Havells India Limited (HAVELLS) Q1 2027 Earnings Call Transcript

Ladies and gentlemen, good day and welcome to Havels India Q1 FY25 Earnings Call. As a reminder, all participants' line will be in the listen-only mode and there will be the opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchstone phone. Please note that this conference has been recorded. I now hand over the call to Mr. Aniruddha Joshi from ICSA Securities. Thank you and you to Mr. Aniruddha Joshi.

Yeah, thanks, Sumit. On behalf of ICICI Securities, we welcome you all to Q1FI27 Results Conference Call of Havels India Limited. We have with us today Senior Management, represented by Mr. Anil Rai Gupta, Chairman and Managing Director, Mr. Rajesh Kumar Gupta, Whole-Time Director and Group CFO, Mr. Amit Kumar Gupta, Whole-Time Director, and Mr. Rajiv Goyal, Executive Director. Now, I hand over the call to the management for initial comments on the quarterly performance. Then we will have the question and answer question. Thanks and over to you, Anil Rai Gupta, sir.

Thank you. Good evening, everybody. Thank you for attending the call today. Hope you would have reviewed the results by now. We delivered strong revenue growth in the first quarter as the demand was resilient despite inflationary pressures and the uncertainties arising from the West Asia situation. During quarter one, a decent summer supported cooling products demand, although a delayed onset restricted the full benefit of the season. Given significant raw material inflation, we undertook calibrated and staggered price hikes across the categories to offset the impact, encouraging to see that the consumer categories held well and absorbed price hikes. Each category showed strength, and we are positive to build further from here. Renewables business continued to scale rapidly with robust growth in revenues, leveraging sector tailwinds. From this quarter, we have begun reporting renewables as a separate segment. During the quarter as planned, we significantly stepped up grand building efforts, led by mass media, with advertising spends more than doubling year on year. While this front-loading of investments impacted the quarter of profitability, these will normalize during the rest of the year. We expect the demand environment to improve further and have a healthy outlook on the margins. We can now move to Q&A.

Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on the touchstone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handsets while asking a question. The first question is from the line of Balasubar Mine from Aryanth Capital. Please go ahead.

Good evening, sir. Thank you so much for the opportunities. Sir, on the lighting side, I think earlier you have concerned about ASP declines have stabilized. And how is that pricing and volumes for this quarter, sir?

Yes, as far as writing is concerned, we have said that the pricing has stabilized. In fact, we may start seeing some price hikes in the coming times because of the electronics, but otherwise, generally speaking, it has stabilized, and hence, we're seeing some volume growth now in the business.

Okay, sir. So, on the switchgear side, it's literally impacted by West Asia export disruptions. So, I'm trying to understand what is the mix of domestic and international for switchgears, and is there any margin difference profiles compared to domestic and the international side? Basically, I've seen around a 260 basis point margin erosion in that segment.

Rajiv, would you like to take this?

Yeah. International business is normally 15%, but it varies from quarter to quarter, and that's why it has been impacted, but we are expecting this to rebound this quarter. It finally happened because there are no vessels going to that, but things have considerably eased since then. So, we are very confident that Q2 will see a good growth in the international overall switchgear segment. The domestic demand has been fairly stable. Okay, sir.

So, my last question on the renewable side. I think we have seen impact on the margin side, whether it's – if you could quantify in terms of product mix shift, higher – in terms of, like, a higher share of solar pumps, maybe lower margin versus other products, and competitive pricing pressure on solar model market. And raw material side. We could break down those impact on the margin side. And if you could also explain whether it's timing of the project side or is there any other reasons.

As you were asking about renewable, solar pump still is not very significant in this. I think that should come in the ensuing quarters. And largely it has been because there has been a strong demand on the panel side. And as you know, panels have slightly lower margins than the inverters. But that also we expect to improve, you see, in the coming quarters. I think Renewable, we believe, is holding pretty well in the margins concerning the industry scenario, and as we move more towards the consumer side of the business, we are expecting improvement in the margins on the Renewable side as well.

We can expect in the H2, sir.

Yeah, that's right. Next quarter. Okay, thank you.

Got it, sir. Thank you.

Thank you. The next question is from the line of Natasha Jane from Philip Capital. Please go ahead.

Thank you for the opportunity. Good evening, gentlemen. My first question is, if I see across the major revenue contributors, which is Lloyd, ECD, and Cables, our top-line growth has slightly lacked the industry growth. So, first off, I want to understand, is it because we took sharper price heights and therefore maybe lost on volume? And if that is the case, from a very medium to long term perspective, could you pull out what is the right mix between volume and pricing, especially given that there is intense competition across these categories? That's the first line.

See, I think so, especially as far as Lloyd and ECB is concerned, you know, this particular quarter was the quarter where there was maximum volatility, and especially in the second and the third quarter, sorry, fourth in the first quarter. So there have been continuous price rises, volatile price rises, and we have taken, you know, staggered steps of price rise. At this point of time, sometimes we are inward looking, and hence we took calibrated right sides. We do believe that we've taken the right steps towards price-size, you know, keeping an eye on market shares, as well as the fact that, you know, we have been making some improvements in our distribution policy, wherein, you know, a lot of focus has been ensuring that we do not unnecessarily load the channel and basically improving their return on capital. So, a lot of things were happening in the first half of the year, first half of the calendar year, but I do believe that on a long-term basis, including if we take secondary sales from the channel, we do believe that we have done a very robust job of ensuring that we do not lose any market share or, in fact, gain market share.

So my second question is on the ad spend. While it's highly appreciated that Havel continues to be a consistent spender here, what's the ideal timeframe wherein we can expect such aggressive ad spends to translate to revenue? And more importantly, volume growth. And on those lines, if you could just call out the volume growth for a lawyer, and if we are seeing any brand full traction there.

No, I think, first of all, as far as advertising stands are concerned, you know, basically, this is just a readjustment of our strategy between above the line and below the line and between categories. So, one question is whether, you know, this will get normalized. Yes, it will get normalized. How much it translates into volumes and values, you know, usually advertising is a long-term investment. And over a period of time, it relates to volume growth, value growth, premiumization. So, it's not something like a FMCG where it's an impulsive buy. So, advertising has always been looked at as an investment for a long period of time. And hence, even during the year, it will get normalized, but there was more front-ending in the first quarter because of the seasonal products. And what was the second question? Sorry.

Sir, on Lloyd, the volume growth?

Yeah, the volume growth in air conditioners would be single digits, but the value growth has been higher because of the calibrated price hikes during the first half of the year.

Got it. Thank you so much. All the best.

Thank you. The next question comes from the line of Umang Mehta from Kortak Securities. Please go ahead.

Hi, sir. Thanks for the opportunity. The first question is on ANP. So for the full year, I mean, last year you spent something around 600 crores. Possible to share any kind of budget which you would have for the full year this year? And how should we think about this now going ahead? Do you think this is a new base on which we keep on growing every year? Or do you see this as a lumpy, episodic kind of investment you're making at now? That's the first question.

No, as I said, you know, lumpy could be during quarters and all that, but over a longer period of time, it's just a readjustment between the media that we've, you know, we've looked at. And maybe there is a slight impact during the entire year, and maybe there's a readjustment, but as a percentage of revenue of consumer products, I think over a longer period of time, four to five years, we will be remaining consistent.

Got it, sir. Sir, any budget you can share for the full year? Should we take north of 700-800 crores?

Yeah, somewhere around that number.

Yeah. And look, our long-term average has been around close to 2.7% as a company as a whole. I'm not getting into consumer otherwise. We expect that to remain the same even for the current year. Got it, sir.

Sure. Thanks. Second question was on renewables. Given that you've called that out as a separate segment, any aspirations or targets you'd like to share from? So, can we annualize the current run rate or do you think there are certain tailwinds from, you know, which are specific to 1Q? How should we think about this segment? Thanks.

I think if you look at renewables a bit more strategically, our focus will be, you know, looking into various categories of renewables which are adjacent to our brand and distribution. So we are looking at, you know, installations in not utility scale of installations, but more residential homes, commercial and industrial establishments. And also looking at more strategic inputs for the future, battery energy storage solutions, EV chargers. So these are the kind of categories that we are getting into where we can utilize and leverage our GAN and channel.

Sure, sir. Thank you so much.

Thank you. The next question comes from the line of Rehan from Trinita Asset Managers. Please go ahead.

Hello, good afternoon. I have two questions. First on the manager has given the... So, in the last call, management declined to give specific X527 growth guidance due to market volatility. So, given this quarter's result, can you now provide a clear view on full year revenue and revenue expectations? This is my first question.

I think if you attended calls for a longer period of time forever, we do not give guidance for the year. But yes, the quarter start has been very positive and, you know, we are hopeful that a good, resilient growth momentum will be maintained during the year.

Okay. And my second question is around your price hikes across multiple categories. So, as the company implemented calibrated prices across multiple categories to offset raw materials information, yet contribution margin remain broadly stable around 18.3%. So, going forward, commodity prices remain elevated. So, do you believe there is still pricing item available, or will future margin improvement depend more on operating leverage and product mix than further upside degree?

I think that will be part of the initiative, definitely, because it will be led by the growth. And look, these prices have been increased to compensate, but there are usual price increase which happens also, you see, once in a year. So, those will always be undertaken. And then the contribution margin you're looking at is also a product mix. We do expect, and we are seeing certain growth momentum in our other categories as well. As it grows, we're expecting to grow our contribution and overall profitability much higher than the value growth in sales itself. So it will be developed, it will be leveraging, but it will also be, you see, growing the high growth categories as well.

Thank you. The next question comes from the line of Indrajeet Agarwal from CLSA. Please go ahead. Hi, thank you for the chance.

A couple of questions from my side. For the cable segment, can you split out between the value and volume group in this quarter? And how has it differed in wires and cables?

So, volume has been largely flat, very, very low single digit, but I will term it more as flat. And this is across wires as well as cables.

Sure. And in renewables, would it be more like volatile or the quarterly run rate is something that can maintain?

And at what top-line level we can see more in sourcing than outsourced model?

Look, as you are aware, I'm coming to insourcing, outsourcing first. The strategic investment in Goldie which we made was the part of a very planned execution that this will be, so Goldie, I don't know if you put it outsourcing or insourcing because this was a strategic decision taken on that. I think this has held well because now as there is so much clamor, we are able to sort of have a very significant and sure supply chain there. So I would tell me this is a strategic insourcing rather than outsourcing to that extent. And inverters, we have been doing ourselves in-house. In the other categories we are talking about, there will be a very strong strategic tilt towards that. And the log then will be done in-house either to the assembly or to the technical collaboration. And as far as the, I think the sectoral tailwinds are strong in the way we are looking at the adjacencies as well. We are hoping internally that we should continue to grow well in this category because this is a strong economic imperative for renewables in India, which is also reflecting how the government is supporting this initiative. So we are very positive on this, and we expect it to become a larger segment, and that's the reason why we have also carved out renewables so that it can be tracked both by the company as well as our investors on how we are doing the same. So I think it just demonstrates our faith and belief in this category and the growth in fetters there.

Thank you for the detailed answers and all the best. Thank you. The next question comes from the line of Siddharth Behra from Nomura. Please go ahead.

Yeah, thanks for the opportunity, sir. First question is on the cable and wires. If we look at the gap between the contribution margin and EBIT margin, it seems to have gone up a bit in the current quarter. Is it because of ad spend, or if you can highlight what has led to this? And second question is, sir, on the price hikes and cost. I mean, if you look at, say, ECD or Lloyd, how much have we taken in terms of price hike in the current quarter, and how much more do we need to take to pass on the current cost?

No, I think as far as your first question is concerned, yes, it is due to higher A&P spends during the quarter. It's across the businesses, not just cables and wires. And as I have said already, during the year, it will get normalized. So we do not expect any major changes in the overall profitability for various divisions. And as far as price hikes are concerned, look, you know, different product categories require different price hikes depending upon the kind of romptures used in that category. But generally speaking, 7% to 8% would be the right price hike average if we take it. And whether everything has been passed on, we were actually disciplined enough to say that we have been able to pass on the entire course, but some of the remnants of, you know, some averages might be coming in the second quarter, but I would say most of the price hacks have already been taken now. in a staggered manner.

Okay. Okay. So at current commodity cost, we should ideally see margins, uh, improving, uh, from the coming quarters, uh, if it, uh, stays at that level.

No, I think, uh, you know, governmental prices have also moved up in a staggered way and price types have also moved up. So I would say we will now see the normalized margin levels.

Got it. Contribution margin levels. Okay. And second question is around the Lloyd. I mean, the Lloyd, we used to do a double digit contribution margin which has now been in high single digit for quite some time. Given the competitive dynamics and your focus, do we anytime soon see that going to that double digit levels or do you think that may take longer now given the industry?

No, no, I think except the non-seasonal quarters or second and third quarter, but we should be seeing double digits sooner than later. You know, all this has happened also due to the volatility and, you know, timing differences between passing price highs and all that. But otherwise, in full quarters, we will definitely see it coming back to double digits.

Got it, sir. Can you do not? I'll come back in the show.

Thank you.

Thank you. The next question is from the line of Praveen from PL Capital. Please go ahead.

Yeah, thank you for the opportunity. My first question is related to the pricing. Sir, last quarter Q4, you indicated 5-2.2% of a price hike implementations. So, is there some challenges have you faced in absorption of those price hikes in this last quarter Q1 as well?

I would not say challenges have been faced. I think, you know, the challenge was to pass on the price hike and which we've been able to do it successfully. You know, as I always remain skeptical about, you know, what it means for the volumes. Thankfully, the demand remained resilient in the first quarter, and hopefully in the coming times also it should remain resilient. Any improvement thereon in terms of raw materials or the world situation, definitely it will be either further passed on or reduced. But as of now, we believe that we have been successfully able to pass on the price side.

Second question, sir, is related to the Capex, nearly around 1,400-odd crore of a Capex for 27, what you had given in the first release. Can you give us some color on the bifurcation on the segment-wise, where it is going for a full year in this summer?

Look, the bigger part of that is going into the tables and wires business, almost about 800 crores. About 200 crores is going into the new R&D center. The rest is all divided into other positions.

And last questions are related to your collaboration on the base. If you can give some more color on this, on the revenue and the margin visibility, and when that's going to contribute to the numbers, this Pixie collaboration, and how is it going to work, whether you are going for a manufacturing of those, assembly of those, or just a distribution you are planning for.

I think these are early stages to discuss this on the call right now. One, and two, it's anyway part of the overall renewables strategy. So, as things pan out, we will be coming back with more information, but it is too early to comment on it.

Thank you, sir, and all the rest.

Thank you. The next question is from the line of Sonali from Jafariz. Please go ahead.

So thank you for the opportunity. So my first question is, if you could give, you know, shed some more light on the weaker performance in Switchgear. Both in terms of demand and margins, especially because this is your highest margin segment. How should we look at this segment going forward in the coming quarter? I do understand, you have mentioned in your press release that, you know, the demand has been impacted because of West Asia crisis, but since we are amongst the key market leaders, a 4% decline in sales year-on-year and with a margin bid seems a bit concerning to me, which is why I'm asking this question. Thank you.

No, I think, you know, one is not only the West Asia crisis, but it's also, you know, SwitchCare is one of those business where, again, volatility of raw materials was high and it impacted, you know, the entire passing on of, and I would say because of this volatility in raw materials, there was also confusion amongst the trade also on buying products. I think it has fairly stabilized. And this should mean that the demand should be coming back from the second quarter. Hopefully, the international situation may also improve, but at least the domestic demand will remain stable from here. It seems so.

Sir, how much of our sales and switchgear system international, just in the context of what you said?

15%.

Understood. Got it. Very helpful. So, my second question is you did mention about the average price size on an average about 8%. Would you be able to help us understand which category on an average how much price? And I understand you don't give outlooks or guidances, but how should we look at the margins in the coming quarters? As in a broader range, should we expect it to reverse back to our normal 99.5%? And talking of EBITDA margin.

No, I think, again, as far as price size are concerned, we have reached between, let's say, 5 to 20 percent. Teebus and Wires have seen a larger price increase because of direct relation with copper and aluminum. But otherwise, as I said, most of it is average about 7 to 8 percent. As far as margins are concerned, you know, going forward, I think we are looking at stabilizing contribution margin. I would not so much comment on the margin because there's a lot of things associated with that, you know, volume growth and all that. At least contribution margins do believe I will just have very good work in terms of managing the volatility in the long-term crisis. And hopefully these things should remain stable in the coming quarter.

And just one last question, a sort of a confirmation. For the CapEx for Fi27, we should expect at about $13 billion, right? Okay. All right. Thank you so much, sir, and all the best to the team.

Thank you. The next question is from the line of Nitin Shidkar from Green Capital Single Family House. Please go ahead.

Good afternoon to the management. This is a question not as an analyst but more as an investor. So, obviously, the renewal business is showing excellent growth rate. I just wanted to get a sense of... What the management is thinking in terms of revenue and top line in the future from the renewals and the strategy towards that, because it's showcasing a lot of positive revenue offtake and huge growth. So if you could just talk us through some strategic aspects of the renewal business for this.

See, I would say that, you know, having looked at this business, especially with the Goldie investment last year, we are looking at this business very strategically and for a very long period of time. We've made huge investment, in fact, for ensuring our supply chain for the coming years. So basically, you know, if I look at it strategically, we are very hopeful that this business can become better. We have been just still evaluating all the... You know, possible places where, you know, could actually make sense, not only as a business, but also as a supplier to the renewable category. So, you know, when we are talking about renewables as a business, that's just one business. But also, you can understand when all these capets and, you know, investments are happening in the country, a lot of our products, including switchcares and cables, is also getting. I think... What happens in India, what kind of tariffs are there, what kind of subsidies are there for the consumers and users. So there will be a lot of moving parts to this business. I would only say that... I also mentioned that we will be looking at it more, not at the utility scale, but more at the consumer end. So, that's how we are looking at this segment. There are tailwinds and hints.

So, a second question I would like to ask. Looking at a future outlook by the close of next year, do you anticipate to recover the net profitability and come up to a certain level that showcases a growth or do you anticipate this year to be a bit flat? What's your anticipation in terms of the margins?

Going ahead for the second, third, and fourth quarter. I think without giving any guidance, I can say that we are one on the...

Best of the Harwell's family.

You are requested to restrict your question to per participant. The next question comes from the line of Jatin Sangwan from Optiver. Please go ahead.

Thanks for taking my question. My first question is related to ANP spends and the market share that we're continuously losing in AC. Because if you think of medium term to long term, to get the customer's top of mind share, you have to continuously spend on ANP to get the share back and which will result in your increasing market share in ACs. Of course, the AC season is over, and you may not spend too much on marketing for the next two quarters, but let's say when the Q4 of FA27 comes, or Q1 of FA28 comes, so how do you think of this advertising and promotion spend?

Yeah, I think there are two things to advertising in terms of a very different term. One is ensuring that we, you know, we remain top of the mind awareness for the consumer during the season, but also to ensure that we build a long-term premium image for the brand. So these two aspects we are always keeping in mind when we are advertising for Lloyd. And having said that, yes, the first quarter was certainly depending upon, you know, not just issues, but other product categories also. And coming the fourth quarter also, we should be looking. So, the way we look at it is that budget spends on A&P will remain elevated for the next couple of years because there is a dual requirement of also premiumizing the brand and the product categories, the kind of quality and the features that we've given up for. Need to be communicated to the consumers for a longer period of time.

Got it. And my second question is on wires and cables. So if I compare it with our competitor who reported a couple of days back, so they have reported like high single digit growth in wires and low to mid single digit growth in cables over a very high base that they had, while we are almost flat. And of course, our margins have also declined. So but we do actually need to win in that segment and where we are losing to some of our competitors and how do you plan on gaining that market share back in wires and cables?

I think, as I said, that especially in domestic violence, we have done a very good job in terms of not only ensuring that our contribution margin continues to remain the way they are, and also, as I mentioned, we've made certain that the distribution strategy changes. To ensure that we become more of a sellout brand rather than just a selling brand, which also impacted some volumes at the end of the quarter where suddenly the proper prices have started going down. So we are becoming more of a sellout brand. As far as TVV is concerned, we are seeing very good growth, but also it is linked to the capacity expansion which are happening. So, I would say that, you know, the whole idea of winning in this business is more capacity expansion, ensuring that we continue to, you know, build our capacities there. But also, in Viage, we continue to keep the customer confidence very high in terms of brand and distribution. I think if you may have seen that we have also during the quarter, we have spent part of our advertising promotion. On buyers as well. So I do believe that we have a very positive model on the long-term prospects. If you're talking about lower margins, that also is affected by the fact that there were disproportionate spends on advertising and promotion for the quarter, which will normalize over the quarter.

And just to follow up on this, this is the last question from my end. So when you say you are spending higher on wire and cable side also, and still it is not resulting in sales for us. Of course, you may say that it will result in coming quarters, but over the time we have seen that we have been consistently losing market share to the competitors. So how do you think of this advertising strategy on wires and cables and when will it lead to results?

I think I don't need to repeat my answer. I've already answered. Okay, sure. Thank you.

Thank you. The next question is from the line of K.Yur Pandya from ICICI Prudential Life Insurance. Please go ahead.

Thank you. Answer for question on the Lord's side. Room from room and air conditioner. Last, because of our product placement timing, last year Q1 itself, we had a low base versus industry, and even last quarter was a low base for us. So, despite that Q1 numbers are relatively lower in the past summer season, so is there any changing strategy or some rejects, and apart from that, any market share loss that you think to have?

I think initially I had mentioned that as a company we have made certain improvements in our distribution system where we are becoming more of a sellout brand. And same is the case with Lloyd as well. So we are focused right now on the sellout from our channel. So because of the B rating changes, there were certain stocks which were pushed during the... We do believe, along with the delayed onset summer during April, we have been able to have a recent sellout from the channel. Sell-in may have been affected, but I think over a long period of time, this should get stabilized. And this is also during the entire volatility in the raw material. So, sometimes during a particular quarter, sometimes we may choose, you know, a raw material. Yeah, there's some disturbances.

So there is no market share loss.

We do believe that on the cloud, you can separately connect with our higher department. Sorry for, can't hear you properly.

Second question, on profitability of years and years.

Your voice is not audible.

Am I audible now?

Hello, can you please speak right now?

Okay, last question. So, on the property of six years and ECB. So, apart from the ANP spent this quarter, for last two years, we have seen, say, retain property of these two segments. So, when you say normalization of margin, what will be the normalized margin? That is, one point, and second, specifically to switch and switch gears, for the last couple of four years, our absolute advantage is doing the same, even with lower sales growth. So, probably we have lost market share as well as profitability.

You're saying that the switch care margin, the normalized margins are somewhere between 37% to 40%. That's the question that I understood.

Okay, let me connect with it separately, probably some issues with my connectivity. Thanks a lot, and all the best.

Thank you. The next question comes from the line of Achal Lohoda from Numamo Institutional Equities. Please go ahead.

Yeah, good evening. Thank you for the opportunity. Just wanted to check in terms of the cable segment. How are you seeing the momentum? Was there any pain in terms of the demand in last couple of quarters, or it is purely to do with the teething issues in the asset ramp-up for us in cable segment, sir?

I think cable segment, we've been doing well. So, we've been ramping up our capacity and, you know, I don't think there are TV issues. We are actually gaining good growth in the cable segment. The challenges that we have seen in the last couple of quarters is the volatility in volatile prices. So, sometimes, you know, sometimes material gets pushed or sometimes there is a slow pickup because of suddenly the volatility, you know, volatile prices start going down. Other than that, on the cables, I think we are on the planned track of increasing capacity on this increasing scale.

Fair. Just one question I had with respect to solar cables. In terms of offering, do we have all the relevant SKUs, and what is the contribution of solar cables for us, and also is possible for the industry? Just your thoughts on the same stuff.

We do have the entire range, but we'll come back to you. I think if you talk to an IR, they can give you more color.

Sure. That's all. I'll fall back in with you. Thank you.

Thank you. The next question comes from the line of Ravindranath Nayak from Nirmal Bank Securities. Please go ahead.

Good evening, sir. Thank you. Yes, sir. In this quarter, there is a significant rise in the A&P cent. So, is it possible to quantify how much it has gone from Lloyd and how much, you know, non-Lloyd business of the company? And if at all, you are targeting 800 cores and how much you are planning for Lloyd and the rest of the business of the company? Thank you.

Yeah, the break-up we don't give. Normally, it depends upon also the quarterly because it's very seasonal. But overall, I don't think we have given any guidance for 800 crore. As we said, this should be normally around 2.7-2.8% of the net sales, which has been the trend for the last few years.

But for this 286 crores, any idea that how much it is gone from Lloyd and non-Lard business?

As I said, we do not give bifurcation on the division wise.

Okay. Thank you.

Thank you. The next question comes from the line of Samir Gupta from IIFL Capital. Please go ahead.

Hi, sir, and thanks for taking my question. First question is on Lloyds. Now, I understand this question has been answered during the course of this call, but I am just trying to find my interpretation here. So, you are saying that there is an impact due to higher sell-ins in previous quarters, and normalization of that has taken place, plus staggered price hikes over the course of the last two quarters that might have impacted primary optics. Would this be a correct interpretation?

Yes, and a few other reasons also, but primarily these two reasons.

Sir, so just a follow-up on this then, basically higher sell-ins in previous quarter should have then resulted in higher growth in the previous quarters, which I am not able to see. So, is it that the last year the sell-ins were very high and that is normalizing now?

You see, if you remember last year, there was a very bad season. And also, you know, a lot of B rating changes happened at the end of December, plus the volatility in the moment in the first quarter. So, and also, I've also mentioned that, you know, Havels and Lloyd both have gone through a change in the distribution strategy for the company, which is, we believe, is a foundation for very positive growth in the coming quarter. So, all this put together, yes, it has reflected in, you know, this growth that we have achieved in the first quarter.

Thanks for the detailed answer, sir. If you could just elaborate on this change in distribution in Havels and Lloyds that you're talking about.

I think for the purpose of this call, I would say that, you know, as both Havels and Lloyds have become more sellout oriented than sellout oriented.

So basically, primary aligning with the secondary, that's what it would mean, right, sir? Got it. Thanks, sir. Second question, if I may squeeze in. Adspens, if I'm looking at this quarter, and again, this has been discussed, so pardon me if something that I'm not being able to interpret correctly, but on an absolute and as a percentage of sales, both it is among the highest that we have done in any quarter, especially in a quarter where there is RM pressure across the board. So is it driven by any major event like an IPL or something, or just wondering if this could have waited?

No, that depends upon the strategy of the company. You know, company looks at the long term. All the raw material situations and everything are short term. Van building is long term. So, if I would have been too concerned about performance, then, of course, I would have definitely said that, you know, it's been great for me. But I think brand building is a continuous activity. As I said, we have re-looked at the entire strategy of A&P, and that's where it led to us coming back to certain media or certain product categories. That's the only thing. Otherwise, nothing, you know, again, as I said, the difference between thinking long-term for certain things and short-term for certain things.

Got it, sir. That's very detailed. Thank you so much. I'll come back in the queue for follow-ups.

Thank you. The next question comes from the line of Ashish Jain from Maguire. Please go ahead.

Hi, sir. Good evening. Sir, my first question is on renewables. Can you, you know, share some thoughts, you know, from a, let's say, three-to-five-year perspective, how big this business can be in your vision, and what are the key products which will be driving that?

I've already said this, that it's too early to give any more detailed answer than what we've already given.

Okay. So, secondly, on cables, it's a bit surprising that four quarters back or six quarters back, we had capacity issues, and now with capacity coming in also, our cable volumes are flattish. So, how should one think about that and what's driving that?

I think I've given this in a lot of answers that, you know, while capacity utilization has been high, some part of the table is also affected by the raw material fluctuation, which also means that sometimes the sellout becomes slower when the raw materials are fluctuating heavily. So, not everything is going to produce because there's a lot of dealer sales also in tables. So, when the raw materials start going down, the dealers start selling out from their own stocks rather than picking from the company. So, there are a lot of factors. I don't think you should look at one quarter.

No, sir, just an extension of that. So, should we think that for cables and ACs in particular for the same reason, the channel inventory today is lower than normal? Is that the right way to think then?

At least at the end of the quarter, yes.

For both the products. Okay. Thank you so much.

Thank you. The next question comes from the line of Pulkit Patni from GS. Please go ahead.

So thank you for taking my question. So first question is, in your opening remarks, plus a few other times, you sounded a lot more confident on overall growth. My question is, is this confidence stemming from the price increases that have happened across categories? Or are you also feeling more confident about volume growth going forward?

I'm always confident.

About, sir, volume growth or it's the pricing growth that is going to be?

I'm always confident about how it's growth.

Okay. Okay, sir. So, my second question is, would you be able to highlight what is the capacity utilization at the cables and wires division right now for us?

I can't give it to you on this call.

Okay. I'll take it from the IR team separately. Thank you. Thank you, sir.

Thank you. Ladies and gentlemen, that was the last question. I would now like to hand the contents over to the management for the closing comments.

Thank you very much, everybody, for attending this call and being very patient on the call. Thank you once again. You should have a very good weekend.

On behalf of ICIC Security, that concludes this conference. Thank you for joining, and now you may disconnect your lines. Thank you.