Ladies and gentlemen, good day, welcome to the Q1 FY2024 earnings conference call of Havells India Limited, hosted by DAM Capital Advisors Limited. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Ms. Bhoomika Nair from DAM Capital Advisors Limited. Thank you, over to you, ma'am. Thanks, Michelle. Good evening, everyone, and welcome to the Q1 FY24 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. Amit Kumar Gupta, Whole-Time Director, and Mr. Rajiv Goel, Executive Director. I now hand over the floor to Mr. Anil Rai Gupta for his initial remarks, post which he'll open up the floor for Q&A. Over to you, sir. Thank you, Bhoomika Nair. Good afternoon, everybody. Thank you for attending the call today. Hope you would have reviewed the results by now. Overall, I would say consumer demand has been muted, partly due to unseasonal weather, which impacted B2C business. Demand lately seems to be improving. B2B and Lloyd have grown well. Deflationary trend in LED business has impacted the consumer lighting revenues. However, there is healthy growth in professional lighting. Lloyd product performance has been encouraging. The brand is sitting upon the positive momentum. Commodities have relatively softened, while the impact has not been fully reflected in the margins. Working capital levels improved during the quarter with normalization of inventories. We can now move to Q&A. Thank you very much, sir. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press Star and one on their telephone. If you wish to remove yourself from the question queue, you may press Star and two. Participants are requested to use handset 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 Rahul Agarwal from InCred Capital. Please go ahead. Hi, good evening. Thank you so much for the opportunity. Just quick 3 questions. Firstly, could you give us a sense on volume growth for, you know, cable and wire, lights, switch gears and Lloyd please? Volume growth of cables and wires has been more than 30%, and in case of lighting, it's around mid-single digits, about 6%-8%. Anything on Lloyd and switchgear? Lloyd has been, I think, pretty much the same as that of the value growth. Switchgears is. How much is the volume? In terms of volume. Volume is same as the value growth. Got it. Secondly, during the quarter, there was this new media article which talks about white labeling and white label manufacturing. Could you please clarify if that's true, and if yes, what is the intention here, and when can we expect any sales booking in the P&L, please? Well, we've been looking at expanding our international business for not only Lloyd but for other specific categories. Yes, there is an opportunity available in manufacturing not only other products, but also air conditioners for white labeling. Just like the same way we have been doing switchgears in the past for known international brands. We are looking at that opportunity, and we have already started some very small quantities to be exported. This is something which we'll be open to look at in the future. It will be very difficult to give an estimate of what is the kind of revenues that we're looking at at this point in time. It will develop over the next two years. Is it very clear that this is only for export and nothing for the domestic brand? Yeah, we don't see that as a part of our strategy as of now. Great. Does it help for faster revenue even for Lloyd because you'll utilize more capacity? Naturally, it should. Any comments? Yeah, that's also one of the reasons that we have developed the highest capacity in terms of manufacturing and air conditioners with this second brand coming in. It will definitely give operating leverage. Lastly, sir, on fans, what should we expect? I understand what has happened earlier, would you see sustainable volume growth for the industry in Havells? I think, fan has gone periods in the last year with the rating change. I can't say much for the industry. I would say industry will follow a regular growth for as far as all installation electrical products. Havells has been putting in, you know, lot of investments in distribution enhancement and especially R&D on developing newer and newer fans. We expect good growth in fans in the coming years. Like anything upwards of 15% on volume? Yeah, unfortunately, one of the large periods of, growth for fans has been muted this is the 1Q. We'll put in all our efforts in the third quarter and fourth quarter, but, difficult to give a number right now, and we don't give numbers. Understood, thank you so much. All the best. Thank you. The next question is from the line of Renu Baid from IIFL Securities. Please go ahead. Yeah, hi, good evening, sir. My first question is, actually, look at the strong volume growth in cables and wires, where the cables is actually a positive segment from the B2B segment of the market. If you look at the portfolio of switchgear and cables and wire, where do we see the divergence in volume growth as the infra demand is so strong? Why. Renu, I think you're on the speakerphone. I can't hear you very properly. Ma'am, may we request you to kindly use your handset to ask a question? Sure. Am I audible now? Yes, ma'am. Please proceed. Yeah. My first question is, actually, just robust volume growth, which has been seen in the cables and wires for some time now. How should we look at the demand supportive of these numbers? From where, technically, switchgear and cables and wires both being driven by the B2B or infra-led demand or CapEx-led demand, where do we see the divergence, right, switchgears continue to be a bit soft and cables and wire volume remaining to be robust and high from which levels? Renu, I think, you know, if you look at the last six months rather than just last quarter, switchgears, you know, in the last quarter had grown by almost about 30%. We have to look at a little bit of a longer period, rather than just one quarter. One quarter can be different because of, you know, certain base effects also. Example, last year, I remember there was a little bit of a base effect in cables and wires, which actually gave much higher growth in the 1Q in this year, whereas there was a base effect in the fourth quarter of last year for switchgear. I think, it will be better to actually have a little bit of a longer term view rather than just a quarter. Both these categories together, because of strong underlying drivers, should sustain the double-digit growth in the next 12, 18 months or maybe looking at the end market? As to the business, the industrial infrastructure demand continues to remain strong, which will affect the underground business, underground cables business and the industrial switchgear. In both cases, you know, our business for in domestic switchgear as well as in domestic wires, the proportion is higher if you look at the entire business. There we see that the construction cycle is also seeing some revival. In the next 12 to 18 months, we should see both good growth in both the segments, both cables and switchgears. Sure. The second question is on the profitability front. While we have known that at least in ECD fans and air conditioners, there has been cost under recovery on the new energy efficient product. Where do we see this divergence getting worked out, and margins also starting to improve back along with volume growth that we're seeing in some of these categories? What would be your strategy to bridge this gap in gross margins and overall operating margins to client, while overall topline growth for Havells has remained pretty healthy? If I understand the question correctly, I think, you know, fans, for example, we had seen unprecedented cost raw material increases in the last one and a half years. That has been softening to some extent. We would have seen better margins in fans in the 1Q, had it not been for the unseasonal rains, leading to some absorption on manufacturing overheads. We definitely see that the ECD business margins, as well as especially the fans, will improve in the coming times. Lloyd is definitely a journey, and we will continue to, you know, keep pushing for market share, but we also see margin expansion, given the raw materials, now abating to some extent. We will see over a period of time, margins also expanding in Lloyd. Sure. Lastly, if I can ask one more question. With the broad belief is that ECD categories and markets have become overcrowded, with players and competitive advantages, edging out. Do you think there are any sub-segment categories where you would want to accelerate, focus, or enter, those segments in the coming time, to ensure that the business profitability and, positioning remains slightly robust? I think, Havells is in a very unique position of being a very diversified electrical player, and we are present, and not only present, but also, you know, with good amount of market share in each business segment. That actually gives us the confidence that the kind of, product categories that we have, other than the last one and a half years, where there was, you know, so much of volatility of raw materials, our margins have been quite stable. Since, I don't see that increased, intensity in the competition or anything, is it really affecting the, you know, margins to some extent? It's on the other hand, you know, our growth, has been healthy, and that clearly indicates that we want to and we will continue to strive to, you know, increase our market share in each category that we are in. You know, I've been hearing this for the last 10, 20 years, that the competition intensity has been increasing. The fact is that there are two ways to look at, you know, there are only two things to look at a business, whether the growth is coming or the margins are being maintained or expanding or not. You know, there will be some periods where the margins can come under pressure, but there can be, this could be due to many reasons other than just increased intensity of competition. Got it. Got it. Thanks much, and have a good day. Thank you. Thank you. The next question is from the line of Natasha Jain from Nirmal Bang. Please go ahead. Hi, sir. My first question is on the Lloyd portfolio. Firstly, there has been a healthy growth despite an unseasonal RACs. Basis, I have couple of questions. Firstly, have you gained market share, and how has the non-RAC portfolio done there? Probably now that, you know, the EMS thing has come in, keeping that in mind, where do you see this segment fitting, even in terms of margins? No, EMS portion is very, very small for us, and as I said, it will develop over the next few years. Let's focus only on the India business as well as the branded business for the present moment. To your question, we do believe over the last we have gained market share in air conditioners, and we continue to remain amongst the top three, even in the 1Q. We do believe that we probably have been able to achieve, you know, better than market growth, and hence increase in market shares in air conditioners in the 1Q as well. As far as the other products are concerned, we've always said that our market shares are extremely low, and that is growing at a decent pace. Though, you know, there are also the market competition, as well as the established brands are very strong. It will be a, slow increase, slow burn, but it's continuing to grow at a healthy pace. All right. Sir, my next question is on the ECD portfolio. There we've seen a muted growth. However, since you've mentioned that the demand has started picking up lately, so how do you see this segment over the next few unseasonal quarters that will be there? Secondly, on the fans segment, I understand that Havells is mostly the premium fans. Could you just, you know, share how the demand for BLDC fans has been, and what's your share of premium fans in the overall fan category? Too many questions, I may not have all the answers at this moment for all the numbers. If on a general basis, I think, you know, still the seasonal impact of the second quarter, if we take away, we do believe that the ECD business should have good growth numbers in the second half of the year. Yes, our market shares are very high in the premium side of the business, that's where our focus is. That's where most of our R&D investments continue to go in. You know, most of our business comes from the premium segment. It's also not just in the premium segment, even in the, you know, less decorative or base fans also. We've always been at a higher end of the market. You know, for example, even if it's not an INR 10,000 fan, but an INR 2,000 fan, our focus has been to give a better quality and features product to the consumer. We are at a premium even in the base fan category. Our market shares are extremely strong in the premium segment, and there we believe we have been gaining market share. Okay. Sir, just last one, housekeeping question? Sir, other income and other expenses both have increased sharply, so can you just throw some light on that? Other income has a non-recurring part of the income of a sale of a property of worth about INR 10 crores. The other SG&A is a little bit of an increase on increased warehousing space because of unseasonal range of the product. Large amount of air conditioners were, you know, there. Rentals have also increased, but also to some extent, you know, normalized expenses of travel and all have come back, which were muted for a couple of years. All right, sir. Thank you. Thank you. The next question is from the line of Siddhartha Bera from Nomura. Please go ahead. Hi, sir. Thanks for the opportunity. My first question again, on the margin side, first for Lloyd. We have seen, even the contribution margin, dropping slightly in the second quarter. Has there been any discount cycles which have led to this? Second is, I mean, over a medium term, will you be able to indicate, we'll be going back to that contribution margins maybe in the next couple of years, or do you think it is still some time away? No, I think, if you're comparing specifically with the fourth quarter, yes, fourth quarter was, you have full production, all the plants running smoothly. In the 1Q, there were manufacturing overheads which were under-absorbed, so that led to some contraction in the margin in the 1Q. Going forward, as I said, as the raw materials are now stabilizing, so we do believe that the margins will increase especially in the second half of the year, where there will be sales coming back for the room air conditioners. From the longer term margin outlook? As I said, we don't give numbers, but this will continue to improve from here. Our first focus is to continue to expand into this very large business segment. It's more than INR 1 lakh crore right now, after we did INR 3,500 crores. Our first focus is to become an established player, and also margins will continue to improve with, you know, our better positioning in the market as well as better volumes. The second one, again, on the commodity side, you have mentioned that there is some softening, but it's not fully reflected. Will it be possible to quantify how much benefit we may see is given the current commodity prices which you are looking at? No, I will not be able to quantify that. Okay. overall, sir, I think last year you also indicated that at the margins, we will try to achieve the range of 30%. With that, will you say, or do you think? Given the current market environment, it will be difficult to comment. I think overall, 13%-15% is the range for Havells standalone business, depending upon the quarter or the season or the product mix. Then, of course, wire is separate, but overall, 13%-14.5%, 15% is for the Havells annual. Got it. I'll come back to that, sir. Thank you. The next question is from the line of Charanjit Singh from DSP Mutual Fund. Please go ahead. Hello, sir. Thanks for the opportunity. My first question is on the overall, you know, inventory levels in the channel for, you know, especially room ACs, and also for the fans as a category, how is that, across, the channel? I think the channel inventory is not at a high level because, you know, we did see some summer coming back in the month of June. The primary sales did not happen from the company, but the secondary channel inventories were flushed out. I think the channel inventories are at a normalized level. Thank you. Sir, if you have to look at, you know, from rural versus urban, any, specific demand trends you can highlight how, those, markets are shaping up? Do you see that rural markets are picking up for some of our products? You know, the specific brands which we have into the, you know, tier two, tier three markets, how are they shaping up? Right now, the tier rural demand is still to come up at the pace which it is required to. Right now, we are actually seeing more traction in the tier one to tier three cities because of the construction activity as well as increased professional or infrastructure demand. I think over the... As I said earlier, that during the second half of the year, last year, we see more consumer demand coming up, and that's where the hope is that the rural sector should also start doing much better. Okay, sir. Lastly, from my side, on the lighting segment, you know, if you can just help us understand, you know, the growth has also been impacted during the quarter, and, you know, if you look at profitability is also under pressure. If you can just help us with the dynamics of both B2C, B2B, and how do we see this, you know, profitability profile for the lighting improving, going forward? I think if you see the profitability, if you look at the contribution margins, they are not that much affected as it is the segment results. Segment results are also impacted by the fact that there has been lesser growth for the consumer side of the business in the 1Q. It's also because we saw a deflationary trend in the 1Q for LED lighting, and hence, when it happens, the inventory levels in the channel also starts going down. We do believe that in the second half of the year, especially during the season time, this demand should come back for consumer lighting. The professional lighting business has been growing at a much healthier pace as compared to consumer lighting. I believe that the margin level is not so much of a concern. We've been maintaining, we should be around 30%-31% of the contribution margins in lighting. Got it, sir. Sir, thanks for taking my questions. All the best for the future. Thank you. Thank 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 again, with respect to the margins, but from a Q to a sequential basis, have we taken any downward price revisions in any of the key categories that has warranted, a sequential dip in our contribution margins? That has not reflected in drop in margins. The margin drop, as if we compare sequentially, has been due to many reasons which I've already enumerated. If as far as downward price trends are concerned, yes, we have seen in cables and wires, as well as in certain cases in LED lighting as well. I understand. Secondly, you're saying under absorption of capacities because of the regional demand, in particular, unseasonal rains in Q1. Did Q4 also see unseasonal rains across any of the regions which could have impacted load or fan category? Most of it was in the end of March. Yes, it affected the demand, but it would affect the manufacturing. Usually, the inventory levels are the highest in for seasonal products at the end of March. I understand. Thirdly, do you quantify how much has the AC industry declined in Q1? Our channel checks do suggest that there's been a decline. Of course, Lloyd and June by 20% revenue, but, any comments on the industry decline? We haven't seen the figures as of now for market share, so it's difficult to comment on the industry figures right now. Understand. Lastly, CapEx. Do we still hold the guidance of INR 6 million for FY24? Yes, we do. Okay. That's all from my side, sir. Thank you. Thank you. Thank you. The next question is from the line of Tushar Bohra from JM Financial. Please go ahead. Good evening. Thank you for the opportunity. Sorry, yesterday, I couldn't follow the volume growth numbers for cables and wires. Was that 30% or 32%? Upwards of 30%. More than 30%. Is there a potential in terms of growth number for cable and wires, sir? Pretty much the same. We actually don't get the. can you help us understand, sir, if, you know, in terms of the capacity utilization for the cables capacities, you know, are we at full utilization, is that where just go, apart from the green field, which we are expanding? Yeah, I think, as far as underground cables are concerned, we're pretty much operating at very high levels of capacity utilization. Hence the new facility for Tumkur is coming up. Right. What I'm curious to also understand from you, sir, with respect to the industry, is there a shortage of capacity scenario and which is kind of driving the higher pricing and hence better margin? Is case made for that? I think overall margins do get, you know, better if there is higher demand. I would not say there is shortage of capacity, but there is, margins are better, you know, when the demand is higher. In all, infrastructure-related products, industrials, which we have professional living in, there is a higher demand in the last six months to one year. Understood. Just one data question, sir. With respect to other people expense, you know, we see that it has jumped actually from INR 65-67 crores and just to INR 89 crores. Is there only one-off there, you know, or is this a new normal? There is no one off at this point in time. It's mainly related to rent and travel. That's a substantial jump QOQ, YOY, just, you know, almost INR 25 odd crores jump. Yes. That's why I was curious. That's annual increase. That's why I was curious. Sure. You're saying there is no norm. No. Got it. Just one more question, if I may. If I see the difference between the contribution margin and the and the EBIT margin, I see a very large number of Lloyd at 20 odd ECD business, INR 100 crores. Can you clarify what these two, you know, what are the available expense for these two business, which are the difference between the EBIT and the contribution margin? Can you repeat the question, please? I'm just simply looking at the difference, in terms of value between the contribution and the EBIT, values for each of the segments. I see the number is very large for ECD and the Lloyd business, INR 100 crores plus. Yeah. There is a substantial increase. I wanted to understand what are these expenses? Are these corporate costs? These are expenses that are directly attributable to those businesses. For example, salaries, advertising, and promotion. These are more consumer-oriented products, hence the advertising and promotion expenses are also higher in these products. Okay, got it. Thank you so much for the clarification. I appreciate it. Thank you. Thank you. The next question is from the line of Bhavin Vithlani from SBI Mutual Fund. Please go ahead. Yeah. Thank you for the opportunity. This is a follow-up to the CapEx questions asked twice earlier. If I go back into 5 years, of the INR 2,000 odd crores, you've incurred towards capital expenditure, INR 1,000 crores equally is towards Havells and Lloyd. Especially when I look at the last year, 70% of the INR 570 crores or INR 400 crores was towards Lloyd. Give us a little longer term picture in terms of... It seems to us that you are under-invested in the CapEx in the Havells X of Lloyd. Specifically when I look at some of these segments, like cables and wires, where you have spent only INR 250 crores over the last 5 years, where the capital intake is very significant. more color on slightly longer term basis in terms of is it that Lloyd is taking precedence over the Havells? No, I think that's a very good question, but that's not the way to look at it. As I said, we are a very diversified portfolio of products, and there is any time when we discuss the businesses, we discuss the businesses independent of, you know, the capital allocation into other businesses. That's also one of the strengths that we have as, you know, a strong balance sheet that we have. It's all independent. It's not related to. I believe that, you know, when we acquired the Lloyd business, it needed more investment in terms of manufacturing and R&D, and that investment has happened and will continue to invest happen. As far as Havells, other businesses are concerned, the CapEx requirements do come up at a stage when capacity utilizations are higher in any product business, and then new capacities are added. It's never either/or. It's always, you know, looked at, the business requirements for that particular business. Okay. maybe it looks like last year was an anomaly, where 70% was towards Lloyd. On a INR 600 odd crores, CapEx, how should one look at the mix going forward? I think the mix this year will be more skewed towards Havells, because the new facility for cables and wires is coming up in Karnataka. I think, you know, it varies upon the timing and requirement for the business. Okay. This second question is, when we've seen a very strong growth in Lloyd over the last three, four years, usually we see when the growth is very strong, there is always some of the expenditures which are overlooked. Could you talk about the costs that could be taken out and where are, where there will be kind of opportunity there? There is an observation that we are now seeing that from a three, four percent discount to Voltas, looks like Lloyd is now at par or 100% to Voltas, especially on the equity enterprises. There was a slight, a longer life path that when we had acquired and we had the enterprises and then we had to go back. Is that journey now heading towards where eventually we target, LG, and consequently, we head towards a more like 600% profit margin on a yearly basis? Is that something you're reading or are we interpreting it incorrectly? No, I think this is a very intelligent question that I do believe that, you know, you've actually seen the journey of Lloyd over the past and also looking into the future. You are absolutely right that the journey has been when we acquired the company, it had been, you know, a discounted way as a brand. Over the last 5 years, what we have invested in is brand distribution, manufacturing and R&D. That will continue to improve the positioning of the brand in the consumer mindset over the longer period of time. That has been the journey of Havells over the last 20 years, and I think Lloyd is on that journey for the next few years, and that's where the major investment is going on. You asked about any one-off expenses, inefficiencies in Lloyd. I would say most of it is actually investments that are happening in brand, distribution enhancement, so placement of products in new channel, modern format and e-commerce. I think that's a lot of investment which is going on. I do believe in the next few years, Lloyd is on that path where, you know, it would be competing against the best in the industry in terms of consumer perception as well as premiumness of the product. Sure. Those are my questions. Thank you so much for taking my questions. Thank you. The next question is from the line of Girish from Morgan Stanley. Please go ahead. Yeah. Thanks for the opportunity. I just wanted to understand refrigerator cases, if you have already thought through, whether it'll be by 25 and things like that? Secondly, I just want to understand, if you want to cover... Sorry about that, I missed it. B2B versus B2C, what is the revenue split, or if you could help us with the growth per quarter? No, we haven't, you know, formalized our plans for refrigerator effect at this present moment. It will be difficult to give a bottom as well as the timing for that. Secondly, as far as B2B to B2C is almost 70, same as in the past, 70% is B2C, and the growth is also about 12% on both sides. Thank you, sir. Thank you, sir. Thank you. Thank you. The next question is from the line of Aakash Javeri from Perpetual Investment Advisors. Please go ahead. Hi. Good evening, and thank you for the opportunity. My first question is that, what is the percentage of BLDC model fans in our overall fan portfolio? It's around 15%. 15%? How is the current demand for BLDC fans versus, you know, the lower end fans? How is the consumer perception around it, you know, now we've been 6 months into the new norms? At this point in time, it will be difficult for me to get into the details of this answer, but, you know, my IRS can come back to you on this. Sure. Thank you so much. Thank you. Thank you. The next question is from the line of Aniruddha Joshi from ICICI. Please go ahead. Yeah, thanks for the opportunity. Sir, two questions. Can you indicate the brand-wise revenue growth rates, Reo, Standard, Reo and Havells? That's question one. Secondly, can you also indicate about the new brand, Havells Studio? What is the product that we are targeting, price points, or the strategy over the course of next few odd years? Yeah. That's it. Thanks. We actually don't give brand wise numbers and hence the growth rate. All these are, you know, housed in different SBU. For example, all three brands of wires will come into wire SBU. That's not how the way, how we look at it. We look at, you know, brand positioning and brand distribution, and hence, you know, at certain points of time, certain brands in rural markets will grow faster. We don't give numbers for that. Havells Studio, as far as Havells Studio is concerned, you know, we are looking at because we have a very strong investment in R&D going on at this present moment. We come up with development of certain products, which are, you know, very high and very, I would say, you know, technologically much more like breakthrough products, and that will be housed under the Havells Studio brand. The first product of that is a air purifier. Okay. Okay. Sure, sir. Yeah. Thank you. Thank you. The next question is from the line of Rahul Agarwal from InCred Capital. Please go ahead. Thank you for the follow-up. Anil, one question was on LED. Like, the price has been declining for showrooms. What is the reason for this? You know, I'm asking this purely to understand what's the outlook? Yeah, I think, LED prices have stabilized for 2 years. Now, it has, over the last few months, it has, further come down, and it's also because of the global situation. If it goes up, it is passed on into the market, and, it comes down, it's passed on in the market. It's difficult to say, give you an outlook of where the LED prices, will go. All we know is that as a company, you know, our focus has to be to maintain margins. Again, you know, pass on the, increase or decrease in the raw material prices, especially products like LEDs or copper and aluminum. Right. There is no, like, there's not been a material reason for significantly high imports to the country, which is driving this design? No, this is due to the global situation, not necessarily just because of a glut in India. Okay. Secondly, on cables, you know, obviously, one of our peer brand, the reported numbers, you know, 2 days back, the cable demand looks like extraordinarily high in the country, and you also highlighted that infra and industry demand is pretty high. Just to understand, with getting to elections next year, would you foresee or, you know, based on your past experience for elections, continue the way it's happening right now, or you think it could, you know, the redressing, as you said, last year, same quarter, the base was low, which obviously will normalize going forward in the year. Would you foresee this growth continuing at 20%-25% volume, or would you foresee a 10%-15% sustainable long-term average should come back? You know, I'm difficult to comment about elections or not, but I think it's a good sign that the infrastructure demand and investment demand is continuing at a good pace, especially after a very long lull period for many years. In the last 1.5 years, we have seen good growth. Let's hope for the very best. One last question for Anil. In the balance sheet, you can see, you know, if you look at current liabilities and provisions, the number is essentially a bit higher than normal. If you could help me understand that. Is that the way you also read it, or maybe I'm looking at something else? I think this also includes almost about INR 300 crores of dividend to be paid, which was paid in the month of July. Okay. Okay, I get that. Thank you so much. Thank you. The next question is from the line of Kavidan Jen from Singular Capital. Please go ahead. ... Your voice is breaking. Sir, your voice is still breaking. Yes, let me just I hope this is better now. Please proceed. Sir, the question was on Lloyd. What's the right path for the, for the next five years? What sort of numbers you will be targeting? I'm not looking for any guidance, but, assuming you meet your market share target and the positioning, what sort of steady-state margins you would lead to? What would be the drivers of those margin achievements? Would it be pricing improvement, or there are cost efficiencies that will come in, because of the scale of this pricing? As I explained about 5 minutes back, you know, there is a long-term vision for Lloyd. It's a very large market of over INR 100,000 crores. We want to be a meaningful player, not only in the air conditional business, but all the other product categories, which will take a longer period of time. The margin expansion will be based on many factors, including brand positioning, distribution placement in the, you know, high-premium counters, product efficiencies, and pricing because of the brand positioning. It'll all become a reflection of all these factors in the coming times, so which should improve the margins to industry levels at least, if not better. sir, where do you peg best in the industry in terms of EBITDA margins? What you would try to aspire for, given your research and understanding of the across players? I think that right now the aspiration is not just on certain number of EBITDA. The aspiration is very clearly that we want to be meaningful player in a INR 100,000 or above lakh crore market. That's what the aspiration is. As I said, you know, manufacturing imports or expansion, R&D imports, brand positioning, every year spend of more than INR 100, INR 140, INR 150 crores on brand, is all being done to keep this looking at the future in mind. EBITDA levels will definitely follow with all these factors. One last question. Would you say that if you, if you kind of segment the market between economy, mass premium, and say, premium, there is a big margin or a profitability differential? Because what we hear is there is intense competition with 20, 50 odd brands in the economy, where probably Lloyd does not play at all. As you move higher up the curve and gain decent scale, then there is the ability to charge premium and hence, something comes in which kind of increases profitability. It's not very different than, you know, the electrical industry, right? There are hundreds of brands in the electrical industry, regional, city-wide brands, and, you know, the ability to charge a premium or get the right perception or the positioning from the consumer's mindset is to be among the top tiers. We also see that in the consumer durables segment. You know, if your product quality, if your positioning is right, then there will be it's not 20, you're saying 25, but there will be just a few players, and that's already panning out. If you see the, in the air conditioning segment, there are only 4 or 5 who contribute to more than 60% of the business. The rest, there might be a long tail, and that will always continue to be there. You know, within that, if somebody is a mass player, that's different. Lloyd's journey is to become a mass premium player as system have this. Sorry. Thank you so much. Thank you. The next question is from the line of Amit Mahawar from UBS. Please go ahead. Yeah. Anil, hello. I just have 2 broad level questions. First is, on the capital allocation and, you know, manufacturing setup. It has always been a north-centric manufacturing entity, and the market is pan-India. It seems to be moving more towards south, coming up with wires plant, coming up with the 2nd plant in AC, so significant one. How will, in the long run, this help us, going south, you know, moving more closer to customers, distributors, and more importantly, seems the manufacturing setup in 4, 5 years' time, you know, will it more move towards a very balanced supply chain for Havells in North India, South India? You know, that's my first question. I think the two plants which are coming up in South are, you know, the second plants for one product category, just like air conditioners and Geysers and wires. It always makes sense to actually be, you know, in a different location than in the North. For many strategic reasons, the market shares are strong in those areas, and these are anyway, products which are bulky in nature and hence, takes more trade components. It made a lot of sense to go south, and since any expansion of an existing product category might be a bit away from where we all already are. Many of the product categories like Switchgear and all, the trade costs are less as compared to other product categories. It is always to be a balance of, you know, you know, all the other parameters, including trade, when we decide on the manufacturing location. It makes more sense to be in South with these two product categories. Okay, fair. Second question is, I'm sorry, you know, to hop on Lloyd. I have a lot of questions on Lloyd, but, you know, a segment where, you know, room AC is still going to be the largest business for us over the next 4, 5 years. There, you know, I'll maybe come to the brand and, but getting the cost right is by far the most critical part of competition like Voltas and Geysers have achieved. Do you think FY25, FY26, when you start procuring motors, compressors, you know, competition, securing scale? Do you start with, you know, like shipping AC from below, from north to south, you will start manufacturing from south to south market. Do you think 2025, 2026 is the year where you'll logically break even as you need the AC prices at the current rates? Yeah, I mean, most of the efficiency, a lot of the efficiency will definitely come from product costs as well as logistics costs. Yes, given that, we definitely seem to be moving in the right direction towards profitability. Okay, sir. Thank you and good luck. Thank you. The next question is from the line of Gopal Navandar from SBI Life Insurance. Please go ahead. Hi, sir. Thanks a lot for the opportunity. My question is again on the margin side only. Earlier, you know, we used to, you know, do margins of 11%-12%, and for last couple of quarters, there's been a bit of volatility in every quarter. In some segment, we recoup, and again, you know, in the other segment, we. Generally, this kind of volatility we have not seen in the past for Havells. Is it largely just because of the raw material it is or, you know, flexibility in terms of passing on these prices or absorbing these price increases is not there, that's the reason, the margins are impacted? I think, last few quarters, as I said, the kind of volatility which happened in the raw material prices, yes, there was not only an inability, but also, you know, conscious decision to not pass on the entire cost to the market. Hence, the margins were affected. Going forward, we do believe that if when the raw materials do come back to normal levels, we should be coming back to normalized level of the margins. Okay. The second question is on the Lloyd, on the in terms of, you know, capital employed, the day we acquired and, you know, the last financial year, I see there is almost in last 4-5 years, the capital employed has gone up by INR 1,000 crore. Whereas if I see it on the contribution margin side, actually, there is a absolute dip in the profit and profitability. Basically, in terms of, you know, earning a decent IRR on these businesses, which is the year you think, you know, we should be able to go back to the 10%-12%, at least on in terms of returns on these capital employed? I think, as I have already explained, you know, sometime back, that there is a journey for Lloyd, which we are very positive about. Definitely it's on the positive side. Moving in a positive direction, we are getting increased market shares, a good amount of growth. Our costs are now stabilizing, which will help improve in margins. Going forward, you'll find not only the CapEx requirements will become lower, but also with profitability coming in, the return on capital employed will be better. Okay. Thanks a lot. Thank you. Thank you. The next question is from the line of Srinidh i from HSBC. Please go ahead. Yeah, hi. Thank you for the opportunity. When do you expect your new greenfield cable and wire plant getting commissioned and supply starting from that plant? Around end of this financial year. Right. Sir, is the capacity constraint already holding back some of the growth which is available for you because of constraints? I would not say to a great extent, but yes, you know, if we would have more capacity, there, we would have better ability to certain markets closer to the plant. Right. The second one is, it seems like channel inventory impacted primary sales in switchgear segment. Would you say in general, so that the secondary or the tertiary sales in the switchgear category is probably significantly higher than the 5% primary you require? As I said, in April and May, we did see some muted demand. I do believe if not the second quarter, we'll see a better quarter in the third and fourth, you know, hopefully it should come back very soon. Right. The last one, sir, on the plan category, when you look at this category, do you see this category as a beneficiary of housing construction cycle, which seems to be on the positive side? It's largely a beneficiary, you know, installation products and all. Once we see a uptick in the consumer's construction cycle, they also get impacted and benefited. I would say, the demand for these products come over a longer period of time, but it does come. Okay. Thank you for answering my question, and all the best. Thank you. The next question is from the line, Latika Chopra from JPMorgan. Please go ahead. Hi, thanks for the opportunity. Sorry if, you know, this question was addressed earlier. I want to check whether demand recovering the, you know, in the later part of the quarter. Could you specify which B2C categories you saw, you know, an improvement? Does that in any way point to your comfort that ECD segment, which is largely B2C, could reverse to double-digit revenue growth? Sorry, can you repeat the first half of the question? Sorry, I couldn't hear. Could you repeat the question? I was just saying, in your press release, you talked about, you know, recovery in the consumer-facing segments of late. I just wanted to check which product, specific product categories would you see or do you see the strength playing out? It's again, you know, as I said, April and May were a bit muted. June saw some amount of decent growth coming in in all product categories, including, you know, switchgear wires. Again, it has to be seen how it pans out. I'm more hopeful about the second half of the year because, you know, the way things were going, it was not expected that the 1Q and first couple of months will be a bit muted. We're definitely seeing that these product segments like, you know, switchgear, wires, and hopefully in the consumer durable segment also, things should start coming back soon. Mr. Chopra, you're saying this more from a behavioral basis, because the base also starts becoming a little softer, right, as you move towards the second half? I didn't say it from that point of view, but yeah, that also could be a, could be an opportunity. All right. The second question was, with respect to ECD segment margins, you know, contribution margins in this quarter fell QOQ, though revenues were higher in an absolute terms QOQ. I understand, you know, you talked about under absorption of overheads, but what really led to this particular segment? Highly wouldn't raw material prices be already moderating for ECD segment, that should be partly reflected in June quarter? That is really what kind of led to this, process and margin especially. I think I would attribute it to a bit more of the manufacturing overhead than the absorption, because in the second quarter, those sales were lower. Sorry, fourth quarter, the sales were lower than the 1Q. Actually, the production levels were at peak levels in the fourth quarter and not in the 1Q. I don't see, you know, raw materials have stabilized, but also the prices have stabilized. There's no reason why, you know, the margins would have dipped for any other reason. Okay, you would anticipate these margins to improve sequentially because there's some part of lower commodity prices yet to get reflected? Also depends a little bit on the product mix within the ECD portfolio, but yes, individually product-wise, yes, they should be improving. last question is a little broader question, you know, for the ECD segment, you used to see, you know, 26%-27% contribution margins, you know, amid to high margins, prior to COVID. now I understand there's a lot of volatility on raw materials, but so that segment itself is becoming more competitive. of course, you know, you are also making lots of investments in advertising and new launches, et cetera. do you think it's feasible for this segment to revert back to, you know, a margin set pre-COVID, both in contribution and ESG levels? Yeah, it may be difficult in the short period of time, but over a long period of time, that would be an aspiration. It's, you know, because, you know, more brands have been added, more product categories have been added. There has been fast growth in the appliances segment as well. As the product mix is concerned, you know, it may not reach the same levels as which was pre-COVID levels. All right. Thank you so much for your answers. Thank you. Ladies and gentlemen, this would be the last question for today, which is from the line of Kalei from Bank of America Securities. Please go ahead. Hello, am I audible? Yes, sir, please proceed. Thank you for the opportunity. I have only one question on margins. On why isn't other segments, you see the margins have dipped significantly? You mentioned that there has been some product price cut. Is that the raw material dip in the raw material prices has more than offset by the product cuts that you have taken? I think pretty much it's in the range, so I would not care to comment upon that. Okay. That would be all from my side. Thank you. Thank you. That was the last question for today. I would now like to hand the conference over to Ms. Bhoomika Nair for closing comments. Over to you, ma'am. Yeah, hi. I would like to just thank the entire management and all the participants for being online. Thank you very much. Wish you all the very best, sir. Thank you. Thank you, everyone. Thank you for joining. Thank you. Ladies and gentlemen, on behalf of DAM Capital Advisors Limited, I conclude this conference. Thank you for joining us. You may now disconnect your lines. Thank you.