth for 8 consecutive quarters of the M. It see the domestic truck industry volume started with the string of year on year of growth from Q3, 16%. This continued in Q4, they didn't volumes of doubled driven by the lower base of loss deal last year.
For the full volumes of witness ramping down consequent to the transition to be of 6 emission norms effective as we're all aware first step for 'twenty 'twenty 1.
While the bus the IV continues to lag and we know the reason for that of it is expected to recover with the opening up of a restriction of gradually and the replenishment of fleet to be of 6 by the state run sports undertakings.
During Q4, FY 'twenty, 1 you're on your M. A C truck.
Truck volumes for the show Cleveland have grown at 111%, which is better than the rate of growth of the industry of shortly along the Mississippi the truck market share for Q4, FY 'twenty..1 has therefore, the improved to 28, 9% vis vis 27, 6% in Q4.
FY 'twenty.
Sequentially.
The Q3, FY 'twenty 1 M. A C truck volumes for a show Cleveland have grown by 57% in Q4, FY 'twenty, 1 which is higher than the growth of the industry of 53 per cent.
The resulting in market share improvement of the 0.8 per cent 28, 9% in Q4 versus 28.1% in Q3.
This performance was backed by the successful launch of the EV YOD, what we call. The all Star range. India's first module of truck platform. We have thought platform gives customers the choice to customize the truck I suppose the unique requirements and this platform has been delivering best in class total cost of.
Ownership across the segments, leading the customer delight the.
The impact of commodity price increases, particularly steel, which went up significantly in January for anyone has been partially negated through price increases and internal cost reduction initiatives, we've taken price increases in Q3 as well as in Q4.
The demand for Ltvs is driven by e-commerce and growth in the rural economy domestic LTV volume for the show Cleveland of sequentially improved by about 7% in Q4, FY 'twenty 1 LTV of volume for Q4, FY 'twenty, 1 was that 17042 numbers, which is.
The higher than last year 8057 numbers by 112 per cent the launch of the BARDA of those what's the success and has been well accepted by the customers in the market and more than 4550 vehicles have been sold in Q4 FY 'twenty 1 on the full year.
This LTV domestic volumes for the shortly and have grown by 4% at 46006.71 numbers last year. It was 44912 numbers bucking the industry trend LTV truck volumes for the industry actually be grew by about 11 of the half per cent.
Despite the pandemic our M. A C. VLDL C. The exports of 316 for numbers have grown by about 8% sequentially quarter 3 of FY 'twenty..1 was 2.9 for 1 numbers and there's also for people send it higher than Q4 last year of 2 to 5.5 numbers on the full year.
This of our export volumes at 8001 is lower than last year, It's 920 numbers by 10% of lock because a number of regions around us were closed because of the pandemic.
Revenue for the fourth quarter has grown by 45% sequentially. The rupees 7000 crores and there's also 2% higher than quarter 4 last year, which was rupees 3838 crores on the full year basis.
The 15301 crores of revenue in the current year vis vis rupee. The 17000 for 67 crores last year, which was lower by $12.4 per cent.
EBITDA has improved to 534 gross 7.6% in Q4 up from rupees to the fifth.
For gross 5.3% in Q3.
Given for EBITDA is also higher than Q4 last year rupees 183 per rose by about 1.9 times for your EBITDA Atropine 535 cohorts 3 and a half per cent is lower than last year rupees 117 for growth 6 in the half per cent by about 54 per cent.
The show Cleveland as reported at the back of rupees to 41 crores in Q4 vis vis the after tax loss of rupees 19 crores in Q3. The after tax loss in Q3 was primarily due to a 1 time vrs charge for the full year basis. The after tax loss was the true PS 300 for.
The growth vis vis the fact of rupees to 40 crores loss deal.
Of shortly I learned of the Manufacturers' 26596 M. A C vs in queue for 17911 and mid C vs. During Q3 and as the ended the quarter with an M. A C V inventory of 3448 numbers 3171 numbers in Q2.
Free fully of production was 54071 M. A C vs vis vis the 71189 M. C vs last year and we see the inventory was 1243 numbers in March 'twenty, representing vehicles for exports and defense.
Q4, close the clothing operating working capital was negative at 133 crores, which is lower than negative 525 growth skewed in Q3, FY 'twenty operating working capital was also negative at 667 crores.
Capital expenditure for the full year was contained at rupees 621 crores as compared to the rupees 12, 92 crores last year Capex incurrence of towards the module of business program on the Phoenix program et cetera.
Investment in some of the current year was rupees 360 at Crosby. The V rupees for 47 crores invested in the same period last year.
Net debt is on the 31st March 'twenty, 1 was the trapeze.
600, and the 7 crores, that's the gearing of 0.37 times up from rupees 2005 crores. The gearing of 0.28 times as of 31st March 'twenty net debt as on 31st December 'twenty was that true piece 2880 gross.
Gearing of zero point for 3 times. The board has recommended a dividend of rupees 0.60, but equity share of rupee 1 each for the financially of ended 31 March 'twenty 'twenty 1.
Now moving onto the outlook.
The domestic automotive industry saw healthy sequential recovery in the second half of FY 'twenty 'twenty 'twenty 'twenty 'twenty 1 both of the gradual removal of the Lockdown however, with the sudden onset of the second wave of the industrials again received a setback regional restrictions imposed in several stay.
<unk> have again brought the country to a halt during may and June 'twenty 'twenty, 1 rural sentiment, which was untouched in the first wave is likely to be subdued after the second wave, but there is the flip side to this as well the flip positive side, we think that the answer of the onset of a more normal monsoon.
And therefore healthy crop harvests, coupled with the focus of government supported of incentive schemes are likely to support household cash flows and therefore, the rule SEC rule sentiment as well.
Quarter, 1 of FY 'twenty 2 is different from the same period last year. As we are now better prepared this time with the second way of gradually of being in a possible third wave on the Anvil as mentioned earlier, we must continue to be extremely cautious and focus our efforts on vaccination in the safety protocols.
Our however expect of quarter on quarter recovery during FY 'twenty 2.
Both segments covering M. A C V in LTV trucks and buses would continue to reported growth on the year on year basis, mirroring the expected growth of GDP at 9 of the half the fendt. The Seo and then see the trucks will benefit from construction lot of government spending on infrastructure and lost my connect.
The demand propelled by e-commerce is likely to support LC the truck volumes.
Passenger segment has been impacted due to closure of schools work from home lots of low state transport undertaking demand and weak the tourism prospects. However, as the markets open up and economic Revival takes place coupled with favorable policy and the shippers by the government for state transfer.
For the undertakings, we expect to see an increase in bus demand as well.
Commodity prices are at an all time high.
Steel or aluminum and copper are expected to remain at current multiyear highs for the few months before as possible softening in the second half of FY 'twenty 2 as in the past we are further enhancing our focus and trust on V E V programs, which together with the product price corrections will help mitigate.
Moderately price movements in the more sustainable where we.
We are closely monitoring the availability of electronic control units ease of use and are in close touch with various suppliers.
Going forward, we foresee tremendous opportunities we will continue to grow the export defense B S. B L. C V in parts of businesses, even as we expand the reach and product of our core EBIT CV business off of.
Focus on digital will help leverage the benefits of efficiency and cost customer requirements will be at the core of the heart of all of our digital initiatives the emerging businesses such as electric vehicles of the Evs and customer solutions business CSB will assist in complementing the core business.
As you, perhaps aware of in line with the expanding importance of electric vehicles and Green mobility of shortly island has created a dedicated EV only entity called switch mobility switch mobility brings together the show Cleveland's capabilities, both from opt out of U K and the shortly islands EV Division.
With the dedicated team of people around the globe and combining the best of Indian and British design technology, Frugal frugal engineering and sourcing advantage, we aim to create unique products and offerings for our customers globally.
Furthermore.
We also plan to create another company, which will provide mobility as a service to end customers for the evs through the.
This we expect to differentiate our EV solutions by capturing the entire value chain.
At the show Cleveland are rock solid and resilient and I'm confident that extremely well positioned as the pure play of commercial player with new generation products talented people to deliver profitable growth as the market revives and I. Thank you once again on behalf of all of us in the show Cleveland.
For the interest that you've shown the enough and with this I'd throw open the floor for questions. Gabon Biology are with me today to answer them. Thank you very much back to your ownership.
Thank you Sir.
Sorry for me back to your mother's day. Thank you Sir.
Ladies and gentlemen.
The question and answer session.
If you have a question. Please press star 1 on your telephone keypad and wait for your turn to ask the question.
If you would like to withdraw your question you may do so by pressing star 1 again.
Okay.
Yeah.
Our first question comes from Mr.
From Morgan Stanley. Please go ahead zone.
Oh I didn't know the type of the opportunity.
Oh good.
Can you be a little louder.
Uh huh.
Yeah, Hi.
Oh Bang for the off.
Congrats on a good number than a day.
Environment, So can you.
Operating margin for cotton.
When you bundle.
Line items.
Could you comment on the gross margin, which means that the multi quarter low.
For example.
Well, how do you see that playing out so that's the first question.
On the electric vehicle, even surety loss its mobility.
What sort of hope for Docs section do we keep how much of the land.
The bulk of India, and the meat in the coming financial year.
Anything you don't get the Pea on the electric vehicles all of you adopt laid out.
Yes.
Yeah.
What are the ones that onto the you know the operating margin are definitely look for it.
You may have been either go with what it would be yeah, I think for what we have been doing over the last 4 quarters that our people thing that I would want to share with investors 1 of as you know.
Let me open that the Covid in Q1 of last year, we actually at the Orange stacked against us because when the economy I mean the.
When the.
The unlocking happened the unlocking happened the.
For the rest of the country down to the south end.
For us it was actually a little bit of a negative net.
It's why we while we kind of you don't kind of followed the rules et cetera, but from Q1 Q2 Q3 Q.
What if you were to look at our market share.
Recently, the once the unlocking was kind of more rationale and of course right out to the well the country addressing that I would say kind of spread of equally.
Equally throughout the country that though we saw market share is going up while we did that at the beginning of the loss of theater et cetera, you know the leadership team of decided that we need to take some while we will try to enhance revenue to be lots of the kind of.
Buttoned down at the costs, ensuring that by the time because of the E&P all of the performance of the company kind.
Kind of get better and better which is exactly what happened in Q4 of which we were discussing last year as well. So that was the large initiative that we had 47 for Pete.
And then the sales and marketing team were actually spreading the network the seats, how do we get the biggest back.
The action with customers in a very tight market, which was having the challenges of Covid and thirdly. Most importantly, they said that you had mentioned the other part was the Oh the.
I would say the non M ATV business at the wonderfully.
And you see an LTV of the market power.
Power solutions that even the export started to recover by the fourth quarter still the miles to go because you know that the COVID-19.
All of it is still there, but I think all of this kind of the converged.
Converged into beautiful and we must remember this is the this has been an exceptionally challenging year for the industry not only for the because of Covid because of general thing, which was all through the words. The second challenge was that we were actually loss all of US I mean, all of them at Seabee manufacturer of the larger do you think that completely new technology in an economy, which was completely kind of.
The third was of course, I think God empty mentioned about the.
The.
Ability of semiconductors, because again, a big challenge and then you also saw continuous locking and unlocking that was happening in the transportation business and the bus business was what really kind of what you know in the industry. Typically does about 40000 unit was doing 7000 by end of last year I'm, giving up.
So we deferred the this is what it is and we need to walk around the books through at the local water to ensure that we're able to of.
The Delaware margins, which are.
Uh huh.
The getting improving quarter on quarter of doing the.
Possibly rolling fourth quarter, nothing exceptional as happened in the fourth quarter, which is improved budgets are once a day.
Of your question.
And at the respect to the gross margin contribution that has been the challenge.
All of you know this better commodity prices, especially steel has been going through the roof and you've seen that happening you went in the you know as we speak so we expect that this the he did the steel prices will start to kind of pull up sometime in the second half of that could also help.
That's 1 of the email issue is concerned all I would say is that this is very important I think that you can hear the question of would want to mute.
There's a lot of noise.
Thank you. So the other thing that I would say is that you know what you mean is an important initiative.
The net of energy.
The initiatives and we need to be suits, the already even ex the kind of.
The growing the current scenario with the internal combustion with lots of of kidney So which is why the idea was to have the all electric vehicle initiatives coming for the switch, but more of that I think would be back under the hood from RMT.
You may want the lag.
I just wanted to add the 2 what Paul said, it's really creating a euro where we have up there in the U K and the carved out of their E V and the book of the vision that we have an issue of Cleveland, So that we capture the strength and synergize across the U can and the.
And put up what will it be a focused the EV company, which is switch now we are working on product designs in development and obviously, we speak to you.
Separately, when we are absolutely ready to announce that but to just give you. The brief up Ashok Leyland as you know already mix of EV buses, we already are playing in the blood for the last few years and recently have started and whatnot. So that process goes on as switch gets ready and we will be back to you.
When we are ready to talk more about the future on the EV buses, but you'll hear a lot about it.
Oh, thanks for that.
That's the 1 the 1 follow up on the gross margin.
Do you how do you expect the mountain to climb from the other ones that are you talking about the price that you've taken.
To offset the what anything planned for the near future.
See we are doing 2 things.
1 is that it's the.
The things that we're working on and each of them are actually kind of dependent on in much of the dependent on the other 1 is we will continue to increase our penetration in all of the buckets. That's important for US we got a ban and the player and a non nearly of southern players for that those initiatives I'm talking really about the next day and that is the zoo the opportunity of LTV between Oh.
Because while we talk about them at the SUV.
Use of supercritical business for US now and we have you know all of that we have done in the past you kind of reaping the benefits of it now are complements to the impacting not only the LTV, but the ltd, well actually worked wonderfully well over the last year the.
The second thing is all of our product launches of gone pretty well you know we launched it with your other than the mix to be completely differentiated from the rest of the pack.
The LTV, but other was launched and in case. Some of you don't know the bernardo's got the.
EV of the ear.
The war.
Across the city.
So it's a completely differentiated product it's an important segment of it has opened up.
New slot for us and so we have both of them but are those the.
Running at Lilly and that has again improved.
The overall revenues and the margin for US. This is the second part of the third part is I mean this is 1 thing. The second thing is of course, the need to ask me degrees of penetration and also our channel some of the business. The second thing is on the cost. So we would continue with the work on cost that is like last year, we had the 7 BP we have another the.
The initiative that is being done and that is of that.
The old program as people kind of I'll do it.
Cost of more efficiently and that could be of all bunch of initiatives, including the you don't looking of darkness arch looking at design the room.
And that can be done, which can order for the product quality, but at the same time, you don't kind of give a you know a cost advantage to it. So this is the second part that we are looking at the the third part is of course the away. So we will continue to kind of you don't think of the adjusted overhead C..1 of the challenge.
The debt we have at the larger organization, which you know which is a very key all of that it needs to be the global bump in is to ensure that we don't in the interest of the short term short change the long term for wherever we need to acquire to make something that's been sort of cost me is continuing to believe that but at the day and time you can look back out of what ex of last year.
The needed to manage it very astutely and back the share doesn't continue for this 3 pronged strategy I believe should help us to.
The what does the bank, we've just looked at improving margins, but at this moment.
Paid back the B will be able.
To continue on improved margins ex that drives the little too early because we don't give the forward looking statements. All we tell you and share with investors at the airports than bad management team is taking to ensure that the you know we continuously work on cost and efficiency.
I think a low but have you been would you want to add something especially on the pricing and what we are doing and are also on the b on the initiatives Yeah, No I think you've summarized it very well.
I mean just to.
Just to say that every aspect of cost and operating efficiency is focused by each 1 of our colleagues and obviously we are running.
We are running our enthusiastic campaigns with the people participating so that every element of waste in the value chain.
And to fight and removed why do we continue to invest in opportunities for growth and make sure that the customer and is actually seen and forced upon you.
Digital has helped US a lot to identify a lot of it. So does the digital play of taking place right across the organization with the customer at the heart of the decision making process back to you.
Oh, Thank you thanks for the detail.
It's for them.
Thank you Sir.
Participants are requested to the strict with 2 questions during the niche of rounds.
The next question comes from Mr. Joel Coen London.
From MK Global Please go ahead Sir.
Congratulations on good set of numbers and thank you for the opportunity set.
So 2 questions on the CV side.
More launches for unexpected for it but all of those strange and even capacity expansion was also planned if you can share some of abates. There. It will be helpful. Secondly, on the engine defense and space businesses can you share some details for the cycling even performance and bad externally your expectations of eggs for these segments.
<unk>.
Thank you.
I'll keep this brief but better answered by our M. B I think the Eagle.
We will continue to look at opportunities for filling the slots in the LTV.
What the variant THAAD and Bernardo how much will be the capital investment we will have to come back to the little later, but all we can tell you is that you are moving very very Boston CBD of growing.
Growing very fast of a market that is growing and we will continue for filling the slots with the debt is this opportunity. So you know and that is the opportunity to kind of fill in the slots at the dose level and at the back but other nevertheless, and we will get the missing on 1 more important thing, which we have shared with you earlier or the entirety of sports strategy.
Is it as you know to look at you know exiting some of the market addressable market with the smaller vehicle with the LTV and.
Penetrating it with the ICB and then start the MSP.
But the reason is very simple you know the.
The areas of the efficiencies are quite small in terms of our.
So this is the bulk of the GNC the release of service becomes very small in the case of LTV, because ltvs that could be clean for us. If you just crossed the D of market. So it becomes very easy to launch the product ensure that the uptime of the rate goes there's the having the subject of sales network 1.
1 you know the brand is kind of established and does it make a lot of pain, then you're kind of quickly scale up with ni CD business excuse me of vehicles and then once the limit.
So this is something that we're looking at the Lee and good evening of odd bar of better poised to kind of address the export market that would be that 5 years ago simply because we have of a wash the pumping rental vehicles per day.
On the left kind of driving that kind of bread and this is going to be sort of thinking initiated with lots of would be very important from an international business perspective, but before I can say anything more I wonder of hundreds of watts water.
So I was just the stock for from Redwood per left on the international operations, it's really to expand the footprint.
Friend and enhance it more and more in the retail.
A lot of the footprints and hours of Paul mentioned, we have a bouquet of products, we have a variety of needed with the other variety.
In the Phoenix Bowtie package protected for left and right in driving the continue to appoint prominent distributor's in Africa and the middle East that are already very very strong in the in the country. The homegrown in the countries in which they operate so you'll hear more of us.
On the international side, but coming specifically.
You asked about the Phoenix, Colorado the Bernardo.
All of those have come out of what is what we call the Phoenix platform and the Phoenix platform within the range in which the top rates will true up more and more variance over the next quarters and therefore, we will be expanding our that's the presence.
Presence, but we didnt, where the Phoenix platform extensions.
On top of that we will obviously be looking at participating more and more in the light commercial vehicle business overall because of let's of the tremendous confidence we have in our products and the gains we've had in share.
You spoke about the engines I think of the what we call. The power solutions business has really done very well last year. Despite the pandemic, we actually grew year on year in the agricultural segment, we have a of a predominant market share we are working with the construction.
<unk> equipment industry as well to give them engines and as you know there's the transition that's taking place in see what what is called the C. V for where we are the we already well positioned and working with our customers defense as a matter of pride of we continue to expand the stallion and Super stallion.
The range of vehicles, we are diversifying into tracked vehicle aggregate programs grip.
Powering the M P's.
Really we are expanding out of armored vehicle portfolio of 2 new new bulletproof vehicles. So we're looking at all aspects of mobility solutions with the auxiliary power units and we continue to give the focus too.
The defense as well so in all of these from the suffering.
At the heart of Luckily who is.
Hello, sorry, Andrew.
And we continue to focus on all of these areas to further strengthen our portfolio of the court which of them. It's Cindy.
Hello can you hear me.
Yeah.
Yes.
Oh, Okay, sorry, so thank you robin none of them.
Thank you for that goes very comprehensive and helpful.
Thank you Sir.
The next question comes from Mr. Fatigue for some IC IC true AMC. Please go ahead Sir.
So this is the because of that.
On the plenty of them a couple of them.
Question. So the 1 is.
Just on the export side did you can just talk a bit about the homebuilding.
Blanketing, the last 1 yard and the mean that each of them and we actually got Egypt like would be helpful.
The question I mean is that the combination like that it would be 9 months of the launch of the female yeah. The export traction teams really limited by the way.
Part of the G.
Uh Huh cyclicality in the revenue of which we have talked about the Indiana and largely a yard parts of until it makes 1 of them.
True.
So, but I think I'm going to let the at the site.
The Oh the standard.
The tool by the day.
I think really give of capex outflow.
It should be that Ain't the anywhere between 7 for PC, we keep paid the number of ductility you keep it very tight.
The reason why we share the numbers anyway of the Capex would be about 700 other peoples depending on the.
How about if we wanted to do but broadly we know that we need to invest the capacity they need for Banco de bottleneck. We are not the I wanted to clarify 1 thing, though because I think because it's the 1 of them all in the limited information of that.
We're not looking at any major brownfield index.
But really I think the manufacturing guys.
We have taken it upon themselves and the multiple down into of making the plant even more efficient and they have been continuously improving the throughput and we will need some debottlenecking investments that particularly on the capital.
Do what we're doing is we're paying all of the role as the demand keeps going up and sort of the reality.
Capacity. So overall I think it would be 750 of that or the change. We'll let you know on the dealerships and you don't export started the I would the request of the day.
Okay.
So what kind of timing, but I would tell you just 1 small question oney investment.
And subsidies I said, there can be no pixelated over there and he says he said instead of this year next day and we'll come back. The investments are you looking we don't at all we don't know the C. V made acquired maybe another 250 at the moment I don't know you may not also invest.
What is the required the major investment I mean, typically that happens is 1 that's supposed to be wonderful can further reduce your kind of travel.
If he wants to make any sort of if you wanted to make an investment that the telephone for capital adequacy would make the back because it's the I think they have been doing wonderfully well under the circumstances of whether the managed I would say not even whether the advantage the whole COVID-19 said, it very very well reasonably L people sufficiently provider and they also have ex.
Frankly, the plans into the solution.
Talk about later so if there is any capex required which is actually the money relative but we will continue to do that if any of the other subsidiaries of the question of support we will do that but the capex that I'm talking for the peak losses.
The only capex.
Thanks. Thanks.
Yeah.
Should I yesterday.
Oh, yes.
I think God don't hold me to the number but.
6 of 7 strategic large distributors in clusters.
Strategically placed around the African continent, and also at the Middle East.
The question you asked is why haven't we kind of grown as much of a you've got to remember that many of these countries..1 have not yet come off like we had a second wave many haven't yet come up and opened up significantly.
The trade routes, whether it is from here for the board from the Port to the Middle East still on the African Route and then inland play have also coming under a lot of pressure. So out of these open up these distributors will come into play and it's very very important.
We'd be ready and well positioned which is what we've done during the period of relative closure of over the last 15 months.
The 1 thing that.
It has been the very good of an exciting that we launched the Basel and the Falcon, which isn't in the middle East the on the partner partner platform they've gone when we are enhancing the positioning of our products in the middle East taking them to the next higher level as the.
Again the.
As we gain prominence as we gain more products. So we see subject of opening up subject to opening of the trade groups and the countries. These distributors will be ready and there are strong the strong big guys on the ground.
And what's the plan for next year and is it fair to understand that the 6.7 new distributors onboard there.
In spite of indeed do the old good take sports will be much much more stronger than what we had seen in FY 'twenty 1.
I mean.
You know my estimation.
Definitely of yes. It is all subject to the opening of the countries. So for me to that extent.
For the the readiness of the product set that the the training of people the training of our people on both sides of what truly that goes on but the physical movement and the testing there for that off.
The only question Mark subject of opening up let's say from July onwards, not only here, but in those countries as well we will see better.
And Doug it's when the extent of yogurt makeup of stepping up near the distribute the other strategic just give you the dose and so if I can I mean, just if you can answer the question understand what kind of volume can be used distributors gameboard..1 of these distributors are this low.
Please turn to either go a day or their big industrial groups, who have 1 of our corporate items also I'd be quite in convention just trying to understand the needs of these dealerships and what kind of growth. They can tell you that I'm pretty sure of it.
So as I just talked about the distributed 1 day or they are a big industrial.
Jill houses, who are of that country and who've grown up in that country of let's say cluster of countries in some case, 2 or 3 countries around them.
Also the love in automobiles will be understand not in and not in commercial vehicles, but the north of I'm talking of not an Indian commercial vehicles, there could be other commercial weight loss, but they're focused on for various did they actually got diversified companies. They do have most of that makes sense.
The 1 most of them have automobile background of some kind so they're familiar with the industry and what we are ensuring is that there's a separate the vertical that's developed there's a separate general manager of C O, which will focus moving focus with a separate team on assure Cleveland products.
And how many dealers you wish the super.
Neither of these.
Kilometers of the stride in FY 'twenty 2.
That will continue I wouldn't I wouldn't put them all of the book will continue to what you reported.
We've got to look at what is the opportunity the opportunity of having appointed 6 of 7 we've got to make sure the come out and perform and whether you noticed any gaps we will fill those gaps but the main thing is now to ensure that these people come out refocused with focus with them and help them develop and the cool.
Thank you for a bunch of all the things instead of years.
Thank you Frank.
Thank you Sir the next question comes from Mr.
From H D. F. C. Please go ahead Sir.
Yes, just the 2 big picture questions.
So I saw in the recent low day bank because end of.
The company I mentioned back of hydrogen fuel cells will play a very important growth in the next thing you know because the easement Nazi also been part of the large oh.
Kind of.
So how do you see the email.
The ultimate.
And the environment.
The second is the.
Dedicated freight corridor.
So you have the connection to the daily Task Force and.
Uh huh.
The C V ecosystem of desktop to the sort of news.
But all the nature of the candidate which is not really the building.
Thanks.
Okay.
Paul you Wanna comment of should I take it go ahead go ahead. Please go ahead of this work.
Okay.
A very good questions and the.
The D.
What we see is while E vs will be essentially.
True.
And.
All of them.
Metro in the suburban let's say the suburban city play at least in the initial period other than.
The ecosystem develops whether it's for passenger buses or for the E. N C vs.
The the larger vehicles as you rightly said will be and especially those which are of interest 50 interest in the city and in the country and the large country like ours.
We think will be powered continued to be powered with IC engines for the future combined with let's say oil blends, which are which we are talking to the government with limited LNG or whether it's the biodiesel or any other form.
And in the future for them as you said and we are very clear about that as well hydrogen fuel cells. How this will play out over the next few years I'll be getting ready for it in terms of testing developing our own capabilities.
Talking to people, who are important in the ecosystem beyond the sort of yes, we do think that the large trucks that we apply across the.
Across the nation will be powered by the hydrogen hydrogen fuel cell.
There's a lot of conversation going on and you read about it in the press as well as the the fact that the government in its budget is allocated a significant sum of money to what is called the national hydrogen the mission. So an ecosystem will develop and we want to ensure we are part of that chico's.
Oh of course, it will take time, but we are working on it.
The dedicated freight corridor lines of.
We'll not have I mean does the study which is being done really the central studies are available the.
In fact from the over all of the IV will not be.
A significant that could be on the long haul in certain applications, but.
What is important is that last mile mining infra projects those wouldn't be impacted at all the <unk>.
Other than the customer of meal may not be comfortable with tranche 1.
Taking place and as long as we continue to compete with continues to provide the customer with confidence that we can deliver door to door instead of shipments taking place and we as a commercial vehicle industry I think the impact of the BSC.
We will not be the significant now having said that.
The initial load that is transport the dfc will be from the parent passenger lines, which hold up of passenger vehicles in any case. So it gives the existing lauder to transfer to the Dfc and then has the D. C was further more and more of load comes in but we'd obviously will.
Viewed this very carefully and ensure that we are competitive and provide the customers waiting for that.
But it's oh, thank you for some of the BJ landfills.
Okay.
Thank you so the.
Next question comes from Mr. Mukesh shut out of stocks.
The capital.
Please go ahead Sir.
Yes of the money for the arm.
Opportunity.
My question is on on gender of longer term margin things.
If you look at the age of the previous peak in the slide 19 in terms of the the IV, we touched about 11% of margins.
So just trying to understand what are the you know.
All of 1 of the positives and negatives.
No playing out.
Especially as either the media.
And then she will of course clean up.
And all of my last name along the handy.
But you will not have now.
If we go back to the of slide 19 kind of the I D.
Could we kind of be we'll see gross margin piece based on the TV.
Tom and maybe some other steps.
I'm thinking of how do you sort of thing.
Yeah, just very quickly tell you that you know I think that are true they think that we see happening 1 day.
We believe that we are somewhere north of the bottom in terms of other just because of the demand.
We are seeing that the because of COVID-19.
For a lot of well while the.
No I think that there's a lot of opening up there for that.
To be done and once that happens its going to the positive lead back.
Great.
The other opportunity, which I had mentioned earlier the sort of heard other b was back on the passenger side.
What's really you know there's.
80 per cent of the theory of come up.
So there's a huge opportunity that is going to come up.
As of the transport undertaking the intercity buses.
Schools offices, all start opening up so at some point of time this will happen whether it will happen in 6 months of whether it'll happen as 1 of your is the long term for we're going to say, we don't know now.
Are you waiting for graduate day, assuming that it is to say I see another you see on other opportunities.
It's not that we of moderate about it the planning to social distancing is the norm at the habit will also start.
Somebody to the start and when it has already started and if you could give you when that happens you're going to see lesser number of people in the bus.
Let the number of people packed and possibly for when that happens you're going to see there.
The demand for buses could actually go up.
The other other portion is that Oh, you know as we move forward with the demand catching up with the setting of Covid.
We also would see that the price location that has happened in the industry.
Long haul.
I C D and E.
L P. We actually create other opportunities in terms of.
You know profitable braking.
We are seeing the company you know people are not getting the.
The big boat specific there's a lot of Ah I would say analysis that is being done there's a there's a there's a lot of science to the baking industry because of again good for us. So as we move forward I think we're going to see that the pricing adjustment will also happened with the demand.
So we could possibly see.
You know margin being more rationale of the C V site.
The touch wood, we have but you know the LTV margin a good day industries pop out of more rational day, then let's see the site and that is also helping us because the LCD business, it's a significantly more profitable, but actually when the total cost of ownership of the team from a customer and especially on the embassy the site with makers of being on the beer.
The you don't technology.
I think you would see the art with the demand coming in B C investment.
That's the way this is a larger day that'd be want to be kind of 1 of the ship. So while now it looks very challenging and we are going through a lot of selling in terms of.
The little bit of its own thing.
The happening right.
Trying to get the idea of the customer and all of that I think the the all the industry. The freight industry is becoming part of part of board organized and what it was the loss and that is good news for the MSA.
Would you want to add something.
Well I think you've done it.
Summarized it well, let me just add Paul mentioned total cost of ownership in all of the importance of the important thing is what does the have started to deliver it as the module business platform, which actually reported mentioned about you know virtue of customization to our customers of.
Customer specific application the customer knows that his or her application the actually the truck based on that basis. So there are no wastage is and could there be of getting fluid the efficiencies, we believe which is superior to others.
Therefore, the create some value none of the value is in the product with the value will also be in the services that we provide what's important is we have something called the I alert the platform. It's real time information in in the coming from each truck back into a control room, so that'd be a mall.
The trim the performance of the truck of the health of the truck the viability of the truck and then the feeding it back to our to the customer so that he drives of she drives efficiencies across the Oh, they're free to movement as well all of that the value is what really capture into.
Better margins, while ensuring that operational efficiencies of Iran. Very very tight so we see that as a positive moving remember.
Just wanted to add also the dip of isn't.
He is an important part of the segment and also I sort of wholesale moving up and we're getting ready for school buses for those.
Those will give better loss right.
Thank you for that and just sort of any quick 1 secondly, how are the inventory levels.
Right now in the system I mean at the channel level on the and at the plant.
I think of biology has been quite of the causal.
What are the watershed the feel of it.
The other.
For the especially low what could you.
In the entry level.
So he doesn't Oh 400 makers some of them okay.
This is about as planned.
This will be certainly no higher than the last year, we had loss.
That wasn't part of the vehicles with the zero inventory on the domestic are most of these things.
All of the is actually I didnt country letter at the same thing.
Because of the Essex for sure.
Right.
The channel inventory of how old the right.
Right now.
Well I would say the the standard.
You see what is happening as of Dec. The channel inventory is I can't I.
I don't have the numbers readily with me know unfortunately because of the.
I wasn't prepared for that but that is the.
We shouldn't stocking the channel the.
The margin just because you know when you actually transferred.
Transferred into the channel than that of the Lockdown.
The channel does have a you know it is having a provision number of stock the reducing debt I will share with you. The 1 is we don't push into the channel. So what we're trying for Joe's is closely monitor the retail and then ensure that but it won't be I'd actually tell it to the channel.
And this is done kind of light you have to ensure that the retail is the same out of higher than the wholesale that we go for that so I think over the next couple of months you will see the.
The tuition change and we had this is being done on the expectation that you know the the current opening of the copper will continue to do and once that happens you will actually see that'd be a you know the the.
The throughput through the channel will be much motor for sure. That's all I can share of the deal.
Sure understood.
Thanks, a lot of stuff on this.
Thank you Sir.
The next question comes from Mr. <unk> from Credit Suisse. Please go ahead Sir.
Hi, Good morning, and thank you for taking my question just a couple of questions Firstly.
If you could share how the trend on industry just the only thing in image T vs has moved and December quarter, you had shared that it had gone up so what happened in the March quarter, and then subsequently in the June quarter because of some checks are indicating it might have gone up for that so right out of the on deck now.
Well the I lost the will have.
M B give us the effective but broadly the discounting levels are still quite low height, I'm not going to say that the.
I'm all in.
In fact, the you know the the habit markedly higher.
That's the that's the point I mean, I think that.
While we will continue with the place of your market share of you will grow market share for what Youre doing is youre looking at and we have done that over the past 5.6 years, we've looked at both of the cost of ownership differentiator of technologies some of its network channel profitability.
Of the 5 levers that we will adopt to ensure that we are doing and the customer mindshare finally, the customer whichever customer who actually buys the truck thing that the.
Thousands of appears to be part of copper.
He's giving of itself I think those kind of tail for lots of sometimes but they cannot.
Because of the water it happened at the cost of about 1 of the vehicle for 10 years of what we would want the lowest reported better quality of the vehicle and show that we are backing it with the AMC if necessary even with the extended warranty because we are confident about our product and that is somebody of doing it but with the all of this we have been gaining share.
Over the last for water and we will I think that this is the right strategy for the.
The.
But to answer your question the accounts are higher.
What it was the maybe even couple of quarters ago, and hopefully that would be irrationality coming in as we move forward, but are 1 thing that I would want to leave a message very clearly and I'm sort of them be will also kind of.
That said the strategy is the will pursue growth and we will pursue of profitable growth.
It is not going to be 1 of the possible other.
Hopefully, we will see the type of M.
Over to you.
Yeah, just to add really it's about selling value, it's about selling the technology that we built in and which is going to deliver and as the customer experience. The remember customer experience of the last 15 months of 12 months has also been Ltd.
Again because of start stop start stop with that.
As the what type of feedback we have it's about the living value and as growth comes back the.
The discounting will ease off as well the focus will be not to be.
Sure.
Share and earn it profitably for the quality of product service and digital technology.
Thank you for that and the second question that I had was could you share some light on the throw some light on the Doe what's happening with all the customers on the end of the TV side. So the operators are in the broadly and combining what you in all of them the language and so watch the collection of since Ive been like in June what is.
The Frac fleet utilization like in June for our customers and is it the northern crude enough in June now that gives us confidence that even though the company in sales would be really not yet.
How would you think about it.
The I would only the 1 thing I think the fleet utilization in the month of June is a little too early because we are deploying all of the.
If you do not know.
Not really great months right. So I.
I would say the light is great for a couple of for months.
The logic tells the this is nothing I mean, we don't for quite some very big thanks to the older.
If the economy opens up you're going to see more trucks rolling on the on the road, so you're going to see more of the transportation and if if all of you reported that believe that that is the good run for the index like US most of that I'm not telling it in the later, Don you're kind of bringing together all of the pipe.
If you believe that the turnpike in the index.
There's going to the wonderfully well stock market, they're going to the well that can't happen only if the GDP starts to grow and if more of production happens in all industries start the growth. So that is in all of these and why we believe that something different is going to happen, but fleet utilization numbers in the month of June. This is something that you know, it's it's not of great, but I put it the I.
I mean, it's not a very important instead of it I don't know the number to be candid with you, but I'm sure the fleet utilization of doing it ballpark for video.
Fleet utilization and day.
That is for sure because you don't get being that the unlocking of is happening and the government is looking at the opening of schools over the next couple of months and hopefully with the you know the AR the.
What were the addictions coming to the confidence that all of us will have to get back onto a normal not most of it will also be much higher for the second part of that I would say before at 100 or with the other day is on the collection of efficiency I think the collection of efficiency of Oh, you know at the level has been quite healthy I'll provide you the number.
The the you know the.
Overall, the efficiencies now I almost I think about 90% of my memory serves me right and that's why we are so the collection of efficiency for the April for example is 90% that's like I don't have the number for May and June but think the definitely much better.
Ideally for lack of.
The concern is got a narrow view of 11.6 of the thing.
They have had the D N P O 4 per cent N. P of 2% of you have also that has been publishing provision taken for COVID-19 accumulated of provision that has happened. The you know over the last year and the probably 'twenty 'twenty..1 is nearly 200 crores of over 200 crores. So I think the and you know that portfolio of the other thing is why.
They do help for you know the partner of chocolate and connecting the.
Okay and the trucks.
They have a very healthy mix of Contracyclical portfolio and also loan against property the.
The acquired assets.
From other lenders that they've got to be low there, but even though they've got off road applications. So you know the that mix of our.
Business is also kind of ensuring that you know the.
That business is the biggest but we are definitely seeing improvement of the collection, so you're going to be a mix of your customers.
Over the last 2.3 months and that is also I think both of the banking sector as well so.
The things are definitely looking much much better than the way in 2 quarters back and be over do you I know I kind of gave a very longish answer, but what would you size. The none of you are absolutely covered it I have really nothing to add except the September man June have been tough for the country of the old on the health and safety and of course.
Wally and I believe we must ensure that we follow a protocol, we get vaccinated and help the economy now move forward and as the economy moves forward great ease of natural impact of I mean, it's the core industry and other.
Core industrial moving the economy moves and we are confident for the.
Government with public spending will ensure that we are focused on building infrastructure and create the movement of goods and services across the country.
Thank you for the retailer.
The.
All of them, thanks, Doug so sort of before.
Are you free.
For the audience.
Of the ICD sales right.
Yeah. So you know Oh, we can do that I mean, there is nothing like the little brief but since people are curious about it and frankly for us at the end of it.
The big that's hugely.
Material, but the Ashland 30 per store box Bruchhausen Brady won all the activities have been repaid back so we talked a little earlier.
So what 'twenty 1 so I said, it's on the books at some pretty much stuck with all of the Brady.
Zero.
Yeah.
Yeah.
Hello.
Thank you Hello, Hello, Yeah.
Yeah. Thank you Seth.
Yeah.
Due to time constraint that most of the last question for today, none of my hand.
Just kind of finishing gillard for closing comments.
Thank you Melissa on behalf of Axis assay.
Sometimes the shuffling of the management and all of the sockets from soft for some of the fun.
For me I understand that some of the participant in southeastern license the name and joining the call my apologies for that.
The clinical file any closing comments on the site.
I think I'll hand, it to we've been to give the closing comments.
Yes.
Okay, No I I think the first thank you very much I think that just the number 1 we must be focused on health and safety all of us for us citizens to ensure that we we we we help ourselves as well of the government and the economy to come out of this safely the.
Second is we have the show Cleveland look.
Very positively at the future in terms of product in terms of what we're doing on E vs. In terms of the product platforms. We have created and will continue to do that we will continue to gain we didn't domestically, but also go overseas. We are proud of supply into the defense.
And our associates of the businesses. Finally, we will continue to create value for the customer in all aspects of what the customer needs of its more and more.
Catering to specific needs of customer through better products and better services and finally, I think we have a great set of people very talented people who are good for the present and the future of a shock Leland.
Mustang for the investment community for your continued support to us and thank you very much please stay safe and stay healthy.
Thank you Scott.
Ladies and gentlemen did the should we conclude our conference for today.
Thank you everybody. Thank you Sir Thank you moment of things. Thank you. Thank you. Thank you very much.
Allergy. Thank you everybody. Thank you.
Yes.
Ladies and gentlemen, the discipline.
For today, Thank you for your participation and for using the <unk> Conference call.
You may all disconnect. Your lines now thank you and have a good day.
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