Ladies and gentlemen, good day and welcome to the Orient Electric Limited's Q3 FY 2022 earnings conference call hosted by PhillipCapital India Private 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 would now like to hand the conference over to Mr. Deepak Agarwal, from PhillipCapital India Private Limited. Thank you, and over to you, sir. Okay. Thanks, good morning, everyone. On behalf of PhillipCapital, I welcome you all to Orient Electric Limited Q3 FY 2022 earnings call. Today we have with us management represented by Mr. Rakesh Khanna, Managing Director and CEO, and Mr. Saibal Sengupta, Chief Financial Officer. Without taking much of time, I would like to hand over the floor to management for their opening remarks, post which we will open the floor for Q&A. Thank you and over to the management for opening remarks. Thanks. Thank you, Deepak. Good morning, everyone. My name is Rakesh Khanna. It's a pleasure to be with all of you, and thank you all for joining us for our third quarter earnings call. I hope that all of you and your families are safe and healthy in these tricky times once again with the globe with three surges in the past few weeks. Health and safety of our employees and all business partners continue to be our top priority. Our COVID response team has continued its surveillance, and we have extended support to all our employees with free doctor consultations, having oxygen concentrators on the standby, and made food delivery available to affected employees and their families. Rapid antigen test kits have been arranged at the offices to act as the first line of testing and defense. Agile RT-PCR testing and isolation of COVID positive associates and their immediate team contacts was acted upon very promptly. I'm happy to share that severity of the virus is less as no hospitalization has been reported to date from the employees and business partners, and neither has there been any impact on business continuity so far. Moreover, 100% vaccination and greater awareness gives us the confidence that we will be able to come out of this quicker and stronger. We have also carried out community health care programs with hospital tie-ups for underprivileged, vaccination drive, and mask distribution. Coming to our overall performance, the third quarter of financial year 2022 saw an overall resilient performance, even though we continued to face challenges on multiple fronts. For Q3 FY 2022, Orient Electric experienced healthy revenue momentum, growing by 9.7% year-on-year against a much higher corresponding year-on-year base, which had surged due to consumers' extra buying related to pent-up demand last year. We continued to strengthen our brand image and consumer centricity in all our offerings, which was validated by securing ET Best Brand and consumer-validated Superbrand award. Following our promise of delivering smart products, we were recognized by Ministry of Power and MNRE and bagged the prestigious National Energy Conservation Award 2021 under the category Most Energy Efficient Appliance of the Year LED bulb for our 9-watt self-ballasted LED bulb. Despite the looming concern of a third wave led by Omicron variant, the company's preparedness to counter production challenges and ensure business continuity helped in delivering overall revenue growth during this quarter. All our factories are up and running in full capacities, and our sales, service, and distribution staff, including warehouses, are all operating smoothly within the given restrictions and guidelines of the government. Considerably good growth were reported across all business segments, except for appliances, which was impacted due to delayed winter and lacklustre festival season impacting the inventory rotation in the trade. The lighting and switchgear segment performed extremely well with double-digit growth during the quarter. The increase in commodity prices and our inability to pass the entire increase has kept the margins under pressure until now. With a 70% share of the business, the ECD segment has been most severely impacted. We were largely able to compensate for the loss of margin in ECD segments by protecting the lighting and switchgear margins through smart component substitution, vendor selection, rebuying, inventory management, and favorable product mix. The ECD segment grew by 4.5% year-on-year in revenue and continued its positive momentum in Q3 FY 2022 despite many headwinds, including raw material inflationary pressure and the looming fear of the third COVID wave. Fans business had a good sales update for the quarter. Our distribution expansion initiatives, supported by the increasing adoption of DMS, SFA, and Orient Connect platforms, are helping the reach expansion and more visibility of sales to support our value-selling proposition. Export sales were marginally impacted on account of geopolitical and economic emergencies in countries such as Sudan and Sri Lanka. In terms of appliances, this business delivered subdued performance during the quarter. Water heaters and kitchen appliances were sluggish in the quarter due to pre-buying in quarter two, late onset of the winter season and less buy work during the festival season. However, on YTD basis, these categories have registered a growth in the range of 30%. On the coolers front, which is a significant contributor in appliances business, channel partners were already stocked up on previous inventories. With the fear of another COVID wave looming, they refrained from making restocking purchases. Lighting and switchgear segment, on the other hand, registered a very strong high double-digit growth at 35%. Lighting business had an interesting run. The B2C segment, led by consumer luminaires and professional luminaires, recorded encouraging growth, enjoying strong demand from homes, small offices and showrooms. In the B2B segment, both private and government business inquiries have increased, especially in highways, railways, and smart cities. Furthermore, the facade business is showing very positive traction with new projects coming on the way. This is also helping the company to build its capabilities in this sector as well. Thus, the slowdown of the EESL business was more than compensated by fans, appliances and B2B businesses, which also supported the margins. Switchgear business also recorded good growth in the quarter. The company's new range of switches catering to mass premium segment is being very well received by channels and consumers alike, and volumes continue to pick up pace each month. Through new projects and new dealer appointments, we are placing particular focus on our B2B segment. The company is continuously engaging with the electrician community for advocacy and influencer programs. On the expenses front, our other operating costs also saw an upward trend during Q3 financial year 2022. As operations resumed to normal pre-COVID levels, ancillary costs such as distribution, marketing, and travel, which are essential to drive business growth, came back into the system. Thus, our operating EBITDA decreased by 21% year-on-year on an unusually high base, leading to two year CAGR of 9%. Looking at our working capital as of December 31, 2021, it has increased by 16 days from the previous fiscal year levels. This was due to a planned buildup of inventory in readiness for upcoming season, quarter four financial year 2022, coupled with slow-moving cooler inventory. However, due to better working capital management, the working capital days has been on a decreasing trend from 52 days in quarter one financial year 2022 to 34 days in quarter three financial year 2022. In terms of liquidity, our net cash position improved quarter-on-quarter due to improved collections and better working capital management. Furthermore, there is general consensus forming that third Omicron-based wave is likely to cause less damage to the healthcare system, and this wave is expected to have milder economic impact than previous waves, making the marketplace feel calmer about the sustainability of consumer demand. As I have mentioned in my earlier calls, through this entire COVID period, we have continued to invest in our long-term strategic plans, cost control measures, improved efficiency in production, enhanced key strategic partnerships, empowered channel partners with extended credit, which will enable us to grow faster than the market. On this note, I now hand over back to the PhillipCapital team. Thank you very much, people. Okay, thanks. Mr. Agarwal, your line is unmuted. Thanks, [Arimand]. I request you please open up the floor for Q&A. Thanks. Thank you very much. Ladies and gentlemen, we will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Rahul Gajare from Haitong Securities. Please go ahead. Hi. Good morning, gentlemen. I have a few questions. The first question I've got is on the ECD margins. I think in your commentary, you have indicated, you know, that the ECD margin were impacted a lot of the factors. Could you highlight what is the share of premium and decorative fans in your overall sales of fans since FY 2021 last year, and what is the share of premium and decorative fans in this particular quarter? Also if you could, you know, highlight the difference in margin between the entry-level fans and the premium fans. That is the first question. Rahul, first of all, I want to clarify, I have said it a few times earlier also, that there is no margin correlation between entry and premium levels. There could be many entry level products which will have higher margins than some of the premium products also. Because it's all dependent on the cost and the customer's ability to pay, competitive pressures and other strategic positioning for a particular product. Having said that, there is not much of a difference between the mix of the entry level and the premium decorative. It largely remains on the similar side. While the premium has also grown, the entry level has also grown. It is just that the middle segment is getting a little squeezed as of now. That's the trend that we are seeing in the market and therefore the importance of every single segment remains the same. Could you give a share in terms of the share, how much is premium and decorative fans in the overall fans sales? Once again, Rahul, it is a little difficult. The way we count premium may be a little different than what you count premium and some of the other peer group companies count premium. We count premium which will be 10% of our top segment. You understand, sometime back there was a discussion that INR 3,500 plus was premium according to us. The prices having gone up by around 17%, we cannot call INR 3,500 as premium. Now we actually call more than INR 4,000 plus as our premium. It's a continuously moving up segment. For us, what is important is how is our top 10% behaving and what is the share in that particular segment that Orient is enjoying. We will continue to remain a dominant player in the topmost segment in the market, which they also are clearly in that segment, more than 10% of the market share. Fair to say, you know, that 10% of your total sales will be your premium fans. That's how we define the premium. The second question I've got is, you know, on your R&D. Could you specifically discuss R&D in some detail, specifically highlighting, you know, the expenses that you have done towards R&D in last year, FY 2021, because I couldn't find R&D expenses that the company has done last year. How is it that you have done in the first nine months and plans for the full year. Also, which are the areas or products you are specifically targeting in terms of the R&D spending that you are doing? Thanks. Great. Let me first of all tell you what are we targeting in R&D. There would be a few confidential projects which I will not be able to discuss. Those we will share as and when they come out. You will see the safe launch that we have announced of our i-Floral, which is one of the unique patented design fans, which is for the first time a fan without any shank and rivets. It has been a dream for a lot of people to say, can we remove the rivets and the trims from the fans? Nobody has been able to achieve that in metal fans to have these in aluminum because that's the nature of this material and cannot hold the blade unless the shank and rivets are there. We have been able to crack that problem with a patented design, and we are very hopeful about how that product will do. The second, there would be focus on the fast changing market requirement of power efficient fans. Within this, the BLDC and IoT series will continue to stay in focus. The re-designing of a lot of fans to get into the star rating and meet those requirements will be a lot of issues. There are new emerging taste of the consumer, where the consumers are asking for different kind of designs. That will be another focus. Our focus will be in the TPW area where that particular segment shows a good growth. There are various pockets on which we are focusing. There are various levels of priorities that have been set up depending on where we are seeing the highest potential to gain ratio. In terms of cost, as of now, we have not completely isolated and published the R&D spend because we also believe that R&D doesn't happen only in the labs. R&D is a common activity which is together delivered by the entire team, which includes the manufacturing team, the marketing team, the sales team and the design team. That's if I have answered your question on R&D. There is no specific number that we can, you know. No, we don't share this number. As of now, we don't share this number. You know, in FY 2020. We keep it out. In FY 2020, you know, you all used to declare this number in the annual report. From 2021 I couldn't find this number in annual, so that's really the point I asked. Now, you know, just continuing on this particular, you know, the separating on. [Chandra], may I please request you to self-mute your line as there's a lot of disturbance from your audio. Thank you. You know, just continuing on this question. When is the star rating going to be effective? Is it July of this year for BLDC fans or can you throw some light on if there is any change in the BEE norms? Thanks. Currently it stands at July. It is not for BLDC fans only, it is for all ceiling fans. Okay. Thank you. That's clear. Thank you. Before we take the next question, a reminder to the participants, please limit your question to two per participants only. You may rejoin the question queue if you have a follow-up. The next question is from the line of Rahul Agarwal from InCred Capital. Please go ahead. Hi. Thank you, and good morning, and I hope you guys are keeping safe and well, Rakesh and [Saibal]. Sir, two questions. Firstly, on the volume growth, if you could just give some color as in what really happened with fans and appliances, ceiling, [premiums], YOY, QOQ basis, whatever you can help to understand volume, please. Yeah. When we say that our growth has been 7% and 9.7%, and the price increase has been in the range of 14%-15%, you would, it's a normal thing that the volume has been lower and the price has been higher. It's a simple math, right? Yes, sure. Anything between fans and appliances of ceiling fans you can specify please? What would you like to be specified? Let's say fans volume growth YOY, you know, what would that be? Oh. You see that becomes rather complex because. You know, this is why every single segment would have grown and shrunk a little differently. Every single product would have grown and shrunk differently. It will be a fairly complex and wide matrix which I will have to give you. It won't be possible in a small time. Largely on a weighted average, if you would see, this is how it behaves. Got it, sir. Second question. You know, purely because of COVID wave three, even January must be a problem to raise prices, right? Of course, the summer demand will now pick up, you know, as this wave subsides. You know, what is lined up for Feb? You know, what are we thinking in terms of, you know, which product mainly you want to pass on? And will the market be ready to, you know, accept these price hikes? Is the channel okay now, settled down because this COVID wave again disrupted it. Just your thoughts on price rise in Feb. Thank you. There is always a little resistance to increasing the price hike. Okay. Despite all these resistance, this sector industry has been able to pass 15%-20% price hike and the market has accepted. I'm not saying no to the fact that there is no price sensitivity with respect to demand. There is a little, and that's where we say that the volumes have not been as high, whereas the total value is high. That part of price to volume will always remain. Nevertheless we remain positive because of the total share of wallet and total share of the total household expenses, the categories where we play are not very large and therefore the price increase is not likely to deter the customer that much. Although there is some resistance from the trade in terms of their channel inventory and when the prices go up they prefer to first liquidate their channel inventory and they keep hoping that the commodity will take a correction and the price may come down. There is a certain lag, but we have been able to put through maybe 15%-20% price increase during the year, reasonably well. We're confident the market understands that the commodity increase is a reality and these cost increases are a reality, it will happen, it will get accepted. How much would you take in fourth quarter? How much price rise is pending? That's all. That's my last question. Thank you. The gap that you are seeing in the margins is something that we would want to cover up, and we would want to go back to the rightful margins. Anywhere between 4%-6% is a kind of price increase, depending on different categories. Also it depends on how much cost increase continues to happen. That's the price increase that we are looking at. Thank you so much, sir, for answering my questions. All the best for the year and the year ahead. Thank you. Thank you. Thank you. Before we take the next question, a reminder to the participants, if you have a question, please press star then one. The next question is from the line of Nitin Arora from Axis Mutual Fund. Please go ahead. Hi, sir. Good morning. Thanks for taking my question. First question on the demand side. Can you talk a little bit about, you know, how is the retail demand really panned out in the Q3 this year? I'm asking this question because, you know, as you said, you have a very high base, volume growth this quarter has been on a decline, price rise is more. I'm asking this question more from an angle of an inventory. Is the retail demand really weak at the ground level which added more inventory to the channel? Given I understand there are only 15, 20 days till the January and the wave has not hit hard to anyone barring few states, you know, enforcing lockdown on weekends. Has the sentiment really weakened or you think now channel is filling up the inventory, the retail demand is coming back? Just first question on this color, please. When I say that the demand has been a little less, you see one of the things is we're comparing to it last year. The second, if you see compared to last two years, the total CAGR has been fairly high. So if I go to pre-COVID level, the CAGR has been good. So the demand has not been bad. Demand has been good. It is just the comparison with what everybody was expecting and the kind of growth that we have got used to, the very high growth that was not there. The e-commerce team felt a little less because last year the e-commerce growth was very high because everybody went only e-commerce route and this time people were out in the market. So while the sales saw a better growth, e-commerce saw a little less growth. It's a mixed-up thing, but the total if you've grown by close to 10%, if the two-year CAGR is close to 45%, then it's a total growth from the pre-COVID levels. Any comment on the inventory side? Is the channel stocked up well or is it like high or, you know, is there a scope of further inventory growth that can be done by the company? The channel is both sentiments played on channel this time. On one side, the sentiment was that the channel saw the prices are gonna be going up and channel always tries to stock up when the prices go up. On the second side, the second sentiment was playing that what if the next wave comes and if there are lockdowns. There was a caution and there was an optimism. Both played, and I would say it kind of both neutralized each other, and I do not see a major any one major factor playing big. It is a normal channel inventory and in case if the wave three doesn't affect, we should be able to see a good offtake. Okay. This is the last question from my side. A little longer term. You know, I agree you always maintain that fans is something, you know, experts keep debating. That's, you know, it's a very high penetrated product, but you're still showing growth in that category by launching very innovative fans and gaining market share. What's the other category, sir? I mean, if, you know, this is the first time, you know, we saw switches and switchgear coming back. We know that switchgear is more of a new build. The driver is a new build market, which in some pockets of the country. Generally your long-term view, let's say in the next year, next one and a half to two years, do we see switches and switchgear really becoming big in the ECD segment? But I mean at least from a growth perspective. You know, apart from fans, which are the categories, you know, which we feel, you know, now is the time to gain market because already the players are there, so eventually you have to grow by gaining the market more. If you can comment a little bit on that. That's my last question. Thank you. First of all, let me say switches and switchgear come in lighting and switchgear segment, not in ECD. Sorry. Switches and switchgear will grow for us, because we are not as dependent on the market growth as we are on the market share growth. You see, we are very small and the market is very large. As we get into with the proper range, with our rightful presence, for what the brand demands, for what our product quality, et cetera, demands, we should be able to gain a respectable share in the market and that will give us a very good growth. Same in ECD. We will be continuing to focus on the products that we have always said. Apart from fans or air coolers is a category which although has suffered for these two years, we still remain positive going forward. Given the kind of weather conditions in India, coolers will continue to do well. Water heaters are still a high growth category. They will continue to do well. We will continue to focus on these products. Thank you, sir. Thank you. The next question is from the line of Bhavin Vithlani from SBI Mutual Fund. Please go ahead. Yeah. Good morning, gentlemen, and thank you for the opportunity. Could you talk more about the lighting segment? Because we have seen even Havells' report strong numbers. Maybe is something to do with the changing competitive landscape. Your thoughts will be useful on this. Sure. Well, of course, we are gaining market share, and that's because the competitive landscape is changing a little and we're getting opportunity to improve our shares. That's definitely happening. Also, the consumer's consumption behavior is changing with lighting. Where the consumer was earlier using the bulb is now using the batten, and where the consumer was earlier using a batten wants to now use downlights and panels. The overall lighting consumption behavior of the consumer is changing and changing fast. Put together, that all is helping us for the market to grow. The B2B is also picking up, and we have been small in B2B, and we are gaining traction on that side, gaining a faster acceptance. Those are the reasons why we are growing well and we're gaining shares. Thank you. The second question is, if you could talk about the other categories in the ECD. Correct me if I'm wrong, I heard water heaters and the heating category grew by 30%, so correct me if I'm wrong. Water heater and kitchen appliances. Kitchen appliances, which is room heating appliances, really suffered because the winter was delayed. Normally these products will pick up and sell in quarter three. Because winters are delayed, the trade is hesitant and on top of it with the COVID wave and all those anxieties related to it, the room heating suffered. Water heater has done well. Kitchen appliances has done well. Sure. Just the last question from my side. Given that the COVID has hit again, are you seeing any momentum that is kind of slowing down because we are seeing deceleration in the growth, especially in the ECD segment? Is it more to do with the strong price hikes? And I'm drawing analogy with from the two-wheeler manufacturers who are talking about entry-level bikes not doing well or Samsung, LG saying the entry-level refrigerators and washers actually declining. Any trend that you could throw that will be useful. There is definitely some kind of headwind, but fortunately, as we are gaining our presence and as we are gaining share, we're not feeling it as much. By and large, the sentiment is reasonably positive and optimistic today in the market. The trade feels that this particular COVID wave will not cause a damage. We are also seeing internationally the governments are now accepting it more as a flu. While U.K. has announced that this will no more be a compulsion, your mask will not be a compulsion. We're not seeing people emotionally suffering this time. Families have not suffered. Everybody has comfortably passed through, although many people have been infected. We're not finding that kind of a caution. People are reasonably optimistic. As an organization, our current stand is that we will stay optimistic and we believe the market will sustain growth. The rest we will all see as it goes by. Sure. Thank you so much for taking my questions. Sure. Thank you. Thank you. The next question is from the line of Keyur Harsh Pandya from ICICI Prudential Life Insurance. Please go ahead. Thanks team for the opportunity. Sir, first question is on the cost front. I think the entire industry had seen downward cost revision, cost savings last year. Now again when things picked up again and they have gone back to say almost normal levels. Last two quarters when we see cost over on the overhead front, can we say that this is more of sustainable nature of cost, and we have reached that level? Or are there any other cost savings or cost escalations which are yet to be seen? I mean, because of seasonality it may change, but as a percentage of sales, have we reached a more of sustainable level of cost? By and large, yes, Keyur. More or less most of the costs have come back. There are some costs as of now, for example, our marketing costs are not in full swing, because every time when we go in for spending the money, we look at what the environment is, and if the environment is very healthy, we would spend. There is a careful watch on those ROIs of those spends. Mm-hmm. Some level the costs will go up a little. They will be all product costs. Largely we are on the sustainable range now. Okay. Understood. The second question, extension of previous two participants' question. When we talk about ECD, other than fans, we talk about water heaters and coolers. Now kitchen appliance is a large category which has many subsegments. I mean, when I see our website, we have lot of products listed there. Are we focusing all those products at the same time, or right now our focus remains, say large categories like water heaters and coolers, and that is why only we talk about them? Just want to understand when we talk about ECD other than fans, which are our focus areas which may or may not be, I mean, due to time constraint, we may not be talking about it, but just which are the focus areas other than fans? Great. Great, Keyur. Thank you. Your answer is hidden in your question itself. You see, for us all the categories are important. Kitchen appliances are important. Kitchen appliances are a highly fragmented area. Okay. There are very few market leaders. There's hardly any market leader that you can talk about barring some regional market leaders. There are various reasons for it. Therefore, in kitchen appliances presence is good enough, and we are expanding and doing very well in kitchen appliances by ensuring that we are present. Coolers and water heaters are focus areas because that's where we are looking at gaining leadership position. Okay? Mm-hmm. That's how I differentiate. When you ask me focus area, I say, coolers and water heaters because that's where we are looking for leadership position. Okay, understood. Just last question. An update on the new CapEx which we announced. I think it is supposed to get commercialized, say by start of, say, Q1 FY 2023. Any update on that? Once that has started, how it will contribute in the sense is it increasing our capacity? We are adding new products or is it, say, in, we are from outsourcing to we are going inwards and doing insourcing, and so it will contribute in terms of better gross margins or better margins at the operating level. I mean, what is specific objective? Is it to reach out to some particular geography or to improve margins by insourcing? Just to understand how it will reflect, say, medium term in our numbers. Saibal, can you take this question? Yeah. Th e Hyderabad project is not going to commercialize from first quarter of FY 2023. It is going to start within the next few months. The commercialization of the project will happen at the end of FY 2023, subject to trials, successful trials and all that. As far as the second part of your question is concerned, yes, it is meant for the capacity expansion to cater to the future demand and to service the growth that is coming up. It is going to start with fans, [as we have always] mentioned. The project is going to start with fans, but it will be followed by all the other product lines as well. Okay. Understood. I correct myself here. Q1 FY 2024, I meant. Okay. Thanks a lot. Thank you and all the best. Thank you. The next question is from the line of Achal Lohade from JM Financial. Please go ahead. Yeah. Good morning, gentlemen. Thank you for the opportunity. You know, my question was why it is kind of answered in pieces. What I just wanted to ask is that, you know, if you look at the demand environment prior to COVID and during COVID, is it fair to say that the kind of growth all the organized the leading players have seen is more to do with the market share gain while the underlying demand was pretty much steady. It was kind of weak prior to COVID. That is now there in the base, the market share gains are there in the base, and hence the incremental growth is looking little weaker while the demand continues to remain very much steady. Is that a fair assessment? I just wanted to understand, you know, your perspective on the same, sir. I think good way of thinking. See, there are no syndicated data and therefore I cannot say with certainty as to what is happening. These are all judgments and we are all making our judgment call based on whatever best we can understand. Yes, the best understanding is that the larger players or the faster players had gained better shares. Okay? Some of the smaller unorganized people have suffered. They have given up for various reasons, was it their ability to match the cost, was it their ability to plan, was it their ability to sustain. There were various reasons. Some players have gained. If that is right, then it's a permanent gain that has come in to these players. As the market grows back, the gain will be maximum with these people. This is a hypothesis. I don't know to what extent it will be true as the market opens up and as we get more and more information which is more syndicated and reliable, we will validate that. This is a hypothesis which is a reasonably good hypothesis. Understood. My question, another question was, you know, in terms of the urban and rural mix for us, how is it, and are you seeing, you know, a weakness what we tend to read in media in the rural? Do you see, you know, in your product categories for your company as well? It will be marginal. You see, you will have to see how we as an industry are more structured. You know, unlike an FMCG which has direct reach in rural, most of the fan industry, the lighting industry does not have a direct reach to very small towns, and we go through alternate routes. Also, if you go to the smallest village, you will find an Orient's fan. It is always there. Our measurement always happens from the nearest town because nearest town supplies it to the small rural village. Currently we are focusing on expanding the network and expanding the reach. Therefore, naturally, our share from the smaller towns is increasing at a much faster rate. Is it because of the demand or is it because that we are reaching out to those places a lot more? The visibility is not there with us. Difficult for us to say whether the rural is going down or up, but as when we measure, to us it appears that our rural share is going up. More so because of our reach and expansion is happening in the smaller towns a lot more. Understood. Would you be able to put a number to it, sir? Is it like now 10%-15% of the sales from rural or hard to put that number? Hard to put that number. We don't define those numbers in terms of our reach. We don't define those numbers. Got it. If I may ask one more question, sir, with respect to the lighting business. Sorry to interrupt. May I request you to rejoin the queue for your follow-up. Thank you. Before we take the next question, a reminder to the participants to please limit your question to one per participant. You may rejoin the question queue if you have a follow-up. The next question is from the line of Nikunj Gala from Sundaram AMC. Please go ahead. Yeah. Good morning, everyone. I just want to understand, from the pricing case which we have taken till date, you know, in the range of 10%-15%, and then in Q4 we would be taking further price increase. In July too, you know, if the star rating gets implemented, there will be further increase in the range of, you know, 10%. How do you see the demand trending out after, you know, July month, like considering the, you know, such a sharp increase in the last one year, and especially on the, you know, replacement demand that, you know, that demand trending can get deferred, you know, if there is such a higher price increase? Okay. [Concern], Nikunj, can happen, but I personally don't think that's a huge deterrent. First, because the product that we're talking about, specifically [audio distortion], is not a high discretionary product. Also, I always say that as a share of wallet, it's a very small share of wallet. In the total household spend, it's a very small household spend. I don't think it's going to matter as much to the consumer. Small, yes, it will affect, but it's not going to be large. People will easily get accustomed to the new price levels. Secondly, when the new five-star rating happens, the payback period is so quick that the increased cost gets justified very, very quickly. I don't think it's going to be a deterrent in the longer term. In short term, yes, psychologically it impacts, but logically there is no reason to have an impact. Okay. Sure. Just, secondly, say in case, like, building a scenario where there is a, you know, decline in the commodity price, will you be continuing your, you know, the price increase which you have taken till date? Or, you will believe that, you know, the commodity intensity is such that you might have to, you know, give the benefits to the consumer also. Again, good question, Nikunj. The lag always happens on both sides. Okay. When the commodity goes up, it's always with a lag that we are able to pass. When the commodity comes down, there is also a lag, because understand, in the market there is a high cost inventory sitting. Okay. No company wants to put the dealer's inventory at loss. Mm-hmm. Therefore, even if the companies want, there is an inability to pass it on to the market very quickly. There will be a lag on both sides. Okay. It's not like, in the, you know, in the deflationary scenario, we will continue to enjoy the, you know, kind of increase which we have taken. Because that becomes a, you know, new normal from the consumer perspective. There is no such a, you know, pricing power, at industry level in that case? It is generally dependent on the competitive scenario. Right. Right, Right, sir. When the prices go down. Yeah. The companies cannot immediately pass on the benefit to the customers. There will be a lag also. Mm-hmm. Even if the companies want to do it, there will be a lag. Sure. Thank you. Thank you for your time, sir. Thank you. Before we take the next question, a reminder to the participants again, please limit your question to one per participant only. The next question is from the line of Bhargav Buddhadev from Kotak Securities. Please go ahead. Yeah. Good morning to you, and thank you for the opportunity. In the PPT there is a mention that Orient has seen market share gain in South and East for lights. Is it possible to highlight very briefly key efforts taken for this, and [audio distortion] sustainable? Yes, Bhargav. There have been very sustainable efforts which are going on in South and East. These are the lower market shares for us, and therefore naturally, these are the areas where we would want to focus little strongly because the gains are better. In South, for example, we have the whole advertising campaigns in vernacular language. We are going very local. The Connect project and the DMS project is going very strongly over there. There are very strong ground teams that have been placed over there. The dealer network expansion is going very fast. There are many of these operating level efficiencies that have been built up which are helping us to improve our presence on the ground very strongly. In East, in Odisha and Bihar, we are going with a completely new distribution practice of going with the redistribution strategy, where we are going directly to the market, appointing our redistribution partners by the district and going very intensely into the distribution and the direct dealer strategy. We are taking these actions, and we hope that we will gain significant position in these markets. Great, sir. Thank you for the clarification. Lastly, is it possible to highlight how much of our receivables and creditors are covered under the channel financing and vendor financing scheme? Pardon? Just to take that. So part of the percentages which we had referred in the last quarter, that continues to remain, which is roughly about 40% as per channel financing concern and about 60%+ as per vendor financing concern. That percentage continues to remain and as volumes go up, that will go up for us. Okay, sir. Thank you very much, and all the very best. Okay. Thanks. Thank you. The next question is from the line of Ankur Sharma from HDFC Standard Life Insurance. Please go ahead. Yeah. Hi, sir. Good morning. Just two questions. One, you know, as we get into Q4, you know, even Q4 of last year had a fairly high base, you know, both in ECD as also lighting. Fair to assume that, you know, here again we might continue with the volume degrowth and, maybe as we get into Q1 of next year fiscal, we get back to volume and value growth. Would that be a fair assessment or do you believe that channel restocking can be strong in Q4 to, you know, even get us some volume growth as well? Ankur, difficult to say. I generally restrain myself from telling what will happen in quarter four. We are still, y ou know, in January, we still have two and a half months to go. We will see together. Mm-hmm. We are hopeful. We are optimistic. We believe it will go well, but we will see. Okay. Okay, fair. Quickly, sir, on the export markets, as well, if you could, you know, talk a little bit. I think that's about upwards of 10%-15% of our total fan sales. So how's that shaping up? I think you did talk about some weakness there in a few markets. So, you know, if you could talk about the export market, where do you see that kind of, say, two, three years down as a overall fan sales? If you said that 10%, I would make a correction there. In terms of the markets, well, summer, we all know it's a large fan market and it has got hit seriously through the. Mm-hmm. The political and economic turmoil there. Sri Lanka is another concern. Sri Lanka is on the verge of bankruptcy, as has been announced. One has to be extremely careful in terms of. Mm-hmm. Ensuring that, the payments, et cetera, are secured. Mm-hmm. Of course, in such situations, the exports really take a beating. Having said that, the rest of the world is doing well and there are new opportunities which are coming and we are continuously growing in those opportunities. It's a balanced view. There is a clear headwind from a few countries, but at the same time, there are opportunities coming from other places. Any targets in mind? How much you would want to have exports as a overall sales, in fans, you know, longer term? Yeah. Our export ambitions are big. Currently I would not want to make statements about them. Yes, we would want to stay in the range of 10% and maybe grow a little better. Opportunities are big and we are working on them. Okay. Sure. Yes. That's all from my side. Thank you. Thank you. The next question is from the line of Aniruddha Joshi from ICICI Securities. Please go ahead. Yeah. Thanks for the opportunity. Sir, just wanted to understand the breakdown between multiple brands, obviously Orient is your mother brand, but excluding that, De'Longhi, Kenwood and Braun. These are the key other brands that we are having. So what is the revenue contribution from these brands? That is question one. Question two is, now with the star rating coming in from July, so obviously there will be lot of inventory mismatch and their inventory goods, the trade may not be willing to offload at that point of time. Again, for the organized players like us, it will be a good opportunity to gain significant market share from smaller unorganized players. So how is the company prepared for that? Can you share what are the plans in a way to gain significant share from that event? That's it from my side. That is very good. Great. First thing, let me tell you about De'Longhi, Kenwood and Braun. This is a strategic partnership. All these products are very, very premium products. While they're globally the leaders in their segments in India still has to gain sufficient momentum and appreciation for such high quality products at these price points. The market is still small. Both us and the De'Longhi Group are very clear that this is the time to enter India. As Indian market matures up to these kind of products, we should be having significant presence in this particular segment. The point to remember is, globally these products are market leaders and therefore as the market grows in these categories, we should grow very well. Currently, these are fairly small, and for us it is more of ensuring that these brands are well represented and present in the country. The second point that you talked about is about how the complexity of inventory happens when the changeover happens. It's a very valid point, and we are planning very closely on this. You are right that the players who manage it well will tend to gain better than some other players. During this changeover, it's a high focus, as I said earlier also during the day, that one of the focus areas we have for our R&D team is how to reconstruct every fan to match into the new BEE regime and get into the best possible star rating. You are right, we have to plan on the inventory very carefully, not only ours, but also our trade partners. Okay, just hypothetically, if you have to, i t is part of that question only. If you have to just divide your own portfolio currently, how will you say on that when the star-based rating system comes? Where do we stand on that? Whether some of our portfolio will get affected or larger portfolio will require no change as such? Yeah, that's it from my side. Thank you. Good. Aniruddha, a fairly large part of the portfolio of all the fans will require a little change, but the change is not very large. Okay? It's about managing the specifications of the fan a little better so that they qualify for the star rating. That's what we are working on. All the fans are undergoing minor adjustments in their specifications to match the star rating. Most of our portfolio will be compliant with the star rating. Okay. Yeah. That's helpful, sir. Thank you. Okay. Thank you. Thank you. The next question is from the line of Charanjit Singh from DSP Mutual Fund. Please go ahead. Hello, sir. Good morning. Am I audible? Yes, Charanjit. Yeah, first question is, you know, you talked about, you know, rural and urban, you know, markets. If you can just touch upon the, you know, distribution side in terms of our expansion in the rural. At what pace we are adding, you know, touch points in the rural, and what is the mix, right now of rural versus urban for us. Second question on the distribution side is in terms of, you know, e-commerce versus, you know, general trade. What is the mix there and how we are seeing earlier, you know, some divergent trends in distribution on general trade versus e-commerce. If you can touch upon the, you know, sales trends on e-commerce versus general trade. Those are the two questions from my side. Let me first answer your e-commerce versus general trade. E-commerce versus general trade, for different categories is anywhere between 10%-20%, depending on different categories that we're talking. Okay? Some of the categories is very, very small. To tell you, for example, you know, the lighting, it's very, very small. It's kind of more or less negligible. One of the reasons is that we have cautiously taken the call as of now, given the kind of product and the challenges that we have, that we would rather focus on the trade, and we are gaining very quick traction. Given the limitations, we are focusing there. But when it comes to ECD, we are anywhere close to 10%-20%, depending on different kind of product category, and also it depends on different months. There are festive months when suddenly the e-commerce goes up, and some months when the e-commerce percentage is less and the trade percentage is high. By and large, we are in that case. When you ask about the expansion in terms of the rural expansion, we have our numbers, but as I said, we're not really talking about the expansion in the rural areas. Our expansion is a little differently defined. Our expansion is defined on the quality of expansion that we're doing. We are cutting down at a lot of places, and we are expanding at a lot of places. What we're doing is, to what extent are we connected with the retailers now? That's the bigger question rather than how many retailers have our material. To tell you how many retailers have our material, the 125,000 retailers. We don't even have that kind of a target to be at 125,000 retailers because there is no way to measure that. However, our direct reach and direct influence to the retailers has to significantly go up. Those are some of the internal targets that we are not sharing with the public today for reason of competitive advantage. I can only share with you that there is DMS, SFA, and Orient Connect are our three platforms. A combination of them is helping us to improve our direct reach, visibility, and influence with the retailers at a very high pace. That's helpful, sir. Just if I can squeeze one last question, sir. In terms of, you know. Charanjit, sorry to interrupt. Yeah. Due to time constraint, we'll have to limit to one question only now. Okay. Thank you. Thank you. Ladies and gentlemen, this was the last question for today. I would now like to hand the conference over to Mr. Deepak Agarwal for closing comments. Over to you, sir. Thanks. May I request any closing comments to the call? Thank you so much, Deepak. Thank you all the participants. I once again wish all of you be safe. I'm sorry for not being able to take all your questions, but we will be very happy to answer your questions. You can be sending us the questions. You can write to Saibal, directly, and we will ensure that all your questions are well answered. Thank you so much once again for your continuous interest, and thank you to the PhillipCapital team, especially you, Deepak, for organizing this call. Thank you. Thanks, [Nagen]. Thanks, everyone, for joining the call. Thanks, [Nagen], [for giving us opportunity to host] this call. Thank you so much. We end the call. Thank you very much. On behalf of PhillipCapital India Private Limited, we conclude today's conference. Thank you all for joining. You may now disconnect your line.