Ladies and gentlemen, good day and welcome to the Q4 FY 23 earning 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 0 on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Rahul Agarwal. Thank you, and over to you. Thank you, Deepa. Good evening to everyone on the call. InCred Equities welcome you to discuss the fourth quarter fiscal 23 results of Havells India Limited. We thank the management team for giving us this opportunity to host the call. We have with us the senior management team of Havells India, represented by Mr. Anil Rai Gupta, the Chairman and Managing Director of the company, Mr. Rajesh Kumar Gupta, Director of Finance and Group CFO, Mr. Ameet Kumar 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. Good evening. Thank you very much, Rahul. Good evening, everyone. Thank you for joining the call today. Hope you have reviewed the results published today. It's been a moderate performance, given the fact that we had a subdued consumer demand, but also buoyed by a good industrial infra demands. The B2B segment has sustained steady demand led by infrastructure, and housing activity has also revived in the second half. ECD witnessed weak performance given the fan industry stocking scenario in the third quarter. Lloyd maintained its growth trajectory. During the quarter, we commenced production in our new AC plant in Sri City, which doubles our AC manufacturing capacity to 2 million ACs per year. Contribution margins has improved across segments. We are witnessing a delayed summer, which might impact the demand for summer products for this season. That's all from my side, for my opening remarks. 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 then 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. The first question is from the line of Ravi from Edith Park. Over to you. Hi, sir. My first question is with respect to the core business. As you had mentioned, the consumer demand had been weak, and because of that, during the quarter, it had been a mid-single-digit kind of growth. My question to you is, going forward, given the fact that consumer sentiment continues to remain weak, do we expect the core business, for the current running year, that is FY24, to be at the same momentum? Are we doing something to take the growth back to double-digit kind of growth? I think a few things. We are definitely doing all the things we would have continued to do, you know, whether it's brand building, distribution reach and all. We are continuing to do our work. Yes, we saw some subdued demand in the second half of the year. Also, you know, sort of we are enthused by the fact that what we hear and we see from the market is that the real estate sector has started seeing new construction, which might be visible from the fact that, you know, some sort of uptick has been seen in the wire and cable business, in the switchgear business. That may lead to increased consumer demand in the coming months. We are hopeful on both sides. Consumer demand should do well, and the industrial infrastructure demand continues to do well, at least in the last 6 months. I think going forward, we're not expecting that this low momentum to continue. The ratio of B2C and B2B at an overall level, any What is the ratio? Approximately it remains at 70/30, 75/25, but this quarter, particularly it was around 70/30. Generally in the fourth quarter, there is some increased demand for industrial and government project products. In this quarter, it was around 70/30. Okay. Is there any big difference in the profitability of B2B and B2C? Depending on the product to product, yes, in cable, underground cables and wires, domestic wires is more profitable. In lighting, pretty much the profitability is similar, in switch gears also. Got it, sir. I'll come back in the queue if I have more questions. Thank you. The next question is from the line of Renu from IIFL. Thank you. Go ahead. Yeah. Good evening, team. My first question is on Lloyd. If you can share as in overall, this year we've continued to focus on very high volume driven growth and towards the end of the year in Q4, clearly, at the EBIT level, losses have trimmed down. From a yearly performance, in your view, how has Lloyd done both in terms of volume share in the RAC market and performance in non-RAC products like washing machines and refs? From a margin outlook perspective, in your view in FY 2024, what needs to be done so that the business is back in blue and profitable? On the volume side, you know, ACs continue to be the mainstay and we almost 70% of revenues come from air conditioners. That's where we definitely believe that there's a good opportunity for Lloyd to maintain its, you know, top 3 position in the market. We're continuing to give our focus there. We have a lot of white spaces, including, you know, certain markets where Lloyd was hitherto not present, like the western part of India, eastern part of India, where we're gaining tractions and market share. That continues to remain as a growth strategy for Lloyd. On the margin front, you know, last year there were unprecedented increase in raw material prices, and the entire cost was not passed on to the market. Over the next few quarters, we do believe that there will be some softening of the raw material prices. The Lloyd market positioning will also be in a position where we will be able to, you know, push in our premium products as well as, you know, product mix will change. Profitability is definitely something in mind and margin expansion is definitely in mind and will continue to happen. It's a journey and it will continue to happen. Sure. How was the performance of the non-RAC portfolio, washing machines and refs, where we had capacity expansion and new models being launched? Aligned with this, what has been the cost under recoveries or investment in the ref portfolio for fiscal 2024? I think overall, both ref, washing machine and LED TVs are growing at a decent pace. I would still say that it's not really at a very fast pace given the fact that the base is low, but it is the acceptance in the trade and it's catching up. It is growing decently well. I think the benefit that we get in washing machines is definitely more because we have our own production. Over a period of time we'll start, you know, getting some more advantage in refrigerators also. I think refrigerators is still a longer journey, but washing machines is a faster growth strategy for us. Sure. Lastly, if I can ask one more question? Given that the, in general, demand for consumer products or consumer demand is weak, not much of price actions were taken in this quarter for fans, or Lloyd in other categories. How are you looking at the pricing environment moving ahead in FY 2024? Are any price hikes being announced or already planned, which will be transmitted to the market in the coming quarters? I think after some time we are seeing some stability in pricing, and it's not re-required actually to place where we've seen some volatility in the fourth quarter was cables and wires. Otherwise, generally speaking, in other product categories there is stability in pricing. I hope it continues to remain so for the next few quarters. Got it. Okay, thank you so much and all the best, sir. Thank you. Thank you. The next question is from the line of Siddhartha Bera from Nomura. Please go ahead. Yeah. Hi, sir. Thanks for the opportunity. Sir, first question on the like on the consumer side, you said the demand has been soft, if you look at the advertisement spend, it is about 2.5% and still lower than what we have seen in the past of in the range of 3%-4%. Do you think this can be one lever to sort of look at to drive more growth in the coming year? You know, generally speaking, product, overall 2.5% is coming. Last couple of years it was subdued because of, you know, COVID and coming out of COVID. We do believe that, given the product mix that we'll continue to drive around this level will continue even in the future. There will be continued investment in brand building over the next few years. Got it. Second, sir, on the growth side. Switchgear, we have seen a big improvement on the growth. Is there any pent-up demand which has also come during the quarters or these are the levels which we should expect in terms of the run rates to continue? I think let's not overread the switchgear growth based on 1 quarter, because, you know, sometimes it happens there are, you know, certain quarter ending, you know, push which happens. Maybe, you know, last quarter and this quarter could have been different pricing change, shelf selling might have been different. Definitely there is some uptick in the real estate environment in the last 6 months. That has also helped switchgear. On the industrial switchgear side also, there has been increased spending by the government infrastructure projects. Both are getting benefited in the fourth quarter. As I said, let's not, you know, base our, you know, future projections just based on 1 quarter growth. Got it. Last question on the Lloyd side. This is a seasonal quarter and if you see the capital employed, that has kept on going up even at the end of this quarter as well. Do you think coming, I mean, this will continue to inch up as we grow or we should expect some mobilization at some point in the future? I think, in case of Lloyd, you know, the kind of growth that we were getting from the third quarter, we were quite hopeful that we'll have a very good summer, for which we had been building inventory for the month of March, April, May, June. You know, the Sri City plant also started production around February and March only, around March time. Basically, it was dependent on one plant. We have been building inventory. Unfortunately, end of the quarter, March, we saw some lower demand because of the weather change and so hence a high level of inventory in case of Lloyd at the end of the quarter. In fact, with the Sri City plant coming up, we will see more balancing in inventory in the coming times, for this use. Got it, sir. Thanks a lot. Thank you. Thank you. Thank you. you. The next question is from the line of Sonali Salgaonkar from Jefferies. Please go ahead. Thank you for the opportunity. My first question is regarding the CapEx guidance. We have seen that there has been an increase in CapEx this year. Possibly any guidance you could share over the coming two years? This year we're looking at about INR 600 crores, you know, with the Pimco facility also coming up, in this year. We're looking at about INR 600 crores in this coming year. Right. Post that, should we expect some normalization in CapEx, probably reversal. Yes. Normalization because two new facilities will be coming up in 2022, 2023 and 2023, 2024. Understand. Secondly, you did mention that in Q4 there was some pricing volatility in cables and wires. Could you quantify the price hikes that you have taken in cables and wires? Secondly, post the transition to new BEE norms, have you also hiked prices in the new models of fans and air conditioners? Cables and wires, when I say volatility, actually it happened both ways. If you see volume growth, value growth is the same. Volume growth is the same as our value growth. The volatility was to the extent that sometimes the raw materials went up and sometimes it came down. There was a little bit of uncertainty in terms of the channel in stocking the product. Hence, I say that there was volatility. Overall, the prices have not increased. There was an increase in the prices of fans because the ratings changed from the first of January. How much that would be? Sorry. What could be the quantum of price hike, sir? Around 5%-7% on an overall basis. Is this margin accretive as well? Margin neutral, I would say. Understand. Last question from my side, could you possibly quantify the volume share gains in Lloyd in the past 12 months? Because we have done exceedingly well on the sales. I think that we are not looking at. As we said, we believe we are gaining market share, and I think we continue to be top three. Would you continue to invest more in brand building in Lloyd? Definitely. Got it, sir. Thank you. Thank you. The next question is from the line of Latika Chopra from J.P. Morgan. Please go ahead. Hi. Thank you for the opportunity. I just wanted to, you know, delve a little bit into the ECD segment. You know, for the second half of the fiscal year, you know, assuming there was a stocking up done in Q3, the revenues are down 5%. You just mentioned a price increase that you took, which got reflected probably in Q4. How has the performance been of the non-fans portfolio, and how should one think about the growth here? You know, large chunk of this business is B2C. You know, as we look into FY 2024. Contribution margins seem to have held out better. Now with given your outlook on commodity prices, is there scope to, you know, improve these further? I think second half definitely has been slow in terms of consumer products are concerned. One of the concerns that we also saw was that, besides the fact that we, third quarter was a self-filling and fourth quarter was a reduction. Also because the prices went up, you know, the channel was also waiting for new channel build up during the month of March. Overall fans suffered because of that. Overall, I would say consumer demand has been weak and which has actually seen that the rest of the products have also seen a flattish growth in the second half of the year. How are you thinking about margins, you know, going forward, given your view on raw material pricing? I think, you know, what we've seen over third and fourth quarter is because there is now stability in raw materials and the prices have settled. We believe that, if the situation continues, there will be some normalization of margins levels to the previous levels to what we used to have. And- In the last one or two years, if you've seen that, we've not been passing on the entire cost increase to the market. Sure. If you benchmark your market shares and fans, you know, in the last one and a half years, how has Havells fared? Any parts of the portfolio you think you want to get more aggressive on market share front, and that could imply that, you know, in brand investments could rise? Why I'm asking this is that if you want to grow double digits, would you be okay with an aggregate margin profile of 11-12%? Is that, you know, the buildup that we should think about at an aggregate company level for you? I think the margin levels we drive, more from, you know, gaining market share, the expansion of, you know, premium products in the portfolio, brand building, market pricing. That's not really related with the overall market share increase, so margins go separately. We do believe over the last couple of years we have gained market share in the fans business and we'll continue to do so. Going forward, there will be more focus, which has always been there, one on the energy saving products as well as on the premium, category products. That's how we maintain the margins for this category. Okay. My observation is more that in a slow demand environment, would there be more, competitive activity to at least, you know, move market shares, to drive top-line growth? Hence I just thought maybe, you know, investments, would increase going forward. Thank you for your comments. Thank you. The next question is from the line of Charanjit Singh from DSP Mutual Fund. Please go ahead. Yeah. Hello, sir. Thanks for the opportunity. My first question is on Lloyd. While, you know, you have put in a lot of effort in terms of now having the manufacturing facility in Sri City and also the distribution in place, so in terms of target market share from here on, what we would look at? From the, you know, industry margin perspective, do you think that there has been a significant reset in industry margin on a downward side, which would now maybe sustain at the levels what we have not seen earlier? I think overall market shares, we continue to maintain that we want to be amongst the top three players. You know, we do believe that Lloyd has a good potential to continue to be one of the leaders there. On the margin front, I think what we've seen in last three or four years, AC industry has really gone through troubled times because of COVID earlier and then very high raw material prices. I think going forward we will see some stabilization in the overall industry, which will definitely help Lloyd also. Overall industry should also be stabilized in terms of margins. Yes, there might have been, you know, reduction in margins overall in the industry, but that was also due to very unprecedented times in last three or four years. Okay. Sir, if we look at the, you know, X of Lloyd portfolio, you know, we have elections, you know, coming up in the, you know, subsequent quarters. You know, how is the kind of growth expectation if we have to, you know, look at from B2B perspective and B2C perspective, if you can give some, you know, quantitative as well as qualitative comments on, you know, the growth outlook going forward? I believe that, you know, while generally there's always an expectation before elections that the industrial and, you know, government infrastructure demand should improve, but actually we've seen it improve and improvements in the last one year. We hope that this will continue to improve. Going forward, I don't think the other part of the portfolio is so much election dependent, but more dependent upon the real estate updates, what happens in the market, the consumer demand sentiment. You know, overall, I would say both positive that the real estate is doing well. On the other hand, the negative is that the interest rates are high, which definitely, you know, increases the inflation and also reduces the ability for a consumer to buy. There has to be a balance which has to be looked at. I will not relate it too much to the election year. Got it, sir. That's all from my side. Thanks for taking my questions. Thank you. Thank you. you. The next question is from the line of Swati Jhunjhunwala from BOB Capital. Please go ahead. Yes. Hi. Thank you for taking my question. First can you just give me some color on what was volume growth in the wires and cable segment? Same as the volume growth, value growth, around 6%-7%. All right. The CapEx that you are planning to do, the INR 600 crore CapEx next year, will that be through debt or through internals? Internal, internally. Internal. Okay. Are there any price hikes for TCA you're planning to take further during this quarter? As I've already said that we believe that there is some stability in the raw material prices, so we do not anticipate any price hikes. All right. Lastly, we have, like, we've heard from other competitors that, you know, Lloyd is gaining market share in the last, I would say 6-7 months. Could you just give me any sense of what it is right now, and how much do you expect this to go in this AC season that's about to come? Yes. You see, I think, you know, there are very different market share numbers from different, market reports. We actually go in by the industry numbers, and we do believe that, we are amongst the top three. Over the last one year or so, one and a half years, we've moved from top, you know, fifth position to the top three position. Our aim is not to be like, you know, number two or number one. It's then, you know, it becomes, like a race kind of a thing. We hope to be amongst the top three in the coming time. All right. Thank you so much. Thank you. The next question is from the line of Abhijit Akella from Kotak Securities. Please go ahead. Yeah. Good afternoon, thanks so much for taking my questions. I just have a couple of clarifications to seek. One is, within the ECD segment, if you could please just help us understand what the proportion would be the fans business? Also, in terms of this, you know, channel stocking, et cetera, that impacted demand in both the fans as well as the cable segments, is that largely done and do you see, you know, the situation normalizing going forward here on this? I think, from a channel stuffing point of view, things are normalized. Though there is some impact on the weather impact on the fans business particularly. Otherwise, generally, you know, the channel is at normal inventory levels. Usually the fans again, season to season or quarter to quarter, it can vary, but around 60% comes from channel as a This quarter, 65%. This quarter 65 because it's a summer. Correct. Understood. Thank you. Also just to add, the new models of the energy efficient fans, have they started to, you know, experience a significant pickup now or have the older models depleted now from the channel? Yeah. The first quarter after January, February, older models have almost been finished, and it's all the new rating fans. Got it. One last thing is on the AC category. In the, you know, context of all these new capacities coming up in India under the PLI scheme for, you know, various kinds of components, would you sort of anticipate an increase in competitive intensity in the next, you know, year or two as maybe the industry sort of competes to sell out all the additional capacity that has been created? How would you see pricing and margins trending in the market in that backdrop? No, I think, as you have also said that this is for the components, so I don't see any reason why that should increase the competitive intensity. Would the more backward integrated producers have a competitive advantage, sir, compared to someone who's maybe more dependent on importing from China in terms of these components going forward? Not really, because most of these component suppliers are also setting up manufacturing facilities in India. They're all backed now. Okay. Thank you so much, sir. All the best. Thank you. Yes. The next question is from the line of Aakash Jhaveri from Perpetual Investment Advisor. Please go ahead. Good evening, thank you for the opportunity. My first question is on on the BLDC segment that how is the current demand with you know, from first January onwards, and how are you expecting this demand to be going forward? I think, you know, with the new ratings change, BLDC will definitely see more pickup in the coming time. Many of our categories in fans now are BLDC model based. It's a larger portfolio. It will take time because of the cost difference, but it will be much faster than if the rating change would not have happened. Sure. In the industry, we've heard that, you know, there were some quality issues with regards to BLDC. you know, one of our competitors mentioned that. Did we face any quality issues as such or, were we largely insulated from that? No, we've not faced any quality issues. Sure. Thank you so much. That's all from my end. Thank you. The next question is from the line of Achal Lohade from JM Financial. Please go ahead. Yeah. Good afternoon. Thank you for the opportunity. You know, my first question is that on the switchgear business, you said in the press release that it's a better product mix which has driven this. Sorry. Can you repeat the question? I didn't hear. In the presentation you have mentioned that switchgear margin improvement is driven by the product mix. Can you elaborate a little bit more as to, you know, what has driven this substantial margin improvement, and how do we see the margins for switchgear business going forward? Switchgear business, you know, I would not say it's because of the product mix. It's also because of higher sales and operating leverage. Generally speaking, you know, other than the very volatile raw material market conditions the last one and a half years, generally they remain stable between 37%-40%. Understood. My second question was on the Lloyd business. If we look at the contribution margin improvement QOQ is 250 basis points, while the EBIT margin improvement is 810 basis points. Obviously, there is an operating leverage. Just wanted to check, you know, would there be a reduction in the A&P as a percentage of revenue QOQ for Lloyd? No, I think, you know, Q3 to Q4 comparison is not a comparison, both in terms of operating leverage, even in A&P, because most of the A&P happens in the fourth quarter and the first quarter. It's not really a good comparison to make from the quarter. I think YOY will be a good comparison. Would you say that the A&P has increased in the similar fashion, what it is for the aggregate company? Yes. The Lloyd A&P has increased in Q4 because Q4 and Q1 are the sort of months where most of the A&P is spent on Lloyd. Would you be able to quantify, Raju ji? Yeah. Actually, that number will not be there. Maybe, I think we will not give the disaggregated numbers. Got it. Just one more question I had. Is it possible to get some sense about the exports revenues for FY23 as a whole, and what has been the growth, and how do you see this, you know, in terms of switchgear, cables and wires, any other products exports, we can talk about? The export sale has been around INR 550, which is pretty flat on the last year. Hopefully we'll see better days ahead. Got it. Just last question, if I may, with respect to the new ACs facility in Sri City, what is the revenue potential from this particular facility? This facility is for 1 million ACs. As we said in the beginning, we double our capacity from existing 1 million to 2 million ACs. Right. In terms of the revenue? Revenue could be in this, between, let's say INR 2,700 crore-INR 3,000 crore. It depends whether we, you know, when we are able to achieve full factory utilization. Got it. Thank you. I'll come back in the queue for follow-up. Thank you. Thank you. Thank you. The next question is from the line of Aniruddha Joshi from ICICI Securities. Please go ahead. Yeah. Thanks for the opportunity. Sir, 2 questions. Can you indicate the brand-wise revenue growth rates, Havells, Standard, Reo? Which brands have done the highest growth in FY23? Secondly, can you indicate the growth rates on a region-by-region basis? At least what we understand that North and East is doing relatively weaker. How is Havells doing in these regions? Lastly, the revenue growth rates in urban versus rural markets. The last question, what is the final number of retail outlets at the end of FY23? Yeah. Thank you. Yeah. All these three, first three questions, we don't, you know, I don't know whether you followed Havells in the past. We don't give, you know, disaggregated numbers, you know, for various brands or regions, or even sometimes product category within the ACs. We'll refrain from answering that question. In terms of retail outlets, you know, we do believe, given the fact that we are into both rural now and semi-urban, we do believe that we cater to more than 200,000 retail outlets. You know, on a regular basis, it is not necessarily 200,000. Our distribution now caters to more than 200,000 retail outlets. Okay. Okay. Sure, sir. Thank you. Thank you. The next question is from the line of Abhilasha Satale from Quantum AMC. Please go ahead. Hello, sir. Thank you for giving me opportunity. Sir, my question is, again, related to Lloyd's. I want to know how much is the channel inventory and inventory at the company level, and how do you see demand panning out for this season? Sir, with this capacity, Sri City capacity coming, do we have a target to break even Lloyd in this year? The channel inventory was high. Company inventory was also high at the end of March. Because, you know, the summer did not kick in as anticipated, it did come in for few days, the season started in the month of March. Even in the first quarter, things are, you know, the season is not really the way it should be. We will see how it goes in the next couple of months because the AC season generally is up to June. We'll see how it goes. As far as the, you know, breakeven is concerned, I think, it's a bit of a journey we've always said. We are right now, you know, wanting to, you know, utilize our capacities, both in Ghiloth and Sri City. Over a period of time with brand building, distribution, product premiumization, product mix, we should definitely reach profitability, sooner than later. Let's see how much time it takes. Okay. In terms of inventory, can you just quantify, like, normally, compared to the normal level when we entered the season, how much higher inventory was? As we are into the season, how are you seeing demand panning out? I've also said... I'd say it's difficult to quantify how much inventory is lying in the system. I've already said in the month of April also, things are not the same as what an April summer should be. Okay. Thank you. Thank you. The next question is from the line of Alok Deshpande from Nuvama. Please go ahead. Yeah. Hi. Good afternoon, everybody. Just one question on Lloyd. Given the market share that Lloyd has gained over the past couple of years, coming into the top three now, I just wanted to understand what were the key, what was the key strategy there? You know, how much would you attribute to pricing? How much would you attribute to penetration of the dealer distribution network? Would that now change going forward, given that you're already in the top three? Is there any change of guard there? I think, you know, we have always maintained that Lloyd always had a great opportunity because there were too many white spaces. Lloyd was a very distribution-oriented business. It was not present in many channels like modern format retail, regional retailers. In last 2 or 3 years, with the coming of Havells, you know, that relationships have been, you know, used by, from Havells to Lloyd. A lot of channels, new channels have been added. New markets have been added. Like, for example, Havells had always been strong in the eastern region. Lloyd was pretty much non-existent in the eastern region. New markets have been added. A lot of brand building has happened. Product additions have happened. These are the various of, you know, gaining market share. I would not say that, you know, we have, you know, gained a lot of market share in the existing markets. New products, new markets have added to the overall margin. Once these wide spaces have now been covered, will the strategy change significantly going forward, or will this continue? I think we are still at the starting of these relationships with the channels, so, and the consumer build, brand building is continuing to happen. I don't see any reason why this should, you know, slow down. This should continue. Sure. Understood. Thanks a lot. Thank you. The next question is from the line of Akshay Thakkar from Fidelity. Please go ahead. Yeah. Hi. Congratulations to the team on the good performance, given the environment. My question was, you know, related to margins. If you take a last 2, 3 years sort of view, we've seen a lot of volatility in margins. Admittedly, the management has invested in the business, and that is reflected in the market share that you have delivered. You know, now if you think about margins on the next I'm not saying, you know, next quarter or next year, but just generally over the next 2 to 3-year period, how are we broadly be thinking about margins? Are we thinking about margins going back to, you know, where they were 3, 4 years back? Are we thinking about, you know, average margins over the last 7, 8 years? Just generally, how you think about margins will be a great starting question mark? Yeah, I think, a very good question I would say. You know, this is how we would also view, given the fact that last 3 or 4 years were, sort of up and down both in terms of demand, in terms of raw materials. Going forward, if we continue to see this stability, we would want Havells' core business, margins to come back to normalized levels, which were there before COVID. We are seeing that trajectory now in the last couple of quarters, but I think it will continue to remain there. Lloyd, I've already said that it's a continuing journey. We do believe that at certain, volume levels, we should definitely make money. It will take some time. It's a investment time for Lloyd at this point of time. Okay. Second question, again, slightly on a medium-term basis, how large do you see exports as an opportunity from this business? Sort of I want your perspective both on Lloyd and ex-Lloyd. Do you see that being a material growth driver or it's something which, I mean, it has been a focus or doesn't more than it is maybe as much over the next three, four years? No, I think, in the next three, four years, we'll see a lot of focus on building exports. Both one, from the core business of Havells, there are opportunities for building cables and wires business, lighting business. We are already have been doing well and there's opportunity there. Lloyd also with the manufacturing facilities that we have, we definitely see more scope there. This whole China plus one. Within our industry, it's not really a commodity. It takes time to build relationships with the channels. Definitely we see a huge potential coming in the three years. All right. Thank you, sir. Thank you. Thank you. The next question is from the line of Indrajit Agarwal from CLSA. Please go ahead. Hi. Good evening. Thank you for the opportunity. I have two questions. If you look at our AC capacity, currently we have about 2 million units as capacity versus India's current consumption of about 8 million. We have about 25% capacity of the consumption. How should we look at market share gain versus, or export substantially from the new unit? I believe, you know, we take Indian capacity or Indian sales as about 10 million. We have about 20% capacity. You know, I think, you know, the future demand for air conditioners is continuing to grow in India. We do believe that, you know, even the small towns within India will demand ACs in the future. We definitely see a huge potential for growth in the air conditioner space. Yes. Okay. Of course, exports from Sri City will be also a good option. Sure. Thank you. In this 2 million unit capacity, how much integration do we have, backward integration in the BOM currently, and how should we look at it going forward? Except for, you know, compressors and motors, we have pretty much integrated everything in-house, including the plastic moldings and the sheet metal as well. Sure. Thank you very much. Thank you. The next question is from the line of Pulkit Patni from Goldman Sachs. Please go ahead. Thank you for taking my question. My first question is what Akshen has asked, continuing with that. In terms of ad spends, you know, discounts, commissions, et cetera, there was a time you used to spend about 4.5% to 5% of sales on that. Now, as you look at competition, you know, those who are doing cables and wires wants to do electrical consumer durables. Everybody wants to do everything. Do we see a scenario that we may have to increase the spending of 2.5% to 3% just because competition across the board seems to be pretty aggressive? 2.5%-3% is overall Havells. We, if you look at Havells consumer products, especially the products where there is, you know, direct consumer advertising required, there the percentages are higher. When you see 2.5%, it's a mix of things. We believe we are still, you know, the biggest spenders in the electrical industry, and there is a lot of rub-off effect from one product category to the other. I don't see any reason that we should be, you know, seeing a huge increase in advertising spend. As far as general trade promotions and all are concerned, it's not really a part of this spending. It's part of a... It's not captured in this. Sure. The second question is, we've got INR 2,000 crore, more than INR 2,000 crore of cash with us, no debt. Any portfolio gaps that we could think of filling, say, in the next 2-3 years, which you feel, you know, could drive significant growth from here? Anything you can talk about? Again, nothing immediately, but you know, over the 3-4 year period. Yeah, there's a continuous process. Look, within organically using one, you know, there's a constant process of adding product categories. You know, we've seen that in the past. But also the another fact is that these kind of organic expansions don't require a whole lot of capital infusion. It's a good problem to have, but the fact is that we don't anticipate any major cash infusion into a new product category. But, you know, constant improvement, constant addition of product categories are happening normally. Sure. Thank you so much. Thank you. The next question is from the line of Rakesh Roy from Omkara Capital. Please go ahead. Okay. My first question is, Rajesh, so your, our rural sales is very less. In FY23, how much is there and what is the strategy for next 2, 3 years to increase the rural sales? Can you please come closer to the my can't hear you? Hello. Yeah. Yes. Yeah. Sir, our rural sales is very less compared to other players. For FY 23, how much is our rural sales and what is the strategy for next two, three years to increase our rural sales? Rural sales, I don't know whom you're comparing with, but in FMCG, we are definitely a good portfolio coming from rural sales. In the electrical industry, we've seen the rural penetration is increasing over the last two years. Right now about 5% to 6% of our consumer product sales come from rural sales. Going forward, the basic strategy is to continue to increase penetration and add more categories. Okay. All right, sir. Sorry, in the ECD business, maybe I may miss, in the ECD business, how much is the fan contribution, sir? It varies between quarter-to-quarter, but varies between 60%-65%. 60%-65%, sir. Yeah. Okay, sir. sir, last question, sir. In cable business, how much is from domestic side and how much is from industrial side, sir, for full year, sir? Around 60% comes from the domestic side. Okay, sir. Okay. Thank you, sir. Thank you. The next question we have from the line of Rahul Agarwal from InCred Equities. Please go ahead. Yeah, thanks. sir, three quick questions. On Lloyd's, in your opening remarks you mentioned, west and east is what Havells is working on in terms of improving market share. Just wanted to know, overall regionally around the four corners, are we weaker and stronger in some areas? That's one. Obviously, I know that east was stronger for Lloyd's. In terms of peak manufacturing sales from Lloyd's, excluding the Sri City expansion, what would be like the peak revenue for Lloyd's, if we, you know, excluding the outsourcing and the Sri City expansion? Yes, in every category, yes, there are strong areas and weak areas. You know, South and North have been traditionally stronger for Lloyd. East and West have been traditionally weaker, and that's where the focus has been. I've not understood your second question fully. What I'm asking is, based on our manufacturing capacity of Lloyd, excluding the new 1 million at Sri City and, but including the washing machine and the outsourcing obviously is additional over and above that, what would be the peak revenue potential? I think Rajesh-ji mentioned INR 3,000 crore comes from Sri City additionally, but excluding that, what is the peak? When you see capacity, INR 2,500 crores-INR 3,000 crores can come from Sri City. Same is the capacity for ACs at Ghiloth. As far as outsourcing is concerned, it is more opportunistic. We do not prefer to do any outsourcing for air conditioners, especially when we have manufacturing because of the quality differences, differentials which we have in our plant. We prefer not to have any outsourcing. That is the thing. Washing machines and refrigerators is an ongoing process of increasing sales. They are not constrained by capacity. Right, sir. Secondly, on fans, obviously the channel was overstocked into Janfeb, that could be more for 1 and 2-star ratings. Could you share some trends for premium and decorative fans? I understand April is weak, but what's happening in that segment? For the third quarter, premium fans sales were low and, you know, going into the season, we are now coming back to normal levels. Inventory, position of non, rating fans, especially in the month of January, February, were high, so people were not really picking up the premium fans. I think we, what we expected was the, when the season comes in, that will be the, pick up in the channels. However, the season has been a little bit tepid both for March and April. Let's see how it goes in the months of May and June. Perfect. Sir, lastly, on South India, I can see, you know, Havells putting up, you know, cable plant there, AC plant has already come up. Is this a conscious decision to strengthen South India presence? Do you see more opportunities there? Related question is Sri City is obviously seeing too many AC plants come up with very large capacities. I think Beko also put up, a lot of other foreign brands are doing it. Margin stability to come back ahead, is that gonna be like a 2-3 year phenomenon, or you think the next 12 months should answer that question? I think on the first hand side, you know, in part, in terms of expansion, when we were thinking of expanding further capacities in products where we needed to expand, we thought about diversification of region, because most of our plants have been in north. South has been there. It has been a stronger market. It's not necessarily to develop those markets, but as I said, for Lloyd or cables and wires, it's been a strong market for Havells. That was also one of the reasons to put up facilities there. In terms of, you know, more capacity coming in for air conditioners, that also is a reflection of the future demand scenario, which we do accept, expect because the penetration levels are still extremely low in India. Going forward, you know, we do believe that there will be good growth coming in for air conditioners. I think that is something which the entire industry is working on. Vishal, the question essentially was on the margin for AC industry. Yes. You know, it's very difficult to say when the exact demand will come, whether that could mean, you know, oversupply or not. It has to, you know, it's difficult for me to comment on the margin, profiling at this point in time. Understood. I understand, sir. Thank you so much for answering my questions. Thank you. Thank you. The next question is from the line of Amit Bhinde from Morgan Stanley. Please go ahead. Hello sir. I have two questions. First one is on Lloyd. Can you approximately tell us how many units approximately, I know you would not wanna give out the exact numbers, would Lloyd be selling in AC, refrigerator and washing machine right now? In AC, how do you see the utilization levels panning out with the Sri City capacity being added? As you said in the previous question that it is a crystal ball gazing as to how demand and penetration would shape up. What are the backup plans on export side? Or how would you look at improving the capacity utilization in case the domestic demand doesn't support? As you can say that when we don't give numbers for air conditioners, we can't even give approximate numbers. We have a, we do say that we are among the top three players in the AC industry. On the capacity utilization, it is more dependent upon the demand. You know, and obviously there are efforts going in to build exports also. It takes time. The demand is going to be there. If the demand is very good, then obviously we'll have higher capacity utilization. You know, you are asking me the question of crystal ball gazing anyway, so it's very difficult to say exactly how much will be the sales. Approximately like, most of your sales were coming up from the Ghiloth facility, which was 1 million. Approximately would it be right to say the capacity utilization would be 70%-80% over there or 90%? Yeah, you can say that. That's right. Yep. Okay. Great. Other question that I had was on your O2O model that you had launched during the COVID period. That was focused on supporting the demand and supply in that given situation. How are things panning out on that model? So, so it's- Still continuing or something? This is a very, very small part of the business because, you know, post-COVID, most of the business online has come to the market places. Right. We understand, store sales have been very low. If you remember at that point of time, the idea was to build availability for the consumer at very close proximity. That really is not a whole lot of requirement as of now. Going forward, how it pans out, it's, you know, we'll continue to be there. We had developed a capability, but in terms of revenue, that's been very low. Right. Right. I get that. Yeah. That was it, then. Those were my questions. Thanks. Thank you. Thank you. The next question is from the line of Amit Mahawar from UBS. Please go ahead. Thank you. Congratulations on great set of numbers, really current challenges. I just have one question on cable and wire and switchgear segment. If you see last four, five years, the way they've, you've basically grown on the segment is very steady and, I just want to understand if we are allocating any, you know, capacity creation in the next two, three years in especially in wires and switches, and what is the current utilization level in both these segments, sir? In cables and wires it is, capacity utilization is at a very high level. That's why new facilities are coming up at Tumkur, which will be operational in the next 12 months. Switchgears we are constantly adding capacity over last two, three years. We don't see any major CapEx in switchgears. Okay. Overall, between the two segment, can I say roughly around, INR 100 crore-INR 200 crore will grow in capacity creation or it's going to be much more than that, sir? For the Tumkur facility will be higher, about INR 300 crores, part of INR 600 crores. This is part of an INR 600 crores CapEx that we have guided. Okay. Okay. I'm sorry for one more follow-up on this. Within cables and wires, is it more towards the branded wires, sir? Oh, both sides. Both sides. Utilization is high on both, underground cables and wires. Okay. Sure. Thank you. Thank you very much and good luck, sir. Thank you. Thank you. As there are no further question, I will now like to hand over the conference over to the management for the closing comments. Thank you. Deepa, over Deepa, over to you. No, thank you very much. Thank you for joining the call. Thank you.