Ladies and gentlemen, good day and welcome to the Q1 FY23 earnings conference call of Havells India Limited, hosted by InCred Equities. 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 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. Rahul Agarwal from InCred Equities. Thank you, and over to you, sir. Thank you, Rutuja, and hello, everybody. Good morning. InCred Equities welcomes everyone today on this call to discuss the first quarter fiscal 2023 results of Havells India Limited. We thank the company for giving us this opportunity to host the call. We have the senior management of the company with us today, represented by Mr. Anil Rai Gupta, Chairman and Managing Director, Mr. Rajesh Gupta, Director of Finance and Group CFO, Mr. Ameet Gupta, Whole-Time Director, and Mr. Rajiv Goel, Executive Director. I now hand over the call to Anil ji for his opening remarks, and then we'll get into the Q&A session. Over to you, Anil ji. Thank you very much, Rahul. Good morning. We hope everyone is staying safe. You would have reviewed the results by now. There was steady growth in quarterly and three-year CAGR numbers. Overall contribution margins sequentially maintained except cable, which was adversely impacted due to commodity cost fluctuations. We expect benefits from the recent cost moderation to reflect in a couple of quarters. The demand outlook is stable in consumer and residential segments, with slight deferment in industrial and sub-segments. We can now proceed for Q&A. 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 the touchtone telephones. 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. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Naval from Emkay Global. Please go ahead. Yeah, thank you for the opportunity, sir. I have two questions. First, on channel inventory, you know, on cable and wire and other products specifically. Second, on Lloyd margins, as your media interview suggests that Lloyd margins will normalize in ensuing quarters. Will that get somewhat impacted by new facility, which will be again operational from this year-end or so? Thank you very much. In cables and wires, generally the system inventory is lower, and hence we believe whatever short-term pain of the inventory would be over in this quarter. From the third quarter, we expect normalized margin levels to come back in cables and wires. As far as Lloyd is concerned, because you know the inventories are larger, and then the season is also slower in the second and third quarters, we expect 100% normalized margins in the fourth quarter. We do not see any major impact on margins because of the upcoming plan, because by the time that gets ready, we would be venturing into the second, the coming season of air conditioners. Both, I think, in cables and wires and Lloyd, we should be expecting normalized margins in the third and fourth quarters. Sure. Some follow-up on this, inventory level for other B2C products, is there any change there as well? No, I think they have been stable over the last few quarters. Sure. Thank you so much. I'll come back in the queue. Thank you. Thank you. The next question is from the line of Latika Chopra from JP Morgan. Please go ahead. Hi. Thanks. This is Latika here. I just had, you know, a little more follow-up on the earlier two questions that were asked. The first one was on cables and wires. You know, we did see another company, you know, also reporting Q1 numbers, and it seems the margins held up pretty well there. I wanted to understand, you know, when you expect margins to improve, are we going to see sequentially improving margins starting with Q2 itself, or there's something else, you know, which we need to make a note of here? The second bit was on Lloyd margins. You know, you said normalized margins. If you could help us with, you know, what is the definition of normalized margin? Any range that you have in mind? If you could clarify what kind of incremental capacity, you know, is going to get commissioned, you know, and the timelines for the same. Thank you. As far as cables and wires is concerned, you know, generally when there is a sudden reduction in raw material prices, it's very evident that when you are selling in the market, you would be expected to reduce the prices, especially in cables and wires because when there's a sudden increase also or when there is an increase, we pass it on to the consumer in a short period of time as well as in a reduction also. Obviously there will be system inventory, certain you know, purchases which will continue to happen because there is some imported raw materials also which continue to happen, hence there will be certain impact in the second quarter. Hopefully in a few days or a few weeks, the system inventory will go down, but there will be certain impact from the past purchases. That's why I said by the third quarter we expect normalized margins to come back in cable wire fully. As far as Lloyd is concerned, you know, we've seen that pre-November or October, before, you know, the sudden increase in raw materials started happening in the industry, as well as probably Lloyd did not pass on the entire cost increase in the market because, you know, season was coming after two years and everybody was wanting to, let's say, retain or regain market shares. There was not full transfer of cost increases in the market. Before that, Lloyd was making double-digit contribution margin, and we believe that we should be back to those margin levels by the fourth quarter. Perfect. Thank you so much. Thank you. Thank you. The next question is from the line of Siddhartha Bera from Nomura. Please go ahead. Yeah, sir. Thanks for the opportunity. Sir, my first question is on the volume growth side. Would it be possible to highlight if I just look at the electrical business X of Lloyd, we have done about like a 50% growth in the current quarter. How much will it be led by volumes? Going ahead, what do you expect in terms of volume growth? We did about 11%, 12% in FY 2022. Leaving aside Q1 because there is a base impact, what kind of volume growth should we expect for the remaining part of the year? We've seen about a 40% increase in volume in case of Havells and about 10%-12% or in terms of value. Basically, you know, again, this is not the right comparison because it was a disrupted quarter last year. Any outlook, sir, that you can share, how should we expect that type of trend of double digits to continue? Or do you see some risks because of the price hike which have happened in the past? Do you expect asking me to say what growth we are expecting in the coming quarter? Yeah. Generally, we don't give guidance. I think, you know, let's see how the market behaves. You know, I think, I've also mentioned on the media as well in the morning that, in the month of second half of May, June, there was some slight slowness in demand, especially more towards the industrial and consumer, industrial infrastructure segment, right? I also believe that was due to the fact that, there was high prices and, you know, raw materials were at an all-time high. We believe that with these prices coming down, we should expect that demand should also come back very quickly. I think, going forward, we are positive about the demand outlook. Got it. The second question is on the Lloyd. I think the rating changes were supposed to happen in July. Any update on what has happened, and are we looking at any price hikes because of that? That has happened already. The rating changes have happened, so all new production will be on new ratings. Yes, there is a cost impact on that, and we are evaluating that. Depending upon the raw material, you know, scenario as well as, depending upon the cost increase, we will be taking certain pricing actions in the coming few weeks. Basically the current commodity fall and the price hikes which we will probably be taking, so will that be sufficient enough to take us to the double-digit contribution margins in the current quarter? Or do you think that might take some time more? As I said, there is inventory in the system and this is the second and third quarter is generally low in volumes for products like air conditioners. We will be carrying this inventory for some more time. You know, we expect by the end of third quarter and fourth quarter we should be back to normalized margins. Got it, sir. Okay, thanks a lot, sir. I'll come back with you. Thank you. The next question is from the line of Achal Lohade from JM Financial. Please go ahead. Good morning. Thank you for the opportunity. My first question was, you know, if you could explain in terms of the ECD margins, we see that QoQ, ECD margins at contribution level was fairly steady. While in terms of the EBIT margin, there was substantial drop. Is it entirely to do with the A&P or is there anything else as well, sir? Yeah, entirely due to A&P because, you know, generally A&P is never, you know, I would say you have to look at the entire year, but, most of it is due to A&P. Understood. The second question I had is if you could give us some sense in terms of given the first quarter of 2021 and 2022 were impacted. On a three-year CAGR basis, what would have been the volume growth across segments? Would that be in mid-single-digit, high-single-digit? It would be high single digits, close to double digits. Understood. What I'm trying to also ask is, given the cost reductions, what we are looking at, is it fair to say that, you know, part of this will be retained, part of this will be passed on? Do you see the way it will behave will differ depending on the category, or it will by and large get passed on? I've not fully understood your question. Can you repeat? In terms of the RM cost reduction, what we are looking at at this point in time would this be largely passed on? Will this be retained? Would the extent of reduction or pass on will depend on the category? I think this will give us an opportunity to at least look at you know the long-term normalized margins of each segments in each category. If there has been any reduction within say the businesses like switchgear ECD lighting that will give us an opportunity to at least come back to those margin levels. As I said cables and wires is wild. It's you know very acute in terms of the impact and that should normalize in the next couple of quarters. This you know reduction. This is very recent so you can't take really a you know view on how long will it sustain and how much will it further go down or up. I think this generally happens over a few weeks rather than with an immediate decision of price hikes or volume prices. Got it. Just last follow-up with respect to Lloyd. Is it possible to share what is the market share we have in the AC segment for the season, if we have for the season or for the quarter? Well, we tend to believe that, you know, we've regained market share in Lloyd air conditioners, and we would be among the top three players, at least in the first half of the year, first half of the calendar year. Got it. Thank you, and I'll come back for the follow-up. Thank you. Thank you. The next question is from the line of Atul Tiwari from Citi. Please go ahead. Yes. Thank you. Just one question on industry. Now that we have seen Lloyd operating at negative margin through this season, and obviously the market share has gone up. In response to that, some of the larger players have indicated that they're willing to work at lower margins, at least temporarily, compared to what they were used to in past to retain their market share. Do you think that there's a risk of entire AC industry margin structurally settling down at low levels because of this fight for market share among stakeholders? I doubt very much, because, you know, last two years, there was disruption in the air conditioner market. Ultimately, it is a technology-oriented business and a product, and hence, it has to retain certain amount of margin levels to reinvest back into, technology and in technology upgradation for the consumer. You know, ultimately, I think the entire competition should behave responsibly in this. We believe that raw material prices stabilizing over the medium term. You know, I don't see any major structural changes in the business. Sir, I mean, following up on that, so I mean, as per your plan, what will be the exit level normalized margin for Lloyd that you will be happy with? I think let's not focus on that as of now. This has been a period where raw material prices have been up and down quite considerably. Let's come back to normalized margin levels, and we will continue to invest in brand building and distribution enhancement in the coming times. This is a long-term play for us, and we'll take it as it comes along. Okay, thanks. Thank you. The next question is from the line of Rahul Agarwal from InCred Equities. Please go ahead. Yeah. Yeah, thanks for the opportunity. Sir, one question on Lloyd. Just to get this right, the base revenue last year was about INR 2,200-2,300 crores. My sense is they're utilizing almost 90% capacity. Is the understanding correct that the incremental growth is all gonna come from new capacity additions and the existing infrastructure is all fully utilized? Is this correct? No, that's not true because, you know, INR 2,200 crores also includes other product categories, where, you know, washing machines, refrigerators and LEDs. In the last financial year, we were not at 100% capacity. Going forward, the kind of growth that we are envisaging, we would definitely need to enhance our production facilities in South, and that would also take a sizable part of the entire demand. Fiscal 2023 growth is, you know, there is still scope to utilize existing capacity to further grow on the last year's number. Is that correct? That's right. Got it. Lastly, on, you know, we've been hearing from, you know, some dealer checks that Reliance, through the BPL and the Kelvinator brand rights, they're trying to, you know, cause certain disruption into the similar product categories. Would you think it's gonna be a meaningful play there? Or in terms of your own assessment of absorbing capacity for, you know, whatever new product launches we plan for Lloyd, that should be comfortable enough? Yeah. Generally, you know, AC industry has seen at least 10-12 brands, and there will be, you know, top four, five brands, and then there are host of other brands as well. There will be brands, but I think ultimately it depends upon what the consumer goes for, technology, brand, distribution, service. There are factors in building success for a brand, and it's not really that I would say that price elastic where, you know, suddenly market shares change a whole lot. Got it, sir. Thank you so much. I'll come back in the queue. Thank you. Thank you. The next question is from the line of Aakash Javeri from Perpetual Investment Advisors. Please go ahead. Good morning, thank you so much for the opportunity. I have two questions. My first question was, when would the mandatory BE ratings of the fans kick in? The second question was that out of the entire fan market, how do you see it evolving over the next three to five years, you know, especially in terms of the BLDC penetration? The BE ratings change from the first of January. Going forward, there will be, you know, market for BLDC fans and, you know, the ranges will continue to enhance. You know, generally the industry has seen over a period of time that products transition towards more energy efficient products. You know, if the cost difference continues to reduce then that's we will definitely see more of BLDC penetration in the business. Sure. Thank you so much. Thank you. Thank you. The next question is from the line of Rahul Gajare from Haitong Securities. Please go ahead. Thanks for the opportunity. You know, some of my questions are answered, but you know, could you you know, on Lloyd, could you give us a sense on you know, what is the price hike that you have taken in this particular quarter, if that is something that you've done? Because you've taken about 10% price hike in the last year. In this particular quarter or till June, if you could give some sense. I would say that we would have maintained the prices, what we would have continued in the fourth quarter, in the first quarter as well. Okay. On the second question is, you know, in terms of the shortages of raw material, supply chain issues, is all of it behind or you still seeing shortages of certain raw material or those kind of things? Yeah, I think, generally speaking, you know, it is all behind. You know, the noise is more about chips, wherein now we are in the process of having a long-term planning schedule, which means we are planning for the next year. Supply chain disruption didn't really affect us in the past as well, and it's not really affecting us now. Okay. My last question is, you know, you indicated that you've got about 40% increase in the volumes in this particular quarter. Is there a particular category that has seen significant rise in in volume? You know, because lighting we've seen about 70%+ growth. Most of the other were in the range of, you know, 30%-40%. Any particular category which really stands out in terms of the volume growth that we've seen in this quarter? Yeah. It's across, but lighting has seen better growth in this quarter also because of the fact that it also has an industrial and professional component which, you know, was majorly disrupted last year because of the second wave of COVID. Got it. Generally speaking, it is across. Fair enough. Okay. Thank you very much. Thank you. The next question is from the line of Vishal Biraia from Max Life Insurance. Please go ahead. Hi. What will be the key driver for this improvement in margin that we're targeting to double-digit contribution by fourth quarter? Will it be the lower discount that we were offering to the dealers? Will it be just the correction in commodity prices? Because that will impact everybody else as well. Could you elaborate a bit more on this? Thank you. Well, I think as I mentioned before, that, you know, the raw materials went up and the entire cost increase was not passed on. When the raw materials go down, there will be an expansion in margins, going forward, and that's what we're expecting by the fourth quarter. I don't know whether I've answered your question. Maybe I've not fully understood. I was coming from the perspective that we've been more aggressive than the industry, maybe in increasing our market share. I didn't say that we were more aggressive in our industry. I mentioned that the industry didn't take the entire price hike as commensurate to the cost increase. I mentioned that we've also not done it, and we believe that the industry has also not passed on the entire cost increase. Now you mean that now that the commodities have corrected, so the incremental price hikes are not required, and so the margins for the industry as a whole should bounce back. Will that be fair? Yes. Okay. In terms of market share, for the incremental market share growth that we are targeting, in the air conditioning business, what will be the key drivers? I mean, one is the brand building that you are already focused on. Incremental, will it be more incentives for the distributors, more, I mean, working maybe better credit terms? Okay. Long-term market share development requires product development, technology, manufacturing, reach, distribution, brand building, and quality perception of the consumer. I think, you know, incentives to the dealers and all play a very, I would say a very, very short-term role, and many times it is counterproductive also. Havells has not, you know, practiced this in the past, and we don't envisage this happening. I think, I keep saying this, Lloyd is a long-term play, something what Havells has done over the last 20 years, that we continue to build, reiterating brand, distribution, manufacturing and technology. Lastly, to what extent do we outsource our air conditioning? Pretty much, it's now manufactured in-house, maybe to the extent of certain models which we don't produce, but 10%, maybe maximum 10%-15%. Okay. What is the contribution of refrigerators and washing machines in this quarter? We don't give a break-up in this. We look at the overall. Approximate percentage. Okay. Maybe 5%, single digits too? I will refrain from answering this, please. Okay. Fair enough. Okay. Thank you, Anil ji. Thank you. The next question is from the line of Abhijit Akella from Kotak Securities. Please go ahead. Yeah. Good morning. Thank you so much for taking my questions. First one, just on the cable raw material procurement, I was just hoping to understand you know, the sourcing model a little bit better. If you could just help us understand how much of it is imported versus procured domestically. Also whether there is any kind of you know, embedded derivative or any such time lag between the time you book the order for the metal versus the time that you actually make the payment. You know, we have various businesses and, are you specifically talking about any particular business? For cables in particular. Okay. Cables, generally speaking, we buy, you know, most of the raw materials from the country. There are certain raw materials for wires, like copper, we import part of it, and it depends upon availability as well as pricing at that particular period of time. It could vary between 20%-40%, the extent of imports. There are no derivatives that we believe in because we believe in the fact that there is not high levels of inventory in the entire system, and generally the cost increase or reduction is passed on to the market. Okay. If I understood you correctly, sir, you're saying that the price is set on the date that we sign the contract itself. It's not set at a later date in time. I would not like to get into these details on this. There are no derivatives. There are no derivatives. Understood. Second part I just had was, on some of the cost items, on the advertising and promotion line, is there a, you know, ballpark number for the full year that you could help us with in terms of guidance and also the rough seasonal pattern that you expect in that? We usually spend close to about 2.5%-3% in a normal year, other than the disrupted COVID years, but generally about 2.5%-3%. It does vary seasonally, but over the entire year it's about 2.5%-3% of the revenues of the entire company. Understood, sir. One last thing, the employee cost has ticked up a little bit. Just wondering if there are any one-off items within that or whether we should use this as a good number for modeling purposes going forward. Actually, if you see sequentially, there is no significant growth. I think there were certain, maybe adjustments in the last year. I think that's why on the base it is even higher. Otherwise it is normative in nature. Okay, understood. Thank you so much. All the best. Thank you. Thank you. Next question is from the line of Latika Chopra from JP Morgan. Please go ahead. Yeah, hi. This is Latika again here. I wanted to just check with you, to get some flavor on the demand, you know, outlook. I understand you said you expect, you know, steady, you've built steady trends on the residential side. But, due to the high inflation, did you sense any moderation in consumer sentiment as you progressed through the quarter? And when do you anticipate this commodity deflation benefits to start, you know, getting passed on to consumers, particularly for the ECD category? And, any color on, you know, consumer behavior towards upgrading? Has that got affected? Any sense on rural versus semi-urban versus urban trends? Any thoughts, sir? Thank you. No. I think starting with the last question on the rural, urban or the upgrading, I think we have explained this in the past. We have not seen much consumer behavior changing in terms of the high inflation. Also I think a lot of, not all the costs have been passed on also to the consumers. It's not that he has borne the entire brunt of the inflationary pressures. Yes, I think as we just mentioned, that towards the latter half of the last quarter, we did see some moderation. I think it was, maybe it was largely also due to the trade being cautious because when the commodities fall, they believe that there will be some price benefits being passed on, so they hold. There have been some maybe destocking at dealer level. Cable wires may be higher in other product categories. We do believe there is a destocking and that's why the channel inventory is extremely low in our view. I think the consumer usually continues to you see the sort of purchase. That's why on the consumer side we are more sort of confident. Infra and all also we believe there is a moderation, but hopefully as the deflationary or the commodity benefits are passed on in the, let's say this quarter and going forward, we believe that demand also should revert back. That's why I think we continue to be sort of cautiously but positive about the demand scenario going forward. Thank you. The last question that I had is we discussed a lot about air conditioners and Lloyd. Any milestones to talk about on the refrigerator or washing machine side, even in terms of innovation, consumer acceptance, distribution, outlet expansion, et cetera? Thank you. I think the washing machines business where, you know, we started development much ahead is really taking up a good shape. The consumer acceptance and the trade acceptance is strong. We now believe that we have a complete portfolio in terms of washing machines. Refrigerators, which we started last year, we believe that by the end of this calendar year, we should have a complete portfolio, but the initial reactions from the trade and the consumer are strong. You know, to have a complete play of refrigerators, we need a larger range, which hopefully should be fully operational by the end of this year. Thank you so much. Thank you. The next question is from the line of Keyur from ICICI Prudential Life Insurance. Please go ahead. Thank you. Sir, just want to understand on the Lloyd side, if you look at the calendar year 2022, and if I do the back-of-the-envelope calculation, probably our facilities were utilized fully. Now in that context, the incremental margin improvement should be driven by pricing, basically price hike or lower commodity prices, or are there any other levers? Here the assumption is that since the facilities are fully utilized, the operating leverage part has already been there, in these numbers. I think we, as we explained earlier also, right now we are anticipating the lower commodity cost benefit to reflect in the margins, and that's why we believe we should be in the latter half or rather Q4, because the season also starts late Q3, early Q4. Mm-hmm. That's where we expect the benefits to flow in, and largely it is dependent on the falling commodity cost. Okay, understood. Second question. I mean, historically we have seen this cycle of destocking and restocking in at the time of, say, sharp commodity move in wires and cables. Visibly similar trend happens in ECD as well, or it is less prone to this kind of cyclicality or any other segment which are prone to this kind of cyclicality? Less prone. Some degree of destocking would be there, but yes, it will be more pronounced in cable and wires. Okay. Sir, just last question. That is on the. I think we have at least the commentary phase from many of the players or OEMs that there is some slowdown in the lighting. What is your view on that? Because I would just consider lighting as more of, say, utility product. What is driving slowdown in lighting, if there is any? We have not seen any slowdown. Actually, our business is more consumer and professional. We are not doing government orders and all. Our business continues to hold pretty well. Even margins continues to hold steady. Because a lot of our business is now innovation- driven and also very deep distribution- driven. Oh. We have not perceived much slowdown. We are not dependent upon any single order or two large orders, and then you see create the havoc and then those orders go away. In lighting is not seeing any impact as such as of now? No. No. Okay. Understood, sir. Sir, thanks a lot and all the very best. I will get back to you. Thank you. Thank you. The next question is from the line of Ashish Jain from Macquarie. Please go ahead. Hello. Sir, I had one question on the switchgear segment. Can you just, you know, talk about what the growth now seems, because this quarter the growth was exceptionally strong. Does it have like any one-off nature here or by and large, we are seeing very strong, you know, demand on the ground as well? Yeah. Switchgear growth actually if you see last three years, because that is more relevant sometimes on the lower base, it may not reflect. I think we are very, actually, to some extent excited that we have got almost 15%-16% CAGR in three years, which has been, if you see the trend before that has been almost single digits. We believe this property cycle, the construction cycle, which has now kicked in and which we believe is sustainable, that I think should further support the switchgear business. We continue to be confident about the switchgear and the [inaudible] segment. Sir, does switchgear have like what is the mix of retail versus institutional on the switchgear? See our business is largely retail. It does not mean that there is not enough institutional, but largely, you know, we are distribution-based brand. That's why we believe there's a lot of construction happening in smaller towns as well as the urban. We are not much builder-driven business. You are aware of that. Sir, still on Lloyd. You know, I know a lot have been asked about it, but I just had one question. Historically in Lloyd, you know, when we were seeing double-digit contribution margins, we were also seeing 6%-7% EBIT margins as well. Shall we think on similar lines or, you know, when Anil ji spoke about higher advertising spend and higher focus on distribution and all, there could be a variance between contribution versus segmental margins in Lloyd for the next, say, few quarters and all? That's why, as we rightly said, our first priority is to get to the contribution margins. You see rest of the things are strategy dependent. Our strategy will continue to invest behind this. We see a very large opportunity in this segment, and I think, we see a fairly long-term play with Lloyd into the consumer appliances segment. I think we continue to take long-term calls for the health of this business. Okay. Okay. Got it, sir. Thank you so much. Thank you. The next question is from the line of Pulkit Patni from Goldman Sachs. Please go ahead. Sure, sir. Thanks for taking my questions. My first question is on CapEx. We spent INR 56 crore in CapEx in the first quarter. What is the ballpark number for the year that we should be taking? I think we are because of some. Things do take time. I think we are expecting of INR 700-800 crores here. Okay. That number stays intact. Yeah, I was surprised with the first quarter number. My second question is, when we look at our portfolio, you know, we've got premium products, say, for example, switches in Crabtree, and then you've got, you know, economy products under different brands. Have we seen a difference in terms of demand trends where the premium products have sold a lot more relative to the economy products? Any trends that you have seen based on different income levels? Because we've got a portfolio which spreads across, you know, different price lines. Anything on that? I would say, you know, REO or the products which are affordable in nature are the recent entry in Havells, maybe just for five or six years old. Hence there's a lot of distribution and reach in maximum retail, in progress right now. We've actually not seen any variation in terms of demand. But, you know, if we see a little bit of high growth in affordable segment, that's primarily because of distribution reach enhancement which is happening. Whereas, our premium products have already been, you know, well placed in the market for many years. But otherwise, generally speaking, the demand is equal throughout. Understood. If I may take the liberty of asking, I'm assuming margins would be similar in both categories. No, premium products, the margins are definitely higher, but we definitely do get advantage of operating leverage with increased numbers. Got it. That's helpful, sir. Thank you. Thank you. The next question is from the line of Gopal Navaldhar from SBI Life Insurance. Please go ahead. Hi, sir. Thanks a lot for the opportunity. So my question is, you know, in the last two years despite COVID, we have seen a very healthy growth, 15% CAGR for this quarter. I think even organized industry has also seen a very healthy growth. The last few years have been challenging for unorganized players. Now, you know, the things are reversing in terms of commodity prices, supply chain issues and all. Are you seeing, you know, unorganized player coming back into the system and, you know, disturbing the businesses? No, we don't see that trend. Sure. The second question is on how are the inventory in the AC for us and for the system and how long it will take to liquidate these old price inventories? Generally, in the system, the inventories are not very high, but obviously, you know, because of the manufacturing facilities, we do keep an inventory levels, and we continue to build inventory even in the low season. As we have already mentioned that there are high cost inventories in the system, so it will take a couple of quarters because this is low selling season anyway, so to now come back to normalize margin levels. Okay. Sure, sure. Thanks a lot, sir. Thank you. Next question is from the line of Vishal Biraia from Max Life Insurance. As the participant has placed the call on hold, we'll move to the next question. It's from the line of Prasheel Shah from CapGrow Capital. Please go ahead. Yeah. Hi. I have two questions, both of them are regarding the competition. This is one of the most competitive industries, right? What... How do we differentiate ourselves when it comes to lighting, fans and, you know, these consumer durables? How do we differentiate ourselves from the competition? The second question is regarding the distributors. How do we approach a distributor? What is our strategy when we are going and trying to win new distributors, and how do we sort of keep them and maintain them? I would say that, you know, this is not a quarterly, you know, analysis call or question on the call. I would suggest that you can spend some time with our team in the IR team, and maybe that'll be a better way to understand the strategy of the company. Okay. Thank you. Thank you. Thank you. The next question is from the line of Sreenidhi from HSBC. Please go ahead. Yeah. Hi. Thank you for the opportunity, and congratulations on strong top- line performance. Anil ji, I have just one question here. We have seen some senior management exits from Havells and joining competition. In that topic, I just want to know, is that these are the just few exits which gets reported from competition, or are you structurally seeing a lot higher attrition rate in senior management? In fact, we've seen a very low attrition rate in senior management over the last few years. There are a lot of reasons for people to switch to Havells. In fact, our attrition levels beyond the VP levels are low single digits, I would say. I would not say that there are higher attrition levels. Yes, there were some challenges last year, wherein we saw some sort of attrition in the technology side, IT side and the R&D side, for which company has taken various other steps also. For example, employee ownership plans, ESOP plans, to give long-term wealth creation opportunities for the employees. At senior levels, our attrition levels are extremely low, low single digits. Okay, sir. That was my question, sir. Thank you for answering it and all the very best. Thank you. Participants who wishes to ask a question may press star and one now. The next question is from the line of Rakesh from Indsec Securities & Finance Limited. Please go ahead. Good morning, sir. Sir, how much price hike we have taken in Q1, sir? I'm sorry, Mr. Rakesh, but can you please speak little louder? Hello. Hello. Yes, please go ahead. Morning, sir. My first question regarding, sir, how much price hike we have taken in Q1, sir? Any price hike in near future, sir? Sir, any particular business you're asking? No, overall, sir. It depends on business to business. Maybe in switchgear we have seen certain price rise in the first half of the quarter. Otherwise, generally, there were no price hikes. Okay, sir. My next question regarding any impact on demand, especially for window AC after new energy norm implemented from July because this will increase the cost of, say, AC for window AC. Yeah, we will see this in the coming quarters because, you know, this is a very recent phenomenon. Okay, sir. Sir, my next last question is, sir, any plan to add new product portfolio in your large goods business? This is an ongoing process, you know, in various businesses, whether it's appliances and consumer durables. You know, there are constant product innovations and additions happening. I would say it's a continuous process. Okay, sir. Sir, how much rural contribution to overall revenue, sir? Havells, sir? I would say it's about 5% of the overall consumer business. Okay, right, sir. Okay, thank you for my answer, sir. Thank you. Before we take the next question, reminder to the participants, anyone who wishes to ask a question may press star and one. The next question is from the line of Keyur from ICICI Prudential Life Insurance. Please go ahead. Thanks for the opportunity again. Sir, question is on, so if you can just give breakup of this CapEx either by product or by, say, growth CapEx and maintenance CapEx. And second, on the Lloyd side, we have earlier highlighted that, really just want to understand what we are doing under the PLI or the scope of insourcing that we'll be doing under PLI. And earlier we have highlighted about export of ACs as well. So if you can throw some light, any tentative timelines, whether it could be white label or under the brand Lloyd, if you can touch upon this aspect. Thank you. I think the breakup we don't really not provide, but we can tell you the large amount of CapEx will be accounted for by the new AC facility which is coming in the southern India. As far as the export of ACs are concerned, I think we are getting good response, and this will be both under our own brand as well as a white label opportunity on a global basis. Third question was? What was your other question? Basically scope, I mean, under the PLI, what would be the scope of our manufacturing? PLI is largely a component base, so we have also participated on few of the components, which we are currently will be done both in the existing facility as well as a new facility in southern India. I mean, any specific key components that you would like to highlight? No, not nothing. I mean, basically. We are not doing compressor, if that is the question. No, no. I'm saying in general, see AC unit, generally we have seen many of the brands doing sub-assembly. There are too many components, so specific few components which you would like to do internally versus you used to outsource it two, three years back. We don't believe in sub-assembly concept ours. If anybody has seen our manufacturing facilities, we are very integrated manufacturing system. Okay. Noted. Thanks a lot, sir. Thank you and all the best. Thank you. Participants who ask a question, please press star and one. The next question is from the line of Devang Patel from NAFA Asset Managers. Please go ahead. Hi sir, I had some queries around why we do not hedge our copper requirement using derivatives. Is it because we do not find the cost- benefit favorable? Have we hedged in the past? If you know, we expect high volatility, would we change our mind in future? No, hedging is you see our policy is not to do the hedging. This is part of the policy. You see these things keep coming up, but we have seen in the past that ultimately these do not provide any tangible benefit. I mean, one even cannot define the long-term strategy. We believe that the real hedging is that we pass it on to the market, maybe with a lag effect. This has been working well almost for a few decades now. Consistently we've not been hedging in the past also? No. Okay. That's all. Thanks so much. Thank you. The next question is from the line of Hitesh Taunk from ICICI Direct. Please go ahead. Thank you for the opportunity, sir. Sir, my question pertains to the distribution network. Can you please quantify what is the distribution network of Havells and Lloyd separately? Because earlier we had a target to increase the town penetration almost double. I just wanted to understand on the distribution point of view for the Havells and Lloyd separately. On the Havells side, we have indicated we have almost 14,000 dealers. On Lloyd side, more than 1,000 direct distributors. Sorry, sir. 14,000 for Havells and for Lloyd? Dealers and for Lloyd, more than 1,000 distributors. What kind of growth are we seeing in the distribution network in the Lloyd front, sir? Lloyd we see is multiple channels like regional retail like MFR like online. All these channels we would argue that we have been well penetrated. Okay, sir. Thank you. Thank you very much. Next question is from the line of Vishal Biraia from Max Life Insurance. Please go ahead. Thank you again. My question pertains to fans as to how was the performance in 1Q? Do we have gained, lost some market share? Is it overall for fans and also within the premium fans? Thank you. Can you repeat the question please? Yeah. My question pertains to ceiling fans and fans overall. As to how was the performance for us in the first quarter, in the June quarter? Could you comment also on the market share and the outlook for demand? Would we have seen some amount of downtrading here as well? No, I think first quarter the fans performance was quite positive. We again, you know, growth over a very disrupted quarter. In the second half of the quarter, we did see some slowdown in the purchases, which has to be seen whether it's, you know, in the coming times, whether it was structural in nature or is it just because of high raw material prices and high costs and, you know, hence dealers destocking, with the season going away. If you look at market shares, I think, you know, our growth, if you compare over the last five years, CAGR has been the highest in the industry. Hence we have been continuously gaining market share in fans category over the last five years. You know, quarter and quarter there can be various comments, but otherwise, whether it is lighting, fans, or Lloyd, our CAGR over the last five years has been the highest in the industry. I would say that we have gained market share. Yes. The other question is on the small appliances. Do you see a scenario of increasing competitive intensity in this space? No, it's already there. You know, it's a highly competitive business, so we don't see any increase in competitive intensity. Okay. This is also a place where the price hikes would have benefited us. We have not seen enough price hikes. Would that also be just largely because of competitive intensity that others have also not taken enough price hikes? Would that be the only factor? I think this is again similar to Lloyd where, you know, it's a very, very consumer-oriented product. You know, I would say that the industry has taken a view of not entirely passing on the entire cost increase. Yes, over a period of time, this raw material abatement or increase abatement would actually help the margins come back. Okay. All right. Thank you. Thank you. Thank you. Participants who wishes to ask a question may press star and one. The next question is from the line of Ashish Jain from Macquarie. Please go ahead. Sir, I had this one housekeeping question. Can you quantify your, you know, market share in AC on 1H basis or 1Q basis? No. Okay. Like, safe to assume we are 15%+ kind of number? No, when I said I don't want to give a number. I believe we are among the top three players in the first six months of the calendar year. Okay. Great, sir. That's helpful. Thank you. Thank you. Participant may press star and one to ask a question. I just want to make one comment on market share. You know, it's like investment bankers giving their table. Everybody tries to give numbers which are suiting them and come from very different sources. There is no one particular source which we can use for market share. I would say, you know, normally the way we look at market share is, you know, CAGR growth over a longer period of time. Again, quarter- on- quarter or half- yearly market shares don't mean much. We have to look at the actual performance which is happening in the market and long-term performance. Thank you. Ladies and gentlemen, this was the last question for today. I would now like to hand the conference over to the management for closing comments. No, thank you very much for joining on the call. Thank you. Thank you. On behalf of InCred Equities, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.