Ladies and gentlemen, good day, and welcome to Polycab India Limited Q2 FY 2024 earnings conference call. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchtone telephone. Please note that this conference is being recorded. I now hand the conference over to Mr. Gandharv Tongia, Executive Director and Chief Financial Officer for Polycab India Limited. Thank you, and over to you, sir. Good afternoon, everyone, and thank you for joining us. I hope all of you are staying healthy and safe. I'm Gandharv Tongia, Executive Director and CFO at Polycab India Limited. On this call, we shall discuss the Q2 FY 2024 results, which were approved in the board meeting held yesterday. We will be referring to the earnings presentation, financial results, and condensed financial statements, which are available on the stock exchanges as well as on the investor relation page of our company's website. Joining me today from the management team, we have our Chairman and Managing Director, Mr. Inder T. Jaisinghani, and our Head, Investor Relations, Mr. Chirayu Upadhyaya. Let me now hand over the call to Inder bhai for his initial comments. Good afternoon, everyone. Leveraging the strong demand environment, the business continued with its robust growth momentum during the quarter, registering the highest ever second quarter revenue as well as the highest ever quarterly profits for the company. In addition to being a remarkable quarter for the business, the quarter was also a memorable one for everyone at Polycab, as we unveiled our new brand identity. The company is on an exciting course towards a more promising future, and I am filled with the enthusiasm for the path that lies ahead. With this, I would request Gandharv to take you through the earnings presentation. Thank you, Inder bhai. In a tentative world where economic indicators are closely scrutinized daily to anticipate the future trajectory of the economy, India stands out as a notable exception. Here, the force of domestic consumption and beneficial government initiatives have cohesively formed a concurrent narrative of long-term sustainable growth. Latest high-frequency indicators suggest that domestic growth momentum continues to remain strong, with the services PMI at a 13-year high, industrial production at a 14-month high, manufacturing PMI being above 50 for 27 consecutive months, and a sharp recovery in domestic tax collection, particularly led by income and corporate tax. Payment systems indicate that business activity continues to be robust, with UPI crossing 10 billion monthly transactions, while IMPS transactions reaching a volume of 473 million in September. On the consumption side, there is an improvement in domestic demand as policy rates have been stable and inflation has been on a decline. Bank credit growth plus 20% in September, while with improvement in consumer sentiments, demand for cars, two-wheelers, as well as travel, has been booming. Moreover, investment spending is increasing even faster, particularly driven by government initiatives and real estate construction. These positive indicators reflect a strong and resilient domestic economy, making it an excellent backdrop for our quarterly performance review. I would now hand over to Chirayu to take you through the financial performance for the quarter. Thank you, Gandharv. I would request everyone to refer to slide 4 of the earnings presentation. For the quarter ended 30th September 2023, our consolidated revenue grew by 27% year-on-year on the back of healthy volume growth in domestic wires and cables business. EBITDA grew by 43% year-on-year, while EBITDA margins at 14.4%, a growth of 160 basis points year-on-year. Margin expansion was achieved through enhanced operating leverage and a favorable product mix. A detailed breakup of the other income and finance costs have been provided on slide 19 of our earnings presentation. The company registered its highest quarterly PAT of INR 498 million, a growth of 59% year-on-year. PAT margin stood at 10.2%, an improvement of 210 basis points over that of the same quarter last year. Net cash position improved to INR 15,317 million, over INR 10,132 million in Q1, while working capital cycle improved to 50 days as inventory levels normalized and payable days improved. On half-yearly basis, our revenue grew strongly by 34% year-on-year. EBITDA was up by 57% year-on-year, with margin expansion of 220 basis points to 14.3%. PAT grew by 69% year-on-year, with PAT margin expanding 220 basis points to 10.3%. I'm immensely proud to share with you all that our H1 FY 2024 revenue, EBITDA, and PAT are the highest ever in the history of the company for a half yearly period. Our outstanding performance reflects the strength of our execution capability, effectively leveraging our strong market position, robust distribution network, and favorable market conditions. Moving on to slide 6. During the second quarter, the wires and cables business grew by 28% year-on-year on the back of 30%+ volume growth in the domestic business. The domestic distribution driven segment sustained its strong growth momentum, while the institutional business witnessed remarkable acceleration, buoyed by the business being generated through our on-ground sales team. Geographically, the growth was broad-based, with highest growth coming from north region, with states of Uttar Pradesh, Delhi, and Haryana registering considerable growth. In the first half of fiscal 2024, Polycab has witnessed a remarkable growth and success across various cable product categories. Notably, Polycab's special purpose cables demonstrated robust growth in the first half. A primary driver of this growth has been the increasing demand for cables used in defense sector, the contribution of which soared to north of 20% in the first half of the year. Polycab continues to demonstrate its commitment to innovation and growth across diverse cable product categories, positioning itself as a key player in the industry. The demand environment in India's economic landscape remains robust, significantly bolstered by the government measures and improving state capital expenditure. The real estate sector is experiencing healthy uptake, providing an additional impetus to the market. The government has allocated INR 30 trillion of budgetary monies towards infrastructure growth in the country. To achieve this goal, various ministries and public sector enterprises are making substantial progress. The Ministry of Road Transport and Highways have already utilized 46% of its budget by August. Similarly, Indian Railways has spent about 59% of its budget by September. Large, public sector enterprises, too, have made remarkable progress, reaching 42.25% of their budget by August. Key players like Indian Oil Corporation, ONGC, NTPC, HPCL, Bharat Petroleum, et cetera, have made significant contribution towards their respective CapEx targets. At the state level, capital expenditure has witnessed substantial growth. The combined CapEx of 17 major states increased by 45%, reaching approximately INR 1.67 trillion by August 2023. Notably, the government has played a vital role by providing INR 400 billion crores out of the sanctioned INR 850 billion rupees. That is 65% of the budget estimate in 50-year CapEx loans to states, aimed at boosting state-level CapEx expenditure. Leading private companies are also displaying strong CapEx plans in order books, which further contribute to the positive economic outlook. The largest domestic EPC company anticipates significant growth opportunities, with a promising pipeline of prospects amounting to INR 10 trillion. Key growth sectors of the company include transportation, renewables, water, and hydrocarbon industries. Additionally, the renewable energy arm of a state-run power generation entity is planning a CapEx of INR 100 billion for the renewables this year. The residential real estate sector, too, continued with its strong growth momentum. According to a research report by a leading real estate consultant, the top eight Indian cities witnessed a remarkable 23% year-on-year growth on number of residential project launches during Q3 of calendar year 2023, surpassing the 2X sales growth. This trend is particularly significant as it showcases the developers' confidence in future sales. The number of launches in the quarter was 1.5 times that of the pre-COVID period in the 2019 quarterly average, highlighting the resilience of the market. Land acquisitions have also seen an uptick, with land deals increasing over 50% in 2023. Over 72% of these land deals are for residential purposes, including high-rises, plotted developments and townships, indicating a positive outlook for the residential real estate sector. Supported by robust demand as well as a series of strategic initiatives undertaken by the company, our wires business too achieved good growth. One key initiative has been to implement a price-driven strategy to cater to diverse customer segments effectively. We have introduced Etira, Optima, and Green Wire ranges over the past few months to cater to customers across different segments. In the first half of the year, these ranges combined made substantial contributions, collectively accounting for 30% of the sales. The company has successfully pursued a targeted approach in the southern region, which has translated into impressive growth. Sales from the southern region have surged 19% year-on-year in the quarter, outpacing other regions. The success is highlighted by contributions from key states like Karnataka, Telangana and Tamil Nadu. These developments reflect Polycab's dedication to expanding its reach and influence within the retail wire segment, while maintaining a strong focus on product innovation. The international business registered a growth of 14% on a sequential basis and 18% on a half-yearly basis. During the quarter, the international business contributed 9.3% of the consolidated revenue of the company. We also expanded our global footprint to 76 countries now. Please refer to slide number 8 for an update on the FMEG business. The FMEG business registered marginal growth, with segmental revenues growing by 8% year-on-year during the quarter. This growth can be attributed to the benefits of channel realignment, new product development, developing in-house capacity, and various other initiatives implemented over the past few quarters, which are now beginning to materialize. All major segments, with the exception of fans and lighting, have experienced good growth both on a yearly and quarterly basis. The switchgears business exhibited robust performance, aided by the company's focus on specific categories, such as the 6 kA MCBs and RCCB. Polycab's strategy of leveraging cross-selling through wire distributors has shown positive results. For switches, our in-house manufacturing capabilities have continued to enhance product availability, resulting in an impressive rate growth of over 2x over Q2 FY 2023. The Etira series, a low-cost offering, has contributed significantly to the sales during as well. Similarly, the Levana series, our premium product, has made substantial contributions. Our conduit pipes and fittings business too has shown robust sales momentum, primarily due to continued healthy real estate activity. Again, here, the South zone has emerged as a notable growth leader. The luminaries division witnessed a remarkable growth, benefiting from the setup of its separate GTM vertical. Despite muted consumer sentiment, Polycab's fan division has continued its efforts to innovate and cater to market needs. The company introduced three new fan ranges in quarter two, including two in the premium segment and one in BLDC segment, demonstrating Polycab's commitment to product diversification and energy efficiency. The launch of the Silencio Mini, a new BLDC fan in select cities, has garnered an excellent response. Pricing revisions in the LED segment, primarily due to the Driver on Board technology, have impacted the top line. Approximately 25% in pricing corrections have already taken place, with almost 10%-12% being done in quarter two of this fiscal year. We believe the pricing corrections have bottomed out and expect some relief from here onwards. The segmental EBITDA for the FMEG business continued to remain in the negative territory during the quarter, impacted by fixed costs, costs and the absence of scale. However, with the product mix changing towards higher margin products, the declining bottom line was contained despite higher A&P spends done during the quarter. Let's now move to slide number 10, which gives an update on our other businesses, which largely comprises of our strategic EPC business. We clocked revenues of INR 1,608 million in quarter two, a growth of 95% year-on-year. Profitability grew by 26% year-on-year, with segmental margin at 11%. Annual sustainable operating margin in this business is expected to be in high single digits over mid to long term. So that was the financial update for the quarter and first half of the fiscal 2024. To conclude, our performance in the initial half of the year has been truly remarkable, establishing a formidable benchmark for ourselves. This achievement reflects the unwavering dedication and tireless efforts of our entire team. Additionally, we have benefited from a favorable macroeconomic environment, with market conditions working in our favor and a consistently strong demand for our products and services. Given these advantageous circumstances, we acknowledge the importance of maintaining a rigorous approach, and we continue to dive even deeper in our relentless pursuit of excellence. Thank you, and we are now open for questions. Thank you very much, sir. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Ravi Swaminathan from Spark Capital. Please go ahead. Hi, sir. Congrats on a very good set of numbers. My first question is, in terms of the volume growth that you had mentioned in cables and wires of around 13, and in the press release, you had mentioned that cables have grown faster than wires. Just what are your thoughts on cables? Where are we seeing such robust growth? Is it from the infra side, industrial side, real estate side? If it is in infra, how much from central government side, how much is state government side? If you can give broad breakup numbers, what is driving this growth, it'd be great. Sure, Ravi. Thank you. So within the cables section, we see demand coming from across all the segments. Infrastructure, which is largely being driven by the government, and this includes your roadways, highways, railways, metro lines. We also see demand coming from power transmission and distribution, and a good amount of demand coming from the real estate as well. So it is a mixed bag. It is from across all the industries. We, at our end, since we operate through our distributors, a large part of our sales are through distributors, we wouldn't have an exact proportion of what percentage is coming from which sector. But I can tell you that these are the top three or four sectors wherein the demand is being generated from. Okay. At least rough numbers, percentage, if you can give to these top sectors, it'd be great. Power T&D means how much will it be out of the overall cable demand? Say, real estate, how much will it be? Railways, how much will it be? Metro, how much will it be? Similarly, for five, six sectors, is there a number that you can put? I understand that majority of the revenue would come from dealer distributors, but you would have a sense, right? If you can give that, it'd be great. So, Ravi, the thing is, each type of cable has different end users from across all different sectors. So at our end, even if we supply a particular type of power cable, we will not be able to gather that, which end industry this is being serviced to. So it is ultimately the distributor who's actually gathering this demand, and is servicing those customers. And then at our end, we wouldn't have a particular idea about what end industry these cables are being supplied to. Okay. And solar, is it a very big contributor to the overall cable growth? I mean, as a percentage of overall demand, so solar, like, significantly a large chunk of the overall growth? So the investments in renewable energy sources, both domestically as well as internationally, has been consistently increasing. And it is very recently that various manufacturers in the country have started manufacturing these solar cables. So definitely the growth is there in solar cables, both domestically as well as internationally. But as of now, its contribution to the overall top line is comparatively minimal. Okay. And, the second question is, what kind of volume growth will you see in the second half? I mean, your, your sense, given the fact that elections are there in another six months, is this 30% kind of growth sustainable, or has there been some kind of front-ending in spends that have happened by the government, that you sense, your, your thoughts on that? So I wouldn't be able to give an exact number in terms of what kind of volume growth would be possible, but I can definitely say that we, based on the demand that we are seeing on the ground, the volume growth in the industry has been better than what it has ever been. And we believe that this case will continue in the future as well. At our end, Polycab, we have always grown ahead of where the industry growth is at, and we believe we'll be able to achieve that in the future as well. So that is how we are seeing volume growth to be in the near future. But we definitely believe that it should be much better than what it has been historically in the sector. Okay. And the cable growth and wire growth, YoY, if you can give that quantification, is it possible? Cables' growth again was north of 30%, while wires' growth was again near about 20%. Got it. Yeah. Thanks. Thanks, Ravi. Andrew, I see there's someone on the line. Am I audible? Hello? Yeah. Andrew. Thanks, Ravi. Andrew, can you please take the next person on the line for the call, for the question? Hello, hello. Am I audible, sir? Yeah, you are audible. I'm so sorry, there was some disturbance on the line, so I think I got disconnected. Just give me a minute. I'll just take the next question. So the next question is from the line of Manoj Gori from Equirus Securities. Over to you, sir. Yeah. Thanks for the opportunity. Chirayu, here, I would like to understand on the realization part, because obviously when you said like volume growth was around 30%, so probably we are talking about increase in, probably drop in, realizations. But if I look at the copper prices as compared to 2Q, those were on the higher side. So was there some impact because of the higher contribution coming from something like Etira or probably can you throw some light over here? Sure, Manoj. So when you are looking at volume growth, you need to look at three things. One is how the copper price movement has been, how the aluminum price movement has been, and how the USD INR price movement has been. You need to take all three of these into account. And again, what also you need to take into account specifically for our case, is that, when we work with our vendors, we have this embedded derivative contract, wherein we work on an M-1 basis. So it's a mix of two things. Whenever we have institution contracts, they are back-to-back price, whereas with those that we procure for distributors, they are on M-1 basis, so there's a mix of both the things. If you look in terms of the pricings, if for the monthly average or the quarterly average for copper, copper has definitely increased by about 8%, but at the same time, aluminum was down by 8% and USD INR rates were up by about 3% odd. That was for the quarter. If you look at M-1 basis, copper prices were up by 3%, while aluminum prices were down by 13% and USD INR rates were up by 4%. So if you take a mix of both these things, then, then you'll get to know that the value contribution, because of whatever price variations that I mentioned, was in both ingredients, and, and hence, the growth that we have achieved is actually because of the volume growth that we took. Right. Right. Second, if you look at the advertisement expenses, obviously there has been a sharp increase, and that has really led to strong volume growth. So probably if you look at, you have been going very aggressive, you have sponsored into World Cup as well. So, does H1 account for those expenses? Or probably that would be purely coming into third quarter, and whether we would be booking it in the entire quarter or we'll be amortizing it gradually. So Manoj, these are period costs. So as and when the event has occurred, this has been accounted for in the period. So till thirtieth of September, whatever event has occurred, whatever advertisement has been done, whatever slots have been aired, those have been accounted for. And as the World Cup is continuing, the balance cost, as and when it is incurred, it will be accounted for in the third quarter. Sure. Thanks. Lastly, on the FMEG side, so, we do understand that somewhat demand has been under pressure, and probably there has been delay in revival because we were expecting somewhere around from FY 2024. Probably FMEG on top line and on profitability should improve. So any comment over there, like how do we see in the second half and probably from FY 2025, if you can throw some light? And lastly, on the Project Leap, if you can throw some light with regards to any revisions in your guidance or something like that. Right. So if you looked at the FMEG, basket, there are different product categories, and, some of them are seasonal, some of them have demand across the year. So if you look at the, fans business, it is more a seasonal business. And, very recently, there had been a change of, energy norms. So, this is the first year post those energy norms, and hence, the coming season will be the first year post those, changes. And we believe that, we should have a good pick up, as and when that season, begins from October or November of this year. If you look at the lighting segment, there has been kind of a pricing corrections that have happened over the past 12-15 months, and which has actually affected top line for all the players in the industry. Lighting does have a kind of a pickup in sales during around festival season. So we believe that whenever such festivals would be there, there might be some other pickup that would be visible. At our end, we will be ready for that. We will have our distribution in place, we will have our products in place, we will have our new launches in place, so that we'll be able to cater to the demand that will be coming during whatever seasonal demand is there. If you look at switches, switchgear and other product categories, these are comparatively smaller for us. We are employing various initiatives so that the growth of this product categories is higher and the mix improves more towards them. As we've guided or we've given out in the earnings presentation, we've already realized, we are already realizing good growth. We've realized good growth in this quarter for both switches and switchgear, as well as conduit pipes and fittings. And, most of a large part of the demand for these products is linked to real estate. And since real estate is doing well, that consumer demand continues to be there. At our end as well, we have done a lot of work under Project Leap, so the entire distribution realignment is something that we've completed. Over the past 12 months, we've launched various new SKUs in all those product categories as well. We are employing the price laddering strategy and hence, now have offerings across those product categories. Wherever we don't have, we will be coming up with new product categories within those price points. We are also working a lot on influencer management as well. As you are aware, our brand positioning is something that now we have very actively started working on. We believe that based on all these initiatives that we have taken and will be taking, the FMEG will start showing growth, both top line as well as bottom line. It will be a gradual growth, but it will be a growth that we have guided the market towards. In terms of the Leap targets, we are in the process of recalibrating those targets. We definitely believe that the FY 2026 target of reaching INR 2,000 crore-INR 3,000 crore of top line is something that can be achieved ahead of timeline. We are recalibrating that along with all the other targets that we had given out, along with the top line target. And we should be out with those recalibrated numbers in the space of three quarters from now. Thanks. Thanks, and wish you all the best. Thank you, sir. Thank you. The next question is from the line of Atul Tiwari from Citi. Please go ahead. Hi. Yeah, hello, sir. First of all, congratulations on yet again, very strong comments. My question is again on FMEG, so just trying to kind of probe a little bit. So the distribution realignment that you had done, that has been complete, right? I mean, there is no further realignment happening on a major scale. I know, I mean, you can keep on tweaking the business. Just wanted to confirm that. Right, Atul. So the distribution realignment is largely complete. Having said that, but we'll continue to improve our distribution across all the geographies. So that is something that will continue. But yeah, on the large part, that entire realignment or working with, or tying up with larger distributors that we wanted to, that is completely completed. Okay. And my second question is on the EHV facility, that you were setting up. So what is the update on that? I mean, when is it likely to be completed, and how much is the CapEx? And once completed, you know, how much top line could it do, or what is the capacity, if you could, you know, share some details on that. So we have started incurring CapEx on that project. This year and the next year, last part of the CapEx that we'll be doing at the company level will be, or for the cables and wires segment, we'll be going towards that project. As we were guiding in the past, we expect that the facility will be becoming operational by the end of FY 2026, and as of now, we are in line with that timeline that we had given out. In terms of the revenue potential and everything, we'll be coming out with those specific numbers as and when we are closer to that time period. It's still two years away, since that facility is expected to become operational, and we'll be coming out with specific targeted numbers for those facilities, once we are near to that time. Okay. And if you could allow me one more. So, I mean, obviously, we understand that a lot of benefit has happened to the business because of upfronting of CapEx by government this year. So once the quarter is over, I'm not asking for your numbers, but have you seen any kind of letup in the CapEx because of the election season, et cetera? I mean, definitely the on-ground demand has been good. There has been various tenders that have been rolled out for various projects across industries, and definitely that has resulted into a better demand for cables. But this is not something which is, t his particular year's phenomenon, if you've noticed, the government has been increasing the amount of CapEx that they've been doing for infrastructure every year over the past three years. This is something that we believe should continue going ahead as well. Of course, the caveat being that the current government comes back to power. But then, we do believe that this is something which is a structural story, structural demand driver for the country. Very recently, I believe yesterday itself, we, there was a news article that the Ministry of Highways have come out with a 2047 pipeline, wherein they want— they will be spending or they are thinking of spending somewhere close to INR 20 trillion in terms of CapEx. I mean, this is the kind of growth story or the path which is there ahead in terms of infrastructure growth in the country, and we believe this is a long-term story. There, there's nothing to do with the pre-election year or something of that sort. Okay, thank you. Thank you. Thanks so much. The next question is from the line of Shubham Agarwal from Axis Capital. Please go ahead. Hi, thanks for the opportunity. Just two questions. The first one on, is on exports. This quarter, the exports trend seemed to be weakened a bit. We are at about INR 390 crores this quarter. Can you give us a sense what kind of exports you expected over the, you know, going forward and, the decline, we've seen a decline this year, and we saw a similar decline in Q3 of, last year as well. So is this a one-off, or do you see that the exports will pick up going forward? That is the first one. So Shubham, we did around INR 400 crore of exports business in this quarter, and here in it was actually an 11% growth to what business we did in Q1. If you look at the H1 numbers as well, it is actually an 18% year-on-year growth. So we do believe that the international business holds immense value for the company, and we are geared up to capture that opportunity. We have those capacities available, we have those approvals available in various geographies, and we are incrementally looking to add new geographies as well. So in the mid to long term, we believe that international business can be a big revenue generator or a contributor to the business top line, but and bottom line. Any sense, like, this next year, let's say, will that, this 10% contribution go up to, let's say, 15%, or do you think it's a stretch? Just a broad sense. I mean, we are recalibrating those numbers, as I mentioned, to the previous participant. All those guidelines or all those targets that we had given as a part of our Project Leap numbers, and the 10% of contribution from exports being one of those goals, is a part of our recalibration process. And, we'll be out with those revised, calibrated numbers in a matter of few quarters. Okay. Thank you. Thanks. Okay, just coming on to the second question. Sorry if this has been asked earlier, I missed, I got dropped off the call. So I just wanted to ask that H1 growth has been very strong for the company and for wires and cables as a whole, and that is also a lot to do with the front-ending of the government CapEx. You know, we might continue to see this growth in Q3 as well. But, what is the sense you see as, as soon as we approach elections, will this growth probably slow down a bit entering Q4 FY 2024 and Q1 FY 2025? Could you give a sense? And just related to that, since the base will be very high for nine months, FY 2024, and, you know, the government, the next budget would spend the one-year budget in one year, there'll be no front-ending. Do you see that the growth would be relatively lower than, let's say, what we are doing right now, in FY 2025? Those are the two questions. Those are the two related questions, if you can answer. Sure. So at our end, we have already always been able to achieve is that H2 has always been better than H1, and we believe this year will be no different. The performance in H2 should be better than what we have been able to achieve in H1. In terms of front-ending of CapEx by the government, again, over here, we believe this is something which is a long-term structural story and not a one-year story because of being a pre-election year. If you look at the cables, as a business, whenever new orders are given out, it is not immediately that the requirement of cables coming. So in that sense, there are all those orders which are being given out for development of new projects right now. The demand for cables is something which will be coming in over the period of next one year. So, specific to those particular months wherein the election will be happening, we, there is, there's not gonna be that kind of demand slowdown that might happen. Second thing is, even if we look at the other avenue, which is the private CapEx, that is also something which is picking up because of all the government CapEx that has happened over the past three years. We are seeing that kind of crowding in of private investment coming in from the private players, and that is also something which will support or add to the demand of cables going ahead. Having said that, even if, and I mean, like I mentioned, even if the 9, 9 numbers for this year are high, we don't believe that the next year should be difficult. It's a structural story. The demand for cables is rising, structurally, and we believe that every year we should be able to give pretty good growth, or be able to get pretty good growth in that. Yeah. Got it. Got it. Thanks. Thanks. Thank you. Thanks for the answers. Thank you so much. The next question is from the line of Aniruddha Joshi from ICICI Securities. Please go ahead. Yeah, so thanks for the opportunity. So two questions. While we are doing great work, obviously, we are getting helped by the up move in the infra, real estate, CapEx, all those cycles. So just from your experience, in 2007, 2008, we experienced similar situation, but post that there was a sudden decline in overall CapEx, real estate activity, et cetera. So from your experience, what was the Polycab strategy that time versus the strategy right now? Or do you see it's different this time, and probably the CapEx cycle is going to last for a considerable more period of time, and so that there is a more benefit possible to us, for us? That is question number one. And question number two is the spends related to Polycab relaunch. So whether all the spends are already in Q2, H1 numbers, or do you see some more expenses getting incurred in H2 as well? Yeah, that's it from my side. Sure. Thank you. So in terms of the government CapEx from the government, we believe that this time is different. We believe that this is—a nd as I've mentioned, many people, that we believe that this is a structural study, which will play out consistently over the next few decades. The current government, the Prime Minister, they've been very vocal in terms of what they want to achieve over the next couple of decades. They want India to be- to become an advanced nation by 2047, and, and they believe that infrastructure growth will have to be a big or primary driver of this growth. And so we believe that going ahead as well, the kind of CapEx that the government has been incurring over the past three years, and the kind of improvement that they have been doing in terms of the numbers, that kind of, will continue to go on. In terms of the real estate cycle, generally, the real estate cycle in the country is about six-to-eight years long. We are in the second or third year of the current real estate cycle, and so we believe at least the next three-to-four years, should be good from the real estate point of view as well. So, so I guess, that is, on the, CapEx side. On the cost for the relaunch, as Gandharv mentioned, whatever costs have been incurred during the quarter, they have been accounted for during the quarter itself. As and when those costs will be incurred going ahead as well, they will be accounted or taken into financials in those quarter itself. We have already incurred the cost, a part of it on the recent launch, but we'll continue to increase our expenses on advertising and promotion, as we've guided that incrementally 3%-5% of our B2C top line will be spent for brand positioning. So we'll continue to incur those kind of costs, and that is something that will happen pan year, not in a one or two months or one or two quarters, but it is something that will happen across the year and all the years going ahead. And they will be taken into financials as and when those are incurred. Okay, sure. That's helpful. Last one question, we have- Yeah. Sorry to interrupt you, sir. If you have more questions, you can please reach out to you. Sure. Thank you. Thank you so much. Ladies and gentlemen, in order to ensure that the management is able to address questions from all participants in the conference, please limit your questions to one per participant. Thank you very much. The next question is from Aadesh Mehta, from Motilal Oswal AMC. Please go ahead. Sir, my questions have been answered. Thank you. Thank you so much. The next question is from the line of Rahul Maheshwari from Ambit Asset Management. Please go ahead. Thank you so much. Hope I'm audible? Yeah, you're audible, Rahul. Yes, you are audible. Sir, just one thing, can you explain in your corporate presentation where you have given that the margin protection will be through embedded derivatives? In short, it would be protected against commodity price volatility through access to embedded derivatives from suppliers. So in long run, what kind of support and protection you are, you can throw some color on it, it would be really helpful? Sure. So, when we work with our vendor, whom we procure our raw material from, we have embedded derivatives within the contracts. What this contracts allows us to do is that it gives us a particular time period to firm up the price of those raw materials. What I mean by that is that when we place an order with the vendor, the price that is prevalent is a provisional price, but we would have a time period of around three months to finalize the price of those raw materials. So what will happen is that from the time that we place the order, we receive the material, we convert it into whatever cables and wires that we wanted to manufacture, and till the time that we sold to whatever end customer that we wanted to sell it to, whatever changes in the prices of raw material would have happened, that will be completely passed on to the end customer. And, over here, since we have this time period to decide or firm up the price at a future date. And that is why it will act, because of the embedded derivatives, the commodity prices for us will be complete pass-through. So irrespective of whether the prices went up or down during the time that we placed an order to the time that we sold the cables or wires, whatever changes would have been there, that volatility would be negative because of the embedded derivatives. And that is why we, and that is how it has played out over the past many months. So if you look at our margin trajectory, it has been comparatively very stable, irrespective of whether what the copper price or aluminum price movement has been. Just a follow-up question on that. In terms of percentage of revenue, how much is the backward integration in the wiring cables for you currently? Almost 100% on the cables and wires. Okay. And just one connected question: As you have entered more into the renewable cables, data center cable, t he difference between the realization or the margins, can you give some color that how big is the difference between the normal cables, which is wires which is being used in real estate or normal cables, compared to the emerging sectors which you are seeing? So, the differential in terms of margins will vary depending on what cables we are looking at. But all such cables which have traditionally been imported, and it is now that the demand for them has been increasing domestically, and hence have been started getting manufactured over here, what internally we call as special purpose cables. For them, margins are definitely better than what we make on the other types of cables. But again, it will vary depending on which cables you are looking at. Okay. Thank you so much, sir. All the best wishes. Thank you. Thank you so much. Well, before we take the next question, ladies and gentlemen, in order to ensure that the management is able to address questions from all participants in the conference, please limit your questions to one per participant. Thank you very much. The next question is from Rahul Agarwal from InCred Capital. Please go ahead. Yeah, hi. Thank you for the opportunity. Good afternoon, and congrats on another quarter of super performance. Sir, two questions. Please allow me to ask them very short. Firstly, on channel finance, you know, my understanding is the balance sheet is improved quite a bit on working capital, clearly because our channel finance percentages have increased into FMEG as well as cable and wire. The question essentially is if the channel pays you faster against cash discount, does that mean lower gross margins, just from an accounting perspective? That's question number one. Sure, Rahul. So, no, that doesn't translate into lower margins, because whenever we revise the prices of the cables or wires, we definitely take into account that this is the kind of cash discounts and what kind of the channel financing we have with our distributors. So we take that into account while revising the prices, and hence, that doesn't translate into lower gross margins for us. Okay. And second question was on overall margin guidance. Sorry to interrupt you, sir. Sir, due to time constraints, we'll only take one question per- Operator, I have a suggestion. Why don't we close the second question of Rahul, and then we'll probably for the next participant on- Sure, no problem, sir. I'll do that. Rahul, please go ahead. Thank you so much, Gandharv. So, you know, the question essentially on margins, I think cables have done better than wires again, but the margin trends are reversed, that they're holding up QoQ also, margins are 14.4%. Your guidance, you know, earlier had been 11%-13% sustainable range. I think on TV today, you said 12%-14% sustainable range. I understand it's more conservatism, but, my sense is ultimately we are expecting this to normalize, right? So eventually it should trend down towards 10%. I don't know when it happens, but that should be the reality, you know, for the industry. Is that the right way to understand? I mean, Rahul, we believe that 11%-13% range is something that we'll be able to achieve, irrespective of what happens in terms of commodity price movement tomorrow, and then that is, that has been what our guidance has been. What we have been able to achieve over the past few quarters has been because of various reasons. It might be because of the mix that we have been able to achieve within the cables. It might—i t is because of the higher number or higher percentage of contribution from exports as well, which is a better margin product. It is also a large, to a large part now because of the scale at which we are operating. So because of various reasons, we have been able to register better margins than our guidance. In the long term or in the midterm, if you are putting it into your model, you should definitely put or take into account the guidance that we have provided, and then you'll another have a negative surprise on it. You know, in terms of growth and mix, I think everything is sustainable, right? The mix is going to sustain ahead. The exports are going to be better. I think there is no reason for margins to come down if that doesn't change. If we are able to sustain the current levels or the current scale that we are operating, if we are able to sustain the contribution from international business of HDC, LDC, different types of mix, definitely we should be able to sustain the margin. But I mean, at sitting at this point in time, we wouldn't be able to comment that hundred per from a 100% sure we are, that is something that will play out. But 11%-13% is something that we definitely believe that, irrespective of what happens, that is something that we'll be able to achieve, and hence that has been our guide. Perfect. Thank you so much. Thanks, Gandharv, for taking the question. All the best. Thank you, Rahul. Thank you so much. Ladies and gentlemen, just a reminder again, please limit your questions to one question per participant. The next question is from the line of Praveen Sahay from Prabhudas Lilladher. Please go ahead. Thank you for taking my question, and, many congratulations for a very good set of numbers. Few data points I need. So can you give the capacity utilization in the wire and cable currently, as well as, the contribution of cable and the wire, segments in the quarter, and the CapEx number for 2024-25? Sure. So in terms of capacity utilization, we will be operating somewhere in the vicinity of 65%-70% on cables and wires. Yeah, in terms of CapEx, as we guided this year and the next year, we will be incurring CapEx of close to six to seven hundred crores of rupees, and that guidance continue, stays as of now. Can you bifurcate 2024, 2025? Equally, both year. Both years, so, INR 600 crores-INR 700 crores of CapEx each year. Got you. Each year. Okay. Yeah. And, in terms of mix between cables and wires, again, since cables have performed better than wires, it would have few hundred basis points more towards the cables side. Okay, great. Thank you. I'll come back in a moment. Thank you so much. you so much. The next question is from the line of Abhijit Akella from Kotak Securities. Please go ahead. Yeah. Good afternoon, and thanks so much for taking my question. I have just one on the CapEx position right now. So 65%-70% utilization we are at right now in wire and cables. Usually, what is the, you know, optimal or peak level we can go up to? And, at what point would we need to start thinking about adding capacity beyond this, EHV project that we are doing? Is there currently something besides EHV that's also going on in terms of capacity bottlenecking, or, you know, is that something we need to consider as we get closer to optimal levels? Thank you. So, Abhijit, we can go as high as 95% in terms of capacity utilization. But what we have always done is that we have invested ahead of time in terms of CapEx, and we incur those CapEx every year. So as you know, even prior to the INR 600-INR 700 crore of guidance that we gave, we anyways used to incur about INR 300-INR 400 crore of CapEx every year, and hence we continue to invest into expanding facilities every year. So that is something that we'll continue to do. In terms of other projects that we are doing other than EHV, we are also investing in expansion of our facilities for SPV, SPC, which is our special purpose cables, and various other product categories. Yeah, I mean, we'll continue to incur those CapEx in terms of expanding the facilities every year, and we wouldn't wait to reach 80, 90, 95% of capacity utilization to incur more CapEx. Got it. Thank you, Chirayu. Just to clarify, this INR 300 crore-INR 400 crore that we keep spending on a usual basis, approximately how much capacity addition would it lead to on an annual basis? Is it like 10%, 15%, or higher than that? I mean, it is varied year-on-year. Roughly about three-fourths of that goes into cables and wires, and one-fourth goes into FMEG. So on FMEG, we have been moving towards in-house manufacturing, so that is wherein the incremental CapEx has been used towards. And cables and wires, that has been used for various purposes, to increase the capacity of domestic cables, increase the capacity of manufacturing cables which are exported, and all and so forth. So the expansion numbers vary quarter-on-quarter, sorry, year-on-year, depending on what we spend it towards. Okay. Thanks a lot. All the best. Thank you. The next question is from the line of Natasha Jain from Nirmal Bang. Please go ahead. Yeah. Thank you for the opportunity. Congratulations, sir, for a strong set of numbers. I just have one question on the A&P spend. So, do you bifurcate the A&P spend into cables, wires, as well as FMEG? If yes, then can you please give us the split, both for this quarter and same quarter last year? I mean, Natasha, we haven't, we normally don't give out the split between the cables and wires and FMEG, but definitely there is a kind of, the bifurcation that happens in the financials, as and when whatever that has been incurred for. So just any sense, Chirayu, as to more spend is towards wires and cables or towards FMEG? A qualitative sense will do. I mean, it will depend on what kind of spends we have done. So, for example, if there is a particular adverse treatment that we have come out for wires, for example, the Green Wire treatment that we came out for last year, so then those costs will be incurred on the cables and wires segment. If there is something that we are doing on the fan side, that will incur on the FMEG side. So depending on where it is utilized, those costs will be accounted for in the financials. All right. Thank you so much. Thank you. The next question is from the line of Nilesh from ICICI Securities. Please go ahead. Yeah, thanks for the opportunity. Hope I'm audible. My question is on lighting division. You explained briefly that the lighting division is undergoing difficult phase on change in pricing environment. So could you please elaborate on exact situation happening in the lighting division, both at company level and industry level, if you could so? Thank you. Sure, Nilesh. So, within lighting, especially in the LED segment, what has come about is that a new technology, which is known as Driver on Board Technology, has come about. Because of this, there is efficiency in terms of costing, as well as then, which has led to pricing correction in this. So what has happened over the past 12-14 or 12-15 months is that the pricing of LED lightings has gone down by almost about 24%-25%. And that is why you've seen the top line getting softer for us, for other peers in the segment as well. So that is what is an industry phenomenon as of now. As of now, we believe that pricing correction is should be done with, and now going forward, that should be... But, let's see how it pans out, going ahead. Yeah, thanks for the information. Thank you very much. The next question is from the line of Sandeep Agarwal from Naredi Investments. Please go ahead. Hello. Thank you. Thank you, sir. My question is regarding, sir, wire and cable side. Have you seen any material CapEx coming in near future in India, wire and cable side? Sorry, Sandeep, are you asking for us in terms of CapEx? Yeah. No, no, no. For the industry. I mean, if you look at across all the industries, so cables and wires have requirement across industries. You look at roadways, highways, power transmission, distribution, real estate, each and everything. If a private player is constructing a new manufacturing facility for himself or schools are being constructed, houses, commercial real estates are being constructed, everywhere cables and wires are required. So in that sense, and that is the reason why, you've seen the kind of volume growth that has been being given by the industry over the past few years. Because the CapEx, as well as investments in infrastructure growth, has been continuously increasing for many years now. And that is something that we believe will continue to go on for many years going ahead as well. Thank you so much. Thank you, sir. Sir, if you have more questions, can you please rejoin the queue? Thank you. Thank you so much. The next question is from the line of Onkar Ghugardare from Shree Investments. Please go ahead. Yeah, my question was regarding FMEG. You have been highlighting that it would be a 10% margin business, but given the state of the business currently and given the sentiments, I mean, what kind of a target you would be looking at for that? You have stated your target of 10%, and when it can turn into the, into black, and, excluding A&P spend, what would have been the profit this quarter or loss this quarter? Sure. So, when we started our Project Leap, there were various different changes that we made in how we used to operate in the FMEG segment. One of them was the complete realignment of our distribution channel. That is something that took us almost 1.5-2 years to complete and which is now behind us. There are 2-3 other things that we are doing on the FMEG side, which should help us on improving our numbers on that side. For example, we are doing a lot of work on brand positioning. We are doing a lot of work on new product development. We are making sure that we have product offerings across price segments, so that we are able to capture the opportunities that come in the entire industry. We are working a lot on influencer management. If you look at the FMEG as a business, the influencers are the one who actually decides or pushes a particular customer to decide a particular brand when they are buying a product. So we are doing a lot of work on influencer management as well. Through all of this, we definitely believe that the growth in FMEG business should start picking up. In terms of bottom line, there are two or three things which should help us. One is that we are now trying to change the mix of our product categories within the basket. Till now, fans and lights have been the largest contributor of top line on the FMEG side. But what now we are trying to do is change the mix more towards switches and switchgears. Switches and switchgears, as an industry, has lower competitive intensity and hence, much better margins than what can be made on the fans and light side. As and when that mix change will happen, you'll start seeing, improvement in margins. Second thing that, should help us is scale. We manufacture everything in-house, even on the FMEG side, and when you are operating at lower capacity, definitely your costs are higher, and hence, that, affects your bottom line. As and when we are able to scale up, the, the FMEG, segment, the product categories, you should start seeing improvement in margins over there as well. So, and the third thing that we are trying to do is premiumization. So in all the product categories, we are trying to be present on the premium side, where again, the margins have been are better. Traditionally, we have been only present in one price point, but now we have offerings on the premium side in all those product categories. So again, as and when the mix changes more towards sales of our premium products, again, the margins will start improving. So we believe that going ahead, both top line and bottom line should start to see improvement, and it will be a gradual improvement, but we still definitely believe that 10% EBITDA margins in FMEG is something that we should be able to achieve by FY 2026. Yeah, and the clarification on normalized profit, excluding A&P spend, what would have been? If you exclude the A&P spend, definitely there has been an improvement in profitability. I mean, it wouldn't be a significant number, but definitely it has been better than what it was in the past quarter. But has there been a profit or a loss, or you have broken even, or you haven't still? Again, well, if you look at the combination, we might have been on a bit of profit. Okay. And, in the short term, you expect that trend to continue to be in, black? Definitely. Gradually, we'll start seeing, much more improvement happening on the bottom side, bottom line side as well. Okay, thank you so much. Ladies and gentlemen, due to the time constraints, that was the last question. I now hand the call over to Mr. Gandharv Tongia for closing comments. Over to you, sir. Thank you so much for joining us, today. In case if you have any follow-up questions, please do write to us at investor.relations@polycab.com, and we would be extremely pleased to attend your queries. Thank you and have a great day. Bye-bye. Thank you. On behalf of Polycab India Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.