Ladies and gentlemen, good day, and welcome to the Havells India Q2 FY 2024 earnings conference call hosted by ICICI Securities. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity to ask questions after the presentation concludes. Should you need assistance during the call, please signal an Operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. I'll now hand the conference over to Mr. Aniruddha Joshi from ICICI Securities. Thank you, and over to you, sir. Yeah. Thanks, Rio. At ICICI Securities, it is our pleasure to host Q2 FY 2024 earnings conference call of Havells India Limited. We have with us senior management, represented by Mr. Anil Rai Gupta, Chairman and Managing Director, Mr. Rajesh Kumar Gupta, Whole-time Director, Finance and Group CFO, Mr. Ameet Kumar Gupta, Whole-time Director, and Mr. Rajiv Goel, Executive Director. We congratulate the management for a strong set of results in tough macro environment and remain positive on the company due to its established segmentation strategy and multiplied brands and distribution. Now, I hand over the call to the management for initial comments on the quarterly performance, and we will open the floor for question- and- answer session. Thanks, and over to you, sir. Thank you, Aniruddha. Good morning, everybody, and thank you for attending the call today. Hope you would have reviewed the results by now. Second quarter witnessed softness in the consumer demand. However, infrastructure and housing demand led to a healthy growth in B2B categories like industrial switchgears, traditional lighting, and power cables. Lloyd continues to maintain its growth momentum. Lighting business delivered decent volume growth. However, price, price deflation and LED impacted the revenues. Festival calendar shift has led to spillover of some consumer demand from Q2 to Q3 in relevant categories. We remain quite positive about the upcoming festive season in the second half. Contribution margins improved across segments year-on-year. Commodity price normalization and product cost-led initiatives will drive further margin improvement. Despite consumer demand headwinds, we continue to invest in our manufacturing, product portfolio, and talent pool for sustainable growth trajectory. We can now move to Q&A mode. Thank you very much. We will now begin the question- and- answer session. Anyone who wishes to ask a question, please press star and one on the touch-tone 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 questions. Ladies and gentlemen, we will wait for a moment while the questions queue attendants. To ask questions, please press star and one. The first question is from the line of Natasha Jain from Nirmal Bang. Please go ahead. Yeah. Hi, good morning, and thank you for the opportunity. My first question is in the wires and cables segment. While I understand that last year we had some high-cost inventory, and therefore, probably this quarter the margin has been a catch-up rather. We were expecting slight strong double-digit growth in this segment, given the strong infra and rural development. Can you throw some light there, and also give us a sense on the volume growth on a YoY basis? As far as wires and cables are concerned, you know, the big impact or the big offtake has been on the underground cable side, which is a smaller business in this category for us, where we are also constrained by capacity till next year, till our new facility comes up. Domestic wire business has done well, and despite the fact that the consumer demand has been weak, we should even do better in the coming times. As far as the value growth, volume growth is concerned, is about 10% as growth. Understood. Sir, my second question's on the Lloyd's division. Again, here, while last year was a high-cost inventory quarter, inventory quarter for Lloyd's, too, sir, our losses have actually expanded the most if you compare it to any other quarter since FY 2022, first quarter. This is given the fact that this was an unseasonal quarter for RAC. Just wanted to understand that, is it because we continue to do aggressive marketing and so on, that's why there is a strain on margin? How do we see this margin moving forward in the midterm? In fact, as far as Lloyd is concerned, we are seeing margin improvements, and this is despite the fact that A.C. sales are, which is the major business for us, A.C. sales are the lowest in this quarter. We have grown actually better than the average growth of Lloyd in this quarter. Also, the fact is that we also have the second facility now at Sri City, which gives us double the capacity. There has been under-absorption of capacity overhead in a low season. In the coming season where, you know, where the stocks are going into the distributor shelves in the third quarter, and the summer season starts in the fourth quarter, it should start improving. We will see further margin expansion in Lloyd. Understood. Sir, lastly, any light on how the premium fan segment did? Premium fan segment, you know, Havells has been the leader in that segment, and it's doing well. Overall, fan demand has been weak over the last six months since the energy rating change. I think going forward, this should improve because there was enough stocks in the markets, but I think overall it would improve. Our focus on premium play continues to be strong. All right. Thank you so much. I'll get back in the queue. Thank you. Thank you. The next question is from the line of Ravi Swaminathan from Spark Capital. Please go ahead. Thanks for taking my question. My first question is in terms of overall consumer demand, especially growth in lighting and fans. The sluggish growth is because of overall market is still growing slowly, or are you seeing increased competition there also? If you can throw some light. Next 12 months, do you see a recovery or market to double-digit kind of growth? Yeah, I think it's a combination of things. I don't see increased competitive intensity. It has always been there in lighting, and it will continue to remain, but there will be, you know, consolidation towards more branded products in the coming times as well. In fact, the major reason for the lighting growth not happening is also the fact that the volume growth has been double digits. Value growth has been quite, price erosion has been quite aggressive. Also in a... Yeah, sorry for the disconnection. I was talking about fans. Overall, the demand has been weak over the last six to nine months. We believe that the season coming in, in the next half, we should start seeing better pickup in the fans business as well. Got it. In terms of growth in volumes in the cable business, you had mentioned that you had grown by around 10%. I wanted to understand how much would the cable portfolio have grown, how much would the wires portfolio have grown in terms of volume? How much dependence is there in terms of the infra-led growth? Although some of the competitors, larger competitor in the cable and wire space, had a 30% growth during this quarter in terms of volume, hadn't there been for a capacity constraint, would we have grown at similar pace? Yeah. I think we can say that around 40% of our sales come from underground cables, where we have capacity constraints. Yes, of course, if the capacity constraints would not have been there, we would have done better. Also depends upon the capacity that we are putting up. As far as wires is concerned, we do not have capacity constraints in wires, and there the growth has been tapered as compared to the industrial products, industrial cables. Okay. In switchgear also, how would the bifurcation be towards industrial, real estate, commercial real estate, motor, and product-wise also switching to a bifurcation? We actually don't give this kind of bifurcation in terms of product because there are too many product categories. We have switched, we have domestic switchgear, we have industrial switchgear. And it will be difficult for us to give this kind of bifurcation on this call. Okay. In terms of industrial. Industrial segment, industrial pickup is better, stronger. Okay. Both residential and consumer segment demand pickup was slow in the second quarter. Got it, sir. Thanks a lot for this. Thank you. The next question is from the line of Rahul Agarwal from InCred Capital. Please go ahead. Hi, good morning. Thank you for the opportunity. The first question on, you know, second half being better, just to understand, you know, which are the products which are festival dependent, and is Havells approaching the season differently in terms of, you know, anything you've done differently in terms of channel incentives for you to get better growth in the market? I think overall, the kind of products that are dependent upon the festive season are small domestic appliances, washing machines and refrigerators to some extent, but we are not very strong in that segment. The market shares are small. Right. Of course, lighting. These three segments are dependent upon the festive season. I think one of the main things what Havells has been able to achieve in the last couple of years is to be only present across channels. We have been traditionally a more dealer, distributors-oriented company, but over the last couple of years, we have expanded our presence in modern format retail, regional retailers, online. That, I would say, gives us a complete presence. Of course, you know, new product launches and, you know, not so much on the trade incentives, but consumer offers continue to come at this time. Which helps, you know, sales growth in these categories. Got it, sir. Secondly, on ECDs, I think if I look at the first half sale, about INR 1,600 crore, it's flat YoY. I understand the reason. Second half last year was also similar, about INR 1,700 crore, given some INR 50 crore. Would you expect 10%-15% YoY growth in second half? Without giving any numbers, we do expect a positive second half. Okay. Lastly, on Lloyd, just wanted to know the full-year cash burn. My sense is, you know, given we have numbers, and I think that that also includes depreciation. In fact, if I remove that, it should be about INR 200 crore, if you could just help me with that, please. Thank you. You made an estimate. I would rather leave you to that. Our focus on Lloyd in the next half will continue to be on, you know, increasing sales and increasing our reach, market share gains in air conditioner especially, and, of course, continue to spend on brand building efforts, R&D and manufacturing. You know, here we are looking at a very long-term play, because we do believe that we are a much smaller player as compared to the competition in terms of the overall consumer durable category. We do believe this is a huge opportunity for us to be a good, you know, player amongst the top two or three players in this category. We will continue to invest in this. I've said it earlier that with the new manufacturing facilities and the sales growth, our margins will continue to expand in these categories, especially in air conditioners, which is the major category for us. That should help, you know, overall margin should expand. Sir, I understand that. If you could help me with first half number, that should also be fine. First half number is already reported in the thing. I'm looking for cash burn, excluding depreciation. Yeah, I think we have given EBIT, Rahul. I think let's stick to that. Okay, sir, no problem. Thank you so much. All the best. Thank you. Thank you. The next question is from the line of Siddhartha Bera from Nomura. Please go ahead. Yeah. Hi, sir. Thank you for the opportunity. Sir, continuing with the Lloyd question on that, is that I mean, the current drop in the margin essentially, is it only to do with the new plants coming up, or has there been any pricing action or any? It's a much lower as compared to the first quarter, right? Yes. The margins would get lower because of the under-absorption manufacturing overheads. If you see YoY, Siddharth, there is an improvement there. I don't think in this you should compare really the QoQ. Yes, sir, if I look at over a year, for the whole year, if I look at the trends in terms of the improvement over the next few years, apart from the capacity ramping up and probably you setting up a good chain, any other factors you think will be supporting us in the margin expansion? See, as we have said, that Lloyd is a long-term play, and building efforts will continue, which will definitely improve our consumer perception over a longer period of time. There will be, you know, as the plants mature, there will be cost rationalizations also. Overall, all these actions put together should help in margin expansion. Okay. The second question is on the consumer portfolio. You have mentioned that we expect some margin improvements, let's say, weaker commodity prices. Given the growth you are seeing in the margin segment, do you think you may be required to spend higher on incentives to add, and the margin recovery can be slower than what we expect? Do you think that should not be an issue? No, I don't think pricing will play a huge role or trade incentives increase because of, you know, lower prices or anything. Our brand building efforts will continue at the same pace. We've maintained even when the growth was lower, so that should not stop. Got it. And sir lastly, on the cable and wires, we don't have any capacity constraints. So, in terms of the channel inventory levels how is it and should we expect a pickup in the second half or these are been growth trends which we should expect even in the second half? No, that should go with the consumer demand offtake and the residential demand offtake. The channel inventory at the present moment is normalized. It's not low or anything, it's normalized levels. Okay. Okay. Thank you. The next question is from the line of Renu Baid from IIFL Securities. Please go ahead. Yeah. Hi, good morning, sir. My first question is, can you elaborate a bit more on the export strategy? While in switchgear we had tie-ups with foreign OEM for white labeling, what are we planning for the RAC segment? Any other category where we are looking to step up exports? I think, Renu, on the international business, we believe we have fairly macro tailwinds. Everybody's aware. I think we are taking sort of additional steps, whether in terms of the markets or in terms of products. I think we are getting more and more sort of focused on the same, so I think getting wider and deeper. RAC definitely we believe is a strong opportunity, both in our own brand and OEM. These things, as you're aware, will take time, because we need also a lot of certification for specific markets. I think this endeavor has already started. I think with the time, I think you will see sort of certification of the same. What timeline should we look? Are we looking at three to five years from today, or? Yeah, I think, probably I think the things should start, I would say, in a sort of like to 18 months. The scaling up will require this much of a time horizon, what you mentioned. Got it. Secondly, within the Lloyd portfolio, how is the non-RAC portfolio performing? Any inputs you can share on the ref business, how is the scale-up versus our internal expectations, and what are the challenges that you're facing there? Still slow, and second quarter was slow as compared to last year because the festive demand, which comes in the second quarter, has been shifted to third quarter. Right now, I would say that the air conditioner demand air conditioner sales were faster growth as compared to the ref and washing machines growth. You know, the buildup in refrigerators is it per expectations. We actually, not only, you know, sales is a constraint, but also manufacturing is a constraint for us as of now, because we are dependent upon this product. Over a longer period of time, we are taking baby steps in this in terms of building network, but it is a longer duration time. Got it. When we look at the ECD portfolio, channel interaction suggests that broad-based schemes and discounting are back in the market, which had discontinued during the pandemic. How do we view the impact of this on the margins, given the segment is already facing hypercompetitive intensity and challenges to take price hikes? What has been the view here, and how is the down consumer offtake with respect to acceptance of price hikes in this segment? Well, one of the reasons for the low growth in the first half for the industry has been the price hikes due to the raw material prices. Hopefully, you know, if the discounting or pricing happens, that will be in line with the raw materials coming down. I don't see, especially for a company like Havells, to be, you know, participating in something like what, trade discounting or anything for that matter, because that's not really a long-term solution for a company like Havells. Okay. Lastly, if I can add one thing. Within the switches as part of the switches portfolio, are we seeing... This market has consolidated over the last five, seven years. Of late, last 12-18 months, quite a few domestic brands are trying to step up into the segment. While they might be very small, are you seeing pockets where competitive intensity or price pressures have increased up? Or maybe for the Standard and the REO brands in the economy segment or some low end of the mass premium market. I think it's a very dynamic market, and, you know, as you rightly said, there are more and more players coming, but there are players weakening also. It's also a huge market. Yes, there are various consumer segments. There are various positionings that are possible to achieve. The good thing about Havells is that we operate at different brands at different pricing positions, and we are able to cater to different consumer segments in this. I think this is a very, very important piece of business for us. We operate from very premium consumers to affordable housing as well. That way, I think we are well covered. If I can, one more. On a very broad basis, if we take a three to four-year view, do you see the core profitability of a portfolio ex of Lloyd? Are those margins improving back closer to mid-teen levels, or because of premiumization of portfolio, et cetera? Do you think there are constraints towards that? I think overall, ex-Lloyd Havells had been operating between 13.5%, 13%-14%, and we are now back to those levels, except for a couple of years that they were unusually higher during the COVID period. Otherwise, we are now back to those levels. We'll continue to strive towards the, you know, making it better. Despite the market competitiveness, we will continue to strive to make it better, but through internal efficiencies and, you know, market reach. Yes, that will be a strive over the next few, four years. Thanks much, and all the best, team. Thank you. Thank you. Next question is from the line of Praveen Sahay from Prabhudas Lilladher. Please go ahead. Yeah, thank you for taking my question. The first question related to the lighting business, sir. When do you think this deflationary trend with the LED lighting to reverse? I think it's pretty much bottomed out. Okay. As you had highlighted, double-digit of volume growth you had seen in lighting. The way forward, we can see some kind of volume to revenue. Yeah, we would expect to see this, that kind of a growth. Okay. The next question is, sir, related to the ECD and especially in the fan, premium fan segment. You don't see any price competitiveness in the premium fan segment as a whole? That's a continuous thing. You know, some of the brands take to, you know, newer channels, for example, online, in a very aggressive way. But, you know, these are, again, I would say, short-term niggles, but, you know, that's not something which we are too concerned about. Okay. Okay. You believe the second half with the festive coming in is reflected in the numbers as well? Hopefully, we are looking at a better consumer offtake in the second half and a better summer season in the later part of the second half. The last question, sir, related to the Lloyd, and it's a bit long-term. Do you see in the next two to three years your mix of portfolio, product portfolio to change significantly from the current level? I don't think so, because, you know. Whilst we are expanding the product portfolio to be a complete consumer durable play with washing machines, refrigerators, and everything. Because of the focus on the, you know, air conditioners, where we see a huge opportunity for growth in the coming years, we don't see a much big shift in this overall category, because, again, the market shares are very low in the other product categories. You know, when your market shares are actually strong, it gives you a better opportunity for growth as well. If you are talking about the next two-three years, I don't see a significant change in the product mix. Great, sir. Lastly, can you give the CapEx number for this year and the next year? INR 600, INR 600 crore for this year. I will announce the next year CapEx number at a later date. Thank you, sir. All the best. Thank you. Thank you. The next question is from the line of Mr. Achal Lohade from JM Financial. Please go ahead. Good morning. Thank you for the opportunity. My first question is, you know, ECD segment, -5% YoY in terms of... Mr. Lohade, we can't hear you very clearly. If you're on a headset frequency, do use the headset. Hello? Yes, sir, go ahead. Sorry for that. My question is pertaining to ECD business. -5% YoY for Q2, flattish for first half YoY. How much of that do you think is attributable to the delay in festival? Actually less than 1%, or could that be much more than that? Your voice is breaking, Achal. I think your question was how much is attributable to festival? Yes. I think, you know, it's comprising of fans and appliances. Clearly, fans, I think you are aware the industry has gone through a shift because of change in the introduction of rather ratings. I think in the Q1 that impact was pretty visible. Q2, in any case, you see, because of the summer season sort of failing, I think that impact lingered on. I think for the festive season has more profound on the smaller appliances and all, which I think should recover in Q3 and Q4. I think we have to segregate Q1 and Q2. Q2 is largely because of festival and appliances. On the fan side, I think it has been a structural issue, which we believe is now sort of getting pretty washed out, and hopefully in Q3, Q4, you will see organic traction in that segment. The second question I had was with respect to pricing. You know, if you can help us understand if there was any price cut, you know, discounting which was laid out in Q2, and if anything is announced for Q3? No, there has not been any price discount. You see there. Due to the pricing, pricing is the realization including A.C. Is that right? Yeah. Just one more question. You know, CapEx INR 600 crore, can you help us understand the breakdown of which is going how much, and what kind of revenue can we see from this CapEx in terms of asset? I think that, Achal, we have clarified earlier also. Maybe you can connect with the IR separately, and we can give you that. No problem. Just last question, if I may, sir. With respect to fixed costs, you know, given the scale we have seen increase, you know, I think we will have a benefit of the operating leverage kicking in. We see if we look at the employee costs, the number of businesses continues to rise. I understand you continue to invest, but from a next touch of figure perspective, you know, how much operating leverage can we see in terms of the margins? Could we see closer to 100 basis point if the revenue growth is interpreted? Quantification may be difficult, but clearly I think operating leverage will kick in. I think we do expect that again, we are not building organization for 8%-10% growth. Hopefully, I think these things will kick in. But look, investments in manpower, infrastructure, I.T., I think these are for fairly long-term. I think sometime I think just lots to go on the quarters and try to sort of see extrapolate that. I think this will definitely kick in. Give it some time. Got it, sir. Thank you, and wish you all the best. Thank you. Next question is from the line of Bhavin Vithlani from SBI Mutual Fund. Please go ahead. Good morning, gentlemen. The first question is a continuation to what the previous participant was asking. On a 6% revenue growth, we have seen 22% growth in the employee cost in this quarter. If you could just help us understand your thought process, I mean, how much of this is new addition and the kind of growth that you are anticipating, and how much of this was repricing because COVID had actually suppressed some of this and you are getting it up to speed on the market levels? I think it will be a mix of sort of everything what you said. I don't know, COVID is still there. I think but definitely from the COVID time, things have gone. You are also aware how inflation is building to everything. When you say employee cost, it also includes costs related to travel and all, and everybody is aware, you see how things have really spiraled up, especially over the last year. I think these are all baked in there. Look, Havells is also silently working on a lot of new initiatives as well, which we do not get reflected. Because if you are a startup, you can show you are developing something, and that gets reflected in your losses to investment. That's something we keep sort of doing on a regular basis. I think there are a lot of investment into, see, our research and development, you see, into the. Digitization. Digitization into I.T. infrastructure. These things, I think it makes sense to put them into the plan, and everyone could argue these are really maybe capital investments for a longer period. These are the conscious choices your management has made. We all believe that, as I said to the earlier participant, organization is not built for 6% or 10% growth. I mean, the growth, I think, which we are very hopeful as a country and as a company, we both believe in the, you see, the potential. I think we continue to sort of trust in that and continue to invest behind that. As I said, don't pick up a quarter and then sort of start, sort of, you see, ruminating about that. Sure. The second question is, you highlighted capacity constraints in cables, which is 40% of the cables and wires. Are there also capacity constraints also in the switchgear portfolio? Because there also, given the way we are seeing real estate launches and the growth by real estate players, a 9% growth seems subpar to us. Could you just help us understand a bit more on the switchgear piece? Is there capacity constraint? Are there competitive dynamics which has resulted in loss in share? It'd be helpful to understand. No, there is no capacity constraint. I think when you say the real estate launches, where a lot of things are announced, but I think it takes time for them to come on the ground. If you look at industrial switchgear, the growth has been good. On the residential side, growth has been slightly sort of continued. These things, again, we are expecting them, you see, to going forward to get better. As far as the capacity is all scattered, at least in switchgear, you see, we do not have any constraint. The only constraint as of now we speak is on the cable side. When I look at the past five years, I think you've done little over INR 2,000 crore of CapEx, and Lloyd's has taken a lion share of almost 55% of that. Is it that maybe the attention has got diverted too much towards Lloyd's that we've kind of neglected the existing business? Because a good company like yours is supposed to anticipate growth better and plan better and not have capacity constraint as letting go of growth as a reason. Look, sometime what happen, you make choices. If you... I don't know how long you have been connected with us, but in the past, we have said that we are gravitating more towards B2C. I think one change those calls. When... and these cycles will continue to happen. Yes, I think this could have been, we could have taken it serious, but I don't think it's fair to assume that it's happening at the expense of Lloyd or because of Lloyd. I think that would make everybody, we should have a capacity constraint. Sometime, yes, you do get caught, you see, off guard on that, but we have been focusing on B2C, and that has been the trend in Havells. These things, look, do happen. You learn from that, and you move on. That's how some companies operate over a longer period of time. Last question from my side. In the ECD, quarter one being the largest quarter, there were seasonal rains, and also channel was loaded up with the earlier energy rating inventory. Just help us understand, has that been cleaned up now, and are we now seeing growth pick up a little bit more forward-looking cover? Has been muted. I'm sure you guys follow FMCG. Today, Hindustan Unilever results also came, so everybody know the consumer has been sort of. There has been a stress there. There, definitely on the channel side, they are destocking because they are also realizing there's not too much demand. The fresh pickup is not there, which is healthy. Maybe it could have taken one quarter, it has not taken two quarters. Definitely, I think the destocking will help us in the quarters going forward. Great. Sure. Thank you so much for taking my questions. Thank you. Before we take the next question, we'd like to request participants that in order to ensure the management is able to address questions from all participants in the conference, please limit your questions to two parts. You may rejoin the queue for follow-up questions. We take the next question from the line of Ashish Jain from Macquarie. Please go ahead. Hello. Hi, sir. Good morning. My first question is on the Lloyd business. You know, I understand the growth percent, you know, that it will be a drive on margins. Even on the contribution margin side, you know, like last year, we were talking about touching closer to 10% margins and all, we are far from that. Any sense on contribution margins that you think will improve from here with commodities coming off and all, or that also will remain in this similar kind of range? I think, you see, the endeavor is definitely toward that, and I think that number was more when the season is there. Let's say Q4, I think you will see somewhere around that. I think this is something which will, as we also see now, the new facilities also come up, you know, these takes time to fill up. I think that's something I think which will continue to grow. I think as R.M., we are seeing the softening, that effect will also be there. Yes, I think our sort of goal post hasn't moved. It still there, and I think that's something, as you said, we see a gradual improvement there, and that's something I think we expect to achieve. Sir, secondly, you know, apart from cables and wires, can you comment if you have gained or lost market share in, you know, switches, lighting, all these bits in the last 12 months or so? Any, you know, distinct trend which is there in terms of market share? No. No, no, Ashish. We have not witnessed any. If at all, I think we would have in lighting and all, we would have gained market share. Let's say, I think to your specific question, no, we have not lost. Okay, okay. Okay. Thank you so much, sir. Thank you. The next question is from the line of Atul Tiwari from Citigroup. Please go ahead. Yeah. Sir, could you give some color on the revenue contribution of Lloyd business? What percentage is from A.C. and the other category? Yeah, this quarter, Atul, it will be A.C. 50% and other 50%. Which are the key items in other? Other, we have largely washing machine and refrigerators. Roughly equally in, like, 50% or one dominates the other between washing machine and refrigerator? I think what we have, let's say, 50 to A.C. 50%, other 50%. Okay. Thanks. Thank you. Thank you. This question is from the line of Shubham Aggarwal from Axis Capital. Please go ahead. Shubham, we can't hear you very clearly. If you have, kindly request you to use the handset. Am I audible now? Yes, much better. Please go ahead. Okay, great. Thanks for the opportunity. Just wanted to ask some questions on the ECD segment. The margins in the ECD segment are sub 10% right now. For 2020, margins were somewhere close to 50%. I just wanted to know, is this the new normal because of the increase in competition, or do we think that the margins will impact the 14% in Q, and now going ahead into H2 also, the margins will improve for the ECD segment? Yeah. I think if you recall, it was asked about the Havells ex-Lloyd margins, and he said, "See, we are now sort of coming back to our earlier numbers. Right. Somebody said you could see mid-teens also. I think we said that, that's the sort of endeavor forever. I think ECD is an important piece of Havells business. We believe, I think those margins which we had done in 2020, I think it's something what we are inching towards, and it should be possible. There has been a lot of volatility since then. You see, earlier it was COVID, then you see post-COVID recovery, there was huge flare-up in the commodity costs and things like that. We believe as the things get much more cleaner going forward in a fresh base, I think we are inching towards our margins. You see, Havells as a whole, I'm seeing ex-Lloyd. Okay. Great. Second question on the lighting segment. First, similar to the margins, that you maintained margins despite the price erosion in the system. The margins have been strong. Congrats on that. The question was, you know, what percentage of the lighting portfolio would be perfect and lighting? If you could give a trend of how was it in 2020, and how is it now? Just compare and how is it now? That's my second. 60% will be consumer and 40%. But, you know, this also get led by the consumer, has been slightly muted, and on the professional, there has been some good tailwind, basically. But the past, I think it was like 70/30. 65/35. 65/35, you see. I think that has improved in favor of premium professional lighting. Okay. Thank you so much for the answers. Thank you. The next question is from the line of Isha [audio distortion] Capital. Please go ahead. Hello. Good morning, sir. Sir, I wanted to understand your strategy on the ad spend. Like for this particular quarter, we have seen a significant decrease. Last year same quarter, again, we saw the decline compared to Q1. Can you please help me understand what your strategy is behind it? The strategy is very simple. It goes with over a period of time. There is, one is impact advertising, the other is frequency. Impact advertising happens more during the season time. We have two major seasons. One is in the first quarter, which is the summer season, and then the festive season. There we see a higher gain of advertising spend in the first quarter and the third quarter, and the second quarter and fourth quarter are usually lower. Overall, we maintain that we will be around 2.5%-3% of revenues in terms of advertising spend. Okay. The other question is on the price revision. Just wanted your idea that in following quarters, what are our cost effects on the price revision? Are we going to see any price cuts given the commodity price increase? Any cost effects? There are certain adjustments which happen for certain product categories, like lighting. If the price erosion is there, we adjust the prices. Cables and wires definitely go along with the commodity prices. You know, we are quite dynamic in terms of pricing as per the cost of the product is concerned. Okay. Thank you so much. Thank you. The next question is from the line of Alok Deshpande from Nuvama. Please go ahead. Good morning, everyone. First question is on the capacity expansion that's happening on the cables business. Could you give us a sense on, you know, what would be the quantum of this capacity expansion compared to what we have currently? Yeah. Almost, I think 25% there will be expansion. 25%? 25% cables expansion. Okay. Currently, cables would be about how much would be the cables in the current sales? Almost 40%. Okay, this 40% will get enhanced by 25%, you're just saying? Yeah. Also some- Yeah, and something will be in domestic wires as well. Oh, okay. Understood, sir. Similarly, sir, when you think about the Lloyd business, I mean, currently, so last year we had INR 3,500 crore of this year, probably INR 2,000 crore. I mean, from a capacity perspective, currently the underutilization that's happening in off-season, et cetera, what would be the revenue sort of level this capacity is built for currently, whatever we have? Any ballpark number? I mean, what is the- We should serve us up to maybe almost double of this turnover. Double of Lloyd's turnover, that is? Yeah. Okay, understood. Okay. Okay. Thank you. Thank you so much, sir. Thank you. The next question is from the line of Amit Mahawar from UBS. Please go ahead. Hi. Thank you. This question is to Anilji. Sir, the first question is, you've been talking about talent, you know, acquisition, and there's been a lot of that in the last couple of years as the business expands, you know, to multiple categories. How relevant is it for Havells to have a professional CEO? You know, and how soon should we see that? That's my first question. Thank you. Amit, I think that's a very profound question. I don't think it's something we can discuss on the quarterly call. The place of professionalism is only sort of enhanced, and I think just because a promoter is there, which I don't think one should assume that professional is not there. I think that journey is something which is only rapidly expanding in Havells. I don't think anybody can claim that Havells is not a professional organization. To that extent, I'm not sure where your question is coming from. You know, I was just trying to understand. You know, I think in the past discussions we've spoken about the ultimate journey of, you know, you know, how the talents have been coming through Havells. So I was just trying to understand if that's the thought in the near to medium term. Every person, Amit, in this company is a CEO. That's how this company is run. That's how the empowerment works in this company. CEO is not the only one who is the Chairman. You see, every business head in this company, every person in the factory, every person in the functions, every salesperson in this company is CEO. Every person is ARG here. Ah, fair point, sir. Thank you for that. Second and last question is, we've seen in kitchen, you know, and small appliances, which is a very big market, but a tough one, you know, organic expansions have been very hard to come by. Like Crompton or Bajaj, et cetera, you know, going for an organic route there. You know, where are we on that thought in the kitchen portfolio? That's my last question. Thank you. No, kitchen portfolio is expanding, and I think when we introduce them to the market, I think we will inform them. I think that portfolio is sort of expanding, you see, on a rapidly basis, because we believe kitchen is a very important segment of the homes going forward. Thank you, sir, and good luck with the entire team. Thank you. The next question is from the line of Keyur Pandya, ICICI Prudential Life Insurance. Please go ahead. This question is on Lloyd. As you talked about margin expansion led by operating leverage, just on the margin front, so what are the other levers, like as a cost optimization or the gross profit side or price increases or the normalization of general margin? If it is an operating leverage, what are the levers for margin expansion? Similar, just to add to that, washing machines and ref as a category are higher margin than this? I think I've already answered this question in the past that the levers are raw material prices are bringing higher operating leverage in manufacturing, brand positioning and hence price improvements in market. These are all medium-term plays. Okay. Just last question. The press release also mentions about the incorporation of subsidiary in USA for any specific product or if you can just throw more light on? Look, these are enabling provisions. Again, somebody asked this question about our international strategy. And we said we are looking at some strong macro tailwinds. I think we need to be prepared for the actions on that. So I think this is enabling resolution and approval we have sought from Board since we had a Board meeting. And I think as we sort of operationalize it, I think we'll keep you informed. Sure. Thank you very much. From the line of Latika Chopra from JP Morgan. Please go ahead. Yeah, hi. Thank you for the opportunity. The first question is, you know, you have commented quite a few times that you're hopeful that, you know, B2C is going to revive in the second half. Are there any reasons or any signs which are eluding you to have this kind of confidence? When you exited the quarter, did you see any pockets which promised you some sort of recovery or some change in consumer behavior? More importantly, as a company, what would, in your view, actually drive the consumer to come out and, you know, spend on electrical goods? That's the first question. I would say two things. One, to your question, whether we saw some green shoots in the second half of the second quarter. Yes, we did see something. It's difficult to say, it's difficult to say whether it's, you know, permanent or is it temporary. But, you know, more importantly, to your second part of the question, what will help the consumer pick up more is definitely there's residential demand picking up, residential construction picking up in reality. Second, and most importantly, with this inflation, you know, coming down to normalized level, I think that will propel the consumer to come out and buy more. We, you know, that's why we are a bit more hopeful of the second half, because the commodity prices have stabilized over the last six months or so. You know, in this electrical industry, the first half, the kind of growth that we've seen in the first half is also something which is not been normal and also is related to, you know, some of the product categories, like fans not having a great summer, going through its own challenges of the industry. Overall, many reasons for us being positive about the second half. Just checking because, you know, around the fact that, you know, you mentioned in during the call that, you know, you chose to be more B2C focused and I completely understand that. Is there now a change in thought that probably you need to have a more balanced exposure towards B2B and B2C, and given the kind of capacity expansion plans that you have? That is one. The second bit, I was actually thinking, you know, when you were commenting on competition and pricing, you know, in category, like air conditioners, you know, we did see the market leaders, market basket going down completely. Do you see that risk at any point as you find more challenges in your B2C strategies with the smaller clients that are in ECD? Just any broad thoughts there. Thank you so much. As far as the industrial, the B2B side is concerned, I think where we've seen the strength is on the cable side. We have grown well on the industrial switchgear side, though our market share is smaller. Professional luminaires, we are doing extremely well, you know, despite having a quite good position amongst the top three positions in this industry. It's not that, see, the focus has completely changed towards B2C. It's always been there. It's as Mr. Rajiv Goel mentioned, that there are certain times you take certain decisions, maybe certain could be delayed decisions as well. The fact is that we will continue to strive towards being a good balance between B2C and B2B. As far as the... What was the second question? Second question was just there on the. On, like you mentioned, you know, the market leader in air conditioners, I think one of the reasons in the past one year has also been, you know, unprecedented increase in the cost of the product as well. We do believe, you know, with that coming down, and Havells has proven over the last 10, 15 years that our margins have been stable. This, except the last one or two years of COVID and volatility in commodities. Otherwise, we have been able to maintain our margins, and that hopefully will should continue in the future as well. Thank you so much. Thank you. The next question is from the line of Natasha Jain from Nirmal Bang. Please go ahead. Thank you for the follow-up, sir. I just had 1 question upon, follow-up question rather, on what 1 of the previous participants asked. In the switches and switchgear, all these ancillary products seem to not doing so well compared to how the real estate or how the market is doing. Specifically to switchgear and switches, do you think this market is more dominated by local or organized players? Because, you know, some of the challenges is that the organized players have been getting a good growth. How do you see this, sir? Well, I think if you divide switchgear into three parts, one is the residential switchgear, industrial switchgear, and within residential switchgear, there is residential circuit protection and switches and sockets. I would say that the unorganized sector is now only in the switches and sockets, not in the residential switchgear and the industrial switchgear. That is reflecting the actual off-take of the real estate position in the market. The switches and sockets, definitely, there is a lot of unorganized competition as well. That also, in the next few years, should start getting consolidated with more and more consumer getting attracted towards the brands. I think that is also a segment which will get more consolidated. Understood. Lastly, sir, how has your growth been in your weaker markets like Eastern and Western India? I would not say Eastern is a weaker market for us. Our market shares are smaller in western part of India. There, the growth is definitely faster than the other strong markets that we have. All right. Thank you so much, sir, and all the best. Thank you. The next question is from the line of Rahul Agarwal from InCred Capital. Please go ahead. Thank you for the follow-up. Maybe one question was on insurance claim. The INR 59 crore received, where was that accounted? You know, we had created a claim when we filed the claim, so it has been adjusted against the, basically, like, letter, the receivables. No, no, it's not flowing through the P&L, right? No. The same thing will happen for the balance INR 16 crore, right? It's not going to the P&L, so the provision continues to remain for the balance INR 16 crore-INR 17 crore, whatever it is. Perfect. Any thoughts on commercial A.C.? Yeah, I think everything is in offering. We, as I say, we watch out for this space. Okay, perfect. Thank you so much. All the best. Thank you. Thank you very much. We will now take that as the last question. I would now like to hand the conference back to the management team for closing comments. Oh, thank you, everybody, for joining the call. We wish you a very happy Diwali to everyone and look forward to see great, great 2023 and 2024. Thank you. Thank you very much. On behalf of ICICI Securities, this concludes the conference. Thank you for joining us, ladies and gentlemen. You may now disconnect your lines.