TVS Motor Company Ltd (TVSMOTOR) Q4 FY22 Earnings Concall Transcript

TVS Motor Company Ltd (NSE: TVSMOTOR) Q4 FY22 Earnings Concall dated May. 05, 2022

Corporate Participants:

K. N. Radhakrishnan — Director and Chief Executive Officer

K. Gopala Desikan — Group Chief Financial Officer

Analysts:

Annamalai Jayaraj — Batlivala & Karani Securities India Pvt. Ltd — Analyst

Rakesh Kumar — BNP Panama — Analyst

Pramod Kumar — UBS Securities — Analyst

Unidentified Participant — — Analyst

Raghunandhan N. L. — Emkay Global — Analyst

Gunjan — Bank of America — Analyst

Jinesh Gandhi — Motilal Oswal Financial Service — Analyst

Arvind Sharma — Citi — Analyst

Amyn Pirani — JPMorgan — Analyst

Hitesh Goel — CLSA India — Analyst

Kapil Singh — Nomura — Analyst

Pramod — InCred Capital — Analyst

Presentation:

Operator

Ladies and Gentlemen, good day, and welcome to TVS Motors Limited Q4 FY ’22 Earnings Conference Call hosted by Batlivala & Karani Securities India Pvt. Ltd. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Annamalai Jayaraj from Batlivala & Karani Securities India Pvt. Ltd. Thank you, and over to you, Mr. Jayaraj.

Annamalai Jayaraj — Batlivala & Karani Securities India Pvt. Ltd — Analyst

Thanks, Peter. Welcome to TVS Motor Company, 4Q and FY ’22 portion conference call. From TVS Motor company management, we have with us today, Mr. K. N. Radhakrishnan, Director and Chief Executive Officer; and Mr. K. Gopala Desikan, Chief Financial Officer. Chandra has a weak set of numbers on the margin front. I’ll now hand over the call to Mr. K. N. Radhakrishnan for the opening remarks to be followed the question and answer session. Over to you, please.

K. N. Radhakrishnan — Director and Chief Executive Officer

Good evening. Good evening, everyone, and I trust all of you and your family members are safe. Thanks for joining this call on TVS Motor Company Quarter 4. First of all, I’m extremely happy and delighted to share with you that Mr. Srinivasan Venu has been elevated as Managing Director effective today. As we know, Srinivasan joined TVS Motor in 2011, and he was appointed at the JMP in 2014. With his deep-rooted values, he has been instrumental in driving innovation and advanced technology and investments in the future technologies like digital and future mobility. His passion for customer delight quality and right for cost management for exemplary. He has created aspirational products which are extremely successful in the market.

During his tenure, the company has tied up with BMW Motorrad, established TVS Digital and recently invested in e-bikes, which is a growing segment in Europe. Under his leadership, the company has achieved more than 1 million exports volume. And due to his special focus on premiumization, it has resulted in the highest revenue, EBITDA and PBT during this year.

Coming to ’21, ’22, which was a very, very challenging year, as all of you know, impacted by COVID-19. We had same time last year, a lot of shutdowns in Wave 2. Third quarter after that, we had subdued rural demand, supply chain-related issues and huge customer price increases driven by customer the commodity cost increases. This resulted the decline of industry 2-wheeler industry by 11%.

TVSM with its strong portfolio and focused exports grew in the total 2-wheeler sales by 7%, resulting in a market share gain during the year. With the focus on premiumization, successful new product launches, growth in international business and sustained cost reduction initiatives, the company posted highest ever PBT of INR1,243 crores in spite of all headwinds.

During the year, 2-wheeler domestic sales clocks 2.05 million units, international trend the 2-wheeler sales was 1.09 million. The company has achieved this significant international business milestone in a financial year for the first time. On Q4, the revenue from operations grew by 4% to INR5,530 crores as against INR5,322 crores last year. The domestic sales declined by 11% compared to Q4 of last year against the industry decline of 23%. International market sales declined by 3% compared to Q4 of last year. The total 2-wheeler sales declined by 8% compared to Q4 of last year against the industry decline of 19%. Total sales of 3-wheeler during this quarter was 42,000 against last year is almost similar numbers.

Profit in EBITDA, we reached INR557 crores, grew by 4% over last year. Continued focus in cost reduction initiatives helped the company to maintain the EBITDA for the quarter at 10.1%. PBT for the quarter is at INR373 crores as against INR387 crores last year. Profit after tax is INR274 crores as against INR289 crores. On PT TVS, company sold 18,600 and the sales is at INR18,649 crores as against INR22,000 of last year. We also sold a 3-wheeler, 2,669 numbers compared to last year 2,298 numbers. PBT for this quarter is 1.1 million.

Overall, for ’21, ’22 Revenue from operations grew by 24% from INR16,751 crores to INR20,791 crores. This is the highest. Two-wheeler sales in the international market during the year grew by 43% over last year as against the industry growth of 36% domestic, 2-wheeler sales declined by 5%. Industry declined at the same time was 11%. 3-wheeler sales grew by 39%.

Operating EBITDA for the year is 9.4% compared to last year, 8.5%. During the year, the company posted highest ever PBT before exceptional item of INR1,243 crores as against INR826 crores last year. INR30 crores incurred towards COVID-19-related expenses are reflected as exceptional item. Profit after tax grew by 46%, INR612 crores to INR894 crores. And PT TVS continued to achieve profits this year. Two-wheelers grew by 46%, 8,025 compared to last year’s 58,900. And 3-wheelers, we grew by almost 8% 11,043 wheelers compared to 5,863. As you know, Board at its meeting during March declared an interim dividend up INR3.75 per share, absorbing some of INR178 crores.

On EV, we have excellent positive response from the customers and it continues to grow. TVS iQube electric based on the performance, dependable performance, reliable range in a silent comfortable driving experience. As on today, we have more than 12,000 bookings. We are currently present in 33 cities, and we have sold so far 12,000 units of TVS iQube. In ’22, ’23, this financial year, we will be launching a series of new products focusing on different customer segments. Company is redoing a complete portfolio of 2-wheelers and 3-wheelers in the range of 5 to 25 kilowatts all of which will be in the market within the next 8 quarters. First of this product will be in this quarter. I’ll give you more information closer to launch.

In TVS Motors in line with the vision of electrification, we envisage a wide and reliable charging infrastructure for our EV customers across India. Recently, we collaborated with GEO VP to access its widespread charging network for its customers. We also have Tata Power and CSL network. We have already tied up with them. This will substantially enhance the customer experience. As you know, EV industry is slated to grow rapidly and company has got a robust plan for this segment.

On outlook for ’22, ’23. We are expecting normal monsoon, and this will definitely help the agricultural sector to grow. This will be the fourth year in succession for favorable monsoon in India. The rural economy should get benefit because of this. The future economic impact of COVID is to be lower based on the Wave 3, which saw minimal hospitalization. The administrative response through vaccination drive and not resorting to broad lockdown measures is seeing positive impact on the consumer sentiment and overall economic activity.

The improved investment in the road infrastructure, economic environment with our current mass transit systems will further drive the demand for mobility for masses. This demand is today best served by the 2-wheeler segment, making it fundamentals very attractive in light of a [furin] India. 2-wheeler in international business is also likely to see a good growth during the year with current trend of crude oil prices and availability and stability of currency. We have a strong portfolio of products, which will enable to grow ahead of the industry. I’m extremely happy on the demand for TVS Raider and TVS Jupiter 125. One or the best to we have seen, and we even have very good order bookings what’s good for this product.

We are very confident that these 2 new products will help us in the growth journey of TVS Motor, both in domestic market as well as international market. We are continuing to witness the trend of premiumization in all markets, and therefore, we are confident that our premium products such as Apache, Raider, [Indecipherable], Jupiter [Indecipherable], Jupiter Grande and the Jupiter 125 will do very well.

The recent geopolitical climate and allied economic consequences will have an adverse impact on different commodities and crude oil prices in the first half financial year. We have taken judicious price increases both in domestic and international markets to mitigate the impact on the commodity prices. We are pretty confident that this year, we will grow ahead of the industry, both in domestic and international. And with the strong portfolio of brands like Apache, Jupiter, NTORQ, Raider, and Star range and Radion and TVS King. And the new launches, what we are planning this year, we will continue to grow ahead of the industry. And our sustained cost reduction initiatives will help us to significantly improve our EBITDA going forward. Sasha, we open the floor for questions. intestines.

Operator

Radhakrishnan, we open the floor to questions?

K. N. Radhakrishnan — Director and Chief Executive Officer

Yes, please.

Questions and Answers:

Operator

[Operator Instructions] The first question is from the line of Rakesh Kumar from BNP Panama. Please go ahead.

Rakesh Kumar — BNP Panama — Analyst

My first question was around your EV sales network and production capacity ramp-up plan. So our sales network for the last 2 quarters haven’t been able to expand beyond 33 cities. I understand it’s the reflection of supply constraints, which we have. So what is the visibility now you have? And what is it that you are targeting now on the sales network expansion?

And also on the production plan expansion, you had talked about that the first quarter of FY ’23, we should reach 10,000 unit production, I think that would also be critical for network expansion plans. So how are we planning on 2 year?

K. N. Radhakrishnan — Director and Chief Executive Officer

We are definitely confident of ramping up to 10,000 by first quarter end. We had some challenges in terms of some of the semiconductor suppliers. But given the kind of relationship we have with them, they are all supporting us in terms of ramp-up. And we have an aggressive plan this year once we are able to reach 10,000 by end of this quarter, then as I said, there is going to be a new product launch as well. And we will have a very good quarter after quarter disproportionate growth, and we have enough capacity for that. Also, we have lined up with all of the suppliers. So it will be a great journey in terms of the EV.

I think most important is all the customers of TVS iQube really love it, and that is the reason we have over 12,000 bookings.

Rakesh Kumar — BNP Panama — Analyst

Thank you for that. My second question was on the acquisition side. We have made a few new bikes acquisitions, especially in Europe. And earlier, we had made an acquisition of [Martin] brand. So how are we planning about center of product and also the planned strategy around those? And more importantly, in the context, are these EV bikes would be purely for the European market? Or we are looking at it in conjunction with the Indian EV market and our strategy here domestic?

K. N. Radhakrishnan — Director and Chief Executive Officer

See, the general principle is, all these products will be applicable to many markets. But the first focus when we have acquired [EMT] is to focus on markets in Europe because this is the market which is likely to grow very, very fast. And these products is [CMG] is also a leading provider of e-mobility solutions in this region.

And as you know, last year, they have done $100 million in revenue, and they were profitable last year. So we will leverage that. But this gives us a huge opportunity to expand the product portfolio of e-bikes and we will be very closely looking at which are the other countries where we can use similar platforms, and we can also look at, at some point of time, India.

Around Norton, as you know, it’s a very premium brand. It’s a special brand. And definitely, since acquiring in April 2020, we have set up an excellent facility with all the focus on right talent pool, focusing on quality improvement and ramping up for production. This is in solely health. And you will see this year production and sales happening in a small way. And then we have a very we are now articulating the plan three to five year plan for this brand. And once it is ready, we will share it with you, but we are pretty confident that both these investments are going to give us huge returns going forward.

Rakesh Kumar — BNP Panama — Analyst

Got it, Thank you for the answer.

Operator

Thank you. The next question is from the line of Pramod Kumar from UBS Securities. Please go ahead.

Pramod Kumar — UBS Securities — Analyst

Thanks a lot, Yes. My first question sir thanks to your comments on semiconductor situation easing. You talked in specific context of EV. But first want to understand, will it also help you elevate the supply chain pressure on brands like Apache, Raider just because they’ve been on a waitlist, all these 3 brands have been on the waiting, especially Raider, Apache and Jupiter 125. So and I understand the [Marasso] is ongoing and keep demand for some of these banks. So will there be any easing of supply the situation on production side for these brands as well when you look at the remainder of the 2 months of this quarter?

K. N. Radhakrishnan — Director and Chief Executive Officer

Surely because we are taking some alternate actions also. One of our players are not able to ramp up or we had some lot of challenges. So we are also looking at augmenting with some more suppliers in this area. And we are pretty confident, especially in Raider and Apache. Fortunately, we were able to get full support on Jupiter 125 and the supplier also has helped us to increase the volume.

So I think what is most important is there is a genuine shortage of semiconductor. So we have to plan some alternatives. And also, we have to give some time because both in Raider and Jupiter, the customer demand has been exceptionally good, and the reception has been exceptionally good.

Apache, we had a setback last couple of months and this month, we had a previous setback, but we are coming up with alternative soon. So I’m pretty confident that once the current supplier is still they are going to support us more. Plus, we will have some alternate suppliers also developed for the quarter. But the good thing is the demand trend, we are extremely happy in a difficult and challenging situation like this, both the Raider, Apache and Jupiter 125 huge demand, which is a very positive news.

Pramod Kumar — UBS Securities — Analyst

On that comment of the demand set banks, just trying to understand because we’ve never seen a stable month for Raider or Jupiter, and I understand you haven’t even actuated marketing campaigns for them in the bigger because the part to be constrained. I was just trying to understand how much could be the demand with Raider 125 alone as new brand introduction can add to your volume it say, net of cannibalization, there’s some of Jupiter and all of that. So where do you think these banks can head to at a combined level in terms of volumes for your for the domestic market?

K. N. Radhakrishnan — Director and Chief Executive Officer

Domestic market, you have seen we exited around almost 17% market share, which is one of the best for TVS Moter. And thanks to the existing brands as well as for Raider and Jupiter. And this is with some constraints we had in Apache in February and March. So you can estimate. So we have a huge opportunity to gain significant market share this year. With the existing brands as well as these two new brands and we understand this Jupiter 125 is also moving in international market and also Raider is moving in a big way in international.

Pramod Kumar — UBS Securities — Analyst

So will that be wrong if the is like these brands domestic price export can easily do 50,000 to 75,000 units per month, domestic plus exports, both the bank put together.

K. N. Radhakrishnan — Director and Chief Executive Officer

I don’t want to guide with any numbers. All that we look at is whether the customers are delighted, yes. There is a huge demand. Yes, continuously invest in high capacities and work with the suppliers, work with the dealers and distributors and make sure that you grow profitably these brands.

Pramod Kumar — UBS Securities — Analyst

Thanks for that, Second question is for basic and sir, and you also in a way. On the cash generation, because the last couple of years, we’ve been investing very aggressively on either acquisition or capability buildup, right? And we’ve been our investments are probably are growing ahead of our cash flow from operations, with that said. So when you look back now with the [SMG] acquisition being done and creation of the e-mobile platform and the expected monetization on the financing arm and some proven transaction on the EV side. So is it how should one look at as investors and as analysts on FY ’23 cash flow generation and going forward, whether in terms of whether there’ll be big investment happening again? Or we have kind of done bulk of the investments which you wanted so far? So how should one look at the free cash flow situation going forward?

K. N. Radhakrishnan — Director and Chief Executive Officer

I would like to guide you saying that a significant portion of these investments made by the company are already earning good returns, for example, [TVSCS]. FCS in a minute, I’ll tell you the numbers. during this quarter. TVSCS Book size is almost INR14,000 crores. and the net worth of the company, INR1,866 crores. And Q4 profit is INR74 crores compared to last year Q4 of INR62 crores. So and year as a whole also very, very good performance. So again, I go back to the other point. So a significant proportion of whatever investments we have made whether it is TVS CS or PTT of Indonesia, we did International last 2 years, it is giving us very good profits, and I’m very confident about this year also 2023. The markets are growing our exports are growing, there is a huge opportunity and SSCL.

Also, the new 2 newly invested e-mobility companies are already profitable. Almost INR700 crores we have invested in this. So we have already we always invest in the right segments and right businesses, and we are confident that we will deliver good performance and returns in the future. And we should understand that any company, you have to give 1 or 2 years to reach certain levels of complete maturity in terms of product, quality, standards and having the right network. So these investments definitely are going to give very good returns in the future. We are confident about that. [Nitin], do you want to add anything?

Unidentified Participant — — Analyst

Yes. On the monetization part, I just want to answer the most questions. See significant portion of the investments are behind us, to be very, very clear to your question. And second is the company continues to generate free cash flow. And next year, we’ll also we’ll continue to generate free cash flow.

Pramod Kumar — UBS Securities — Analyst

And sir, on the monetization part, you did share about financing monetization and also potential opportunity on…

Unidentified Participant — — Analyst

We said that TVS Credit Services is evaluating various options for fund raise. And we are pursuing various options. We will come back to you at the right time. We are progressing on the front.

Pramod Kumar — UBS Securities — Analyst

Okay. And sir, last one, sorry for this. But on the software side, I want to ask this question because we’ve seen so many new people getting addicted to products like voice command on a new product like [into], a new variant. So I just want to understand, this is something which is unique in the tool industry, right, the kind of features what you are offering on their products on the connectivity and digital, but just want to understand, are these all kind of bought out technologies which you’re buying from vendors under license or these are something which you develop in-house your own profit.

K. N. Radhakrishnan — Director and Chief Executive Officer

We completely believe in designing and developing in-house. Of course, we partner with the right suppliers. You can be really proud that we are really having the spirit of [Ataata] India from design and development.

Pramod Kumar — UBS Securities — Analyst

So sir, I was asking this more from the EV perspective because electric vehicles are….

K. N. Radhakrishnan — Director and Chief Executive Officer

Even for EV, most or the significant proportion of these developments are completely done in-house. We partner with the suppliers for some of the parts to be produced, okay? That is the biggest differentiator.

Operator

Thank you. [Operator Instructions]The next question is from the line of Raghunandhan N. L. from Emkay Global. Please go ahead.

Raghunandhan N. L. — Emkay Global — Analyst

Thank sir for the opportunity. Firstly, on the demand side, demand conditions are improving and your peers are indicating expectations of double-digit growth in FY ’23. Can you talk about which segments are driving this demand improvement? You indicated good traction in rural, can you also talk about other customer segment like salary, student thereon do you expect traction this year?

K. N. Radhakrishnan — Director and Chief Executive Officer

The good news is, again, last year, because of the lockdowns [Indecipherable] initially got affected. And once the COVID situation in Wave 3 became a little bit better with minimal hospitalization and better vaccination, we could see, I think, the people coming for better bikes.

See, the biggest challenge was in the entry-level segment. If you look at the entry-level segment, we have the ritual starting from operates and entry-level motorcycles. Finally, because. Of, one, the cost and the price increases, whatever we have seen. Second is because of the anxiety of the COVID and kind of almost 2 years of their income level being very, very subdued. okay?

Now we are seeing much time after COVID 3, the mobility, people are now doing their regular jobs. The self-employed are doing their job tools are opening. So I think it is positive for the industry, very, very positive for the industry. And I’m very confident that this year, you will see rural will come back, urban will continue to do well this year. The premium products always does well. Now the challenge is the 50% of the market, which is in the entry level, those segments will improve this year. Definitely will improve. And also the retail financing company now practically, for example, [TVS ES], [Indecipherable] our collections are 100%. Correct Desikan?

K. Gopala Desikan — Group Chief Financial Officer

Last 3 last 4 to 5 months, there are no provisions there, and we have been collecting the earlier made the provisions also to that extent, it is extremely robust

K. N. Radhakrishnan — Director and Chief Executive Officer

So I think positivity through many qualitative measures, we can look at it. It’s very good for India. What we have to look at is if this commodity increases, okay? If commodity increases can also be a little bit because it is not that we have seen huge increases, but keep on increasing prices. We have some challenges, but I’m pretty confident in the case of TVS, we have a range of products and a range of customers, and we can definitely grow much, much ahead of the industry. So I am very optimistic about ’22, ’23. Always this little caution of how it is going to be? Vaccination is going to help us okay? So we all pray that let that be like Wave 3, like Omicron, no hospitalization. So that situation comes, I think we will see a great year this year.

Raghunandhan N. L. — Emkay Global — Analyst

Thank you sir for a detailed answer, My second question was on the commodity inflation. How severe is the impact expected for June quarter? How much is the price hike? And net of price hike, what could be the Q-o-Q gross margin hit?

K. N. Radhakrishnan — Director and Chief Executive Officer

See, I don’t want to look at any shift on the gross margin. I think the way we have to look at is there is a commodity increase.

We are not able to pass on fully. So always there

[Technical Issues]

Between your own internal efficiencies and your own ability to look at the range and product mix and geography mix. That is exactly the way we go. The good news is for us, almost 35% of our income comes from international market pressure. I think it’s really, really doing extremely well. So most importantly, if you are able to grow your top line much faster. I think that gives you supply chain efficiencies. It gives you an opportunity on certain brands to increase prices. Maybe you can even parse on fully the commodity prices, areas where the customers are not able to fully afford the pricing because maybe partially 2, 3 installments.

So we have different, different strategies. So I’m not so much worried about commodity prices really, really putting us in a headwind. I think it is a combination of you would have seen our results. I think the most difficult times have given the best numbers. And given lockdown not there and with existing models and with the alternate countermeasures, what we are looking at in semiconductor and the new product, what it is today, Raider Jupiter 125. I’m extremely positive about TVS Motor doing much, much better this year, both in top line and in bottom line.

Raghunandhan N. L. — Emkay Global — Analyst

Thank you sir. Desikan sir, can you please share the exports and spares number for Q4.

K. N. Radhakrishnan — Director and Chief Executive Officer

Q4, what is the number you asked?

K. Gopala Desikan — Group Chief Financial Officer

No, I didn’t get the question, please.

Raghunandhan N. L. — Emkay Global — Analyst

Exports and spares, sir.

K. N. Radhakrishnan — Director and Chief Executive Officer

In just a minute. Exports revenue you are saying for Q4?

Raghunandhan N. L. — Emkay Global — Analyst

Yes, sir.

K. N. Radhakrishnan — Director and Chief Executive Officer

Revenues to an INR1,899 crores.

Raghunandhan N. L. — Emkay Global — Analyst

And the USD/INR realization?

K. N. Radhakrishnan — Director and Chief Executive Officer

76.

Raghunandhan N. L. — Emkay Global — Analyst

Wonderful. Spares number, sir, if you have it handy? And sir, like the supply issues, which you indicated even in the month of April, how much could have been the production higher, if not for the supply issues. That’s my last question.

K. N. Radhakrishnan — Director and Chief Executive Officer

Again, I don’t want to give a number. Raider was practically, we couldn’t produce any Raider, I can say that. Whatever was there in the pipeline, we were able to sell. And Apache significantly was affected. Sometimes one-off things could happen in a month, okay, but that was very shocking. But despite that, I think our numbers are very good. So that also shows the pull in the market for the existing model. So we have to manage between the existing models and the new model, sometimes one-off brands have a challenge. We will find alternate solutions.

Raghunandhan N. L. — Emkay Global — Analyst

Got it. And the spares number?

K. N. Radhakrishnan — Director and Chief Executive Officer

Spares, I don’t have it straight away. I’ll come back to you.

Raghunandhan N. L. — Emkay Global — Analyst

No problem sir, Thank you so much.

Operator

Thank you. Next question is from the line of Gunjan from Bank of America. Please go ahead.

Gunjan — Bank of America — Analyst

Hi, Thank you for taking my question. Just 2 from my side. Firstly, on this Norton, I remember this release, which you had put out of about INR1,000 crores investment. When what is the time horizon we are looking at? And how much has already been invested. And in the same on the same around investments, when I look at this year, you all have invested about INR1,400-odd crores in the acquisitions or subsidiaries associates. When you look at F ’23, what are the pending payments for acquisitions? Or how should I look at this investment number for next year?

K. Gopala Desikan — Group Chief Financial Officer

See, about the investment announced about 100 million, EUR40 million to EUR50 million have already been made leading to the creation of a world-class facility and imminent launch of some of the new products that we have products or reengineer products that we are planning to do this year, okay? And also this will be spread over five years. And these investments will be towards electrification, cutting-edge technology and world-class vehicles, manufacturing, sustainability and future of mobility. These are the areas we are looking at.

And I can promise you, you will see an exciting range of products for the global market from Martin. This is the first question. On the second question, I already highlighted to you, the majority of the investments that all have done are giving us very good returns, whether it is CVC, whether it is PTS, whether it is SSCL.and 2 of the e-mobility companies where we have acquired recently, both are profitable. So I think we are pretty confident that we are investing in the right segment and the right business. And we are very confident about delivering good returns from these new investments going forward.

Gunjan — Bank of America — Analyst

Sir, I was just trying to get a number if there is a ballpark number in your mind that this is how we look at F ’23 capex plus investments. I do appreciate some of these are very strategic in nature, but generally trying to make sense of the amount of spend, which will be made in F ’23.

K. Gopala Desikan — Group Chief Financial Officer

Capex, Next year will be about INR700 crores, including our future mobility area.

Gunjan — Bank of America — Analyst

And investments, any guidance?

K. Gopala Desikan — Group Chief Financial Officer

Investments, I don’t want to give any guidance at this point of time. As you said, these are all very strategic based on the future plans for the company. We will look to invest in the plants.

Gunjan — Bank of America — Analyst

Okay. And just quickly from my side on the financing penetration this quarter and if you are able to quantify the price hikes taken in Jan or in April, that will help us.

K. N. Radhakrishnan — Director and Chief Executive Officer

Financing penetration, Desikan.

K. Gopala Desikan — Group Chief Financial Officer

Just a second, please.

K. N. Radhakrishnan — Director and Chief Executive Officer

I think financing penetration this quarter is almost…

K. Gopala Desikan — Group Chief Financial Officer

Overall penetration for ’21, 24 this quarter is around 58%.

K. N. Radhakrishnan — Director and Chief Executive Officer

58%. It has gone up substantially. That is the confidence, which is seen in the market, definitely, you are able to see it.

Gunjan — Bank of America — Analyst

Okay. price hike, sir, and then I’ll join back the queue.

K. N. Radhakrishnan — Director and Chief Executive Officer

We have taken during this quarter. I think it was around 1.5%.

Gunjan — Bank of America — Analyst

Okay, Thank you so much.

K. N. Radhakrishnan — Director and Chief Executive Officer

Thank you.

Operator

Thank you. Next question is from the line of Jinesh Gandhi from Motilal Oswal Financial Service. Please go ahead

Jinesh Gandhi — Motilal Oswal Financial Service — Analyst

Hi sir. A couple of questions from my side. One is with respect to the RM cost impact, which you talked about. So was there any material RM cost inflation in fourth quarter or it was doubly stable?

K. N. Radhakrishnan — Director and Chief Executive Officer

No, there is RM cost increase in this year Q1 as well and Q4 also, we saw.

Jinesh Gandhi — Motilal Oswal Financial Service — Analyst

Okay, Any indication of what was the inflation in fourth quarter and expected in 1Q?

K. N. Radhakrishnan — Director and Chief Executive Officer

1Q not yet settled because there is always a lag, and there will be some negotiations which is going on, because last quarter increase, it still is something huge. You have seen 1.5% price increase and may be uncovered is about another 1%. So that will be there given the last 6 quarters of material cost increases, whatever we have seen because you can’t immediately pass on, on all brands and every market. So we have to look at a combination of product mix, geographic mix and also leverage the revenue growth.

So and of course, thanks to the sustained cost reduction, whatever we have done. So that is the best way. But the most important is, if you look at year-on-year, we have managed our material costs very given all the headwinds that we had last year. Possibly a little bit of better semiconductor availability in the last quarter and container availability international market in quarter 2 and quarter 3. I think that would have helped a little bit more on the revenue side. So but the things happen. These things happen. However, if you look at overall as a company, highest revenue and highest TDT, and we are able to Q2, Q3, Q4, we are able to hit the double-digit EBITDA margin under a very difficult situation.

Jinesh Gandhi — Motilal Oswal Financial Service — Analyst

Sure. No, that’s a very commendable performance in top time not to restart that. So second question pertains to when I look at the consolidated performance, the auto component business seems to be having substantial pressure, continuing to have EBIT losses. So what is happening in that business that are going to around that business?

K. N. Radhakrishnan — Director and Chief Executive Officer

I already highlighted that. See, when we started TVSCS, it was also having a lot of challenges, but it is today one of the best performers. This year, the PBT line cost INR156 crores, which is outstanding, and the book size is almost INR40,000 crores. I think we have to always invest in the right area in PT TVS. We look at PT TVS performance and you look at [PBT] performance. So and wo of the investments, whatever we made, were already profitable last year. So a significant proportion of all the investments are profitable. And there are new investments we have made last year. I’m pretty confident that they are strategic in nature, and I are going to use the returns going forward.

Jinesh Gandhi — Motilal Oswal Financial Service — Analyst

Sure. So is the loss are the losses in the Norton business reflection of difficulty to pass through cost inflation to end customers? Is that the main reason or there something else here?

K. N. Radhakrishnan — Director and Chief Executive Officer

I think markets have been very slow. All of us know that the markets have been very, very slow. I think the challenges this eight quarters of lockdowns and country by country. Now look at China now. China is on maximum lockedown and many things are getting affected, including containers. So I think uncertainty and unpredictability, definitely is one of the reasons these are these last eight quarters. But last eight quarters, I think this also tested the robustness of the company, and I can be very humble and very polite in saying that we have done extremely well. Sure. And sir, can you share what percentage of the component business revenue would be to third parties? You are talking about [ACL]?

Jinesh Gandhi — Motilal Oswal Financial Service — Analyst

Right.

K. N. Radhakrishnan — Director and Chief Executive Officer

[ACL], Desikan, you have how much is outside? About 60% is for TVS or 40% is TVS?

K. Gopala Desikan — Group Chief Financial Officer

Yes. It’s only as far as [Auto] component is concerned, their dependency on TVS Motor is around 40%, slightly lower than 30%. The rest are only [Indecipherable].

Jinesh Gandhi — Motilal Oswal Financial Service — Analyst

Okay, Got it, Thanks for that.

Operator

Thank you. Next question is from the line of Arvind Sharma from Citi. Please go ahead.

Arvind Sharma — Citi — Analyst

Hi, Thank you for taking question. Sir, first question more on the quarter side. The realizations were literally flat quarter-on-quarter. And you say the cost 1.5% increase. So how do we how do we clarify this thing?

K. N. Radhakrishnan — Director and Chief Executive Officer

I think primarily, we lost some volumes in the premium segment due to semiconductor availability, especially in February and March. That and I’m pretty confident that the kind of countermeasures we have taken will become better in this quarter. Of course, April also, we had some setbacks, but I’m pretty confident that in May and June, you will see the recovery there.

Arvind Sharma — Citi — Analyst

Great, sir. Sir, I think the question is, we are already almost a month into the first quarter. How much do you think that the commodity costs have been deferred toward will be lumpy than in the first quarter. Is there any sense on that part?

K. N. Radhakrishnan — Director and Chief Executive Officer

Commodity, in my opinion, has reached its peak. And even in Q1, we have not settled on the commodity cost in cases because the increased requests have been very high. So still negotiations are going on. And we have increased prices even in this Q1. So I’m pretty confident that there will be a balance you will see going forward. I think once you see the availability of many, many ingredients for the raw material becoming smoother, you will see a stable situation. And equally this geopolitical situation easing out also will help going forward on the commodity prices. So I’m expecting maybe Q1 Q2 onwards, you should see some settling window.

Arvind Sharma — Citi — Analyst

All right, sir. Just 1 final question is more a customer side. Where you selling your iQube. How much do you think is the commonality between the potential buyers in iQube and say something like Jupiter? Is there any commodity in the customer base?

K. N. Radhakrishnan — Director and Chief Executive Officer

See, since we have not given March numbers, the numbers today, we are averaging around 2,500 per month sales. And 2,500 in these 3 cities, we are seeing techs buying this in the urban area. To answer you, once we start selling 10,000, 15,000 per month for about 6 months, I think we will be able to see how the total EV scooter to IC scooter, how it is happening. But my hypothesis is that scooter as a category today is 32% of the industry in IC. I’m very sure this will expand because more and more consumers will look at EV scooters. More and more consumers will look at the scooter as a form. So I feel that both IC you will change. EV will continue to grow. I’m giving my kind of prognosis at this point of time. But currently, if you look at the type of customers, they are all picky customers who want the normal Jupiter type of customers we are just seeing now. You have to supply sufficiently into this market, then you can see what is the overlay of this type of customers.

Arvind Sharma — Citi — Analyst

Thank you so much for answering my question.

Operator

Thank you. Next question is from the line of Amyn Pirani from JPMorgan. Please go ahead.

Amyn Pirani — JPMorgan — Analyst

Hi sir, Thanks for the opportunity. Congratulations on a good set of numbers. Just wanted to go back and apologize for this on the point raised by or as well as. Now we understand that when you make an investment, you obviously have a three to five year view. Markets may not be as patient. So what would help us and maybe hopefully we’ll hear more on this, is that maybe on Norton and maybe on the other businesses, if you could come out and share some of your three to five year plan in terms of maybe capacity which geographies, that would give us some comfort that, okay, investments are high, but that is fine. Like financial services has done and how Indonesia has turned around, these businesses will give us good returns in the future. That was just some point that I wanted to make. And hopefully, like you mentioned, if Norton does start production this year, hopefully, we’ll hear some of your plans during the year.

K. N. Radhakrishnan — Director and Chief Executive Officer

I can promise you the time what we took for TVS and [TVS] will be much faster and more agile. I promise.

Amyn Pirani — JPMorgan — Analyst

That’s good to hear, sir. Secondly, sir, on the EV side, as you move from around 2,000 per month to, say, 10,000 to 15,000 a month on the two wheeler side, do you think that the current format of distribution, which is how you sell it in the current existing TVS showroom would work? Or do you think you’ll have to create a slightly different format, maybe a shop-in-shop or a separate distribution because the category, while it’s a scooter, it’s a it still has different nuances. I would love to hear your thoughts on that.

K. N. Radhakrishnan — Director and Chief Executive Officer

Absolutely. Absolutely. Absolutely. See TVS iQube, the company, we have also leveraged digital channels to our vehicle booking and sales and completely digitally enabled the purchase processes, test ride, booking, payment, seamless home charging, unit installations, providing truly hassle-free experience. So I think it is going to happen. It is going to happen.

In my view, this could happen not only in India, many parts of the world, number one. Number two, this could also change some of the IC distribution models as well. So Today, I cannot give an inference that this is the model. So we are experimenting both the models. For example, I give is available through some of our existing dealers. It is also available to the digital channel, but I cannot give you any conclusion what is the proportion through the digital channels and how we are going through that. I think some more numbers, maybe another 6 months when we start selling 10,000 per month or 15,000, 20,000 per month, I’ll be able to give with much more confidence. How is this panning out? But I’m very sure the new digital the new ways of doing business will happen.

Amyn Pirani — JPMorgan — Analyst

Great. Thanks for this ill come back in the queue.

Operator

Thank you. The next question is from the line of Hitesh Goel from CLSA India. Please go ahead.

Hitesh Goel — CLSA India — Analyst

Thank you sir for the question. First question on the iQube, right? Your current bookings are around 12,000, but you are expecting to ramp the production to 10,000 per month. Do you have the chip supply to really get to these numbers anywhere in the second half of this year?

K. N. Radhakrishnan — Director and Chief Executive Officer

Not even second half. We are looking at it in the first quarter itself, how do we come to 10,000 and second quarter go much beyond that. I’m pretty confident. There are — the most difficult thing we have got it right, which is the acceptance by the customers. And as I told you, we have a range of new product lines also planned. So we are planning to really launch, go beyond 10,000 in the second quarter and beyond whatever number. So we want to really have a great year on EV ramp-up and EV sales this year.

Hitesh Goel — CLSA India — Analyst

Sorry sir. Just to clarify, this is 10,000 per month capacity of 10,000 per quarter?

K. N. Radhakrishnan — Director and Chief Executive Officer

10,000 per month now. We are looking at. Not yes. So I want to hit 10,000 definitely by June.

Hitesh Goel — CLSA India — Analyst

So sir, why is the bookings only at 12,000? Just wanted a greater sense.

K. N. Radhakrishnan — Director and Chief Executive Officer

We always we don’t want to have customer dissatisfaction beyond that point. Once somebody books it, if I open my bookings, there are enough paper who love this product. We have restricted the 3350s also. One month, we reach 10,000, then we will ramp it much faster, okay?

Hitesh Goel — CLSA India — Analyst

So you are planning to get to all over India, right, which will happen…

K. N. Radhakrishnan — Director and Chief Executive Officer

All over India, 100%, all over India, and we will also start some international markets.

Hitesh Goel — CLSA India — Analyst

Okay. And sir, on the export side, my second question is on export side. Can you give us some color on what is happening on the export side because all the oil the oil prices have gone up, right? But there’s inflation also, which is on the food prices, which could affect consumption, right? So can you give us some sense on how you see demand especially in Africa on the export side, what is happening there? Can you give us some color?

K. N. Radhakrishnan — Director and Chief Executive Officer

Exports, we see very good growth, very good growth. And what is helping us is our product range and the kind of customer satisfaction we have on the SL series or on Apache or even Raider, whatever we have launched or NTORQ the new Jupiter 125 also small numbers we have started giving. So and the three wheeler side. I think Africa market is doing extremely well for us. And I agree, the challenges on inflation is across the globe this year. And the positive thing is the political stability, availability and stability of currency, they’re all helping. And crude oil prices are somewhere on the higher side this year.

Hitesh Goel — CLSA India — Analyst

Just to rephrase, so if TVS is gaining market share in Africa and Latin America or the market is also expanding?

K. N. Radhakrishnan — Director and Chief Executive Officer

Both. Both. The markets are expanding. Markets are expanding, and we are gaining significant market share gains in every market where we operate.

Hitesh Goel — CLSA India — Analyst

Good. Thank you. Thank you very much.

Operator

Thank you. Next question is from the line of Kapil Singh from Nomura. Please go ahead.

Kapil Singh — Nomura — Analyst

Hi sir, Just wanted to in terms of strategic acquisitions or investments, how do you think about it? What is the play that TVS have in the mobility space and how are you planning for management bandwidth for some of the new segments that we are entering in?

Operator

[Technical Issues]

Ladies and gentlemen, thank you for your patience. You have line for the management reconnected. Sir, you may go ahead.

K. N. Radhakrishnan — Director and Chief Executive Officer

Sorry, the line got disconnected. I think somebody wanted to ask some question.

Operator

Kapil, may I request you to repeat your question once again for the management, please?

Kapil Singh — Nomura — Analyst

Yes, sure. I just wanted to understand your thoughts on the strategic initiatives in the mobility space and global overbaking states there, what are the ambition? How do you think about acquisitions and will there be more such strategic investments that we intend to do going ahead? Also, how are you planning for management bandwidth to look at some of these new areas and new geographies.

K. N. Radhakrishnan — Director and Chief Executive Officer

The EV and future mobility, this is something definitely going to happen. And we have embraced the change, and that is why we have invested in TVS Motor as well as we are also looking at such strategic investment. So these strategic investments are based on looking at global market and opportunity because we feel that there is a great opportunity for TVS to leverage.

Anything related to future of mobility. So we have a very strong plan, and we look at constantly on this area. And on teams, we have for example, we have a separate team on North on a separate team on Norton. And here, we have a separate EV team, more than almost engineers, managers and especially in certain areas like software and electronics, we are strengthening with the lateral hire. So we always believe in putting a very strong team and investing in R&D and facilities because most important is the belief that what I told earlier promote, monobores means it is also designing and developing. And partnering with many, many suppliers and global partners who are best in class. So we always do that. Those partnerships are helping us plus the kind of resources that we have invested in. And we always do that.

Kapil Singh — Nomura — Analyst

Sure, sir. So does this mobility is a very broad term. Does it include four wheelers also, if there are opportunities or will you be restricted to two wheelers? Some thoughts around that.

K. N. Radhakrishnan — Director and Chief Executive Officer

Now it is two wheelers and three wheelers.

Kapil Singh — Nomura — Analyst

Okay. Secondly, I just wanted to ask on PLI, how will the accounting work will you be booking on a proven basis or when we receive the cash flows digital.

K. N. Radhakrishnan — Director and Chief Executive Officer

Realize basically question not cost, please. Rowena. I couldn’t care them clear.

Kapil Singh — Nomura — Analyst

The PLI incentives, will you be booking on an approval basis or you will be booking because cash flow as per the government notification will take place, they will pay after 1 year, right? For FY ’23, they will be in FY ’24. So I just want to understand how the accounting was coming in FY ’20 or even got when you receive the capital.

K. N. Radhakrishnan — Director and Chief Executive Officer

No, we will be conservative in our approach, and we will account it based on cash flow basis funding.

Kapil Singh — Nomura — Analyst

Thank you.

Operator

Thank you. Next question is from the line of Pramod from InCred Capital. Please go ahead.

Pramod — InCred Capital — Analyst

Yeah, Hi sir. This regards again the opportunity in India, considering your [moped] present and also the number of efficient you are in internationally. How do you see a low-speed two wheeler opportunity in India? What’s the market size as per you? And what it can grow and do you see a role for TVS to play in the those 2 wheelers?

K. N. Radhakrishnan — Director and Chief Executive Officer

Customer segment will evolve. Definitely, customer segments will evolve. When we started found that there are set of customers in a lot of the pyramid they wanted to carry load and they want to earn income. So today, operate is carrying something like 100 to 150 kgs of either uricase produce or milk or whatever and it is used to for earning everyday income, okay? So I think we have to closely look at what is this type of application and what is the type of customer segment and then decide. I can’t give a generic answer at this point of time. We are studying very deeply, customer segment by customer segment and I can promise you every customer segment in the EV space, we will have a product.

Pramod — InCred Capital — Analyst

Sir, any estimate based on our studies is the market size here because we have not registered?

K. N. Radhakrishnan — Director and Chief Executive Officer

Too early. Too early. Too early.

Pramod — InCred Capital — Analyst

Sure. Thanks.

Operator

Thank you very much. Ladies and gentlemen, due you time constraint. That will be the last question for today. I now hand the conference over to the management for closing comments.

K. N. Radhakrishnan — Director and Chief Executive Officer

Thank you, and the conference and stay safe, and we are all hoping that even if some wave of it COVID comes, it will be like a 3 and it will not lock down the country and all of us. And we will see that the economy will do well in India. And we want the rural with a very good monsoon should do well for this year. So overall, with the kind of new products, whatever we have launched Raider and Jupiter 125 and the portfolio of products that we have started from a Apache, Jupiter [range] Radion and TVS King. And now TVS iQube, I’m pretty confident that we will grow ahead of the industry, both in domestic and international. And our sustained cost reduction initiative, product mix, geography mix, this strategy will definitely help us to go beyond now the double-digit margin, whatever we have clocked quarter after quarter. in the last 3 quarters.

Operator

[Operator Closing Remarks]