Ladies and gentlemen, good day and welcome to TTK Prestige Limited Q2 FY24-25 Earnings Conference Call hosted by Ambit Capital. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please press star, then zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Yash Jain from Ambit Capital. Thank you, and over to you, sir. Thank you, Tanvi. Hello, everyone. Welcome to TTK Prestige Q2 FY25 earnings call. From the management side today, we have Mr. Venkatesh Vijayaraghavan, Managing Director and CEO, Mr. Shankaran, Advisor to the Board, and Mr. Saranyan, Whole Time Director and CFO. Thank you, and over to you, sir, for your opening remarks. Good evening. This is Saranyan here. Welcome you all for the Q2 earnings call of TTK Prestige. Before I hand over the proceedings to Managing Director, Mr. Venkatesh, I just want to remind the participants that today's discussions may contain certain statements which are futuristic in nature. Such statements represent the intentions of the management and the efforts being put in by them to realize certain goals. The success in realizing these goals depends on various factors, both internal and external. Therefore, the investors are requested to make their own independent judgment by considering all relevant factors before taking any investment decision. Thank you. I hand over the proceedings to Mr. Venkatesh for his opening remarks. Good evening and welcome to this call. So while we look at the performance of the company and the industry, I think our view of the economy is quite robust, and we see a lot of positive offshoots coming in from an Indian economy perspective. Despite issues around the global turbulence and other geopolitical tensions around, we do believe that the economy is on a robust platform, and that is sort of also reflecting in some of the numbers at a macro level. From our business perspective, if you had to look at some of the global tensions, it's sort of reflecting in our business impact in terms of container availability and in terms of some of the flight rates related, which has some bearing on our export business, which we will talk about as we move. Overall, the economy seems to be robust, and we do believe that that's a good positive sign for us as we move in the direction of growth for the industry as well. Globally, from an industry perspective, we believe after a long period of time, the industry is starting to bounce back again. Our categories and our core categories have started to see good growth coming in, particularly on the retail environment, and this sort of gives us the confidence that the overall direction with the categories are moving in the right direction. Our trade channels have done very well in the last two quarters, and this is complemented by our growth coming in from e-commerce and modern format stores. We do have specific issues around the rural channel, which in this category is sort of finding a little bit of struggle given some of the model changes that's happening and some of the economy-related issues on the rural demand as well. On the commodity side, like I mentioned, there is a surge that we've seen in terms of our prices. While it's being managed from the quarter perspective, we do believe that this probably would have an impact as we move forward. This level of increased commodity pricing is expected to be there across the year, and that's something that we would factor in as we move forward. Our export orders are robust. There's been delay in shipment because of freight-related challenges given the global tension. But our belief is that as we move forward, we would look at a robust export growth, and some of our shipments have got deferred to the second half of the year, and we believe that will also get sort of that demand will get addressed as we move forward. Overall, our outlook from the channel's perspective is quite good. We do believe that we're moving into a phase of good growth, and as we move forward, this would sort of help us drive the growth much more faster and ahead as we move forward. That would be my sort of remarks, and I think we're quite confident as we move forward that we would continue to keep the path of growth. We've also sort of looked at some of our investments to be made in a few areas of improvement, and that is work in progress as we move forward. Some of them would reflect as we move in the quarters coming by. So overall, a confident position, and we do believe that we are in the right place and position, and we will take this forward as we move. We are open to the questions and answers. Yash, we can proceed with the questions and answers. Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to only use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Resha Mehta from GreenEdge Wealth. Please go ahead. Yeah, thank you, and the warm wishes to the entire team. So the first question is on the consultant. So we have engaged a consultant, so if it would be possible to elaborate on what were the observations, corrective measures, gaps, etc., that have been recommended, and what we have worked out as a plan. And also related question that what would be the recurring cost for the consultant each quarter going forward, and till what time would we incur such a cost? That's the first question. So while we come back on the specifics, at this point of time, what we have done is to take an asset stock of where we stand and some of the opportunities and efficiencies that we would be able to unlock as we move forward. The consultant has actually done the first phase of the work, and they've come back with their recommendations to us. That is getting internally evaluated, and as we move forward, we will take appropriate steps in that direction, including sort of looking at the boundaries of operations with the consultant and the related costs as well. But at this point of time, I think the first part of the exercise has given us quite a visible set of opportunities that we would like to work around our core and therefore be able to bring in efficiencies as we move, both in terms of top-line growth and in terms of some of the related efficiencies that we can bring in. Specifics to the costing, I probably we would not at this point of time be able to talk about it, and over a period of time, as relevant, we will sort of talk about it later. Any specific findings or anything that you can elaborate from the consultant's recommendations? So we'll come back on that, and maybe at an appropriate time, we will come back on that. All right. The second question is basically on the channels. So you've called out that Institutional Channel is seeing some headwind or has been seeing some headwind for quite some time. So what exactly is the issue there? And also on the Prestige Xclusive Stores, if I see the closing as of this current September quarter is similar to what was there as of March quarter. So there's a reduction of almost 40 stores. So are we seeing any kind of mass closures here or any kind of stress on the Prestige Xclusive store format? So that's the second one. Yeah, Saranyan here. I will answer the second question first, which is on the exclusive stores. Yes, there are. See, what we have done is we have rationalized the stores to ensure that I think the partners that they are not doing well, I think we have closed down in those markets. We have filled up that gap with the other distribution process. So that's why you see a reduction. But going forward, I think we keep adding as we move forward, depending on which market is required and where exactly those stores are required, we keep adding it up. Over to you, Venki, on the other one. So some of these do not have a visible bearing on the top line, but it is more about rationalization that has been required at this point of time and that's been done in the Prestige Xclusive chain as we look at. From a channel perspective, like we said, one of the very positive signs that we see is that the overall traditional channels, which includes General Trade Exclusive Stores, e-commerce, and Modern Trade, are doing well. While we see a little bit of pressure on the General Trade channel because of the e-commerce scale-up and Modern Trade scale-up that's happening, as a combined bucket, we do see that there's a significant growth that has happened, and that would probably continue as we move forward. However, unique to the current situation has been the rural channel and the Institutional Channel. These have been some structural related challenges that are at the market level, not from Prestige perspective or not specific to TTK Prestige, but at a market level, and TTK Prestige being a very dominant player in the segment, we've sort of seen this impact our top line. These are some structural changes that have happened combined with weak demand from these markets, so to that extent, I think this is something that would be transitory in nature, but we would have to address it as we go. So just to follow up here, if I may, so when you say institutional channel, you are meaning the CSD channel or the corporate sales channel? And also on the Prestige Xclusive Stores, so broadly, the major part of store rationalization exercise has been done or is still underway? It's done. It is more or less done. This was work in progress that got finally sort of consolidated right now. It's largely done. And you would therefore see that as we move forward, the expansion plans would be visible. We are rapidly expanding new stores in specific targeted geographies, and that would reflect as we move forward. And as I said, the bearing of this at this point of time is very little from a top-line perspective, but the expansions will continuously keep adding to the team. On the institutional channel, yes, that includes the CSD channel as well. Even the corporate sales channel? Corporate sales channel, we're not seeing too much of a problem. It is more of the CSD channel and the rural channel that we are seeing this sort of a channel challenge that's happening right now. Got it. All right. Thank you. Yeah. Thank you very much. Before we take the next question, we would like to remind participants that you may press star and one to ask a question. Participants, you may press star and one to ask a question. The next question is from the line of Hitesh from Kosha Capital. Please go ahead. Hi. Thanks for the opportunity. Can you hear me? Yeah, definitely. Sure. Sure. Sir, could you share how have been the demand trends with this festive season? And also, if you can dissect this demand between, say, the mass premium segment and the premium segment? When I say premium, I mean products priced at a higher price point. How the demand has been in both these segments, if you can elaborate there? And also, how much of festive season sales are already reflected in Q2 numbers? Or is it in Q3 that we'll get to see the festive sales numbers? Some part of the season sales would be felt in this season as well, in Q3, partially. But a major portion has already been reflected in the quarter two as we speak. So to the question of where is the growth happening, we are seeing the growth happen at the mass end, which is reflected in terms of the insights coming in from e-com channels as well as the other, where we're seeing growth coming in from tier two, tier three expansions that are happening. We're also seeing growth coming in from the premium end. We are not exposed directly to the super premium end, but our belief is that the super premium end is offering us a growth opportunity as we move forward. From TTK Prestige perspective, across the three segments of premium, mass premium, and mass, we believe there is enough growth opportunities that are there and are getting addressed as we speak. Rural, there has been a weak demand, and that is sort of reflecting in the rural channel that we've seen. But otherwise, from a mass market perspective and the mass premium stroke premium perspective, the growth rate, in our view, is robust. Like I said, after a long period of time, they're coming back. The categories are coming back to a growth phase right now. Sure. And sir, how has been the implementation of BIS in the appliances side? Because growth that we see is quite subdued. And is there any I mean, how is the industry gearing up for this whole transition to this BIS? Yeah. So BIS implementation would largely impact the flexibility of having new products come in from export perspective, which is from other countries that they get imported. There is a progressive implementation of this across multiple categories, and that, I think, is a short-term challenge, but from our perspective, we would say that over the last few years, we've been consistently working on that with our vendor partners. We are better positioned to handle this challenge as we move forward. The subdued performance that you see is also partially due to the reflection of the rural channel. Appliances, overall, is growing well in the trade channels, as we mentioned, so going forward, I think we do see that happen. BIS and the implementation of BIS, long-term, in our view, is good. It ensures that there are certain quality parameters that come into the industry. From our perspective, we are better equipped to handle it, given that we have our vendor partners also doing this for us for the last three, four years now. Sure. And sir, just a last thing, because as you mentioned, the traditional channel continues to do well. We had a 12% kind of growth. But if you look at the overall number, it's still lower than the FY22 number that we had, at least on the domestic side. Now, if we do a like-for-like basis for the same traditional channel, how has it been vis-à-vis FY22? Is there a growth, or is there a negative growth there too? There is a growth. Sure. Sure, sir. I'll get back in a few. Thank you very much. Sure. Thank you very much. Before we take the next question, we would like to remind participants that you may press star and one to ask a question. I repeat, you may press star and one to ask a question. The next question is from the line of Sameer Gupta from India Infoline. Please go ahead. Hi, good evening, sir, and thanks for taking my question. Sir, given there is an early festive this year and we had a base of minus 15%, how do you look at this 2Q performance? Optically, it should have been a good growth because it's an early festive and the base is also favorable. Secondly, the industry is bouncing back. So what kind of growth are you targeting in the second half of FY25? Yeah, I wouldn't be able to give you a direct number on that. But like I said, I think our outlook is quite positive given the way we've been sort of looking at some of the channel performances in other sides. The overhang of rural continues, and that would be a challenge as we move forward. But we would definitely look at a good growth as we move. Specifics, I wouldn't be able to sort of work on right now. Actually, festive things, look at the development from the last week of October. So the festive filling of the stores has happened in the second quarter of September and the whole of October. So October, it looks very robust. Got it, sir. Got it. That's all from me, sir. I'll come back in the queue for any follow-up. Thank you very much. We would like to remind the participants to press star and one to ask a question. Participants may press star and one to ask a question. The next question is from the line of Sameer Gupta from India Infoline. Please go ahead. Hi, and thanks for giving the chance again. Just a follow-up. Sir, you mentioned that rural is facing an issue, but most of the companies till this quarter have specifically mentioned as to the problem being urban India, and rural is actually coming back very strongly. So just wanted to understand, is it a specific geography issue in rural that you're facing, or a little bit more color here would be helpful? So I think it's backed by two parts. There is a demand challenge in rural, in our view. And also, there is a channel-related structural issue that is being sort of addressed at this point of time. So a combination of channel and a combination of weak demand in rural is, in our view, creating this issue as we speak or the challenge as we speak. We are not too sure that there is a robust rural demand, which we are not witnessing at this point of time. The structural challenge is basically the MFI channel, you're saying? Yes, yes, yes. Both TSC and MFI have got some structural challenges, which is internal to them, and that is sort of reflecting in our performance right now. Got it. And it's not very geography-specific as to it's only a south-related problem. It is across the board in rural that you're facing an issue. This is across. The channel is more dominant in non-store, but this is across. Got it, sir. Thanks. Thank you very much. Before we move on to the next question, we would like to remind the participants to press star and one to ask a question. The next question is from the line of Resha Mehta from GreenEdge Wealth. Please go ahead. Yeah, thanks for the follow-up. So just on this BIS bit, if you could elaborate on how well the overall industry is prepared to handle this transition, and do you see that as a distinct advantage for players like us, and are we prepared for this transition? So if you could just share some granular details on this, it would be very helpful. So we are not dependent on the input so much. So we have built an entity structure, and we are able to meet the BIS standard for all the appliances which we sell in India. Okay, and how about the industry at large? The unorganized players or the very small regional brands? Companies, I cannot answer as well as other companies. Directionally, that would be a challenge given the dependency that some of the competitive other companies would sort of depend upon. I think over the last three, four years, we've invested steadily in our domestic capabilities, particularly in the appliance side. That we hope will help us in good stead as we move forward. In the short term, there would be transitory pressures on new product development and new product launches. But I think as we move forward, that's a good sign, and we are better poised to take advantage of this. Right. And on the China bit, right? So of course, post-COVID, we had greatly reduced the dependency on China. But overall, at an input level, would it be possible to quantify that what is the China sourcing? Maybe we don't do it directly, but via our vendors, possible to give some color here if not an exact quantification? There are some. The reality is that there are some core parts that still get imported from China. The domestic capability to do them is not there in appliances. That part of it, including the challenge of BIS, is getting addressed. So I think as we move forward, that is something that will get addressed. But from some of the vendors of ours importing some critical parts, that is still work in progress as we speak. But that's an area of focus that we've taken upon us to ensure that that does not sort of derail us as we move forward. Can you just elaborate on which are these small kitchen appliances? What parts exactly? Motors, etc.? Something, some color here would help. Not in this call. All right. Okay. Sure. I'll reach out to you offline. Thank you so much. Thank you very much. Since there are no more questions from the participants, I now hand the conference over to the management for closing comments. Thank you very much. So first of all, our wishes for the festive season and a happy Diwali to all of us. I think thank you for having taken the time to be on this call. And as we said, I think we do look at positive outputs coming in in terms of category, some of our performances as well. And we're quite confident that as we move forward, we would continue to do well as we've done in the past. And once again, Diwali wishes from our side. Thank you. Thank you. On behalf of Ambit Capital, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.