Ladies and gentlemen, good day and welcome to the Voltas Limited Conference Call hosted by DAM Capital Advisors. As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing the 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 Ltd. Thank you. And over to you, ma'am. Yeah. Good afternoon everyone and a warm welcome on behalf of DAM Capital to the Voltas Limited 2Q FY25 Earnings Call. We have management today being represented by Mr. Pradeep Bakshi, Managing Director and CEO, Mr. Jitendra Verma, Chief Financial Officer, Mr. Nikhil Chandarana, Head, Corporate Finance, and Mr. Vaibhav Vora, Head, Treasury. At this point I'll hand over the floor to the management for the initial remarks after which we'll open up the floor for Q and A. Thank you. Over to you, sir. Hi, this is Jitendra Verma. I'll be taking a few minutes to give you analysis of results and then we will take the questions answered along with our MD and CEO Mr. Pradeep Bakshi who is also on the call. As you are all aware that global growth remains resilient despite a sluggish outlook for the Eurozone and China, stronger than expected growth in the United States among advanced economies along with robust performance in India within developing economies is sustaining overall growth momentum. Sales. While urban consumer sentiment appears to be softening. The recent surge in inflation can be attributed to a temporary spike in prices. However, core inflation remains within a comfortable range and several food items such as pulses have declined in price due to government initiatives in the current quarter. Considering underlying global and domestic factors, the Reserve Bank of India has shifted its stance to neutral, focusing on inflation targets while supporting growth. Nevertheless, inflation projections may face headwinds from renewed volatility in commodity prices particularly due to fiscal stimulus in China which could impact the RBI's inflation target and potential rate cuts. Voltas has delivered another remarkable quarter. Two quarters ago, the company achieved the milestone of selling two million air conditioners within a 12-month span. Impressively, this achievement was reached in just eight months during this calendar year 2024, highlighting strong market demand for the company's products and a year to date growth of 52% at this time during the traditionally lean monsoon season. In the current quarter, Voltas reported a 15% growth compared to the same quarter last year despite a higher base. The Unitary Cooling Products division continued to outperform the market, maintaining its growth momentum with an overall volume increase of 56% over the previous lean months period. For the six months ending September 30, 2024, the company achieved a 33% increase in consolidated total income reaching INR 7,726 crores up from INR 5,794 crores in the same period last year. Profit before tax surged by 128% climbing to INR 657 crores compared to INR 288 crores previously. Net profit after tax also experienced significant growth reaching INR 468 crores up from INR 165 crores in the corresponding period last year. This marks the highest half yearly profit in the company's history. Earnings per share for face value per share of INR 1 for the six months period ended September 30, 2024 was INR 14.15 compared to INR 5.02 in the same period the previous year. In the same quarter, consolidated total income grew by 15% reaching INR 2,725 crores compared to INR 2,364 crores in the same quarter last year. Profit before tax surged by 142% increasing to INR 205 crores from INR 85 crores, net profit after tax saw a substantial rise climbing to INR 133 crores from INR 36 crores in the corresponding quarter last year. Earnings per share for the quarter ended September 30, 2024 were INR 4.05 compared to INR 1.11 in the same period previous year. During the quarter ending September 30, 2024, the Board of Directors approved a long term incentive scheme for 2024 aimed at driving company performance and retaining key talent. This scheme, which commenced in the financial year 2025 and would end in the financial year 2027, has resulted in a provision being added to employee benefits of INR 24 crores for the first six months in the current quarter, which moderately impacted the bottom line. These actuarial valuations will be reassessed periodically. Overall, the corporate balance sheet remains healthy. A snapshot of our results for this quarter and for the financial year is already available to you guys. In Segment A, in the Unitary Cooling Products, the second quarter typically marks a lean period. The early heat wave in the northern regions helped sustain the growth momentum in the company's air conditioning business. However, persistent rains across the country during this quarter slowed industry progress. Despite these challenges, the segment performed relatively well, reporting revenue growth of 30% compared to Q2 FY24 and 44% compared to H1 FY24. All products within the room air conditioner category experienced strong demand driven by consumer's desire for comfort and convenience. Both window and split air conditioners saw robust growth with demand emerging from across the country. The premium segment, particularly five-star rated products, continue to thrive, leading to an improved overall sales mix for Voltas. With the new facility operational, we aim to enhance sales and service through our extensive distribution network. Leveraging our supply chain has enabled us to maintain our leadership position with an exit market share of 21% as of September 2024. Over the past few quarters, we have consistently strengthened our brand proposition and product placement across all channels. During the season, our performance in the RAC segment has remained strong. We also noted significant volume growth in other cooling products including air coolers and commercial refrigeration items. The commercial refrigeration industry currently faces headwinds due to a reversal in the capital expenditure cycle after two to three years of consistent growth. Products such as chest freezers and chest coolers have reported moderate growth. Nonetheless, demand for water coolers and dispensers within this category has remained supportive. Thanks to our new plant and a higher base from the previous year, commercial refrigeration products showed a healthy performance. Our new offerings in cold room and medical refrigeration are gaining traction bolstered by a solid order book. While revenue growth was commendable, challenges in the market stemming from reduced capital expenditures by customers have led to a decline in margins during this quarter. The air cooler and water heater categories continued to outperform, achieving substantial growth compared to the previous year. Strong sales in the first half coupled with healthy or heavy order commitments from our channels set the stage for an exciting year. Aggressive initiatives to expand our distribution network combined with quality products and favorable climatic conditions have helped us establish a robust foothold this season. Our new cooler models were well received, further fueling growth in this category. Recent reports indicate that our market share has grown to 11.11% exit September, positioning Voltas as the number two brand in September 2024 in the water heater segment. Partnerships with distributors and sub dealers have also contributed to strong performance. The commercial air conditioning CAC vertical maintained steady performance during the quarter driven by sales of VRF, Cassette and ductable ACs. The higher volume of margin, effective product sales, value engineering initiatives and the current mix of AMC jobs have positively impacted our bottom line. Consumer centric financing schemes significantly contributed to sales growth this season. However, elevated commodity prices and a depreciating USD-INR exchange rate have affected profitability. Our investments in BTL advertising have helped keep margins steady, aligning with our expectations. Simultaneously, various value engineering initiatives and cost control measures contributed to stable margins. In summary, segment revenue grew remarkably by 45%, reaching INR 5,384 crores, up from INR 3,723 crores during the same period last year. The segment result increased by 48%, amounting to INR 443 crores compared to INR 300 crores in the corresponding six months of the previous year. For the quarter ending September 2024, segment revenue grew by 31% totaling INR 1,582 crores compared to INR 1,209 crores in the same quarter last year. The segment result for the quarter was INR 116 crores, up from INR 93 crores in the corresponding quarter last year. On the capacity expansion front, we are pleased to report that production at our new factories in Chennai and Waghodia is progressing as planned. These facilities provide us with strategic advantages in location, enabling us to effectively cater to markets in South and West Asia. Segment B. For Electromechanical Projects and Services, this segment, the segment revenue for the quarter was INR 880 crores compared to INR 924 crores in the previous year's corresponding quarter. The segment results for the quarter stood at a positive INR 46 crores, a significant improvement from a loss of INR 49 crores during the same period last year. Over the six-month period, segment revenue increased by 14%, reaching INR 1,829 crores compared to INR 1,603 crores in the same time frame last year. The segment result also turned positive, amounting to INR 114 crores, a substantial turnaround from a loss of INR 101 crores last year primarily due to provisions made on receivables. During the current quarter, heavy rainfall affected project execution across all verticals, leading to marginal growth for the business. Delay in job progress and collections from government tender jobs impacted profitability. However, domestic business performance for the six months showed improvement. A focus on collection of dues and better working capital management has resulted in strong profit growth. The business anticipates a return to normal execution levels and aims to achieve its targets and growth by the year end. For the domestic project segment, we secured an order of INR 822 crores with the current order book standing at INR 5,014 crores in the international project sector. Operations in the UAE and Saudi Arabia continued to perform well, driving the revenue growth. Strong project execution has ensured robust bottom line performance as well. We have adopted a cautious approach to order booking during the quarter. As of September 30, 2024, the carry forward order book for international business stood at INR 2,473 crores predominantly in the UAE and Saudi regions. The total carry forward order book for the segment was INR 7,487 crores as of the same date. Segment C: Engineering Products and Services. This segment faced certain challenges during the quarter. While revenue increased to INR 308 crores from INR 277 crores the previous year, segment results fell to INR 84 crores from INR 108 crores during the same period last year. For the quarter, segment revenue grew by 9% reaching INR 147 crores compared to INR 130 crores in the corresponding quarter last year. The segment result for the quarter was INR 40 crores down from INR 54 crores the previous year. The mining and construction vertical showed positive momentum in the new pipeline ensuring continuity in operation and maintenance jobs as well as sales of Powerscreen machines. However, challenges in revenue mix in job renewals and healthy margins limited the ability to translate top line growth into EBIT. The textile industry faced headwinds due to fluctuations in cotton and yarn exports. Consequently, capital expenditure across the sector decreased leading to reduced utilization level for spinners and a corresponding decline in demand and margin for our agency business. Despite these challenges, our after sales and post spinning business showed positive performance. Voltas Beko, our joint venture Voltbek Home Appliances Private Limited also emerged as a beacon of growth, a volume growth of 54% in the first half of the year. This was complemented by a significant increase in market share in the refrigerator and washing machine categories year- over- year. As of YTD September 2024, our market share improved by 7.5% for washing machines and 5% for refrigerators. The home appliances industry in India experienced steady growth driven by demand for both large and small appliances. However, as compared to industry volumes, Voltas Beko achieved strong growth by offering an impressive product range to meet consumer needs. The launch of the Harvest Fresh campaign, along with enhanced social media efforts, focus on e-commerce exhibitions and dealer meetings significantly boosted overall business performance. Improved traction from modern trade has further supported this growth. In terms of profitability, increased volume has led to a gradual reduction in losses. Voltas Beko continues to work towards minimizing loss per unit, aiming for EBITDA breakeven in the coming future. Voltas Beko remains committed to enhancing its market presence across various product categories through customized market penetration strategies and growth initiatives. These efforts include expanding distribution reach, adopting channel specific practice to enhance market presence in key regions, and maintaining a strong focus on boosting e-commerce and Omni channel development. On the cost front, localizing production for a larger portion of its product portfolio, implementing product efficiencies, value engineering and optimizing the product mix have contributed to a positive outlook for the company. The period from October to December that is quarter three FY25 for the company is generally a lean season for cooling products due to winter. However, the onset of the festive period may bring an early surge in demand in part of the quarter. It will be interesting to observe the interplay of various factors including inflation, fluctuation in crude oil prices, currency behavior and geopolitical challenges. The current economic environment is marked by uncertainty and volatility. Inflation remains a focal point influencing future monetary and non-monetary action that will impact overall economic growth and consumer demand in the upcoming quarters. Nevertheless, we remain optimistic given the supportive factors for the businesses we operate in. Thank you. Maybe we can open it for question and answers. Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handset while asking a question. A gentle reminder to participants that they may limit their questions to two per participant. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Nitin from Axis Mutual Fund. Please go ahead. Thank you for taking the question just as you articulated. Market share coming back as you stated in the press release and the primary growth looks pretty promising. Can you talk a little about how the secondary market has gone during this quarter? I understand this is something you know, not a season, but generally if primary has been on such a higher side, how has the secondary market and number two given festive, you know, we already must have seen last 10, 15, or 20 days of festive. How has been the response you know, on overall sentiment wise. On the product. Itself and how you're doing it? That's my first question. Yes. Then I'll take up the second question. What do you want? You want to answer one by one by one? Okay, you know, copy. You ask about, you know, this year right from the March onwards, you know, last seven, eight months the sales have been brisk and the market here which we are sharing with you. That's a secondary sales market data only. Right. Which is by third-party syndicated. Right. So that shows that we have continued to do well by gaining 21% market share as at September. So this quarter this year has been quite robust. It's not that you know we are just in the market over here is only problems have also been happening equally good for the better. Also for your information you wanted to know as to how Diwali. You know. You know kind of is not. You know it doesn't give great numbers during this festival period. However it is more of other appliances. And also we continue to do pretty well on our AC related products. And we have clocked very good numbers even during October period. Also because Diwali from September onwards it is even 30 days in advance. Whatever we are counting as. So this last one month appliance sales has been very big. All appliances across. You know both have done very well. AC also have done well compared to last year. We have continued to grow, but more to talk about. You know we are currently talking about quarter two and half. So our primary sales and facilities have done well. Yes, of course in the quarter two because of actually in several parts of the country and extended rains. I saw with time reception was there in certain areas. However, overall we have done pretty well for ourselves as a brand, and even the industry has done reasonably okay. You know, everybody has shown growth whatever numbers we have seen for most of the brands. So that's the answer for you. So, why I asked specific AC because when we were talking to few channel partners and all, surprisingly they're talking about October festive is some 20%-25% growth in AC. So I was pretty surprised to hear that. So I thought I'll ask you. That's what I'm saying. But I'm getting it right from March until May, June. I was growing 70%, 80%, 100%. 24% is a growth for me. But yes, looking at, you know, the. I don't count very high on the. You know, period for the AC, to be honest. All along I think for last four years I've been in the market AC only largely. Yeah, got it. Second in terms of getting. Sorry to interrupt, sir. Can you please go back to the question? All right. Okay, I'll come back. The next question is from the line of Sumil from Kotak Mutual Fund. Please go ahead. Losses while they have come up will. Continue to be at. What revenue threshold or at what market share you believe that you can achieve? There was a lot of noise from his background so I could not. I'll probably pack in again. Hello. Is this better, sir? Yes, it's better. Two questions. First on installed base. Now obviously you have alluded to the. Market share going up both in ACs, both in fridges as well as washing machine but the losses seems to be at INR 30 crore on a quarterly basis. Now at what revenue threshold or at what market share you believe you can achieve a breakeven? That's my first question. Any broad indication on that? So you know as you said in recent few years we are investing into the brand actually and we are building the revenue and the numbers. I would believe that you know very soon we are likely to reach 10% market share in the washing machine and probably 7%-8% in the refrigerator segment because we are already 5% and roughly 7.5% 8%. It's been hovering around month to month between the washing machine and in case we talk about only 20 of those 14%-15% all along across month after month for almost a year now. So I think you know when we overall in the V segment we by probably next year we should see you know some EBITDA. That's what we had committed to the guideline. We've been working towards it. Probably in a year's time we should cross this, you know, threshold numbers which I'm saying roughly 8%-10% market shares in both the categories. You will see a better result on the front. Yes, of course. But these are for designers, for design only. We have decided that we're going to invest into the brand. You will see that we have been continuously building network. We are continuously building the, you know, making the consumers aware about this category, about the products which we have been offering. Our products have been accepted very well. No complaints whatsoever from any segment, all their channel partners across segments, across channels including E, including Modern, including organized food everywhere. This product seems to be doing very well also. Hopefully we'll get good news very soon. Sumil, just to add to what Mr. Bakshi has said, you know we have always been maintaining that somewhere in this year we should become, we should break even in EBITDA and that is looking highly likely. As is also evident by the fact that with higher volumes our losses per unit are also coming down gradually. If I were to actually put a number I would say somewhere closer to 2,500-2,600 crores kind of a turnover, we should be definitely breaking even. Don't take my, you know this as a gospel truth because there can be many factors which work on this but generally speaking at this number we should be starting to break even. Also the market shares. Perfect. So my second and last question now obviously once the new plant which is already operational Tamil Nadu in year. Two or year three, what could be? The utilization rates in the volume sold? Any broad number? And subsequent to that, what could be the broad margin differential versus where we are today? So let me answer the RAC. You know, if you look at our current sales is well past, you know, two million in the first 240 days of this year. And we've been growing at a pace of almost 50% in this category for which we have set up this new factory. So if we continue to grow with this pace, we are likely to cross two and a half, three million. So this particular factory, what we have set up is only at the moment one million units. And my existing factory is able to produce about 1.4, 1.5 million. So put together as it is, I am running short of, you know, the capacity and we are augmenting it further. Probably we are very soon going to 1.5 million and 2 million by 2026. So therefore it will just be sufficient for my needs. So when you're talking about full territory, it has to anyway run on the full capacity and continue to catch up with demand. And that we have an obligation on that factory. So you don't worry. This will be running at full capacity and this full capacity will be utilized. Also coming back to you say how the profitability is going to improve through the factory. Honestly speaking, I am not looking at, you know, I'm not greedy by setting up the factory. I want to first, I want to provide comfort and convenience to my consumers first. And profitability has been reasonably good as of now. And I'm not hassled about that to be honest. First we need to fulfill the requirement and extend the market. That's what, you know, guidance and I've been providing you this input all along. Our endeavor is to expand the market comparatively because penetration level is pretty low as compared to similar kind of geography with similar kind of, you know, population data and consumption base. So we need to extend the market. You know, it's our, you know, ownership on the brand. It is a leading brand to extend the market and to please provide the, you know, comfort to these consumers. That's the objective of this factory. I don't think we should be bothered about that. Sir, can you please fall back in the? No worries. No, thank you. Thank you. The next question is from the line of Naushad Chaudhary from Aditya Birla Sun Life. Please go ahead. Yeah, thanks for the opportunity. Two questions, then I'll come back in queue. Firstly, again, in Voltas Beko. I take your point sir, but just. To help us understand more at what gross margin we operate this business and what specific steps are we taking to make it profitable, how much capital we have deployed so far in this business? This is first questions. So I think you know partly we've answered on this how we are when we make it profitable. I think it was answered if you asking about what kind of gross margins you've been making in the categories different products with different kind of gross margins. It ranges between. I think if I'm not mistaken Jitendra can add to it. Roughly around 10%-12% to 15%-18% type margins are there in each of the category and as we said is you know positive probably this year by this year. That's the endeavor at the moment and that's what we applying for profitability as we said is in terms of revenue has said something INR 2,500 odd crores or so, whatever, whenever last year we've done about INR 1,500. This year most probably we will cross and next to next year we are growing very fast in this category. We are the fastest growing brand. So you can be rest assured they will be profitable in this category. This is initial investment in formative years where you need to build a brand because you know we appreciate that there are multiple, you know Korean and you know other brands, Chinese brands are available and American brands are available. So we have to establish our mark into the industry first and we have to expand this industry also because industry has also been not growing with that speed. Our endeavor would be to grow this industry. We've also been doing about, you know, 13-14 million, 15 million all along. You look at how fast is it going to cross 14-16 million now. How much capital we have deployed in the business. I think Voltas correctly, it's about INR 1,300 crores if I'm not mistaken. Yes. Yeah. About INR 1,300. Out of which 15% is by Tatas including Voltas and capital investment and 50% by the partners, 49% by Arçelik Group by 1%. That's how it is. Yeah, it is INR 1,300 crores. Yeah. And all that I have follow up on this, I'll come back. But second question is on the raw material side sir, if I see from last FY from Q1 there is slight gradual inch up in the material cost. So do you think the market is ready to absorb that cost or we may see some challenges in coming quarters in terms of passing on that raw material. I'm sure you know that in all the categories, including air conditioners, you know, get the pricing up by some, you know, percentage point because raw material cost. Yes, you're right. Obviously in one of our businesses last few months we have passed on part of it already and we will continue to observe. Partly we are trying to cover up through value engineering in our ACs. How can we minimize the cost, you know, of production and similarly, you know, part of it is depending upon how we can mitigate that. Of course the brand cannot absorb everything. Something has to be passed on to the market as well. Thank you. The next question is from the line of Natasha Jain from Nirmal Bang. Please go ahead. Yeah, hi sir. Thank you for the opportunity. So my first question is on the domestic side of the EMPS business. Now historically in the past couple of quarters seen quite strong growth and honestly very bullish commentary as well. But this quarter in the domestic side the growth has just been 6%. I understand the incessant rains could be a factor, but could there be a possibility that there's some slowdown in certain projects that we are executing? And on a related note, how do you see order book execution for domestic business in the second half? That's my first question. Natasha. To answer that very quickly, I think in your question itself the answer was there: the incessant rains. That is the real reason, and I will therefore call it a kind of a one off thing. The H1 was good. We don't have any issues on that. Yes, slightly bit of a lesser growth than as we have been showing. The H2 we should be able to recoup all these things because in the projects business sometimes we don't have to look at it quarter- to- quarter because different projects have different kind of speed, and therefore on a yearly basis we should be able to recoup. The order picking on the domestic side also has been really good, and we have picked up some nice good margin orders. This has also been our strategy to be selective and pick up only those orders which we believe are having good KYC and all those factors. So we have been on track for that. Let me add to what Mr. Verma has said. The order book has been reasonably healthy. It is of the same order as it was last year on 30th of March. We are hovering around 5,000-odd crores of order book with us. And you know, while we have said that, you know, during the rainy season there is always a bit of a discount because you know, right of way etc. etc. time is not available therefore you cannot complete deadlines etc. However, if you look at H1 numbers we're way ahead of our commitments and numbers and targeted numbers in this category. Q2 also looks very promising. We have got very healthy orders from you know Tata Electronics almost you know thousand-odd crores which we need to execute during the course of next few months. So, I think we have got very good order there and I'm very confident in billing from that segment as well. Understood, sir. So that helps. And my second question is on the RAC side while you've mentioned earlier that there was tertiary demand in the sense that end consumer demand did pick up but I would just bring in a lean quarter like a Q2 when practically your August and most of your July was also completely washed out because of rain. Still we've had healthy growth in the RAC category. So should we read it as there could be some bit of channel filling also because inventory was low and if that has happened how do we see the near term because now we'll enter quarters wherein we'll sit at very high basis. So what is the kind of growth that we can expect in the second half from RAC as a category? Natasha, in my report, in my initial comments I mentioned that we did exit in September of 21% market share. So when we are reporting that that's the secondary data only which we pick up from the market and that will also show you that secondaries have been doing pretty well. Of course there would be some, you know, stocking up. Those are like normal levels. It is not that people are or the dealers are building up unprecedented inventories or anything and this market share data actually alludes to that fact. And let’s have Mr. Bakshi address your question. Yeah, yeah. Actually, you know, the market knows the dealers are very smart people. These are, you know, they understand what to stock up, what not to stock up. The history shows there is a greater demand of appliances, therefore they invest more into the other appliances than the ACs. So I don't think, but of course they need to prepare themselves for the, for each category and therefore they would have kept in stock and they have been able to sell a little bit part of it. I'm not too sure that inventory is being built up in the channel and going forward also right from, you know, now another two, three months, February onwards the season picks up and of course, you know, west and south there is a festive season also in October, November. West has done very well for us actually, you know, mine, North, of course, has been under strain because of you know, Diwali festival and all. There is more focus towards the planning, but West, South, they're setting. Some are catching up and the demand for compressor products there. So I don't think I'm worried about any stock, and I've not been informed by my team that there has been additional stock or high stock in the marketplace. So it will be next two quarters. Understood, sir. Thank you so much. Your team are very happy to value, sir. Thank you. The next question is from the line of Ravi Swaminathan from Avendus Spark. Please go ahead. So thanks for taking my question. Most of my questions have been answered. One question on the engineering product side. So our profitability which used to be in that range or band of 33%-35% at an EBIT level had come off to 27%-28% in the first half. Is it because of the fact that the profitability in the textile side is generally way better than that of the mining side that is the major reason or is there something else that we need to read into it and how sustainable or should we read like the margin should be in this band at least this year to 27%-28%. It is having a little bit of a swelling at the moment because you know, Bangladesh because of you know, sanctions there. Bangladesh sort of yarn goes to Bangladesh and that was actually had come to a halt there. That's on certainly yarn prices also have suffered and therefore the margins have sunk during this period. Even the policy probably we are presuming that the margins are going to be around this level for next few months until situation starts picking up. Yarn prices need to be get corrected and of course the you know, Bangladesh starts operating in the normal that will be the way of life for this particular category. But it's been a healthy number. We have been delivering about 100 levels the last two years which are also slightly lower than the previous number or the desired number. But we are likely to catch up in the game by the year because we are focusing on EMPS renewable services. Also EMPS, you know, doing the energy audit for them. My team gets engaged whenever these kind of, you know, situation once we start doing some other things which you know continues to give us some revenue and payback which makes up for a bit of a loss which may happen because of all these events. So don't be worried. Actually we are reasonably placed in this category as well. And by the year end we should be, you know, well close to our targeted numbers. Understood, sir. Thanks a lot. Thank you. The next question is from the line of Keyur Pandya from ICICI Prudential. Please go ahead. Thank you for the opportunity. Sir, one question. So on the UCP margin side, I mean you mentioned last quarter that industry has increased the prices near the end of the season and year- over- year, 30% kind of growth. And despite that if margins are lower, Qo Q. If you can just throw some light on what is driving the margins in this narrow band, is it competitive pricing or the OpEx of the new plant or something else. And in that backdrop how should we think of margins going ahead? Also, thank you. There are a couple of reasons to answer them. You know there are a couple of reasons for this one as you explained in Excel also that we have definitely provided for long term incentive for our, you know, team because you know to continue to keep them motivated and highly charged up to continue to keep giving us growth. So that's a different number which has come in this quarter despite the fact. Yes of course we have passed on some cost to the market but at the same time this is an additional cost which has come up and the complete H1 has been put into this quarter only because it was approved by the board now only. So that's one piece. Secondly, of course, you know, there are some investments being made, but of course we have not taken any depreciations as of now. I don't think so. That's one part. But of course, you know, because of lesser volume, so you know, this cost doesn't get absorbed. You know, there is a number which needs to be operated upon. Quarter one is huge, quarter two is very less as compared to that. So therefore you cannot presume similar kind of margins in quarter quarter margins. If you compare with last year. Last year you can see in comparable margins were about the same level. So I think that. Yeah sure. See we, we have to also see that we are building up for future growth. So therefore we are investing in ISDs also which are our in-shop demonstrators. So that's one part of the thing. And we have kept even during the lean season. We have continued to work with them and as Mr. Bakshi said long term incentives for our employees, like it's sharing of things with our employees as well. We also mentioned in my speech that the commercial refrigeration bit which is part of the UCP didn't really come up to the party for this quarter and we are seeing a bit of challenge there. Yes, depreciation impact has been there but I wouldn't say that anything major on the side. Commodity prices also had been slightly up. We couldn't pass on. So all that came impacted, but the margin was not very big drop. And as we have been saying that rather than focusing on these quarterly minor adjustments on these kind of margins, I think we should look at rupee profit. Rather than a margin percentage. And if you would look at and focus on that, the profits we have done pretty well, and these numbers are really remarkable in that. So what both of us have said is we continue to invest in brand promotion, you know, and also on building and expanding the market and building the market share and also on our team to keep them motivated, engaged, in charge of investing into all these things, and this is what is going to pave the way for our success in the coming years. So that's what it's an investment, and I don't think, you know, we should be hesitant about that as well, and I'm sure all of you would be happy. The kind of results the team has put up in the first half is unprecedented. You know, I've been for about almost 24, 25 years with this absolutely awesome number. Understood, sir. This last and second question on the commercial refrigeration to mention that it did not pick up as expected. So is it because of some product gaps or basically internal reasons or there is slowdown at the macro level? Our industry levels have done well. However, part of this commercial refrigeration which is freezers and bottles etc. have not been, you know, doing well. This has been in decline. That's what I have been given on. When we get to see results of the others, people also will get to know more about it. But this is the feedback which I have been gathering from the market and from the demand for the category is being a bit subdued because CapEx has been took on a bit of a hold at the moment because last, you know, sort of a people invest into this strategy two, three, four years and again a bit of a slowdown like that. You know, just continues the cyclical nature of this business and therefore this is a bit of but our. I think about 13%-14% so that's a bit of a confirmation to me overall in this category. And however yes when we compare with air conditioner or other appliances which is more than 50% I agree with you. However we are happy because probably our market share we have continued to remain most of the. We have been about 35%-37% all along in this category for last several years water dispensers we've been more than 55%-60% in this category all around. Water heaters we've been more than 40%-45% in that. So I think we continue to do well in these categories. But yes, of course relative performance, if we compare with other categories it's a bit. Yeah, I think that's the most important point. That it is not that there is. A degrowth or anything. It's. It's not as high growth as in other products. So it stays as the nominal thing. And. Two, three years it was a very high growth. Therefore, there is a bit of a slowdown. We are not bothered with this loss and the margin. In fact, if I were to just simply mathematically remove the LTI numbers, my margin percentage also would have been higher. But anyway, it is a cost which we have decided to allocate to our, you know, hard-working teams. So we will keep that and that will be the future. And we have also said that these values would be reassessed by the actuarial valuations at every period as the accounting norms are. So we'll take that. Thank you. The next question is from the line of Aditya Bhartia from Investec. Please go ahead. Hello Mr. Aditya, your line has been unmuted. Please go ahead with your question. As there is no response from the participant, we'll move on to the next question. It's on the line of Siddhartha Bera from Nomura. Please go ahead. Yeah, hi sir. Thanks for the opportunity. On this margin side, some color in terms of the commercial category, you indicated last quarter there were some inventory related adjustments and that led to margin pressure. So now with this type of competitive intensity which you are seeing, do you see some improvement for the commercial category also in terms of margins going ahead or this is something which may continue to be there in the next few quarters. Which commercial is he talking about? Commercial. Commercial project. What exactly? The question about which category between the commercial refrigeration. Right there we have seen some margin softness in the quarter. Okay. I said commercial refrigeration, you know, last year, last quarter when we talked about it was a key. You see things which have been brought in by the government on components. So therefore there was some inventory and that inventory needed to be liquidated. So that was the issue in the last quarter. So that's now gone. That's not an issue anymore. And from here we'll have to see if there is really a slowdown on the capital in investments within the industry, whether it be the ice cream manufacturers or whether it be other consumers or other business users of these products. So this quarter we have seen there is a kind of slowdown on that investment and we will wait and watch on this thing. We have some orders which we will. Be willing to complete as it will be feeling going forward. We observed during this last two, three quarters in this category as also mentioned by Manish. You know, people were holding stock and they were building trust for the summer season. But you know, unfortunately the QCO came in place actually and they wanted to liquidate those. They were the best of some of the brands and since they were selling they were reasonably placed in terms of inventory and all because our sales and secondary sales have been reasonably good but because the competition, as we rightly said, competition intensity or the anxiety to liquidate those stocks which were not QCO compliant. So they were trying to liquidate that discounted prices in the marketplace. So which was exactly based on all of us to compete to remain competitive in the marketplace and therefore the market are big strength in this category. Margin, sorry, a big strength in this category for the moment. So I think now we are past that stage. Most of that has been cleared by the brand and now I think we will start looking at the new category also going forward. Got it, sir. Lastly, if you can highlight what has been price increase which we have taken to perform the near term commodity cost which you indicated that that will be also metal. Roughly around 3%-4%. You know, price increase we had, you know passed on in the marketplace in the last quarter and in probably. Got it, sir. Thanks a lot. Ladies and gentlemen, this was the last question for today's conference call. I would now like to hand the. Conference over to Ms. Bhoomika Nair for the closing comments. Yeah, thank you very much to everyone and particularly the management for giving us an. Opportunity to host a call. Wishing you all the very best and a very happy Diwali to you and all the participants. Thank you very much sir. I will take this opportunity. I also like to take this opportunity to wish all of you a very, very happy Diwali and all these festivals around this event. Also, I'd like to thank all the investors and our consumers to this call for posing this brand and continue to allow us to grow this. Thank you very much. Welcome. Happy Diwali to all of you. Thank you. Thank you On behalf of DAM Capital Advisors Limited. That concludes this conference. Thank you for joining us and you may now disconnect your lines.