Landmark Cars Ltd (LANDMARK) Q3 FY23 Earnings Concall Transcript

Landmark Cars Ltd (NSE:LANDMARK) Q3 FY23 Earnings Concall dated Feb. 14, 2023.

Corporate Participants:

Sanjay Thakker — Chairman and Executive Director

Surendra Agarwal — Chief Financial Officer

Unidentified Speaker —

Analysts:

Basudeb Banerjee — ICICI Securities — Analyst

Amarnath Bhakat — Ministry of Finance, Oman — Analyst

Ashish Agarwal — Edelweiss Securities — Analyst

Riken Gopani — Capri Global Advisory Services — Analyst

Pallavi Deshpande — Sameeksha Capital — Analyst

Yash Bajaj — Lucky Investment Managers — Analyst

Anand Trivedi — Nepean Capital — Analyst

Dhaval Shah — Girik Capital — Analyst

Presentation:

Operator

Ladies and gentlemen, good day, and welcome to the Q3 FY ’23 Earnings Conference Call of Landmark Cars hosted by ICICI Securities.

This conference call may contain forward-looking statements about the Company which are based on the beliefs, opinions and expectations of the Company as on date of this call. These statements are not the guarantees of future performance and involve risks and uncertainties that are difficult to predict. [Operator Instructions] And there will be an opportunity for you to ask questions after the presentation concludes. [Operator Instructions].

I now hand the conference over to Mr. Basudeb Banerjee from ICICI Securities. Thank you and over to you, sir.

Basudeb Banerjee — ICICI Securities — Analyst

Thanks, Suja. Good morning, good afternoon to all the participants, and thanks to the Senior Management of Landmark Cars for giving us the opportunity to host this call. We have with us in the call the Senior Management of Landmark represented by Mr. Sanjay Thakker, Promoter and Executive Chairman; Mr. Aryaman Thakker, Executive Director; and Mr. Surendra Agarwal, Chief Financial Officer.

So, without wasting any time, over to the Senior Management of Landmark Cars for their opening remarks. Over to you, sir.

Sanjay Thakker — Chairman and Executive Director

Yes. Thank you everyone. This is Sanjay Thakker. Good afternoon, everyone, and thank you for joining our Q3 and nine month financial year ’23 earnings conference call to discuss our operational and financial performance. This has been a momentous quarter for the Company with the recent listing of on the stock exchanges. This first for any multi-brand multi-locational auto retailer. We would like to thank all our shareholders and other market participants for the confidence shown in us, and as our tag line suggest, You Drive Us.

Being our first interactions with the capital market participants and investors at large post listing on the stock exchanges, I would like to take some time to establish who we are and what we do for those who might be uninitiated. And since this is our new Company, I would like to dwell slightly more on it. India has recently become the third largest auto market in the world with the sale of approximately 4 million passenger cars. In a normal year, China sells around 27 million cars and USA around 17 million passenger cars. We believe that the growth in the Indian passenger car market has just begun.

We are essentially a multi-brand premium auto retailer, which acts as a one stop solution for premium and luxury cars. Right from selling premium cars, then providing finance and insurance for the same to servicing the cars once it is sold and then facilitating the buying and selling of pre-owned cars, we do it all. It’s actually very simple to understand the business and as we go through today’s presentation, you will realize how simple it is to understand and difficult to implement though.

Our journey began with a single Honda dealership, 29 — 25 years ago. Yes, we are celebrating our 25th year. And it’s a happy occasion that we got listed in our 25th year. Today we are the authorized retailers for multiple premium vehicle brands with a total of 106 showrooms and service outlets put together across the length and breadth of the country. In each of the regions that we operate in, we have established a very strong foothold and achieved market leadership, which not only help us operate at scale, but also fortify our brand equity in the premium vehicle market.

Over the course of 25 years, we have added several OEM partners, worked our way up to hold leading market share for most of them. As of now, as we speak, we are the number one dealer partner for Mercedes-Benz, for Honda, for Jeep, for Volkswagen and BYD. And we are the number three partner for Renault in India. We also have presence in commercial vehicle sales where we are dealers for Ashok Leyland in many parts of Gujarat.

25 years ago we realized the need and benefit of separating ownership from management. This was an industry-first where dealerships were always and always run by promoter family in every case. One of the decisions we took right at the start was to hire a young team of professionals to run the business and what is most impressive is that those — that team has continued to be up part of Group Landmark till date occupying senior positions and displaying highest level of ownership for their work and towards the Company. From that core group of young professionals to having 4000-plus employees strong organization today, we have come a long way.

Hungry for growth and driven by our zeal to provide excellent customer service, our work impressed the leading OEMs of the world over a period of time and we have become their trusted partners and go to partner in every case. Throwing some light on the corporate structure we have created, we have created OEM that is brand-wise specific entities which are in practically all cases wholly-owned subsidiaries. This ensures brand-specific focus, customer — customized to the needs of the demands of each OE and different set of customers. The earliest members of the Group now hold top positions in these entities and run the businesses with highest degree of ownership. And out and out indicator of not just customer loyalty towards the Company, but also a strong affinity and loyalty by our employees.

From a geographical point of view, our 106 outlets spread across eight states and 26 cities. We run a asset-light model. We own only two out of the 106 outlets that we operate. In the nine months that have gone by, we have added two showrooms and a service station for BYD, merged two workshops of Mercedes-Benz with a larger one in Kolkata, strategically shutdown a few Renault outlets that were not value-adding. And therefore, staying true to our effort of increasing efficiency to our operations with margin-accretive operations. We take pride in being India’s multi brand auto retailer, while still believing that we have only just started and the headroom for growth is enormous.

I would like to dwell a little more into each of the businesses, starting with our mainstay, the new car sales. The new car vehicle sales cater to the — caters from economy to luxury vehicles and commercial vehicles. Overall, this business contributes 84% of our top line in terms of pro forma revenue. The distinction between the pro forma and the reported revenue is something that we need to explain to people at least for this year. And Surendra Agarwal, after I finish my first part will explain what exactly we are talking about.

As mentioned earlier, we are number one sales contributor to Mercedes-Benz with just under 16% market share. That means that one in six Mercedes sold in India is by Landmark. Coming for Honda, we account for 6% of their all India volumes. Corresponding numbers for Volkswagen has increased and stands above 9% for the 9 months that has ended and close to 29% of Jeeps sold in India are by Landmark. This number is around 5% for Renault, though it is very — these are very early days for BYD, that the operation is just starting. In the nine months that have gone by, we have contributed to over 25% of their all India sales so far.

The recent trend seen around car ownership clearly points towards premiumization, which works perfectly for us and we find ourselves as the market leader in the exact state — exact state segment which is growing the fastest. In close connection with the new car passenger sales, the other vertical that we operate is the vertical of finance and insurance. This works synergistically with our vehicle sales, and we have the statistics to back this claim. Typically 75% of the buyers purchase the vehicle making use of the financing options. Of these people who opt for financing, 50% customers opt for financing through Landmark. This figure is even more encouraging for insurance, where 90% of the customer purchase insurance through Landmark. This also is a long-tail business, where the renewal commission also kicks-in.

Now the commission that we derive from finance and insurance flows straight down to the bottom line and normally is in the range of around 1% of the overall top line, which is the pro forma revenue and not the reported revenue, so I can point this out. The — so we are talking about two basically businesses that we do. I spoke about the sales. The other is the after-sales. We are with the after-sales and servicing business that comprises of accident repair, of periodic maintenance and general repairs. Now this is a highly profitable business which has been growing at 20% CAGR for the last eight years, nine years actually now and this is a 40% gross margin, 18% — 18% EBITDA margin business.

And what I can say with a lot of conviction is that the customers do not go to local garages typically and with the warranty and the extended warranties that we sell, they visit the authorized dealership. And this is kind of an annuity type of a business that we run. And to increase the margin of this business further, you would have seen our announcement about we becoming the all India distributors for two car care products world-renowned products of Permagard, as well as MotorOne and we believe that going ahead, the margins in this business will increase with these additions, and we will also sell these products in the open market as a separate line of business.

Now interestingly, one in three cars sold — one in three cars that is on the road to date meets with an accident every single year. Now, people on the call can think about this and their has met with an accident at least once in the last three years. With the world slowly moving towards EV, one would wonder if this arm of business would be impacted, with lesser engine parts and space to deal with. The reality is a little different. Reports coming out of China and USA point towards a very marginal decline in maintenance cost over for EVs as compared to IC engines due to higher accident repair rates and soft grade upgrade charges that the OEs would be charging going ahead, where the dealerships would be a part of this ecosystem.

Lastly, we are also present in the other world of automotive ecosystem involving the sale of pre-owned vehicles and nearly one-fourth of the new car buyers exchange their existing cars while buying the new car. Landmark currently offloads these vehicles at a small margin in the market. What I would like to point out is that 30% of the pre-owned cars sold in America are by the new car dealers. Now it is high time that some organized retailers like Landmark takes this position here. We have seen how the other ecosystem over pre-owned cars has crumbled over a period of time. A lot of start-ups who have come and gone. So we will want to make some forays into it.

The Indian luxury car market is poised to accelerate in contrast to other growing and developed markets. India has a lot of potential for expansion and in-line with government plans to making India a five trillion dollar economy, India as a nation enjoys a strong demographic mix and with higher disposable incomes, changing lifestyle preferences, there is an imminent shift towards luxury and premium segments. The forecast for Indian premium vehicles from foreign OEMs is incredibly bullish. The average selling price of — price of the vehicle that we sell has also been going up significantly. In the nine months ended 31/12/22 it has touched close to 17 lakh rupees before GST. I think it is a growth of over 22% over the same period last year. And this obviously is resulting into a higher margin per car including insurance and the finance for us.

In addition to the premiumization trend, there is also a strong consolidation drive in the industry, with a growing preference amongst OEMs who prefer fewer number of dealers to deal with rather and rather drive more volumes for better-performing dealers. On that front, we have been very proactive and have a strong track-record of making inorganic acquisitions and driving accelerated growth inorganically, leading to strong brand equity, greater market share and simultaneous consolidation of players in the market. Approximately 28% of all Landmark outlets have been strategic optimizations in different points in our time. I can go back in 2008, ’09 and we have acquired things in Gujarat, 2013 in Kolkata and in Mumbai Mercedes-Benz as recent as last year, so this journey continues.

There are dozens of dealers across the country who for different reasons want to exit the business, ranging from succession plan, health, financial difficulties and so on. Landmark will be closely evaluating these opportunities, focusing on prudent capital deployment and a build versus buy test. Our inorganic acquisitions thereby have definitely had a catalytic effect on our pace of growth. However, even having said that, we are cognizant of the fact that disruptions are the name of the game. And just like we disrupted the asset-heavy traditional dealerships many years back, we would like to kind of be future-ready. That is exactly what we are doing, where we have set-up a team, an internal team known as the Landmark Transformation Team, a 35 member team led by our Executive Director, and my son, Aryaman Thakker. Now these — this team constitutes to work for internal tech-focused solutions to enhance customer experience and add value to them and deliver high-quality services to the OEMs.

I take this opportunity to hand over to Mr. Surendra Agarwal, our CFO, to take it forward. I’ll come back to you with some further thoughts.

Surendra Agarwal — Chief Financial Officer

Hi, good morning, everyone and a warm welcome to one of — one and all attending our first ever earning conference call. Before getting into the numbers, I would like to throw open some operational metrics for you all to better understand the size and the scale at which we operate and I appreciate the strong moats we have built over the years. We are the highest contributors in terms of volume for multiple OEMs. And this translate into meaningful volume in terms of vehicle sales, service and spare parts sold. We serviced close to 2,80,000 cars in FY ’22 and expect this business to see a growth above 30% in FY ’23 in the current financial year. As highlighted by Sanjay bhai, this is a extremely predictable business with repeat customer and once we hit that tipping point in certain OEMs, we are of course on course to see tremendous growth.

Now coming to the Mercedes-Benz different model. One of the major development that happened in the way we operate came in the form of the shift in Mercedes-Benz business model. With their move to agency model, it is critical to understand this model and how it works, how it translate and affect the numbers and the benefit it brings to all stakeholders involved, before diving into the financial performance numbers. With effect from 1st October 2021, dealership agreement of the Landmark Cars Limited and one of the subsidiary Landmark Cars East Private Limited for sale of new car with Mercedes-Benz India Private Limited. What naturally changed and converted into an agency model, whereby all new car sales are made directly to customers by MBIL. Under the agency agreement, customer now place orders through us directly to MBIL on which we earn commission on each sale of Mercedes-Benz car.

The pro forma revenue from operation include the revenue of sales of car through agency model to enable a like-for-like comparison. And because of previous year first half we were selling through a normal dealership model and last quarter of the last year, we started this thing. So, for the comparison purpose, we put up the pro forma revenue so that we have like-for-like comparison. We are thereby reporting pro forma revenue and also reported revenue as well as for the comparison understanding purpose, till the time we need a better and fair comparison. Having established this agency model and all Mercedes-Benz booked in the direct-to-customer model, we can now get into the financial performance.

I will first start with the quarterly numbers. Our pro forma revenue for the quarter stands INR12,031 million as compared to INR9,788 million in the previous year same quarter. This symbolize a growth of 23% year-on-year. Sequentially this growth stands close to 5% as compared to previous quarter INR11,500 million we’ve done in the previous quarter.

Moving to the profitability metrics. Our gross profit for Q3 stood INR1,629 million, INR1,629 million as compared to INR1,385 million in quarter three last year. And as compared to previous quarter is INR1,530 million. EBITDA for the quarter, current quarter is, last quarter, quarter three INR734 million as compared to INR539 million in the same quarter last year and INR646 million in previous quarter. On the margin front, I’m telling this margin percentage on the pro forma revenue, so the EBITDA margin clocked in this quarter is 6.1% as compared to 5.5% in last year same quarter. Lastly, the PAT stands around INR258 million. This in the previous year is INR191 million for the same period. Now coming to the nine month performance number. Pro forma revenue for the nine months ended is INR30,824 million, which is actually the — so for the last whole year revenue and as compared to nine month period is INR23,915 million. This symbolizes a growth of more than 41%.

Moving to profitability metrics. Gross profit for the nine months is INR4,560 million as compared to INR3,369 million of the same period. EBITDA for nine months INR1,908 million as compared to INR1,316 million. On the — again on the margin front, EBITDA margin is 5.6% for this period, nine month period as against the 5.5% of the last year same period. Profit after tax for this period is INR60 crores, which is INR608 million as compared to the previous year INR471 million for the same period. With regard to the IPO proceeds and it’s utilization, I would like to inform you that is in the line with the object of the offer. The net proceeds have been used up to pay-back the working capital loans. This will result in reducing our finance cost in future. Thank you.

Yes, I’ll hand over to Sanjay bhai for his closing remarks.

Sanjay Thakker — Chairman and Executive Director

The direction for India as well as the auto industry remains extremely positive over the medium and long-term. The industry having grown at over 22% last year may post single-digit growth in the current year, that is calendar year ’23. The real-time drive emission norms coming from 1st April 2023, will have some impact on the sales volume in this quarter. This is because some of the OEs have decided to reduce some of the model offerings and the fuel types, keeping these regulations in mind. Due to the annuity type of the after-sales business, new launches by partner OEs and acquisitions that the Company will do in the coming years, Landmark will significantly outpace the auto industry in general. Recently one large investor asked me if Landmark was a rocket stock. I replied that it could be better compared with the Voyager which keeps on going on and on in the universe in unchartered territory. Thank you.

Basudeb Banerjee — ICICI Securities — Analyst

Yes, we open for the question-and-answer.

Questions and Answers:

Operator

Thank you very much. We will now begin the question-and-answer session. [Operator Instructions]

Sanjay Thakker — Chairman and Executive Director

Can you speak little louder?

Operator

Yes, sir. [Operator Instructions] Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Amarnath Bhakat from Ministry of Finance of Oman. Please go ahead.

Amarnath Bhakat — Ministry of Finance, Oman — Analyst

Yes, hi gentlemen and thank you for starting this culture of having a Investor presentation as well as the investor call. Now as you guys are the new business, just to try to understand two conceptual facts, first. So, whatever car is getting sold through you, the sales value of the original car is coming to your profit and loss account or going to the Company and you are booking only your part of the commission as your revenue?

Sanjay Thakker — Chairman and Executive Director

Yes. The thing is that for companies which are not Mercedes-Benz, as far as Mercedes-Benz is concerned, only the commission part is booked in revenue. That is the reported revenue. As for the other OEs that we represent, for example, Jeep or Honda or any other is concerned, yes, we are — we have a principal-to-principal relationship, so we buy, we add our margin and we sell. So, that is recorded in our books as revenue.

Amarnath Bhakat — Ministry of Finance, Oman — Analyst

So, in that case, you have to buy the car from your principal by paying the cash upfront and then you sell to your customer on a regular interval and collect the cash. So there, that is how the order looks for the other — other than Mercedes?

Sanjay Thakker — Chairman and Executive Director

That is broadly true. Sometimes OEs give a kind of a credit to us, but that is all depending on, we end at different points at different times. Some — in most cases right now we are paying cash and buying the stock.

Amarnath Bhakat — Ministry of Finance, Oman — Analyst

So, in that case, that is why your working capital gets stuck, right, because you have to pay upfront, but you collect from your customer or from the finance companies little later.

Sanjay Thakker — Chairman and Executive Director

That is exactly correct.

Amarnath Bhakat — Ministry of Finance, Oman — Analyst

Okay. Okay, in terms of the services part of it, but generally this type of business, the major thing comes from this annuity part. Now from your past record, how many customers or how many percentage of the customers are coming to you for, say for example, first two, three years when the car is literally new for the services, say, if you sell 100 cars of Mercedes, how many percentage of those cars are coming to you for services? Generally, Mercedes maybe the higher percentage, what about the other two like Honda or the Jeep, how much percent is coming and how much for what they are doing outside?

Sanjay Thakker — Chairman and Executive Director

Okay. Now this is a very important and interesting question that you asked. There are two, three things that I would like to point out over here. The first thing is that on a number basis, 50% of the cars that we service today are more than five-year old cars. So, — and wherever the cars are under warranty, they practically every car comes for service to us. Now the warranties range from two years to four years which the manufacturer gives. We are also focused in selling additional two to three years extended warranties. But typically — or for premium and luxury cars, one can say that cars up to maybe six years at an average would come to the dealerships regularly. And then the numbers keep on going down.

Amarnath Bhakat — Ministry of Finance, Oman — Analyst

Okay, so the less premium cars, for example, Honda and the BYD and all, they the percentage of coming to you after the warranty period finish are literally low?

Sanjay Thakker — Chairman and Executive Director

I would not say that for Honda or BYD, BYD obviously is early days, but with the higher kind of electronics that the car has, the trained staff that is required and the genuine spare parts that are needed, I believe that the authorized dealerships remain to be the preferred place where most people come for their servicing. Also to point out to your question, 40% of our revenue comes from accident repairs. Now this accident repair is paid for by the insurance companies and the insurance is sold by the dealerships. So, this is a good circle that, inner circle that is getting created and I do not see much of an impact and we have seen what has happened to some aggregator of local garages and all and I don’t want to kind of name the people, but we all know what has happened to that kind of an endeavor.

Amarnath Bhakat — Ministry of Finance, Oman — Analyst

Okay. One more clarification, do you service the other brand vehicles at your service centers or the vehicle sold by the other dealer to your service center, that kind of cross-sell within is also possible?

Sanjay Thakker — Chairman and Executive Director

Yes. So, just to — and this is again a good point that you brought up, it allows me to tell you something which I should have may be covered in my opening speech. The thing is that with 90% of the outlets that we have, there is no other dealer of the same brand. Now this is something that we have consciously done and created those local level kind of exclusivities for ourselves. So, that business is kind of taken care off. But theoretically speaking, what you are saying, the cars sold by other dealers who are of the same brand, come to us for servicing. But no, we do not service the other brand cars in our workshops. We only do it for the brands that we represent.

Amarnath Bhakat — Ministry of Finance, Oman — Analyst

Okay. If I just one more, generally, other international dealers which we have seen, that is at the time of selling the car, they do sell these packages as well. Not only the service packages which comes with free with some of the — some of the car companies and plus they do the service package in order to maintain the loyalty and just to maintain this customer comes to them, maybe at some discounted price, they sell two, three years service package at the beginning itself. Is this something you guys also follow?

Sanjay Thakker — Chairman and Executive Director

Absolutely, sir, you are bang on. And this is exactly what we do. I mean, just to give you an example of a brand that we represent in Ahmedabad, I’m giving you a small example. I believe 40% of the cars which are on the street for that brand are on an annual maintenance package that where we get the money upfront and the customers avail of the services going ahead. We also sell extended warranties. And we also sell high-value Landmark own white-labeled accessories, which is a first-of-its-kind in the industry and this is what keeps on adding to the cash register, every day.

Amarnath Bhakat — Ministry of Finance, Oman — Analyst

Okay. In respect to the spare parts, sir, especially the premium car. [Speech Overlap] This could be the last one, ma’am.

Operator

Okay, sure. Please go ahead.

Amarnath Bhakat — Ministry of Finance, Oman — Analyst

This could be the last one. Just in respect of the spare part, especially the premium cars, I’m sure you might be having some agreement with your principal toolkit, the spare part on-time all, how the supply chain work there and while you — when you’re selling the spare part, the margin on that spare part you determine or it is the principal determines?

Sanjay Thakker — Chairman and Executive Director

Are the spare parts are in our case, bought from the OEs, whether it is Mercedes-Benz, Honda, Volkswagen, etc. The — there is a very good supply chain which is there. Many of the OEs have a daily ordering system. So we do keep some fast-moving parts and regularly required parts in stock, but the supply chain is something sorted, except for what we saw last year we had some disruptions and the margins are between 15% to 30% which is determined, just I think our margin by the OEs and us, where we discuss and it is decided. But OEs have a bigger role to play in deciding the margin here.

Amarnath Bhakat — Ministry of Finance, Oman — Analyst

Thank you very much. I will come back to the queue for next question. Thank you.

Operator

Thank you. The next question is from the line of Ashish from Edelweiss. Please.

Ashish Agarwal — Edelweiss Securities — Analyst

Hello, sir. Thanks for the opportunity. Congrats on good set of numbers. So, my question is regarding BYD dealership. So, BYD has indicated that they want to open 53 outlets across 21 cities and they want to sell 15,000 vehicles in 2023. But as of now, we have two outlets and we have a up to 25% market share. So, going forward, we will open BYD showrooms more initially to maintain like 15% to 20% market share or BYD want to have a dealership in a smaller market share like 4% to 5% market share? So, what is the [Indecipherable] in that sense? And is the talk similar with other OEMs also or the margin is lower or higher than the other dealership that you are doing?

Sanjay Thakker — Chairman and Executive Director

Yes, sure. So, BYD is early days right now. So, I right away pointed out that the market share that we are having is aberration and it will go down for sure. Now we are representing BYD in the large markets of Delhi and Bombay. Now, when you talk about electric vehicles, you also need to understand that which state government gives kind of a subsidy for the sale of these vehicles. Now for example, the Maharashtra government, there is very little registration charges for electric vehicles. That is the subsidy that they have given. So, the sale of electric cars as compared to say a state like Gujarat where there is no subsidy is disproportionately higher for electric cars. Now Landmark is a — I want to believe that is kind of a thoughtful organization and what I call horses for courses is what we do. So, we have signed-up with two large markets, though Gujarat happens to be our headquarters and all, we have not partnered with BYD in Gujarat. And we have taken, Delhi and Bombay as the market. The number of outlets that Landmark will have hopefully will also increase as the volume increases. But if you were to take Delhi and Bombay, this — the number that you kind of mentioned where we would finally end-up with, it will be a high-double digit number. I don’t know at what point. One will have to see how things shape out over this.

Ashish Agarwal — Edelweiss Securities — Analyst

Okay. Thanks. Sir, I have one more question. What will — what is your view regarding servicing revenues from EVs? So, do we expect this number to go down substantially once the EVs start coming in?

Sanjay Thakker — Chairman and Executive Director

Can you please repeat it a little louder, please?

Ashish Agarwal — Edelweiss Securities — Analyst

Yes. So, what is your view regarding servicing revenue from EV, for electric vehicles?

Sanjay Thakker — Chairman and Executive Director

On the service revenue you are saying?

Ashish Agarwal — Edelweiss Securities — Analyst

Right, right. Servicing revenue from electric cars.

Sanjay Thakker — Chairman and Executive Director

The services revenue? Yes. So, the research is talking about around 85% revenue which will remain intact for if you were to service a electric car and this I am relying on the Goldman Sachs report which has come in from China, about the dealerships that have been doing business with EVs and also the Forbes report of now coming out from USA about the accident repair cost for EVs. These are early days, so above and today I read in the newspaper that Nissan-Renault believes that 13% of all cars sold in India by the year 2030 will be EVs. Now, really nobody knows, we are currently at 0.5%, but by any stretch of imagination even in the year 2030, we will be selling more ICE cars than we are selling today. So, really it’s a good discussion to have, but not so much data to support any of these answers.

Ashish Agarwal — Edelweiss Securities — Analyst

Okay. And sir, one more thing, a data viewpoint, what is the sales volume for car servicing and new car sales for third quarter and second quarter?

Sanjay Thakker — Chairman and Executive Director

The number of cars sold and serviced in the third quarter?

Ashish Agarwal — Edelweiss Securities — Analyst

Yes, and in the second quarter also?

Sanjay Thakker — Chairman and Executive Director

[Speech Overlap] So, the nine month is given in the — first three months were given. We will maybe — Surendra?

Surendra Agarwal — Chief Financial Officer

Yes. So, the nine month numbers I have right now is available and I’ll give you the quarter also. The nine month period, we have sold 16,406 cars versus 14,078 in last year same period and we have serviced 2,42,000 vehicle as compared to 2,12,000 vehicle in the previous year.

Ashish Agarwal — Edelweiss Securities — Analyst

Right sir. And for quarter, because we were available in presentation.

Surendra Agarwal — Chief Financial Officer

Yes, we’ll give you.

Sanjay Thakker — Chairman and Executive Director

And while we are talking about the number of cars serviced, I would like to point out that we are just as our average selling price of the car has gone up by around 22%, the service revenue that we are getting for their car service has also gone up by around 13%. So, there are two things that one needs to kind of track, the number of cars serviced and the money generated from each of this service.

Ashish Agarwal — Edelweiss Securities — Analyst

Okay. Sure. Sir, in the meantime, if you can discuss your study for Renault, would you want to close more showrooms or you are fine with like 40 showrooms? Now the closure is done.

Sanjay Thakker — Chairman and Executive Director

We are broadly done with what we had to do and this is something that we have taken with a lot of deliberation. So, I mean, just to give you a perspective, Renault went into the small car segment, which is the Kwid and the Triber, etc. And this is something which was good for that market when we entered in the year 2017. Now what we have seen is that there is a shift from the small car to the premium or something which is costing anywhere 10 lakhs-plus. Now the Renault products will come in as per the newspaper reports today by the year 2025, they’re rebooting. Every OE that we are representing is investing in India big time. But the products that will be coming in, will be not suitable for the markets that we are operational in. So, we have taken a conscious decision rather than trying to have a kind of a egoistic approach by writing-down the investment and taking a onetime hit. So, whatever we do, we are doing it with a very in passionate eye, whatever works we go for it, we make mistakes, we try to correct them and move on in life. The vehicle sales…

Surendra Agarwal — Chief Financial Officer

Yes. So, coming to the vehicle sales quarter, the current quarter we have sold close to 5,650 vehicle and the previous quarter is 5,400 vehicle.

Sanjay Thakker — Chairman and Executive Director

Now again, one will have to keep in mind that the number of vehicles sold is also impacted because of the closure of the Renault outlet, where the number of vehicles sold with a lesser ticket size would have been higher, but this is something one will have to keep in mind.

Ashish Agarwal — Edelweiss Securities — Analyst

Yes. And number of car service also?

Surendra Agarwal — Chief Financial Officer

So, car services is close to around 85,000 in the current last quarter, quarter three and close to 82,000 vehicle in the quarter two.

Ashish Agarwal — Edelweiss Securities — Analyst

Okay. Thank you, sir.

Operator

The next question is from the line of Riken Gopani from Capri Global. Please go ahead.

Riken Gopani — Capri Global Advisory Services — Analyst

Hi, sir. Thank you so much for the opportunity. Sir, firstly, I would like to understand a little bit of data on the vehicles serviced today, if you could give a broad breakup of the nine month vehicles that you’ve serviced, in terms of brand-wise what would be the breakup?

Sanjay Thakker — Chairman and Executive Director

We are not doing that for reasons of our competitive nature and people what will look at it. So, we are not giving you a brand-wise breakup my friend, if you don’t mind.

Riken Gopani — Capri Global Advisory Services — Analyst

Okay, okay. Can you give some understanding in terms of the aging of whatever vehicles you are servicing today, what’s the rough aging of that in terms of vehicles which are more than three years old or five years old?

Sanjay Thakker — Chairman and Executive Director

Sure. As I said in the previous question was that, 50% of the vehicles that we are servicing today are within the first five years and 50% are after five years aging. Now as you go like a 7, 8-year product, that becomes much lesser.

Riken Gopani — Capri Global Advisory Services — Analyst

Understood. Understood. And if you could throw some light, I mean, if I look at your sales data as well over the last 5, 7 years, your — the number of vehicles serviced is growing at a faster pace compared to the number of vehicles sold. If you could help understand what are the drivers for this?

Sanjay Thakker — Chairman and Executive Director

So, what has happened is that we have also done acquisitions, strategic acquisitions in the markets that we have been operational, whether it is Mercedes-Benz Mumbai or a Volkswagen and the Honda in South Gujarat, just to give you two examples. So, the cars which were otherwise getting serviced by that other dealer are now getting serviced by Landmark. This is a high-margin business and that is what we have been focusing on. And let me also tell you something else, earlier when we were — when we filed our DRHP and we were discussing numbers, 20% of what we — of our turnover was service turnover and 50% of the EBITDA was service. I’m actually happy that this number of service revenue to the overall revenue has dropped to 16% this year. Now one may wonder why, the thing is that the more cars that we put on the road today and more expensive cars that we put on the cars today will give us an kind of an annuity for maybe the next seven years. So, this is actually the car sales becoming a little higher is always good.

Riken Gopani — Capri Global Advisory Services — Analyst

Understood. Understood. And while you did explain that this increase in the per sale — per vehicle service income could be because of the kind of vehicles that you’re selling now, rather or lesser sales of let’s say the lower priced vehicles. Are there any other factors which will drive the, you know the service income per vehicle going forward?

Sanjay Thakker — Chairman and Executive Director

Yes. Clearly. Clearly. So, the point is that we are offering things that we were not offering earlier and I’ll — I gave you the examples in my speech of two of the leading Car Care products that we have kind of signed-up for India, Permagard and MotorOne. So, these are like cream coatings, interior treatments and so on and so forth, which are high value, high margin products. So, we are offering it through all our workshops. These are early days and I’m pretty confident that this number will keep on increasing every quarter that I’ll be talking to you.

Riken Gopani — Capri Global Advisory Services — Analyst

Understood, sir. Just one last question on the acquisition. So, you did mentioned that 28% of the outlets through the mode of acquisition, if you could give some direction in terms of the potential here in across your brands and you know, what are the drivers which are causing kind of consolidation? And what kind of sort of capital do you think you would require to be able to do that?

Sanjay Thakker — Chairman and Executive Director

Yes. So, this is really a very interesting question and we have at the Board level also discussed it yesterday, because it is very easy to get carried away and deploying capital in the crest of growth. Now the growth at our end as you will see is 40%, 50% is what we have been doing organically, and I’m hoping that we will continue to do a meaningful growth in the coming years ourselves without acquisitions. Now, acquisitions will — and there are opportunities are so many. And I’ll tell you why.

The thing is that the Indian auto landscape, there are not too many buyers in the space and people who want to exit for succession reasons, people who have financial difficulties, people who have health issues, who have other businesses to look at and the sense is that world over, the larger players are getting larger, whether it is in America or any other Western World, where OEs prefer to deal with lesser number of dealer partners than more, it is counter-intuitive for India for the Indian OEs, but the global OEs have really understood this and are implementing this policy. So, the way we will be doing it is the payback period. We will look at possibly around four years or thereabouts as the max payout time for what we invest in. So our ROCE is not impacted. Otherwise, it would be very easy to deploy capital and acquire this or that, we have learnt our lesson from some acquisitions that we did earlier and that’s why we will keep that in mind, we will do strategically in the towns that we want to go to, the brands that we want to kind of be with and do it in a very, very thoughtful way. But as I said, at our end, we are not lacking in aggression, our logo is the Lion, so I don’t think you will see that happening.

Riken Gopani — Capri Global Advisory Services — Analyst

Just in terms of opportunity, I mean, based on your assessment, let’s say over the next three years, what kind of number of outlets you think is there, which you can sort of acquire in the brands that you are present in?

Sanjay Thakker — Chairman and Executive Director

It is not only in the brands that we are present in, it is also in the brands that we are not present in. So, it will — it’s difficult to give a number, but what I can say and with a very strong amount of conviction sitting here today is that the — that Landmark will keep on outpacing the auto industry by a distance every year, and this is because of the after-sales revenue. It is also because of the growth in the OEs that we are representing will be far, far higher than the industry growth and the acquisitions that we will do. I would be low to give any 3-year outlet number, because outlets really won’t be much. We are a profit-focused organization. And that’s what we will be focusing on.

Riken Gopani — Capri Global Advisory Services — Analyst

Got it, sir. Thank you so much for the answers and all the best. Thank you.

Sanjay Thakker — Chairman and Executive Director

Thanks.

Operator

Thank you. The next question is from the line of Pallavi Deshpande from Sameeksha Capital. Please go ahead.

Pallavi Deshpande — Sameeksha Capital — Analyst

Yes, certainly. Thank you for taking my question. Just wanted to understand, like you said, your three-year outlook would be difficult on revenue side, but, given this BYD has just come in, [Technical Issues] be possible to share the 4Q and FY ’24 outlook on the revenue side?

Sanjay Thakker — Chairman and Executive Director

Would you like — can you please repeat the question? I couldn’t hear well.

Pallavi Deshpande — Sameeksha Capital — Analyst

Okay. Would it be — I mean I understand 3-year outlook is difficult. And I understand you’ll be outpacing revenue growth for the industry, but what would be the outlook for 4Q given — revenue growth outlook, given you’ve just got BYD etc., so any numbers you can share on the 4Q revenue outlook and for FY ’24?

Sanjay Thakker — Chairman and Executive Director

So, the financial year ’24, let’s answer this first. Now the financial year ’24 and I’m talking about things which are now more or less in public domain, will be led for Landmark by the new car launches apart from what we are doing. I’ll give you the example of the Honda, where they have announced the launch of a SUV which we have all been waiting for. Now, it will depend on exactly which month it is getting launched. They said that it will be in the summer of ’24 — ’23. So, now whether that summer is June or August is a difficult question, and I would like to also for all the participants on this call say that we are — because we are dependent on OEs for the supplies and their launches, exactly giving you a quarterly guidance will be very, very kind of it will be a minefield, because it will be dependent on a lot of supply situations and new car launches which are happening. And for me to kind of foresee and tell you that it will be in July and not September, is going to be a little challenging.

So, my the request and suggestion to the people over here would be to look at this as a — as a medium long-term play and just to kind of at the cost of being repetitive, I’m saying it is like a Voyager and not a rocket. So, we may be having a rocket kind of an effect in one quarter, but which may get tampered in the next quarter, but then again we will have that. So, the trajectory is up. Quarterly is a little difficult to kind of guide for — and again for this quarter, I have said that it is also because of the real time drive emission. And some of the OEs have discontinued some of the models before time. So, the volume that we may have available to sell may also get a little muted. It is a evolving story and this is something which will be a little difficult to tell exactly.

Pallavi Deshpande — Sameeksha Capital — Analyst

Sir, secondly on the EBITDA margins for the after-sale, we’ve seen a nice sharp jump in the nine month EBITDA margins for after-sales to 21% now, what would be the sustainable EBITDA margins for this business?

Sanjay Thakker — Chairman and Executive Director

The EBITDA margin, madam, for after-sales business has been in this region for last nine years. So, this is a business which I’m saying that this is something I can predict. The car sales and which month it will happen, I’m unfortunately not able to guide for. The after-sales business is something which I can say that it is going to grow, it has grown last nine years at 20% CAGR. And I see no reason why it should be any different going ahead, it can increase also.

Pallavi Deshpande — Sameeksha Capital — Analyst

Right. Yes. So, on the margin side for [Speech Overlap]

Sanjay Thakker — Chairman and Executive Director

Margin side also, we are at over 40% gross margin on every year and I see that being sustaining or improving going ahead. Adarsh, are we working on single shift there right now and can that go to double-digit? Yes. That is an important question. So, yes, we have a lot of capacity that we can work on in most of the locations. We are working, if not a single shift, at an extended single shift, which may mean 10 hours of operations. But yes, we have a possibility of working over there for much longer.

Pallavi Deshpande — Sameeksha Capital — Analyst

Right, sir. And my last question would be on the inventory and receivables, if you could share that absolute amount for the nine month?

Sanjay Thakker — Chairman and Executive Director

So, the good part is that we have been able to bring down our inventory. We started the year with our debt at — I’m talking about the interest-bearing debt at the end — the beginning of the — for the second quarter, around 36 — on 30th June, I believe we had around INR400 crores of interest-bearing debt, which as on 31st of December gone down to around INR220 crores. Now this is our — from some of it is because of the IPO proceeds and some of it because we have reduced the inventory and some out of the profits and cash that we have generated in this period.

Pallavi Deshpande — Sameeksha Capital — Analyst

Right, sir. And sir, just last question would be on the vehicle floor plan loans, that part — we are part of this number or excluding?

Sanjay Thakker — Chairman and Executive Director

Yes. So, vehicle floor plan, where there is an interest-free period, is not part of this, that will have to be added. So, the vehicle floor plan has two components of it, which is one is interest-free and the other is interest-bearing.

Surendra Agarwal — Chief Financial Officer

I’ll explain you, the vehicle floor, so the OE which we work. So, some of the OE give — have their captive finance, which is the NBFC. So, Mercedes-Benz is having their own NBFC, which is Mercedes-Benz India Private Limited. So that particular debt we are showing in the vehicle floor plans. Now out of the vehicle floor plan which is there in the December, roughly around INR50 crore is the interest-free and rest is the interest-bearing. So it is mainly on the test drive car. Test drive car they give the credit in the range of three to four months or six months, some of that car. So, that is the interest-free debt and that balance is the interest-bearing. So, vehicle floor plan is primarily the fund loan given by the NBFC of the OE.

Pallavi Deshpande — Sameeksha Capital — Analyst

The test drive car.

Surendra Agarwal — Chief Financial Officer

Yes.

Pallavi Deshpande — Sameeksha Capital — Analyst

And so that will just continue right, because you have the test drive car continuous…

Surendra Agarwal — Chief Financial Officer

Yes.

Pallavi Deshpande — Sameeksha Capital — Analyst

And just on the Kia part of it, would that be coming — do they come in next year?

Sanjay Thakker — Chairman and Executive Director

I’m hoping that it does. Let’s see.

Pallavi Deshpande — Sameeksha Capital — Analyst

All right. Okay. Right. That’s all from my side. Thank you so much, sir.

Operator

Thank you. The next question is from the line of Yash Bajaj from Lucky Investment Managers. Please go ahead.

Yash Bajaj — Lucky Investment Managers — Analyst

Hello?

Sanjay Thakker — Chairman and Executive Director

Yes, sir.

Yash Bajaj — Lucky Investment Managers — Analyst

Yes. Hi, sir. Thank you for giving me this opportunity. Sir, I have two questions. First one [Speech Overlap]

Sanjay Thakker — Chairman and Executive Director

Can you speak up a bit my friend, maybe my phone has a problem.

Yash Bajaj — Lucky Investment Managers — Analyst

Sir, can you hear me now?

Sanjay Thakker — Chairman and Executive Director

A little louder, please, if you don’t mind.

Yash Bajaj — Lucky Investment Managers — Analyst

Better right now?

Sanjay Thakker — Chairman and Executive Director

Yes, yes.

Yash Bajaj — Lucky Investment Managers — Analyst

So, sir, first question is regarding the BYD initial responses from the customer, how has that been? And what kind of growth — volume growth do we expect from BYD for FY ’24? That is my first question.

Sanjay Thakker — Chairman and Executive Director

Okay. So, the initial response — so what are we talking about, there are two models that we are talking about, the E6 and the Atto 3. BYD has launched, there are two products, Atto 3 being the most recent one, where we started deliveries in January, which is in this quarter that the deliveries have started. So, the response has been very good in Delhi and Bombay, where we are kind of operating. The volumes are what they are, because under the non-homologated route, there is a restriction on the number of vehicles that can be gotten into India and whatever we are getting, we are able to sell-out immediately with the back orders that we have the — for the next financial year, so I don’t see anything the challenges this quarter for BYD at all. The question is that how is the ramp-up going to happen and how the brand is being kind of perceived. During Auto Expo, I think whoever visited Auto Expo was able to see the fantastic BYD cars including the new Seal, which are the kind of announced for introduction in the festive season. Now one will have to see how the brand is built, how the supply chain happens, they have guided for a much larger volume and let’s see how things pan out.

Yash Bajaj — Lucky Investment Managers — Analyst

Okay, sir. And second question is a bookkeeping question. Sir, so you mentioned about the debt which you reduced by repaying from the IPO proceeds, but if I just compare on a Y-o-Y basis, the depreciation and interest has gone up. I understand that there is an IndAS 116 impact. So can you just help us with the depreciation and finance cost bit?

Sanjay Thakker — Chairman and Executive Director

Yes, correct. So, the IPO proceeds actually came to us only in the last week of December. So, the debt has gone up, but the — we have kind of utilized a much higher amount for that period till 31st. We I think paid it off just two, three days before, that’s where we got the money. The interest rates have also — have also increased in this period that we are talking about. I am first talking about the interest part and the third thing is that our sales has gone up. So, a lot of new models, then for Jeep and all have been introduced.

So, we need to keep two things, one is the demographic and the second is the new car inventory. So, the need for working capital obviously went up during this much time. And as far as depreciation is concerned, it is also because of the acquisitions that we have made in the previous year and this is something which is, yes, a higher figure, but we are in a way following a prudent accounting practice of depreciating the assets in a very kind of a final thing. We could, rather than doing it over 10 years, we are doing it over this period. Now we’re doing it as per what is prescribed by our auditors, and all. So, that is, yes, the depreciation is higher than what we have seen before.

Yash Bajaj — Lucky Investment Managers — Analyst

Okay. So [Speech Overlap]

Sanjay Thakker — Chairman and Executive Director

But my personal opinion is that the life of those assets is much beyond the depreciated thing. So, we will see the benefits going ahead.

Yash Bajaj — Lucky Investment Managers — Analyst

So, just to understand, the depreciation has gone up because of the acquisitions which we have made and the finance cost has gone up because of higher working capital and higher interest rates this quarter, right?

Sanjay Thakker — Chairman and Executive Director

Yeah.

Yash Bajaj — Lucky Investment Managers — Analyst

Okay. Okay, sir. And just, I mean, how much would be the short-term borrowing this quarter ended or the working capital…

Sanjay Thakker — Chairman and Executive Director

Everything that we do — we have a very little or no a long-term borrowing, my friend. So everything is backed by inventory.

Yash Bajaj — Lucky Investment Managers — Analyst

Okay.

Sanjay Thakker — Chairman and Executive Director

So whether it is spare parts or it is new car sales, we do not have any meaningful long-term debt and EBIT.

Yash Bajaj — Lucky Investment Managers — Analyst

Okay. Sure. Okay. Thank you so much sir. Thank you.

Operator

Thank you. The next question is from the line of Anand Trivedi from Nepean Capital. Please go ahead.

Anand Trivedi — Nepean Capital — Analyst

Yeah. Hi sir. Can you hear me?

Operator

Sorry to interrupt Trivedi, we’re unable to hear you.

Anand Trivedi — Nepean Capital — Analyst

Hello?

Operator

Sir, you’re echoing. We’re unable to hear you clearly. Can you please check?

Anand Trivedi — Nepean Capital — Analyst

Hello, can you hear me now?

Sanjay Thakker — Chairman and Executive Director

Yeah.

Anand Trivedi — Nepean Capital — Analyst

Sorry about that. The question I had is on pre-owned passenger vehicles, how much of an opportunity is that in the future? And are you looking at an opportunity from your existing outlets? So you’re creating a separate network for that?

Sanjay Thakker — Chairman and Executive Director

Yeah. Thanks for asking this, our point is that in the last three, four years, we have seen a situation in the ecosystem, where people were burning money. Now that is not what we do. I mean, that’s not what we do at all. So we have kept it kept on the sidelines, while this game was being played. We have seen the exit of a lot of money burning businesses and now we have a meaningful business opportunity here. What we want to do and what we believe is that, we will be selling the same branded cars, from the same showrooms. There will be no new outlets, very little addition to manpower if at all, we will be banking on technology. We have invested in a company known as Sheerdrive for this very reason, where the car evaluation happen seamlessly, Aryaman worked in — my son worked in AutoNation, some years back. What they were using was what was called the equity tool where the cars were evaluated, while they were in service and bought in. So this is a big opportunity, but it is unchartered territory. So we will be slowly getting into it without burning any money, it can become big. I only hope that we don’t have any other money burner coming and disrupting this again.

Anand Trivedi — Nepean Capital — Analyst

Thanks. My second question was on EV adoption. What we’ve been hearing is that, one of the impediments to EV adoption, although it’s been fairly rapid in India, is the lack of models and lack of colors, etc., and choices for customers? Do you share that view and I all how aggressively you all going to be across out sort of BYD across your brands in introducing EV models?

Sanjay Thakker — Chairman and Executive Director

So, every company has its own ascent because this is such a big macro question, everybody seems to be having a view on this. I spoke about, Nissan-Renault, saying that 13% [Phonetic] of what they will of the Indian market in 2030 is going to be EV. If you ask the same question to say, BYD guys, they may say that this will become 25% or 30%. If you add these two Volkswagen, they will have a different answer.

Now, there is a wide range that you have really anywhere between 10% to 30% by 2030. Now Maruti is the biggest player is only going to be making their EV cars after ’25 or ’26. And your first point, whether customers have a choice or not, is a very valid question, because today there is not much choice, apart from the other issues that we have. The main thing is, that there is no choice to customers. So this market will become meaningful, Mercedes-Benz, for example, it has gone to press, saying that by 2027, 25% of what they sell in India will be EVs. So each of the OEs whether it is Volkswagen, who will — who has also kind of said that in the press release only, I think yesterday, that they will be looking at EVs after ’25 — 2025. Now, so this is all our partners. In fact, whether it is Renault-Nissan, whether it is Volkswagen, BYD, obviously, Mercedes-Benz are all large global players. And I think we are in safe hands as and when the adaptation happens, we will be better off than the others.

Anand Trivedi — Nepean Capital — Analyst

And just a follow-up question, as these various companies launch their own EVs, will the charging stations be interoperable or will they have separate technologies for each?

Sanjay Thakker — Chairman and Executive Director

Aryaman?

Unidentified Speaker —

Yeah. This is [Indecipherable] here. I think currently what we are saying is that, the OEMs are also setting up their own network of charging stations via partnerships, mainly initially at the new car dealerships. But I think it is yet to be played out, but I think as the time goes by, there may be some level of interoperability that may come in and maybe some OEMs will have a charging technologies which can be shared at a cost.

Anand Trivedi — Nepean Capital — Analyst

Right. So right now if I have an MG car which is electric at my at my garage and I am charging it and if I sell that and buy say Honda will that same station be used in the Honda as well or do I have to get an entire new infrastructure?

Unidentified Speaker —

Yes, that is likely because if you go — see maybe the public charging infrastructure I think it supports multiple models currently, so I do not see why that should not continue.

Sanjay Thakker — Chairman and Executive Director

Yeah. Yeah. I think it should be happening, the industry will standardize in that.

Anand Trivedi — Nepean Capital — Analyst

Okay. Thanks so much.

Operator

The next question is from the line of Dhaval Shah from Girik Capital. Please go ahead.

Dhaval Shah — Girik Capital — Analyst

Yeah. Hi, team.

Sanjay Thakker — Chairman and Executive Director

Hello.

Dhaval Shah — Girik Capital — Analyst

Yeah. Hi. Okay. So great numbers to start with. So my question first is on the OEMs we work with. So Jeep we have a very huge market share in India. So if you can share your outlook about the models and what do you think — how would Jeep do over next — over next one year in India, with the visibility of new model launches what you have — keeping in mind their launches or the competition is also doing? That is my first question.

Sanjay Thakker — Chairman and Executive Director

Okay. Now Jeep is synonymous based SUVs. And the number of people wanting to buy SUVs is increasing by the day and this number has what reached 45% in India and growing. So the Jeep launched, the Meridian last year, the Grand Cherokee — the locally assembled Grand Cherokee was only launched about two months back, so we will have the full year of Meridian and again Meridian was also launched middle of last year so we will have the full year of Meridian as well as the Grand Cherokee, Wrangler and the Compass of course. So the numbers would be I’m sure better than what we have done in the last year. There is some kind of real time drive emission things which will take one of the engine — the other engine out for a bit, so [Indecipherable] except that, we think it is a fair play, it will outperform the industry. No new launches are expected in this current year.

Dhaval Shah — Girik Capital — Analyst

Okay. Okay. So fairly on the FY’23 base which could be roughly say around 14,000 to 15,000 cars, do you see around 10% kind of growth next year?

Sanjay Thakker — Chairman and Executive Director

Yeah. I think that is a fair thing to say. I don’t see it kind of exploding, neither do it see it tanking but in our case of Jeep there is a meaningful thing which is about to happen and that is the after sales business. So what has happened is that, we have — just to understand how the business works you need cars to service. Now when we started Jeep in 2017 and 2018 there was zero cars on road, so the infrastructure in Delhi, Bombay and now in Punjab that we put in, the workshops were not getting filled up and we didn’t have adequate number of vehicles. Now that tipping point has reached and this is where the after sales business will start contributing. For all other brands for us, after sales business is a very meaningful contributor but no so in Jeep so far. So I’m hoping that thing will change in the next year. Sales numbers — the lot of factors come into play but after sales is something which will start ticking for us in Jeep next year.

Dhaval Shah — Girik Capital — Analyst

Got it. Got it. You were mentioning to the other participant about this BS6 too which is going to be live from 1st April. And you mentioned certain cars will go for across the OEMs. So for us across our OEM partners which all cars will be out and what sort of volume impact do you see and some brief on that?

Sanjay Thakker — Chairman and Executive Director

So what is been announced is what I can tell you, what has not been announced, I’ll kind of refrain from saying even though I’m aware of some of the facts. What has happened is that in case of Honda, they’ve discontinued the Jazz and the WRV and all the diesel engines have been discontinued from I think, November or December of last year, which is two months back. So we don’t have these models to sell now to be sure, otherwise, we were having. And in a similar way, there will be some delay in the petrol engines of Jeep, so that will happen for the real-time drive emission though only the Compass comes in that.

Dhaval Shah — Girik Capital — Analyst

Okay, so Jeep Compass petrol engine will be out?

Sanjay Thakker — Chairman and Executive Director

Will be difficult for them to introduce on 1st April, it will happen later on but not immediately.

Dhaval Shah — Girik Capital — Analyst

Okay, okay. Okay, fine. Yes. And the other OEMs?

Sanjay Thakker — Chairman and Executive Director

The other OEMs are I think, there is no meaningful thing that I can see happening, there is BYD, it doesn’t matter. Mercedes-Benz is I think doing what they have to do and getting their things. Volkswagen is also transiting these cars out. The good part about this regulation at least now is that it is the year of — it’s the manufacturing that has to stop by 31st of March. Earlier we had a problem that the cars had to be — when we transitioned from BS4 to BS6, it was the registration of vehicles in a COVID year which played havoc with the industry. Right now, the clarification which has come is that, it is the manufacturing, so we are not currently looking at any desperate sales, the cars can get registered over a period of time even after 31st of March and it may make sense for us to buyout some cars which are getting discontinued, we will kind of buy them and sell them gradually in the first-quarter of next year.

Dhaval Shah — Girik Capital — Analyst

Right. So not major impact as such?

Sanjay Thakker — Chairman and Executive Director

There will be no kind of a discount distress is what I expect. But the discontinuation will — wherever there is — in some other brands, I don’t want to name them on this call. They will also see that kind of an impact where the volumes from April will — for some time, they will not have those kind of model.

Dhaval Shah — Girik Capital — Analyst

Correct. Now with regards to Honda, for us to grow, like for example, how much — what sales are you expecting for Honda in the current year, overall? [Speech Overlap]

Sanjay Thakker — Chairman and Executive Director

So see Honda has been a very steady kind of a performer and it’s been really profitable and meaningful for us, and we — and again to kind of use the same phrase, Horses for Courses. So Gujarat is a great market for Honda. And just to kind of give you a statistic, close to 12% of all Honda sold in India are in Gujarat. Now this is much higher than most of the other OEs for example, for Toyota, Gujarat is possibly around 6% of all-India sales happens in Gujarat. So we, I believe we’re doing a pretty good job in holding Honda flag in Gujarat.

So the — with the SUV coming in, the Honda City, where there is a facelift coming in next month and the Amaze. So we will have three volume products. Now depending on when the SUV will get launched, which it is difficult to kind of say. I told the other participant also whether they said summer. Now summer whether it is a summer in Western India or summer in Northern India, I don’t know. So it will be around that period, so Honda does, I think, safely around, when all the vehicles will be there, I believe they will lock a volume of around 11,000, 12,000 units a month easily. That’s my sense. It will depend on the 3rd car getting launched.

Dhaval Shah — Girik Capital — Analyst

Yeah, and sorry, again, on Jeep. So this Toyota’s new model, you see them giving a tough competition there and impacting the volumes? How do you see?

Sanjay Thakker — Chairman and Executive Director

See, we are — Jeep is a niche product. So there are die-hard fans. There are people who want to live that lifestyle. You will see a lot of marketing efforts starting with Jeep which has already begun this week. I don’t know where, which part of the country you are in Mumbai. I can see a lot of hoardings that have come up, the TVC started yesterday. So Jeep will invest a lot of more money in marketing. And see what are we talking about? 1,000 cars a month is a drop-in the ocean. So really, I don’t see much impact there.

Dhaval Shah — Girik Capital — Analyst

Got it, got it. And the — some write-offs, which we have taken, so are we now [Speech Overlap]

Sanjay Thakker — Chairman and Executive Director

Sorry, there is somebody else speaking. Hello?

Dhaval Shah — Girik Capital — Analyst

Hello?

Sanjay Thakker — Chairman and Executive Director

Hello, is there a cross connection?

Operator

No sir, it was from the line of NJ [Phonetic], I have muted that line. Please go ahead.

Dhaval Shah — Girik Capital — Analyst

Okay. Yeah, so my question was the — are we done with all the write-offs or anything is left to be done now?

Sanjay Thakker — Chairman and Executive Director

So I think, most of it is done. I don’t think, any meaningful things will come anytime soon. We have done what we had to do as far as and we are not kind of try to be shy about it. We are not try to kind of opportunate over a period of time. We have taken a onetime hit and got it over with. I don’t see any meaningful number.

Dhaval Shah — Girik Capital — Analyst

Okay. Okay, great, sir. Great, thank you very much to all.

Sanjay Thakker — Chairman and Executive Director

You’re talking about the outlet, yeah. Okay.

Operator

Thank you. The next question is from the line of Amarnath from Ministry of Finance of Oman, please go ahead.

Amarnath Bhakat — Ministry of Finance, Oman — Analyst

Yeah, hi, thanks for the follow up opportunity. I just want to know, this business model of Mercedes, which is an kind of an agency model that you would just take your commission and you don’t need to take care of buying the car and–

Sanjay Thakker — Chairman and Executive Director

Can you speak up a bit, sir. Maybe my phone has a problem, but I’m not able to understand well.

Amarnath Bhakat — Ministry of Finance, Oman — Analyst

Yeah, can you hear me now?

Sanjay Thakker — Chairman and Executive Director

Yeah, better.

Amarnath Bhakat — Ministry of Finance, Oman — Analyst

Okay, so I was just trying to understand, the model which you follow for Mercedes has been just based on the commission. Is this the model can be followed for other agencies, instead of buying and selling? Is there an opportunity or for the new agencies, what you are trying to get like Kia, will it be same like Mercedes model or the other models?

Sanjay Thakker — Chairman and Executive Director

See this — what Mercedes has been doing is a absolutely new business model in India, people are waiting and watching how this works. Now, understand what really this entails. This means that the entire working capital burden is on the factory, the customer, KYCs, payment collection, TDS, etc., the back-end work is quite big, so for a company like a Mercedes-Benz which is doing maybe 1,500 units a month or more or less, it may be possible, but for a mass-market player to get it done on length and breadth of the country also reach those vehicles in time will become a challenge. So, personally speaking, I don’t think this will be done by some other OEs anytime soon. The — also to understand is that this is a model, which Mercedes-Benz has been trying to do in many parts of the world, not only in India.

I believe, Volkswagen and Honda have also started this in other parts of the world. So but if you ask me in the near-term, in India, I don’t see this happening with anybody except for luxury vehicles.

Operator

Thank you. And gentlemen, this was the last question for today. I would now like to hand the conference over to the management for closing comments.

Sanjay Thakker — Chairman and Executive Director

Can you — I could hear you.

Operator

Sir, I would request you to please hand it over for the closing remarks.

Sanjay Thakker — Chairman and Executive Director

Yeah, yeah, okay, so thank you all for being on the call today. It was a good learning experience for us also as team, Aryaman, Surendra and me. We are happy to have good set of investors on our cap table. We have a big responsibility on-hand with the first auto dealership chain getting listed and we will surely not let anybody down as — that’s what I can say. And it — India is a great, a long-term story. And if you believe in the economy and the prospect and future of India, you are at the right place. Thank you.

Operator

[Operator Closing Remarks]