Ladies and gentlemen, good day, and welcome to the Orient Electric Limited Q2 FY 2024 earnings call, hosted by ICICI Securities. As a reminder, all participants' lines will be in listen-only mode, and there will be an opportunity to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Aniruddha Joshi from ICICI Securities. Thank you, and over to you, sir. Yeah, thanks, Kayo. On behalf of ICICI Securities, we welcome you all to Q2 FY 2024 results conference call of Orient Electric. We have with us today senior management, represented by Mr. Desh Deepak Khetrapal, Vice Chairman and Managing Director, and Mr. Saibal Sengupta, Chief Financial Officer. Initially, I will request the management to indicate about the quarterly performance as well as half-yearly performance, and then we will open the floor for question and answer session. Thanks, and over to you, sir. Thank you. Thank you very much. Good afternoon, everyone, and a very warm welcome to this earnings call of Orient Electric, and thanks for finding time to join us. I know it's a busy day, and I've had to rush this earnings call today very quickly after our results were declared, and largely to do with the fact that I have some travel commitments starting tomorrow, and if I didn't do that today, we'll have to wait till post-Diwali, and I knew that would be too late. So here we are. So, I'm quite sure that many of you or most of you would have already had the, you know, first look on our Q2 numbers that we already pushed, published, and also a brief presentation of highlights which we have circulated to all of you, so I'm sure it's with you. But even then, for the benefit of some who may not have had the opportunity to go through that, here we are. Well, the fact is that when we did our Q1 earnings call, there were certain directions that at least I had spoken about in explicit terms as to where we think we are, because at that time, we were just recovering from a bit of a hiccup that we went through. And I, I had mentioned that the key priorities for us will be to stabilize the business, stabilize the organization, remove undesirable anxieties and fears and worries of everyone, people within the company and outside. And that was the topmost priority. But at the same time, I had also mentioned very clearly that we will keep working on the priorities of keep building the volume growth and sales growth in the marketplace, and we'll also keep improving on the gross contribution margins that we have in our each of our businesses, and that also sought some indulgence from our investors, whether in this call, in the quarterly call or whether even when I met many of the large investors one-on-one. I was very clearly outlining the strategy that as of now, the organization is being rebuilt, and we will be making some investments in the organization, which will bring benefits over a period of time, but will cost us money right now. And these are the kind of things that get debited to P&L instead of being capitalized, but they are more in the nature of capability building. But by accounting standard, they, they hit the P&L. So I think on, on most of those things which I mentioned, I think we, we have the performance of Q2, which actually brings out exactly where we have been. I did mention that we, you know, we will, we'll go for strong growth. The numbers very clearly indicate that, in the quarter that we are reporting today, our overall growth looks 11% in top line, out of which the fans growth itself is close to 25%. Including fan, the entire ECD is a little muted compared to fans, but it is at 17%, which includes obviously the appliance sales business. In lighting on year-on-year basis, we have a very small growth, which again, we all of us are aware that this is what was expected. In terms of the lighting and switchgear and wires, that's the segment that we report together beyond ECD. Thankfully, on Q-on-Q basis, there is, there's about 7% growth there, which I think we take some heart from that; we are doing the right thing. So besides, like I said, the robust growth in the two segments, the other notable features are the progress that we are making on what we call our strategic levers. And strategic levers include, for example, revamping our go-to-market structure that we had. So in go-to direct-to-market, when we changed in many states, we did have a hiccup, and everybody was anxious whether we'll be able to manage that. These are new things in our company. Orient Electric normally has worked master distributors, but I'm glad to report that wherever we've gone in this quarter, on top of the previous preceding quarter also, we've actually doubled our revenues, in the what we call DTM, direct to market, states for us. And, not only we have doubled the revenues, it also has given us better opportunity to be able to sell, upsell our products and improve our product mix, so to speak. Because the super premium fans, the Aero Series, or... The idea is to keep promoting them, and we are finding that when we are operating directly in a market, it's so much easier for us to convince the retailers to stock the product, product and display it, compared to what we were finding in the same states using our traditional master distributors, the structure. So that's certainly we are very, very happy about. We had mentioned that, the e-commerce and in terms of modern retail outlets, we were behind where we should have been, and we put very focused resources on that. And within a fairly short period, I would say that the new resources being deployed, even last quarter, we had actually reported more than 50% growth in this segment or this route to the market. In this Q2, again, we have close to 50%, 48% or thereabout growth in our e-commerce modern retail route to market. In terms of, I would say, margin improvements, they have sort of. I'm talking of gross contributions as the entire industry reports. At the company level, we have reported about 400 basis points improvement over the same quarter last year. Although there is a small dip with the preceding quarter, but I think that's more to do with, again, the mix of businesses that we have from different segments coming in. Overall, if you see over last year, every single segment of ours seems to have reported better gross contributions, and that sort of makes us happy. We're going to be continuing our thrust on these strategic levers as we had mentioned. When we say continue, and we remain completely focused on what I would call today diligent execution, rather than trying to reinvent the wheel at this stage, where we are still sort of in a way wanting to redetermine where we are and where the markets are. But we do realize that our diligent execution of the agreed priorities that we've picked up in terms of direct to market, in terms of Gujarat, South, in terms of improving the product mix with the premium range, and deliberately taking some steps not to pursue growth, even if we have to give some volumes in what we call the economy segment of fans. We have chosen to do that, and that obviously takes away some volumes from the numbers. But overall, I think we are happy that we managed to grow with the right product mix, giving us the higher gross contributions, contribution margins. And we plan to keep doing that. In terms of e-commerce, the strategy is being further strengthened by our recent launch of what we call our own website, and where we will be doing direct e-commerce. Now, the benefit of this is, while it's difficult to service and grow as compared to the other, the platforms where we've been on large platforms for e-commerce, which everybody uses. Our own website actually brings us the benefit of a lot more, I would say, intimacy with the consumer, with the actual user of our products, and the feedback and the pace and the way the browsing happens. It gives us very rich data to see the people who are visiting our site, how are they viewing our products, and what basis on which they're making the choices. What are the features they are preferring to have? What are the price points they are preferring to buy our products at? Which will actually enable us a lot more in the coming quarters as the database gets richer and richer by more people visiting our site. To fine-tune our offerings based on the preferences of every customer segment. We've seen, you know, when you have full access to the data about the consumers' choices being made online, they're a lot more visible to the website, and that definitely helps in terms of creating solutions which will win over more customers as we make progress based on the insights gained from there. In the DTM states, as all of you know, six states we've already transitioned, and we are seeing very good traction there. In the current quarter, we've taken a decision, and we are moving Gujarat market also from master distributor to direct to market. It may take a couple of months to us to sort of really, really get back the volumes. But I think the opportunity that Gujarat represents for us, and also I would say the constraints that we were facing with our current go-to-market structure there, we've made the choice. We are moving on, and then very shortly, I think we'll also start seeing the benefits in one more market, which will bring more volumes of the right kind of products that we prefer to sell to the market. The distribution penetration that we are currently seeking today is obviously bringing in its own benefits, higher volumes of BLDC fans, higher volume of premium fans. In the lighting business, the professional luminaires, the B2B in lighting was a chosen area that we wanted to grow faster in. All of these continue to be our thrust area because they are actually showing us that they have the promise that we had seen in them, even before we chose to pursue these areas. The sustainable long-term build-up of our business, I think, would keep using these pillars that have been identified and on we are focusing a lot more. Two things which I would say in this quarter, we realized that there is room for us to truly transform the quality of our product and the quality of service that we are providing. Because I see there is room for improvement, and our manufacturing functions and our quality functions have been reoriented to look for quality in a very different perspective compared to how we've looked at traditionally. It's not so much trying to repair it, it's basically to transform it, to make these things, very clear. To my mind, I think, quality obviously is a hygiene, and, that we need to keep doing that. If we are able to convince our consumers or users that this product actually has a quality edge over competition. So I'm seeking to get components, get inputs, get technology, and get the design from our R&D teams to start creating fans which not only are competitive, but they are superior in every which way. I think we remain conscious of the fact that, from, let's say, from the time we launched our Aero Series, which truly impacted the entire, I would say, landscape of the fans industry, we've not been able to introduce any, I would say, groundbreaking product on similar lines. So that's been a bit of a, let's say, a realization that we will want to change. But, as of now, what we're trying to do in terms of R&D and our, I would say, improvement in the product, is that we were actually beginning to notice that, in some of the markets, we had gaps in the right product features at the right price points, and the competition had been winning in those areas. Having closely monitored the market, having identified, so bulk of our thrust is going into making the right product at the right price point available to the consumers, without working against our strategy of choosing the right product mix in terms of more premium. So within, let's say, the premium range or within BLDC range, there are, I would say, positions in the market on which competition was working with the business because we did not position a product to compete in that segment. So we are beginning to fill those gaps in our portfolio, and they obviously are going to give us significant benefits. On service, my view is that we need to transform service, and the current model of service that we provide, to me, at least personally, is not satisfactory enough. We have brought in a very senior professional to head our service transformation. My view is that for Orient Electric, service will become a strategic differentiator, and that's what we will seek and build. It will obviously it doesn't help happen overnight. But I'm delighted to say that in the last three months itself, the initial feedback that I've picked up on our surveys, I'm already seeing a huge turnaround in the kind of feedback that I'm picking up now, on the way calls are being closed, on the way that consumers are beginning to see the change in the response time and how quickly we resolve the problems and things like that. So, to me, I think, over a period of maybe a year or two, we will very clearly work towards making service our, as I said, a strategic differentiator. Those are the additions to the earlier, talked about, strategic levers that we spoke of. So on the basis of all that, as I, as I said, the, the numbers are in front of you. I don't want to keep going through the numbers again, but it's, it's been a fairly, I would say, satisfactory quarter for us at, Orient Electric, in terms of the growth that we have and the margin improvement. I come back to the issue of why profitability will continue to be a little bit of a area that we want to improve on, but we may take a couple of more quarters because some of the investments which are critical to building a robust, resilient, long-term organization, they're needing some investments before they become fully productive. So, I know there would be obviously a little bit of lack of patience on that, and, you know, it's all okay, but we also want to see the improvement in the EBITDA and with the percentage and PBT, PAT, everything. My belief is that we are on the right track. As long as we can grow the market and keep improving our gross contributions, these investments that we are making today will enable us to get to an operating leverage, which will absorb these costs a lot better. Because that means that as we grow our business, these costs will not go up any further. In fact, if anything, as I mentioned last time also, significant costs like the McKinsey cost that I had mentioned that we are incurring and we will continue to incur for a few more quarters. Once those disappear, obviously all of that drops directly in the bottom line with the benefits, I would say, growing in a much bigger proportion as we practice them more and as we keep getting more and more benefits from them. So my apologies to people who wanted to see the improvement in the bottom line level, but I don't think we have deviated from either our strategy or from our promise last quarter, saying we'll give you better growth, we'll give you better gross contribution, but we will need to invest for a while in our systems, processes, people to really convert this company into a what I would say a really robust and resilient organization. On the I would say the various segments, all of us I think are aware, looking at not just the consumer electricals, but on many other sectors, from FMCG to even cement and all. B2C overall has been disappointing in this quarter for most of us across sectors. The good news has been, the, the B2B business, and, in B2B, our focus that we shifted, a while ago, it's been, I would say, paying dividends to us. We continue to, pursue more and book more business in, the professional lighting business, more than, the B2C segment, which is largely lamps and battens. I'm sure many of you would have, seen the campaign that we had launched, the Orient Lights of India, in which we had actually highlighted, lots of, iconic structures across the country, which, sort of showcase the number of large projects that we have done. And that has sort of given us a positioning in the market where, a lot many more such projects are now in the pipeline. We actually have a fairly healthy order book right now on those kind of projects, on facade lighting and professional lighting. And the pipeline for booking more orders is actually growing by the day because we, number one, our work done is already in evidence for other customers to see that, and at the same time, the team that we had created to address this professional B2B market is also has settled on well, and they are gaining in confidence and are winning more and more business as we, as we go forward. So B2B, hopefully, whatever erosion is happening in the B2C segment in terms of value in lighting business, we, we keep making efforts that we continue to improve the overall lighting business through more and more B2B and professional and facade lighting solutions. In terms of our other small businesses that we have added to complete our bundle to the consumer, along with light, which is switchgear and wires, domestic wires, they are small businesses, as we know, because we got in them fairly recently. But both of them are showing strong promise. In fact, last evening itself, I spent about three hours with our team, which we had in Delhi, from all over India for switchgear and switches. But I was picking up their you know, first time for myself, what are they seeing on the consumer response? Where are we getting good response? Where are we struggling with the right response? A very good insights again, that we picked up last night, in our own meeting, and the review is still going on with, the rest of the lighting team. The potential is very good there, but yes, it's taking us a while, but as a percentage growth that we talk about, they look humongous in terms of, pure growth in wires, for example, or even switchgear. But to me, the more important part is that the, not just the consumer, before the consumer, we used to struggle to get our product, being stocked at the retailer level. Unfortunately, in many markets, we are seeing that hesitation is getting over because the consumers are coming back, asking for our switchgear, which, as we keep claiming, is one of the best switchgear and the safest switchgear available for domestic use in India. So we are pushing that, and wires, in any case, we know the kind of, I would say, market it is. But going as a bundle to the consumer, it's adding a lot of value to the consumers buying the buying needs, I would say. In terms of the lighting per se, let's see, as of now, has the lamps what we say a loss of value because of the costs coming down, which have enabled, which in being enabled by the basic technology that has that goes into the lamps. That still remains a bit of a worry because we keep selling more and more volume, but the overall growth does not show up in the value. And like I said, that's a reality which the entire industry has to cope up with. But we will perhaps keep improving that by focusing even more rigorously in B2B business on our switchgear, switches business, and on our wires business. Once again, I would like to clarify that our switchgear and our wires business is focused more on a consumer for domestic use. We are, as of now, not focused on large cables, which is the mainstay of many of the large players in the industry, but we are not competing in that. And as of now, there's no intention to get in there. How on switchgear we see the opportunities? We are beginning to convince more and more of B2B customers. Because many of the B2B customers are actually builders and contractors and influencers who suggest that, and we, by making our technical presentations, we are convincing more and more of the B2B customers with switchgear existing products, which is good news. And similarly, at the same time, we are also finding that the opportunity in the international markets and also the pickup from our partners who, from whom we had actually taken the initial technology from in Europe. They are also beginning to find the cost points and the quality acceptable to take for their own markets overseas. So which is again a benefit which I think over a period of time will grow. What are the other highlights there? In terms of fans, I've talked about in detail, lighting, I've talked about. In appliances, we do know that two of the large categories this year, one, basically coolers, for example, have struggled because of the kind of summers we've had, very early monsoons and, although the heat built up later. But at the later stage, when the heat builds up, even if the consumer is buying the product, basically that just helps liquidation with channel inventories. And the primary suppliers like us do not gain much from there. So that's been a bit of a dampener for us. Water heater segment is showing more and more traction, and we are sort of organizing ourselves to address it a lot better. Recently also, we launched a few new products in the water heater segment, and we want to keep enriching it. We have also noticed a few gaps, and I would say weaknesses, in our offering that we had for other appliances, small appliances, like we said, whether it's the mixer grinder, juicer, you know, stuff like that, including, for example, the items that we sell. Our team has recently been traveling around and trying to identify the right products which we can add to our portfolio to meet the emerging consumer demand a lot better. So that, that's an area which should hold us much better as we go along. In terms of, I don't want to read out many of the names where we did, we have done the facade lighting. It's a too long a list, but, I'm sure if you've not seen it, I'm happy to circulate once again the campaign that we did, in which we've listed lots of buildings that we've lit up. Our cost optimization efforts obviously have been on, and that's where McKinsey has helped in a big way. We have branded this, that product, Project Sanchay, in which, in the current quarter again, not, sorry, not current quarter, the quarter under report, we have had savings of INR 14 crore, which are already built in the P&L. The other anxiety or curiosity, I'm sure, is there in the investors' mind is on where our Hyderabad project stands. Unfortunately, as I mentioned in the last call, there was an issue about getting the foreign technician in to come and commission our automated lines. The progress on that is that we have had our factory site visited and validated by government officials from two different ministries. They have already sent the report back to the consulate in China, and we are in the queue and in the consulate, because obviously, we know dependency of visas in various countries, so our consulates also have some backlog. But to be able to get some help and plead for some help, showing them the evidence, and especially because they've got the reports, as we speak, and part of the reason why I'm doing the call today itself rather than doing it, you know, early next week, is because tomorrow night, I'm leaving for China to go and meet the officials there and to see how quickly we can get those visas processed. If my, let's say, hope, which I'm sort of, will be able to persuade people if that comes through, 60-75 days over- is our estimated time to commission the Hyderabad project. Which typically would also mean that if we start creating, after, let's say, commissioning the project, we start ramping up volumes and get the... Although there, there are lot of tie-ups already being done for the outsourced components, with vendors and all. But even then, we know that when we commission everything to ramp up takes a little bit of while. So in this year, the benefits that we were expecting from our Hyderabad project in terms of providing us, better TPW fans, hopefully some savings on the overall cost of the product and there, giving us better margins. As of now, the benefit from Hyderabad project in the current year would be only marginal. Earlier, we were thinking maybe we'll have at least two quarters of benefits coming in, but like I said, this political situation in which the visas have got delayed, has left us not with much, I mean, much choice but to wait for it. We did examine the option of getting these machines commissioned either remotely or by using some other resources. The only risk is, if we end up doing anything with this equipment, without the presence of the technicians from whom, from the OEM who supplied this, we run a risk of the warranties getting invalidated. And that's a risk, not so much in financial terms or more in the terms of delivery of the project. If the warranties go and we are not able to commission them and warranties are void, after that, we have to start initiating the sourcing all over again, which is too big a risk to take. So we're rather trying everything that we can to get the technicians commission the project. In terms of the total investments, bulk of the investments have already gone in. Obviously, some residual investments happen only when, you know, most of these projects happen with the retention money and the payments being released in stages. So cash flow-wise, we still have some money to spend, but in terms of work on site, bulk of the work which had to happen on site is ready, including the warehouse. What we are waiting for is the commissioning of the automated lines and setting up the full production there. So I'm traveling tomorrow with a, I would say, very fervent hope in my heart that we'll be able to persuade people to make us jump the queue and bring the technicians in faster by getting them the visas. In terms of how we see the coming quarter, or rather the rest of half year, my own belief is that our journey of reporting strong top-line growth and improving gross margins will go on. I don't see any major hiccups there, although there are a few things which I'm sure if I remind you, you will, you will remember. That last year, Q3 was the quarter in which the bulk of the, I would say, inventory that we had of non-rated fans, the non-star bearing fans, had to be liquidated. That became a very large quarter in terms of fans being dispatched and sold by manufacturers like us, because we were being stopped from last year, first January, to sell those fans even if we had them in stock. So as a result of that, in the last year, Q3, we had reported very, very large growth and very large volumes. I don't think we'll be able to find growth in the fans business in Q3. But as a corollary to that, Q4 last year became weak because at that time, the channels were selling their inventory and not buying from us. So Q4 had become rather weak. So while Q3 for us may not show as much growth, but we are quite sure that Q4 will make up for the so-called growth that we are talking about. So I still hope to end the year in fans with a robust growth of 20% +. But it may be phased from Q3 being, I would say, very low growth and, Q4, bringing us back because it's a base effect, as we call it, hitting us in Q3, but benefiting us in Q4. At the same time, given that our preparations that we have had in our hands on the professional lighting, the kind of orders we are sitting on, we believe that the lighting should be able to report very strong growth in Q3, Q4. And so with our appliances business, because as I said, there were a few gaps in our lineup, which we are filling up now through sourcing. As that product starts flowing into our warehouse, and then we start filling up the shelves at the retailers' counters, I think in appliances also, I look forward to fairly robust growth. The focus on margins should continue. In terms of, like I said, EBITDA would not obviously show as much benefit because I don't think we should be withdrawing the investments which have been made, which will continue to be made in Q3 and Q4, which are significant. I'm not saying there'll be no improvement, but it will not be commensurate with the top line growth and the gross contribution growth. So that's a broad indication of where we see Q3, Q4. I think most of the things which I had to say upfront, I have stated. Let me now try to answer a few questions, and if there are items which are missed out, I'll try and fill that up. One of the key highlights that I'm sure you've seen in the setup that we sent out, given the fact that Diwali is late this year, but we had to prepare for the high Diwali demand as is normal every season, we had to manufacture and stock lots of products, and which has led to increase in inventory and increase in our working capital cycle a little bit, but nothing to worry because we are ready to hit the season running. Thank you, and I await questions from your side. Thank you very much. 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 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 the questions. Our first question comes from Rahul Agarwal with InCred Capital. Please go ahead. Yeah, hi, good evening, and thank you for the opportunity. So Deepak, I think you've covered most of the... You know, first question was on how does the year look like for the second half and the outlook for the year? You've answered most of it. One part to that was also, how is the start to October? Could you help us understand what have you seen in October from your side? Well, typically speaking, we do not share information during the quarter, as all of you are aware. Well, I mean, I do have the numbers with me, but I personally don't think at this moment we are going to be changing what we have done. Now, we'll report Q3 at the end of Q3. I've given you indications are in line with what we think, given last year Q3, how strong it was on fans. So are you look- if anyone looking for very, very large growth in fans is not coming in Q3, at least for us. I don't think it will come for the industry as a whole because all of us went through the same cycle of just vacating our cleaning up our warehouses and selling all the fans, which, as I mentioned, resulted in a huge inventory with the channels, which hit us in Q4. So Q, no, October numbers, no, I'm not sharing at this stage. No, sure. Actually, I was looking more from a sentiment perspective, because B2C is expected to pick up from festivals. So more from a qualitative perspective, I'm not looking for any numbers. No, there is. I would say the green shoots are visible, but I think the next three, four, five weeks is where the really the peak demand should hit. But sentiment green shoots are definitely visible. They are better. Okay, got it. Second was on the gross margin. I think, obviously, YoY, the numbers look great, but my sense was we were all expecting it to be maintained even QoQ. But, would you say that there is still some under option there? I would imagine 31%-32% is the range, the company should be happy with. Is that, is that what we expect? No, we definitely are working towards that, for sure. Look, gross margin numbers, when we speak of, again, it's, it's coming from two levers, right? One from the revenue side. The moment you have a slightly soft quarter and a low B2C demand, low B2C segment, what does happen is it tends to bring down the average fan realized, price realized, right? That's, that's a fact of B2C market. Whenever the sentiment is down, not just the volumes struggle, but also the prices, the buying happens at a slightly lower price than normal. So on, I would say on cost parameters, we continue to make very good progress, so that lever is fully in place. As the consumer sentiment improves, as you were asking me earlier, and as we start seeing buying happening at the levels that we want in terms of product mix, we will definitely see better margins going forward. But muted B2C demand does hurt companies which are in consumer businesses. Got it, sir. And lastly, on the DTM strategy, just to recap, you had done six states, Gujarat got added. As of now, you know, the addition of new states was, you know, was more on a rolling basis, that, you know, as you experience and you feel the need of any state going into DTM, you will do that. Could you, could we get some more, you know, any thoughts of of yours on second half? Would you... Is any other state going through that? And how much would Gujarat be your overall business? Yeah. No, Gujarat has been a very significant part of our business, obviously, and, and but we believe the potential there is a lot bigger than what, what we are doing there currently. In terms of, I would say six states plus Gujarat is the seventh state. As of now, as we speak, there are two more states under close observation where we are not happy with the performance of the master distributors. We are working with them to find a way in which they can keep working and give us better performance. But if that doesn't happen, obviously, they are aware the route that we are taking, that either they have to perform or we will get ourselves to perform there. So there are two more states at, at best, that we might pick up, for direct, direct to market in the rest of the year, but not, not beyond that. Because, you know, every state that we do this transition in, it does hurt us for a few quarters, and we don't want to be dislocating, ourselves the way we got dislocated last year when we did too many states together. Right. That's, that's exactly the risk, right? Because, you know, as the demand improves on B2C side, and we are expecting some recovery on the demand side, in case we go through this, there might be more hiccups. So how will you - how would you manage that? No, no, we are being very, very, very conscious of that, and that's why we are thinking, as we're thinking, I think one state at a time, let's build it up. As we start finding our comfort, then we pick up one more and then one more. That's why I'm saying in the next five months, not more than two. It could be even just one. But absolutely mindful of the risk that you have reminded all of us. Perfect. I'll come back in the queue and wish you a very happy Diwali. Thanks. Thank you. Thank you. Our next question comes from Manoj Gori. Before, ladies and gentlemen, if you would like to ask a question, please press star then one. Once again, our next question is from Manoj Gori with Equirus Securities. Please go ahead. Yeah, thank you for the opportunity. So very well highlighted about the base effects during Q3 and Q4. So probably if you look at the DTM we are doing in states like Gujarat and probably a couple of more states under consideration. So probably if you look at FY 2025 should be, ideally should be a very ideal year for us, where probably we would be operating in a normalized scenario. So do we expect a healthy double-digit kind of growth, broad base? And once your south facility benefits kicks in, probably what should be the margin trajectory? Where, where, where should we look at go the margins going ahead in FY 2025? If you can throw some light over there. FY 2025, I'll brief you around the time we approach that, because right now, I told you my biggest anxiety is we have our numbers, but we are behind on being able to commission our Hyderabad projects. Which is a very key investment in our ongoing go-to strategy going forward, right? So while your concern is valid, all I can tell you is that the way the Hyderabad project has been conceived and the way it's been sort of implemented, when the project gets commissioned, we do expect a significant improvement in our. Especially as we talk about the TPW category of fans, in which currently we depend only on our Calcutta factory. I expect a huge improvement in quality and in terms of cost competitiveness, right? That's the big benefit expected. Secondly, we also believe that international business is largely about the TPW fans and network ceiling fans. A great capacity of TPW, which actually can produce export quality TPW fan at a competitive price, opens up a completely new, I would say, market opportunity for us in international markets. In terms of because the lines are going to be automated, the quality will be better, and in terms of our, I would say, the recurring costs of running those plants and costs of quality, that would should benefit us. So all that we are aware about, we have internally, let's say, done our calculation as to how much Hyderabad would benefit us. But let me commission that, and as soon as I commission that, I'll share a little more detail. Broadly, I'm outlining the benefits that we seek from Hyderabad. On the overall, let's say, business, when you ask, in FY 2025, do we expect a robust double-digit growth? I certainly would say yes. Would it be... For example, we've had in fans, 20%+ growth, initially 17%. As the base is growing, it may not look as much in percentage terms, but in terms of value terms, I think we'll keep replicating and increasing it. Right, sir. Right. Thank you. Our next question comes from Natasha Jain with Nirmal Bang. Please, go ahead. Yeah, thank you for the opportunity. And so that was a very detailed commentary, and especially walking us through the strategy ahead, so thank you for that. So my question is, more on the DTM strategy. Now, overall, if I understand that your OpEx is more of the consulting, steep consulting costs that gets baked in. So in terms of staff cost, can I map it to this, that the more DTM you go to, the bigger your staff cost becomes because you start to deploy your employees on the ground? Just trying to understand how this strategy works, if you could throw some light on that. Yeah. Look, the fact that we go to market directly obviously means that we will be spending a little more on people, but those people are, I would say, fairly modest costs in the overall manpower costs, right? The system at the top has been strengthened well enough where we already in the head office are people who lead the teams who are running the DTM market. So the high-cost people are already there, and that's why we're talking about the operating leverage coming in with the benefits of, you know, we further deploying the same strategy. But at the same time, let's not also forget that as we spend on people, the margins that we pay into our master distributor get saved. So the overall benefit on gross margins will keep coming in higher than what it costs us in terms of deploying the manpower. Understood. Sir, so, what happens when a state gets out of the DTM value chain? Like, do you still remain in the value chain, do you monitor, or do you completely go out of the equation and those costs then begin to fall? What happens once a state is out of that chain? A state is out of what? Of the DTM chain, then what happens to the? So, do you still continue to monitor that chain, or do you get out of the equation completely and let the master distributor take over like before, only at a better pace? What happens then? No, no, no, no. As of now, there is no plan to do the reverse migration. The migration that we are doing is, in whichever state we are not achieving our potential, we are going direct. And the intent right now is not that we build it up and give it to another master distributor. I don't think that's likely to happen. Okay. And sir, geography-wise, can you just throw some light as to which geographies are you stronger in, and what's the revenue contribution broadly? Typically, we've been much stronger in North and East always, right? South has been our Achilles' heel. I would say West, we are moderate. So that's how we've been spreading. We are a pan-India player, as you know, but our strengths are North and East. Understood. And sir, lastly, on the website that you've launched, just want to understand the pricing compared to the GT chain. So how is the pricing there? So pricing, we are very conscious of the fact that we cannot let e-commerce, which is still nascent, destroy our GT, right? We are very conscious of that. So typically, every company has the same struggle. So what we try and do is, whether we work through Amazon or Flipkart or you know, other platforms, or we have our own e-commerce, we try and sort of differentiate in terms of the SKUs which are available on those websites and the SKUs which the general trade prefers to stock and sell, right? As we go forward, we'll keep fine-tuning that, but there's no... In terms of straightaway, we say, will we allow our e-commerce channel to cut the price and sell and take over business from GT? That will be a disaster for a company like us, who are still very largely dependent on our traditional distribution and retailers, right? So it's a very risky thing to hurt your established channels, who've been loyal, who've been selling so many of our products for so long, to quickly, sort of, in a way, completely put them off. And, because e-commerce, while it's growing very fast, it's the overall, it's the proportion of e-commerce for every industry is still fairly small. So there is no way that we'll try and steal volume from GT to e-commerce. No, that's that would be a one suicidal strategy. Understood, sir. Thank you so much. I have more questions, but I'll get back in with you. Yeah. Thank you. Ladies and gentlemen, as a reminder, if you would like to ask a question, please press star then one on your touchtone telephone. Our next question comes from Dhruv Jain with Ambit Capital. Please go ahead. Hi, sir. Thank you for the elaborate, you know, opening statement. Sir, I had a couple of questions. So you mentioned that, you know, you are going to be going ahead with certain investments in FY 2024, so we understand that the margins won't be as high. But, we've seen Orient in the past do double-digit margin on a sustainable basis. So, in your assessment, you know, how far we are in terms of getting back to that number? Three quarters, four quarters, any, any indicative guidance would be helpful. Not more than three quarters. Ideally, two quarters, but not more than three quarters. Okay. And sir, you know, in some of the other businesses, like house wires, and also switchgear, so we see a lot of, you know, established players already there in the business. So, just wanted to understand. So we are actually—we are seeing growth, but, do you think that, you know, as, as we, scale up larger, we'll be able to actually compete? Because it's, it's a crowded market, at least the house wires piece. Any qualitative statement would be helpful, sir. So look, the buying behavior that we noticed in the market was that, typically if a customer is being pursued by us to buy our switchgear, for example, and they always inquire about: Do you have wires to go along with it? And that same question, switchgear question, was coming up, you know, when we started with switchgear, which was good, but people said: Where are the switches? So we added switches. So for us, the strategy to also get into wires was largely to, as I said, to complete the bundle that the consumer is looking for. I don't think there are going to be too many consumers who are going to buy only our wire and somebody else's switches and switchgear. We saw this handicap, and many of the retailers actually came back to us saying, "Unless you complete the bundle of lamps, switches, switchgear, and wires, we are finding it very difficult to retain the consumer in your brand portfolio. Then they go to any other brand and buy all the complete bundle from people who already have the bundle available." So it's more meeting the demand of the consumer, which was conveyed to us through the retailers, and we are doing that. Are we planning to sort of, on a standalone basis, become very big in wires? No, that is not even the ambition, at least as of now, unless we find something three years down the line. But currently, the intention is to fulfill the desire of the consumer to give a full basket of products that she needs to, when they are renovating their homes or, you know, building a new home.... Thank you, sir. That was it from my side. All the best. Our next question comes from Niraj Sheth with BNP Paribas. Please go ahead. Yeah. Hi, sir. Thank you for the opportunity. So my first question is on the lighting segment. I mean, considering that we have a higher mix towards professional lighting, I would have ideally expected a higher growth in this quarter, though I understand that it, it has been offset by the price erosion. But how can we see the lighting segment revenues going forward? I mean, considering that we have a strong traction in the professional lighting segment, do you think this till what quarter can we see this base effect of of the price erosion that we have seen in the B2C segment? This is a difficult one, because I'll tell you why. Because if we see the price erosion in lighting, whenever we think now it's hit the bottom, somehow the technology changes and makes the product even more affordable for the consumer. I mean, just go back a few years and remember how expensive LED light was. And today, it's a fraction of that. And every time I ask my lighting team, saying: "Guys, how low do you think it can go?" Nobody is able to put anything, and it's actually true of many of the other product lines also, where the things like this, the costs actually do keep going down. The only good news is that those costs, when they go down, it does not hurt our gross contribution percentage. Because we are not giving away from our pocket. Whatever we are able to save in cost using the new technology, only that is passed on. Currently, we've seen that it's very difficult to take the price of lamp even further down from where it is today, but don't, don't hold me to it. I've, I've been surprised many times in the past. Sure. Thank you, sir. Sir, my second question is on the B2C side. I mean, I remember, like, couple of quarters back, the contribution from the, from the, sorry, direct-to-market sales was around 25%. Any, any updated number on that, considering that we are, almost doubling our revenues in these states? Again, it's a little tricky for me to, you know, share that detailed information, because it's... Look, at the end of the day, we are running our business. The more information we have put it out in the public area, the more our competitors are informed about exactly where we are succeeding. As of now, I'm a little protective of the specific details of which particular state, which market. Within every state, also there are pockets where we are internally very focusing. We will not even, for some large states, for example, we are choosing very carefully how to trade there and how to sort of build our, I would say, a region of excellence in how we are going about it. So we are, it's a, I would say, a very chosen strategy of staying below the radar and keep doing our work. Gross level, I can tell you we have 100% growth. But if you start asking me each state, tell me the growth, I will be very reluctant to speak about it. Because that's, let it be with us for a while, you know, because we, we don't want to, as we know, it's a competitive market. The more I understand our competitors' strategy, the more I am able to prepare myself. Same thing happens with my customers. They're watching us very closely, especially in the markets where they've been very strong and we are trying to make a dent. Because they will, they will try to sort of, anyway, protect their, their force that they've built around them, right? Not every strategy I want to put out in the public, please, allow me that luxury. Sure, sir, that's understandable. Thank you. That's it from my side. Happy Diwali! Happy Diwali. Our next question comes from Natasha Jain with Nirmal Bang. Please go ahead. Thank you for the opportunity again, sir. Just a few, data-related questions. So you said fans growth was 25%. Can I get the volume growth here? Volume growth is slightly below 25, because we've gained more in value through price mix. Okay. And sir, in terms of, lighting, B2B and B2C separately, as well as switchgear, can you also give us some value growth color? The value growth is what we reported. So no, separately in terms of B2B lighting, B2C lighting, that is your professional lighting and consumer. No. So, B2C lighting, B2B growth is significant, which is all being made up at this stage, Saibal, do you... Saibal is with me, our CFO is in the call. Do you have the details with you, or we get back to them later? Yeah. So, I will not give. I will give some indicative indications- Sure. Natasha. Basically, as Deepak had already mentioned, the B2C, especially on the lamps and battens, are on a negative, especially because of the price erosion. But the rest of the ceiling is on a positive, and that is also, to some extent, getting neutralized by the B2B, which is mainly on the professional luminaires. So that's how it stacks up, and which is also getting offset and converting to a 1% segment growth is because of the switchgears, though it is a small share of the pie. That's how it stacks up. So the lighting, B2C, negative. B2 consumer luminaires, the, sorry, B2C lamps, negative, consumer luminaires, positive, and switchgear, high double digit. That stacks up to the 1%. Understood, sir. Very helpful. Thank you so much, and happy Diwali. Happy Diwali. Our next question comes from Rahul Agarwal with InCred Capital. Please go ahead. Thanks for the follow-up. So the working capital cycle should stabilize at 25-30 days. Is that a reasonable number to assume? Uh, Saibal? Well, the working capital cycle right now is reported around 26 days, which is marginally higher than last year, September. It should actually ideally, typically come down. So as we go down during the year in quarter three, quarter four, particularly by end of the year, we should see a considerable reduction of that. But by that time, the inventory liquidation and the peak season and all the holdups would have got neutralized and also the festival periods are over. Got it. The CapEx for this year and next year, could you help me with the numbers, please? The budget, please. As, as you know, see, we don't share budgets like that, but I had already, we had been, intimating earlier as well. Our normal maintenance CapEx rests in the region of around INR 50-60 crores per year, which is including the replacements as well as technology and dies and tools. And, on top of that, we are doing the Hyderabad, which all of you are aware, it's, around INR 200 crores, which we all always have been mentioning. So, this is where it stacks up. So obviously from a balance sheet perspective, by, by late this year or early next year, you will see the balance sheet is already, the CWIP is indicating that which we have published already. The normal maintenance CapEx over and above will continue to be at a INR 50 crore-INR 60 crore level. Got it. And so the earlier question was unanswered. Just wanted to check how much would Gujarat contribute to overall sales? As a percentage, can you indicate that, Saibal, do you have it with you? Yeah. Gujarat is at around 4% of the total domestic sales of fans. I mean, don't keep that as a static constant. It obviously fluctuates, but I'm just giving you a sense, that's where the normal share of business is. Okay. Now, it is fairly low for us, and we know Gujarat is a large market. It should have a fairly large portion of our sales. So that's why this transition is being made now. Got it, sir. And lastly, I'm not sure whether I should ask this question, but just wanted to know, does the company still need an outside professional to manage operations from July next year, or you would be happy to continue? No, no. That's very clear. It's not about me being happy or unhappy about it. It's what the company needs. Company does need a full-time managing director here. The search for that is very intensively on. We've actually reached the stage where we're interviewing very senior professionals, and the interview process is on. Hopefully, if everything goes well, in the next few weeks at least, whether we announce it or not, but we should be able to finalize the candidate and at least start signing up internally, because we are very advanced in that search process. Perfect, Deepak. Thank you so much. All the best. Thank you. So I think we, we've come to the end of this call. Our next question comes from Praveen Sahay with PL India. Please go ahead. Yeah, thank you for taking my question, sir. Just to, one clarification related to the, fan segment. In the presentation, you had mentioned that the BLDC and the TPW has, grown at a faster rate. So can you give, some indication how much that contributes to your ECD business? Saibal, you have the details, right? See what you think is appropriate to... BLDC and TPW, obviously, we've clubbed them in the presentation, so maybe this question is getting clubbed, but we can tell separately how much is BLDC, how much is TPW for us. Or if you can give me some indication of the premium segment of the fan, how much that contributes? Think, shall I, Deepak? Yes, please go ahead. See, the way it stacks up, I, as we already mentioned, is the BLDC and TPW obviously is growing at a high double digit. I don't want to share the numbers, but they are definitely growing at very high double digits, and that's how, the BLDC stacks up to almost at an industry level of 15% share of business. TPW also has, grown at a fairly high double digit numbers. Characteristically, TPW forms about one-fourth of the domestic, business. That's how it normally happens. Premium, premium, including deco, for us, we always maintained it around, short of 40, around 35%. That, that continues to remain. So because that's exactly where the value extraction comes and the margin improvement comes. So roughly that's how it stacks up. Great, that's helpful. One thing, you know, on related to the geographies as indicated in the north and the east is strong for you. This time, the ECD growth of 17%, it's largely in those regions, is quite good that drives the business or some new geographies has contributed large portion to that? Let me now, in North and East, by and large, we haven't done the transition to, and large markets I'm talking about. We've, we've gone in some smaller markets, but large markets in North and East, we've not transitioned to, DTM. So obviously, the large part of growth that we're speaking about is actually coming from, the, the states where we want DTM, which are not in North only. So we are obviously gaining, ground in the, in our weaker states, so to speak. Okay, great. Yeah. Thank you, sir. Thank you for having me. We have a direct master distributor there. Yeah, yeah. Got it. Thank you, sir. Thank you for taking my question. All the best. Thank you very much. Ladies and gentlemen, that concludes our question and answer session. I would now like to hand the conference over to the management for closing comments. My closing comments are nothing. We are thanking all of you who wanted to attend our conference and to ask questions which help us in explaining to you the strategy that we are pursuing and the numbers that we keep declaring quarter after quarter, and also giving us some pointers, and some, some, I would say, food for thought. There are certain area at times you may not know in your question, what will trigger your mind and what sort of it reminds us, saying, "Well, that could be one way of looking at things." So thank you so much for showing the in-depth interest and going through the results and asking us, well, some very, very good questions. They're, they're very helpful. Thank you. Thank you, everybody, and Happy Diwali! Happy Diwali to all of you. On behalf of ICICI Securities, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you. Bye-bye, everyone. Bye.