So, my question is on, you kind of referred about raw material inflation and rupee depreciation impact. So, my question is, what kind of price increases do you think are warranted? And given that we are coming from a fairly weak season, do you think that the industry would be in a position to pass on these price hikes or part of that may need to be absorbed by the Company? And you also mentioned about cost optimization. So, what are the measures that you can undertake to kind of partly offset this impact?
Thanks. Thanks for the question. I think it's a valid one given the environment that we are in. So, you see, this quarter will be a slightly mixed one in terms of navigating the old table sales and also the new table sales. So, we would sort of be having a very balanced approach in terms of trying to navigate the pricing. Will the commodity and the currency fluctuation have an impact on the pricing? Definitely, yes. There will be an impact of the pricing. But how much and when to sort of pass on is something it's a very dynamic decision that we will have to sort of look at it fairly almost on a daily basis. And I think the pricing decisions will have to be fairly dynamic. So, to put a number would be difficult. But is there an impact on the pricing? There is an impact on the pricing. We are looking at it ongoing basis and we will take a call accordingly. The new table also, I think, will take some time for the pricing to stabilize on that front. And that, I think, will also take a few months, given that this quarter is likely to be a mix between old table and the new table sales.
Hi, sir. Mr. Mukundan, I had one question on the price hike that the system and you would need because of the copper being where it is, aluminum being where it is and the rupee being where it is. My estimate says that it could be between 12% to 14%, basis the commodity move as well as the new norms that have kicked in and also some e-waste rules, etc. So, if you can comment, I know this is going to be a mixed quarter, some old inventory, some new inventory. But once the new inventory comes through, is that a fair assessment of price increases needed and how much has already been taken, if at all, in the month of January?
So, essentially, the thing is that the table change impact on the pricing is a little different for the 3-Star and a little different for the 5-Star. 3-Star is a little lesser, but 5-Star is a very, very significant increase. So, the increase will impact the 5-Star more. Now, the impact of the commodity, the copper and the dollar, these are the moving pieces in this entire thing. So, the overall numbers will be a summation of these three things. The table change increase for 3-Star plus the commodity and copper for the same. The table change impact for the 5-Star and the copper and the currency impact for the same. So, typically, 5-Star will be a much higher number. As Sridhar said, it's still too many moving parts in the overall thing. We are unable to really quantify the number to whatever you mentioned. But the fact of the matter is these all will impact the pricing certainly because these are not small numbers by any stretch of imagination.
Hi, thanks. One question on the Project business. This business is consistently declining though we are adjusting the Domestic and International portfolio. But on an overall basis, this business seems struggling. So, just wanted to understand by when the order book slide should stop and from when we should start experiencing growth in the order book? And if this business has a potential to be a Rs. 10,000 crore of business and if yes, how much time will it take to reach those scale?
So, Naushad, this Project business has got two parts, as you rightly pointed out. There is a Domestic and there is an International business. So, the general thing is that across both these businesses, the Domestic and the International, we have been very careful in terms of picking up projects over the last 12 months, I would say. So, we have been very prudent in selection of the clients. There are proper guidelines and frameworks for that in terms of nature of client, the credentials of the client, the payment terms, the margin profile and the exposure of bank guarantees, the liquidity damages. We work around multiple things. So, if you ask the size of the order book might have diminished, but the health of the order book is very, very healthy compared to what it was a year ago. So, we have been very prudent and we have been extremely prudent, especially in the International business, where we have been very careful in selection of the clients. And essentially, we are going after projects where we get a sort of a preferred sort of vendor thing compared to others. So, we are not really bothered about the overall size of the order book, because these are generally order books which sort of get built over a period of 2-2.5 years or so. In terms of the Domestic Projects, again, if you see, there are three different verticals. The first one is the Mechanical,Electrical and Plumbing - MEP vertical. The second one is the Water vertical and the third one is the Electrical and Solar vertical. The Electrical and Solar as well as the Water vertical predominantly operates in the government space, and these are long gestation projects with a fair amount of sort of a working capital locked up for a larger period of time. We have been very prudent in picking up jobs in this category and we have been very selective about it. However, in the MEP vertical , we have been picking up fairly good, healthy jobs. In the manufacturing segment, we are also focusing on the data center segment. And these are the general industrial Segment-And data center are the segments which are very fast track, have a quick completion, very low risk and in terms of profitability also the quick turnaround. So, we have been prudent in this. So, the size of the order book is less important compared to the health of the order book. That's the way we see it, Naushad.
Hi, sir. Congratulations on a good show on the market share. I just wanted one clarity from you on how should we be thinking about margins in the Unitary business? It's been a tough year right now. You've been used to making 8% to 10% margins here. Given what you know in terms of cost pressures, in terms of channel inventory, not in like Q4, but just generally over the next year or two, what's the kind of margin should we be thinking about? Do margins go back to 8% to 10% or do you think we should first focus on getting topline right and then focus on getting the margins right?
So, Sridhar here again. So, I think a fair question. I think in terms of where we see whether it's market share or margins, I think it's never quite possible to sort of give either or answer to be fair. I think it's both has to be sort of balanced while we don't want to lose out on the market leadership that we have, we want to sort of focus on. At the same time, we have to continue to focus on the margins also. So, in terms of if you see the intent is to sort of focus on the cost reduction initiatives very very prudently, in a very institutionalized manner. Look at any pricing opportunities that we have. We are also looking at mixed opportunities in terms of from a product portfolio point of view. So, we are looking at all multiple aspects in terms of trying to see how we can sort of focus on the margin improvements also. So, it's not either or none in all fairness. It is an and, and the focus has to be there on both. The top line has to happen and also in terms of market share growth, at the same time, focus continues on margins also.
Sorry, just continuing that question. There is no doubt that incremental margins will sort of improve. Just sort of want to de-lever on that point a little more. Just to, when we think about margins, so you're saying incremental margins will move up with all the initiatives that you outlined, which is a fair summation and a good strategy. I am just trying to understand the trajectory of that, because from where we are to let's say where normative margins is a decent gap. So, I am just trying to understand, should our expectations be towards 8%-10% right away or should it be over a period of time?
So, the recovery would be sequential as we sort of discussed. Right? And also there are too many moving parts, unfortunately, in this piece. I think the commodity inflation, the currency depreciation. So, there are multiple moving parts and also the table change impact also. So, there are multiple moving parts in this. Intent is to sort of get better. Will it be a sequential improvement? There will be a sequential improvement where and when we will reach, unfortunately, it will be maybe too soon to sort of quantify. That's the only point where we are. But intent is to sort of definitely get better and come closer to the expectations that we have.
Hi, sir. Sir, as per my calculation, due to commodity price rise, the cost as a percentage of BOM is actually increasing by 8%-9%. As a percentage of selling price, if we see, it will be somewhere around 6%. Correct me if I am wrong. But basically, how does Voltas think to pass this on? Additionally, even BEE norm will also have around 5% cost increase. So, overall, how do we think on pricing going forward?
So, Tavishi, what you said is like the BEE norm that I just explained a little while earlier to a question regarding the price increase which Girish had asked. So, essentially, the price increase is also like the 3-Star has a different impact. The 5-Star has a far more sharper increase impact. So, that obviously will get passed through. The commodity and dollar, actually both of them are on an upward trend as you can imagine, essentially copper. The impact of aluminum is not like on the overall BOM is not that heavy. But copper is the big sort of item on the BOM. So, again, model-wise, this changes because there is some amount of copper which goes into a 3-star. There is another amount of copper which goes into a 5-Star. So, we are assessing the impact of all this along with the third dimension which is the dollar impact. And as our CFO – Mr. Sridhar mentioned, we are monitoring it very closely. And then closer to the time when the new table products start getting introduced into the market, we will take a call on this. But the direction is that actually there is going to be a price increase. And many of these will have to be passed through to the channel partners through consumers.
This is Aniruddha Joshi here. So, my question is, what was the exit market share at the end of either November or December, if you can share? You have shared YTD market share. And secondly, was there any excess trade discount given to clear the inventory at the end of December? And last point, there is a very strong market share across both categories, Refs and washers. But despite that, the profitability still remains, in a way, still in red. So, how do you see the profitability? Earlier, there was an indication by end of FY'26, it should be profitable. So, how should we read about Voltas Beko?
Thanks, Aniruddha. So, this is Mukundan Menon here. So, on the market share, our exit market share for the month of December is also at 17.9%, which coincidentally coincides with our YTD market share also, which is at 17.9%. So, if you recall, when we began this calendar year, that is the Jan to March quarter, we had a market share of 15.8%. And that has grown to 17.9%. So, over the last 12 months, we gained market share of roughly 2.1%, which is a good, I think, it holds us in good stead. In terms of schemes, yes, most of the channel partners had a lot of inventory with them, and it is imperative for us to help them to clear the stocks. So, the schemes were progressively being given to them during the Quarter 3. But as we approach summer, these schemes will start becoming a little more market demand related. So, indeed, to facilitate the secondary sales schemes and discounts were offered in Quarter 3, which is reflecting in our margin profile also, if you see. Going back to Voltas Beko, the story is a little different. Here the primary focus is to gain market share, which we are doing consistently. Refrigerators, we are at a market share of 6.2%. And this is a gain of roughly 1.1% over 6.2% for the YTD number. However, the exit November number, the December number we haven't seen as yet, is a better number at 6.8%. And the Washing Machine market share, YTD is 8.2%. But the exit November number is again a very healthy 10.2%. So, here the focus is about gaining market share, about making our presence felt. And the profitability in a way, the scale is slowly getting us to a place where in the very near future, we will see this get into at least a break-even kind of situation.
Thank you. Sir, just one question. Given that we have one of the highest assembly capabilities and the season for calendar '25 was bad, so I assume that we were also left with higher number of inventory. And given that sequential growth for Voltas in UCP has been quite high, is it fair to assume that channel is sitting with larger inventory of Voltas? And by that logic, is it again fair to assume that if and when summer picks up, market share growth for Voltas in 4Q will be sharper than peers?
So, Natasha, very well said. On the second point, the market share will see a very positive trend because of the volume sales and the primary billing that we have done is significant. So, the market share gains will be visible in 4Q for sure. Inventory of Voltas, my sense is that we are talking about a few weeks, 5 to 6 weeks of inventory is there in the channel. And it's just a matter of time. By March middle, I suppose, the entire inventory will get finished. So, that's the way we see it. So, it's not a very high number because the summer season is going to pick up. So, between February when the summer begins from Kerala and then moves on towards Tamil Nadu, Karnataka and comes into Maharashtra, I think we are talking about a clear 45 days, less than 45 days for the inventory of our channel partners to sort of deplete completely.
Hi. I have only one question. So, what would be your strategy for the Domestic MEP portfolio? How is our market share stacked up and what is the strategy of getting Voltas back on the mainstream with market leading share and margins from a medium term perspective?
Understood. So, as I said, we have decided that we will focus big time on the MEP part of the infra project. That is less of Water, less of Electrical the way you have found it. And essentially within MEP also there are 2 or 3 different customer categories. One is the industrial and data center category, which we call it manufacturing and data centers. And the second one is the commercial buildings, which is to do with shopping malls and so on and so forth. And there's a third category, which is metros, airports and so on and so forth. So, the focus currently is that we want to have a larger pie of the manufacturing and the data center market. We are also looking at the steady flow. These are generally fast track projects which will quickly give, are turned around within less than 9 months to 12 months. And we are also looking at the metro and such infrastructure projects, which are generally spread over a longer period of time, but come with a lot of comfort with respect to the price variation clauses and the risks are very limited in this. So, a mix of these two and a little lesser focus on the commercial is what we are looking at. And of course, the Electrical and the Water segments are areas which we have been very careful now. And we are just cherry picking the project that we wish to do in this category.
Sir, thank you for taking my question. Sir, some of your peers have interpreted the BEE norm change slightly differently, i.e. that they can continue to sell those ACs for a slightly longer period of time. And in which case they have actually not liquidated that inventory. Now, my question is, assuming all that's true, in the 4th Quarter, which is the current quarter, is it fair to assume that whatever you sell in the primary market will be higher cost inventory and compared to companies which have old inventory basically benefiting? So, I am just trying to understand in the 4th Quarter, is there a possibility that in the primary side we may have slightly softer revenue? And as you rightly highlighted, that by the time we get to summer, it will all normalize. Is that a fair assumption?
So, there is, I think the BEE norms, there was a Gazette which came in a year ago, which none of us had even noticed. When we got closer to the end of the year, all the industry woke up to that and realized that it prohibits you from manufacturing the new products from 1st of January 2026. But both the manufacturing brands as well as the channel partners can sell this till June end. Most of us had a sense of this by November end, we got to know that this is the rule. So, most of the brands have stocks of the old table products and so do we have stocks of the old products. And depending on when these stocks, like for example, there's a bunch of product SKUs in the 3-Star bucket, there's a bunch of SKUs in the 5-Star bucket. Depending on when these stock levels deplete to zero, the new table products will be introduced into the market. And so each brand, all the brands are almost on an equal level playing field with respect to availability of the old stock versus the new stock. All of them have started manufacturing new products right from November, but obviously the focus would be to liquidate the old table stocks before you start selling the new table stocks.
Hi, thanks for the opportunity. Just building on to the last question. You mentioned about micro-targeting markets, also greater focus on modern trade GT. In this performance that you've shown in 3Q, have you added any new accounts on MT, institutional? You mentioned about some gaps you had in the past with your first interaction with us. Could you share any insights on this?
Umang, actually what we embarked on is we started tracking almost 29,000 counters across the country which sell these products spread over 19,000 pin codes. We have a very structured network acquisition plan which we have put in place. We have added a decent number of channel partners either directly through as a direct billing point. We have also added a fair amount of counters through our distribution network. That's as far as the General Trade is concerned. In terms of modern trade, we have a fair presence across all the three Modern Trade. We call the “Three Bigs” – the Reliance, the Croma and the Vijay Sales as Modern Trade in our terminology. We have got a presence across all of this. The focus now is to have a higher share of their wallet. That is the focus now. There is a bunch of roughly 85 or so Regional Retailers where we see that our presence can be improved. So, there is a major focus in entering many of the Regional Retailers especially in the South and the West markets which are heavy on the regional retailer space. We are making good progress on that as well actually. That's as far as the channel partner is concerned. Institutional sales is essentially we do a decent number in institutions. This comes from things like banks. It comes from builders. We are making very good progress there as well.
Good evening, sir. Thank you so much for the opportunity. In MEP, our data center share is less than 5% and we are aiming to 30% in the medium term. What specific orders or tenders you are bidding in this space? And how does District Cooling fit into your MEP strategy? And you are partnering with international players for technology side?
So, MEP, the data center thing is just opening up. We are doing a couple of projects now, actually. And the same funnel for the data centers is also very healthy. So, we are bidding for quite a few projects. As I mentioned earlier, the focus is to win data center projects using a combination of 2-3 levers. One is essentially, as you know, a data center needs the cooling equipment, which is Chillers and mostly it is Screw Chillers or Centrifugal Chillers, where we have made significant progress with a new technology partner alliance, which I mentioned in the last meeting. So, we probably offer the best energy efficient products in the Screw category. And we also offer the best energy efficient products in the Centrifugal category. Centrifugal has two variants. One is the regular Centrifugal Chillers and the second Oil-free Chillers. Across these three segments, we have probably the most energy efficient products. And energy is a big portion of the OpEx of our data center. So, we are very confident of getting these chiller orders from the data center and we are bidding this together with our MEP division, which is mechanical, electrical, and contracting, that entire group. So, that makes us a single source vendor to the data center. So, this cross-functional, the cross-divisional approach to this entire data center, we will move towards the overall share, whether it will go to 30% so soon, I am not sure. But the direction is very clear and we are seeing some fairly early, good sort of tailwinds for us in that thing. District Cooling also, because of our presence in the Centrifugal chillers, District Cooling essentially comes with a Centrifugal kind of scope, mostly, at the Scroll and Screw. There again, because of the most energy efficient Chillers in both the categories, we have a fair chance of getting a higher share from this. This is normally dominated by the three American brands, which is York, Trane, and Johnson Controls. And we have a fair chance to compete with them in this space as well. So, I think over the next 12 months, this entire story will pan out Bala.
Hi, sir. Thank you for the opportunity. So, given Voltas now have decent in-house capacity, so what will be your strategy for this upcoming season between insourcing and outsourcing for manufacturing? And do you expect the higher backward integration, which is there in the Chennai plant, will start to flow into better margins if the demands for upcoming season turn out the way you're forecasting?
So, Akshay, the backward integration of Chennai has already started playing out. As I had mentioned in the last, I think, meeting that we had, there are many things which we were not backward integrated in Pantanagar, which we are backward integrated in Chennai. One is the entire Sheet Metal work, which is the outdoor body. Second is the Powder Coating and the Painting of that outdoor unit, which is, again, a high-value addition sort of process. The third is the entire Indoor Unit Plastic Injection, Moulding of that internal plastic part and a fully backward integrated Oil and Fin Shop. We used to have partly the Coil and Fin Shop in-house and we used to do some sort of buying of the Coils and Fin Assembly also in Pantanagarh plant. So, the entire play of the Chennai backward integration will play out fully. In terms of the outsourcing versus insourcing, Akshay, the thing is that our Window Air Conditioners, as we have been doing all along, has always been outsourced from the local OEM manufacturers. And we continue with that sort of the same thing. We are not making any change. However, the Split Air Conditioners, which is essentially now predominantly the inverter splits, we are doing it in a way that there are two things. One is there's a steady sort of visibility about what will be certainly required that is in-house. And some of the spikes and the ups and downs which come during a very good summer, those are generally being catered by the OEM. So, it's a blend of both. And we are taking a very judicious call in terms of picking up how much of these from the OEMs. And we have also been very judicious about picking up from the right OEMs in terms of geography. There are some products which are closer to the West market, some products which could sell more in the South market. So, we have been very selective in picking those OEMs which cater to the products in that market. So, very carefully planned out this season, Akshay.
Hi, sir. Just one data point. All my other questions have been answered. If you could just spell out the capacity utilization of the current Chennai plant and in the upcoming season, what is the level at which you expect it to run?
Capacity utilization? Actually, it is almost 90%. So, we have two plants, one in Pantnagar, which is operating at, I think, 100%. And the Chennai plant, we have built a capacity of 1 million units, which we are in the process of expanding to 1.5 million capacity in another 1-2 months. Our sense is that this summer season, we would have maximized the capacity utilization to almost between 85% to 90% or so, Mr. Jain.
Sir, you told that there was a pre-buying in December quarter, so will this effect be seen in January month, vis-à-vis January 2025?
Actually the pre-buying in December actually was in a way a very positive thing for us. We were very pleasantly happy with the result that we have done. And a little bit of this might be the January thing, but as of now, we are not seeing any decline in our numbers. So, it's probably laying a runway for a good January and hopefully for a good February and March, Mr. Gupta.