Ladies and gentlemen, good day, welcome to Orient Electric Limited Q1 FY 2024 earnings conference call hosted by Ambit Capital. As a reminder, all participants' lines will be in a listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. To assist during the conference, please again operate by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Dhruv Jain from Ambit Capital. Thank you, and over to you, sir. Thank you. Hello, everyone. Welcome to Orient Electric Q1 FY 2024 earnings call. From the management side, today we have with us Mr. Deepak Khetrapal, Vice Chairman and Managing Director, and Mr. Saibal Sengupta, the Chief Financial Officer of the company. Thank you, and over to you, sir, for your opening remarks. Thank you, Dhruv, and thank you, everyone, for joining me. I'm very glad talking to you. Deepak Khetrapal is my name, and I'm addressing you from the position of Managing Director of Orient Electric for the first time. Just a quick introduction, I think it will be important for me to at least mention that I have been with Orient Electric for a even longer than the current even Mr. Rakesh Khanna, who was the Chairman when this company was. I was involved with the company even from before the time Rakesh Khanna came in, and even when Rajan Gupta, who was with us for a very short time. I've been at a time for Orient Electric, not in the executive position. I've been a board member, I've been a Vice Chairman, non-executive. In my capacity there, obviously, I've been through all the institutions and strategies, quarterly reviews and things like that. Also the-- all the strategic initiatives, which have been under implementation, I'm familiar with that and with the logic and why we adopted them. The best part is, the people at Orient Electric are known to me and, you know, I would say, have gave me a little bit of, like, a comfort as I think about the ask from me to come and take the position of manager to decide the direction and solution. I do realize that the executive role is an executive role, and obviously, I am also working on just fine-tuning my perspective from what I may have adopted in the past, besides being on board with Electric. That's a quick, I would say, background on me. In case, the helps for you to know, in a way that, what do I do with them? I've been involved, let's say, like, maybe with the sun business, which is a very different business nature. Why they are in the board and why they are the vice chairman, my simple logic was that before the, addition of the job that I'm doing here, I've had some very large consumer companies that have learned from the top. That's where I think my past background and understanding of not just the consumer company, but also the consumers, the consumer psyche, what do they like and what do they respond to, has been part of my, let's say, my experience, my knowledge for serious in college. That's, that considered useful, and let's say, as the board at the time, engaged me with Orient Electric for, for a very long time now. The, the advantage, and I think we were given confidence, which, which was either it's, it's a challenge when you go to companies and you have ambiguity, very different in whatever the alignment in whatever. What gave me confidence was the fact that there was a very strong team of, seasoned professionals, which constitute the leadership team at Orient Electric, and they've been driving the business forward. Avani Birla has been carrying on the responsibility of strategy at Orient Electric for a very long time. The understanding and the... I would say my working with her in the past has given me kind of confidence that the team which is there, with Avani involved, which continues for a longer period of time, with me having been around, we should be able to keep creating value at Orient Electric for some time, and I'm the proud to do it, and we believe in behind that. The other factor, you know, whenever I've been listening from the beginning level, I say I'm aware that there's a very robust strategy which has been under implementation day by day, and I'm familiar with the very private leader that has been applied there. That's maybe many of the questions around why am I here and what are my motivation? I thought it would be important for me to just come out. In terms of the strategic leaders that we deployed and the confidence which been there for a while, obviously shows the. These people are kind of actually going to within the core science business that we have a long, a long time. I think one of the big moments was maybe some out of the smart market where when we actually launched OECD a few years ago. All of you are aware that there were huge solutions that are in a very different position in the marketplace. So that was not enough. Obviously, there are lots of other teams, obviously, in our BLDC team was earlier to be the pioneers in the BLDC fans in that category. The key, again, driver behind all this, we have taken a very conscious to actually go premium in the product segment specifically, rather than the, what you call the economy models and things like that, where, obviously, the revenue is lower, the margins also need to get higher. Plus, it doesn't give the kind of positioning that we believe that we want for ourselves. In the recent past, the go-to-market has been redone in many cases. We replaced our master distributors with the go-to-market approach, which is going to work faster. You know, there's also some righting of messages to other master distributors in case they underperform, and the company is today willing to work in there and to build the modern distribution group. Good for us, because as a master distributor, and doesn't build market and then work together, but we work better rather than master distributor all over the place. That's the initiative, which I think is working out well. We have made a very sharp step into more focused drive in e-commerce and modern trade than we were built for a while. In the past, we remained a little, I would say, marginally clear on the e-commerce, because we have our ambition do and as you got our actually today, the figure here is a lot faster than what we had in the past. We are also building our consumer engagement and our visibility at medical counters, because actually we found there were some gaps which we are filling up very, very fast. Our internal project, which we call functional integrity, is our cost optimization effort across every single function, every single location of the company. Again, a good value creator. We are currently seeing other, other, other area which perhaps need more closer look here. We identified, for example, again, to improve our service response to our customers. Our R&D, I would believe, that after three years in the DVC, during the five years, we still have to come up with another product which matches the significance of our network. We need to sort of strengthen our organization and lot more to actually develop products which really are differentiated. Perhaps logistics would be another area that we are looking at to improve service, become more agile and to also become more efficient. Those are the areas that are clearly where we're brought into the momentum, which actually the initiatives that I mentioned earlier have been. It's a result of all these strategies that you get to see the numbers in Q1, that we will be published. These numbers normally have been in the way of a weather system, which has not been very harsh, especially in northern parts of India. We had summer, which has been actually shorter and cooler than normal, which obviously created problems for our products, which are seasonally driven or season impacted. The- I think the, the numbers which are available in the current industry, more or less, are some strong that the company, which has been improving businesses, which we believe in summer have been underperforming. Given all the, let's say, rather pleasant summary that I've experienced as a listener now, also the what we are seeing happen in Europe and in North America. I was wondering where the optimum time to actually see in America and Europe will be seeing our products that we started selling in India. The season didn't go too well for the industry. The good news is that despite the what we said, we should still wins in the season, despite there being missing. ch into country, and this is the target available. So it's definitely a conversation can put a lot of, not just right from, but also a lot of, lot of perception in the initiatives that we've been taking as well as in previous years. And it's definitely an indication which similarly to this every day , like I mentioned, 18%-16% overall, being 13.5%, is a result of the fact that in the lighting business, we've had erosion in the market price of the B2C products largely. And there we sort of be- we have a clear lighting, the growth is much smaller, less than 10%. When we include our switches and fixtures, where they have actually been able to work in place, that segment by adding additional, which, the growth is 13.5% as we retain the numbers Likely the reason behind the, the erosion in price, and that's why in the central growth not translating into monetary growth is very simply, the fact that there is a new product that has come into LED lamps, which is now called driver-on-board. Driver-on-board driver is completely distributed. When we integrate back the price of the product, the cost of the product has come down, and it has been passed down by the industry and further penetration of LED lamps in the country. The other option for the revenue growth obviously is, is, the gross margin that we have achieved in. This growth is even more exciting because it's not that it's coming from any one segment or one business or one product line. We've had a gain, overall gain of, in terms of, company as a whole, we had a growth of nearly 290 basis points. over the margins that we had in last year. We have a range of about 3.6, 3.7 wide range of 50%, depending on which, which product category we are looking at. Because it's really a gradual gain in margins, contribution margins, we are happy, with the situation. The encouraging performance overall, I would say, on revenues as well as, gross margins. Everything that we all the strategic initiatives that we took, the identity people on strategy, they've all been kicking in terms of growth and also lower gross margins, even when we have to put out higher value rates and higher revenue. Again, I don't need to repeat shampoo and some individual market. All these things are very detailed. I think all of them went to look at the numbers. We've achieved more on the revenue growth. We have reached INR 700 crore in Q1, and within that, we already mentioned the number, but we feel is higher than the data, which we are there. The value growth, obviously, the premium products and BLDC, which now is what we call the rated fans, which have now become mandatory for the manufacturers. Obviously, they are sitting now with the old fans, which were unrated. They were very channels at the end of last financial year, more or less getting sold in the market, and much product have been manufactured by unrated fans. Transitioning that particular market to more energy efficient, but somewhat more expensive than the official is now underway. I think lead to a certain level of demand as a replacement demand for the unrated fans, because sooner or later, even the old might become a challenge for the customers. More importantly, maintaining one aspect of the challenge. More importantly, if you have more energy efficient fans and as the entire world looks for greener products, we would expect to push to what you call the greener fans, or any, any greener electric products. That's a good, I would say, engine to have you back. Those are, let's say, BLDC drive the R one and the market is going to be consulted. Direct to market distribution that we went into have increased. It is a growth stage. The growth in Q1 over last year came together is more than 100%, which is encouraging and much, much encouraging. When we are actually in the market ourselves, our understanding of the market dynamics at the ground level actually improves, and that enables us to be further to soften markets and sharpen our strategy. That's become again, not just the growth, but also much better understanding the ground very dynamic, which market distributors obviously become filters and coming. Even if six states are directly, that those states give us enough insights to apply to any other states that the market distributors are there, and they're doing a good job. Our very sharp initiative again, into markets in South India, where we had a much lower market share compared to our market of North and East. That also is working out in South also is very, very encouraging. In the Lighting and Switchgear Division, the growth looks a little better compared to what we were used to get over the trend, and the sales are INR 91 crore. The within 19, the fact of the matter is the B2C has been rather flat, and the B2B sales have been more. The B2B, we've had nearly 30% growth compared to last year. We are making some compared to the district on, a large proportion of B2C sales to not losing B2C market share at all, but also build a very strong portfolio of B2B business. Towards that, we were increasing lots of project, the project like developing new SKUs, which are actually used exclusively by B2B. Many of them are focused on the B2G business, where the government departments and municipalities and smart cities are our buyers. Clear the product that we also have been working on. The work has been there for more than two years to create a capability within the company as much how to get into that business, because obviously the rhythm of B2B business, which are different from the B2C business, is likely to be different. Not just literally, but also executive developer, because many of those come with the responsibility to actually not just install these systems, but also to run them for a few years. These are new learnings for us, and we are gaining a very good experience that we are getting there. On the appliances side, the cooler and expected weather obviously have impacted the demand for coolers. I think if you see the numbers in the industry, really difficult time for you. The currently, the weather will be much too hot, so I think we saw a stronger than normal demand in the segment. We still managed to get very robust growth in the appliances division, despite the fact that the coolers didn't do well for the industry as much as the industry was expecting them to be in our management. Going forward, while the fans are very largely B2C business, appliances are largely B2C. Lighting growth are unlikely from the B2B business. As I mentioned, 30% growth in the past year. Going forward, I think this is becoming a larger like profession of a lighting business. I'm seeing that very how large the, the employee base is within the marketability. Obviously, all of us will be participating in the employee and the a very modest share of the employee base from the B2B segment and IT business. Even the other market for this B2B business, B2B business, as I mentioned, the teams are there now, we sharpen our actually to, to give an to that business. The wires for the business, which we started very recently, we obviously have started to, to learn and grow rather than, you know, value to every market. We have to take a very few markets to get our feet. The initial ordering providers in the next space is very, very incredible, and people are not just appreciating our product quality, but now that we have a pretty basket of food, who buy not just lights from us, from us, switches from us, and we add also wires. This includes the businesses. The whole business house can be done using the basket of products being offered by variant in the ship now. That was a big strategy behind getting the wire too, and it seems to be turning out well in the few states where we launched the product. As I mentioned, I draw a huge amount of business from e-commerce, and modern trade has actually grown by 58%. year-over-year, not yet year-over-year, it may have been installed base, but even Q1 three, there was maybe a 50% growth in our e-commerce and modern business. Again, and these are just conditioning numbers, because we believe our growth in this segment, e-commerce and modern trade, has a very, very large potential to grow very quickly, and all our efforts are being deployed there to gain more penetration and more share of the market, which we believe as much like and as much of being prepared to address and which our current team is very. On the product lines, other areas, we have obviously last five more BLDC model only online, but we also have other more color variations online gained by the consumer insights in our higher models. As you know, the best advantage of e-commerce is that you actually get a lot of data, which gives us a much better idea what the consumer gets. Unlike the general trade, where we get information from the retailers right into national decide on what we get to hear is where version retreat. In e-commerce, the version retreat is different. We must design our even BLDC plan in a way where we are able to appeal to the what I call the needs of the customer. We also on the general market and general trade, actually, you know, obviously the BLDC range through adding new models, even licensing our eight new SKUs. We launched on the, in retail, six new SKUs, I mean, launches that we've been doing. We also had a good growth this year in Q1 over last year, Q1 in, in scope over the previous time. Besides that, we found that our key markets, where we've been a pretty strong player for many years, which is, which is Sudan, and that includes Ghana, and that includes Sri Lanka. Some of these markets actually haven't been affected in the recent past, but the size back in this quarter, we were 38% of exports growth, are just coming out from better and better, even for our international customers. The margin improvement, as I said, the gross margin and contribution margin improvement has been 290 basis points, which gives us the cash flows and gives us the, I would say, very well to keep investing in the initiatives that we have taken up. Those initiatives as of now are still consuming cash, and that's why we see a lot of overhead, the fixed costs being higher, sharply over the previous quarters. This is a conscious decision as we move forward with strategic initiatives, there is a period of investment that we are going through. The first level of success that we need to come out of that is obviously higher value and higher contribution margins, which we are beginning to see, and we, we have the line of credit available for us to be continuously some of the investments that we are still in the process of making and continuing, whether it's in branding, whether it's in market penetration, whether it's into plants, whether it's into building the overall organization competence, bringing in more seasoned customers, more, I would say, people who are in line with the new strategy in our company, and that, that is still going on. We have taken up a lot of additional contribution margin that is generated, and that's why what we don't get to see is a proportionate increase at the bottom line level. Please understand that those investments are necessary if we have to keep chasing the growth, which, if one just able to get a very high level of growth. We, we believe that given the... One, our position in the marketplace, and, secondly, the growth in the overall market, we believe a pretty large potential, and if we invest in for, for little, little while, the growth position that we have in terms of, peaks of charging somewhere or exploration and building the other within the sooner than, otherwise it happened. Actually, in a way, the long and short of where we are, if you are interested in knowing, you know, where some of these thoughts will, will be, obviously, almost need to be to the organization. Our consumer insight function has become our guiding light. Our direct-to-market conflicts is giving us a granular data, as I mentioned, and community. Our green team of young and bright product and category managers, which are a different quality altogether. They are preparing us all the time to meet the growing consumer expectations, and that's winning what I call the hearts and minds of our customers. We are relooking at our logistics as I mentioned, and supply chain to make them more responsive and cost-effective. Our mark-on team is preparing engaging communication initiatives to communicate our value proposition more sharply and differentiate us from in the marketplace in a very short period of time. We do have a very energized and highly capable team to realize the ambitious goals of the company. With a commitment towards being sustainable, profitable, and growing business, we continue with our investment. We seek your support and your understanding to be able to continue to have these investments, meaning that we get more revenue, more contribution margin for a while, invest it back into the business while I'm taking the next bottom line, thereby delaying the achievement of our expectations. The areas which have become, which have become much stronger in recent past include government, include organized model retailer, we mentioned our e-commerce capability, our trade working function. Obviously we are creating the base for wires, which will really take some time before they become successful, but obviously the box coming up, so that should go. All these things have obviously, you know, when you send them, take some cost. We are, as I said, we are focusing on the people cost in our company. We are trying to build an organization, which sustains our growth ambitions, even faster than what we have actually done. The other critical update from my side would be our new state draft in Hyderabad is ready to commission. We are awaiting the arrival of a chief technician from our current vendor of the automated line. We are building a completely automated line. Building an automated line not just needs to be assembled there, but they also need to be programmed by the technician of the vendor line. We are working on getting the visa to come in. They have delayed a little bit, but we are hoping of getting the visas in the next few weeks after the technician will come and help the commission with that time. That new base, already working with Miraj and already, I think it's great that I was talking to him before she did. All of that investment has been funded by our internal team. We haven't had to raise any debt to fund our growth and plans. That obviously has happened not just from the from the cash flow, which otherwise come in, but also from the working capital, which as you might notice, so the working capital days have been reduced to the at the end of last year. Sorry, during last year, 25 days, and this year we got them by 13 days. Working capital being reduced to us also helps us not just financially for other investment and other investments. With all that into the net cash position, end of June, INR 156 crore, which obviously speaks to how we manage the entire generation of cash and I would say conserving and working capital and every other opportunity to have a healthy cash position even after funding the Hyderabad project, which by the end of June, we are coming to increase because obviously every month that we spend, it is giving more money. With those words, I would say, I have tried to give you a fair picture of where the business is and where it's going to be but it's also remain under way to the questions and comments. Thank you. Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and two. I refer to use hand for 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 from Bhargav Buddhadev from Kotak Mutual Fund. Please go ahead. Yeah, good afternoon, team, and congratulations on a good set of numbers, and congrats to Mr. Khetrapal for being appointed as the MD & CEO. My first question is, sir, what is the roadmap going ahead? Are we sort of looking at some professionals to join in, or you would be sort of continuing this for medium time period? Okay. just to clarify, are you calling me a professional? I'm, I'm a little surprised with that. I'm a professional myself. No, no, sir, you are very professional. No, what I really think is, are we looking for some professionals? The first part, being MD & CEO, definitely, as should be, all of us we know that this is not a permanent, not an individual, arrangement. That's why the announcement has been made for one year, if you know. I'm sure you've seen that the announcement is made. Yes, yes. After the announcement, one year basically means that even if you, start looking, because it will, it might happen that the interview was rather sudden, and none of us were not expecting it, not to get it. Correct. Doing steady guidelines in within three months, you have to build a question, how practically would that have been possible? Is something that, that's not come to us. Sure. The practical side of the matter is that at the induction of the level of the engagement, so to first meet many months after that, sometime goes into analyzing, also communicating the deals, and then people always agree whether we have rather long notice period, right? Right. So that's why the, the appointment of one year, basically, is a very practical way of saying it might be possible here to get the professional, but in no way does it change the decision of permanent or last. First of all, for the company, even for a human being to, to manage these things, you know, practically, it's, it's, it's very demanding. Otherwise, when have you seen an announcement from a company saying nine, which has been the company for one year? Has that ever happened before? Right. Right, right. Fair enough. Fair enough. Just to get it, very clear. I think within 1 year's time, we should get some updates on this, right? You will have the new ambition. Right. I won't be there. Secondly, sir, if I look at your employee cost on a YoY and a sequential basis, there has been a significant increase of almost 50%. In your opening remarks, you made a view to the fact that you've recruited people on the wire business. But, I just want you to have more clarifications on this point, because it's almost an INR 20+ crore increase in the employee cost. What has been the reason for this? Actually, what you see as the, as the problem, right? Is the QoQ. I mean, YoY, there are obviously a reason. The QoQ, there is a slight impact of what they call, when you have a peak at this level and induction at this level, there, there is processes, as you know. Increasing the, is just a few that we undertake to, to find a company like, one of the wider, the most utmost, firm in the first business that for us to do the research. There is some cost this coming, and certain specific project and also doing some adjustments on account of the-- actually, last year's, the same quarter number was partly impacted by the fact that there were over-provision for revision pay that was done with that in the Q1 of last year. These were recently people cost of Q1 last year, which was artificially low compared to what the actual cost was. This year we had a company realization of saying that we are, we grant half of the provision. That was basically even this year. This year, a large amount of impact is taken away, and obviously, that's not a running thing that we would have. This year is going to be a lot more, I would say, something, even when I'm saying that we will incur more costs, perhaps, they, they would more be in the region of including the induction that we planned out and so forth. We're more in the region of INR 60 crore project for Y2. They look like a little bit of a burden until they bring us the operating leverage, it will soak up these additional costs. Right? I think the explanation from some cost of this one induction, some cost which was a provisioning impact with and even probably become the any provision under the table that you know. What you are referring to that the annualize that number could be closer to INR 250- odd crore? Yes. Yes, yes. Apply your request to finish it. If you want to cancel this request, please press star zero again. Hello? Yes. Yeah, sorry. I'm confirming that. I mean, might be somewhat possibly repeat this year. We can take together number that we should. Okay. Okay, I understand. Yeah. Yeah. Yeah, you are saying something. Even last year, we were affecting this is the other INR 200 crore. Right. Right. Right. Against the 157. Okay. Okay, I understand. Given that you've seen a very strong gross margin improvement on a YoY and a sequential basis, is it fair to say that the pricing environment and strategic trends have now stabilized, and one need not worry about sort of price rationality going forward? The actually the market prices are in the product range. Our strategy is actually to bring the strategic products which are bringing a clear premium. That's not one part of the reason. I think the rating trends are more expensive than the machine and the old trends that were there were on rating. That gives a frequency W again, right? The third case is happening of the material expenses in materials and things like that, right? Obviously, multiple factors which have gone into bringing up the higher margins. Given the actually that we pushed to excluding product, gross margin also lower, difficult than what we are seeing in the direct market space. The logistics cost and all at the, at the gross margin level, we see a little stretch there, right? Because those costs are being... Otherwise, these are a bit of cost, of cost of, you know, when we're giving discounts to our master distributor, right? The channels. Becoming more broad, this can again become the cost way down below the line. It's a mix of many things. Fair to say is what I basically want to, because including, I think, as of now, if you look at it, actually, huge hike that we had last year, everybody as of now believes that metal sources should not see anything like that and anything they should keep certain, right? Especially till the time the Chinese economy looks as strong as it is today. Right. Right. Great, sir. Thank you so much for the request. Thank you. Thank you very much. Thank you. Next question is on the line of Natasha Jain from Nirmal Bang. Please go ahead. Hello, sir, and thank you for the detailed comments. It's quite helpful. Most of our questions were answered there. I believe I have a question on the fan segment. This quarter was ideally the first actually quarter for the LED fans. Can you just give more color as to what kind of which fans are more in demand with the consumers? In terms of your premium decorative and BLDC fans, what really you can unlock? The, the two initiatives that I took out from directly market, where we do not have the fear of the damage related to the product. Channels are more scared about carrying the product because they are, okay, they are expensive product in itself. One is that, you know, directly in the market, we are willing to take that risk with this energy, and inevitably you'll find a premium product more than the consumer. The channels are the blocking factor in every product, right? Somebody will be telling you some money for development. When you take a lot of the customer, the customer, they are not willing to look at higher price, provided it is damage, provided it's mixed with. That helps you in, in realizing a better price. Secondly, the shift that we made in modern trade and e-commerce, again, we're choosing the exclusives that we want to invest in. Okay? Be in the, in the segment where we want to be more successful, more known for. By, by doing design, as I mentioned even earlier, the AC fans have a higher cost of production, so they will get a higher price. Sure. Okay. Well, you had mentioned in your presentation that, the contribution to premium segment was approximately 32%. Can you check if the number, for the last year was it? I'll have to get back to you because I do not have that information at the right time. All right. So my second question is on the recent strategy. Definitely it's shown phenomenal growth there. I want to know if we done with all the states, and if we are going to, you know, continue this strategy to any other state? There are a few other states which seem to be underperforming right now. Our first intent will be to get master retailer marketplace. We follow the strategies that we have followed and they're coming the way. Most of them, having seen how we've taken 1,006, obviously want to retain their business. The first, like the moment we see a state underperforming, and there are a few underperforming states today, first attempt would be to work with the master distributor and make them more effective in the marketplace. Wherever it doesn't work out, we are not shy of taking the decision that we are. We, we are taking a decision on state by state basis, because it's not policy decision at all. We prefer that distribution over master distributor, because when you do, what you have to also remember is that there is a certain commission cost which costs are very different. It's not a policy that will not, you know, just all master distributors, can't be the policy, which will actually work. Trying to use best both the world by having enough dealers to build directly market and thereby coming to our distribution. This is how we want them to work. Got it. My final question is, you've mentioned that, you know, your e-commerce channel and modern trade did very well. Now if you look back against the working capital, the working capital has sharply increased. That's not a good signal for any first quarter over the previous years. How do I relate it? You know, at one point, your e-commerce business is growing, at what point the working capital is actually increasing. Let me, let me... Because as you know, in every country, the working capital management is a portfolio which is actually driven and owned by the CFO. My CFO is online. Can I ask him to answer this question? Arjun? Yes. Hi, Natasha. Basically, the working capital reduction that we have done is an overall business from last year June levels to this year June levels. Let me just check your question, right. Are you talking about the e-commerce channel, channel in particular? I, I could not get your- Sir, my question is, first of all, on a very broader basis, that what has led to the sharp increase in your working capital base? Secondly, I was just trying to relate, you know, if the e-commerce business increases, ideally, you have to give more, you know, more days to your debtors to pay off. Okay, let me come back. Continuing my previous answer. This reduction is an overall reduction from 25 to 17 days, and this is a function, mainly because inventory management, we have done that our inventories have reduced. That is the biggest factor. Of course, the cash management with receivables, collections, as well as in terms of debtors. Those are the three outcomes, mainly driven by inventory. The 2nd thing which you have talked about is on e-commerce. E-commerce, because today, still a very low share of the business. While basically, your observation is absolutely right, the thing is that, while we are growing at a very, very fast rate, and that is our intent to make it the share to, the share of business at decent levels, more than double digits. Today we are still at a mid-single digit level. Therefore, share of business is not such that it moves the needle on an overall company's focus to serve the working capital. One more thing I would like to add with our new e-commerce strategy that we are putting it in, we are increasingly, we increasingly getting into cash collection in advance of customer delivery or other modes of faster cash collection from our e-commerce partners, which is also helping to improve the working capital in our e-commerce. Sir, on a annualized basis, what can we expect in terms of another number here? Listen, Natasha, there are clues in the three quarters. As of today, it would be difficult to give you a number per se, but our efforts are continuously on, as you would have seen from our previous quarter, results of we have been continuously pushing in terms of extracting more of the working capital and generating cash there on. Honestly, it depends on the quarterly schemes, because, previous business but yes, our efforts would be on, on a YoY basis, to restrain and, keep the Understood, sir. Thank you. If I can correct you, Krishan Iran, actually could be that last year, our Q1, we were less than that entry. This year, we had a much larger growth on the market, which also helped in correct offloading some of the working capital, which we were carrying it last year at the end of the financial year. That we were still. On a YoY basis. Yes, I agree with that. Last year, I know we had a much better Q1. That obviously needs to be because we are ready for a much, much bigger Q1 than we had in the previous year. Yes, that is also- Including other players and other things, right? Yes. That is the reason that I was teaching to that collection that goes. I know. Unfortunately for us, despite all that, we had good growth on the Q3 entry. Thank you. We'll take the next question. I'd like to remind the participants to limit their questions to two per participant if trying to commit, you may try to keep any follow-ups. The next question is from line of Aditya Bhartia from Investec. Please go ahead. Hi, good evening sir. We have seen some big changes in top rotation and so on. Basically, whenever a new CEO comes, we see some changes in strategy like this. That one shift to understand how has the management strategy changed in the last one month. Anything that was being done earlier, which you think wasn't correct or needs a correct direction is required? Let me just sort of in a way, change it. I think that is coming up with this company. Mm. Yeah. It was not a big change, it was a planned succession plan, but he on the induction of the new MD was very much planned for. It was part of the session plan. The session somehow didn't work out as well as it was expected, and nobody, like I said, these are the things that happen to everybody in today. I would say one particular point, I wouldn't say there were two particular things, right? The other part of the that we just need to remember is that businesses are always run by a large team of people. The CEO, the MD can come in and impact what's ongoing, but irrespective of how great the CEO is, it's possible to find within C1 and understand the business, revise new strategy, start implementing, and it happens. It's a very simplistic reason that, in a few months time, any CEO can either be magic or create haven't happened, because it is the organization of far more robust as organization today. And as a result, the strategy of the company, was not the sole creation of Rakesh Khanna or, the short time that he was in the company. It, it was a process which is deployed all the time, and the current strategy, is in the last-- it has been continuing for a long time. Strategies don't go off track just because somebody has come in and said, "This is the organization I want to do." The second is the fact that the initiatives that I, I spelled out at the beginning of my presentation today, all of them have been planned over a period of time, and they were under implementation, and now they're beginning to show results. Let me assure you, there is no knee-jerk reaction which would even allow the possibility. No, because within a very short time, new changes are being made here. It is happening that we have taken a very studied, robust process. It's not, not something you can do in any, any division at all. I think it's an organization we are talking to. We are not talking to one individual about it. Sure, sure. That's helpful. My second question is on the swap team that the company is running. Just wanted to understand how many personnel that have been allocated to swap option until now, where does it land at what point? They see that have been made available in actually scheduled as a first to them. If not, then I'll, I'll, I'll get it to you. I'm not having the exact number of individuals that are against this. I didn't think to come to the question. It's already there because we are bound to do that. Sure, sure. Thank you. Thank you. I remind you, participants, please press star and one to ask a question. The next question is from the line of Rahul Agarwal from InCred Capital. Please go ahead. Hi, good evening, thank you for the opportunity. Just a few questions, you know, there are more follow-ups to earlier questions. On the working capital side, you know, the question essentially is to Karalji. Karalji, basically you explained that, you know, all the line items inventory before were down, creditors have increased, is what my sense is, hence the overall working capital is down completely. Can you elaborate a bit that how did you manage to do this? Like, on the inventory side, you know, are you trying to streamline raw material or inventory? Is the inventory better at the warehousing or at the factory? As far as the debtors are concerned, you know, maybe because our share of B2C, you know, direct market is increasing, hence this is getting reflected among creditors. Is there any renegotiation with the vendors? That's my first question. Okay, Rahul, just to start from last. NCC was the major driver of the working capital reduction, and that has two parts to it, one of which, we had already pointed out and emphasized. Last year there is a big effect because of the transition of the season and the lack of demand, which caused the inventory to record last year's number one. And compared to that, we've had a good growth this year, and therefore, there was steady movement in stocks, whatever which we have been able to do. And second factor is that within that, we have been able to plan better with more focused products, and therefore it's able to move out the stocks, reduce our overall inventory, which is a year-on-year effect. As you can see, clearly the collection management that has improved, partly by general comments and partly by our own internal collection practices, collection of overdue debt to remember the B2B space. That's really well. People is also the management of vendors. Compared to last year, the collection management improved. The credit periods also, although was negotiated during those tenures. It's a function of all of that. It'll be not possible to thank the details of each and every element like that, but this is a function of all of these three areas. If it continues like this, going forward, we should assume that improvement of net working capital for the company is similar on a year-on-year basis? Rahul, I already mentioned that there are probably issues that you're aware of in our business. Those probably issues will remain, we will always attempt to have year-on-year improvement in working capital. Where possible, probably issues will obviously impact the level of the working capital. Thank you. The second question was essentially on what you explained on the staff cost and the other expenses. If I got it right, the staff was essentially, you know, again, there was, you know, the basic cost there, as well as there was some hiring which happened. Secondly, you explained about, you know, some consulting costs which got better as expenses, which are in Present on India and hence the cost will increase. On a clear basis, they should, you know, come back to, like, 25% increase year on year. Is that the understanding, sir? What I said was a 20% on the mentor cost, into cost, and consulting cost is not being reduced, consulting cost goes into other expenses. I was just saying why the other 4% is higher. There is a consulting working and that consulting cost will be booked, and it will still be there for the coming, I think two to three quarters when the entire pilot ends. The improvement that you're seeing in our strategy, including in our working capital, is an outcome of those pilot practices which are actually being driven along with our team, probably on site team as well. Those are not included in the people cost. We want to have the opportunity. I made two statements. One, on people cost, where as I mentioned, we had last year close to INR 300 crore, which we are thinking should be like INR 250 crore approximation. Second cost are very costly, just as during the period of engagement. Just one engagement deliver the benefits that we brought in, there are expected to continue for many years because the processes have been streamlined. I just want to clarify that not the mentor cost, not the consulting cost. Yeah, I get it. You know, basically, the functioning of the cost, I understand where the benefits are, you know, coming much ahead of time. Just the last question, do you consider working capital property? In the quarter, as we announced today, they normally are contractually confidential. To disclose that in an investor call may not be possible, I'm not very good at that, but, you know, they are just fully informed. Okay, I get it. I'll come back with you. Thank you so much. All the best. Thank you. Thank you. Next question is on the line of Raj Shah from Ambit. Please go ahead. Yeah. Hi, I just wanted to know, for the new capacity that we have worked with that we have commissioned, what will be the additional depreciation hit that will take to the P&L? Consequently, just wanted to know, medium-term margin guidance, for the next 2-3 years. That would be my question. Thanks. On depreciation side, do we, do we have an idea that as of now or do we come back to it? Since the commission, so maybe we can even come back to that next week. It's a little bit right now. Look, actually, Raj Shah, we will come back to you on that because when we come up our commissioning plans, we will be able to get a better picture about the acquisition. But the overall next year sales, if you have an idea, the overall next year, I think in the region of 180 years. Is that right? Yes, 100 years. Depending on which specific the precision policy, which will determine category results, right? Maybe these numbers would still get proven, but if you know the overall effects, if you want to build your own model, you can try and build. This is the process that is coming here. As far as margins are concerned, we intend to that the available new plant will actually give us the completely available lines, less contribution, which should actually help us not only sustain the contribution that we have taken up, but also make them increase by, I'm talking only to one plant now, don't visualize it all over the company, because this will apply to only products which get made in Hyderabad. That will actually 600 basis points more gain from being produced by us. Okay, thank you a lot. Thank you. The next question is from the line of Rahul Deshwani from ICICI. Please go ahead. Good evening, gentlemen. I have two questions. The first one is, which is a solution. If you can, have spent how many of your- We cannot guarantee it will come. Sorry. I want to understand by the time you continue this one. Sure. Thank you. You know, also in terms of you sold the land parcel there, for cultural. What if land parcel together is actually on the part of the article or what is it? I, I understand the, your confusion. Initially, we bought a land parcel there. Later on, we actually came across a very good opportunity where the government was giving us much better quality of land and a better opportunity, which is also more amenable to our needs. We picked up that land from the government, which is already in the bit, which is included in the cost that we are talking about. The earlier bought land, which we had, which became redundant, and that we have sold in the month of July. It's not included in the last quarter results, that is definitely between this, because the land got sold in July. There are 2 different issues of land, and most of the 2 is rather good because we have a return of more than 100x on the land that we bought and sold within a period of 3 years. Thanks for clarifying. Yes. That's correct. The second question I have got is, so more on the long-term roadmap, both for revenue and contribution. Sometime when you are in the market, you will be talking about your intention to be a $1 billion revenue. I want to understand how you think that you intend to see the company that kind of revenue, the kind of timeline that you have, which are the areas where you think significant growth will come from. More clarity on a roadmap for this revenue aspiration that you want. Well, frankly, I, I hate to tell up all strategy on an industry call, because as much as you guys, there is even competition. The various levers that we've spoken about, there would be increased product features which are innovative, which are differentiated from others. One, getting a lot offer value proposition, right, and getting our people, improving our distribution channel to sell them directly to consumer, to convince them, of the value for money in our product rather than just in their exchange. Bringing in more economy, more, product lines. Quite frankly, we believe that in the space level, size and investment in terms of the number of new products we can add and the higher price we can get from, the some of the products. I remember when we launched previously, 6 years ago, and we want to sell at high, hardly anybody was a transformation buy your product. We created a better market from it, and it is obviously new, new product lines and new product should be brought in. We were actually, your product is big, and we are able to convince the customer about the value proposition, which is likely as a company beyond the 7 electric vehicles. Thank much about it. I think, you know, what would be helpful is, you know, given that from we've seen the revenue, pretty much stagnant for the last 2 years, you know, from between INR 2,000 crore to INR 2,500 crore or 4. Can you give us some kind of timeline that you have in your mind when you are talking about that kind of revenue? That will be helpful. Thank you. We say $1 billion is between 2,500, right? So we're talking about the 3x. If I told you that within 3 years, it can be achieved inside, right? My own sense is, given the number of years we can play with, to get that level in about 5-6 years would be a fair target. That's what we like to call it, which is... Sure. Thank you very much, and appreciate. Thank you. Thank you so much. Thank you. Ladies and gentlemen, that will be our last question for today. I now hand the conference back to the management for their personal remarks. Thank you. Over to you. Thank you very much. In terms of concluding remarks, I, I thank you. Thanking all of you for finding time for us. We appreciate to hear what we're trying to do and asking some very penetrating and very relevant questions. Thank you all for that. Some of your questions, obviously, give us more will for us to continue our thinking, because obviously that invitation from the, from the investor side, that's what the investor will be concerned with, that we're trying to cater to the consumer. What we do in the next few months becomes more clear in the questions that you put up. I have to help you and, and help you. Some of the questions you're asking, I do not want to answer. It's please understand, due to confidentiality and way to discuss with you what we require. Just be a little understanding of that. I don't see questions which we may want to answer. Just be a little understanding. At the end of the day, in a competitive market, you have to keep some of your strategies up your sleeve, and even when you declare them, continue to provide them. Please understand this. Again, thank you all very much. You've been very patient, and your questions are very good, really good. Thank you. Thank you, everybody. Thank you very much. Thank you, everybody. Thank you. Thank you. Bye-bye. Ladies and gentlemen, on behalf of platform, that concludes this conference. Thank you for joining us. You may now disconnect your lines.