Ladies and gentlemen, good day and welcome to the Voltas Limited Q3 FY 2023 earnings call hosted by DAM Capital Advisors Limited. As a reminder, all participant lines will be in the 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 then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Ms. Bhoomika Nair from DAM Capital Advisors. Thank you, and over to you, ma'am. Thanks, Aman. Good afternoon, everyone, and a warm welcome to the Q3 FY 2023 earnings call of Voltas Limited. We have the management today being represented by Mr. Jitender Verma, CFO, Mr. Manish Desai, Head Corporate Finance, and Mr. Vaibhav Vora, Manager Corporate Finance. I'll now hand over the call to Mr. Verma for his initial remarks, post which we'll open up the floor for Q and A. Over to you, sir. Hi. Good afternoon, everyone. I hope you all are having a good day. We start with our call by giving an analysis of results from our side, and then we'll open the call for questions and answer. As you are all aware that the impact of multiple headwinds during the calendar year 2022, you know, such as Russia and Ukraine war, resurgence of COVID-19 in China, movement of commodity prices and policy measures taken by central banks of increasing benchmark interest rates to curb the inflation, et cetera, could be felt throughout the year. Considering these above macroeconomic factors, USDR along with other currencies across the emerging markets remained extremely volatile and depreciated about 11% during the year, adding to the rules of inflation and consumer sentiments. While the impact of COVID has slowed down, the consequences of war and inflation still persist. Stoked signs of recovery in the last quarter of the calendar year in few economies, descending inflation rates and softening of central bank stance on the interest rates are green shoots building positive sentiments around the globe. While India has showed resilience to this global inflation, the overall growth of economy has witnessed the effects of various global events. The widening of current account deficit, muted capital inflow and higher inflation rate has affected the consumer confidence index across all segments and in particular, the discretionary sectors. The policy measures taken by the central government to strengthen manufacturing in key sectors, that is production-linked incentive, higher allocation towards building infrastructure and softening of inflation rates shall support the economic growth in the coming quarters. Given seasonally weak quarter for the cooling products, the company reported a growth of 12% for the quarter in consolidated total income at INR 2,036 crores as compared to INR 1,822 crores in the corresponding quarter last year. Profit before share of profit loss of joint ventures and associates, exceptional item and tax was at INR 90 crores as compared to INR 131 crores in the corresponding quarter last year. Profit before and after tax was impacted during the quarter due to an exceptional provision made on an overseas project. Earnings per share not annualized for the quarter ended December 31, 2022 were at negative INR 3.34 compared to INR 2.90 last year. A snapshot of our results this quarter is presented which already is in our published statements. Segment A, residential cooling products. Considering the seasonality of the cooling product business, this segment has performed relatively better, reporting a revenue growth of 11% and 44% compared to Q2 FY 2022 and nine months FY 2022 respectively. During the quarter, we witnessed positive demand for high ISEER and better STAR-rated products across the markets. The expanded portfolio of SKUs with improved features and tactical pricing of inverter category has helped us in increasing its share to 82% from 65% of split air conditioners sold during the quarter. The success in the split category has led us to launch inverter window category in the recent period. In terms of the overall AC market, we continue to retain our undisputed leadership with a YTD market share of 22.5%. The expansion of exclusive brand outlets and healthy participation with various channels shall assist in the forthcoming season sales. It shall further strengthen our market leadership in this category. Commercial refrigeration continued its growth journey during the quarter with the participation from OEM and retain chain. The capacity expansion is progressing as per schedule, which will help us in introducing various consumer-centric products with improved features. With the objective of product portfolio expansion, we have signed technical agreement with Vestfrost of Denmark for medical refrigeration products during the quarter. The relevant SKUs will be introduced in the coming year with the long-term objective of attaining a leadership in this growing category. After having muted growth in the air cooler category during COVID-19 period, this category has grown during this quarter as well for the period ended December 2022. Introduction of SKUs across all product verticals, a differentiated product from the investment in molds, and a targeted distribution and dealer scheme have resulted in wider penetration across potential markets, which will bode well for future quarters. The above has resulted in improving overall profitability of the category with a market share of 9.2% in this competitive and fragmented market. Expansion of commercial establishments across various sectors and a growing demand for light commercial and ductable products resulted in growth for the commercial air conditioning category with improved margins. The focus on customer retention with value-added services is supportive in securing long-term orders of after-sales service at a competitive pricing. Sorry. On the cost front, the quarter has seen reversing of downtrend of commodity pricing witnessed in the previous quarters. Sorry. The rupee depreciation has taken away this so marginal advantage of soft commodity price from the peak level. The intense competition to grab the market share by the players in the industry has kept the consumer price competitive despite an energy upgradation in July, increasingly cost across air conditioner products. The value engineering coupled with heavy negotiation with the suppliers have mitigated the above risk, partially reducing the impact on margins sequentially. In summary, for the quarter ended December 2022, the UCP segment registered 11% growth in turnover from INR 1,094 crores to INR 1,216 crores. Segment reported an EBIT of INR 89 crores in quarter three FY 2023 as compared to INR 102 crores in quarter three FY 2022. For the nine months ended December 2022, the segment registered 44% growth in turnover to INR 4,426 crores from INR 3,064 crores with the EBIT of INR 332 crores. Segment B, Electro-Mechanical Projects and Services. Segment revenue for the quarter was INR 648 crores as compared to the previous corresponding quarter of INR 554 crores. Segment result reported a loss after exceptional item of INR 183 crores as compared to profit of INR 36 crores last year. Domestic projects business witnessed a jump in order booking of INR 1,040 crores as compared to INR 185 crores in similar period previous year. This quarter witnessed a planned execution of the projects. However, a delayed certification by customers coupled with new projects not crossing the milestone of recognizing margin in line with the internal policy impacted the financial results. Inter-International business has secured an MEP project heralding our entry again in the Kingdom of Saudi Arabia. The progress of the ongoing projects across Middle East is at scheduled pace, and few of them are at the completion stage in the near future. Delayed collection in few of the projects continued in this quarter, resulting in provision in line with the risk policy. In addition to it, in one of the overseas projects in Qatar, the main contractor has unilaterally attached the underlying bank guarantee regardless of any such action from the client to his bank guarantee and in spite of satisfactory execution and performance of our scope of work. The company has considered a provision towards retention dues and the attached guarantee of the said project following a prudent approach and disclosed the same as an exceptional item during the quarter and nine months period ended 31st December 2022. The company has initiated legal actions and issued requests for arbitration to recover the amounts due from them. Domestic front, we remain optimistic with an increased allocation of infrastructure relevant to our project skills and expertise covering electrical and water infrastructure. At the end of the quarter, the carry-forward order book for domestic projects stands at INR 4,538 crores, containing orders across water, HVAC, rural electrification, and urban infra activities. The international order book as at 31st December 2022 stood at INR 3,505 crores. Total carry-forward order book of the segment stood at INR 7,543 crores. Approximately near the pre-COVID levels, giving a clear visibility to future performance. Segment three, engineering products and services. Segment revenue and results continued to report improved performance for the quarter over corresponding quarter of previous year. Segment revenue was INR 180 crores, and EBIT was INR 46 crores respectively. During the quarter, mining operations in Razmig were in full swing. Increase in off-core duty on the RNO has impacted the demand for the capital equipment and improved margins has boosted results for this vertical. Improved delivery of textile capital machinery from the principals and a tactical approach towards after-sales service revenue augured well for the segment during the quarter. Focus on after-sales service gave boost to the margins under the vertical. Supply chain-related disruptions and volatility in the yarn prices impacted the running of textile mills, which continued to pose challenges in the challenge period. We are happy to inform that we have a good order booking of capital machinery pipeline, and have also won contracts for few global vendors during the quarter. Whirlpool Voltas-Beko. At the outset, the Whirlpool-Dana her brand has crossed a milestone of selling close to 3 billion units cumulatively since launch, which is first one in the appliance category in a short period of around four years. This demonstrates the strength of Whirlpool-Dana her brand and acceptance of the products across value chains. The demand for the appliances at large was muted during the quarter, given the overall trade and consumer sentiments. On a relatively higher base of the previous year and the limited offtake during festive season has affected the trade participation in the primary sales, resulting into a small volume drop during the quarter. Nonetheless, the brand is aggressively pursuing growth strategy by increasing channel participation, focusing on the online retail channels and e-commerce players. Whirlpool continues to provide good quality products in refrigerators, washing machines, microwaves, and dishwashers at value for money. The aggressive localization of these products accelerated launch of customer-centric products with improved margins and improved supply chain to mitigate related risks. Whirlpool will continue to leverage strength of our international joint venture partners across value chains to further strengthen its presence of Whirlpool in this competitive environment. Outlook. The softening of the rural inflation and buying across sales channel or the forecast of hot weather should support cooling product sales in the coming quarter. The easing of supply chain disruptions should also bring stability in commodity and other related costs. In addition, a focus on the infrastructure by the government in the operating territories should help in securing profitable orders for the project business as well. In general, we remain optimistic with improvement in general macroeconomic environment. Thanks. Hi. This brings an en from our side. The platform is now open for any question and answer session from the participants. Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star one on their touch-tone telephone. If you wish to remove yourself from the question queue, you may press star two. Participants are requested to limit their question to two per participant. If time permits, you may join the queue for any follow-ups. Ladies and gentlemen, we will wait for a moment while the question queue assembles. First question is from the line of Ankur Sharma from HDFC Life. Please go ahead. Yeah. Hi, sir. Good afternoon. Thanks as always for your time. Three questions. One, again, on the room AC side first. You know, given the fact that, you know, we had a very weak second summer, you know, and, when I look at the GfK data as well on, the retail side, AC sales have actually declined at least for November, December. Sorry, October, November. December, I haven't had a look at. Clearly, you know, Details have not been very good. If you could help me, understand the kind of inventory that is there, both with you also with the channel as we get into the, you know, upcoming summer season. Do you believe given if there's high inventory, you know, you may see slightly softer primaries, going into Q4? Ankur and other participants, since Mr. Verma has a throat problem, most of the questions will be answered by me, leaving any few questions where Mr. Verma has to provide additional input to it. Having said that, Ankur, yes, if I look from the October to December GfK data, the growth in the category of the air conditioner is not even more than 2%. Primarily led by some growth what we have seen in the month of December, whereas the reading of the October level, what you said stands, it holds good over there. That is resulting into a invent of the material by the channel partner as well. I would say that the inventory at the channel partner and has largely been regularized or largely been in line with the secondary sales what they are seeing. Accordingly, in our own reading, the inventory with channel partner is not in excess of what the season or what the period demands for the same. If I look from the manufacturer perspective, Ankur, obviously we are building up for the season period. Looking into various initial, I would say, hearings on the supply chain, possible supply chain disruption on account of COVID or whatever the reasons, learning from the past lesson, we wouldn't like to take any risk during the season period of time and that because of that, our inventory level are slightly higher. If I take into the growth or when I take, the volume of the last year, what we did for us as well as for the industry, I would say that the players will be carrying inventory of not more than even 75-80 days or more than 90 days. In our case, if I take into the future the volume growth, what we are eyeing for it, our inventory days are in 75-80 days. Okay. Fair. Second would be, you know, on price hikes and your guidance on margins, more importantly for FY 2024. You know, typically, you know, brands announce new models for summer during Feb and possibly take price hikes as well. What are you seeing or hearing, you know, and what are you planning to do as well, given, you know, the market data for the coming summer? I remember you said that, you know, for the foreseeable, at least for the next few quarters, you have said in your Q2 call, margins could be in high single digits. Are you still retaining that? Would you want to kind of raise that given RM prices at least seem to have cooled off and kind of stabilizing? Ankur, in fact, the new models we get introduced during this quarter four, because that's where the model launch plan, taking into consideration the season preparations and season demand from the consumer side. If I look from both from the cost and price side, yes, there's a pressure on the cost. We have seen softening of the commodity price. However, we all will agree that in the latter part end of the quarter three, the cycle is getting reversed, and we are again seeing the accelerated or the escalated commodity price setting in. Although it is still lower than the peak what we have seen in the beginning of the calendar year. However, we all know that still the component perspective, the larger dependence is still continuing on the import side, which means any currency depreciation also will have impact on the overall cost structure for the category. That's where, in the initial spill which we just put it out, we clearly said that the cost has not actually seen any significant reduction. In fact, after the energy labeling, it has marginally gone up. However, the quarter two and quarter three from the consumer perspective, the demand was not that strong, and that was not having any sense to do a price increase in the market. We have to wait and watch for the quarter four, how it is panning out. If it is showing a good amount of or reasonable amount of growth, what industry is expecting it, some kind of price hike can be expected in the beginning of the quarter one of the next fiscal year. For the quarter four and even for the quarter three, which we have seen, there was no price increase announced, at least by Voltas, for the quarter three, and there's no plan for any price increase to be announced for quarter four as well. Thank you. Mr. Sharma, I request you to join the queue for any follow-up. Before we take the next question, I'd like to remind our participants to limit your question to two per participant. If time permits, you may join the queue for any follow-ups. The next question is on the line of Sujit Jain from ASK. Please go ahead. Yeah, thank you for the opportunity. If I look at your Q1 presser, you spoke about exit market share 24.1%. In Q2 presser, you spoke about August market share, and in Q3's presentation, you spoke about YTD market share. Our request would be to stick to one format. If there is an improvement that you need to highlight, you can highlight it separately so that we can maintain a series across all quarters and all the years for your market share. That was. Okay. Let me answer this one so that I can recollect when I complete your second question. Since the reporting, what happens is, since you are in a seasonally product category, and the, when you have a secondary to give you a perspective for the October to December quarter, for as for the GfK data, the entire secondary in this quarter is 500,000 units. If I take the industry size, it will come in a small%. That's why any swing in the market share for any player as such in the industry during quarter two, quarter three will not have that meaningful difference or meaningful kind of indication towards it. That's why we refer to our YTD market share generally during quarter two and quarter three compared to the quarter one and the quarter four, where the exit market share does make relevance due to the season peak, year, season peak time for this category. This is the clarification, but if you require separately, you can contact with us, with any one of us, we'll give you the month by month if you need for that market share trajectory. Yeah. The other company listed large, where they report YTD for every quarter. Basically, there is some semblance as to how the series is moving. I have not seen. If I look from the listing category, I have seen only Blue Star, which is making the investor call up like us. In that, if you look into that itself, they do talk about the market share, what they have. Then if it goes, that's why. When in a quarter, what it generally prefers a YTD during the quarter to quarter. This is my reading, but I'll correct myself once I go into more deep and when I interact with them, generally we do it after the quarter ending. Yeah. about the EMPS segment, the negative margin- Furthermore, to give a clarity on that, there is a difference between appliance and the air conditioner. Generally, we look into the appliances because of the festive season. You have a good amount of buying coming into a refrigerator, washing machine. That also draws them in order to report a market share at a particular frequency. This is what the analogy I can drive for it, being in the industry for some period of time. You can proceed with the second question. Yeah. I'll takeu this offline. To maintain the same series, you should be reporting YTD so that there is no confusion. As I said, you can interact with us at any point of time to get any month market share in between. For the reporting period, I cannot talk about the unreporting period for that matter. Sure. Thank you. EMPS, the negative margin that you reported, the EBIT margin, and you called out provisioning for delayed collection, is this on account of Indian orders or Middle Eastern orders? I would say largely it pertains to when I aook into the domestic side, we have find the delayed, I would say, certification of the claim amount. Generally what happens is the certification of the regular bills takes at the, at the pace at which it is taking place. When the project is coming to an end or when you have a substantial amount of variation that claims to be certified, it generally takes a longer time. As our internal policy, we cannot wait endlessly to get it approved because in our books of account, it's been accounted as a cost, and I have to take reasonable provision in terms of any delay over there. In case of domestic, this was a dominant kind of factor, where the settlement of the claims actually took a longer time, and the claim and the variation. If I look from the international side, yes, the delayed collection played a larger role in addition to the exceptional item which we have just built out in terms of one of the contract, one of the order, where the unilateral action being taken by the contractor, regardless that his position with the main client remain more, I would say, in a quiet manner. Thank you. The next question is from the line of Rahul Gajare from Haitong Securities. Please go ahead. Thanks for the opportunity. Building on the earlier question, you know, is it possible you can quantify the provision that you've made towards receivables and the provision you've made towards the international projects? We have a very clear understanding as to what is the provision that are for the receivables, which obviously, it's more of a delay rather than not coming. Whereas international project, we don't know what is what could happen over there. As I said, Rahul, I've just clarified to the earlier participant, when in the case of domestic, it was largely because of settlement of the claim that is going into delayed settlement of the claim is going into it. On that front, the provisioning on account of receivables delay or collection delay is not so high compared to the international. We are not giving any breakup in between these two verticals of the projects. I would like to maintain those, I would say, trend for that matter. Okay. sir, with respect to this particular project, do you see any more risk of similar provisions which would come in international projects? How the risk management, ensuring that, you know, such things will not happen? Rahul, if I, if I look, if you ask me this question in quarter two, I was more confident that probably such kind of action is not foreseeable in any of the projects which we are doing in the international projects. After having this quarter three incidence as well, our confidence is also somewhere going into much in a deeper way in order to see that what more can come and how best we can safeguard those risks. If you, if you look into this, there is no similarity between quarter two and quarter two incidents in the quarter three event. If I look from the quarter two, it was, although we have mitigated the encashment of bank guarantees by putting a condition, but that condition got fulfilled and thereby the guarantee got invoked. In the present event, it was, as I said, regardless that the main customer has not done any action against the contractor. Contractor has acted unilaterally. In this case, I would say we have a limited kind of avenues in order to mitigate those kind of risks because We all know bank guarantee, be a domestic or international operation, is like a bearer check or bearer instrument you are giving in the hands of the beneficiary to do act. Whatever we can think about the condition to put in order to mitigate the risk, we are taking care of the same. Beyond which the options available to any of the players or any other participants in this project business by way of bank guarantee are anyway limited. Thank you. The next question is on the line of Siddhartha Bera from Nomura. Please go ahead. Yes, sir. Thank you for the opportunity. Sir, just to clarify one thing, if I heard correctly, you said that there was no price hikes taken in the fourth quarter in the UCP business. I assume that the BEE-rated products are now in the market, which would have needed a certain cost increase. Is it fair to understand that, for those new products also we have not taken any, price increase till now? Siddhartha, your reading is correct. I said quarter three, we have not taken any price hike. For quarter four also, we are not looking into any price increase currently. This is one sentence, yes. The second thing is the quarter three, yes, the energy labeling got changed in July itself, and we have to now sell whatever we are selling is with the upgraded star rating. Obviously each star rating evolves in the increased cost, and we are incurring those costs over there. Somehow we are managing, as I said, swapping of the commodity price, some kind of value engineering, good negotiation with the suppliers. We are mitigating those risks and delivering this product at the same price, delivering the improved products at the same price. Understood. Does that assume that or is it a fair assumption that given the lower cost of procurement which we would have done in the last few quarters, which was probably we have not sold till now, so that would take care of the cost increase and at the gross level we will not see any further margin pressure? Or, do you think that may not be accurate? Siddhartha, if I look into this, I would say that the level change what we gave out, the product, it would have result into some kind of price increase to the competition, to the end consumers. Had I done this price increase along, as the industry would have moved into a reasonable price increase, probably the players would have seen the improved gross margin sequentially compared to what we have done in quarter two. However, that has not happened. Second thing is, the second question comes about, and I'm talking more than what you asked about. It's on the leverage of the volume. Obviously, quarter three primary billing is slightly higher than my quarter two, but those volume will give you some kind of leeway in managing the cost, but not enough, resulting into any improved gross margin. What we are looking for, eyeing for a quarter four now, where the volume should be much higher than what we have seen in quarter three. That should also leave some space for the leverage to play on the margin side. In and all, what I'm saying, Siddhartha, is carry forward inventory is anyway be there for some, to some time, and it gets averaged out with the new inbound material which is flowing in. However, the commodity price again touched to a, as I said, level of closer to a peak level, which is again going back to the peak level. What we are looking from the leverage perspective on the volume side, that will also now flow in the gross margin in the quarter four. We have to wait and watch. That's what even, Ankur, I could not answer the first participant from HDFC when he asked this question that how the quarter four on the gross margin I'm still maintaining stand on a single digit. These are the uncertainty in which we are living for. If the commodity price is going up, we will not get the leverage or the volume leverage advantage. If it remains where it is, probably you can see some kind of improvement sequentially when we move out. Thank you. The next question is from the line of- Just to end, Siddhartha, I'll just end to it. I had only mentioned gross margin. I'm talking about the end EBIT margin. Thank you. The next question is from the line of Amber Singhania from Nippon India AMC. Please go ahead. Yeah. Hi, sir. Thanks for taking my question. Amber, please use the handset. You're not clear. Amber, we are not able, yeah, we are not able to speak, hear you from here. We are not able to hear. Am I audible now? Yes. Yeah, much better. Sir, my first question is towards the project side. As you mentioned that this quarter it is less confident about the future trends compared to last quarter. If you can just give some highlight about how much is the more projects we have or how much is the more claim we have there where in other projects also which have any probability of going otherwise. Also, the currently these two projects, the last quarter it was one project where we had provided everything. Now again, another project has come in. How much was the total size of these project where we have provided so far around INR 250 odd crores? Amber, INR 250 crores is the cumulative amount. For the quarter, the provision took almost equal to or slightly higher than the quarter two what we picked up. Right. Second thing is, again, when I was saying I'm not so confident, I told in the context of happening this transaction one by one in this, in the two quarters period. Although we take all projects irrespective of whether Voltas is doing or the other contractor is doing, has to provide a bank guarantee to another project. This is the normal market practice. Okay. If you recollect and if you can... Those who have been seeing or trending the Voltas for the past, for a long period of time, we never had an engagement of bank guarantee positions or situation. Ever, the one I take from the last 10 years where I've been working in this company for long. However, situations are keep on changing in the external world, and we have to keep close eye on it, and that's what we do normally. That's why we have some kind of condition also get inbuilt into the guarantee so that it won't trigger on a normal way of business. That's where we have to be more careful about it. As we move forward, if this is going to be a trend, I said we are not forcing any such kind of guarantee encashment taking place on any of the projects we give. That opens the eye that we need to find out an instrument alternative to bank guarantee, which doesn't tempt someone to give a bearer check to the beneficiary, but some hold some kind of responsibility at the entire value chain partners. Why I'm asking this also, if I'm looking at last entire decade of our operations in this business as such, we have made roughly around INR 800 crore of EBIT. At the same time, we have provided for roughly around INR 600 crore of money, including Sidra, if I to look at the 10-year horizon as such. Would it make sense to, for us to do this business in Middle East going aggressively so much, and at the end of the decade, we realize that we have virtually not making anything? This thing is the geography is panning out to be very difficult continuously in every period of time, be it Sidra time and be it now again, these things are cropping up. How, what is management's thought process on this line, whether we should have a relook at this geography as such? Aman, in fact, if you go in our reading, if you go to any of the geography, because if you look from the market perspective, if somebody was doing project in Sri Lanka, Pakistan or any other countries, Bangladesh even then you will see the economies will go into such kind of crisis and will have such kind of situation to come up. The Middle East countries have not gone into such kind of financial crisis. Somewhere, as I said, the indiscipline has cropped up over there leading to such kind of events. I would not like to compare Sidra with the two events which took place in the current period, because Sidra was altogether a different kind of incidents to took place or some kind of provision which we took that point of time. The learning also has continued in the subsequent projects when we took. I would not like to elaborate more on this, but on a one-to-one I can talk about it, the difference between these two, considering the time constraint what we have and we to provide for the other participants. I would say that the business does go through this kind of cycle. Yes, we did provide a good amount of profit what we earn in this quarter, but that doesn't mean that we should ignore this territory. If we are able to do this business and generate some kind of ROCE in a better way. That's what the focus we are having at concurrently. Some learning, as I said, something comes up, but we will definitely ensure that how best we can mitigate those kind of risk and ensure that we remain, I would not say a much profitable, but a reasonable profitable driven territory as we move forward. In terms of if you are to discontinue this line of business, I would not say the biggest risk to run into it. You have to take this perspective in a, this into a larger perspective when we look into the, look holistically into the all business verticals. Thank you. The next question is from the line of Bhavin Vithlani from SBI Mutual Fund. Please go ahead. Three questions from my side. First is in the unitary segment, if you could help us, either nine months or a quarter three basis, how is a broad breakup between room air conditioner, commercial refrigeration, commercial air conditioning and our air cooler business? That's the first question. The second question is again, on the projects where asides of the extraordinary in your, you mentioned there is a ECL provision. Either what is the quantum of that ECL provision? Or if we were to take that ECL provision out, what is the underlying margins of that of the segment for the quarter three or nine months? These are my two questions. If I look from the, let me answer the second question, first, to answer my first. If I look from the, what you asked about is if I take out the ECL provisions and if I take out the exceptional item, obviously it leads to a level at which we were doing this profit or the recognizing this profit in this business. But we cannot compare, we cannot shy away from the reality. We have to take cognizance in terms of what kind of, I would say, provision we have taken up. As I said, we take this as a pinch of salt, and we always aim to work towards improving it as we move forward. You have seen some of the project when we talk about the order inflow. We have reduced taking orders where we find we are seeing some kind of risk. Those risks which I'm saying today was or the kind of encashment, which is both actions taken by the contractors were unilaterally. There was no need of reacting, I would say, taking this action from their end. Having taken, I have to follow the consequences of the risk policy, what we have, and we will take, I would say, a stock of the same. When you come to the question first of the contribution of CAC into the overall segment, if I look from the YTD perspective, the CAC will contribute around 20% odd in the overall AC mix. Probably when we go to the Q4, the percentage will be tilt more towards the other businesses than CAC, because Q4 is generally a season period for that matter. Thank you. The next question is from the line of Gopal Nawandhar from SBI Life. Please go ahead. Yeah, hi. Thanks a lot for the opportunity. My question is more related with project only, because in the past, we have been seeing such incidences, you know, at least for last three quarters, we have been making provisions also. We have provided the dues of which are related with these two projects. When I compare with the peers like Blue Star and all in their project business, so if I compare five,six years quarterly margins, they are on an average, you know, 5% margin. In our case, it is hardly 2-2.5% margin. I just don't want to, you know, waste more time on this. Our advice, you know, from our side, can just, you know, put some more risk measures or either, you know, something which should be there which can take care of such kind of events in the future, either in terms of margins or something else. I do take your inputs into it. If you recollect, if you see the past trend of all the companies who are in this business, be it even the Bajaj Electricals who have burned their hands in electrical projects in the past, we do go through such kind of cycle. I would never compare Voltas with Bajaj Electricals. No, I'm saying all companies in this cycle. For Voltas. No, no, I'm comparing. Again, gentlemen, I'm just saying that all players in the project industry has gone through this up and down. I've just given Bajaj Electricals as an example. Blue Star is also an example. If you take Blue Star is also an example, Chief, if you take the last three, if you go three years back into this project business. L&T, even a big giant being acting as a main contractor unlike a subcontractor, us, has gone through this up and down in the margin cycle and the blocking of their working capital. It's a cyclical kind of business. When the things are going good, business will continue to flow into it, and you have a better kind of cycle on the working capital side. If the things start getting somewhere and hold it on, all these consequences follow. Having said that, we have taken lot of measures in terms of you can see that my ordering flow has not been... Last year, we have not secured more orders. The reason being is because we don't pick up the orders, we won't find the merit into it, or we won't find the profit flowing into it. Somewhere the other project which we evaluated, that point of time it was a merit, and suddenly this kind of action took place. I would not like to narrate the more story into it, but I'm sure that each player in those regions are actually facing a headwinds in terms of that, not only Voltas. Sure. Thanks. Thank you. The next question is from the line of Renjith Sivaram from Mahindra Mutual Funds. Please go ahead. Hi, sir. Sir, just wanted to understand that from here on in terms of the business. Because what we widely understand is that Voltas was one of the biggest beneficiaries when we had this outsourcing model that most of the ACs were made in China or somewhere else, and we used to get it at a scale. We had this 1 million + demand per annum. Now that from that outsourcing standpoint, now we are getting more into in-house manufacturing. We are forced to do manufacturing by the government itself. In a structural way, you believe the year-to-year margins will never happen because that low-hanging fruit of outsourcing is completely out of the window now, and now we have to focus on more of manufacturing. This, new guys like Lloyds Andall coming and cutting prices. Is there any structural impact in the way we do business or, and have we evaluated that, engaged with some consultant or something to get back to at least some reasonable margin level to cut our cost or work on those things? Just to get some idea on this aspect. Renjith, if I look from the outsourcing versus in-housing, I would say that these players have to take advantage of the situation prevailing at that point of time. Doesn't mean that when I do in-housing, I start heavily bleeding into it. The scenario which was, or the strategy which has been adopted by Voltas in the past, most of the players have done it. I'm not talking about the Korean players, most of the other players have followed those strategy, what we were following earlier, they have blindly followed the leaders in many of the cases as well. The question then comes is, how I'm competitive when I'm doing the in-housing? The government is forcing you to do carry out in-housing, it does give the incentive as well for carrying out those kind of... Government itself knows that there is a price gap. There's a gap between when you do in-housing versus what you do outsourcing. Those support also being announced by the government in form of the PLI. The actual PLI benefit will start flowing when the commencement of the production facility will take place at the respective players' manufacturing capacity. To answer that, whether we're going to go for appointment of consultant or not, I would say that it's visible with the naked eyes. What our strategy is very clear. Whatever activities we do in-house. We want to start with breakeven between the outsourcing cost versus the in-house cost, and accordingly to take any strategic call. If this is not the case, I would have announced in-housing for all the components which are ingredients to the air conditioner, but we have not done that. All players have applied for a different kind of component under the PLI. It is not, I would say, a common thing which is coming out. The players are evaluating their skills, their strength in terms of which component can give advantage in terms of the value addition, in terms of breakeven or in terms of direct, indirect saving in the cost. This is the way in which the strategy in terms of in-housing or any manufacturing, be outsourcing, be in-housing, be both the models of outsourcing versus... And in-housing takes, I would say, gets implemented for that matter. Don't you agree to the fact that the cost has increased from two, three years before when we used to report some 13%, 14% margins to the current margin levels? Your overall cost of manufacturing, how much would be the increase? Renjith, if this is the case, then I should only make the losses and the industry, other players should have done the profit. This is not the case. Which means all industry players or players in the industry are witnessing this kind of cost increase. Furthermore, the price remains tight at the consumer end. This is leading to a margin erosion for most of the players in the industry. I would not 10% agree in terms of increasing cost in those parallels. If you have a commodity price coupled with currency depreciation and adding into a normal inflation, which is not getting passed on to the end consumers, obvious decide next impact is in your margin. Do we have a zero inflation in the last four years in this country? No. We did have inflation has should result into the cost. That point of time, the other factors were supporting me in terms of mitigating those risks. In this last 18 months, these all factors are turning on a southward kind of trajectory, resulting into the increased cost of inputs. Thank you. The next question is in the line of Amit Mahawar from UBS. Please go ahead. Hi, Manish. I have three quick questions. First is, conservatively speaking, what is the closure date for both these projects? I'm sorry if I missed data on this. For the project which we. Sorry. The impact which you take in the quarter two, it's in a halfway, the process of completing this entire project being initiated by the main contractor. Voltas, to certain extent, may get chance as a nominated player in the balance scope of work to get over. It is the, I would say, on a more optimistic side, and that's what the players that what we are getting from the main client. We have to see, wait and watch when ultimately contract gets finalized and gets awarded. For the quarter three impact which you have taken, you'll be surprised that the project is almost over, and this action has taken place at the back end of the project. Understood. Helpful. Second question is, you know, going by the current expansion, in the RAC, you know, Pantnagar and maybe, you know, Chennai, et cetera, broadly move from 1 million to maybe 2 million in two to three years' time. Can I broadly... Am I right in my understanding that outsourcing largely can reduce to half in the nexttwo to three years, very directionally? I would say that, in this industry, chief, it is difficult to say, how the outsourcing will go down. If I look from the AC product, we are not there in the manufacturing of the motors, we are not there in manufacturing of the controllers, we are not currently in the manufacturing of the compressor as well. This itself accounts for a sizable part of my BOQ. The players, then to my best knowledge what I carry in this industry, none of the players in the industry are having in-house for all these three components. To that extent, outsourcing will continue till the time we have the players are deriving or seeing the benefit getting into the in-house. Till such time, this kind of player, the leveraging of outsourcing, in-housing will continue. What I can say confidently is if I look from the supply chain from input to a localization, great move will be done in the next one and half year, whereby most of the components will start flowing in from my local manufacturers than getting imported from the overseas market. Thank you. Amar, probably we have to end the call. We are just reaching to our closing time. Yes, sir. We'll take this as the last question. Sure. It is from the line of Praveen Sahay from Prabhudas Lilladher. Please go ahead. Praveen, please proceed with the question. The line is unmuted. Thank you for taking my question. I have two questions. First is related to the RAC. How much is in a channel inventory, like how you are seeing the channel inventory filling for a summer? One. Second is related to the Voltas Beko. How is the revenue and where we are in the, you know, the breakeven which we had guided for FY 2025? Inventory, Praveen, if I look into it, this is a time for the channel partners to start building up their inventory. In the quarter four, during quarter four, I would say the inventory level with channel partner will go up, aligning themselves to the seasonal requirement. In terms of the Beko, I would say that, in terms of the breakeven, we are still maintaining our stand by 2024, 2025, and that's what we are eyeing and heading for the same. In terms of the overall performance, I would say it's relatively better. Where we have done almost closer to 3 million units in a shorter span of time. And that, I would say is a credible thing to happen for any brand in the appliances we're moving in this category. We are targeting our... we are on the path of target. The only concern which comes on the 10% market share, which was another objective, given the COVID period of time where the actually market has started seeing de-growth even in the current year, the overall refrigerator market is showing a downward trend. That objective probably will still takes, will slightly take a longer time than 2024, 2025 we initially conceived for. Okay. Just to continuation on the channel inventory set, you are seeing the similar level of a channel inventory spilling as of the last year or the normal years? Yeah, that way they normally align because they also align all the. Seasonality in this appliance businesses comes one after the other quarter, you know. Last quarter you had this quarter, I would say, and the last quarter was more for washing machine and refrigerator. Now this will move to the air conditioner. They'll align the inventory accordingly. Thank you. Ladies and gentlemen, that would be our last question for today. I now hand the conference over to Ms. Bhoomika Nair for closing comments. Thank you, and over to you, ma'am. Yes, thank you, the management for giving us an opportunity to host the call and answering all the queries of the participants. Thank you to all the participants as well. Wishing you all the very best, sir. Yeah. From our management side, I thanks to DAM and their participants to attend this call. I know our participants are going to have more questions than what has been put up in this on call. We are there to answer each one of you, and I would say that I thanks everything. Thanks for your participating in this call and look forward your support in the future as well. Thank you very much. Ladies and gentlemen, on behalf of DAM Capital Advisors Limited, that concludes today's call. Thank you all for joining us, and you can now disconnect your lines.