Ladies and gentlemen, good day, and welcome to Polycab India Limited Q3 FY 2023 Earnings Conference Call. As a reminder, all participant lines will be in listen only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchtone telephone. Please note that this conference is being recorded. I now hand the conference over to Mr. Gandharv Tongia, Chief Financial Officer, Polycab India Limited. Thank you, and over to you, sir. Thank you, operator, and good afternoon, everyone. I hope you are having a fantastic start to the new year. It is a pleasure to have you on the call. As operator mentioned, my name is Gandharv Tongia, and I am the ED, CFO at Polycab India Limited. Thank you for joining us today to discuss our third quarter earnings. During the call, we will be referring to the presentation, financial results and condensed financial statements, which are available on the stock exchanges as well as investor relations web page of our website. It can also be downloaded through QR code on slide nine of earnings presentation. From our management team, we have with us our Chairman and Managing Director, Inder Jaisinghani. Let me now hand it over to him for his opening remarks. Good afternoon. Thanks, everyone. We continued to deliver strong quarterly performance, registering highest ever third quarter revenue in Q3 2023. Moreover, we achieved the highest ever quarterly PAT, as well as the highest ever nine-month revenue and PAT in the history of the company. Our excellent performance demonstrates the strength of our execution capability, effectively leveraging our strong market position, robust distribution network and favorable market conditions. Being committed to the highest standard corporate governance, we are strengthening our board through the induction of two more directors. The new board is more diverse with a 20% representation of women directors in line with globally followed best-in-class corporate governance practice. I now request Gandharv to take you through our earnings presentation. Thank you, Inder bhai. Before I take you through the quarterly performance, let me give you a flavor of macro environment. While the global economy continues to reel under recessionary pressure from burgeoning interest rates, high commodity prices, and supply chain disruptions due to Russia-Ukraine war, India's economy has held up strongly, drawing strength from its macroeconomic fundamentals and largely domestic consumption-driven economy. Most of the high-frequency indicators are exhibiting sustained momentum and activity. Monthly GST collections have continued to remain above INR 1.4 lakh crore since May 2022. CPI inflation nosedive for two consecutive months from 6.8% in October 2022 to 5.7% in December 2022. Festive demand has supported activity in both manufacturing as well as services sector, driving the composite PMI to an 11-year high, underpinning the economic outlook and positive sentiment. Recently released IIP figures also paint a similar picture, touching five-month high in November 2022. Furthermore, rural economy is bottoming out and is likely to see recovery through calendar year 2023, supported by factors like better outlook for wages, crop margins, rising construction activity and government spending. The government has already achieved almost 60% of its budgeted capital spending of INR 7.5 lakh crore for FY23 in the first eight months. Private CapEx is also showing early signs of improvement, supported by government measures such as PLI scheme and optimum capacity utilization on the back of robust domestic demand. Private sector CapEx announcement for the eight months of FY23 rose to INR 8.5 lakh crore, up 35% year-on-year and 52% above the pre-pandemic level. The real estate sector too continued with its growth momentum with annual residential sales at nine-year high in calendar year 2022. All in all, the Indian economy is doing well despite global headwinds, setting up the stage for its continued economic outperformance in 2023. Moving on to the presentation, please refer to slide number four. We finished the calendar year 2022 with a bang, registering record high revenue for our third quarter and achieving the entire FY22 profitability within the first nine months of FY23. At INR 37,152 million, revenue grew by 10% year-on-year and 11% quarter-on-quarter. What makes the revenue growth even more impressive is the fact that these numbers have been achieved in spite of high base, lower commodity prices and higher inflation on the back of healthy volume growth in domestic cables and wires business. As Inder bhai mentioned in his opening remarks, this is truly a testament of the execution ability of the Polycab team and which assumes significant importance in light of the massive opportunities on the horizon due to pickup in CapEx cycle. EBITDA for the quarter increased by 39% year-on-year and 18% quarter-on-quarter, with EBITDA margin improving by 281 basis points year-on-year and 73 basis points sequentially to 13.5%. Sequential growth in EBITDA margins was achieved on the back of better operating leverage, partly offset by input cost pressures and increased AMP spends. During the quarter, we ran a number of branding campaigns across TV, digital, social, and print media platforms, which increased our AMP expenses roughly four times as compared to the last quarter. We also actively engaged with influencers, including electricians, architects, and contractors, as well as the dealers and distributors, through various engagement programs to improve awareness among B2B customers. The snapshot of some of these initiatives are provided on slide 16 of the presentation. A detailed breakup of other income and finance costs have been provided on slide 13 of the presentation. Finance costs for the quarter stood at INR 93 million, and other income at INR 397 million. Other income came in higher on the back of income realized through deployment of our excess cash in mutual funds and other interest earning assets, such as. As well as around INR 100 million realized through monetization of certain assets. Our profit after tax for the quarter stood at INR 3,608 million, increasing 45% year-on-year and 33% quarter-on-quarter. As Inder bhai mentioned, this is our highest ever quarterly PAT. PAT margin expanded to 9.7% for reasons I just mentioned a while back. Our net cash position further improved to INR 18.7 billion as at end of December 2022 from INR 16.7 billion last quarter. As I mentioned during last quarter's earnings call, this cash will be utilized in four ways. One is towards CapEx for M&A activities, some retained as war chest, and the rest will be distributed to shareholders either through dividends or buybacks. Herein, I would like to provide a very important update to all of you with respect to our CapEx guidance. During various past earning calls, we have communicated our intention of entering the high voltage, extra high voltage space. With power demand multiplying across all tier one and two cities, as well as with smart cities coming up, entire overhead high voltage transmission line conductors will have to go underground, and thus the demand for high voltage, extra high voltage cables would grow exponentially. Due to ever-increasing load transmission system, we see 220 KV transmission lines moving to 440, 400 KV, and soon expect to even see the 550 KV transmission lines in India. Being a market leader in the cable industry and looking to capitalize on this opportunity, we are kicking off investment for a state-of-the-art EHV production facility in Halol, Gujarat. We will be putting in CapEx this year towards setting up this facility and expect the project to be completed and production to get started in 2025. Since EHV is high technology product, so we have tied up with a leading Swiss company, Brugg Kabel, for the technology procurement. Brugg Kabel was founded more than 120 years ago and has grown to be one of the world's leading cable manufacturers. Brugg has signed a technology know-how agreement with Polycab to transfer design, testing, production, and installation technology to Polycab for up to 550 KV voltage system. The investment will open up INR 4,000 crore-INR 5,000 crore of potential HV, EHV transmission market and also a significant amount of overseas business for Polycab. Taking this investment into consideration, our CapEx for the 12-month period from January 2023 to December 2023 will be roughly INR 600 crore-INR 700 crore. 3/4 of this will be utilized for wire and cable and 1/4 for the FMEG business. On slide five, we have presented our numbers for the nine months ended December 2022. Our revenues grew strongly by 19% year-on-year. EBITDA was up by 58% year-on-year, with margin expansion of 312 basis points to 12.7%. PAT grew by 64% year-on-year, with PAT margin expanding 241 basis points to 8.7%. I'm immensely proud to share with you all that our nine-month FY2022 revenue, EBITDA, and PAT are the highest ever in the history of the company. Moving on to segments on slide six. Our cable and wires revenue for Q3 FY23 and nine months FY23 grew by 11% year-on-year and 20% year-on-year respectively, driven by strong volume growth in both the segments. In fact, the production volume for the quarter and for the nine months was the highest ever in the history of the company. The distribution business continued to see strong growth momentum, having grown by 25% year-on-year in nine months FY23 on the back of strong volume growth of over 26%. The outperformance was primarily on account of benefits being realized through the merger of HDC and LDC verticals last year. We have also taken various initiatives under Project Leap that are helping us outpace the market growth, such as we are targeting high potential districts wherein Polycab has no or minimal presence. Second, we are also trying to activate distributors which have been inactive for some time or through whom sales have been on a decline. Three, through our real estate key account management initiative, we have been successful in generating higher secondary sales from our customers. Four, we are also realizing good sales momentum from our Emerging India vertical. Revenue from exports business grew 32% year on year in nine months FY23 on the back of good demand from sectors like oil and gas, renewables, and infrastructure. Overall export business contributed to 5.9% of consolidated revenue in Q3 FY23 and 8.6% in nine months FY23. We have a strong export order book and expect exports to contribute roughly 8%-10% to FY23 consolidated revenue. Our focus on achieving double-digit top-line contribution target to exports over the medium term remains intact. EBIT margins improved sequentially to 13.8%, led by change in product mix as wire sales outpaced cable sales during the quarter and through judicious price revisions. Please refer to slide number seven for an update on the FMEG business. The FMEG business was almost flat year-on-year and grew 12% quarter-on-quarter enduring challenging business environment. On a nine-month basis, the FMEG business grew by 8% year-on-year. If you look at individual categories, fan business grew the fastest at 24% quarter-on-quarter as distributors started restocking to take advantage of liquidation of non-BEE compliant inventory. Switchgears business, wherein we are channeling a lot of our incremental focus, also witnessed healthy growth as we reap the benefit of our strong influencer incentive program. Pipes and fittings and switches business too posted double-digit growth quarter-on-quarter. FMEG profitability during the quarter was affected largely on account of higher A&P spend. As I mentioned last quarter, one should consider FY 23 as a base year for the FMEG business. We expect reasonable growth in the FMEG business to resume from FY 24 onwards as we get done with the realignment of our distribution channel by the end of this financial year. We are taking various initiatives such as brand marketing, new product development, premiumization of offerings, influencer management program, more focus on higher margin business such as switchgear and switches, which will aid in the scaling of the FMEG business growth and margins going ahead. On slide eight, we have given an update on the performance of our other segment, which largely comprises of our strategic EPC business. Revenue from other businesses witnessed a 20% quarter-on-quarter and 33% year-on-year growth. EBIT from the other business stood at INR 131 million, up 23% year-on-year, with margins at 13.1%. We expect the annual sustainable operating margin in this business to be in high single digits over mid to long term. Overall, the financial position continues to remain healthy, with debt-to-equity ratio at a measly 0.02x and the business generating good cash flows. During the quarter, the company's working capital saw a slight increase as we had higher inventory during the quarter end, having procured raw materials in anticipation of better demand in Q4. That was the financial update for the quarter. Polycab as a company has always been committed to the highest level of corporate governance. As another step towards achieving best-in-class corporate governance, Polycab's board yesterday approved the expansion of the board to strengthen it further and bring in more diversity. Polycab's board will now comprise of 10 directors, with 20% representation by women directors and only three members of promoter family on the board. Our board comprises of preeminent directors with rich experience in their respective fields and diverse set of skills for effective oversight over the company's overall operations, strategic initiatives, systems and processes, and governance practices to achieve the growth mission of the company. An area of focus for the company that goes hand-in-hand with good corporate governance is sustainable growth. In my earnings call speech of Q3 last year, I had mentioned that we had initiated a project with an external partner to create our long-term ESG framework aligned with international ESG protocols, guidelines, and standards. I'm happy to report that we have made considerable progress on this project. We have identified the material ESG related topics for the company and are in the process of identifying and finalizing workstream and milestone within each category. Once completed, the framework will provide a sustainable outlook towards the environment and society alongside business goals. In our FY23 annual report, you will see a detailed disclosure on our ESG framework and workstreams. That was the update for the quarter. Thank you. We are now open for questions. Thank you very much. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press star, one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star, two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. We have our first question from the line of Atul Tiwari from Citigroup. Please go ahead. Thanks a lot. Hi. Hello, sir. First of all, congratulations on a very strong performance, you know, which almost exceeds, I think, any other player in the industry at this point. Congrats on that. The question is on EHV initiative that you have. Could you throw some more light on the size of the market and who are the current domestic players and which voltages are we exactly talking about here? I think you did mention the total CapEx for this year, but what will be like the expected CapEx on this initiative? Thank you, Atul. Thank you so much for your kind words. you know our company and our offerings, as we are the only company in the entire continent which has all the possible SKUs in cable and wire category and offering, right from defense to automobile to data to electricity to control and so on and so forth. The only white space we had was EHV. Generally, you know, EHV business is done through EPC route, and for that you need pre-qualification. Since we didn't have presence in EHV, we didn't have those pre-qualifications. What we have done now is we have got into an arrangement with a large international player who has almost 120 years of experience. The name of the group is Brugg Kabel, we have entered into a tech know-how agreement to transfer design, testing, production and installation technology. This will be up to 550 kV. This will open up, you know, market, if I were to take FY26 as a number, a potential of almost INR 4,000-5,000 crore. As of now, in the country, there are only two large players who are actively involved in EHV, we would be joining that group. From the profitability and working capital point of view, this is likely to be accretive as far as the current cable and wire business is concerned. Do these two large players manufacture it themselves or they kind of import it? How does it work currently? They manufacture, in-house. There are a few smaller players, but these two large players, have a significant market share, in the country, and they manufacture in-house. Okay, okay. Gandharv, my second question is on FMEG. Obviously now we are very close to the end of the distribution rejig. Could you know, shed some more light on what exactly you have done, you know, in terms of the rejig, where we are and, you know, once this thing is over this financial year, from next financial year, roughly what ballpark of FMEG growth are we looking at? I mean, are we looking at like 10%-15% kind of growth or the aspiration is like 20%-25% or even 30%? I mean, I'm not asking for any guidance, but, you know, you know, a rough ballpark would help. When we were working on FMEG, I'll probably take you back to our 2014 to 2021 journey. We did several things which helped us in achieving top line of INR 1,000 crore in FMEG. We realized that there are a few things which we could have done better. One was the entire GPM and ensuring the right set of dealers and distributors have offerings, FMEG offerings of Polycab. Second was new product development. You know, in cable and wire always we were doing new product development. That is why we have almost all the SKUs. I don't think we did enough NPD in first five, seven years of FMEG foray. Third was how do you know, interact the influencers and other stakeholders. Fourth and important one is how do you ensure that you have right optimum mix within FMEG category of several products which are available. For example, if switches and switchgear are more profitable business than others, do you have sizable contribution coming from such businesses? Slowly and gradually, we have started attending almost all of them. We started with hiring the right talent, and you know, we would have hired almost 25 senior leaders in the last fiscal. We realized that we have to have several frameworks in place to implement these and then that is where we strengthened the entire governance framework within the Project Leap. We invested heavily in digital. We have now a separate vertical, headed by a very experienced digital leader who is helping us in both front end as well as back end, to ensure that we are able to not only utilize the technology, but we are able to exploit the technology. While few of these things will continue to be implemented next fiscal, my sense is from the first quarter next fiscal we should start getting benefits of these. In terms of the growth guidance, you are right, we generally don't give the growth guidance, but I would tend to believe that the options if you give option one, two, and three, we would like to get to option two or three. Suffice to say that we are looking for significantly better than industry average growth. Great. Thanks. That is quite helpful. Thanks a lot and best of luck for the future. Thank you so much, Atul. Thank you. We have our next question from the line of Achal Lohade from JM Financial Limited. Please go ahead. Yeah, Gandharv, thank you for the opportunity. Congratulations on your promotion and also the great set of numbers. You know, my first question was, you know, one of your competitor actually published, also published results yesterday. What they said is that the B2B is doing better than B2C, while you are talking about B2C, the wires is doing better than B2B. Can you help us understand what has been the growth mix in case of 3Q of FY 2023 and compare that against 2Q? Sure, Achal. Thank you so much for your kind words and wishes. I have, you know, our Head of Investor Relations, Chirayu, as well in the room. I'm going to request him to attend your question. Chirayu, over to you. Hi, Achal. Hi. While B2B is doing very well, but B2C is also performing very well. I mean, specifically if you look at wires have major demand coming in from the real estate sector, and real estate sector have been performing quite well for the past couple of years. If you just look at the calendar year 2022, the real estate registered nine year high in terms of the sales of houses. The launches that were announced and happened during the calendar year were higher than the sales that has happened, and that this is something which happened last in 2014. That means the real estate sector is doing quite well, and that is, where the demand for wires is, are being generated, and that is, helping us, improve the growth rate of wires as compared to cables. Cables, of course, is doing very well with all the infrastructure investments being done by the government, the pickup in the CapEx cycle from the private players. Cables are also doing very well, but wires are also outperforming in that group. Can you help us understand the mix, how it was in 3 Q and also in 2 Q? Cables and wires mix generally for us would have been around 70/30%. It would have increased to about 60/40 in this quarter. You're saying 40% of the revenue is from wires, as compared to, say, 30% in the last quarter. Yes. That is helping in terms of the margins, right? Right. The second question I had is with respect to the, you know, the volume growth. Can you give us some sense in terms of what has been the volume growth in the entire segment in wires and cables? How do you see it going forward? As Gandharv said in his opening remarks, for 9M FY23, if you look at our domestic channel sales, the volume growth was higher than 26%. This again, like I said, on the back of various government initiatives as well as private CapEx cycle. This is something which we expect to continue. The volume growth for Q4 also is looking good. Again, this calendar year being and this coming budget being the last budget before the election, we expect good announcements in terms of investment on infrastructure from the government. Again, this is something which will help in improving the volume growth for the industry as well as the company. Sorry. You talked about volume growth of 26% for nine months. What was it for 3 Q? Can you help us understand that? If you look at, domestic volume growth through channel sales, it would be between 18%-20% for us. Okay. Is there any element of channel stocking which played out, which kind of helped? You think this is absolutely normal levels of inventory in channel? No, there was no different scenario being played out. This is just plain vanilla demand, good demand being translated to good volume growth for the industry as well as for the company. Got it. Just last question, if I may. You know, can you help us understand your sourcing, you know, how much is domestic, how much is imports of the raw materials? What is the typical inventory we keep in terms of raw material and finished goods? There's a mixed bag. In copper, most of the copper is being procured from overseas market, though there are supplies from the domestic players as well, but most of it is from international players. As far as aluminum is concerned, is partially domestic and partially international, and steel is by and large domestic. In terms of the overall inventory cycle, it is around 90 odd days, including from RM to our FG, including WIP and FG, both at the plant as well as the depot. That's the cycle which is there way. There is some scope for improvement as far as optimization of inventory days are concerned, but there's no significant improvement which is possible. Okay. Understood. In terms of, I mean, we have seen a significant margin improvement. Is that a number one should look at as a new normal? You think there is an element of this mix which was kind of exceptionally high in this quarter, but it would say normalize in coming quarters or years? Let's go business by business. As far as cable and wire is concerned, I think it's safe to assume a number between 11%-13% EBITDA margin for your model purposes. FMEG, we believe every year we should be able to improve the EBITDA margin so that we get to 10% or thereabout by fiscal 2056. That is how we should, you know, model. If we do that, my sense is we'll probably have chances of having positive surprises rather than negative surprises. Thank you. We have our next question from the line of Ravi Swaminathan from Spark Capital. Please go ahead. Hi, sir. Thanks for the question. Thanks for the opportunity. Just wanted to, and Gandharv has announced set of numbers. Just wanted to check with you, regarding the, once again regarding the margin sustainability. Basically, wires generally carry better margins than cables, and that proportion has increased to 60/40. Is there an opportunity of the, first the wires proportion going up from here? And what can be the reason behind that? And this 13.7% EBITDA margins in wires and cables, will... Can that sustain? Basically once again, because of the wires going up, proportion going up. Yeah. Thank you so much, Ravi, for your kind words and wishes. I think the way to look at our number is you should assume that wires contribution will improve to the top line over the period, and it won't happen overnight. That is why the gradual increase in EBITDA margin is possible. As I mentioned to the previous participant, we should assume a range between 11%-13% of EBITDA margin for the cable and wire business. For FMEG, certainly we believe that we would be able to improve our performance on the bottom line. Every year we should anticipate some improvement so that we can get to 10% by FY26. Got it, sir. With respect to the FMEG business, the sales mix currently would be how much is fans, how much is pumps, lighting, if you can give that breakup? Between fans and light and lum, we should assume that around two-third of the business and the other business are comparatively smaller. Our endeavor is to change that mix and have higher proportion of switches and switchgear, for example, because these businesses are more profitable than the other businesses within the FMEG basket. We expect that every year from next year we would see some incremental positive changes in that direction. Got it, sir. Thank you. Thank you. We have our next question from the line of Rahul Agarwal from Incred Capital Financial Services. Please go ahead. Yeah. Hi, good afternoon, congratulations on the performance, Gandhar, specifically, your elevation to the company board. Two questions. Firstly, on FMEG, you know, two-part question. Is 100% manufacturing in-house now? If yes, you know, what could be the peak revenue possible from that capacity, assuming no price hikes happen hereon? The second part of that question essentially is, as you said, that Project Leap is like just three years out, and EBIT margins you already guided for 10%, let's say anywhere between 9%-10%. Fiscal 2024 has to see a meaningful uptick. Are there reasons behind that to happen? Because my sense is, right now we are almost at breakeven, and that is purely because of fixed costs there and the ad spends are higher because we're building up the market. Next year, what will change for that margin to go up? These are two questions on FMEG. I'll come back on the last question. Thank you so much, Rahul, for your kind words and wishes. FMEG, if the margins have to go up, there are three or four levers which are available. One is we have to change the current product mix. This two-third of fan and light and lum has to undergo a change, and it should contribute lesser than what it is doing today. Contribution from businesses like switches and switchgear should improve. That is the reason why we have set up a new facility in Daman for switches, and we are expanding our Nashik switchgear facility. The second way of improving margin is ensuring that we have availability across the different price points, including premium category. In the first six, seven years of FMEG foray, we didn't do enough on ensuring that we are available at all the price points, but now we are taking strategic and directional steps. If you would recollect, we acquired a company by the name of Silvan around two years back. This company is now helping us in doing R&D, new product development and innovation. On the basis of the work which is being done at Silvan by the team, we should be able to offer better and newer products to our customer. In few of those cases we would be able to charge premium. Because the fixed costs what we are- Sorry? Of the anticipated growth in revenue, which we are expecting. There would be some investment which we require. Ladies and gentlemen, we have lost the connection of the management team. Request you to stay connected while we reconnect them. Ladies and gentlemen, thank you for your patience. We have the management team back. Please go ahead, sir. Sincere apologies, team. You know, technology is a real disruptor, and you realize that only when you have these inconveniences. Rahul, what I was talking about, and probably I'll repeat a bit of it because I don't know when we lost the connection. First is we have to reorient the FMEG portfolio towards the better margin businesses like switches and switchgear. That is the reason why we have invested in facilities in Daman for switches and augmenting the facility in Nashik for switchgear. Second is on the strength of new product development, innovation and R&D. For that purpose we had acquired a company by the name of Silvan around two years back. We have to offer better products to our end customers across different price points. Third is the economies of scale, because not necessarily our fixed costs will go up in the same proportion in the manner we are anticipating the revenue to grow. The fourth one is where we'll have to probably invest more in advertisement and publicity. Last couple of years because of COVID and others, we were slightly frugal. Between second quarter and third quarter, we have pressed the pedal. A&P spend in the third quarter was most close to INR 64 crore, whereas the second quarter it was close to INR 16 crore. It's almost four times increase. Because of these reasons, we should be able to improve the margins in years to come. On the second part of FMEG revenue, we'll have to go business by business in terms of the potential. For example, fan business, our Roorkee facility is almost fully utilized as of now, but the Halol facility, which will be up and running in the current quarter itself, would probably open up almost equivalent to Roorkee facility capacity. Switches we are doing in phased manner expansion. Idea is to not incur significant fixed costs ahead of the time, but switches facility is quickly expandable. As and when there is a need within two, three months, we can put up additional facilities. Switchgear is getting expanded now, so next year I'm sorry, we've lost the management line again. Please stay connected. Ladies and gentlemen, thank you for holding. We have the management team back on call. Please go ahead, sir. My sincere apologies, the whole team. What I was trying to allude to is in terms of top line potential in almost all the businesses we have significant potential at labor. For example, fan business, our existing facility is up and running and getting utilized almost fully, which is in Roorkee. The Halol facility will be operationalized the current quarter itself, and which will be equivalent to the existing facility. There's 100% increased potential which is available in Halol. Switches is being done in phases, as and when there's a need, we would be able to expand on switches. As far as switchgear is concerned, we should be able to expand to almost 1.5x in the next fiscal year itself. FMEG, we don't have challenge with the capacity. I think the external initiatives which were undertaken last year or so under Project Leap would help us in driving the growth and to meet the growth requirement as we will not face any challenge as far as production of backend capabilities are concerned. Is it 100% in-house now for all the products? Yes. Yes, except very small categories, for example, agro pump or solar, where we are, we don't have in-house facility. Other than that, everything is in-house. When I'm saying in-house, I am considering companies like Techno LED, which is a 50% joint venture, and they supply LED lights to us. Okay. Okay, got it. It is not possible to aggregate everything and say that, you know, what's the peak revenue potential of whatever capacities we have? That's not possible? You know, since these particular industries as such that you can put up a plant within one month or so, or two months or three months into the other categories, not necessarily there's a constraint, and that is why that peak FME revenue. This is unlike cable and wire, where you need significant time. For example, EHV, which I alluded to in my opening remark, would take around 2.5 years. Whereas an FME, if I were to just give you example of additional line in switches, it can be done in two months. I don't think that's a constraint. Okay, got it. Lastly, just on the cable and wire side, obviously you spoke about volume growth. You know, again, just to assess, in terms of, you know, what growth should we expect here on, assuming that copper is stable, what kind of volume growth on a CAGR basis should we expect, like next three years? Very industry level. Obviously, you're gaining market share, so it has to be higher than the industry. On a volume growth basis, what would you expect? I mean, if you were to ask us, we are a growth-hungry organization. Whenever I discuss this Project Leap ambition of INR 20,000 crore, everyone internally is of the view that we can do it sooner. When it comes to guidance, I think it's best to say that we would be able to achieve INR 20,000 crore of top line by fiscal 2026, and in cable and wire we'll do better than industry average and FME significantly better than industry average. I could probably leave at that, so that you have enough instance of positive surprises in your model when you compare our actuals in quarters to come. Thank you. We have our next question from the line of Shrinidhi Karlekar from HSBC. Please go ahead. Hi. Thank you for the opportunity, and congratulations on good set of numbers. Congratulations, Gandhar, on elevation to the board. Just one clarification to have on your media interaction with ET Now team. Wondering, did you guide 20% growth in FY23? Thank you, Srini. Thank you so much, and this is, we didn't guide for 20%. I think what we were trying to highlight, in the call was that we will be able to register the growth, which is going to be significantly better than the industry growth in FMEG and, in cable and wire is going to be better than that. Okay, understood. Gandharva, you highlighted that, Hello? Sorry. Yeah. Can I go ahead? Yeah. I was saying that we are very confident of achieving 20,000 crores of top line by fiscal 2026, and that can be done easily if we were to just follow better than industry average growth in cable and wire, significantly better in FMEG. Right. Yeah. Gandharva, you highlighted that wire business margins are materially higher than the cable business, about 15% in wire and about 11% in cable. Would it be possible to throw some light on how gross margins are different for these product categories? Because cable and wire, within cable and wire, it's difficult to compare a contribution margin. I'll give you one example to illustrate what I mean. As far as cable is concerned, there is more need to incur, A&P and spend. For example, you know, TV advertisement. Whereas in the case of wire, it would be natural expectation to incur such expenses. And I'm sure you would have noticed, you know, few of our advertisement in last few months, for example, you know, what was done in the, during the IPL. That is where I don't think it is comparable as far as gross margin is concerned. It's better to see at EBITDA margin level, and that is where the wire's business is better than cable. Understood. Last question from my end, Gandharva, would it be possible to throw some light on fiber optic cable business for Polycab? How large is it? How is margin profile in that business? How is inquiry pipeline looking like in that business? Optical fiber cable business is generally done under two arrangements. One is where the end customer is expecting laying of the cable and supply of cable, and in few other cases, even maintenance after the erection of the this thing. We have done a few of those projects that in the Government of India initiatives, for example, in the state of Gujarat as well as in the state of Bihar in last few years. We have another model which is being strengthened now, is direct supply of optical fiber cable to the end customer through our aggression distribution. We work on both, is progressing well. Initiative like 5G or digitalization of the, well, with the OFC business. The only thing which I would like to highlight to you is we don't have backward integration in place as far as optical fiber cable is concerned. We don't have any manufacturing capability or capacity as far as optical fiber is concerned. What we do is we procure optical fiber and then manufacture optical fiber cable. Understood. Yeah. Last one if I may. Gandharv, Gandharv, we are building these two new brands. One is on the mass, which is Etira, and on the premium side, Hohm. Would it be possible to update us on the progress, how these brands shaping us for Polycab? I think both of them have helped us immensely, in terms of improving our growth rate. While this is being done, we are fairly almost on the verge of completion of our entire brand architecture. I would expect by end of the current calendar year, we should be able to get to a stage where we can relaunch our revamped brand and offer differentiation across the product categories on the basis of product feature or on the basis of end customer. As of now, whatever we have done has helped us in improving top line in the last few quarters. The increase in spend is in line with that particular theme. Right. Okay. Thank you so much, and all the very best. Thank you so much for your time. Thank you. We have our next question from the line of Aniruddha Joshi from ICICI Securities. Please go ahead. Yeah. Mr. Joshi, there's some humming noise coming from your line. Is it okay now? Yes. Yes, it's. No, it's still coming. Yeah. I will go ahead with question. Sir, most of the durable companies we are seeing are going and acquiring the kitchen appliances brands or companies. We have seen multiple such transactions in past two, three, two odd years, Whirlpool acquiring Elica, then Crompton, and then V-Guard also. What are Polycab's aspirations in kitchen appliances space? Is the company looking at any organic, inorganic route over the next one and a half year? Also, the export business, as I understand, would be a relatively low ROE business considering it's largely a B2B business. Is that the business company really wants to invest a lot from the medium to long-term perspective? What are your thoughts on these two? Thanks. Thank you, Anil. Thank you so much. As far as kitchen appliances is concerned, we believe we have enough and more to do in the existing electrical ecosystem. We don't believe that at this stage we need to think outside the existing electrical ecosystem. As I mentioned to couple of other participants, there's a fair amount of work which is being done in FMEG, and we believe that if we do what we are expecting us to do, we should be able to get to top three market position within few of those FMEG product categories in the years to come. In cable and wire as well, one is export market, but within that, distribution business in India is growing. New products like EHV provide a good opportunity to continue with our growth function. To answer your question, we are not looking for any foray into kitchen appliances. Having said that, M&A would continue to be an active driver for our growth because organic growth we will achieve, but for a large organization like us, if we want to fasten the pace of top line growth, we'll have to consider inorganic route, and that is where we are doing lot of work. We are hoping that if we get right asset in the right space at the right valuation, we would like to explore. As far as export is concerned, let me give you a broad overview. In last four, five years, in addition to doing project on the export business, slowly and gradually we have started moving towards distribution business. This is what we did in the country as well in last 10 years. Till 2012 or thereabout, we were more institutional-driven business than distribution-driven business. Today we are practically 85% distribution-driven business. We believe if we are able to do what we did in last 10 years in the overseas market, we should be able to get to a respectable position in three years from now. Distribution business is equally profitable in overseas market the way it is in India, and that is where we are confident on both growth trajectory of export as well as profitability of export. Thank you. We have our next question from the line of Abhineet Anand from Emkay Global Financial Services. Please go ahead. Thanks for the opportunity, congrats, Gandharv, on your elevation. I have two questions. One on your EHV investment. How much, I understand you said you indicated two and a half years for this plant to commission. What could be the investment and revenue potential for this plant? Thank you, Abhineet. Thank you so much for your kind words and wishes. You are right. It will take around two and a half years to construct, a part of the investment will be done in the current year, and the balance will be done in the following year. It would be difficult for me to give you a specific CapEx guidance for a particular project, but I can certainly tell you that we expect to incur around INR 600 crore in the current calendar year, INR 600 crore-INR 700 crore in the current calendar year. Three-fourths of that would be for cable and wire, and most of it would go for initiatives like EHV. Typical in EHV, what is, you know, asset turn, if you can help us with that? Abhineet, these are early days. We are still exploring, and getting into retailing. The asset turn is generally comparable with the existing cable and wire business. I think closer to the project commissioning, we will have, slightly better visibility, that is when, probably we can decide, in terms of what type of guidance we want to give. Okay. Secondly, on this, you know, raw material volatility has been one of the key concern, right? Copper is again up almost 20% in the last two months. I mean, you know, given that your requirements of copper and aluminum is so high and copper typically is being imported as of now, I mean, what is the strategy to, you know, avert any, high inventory, you know, gain or loss? What is the strategy behind, you know, hedging in your case? Abhineet, you know this already that, as far as price per unit good is concerned, for distribution business, the prices are revised on monthly basis after considering changes in commodity prices as well as changes as the INR exchange rate. To that extent, we don't have any material risks of volatility or changes in copper prices or aluminum prices or USD INR exchange rate. That is what you can correlate as well with our performance over the last few quarters. Despite volatility between Q2 and Q3, there is no significant change in our margins, both at contribution level as well as at EBITDA margin level. The effective hedging framework which we have, which we have in place and the pricing mechanism, these help us in avoiding any negative impact on the EBITDA margin. Thank you. We have our next question from the line of Abhijit Akella from Kotak Securities. Please go ahead. Yeah. Good afternoon. Thanks for taking my questions, congratulations to Gandharv. I just have a couple of questions. One is, on the, cable business, is it possible to give us a broad split between, B2B and B2G if, you know, there's any significant, mix out there? Abhijit, we hardly do any B2G business in terms of, you know, in the cable segment. Most of it is B2B. And again, over there the split between dealers and distribution business and institutional business, as we say, is broadly 85%-15%. Got it. With regard to the share of wires in the overall mix, which you said has now gone up to 40%, is there a broad target we have in mind for our, you know, 2026 aspirations about where we want to take it? When we think about our 2020 aspirations, we think more on the lines of B2B2 versus B2C. We want to take that to 50/50 by FY26, and that is wherein we are progressing. B2C will supply both of wires as well as FMEG, and B2B will be our cable business, and that is how we are looking at it. Thank you. We have our next question from the line of Venkatesh Balasubramaniam from Axis Capital. Please go ahead. Yeah. I had a couple of questions on the FMEG business and maybe one question on your cables and wires business. On the FMEG side, you have this Project Leap plan of INR 20,000 crores by FY26. How much of that INR 20,000 crores is, or do you think can come from FMEG? That is the first question. The second question is, I think we will close out this year maybe closer to 1% or 2% kind of EBITDA margins in the FMEG. What kind of margin improvement is possible next year, given that you could possibly end up doing 20%+ kind of revenue growth? That is the first two questions on FMEG. Sure. Thanks, Venkatesh. Like I said, just on the previous question to Abhijit, we don't normally look at contribution from FMEG to overall. We more look like look at B2B versus B2C contribution, and we expect that to go to 50-50 by FY26, and that is where we are working at. In terms of margins expectations for FMEG, what we have guided the market is that by FY26, we want FMEG to be a little operating at a margin of about 10 odd percent, and that is. We have taken various initiatives which Gandharv mentioned, and we are quite confident that we should be able to reach by 10% of EBITDA margins for FMEG by FY26. Thank you. We have our next question from the line of Praveen Sahay from Prabhudas Lilladher. Please go ahead. Thank you for taking my question, and congratulations for a good set of numbers. First question on the fan, as you had mentioned, 24% of sequential growth you had observed. How much is the volume? Is there any price hike, have you taken or plan to take? There was no price hike which was taken. The price hike would be taken once the BEE compliant inventory is given in the market, which is from first of January onwards. From last quarter, it was non-BEE compliant inventory, there was actually a pricing revision on the downward side which happened across the industry. Yeah, a price hike was something which will happen from this quarter onwards when BEE compliant inventory will be out in the market. Thank you. I would now like to hand the conference over to Mr. Gandharv Tongia for closing comments. Over to you, sir. Thank you so much, participants, for taking out time and attending this call. In case if you have any unanswered question or if you're seeking clarification, please get in touch with us at investor. We will be extremely pleased to attend your queries. Thank you. I'm sorry, sir. Can you repeat your last line, please? Your voice was cracking. In case participants have unanswered questions, they can get in touch with us by writing an email to investor.relations@polycab.com. We will be extremely pleased to attend their queries. Thank you for your time, participants. Have a good day. Bye. Thank you. On behalf of Polycab India, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.