Ladies and gentlemen, good day and welcome to the Voltas Limited Q3 FY 2022 earnings conference call hosted by HDFC Securities. As a reminder, all participant lines will be in listen-only mode. 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 and zero on your touchtone phone. Please note that this call is being recorded. I now hand the conference over to Mr. Naveen Trivedi from HDFC Securities. Thank you, and over to you, sir. Yeah, thank you, Tanvi. Good afternoon, everyone. On behalf of HDFC Securities, I would like to welcome the management of Voltas Limited to discuss the post-3Q FY 2022 results. We have with us today the senior management of Voltas, represented by Mr. Jitender Verma, EVP and CFO, Mr. Manish Desai, Head Corporate Finance, and Mr. Vaibhav Vora, Manager Corporate Finance. I would now hand over call to Mr. Jitender, sir. Over to you, sir. Thank you, Naveen, and a very good afternoon to all the participants. You know, we started the quarter three with the optimism of festival season. However, the subsequent news of the highly contagious Omicron variant spread jitters across the world. On one hand, while post-crisis recovery seems to be robust, but on the other hand, it continued to remain uneven due to the renewed concerns about the evolving virus dynamics. Rising energy prices and supply chain disruptions resulted in higher inflation than anticipated in both the advanced and the developing economies. Taking cognizance of the same, IMF now anticipates global growth to be lower from 5.9% in current year, 2021 to 4.4% in current year, 2022. Supply disruptions also continued in the quarter. In China, disruptions from COVID outbreaks, interruptions to industrial production from power outages, closure of various industries amidst stricter norms by the local government to protect environment protocol and congestion at some of the ports resulted in input cost escalations. This led to non-fulfillment of contracts by some suppliers. Monetary conditions are being tightened globally. In United States, with price and wage pressures broadening and inflation at peak, the Federal Reserve decided to accelerate tapering of asset purchases and signaled that it will raise rates in 2022. On the other hand, fear of Russia border conflict intensification has affected oil prices, which has crossed $90 per barrel, adding to the high inflation. India has not remained untouched from these global events. Prospects for India seem more optimistic with IMF raising growth forecast of the country to 9%. Central Bank's accommodative stand and higher direct and indirect tax collections point towards economic recovery. However, at the same time, the increased WPI index reflects difficulty of the manufacturers to pass on the increased input costs to the end consumer. The reliable data indicates growth in the top line in general. However, margins have witnessed a decline across all sectors. In this overall context, we reported a mixed bag of results for the current quarter. Unitary Cooling Products segment reported a revenue of INR 1,094 crores, while Projects business reported revenue of INR 554 crores, and Engineering Products reported a turnover of INR 125 crores. Our consolidated total income for quarter three, FY 2022 was INR 1,822 crores as against INR 2,046 crores in quarter three, FY 2021. Profit before tax was INR 139 crores as compared to INR 166 crores in the corresponding quarter last year. Profit after tax was INR 97 crores versus INR 128 crores in the previous year. Earnings per share, not annualized, for the quarter ended 31st December 2021 was at INR 2.90 against INR 3.87, which was registered last year. For the nine months ended 31st December 2021, the consolidated total income was higher by 27% at INR 5,420 crores as compared to INR 5,061 crores. PBT was higher by 16% at INR 450 crores as compared to INR 388 crores in the corresponding period last year. Profit after tax was higher at 11% at INR 323 crores as compared to INR 290 crores in the corresponding period last year. EPS, not annualized, for the nine months ended 31 December 2021 was INR 9.71 as compared to INR 8.69 last year. Our snapshot of our results have already been given in our investor presentation in our press release. So I will not go through the numbers in more details on that. However, in our segment businesses, for our Segment A, the Unitary Cooling Products, UCP business, witnessed a tepid demand post the festive season on a higher base of corresponding quarter last year. Fear of lockdown amidst the highly contagious Omicron virus made the channel partners cautious enough not to stock high levels of inventory. Unitary Cooling segment reported a revenue of INR 1,094 crores as against INR 1,003 crores, representing a 9% increase over the corresponding quarter of the previous year. However, divisional bottom line declined by 17% from INR 123 crores to INR 102 crores, amidst increasing input costs, disruptive pricing by the competition, and resistance by the trade on price increase, given generally a low offtake volume quarter. Nevertheless, our focus on product placement, trust amongst the channel partners, and value proposition has helped us register a lower volume decrease as compared to the industry in general. Our focus on the inverter subcategory with competitive pricing and larger number of SKUs continue to favor us. Inverter category witnessed a good traction with the customers and now contributes over 65% of all ACs sold, compared to 60% for the similar period in the previous year. In terms of the overall AC market, we continue to retain our undisputed leadership with a year-to-date market share of 25.8% at multi-brand outlets. As concerns on global warming from increased energy consumption is growing, protecting and preserving our environment continues to form a prominent part of Voltas' commitment to sustainability. We are happy to report that Voltas has once again won the prestigious National Energy Conservation Award, outperforming other brands in fixed speed and variable speed AC categories. It may be noted that Voltas has won this National Energy Conservation Award for the fifth time, a testimony to our leadership in technology as well. The commercial refrigeration vertical has delivered a positive performance in Q3 by registering a reasonable growth in volume. Growth in commercial refrigerator products was driven by an expansion in trade sales, exports, and higher participation from OEM. In air cooler category, the lockdown disrupted the limited seasonal window available for secondary sales, even in the current year. This resulted in trade reporting a substantial level of inventory impacting primary sales in this category. As a second preferred brand in the country, we command a market share of 12.5% in air cooler category. We are happy to report that commercial air conditioning business has done well even in these uncertain times. Government, pharma, and healthcare related orders for VRF and other categories, along with increase in demand for light commercial air conditioning in financial services and food industries, has driven the growth in this product category. We continue to receive O&M contracts in many metro and infrastructure projects. Retrofit bookings have seen a spurt in high growth segments through repeat customers. Looking ahead, in the broader context of the commodity price increase and enhanced supply chain costs, the further price increase across all product categories is inevitable, which should support better margins. Segment B, Electromechanical Projects and Services. Segment revenue for the quarter reduced to INR 554 crores as compared to the previous corresponding quarter of INR 847 crores, primarily owing to a low carry-forward order book. However, segment results showed a positive growth from INR 14 crores - INR 36 crores. Carry-forward order book of the segment stood at INR 5,600 crores as compared to INR 7,076 crores last year. Over INR 400 crores of fresh orders were added across both domestic and international markets. The carry forward order book for domestic projects stands at INR 3,327 crores, containing a bouquet of orders across water, HVAC, rural electrification, and urban infra activities. The international order book stood at INR 2,273 crores. Better and timely execution of projects, availability of sites, and a healthy project mix has driven projects business during the quarter. However, since most of the big size projects are approaching completion and new projects being at nascent stage at both domestic and international levels resulted in an apparent low growth of revenue. An increase in commodity prices seems to impact the project cost budgets. However, a sensible negotiation both with the customer and suppliers helps in mitigating the risk. Meanwhile, the increase in global oil price and the lifting of COVID-related restrictions should improve business sentiment and open up further opportunities in our operating markets. As always, we will continue to follow a cautious approach while bidding for fresh orders. Adding to our technical execution credentials, Voltas was recently recognized as one of the HVAC Power 25 list in the Middle East for our international project business. On the domestic front, delay in fulfillment of CapEx commitment by center and state has led to a low order booking. However, we remain optimistic with an allocation of higher amount towards infrastructure in the recently unveiled Union Budget to boost the investments in the necessary and much-awaited infrastructure activities. Segment C, Engineering Products and Services. Segment revenue and results for the quarter were at INR 125 crores and INR 40 crores, respectively. Both Mozambique and India operations have contributed towards improved performance on the back of the revival of the crushing and screening equipment and renewal of the maintenance and repair contracts made with the customer. Growing yarn exports, demand for capital machinery, both in spinning and post-spinning, contributed significantly to this vertical. While the announcement of the production linked incentive PLI scheme for the textile sector will help the industry on a long-term basis. However, price increases by principals and supply chain related disruptions may pose some inherent challenges. Voltas white goods. Lower seasonal demand and trade sentiment to go slow on the inventory front, given uncertainty of the COVID-induced restrictions, resulted in lower volume sold. The manufacturing of frost free refrigerator has commenced at certain factory. We have also added a production line for fully automatic washing machine. This initiative of in-house manufacturing shall help the brand to introduce more customer-centric products, helping in optimizing the working capital and other cost savings associated with it. The recent external study conducted by Voltas Beko points out that Voltas Beko products carry a good brand recommendation with the customers among the established players in the segment. On the back of the stronger acceptance of its product by the customers, Voltas Beko has registered a market share of 2.8% and 3.4% in refrigerator and washing machine category, respectively. Voltas Beko will continue to leverage synergy of the distribution capabilities and other strengths of Voltas to optimize the benefits across value chains. Other matters and outlook. Looking ahead at Q4 FY 2022, which marks the beginning of the summer season sales for all cooling products, and availability of the complete season period, unlike past two years of COVID, we remain cautiously optimistic. Budgetary boost given to the infrastructure sector by the center may help us in building a strong order book, as with higher vaccination rates, the unwinding of supply bottlenecks and policy choices may remain influential factors for revival. In general, we anticipate a pickup in pace of activity, which can reasonably be expected over the coming quarters, and Voltas would continue this growth momentum. Thank you. Thank you. 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 withdraw yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. We request all the participants to limit your questions to two per participant. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Siddhartha Bera from Nomura. Please go ahead. The inventory and the demand, which you are picking up, in the current quarter, what will be the inventory levels and outlook? Siddhartha, is this the only question? Manish over here. Is this the only question? You have a second question as well. Second question will be only for the pricing side. You mentioned that there was some resistance in passing on the prices. In the last quarter, I think you indicated you had taken up pricing by about 3%. Was that rolled back and any further price increases which have happened in the current quarter, that will be from the side. See, Siddharth, let me answer in the sequence that you asked the questions. In terms of the inventory days- As we said in our opening remark, that the trade has become more cautious while keeping the higher inventory level at their end. Which means our anticipation is that the inventory days with the traders are going anywhere between 30-45 days. Largely, it is driven by the last two season experience on the COVID outbreak and the kind of uncertainties what we have seen among the trades, or I can say in terms of the secondary sales. I hope that the Omicron variant has come to an end, and all the governments or all state governments are opening up or are releasing the restrictions in a phased manner, which should bode well for the cooling product categories, which is starting the season period as early as mid-February now. That's why we have put our outlook that everything goes well, and we are not encountering with any other COVID mutant. Probably this is the first year where we are going to see a complete season period available for the cooling product categories, which should bode well for the industry. On the second questions on the pricing side, I would say that whatever step the brand manufacturers are doing, the increased cost is taking a one or maybe a larger step in terms of increasing the input cost. Sequentially as well, we have not seen any of the commodities has come down on a pricing front, except steel, which has some kind of moderate decrease over the last quarter. Having said that, all costs which are coming up. I would say the inputs which we are getting on a regular basis for preparing ourselves for season are coming at a higher cost. In a way, even though the price increase which we did so far on a year-on-year basis falling short in terms of the increased input cost. As we all know, the demand after festival season actually has come down, and the quarter three generally, if you go on a regular period, is not so strong in terms of the volume and all. It was not feasible to have the price increase or think about the price increase again. Having said that, we'll be cautiously looking into the market and the demand supply gap in order to take the necessary call in this regard during the quarter four. Yes, sir. Looking at the current commodity prices, will it be possible to intimate how much price rise you'll need to further take to achieve targeted margins of, say, 12%-13% on an annual basis? Siddharth, if somebody can say that the commodity price will not go further up from this moment, I can easily calculate on Excel sheet and tell you what price increase we need to do to go back to our margin trajectory. We all know it is practically difficult for any of the brand to do so. We'll be doing the increase in a phased manner so as to not to disturb the demand, as well as to gain the advantage in terms of passing of some of the costs to the end consumer. Thank you. No problem. Thanks. Uh, sir, if you can come back in the queue, please. Yes, you're welcome, madam. Thank you. The next question is from the line of Sandeep Tulsiyan from JM Financial. Please go ahead. Yeah. Very good evening. First question is pertaining to the UCP segment. If you can give some more color in terms of growth rates between how your B2B commercial air conditioning business has grown and the B2C business at what pace that has grown, and within B2C, if you can also give some more color on RAC growth and commercial ref growth on a year-on-year basis, please. Sandeep, if I look from the growth perspective, we generally look from both primary as well as secondary perspective. As you know, we do not have a confirmed data on the commercial air conditioner side from the third party source. It is difficult to see that or give any kind of objective numbers in terms of growth or degrowth for the sector or for the Voltas as such. However, we are seeing a good amount of demand coming up from the small institutions. As Mr. Varma said in his opening remark, the schooling institutions, food outlets, and small restaurants are seeing good amount of light air conditioner or commercial air conditioner requirements. Overall, the business has registered a 9% growth put together the RAC and the CAC. We would not, given the competitive scenario, like to give any further breakdown into this. Broadly, I said last year or last time that the CAC contributing around 20% of the overall RAC business what we are reporting it, and rest goes into the air conditioning and the commercial refrigeration, the air cooler category of the UCP segment. Got it. Mohit, second question is on the PLI investment, where we have committed INR 100 crores for the three equipment which was mentioned. If you can give any, you know, how this will change your insourcing component versus outsourcing, where it is currently, and within outsourcing, how much is domestic and imports? One clarification, is this entire order book pertaining to EMP segment or there is a component of CAC also merged within that? Yeah. The order book what we reported is for the EMP segments only, comprising of both domestic and the international project operations. As far as the PLI is concerned, the, as we said, in our last call that the PLI is large, we are putting that PLI application for some of the components like cross-flow fan and the pack and the heat exchangers, all of it some kind of plastic molded components. The way in which we are planning this expansion of this, or I can say backward integration, it will be coming in a phased manner, which means that we will be having a source both coming from our backward, the backward integration as well as from the supplier from whom we are sourcing currently. In terms of the heat exchangers, largely it is being sourced domestically, and it will continue to have it so, even though with the backward integration. However, the absolute volume may go down because our factories or backward integration will contribute some of our requirements where the need is adjacent to the plant where we are going to have this manufacturing. Complete outsourcing will not be stopped or will not be discontinued because the capacity with which we are coming up certainly will fall short of the total requirements which we are eyeing for under RAC business. Understood. Thank you. All right. Thank you so much. The next question is from the line of Manoj Gori from Equirus Securities. Please go ahead. Yeah, thanks for the opportunity, sir. My question is, given that, the channel checks suggest like January and even so far in February, the secondary as well as the primary continues to remain under pressure for the RAC category, like have you taken any price hikes over the last few days, just to get a broad sense on the pricing action? Let me give you an answer on why the primary remains still low in January period or in the month of January. This is partly because of the extended weather situation, I would say, which the entire country is going through. We have seen that there was an extended winter across all parts of the country because the temperature is still hovering around much comfortable level than the one required to go for an air conditioner requirement. I am sure if I look into the weather forecast, we are looking for a slightly higher temperature compared to last year as far as the summer season is concerned. That's why we said if weather is supporting us and we have not come across or coming across to the other variant of the COVID, probably this entire season period should work well and better for the industry as such. In terms of the price increase, as I said, till the time we are not seeing a good correction in the secondary market, it is difficult to do any price increase because otherwise it will remain on a piece of paper. Therefore, as I said, we'll be cautiously monitoring the market, demand, supply, how it is shaping up before we announce or before we carry out effectively any price increase. In terms of communication with trade partners, we have been continuously in touch with them on the need of increasing the price and which we'll continue to do so. However, in terms of the effective price increase, probably it's, as I said, it's a continuous, kind of exercise, but more effectively be done across markets shortly once we see the demand is coming back to season. Right, sir. My second question would be on the demand front, given that there has been a bit of slowdown in the consumer purchases, obviously since the third quarter itself. Like how do we look at the upcoming summer seasons? Is there any change in outlook, your internal targets, like how the summer could pan out? Whether the pent-up demand which we have lost over two years should kick in, industry should witness huge volumes during the upcoming summer. Any outlook on that? That would be my last question, sir. Thanks. Manoj, considering the penetration level at which this category, all these cooling categories are, we are reasonably sure that once we enter into a summer and the weather supports us, this category, the growth could be tremendous over the past two years because the product category didn't see a full-fledged kind of summer season for the last two years under the outcome of the COVID. In terms of why the demand is slow in the initial period, obviously the penetration level at which we are operating it means the first users are going to be more in the market. Then that can only happen once we see temperature is rising and people require a need of the air conditioner. We are very much optimistic that once we have the complete season and the summer which we, the weather forecast is projecting currently, this should work well for the category as such. Thank you. Thanks, sir, and wish you all the best. Thanks, Manoj. The next question is from the line of Praveen Sahay from Edelweiss Financial. Please go ahead. Yes. My first question is, sir, is it possible to share the volume growth for the UCP? And is there any price competition also you are facing in the market for RAC? See, we have given the value growth of 9%, as we have said. If I want to give you a secondary data, because that is more reliable driven towards the indication in terms of how the primary moves, the October-November data for the quarter, because December is still expected to have it, the industry has seen a degrowth of close to 5% in terms of the volume term. However, if I look at the same secondary data, the Voltas degrowth was close to 4%, which means, as continuing our practice, we are doing reasonably better than the industry as such. In terms of your second question, it was price, right? Yes, sir. Price, like competitive pricing, how is the scenario in the market? Do you expect- I would say that the kind of pinch which we are facing as a manufacturer, probably the other brand manufacturers are also facing the same because we consume the larger volume. The brand Voltas is in much competitive positions in order to sourcing the supply of the components compared to any other brand. However, we have seen that none of the brand has passed on the entire cost increase, input cost to the consumer. In fact, we have seen from the past record, there was a time lag between when we have announced the price increase compared to the other brands which have done fairly in the market. There are many brands, and we normally won't talk much about the competition because it is their own strategy, and their declared results are in front of all of you because I don't want to require to go and name the company. All the results are available today in the market, so in the financial world. Considering that, it looks like everyone is facing the pressure. As a leader, we have done the price increase across the categories, and we'll be doing it on a need basis once we see opportunity to take the lead into that. I'm sure that competition will also follow, but with some kind of timeline, continuing with the past practice of past trends. Okay. On the JV business, you are still making losses. Can you give any indication like by when you believe the JV will achieve the scale to breakeven? If I recollect and what we always given direction to the investors, that will be we are eyeing to have a breakeven in 2024-25, which means we are at least two years away or we have a two years timeframe in order to turn around. We are reasonably confident that we will be able to achieve those breakeven as per our strategic objectives of the objective year of 2024-25. Pandemic has created some kind of disruptions, some kind of delay in our plan. However, we are reasonably confident that we'll overcome those constraints, and we have not revised our guidelines, and we are still looking for a breakeven by 2024-25 at a EBITDA level. Thank you, sir. Thank you. The next question is from the line of Rahul Gajare from Haitong Securities. Please go ahead. Rahul, your line has been unmuted. Yeah. Hi. Can you hear me? Yes. Yeah, Rahul. Sir, thanks for the opportunity. Could you throw some light on the growth that the industry and the company has seen, you know, on region-wise? You know, which regions have done well for the company and industry? That is the first question. Okay. Rahul, if I give the region-wise, in fact, it is difficult or it is becoming difficult to compare the growth over the last year if I were to take only volume or a value front. The reason being is because two periods are not actually comparable. If I look from the first period or first year of a year before, the country has seen an intense amount of lockdown for close to 60-75 days. However, in the current year, that lockdown period is hovering between 30-45 days based upon the state relaxation guidelines followed during that period of time. That's why even we, when we see our data, we are getting a little bit confused in terms of interpretation, what should we do or what should we take as a base? If I take a pure base of year-to-year comparison, then the industry is showing a growth in the range of 34% to 30%, 35% to 40% over the last year on a YTD basis. Obviously we have retained our market share, so definitely we have done better than the industry aspect as such. However, in terms of the primary growth and degrowth, as I said, it won't matter much because it is of no use to dump the material with the channel partners if the secondary is not happening. We'll be definitely following close with the market move. In our reading, the north has slightly done better, followed by east, and south is also coming up aggressively, and west is catching up in the order of, I would say a growth trajectory for that matter. You think north has done better for you or the industry? As I said, industry data is giving a contradictory view. Overall looks like north has done better compared to the last year and catching up by the south thereafter. Okay. My second question is, you know, on the project business. You know, I understand Voltas has been very selective on new orders, but there has been a steady decline in the backlog, you know, over the past two years. Could you please highlight what exactly is happening in this segment? You know, is it more competition or lower inquiries? I mean, what is really happening that the orders are actually coming down? Thank you. See, I would say that in terms of the order book, there are two reasons which can attribute it towards it. One is there is a reasonable amount of delay at the center and state level in order to awarding the project. At the same time, as you all know, we are moving into a transition period by transferring this project business to a 100% subsidiary company. Both that factors actually affecting the securing the new order book. Having said that, we have seen that state and central governments are now aggressively looking for announcing the order book. We have seen some kind of traction coming into this, and hopefully so we are coming closer to the transition as well. All this will go well with the, I would say, a clarity in terms of winning the customer contract as well when we are negotiating with them. All this should go well when we look for building up the order book in the coming years, and that should give enough confidence or enough visibility on the revenue for the segment to grow. All right. Thank you. Thank you. The next question is from the line of Girish Achhipalia from Morgan Stanley. Please go ahead. Thanks for the opportunity. Sorry, I joined the call a little late. I have just one question. The quarter three run rate of raw material cost inflation, the quarter three basket that you have for raw material right now, is that a fair representation where the costs are right now, or have you seen further inflation in quarter four? Quarter four, we have seen, Girish, only the one month, which is January, and February is 15 days have gone. If I look from the landed cost perspective, the cost is still going up, but largely on account of the exchange fluctuations and not because of any base commodity price increase. However, if I look sequentially between quarter two and quarter three, yes, we have seen increase in almost all categories of raw material which we are looking into or which we are procuring or which we are sourcing for this category to be there. Except steel, which has seen some kind of, I would say a stay put on that. We have to see how these things will shape it out because demand domestically as well as internationally will go up to build up the necessary infrastructure which we are aimed up to do it. Steel and all commodities to be watched closely on that front. As I said, the inflation in the commodity has not come down, and we have seen some of the other kind of inflation impact in all the commodities. Thank you, sir. Thank you. The next question is from the line of Naval Seth from Emkay Global. Please go ahead. Yeah, thank you for the opportunity, sir. I have a couple of questions. First, do we have any inventory gain on account of low price inventory in the last quarter? And if yes, can you quantify that as well? Second, Manish, as you have been highlighting about price increases getting delayed, so is it fair to assume or what I have kind of interpreted that it is not because of competitive intensity, it is because of demand which is lower, which is restricting industry to take price hike. Is that fair? Third question is that by when we are expecting the transfer of our project business to the subsidiary. Where is the process right now, and how much time we are expecting it? Thank you, sir. These are my questions. Okay. Naval, sorry, since you raised three questions, I missed out your first question, what it was? So If that's gain of low cost inventory in- Naval, in fact, when you see into our working capital or the kind of capital employed what we have in the business, we have never kept the inventory for a period of one year. It was on accelerated level for some period of time. That point of time we took an advantage of the average holding of inventory costs. However, now all the materials which are getting imported from Q2 onwards are coming on incremental orders that we place with the suppliers. As we've given comments in our outlook in the opening remarks, there are a lot of disruptions in the supply chain actually putting a lot of pressure on the increased input costs, and which is making it difficult for the suppliers with whom we contracted the material to supply at the order price. All this is giving a kind of inflationary or increased input scenario on each of the further inward which we are taking into it. We may get some kind of advantage when I bundle it out between the quarter two inward vis-à-vis the quarter three inwards and how it will move to a subsequent period. It will still, if I compare on a YoY basis, it will still be going or giving a higher kind of increase in input cost compared to what we were getting in the earlier years. That's the answer. There's no inventory gain as such. All gains are periodically accruing it and getting accounted in terms of declaring the results. On a YoY basis, till the time I'm not getting or not seeing any hold or any kind of stability on the commodity side, probably this trend will continue, because we are preparing now for the season. Definitely the more inward of categories or the commodities or their material will flow in in the quarter four. Now, having said that, your second question was in terms of when we are transferring the project business. As I said in my earlier remark to Rahul, that almost looks like by 31st March we'll be able to complete the entire transition post the transition related work and hopeful to transfer this business to 100% subsidiary company effective 1st April 2022. On the second question on price increase, so it is demand and not competitive intensity which is delaying the price? I would say both because if the demand is there, which means the customers are coming in, and I keep on saying that if out of four machines, one machine is getting sold of Voltas, none of the retailers will have a situation of not keeping the Voltas material on the shelf. Everyone would like to have Voltas being the brand, being put up on their shelf. Having said that, once I see the demand, it becomes a favorable factor for me to increase the price. Competitors, as I said, they always have a time lag. When we announce a price increase, they'll be doing subsequently at a later period of time. Being a leader, we believe that it's our reasonable course to do so, and we will definitely be doing so in the future when we get an opportunity. Sure. Thank you. Thank you. you. Thank you, Naval. The next question is from the line of Pulkit Patni from Goldman Sachs. Please go ahead. Sir, thank you for taking my question. Just one question. You made the statement that the project business is also not being able to win orders because of this transition of business being moved to subsidiary. I don't understand this. Effectively, it's still a subsidiary of Voltas. Even if it gets transferred later on, it will be to probably a group company. I don't understand why the order wins are getting impacted. Is it, you know, employee morale or something in that business? Because that does have an impact on how we should look at the order win and the profitability of the business for the next few quarters. If you could just clarify what you meant by not winning orders because of it moving to a subsidiary. I said when it is moving to a subsidiary, I'm not saying projects are not getting winning on that count. Because there is a delay over there, what will happen for now, what is happening for it is we are there. We are bidding for infrastructure projects. When you go for infrastructure projects, you require to have a pre-qualification, qualifying yourself to have work experience to do on those kind of projects. As you know, three sectors are coming up on those project sites aggressively. They are the water, electrical, and the modern infra. I say modern infra is like your airport, your metros, and all such kind of infrastructure which is getting developed. In all these contracts we really do with the governments or to a main contractor, they require a certainty in terms of who is going to execute the project, and furthermore, whoever whomsoever is doing it carries a requisite, a prequalification or not. On both the fronts, we have when we bid for the contract, we have said it's a 100% subsidiary contract. Today, they are bidding for it. However, sooner or later, this project business is going to get transferred to it, so it will have both technical, financial, and all other capabilities in order to execute this project. Some of the customers may listen to it, and we have on their ground, we won the project. We won some of the contracts. We said we are closer to almost INR 200 crores worth of contract we took on, or INR 160 crores or INR 100 crores on domestic front, and put together INR 400 crores of contract we won in this current period. But some of the customers may not be openly looking into it, and they'll say, "Boss, I'll give you this once you are actually completing the transition." It's a mixed situation on that front, Pulkit, which is creating some kind of, I would say, a temporary blockage in getting the orders. We are, as I said, reasonably sure in the next two months the transition will complete, and all other things like prequalifications, PQ and all, will get transferred to a subsidiary company, and we should be able to go back on our order trajectory of winning the orders and building up the strong order book for the same. Got it, sir. This is very clear. Just one more bookkeeping question. What exactly had been the order inflow in the quarter, if you could split it domestic and international? Domestically, we are at INR 165 crores, and rest all are for international. Total we have secured INR 400 crores of order. Got it. Thank you so much, sir. Thank you. Welcome. The next question is from the line of Sanjay Ramani from Envision Capital. Please go ahead. Yeah, good afternoon, sir, and thank you for taking the question. Sir, are there any margins guidance? Can you provide us any, as we see that the prices are rising and we are facing some difficulties in increasing the prices and which will be seen in coming months or quarters, I would say. Then too, there would be some margin guidance success that we would be able to maintain. If you can highlight something on that, sir. Sanjay, are you looking for a margin guidance of product business or a project business or on a Voltas business? Sir, overall, I would say overall margins. Yeah. Overall margins, in fact, if you see the current year, wherein we are better to do in a project business, given that the kind of project mix which are flowing through and the execution capabilities which we are able to demonstrate. In terms of the product business, just because of the volume degrowth in the season period of time because of the COVID situations and this increased input cost has impacted the margin, I would say a percentage to the results. At the same time, the other income, because it consists of the other segment as well, which is segment C, has exhibited well, both in terms of revenue as well as on the margin. Interest income has fallen short because we all know the interest have come down and that continues to do so unless and until we are seeing a policy direction from our central bank on increasing interest over there. In and all, I would say that probably we would like to maintain the current trajectory in which we are operating through. Although we are, I would not use the word bullish, but we are optimistic about the margin on the product business side because sooner or later we should be able to pass on a substantial amount of increased input cost to the end consumers. Once we do so, probably we come back to the double digit, which anyway we are there today. At some kind of suppressed level to bounce back to the trajectory which we were enjoying earlier. This is why I would say that, probably another two quarters we are seeing that we should go back on the product side and should start earning, margin, coming back to the trajectory which we always used to have in the range of 11.5%-12%. In case of product project business, probably we remain where we are. Probably we try to improve upon it, but the uncertainties and execution largely depends upon the external factors. We would not like to go below 4.5%-5% where we reach currently on a YTD basis. That's where I would say, Sanjay, on the kind of overall outlook, although we are all seeing that there are very many uncertainties around us, but we are reasonably confident everything works well or what we are anticipated the move should result into this kind of project, this kind of overall margin. Okay. Thank you. Thank you. Thank Thank you so much, sir. This was very clear. One last question on any CapEx plans further for FY 2023, if you can provide some guidance on that? FY 2023. Because FY 2022 is about to end now in the next two months. Yes, FY 2023. Sorry. Obviously in falling in line with the PLI, which you talk about, where we applied for a lower interest with the high investments, we are planning to carry out a CapEx outflow INR 100 crore-INR 125 crore on a PLI front. At the same time, we are augmenting our manufacturing facility for a commercial refrigerator as well as for the air conditioner, which will require us put another around INR 100 crore-INR 150 crore over there. In all, we are eyeing for close to INR 250 crore-INR 300 crore in the next 18-20 months for the causes which I just talked and narrated about. Thank you. Thank you. Thank you so much, sir. This is all from my end. Good luck, sir. Thank you. Thank you. The next question is from the line of Renjith from Mahindra Manulife Mutual Fund. Please go ahead. Hi, sir. Sir, we have heard that in July the new energy transition is going to happen. In that context, just wanted to check with you, some of the competitors are planning to launch their new labeling products. It's from February itself. What will be our strategy? Because I think post-July, we won't be able to manufacture the older top-load products. Just wanted to check with you what will be our strategy in that. Sivaram, we definitely will not be falling back if I look from the competition side. Rather, we will take a lead into this kind of aspect. Obviously we are also going to have those kind of star labeling product be there. But what is happening is that 1st July, which you are talking about, we all need to see how those things are getting panned out. Because if the season, we are optimistically to have the good and full season over there. But for any reason, the season is not falling in line with the expectations, then in those cases, probably the industry may again approach the ministry in order to give a further extension. To just recall the entire discussion on this front, the industry has requested for a one-year deferment on the energy label. However, the industry or the ministry has given a grant of six months with a promise that they will review the position in the next six months down the line. Any upgraded products which you try to sell will have an impact on the cost. At the same time, the industry, the manufacturers are trying to pass on the incremental cost as well. If you are doing both the fronts together, I am sure that the price increase for the consumer will be inexorable for that matter. I believe that we will also come out with a new labeling kind of product, but it will in a limited way, and we'll calibrate in such a way that it won't impact the demand. At the same time, we can easily migrate to the new table, from 1st July when the situation becomes mandatory to do so. There can be a lot of pre-buying happening before the season. The restriction is only in production, right? There is no restriction in terms of sales. Yeah. Because some of the inventories will still lie with the channel partners, no? It is always be there. We always say that manufacturer will be starved because unless and until the inventory won't exhaust at the channel partner level, those inventory will be keep selling to the end consumers. Probably Q4 can see a pre-buy impact because of this. It all depends upon, as I said, Sivaram, the best thing is to look into how the season is going to go. As I said in our opening remark, we are looking into a complete season period, unlike past two years where we have some kind of restrictions or limitations. If that's so, the 2022-2023 should see a bumper growth for this industry, and which will take care of all past issues which we're facing on this, industry front. Okay, great. Thanks, and all the best. Thanks, sir. Thanks. Thank you. The next question is from the line of Gopal Nawandhar from SBI Mutual Fund. Please go ahead. Gopal Nawandhar, we are now able to hear you. Please proceed. Yeah. Thanks a lot. Just on the, you know, this cost inflation and all. If I understand it right, generally, for the supplies, for the season, it's already, you know, tied up, say, two quarters before the season. Is that understanding right? That, in that front, whatever, like, the cost inflation which has been there in the Q3, is already, like, locked in for the season? Gopal, actually I could not get your question. What you are saying, in fact, your voice also becomes wobbly in between. Gopal, I could not get your question rather. Yeah, yeah. I'll just repeat it. Is it better? Yeah, it's better. Yeah. What I wanted to ask you, Manish, is that generally, the understanding is that, for the season, the supplies are tied up two quarters back. In terms of cost inflation and all, is it right to assume that whatever cost inflation we have seen in the Q3 is being locked for, the season? Or, if there's some- Provided supply has also been made based upon the contractual terms. In our opening remark, we clearly said, having seen the continuous increase in the commodity price, the suppliers are finding difficult to honor the contract or to honor the supply at a contracted rate. That's why it is coming to and fro kind of situation whereby they have to come back and we have to agree on an incremental price on a mutual agreed terms and conditions. That's why I said, it is difficult to say how much my cost increase has gone up and how much I need to more compensate. Because every week or every 15 days, I am getting some kind of inward supply. Some of the cases it is coming at the same price, some of the cases it is coming at an incremental price. It is difficult to judge, but that's what dynamic situation which we are. We are taking cognizance of the situation on the same and doing the corrective actions on the further value chain as well. Sure, sure. The second question is on the project business. Despite having such a strong order book, the execution is being slipping for last two, three quarters. Any particular reason would you assign to this? I would say that. Yeah, sorry. So far I would feel that the execution this current year is much better than compared to the last year, where we have seen many kind of immobility and the restrictions impacting the even access to the project site. This year in terms of the accessibility and the execution actually went well or worked in our favor so far. What is impacting us is the project mix which is going through it. On the one hand we are having a limited amount of order inflow coming to us, for the reasons I have already explained in my call. Second thing is, some of the projects which we are running in the last 15-18 months are coming to an end. All this project mix creates some kind of revenue impact, and that's what we are seeing currently. However in terms of the bottom line, you all are seeing that it is our approach of taking a selective project and in a risk mitigated way, helping out in terms of improving our bottom line. As I said, we're in a project business. We are cautiously optimistic to see that whether we should continue this trend because any change or any limitation on the ground, be a project site or a liquidity or a certification or any kind of work from the customer side may have an impact on the overall bottom line of the project, in the project business. Okay, because see, in the last two quarters we have been almost. Sorry to interrupt, sir. I would request you to please email your questions due to time constraint. Sure. We'll have to move on to the next. Thanks. Thank you. In interest of time, we'll take the last question, which is from the line of Sujit Jain from ASK Investment Managers. Please go ahead. Yeah. Hi, Manish. You know, the other significant listed companies spoke about 25% value growth for the industry for Q3 FY 2022, and we are at close to 9% increase in value growth YoY. Does that mean that we would have lost the market share? If I look from the 25% value growth in terms of the YoY, I would say that the product mix, which is only giving some kind of flip to it. However, the generally primary also grows based upon the secondary. We cannot have a primary per section which is not moving and the secondary is moving on the other direction. We have to get the further clarity on this 25% value growth because for the quarter, if I see, the industry actually has degrowth and for the year I've clearly said the industry has done a growth of in excess of 35%. If 35% is a growth in terms of the volume, value growth cannot be at 25% at the first stage. If the quarter is concerned, the quarter has shown a degrowth over last year when I compare to the previous years in this year. You are saying Q3 FY 2022, there's a degrowth in terms of value in primary YoY? I am saying secondary when I said 5% degrowth for the industry. I have talked because the secondary data is more validated, chiefly because that is being conducted by the third party independently. Although we didn't have a December data, I clearly said in one of the answers to the call or the question that for October, November put together, we are seeing the industry is in a degrowth of minus 5% in volume terms and minus 4% Voltas is in the degrowth in this period. Okay. Value term, what it would have been in your opinion in Q3 FY 2022 for the industry? See, we are not taking the value term as such because as I said, we have not seen any kind of premiumization in this category as such, except the inverter category and some of the five-star products. That if I take the inverter which is there last year as well, and the five-star for the industry as such is contributing in the range of between 20-25%. Because of which we both go into more, into volume terms and not the value terms. Thank you. In the interest of time, I would now like to hand the conference over to management for closing comments. Well, Manish, thanks for taking up the answers and we like to thank all the participants for their questions. Thank you very much. To add to what Mr. Verma said, if any questions remain unanswered, email, web or you can write to us and we'll be responding to you as early as possible. Thanks to you, and wish all of you a good evening. Thank you. Happy Valentine's Day to all of you. Thank you. On behalf of HDFC Securities, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.