It is enchantment. Good day and welcome to Voltas Limited Q1 FY 2026 earnings 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 star zero on your telephone. Please note that this conference is being recorded. I now hand the conference to Bhoomika Nair from DAM Capital. Thank you and over to you, ma'am. Yeah, thanks. Good evening everyone and a warm welcome to the Q1 FY 2026 earnings call of Voltas Limited. We have the management today being represented by Mr. Pradeep Bakshi, Managing Director and CEO, Mr. Mukundan Menon, Managing Director Designate, Mr. K.V. Sridhar, Chief Financial Officer, Nikhil R. Chandarana, Head Corporate Finance, and Vaibhv Vora, Head Treasury. At this point, I'll hand over the floor to Mr. Bakshi. For his initial demands, hostess will open up the floor for Q and A. Thank you and over to you, sir. Good evening everybody. as Bhoomika has explained, with me I have got in the room Mr. Mukundan menon, k.v. sridhar, Vaibhv Vora, nikhil r. chandarana. Yeah, these are the colleagues available in the room. I would now request my colleague, Mr. K.V. Sridhar, who is the CFO. He will give you the brief synopsis of the results for the quarter one, 2026. Over to K.V. Sridhar. Thank you, sir. Hope I am audible. Can someone please confirm? Yes, sir, you are audible. Please go ahead. Okay. Good evening all. Glad to connect with you all for the first quarter results for Voltas. I'll just start with the global performance, a bit of category performance, and then go into the details of the specifics of the Voltas category performance. The IMF now expects global growth to reach 3% in 2025, driven by early spending ahead of expected tariff changes, lower overall tariff rates, and government spending in some regions. However, persistent trade policy uncertainty, escalating geopolitical tensions, and uneven inflation patterns, especially in the U.S., continue to weigh in on investor confidence. The consumer durable sector is experiencing headwinds. After peaking in late 2024, growth has turned negative in May 2025. Credit flow to the segment has tightened, and the decline in electricity consumption points to a subdued demand for cooling products such as air conditioners. While the RBI's recent rate cut indicates a pro-growth policy stance, discretionary consumption remains fragile. During the quarter, weather-related volatility had a significant bearing on temperature-sensitive categories, most notably air conditioning categories. The summer of 2025 arrived late, stayed mild, and ended abruptly, curtailing peak demand for air conditioners. These factors, coupled with a record base in the prior year, explain the short-term pressure on Voltas' top line and margins. Despite these temporary challenges, Voltas demonstrated resilience by retaining its market leadership in room air conditioners and maintaining stable performance across its core business segments. Voltas Beko continued its aggressive growth trajectory, achieving year-on-year growth of 33% along with market share gains. For the quarter ending June 2025, the company reported a consolidated income of INR 4,020.65 crore against INR 5,001 crore in the same period last year. Profit before tax stood at INR 202.72 crore compared to INR 451.52 crore in the previous quarter same time. Net profit was at INR 140.61 crore compared to INR 335 crore in the previous corresponding period last year. EPS for the quarter ended 30th June 2025, INR 4.25 compared to INR 10.10 in the same period in the previous year. A snapshot of the results I think has already been shared, so I do not want to elaborate on that. I think it's already been shared earlier. Now, if you go to the specific, performance segment-wise, for unitary cooling segments, the unitary cooling product segment experienced one of the most abrupt seasonal reversals in recent years. Q1 2025 had delivered an exceptional summer with soaring temperatures and heat waves driving air conditioner sales to record highs. Voltas then registered 55% growth in AC volume, gaining further market leadership. This strong base created a high reference point entering into FY 2026. During Q1 FY 2026, it represented an opposite scenario. Summer arrived late, was marked cooler across large parts of the country, and gave way early to monsoon conditions. As a result, peak air conditioner, commercial refrigerator, and air cooler selling season was threatened by several weeks, leading to a substantial drop in primary offtake. Voltas in preparation had entered the season with robust channel stocking, anticipating a continuation of demand trends from the prior years. However, as temperatures remained subdued, consumer footfalls in stores declined noticeably. Retail sales in key metros and tier two, tier three cities fell below expectations, and inventory across trade channels remained elevated. Voltas undertook tactical interventions to support secondary offtake. Consequently, factory operations had to be scaled back mid-season to avoid overproduction. This underabsorption of fixed costs combined with higher warehousing and holding expenses put short-term pressure on profitability. Despite these challenges, Voltas maintained its number one year-to-date June 2025 market position in room air conditioners at 17.8%, reflecting enduring brand trust and strong channel relationships. It is important to reiterate that the fundamentals of the room AC business remain intact. From FY 2022 to FY 2026, the segment has maintained a robust volume CAGR of over 20% for Q1. The company has initiated realignment of inventory and production to reflect actual demand conditions. The festival season and possibility of a second summer in certain regions may further aid recovery. The company has started preparations for upcoming revision to the ENERGY STAR labeling regime later this year. While recovery for the segment may take a few quarters, the company remains cautiously optimistic that its strategic investments and ongoing initiatives will support long-term growth and reinforce its leadership in the cooling product segment. The commercial air conditioning segment also remains steady with continued demand for VRF systems, cassette ACs, and ducted products. While retrofits and customer care margins were softer, they are expected to normalize as execution stabilizes in the later half of the year. To summarize, for the quarter ended June 26, the UCP segment registered revenue of INR 2,867 crore as compared to a significantly higher performance of INR 3,800 crore last year for the same period. At the segment's EBIT was at INR 101 crore in FY 2026 as compared to INR 327 crore in the previous year. Segment B, electromechanical products. Projects under the EMPS segment were largely stable during the quarter. Voltas continued to deliver steady performance across geographies, supported by strong internal controls, timely certifications, and prudent receivables management. International projects in the UAE and Saudi Arabia remain a key part of the portfolio and contributed to both revenue and margin. For the quarter ending June 25, segment revenue was INR 921 crore compared to INR 949 crore in the same period last year. In terms of profit, it was INR 49 crore as compared to INR 67 crore in the last year. The total carry forward order book as on 30th June stood at INR 6,200 crore, ensuring visibility for future quarters. Cross-discipline, project governance, and on-ground execution efficiency remain core to the company's strategy in this segment. Segment C, engineering products and services. The segment faced some challenges during the quarter, influenced by broader macroeconomic trends and industry-wide successes. For the quarter, the segment revenue was INR 135 crore compared to INR 160 crore in the previous quarter same period. The segment results for the quarter were INR 40 crore against INR 44 crore for the corresponding quarter last year. The engineering products and services segment saw softer performance driven primarily by external pressures. The mining and construction equipment vertical was affected by lower sales of power steam machines, although this led to an improved margin profile due to favorable product mix. Operations and maintenance contracts remain stable and provide baseline supports to revenues. In the textile machinery division, CapEx sentiment remains subdued among customers, especially in international markets. Demand in agency business remains limited, and spending caution impacted both revenue and margins. Voltas is focused on consolidating its presence in spinning and post-spinning segments while improving service capabilities to position for the most upcyclers. With regard to Voltas, Voltas continued its robust growth trajectory in Q1 FY 2026, selling close to 1 million units and achieving 33% year-on-year volume growth. The washing machine category drove the expansion, supported by a refreshed product lineup and enhanced retail presence. Market share gains were recorded in both semi-automatic and overall washing machine segments, while the refrigerator category also improved its standing, particularly in the direct cooling models. Voltas' growth was backed by agile manufacturing, timely availability of fast-moving products, and a steady pipeline of product innovation and new launches tailored to evolving consumer needs. Improved traction across general trade, modern trade, and e-commerce channels was complemented by enhanced retail visibility, focused marketing campaigns, and operational efficiency, driving both volume expansion and margin improvement. Voltas' growing sales, expanding product portfolio, and increasing consumer acceptance continue to strengthen Voltas' overall appliance business while reducing its reliance on seasonal product categories. Voltas' trajectory strengthens Voltas' overall consumer appliance portfolio while also diversifying seasonality risks inherent in the cooling products category. To summarize at an overall outlook, Voltas views the performance dip in Q1 FY 2026 as temporary. Inventory normalization, tactical cost controls, and a demand rebound during the upcoming festive period are expected to support sequential recovery. The company retains its market leadership across key cooling categories and remains fundamentally strong. Further, Voltas continues to grow and market strength remains encouraging. The project business continues to progress steadily. Across all segments, Voltas is investing for the long term with a sharp focus on innovation, execution excellence, and customer centricity. Thank you. Sir, should we begin the question and answer session? Yes. Yes. Thank you, sir. Ladies and gentlemen, we will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchstone telephone. If you wish to withdraw yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking your question. Ladies and gentlemen, in order to ensure that the management is able to address questions from all the participants in the question queue, please restrict your questions to two participants. If you have a follow-up question, please rejoin the queue. First question is from the line of Natasha Jain from PhillipCapital India Private. Please go ahead. Thank you for the opportunity. My first question is, on the ROT side, can you tell us how July month was for Voltas? What is the current inventory looking like from you at the brand level as well as the family level? Did you see any pricing pressure, or are you continuing to see that? That's my first question. We have just concluded the month of July, and the numbers are getting consolidated. In fact, it's not a very good number, but right now, since I do not have the clear picture, I'll not be able to comment on this. Since we are mainly talking about quarter one, I think it's better that we stick to quarter one numbers at the moment because that's in my control, and I can talk about that. Coming to your question on the inventory, inventory in the trade you are talking about or inventory you are talking about, the brand inventory? For both, at Voltas' level and at the channel level. We have, having seen a wonderful 2024-2025, we had planned for a big sales during this year as well. The entire industry had planned in a big way, and we had augmented our capacity. Therefore, all of us are carrying inventory. Talking specifically about brand Voltas, we are carrying an inventory of about three months or so, three to four months at best. As far as trade partners are concerned, they are carrying inventory on an average about two months. Sir, are we continuing to give trade discounts or indirect discounting like pre-installation? Does that still continue? We have to remain competitive because we are a brand leader, and we don't want to lose out our market leadership. Therefore, to retain our leadership position, we are trying to remain competitive in whatever our offerings are so that we continue to gather market share. We are not discounting per se at the moment. The sales are happening automatically. We are hopeful that as we enter into the festival season now, festivities have already begun. Onan has begun and after that, Durga Puja, Diwali, Navratra, Diwali, all this is going to continue. The second summers are also likely to come in. Hopefully, since the summer season was milder, summers were milder, I'm hoping that the festival season and the second summer should be looking up and we will be able to make up for these losses. Hopefully, these inventories will get liquidated in an automatic way rather than, I'm not looking at discounting in a big way, to be honest. That is fine. My second and last question is on the numbers itself. Now, if I see South India was a worse off season than North India, and Voltas is more indexed to North India. In fact, you are the leader in terms of North Indian markets where summer was still good until the first week of May. Relatively, still the numbers have been worse off than our peers who were more indexed to the south part of India. Even on the margin side, I mean, now our capacity is at the same level versus everybody else's. There also, the decline has been sharper than what we probably expected. Could you tell us, is it just completely reverse leverage or are there any serious runoffs that we may have accounted for in the VCT segment? That's it. Thank you. Yeah. So, you know, if you look at the summer, never got settled into North India, unfortunately. As you rightly said, our North India is our, you know, big stay, and the largest number comes in from there. Of course, we are brand leaders across regions, but in a bigger way, as you rightly said, in the northern region here. Unfortunately, since North India did not get to see summer this year, we have not been able to gain a big way. However, you will see that our market leadership has remained intact. If you look at, if you analyze in case you were able to lay your hands onto the market share number, in the entire quarter, right from April to May to June, we have continued to increase our market share. In April, our market share was 16.9%. In May, our market share was 17.9%, and now currently, it is 19.3% market share as of June end. You'll see that while we may not have been able to get full summer season, we have continued our focus and remained on gaining the more expectation from the market. Whatever may be happening, even if the sales are low, we want to expect more and try to retain our leadership position. That's what we have been doing. the unitary cooling products market, in Maratha. I'm sorry to interrupt. May I request you to please rejoin the queue, as there are several participants waiting in the queue? Thank you. The next question is from the line of Siddhartha Bera from Nomura. Please go ahead. Yeah. Thanks for the opportunity. Sir, first question is, given the first quarter, would you have some guidance about three years? How much growth are you expecting, given the outlook you have for the remaining months? The second is, on the market share, if I look at last year, we had about 19% market share and close to 19.5% in the first quarter. Have market shares sort of slipped sometime in between, and now we have gained it back? Going ahead, do you think we will probably prioritize market share and try and gain more market share from where we are? So many questions have been embedded into your one question. Let me try to answer it without anyone reminding me. Firstly, you are talking about how, having seen the dip in quarter one, how am I looking at the balance of the year, right? That's one question. Question number one. Let me answer on that. Yes, quarter one was significantly low. As I answered to the previous speaker, as you know, we are expecting the festival season onward, right, from October, November onwards. As we enter into the second summer, and then finally, we'll get into next year's summer, we are expecting these will look better because, in the past years, whenever we have arrived, whenever summers were milder in quarter one, quarter three, four will make up for the loss of that. I am expecting and hopeful that quarter three onwards, festival season onwards, we will again regain the sales, and the business will be as usual and normal. Hopefully, the year-end should be somewhere either flattish or at best between 5% and 10% growth sort of number I'm expecting for the industry. This is the question one. What is the other question? If you can repeat, please. Yes, you answered the market shares. Put 19.5% to 17.8%, and we have gained now. Yeah, market share yet. Of course, I explained to the previous speaker again, we have gained, you know, in April, May, June, 16.9% to 17.9% to 19.3%. We have, of course, definitely, our continuous endeavor has been to gain more shares and to retain our leadership position. Whether the market share was at 17.8% or 19.3%, you will appreciate that we have retained our leadership position in the category. Also, other product categories you should look at. In each of the categories, our market share has continuously been increasing across other appliances as well. Yes, sir. Coming to that, in Voltas, we have seen a very strong. I'm sorry. May sorry. May I request you to please rejoin the queue? Since there are several participants waiting in the queue. Thank you. The next question is from the line of Naushad Chaudhary from Aditya Birla Mutual Fund. Please go ahead. Hi. I have two clear expectations, sir. Firstly, on inventory, can you share the absolute number because three, four months making an average and thinking which month should I take because there is a previous three, four months of the peak summer of the soft season, very difficult to understand the actual number. It would be better if you can share the absolute number of inventory at Voltas level. Absolutely. I am not sharing, to be honest, the full number because, as you know, as I said, the July numbers are still getting consolidated. After those numbers are getting consolidated, only then I'll get to know the clear number. Probably you can come back to my team, Vaibhv, and we will try to answer you later on that. Should it be around $1 million if I am? No way. 1 million, you know, it's a very big number. I have already done more than 1.5, roughly around 1.5 million I've already done. 1 million means it's the entire year's growth. It's not that. It's much lesser than that. Let me tell the exact numbers. Last, on the project business side, last quarter we had indicated we are seeing some green shoot of recovery. If I look at the order book, it is consistently sliding. How should we look at and look at this business and what should we expect from the project business going forward? We have got a reasonably good order book in our hands. Both, you know, internationally, we've got around INR 1,700 crore and in the domestic project business, INR 3,200 crore. 3,200. 3,200 crore. Everybody said INR 2,200 crore, which is higher than the previous year. Previous year, opening was around INR 5,000 crore only for the domestic business, and the international project was almost about the same number. I don't think, yes, of course, we have been, as I told you earlier on, in the project business, we are treading a bit carefully. Wherever meaningful projects are coming our way, which are having excellent margins and the funding is properly available, there only we are participating. We don't want to, honestly, burn our fingers. As you know, in the past few years, we had some nightmares in our international operations in the projects. After that, we have taken a cautious call that we will book orders wherever it is meaningful. However, we've got reasonably good order book in hand, and our team is continuously, we've got a lot of inquiries in hand. Our teams are filling up tenders, and hopefully, in quarter two, three, four, we'll have more projects in hand. We'll be able to share good news with you later on. With this kind of order book, should we expect any growth in the project business next year, or should it be flat? Next year, you are talking about 2027? FY 2026. We are in 2026. You are saying next year. Which year are you talking about? I mean, full year FY 2026, should we expect growth in the project business? Yeah, definitely. Project business has been doing pretty well. Domestic projects, especially, even international also, we are airing reasonably okay. You will get to see better traction from both these project businesses. Okay, all the rest. Unfortunately, while we have seen a bit of a dip in our business, consumer durable business, only the AC part. However, if you look at our project businesses' results, you would have gone through. Project businesses have done much better, even textile machinery, mining, and construction. All of them are on target, and they've done better than the previous year. Thank you. Thank you. The next question is from the line of Umang Mehta from Kotak Securities. Please go ahead. Mr. Umang, please go ahead. Yeah, thanks for the opportunity. Sorry to harp on the market shares, but if we look at June exit, you are still down 200 bps year on year. Any assessment you've done as to what could be the key reason behind this? Have you changed anything on pricing, channel margins, or anything you can kind of share? Pricing or attribution? I think I answered you on that. The reason for market shares, we are on year-on-year shift. Market share year-on-year lift is actually, you know, there are so many players entering into the fray at the moment. If you look at all, more than 65 players are available. Therefore, to some extent, it is likely to become a bit fragmented. It cannot continue to be 25% or 26% market share anymore. However, our focus is to retain the leadership position, as I've been continuously telling you. I need to look at our June 19, you know, June numbers. We are at 19.3% market share. We are keeping it, you know, maintaining a fairly reasonable difference between number two players, almost 400 basis points. Okay, sir. Thank you. The second one was on the CP margin. Now, your cost structure is fairly variable, you know, in other expenses, logistics, with this other expenses and standalone is up INR 35 crore year-on-year. You did allude to higher promotion. Possible to quantify how much was the higher promotion which you scaled this quarter? I mean, pre-3.5% margin was a bit of a surprise factor reason. Yeah, the end of the question. See, as you know, the promotional expenses, including advertising, and also the sales costs, we had to spend a bit higher since summers were lower. To retain our leadership position, we wanted to keep the sale in the consumer intact with our brand. Therefore, we have spent. However, as I said, it will get made up in the subsequent quarters by gaining more traction from the market. Yes, your point is that we have spent a little more, but to retain our, you know, sustain our leadership position. Gotcha. Thank you. All the best. Thank you. The next question is from the line of Aditya Bharti from Elastic Devs. Please go ahead. Hi, good evening, sir. You mentioned that the margin hit that we saw was on account of underabsorption of cost, as well as some of the other expenses on the marketing side that we discussed. Now, given that there is so much inventory in the channel and even companies are also carrying high inventory, it's very likely that factories will continue working at lower utilization levels. To that extent, it seems that underabsorption of cost will remain a trend in the next couple of quarters as well. Is my understanding correct? Yeah, your understanding is correct because, you know, the inventory is there. We have to be a little prudent and the cost, you know, improvement, while, you know, the factories' cost will remain unabsorbed to the full extent. However, we are carrying out a lot of cost improvement initiatives across our business vertical. We are looking at all our overhead line by line and seeing as to how can we improve on the cost and save, when the business is not, you know, as good as what we would have expected. Therefore, we want to save on the cost. I think hopefully we'll be able to make up to cost improvement projects and we'll be able to share better news by quarter three. Understood, sir. Are you also fearing intense competition on the pricing side or in terms of extending support to the channel or to customers given that there's high inventory as well as, as you pointed out, so many players in the market? See, of course, there is a bit of a desperation amongst certain brands. They are trying to discount. However, we have retained our position as of now. Since the sales is not as much, whatever attempts are being made by them remain unaffected and they are not getting affected by those price drops by anybody, sorry, as of now. Perfect. Perfect. Just one last thing. On the project side, you mentioned that the project business has been steady. When we look at margins, margins have been slightly on the lower side versus what we have done in the past. How should we think about the margins in this segment from a slightly longer-term perspective? I know there are no losses and we've kind of turned around to that extent, but is 5% kind of an EBIT margin, does that look like a sustainable number or can it be higher? 5% is definitely a sustainable, you know, percentage on the project side. If you look at our past year numbers also, and we said we will, I've guided also when I've given you, I've always said the project will hover around 5% or so all through. 5% is definitely sustainable. There could be a small blip here and there because we had provided for one particular project in the international business, and that has slightly derailed our project margin. Otherwise, overall in the domestic project business, we've reasonably done well. Hopefully, you know, we will get to see this year with, you know, more than 5% on the project side at least. Perfect, sir. Thank you so much. Thank you. The next question is from the line of Sucrit Patil from Eyesight Fintrade Private Limited. Please go ahead. Thank you very much. Our question is specifically to Mr. Bakshi. Are you there online, sir? I am only answering you, sir. All along, I'm on the line. Sure, sure, sure. Good evening, sir. This is Sucrit Patil. I had a power cooking question. As Voltas continues to lead in the room air conditioner and tries to expand its footprint in the commercial cooling and home appliances space, how are you thinking about integrating energy analytics, smart maintenance platform, or AI-led demand forecasting into your product and service ecosystem in the next one to two years? If you are planning to implement this, how do you think this will help Voltas build a differentiated tech-enabled growth in the climate solutions coming later? Thank you, sir. Okay. So let me try to answer it. Firstly, when you are saying, are we the brand leader? Are we getting more market share? All this, I have replied earlier also. Yes, we are the brand leader for more than a decade now. Right from 2012-2013 onwards, we are retaining our leadership position and continuously, we are trying to extract more and more market share. For this quarter also, I've already shared how we have improved our market share on a month-on-month basis between April, May, and June period. That's answer number one. Secondly, when you're talking about the artificial intelligence and IoT-enabled products and services, yes, we have already been, you know, we've brought about products which are artificial intelligence, IoT-enabled. They can work with Alexa and, otherwise also, if you want to operate your AC thousands of miles away through the internet, you can get connected with our AC. Our team also is developing some new products, which at the moment, are at the nascent stage and I don't want to share in public. After a few months, you'll get to see our AI-enabled series will be introduced in the market on that AV side. Coming back to service, I have shared earlier also, on the commercial air conditioners, all our chillers are connected through internet with our office, in headquarters, in my office, where a team of engineers are continuously monitoring all the installations across the country. They have already been able to move from preventive maintenance to predictive maintenance because they get to see how air conditioners, how chillers are behaving in a particular site. In case that needs any service, it gives a warning to them and they are able to connect with the client and they are able to address that. Similar kind of thing, we will try and implement in our other product categories also as we move ahead. Okay. Thank you very much for your guidance. Thank you so much. The next question is from the line of Mr. Achal Lohade from Nuvama Institutional Equities. Please go ahead. Yeah, good evening, sir. Thank you for the opportunity. Sir, pardon me if I'm asking a repetitive question. If you could help us understand what is the industry decline for the quarter and for the first half? As in, you said year-to-date market share, does that mean Jan to June or it is April to June? Hello? Sir, I can't hear you. Hello? Excuse me. Go on, Dr. Chen. Yeah. Firstly, let me answer you on your question, how the market has re-grown, how the industry has re-grown in the quarter one. Firstly, I'm talking about fiscal year quarter only. Whenever we are addressing, we try to address the fiscal year. By just my answer, we will link this to the quarter one fiscal year, which is definitely the June period. The industry on a primary sales basis would have re-grown by about 35% to 40% approximately, depending on brand-to-brand level basis. Yeah, this is. For us, on a year-on-year, if I look at the market share, what you've mentioned, it was 21.2% in Q1 2025, as in June 2025, in June 2024 quarter. Do I have the number right? Yeah, that's correct. That has declined to 17.8%. Have I got that also right, sir? For the whole quarter, if you're asking our market share, yes, it's 17.8%. The June end number is 19.3%. That's what I shared with you. Compared to 21.2%, it was at 19.6%. Yeah, compared to 21 point what last year number, June number was saying, as against them, we are at 19.3% currently. Oh, okay. That 21.2% is basically. No, I would request it. I'm just clarifying. Let me clarify that. That 21.2% is basically 19% for the quarter average, right, last year? Yes. Yes. June. No, it is June end number, sir. Quarter number is 17.8%, as I told you, and June end number is 19.3%. Right. No, again, the 17.8%, what was the average number for the full quarter last quarter? 17.5%. Last year, it was 19.5% quarter number, sir. Got it, sir. The second question I had, just in terms of the margins, what is the extent of reduction in the gross margins in the UCP business? Is there any way to know that, sir? Is there any fall in the gross margins, you know, material margins? I think we are addressing the areas which we have shared with you in the balance sheet. Also, you would have seen the margins have increased. Am I audible? Yes, now I can hear you, sir, in between you and me. In between I lost voice, I don't know. Sorry about that. Yes, of course, the EBIT level we have shrunk quite a bit. As you know, the reason is roughly around 4% according to the basic point we would have shrunk our profitability a bit at an EBIT level. The reasons I have shared with you, it is underabsorption. Firstly, there was a major dip in the quarter volume numbers. Unless you have got a basic math or scheme, the profitability doesn't come that much. That is one piece. Secondly, having seen the last good year, we had augmented and we had made a lot of investments. Those capacities, extending plan especially, has remained underabsorbed. Probably because of underabsorption, the profits have shrunk in this quarter. However, as I told you, as we are going forward, we are making certain corrections. One, I have told you that cost improvement projects are being carried out by each of the businesses to see as to where all we can save from. Secondly, as I told you, we are looking at festival season in quarter three, four, as a big number coming up from there, which should all these points should make up for the loss which we have gained in the quarter one. Hopefully, by the year end, we will be able to protect and will be slightly better than what we are today. Got it, sir. Thank you and wish you all the best. Thank you so much. Thank you. The next question is from the line of Harshita Surana from UBS. Please go ahead. hello. Did I get this? Yes, please go ahead. Thank you for the opportunity. My question was, given last year's strong summer season, we now have several new brands entering the cooling products market. With this current year being relatively subdued and weak, we think established players like Voltas could leverage the experience and navigate through it. Any color on how these new entrants are finding the current environment and any consolidation that you could see in the market happening currently? See, the only new entrants are facing the veterans at the moment, friends, the new player vendors. It becomes very difficult for them to compete with the established players. Therefore, they have to face an onslaught of the bigger players who can afford, you know, they come with the deeper pockets to sustain losses. Therefore, the newer players are not easily able to establish themselves so much. However, some of the old players here, of course, they are resorting to discounts to gain more share in the pie. It is not a sustainable practice. It is a short-term approach by these players. Okay, got it. Thank you. Thank you. The next question is from the line of Nirransh Jain from BNP Paribas. Please go ahead. Yeah. Hi, sir. Thank you for the opportunity. I'm sorry for my background. Sir, just for clarity, you have mentioned that you have already started preparations for the upcoming ENERGY STAR labeling. If I'm not wrong, the industry is expecting around 4% to 5% price hike on the sub-cost. When you're saying preparations, does it mean that you're looking at cost engineering and would try to absorb this kind of a cost, or are you looking for some kind of price hike? I just wanted some emphasis on what kind of preparations you are referring to there. You are not on, you know, see, or I, all of us understand whenever the energy, you know, regime changes, there is going to be a cost impact. However, how much cost impact is going to come, it is difficult to assess at the moment because, as you rightly answered yourself, only that, you know, we will try to navigate these changes through the value engineering also in our way. Probably we'll see as to how much can we reduce on that impact by the next table coming up. That actually, you know, I'll be able to answer to you in somewhere in November, December. By then, you know, this value engineering project would get over, and also, we will be closer to the, you know, actual numbers coming up. Yes, surely, and whatever little impact has to be passed on, we will pass on also. Whatever through value engineering we can, you know, absorb, we will try and do that. Both ways it will go. Sure, sir. I'm still thinking we wanted to take on Voltas' tech or profitability. Any guidance there or any thoughts on how we are looking at achieving the profitability, like both either at the EBIT level or at the PAT level right now? I thought you were going to compliment on the, you know, what a wonderful job Voltas team has done. We have been able to gain a lot of market share. Last time when we had met and interacted, I told you that we are planning our first delivery to take the market share to 10%. I'm delighted to share with you in the washing machine category, we are 8.6% already. In refrigerators also, we've reached 7.2%. We have gained quite a bit during this quarter and last year also. In the last one year, a lot of work has been done in this direction, which has yielded good results. Our first endeavor is to gain market share in this category. Once we cross 10%, automatically you see that profitability also will come up with the higher numbers. Right now, yes, we are not profitable in this category. We are, you know, whatever, we have budgeted losses, which is actually, I don't count it as a loss. I count it as an investment into the brand. That continues to happen. Got it. We are also carrying out cost engineering, value engineering projects in that also. Both ways we are. Rather than, you know, I don't believe that, you know, whatever we have to pass on to the consumer and increase the prices. What happens if you are not able to gain market share and you are not able to accept more numbers? I believe rather we should work on the value engineering project and try to reduce cost so that we are able to offer better products and services to our consumers. That's our endeavor. Sir, are you seeing an increase in gross margins at Voltas tech or label? Yeah, the pricing, they have improved over the last one year, if you look at. 12 to 15% is important. Percentage gross margin has increased. Yes, the gross margins have been increasing, but they are not very significant, which I can talk about with a price. Some improvements will happen, for sure. Got it, sir. Thank you so much and all the best. Thank you. Thank you. That was the last question for the day. I now open the conference over to Mr. Bakshi for closing comments. Thank you very much, listeners and the investors. I would like to share that having seen the performance of quarter one, which was a sort of a temporary twist, currently, we are looking at tactical cost controls. We are also looking at how we can normalize our inventories by looking at currently how much production is required, which models, whatever models are in shortages, that's all we are being produced at the moment in the factories. We are also expecting a demand rebound in the upcoming festival season and the second summer in West and South India. Hopefully, with all this setting up, we will get to see our quarter three, quarter four, by quarter three and quarter four, we have substantially improved on what we have produced so far. The company's focus is to retain its market leadership position across categories, may it be cooling products or washing products. All these products, we want to remain fundamentally strong and retain and sustain our leadership position. Going back, I have already cited you that we continue to grow and continue to gather better market shares in the category, which is very encouraging for us. We want to replicate similar kind of things across our product categories. The project businesses, we are continuously being prudent and trying to progress steadily in them. We are not showing any anxiety of picking up projects which are not meaningful and not profitable. Across all segments, Voltas is investing. We are investing for the long-term gain, looking at keeping our focus on innovation, execution, excellence, and customer centricity. That is the focus. With that approach, we want to return to your shareholders on their investments. That's what we look forward to. Thank you. On behalf of DAM Capital Advisors, that concludes this conference. Thank you for joining us, and you may now disconnect.