Ladies and gentlemen, good day, and welcome to the Q2 FY 2022 earnings conference call of Havells India, hosted by HDFC Securities. As a reminder, all participants 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 signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Naveen Trivedi from HDFC Securities. Thank you, and over to you, sir. Yeah. Good morning, everyone. On behalf of HDFC Securities, I would like to welcome the management of Havells India Limited to discuss the post 2Q FY 2022 results. We have with us today the senior management of Havells India, represented by Mr. Anil Rai Gupta, Chairman and Managing Director, Mr. Rajesh Gupta, Whole-time Director, Finance, and Group CFO, Mr. Rajiv Goel, Executive Director, and Mr. Ameet Kumar Gupta, Whole-time Director. I would now hand over the call to the management for their comments. Thank you, and over to you, sir. Thank you, Naveen. Good morning, everyone. Hope you would have reviewed the Q2 results. The company delivered broad-based growth across categories. Except for cables, there has been healthy volume growth in each segment. Real estate upcycle improved outlook of industrial and infrastructure sector, and consumer optimism will support revenue growth in the upcoming quarters. Despite unprecedented levels of input cost inflation and continued volatility, we are hopeful to improve margins going forward. We may now proceed for Q&A. Thank you very much. We will now begin the question and answer session. Any one who wishes to ask a question may press star and one on the touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question.Any one who wishes to ask a question may press star and one at this time. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Ravi Swaminathan from Spark Capital. Please go ahead. Hi, sir. My first question is with respect to the volume and value growth breakup. I know multiple products are there. If you give a rough sense on what has been the kind of value growth and volume growth across each of the categories, or at least at a company level as a whole. I would say that, except for cables, where almost 80% is price led. Okay. I think for the rest of the categories, we would say that it's almost 50% price led and 50% volume led. That's how we would sum it. Lighting, there is more of a volume led growth than a pricing, but overall, other than cables, we can say it's 50/50. Got it, sir. Commodity prices continue to rally even over the past few days. Copper once again has kept going up. Other commodities are also rallying. What is your sense on further price increase? Are we going to take further price increases going forward to offset for the commodity price increase? That's right, Ravi. Actually, even in the last few months, it had increased and there is always a delay in passing on the price increase. Especially, for example, in products like air conditioners, the season was not there. It has higher levels of inventory in the industry. Yes, there will be price increases not only for the past but as you rightly have pointed out, that there is continued volatility in raw materials. Again, we have to take a view of the averaging because we can't take an immediate decision and then reface that. We generally take some time to let things stabilize and then pass it on in the market. As things stand, yes, there could be possibilities of further price increase. Got it, sir. My last question is with respect to the two hedge kind of revenue or demand. Last year we were sitting on a very high base of on an average 40%, 45% growth. This year, second half, are we confident to grow over it, match it, or probably it might even see some decline? If you can give a broad thought upon this. I think there is no doubt that last year was a time of pent-up demand, especially what we saw in the third quarter. I think we are quite enthused by the fact that last year was pure pent-up demand coming from the consumer and B and C class towns. This year, the growth or the demand that we are seeing is across segments and across regions. What is healthy is that we are seeing good demand coming from the residential sector as well as industrial and infra sector. Which was not the case last year. The real estate was still under stress. I think real estate has started doing well in the last six to eight months. The industrial interest demand is also picking up. I think that actually gives us confidence that the next six months could also be a decent growth. Okay. We'll be able to grow over the last year's base? Well, that only time will tell. I think at least what we are seeing that the demand pickup is positive. Got it, sir. Thanks a lot, sir. Thanks. Thank you. The next question is from the line of Venug opal Garre from Bernstein. Please go ahead. Hi. Thanks for the opportunity. Two questions from me. First is on Lloyd. Can you describe a bit more on the market conditions and what you see as the drivers for the hyper-competitive environment that you mentioned? That's the first question. I think Lloyd witnessed two years of lockdowns in the high season months. March, April, May are the biggest months for air conditioners. Still, 70% of sales of Lloyd come from air conditioners. Overall in the system, there was high inventory build-up for the season, which the industry was not expecting that it will be a lockdown again. There was high inventory, and when we came out of the lockdowns, the inventory put pressure on the fact that companies, including Lloyd, we wanted to sell the inventories and lower production also because everybody was stacked with inventory. Passing on the entire cost increase became a difficulty, and the industry is waiting for the right season to come in to pass on the entire cost increase. That is what I meant by the fact that there is lag behind the cost increase and passing it on to the market. Got it. The second question is more from a perspective of the volume growth, which based on your commentary, appears to be ex cable. As you mentioned, 50% is volume, 50% is driven by pricing. It looks like probably 10%-12% is a broader volume growth excluding cables, if you were to look at it, right? Correct me if that is wrong, but the perspective I wanted to highlight is that this sort of a demand growth on the volume side, how do you characterize it compared to what used to be in normal environments? Because to me, it appears that in normal growth environments, you actually tend to see only this much, right? Which is a healthy growth of 10%-12%. This doesn't sound exceptional growth. Is it a different way that one should look at the growth environment at this juncture? Well, I think I would term it as exceptional in the sense because when there is high inflation, you would expect the demand to be curtailed, and maybe there might be a degrowth because of high inflation and people would delay their purchases. The fact that the demand continues to remain strong is also reflecting the fact that the consumer continues to buy, the real estate buyers, contractors continue to buy even at these prices. Actually, it augurs very well when things stabilize. We believe that this growth intake or better than this should continue. Thanks a lot. Thank you. The next question is from the line of Renu Baid from IIFL. Please go ahead. Yeah. Thank you for the opportunity, and good morning, everyone. My first question is, given that you've highlighted steep inflationary pressures and volumes still being steady, are you seeing any risk with respect to down trading by consumers, especially given these headwinds in the market? Well, we've not seen that much in that thing. In electrical products In fact, I would argue, Renu, that when there is high inflation times, there is a shift from unorganized sector to organized sector. When people are spending more on an electrical installation in the house, because of the raw material increases, they would want to even stretch a bit beyond and go for trusted brands and high quality products. We've actually seen that there is improvement in the kind of purchasing which happens. We are also wary of the fact that India is a large country with very varied customers all across regions as well as channels. Today, I would say that Havells is far more balanced in terms of offering different brands and different feature-led products to the consumers, whether it is for affordable housing or for premium customers. We have a vast array of products and brands across categories. Sure. This is where I had the second question linked, that last year we had a reasonable share gain coming in from shift from unorganized to organized, plus smaller players losing shares. Now in the current environment where everything seems to be now getting back to normal, both on supply chain as well as business operations, are we seeing the share gains being sustained? Across some of the key categories are you seeing any signs of consolidation or market share gains further strengthening because of some other brands losing out? Yeah, I think market share gains and consolidation would continue to happen. In fact, in an inflationary environment, the relative gap between unorganized and organized sector reduces. The other thing is, we've also seen, though we've been able to manage it well, there has been supply chain disruptions. For organized sector, it is easier to manage as compared to the unorganized sector. There are supply chain disruptions, and volatility in the raw material also is managed better by large and organized players. I would say that this shift is something, and hopefully, with the larger part of the wallet share, I think this shift will continue to happen. Sure. The second question is on the A&P spending, which was anyway relatively muted in the last few quarters for Havells. We have seen further shrinkage in this quarter. By when are we expecting to finally revert back to normal A&C spend of at least 2.5% of revenues? Do you think that shrinking these spend can have medium-term implications on growth in a hyper-competitive market? I think the investment for Havells in brand continues to remain. From this year, last year was a COVID year. From this year, we had decided that we will start investing back into the brand at normalized levels. The muted spends in the first quarter, second quarter, first half is more because of the timing effect. We definitely see normalized A&P spends coming in because of the festive season, plus the demand for summer products coming in in the next six months. We will start seeing coming back to normalized levels soon. Sure. My last question, if I can ask on Lloyd. Where are we in terms of investment in channel distribution for the non-RAC portfolio, specifically refs which were launched and washers? Do we have any medium-term targets which can be shared in terms of market shares or revenue growth for these categories? Any new category requires a good amount of time to get deeper into distribution. We are moving forward in terms of penetration in the channels. There's good acceptance both in the new models of washing machines as well as the new category of refrigerators. Good acceptance from the trade. Obviously, the consumer demand has to be generated over a period of time. We are quite hopeful that in the coming times these two categories would become a sizable part of Lloyd. Sure. Thank you, and all the best, sir. Thank you. The next question is on the line of Nitin Arora from Axis Mutual Fund. Please go ahead. Hi, sir. Thank you so much for taking my question. Just sorry again, drilling more on the demand side because you always give street a very fair outlook on the demand. At one end, you are saying the demand outlook is very good because of the real estate part. At the other end, we are saying there is a lag in pricing, which you were not able to take, margin should normalize going forward. My first question is, when the demand was so strong, what stopped you taking the price hike even in this quarter? The other part of this question is that despite a market share gain from an unorganized, the volume growth is still about 10%-11%, which is a normal growth rate which you used to do pre-COVID. I'm sorry, sir, I just found these statements very contradictory, so just thought we'll ask you, and I have two more questions after that. Okay. Encouraging question, I would say. I would say that we are not really in a commodity industry where raw materials or input costs go up and the next day you increase prices. There is a trade in between, there is an expectation of how the competition is behaving. This is a very different time than normal cost increase of 2%-5%. There is unprecedented price increases. Copper has grown 100%, steel has gone up 100% in the last one year. It is never a time where things settle down. In the trade, acceptance of the product, the pricing, everything has to take time. There is a lag behind that. Again, as I said, we can't compare it to a commodity industry. Brand and distribution industry plays very differently. Of course, you can say it's almost like a testing of the both the trade and the consumer at what is the price elasticity for demand not to start getting impacted. That's something which continues to remain, and that's the reason for the lag. The second question, and I think I alluded to a bit before as well, that despite the fact that there is such high inflation, which has again not been seen in the, I would say past few years of, or at least my experience, the fact that we see volume growth of normalized times is actually quite a good indication that the demand is strong. I would argue that during such an inflation time, the demand would soften, both for the consumer as well as for the industrial and residential real estate developers. The fact that volume growth is continuing, which actually these segments had seen muted growth or even de-growth in the last few years. There's been in such an inflationary trend, if it is increasing, so it's a very good indication for the future. Got it. Sir, generally, with respect to two things, one is the inventory in the channel, how we as placed there, and generally as a sentiment, as a customer sentiment as a retail, is it safe to assume that this quarter was more of retail lower than the wholesale channel filling was higher, and then eventually this quarter seems to be where the company expects the retail finally to start picking up? No, I would not say that this was a quarter of filling up. I would say that the primary to secondary ratio would be same. It would not be that this was a time of filling up the trade. The inventory, one can assume it's still at a very normalized level? Normalized level. I would say the inventories are at normalized levels. Just a last question on the Lloyd. There's a comment made by the company in the presentation, the high competitive scenario. Now, sir, this industry is being competitive from last 10 years. I think next 10 years also it will be very competitive. Is it more of a quarter phenomena that stays an issue? We talked about last few years of making our plants, supply chains will be very strong, and now we will make more margins. When that 2%-3% market share has come to 4%-5%, the growth is becoming difficult for Lloyd in the AC business. I just wanted to understand, it's more of a quarter phenomena or because this competitive comment will be there forever. Just your take on that, sir. Thank you. I would say that this is more of last couple of years of industry as a whole because of the lockdowns and the major season going away for air conditioning industry. The benefit which should have come because of many decisions by the government, whether it is imposition of ban on imports and all that really didn't help us gain any market shares or gain big volumes in this thing. I think we'll have to wait for the next season to actually see the real effects for Lloyd as well as for the industry. Thank you. Thank you. The next question is from the line of Siddhartha Bera from Nomura. Please go ahead. Yeah, hi. Thanks for the opportunity, sir. I would first continue with the last question on Lloyd. What is your thoughts on medium term, like we understand in the past there have been some issues because of lockdowns and all. In general, what is your medium term target of any market share in the AC segment or anything, if you can highlight just for us to understand where can Lloyd be, say, three, four years, and what are the steps we plan to do to achieve that? I would say that our outlook on Lloyd continues to remain extremely strong. We did this acquisition to enter into a high growth industry where Havells was not hitherto present. That continues to remain strong. The investments that we've made in this indicates the fact that we are quite positive over it in the medium and long term. The steps that have been taken is, of course, investment in manufacturing, brand, and distribution. All three things, those investments continue to remain. I would say that our focus in the next few years for Lloyd would be to gain a healthy market share in each product category. I would even say that this would be the main criteria for Lloyd, that in each category, including air conditioners, we would like to see our market shares grow in the coming times. Got it. Even on the margin side, what will be your thought process anyway, because this segment seems to be the competition remains high, and we do have our benefits of in-house plants? Apart from that, what really do you think will help us get a price advantage which can improve margins, or it will be entirely by backward integration according to you? I would say it will be due to volume build-up and looking at even the export markets. Basically, we will continue to remain competitive in the market as depending upon the competitiveness in the industry. The real emphasis would be on getting good growth as well as reinvesting back the profits into brand building and distribution penetration. Got it, sir. Sir, our last question will be on the price hike side. If you can just broadly indicate to us based on the current commodity prices, what will be the price hike required according to you broadly across segments, if you can, to sustain our past margins, that will be very helpful. Thanks a lot. It will be very difficult to tell because the price, there is too much of a volatility in the cost, and we usually wait for some time to see the stability in the price and then take the decision. It will be difficult for me to answer this question on the call. Okay, sir. Okay. Thanks a lot. Thank you. The next question is from the line of Charanjit Singh from DSP Mutual Fund. Please go ahead. Hello, sir. Thanks for the opportunity. My question is basically on Standard and REO brand. If you can touch upon how has been their performance. Going forward, as we are seeing more penetration into the rural and part of the markets, how do you see these brands more relevant going forward? Actually, they are quite relevant, in fact, for our switchgear category, for our wires and cables category because Havells operates for a different customer segment and a different channel. Standard continues to remain very strongly focused on distribution differentiation by having a different channel for more contractor-based and regional strength. REO continues to gain from the fact that it is catering to a customer segment which is for affordable housing. I think the brand play or the brand differentiation within the overall Havells portfolio is panning out very well, and we see good growth in both these brands. Sir, will you be able to quantify how large have now Standard and REO brands become right now? Not able to. We actually look at it as a not just as a brand, but within this business category. We usually don't give these figures of how big these brands are. Because the whole idea is to be able to leverage manufacturing capabilities and design capabilities to cater different segments. Okay. The other question is on switchgear category. If you look at two year CAGR, it has shown around 10% growth. Going forward, as you're talking about real estate revival, on switchgear segment specifically, if you can touch upon both the residential as well as the industrial side, how that segment will pan out. I believe that going forward, this will be strong because as you have seen in the last few years, switchgear sales were impacted both for Havells as well as for the industry. I think, given the fact that the industrial tech cycle is also strong, as well as residential pickup is also strong. I think switchgear definitely seems to be benefiting from that in the future. Okay. Lastly, in terms of B2B, B2G side of the businesses, if you can touch upon, because in half maybe we can see significant pickup in the infrastructure-related execution. How does that lead to this overall growth for us in terms of infrastructure as a segment contributing for us in overall revenue terms? Will you be able to quantify? That's my last question. Yeah. I think we see good traction in both B2B and B2G, industrial, infra, all the segments. Also on the property side, we see from the developers as well. I think as we alluded in the switchgear, on the let's say lighting side, on the cable side, everywhere, I think we see good traction. I think that's why we remain confident that growth momentum should continue despite the price headwinds. Thanks, sir. That's all from my side. Thank you. Thank you. The next question is from the line of Ankur Sharma from HDFC Standard Life Insurance. Please go ahead. Yeah. Hi, sir. Good morning, and thanks for your time. First question, on the fans segment, if you could just talk about what would have been the industry volume growth, either in Q2 or the first half, and how our market share would have moved in the fan segment? I believe that our focus on market share gains continues to remain. I would say that here we saw normalization of the inventory levels in the trade, and hence not a very high volume growth in terms of fans as we've already said, almost 50% is price-led growth. I believe that because of the summer season not being very strong, the trade took time to normalize their inventory levels, and now the inventory buildup will start happening from the third and fourth quarter. Okay, fair. What would be our market share and anything on how much we would have gained over the last three, six months? Well, I don't think we've ever given our market shares, but Havells continues to retain a leadership position in the premium segment. As you know, Havells does not operate in the economy segment, which is still about 30%. Our strength and positioning in the premium segment is extremely strong. Okay, fair. Secondly, very strong growth seen on the lighting side last quarter in Q2, and as you mentioned, it's largely volume led. Is it more of B2B? Is it the fixtures picking up now as well? What's really driving that? Is it distribution? Just some color, what's driving that very strong growth in lighting for us, and do you think it sustains? As you know, consumer lighting is actually very innovation and distribution-oriented business. Over the last three or four years, there has been heavy investments. As you say, Havells is uniquely placed in this industry because we are one of the only manufacturers or sellers who manufacture the entire lighting rather than depend upon imports or third-party manufacturing. There has been heavy focus on innovation. There have been very good product additions to the consumer lighting. Last two or three years, there's been extreme rigorous focus on distribution penetration. Our penetration in the distribution, retail outlets is increasing. Our extraction from the retail outlets is increasing because of innovation. Our penetration in rural is also helping lighting go to these areas. Innovation in products like inverter bulbs for rural areas and all. That has helped gain market share in lighting. and at a very fast pace. I think that is the reason for the volume growth in lighting. Okay, fair. Just a last one on the switches/switchgear, where you highlighted a pickup on the real estate side. Just wanted to understand, is this more region specific, more say around Bengaluru, driven by IT or some pockets in the metros? Are you also seeing a very broad-based pickup on the real estate side, even in the Tier 2, Tier 3 kind of markets along with the Tier 1 markets, and therefore that confidence that this has stayed up? I would say it's a broad-based pickup. In fact, as compared to last year, it's more broad based because last year was more Tier 2, Tier 3. Not only the Tier 1 cities, but also as you rightly pointed out. Urban areas like IT sectors. Generally, there is a pickup across the customer segments and the regions. Understood. Great. That answers that question. Thank you so much. Thank you. The next question is from the line of Sonali Salgaonkar from Jefferies India. Please go ahead. Thank you for the opportunity. My first question is regarding price hikes. I understand you cannot comment on the quantification of the upcoming price hikes. Could you broadly quantify what has been the YTD price hikes on an average across your portfolio, and also how much price hike you took in Q2? It will be difficult for me to give these numbers because each business behaves very differently. Again, lighting is very removed from switchgear. There's copper, steel, aluminum. I don't want to attempt this answer in this call. Got it, sir. Secondly, on the demand, any thoughts on the festive season demand now that Navratri are behind us and Diwali is in the offing? Also you mentioned that inventory situation is normal. Would that be true also for the air conditioning? Sorry for taking your second question. Air conditioners, second and third quarter is the lower season. I think, you need to pick up air conditioner. We need to see the demand coming from January onwards. As far as festive demand is concerned, usually we've seen that the trade is quite positive at this point of time, and the pickup is strong. Which indicates that the trade is also hopeful as well as the initial signs are positive. I do believe that the festive demand will continue to remain strong in the coming days because the early indications are positive. Got it, sir. Sir, lastly, any updates that you would like to share on the PLI scheme and also if any supply chain issues? We have applied for PLI. I think we are awaiting the sort of regulatory approval for the same. I think we will update as we receive the same. Sir, we have applied for both LED and ACs? Only for air conditioners. Okay. The second question is if any supply chain issues? We are not facing any significant supply chain. I think as you know, we are one of the few companies who are very well vertically integrated. Some challenges are there, I will not say they're disproportionate. What is our import content currently? That's very low. Almost 90% we do ourselves. Got it, sir. That's it from my side. Thank you. Thank you. The next question from the line of Girish Achhipalia from Morgan Stanley. Please go ahead. Yes, sir. Thanks for the opportunity. My question is on other expenditure. If I look at other SG&A, and it's difficult to kind of compare it as a percentage of revenue because there's high inflation right now. I look at the absolute numbers, and I know there'll be some expenditure which I am talking outside of ad spends, which would have been cut back. When I look at ad spend, they are flat on a two year basis at INR 268 crores, even though first half versus first half of 2019, they are down 7%. What I want to understand is how sustainable these numbers would be and how should one look at these numbers going forward. Are there some specific savings that you're driving? That's one. Second, I just wanted your CapEx outlook for three years. The third one was around market share for AC. I'm sorry if you've already answered this, have you maintained market share or have lost a little bit of market share? Those were the three questions. On the advertisement sales function, we have clarified there is no. My question was, ex ad spend, if I look at other expenditures, after contribution margin and between segment debate. What's the question? Yeah, that number is flat on a two-year CAGR basis on an absolute number. I know as a percentage of sales, it's unfair to comment because the inflation two years back was different. The current run rate of INR 268 crores, is that a sustained number? Have there been some specific savings that will continue from even in ensuing quarters? As you remember, last year we had mentioned that when COVID happened, we looked at the good cost, the bad cost. There were certain sustained cost takeouts which happened. Of course, there is an increase over last year wherein the good costs might have come back, but certain bad costs are out. Yes, what we have seen in the second quarter is sustainable going forward. Certain things, of course, will continue to increase with our continued investment on manpower. Otherwise, generally this is the right SG&A spends for the second quarter. As far as advertising, we've already mentioned that there is no point in looking over last year or last to last year. Sure. Because of the timing, the first quarter had IPL in 2019. This quarter was a lockdown. It's very difficult to compare. Going forward, we believe that the advertising levels will start coming back to normalized levels. I think there was another question. Yeah, CapEx outlook and AC market share on Q2. Yeah. No. It can't be looked at as in 1 quarter. Generally, in the last one or two years, we've started gaining market share. Sure. Anything on the CapEx outlook, sir, for this year and following two years? For this year, we estimate around INR 250 crores. No, sorry. INR 300, INR350. INR 300 crore-INR 350 crore as a total. Next year we shall be coming back with our revised plans by the end of the fourth quarter. Sir, one small clarification. It's the last one. The contribution margin for cables and wires is quite low. I know because of the commentary that we've made. What I want to understand is the mix more towards cables, hence it was slightly more difficult to pass it on, or that is not the reason in this specific quarter for contribution margin to be where it is for cables and wires? No, you are right. First of all, cables are difficult to pass on because of certain orders already in hand. Actually, the mix was more towards skewed towards wires in this case. That's why we believe. Okay. That it's more for temporary phenomena that we should start seeing margins improving from here. Okay. Perfect, sir. Thank you so much. Thank you. The next question is from the line of Pulkit Patni from Goldman Sachs. Please go ahead. Sir, thanks for taking my question. Just one question. Sir, do you think we could be in an inflation spiral where our channel partners are very well-informed of where commodity prices are, and that there will be price increases attempted, and as a result, they could be consuming more than what they would typically do, in which case, we could probably see some sort of pre-buying happening, which could result in some slowdown in the outer quarter? Do you think that is something which is possible? I understand all our channel partners are very well aware of how commodity prices are moving. That's the only question I have. A very challenging question, I think a lot of price increases happened between the second quarter of last year till about the first quarter of this year. During the last quarter, there have been not I would say there is normalization of inventory levels. There will always be some pre-buying whenever there is an expectation. For example, the copper went up again, there will be some pre-buying happening, just of those events. It takes about 15, 20 days to start coming back to normalized levels. Over a longer period of time, I think, I would say trade is not only smart to pick up, trade is also very smart to keep their ROCEs intact. Okay. Got it, sir. That helps. Thank you. Thank you. The next question is from the line of Latika Chopra from JPMorgan. Please go ahead. Yeah, hi. Thanks. My only question is on margin outlook. In the beginning of your comments, you had mentioned that you're hopeful to improve margins going forward. Just wanting to check, is this confidence shared on the gross margin levels? Is this driven more by you taking more price hikes going forward, or are we looking at any other cost levers here as well? Thank you. We believe that the kind of raw material volatility which has remained, it's possible that we've not been able to pass on the entire cost in the last few months, and there will be certain price increases if the raw material continues to remain high. We are definitely hoping and viewing that if there is some sort of settlement there, then there could not be any requirement of a price increase, which would bring our margins to a little bit better levels than before. As we can't really see quarter-on-quarter because cables and wires is lower because of inventory situation, the buying patterns and all that. I think there also, we are hopeful that they should, over a period of time, come back to normalized levels. Sure. Thank you. Thank you. The next question is from the line of Achal Lohade from JM Financial. Please go ahead. Yeah. Thank you for the opportunity, sir. It was partly addressed. Just wanted to clarify on the margins front. If we look at in the past, our margin range was between 13%-14%, 14.5%, talking ex Lloyd at EBIT level. While if we see currently last five quarters, we've had between 17%-19%, then the last quarter being at 16%. Just wanted to check. When you say that our margins would improve from here on, so part of the margin expansion is obviously to do with the cost control, and given the exceptional situation we are in. If I were to ask you, sir, in a normalized situation, wouldn't some of these costs come back? What is the extent of margin improvements would you see from the current levels? The margin is, again, I would say that I'm a bit surprised the fact that you want to know what is our margin target. There is no margin target. We always want to grow in terms of revenues, and we want to continue to invest in brand building, and we have to continuously look at the competitive position. It's not really something like a margin target that we have, whether we want to maintain 15%. If that was the case, then probably when it was going 17%, 18%, we should have retained those margins. That never happens like that. It's all dependent upon the revenue growth, the kind of investment that you're putting in, the raw material position at that point of time. Generally, there is a range of margin that the company would like to operate in. That range is, I would say that, because of the unprecedented cost increases, this has been at a lower level, and it has been at a higher level during the last three quarters. There has been a range you can imagine, that we would try and remain between this range in the coming quarters. Got it. Thank you so much. Thank you. The next question from the line of Naval from Emkay Global. Please go ahead. Yep. Thank you for the opportunity, sir. My question is on the others category. If I adjust for 1Q 2022, this segment has been hitting a new base on YoY basis. If you can share some insights, which category or across the categories which are part of this, is it firing from all cylinders? Secondly, what is the margin aspiration also because that is now closer to double digits. Are we looking for similar to what we have in ECD category? In the others, as you have seen, I think most of the categories are doing well. Particularly the motors have been doing pretty well for us. I think we have always maintained these others category takes certain years before they start showing up, both on the revenue growth as well as on the margin. I believe there is a continuous improvement which is happening on both these counts in these categories. I think we believe this can only further improve going forward. Okay. Second question on cable and wires. The way volume growth has been there across the other categories, and now, as you mentioned, clearly there's a strong demand in real estate and construction. Will this category also see now equal contribution coming from volumes as volume growth will be stronger? I think we hope so, but you should be aware there has been an unprecedented sort of growth in the pricing in this business. We do hope because of the factors which you also outlined, that there should be a pretty decent volume growth in this business as well. Yes, I think the hope is pretty much on the positive side. One last on Lloyd, although you have highlighted in detail. How hopeful are you that industry will be able to take a price hike this season? Because one of the player continues to remain very aggressive on pricing and market share gains. How hopeful are you that this season will be normalized for the industry? I think we'll continue to be watchful in the industry. You have mentioned about the hyper-competitiveness. I think we will take it today as it comes. I don't think we work in absolute. I think we work on relativity, so we'll see as it comes. Sure. Thank you so much, and all the best. Thank you. The next question from the line of Bhavin Vithlani from SBI Mutual Fund. Please go ahead. Thank you for the opportunity. As you highlighted, there has been an unprecedented increase in the prices across categories. Are you actually seeing an impact on the demand, or are you also seeing any level of down trading because of the price inflation? I think we have addressed this question initially, but I think consumer demand in general has been very resilient. As somebody asked whether volume growth looks very normalized, which used to happen earlier. I don't think in a decade we have seen such unprecedented increase in the commodity cost. Despite that, if there is a growth in the business and the demand, I think it augurs extremely well. I think as a business, we feel very enthused, and that's the only thing we can say. We continue to be very positive on how the businesses should pan out going forward, in general for the economy, not just for us as Havells. Sure thing. Just a last question from my side. Ex of Lloyd, would it be possible to share the channel mix across the general trade, modern trade, and e-commerce? No, we do not share these. Thank you. Sure. Thank you so much. Thank you. The next question is from the line of Rahul Agarwal from InCred Capital. Please go ahead. Yeah. Hi. Good morning, and thank you for the opportunity. Most questions got answered. Just 1 clarification on CapEx. My sense was we had a higher plan of about INR 500 crore each year going into this year and next year. Obviously, you've done lesser INR 140 crore in first half. You're guiding for INR 300 crore-INR 350 crore this full year. What would be the revisions like? Essentially, what are the areas where we have basically revised the CapEx? Related question to that was, any update on the AC plant which we announced in February in the South India? Actually, because of this COVID-related disruption in the first quarter, as you're aware, the things have been sort of delayed. There is no much revision. Exactly, they got deferred. I think it is very normal in these situations. On the AC plant also, I think there will be update. We have tied for PLI as well. I think there'll be update, as we just mentioned earlier, at the end of the fourth quarter. There has been no significant down revision in terms of our CapEx plan because these are the long-term investments, I think, which we continue to do. Right. Got it. Secondly, just to clarify, obviously the base is quite high going into second half, and it's both on top line as well as margins. Last year we did about 15.5%. My sense is that's more of a function of a lot of discretionary costs were not actually incurred at that point of time. Going into second half of this year, you obviously take price hikes, margins can get better on the contribution level, and then there is some amount of ad spend which will obviously get incurred. As Mr. Anil said on TV today morning, that we're still looking at 14.5% for the full year. Is my understanding correct that we're looking for 14.5 for fiscal 2022? Look, what we can say. First of all, I must say that, I don't think I've given guidance on television. I don't know whether how it was construed, but now Rajiv will comment. Yeah. I think on the revenue side, we continue to remain positive. You see, as the other things are concerned, as you said, discretionary cost, we mentioned earlier on this call, there are always good costs and bad costs. I think there is no reason why the good cost should not come back. I think businesses will not be looked at from what happens in Q3 or Q4. These are the investment and the cost incurred for the long-term sustainable health of the business. I think there's will continue to be invested irrespective of what impact they could have immediately on a short-term margin. I think you have already articulated that, but all we can say that we are very positive on the growth, and that's something I think what we will definitely target in revenues. Got it, sir. Thank you so much. Good to see the working capital normalizing and the free cash flow coming back for Havells in first half. Thank you and all the best. Thank you. Come back. Thank you. The next question is from the line of Rahul Gajare from Haitong. Please go ahead. Yeah. Hi. Good morning. My first question is on Lloyd. I remember in the first quarter you had indicated that 27% of Lloyd business came from industrial and infra segment which is when you had reported contribution margins of about 2%. Along with this, you had also indicated that you all were in ramp up for other products like refrigerator and washing machine. My question is, does this high share of 27% of B2B business have anything to do with the operating performance that we've seen from Lloyd in this quarter? Is it possible you can share the similar number as to how much was infrastructure and industrial contribution for Lloyd business? That's my first question. Rahul, I don't think we have mentioned about Lloyd. Lloyd does not have this infra segment and all. I think there is some confusion. This was more for Havells. I think that's not something for Lloyd standalone. Okay. Because I thought. Industrial infra is not very significant part of Lloyd. No, I think this essentially was toward more from a B2B business. That is when you were indicating that 27% of business last quarter. No, more for Havells, not for Lloyd. Okay. Fair enough. On the second question, on PLI, I remember you all had indicated earlier you may not apply for PLI. Now that you've applied, which are the particular components that you're looking at manufacturing? That's something we have still applied. We will mention when we get the sort of endorsement from the regulatory authority. We have never said that we will not apply. It was always that it is under consideration. You see, businesses, but yes, for finished goods, since it is not available, we cannot do that. There are certain sort of components which we already do internally and we wanted to bring in-house. For those, we have applied, but I think the further details we'll provide once we get that approval. The last question is on the container availability. Given the supply chain issues that the industry was facing, is the container availability issue behind or even now we are facing container availability as a significant problem? I think it continues to be a challenge, but as we said, we are fairly sort of integrated in-house. For us, the incoming container situation is much more sort of relieved now than earlier. On the export side, yeah, there have been certain challenges, but those are not very meaningful for the business. We could say that these are not very insurmountable issues for us. Okay, fine. Fair enough. Thanks, Rajiv. This is very helpful. Thank you. The next question is from the line of Abhisek Banerjee from UBS. Please go ahead. Hi, sir. Thanks for the opportunity. A couple of questions from my side. The first one is with regards to ad spend. Again, going back there. Just to understand, would you be able to share how ad spend effectiveness has changed over the last couple of years? I mean, what has happened to the return on ad spends? Ad spend effectiveness. look, what we can claim is that ad spend is shifting more sort of digital, but we continue to present in all the mediums because I don't know, it's difficult to say which is getting irrelevant. I think our ad spend is now getting more broad-based on the digital channels, on the e-commerce channels, on the TV, as well as the print media. Effectiveness, I think it continues to be there, but frankly, we do not like to track and claim what percentage would be there and this. It is more of an investment for us than just a P&L item. Okay, sir. Understood. Coming to the second part of the question, sir, is there any discernible change in consumer behavior that you are seeing? With regards to consumers being open to new categories, because I did some store visits over the last couple of months, and I saw a lot of new categories in stores. Something like a Roomba robot, which cleans rooms and all. Are you seeing anything of that? Is that a countrywide phenomenon, or is it just limited to certain pockets of the country? Look, consumer is much more aware than he has been earlier because of his exposure to the internet and what he sees on the global basis. I think as we continue to respect consumer in terms of his choices and how he wants to upgrade, wants to feel more comfortable, and wants to pick up things which will make his life easier and happier. I think that this is something, evolution which is happening. It's only improving, and that's where Havells is targeting as to how we can come closer to the consumer by putting more and more innovative sort of products for him. Understood. Sir, you mentioned a 10% reliance on products which are not manufactured, or which I guess are imported. That 10% is in terms of value? Yes. It may be less than 10% as well. It could be something like 6%, 7%. Okay, sir. Understood. That's all from my side. Thank you so much for your time, sir. Thank you. Ladies and gentlemen, due to time constraints, that was the last question for today. I now hand the conference over to Mr. Naveen Trivedi for closing comments. Yeah, hi. Thank you everyone for participating in this call. We would like to thank the management of Havells India for giving us this opportunity. Anil, do you have any closing comments? I think, thank you everybody. Seasonal greetings to everybody on this call. Thank you. Thank you. On behalf of HDFC Securities, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.