Garg says, Hyundai has always believed in the quality of growth. Going forward, the Pune plant will add capacity and give them more headroom for expansion, both in the domestic and the export market. The strong cost optimisation culture of the company will help them reduce costs going forward. The premiumisation strategy will continue to introduce more and more features.
Why are going for the IPO now?
Tarun Garg: If you see, this probably is the right time because post COVID, the whole world is recognising the importance of India, the growth of India, the GDP, and consistently at 6.5%, 7%, it is much higher than the global peers. Also in terms of Hyundai, we are expanding with the Pune plant. There has been a capacity addition of 250,000 and we believe this is just the right time for the next phase of Hyundai’s growth in India. The IPO is probably a very good stepping stone to that next phase.
Your biggest competitor is Maruti Suzuki. How are you looking to close the gap in terms of both your output and your financial metrics with Maruti?
Tarun Garg: We have been continuously on a growth path in India. We have our own strategy based on launching some benchmark products in India, using the strong parentage of HMC to raise the benchmarks in whatever segment we come into, like I said, whether it was the Creta or the Venue or the Exter or even with the IONIQ 5. So, we intend to continue that path.
The second is, of course, the premiumisation. If you see, on one hand, our SUV penetration, our contribution to our volumes is at a very healthy 68%, much higher than the industry penetration, then also we sell much higher trims. We believe in quality of growth, that growing along with in volume, in profits as well, so that it is more sustainable. We have a very strong domestic and export mix, if you see, at 80-20. Over the last 28 years, we have got so much love and affection from the people of India.
We believe in having India connect. Going forward, we believe that with the capacity addition, world-class manufacturing facilities and quality standards, global products but suited to Indian conditions and of course looking at India and giving respect to the Indian market in terms of launching the products which the Indian customers want will help us to really sustain our performance in the future as well.
Do you feel that the transition to electric vehicles is now happening at a faster pace given that globally nations have made a commitment to having to become net zero on their climate principles? In EVs, what are your plans and what are the launches you are planning?
Unsoo Kim: India is at the early stage of electrification. We are seeing that India’s EV segment is expected to grow strongly by 2030, led by the government’s strong initiatives and many OEM EV focuses. The HMI has strong access to the HMC’s EV and battery technology, so we are developing an EV ecosystem in India. We are planning to launch four EV models across the mass and premium segment, including our Creta EV, Q4 this financial year. Also, we are localising EV supply chains, like battery packs, driver train, and battery cells, etc. Also, we are investing in EV infrastructure as well. The overall offering mix, are there other launches you are also planning?
Tarun Garg: We have always been ahead of the curve. If you see this year, we launched the Creta, the facelift of the Creta, which has really received a great response. We launched the Creta N line. Of course, last month, we launched the Alcazar, which has again got a great response. We will always continue to see what are the opportunities that exist in the market and continue on this path of growth.What is going to be your long-term goal and strategy now that you are getting listed, towards creating long-term shareholder value?
Tarun Garg: We have always believed in really creating more value. We have believed in the quality of growth. Going forward, the Pune plant will add capacity to us, which will really give us more headroom for expansion, both in the domestic and the export market. We have a very strong cost optimisation culture in the company, which helps us to really reduce costs going forward.
The premiumisation strategy will continue to introduce more and more features. So, we will launch the new models. There will be new features with infotainment, software-defined vehicles.
I think there is a whole lot of opportunities, thanks to our parent HMC’s very strong capabilities in the research and development, I think those all will be handy tools and along with our strong success in India over this past 26-plus years, we believe that we can really continue to create shareholder value going forward as well.
Hyundai should be an ideal case study when we look at the concept of Make in India. Now, you have a manufacturing hub in India. In terms of your commitment to Make in India, what would that be? Is this going to drive your outlook on market share?
Tarun Garg: Right from the time we set foot in India, we have given a lot of focus to Make in India for the world. Exports have been a very critical part of our strategy. And even today, 80-20 domestic to export mix is very healthy. It gives us precious foreign exchange. It gives us a strong brand value as well. So, we believe that going forward as well, this concept of Make in India and of course now with a new plant in Pune coming in will really help us to grow sustainably in the future.
In terms of your financial metrics, like your revenues and your EBITDA, PAT, how do you see this year? How would you see them ending the year?
Tarun Garg: For the FY24 ending, we had a revenue of about close to Rs 70,000 crore, EBITDA of 13% plus, which we believe is one of the industry best margins, not only in India, but even globally. The reason is very clear that we have a very strong SUV, with a penetration of 68%, high premiumisation, good domestic export, very high plant capacity utilisation, very strong cost optimization structure. We believe that as long as we are strong fundamentally, as long as we believe in these levers of growth and sustainable growth, we will continue to make efforts to really have good margins going forward as well.
The festive season is around the corner. Does Hyundai see this as an opportunity where you can boost your sales? What are your plans now in this phase of the year?
Tarun Garg: Absolutely. All of us look for the festive season and this year, if you see in October, we have both the Navratras, Dussehra, as well as the Dhanteras as well. So, this is going to be, it looks like a very good opportunity for all of us, not only Hyundai, but all the auto OEMs and other consumer durable players as well to really increase sales. We are looking at it with a lot of optimism.
The start has been extremely good. The first week has been very good. We are very optimistic that the festive season will bring in a lot of cheers to the customers, to the auto OEMs and of course to the country’s economy as well.
Both India and China are becoming the key manufacturing hubs for the automotive industry on a global scale. In this paradigm, how does Hyundai see India’s role as a global automotive hub?
Unsoo Kim: As the Hyundai Motor Group, HMG is the third largest OEM globally and we at HMC have great access to the overseas sales network across more than 190 countries. So, we are positioning HMI as a production hub for emerging markets in the Middle East, Africa, and South Asia, and Central and South America. Our product line is very suitable for emerging markets. So, we are manufacturing and exporting to more than 80 countries. We have a good model mix for domestic export. These give us not only profit, but also some natural hedge for market fluctuations.
The contribution of CNG sales for passenger vehicles has risen over 11% year-on-year in 2024. How do you see the fuel mix for passenger vehicles evolving in the coming years and especially with the focus on EVs now?
Tarun Garg: The advantage which Hyundai Motor India enjoys is that we have access to all powertrain mixes because of the strength of our parent, HMC. We believe in giving customers choice. So, at the entry level, we give the customers a choice of petrol and CNG.
For example, Exter, Nios, and Aura. In fact, in Aura, the CNG penetration is more than 80%, close to 85%. In Nios, it was about 17%. In Exter, it was about 17%. After the introduction of dual CNG, it has now become 22-23%. Overall, CNG is contributing more than 12-13% to our sales.
In the mid-SUV and SUV segments, we give the customer choice of petrol and diesel. And of course, in the Verna segment, petrol and turbo. Then we have EVs as well. So, this kind of technology agnosticity helps us give the customers different choices. Also, in India, different geographies behave differently. For example, in CNG, in Maharashtra and Uttar Pradesh, CNG is very popular. In Telangana, diesel is very popular. In Delhi, petrol is very popular. So, having the various powertrains helps us to really target all the states well and satisfy the desires of all the customers across the country.