Ladies and gentlemen, good day and welcome to the Q3 FY23 earnings conference call of Havells India Limited, hosted by DAM Capital Advisors Limited. As a reminder, all participant lines will be in 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 Ms. Bhoomika Nair from DAM Capital. Thank you, and over to you. Yeah, good evening, everyone, and welcome to the Q3 FY23 earnings call of Havells India. We have the management today being represented by Mr. Anil Rai Gupta, Chairman and Managing Director, Mr. Rajesh Kumar Gupta, Whole Time Director, Finance and Group CFO, Mr. Ameet Kumar Gupta, Whole Time Director, and Mr. Rajiv Goel, Executive Director. I'll now hand over the floor to Mr. Gupta for his initial remarks, post which we'll open up the floor for Q&A. Over to you, sir. Thank you, Bhumika. Good evening, everyone. Wish you all a very happy New Year. Thank you for joining the call today. Hope you would have reviewed the results published. Amidst the moderating consumer demand, a steady performance during the quarter was supported by the B2B businesses. Inflation remains a challenge for the industry and the consumer. Key commodities remain volatile and elevated. Recent channel expansion initiatives such as rural and e-commerce continue to deliver healthy growth. Lloyd maintained its growth momentum, however, margin recovery has been slow. We expect further improvements from Q4 onwards. There was a strong recovery in contribution margins across segments, especially cables, on sequential basis. Overall, there is a disproportionate focus by the company on technology, consumer journey, and talent buildup. Thank you very much. We 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 their 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. Ladies and gentlemen, we will wait for a moment while the question queue assembles. We have our first question from the line of Renu Baid from IIFL Securities. Please go ahead. Yeah. Hi, good evening, sir. My first question is, can you comment something? What has been really ailing the demand in the B2C segment? In your view, by when should we expect some rebound? Is this weakness in demand more regional focused, rural, semi-urban? What is really ailing it? By when do we expect some recovery and rebound in this end market demand? Thank you, Renu. I think, you know, what was generally seen as a huge inflationary trend over the last one year, one and a half years, I think that is to some extent, slowing down the consumer demand. We were expecting, we hope that, you know, because, prices would have started stabilizing in third quarter, if not increasing. That should have, you know, started giving advantages from the fourth quarter onwards. The fact is there has been some volatility in raw materials again. It's difficult to say, you know, when we can see a come back to normal growth in the consumer products completely. If your question is whether we will start seeing a, you know, turnaround in the fourth quarter, not very sure about that. Yet I think inflationary trends would have, you know, hailed the growth in the consumer products. Sure. If I look on the margin side, while Lloyd has seen some sequential improvement, contribution positive, still overall negative at the EBIT level, can you also comment on the overall margin outlook, status of high-cost inventory, across Lloyd and other portfolio? Should we expect margins also to relatively good this quarter? Any comments there? I think overall margins from the Havells point of view, which we maintained that there were some high-cost inventories in fans and cables and wires were taken care of in the first half. We are now, you know, at normalized inventory costs in Havells side. On the Lloyd side, still some of it was left going into the fourth quarter, so that should be taken care of partly in this quarter, and the rest will be all new cost inventory. But the fact is, as I said, you know, the raw material prices have started showing some upward trend in the last few weeks as well. But at least the old inventory has already been consumed in Havells and little bit of lesser pressure in the upcoming season for the Lloyd AC products. Sure. One last question, if I can ask. While we have seen the RAC portfolio marching ahead with market share gains, even as margins have been soft, how has been the performance of the non-RAC portfolio, washers and refs, which were relatively new in the Lloyd family? Some comments on this would be welcome. Yeah, I think, the growth there also is, you know, has been very good till the second quarter.First quarter was a bit slow because overall consumer demand was not great in third quarter. Obviously it is not reflecting in the AC sales, because AC in the third quarter and early fourth quarter is more of a shelf fill up of fill up from the distributors. I would say that there has been some slowdown in the growth for the other categories, just like any other consumer product. You know, still very small for us, so even that growth is, you know, quite high for us, but it is slowed down in the third quarter. Thank you. We have our next question from the line of Rahul Agarwal from InCred Capital. Please go ahead. Hi, sir. Good evening, and thanks for the opportunity. Congratulations for handling the fan transition well. Looks like there's no hiccup there. Sir, first question is on the upcoming summer season, both for the ACs and fans. ACs I understand obviously the stocking has started and hence the inventory, both at our level as well as, you know, the channel should be increasing. On the fans side, it looks like, obviously they'll have fill up in the transition. I'm sorry to interrupt, Mr. Agarwal. Yes. You're breaking, sir. I'll repeat my question. Is this clear? Yes, please. Sir, question was on ACs and fans on the upcoming summer season. How would you see the channel inventory right now, and what do you expect from the season in terms of market share gains and, you know, overall demand? AC, as you mentioned, rightly that right now is the time for shelf filling. The real season starts late January and in the northern parts in the late February, March. That is to pan out. On the fan side, you know, because of the energy rating change, there was some shelf filling on the lower segment of the fans. Whereas actually on the higher segment of the fans there was some destocking. Because, you know, the cost increase in the higher rating fans was not so high, so there was some destocking. On the lower end segment, like the base fans, there was higher stocking. I think this is, I would say this is normal inventory, not very high levels of inventory at, the fan segment also, because it is distributed amongst the lower end and the higher end. Got it, sir. Lastly, sir, on the margins, you explained a bit, but, just on cable and wire and ECD, I think that's still not back to normal levels. Obviously the old inventory problem is sorted at the Havells level. Fourth quarter should we see? The cable wire, I think it's pretty much there. I think we are, generally our margins are between 14% and 16%, and it's there. I think ECD with a combination of all the products, you know, these are the normalized margin levels. We have come back to almost levels of last year. Got it, sir. I'll come back if needed. Thank you so much. Thank you. We have our next question from the line of Aniruddha Joshi from ICICI Securities. Please go ahead. Yeah. Thanks. Sir, two questions. Well, B2B segment has done well. So was there any one-time impact in that? Or, do you see the B2B growth to sustain in future also? Question number one. Question number two, ad spend. Now compared to the COVID level, definitely there is a recovery in this quarter in ad spend. Still, the ad spend is not near the pre-COVID levels. When do we see the ad spend moving up to the pre-COVID levels and means whether the margins will increase with the correction in input prices, whether that will be largely utilized to improve the brand building efforts? Yeah. I think pretty much we are at normalized levels, the advertising spends. Obviously the volumes have gone up, so as percentage they have come down. I think these are the right levels. We're not anticipating major increase in percentage, spends on the advertising spends. Yeah, on the B2B, I think there was no one time impact of any particular demand. Right now I would say that the B2B segment has been showing the best demand. Okay. Okay. That's helpful, sir. Yeah. Thank you. Thank you. We have our next question from the line of Achal Lohade from JM Financial. Please go ahead. Good evening. Thank you for the opportunity. You know, my question was, you mentioned the B2B is doing better than the B2C. Is it possible to get some sense in terms of the mix, how was it for this quarter compared to 2Q FY23 and 3Q FY22 as well? Approximately 75% is B2C and 25% is B2B. Non-wired. If I see in the past, it has been around the similar level, so I'm just curious to- Yeah. Yeah. I mean, it's, percentage-wise it's not much different whether we pass. It has gone down to maybe 21% or 23% in this quarter. Okay. Yeah. Yeah. Not, not very significantly changed. Yes, maybe when the B2C is high, goes to 23, 22. Understood. You know, when you say about the, you know, the B2C is facing some amount of slowdown or subdued demand. If I look at our numbers in terms of the three year performance, and I presume more than half of that is volume growth. Does it imply that there is a significant market share gain across the categories? You think, you know, you're talking more from the incremental perspective rather than really from the normalized growth perspective in terms of the slowdown, subdued demand also. I have not really understood your question. Okay. you know, subdued demand, when you say, is it more from a YOY perspective? because on a three year CAGR, we are significantly better actually in terms of performance. YOY. Incremental basically. Okay. We want to grow, we want to grow all the time. When there is some degree. You see, there could be multiple reasons for that. We believe primarily it could also be inflation. It could also arguably be something catching up with the consumer demand as well. There could be multiple ways to look at it. Yes, there has been some fatigue in the consumer demand. I think that's what we are articulating. Got it. Just a clarification, you know, with respect to the employee cost, if you see QOQ, it has gone up 6%. Is that a new normal run rate we should look at? Like you said in the opening remarks, you intend to spend on the employee base as well. No. Whatever the increase that you're seeing, that should be considered as the new normal. Got it. Thank you. I'll come back in the queue for follow-ups. Thank you. Thank you. Thank you. A reminder to participants to press star and 1 to ask a question. We have our next question from the line of Siddhartha Bera from Nomura. Please go ahead. Yeah. Hi, sir, thanks for the opportunity. Sir, my first question is again on this B2C demand, which you said that I think it is slightly weaker. Can we expect there can be some incentive or discount push which can to some extent support the demand in the current year? Do you think it will play out as it overall gradual recovery which you expect? Incentive to the trade, you're saying? Yes. Some higher promotion schemes for the consumer. No. No, no. That may be just temporary, you know. It doesn't really change the demand scenario. Well, it just the schemes and, you know, all these things are to push inventory into the channel. Ultimately, the consumer demand has to pick up. Okay. In terms of the margins, you said that ECD margins are largely back to the normal level. Will it be fair to assume that both for ECD and lights, I mean, we don't expect much benefit from the commodity and everything is reflected in the current quarter? Yes. pretty much reflected in the current quarter. In fact, I would argue that there will be some challenge in the coming one or two quarters if the raw materials continues to remain volatile. We will try and manage that as we have done in the past. Over a medium term, you know, our margin levels will remain quite steady. Okay. Okay. Lastly, on the Lloyd business, again, if we look at the capital employed, it has continuously over the last... I'm not just looking at the current quarter, but as a trend over the last few years, it has kept on rising from, say, INR 2,000 crores earlier to INR 3,000 crores now. What should we think about this business in general? Shall we expect that it will keep on rising as a percentage of your overall capital employed in the medium term? Overall, we'll actually start seeing more efficiency there because, you know, we are now setting up our, we are starting our second plant as well. Because the product is seasonal, you know, because of having one plant and the demand growing at a pace of 30%-40%. We have been, we have been forced to actually keep inventory for the season. The working capital. Once we have two plants running, that will come down in number of days overall within inventory. Okay. Will it be possible to share the mix of Lloyd in case we have now ref and washers portfolio also. Possible to share how much will be the ACs and other competition for Lloyd right now? Now 75% is ACs. You know, again, it varies, quarter -to -quarter, but overall approximately about 70%-75%. Okay. There has not been much of a change in terms of the mix for Lloyd. Yeah, because you know, growth of air conditioners has been also quite fast. It's not like that it's become a mature product for us and hence the growth is limited. Oh, okay. Understood, sir. Thanks. I'll come back in the queue. Thank you. We have our next question from the line of Sonali Salgaonkar from Jefferies. Please go ahead. Thank you for the opportunity. My first question is, have we completely transitioned to the new BEE norm inventory in fans and ACs? If yes, what is the price hike that we have taken for the new inventory or for the new models? Yes, we have moved to the new inventories. In fans, our average price hike is around 3%-4%. In air conditioners, approximately about 3%-4%. Would that be positive for our margins, accretive or, you know, the, even the cost was higher... Costs have also risen to a similar level. Got it. Sir, my second question is considering that many of the input commodities have started softening, is there any pricing action that we have taken or contemplated in terms of rollback? I think last year on an average, the price hike across categories were somewhere between 10%-15%. Actually, during the second part of the quarter, rental prices have started going up again. There is no room for rollback at the moment. Got it. Sir, my last question is, in terms of inventory levels for the channels, you are saying that for fans and AC it's near normal. Looking at the weakness in the B2C demand, how would you think the other category inventory is? Other category, in fact, ACs, I don't say it is at normal level because it is normally a time for shelf filling. Fans it is at normal level. Other products also, the inventories in the system are not very high. They are near normal. Yeah. Despite the demand weakness. That's right. Got it, sir. Thank you. Thank you. We have our next question from the line of Praveen Sahay from Prabhudas Lilladher. Please go ahead. Yeah, thank you for taking my question. Sir, my question related with Lloyd. As you had mentioned, that, because of season, the inventory level were on the higher side. In the press release, you had also mentioned that the inventory, you holds a high-cost inventory right now, and as well as you are mentioning that the fourth quarter will see some margin improvement. like, if you have a high-cost inventory, so margin, how to improve in the Lloyd? No, the all the inventory as on 31st December is not high cost. You see, the inventory is getting built up over entire quarter. There was inventory in the September quarter, and in the September quarter is traditionally a low quarter. That inventory we carried in this quarter, and that's why we are aware inventory will be disposing on this quarter will be high cost. Some high cost inventory will be there, but the entire inventory as on 31st December is not the high cost. Okay. On sequential basis, you are considering the improvement in the margin for Lloyd. Sure. Sir, second question is related to lighting business. Continuously we are seeing the contraction in the margin. Can you give some, you know, details like how the professional lighting, you know, mix is doing there and why, and tell how and how long we will see the contraction in the margin there? Have you seen the contribution margins of lighting? lighting contribution margins are fairly steady. you know, there was a one-off spike in the third quarter of last year. Otherwise, generally around anywhere between 28%-30% contribution margins for lighting are there. What you're seeing is a contraction in the particular segment results in this quarter is also because of few product launches in this quarter, we're doing some advertising in inputs for them. I would not actually see it anywhere contraction of margin. Though, in fact, we are bucking the trend in the lighting industry where there is contraction of margin. But because of few product launches and technology enhancements, you know, our lighting business margins, gross margins of all the products are maintained very well. What is the normal margin for this? 28%-30% contribution margin. Okay. Thank you, sir. Thank you for taking my questions. Thank you. We have our next question from the line of Venkatesh Balasubramaniam from Axis Capital. Please go ahead. Mr. Gupta, I had a few questions. The first thing is on ECD consumer durable margin. Your EBIT margins in this quarter were close to 13%, and you said these are like the normalized levels that you need to work with, and these are like, you know, similar to last year. If I actually look at EBIT margins of the ECD division over FY20-FY22, it was in a band of 14%-17% odd. Is there any reason to believe that structurally margins in the ECD have come down? Or is there like a one-off in this particular year why the margins are lower? Like, you know, higher advertising costs. I would say normalized margins will remain between 13%-15%. There cannot be a fixed number because you see quarter-on-quarter advertising spend can vary. You know, somewhere around 13%-15% will be there. When you saw margins of around 17%, those were certain years where, you know, where the COVID was there and the advertising spends were really curtailed and expenses were also curtailed. Those were, I would say, not the normalized margin. 13%-15% would be our regular margin. Okay. Okay. Now, moving on to Lloyd. I guess you did mention this quarter you have taken 3%-4% price increases, right? We will be taking in the fourth quarter. The fourth quarter. Okay. Now- Once the season starts, because right now, as I said, it's a shelf filling time now. Okay. Okay. Are you seeing everybody else also taking these price increases? We are expecting that the competition would also have to take similar pricing changes because of the cost increase of the ratings change from the first of January. Okay. Okay. Now, you also in your press release mentioned that sequentially you are expecting an improvement in margins. Do you think we can kind of break in either in the fourth quarter in terms of EBIT margins, can you turn positive or is it like, you know, for that it is going to take a lot more time? On an annual basis, is FY24, is there a potential of breaking even at EBIT level? That will be in a level. However, you know, this margin improvement will happen over a period of time. It, everything will not come back in the fourth quarter. In fact, this fourth quarter, the improvement will be very small, but we are expecting more improvement in the next financial year. Okay. As we have said, we still have some high cost inventory in the fourth quarter. You know, this is the first one and a half months is also shelter in time. The price increases will effectively happen during the season. Okay. Okay. One last question on Lloyd. I guess, with the tremendous growth in sales, you've already got to, you know, depending on the quarter, you are either third or fourth in the market. Are you satisfied with this third and fourth, or do you really believe that you need to get to the second position or maybe even challenge the market leader to make your business economics work? Is it like you're now satisfied with third and, because when we talk to almost all the other players in the market, and most people actually keep pointing fingers at Havells that, you know, Havells has become too aggressive. Any thoughts on that? Where do you stop being aggressive and, you know, look for breakeven and things like that? Is it like you are looking to increase your scale to such a level and then look for profitability? I think, when you talk about competition and talking about Havells being aggressive, I think we to some extent, the pricing is not dependent on the fact that we are leading the market. We can't lead the market on prices because, as you said, our position is still not the leadership position. In fact, the hyper-competitiveness in the pricing front is due to a few factors, especially, after COVID, everybody wants to come back to their original levels of positions and market shares. A lot of people are sort of not fully passing on the cost increases which happened during the last one year. That is how the competition is actually driving the prices and Havells or Lloyd to that extent have to follow that as well. We will be following the market rather than actually leading the market on the pricing front. As far as the market position is concerned, you know, we do believe that in not only in ACs, but in most product categories, we do want to play the top three positions, and sometimes we don't rush after the number one position also because of the fact that in certain kinds of markets, like for example, in fans, we don't operate in the economy segment of the fans. That's why we don't push ourselves to be. Same will be the strategy in Lloyd. We would continue to, you know, try to be a meaningful player amongst the top two or three players in the brand. It's not, we're not running after a number particularly that we want to be one or two or three or four. It's just that, you know, our product offering market share continue to need to grow. Okay. Okay. Thank you very much. All the very best. Thank you. Thank you. We have our next question from the line of Ankur Sharma from HDFC Life. Please go ahead. Yeah. Good afternoon, sir. Thanks for your time. Just one question, you know, on the fan side. You know, with this whole transition now that we have star rated fans, do you believe there could be some change in the market share? Could there be more consolidation within the top three, four players? Would the market itself move towards more of three, four, five-star rated, fans? Do you believe- Sorry, can you repeat? There was some disturbance. Yeah. Can you repeat the entire question, please? Sorry. Am I audible now? Yes. Yeah. Sorry. Yeah. I was saying that, so I had a question on the, you know, the star rating on fans which came in from January. You know, I was just wondering, you know, with this star rating, do you believe there could be some consolidation within the industry? Would you believe that there is a shift towards more of BLDC fans, you know, which would typically be four or five star rated, you know, which probably also benefits players like Havells, probably in the top two, three players. There could be some market share gains, for the top three,four players and some consolidation as well. Would you believe there wouldn't be too much of a change, post the star rating? You know, generally, theoretically you're right that, any disruption, towards higher and better products and technology should bring in consolidation towards, better brands, better quality of brands. Mm-hmm. We still have to see how this pans out because, you know, like for example, actually, you know, before this change, BLDC was a differentiation. Today, after this change, BLDC is just one of the, all the products which are energy efficient. Right. All the fans now will be below 50 watts. I think. Mm-hmm. It'll again open the market, from an energy saving point of view. Mm-hmm. You know, it's India is a very large market, and it's difficult to say that any such change would actually consolidate the market in a very short period of time, difficult to say. Mm-hmm. Long, long term, you know, it should benefit the branded products. Well done. Okay, sir. Yes, thanks. Thank you. We have our next question from the line of Amit Mahawar from UBS. Please go ahead. Hi, Subrata. Congratulations on recent results, especially bottom line on cables and top line on Lloyd. I just have one question on Lloyd. You know, if we assume maybe around one-two years a very gradual normalization of demand cycles, especially inflation cooling off, which will to an extent benefit Lloyd business naturally. Beyond that, you know, and beyond the expansion that you're planning with the second manufacturing plant I do mean to say, could you throw some color on how Lloyd brand and manufacturing will progress, you know, taking into account the supply chain development that are happening in India, sir? That's my only question. Thank you. Amit, as we are talking two years out, usually we have got another plant already. I think this will come up. I think supply chain, we believe more and more will become domestic. You see whether we do in-house, we are already seeing some action being taken even on the sort of compressors. I think first of all we see the structural shift that most of the products will be sort of made in India, not just assembled in India. Second, I think industry, we believe there will be growth, there will be disruption as ARV just mentioned because of COVID. We believe there will be a structural growth in this industry because India predominantly in a hot country. We expect this industry to structurally grow. This is the least penetrated in terms of large appliances as well. Within that, I think we feel there will be certain consolidations, going forward, which is there have been time where multiple players or multiple categories had got into issues. I think that's already getting corrected. It could be that there could be a relevance of five to six players and you see there'll be a sort of better signs of profitability as well. If you look at pre-COVID, this industry used to have good margins. We believe in couple of years, it will catch up on profitability as well. This is what we broadly, since you're asking slightly longer term question, and we're just trying to give a longer term picture of what we believe, for this industry. Sure. I mean, I was just referring to, you know, can I say that from a two-year view, three-year view, bulk of our capital allocation, capacity expansion will happen on the Lloyd side, barring. For two, three years, I think we have reached a bit of a peak on capital allocation on or capital deployment on Lloyd now. What happened after three, four years, I think we will work out at that time. Now I think we are reaching almost, we are peaking in terms of capital deployment in Lloyd. Okay. Sure. Thank you and good luck. Thank you. We have our next question from the line of Srinidhi from HSBC. Please go ahead. Hi. Thank you for the opportunity and congratulations on good set of numbers. Sir, would it be possible to share some color on how is construction driven demand playing out? Are you seeing slowdown in that part of the market as well? Which consumer demand? The construction, new construction driven. I think there is some pause there. I'm sure you would have looked at our CAGR. Whatever people believe or if there is some pause on the new sort of construction, we just hope this is temporary. We still hold that the property cycle, you see is in uptick. Sometimes it's very difficult to really generalize a particular quarter. Construction, some pause, but continue to be more optimistic that, but it could also be temporary because, you know, sometimes people delay their purchase. Right. Yeah. Just, sir, on Lloyd business again. There has been improvement in contribution margin sequentially, and you're also guiding sequential margin improvement further into Q4. Wondering, would you reiterate your guidance of low double-digit contribution margin in the Lloyd business by Q4? Or when we'll have to wait for longer for that? I think that will take time, Srinidhi, because as you said, we still hold certain inventory. Competition has continued to be there. I think as of now we will see, we will see improvement sequentially. Okay. And last one, sir. If I look at Havells' top line performance, okay, it is significantly above industry. In the past also, you used to grow much faster than the industry, but the whole quantum of outperformance has been significantly above. Not in just at the company level, in each and every segment, you have been outperforming significantly. Wondering, in your own assessment, what is really driving this sharp outperformance? Would it be possible to share some color? I think if you're talking about long term in the last five, six years, you know, there has been a lot of new initiatives towards becoming an omni-channel company. Also becoming more and more relevant towards all kinds of customers, not just the trade oriented customers, but also B2B products. I would attribute a lot of it also to the consumer preference towards the investments that we made in our technology innovations. You know, other than the brand building, which has always been there. Most of it is also consumer led driven through innovation. I think that also helps protection of the margins on a long term basis. I don't know if I've answered you the question, but it's a very long term kind of, you know. No, wondering like you had been, outperforming pre-COVID as well. The quantum of outperformance seems to have accentuated, post-COVID. But I think- It is good. Just understand more of the drivers of it. Sorry. That also is especially the fact we did a re-disruption. There is movement towards organized players. I think companies who invested in product and distribution and brands, they get a higher share of the advantage. Yeah. Last one, sir. Is this conditioner plant likely to contribute in servicing demand for this? Sorry, can you repeat? You have a second air conditioner plant expected to come, become operational soon. I'm wondering, is it likely to contribute in servicing demand for air con? Yeah. Yeah. That is a very small percentage, but it will start contributing from this season. Okay. Thank you for answering and all the other things. Thank you. Thank you. We have our next question from the line of Manoj Gori from Equirus Securities. Please go ahead. Good evening team, and thanks for the opportunity. My first question is on the ECD segment. Obviously when we look at, demand environment was pretty weak in B2C, on the B2C side. If you look at, there was some pre-buying in fans, whereas I believe like there would have been some pressure on water heaters in the December month, especially when we look at the winters were not so strong. Can you just indicate like probably what would have been the impact on the overall growth numbers during the quarter because of the weakness in water heaters? First of all, on the pre-buying of fans, as I explained earlier, Havells was less, you know, benefited by the pre-buying because Havells does not operate in the economy segment. There, wherein the major advantage of cost differential between pre-December and post-December was there. Hence, the shelf filling happened for lower-end fans. For us, the pre-buying was not such a big factor. The other products also, including not just water heater, appliances, fans overall has grown not significantly well. It was not just related to water heater, but overall the demand had been muted in this quarter. Right. Probably for fans, again, the pre-buying or probably switch from, non-energy compliant to BEE rating. It should be a normalized quarter in the, fourth quarter, what I mean first. Yes. Hopefully it should be. We do have, you know, a couple of brands like Standard Electricals and Reo, but at least in Havells, our major foray is into upper end segments. That should be a normalized quarter. Right. Sir, right from the start of the year- There will be increase in, prices and the costs. That can impact some amount of initial, growth, because, you know, trade and then consumer finally takes some time to adjust as well. Yeah. Sir, how do you expect the industry to settle down, especially if you look at fans with the BE rating? If you look at today, we have, like in the EC, it's like roughly 70%-75% is three star, five star would be 20%-25%, somewhere near that. Like, how do you plan your productions with regards to star ratings, whether what would be the execution challenges? Can you highlight something over there? Really can't answer that. I mean, we'll have to see how the demand pans out. I think, actually our supply chain is very agile. See, everything has to depend upon the consumer. Right. What they eventually buy. It could be possible that, you know, the push towards five stars and three stars, people may shift towards more one star, two stars, but could also be they can actually, you know, take a plunge and go for a three star and five star. This has to be seen during the season. Generally we are flexible. Our strategy is quite flexible. That is one of the big advantages that we have our own production. Right. Lastly, second question on Lloyd. Obviously, since quarters we were not sure whether we would be doing breakeven in the current year. Can you offer some visibility on FY24, whether we would be achieving breakeven at segmental margin levels for Lloyd? I think we'll comment after the season. That will be a right time to do that. Sure, sir. Thanks a lot, sir, and wish you all the best. Thank you. We have our next question from the line of Bhavin Vithlani with SBI Mutual Fund. Please go ahead. Yes, thank you for the opportunity. The question is on the Lloyd segment. Could you speak about the cost takeout initiatives especially on the supply chain where a significant part is imported, where you could localize and take cost out of working capital? That's one. Second, if you could also speak about your product differentiation strategy, and also the initial promotion expenses that you could have been doing to which is an entry strategy to get your shelf space and that has led normalization, will you see the margins kind of improve because of that? Bhavin, on cost takeout, as you said, I think this is ongoing sort of endeavor and the commodity, the way they have been volatile, I think they're not helping the cause, whether you import them or whether you do domestically, because a lot of these products are globally sort of benchmarked in terms of the pricing. I think it's a constant endeavor. I think, wherever the cost possibilities are there, I think they are regularly evaluated. That in fact, when you do things in-house, beginning actually the inter costs which are higher than when you just outsource them, either from India or China. I think that takes some time to settle down. Now that we're gonna give brand new, we see actually some costs which could be slightly higher than normal. I think, in a year or so, I think we will see the benefits of doing things in-house. Coming to the promotions and anti-pricing and all, I think, we have been in this industry for some time now. The promotion and making the brand preferable for the consumer will continue to be there. I think this is something what Havells done over long years, and with Lloyd also there's a similar journey. We will not say this was something for a particular level or for a particular period. Yes, as a percentage of sales, as sales grow, you see they may not be similar increase in terms of percentage. On the absolute numbers, we believe these commitments, whether in terms of the products or in terms of the promotions or advertisement, I think they will continue for the time being. Okay, sure. Just a follow-up here. What would be A&P for Lloyd? Historically, we've been seeing it's much higher than company average. A&P, we had it almost 19%, but right now it should be around five and a half percent. Sure. Sure. Thank you so much for the information. Thank you. We have our next question from the line of Ashutosh Parashar from Mirabilis Investment Trust. Please go ahead. Yeah. Hi, Ashutosh from Mirabilis. Sir, I have just one question. If you could shed some light on the demand scenario in the wires, specifically on the housewire, retail side. Also if there was any inventory gains in the quarter for the wires. If there was, then what was the quantum of that? Thank you. I think wires is undergoing a little bit of a volatility because of the raw material fluctuations. You know, at times, there is some shelf clearing also because now the prices have started going up. We do believe that the third quarter there was no inventory gains, but in the third quarter, you know, the, the secondary demand for wires would have been also impacted because just like other businesses, we are seeing some higher sales because there's some shelf clearing because costs started going up in the second part of the quarter. We do anticipate some higher levels of inventory at the end of the third quarter for domestic wires business. Okay. Okay. Sure, sir. Thank you. Yeah, that's it from my side. Thank you. We have our next question from the line of Rahul Agarwal from InCred Capital. Please go ahead. Yeah. Hi. Thanks for the follow-up. Sir, one question on the Lloyd washing machine and ref portfolio. In terms of SKUs, are we, you know, fully prepared for the next season? If you could just elaborate a bit on, you know, what kind of models we have, and are we done with the larger portion there? Pretty much on the washing machine and refrigerators, you know, on its journey. Calendar year 2023, washing machine I think the season just went out, and RACs will actually start summer. Calendar year 2023, we should be fully there, as per, you know, versus competition, right? Yeah. Yeah, that's right. Okay. Lastly, you said ACs will contribute in the season. So, like March and April, is where the timeline is for the plant to start? That's right. That's right. Lastly, CapEx for the current year and next year, if you could guide, please. Thank you so much. This year, eventually we'll finish around INR 700 crores. Next year, we'll let you know by the end of the fourth quarter. Okay, sir. Thank you so much. All the best. Thanks for answering. Thank you. Thank you. We have our next question from the line of Abhineet Anand from Emkay Global Financial Services. Please go ahead. Yeah, thanks for the opportunity. My first question is on the RAC side. Can you throw some light on nine months, what has been the industry volume growth and what is for us? We, we don't normally give the product wise breakup, but we definitely have been better than the industry growth. Yeah, I think that's clear from the, I mean, numbers. Any, you know, at least, qualitative, thing we'll do in terms of industry and Lloyd both? I think, you know, actually it's a not a great nine months to compare because the first quarter we were comparing against a, you know, low quarter of the last year. Difficult to say what the real growth is in the local time now. Okay. Secondly, on the cable side, is it possible to give a breakup of the B2B and B2C part? Cable and wire we can. Wire Yeah, yeah, cable, sorry. 60/40. 60 is wire, 40 is cable. Okay, sir. Thanks. Those were the questions. Thank you. We have our next question from the line of Rajesh Kanna from ITI Limited. Please go ahead. Hello? Hello? Yes. You can hear me. Yes, sir. Thanks for the opportunity. Most of my questions have been answered, but, you know, just wanted to ask something on the competitive intensity, you know, going forward, if you're expecting RAC as well as in the cables and wires. Because in cables and wires also there are some players who were specifically dominantly on the B2B side, but now, you know, they have been guiding that they've also turned equally or even more aggressively on the B2C side. Even in RAC when lately, the competition heightened in, and we are also focusing more on market share gain and establishing our volume presence in the market. Going forward, do you expect any change in the competitive intensity on the RAC side? On the cables and wires, you can actually, you know, maybe give us some idea of how exactly are the things, as well, going to change over, let's say, last, 12 months and going forward, how is it expected? Cables and wires, I think, has been competitive, right from the beginning, and it will continue to remain so. As you've mentioned, some brands are coming on the B2C side. In fact, the more they come, in fact it gives easier and it becomes better to actually, you know, reorganize the unorganized sector to the towards the organized sector. That is all beneficial. I think our focus has always been that how do we grow faster than the market and gain market share. On the, on the RAC side, I, you know, while there is competitive intensity, as I've said many times, due to, you know, post-COVID scenario, a lot of people wanting to regain or come back to their existing market share level. I think the kind of growth is that Lloyd is experiencing, it's not just by being aggressive. We are actually following the market. Also the fact that we are entering into hitherto channels where we were not present. Our the modern format stores, the regional retailers, the e-commerce, those are segments that we are entering into. Some of the sales are also coming from our projects. You know, the builders segment where Lloyd was not present. I think we are gaining market there rather than actually, you know, gaining market share by being more competitive. We are actually more following the market there. Sir, just on this note, you know, if we have to look at it in how long let's say would it take for us to sort of have a saturated presence, you know, through all the channels as well as all the geographies and all the tier places, tier 1, metro. How long will this journey continue? Then from there onwards, you know, it will be more like, you know, it will be present all across, and then it will be up to the market or up to, you know, other factors other than distribution and presence. We've been in business for 50 years, and since we've never reached any saturated presence in any business category that we are in. Hopefully India will continue to give many more opportunities to expand. Yeah. That is there. It's more to do with RAC and Lloyd as a brand. In fact, our starting point in RAC and Lloyd has also been much lower. You know, we started in 2017. There the opportunity is even bigger to actually continue to make our presence across every nook and corner, then increasing market shares where we are weak. There will be a huge opportunity for Lloyd to increase its presence. Sir, any, you know, where is our market share, if, in case you can share that number and where do you see it going forward, let's say almost 18-24 months? Any targets you have set for ourselves? No, I don't think we give those numbers right now. Okay. Sure. Thanks a lot, sir. Thank you. Thank you. We have our next question from the line of Rahul Gajare from Haitong Securities. Please go ahead. Yeah, thanks for the opportunity. You did indicate, you know, that the revenue during the quarter was, you know, driven by the volume. You talked about, you know, 3%-4% hike that you see in fans and AC. Is it possible you could highlight if you've taken any other pricing action in any other product category during the quarter? That's the first question. No. In fans and ACs I mentioned that the actions will happen in the fourth quarter. There were no pricing actions in the third quarter. Okay. My second question is on the ad spend. Given the consumer demand has been soft, you have increased or, you know, maybe, normalized your ad spend. Is it possible you could, you know, help us understand how much is spent on actual advertisement and how much is basically towards, you know, distribution incentives, schemes, et cetera? Is that the kind of breakup that you could share? No. All this advertising and promotion that you see is not the distribution- ATL/BTL. That is already taken out of the net revenue. Okay. Right. That's all from my side. Thank you very much. Thank you. Thank you. We have our next question from the line of Harshit Kapadia from Elara Capital. Please go ahead. Yeah. Thanks for the opportunity and good set of results. Just 2 questions, sir. We had seen a very subdued growth in Switchgears in this quarter, as you have also highlighted on the demand side. Similarly for lighting and ECD segment. However, when I look at contribution margin for Switchgear, it remains flat. Whereas for lighting and ECD, both have improved. Can you share some insights into why is this? No, because the margins in the second quarter had actually gone down. They are, basically they have just come back to their normal levels. If you see the ECD segment had the margins had gone down over the last few quarters because of the unprecedented increase in the raw material prices. That started coming up back after. Same is the case with lighting. There was a second quarter margins were lower as compared to the normal levels. Okay. There was no material benefit which was there in Switchgear, which we have saw in lighting and ECD. Is that a correct understanding? No, no. What we are saying that Switchgear had not declined much in Q2. I think Switchgear has been largely stable. I think it was more profound in lighting and that's initially where the margins have slightly improved sequentially. Even in Switchgear, if you see the margins are pretty stable over a few quarters. Okay, okay. My last question is, what would be the contribution of B2B and B2C at Havells as an entity for. We Lloyd is all consumer. If we exclude that, we mentioned that 25% is B2B and 75% is B2C. Okay, okay. Thank you for all the answers and obviously all the best. Thank you. Thank you. We'll take our last question from the line of Achal Lohade from JM Financial. Please go ahead. Yeah, thank you for the follow-up opportunity. You know, just 2 questions. One is on the lighting business. You know, if you could talk a little bit about in terms of how the professional and consumer luminaire growth trends have been, what is the outlook? Secondly, on the margins, in general, for the ex-Lloyd pieces, the margins, what we have achieved in 3Q, are you suggesting that this is the normalized margins? In case of lighting, the margins of 12.7% look low compared to the past. Just a clarification on that. Yeah. No, I think professional and consumer in lighting, our professional has done slightly better. I think it's still picking up. The consumer is almost 60% of our lighting business. As far as the margin is concerned, on the segment results, you see, we mentioned that if you look at contribution, they are pretty much stable, almost 30%, which has been a, you see, largely the average for lighting in the last few years. As far as the segment is concerned, you know, there have been new launches and also new advertisement sort of campaigns for lighting which could have just for this quarter altered or impacted the segment results. I think lighting remains in good space. We do not feel any structural challenge to the same. Got it. Secondly, just on the cables and wires segment, you know, if you look at the average copper price, it's down 8% YOY, we have reported 17%. Does that mean that volume growth is upwards of 20% in this quarter? How do we tally that with the slowing consumer demand, the macro backdrop? Yes. Let's say 4% to 5% price decline has been absorbed. You could argue around 20%-22%. How do we tally that against, you know, the slowing consumer facing business? Why the construction-led or wiring, wires, volume growth is growing at such a high pace. Is it purely there is shelf filling? Yeah. No wire particularly because there have been some anticipated pricing. I believe there had been a shelf filling in the last month, December of the quarter. Everything I think maybe you can't just attribute to the organic demand for that quarter. Right. What I was trying to imply is that is there any significant market share gain, particularly in the cables and wires business? No, no, we do not. Look, frankly, we don't track like that. I think this will be some general industry performance as well. Got it. Thank you so much, Rajivji. Thank you. Thank you very much. Thank you. I now hand over the call to Ms. Bhoomika Nair for closing comments. Over to you. Yes. I would just like to thank the management for giving us an opportunity to host the call and answering all the queries. Thank you to all the participants for being there. Thank you very much, sir, and wish you all the very best. Any closing remarks from your end? No. Thank you very much for organizing and thank you very much for attending. Thank you. Thank you. On behalf of DAM Capital Advisors Limited, that concludes this conference. Thank you for joining us. You may now disconnect your lines.