Ladies and gentlemen, good day, and welcome to Q1 FY 2024 earnings conference call of Voltas Limited, hosted by ICICI Securities. As a reminder, all participant lines will be in listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then 0 on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Aniruddha Joshi from ICICI Securities. Thank you, and over to you. Yeah, thanks, Yashaswi. On behalf of ICICI Securities, we welcome you all to Q1 FY 2024 results conference call of Voltas Limited. We have with us senior management represented by Mr. Jitender Verma, Chief Financial Officer, Mr. Manish Desai, Head of Corporate Finance, and Mr. Vaibhav Vora, Manager Corporate Finance. I hand over the call to the management for the initial comments on the quarterly performance, and then we will open the floor for question and answer session. Initially, each participant is required to ask two questions in the initial round, and then they can join for the another round of questions. Thanks. Over to you, sir. Thank you. Thank you, Aniruddha. This is Jitender. Welcome to everyone who has joined us in this call. I know it's maybe a weekend for certain people, but we all work nowadays longer. Thanks, thanks once again for everybody who joined. As we begin, I would start by saying that the financial year 2024 began on a subdued note, with the high inflation and concerns on slowing of economic growth and poor health of banking sector. Policy tightening by central banks in response to this inflation continues to raise the borrowing costs, leading to constrained economic activity. While inflation may continue to remain high, it may further escalate owing to shocks caused by geopolitical unrest, natural calamities within various parts of the globe. This, in turn, may trigger a more restrictive monetary policy. Concerns regarding the performance of banking sector receded during the quarter, high interest rates entering through the financial system strained the supply of credit. The rising central bank policy rates to fight inflation will continue to impact economic activity. As for IMF, global growth is anticipated to fall from an estimated 3.5% in 2022 to 3% in 2023. While economies across the world are facing issues, the Indian economy has shown resilience and grown during the quarter. The center's fiscal deficit remained under control. GST collections, manufacturing PMI, sale of automobiles, number of UPI transactions, electricity consumption, all reported strong numbers during the quarter. The resumption of interest by FII in the equity market showed a good infusion of funds, raising the indices to a record high. The Indian economy does not seem to dig up the concerns on the inflation, although driven by rise in food, oil prices, and input inflation. USD-INR, however, continues to remain under pressure, owing to the upper end of range, 60.53, owing to the rise in yield due to US credit downgrade and other macroeconomic factors that may lead to higher import costs, impacting the overall growth. Given the overall business backdrop this quarter, for us at Voltas, it was both exciting and challenging. The interest rates impacted the sales during the quarter and thereby slowed down the anticipated growth in the cooling business segment, both for the company and the industry. Delayed collections in our overseas business resulted in a conservative provision impacting the overall results. Our consolidated total income for Q1 FY 2024 was INR 3,436 crores, as against INR 2,495 crores in Q1 FY 2023, a growth of 22% YOY. Profit before tax, PBT, and after tax was INR 203 crores and INR 160 crores, respectively. Earnings per share, not annualized, for the quarter ended June 30, 2023, was at INR 2.91 against INR 3.29 reported last year. You all have seen the snapshot of our results for this quarter, I'm not repeating that. However, we're looking at segment A, Unitary Cooling Products, UCP. Q1 of FY 2024 was projected to be a high-growth quarter. However, erratic weather conditions in October and May, especially in North and West India, our usually stronger markets, dampened the sales. However, availability of high tech products, aggressive consumer finance schemes, strong channel and network presence, coupled with revival of the demand in the month of June, helped Voltas achieve volume growth of 15% higher than the overall industry growth on YOY, YOY basis. Voltas product bouquet with advanced features and long-term advantage of energy savings, helped the split inverter category of air conditioners remain in high demand, leading to the growth of the segment. The expansive product portfolio, SKUs designed in-house, and competitive pricing has continued to have a high share of contribution in excess of 80% of inverter sales in room air conditioner category for the quarter. While split AC showed the growth, demand for window AC, primarily driven by sales in March, remained weak because of the off-season. Our competitors went aggressive on the pricing to meet their primary billing, which impacted market share and margins. However, secondary sales driven by incentive schemes across sales channels, highly tie-ups with modern trade and organized channels, growing network of exclusive brand, brand outlets for EDOs, including experience zones at strategic locations, along with the focused customer-centric approach during the season. I'm sorry to interrupt. Mr. Verma, this is the operator here. Sir, could you please use the handset mode because your voice seems to be fluctuating in between? Okay, one second. I'll, I'll just repeat. Growing network of exclusive brand outlets, EDOs, including experience zones at strategic locations, along with the focused customer-centric approach during the season, helped Voltas to strengthen market share to 20.6% at the end of June 2023. Sales growth in the commercial refrigeration was lower during the quarter on a higher base of the corresponding previous quarter. Weather disruptions had impacted the consumption of cold beverages, chocolates, and ice creams, leading to the lower than expected demand from the OEMs. Within the commercial refrigeration category, demand was buoyant for water coolers and easy coolers. Affordable pricing tie-ups with modern and retail channels, active channel participation, aggressive pricing, and competitive dealer incentive schemes garnered a positive and a strong growth for the air cooler segment as well. The category has grown by 49% in volume with improved gross margin. Commercial air conditioners garnered good traction in chillers, VRFs, and ducted AC during the quarter, with large-scale OEM orders paving the way for good numbers this quarter. Our focus on customer needs and our track record has helped us win multiple big-ticket orders for OEMs. On the cost front, softening of commodity prices, tactical sourcing, manufacturing efficiencies, and various value engineering initiatives across all our products has helped contain material costs and protected margins to a great extent. We will continue with our efforts to remain competitive and continue to provide value for money products to our consumers, which will help us not only to maintain our leadership position in both the market share and margins, but also continue to be a key differentiator among other players in the industry. To summarize, for the quarter ended June 2023, UCP segment registered revenue of INR 2,514 crores, a 16% growth in turnover from INR 2,162 crores in Q1 FY 2023. The segment reported an EBIT of INR 207 crores in Q1 FY 2023, as compared to INR 166 crores in Q1 FY 2023, a growth of 25%. Segment B, Electro-Mechanical Projects and Services. Segment revenue for the quarter was INR 679 crores, as compared to the previous corresponding quarter revenue of INR 465 crores. Segment results for the quarter reported a loss of INR 52 crores. Loss in quarter ended June 2022 was INR 12 crores. With renewed focus on our wholly-owned subsidiary post business transfer, our collective efforts resulted in better performance of the domestic projects business in terms of both execution and managing working capital efficiently, and also securing high orders during the quarter. The domestic projects segment booked orders worth INR 608 crore, as compared to INR 191 crore during the previous quarter. Further, a tight monitoring on working capital, with focus on certification and collections in return on capital employed, and delivered good results during the quarter. All ongoing projects in our international business are largely under nascent stages, and while the business reported a higher revenue, as per our internal policy, the margins on all such projects will be recognized on reaching key milestones. Considerable delay in certification and slowing collections against due receivables continued in a few projects, resulting in provisions following our prudent and conservative approach. Having said that, all efforts are focused on engaging with customers for expediting certification work and improving collection of the amounts due. Order booking for Q1 FY 2024 was INR 755 crore as compared to INR 435 crore in the similar period last year. During the quarter, the company has been intimated of a request received by the bank for encashment of the bank guarantee from the main contractor in one of the projects in Qatar. The company has issued a cessation request to the bank, pursuant to which the bank guarantees have not yet been encashed. Based on the general assessment on technical merits of the case and legal opinion on the contractual aspect, we are confident that it has good grounds to successfully defend any claims that may arise on the company. The carry forward order book for domestic projects stands at INR 5,244 crore, containing orders across water, HVAC, rural electrification, and urban infra activities. The international order book as at 30th June 2023, stood at INR 2,949 crore, largely in the UAE, Qatar, and Saudi Arabia regions. Total carry forward order book of the segment stood at INR 8,193 crore, vis-a-vis INR 5,362 crore of outstanding orders as at 30th June 2022. Segment 3: Engineering products and services. The segment revenue and results continued to report improved performance for the quarter, registering healthy growth over previous year. The segment revenue for the quarter was INR 142 crore, and EBIT for the quarter was INR 54 crore, respectively. Cutting-edge engineering solutions, coupled with a focused customer-oriented approach, supported Mozambique operations in performing well, contributing significantly to the results. The revival of the capital cycle, along with lifting of export duty on iron ore, has sustained the sale of crushing and screening equipment, albeit with restricted credit to the contractors. While capital machinery rollout from the principal has increased, the volatility in yarn prices and slowing exports, coupled with supply chain disruptions, has lowered the momentum for textile business. Nevertheless, nevertheless, the focus on accessory sales, recent announcement of PM MITRA Park, and the proposed PLI 2.0 scheme should help in sustaining the performance going forward. Voltas Beko. Voltas Beko continued to garner strong sales since March 2023. High demand across all company products, that is refrigerators, washing machines, microwaves, and dishwashers, resulted in a growth of over 40% during the quarter. Revenue was also driven by increased tie-ups with organized retail, improved participation from e-commerce, and a better product, and a better product mix. The expansion of distribution reach, focus on product placements with existing and evolving sales channels, wider range of product SKUs, and in-house manufacturing of the high value-added products continue to support the overall growth. Timely availability of affordable and durable products has been the key strength for Voltas Beko. Our concentrated efforts on innovation with differentiated features and long-term tie-ups with organized trade in the targeted and strategically important markets is anticipated to further support our growth in future. These collaborative steps have resulted in securing a market share of 5% in the washing machine category, with 9.6% market share in the sub-segment of semi-automatic washing machines. The company also maintained its market share in refrigerators at 3.5%. Our objective is to have a vast array of value-added products, which will be manufactured at our own factory, which will help us control and thereby strengthen the supply chain to improve overall margins. With this objective, trials for the fully automatic front-loaded washing machine to be manufactured in-house have been completed, and the production of the first pilot batch is underway currently. Outlook. The period of July to September is usually a lean period for cooling products. However, the start of festival period is expected to witness a spurt in demand. It will be interesting to see the impact of factor such as inflation, revival of rural demand, movement in crude oil prices, rupee behavior, and policies made by RBI to address the overall economic growth agenda. Both the government and private sector's CapEx commitment for FY 2024 remains strong. Uptick in the order booking, coupled with momentum in execution of the MEP projects, should help report better performance for our project businesses, too. In general, we anticipate a pickup in the pace of overall economic activity, and we would seize the opportunity to continue on the momentum of growth. That's all from my side. I would now request the moderator to open the meeting for question and answers. Thanks. Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. We have our first question from the line of Ankur from HDFC Life. Please go ahead. Yeah. Hi, sir. Good afternoon. Thanks for your time, as always. Just a few questions on the UCP segment. Very good performance, you know, the 15% volume growth that we're seeing. Just, if you could help us understand, you know, because industry volumes are maybe flattish, you know, on the secondary side, during the quarter. If you could help us understand, you know, how would our secondaries have done during Q1? Is it also a case of, you know, us kind of filling in inventory in the channel? Is that the reason why our primaries look so much higher than maybe what the overall secondary growth would have been? Ankur, this is Manish over here. Sure. Yeah. Ankur, in fact, the question of higher primary and the inventory with channel partner probably won't material, because. Mm-hmm. If the inventory is there with the channel partner, obviously it will see a reverse impact on the primary sales from the brand. What is happening is, although we all know North region, which is strongest for the air conditioner market, and contributing larger share of the overall, so that didn't go well. If I look from the Voltas perspective, we are relatively stronger, as you well know. Yep. -in the North region. In a way, in the initial months of the quarter, we were having a lot of apprehension on the volume and the growth. The reason being is because industry was not looking into volume growth at all in this quarter because of this inclement weather. Mm. You recall that we have taken some steps in some, in the South market to strengthen our market share, which we are continuously on a weak foot. That actually has helped us because what we have seen in our trend, that we have... If I look from my primary perspective, and generally secondary also follows the primary, our volume growth for both East and South was on a much higher side, followed by North, because North we all know that the growth was marginal. So in and all, I would like to say the, the strategy or the focus, what we did in the past two, three quarters, since I would say last year, to make our position stronger in South region, actually started getting some kind of momentum. I would be say, I'll be saying it will be too early to celebrate on this front, because what we need to ensure now that we sustain this momentum in South, we need the confidence of the channel partners and customers both, and should further strengthen our position as we move forward. Similar steps have helped us in moving in the East region as well, where we were able to locally perform much better than any of the brand. As I said, we will continuously do a monitor on our steps and our strategies in these two regions to further strengthen our positions, not only going to be a strong foothold in Voltas, as well as for the overall industry, and will not leave our footage or leave nothing stone unturned if I have to further aggressively move on the North when the market becomes more open for the for the cooling product categories. No, fair point. No, I just want to reconcile the fact that, you know, our volume growth of 15%, how would that have been versus the industry growth? You know, given the fact that our market share numbers, both QoQ and YOY seem to be lower, right? for Voltas. Yeah. In fact, if you look for the month of June, we improved upon. If I look into it sequentially from the month of May, on a YOY also, if I look into it on a quarter-on-quarter, what we normally will show on the quarterly basis, there also we have seen some improvement over there. As I said, had the North will be doing better for the industry and definitely for Voltas, probably we would have seen good amount of improvement in market share for the Voltas as such. This is where it stands. If I look from the industry perspective, we are having this profit. You are right, industry has not grown in the volume. The growth is there, what the data we are getting from all our industry players and from the market, it is lower than, it is lower than single digit. Okay. Then the last one on pricing. Sorry, sorry. Yeah, sorry. Just on pricing, any change in competitive behavior from any of your peers? You know, if I can name some, like, Lloyd, Daikin, you know, who've obviously become hyper competitive over the last few quarters. Any change there, or is it still very, you know, very, very volume focused over margins? Ankur, we all know that if the initial months of the season quarter, won't perform as in line with the growth which company has projected or the brand has projected for, the only tool what they have is to resort on the pricing. We did see, aggressive pricing by a few brands. Mm. You name almost all, so I'm not going to put again to save time on the Q&A session. That we have seen it, but as I said, we won't concentrate only on the price, because there are certain tools in our hand which Mr. Verma, in his opening spiel, has clearly spelled out on which we focused upon it, have been circulated to all the investors attending as well. I would say that, rather on price, we have more focused upon the BTL activities and winning the confidence of the channel partners on some of the markets where we were focusing upon for a long time, and that has helped us. As I said, we have to continuously drive this as we move forward to achieve our strategic goal of market share as well as margin, what we're looking for. Yeah. Okay, sir. Great. Got that. All the best. Thank you so much. Thanks, Shankar. Thank you. We have our next question from the line of Siddharth Bera from Nomura. Please go ahead. Yeah. Hi, sir. Thanks for the opportunity. Sir, you have indicated that in the quarter we have seen some commodity softness as well. Our revenues are also higher on a sequential basis compared to last quarter. This margin drop sequentially, I think, can you just explain what has been the major issue? I understand that you have not taken any price cut, is what you are indicating, but slightly more color on how to look at the margins from current levels. Siddharth, in fact, in the past call also, when we said why the commodity softening is not going to generally help the industry, the reason being is because, looking into the seasonality of the product, generally, the inventory normally gets invented at least a three or four months in advance. That's why, if I can see the announcements, because this time we were letting our announcements of the results. If I see from the other brands who announce the results, they have also not seen any significant improvement in the cost margins. This is the prime reason. The softening of the commodity price most have been seen after the February and March, where the, where the for, for the brand as such, and for the almost all brands, the inventory has got invented, and then we start selling it for the season purpose. Now, having said that, your valid question is the sequential drop in the margin. If you recollect, during our March investor conference thereafter as well, the brand incurs substantial amount of advertisement expenditure during this season period. It goes, if I look into advertisement expenditure, if I look into quarter, as a percentage, quarter revenue to quarter outflow on advertisement, it goes as high as 4%, 4.5%. That gets settled down once we go down, and at the end of the year, you find we end up growing 3 or 2.75%-3% of the overall turnover. That is prime reason that some of the expenditures which are required to go on a support to the BTL and the activities we incur, impacting the overall sec, margin on a sequential basis. The question from your side is how to look as we move forward to the subsequent quarter. We have been telling that, the industry is becoming more competitive. Most of the brands are eyeing for the volume. Furthermore, the PLI scheme, if you have to qualify for each of the brand players in the industry, we can see more resortment of the price on account of, so to drive the volume growth and thereby qualify for the PLI scheme. Even all, Siddharth, we keep our stand maintained, that industry will now come to a single-digit margin. None of the players probably will be seeing it going into a double digit. Among them, among those, even Voltas will continue to be a leader in the margin. I would not like to quote any percentage currently, because we have been telling about the single-digit margin, but I would like to maintain the same trend. Rather, I would go on that irrespective of whatever happens, Voltas will remain leader both in margin as well as market perspective. Got it, sir. Also for the quarter, will it be possible to share the secondary volume growth which you have seen or, that will be difficult? No, no, we can, we can, we can share with it. If I'm not wrong, the secondary growth for the industry in the market, if I take... Generally, we take, Siddharth, from February or January to June, because that's a period where the different parts of the country goes into a different kind of trajectory of the season and all. If I look from the perspective, probably the industry has seen a secondary growth of around 8%, if I take January to June. I would request, Vaibhav, we did one snapshot on that, so can you just reconfirm on those numbers, if I take January to June, and if you take April to June for that matter? Hello? Vaibhav, are you there on the call? Hi. January to June is 8%. January to June is 8%, right, for the industry as such? Yes, sir. Yes, sir. Yeah, yeah. That's what I said, Siddharth. Why we took January? Because we know very well the summer in the South region starts from the September, sorry, from the February. Probably looks like this year, although we have seen good amount of monsoon during the, I would say, unseasonal rains. The second summer has already started, both in West and South, as I'm sure who are attending from Bombay and all, they are feeling the pinch about the second summer and all. If I take April to June, Siddharth, I'll give you January to June. If I take April to June period, the growth is around, for the industry, is around 20%. Got it. Got it. The second on this project business, we have continued to see the recurring losses coming up in the past few quarters. Possible to highlight when we will get back to the normal sort of margin levels going ahead, or there are many more sub provision which will keep coming up in every quarter? Siddharth, you're, you're right in saying that, you know, there have been certain collection delays and certain other additional provisions which we have to take. I will assure you that these are following the conservative approach, which I can't say for other companies, but, but we, being part of a larger group, we always report whatever is the truth out there. Now, in the project business, and specifically in the, you know, global markets in the Middle East, there have been certain headwinds, with which, when we are looking at our projects business, we are taking those provisions. And this is in a way, cleaning up of the whatever legacy issues or whatever would have been. Like even in this quarter, we have reported, and we have shown in our financial statement press release, that there was an encashment, which we will be fighting and we'll be going with that. I wouldn't say that this is something which will continue, because on the other side, we have also started becoming more and more strict in our order taking. The orders are many, so that it will not restrict our kind of growth in that part of the region, though for a year or so, we may, we may step back and look at our, you know, procedures and the way we select our partners in terms of who we work with and what kind of contracts we take, and we ensure that we get payments on time. Because when we do our work on time, we expect our payments also to get on time, and we don't want to get in a situation that once the work is done, we kind of are pushed, or the payments are slow. That's a approach, or you can say it's a retweaking of the business, little bit, and, just taking the prudent approach on the numbers. Got it. Thanks a lot. I will come back in the queue. Sure. Thank you. Ladies and gentlemen, in order to ensure that the management is able to answer queries from all participants, please restrict yourself to 2 questions. You may join back the queue for follow-up questions. We'll take our next question from the line of Abhijit Akella from Kotak Securities. Please go ahead. Yeah. Good afternoon. Thank you so much for the opportunity. Just on the UCP segment, you know, I wanted to confirm the number that you cited earlier. I think that air coolers have grown about 49% in the quarter. If you could also please just share how much the commercial AC and commercial refrigeration parts of the segment have grown, as well as, you know, RAC on a pure play basis. If I look from the commercial refrigerator perspective, we have put on our screen that what we anticipated the growth actually has slightly come down. The reason being is on a higher volume base, as I thought. Second thing is, due to the inflation together, the demand for these cold beverages, chocolate, cold, and the ice creams actually have tapered down. Once you see this kind of cycle, you find that the demand from the OEMs are not there and impacting the overall primary sales from the brand as such. To put together, our growth in the commercial refrigerator was in single digit. If I look from the CAC perspective, the product sales actually have done much better in terms of the product sale. Service revenue, which we commonly combine with the commercial conditioner, has seen a lower growth if I compare with the product sales. The overall growth for the CAC business was around in double digits and exceeding 25%-30%. Got it. Now, that's very helpful. Thank you. Then just the other thing was on the market share numbers. When I look at the exit run rate of market share reported for June, it seems to be about 20.6%. Versus last year, I think, it was 24.1% as of June again. It seems to be a decline. I was just sort of trying to reconcile that with your statement earlier, that market share is actually increased. Perhaps if you could, if it's possible, to share the average market share for the quarter, both for Q1 this year and last year? Akella, when I was saying as I do about the market share, I was more referring to the sequential improvement from the May. If I take from April, or I can take it from March, April, May, and June. Yes, if I compare with the last year, June, on a YOY basis, yes, the market share has gone, and we have been trailing into it for the last almost 8-9 months. So, we, we have came down from 24% to around 20.6% now in the June exit. If I take a average market share, we are somewhere around 19%, as we stand right now. There is no comparison for the last year, because last year we were running most of the year in excess of 24%. You can say for calculation purpose, we are running around 24 average market share in the last year, and this year we have came around 19%, what I just told you for that matter. There is, as I said, there's a journey for it, and that's why I said some of the markets we analyze in much deeper way, where we have to focus upon. The efforts are there, and we're hopeful that as we move forward, it turns out to be, you know, in a result-oriented gain in all the efforts of the effort and currency. Got it. No, thank you so much. That's very, very helpful. Just one last quick thing, if I may slip in. Just the geographical or region-wide split of revenues, if it might be possible to share some color on that for this year versus the comparative last year numbers. Thank you so much. ... obviously, what I said, we see that the industry has seen the tilt towards this current year. Otherwise, north normally contributes 50%-55% of the overall business for the industry, and that even Voltas is very strong, but we cannot be far away from the industry. Otherwise, our market share will see immediate figure amount of fall into that. In an overall business, if I look into it, the south has done this time much better, south and east. They have each up by 2%-3% what they used to have. Otherwise, north has dipped down and west is affected the most. Thank you so much, sir. I wish you all the best. Sorry, Abhijit, hi. Vaibhav on this side. The market share for Q1 FY 2023 was around 22.5%. Okay, 22.5 compared to about 24 last year? No, 22.5 last year, we were just 19% this year. Oh, okay. Got it. Average of last year. Yeah, sir. That's the data. Okay, thanks. I also have 20%. Thank you so much. Thank you. We have our next question from the line of Dhananjai Bagrodia from ASK. Please go ahead. Sir, congratulations on the final results. Just a couple of questions. If we see our EBIT for our EMP business, the losses, as you, taking in the exception of the last 2 quarters also, has been equivalent to a 5-year EBIT of the same business, before that. Net-net, all the hard work is not being able to be fructified. Is there any thoughts about maybe scaling down the business or even going about it slowly? Because, 5-year business to be lost in 3 quarters is a huge number, if you think about it. Dhananjai, what you are saying is exactly the thoughts in the minds of the management are, and that's a fact. I mean, the numbers don't lie. Rather than scaling down the business, like I said, the opportunities are great. You have to go in with, I would say, more improved processes in terms of who we contract with, how we contract with, and what kind of procedures we put in. Those are the things which we have been doing over the last few months. We continue to strengthen that part of our business in terms of, you know, getting the things properly. Now, on the execution side, as a project is executed, we are, we are very strong, and we have been in that part of the region for the last 40 years. Certain players in that part, you know, they have started this new thing of not paying on time, and then once the project is done, then finding excuses for not paying it. Those, those things which we need to improve it. I would say it's more external, but we need to be stronger internally to, to face this kind of external situations. I, I do not want to name or be specific, but, but yes, it definitely does not look good that all the efforts of last few years get wiped out in a smaller portion. At the same time, as a part of a larger business of Voltas, we always stand with our businesses because each, each vertical or each segment of the business have their good days and the bad days. I mean, at this time, we can say that IBD is, is facing some rough weather. IBD is for international operations. They are facing, yeah, bad weather, and we need to stand with them. There is no scaling down, but it is a prudent cleaning up of the processes. From your assumption, having seen other players also do a similar business, what are, what are we doing wrong in this compared to other players? Because no one else is having this EBIT level loss, or is recurring. Anything which we are doing different versus them, and then what we can incorporate to do something similar to them? We are looking at other businesses also, which are in the similar field like us in the electromechanical projects. We have seen people facing similar problems in the business. How are they doing their accounting is what we would not like to comment, and like we have said, that we always take a transparent approach and a, you know, a prudent approach. So in the business side, we are seeing kind of similar issues being faced by others. Okay. Sir, would we also look at, like how other players have started realizing that to go about the segment by maybe having a outsourced model so that to increase our asset turn, asset turnover? Is that something which we could also look at for our UCP business? I don't know really, what you refer to. I mean, in this contracting business, outsourcing is there. Yeah, some of the other players. No, sir, he's referring to the UCP segment. Am I right? Okay, sorry. I, I, I thought you were talking about- No, it's like I agree, because it is always on outsourcing model what rightly said, by you, sir. In case of UCP, what happens generally, asset-light model was the key, till such time we have seen or I would say we have a different sources to put the material in. The question is happening is when you go on a higher on the volume side, it all depends upon how you strengthen your background or I would say, back-end process, in order to gain control on the design as well as on the uniqueness which your product is going to differ. To our reading, when we have gained our market shares this time, we could do it by virtue of our in-house SKUs, which are there in the market today in a larger spectrum, and that actually helped us to go on this. We are still following the asset-light model because you know very well we have not gone for the entire back end or the all components getting manufactured in our own factory. We are going to outsource some of these to the OEMs and to the import source, but the balancing needs to be done in order to, as I said, the advantage to achieving the product differentiation, design, controls, and more importantly, to get advantage on the shift in the economics, which we are seeing today in terms of resourcing. Okay. Okay, fine. Sure. Sir, any, any thoughts on what you, you all think? Let's say now, this year we've been impacted. For the remaining year, what could, volume be, growth be for-- not maybe for you all, but for the industry? Hello? boss, I missed your question. I'm saying, this will... Can you hear me now? Yeah, yeah, I can. Just a question: What do you think will be volume for the industry for the year? Oh, you're asking me at the end of the quarter one to forecast for the quarter four. In fact, for the quarter one, the industry was expecting around more than 20% growth, but the way in which weather behaved, all forecasts have come down drastically. I would say that, boss, let's wait for the festival period to get over for us to assess in terms of the how the overall volume growth will look like. Fair, fair, fair, fair. Okay, sure. Thank you. Thank you. We have our next question from the line of Nihar Dave, from Vallum Capital Advisors. Please go ahead. Yeah. thank you for the opportunity. My question was, since the market share has, has come down, like you said, on an average from about 22% last quarter to 19 at the moment, do we have any plans or strategy in mind to, you know, get back to, to that 20 or 22, or do we see our strategy aligning more to 19 itself and continuing at 19? See, as I said, none of the brand would like to stay where they are. They make all efforts to climb up on the stairs, and that's where we are living upon. Our internal targets are a much higher side. I would not like to quantify on the call, because we have to prove ourselves, which is done now in a quarter by improving upon it. Hopefully, as we move in the year forward, we'll see a good amount of improvement over there. Okay, okay. My, my second question is, like you said, the, gross margins are, are also down. Any, any strategy change that we're expecting that, you know, we will start, pricing more aggressive, like, aggressively, like our competitors are, to, to gain that internal target, which is a higher market share? As I said, we always try to balance the market share and the margin, and we'll continue to focus upon it. That doesn't mean that no price correction, we have played out in this quarter, which has gone by, but that correction was not across the entire market and across all categories or across all SKUs. We do balance it out, and we'll do that activity or that, I would say, eye in detail, we should talk about, and keep our eyes close to the market. We'll continuously follow, but we won't find any price correction happening across markets and across all SKUs. We balance it out to gain wherever we can and to lose the purse wherever we find it is better to do it, to maintain our positions in that particular market, in particular, potential territories. Okay. Yeah, sorry, please. No, I just wanted to add that we have to remember that, numbers, of course, everybody looks at the numbers of market share, but, but we continue to maintain our leadership position both in the market share as well as in the margins. There are certain players who tend to, you know, buy the market share by continuing to keep on making losses in this segment and, saying that we have, the volume numbers et cetera. We, we, we are very alive to that fact, and we have to balance our situation. We, we are not here to, you know, give away our market share to anybody who wants to come in and play the prices. We, according to the geography, according to the market space, we, we, we are also doing what we need to do on pricing, on other areas, like we have just mentioned, whether it be in increasing our reach, increasing our, you know, strategies by introducing more innovative products, more value-engineering products to save costs, because at the end of it, it's always margin versus market share. We, we are focused on our market share as well as at the same time, doing a, you know, if somebody wants to... ... go and keep on hurting themselves, so that, that is their problem. We, we have to maintain a balance out there. Got it. We, we, think you'd be, correct. Yeah, absolutely. Absolutely. Just a small follow-up on that. Any, any particular regions or any particular categories that you are, you know, the management is more open to, let's say, being aggressive at pricing? I would say entire market is open, free for us to play around on, on pricing or on the kind of product differentiation. I would say that focus will be continuing where we have put our efforts on South side. North, anyway, we are strong, so we have to further ensure that we are not losing on that position. West, and it's required to be more, I would say, aggressive in terms of seizing the opportunity of the growth in future. Okay. Perfect. Thank you so much. Best of luck. Bye-bye. Thank you. We have our next question from the line of Latika Chopra from J.P. Morgan. Please go ahead. Hi, thanks for the opportunity. 2 questions. Just trying to understand the construct of your revenue for air conditioner segment. The first is, you know, if you could share what is the change of organized retail and e-commerce in this business currently versus, say, 2 years ago? How does profitability metrics track for these channels for you versus, you know, traditional dealers channels? That's the first question. The second question is, again, you know, just trying to understand, you know, what is the contribution of channel finance, you know, to this segment currently? Is it very different from what you saw pre-COVID? Also, does it influence in any way, you know, the trade margins or the product margins? Thank you. So, Latika, if I were to put on the first question in terms of how the organized and the e-commerce have behaved. Latika, in fact, the definition of the organized trade is changing, I would say in a very dynamic way. Once we count with the organized trade, we are counting the regional strong partners as well, because what is happening with them is, they are expanding to their-- beyond their home territories. So in our terms, in the industry terms, we talk about the regional players, but they are now taking shape of the organized player as well. Otherwise, if I go to the old tradition of the organized players, I would say I would find the modern trade, which was classifying another organized trade as such. If put together, both I look into the e-commerce versus organized trade, they are strengthening their position in the market, making difficult for the modern pop stores for them to survive. Eventually, if retail has to drive to the tier three and tier four cities as well, probably over a period of time, distribution itself will convert into a retail stream, and you won't find any products are getting or being done through a distribution channel. That's probably another, I would say, long term, or I would say, mid to long term kind of market development. Otherwise, what we see today is put together e-commerce, organized trade, modern trade, put together, they have instructed to a, close to a contribution sale of industry around in excess of 20% or 25% compared to what they used to have, less than 10%-12%, I would say 3-4 years back. Does it in any way influence the channel margins, on a like-to-like product? Obviously, obviously, Latika, when some becomes more stronger, the monopoly principle drives, right? It's going to be more difficult for the brand in order to serve the modern trade or the organized retailer and e-commerce as well. I would find the e-commerce is disruptive in another way because they do announce one day sale, a big bonanza sale, and the price gets dropped without even consent from the brand side. We have to build with it, and we have built in the past with all these ordinances, and we will continue to do into it. What is more is, like, if this way, this getting more strengthened, it will see overall impact, of course, to serve to the end consumers. That's why you may be recalling that the all brands are now putting more focus on the brand outlets, on their exclusive brand outlets, as well as their own e-commerce portal or the online channel, in order to cater to the customers directly. You may not find traction currently, but As a brand, if you see the next 5 years down the line, probably this will this should start getting good amount of attention from the customer as well. In terms of your second question, sorry, I missed out. What was the second question? That was on channel financing, you know, for the question. Channel financing. Yes, channel financing. Yes, in fact, the entire market under the channel financing, and they're gonna change for the last 3-4 years. We have seen these small finance companies, credit cards, and all are now getting participating in the consumer finance, seeing the digital growth in this category. These, once upon a time, the stronghold like Bajaj Finance, they are overall losing share into it. If I want to put a percentage on the leaders, Bajaj is still a much higher percentage of share in this overall market. The credit cards and all of those have almost started contributing in around 10%-12% in the overall channel financing spectrum for that matter. ... what's the total savings of our channel finance products in non-AGM? Generally, Latika, you find during season it goes on a higher side. If I look, at Q1 sale, for us, I would say that if I want to put as a percentage to turnover, but I would put percentage to the, primary, because secondary data we do analyze on an overall basis. It does goes higher as 30%-35% now on a channel financing, which otherwise used to have 10%-15% if I look into, three to four or five years back. It is increasing, on a year-on-year basis. As I said, it is not on a, on totally non-recourse basis. Brand only just contribute towards the subvention cost, and there also we do many times, co-sharing with the channel partners, because at the end, entire channel is getting benefit and not another brand. Okay, thank you. Just one more follow: How many brand outlets do you have now for Voltas? We are currently around 270, and we have a much aggressive plan to expand into it. Across how many cities, now? Across we find more on the Tier Two and Tier Three cities, because there. Otherwise, metro find difficult to have. Although we are planning to go for it, but then more presence you find in Tier One and Tier Two cities. Tier Three is yet to catch it up in terms of the, in terms of the market as such. Sure. Thank you so much for your answers. Yeah. Thanks, Latika. Thank you. We have our next question from the line of Keyur, from ICICI Prudential Life Insurance. Please go ahead. Thank you, sir. First question is, on the say breakup of the UCP segment, either for the season of January to June or for the full financial year, what would be non-RAC as a% of UCP revenues broadly on a steady-state basis? Obviously, the percentage of RAC will be higher during the season time, because when I say season in a sense, if I put together CR, air cooler, and AC together, the percentage definitely get tilted towards the air conditioner, being the large value per unit item compared to the air coolers and the commercial refrigerator. I would say, if I were to go on an average analyzed basis, you find that if I take 100 as a part of contribution from AC, CR, and the air cooler, you find that 80% largely comes from 35%-80% comes from the AC. 15% odd, 15, 16 to 15 to 20% comes from the commercial refrigerator. Air cooler also, the volume you may find huge on a higher side, but being the lower price per unit value, it contributes around 3%-4% of the overall revenue, or around 2%-3% of the overall revenue. on top of that, commercial AC would be I, I have contributed this from considering the 100 as comprising of these three. If I add the CAC, then if I CAC becomes if the CAC becomes 100, then CAC will contribute around 20% on overall basis, 18%-20%. Okay, understood. Understood. second question on the inventory. Since in a weak season, you have done this kind of great sales growth in UCP, should we assume that channel inventory is normal? What is the channel inventory and brand inventory levels as of now? See, as I said in the answer to the first question, to one of our colleague, that the generally primary follows the secondary, because if there is no secondary, then primary also will feel some kind of impact into it. In terms of inventory, if you're looking into, in particularly the sales which took place or which is taking place now under the secondary, second summer. In our own reading, the inventory at the trade level is a much comfortable level, and probably it will not going beyond even 30-35 days if I put together all India basis. Region-wise, it may differ, but I'm sure South and West will not be carrying huge inventory, including East as well. However, the North, because the season, has seen some kind of setback, may be slightly having the higher inventory. Okay. Just last one clarification on the one of the points in the result press release regarding INR 3.7 billion bank guarantee being asked by the main contractor. This is already shown as of now as contingent liability. Since you just clarified it, since it was basically main contractor asked to encash the same. We don't believe that... It is continued to be a contingent liability, and we don't need provision as of now. That is what the stand is, right? Yes, that is, you are correct. That is why we have... I mean, it has always been... It, it's a case, actually, from many years ago, which has been going on between the original customer and the main contractor. Nothing, no claims on us, no nothing. At the same time, they, they encash, they, they, they send a request for encashment to the bank, bankers lightly decided not to encash it, therefore, we have continued to keep it as a contingent liability. Of course, with a, with a note, clearly explaining what is the situation. That, that stands. Okay, understood. Thanks a lot, and all the very best. Thank you. Ladies and gentlemen, that was the last question for today. I would now like to hand the conference over to the management for closing comments. Over to you, sir. Well, thanks, thanks, all of you. I think there were some very wonderful questions, to get insights into the business. As closing remark, I would like to maintain that, you know, Voltas is a national brand, and we continue to focus on our leadership positions, and we are always there to-... you know, provide good products at the right price to the customers, and customers know what Voltas stands for. We are a national brand. We have shown in this quarter that in spite of incessant rains in all of North India, we still do a very strong growth in other regions, other parts of country. That's a kind of a testimony to the strengths to which we can draw on. We are looking to grow this business more. The penetration levels in the country still remain low, and we are, you know, going to get the fruits of the economy growing, as our current government has very aggressive plans for making India, and all those benefits will definitely accrue into our company, and we will continue to go for it. We are expanding, we are making the factory in Chennai. That definitely is an indication that we are out there to make the most of the opportunities which are being given to us. With that, I'd like to thank everyone once again. Yeah. Just to add on what Mr. Verma said, this year is going to be challenging for both product and the project business. The efforts from the management as a management side is to continue this great momentum and assume the opportunities whenever it arises in the future. Now, having said that, guys, I know, we could not be answering to all the questions from the investor side. We are open for any Q&A session, my only one request is, since I have some personal commitment on this next two or three days, if you have any questions, I will be able to answer them post Independence Day or post 16th of August. In the meantime, if you have any pertinent questions, you can reach out to whoever. My call may go on a silent mode because of the personal commitment that I have. Thanks a lot to all of you to spend time on the weekend to attend this investor call, and wish all of you a good weekend and next weekend as well. Thank you. Thank you. On behalf of ICICI Securities, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.