Landmark Cars Limited (LANDMARK) Q1 2027 Earnings Call Transcript

Ladies and gentlemen, good day, and welcome to the Landmark Cars Ltd. Q1-FI27 Earnings Conference Call, hosted by Access Capital Limited. As a reminder, all participant lines will remain in the listen-only mode, and there will be an opportunity for you to ask questions after the management's opening remarks. Should you need assistance during the conference call, please signal the operator by pressing star, then zero on your touchstone telephone. Please note that this conference is being recorded. Before we begin, a brief disclaimer. This conference call may contain forward-looking statements about the company which are based on the beliefs, opinions, and expectations of the company has on date of this call. These statements are not the guarantee of future performance of the company, and it may involve risks and uncertainties that are difficult to predict. I will now hand the conference over to Mr. Vijay Pandey from Access Capital Ltd. Thank you, and over to you.

Thank you, Ryan. Good morning, everyone. Welcome to the Q1 FI 27 post-result conference call of Ladmarkers. We are pleased to host the promoter and management team of Landmarkers today. We have with us Mr. Sanjay Thakkar, promoter, chairman, and executive director of the company, Mr. R. Iman Thakkar, the executive director, and Mr. Surendra Gauravad, the CFO of the company. I will now hand over the call to Mr. Sanjay Thakkar for his opening remarks. Over to you, sir.

Thank you, Vijay. Good morning to everyone. On behalf of the company, I extend a warm welcome to everyone who has joined us today. On this call, as Vijay just said, I have Aryaman and Surandra Agarwal who have joined me. The results and the presentations are uploaded on the stock exchanges and the company's website. I hope everybody has had a chance to look at it. Financial Year 27 started on a strong note, with PURMA revenue from operations growing at over 22% year on year to deliver our best ever Q1 performance in a seasonally soft quarter. Profit after tax nearly doubled ahead of the revenue growth. This financial performance was driven by improving operating leverage and sustained cost discipline. Moving to the automotive industry, the sector continues to evolve, supported by healthy customer demand and broader choice of power drains. Electric mobility traction increased significantly in recent times amid geopolitical situations, and EV adaptation is emerging as an important structural change. We are happy to report that 30% of the vehicles sold by value have been EVs at Landmark, much, much higher than the industry. Landmark has expanded its capacity and partnered with relevant brands over the last few years, enabling us to participate meaningfully in the growth that is happening. Sticking to the EV story, there have been questions about the after-sales revenue potential that the EVs would generate over time. The initial study indicates that there is absolutely no negative impact on after-sales revenue from EVs as compared to ICE vehicles. This augurs well for the annuity type of after-sales business that we have built over the years. Please refer to the slide number 8 in our presentation. We have found that the EVs run much more on the road as compared to ICE vehicles due to its lower cost of running. This increases the frequency of its visit for periodic maintenances and accident repairs to our workshops. On top of this, the accident repairs for EVs cost more than ICE vehicles. As has been seen across the globe. This is ensuring higher revenue per vehicle for the full year for EVs currently. One should also note that due to the sophisticated technology, the EVs will come to the authorized workshops more often than the ICE counterparts. The EV segment also presents new and differentiated revenue opportunities. From our strategy to build a comprehensive EV ecosystem for our customers, we have signed an MOU with ChargeZone, one of India's leading EV charging networks. Under this partnership, our EV customers will receive wallet credit redeemable at ChargeZone's charging locations, while we will earn a share of charging revenue from onboarded customers. This is an industry-first partnership between retailer and a charging service provider, and it allows us to create an additional recurring revenue stream while deepening the engagement with EV customers well beyond the point of sale. In the past few years, Landmark has added many new brands in its portfolio. Its margins as well as cost structures may be different than our existing brands. The after-sales business of these brands also is in a ramp-up stage, so we believe that the way to look at our business may be better at EBITDA and FAT level along with cash profit from business rather than the gross profit level. Looking ahead, we expect the demand environment to be positive. The corresponding period last year saw some lumpiness in the quarterly trend influenced by GSD-related changes, deferred purchases, and subsequent pent-up demand. While these dynamics rise largely behind us, we expect a more normalized and consistent demand trajectory through the later part of the year. And with this, I'll hand it over to Aryaman to take us through his work.

The beginning of this year has seen a strong momentum across the private vehicle car market. Due to various macro factors and post the GSP cuts, we have seen that the premium and mass segments have grown faster than the luxury segment over the last few months. Let me now provide some color on the performance of our individual OEM partnerships and key developments across our network. Starting with Mercedes-Benz, the brand continues to be the leading luxury brand in India, recording a sale of 9,786 units in H1 calendar year 2026, which was a 9% year-on-year increase. On its biggest ever product offensive, with over 40 new models expected to launch globally starting from 2027. The focus on its top-end vehicles is paying off as the demand for it remains strong. We have seen this reflecting in our average selling price, which has increased to approximately 79 lakh rupees in Q1. FY27, which is up from 73 lakh rupees in Q4 FY26. The penetration of electric vehicles has positively impacted MG Motors. They are the second largest EV OEM. The new MG Magester also commenced deliveries during the last quarter, strengthening the premium portfolio. The call is to be launched shortly across EV and hybrid powertrains. which is to be launched later this month in August and we expect that to significantly boost We recently received an LOI for an additional MG showroom in Ahmedabad, which will take our total MG network to 17 outlets and further strengthen our presence with the people. The new launches have been very well received with more launches to follow later this year. Our new workshop for Mahindra will be starting operations soon in Hyderabad to cater to the strong after-sales momentum we are witnessing. BYD continues to perform well. The supplies for BYD will significantly improve throughout the rest of the year. The hybrid models will also be launching later in this financial have become operational in July and will further increase our market share with the brand. The luxury brand of BYD Densa is going to be launching in India shortly. The new Solentos is expected to be launched in September and we expect the brand to continue its good performance throughout the year. The launch of the city facelift and the ZRV The AlphaZero electric SUV will launch later this year, which will be the right timing given the broader switch to the car. The commercial vehicle market continues to remain strong, and we are seeing that in the performance of our Ashok Leyland dealerships. We are awaiting details of the recent media reports of a potential deal between the JSW Group and Volkswagen India. On the after sales front, we have reached our historic home needs. We are selectively expanding service facilities to increase capacities. Today we are inaugurating a large 50,000 square foot workshop in Mumbai to cater to Mercedes-Benz, BYD, and Jeep. If you refer to our investor presentation, you can see that we have a large upside possibility in after sales for our new high growth brands. From outlet perspective, we continue to expand in markets where we find attractive potential while maintaining capital discipline. Overall, our diversified OEM portfolio across luxury, premium, and EV segments combined with our showroom and workshop network positions us well to capture the structural growth opportunity in organized auto retail. Now open up the call for questions.

Thank you. Ladies and gentlemen, we will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on the touchstone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use their handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. We take the first question from the line of Arnaud Sakuda from Ambit Capital. Please go ahead.

Thank you for taking my questions. My first question is that, you know, there were a few news articles which mentioned that some OEMs like Mercedes has been taking a few price hikes in the last few months. So, you know, can we see some improvement in the Mercedes gross margins because of these price hikes? Or were the price hikes mainly just to cover the increased costs of the cars?

Yeah, so Mercedes-Benz, along with most of the OEs that we represent and those who we do not, have taken a price hike because of the raw material prices going up globally. So what happens is that we get a percentage of that. In percentage would not increase, an absolute number will increase.

And there was also a few articles mentioning that Audi India is getting increasingly aggressive through some new model launches, and their aim is to increase their market share from the current levels of 8% to around 16%. So, you know, do we expect that there could be any pressure on Mercedes sales because of this, or would they likely capture the market share from other OEMs?

I think it's high time that the luxury market itself grew, and what we have seen is that new offerings many a times actually... Expands the market, the addressable market. The luxury market, as you may recall, has been kind of hovering around 50,000 units, and the penetration of luxury to the overall market has actually, in the last year, reduced. Now, which is contrary to everybody's belief, what Aryaman just mentioned, that the premium as well as the mass market has grown faster this year than the luxury market. And it's time that luxury market catches up. That's how we have seen the trend fanning out over the last several years. Thank you.

So, congrats again to the strong help of us and thank you for your questions.

Thank you. Thank you. We take the next question from the line of Akhil from 360, one capital. Please go ahead.

Yeah, thanks for the opportunity and many congratulations on a very good set of numbers and also good disclosures in PPP. And also, as Sanjay sir has said, multiple times in the past, this business is fairly predictable if followed a well-disciplined approach. I think we have kind of showcased that now over the last few years as our profitability is increasing upwards, basically. So, the first question from my end is, just from two to three perspective, how should one look at it, given that, you know, we are generating now strong cash flows. Last year, also, if you look at it, we generated almost 250 to 60 crore of operating cash flows, and this quarter also almost 60 crore of operating cash flows. So are there any white spaces which we may tap into maybe probably the OEM additions or further outlet or workshop additions which can help us to sustain this growth momentum for next couple of years at least? That's my first question.

Yeah, Akhil, what you are saying and what you have observed is the absolutely correct thing. The business generates a decent amount of cash. We had increased our dividend way out also last year, meaningfully. Now, we continue to be in lookout for opportunities across OEMs, across the ecosystem, where we can actually deploy money and make it meaningful. So, yes, we are in talks with... Some OEs who may be entering India, some who may want to expand, some may be a takeover opportunity, but we don't want to rush into it. We will do it on our terms. So the submission is that this is something which is... We have built a platform, we have stabilized the ship, we have gone through a very rapid amount of expansion and what I sometimes call a blood transfusion into our system to have a different fiber of what a landmark. And that ship has stabilized the matrix, are coming back to what, where they belong, and the opportunities are all there, and we will take it one by one.

Good to hear, sir.

I think second on the new vehicle sales business, right? I mean, we have been growing their handsomely and our margins, which have dipped there to almost 1.7% in FI 25, has been steadily on an upward trend. Like FI 26, if I look at it, most of 2% and now at 2.3%. So what would be some of the levers for the further margin improvement basically to the new vehicle sales business? That's my second question.

Yeah, so in new vehicle sales, as you know, is a combination of what the market operating price is. The price hikes also help for a one-time kind of a thing. The demand basically being more than the supply or as much as the supply actually helps the situation where you don't need to give out any kind of freebies to the customers. So this is something which is a trajectory that we are seeing and I am pretty hopeful that this will continue to kind of go on the upward trajectory. Also, it is also a factor of target achievements and I am hoping that and I am feeling that our target achievements for one or the other brands will also improve. So this trajectory should continue.

Sir, great to hear that. And that brings me to my last question. So, from an overall profitability perspective, is it fair to assume that somewhere in F528, we should be handsomely crossing the profits which we did in our peak cycle of F523? That's my last question.

I wish I could say this in a Buka world that we are all living in. We are on a trajectory which is going to take us there. We'll let the world kind of hold it the way it is and not have some shocks.

Sure, sir. Thank you so much, and I'll get back in with you for any further questions. Thank you.

Thanks, Akhil.

Thank you. We take the next question from the line of Bhargav Bhuddhadev from Ambit Asset Management. Please go ahead.

Yeah, good morning to you. I'm sorry to

interrupt you there, but your audio is not clear. Could you please use your handset and proceed with your question?

Yeah, yeah, Mama, is it here?

Slightly better, Marga.

So, what was highlighted is that we have about 141 outlets, and if we divide that into showrooms and workshops, we have 77 rooms and 64 workshops. Now that we have opened a lot of showrooms in the last two years, is it fair to assume that over the next two, three years, the mix of showroom and workshop can be 50-50, because effectively the ROC in workshops is much higher, and now that we have enough showroom penetration, the focus incrementally will be on workshops. You also highlighted the opening of a Mumbai 55,000 square feet workshop. So, just wanted to know your thoughts on that front.

Yeah, so Bhargav, let me kind of explain to you the number of workshops. The workshop could be of different shapes and sizes. We have workshops which is 5,000 square feet, and we have workshop which is 1,000 square feet. So, one workshop is not kind of comparable to the other. So, the number of workshops may not be the best way to look at situation. What Aryman just mentioned that we are opening a workshop in Yogeshwari today, 50,000 square feet. Actually, we will house three brands over there. And what we will do is that we will give up, once this is operational, some workshops which are smaller workshops and consolidate. It is in one workshop. So, on paper, you may see that the number of workshops has possibly reduced or remained the same, but we have added significant amount of capacity in that consolidated place where the margins would be better, our control would be better, and operating costs will come down over there. So, but what you are saying, and I hear you, and this is exactly what is happening, we are adding... Workshop capacity, it may not be looked at from the number of workshop bases, but the number of base bases. So, like in Mahendra and Mahendra, we have seen that our capacity has already got exhausted in Hyderabad in no time. And in, say, Mahindra and Mahindra, our contribution of after-sales to the overall revenue is single digit, even now, where the group... So, once we add this capacity, the Mahindra after-sales business will continue and contribute much more. Same thing is with Kia, where we have added workshops in MG. We are adding more workshops in BYD, where we are selling... Hundreds of vehicles now a month, which we did not think was happening. So we are desperately going to be adding more BYD workshop capacity. We have seen that the EVs actually are a good revenue stream for after sales. So the workshop capacity will, yes, come up much more, but it may not be seen in the number of workshops, but the number of days. Let me see if we, over a period of time, can... Our disclosures have always been kind of looking at and hearing investor voices and the questions because we are defining the segment. So whether we can actually give you the number of bays that we have rather than the number of workshops.

Yeah, no, that makes sense. Sir, my second question is that if you look at your new high-growing brands, the share of EV within that is much, much higher. So, and if you look at your after sales contribution from these high-growing brands to our overall after sales is 19% versus 38% in new car sales. In your PPT, you have mentioned that the EV service revenue is much higher, given the higher frequency and also the... Coverage in terms of kilometers. So, is it fair to assume that given the high contribution of EV, this after-sales contribution will also grow much, much faster and possibly it will match your new car sales mix maybe sooner rather than later?

So, it's a factor, Bhargava, a variety of things. One is capacity. In case of, like, say, BYD or Mahindra, we need more capacity, which we are adding. What we have given on page 8 is the per car revenue. But in some brands, we need more cars. So, once both things happen, the number of cars, which is going to happen sooner rather than later, and the critical mass and the capacity being reached, this will reach. And you have rightly caught, and that's why we have kind of said that the upside in after sales for these brands is significant.

Sir, is there an EV in a normal service center, or do you need a separate service center?

Same service center, with some different equipment. And once our Yogeshwari workshop is fully operational, we are inaugurating the Mercedes part of it today. You will read it in the newspapers. After two hours, I will be cutting the ribbon over there. You'll see it in the press and all that. But once the BYD and the Jeep part is also completed in the next few months, we will invite investors to have a look at this state-of-the-art workshop.

Great. I'm the very good.

Thank you.

Thank you. We take the next question from the line of Deeraj Kassan from InCred Equities. Please go ahead.

Congratulations, Mr. Sir, on a great set of results. And, uh, I just wanted to first talk about the service mix that has been, uh, you know, it has been, uh, lowering, but that's because we have been experiencing a very high kind of growth the past six, seven quarters in the new car sales. But, uh, as we have seen that you have posted at the new, uh, vehicles that we have added, they have, uh, Good morning, everyone. Contributing 38% in our new car sales, but only 19% in the after sales service. So I think we are expecting that maybe from FI28 onwards or mid FI28 onwards, we will be seeing a major kind of growth coming from there. As also right now, the volume growth from 14% of after sales, we have only experienced 4.8% volume growth, rather everything is coming from value growth. Sir, I think most of our outlets are still very underutilized in terms of service sector, correct?

So, yes, you have kind of read this situation well. The upside in after sales for the brands which are in the 19% bracket is clearly much more. And yes, our sales growth has been far outstripping the service growth. It doesn't say that the service growth is lower. Service growth is at 14-15%, which has been our historic growth. So, service is growing the way it should, but we are selling much more. That's why it's a question of this mix, which is happening. But selling more is always good. One should look at the absolute number of money one makes rather than only the margin.

Yes, and also our margins have been quite better in the past two to three quarters in the after-sales segment. So, is this a structural shift, like from above, we are going above 18% and we have been maintaining that?

We are maintaining that. Yeah, I think it would hover around, see, many a times in some of the quarters, like March or December, we also get annual bonuses, which are not accounted in the first or the second quarter of the financial year. So that also plays up the thing, and as what we have disclosed, a kind of a revenue from charging. Now, who would have thought that we would be able to open up a new segment in itself which did not exist at all? So this, I believe, will also help us slowly, gradually, and it's going to be pure profit from the commission, from the charging that people will do.

Yes, this last question, can you, like, explain, like, kind of in, you know, in a unit economics, how this new partnership is going to help us, like? Like if we sell, like we are selling 30% of EVs, we are selling 20-25,000 cars a year. So selling almost 7,000-8,000 vehicles, how much of charging does, how much units does a car usually consume and what kind of revenue share are we looking at from this segment?

I don't want to do it on a public forum right now or to disclose the commercials over here because it's a unique, first-of-its-kind thing, and we want to kind of keep it exclusive.

Sure, sure. We can get back to it. Thank you so much.

Thank you. We take the next question from the line of Lokesh Manik from Valum Capital. Please go ahead.

Yes, good morning, Sanjay, sir, and Ariman and team. Am I ordering?

Yes, Lokesh. Go ahead, please. Great, great.

I'm good, Sanjay, sir. Thank you. Sir, my question, just continuing on the charge zone, I appreciate that you cannot disclose details, but some color on, you know, whether it would conflict with the OEMs, because they would also want to put up their charging zones and they have their battery specifications. All those kinds of nuances, or it also helps you, you know, from an OEM perspective, you become a preferred dealer in a lot of areas because you are offering that charging zone which is coming through this partnership. So how should we look at this, some idea on that, a broad idea would be really helpful.

Arieman here. Some details. Just a quick background on them. I think they operate close to 16,000 charging points across India. They are already working with most of the major OEMs in this space, including the mass market brands, the premium brands, and many of the luxury brands of all shapes and sizes. So what we are doing is that it will not really be a conflict with any of the OEM. I think the idea is that Landmark will actually onboard our EV customers onto their charging network, which is already operational. We are not putting up additional charging capacity with them. We are onboarding customers to their charging network, which is already existing and approved for charging across OEMs. And the idea is that we will be kind of getting a revenue share of those customers' spend, which will be a recurring basis over multi-years. The customer will also benefit because they will be getting a certain amount of wallet credit which they can redeem while utilizing the charge zone network. So, it also, in a way, an additional benefit is that it also helps us converting more customers on the sales side by utilizing this tool.

Correct. Great. My second question was on after sales. So, you know... I don't need to pick that number, but if you can just give us an idea, you know, what is the space for utilization left, you know, where we can reach reasonable utilization levels, and how far are we, let's say, from 100? Are we at 50, 60, 70 utilization? Just some broad idea on that would be really helpful to get a sense of the potential for after sales in the portfolio.

The location is... Mission-wise and it is brand-wise. So, it is difficult for me to off-the-cuff rattle out a number. And also, please keep and bear in mind that Landmark is one of the few who has made this entire asset allocation fungible. So, what is happening is that wherever we see, and that's why we go deep in a geography. We not only go deep in a brand, but we go deep in a geography. In case of a downturn or lesser capacity that a certain brand would require either at a showroom level or the workshop level, it is quickly given to some other brand. So, before we add up more capacity, we always look at utilizing the existing capacity wherever we can actually do. We have cut our workshops, we have kind of reshaped, resized our workshops as well as showrooms. to kind of do this activity.

Great, great, sir. That's it from my side. Thank you so much and all the best.

Thank you. Participants who wish to ask a question, please press star and one. We take the next question from the line of Vijay Pandey from Access Capital Limited. Please go ahead.

Thank you for taking my question. A couple of questions. First one, the outlet says, so our number of outlets is around 144. I remember that last time when we spoke, there were around eight outlets that you classified as new. So, I just want to understand how many of these 144 are still new and there the ramp-up can be on the higher side over coming quarters, and how many of them have moved to the, like, Nominal level, like with more than 12 months of operation.

Yeah, so Vijay, we stopped the kind of taking refuge under this new category. We said that now there are no meaningful number of new outlets, so we don't want that handicap or some consideration from investors that these are new outlets, and we are putting everything We will continue to have two, three, four, five new outlets at any given time. So, that's fine. That's the way we have always been. That's the way the business is. So, we are not kind of, we stopped classifying any kind of new outlets, I think, a couple of quarters back. After that, we have kind of taken everything as if it's regular old.

As of now, is it fair to assume that almost all of them are Like, broadly, all of them are operating at nominal capacity?

No, that's not what I'm saying. There will be some which are not operating at the optimal capacity, but we are not kind of trying to carve them out. Whatever has opened, say, three months back, six months back, we opened two new outlets of BYD only, say, a week or ten days back in Pune. Now, obviously, they are not working at optimal capacity in the first 15 days of operation. So, there will be outlets like these which will continue to be new, but that's the part of the journey. So, there will be a few which will be like that.

And on the profitability side, so, is it fair to assume that because last year, I remember that we had some GST-related issues with the second quarter. Should we assume that this year, quarter two and going forward, quarter three and four will be a more normalized quarter? Like an EBITDA margin of 1.5% on pro forma, like on new car sales.

Yeah, it would be a normalized quarter. I do not expect any disruption like what we had seen in this second quarter. Last year's second quarter was a traumatic period, and I don't expect that to repeat.

And so, on the Mercedes side, quarter-on-quarter, the revenue has declined meaningfully for Mercedes-Benz. So, any particular reason?

See, look at the business in a seasonality way. The first two quarters of the financial year are 40% of the business, and the last two quarters are 60% of the business. We all know that the Jan-Fap March quarter, not only for Mercedes-Benz, but for everybody, is bigger than the April, May, June quarter, which is... Which is the slowest quarter in the Indian automotive industry. So, the message here is that if on the slowest quarter this kind of growth has happened, though, let me qualify that last year the base was lower. And after September or October of last year, the Indian auto industry, after the GST 2.0, started to grow at a much... So, the two points here which I am making is that there is a seasonality. March quarter is always bigger than June quarter, and we have grown with Mercedes-Benz year on year by a big number.

Okay, okay. And, sir, anything on the interest cost? How should we expect the overcoming quarters or coming period?

So the interest, the borrowing costs for us are pretty stable. We haven't seen anybody asking for a higher rate. Our cash generation is happening month on month, and our CAPEX, which we had guided in the last year closing, at around 50 crores. We are, as of now, in line. The first quarter, we have spent less than the proportionate share. I can't say for the rest of the year so far, but as of now, we are holding that, and that cash generation is going to be going to repay the working capital loans till we need the money.

Okay. Okay, sir. Thank you. I'll fall back in review.

Thank you. We take the next question from the line of Harsh Shah from Helios Capital. Please go ahead.

Hello. Yeah, what are you?

Yeah, yes, Harsh. Go ahead, please.

Yeah, congratulations on a good set of numbers, and again, very good set of disclosures, especially on the market sales side. Now, I understand that in the after-sales service business in the EV side, the sales are much higher, up by 45% in brand one and 9% in brand two. However, can you talk about the quality of these sales, like what sort of profitability margins will there be here? Because I'm assuming in EV, there'll be a lot of electrical and electronic sort of component changes, which might be in the material cost side and might not have very high margins.

Can you, Harsh, repeat this? I didn't exactly understand what you were asking.

Basically, sir, I'm asking, when we look at the revenue on the after-sales side, EV versus ICE, I understand that it is higher. Can you also talk about the profitability on this higher revenue? Is it similar to what we are making right now at around 18% margins on EV?

It is similar. What we have excluded from this, if we had not excluded the warranty, then the number was in fact looking much more in favor of, not in favor, favor is an incorrect word, where the EV cost was looking much higher if we had taken the warranty, because warranty may involve changing of battery, which should be a very high value thing. So we have taken it out. So, the margins, as of now, what you are seeing will be similar. So, we are not saying that it is going to be higher over a period of time. We are trying to say that it is not going to be lower. Right now, it shows to be higher, but we are taking a cautious stand because things are just kind of unfolding, but we don't expect it in the near term to be lower.

Okay, welcome. Thank you.

Yeah.

Thank you. We take the next question from the line of Chirag from MS Capital. Please go ahead.

Hi, congratulations on a strong number, sir, and thank you for the opportunity. Just one clarification, I think in the opening remarks, you mentioned that gross margin is probably not the right way to think about our business in the interim. Could you elaborate on that? Obviously, gross margins have been a little soft also this quarter. Could you help us understand, you know, what are the moving parts in gross margins that make it misleading on a quarter-on-quarter basis?

So, this is something which we don't, while we do the business, we don't look at it so closely. Now, when we started looking at it closely, what came out is that every brand has its own kind of a business model. Where there are higher margins that we may be able to make, the costs are also higher. Cooperating costs are higher. The manpower requirement, the quality, the infrastructure is different. So, the net, what comes out of it, so this is one part. And the second is that the mix of sales and after sales. So, a business will have 16% after sales as a component of its overall revenue. Business B, which is starting now, may have 5 or 7% after sales business, which will give a gross profit which is lower for business B. But the business B may also have costs which are lower prescribed by the OE. So, it's a little complex thing. It is between sales and after sales. It is within different brands. So, when you have different portfolios, this is what emerges. So, what we are focusing on is going towards, because why do we need a gross profit? We are basically finally wanting an EBITDA and a PAC, and a cash that the business generates. That is the objective of doing it. So, that's why we make this submission. And, you know, maybe a one-to-one meeting, we can show you on a spreadsheet as to how, why we are saying what we are saying.

And this is a follow-up on that.

Yeah.

Thank you. We take the next question from the line of Abhithar Jain from Monarch AIF. Please go ahead.

Yeah, hi, sir. Sir, my question is on the employee cost and other expenses. We have done very well there, and I think we are now trending below our understated targets. So, as we ramp up from here in terms of the sales, you know, since the new audience sales volumes are ramping up, what do you see these numbers trending going ahead, and is there room for more efficiency in these two metrics?

Yeah, Abhisar, thanks for this question, and I believe that on this call are some of our senior employees who may have also joined. So, the message is unequivocal from my side, from our side on this table, that the cost focus has to continue. And we believe that this has used to further go down. As the revenue increases, that it will. The point is that the newer launches, a lot of availability and ASP going up, the revenue is going to grow. We have to keep a razor focus on the costs, and we believe that this still, as a percentage, has a way to go down.

Sir, any indication on what could be efficiency over the next two years, if you assume a certain... Growth in top line, which, of course, we are right now having a little higher growth with the industry doing well, but even at a much more normalized top line growth, what would you expect these metrics to further improve by any indication?

I would take a little more time, maybe once on a separate call or whatever. We will try to do a more detailed granular number rather than my just throwing a number. What we have done, Abhisar Bhai, and you will appreciate is that we have walked the talk. When we said that we will do, say, a 4% of cost, and we went there, we actually did that. When we say that a certain thing will happen, we want to be a credible organization. What we say is what we do. So please allow us some time to put a number. I am only saying that the numbers, can the cost still go down? Yes, they can.

Sure, understood. And so just one request on the gross profit front is that is it possible to share the breakup of the gross profit quarter-wise in your PPT for after sales and new car sales so that we at least get the trend and understand that there sometimes are fluctuations because of the OEM mix in every quarter which impacts it? If it is possible, I would urge you guys to take

this back with me. We'll see what we can do.

Sure. Understood. And so just the last thing, as you mentioned that with cash flows, you know, being robust and CapEx being on the lower side, at least for now, of course, next year you will have your own plans sorted out. But for now, the CapEx is also lower. So the excess cash flow will keep on reducing the debt and subsequent decrease in the finance cost. Is that understanding, right?

It is right.

Thank you so much, and best of luck, sir.

Thank you, sir.

Thank you. We take the next question from the line of Akhil from 360 One Capital. Please go ahead.

My question is answered already. It was on better interest for us. Thank you so much.

Thank you. We take the next question from the line of Raman K.V. from Teakman Investments. Please go ahead.

Can you hear me? I just have two questions. One, during this quarter we grew, our top line grew around 22% to 23%, roughly. How much was this because of the increase in average price, because the OEM took price high, and how much was volume?

I think the price would be maybe around, what, 3%? I'm just giving a ballpark. I don't have it offhand, but I'm just saying the rest was because of the volume.

So, 19% will be the volume?

Yeah, I would think so. I may stand corrected going ahead, but I don't think I'll be in that way off.

Okay. And so, second question is, how much will the lease or rental cost for this quarter?

How much will what?

How much will the lease and rental cost for the quarter?

Yeah, I think, let's have Surendra, we haven't heard his voice in today's call, he didn't give an opening statement, so let's have him, he's also here.

So, our lease cost, which is the amortization of lease is around 19 crore for the quarter. If we look at the lease and interest lease cost put together is 27 crores. So roughly around 25 crores is our rental cost. So India's impact on the lease is around 2 crores, we can see. So going forward, yes, hello, can you hear me? Yes, yes. So going forward for the entire year, our rental costs or like the, including the adjustments will be around 100, 110.

Yeah, 100 crore around. Yeah.

Okay. Understood. And so my last question is, internally, what's your target of converting EBITDA to CFOs? Is there any particular target? If you look at our EBITDA percentage is 5.8%, which is roughly similar to the last two years. We are maintaining that percentage. We see further improvement in that percentage. No, no, I was actually, I just want to understand whether there is any internal target of EBITDA to CFO conversion, cash flow conversion.

Okay, so cash flow, last year it was 0.95%. We will be around that.

Okay, understood, sir. Thank you.

Thank you. Ladies and gentlemen, I have no further questions from the participants. I now have the conference over to the management for their closing comments.

Thank you, Access Capital, and the participants for a positive and a productive earning call. GFT 2.0 has given a fillip to the industry, and the demand side remains to be robust. Having added the capacity in the times which were tough, a landmark is well-poised. to capitalize on this and reward every stakeholder in its journey. Thank you.

Thank you. On behalf of Access Capital Limited, that concludes this conference call. Thank you for joining us, and you may now disconnect your lines.