Hero MotoCorp Ltd (HEROMOTOCO) Q2 FY22 Earnings Concall Transcript

Hero MotoCorp Ltd (NSE:HEROMOTOCO) Q2 FY22 earnings concall dated Nov. 13, 2021

Corporate Participants:

Umang Deep Singh Khurana — Head, Investor Relations

Niranjan Gupta — Chief Financial Officer

Naveen Chauhan — Head, Sales and After Sales

Analysts:

Satyam Thakur — Credit Suisse — Analyst

Rahul Arora — Analyst

Kapil Singh — Nomura — Analyst

Rohil Gandhi — PPFAS Mutual Fund — Analyst

Sonal Gupta — L&T Mutual Fund — Analyst

Raghunandhan NL — Emkay Global Financial Services — Analyst

Jinesh Gandhi — Motilal Oswal Financial Services — Analyst

Hitesh Goel — CLSA — Analyst

Ashish Jain — Macquarie — Analyst

Nitij Mangal — Jefferies — Analyst

Binay Singh — Morgan Stanley — Analyst

Gunjan Prithyani — Bank of America — Analyst

Chirag Shah — Edelweiss Securities — Analyst

Amyn Pirani — J.P. Morgan — Analyst

Presentation:

Operator

Ladies and gentlemen, good day and welcome to the Q2 FY’22 Earnings Conference Call of Hero MotoCorp Limited hosted by Nirmal Bang Equities Private Limited. [Operator Instructions] Please note that this conference is being recorded.

I now hand the conference over to Mr. Rahul Arora from Nirmal Bang Equities. Thank you, and over to you, Mr. Arora.

Rahul Arora — Analyst

Thank you, Margaret. Good morning, ladies and gentlemen. On behalf of Nirmal Bang Institutional Equities, I welcome all of you to the Second Quarter FY’22 Earnings Call of Hero MotoCorp. The management this morning will be represented by Mr. Niranjan Gupta, Chief Financial Officer; Mr. Naveen Chauhan, Head of Sales and After Sales; and Mr. Umang Khurana, Head of Investor Relations and Business Support.

At the outset, I’d like to thank the management for giving us this opportunity to host them and Season’s Greetings for Diwali and the New Year to all the participants and the management. I do hope everyone is keeping well and safe in these trying times.

I request the management to commence the session with their opening comments. Subsequent to which, we could open up the floor to the participants for their Q&A. So, thank you once again. And Umang, over to you.

Umang Deep Singh Khurana — Head, Investor Relations

Thank you, Rahul. Thanks for hosting us. Trust everyone’s keeping safe and a very Happy Diwali to everyone as well. Welcome to the Q2 FY’22 post results investor call. As Rahul just mentioned, we have our CFO and Head of Sales on the call. Thank you for sharing your Saturday with us. We’ll begin with opening comments from Niranjan and then open the floor for Q&A.

Over to you, Niranjan.

Niranjan Gupta — Chief Financial Officer

Thanks, Umang. Thanks, Rahul. [Foreign Speech] to everyone and thank you all for attending our earnings call and greetings of festive season to everyone.

You would have seen our results announced yesterday evening. We delivered 14.4 lakhs of volume, INR8,450 crores of revenue, and net profits of INR794 crores with strong recovery in EBITDA margins from 9.4% in the previous quarter to 12.6% in the current quarter.

Let me just talk about a few highlights amongst many which are there and this time let me start with Global Business. Delighted — we are all delighted with the progress that Global Business is making. Annual run rate has crossed 300,000 comfortably versus the earlier run rate of 200,000, which was there for quite a few years. We still have a long way to go, but we’re very confident that our revised GB strategy is working well and it will be a key growth driver in future.

Second, let me touch on the Parts Business: the parts, accessories, and merchandise. We have clocked highest-ever revenue of INR1,141 crores, registering 40% growth on year-on-year basis and accounting for more than 13% of revenue. We see the trajectory of growth in the parts, accessories, and merchandise continue to be surging moving forward as well.

Third, our premium segment in domestic market has done exceedingly well, it’s moving in the right direction. Sequentially, if you look at it, the quarter one shares were 2.2% moving to 4.1%. Currently, last couple of months, we are at 6% plus and we are on target to cross 10% by March. And therefore, that’s actually now giving the outcome of the portfolio strategy that we had. You’ve seen couple of launches that we have done in the quarter: Xtreme 160R Stealth, Xpulse 200 4V, and you will continue to see more and more actions on the product side as we had already promised as part of our premium strategy. And the focus is not just on premium, it’s on premiumization within segments as well. Accordingly, Glamour XTEC was launched with more than INR4,500 price premium. It’s already actually garnering more than 50% demand within Glamour segment. Similarly in scooter, we launched Pleasure Xtec and we launched Connected Maestro Edge. So, we’ll continue to have the premiumization story as a key theme within the segments as well.

Fourth, retail financing, as you know, is the key driver for the future and long-term category growth and our focus in this area has yielded good results with actually finance penetration in the quarter moving to 55% versus 51% same quarter last year and we’ll continue to focus on this to take this higher and higher.

Finally, cost management, as you would have seen in the commentary that we released yesterday, not just on variable cost, but actually on fixed cost as well has yielded handsome dividends with Leap savings giving us more than 300 basis points of savings, helping us offset large part of the cost inflation, as well as the overheads management and that has helped us sequentially improving margins as we saw.

Let me now turn my attention on the outlook and the economy and the sector as we see moving forward. Lots of positive indicators. Lots and lots of positive indicators. You look at our robust GST collection, you look at good monsoon, therefore, the water levels which will, of course, help the next crop cycle. The Consumer Confidence Index is moving up. And the reopening of hospitality sector because that sector actually augurs well for the lower income group where lots of employment, organized and unorganized sector has in that sector, and therefore, that will boost confidence and income levels of the category that’s very relevant for the two-wheelers. Plus, of course, the recent tax cuts by central and state governments on petrol and diesel that augur well as it is providing a much needed relief. And on the long-term GDP forecasting, you would have seen, IMF has forecasted a robust GDP growth and Reserve Bank of India has forecasted also strong growth for fiscal year 2023 upwards of 8%. So, overall, there are positive indicators for our economy moving forward. As far as two-wheeler is concerned, we believe that the underlying demand story stays strong. Considerable potential because of penetration and increased retail financing and backed by the positive economic indicator that I just talked about, the momentum should come back soon.

Now, finally and last but not least, the topic that’s receiving a lot of attention these days in media is EV and let me just talk about — touch a bit on EV. We are on course. We are on course for launch of our product by March. Our product has been designed by R&D in Jaipur and the Tech Center Germany. Manufacturing, as you saw in our release, will be done at Chittoor, which is our plant in Andhra Pradesh. So, we are on course and watch this space. Recently, of course, there have been a lot of talk on who will win in EV and we’ve had several acronyms that have been floating around. Well, I won’t get into betting, but let me just talk about what we believe success in EV will require. It will require focus on customer, on cost, and on collaboration and not necessarily on competition. Having said that, if you still want to pick a winner company, just Google the synonyms of the word winner and you will have your answer.

On that note that, let me just open the floor for Q&A. Over to you, Umang.

Umang Deep Singh Khurana — Head, Investor Relations

Thank you, Niranjan, for opening comments. Let’s now take questions, please.

Questions and Answers:

Operator

Thank you very much. [Operator Instructions] The first question is from the line of Satyam Thakur from Credit Suisse. Please go ahead.

Satyam Thakur — Credit Suisse — Analyst

Hi. Good morning, team. Thank you for taking my question. So firstly, sir, could you share an update on the festive demand in the final assessment, how did it end up being? And beyond festive as well in the next month or so, there is lot of speculation in the market that the wedding [Phonetic] calendar seems quite full. So, do you see signs of sales beyond this as well?

Niranjan Gupta — Chief Financial Officer

Okay. The question is around festive demand, how it has been and what’s the outlook? Naveen?

Naveen Chauhan — Head, Sales and After Sales

All right. Thank you. And first and foremost, good morning to everyone and wish you all a very happy festive. Let me also wish you all good health as we move in the year ahead. Coming to the question on festive, overall it was subdued. However, the second half we saw the related traction being better. If I were to attribute some rationales and certain reasons for that, we’ve seen that it has been a delayed monsoon this year and normally in past also I mentioned that rural health led the growth in terms of over urban. This time that lagged. We’ve seen that crop is still in the field and it’s going to mandis. In fact, in the markets like Punjab and Rajasthan, the fossil has — the crop has reached the mandis, we’ve seen the better traction. And hence going forward as the rural comes back, we would see better traction. And post-festive, if you look at, right now I think the urban remains at the same level. The rural is weighted.

Satyam Thakur — Credit Suisse — Analyst

But if I can follow-up, what do you think in your [Technical Issues]

Operator

Sorry to interrupt you, Mr. Thakur, your voice is breaking up, sir. Mr. Thakur, your voice is breaking up. Can you please check?

Satyam Thakur — Credit Suisse — Analyst

Is it any better now? Or else I’ll join back in queue?

Umang Deep Singh Khurana — Head, Investor Relations

Satyam, we can’t hear you very well. Do you want to dial back in and we’ll take your call on priority? Is that okay?

Satyam Thakur — Credit Suisse — Analyst

Yeah. I’ll do that. Thank you.

Umang Deep Singh Khurana — Head, Investor Relations

Yeah. Thank you. Let’s move on, Margaret, to the next speaker. We’ll get — the moment Satyam is in, let’s take his question again.

Operator

Thank you, sir. The next question is from the line of Kapil Singh from Nomura. Please go ahead.

Kapil Singh — Nomura — Analyst

Hi, sir. Good morning. Thanks, Niranjan, for the very detailed commentary. Very helpful. Firstly, I wanted to check on electric vehicles. We have talked about the fact that we will be making — launching the EV before March and also making our own battery pack. So, I just wanted to check, how many EV products are we looking at over the next few years? And as a strategy, is Hero MotoCorp going to make its own battery pack going ahead?

Niranjan Gupta — Chief Financial Officer

Hi, Kapil. As you saw, what we have said is that, our product will get launched by the month of March. Obviously, we’ll keep launching products every year as upgrades or variants. How many? I’ll not be able to disclose as of now, but closer to the time you will get to know. Equally, as you saw that we are — in our manufacturing, we have talked about that we will provide an eco — integrated ecosystem for battery pack manufacturing. Cells, of course, come from various providers. So, that’s the plan.

Kapil Singh — Nomura — Analyst

Okay. Great. And also, sir, in your commentary you talked about several positives that we see for demand. Would you also — are there any key risks that one should be watchful of in your view?

Niranjan Gupta — Chief Financial Officer

So, Kapil, the only see risk that we would say is, if there is a wave three which happens. Even there we do feel that the vaccination rates have really picked up. In terms of the overall country if you see, more and more vaccines have got approved. First doses, now probably the government is moving the direction of booster doses. So, it’s actually mitigated most of the commentary around pandemic is now soft. So — but yeah, if you say the risk then that would be one. Second, of course, we have given our commentary that inflation now looks like it will cool off because some of the commodities, as you would have seen, are stabilizing or coming off their highs. But if there was another wave of inflation, of course, that can act as a risk.

Kapil Singh — Nomura — Analyst

Okay. Great. And lastly, if you could just talk about how much price increases we have done and the outlook on commodity costs in terms of if we have passed on whatever increase was there up till now?

Niranjan Gupta — Chief Financial Officer

So as you would have seen, we took price increase in April, in July, in September. This year we probably have already taken close to around INR3,000 price increase. As far as how much of it covers, you see that there’s a combine of Leap savings as well which we have done and net material cost as a percentage of revenue has gone up by 110 basis points. So, ideally that’s the one that we would like to recover more. But beyond that, everything else is factored in the margin as you see sequentially, the margins have improved. Moving forward, as I said and let me just reiterate, some of the commodities seem to be cooling off, some of the raw materials which lead to those commodities seem to be cooling off, be it, iron ore or coal. So, sooner or later we should see now commodity spectrum stabilizing and therefore, then the prices give a chance to actually recover more than the forward inflation. And therefore, that should help recovery of industry margins moving forward.

Kapil Singh — Nomura — Analyst

Thank you very much. Thanks.

Operator

Thank you. The next question is from the line of Rohil Gandhi from PPFAS Mutual Fund. Please go ahead.

Rohil Gandhi — PPFAS Mutual Fund — Analyst

Yeah, hi. Thank you for the opportunity and wish you all a very Happy Diwali and a Happy New Year. My question was on the entry level segment. So if I just see since implementation of BS VI and even now the commodity-led inflation, the realizations have gone up almost 25% or so. So, some of it probably is led by the export mix and the premiumization mix in your portfolio as well. But I just wanted to understand how you’re seeing the consumer demand and the purchasing power and then [Indecipherable].

Naveen Chauhan — Head, Sales and After Sales

Okay. Thank you, Rohil. Entry, we’ve seen in the first half and second quarter too also not just entry, if you look at even moped, I think the de-growth levels are comparatively higher. Now, as you said, there is — this is the most price sensitive consumer and the macro factors like fuel prices and all also had an impact on the mind frame. But while there is an issue and impact if you’ve seen, the COVID wave has been far more sharper this year impacting disposable income. But I think it’s more about how do you make it easier for the consumer to acquire the asset that will drive the growth and we have seen the impact on — the positive impact in terms of the way we’ve done on the finance part and Niranjan shared, the increase in the finance — retail finance penetration, it’s been far more in entry segment. I think that’s the way this segment would expand.

Niranjan Gupta — Chief Financial Officer

If I just add on top of what Naveen said, we’ve been proactively taking multiple actions. And Naveen, we launched HF 100, which was a bit of a strict [Phonetic] down version just to enable people to come in at a lower price point as well. And like you rightly said, while the upfront price goes up, if you increase the financing penetration, then it’s more on EMI basis so that the down payment that somebody needs to do, that doesn’t get impacted big time and which is what we have seen. Also, on top of that, gradually consumers also realize that the resale price also goes up. So while — so you can take care of upfront price through finance penetration and you can take care of the total price which goes up through actually higher increase in resale value. I think that combination would work well as consumer confidence is moving up and people are in more confidence not to conserve the money, but actually to spend for the need that they have which is of mobility.

Naveen Chauhan — Head, Sales and After Sales

Absolutely. Absolutely. And, in fact, just to give you a flavor on the innovation that was done in the retail finance scheme, we are looking at increasing penetration for the consumers who do not have banking habits with Suvidha being launched by HFCL. We got bullet payment scheme for farmers at four monthly level. So, I think this is what we are doing in terms of expanding and going out to the consumer who have the need, but may not be able to pay upfront to acquire the asset.

Rohil Gandhi — PPFAS Mutual Fund — Analyst

Great. Thank you for such a detailed answer. That’s all from my side. All the best.

Operator

Thank you. The next question is from the line of Sonal Gupta from L&T Mutual Fund. Please go ahead.

Sonal Gupta — L&T Mutual Fund — Analyst

Yeah, hi. Good morning and thanks for taking my question. Sir, just a couple of questions. Sir, one, could you sort of also give the number for the other operating income for this quarter?

Niranjan Gupta — Chief Financial Officer

Sorry, can you just repeat the question? I just missed it. Sorry.

Sonal Gupta — L&T Mutual Fund — Analyst

Sorry. So, I was asking for the other operating income number for this quarter.

Niranjan Gupta — Chief Financial Officer

Okay. Okay, Sonal. First of all, congrats on your move. I hope you’ve settled down well.

Sonal Gupta — L&T Mutual Fund — Analyst

Thank you.

Niranjan Gupta — Chief Financial Officer

All right. The other operating revenue for quarter two was INR223 crores, last year same quarter was INR187 crores and quarter one FY’22 was INR110 crores.

Sonal Gupta — L&T Mutual Fund — Analyst

So, this is primarily linked to the — I mean, like the production at your facilities or is there any other element which is driving it?

Niranjan Gupta — Chief Financial Officer

So, it’s primarily linked to that. As you saw, it’s more linked to — obviously, there is a fiscal incentive, state incentive part which is there. And then there are other elements — minor elements which are there, primarily linked to the production incentive and how much we sell in Rajasthan and how much we sell in Gujarat, etc., etc., and Andhra as well.

Sonal Gupta — L&T Mutual Fund — Analyst

Got it. And just my second question was on what is the — where are the inventory levels now, I mean, like post the festive period? I mean, how do you see them and what is the plan in terms of wholesale versus retail going forward?

Naveen Chauhan — Head, Sales and After Sales

So, our current inventory after the festive was over is in the range of five to six weeks as it stands. And moving forward, I think we — that’s the number that we would maintain our inventory.

Sonal Gupta — L&T Mutual Fund — Analyst

Okay. Okay. Sure. Thank you so much. All the best.

Niranjan Gupta — Chief Financial Officer

Thanks.

Operator

Thank you. The next question is from the line of Raghunandhan NL from Emkay Global. Please go ahead.

Raghunandhan NL — Emkay Global Financial Services — Analyst

Thank you, sir, for the opportunity. My first question was on EV scooters. How is the Company planning to approach high speed, city speed, and low speed categories? The new product in March which is being launched, which category would it cater to? And slightly on a medium-term query, the Company has a vision to dominate the space. Can you talk about market share aspirations? Also, Company had indicated 10 strategic alliances in future. If you can talk about areas where these alliances can materialize? Thank you.

Niranjan Gupta — Chief Financial Officer

Thanks, Raghunandhan, for the question. Let me just address the market share part first. I think in a new category, the role of leader is category expansion and category building and not market share. So, I think that’s where our focus would be. And as we said, how do you build that is the customer cost and collaboration. From a customer point of view, it’s very important that how fast you charge and which is where we’ll have twin solutions which are coming. First, of course, is on — just on a charging basis and the second, which will be on a swapping basis a little later during the year. And that addresses both types of consumers in terms of their charging solution, plus of course, the convenience, the range, anxiety, all of those we need to solve.

The second element, of course, is the cost element because unless your unit costs are viable as such, there is always a limit to the cash burn on that one can do. I do think that we, as Hero, are very well placed on that with our scale of supply chain, with our existing manufacturing locations, land, building, our distribution locations, servicing locations. On logistics, you can rise. So, there’s a lot of economies that will operate on the back of our scale and therefore, we are confident that we would be better placed on unit cost economics, which in the medium-term will decide that who will fall out and who will remain in this game.

And third is collaboration and which is where you’ve seen that we focus more on collaboration and less on competition and that’s where you see that to start with itself, we had invested in Ather. There’s a lot of two-wheeler, that happens. We have announced a JV with Gogoro. So a lot of collaboration on the design space as well, which is happening and effectively, therefore, that’s what we are playing for.

In terms of then honestly the high speed, city speed, low speed, we probably don’t look at the segmentation that way. Watch the space as the product comes out by the month of March and I’m sure then we can take up those segment questions thereafter.

Raghunandhan NL — Emkay Global Financial Services — Analyst

Thank you, sir. My second question was on, can you elaborate on the benefits — the area of benefits for Leap program and how do you see the full-year targets?

Niranjan Gupta — Chief Financial Officer

All right. So, Raghunandhan, we had announced — in fact, if you remember when BS VI, Umang, was launched at that time itself, we had talked about the Leap 2 savings program and we have said that we are accelerating the program covering not just post design, but right from conceiving the design to the end of line and then, of course, sourcing and covering also the other areas of variable cost. So, all of those put together year-on-year basis, if you see quarter two to quarter two, we’ve got 320 basis point of Leap saving which is built into the results.

Raghunandhan NL — Emkay Global Financial Services — Analyst

Thank you, sir. Wish you all the best.

Operator

Thank you. The next question is from the line of Satyam Thakur from Credit Suisse. Please go ahead.

Satyam Thakur — Credit Suisse — Analyst

Yes. Thank you for bringing me back on. So, the other question I have is on your electric vehicle launch so which obviously will be a scooter the one that you’re launching in March and the market also does not seem to have many motorcycles in the market right now. But based on what you gather from your channels, what’s your assessment in terms of the demand pull? Like is your typical entry level motorcycle customer also looking to transition to electric and even willing to go for electric scooter?

And secondly, do you also have — are you also working on electric motorcycle as well? Will that form factor — is that also part of the plans?

Niranjan Gupta — Chief Financial Officer

Satyam, good question. Thanks for this. Yes, the March launch that will be there will be scooter. So, that you are absolutely right. As far as motorcycle is concerned, let me talk a bit about that. If you really look at, first of all, the fuel efficiency that motorcycle gives versus scooter, there is a big difference. So you look at the mileage that the entry motorcycles give versus scooter. Second, you look at also the pricing, that’s different. Third, if you look at the range and the power that’s required in the motorcycle use — what they use for and the distances that they need to cover. Effectively if you have to cater to that consumer, your battery pack size and the battery pack capacity has to be far more. So on one hand, you have to cater to a lower price, but with a higher battery pack capacity and which is why — and higher, bigger range because while scooter, on daily average, actually would be far lower than the motorcycles on an average basis what a commuter uses.

So effectively when you see that, EV in motorcycles is way off in our view. There are some players globally who are trying, but they are more on the super premium end where probably a customer can pay a premium — huge premium for possessing that vehicle. But as far as the commuter and, in general, right up to probably the mid-CC segment is concerned, it’s way off. The EV penetration at least over the next few years will be driven by scooters and then thereafter as battery technology develops where you can pack more with less and cost reduce, maybe the other cell technology, solid state batteries, only then. So it has to be a different solution which actually works on the current battery technology, which are either there or in the works, there we don’t see actually motorcycles happening. And as you know in two-wheeler industry, motorcycles are still 70% and scooter is 30%.

Satyam Thakur — Credit Suisse — Analyst

Okay. Thank you and all the best.

Niranjan Gupta — Chief Financial Officer

Thank you.

Operator

Thank you. The next question is from the line of Jinesh Gandhi from Motilal Oswal Financial Services. Please go ahead.

Jinesh Gandhi — Motilal Oswal Financial Services — Analyst

Hi, sir. First clarification on festive season sales. So, the 32-day or 35-day festive season as we classify, would it be down about 15%, 20% or would it be more than that?

Naveen Chauhan — Head, Sales and After Sales

Jinesh, as I said, as we progressed into the festive in the second half, it improved. In fact, if I were to kind of share with you. On Dhanteras, the day which is the biggest day, that’s the day that we saw the consumers coming back to the showroom. There was good crowd in the showroom and it is manifesting in different zones in a different way. Markets which are big, which is North, Central, and part of East, I think the growth rates were better off as compared to South — Southern markets. So, I mean, as I said, it’s — it was not as good as it was last year. So, early double digits is where it was.

Jinesh Gandhi — Motilal Oswal Financial Services — Analyst

Okay. Okay. And as you rightly pointed out that the entire drop, some timelines are being a bit delayed because of delayed monsoon and considering the marriage season which is around the corner. Do you expect catch-up to happen during next maybe one to two months on this side?

Naveen Chauhan — Head, Sales and After Sales

Yes, of course. I think there is good marriages right up to middle of December and we’ve seen marriage buying happening to a certain extent during festive also. But I think because that’s largely in the semi-urban and the rural segment, they wait for their crop to reach mandis and once they have the cash in hand, then they come and buy. So, I am positive about once the harvest happens and it was delayed because of the delayed monsoon this year. I think they’re also going to save — the farmers are going to save on first and second irrigation that happens in the rabi crop because moisture content in the soil is pretty good right now.

Niranjan Gupta — Chief Financial Officer

Also, Naveen, what may help probably is what we discussed yesterday that this cooling off at least diesel prices by INR10 per litre, that could be significant in that cost equation as well for the farmers.

Naveen Chauhan — Head, Sales and After Sales

Yeah.

Jinesh Gandhi — Motilal Oswal Financial Services — Analyst

Got it. And second question on the price hikes, you have mentioned about INR3,000 price hike since April till now. But what kind of price hikes were taken in this quarter just to — for us to understand the cost inflation of this quarter and the price hikes taken?

Niranjan Gupta — Chief Financial Officer

I think we took around INR1,000 to INR1,200 in this quarter.

Jinesh Gandhi — Motilal Oswal Financial Services — Analyst

INR1,000 to INR1,200. Okay, great. And lastly, on export [Speech Overlap]

Niranjan Gupta — Chief Financial Officer

Sorry, Jinesh. Just to clarify that was the price increase that we took from — around in September or beginning October. September 21, that was around INR1,000 and July was around INR1,200. Yeah.

Naveen Chauhan — Head, Sales and After Sales

Yeah.

Jinesh Gandhi — Motilal Oswal Financial Services — Analyst

Okay. Okay. And on the export side, I mean, it’s good to see we are getting traction in that business. So, we had talked about approaching market differently than your earlier strategy. Can you update on where we are with respect to market wise product strategy? I mean, in Africa, new launches based on the market requirement, how they’re doing and similarly in other markets?

Niranjan Gupta — Chief Financial Officer

Yeah. Short question, Jinesh, but it requires long answer. But let me just try and summarize that. Overall, as I said that, we are comfortably at a run rate now of 300,000 annualized, which is 50% more than the run rate we were running for the last four to five years. There are areas like, let’s say, Mexico, where we tied up and launched, obviously, that we expect to do very well. Bangladesh has started recovering from the pandemic and from the impact that it had. Nigeria, we have sent in the modified customized product. We talked about the taxi segment with elongated seat. Colombia is receiving good reviews on XPulse on the premium segment, plus, of course, Colombia is also turning around. Where it was investing, now it’s actually breakeven on EBITDA level. It will soon breakeven on bottom line as well, which will allow the Company to invest more. So, I think things are happening.

The products that are required for each of these markets are going in. Sri Lanka is also one of the good markets for us, but Sri Lanka there has been no sales so the numbers don’t include Sri Lanka at all given that the country had put import restrictions. That’s expected to be sorted out in the next six months or so. So, that should help in FY’23 as well. So, I think that strategy is working well. As I said early days, but we are delighted and we’ll keep building on that.

In terms of market share trajectory, the key markets we are focusing on. There is around seven to eight markets where we have positive market share movement. But I don’t want to talk about the numbers because the base is still small and as it starts growing up, we’ll be talking more about these numbers.

Jinesh Gandhi — Motilal Oswal Financial Services — Analyst

Got it. Thanks. I’ll fall back in queue.

Operator

Next question is from the line of Pratik from CLSA. Please go ahead. Pratik from CLSA, your line has been unmuted. Please go ahead with your question.

Hitesh Goel — CLSA — Analyst

Yeah, hi. This is Hitesh from CLSA. Hi. My question — thanks for taking my question first of all.

Niranjan Gupta — Chief Financial Officer

Hitesh, go ahead.

Hitesh Goel — CLSA — Analyst

Yeah. My question is basically — first question is on EV. So, just wanted to your sense on customer preference. How it will shape out for scooters basically? Whether they will go for high-speed scooters or low-speed scooters? Because some of your competitors are talking about the low-speed scooters could still form 25%, 30% of the electric scooter market. What are your views on that?

And secondly, related to that in the export markets, especially in Latin America, Sri Lanka, Bangladesh, just wanted to understand how is the electric scooter journey there or electric transition there? Are the governments also giving incentives like India in those geographies to really propel electric demand?

Niranjan Gupta — Chief Financial Officer

Thanks, Hitesh, for the question. Good to see that that you’re calling this question in from your new house, CLSA. So, Hitesh, just addressing this in terms of scooter. Look, whether a customer drives at a low-speed or high-speed, everyone prefers a certain speed to be in the scooter, right? I mean, India is not a market where people would be happy with saying that my limit of my speed is only X, which is lower than the current scooters which are there. So, I think the benchmark for — our new benchmark for the customers would be that am I getting a similar comfort on speed, on convenience, on range as I’m getting on my current scooter. I think that’s the bare minimum that we need to address on the customer part of it and, of course, then the plus, plus is the tech part of it. Currently, what’s happening is probably tech is becoming the core and the rest is getting a bit ignored, which will come back as the customers then start picking up deliveries and start riding. So, that’s our view on that, that it needs to meet the bare minimum benchmarks of the current scooter for the customers to migrate and then the tech will be a plus, plus. But the convenience of the customer cannot be compromised whether on speed or on the range part of it.

On the exports part of it, yes, some countries have started contemplating. You’re absolutely right. So LatAm, Bangladesh, some of the countries have started talking. Of course, they are not progressed as much as, let’s say, countries like India have progressed in terms of putting out incentives. But I think discussions are in the works there, and therefore, any developments that we do on the scooters here and what we launch here, we are keeping that in mind the global requirements as well. And as and when the market is right, the policy framework is right, we would be then able to actually capitalize on that and export that to the market.

Naveen, would you like to add on the scooter customer in general from your eye’s perspective when they migrate to EV, what is the bare minimum they would expect?

Naveen Chauhan — Head, Sales and After Sales

You said it right, Niranjan, the consumer — when the consumer enters into the mobility, they would need a bare minimum level of performance, right? So it’s — I mean, for those consumers after the house, it’s second most prized possession and compromising on that is something that we’ve seen not preferred. Yeah.

Hitesh Goel — CLSA — Analyst

Just a small follow-up, on the tech part of the electric scooters, Niranjan, if you can add there. Basically, I want to understand who is controlling the operating system in our electric scooter. So, basically the consumer data that you guys will get once the scooters are connected and all, a lot of business models can be evolved by auto companies on that. I’m not sure whether you have started thinking about that. But who controls that operating system or the data that you’re going to get?

Niranjan Gupta — Chief Financial Officer

I can answer that, the data will definitely be controlled by us. All the customer data will be controlled by us and you’re absolutely right, once you have that. In any case, what works for us is also that we have 100 million customer base already and which is by far the biggest customer base that any OEM can have because, obviously, people who ride scooter are not going to spring from a new planet, they are going to be — a large percentage are going to be from this and from people who need mobility. There can be smaller percentages who take it just as a tech part and get added on and therefore, that gives us the advantage. So, we already have the data, of course, with tech. Then you get more live data and you can actually capitalize on that as many companies globally have been doing on many other multiple sources of revenue streams.

Hitesh Goel — CLSA — Analyst

Great. Thank you. Thank you, Niranjan.

Operator

Thank you. The next question is from the line of Ashish Jain from Macquarie. Please go ahead.

Ashish Jain — Macquarie — Analyst

Hi, sir. Good morning. Sir, my first question is on the margins. So, you spoke about 300 bps savings on — from Leap program. One, can you break that between raw material and other costs? And secondly, what is the headroom — further headroom we see coming from Leap?

Niranjan Gupta — Chief Financial Officer

It will be largely on account of materials. There is some part of other variables also which is included into this. Moving forward, look, our program continues on this one. What the number will be, difficult for me to give out. But all I can say is that — and you — as you would have seen, in the last few quarters we’ve been working very aggressively on the Leap 2 savings, and therefore, we should continue to see good traction on this in coming quarters as well.

Ashish Jain — Macquarie — Analyst

Okay. Sir, secondly on the spares and all, if you can just elaborate what are we doing different for spares to be now 12%, 13% of our revenues? And is there any target in mind? Or what is the potential you think this can go to in the next few quarters?

Naveen Chauhan — Head, Sales and After Sales

Yeah. So, I think spare parts — in fact, I won’t say spare parts, it’s parts, accessories, and merchandise [Phonetic] businesses has been taking off and it’s been on the rise. Multiple things, I think one is the core principles of going very, very deep into the country and expanding our footprint at the last level of sales, that’s paying off rich dividends. And then once you’ve got very, very deep and strong distribution robust system in place and you bring in additional lines which are existing lines. So, for example, oil has been adding good numbers to the business, you got accessories launched which is increasing. In fact, in October, we had the highest-ever monthly retain on accessories. Going forward, I think our distribution footprint that we’ve created still 30% more to kind of plan that should continue to pave the way. And as I said, in existing [Phonetic] businesses, we are exploring more of them both at our workshops, as well as in the aftermarket.

Ashish Jain — Macquarie — Analyst

Sir, lastly if you can, what is headwind from exports at this point on your EBITDA margins? Is export contributing positively to our margins today?

Niranjan Gupta — Chief Financial Officer

The exports EBITDA margins are lower than domestic because, as you know, as we are launching in Nigeria, into some of the other markets, it is lower than that. But moving forward as the scale quickly picks up and as we also put more and more premium products into the export markets, the EBITDA margins will recover. Overall, as it scales up fully as you know, typically, all put together, the export EBITDA margins at full scale should be at least equal to, if not, higher than the domestic market.

Ashish Jain — Macquarie — Analyst

But, sir, at gross margins level, are they already comparable with the domestic business or even there is opportunity at gross margins also?

Niranjan Gupta — Chief Financial Officer

There is an opportunity at gross margins as well.

Ashish Jain — Macquarie — Analyst

Okay. Great. Thank you so much, sir.

Operator

Thank you. The next question is from the line of Nitij Mangal from Jefferies. Please go ahead.

Nitij Mangal — Jefferies — Analyst

Hi. Good morning. Thanks for taking my question. So, sir, on the demand side, we are seeing that two-wheelers are lagging passenger vehicles in the demand recovery for reasons which are probably somewhat unknown. But in your assessment when you see industry going back to, let’s say, FY’19 levels? And is that like one, two years away? Is it longer than that?

And secondly, from a next one-, two-year perspective, how would you rate the drivers for rural versus urban demand? Thanks.

Naveen Chauhan — Head, Sales and After Sales

All right. Thank you for that question. We are looking for the industry to go back and cross that FY’19 level in its second consecutive years — year of de-growth in the industry. And being a sales guy born optimistic, I would love to see that CAGR to come back and going back to that level. I mean, of late because of the COVID and other impact, the last level of sales has been impacted, but fundamentals remains intact. The penetration levels are far lower than what it needs to be. There is lot of employment and government actions, which should push the demand ahead. Going forward, I think Q4 it should be better off than what we have seen in the recent past. And, I mean, my belief is it will take a little time, be a year or so to go back to that FY’19 level.

Nitij Mangal — Jefferies — Analyst

Thanks. And how do you see rural versus urban over the next one- to two-year?

Naveen Chauhan — Head, Sales and After Sales

Rural in past because of the penetration level has always led the growth as compared to the urban, recent times, in fact, last year also was better. This year it has been subdued. And because of the, as I said, core fundamentals remain the same, strong, need for mobility is far higher with lot of government actions and hence that should come back sooner than later.

Nitij Mangal — Jefferies — Analyst

Thanks. And one more question. Can you share anything on your plans with Harley-Davidson? When could you see a joint product launch? What kind of segments you could target? Thank you.

Niranjan Gupta — Chief Financial Officer

So the progress is on track, which is what we can actually say at this point in time. We can’t give a timeline unfortunately. But the progress is on track. The work on the product began as soon as we signed the agreement last year, if I remember right, was around October, November last year. So, the work started then itself and it’s progressing as per plan. Beyond that, we’ll not be able to comment at this stage.

Nitij Mangal — Jefferies — Analyst

Sure. Thank you very much. All the best.

Niranjan Gupta — Chief Financial Officer

Thank you.

Operator

Thank you. The next question is from the line of Binay Singh from Morgan Stanley. Please go ahead.

Binay Singh — Morgan Stanley — Analyst

Hi, team. Thanks for the opportunity. So, one of the reasons that across two-wheelers we note for demand slowdown is also the sharp price hikes that have happened and as you pointed in your commentary, increasing finance penetration clearly helps that. But even if you look at finance penetration, it’s largely remained in the 45% to 55% range. Is there a plan to sort of take it aggressively up because that could be one big driver to help the consumer absorb this very steep price hike that we’ve seen, like anything that you’re doing there, a year down the line we see a sort of a significant jump in finance penetration from current levels?

Niranjan Gupta — Chief Financial Officer

So let me first say and then I’ll ask Naveen to add what’s the new thing happening there. No, we were never at 55%. Honestly when I look at all the quarters, we were hovering around 40% and probably the best that we’ve reached in quarter two was around 50%, 51% last year. 55% is a clear, clear departure from that perspective, it’s a significant jump. And why do we believe that it will keep going up, Naveen?

Naveen Chauhan — Head, Sales and After Sales

Yeah. And, in fact, that another 1% or 2% added in the festive is normally because of the kind of consumer which comes in towards Dhanteras. It normally goes down, but this year we’ve seen the trend going other way around. And lot financial innovations. I mentioned that earlier, lot of financial innovation. I think that’s the direction in which things would move to increase the finance penetration levels in two-wheeler industry. And as I said, the segment of consumers we’ve identified and looking at the right product for those consumer segments, HFCL has been very, very proactive in terms of responding to the needs which were emerging from various markets. And across the categories and across the geographies, we have seen the finance penetration going up.

I think one more aspect that’s waiting for this finance space to get disrupted is also how do we get increased level of digital play in terms of having a higher level of competitiveness among the financers to bring down the cost of finance, which still remains at a slightly higher level. I think that’s one space that we are looking at to work on further.

Niranjan Gupta — Chief Financial Officer

In fact, Naveen, just to add on your point, that’s a big opportunity and we already see players are looking at tech, at digital from their end, as well as from a consumer end because they are getting more digitally included in the entire payment tech and fintech system more and more, we do see that that augurs well, both on the financer side, as well as on the consumer side and therefore, this space is actually likely to be a big growth driver for the category as such itself moving forward over next three to five years.

Binay Singh — Morgan Stanley — Analyst

And could you also comment a little bit about Hero FinCorp’s role? Like in this jump in financing that we’ve seen, what has been share of capital? How has that played out?

Niranjan Gupta — Chief Financial Officer

As far as FinCorp is concerned, they are roughly around anywhere between 35% to 40% as a share of financing. They continue to be at a solid level of that range, plus or minus few basis point keeps happening depending on quarter-to-quarter. So, they continue to be the lead players. But then there are other multiple players who have come in, which also help expand the basket. But they are at a robust 35% to 40% share of financing.

Binay Singh — Morgan Stanley — Analyst

And the second question, as we recall, last year sales promotion spend had gone up — gone down quite sharply for you and for the industry after COVID. How would you compare the sales promotion spending now versus pre-COVID level? Has it normalized?

Naveen Chauhan — Head, Sales and After Sales

Yeah.

Niranjan Gupta — Chief Financial Officer

Yeah. I mean, let me just comment and maybe then I’ll ask Naveen to supplement. If you look at I think this festive, whatever the promotion spends and all were done, it’s at a normalized level. So if you go back to the pre-COVID level, whatever those spends to revenues and for vehicle used to be, there is not a significant departure from that in this quarter.

Naveen Chauhan — Head, Sales and After Sales

It’s just about where do you put that money.

Niranjan Gupta — Chief Financial Officer

Yeah.

Naveen Chauhan — Head, Sales and After Sales

Right? So, as far as expense is concerned, it’s consistent. It’s just about which is the opportunity bucket that you see to put your money on.

Binay Singh — Morgan Stanley — Analyst

And lastly, if you could comment on Gogoro. Is that plan on track to launch the model in next calendar year? Will it be in the same facility? It’s been six months since the partnership. Any incremental details on what’s happening there?

Niranjan Gupta — Chief Financial Officer

At this stage, we will not be able to provide any more incremental details, I’m afraid. But as soon as we are able to, we will come back. So, watch this space.

Binay Singh — Morgan Stanley — Analyst

Great. Thanks, team. Thank you.

Operator

Thank you. [Operator Instructions] The next question is from the line of Gunjan Prithyani from Bank of America. Please go ahead.

Gunjan Prithyani — Bank of America — Analyst

Yeah, hi. Thanks team for taking my questions. I had just two quick follow-ups. Firstly on this whole demand thing, how much do you think — it’s still whole EV overhang because media has just created a lot of hype around it. So, do you sense in your conversations with the dealers that some percentage of queries are coming only for EVs or are you seeing rising inquiries around that? Is there anything that you can share around that?

Niranjan Gupta — Chief Financial Officer

So, Gunjan, firstly, as I talked about, if you see 70% is motorcycles in two-wheelers and 30% is scooter. So first of all, primarily whatever inquiries and questions on all that come around, they come around from the existing scooter base and people who have the need for the scooters. Overall, right now on the demand, it’s actually not impacting at all because overall EV probably, if I’m not wrong, is less than 1% of the overall. So, there is a lot of — yes, there’s a lot of interest in media I would say rightfully so. But from a demand perspective, it’s not started impacting right now. I mean, it will still be a while before a sizeable share starts putting on that. Naveen, do you want to add?

Naveen Chauhan — Head, Sales and After Sales

Yeah. I think it’s a little — Niranjan, it’s more about — it’s more in that space. But I think the positive that I take from whatever inquiries that are coming in that consumer trust the brand Hero and it’s the brand Hero that they would kind of come first to check what’s new on EV front.

Gunjan Prithyani — Bank of America — Analyst

So, you don’t think that people are in wait and watch. I mean, that’s not a reason for generally the demand being low in two-wheelers versus some of the other categories?

Niranjan Gupta — Chief Financial Officer

No, Gunjan, because if you see within even motorcycle versus scooter, the total two-wheelers, I think if I’m right and Naveen can supplement, the scooter as a percentage of two-wheeler probably in quarter two is more than what it was in quarter one. Right? And as you said, so if that was the case, people would have deferred their scooter and therefore, scooter percentage to total would have gone down. So, that’s not the case there. But yes, they are interested because there’s a lot of interest in this. They are interested, people are asking. So, that is building up. But currently, is it that people are deferring their current purchase to actually avail of an EV scooter? No, we don’t think so.

Naveen Chauhan — Head, Sales and After Sales

Yeah.

Gunjan Prithyani — Bank of America — Analyst

Okay. Just second very quick question on the capex commitment for EVs. Is there something that you would like to spell out this is what we are looking to spend in this for the next three, five years?

Niranjan Gupta — Chief Financial Officer

So, Gunjan, we’ve already, in fact, said the overall investments that we have talked about, our CEO has talked about over next five to seven years and this investment is not just capex. It’s on capex, on brand building, on R&D towards this space. We’ve talked about five to seven years overall INR10,000 crores we had talked about I think a year back and we have said that almost 50% of that would be primarily into EV. So, that’s what we are looking at. Having said that, it’s basically need-based. Yeah. Obviously, we won’t spend where it’s not required. And if it is required, we may spend even more. So it’s the question of spending based on the need and based on our product plan, based on what we are going to launch, and obviously there’ll be no — there’s no scarcity of that.

One thing I can assure you that we, because of our ability, our scale, will be able to do that in a far more optimized manner. So if, let’s say, a new player requires X to spend behind achieving as an objective, we probably can do in X, Y, too. So, that’s the broad thing that I can tell you.

Operator

Thank you. I would request Ms. Prithyani to rejoin the queue for follow-up questions and request participants to limit your question to one at a time. The next question is from the line of Chirag Shah from Edelweiss. Please go ahead.

Chirag Shah — Edelweiss Securities — Analyst

Yeah. Thanks for the opportunity. Sir, Just a clarification first. Other operating income for the quarter you mentioned was INR222 crores, right?

Niranjan Gupta — Chief Financial Officer

INR223 crores. Yeah, Chirag, right.

Chirag Shah — Edelweiss Securities — Analyst

Yeah. Thanks. Sir, I have a question on spare parts. Is this the normalized run rate 12%, 13% of sales or there is scope to pick it up also?

Niranjan Gupta — Chief Financial Officer

So, let me just give a short answer and I’ll ask Naveen to maybe supplement. Let’s look at an absolute level, which is the INR1,140 crores that we have done. We had done couple of quarters of more than INR1,000 crores also earlier and we were confident that that’s the trajectory moving forward. So, we hope and we expect to continue to build on these numbers as we move forward. There could be times here or there, quarter here, quarter there which could go up or down, but as an underlying trajectory to build on these numbers even further. As a percentage of revenue, of course, it all depends on demand and the momentum of overall two-wheeler also coming back. But on an absolute level, yes, we are quite comfortable and confident that growing — and Naveen already explained and Naveen would love to just touch upon the underlying couple of drivers that he already talked about, which are actually leading to this growth and confidence in that growth.

Naveen Chauhan — Head, Sales and After Sales

Yeah. I think we kind of started this story around two years back when we went micro as we said. So fundamentally, we are in place in terms of our robustness of distribution. And once you have that, it’s just about looking at — in fact, I would say, what we do in vehicles in terms of looking at every single product as a product and have a product manager is the same approach that we are doing in spare parts wherein there is a team which looks at different — various product groups and how the competition is and where is the price in different markets. And that’s the approach that we have taken in spare parts to go deeper. At every single counter, we are looking at how many SKUs would I sell and how many SKUs do I want to sell? What’s the potential? I think so the basic fundamentals have been worked upon in recent times, which is actually delivering the result that we’re seeing.

Niranjan Gupta — Chief Financial Officer

In fact, let me just add more on this, Chirag, is that, what we are doing now is as we are launching more and more products in the premium segment, right at the design stage itself we are looking at that how many accessories we can add because there is a demand for that. Let’s say, you take XPulse and then people want those customized, people want those add-ons. While they may not want, let’s say, on a HF, but as you move up the chain. So as we are launching more and more premium product, at design stage itself we are saying X percentage should be accessories that’s being designed rather than later to do that based on what is required and what the customer comes back. So as it moves forward and we build our premium portfolio, actually that should augur well as well, our accessories going up and, of course, the focus on merchandise. Overall put together, Chirag, I think the movement forward is that, how much more can we get as a percentage of revenue from these aftersales, services, all of those and that, therefore, basically builds a more robust alternative or additional stream of revenue on top of the product revenue that we’re talking about.

Naveen Chauhan — Head, Sales and After Sales

One perfect example, we launched this Canvas Splendor. It’s now contributed to 30% of our retail and it’s a model that we have given to the consumer to customize with the stripes [Phonetic]. That’s becoming additional revenue in spare parts.

Chirag Shah — Edelweiss Securities — Analyst

Yeah. Thank you for the elaborate answer. If I can just squeeze in one more question. See, on the export front, what is the change in approach that we adopted which is helping us to have a faster addition of distributors versus our historical track record? Over last two, three years there is an improvement in pace of regions that you’re entering and tying up with new distributors. So, is there a change in approach and can the space get further accelerated over next three to five years?

Niranjan Gupta — Chief Financial Officer

Yes, Chirag. In fact, maybe we’ll — at some stage, we may have full-fledged focus on GB for all our investors and analysts. But if I were to give a short answer, Chirag, it’s — I would call it a Phase 2 and therefore, a revised this one, where, as we talked about, in the Phase 1, the focus was on go and set your foot in as many markets as you can because you need to understand each of the markets and please go with whatever products you have because you can’t afford to delay. In the Phase 2, which is now which has already started and yielding results, is now about now give the market customized products that they require and therefore, focus on that. So even where we are developing products, actually it’s not like we develop products for domestic and then we say okay this is going to GB market. In the cycle plan in the product design itself, there is a very clear path for each of the key countries that what is the next five-year plan for this country that I want to have based on the customer needs which is there. So, that’s the shift or a Phase 2 or an add-on as you may call it.

And the second one is that, while we are in 40-plus countries, we clearly decides the nine, 10 which will receive disproportionate focus and the rest 30 will continue to manage. When they scale up to a certain extent, then of course, they’ll start receiving focus as well. So rather than equally dividing the resources and the focus across 40, it’s about priority A and then, obviously, as you nurture them back, then they also move into that category. So, I think that’s the short answer, Chirag. So there is a lot of teeth, muscles, flesh behind this entire strategy. And as I said, we’ll at some stage maybe have a full-fledged session on Global Business itself.

Chirag Shah — Edelweiss Securities — Analyst

Sir, basically we have the right distribution partner at least in this eight, nine countries, right? That has been done already.

Niranjan Gupta — Chief Financial Officer

Chirag, most of them. Couple of them only we have changed, but we have the right distribution partners. I mean, most of our distribution partners are selected after very, very rigorous scrutiny in terms of both their financial strength, their understanding of the country, their networking, their ability on policy advocacy, and their experience in auto sector. There are multiple parameters. So apart from a couple of them. And as Hero, we do believe in stability of partners and not changing and chopping them every two years and three years. So they are stable partners whether you look at Colombia, whether you look at Bangladesh, whether you look at Sri Lanka, or Nepal, all of them are continuing. So, yeah, a couple of places wherever required, we have changed and we may change, but that depends on the need.

Operator

Thank you. The next question is from the line of Amyn Pirani from J.P. Morgan. Please go ahead.

Amyn Pirani — J.P. Morgan — Analyst

Yes, hi. Good morning. Thanks for the opportunity. I had a question on the trade-off between profitability and volume growth if there is any because if you look at two-wheelers since the time of BS VI transition and then COVID second wave, in general, two-wheelers have been more disciplined in pricing, growth has been sluggish compared to other categories. So, do you think there has been a trade-off? And if not, do you think that growth is not dependent on pricing and it will come back based on other factors that we are missing out right now?

Niranjan Gupta — Chief Financial Officer

So Amyn, first of all, you heard my views on this subject earlier as well that a business cannot be run based on that, okay, I’ll either deliver volume or I will deliver profitability. We got to deliver both because it’s volume growth combined multiplied by profitability is what generates the net shareholder income or the value accretion. So, I’m a great fan of believing that both have to be addressed. At different times, you have to then maybe give a weightage to one of the factors more and at other times, you can swing to the other extreme and which is what we have done. For instance, is the cost inflation is happened. Have we — have the industry and have we, as a leader of the industry, have we like taken a stand that we’ll pass on the entire inflation to the market plus the margins that we want to? You know from the results that we have not. So there’s already a call which has been taken that you pass on partial, please focus on your own savings program, accelerate them. You tighten your overheads management and therefore, cushion the impact on the customers. So, that’s the balanced strategy where you start balancing profitability and this as well. As the commodities start cooling off, then that gives you actually a headroom to actually then take judicious smaller doses of price increases where the inflation maybe far lower and therefore, your recovery can be far higher. So, I think it’s a question of just lag and lead and it’s not a question of either or.

Amyn Pirani — J.P. Morgan — Analyst

Okay. Okay. That’s helpful. And just quickly on the EV, I don’t know if you can answer this question right now. Most of the EVs which have been launched at least in the medium to premium end right now come with a closed source charging thing. Their own charging infra can only support their own scooters. I don’t know if you have any thoughts around when you launch your scooter, will it be an open source or will it also be a closed source, if you can help us on that?

Niranjan Gupta — Chief Financial Officer

I think, Amyn, we’ll reserve some of the information and news for our launch, otherwise, at the launch time we’ll have only product, we would have disseminated all information. So, let’s wait for that exciting time when Hero, the leader of two-wheeler industry, comes out and launches its EV product in March.

Amyn Pirani — J.P. Morgan — Analyst

Sure. So, looking forward to that, sir.

Operator

Thank you. Ladies and gentlemen, due to time constraints, that was the last question for today. I now hand the conference over to the management for closing comments.

Niranjan Gupta — Chief Financial Officer

Thank you. Thank you very much. And don’t forget to Google synonyms of the word winner. Thank you.

Umang Deep Singh Khurana — Head, Investor Relations

Thank you very much. Have a lovely weekend. Thank you again for joining us.

Operator

[Operator Closing Remarks]