Havells India Limited (HAVELLS) Q2 2027 Earnings Call Transcript

Ladies and gentlemen, good day and welcome to Howells India Limited Q2 FY27 Earnings Conference Call, hosted by Dam Capital Advisors Limited. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star, then zero on your touchstone phone. Please note, this conference is being recorded. I now hand the conference over to Mr. Tanaish Shah from Dam Capital Advisors Limited. Thank you, and over to you, sir.

Thank you, Nazneel. Good afternoon, everyone, and welcome to Havel's 2Q27 Earnings Conference call. Today, we have the management with us being represented by Mr. Anir Rai Gupta, Chairman and Managing Director, Mr. Rajesh Kumar Gupta, Whole-Time Director and Group CFO, Mr. Amit Kumar Gupta, a whole-time director, and Mr. Rajiv Goel, executive director. At this point, I will hand over the floor to Mr. Anil, sir, for his initial remarks, post which we will open up the floor for Q&A. Thank you, and over to you, sir.

Thank you, Taneh. Good evening, and thank you for attending the call today. Hope you would have reviewed the results by now. We delivered a strong performance in the second quarter, with revenue growing 35% year-on-year. During the quarter, each of our categories grew, with healthy contributions from both our established categories, including cables and switchgear, as well as the emerging renewables category. Encouragingly, the consumer demand remained steady despite the inflationary environment. During the quarter, we also undertook calibrated pricing actions in response to the sharp rise in romative costs witnessed over the past several months. Contribution margins were softer year-on-year, primarily due to cables, where a decline in aluminum prices during the quarter impacted margins, particularly against a strong base last year. For H1, cables' contribution margins were approximately 15%, broadly in line with the long-term average. In the rest of the portfolio, margins held up well, supported by pricing Lloyd also delivered healthy revenue growth supported by both volume and value growth. Margins, however, remained subdued with raw material inflation as well as seasonal under-absorption during the off-season. At an overall level, operating leverage supported healthy EBITDA growth of approximately 30%. EBITDA growth was relatively moderate, primarily due to the higher base arising from a one-time gain in other income in the corresponding period last year. Looking ahead, while macroeconomic uncertainties persist and commodity prices remain elevated, we enter the festive season with a positive outlook on both demand and margin. With that, I would like to wish all of you and your families a very happy festive season, and we can now open the call for questions.

Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. This is from the line of Natasha Jane from Philip Capital. Please go ahead.

Thank you for the opportunity. So, my first question is on switch care segment. The growth has been quite strong. Could you break it down in terms of what is the spillover impact of quarter one order here and how much pricing growth we have taken here?

So, you know, there's not much of quarter one, I would say, spillover, because as you would realize that we are, our major business comes from residential switch care, which is not really order input based in terms of long term order. It's primarily a lot of B2C sales through the channel network. We do believe that overall there is a very good, positive growth over the first six months. There is a bit of a higher impact in the second quarter because first quarter growth was muted because of some pricing actions that were taken due to sharp, prominent price increases in the first quarter. But I think the markets have settled down now with the price increases, And so second quarter is a regular demand which has come from the market. And I think overall volume growth has also been healthy closer to double digits because SwitchCare value growth is not the same as KVS-VS. So SwitchCare volume growth has also been healthy.

And in terms of margins, if I see last year, last quarter, and this quarter, variation is quite high. Any changes in terms of the long-term or medium-term guidance here for SwitchCare margin?

I think switchgear margins are actually coming back to normalized level, which are always used to remain between 38 and 40. We have seen some reduction in the last year due to sharp raw material volatility. But as we had maintained that we will be taking pricing action as the market's stabilized. So that has now started coming to 38-39% contribution margin. I mean, having said that, we do see, you know, raw material challenges even in the second quarter, for which certain more actions are being taken in the third quarter.

My second question is on lawyers. Now, if I see the top-line growth that seems quite strong, margin value mentioned there has been under-absorption. So, first of all, could you break down that 28% also in terms of volume and pricing?

I think volume in case of Lloyd is better because the pricing growth is more muted as compared to the Havel segment. But also, I had mentioned in my previous calls that we've taken some distribution actions which are now settling down. And so volume growth has started coming back in both Havels as well as Lloyd. But I think more importantly, the margins are not only impacted by the under-absorption, but also the fact that due to off-season, certain cost increases have not been fully passed on to the marketplace, which will happen more as the season starts kicking in. So, I think this will start in the third quarter and will trickle into the fourth quarter as well.

Understood, sir. So, what I understand is out of the 28.5% top-line growth, most of it is volume back.

No, no. I would not say most of it. I would say there is a decent healthy growth of volume as well. Understood, sir.

Understood. Got it. And, sir, one last question on renewables. The scale-up has been quite healthy in this segment. So, just from a very long-term perspective.

Can you repeat? Sorry?

Yeah, sir, in the renewable segment, the scale-up has been very healthy, both in terms of top line as well as margin. So, could you just guide us from a medium-term perspective, what is the peak revenue that this segment can achieve and time frame? And even margins, where is the peak margin for this segment?

See, right now, this is a developing business, and as you know, it's a very fast-growing business in the overall Indian. And we are also looking at this business differently. We're not looking at this as a commodity business. We want to build more brand and distribution stickiness to this business. So at this point of time, it's too early to say what are the peak volumes that we'll be getting out of this business. But we'll continue to strive towards making it into a healthy margin business because we want to make it into a brand and distribution-oriented business.

Understood, sir. Thank you so much and wishing you a happy Diwali.

Thank you. Next question is from the line of Samir Gupta from IIFL Capital. Please go ahead.

Hi, good evening, sir. Congrats on a very good set of numbers and thanks for taking my question. Sir, firstly on buyers, just wanted to basically understand the thought process here. So two new competitors have recently entered. One is Crompton, one is Ultra World. Now, while I understand it is still early days from their entry perspective, Just wanted to understand the strategy of Havels to tackle here. So, will the immediate priority be to maintain shell space or kind of protect profitability or a balance between the two? And in that context, would it be fair to assume that the industry-level discipline on pricing and margins could come under pressure in the near term? What other levers does the company have to protect the same? That would be the first question.

So, I guess I think wires is a very interesting category because, you know, as we all know, over the last few years, this industry had, you know, limited amount of unorganized sectors. So, it was reducing, but over the last couple of years, unorganized sector has started increasing because of the high inflationary trends in the market. So, I do believe always when there is more organized players who come into an industry where there is unorganized players, so the market shares are generally taken from the unorganized sector. But yes, of course, certain irrational behaviors from new competition can affect certain market shares for some time. But I guess this is where, you know, established companies with product launches, with deeper distribution relationships, with influencer management can do a good job of retaining their market shares. Or if there is anything, you know, maybe a slight compromise on the contribution margins or profitability. So I think these are all, I would say, you know, generally speculative things that we are discussing here right now. We just have to say how competition pans out in the market, how trade channel behaves to their, or looks at them. Because it's not just the consumer direct, consumer business. It's also a lot based on trade relationships, building a network, influencer management as well. So I think right now, early days, we are very hopeful that the kind of growth, I mean, it's after some time that we started getting industry-leading growth in this wild business. We'll continue to strive to improve market share in this business.

Got it, Paren. Any initial signs of the competition? Is it a more pricing strategy that they've employed in the initial part of their strategy, or it's still very early days?

You see, I think as far as you mentioned, one competitor, Crompton, it's fairly like many other brands who have launched products just out of no technology, no factory, or basically out to use their brand and distribution. So, it seems more like a strategy like that. But the other competition which have put in investments and, you know, wanting to build it as a long-term business, I would treat them more with more respect as well as I would say that's a good thing for the industry.

Got it, sir. That's very helpful. Second question is on the renewables part. Now, you did mention to Natasha, but just wanted to understand while the market landscape here is based, what would we have a basic right to win in this segment? And any targets that you are working with that today, this is talking around 300 crores on a quarter basis, but this is where we want to take it up to by FI 29, let's say. I just also wanted to understand versus the larger players like a Tata Power or a Wari or an Adani who are more integrated in the transmission and distribution chain, what would be Havel's positioning and right to win?

I think the habilitation is very clear. We're not looking at the large players who are manufactured as well as building their solar farms as well. Our main focus will continue to remain looking at building the business through brand and channel, through an integrated channel for system integrators, distributors, and dealers, and bringing in products which go more through the brand. So, even if, let's say, you know, solar panels, but it is fully integrated as a kit, and the channel, you know, supplies it to either to an industry or a residential consumer.

Got it. Currently, we are not doing any manufacturing in this part of the business, right?

As you know, we have tied up with Goldie Solar. So, a lot of manufacturing is done by them for HAWL.

Got it. But in our entity, in the Havels business, this margin is still more of a trading margin, right?

As I said, you know, trading is considered when you just buy and sell. Basically, it's our own technology development, development of the complete product kit, and then using our brand and channel. So, it's, you can say, you know, whenever there's an outsource manufacturing, I don't know which is, just a trading margin, but there is a ban in channel play in there.

Got it, got it. This is helpful. Just last follow-up here. So, basically, we do understand that overall industry has, you know, a lot of players who are entering who are just trading here. And if, let's say, tomorrow, would it be a fair assumption that there will be a good consolidation in this space and margins can go up further?

Possibly.

Thanks a lot, sir. I'll come back in with you for follow-up.

Thank you. Next question is from the line of Aditya Bhartia from Investec. Please go ahead.

Hi, good evening, sir. My question is again on the SwitchKeya segment. Just want to understand how you're looking at the revenue buildup from a slightly kind of longer-term perspective over the next one, two years. Do you think that the kind of quarter that we have seen, part of this is sustainable? We should be consistently clocking double-digit kind of revenue growth in this segment? And what proportion of this revenue growth is likely to have come from exports?

So, just looking at the numbers, but the export percentage to the overall thing is about 15%. And I think, you know, after some quarters, both volume and value mix, there is decent fraction. I think it's also related with some market share gains as well. So hopefully this should, a positive trend should continue in the coming quarter.

Sure. So my related question was also on the point that you earlier referred about switch gears, that in the past when we had taken some price increases, there was maybe some channel de-stalking or some impact on demand. Now, just a bit intrigued with this phenomenon, given that in wires and cables kind of a business, we keep seeing fairly sharp price increases being taken and getting absorbed by the market, then why is it that in some of the other categories, it is much more difficult to pass on the RM inflation impact?

No, no. So, first of all, I didn't say there is de-stocking in the first quarter. There was delayed price movement by some competition, you know, because there was a – you see, industry to industry, it varies. Sometimes certain industries which have not seen sharp increases in the economical prices, they also tend to wait and see how the overall commodity situation may pan out. So some industries may take a bit of a longer view on this. Cables and wires have seen for the last 20 years, since 2008, sharp fluctuations, both upwards and onwards. So there is a faster pass on both sides to the consumer and to the channel. So I think the channel is also used to it more. The consumer is also used to it more.

I understood. That's helpful, sir. Thank you.

Thank you. Next question is from the line of Sonali from Jeffree's India. Please go ahead.

Thank you for the opportunity. So, my first question is, you did talk about price hikes, calibrated price hikes, and it is showing in our operating margin being held at the current level as well. So, could you let us know which categories took average how much price hikes?

See, across the board, we've seen varying between 10% to 25%. And it depends on the period also. In cables and wires, over the last one year, we've seen more than 30% price size. But in certain categories, it's about 10% to 15%.

That would be in the last two quarters of ITD?

No, I'm saying over 12 months.

Over the past 12 months. Got it, sir. So, secondly, in terms of volume versus value mix, you did mention that in switch gears, it's double-digit volume growth, which, by the way, congratulations for that. In the cables and wires, as we understand, it's largely commodity-led, but if you could let us know the volume growth, that would be helpful.

Volume growth overall, if you see cables and wires, it's about very close to double digits.

Okay, okay. Good to hear that, sir. So, in terms of Lloyd, A, have you retained market share and any color on the ANP spends, also the channel inventory across the products, especially the air cons, since we are getting into the festive season?

So, I think for market shares, this is probably not the best quarter because either market shares are in air conditioners and this is the lowest quarter for air conditioners. But A&P spends are generally in line. If you remember, we had talked about it the whole year. First quarter, we pulled in a lot of exciting spends, and second quarter has been more in line with our budgeted spends. And any other question on Lloyd? Sorry?

Sir, channel inventory, generally.

As far as channel inventory, again, in the second quarter, usually, even if there's some overstocking in the first quarter, which happens, usually the channel brings down their normalized inventory levels by the end of the second quarter.

Understood. Sir, you did mention that if the cost surge persists, we'll have to take more price hikes. Sir, any ballpark as to what are your plans and by when would you want to take these price hikes?

Now, I think in this quarter, certain price hikes will have to be taken, because in the industry, second quarter is not the time when usually the competition also increases the prices, but that's the time when we've seen sharp raw material price increases. So, it could range between product to product, between 5% to 7%.

Got it. And just last question from my end. On the CapEx, are we retaining our estimate of about 14 billion CapEx in FI27, and largely for CNW?

And R&D.

All right. Thank you very much for this opportunity. All the best and happy festive season for all of you.

Thank you.

Thank you. Next question is from the line of Pavan Kumar from Global Consilient Research. Please go ahead.

Thank you for the opportunity, sir.

I think I've already mentioned the reason for the aluminum price increases, which led to a lower contribution margin as compared to a high base last year. Overall, I've said in the first half, we've retained 15%, which usually is the normal contribution margins overall with the product mix that we have between 15% and 15.5%.

Okay. And sir, the next question is on the margins. I understand that you don't cover any specific guidance, but how should we look at the margins over the next two quarters? Should we expect them to remain stable, or are you seeing some scope of improvement there?

As I said, you know, we've always given general views on the trends of margins of various businesses. Now, it also depends upon the growths of various businesses that we achieve. But usually, you know, contribution margins of each business is established. Sometimes, due to very sharp volatility, it can get disturbed, but usually we try and maintain these margins over a longer period of time.

And so, my last question is on the Lloyd business. The segment continues to face some profitability challenges. So, could you help us to understand that what steps we are taking to include its margins and reduce its margins? And also, by when we can expect the segment to become profitable, any broader timeline we can give will be a very good point.

See, I've always maintained that in Voyard, we'll continue to, you know, build out the brand and distribution channel, which is an ongoing process. So, when we are talking about our overall annual profitability, we are trying to ensure that we will continue to invest, but at least start making profitability in the medium term. So, difficult to give any timeline, but that would be more of a guidance which you would like to avoid.

Thank you so much, sir. I wish you a very happy one.

Thank you. Next question is from the line of Saurabh Jain from Sequent Investment. Please go ahead.

First of all, sir, congratulations on a good set of numbers. What is your revenue guidance for April 27, and secondly, you mentioned that you had a clear price around 10 to 12%.

I'm sorry to interrupt, sir. Your audio is not clear.

Hello. Hello.

Please use your handset, sir.

Hello. Am I audible? Yes, you are. First question is my, what is your revenue guidance for FY27? And secondly, you already said that you raised your price around 10 to 12%. So it is buy on buy, that is all. It is quarter on quarter, that is all.

So we do not give any revenue guidance for the year. And I have not understood your second question. Sorry, but, you know, the voice was not audited.

Thank you.

Next question is from the line of Arjal Lohade from Nuwama Institutional Equities. Please go ahead.

Yeah, good evening, sir. Thank you for the opportunity. So, two questions first. You mentioned about the sales and distribution recheck in Lloyd as well as the Hyvel's business. If you could elaborate a little bit as to what, you know, what kind of changes and has that got stabilized or is there any, you know, further impact you're seeing? And is there anything left as well in terms of the certain changes? If you could help us understand that, that would be great.

I think last year I had mentioned that starting October in Lloyd and January in Habels, we've moved towards a distribution system where it is more pull-led rather than push-led. And basically what it means is that we are not using pricing or schemes to push product into the channel. We want more and more consumers to buy the products from the channel. I think I have mentioned that it takes about six months to nine months to establish this kind of a system. We do believe that it has established well, and now it's more pull-led rather than push-led.

And in terms of the, so that's on the distribution, but in terms of the, you know, on the personal side, you know, there are certain changes which are done. If you could call out, you know, how do you see that? Would there be further management changes if you could help us understand that?

Yeah, I think this is a regular process of, you know, rejigging the management team and what we announced in the start of the year is a part of every three to four years. You know, people, it's more like people development process, you know, people handling different parts of the business to be ready for, you know, taking bigger responsibilities and different challenges. So I do believe that's a very regular thing, nothing major which has happened in this particular year.

Got it. The second question I have with respect to, you know, the cables and wire space, in terms of the, you know, CAPEX for the last couple of years, we have seen that larger amount got allocated to cables and wires segment and particularly cables. So, I wanted to understand, you know, where are we in terms of the, you know, the product portfolio as well as the distribution on the cables front, given it's more B2B, given it's more tender-oriented. So, if you could help us understand your thoughts as to how you look at the cables business from a more medium-term perspective, what kind of…

So, the underground cable business, a few things. One, we've maintained that we were a bit delayed in terms of capex, which we have caught up in the last couple of years. And this is a business where there is huge opportunity for growth as well, in newer customer segments opening up. And we do believe that in the overall, not only in the market, but export markets also, there is a decent traction for cables in the next 5-7 years. So we will continue to invest upon in this business, and going forward also, we think the kind of growth that we are now experiencing with this new capacity will continue to be on a good growth path and underground cable as well.

Just a follow-up, and that is my last question, sir. You know, within cables, is it fair to say that, you know, in terms of competitive intensity, it will be much higher in the case of LT compared to the medium voltage and the high voltage cables? And in terms of our portfolio, will it be more of LV or it will be MBS?

In the last 30 years or so, LTE has always been more competitive as compared to medium voltage and high voltage, and that will continue to remain in the future as well.

And in terms of our mix, would it be possible to call out, like, what would be the mix of LTE cables within cables?

The recent capacity expansions in ours has been more towards medium voltage and high voltage.

Great, sir. Thank you, and I wish you all the best. Thank you.

Thank you. Next question is from the line of Karan Gupta from Asit C. Mehta Investment. Please go ahead.

Hi. My question is again on the table side. So, looking at the comparison to the spheres, the table side, the audience are more impacted on half-yearly basis. So, what is our product mix or category mix in terms of cables? Are we more on the aluminium side of the cables

or more? Yeah, so if you look at cables, we are more aluminum heavy because still about almost 80 to 90% of our sales come from Indian markets, which is more aluminum heavy. So, yes, we are more aluminum heavy under cables business.

So, going forward on the aluminum, what's the growth you are expecting and normalize level of margins you are expecting on the season side?

No, we, you know, I mentioned just before you, I mentioned to the other person also that we are overall underground cable business. We are looking at a good growth because all our capacities have been invested in the underground cable business in the last couple of years. So, we will continue to expect good growth. We are, you know, we are not the leading person, people for, you know, in terms of margins in the cable business concern. We maintain certain quality standards, and it's a bit more commoditized. Hence, our focus has always been on more consumer-oriented wires business. So, going forward also, despite some volatility which happened in the last quarter, otherwise we'll be coming back to our normal margin levels in underground cables, let me say that.

The upcoming CapEx, as you said, on the medium and high voltage cables.

In the last few years, most of the CapEx has gone towards medium to high voltage.

Thank you. Next question is from the line of Nikhil S. from Lister Ventures. Please go ahead.

Hi, good evening. So, I have my queries regarding the large consumer segment. So, wherein we can see the revenue has almost come halfway down from around 1,460 crores in the last quarter to around 6,15 crores right now. So, may I know it's the shift in the or the significant decrease in the sales is only because of the shift in the summer season or because of any other reason. Because I can still see that because of all the early news and other things, the summer is still in place in almost most parts of the country. So, may I know the reason first for the decrease in the sales and also for the drastic decrease in the cost contribution margin as well, where it is mentioned that there is under-absorption as well as the inflationary pressures.

No, so, Ashish, sorry, Nikhil, first of all, I think this has been a trend for many, many years. The first quarter is the biggest quarter for air-conditioner sales, and in the second quarter, the air-conditioner sales come down. I agree with you that in certain markets, in South especially, there is a second summer which comes in, but that also comes in every year. So, when we are looking at growth, you have to see growth over a Y on Y rather than quarter on quarter. So, this trend which you are seeing is a bit less pronounced last year because we had a very bad April, May, June. But otherwise, generally, this has been a trend. And it happens so in the second quarter that And because of under-absorption of the manufacturing overheads, the contribution margins also see a decline. In this particular quarter, there was a sharper decline because of the raw material fluctuations. Raw material continued to increase, and it took some more time for the industry to pass on the price increases.

And do you know what are the measures taken to tackle dirt inflation? Any aggressive measures from the company's side?

I think one is obviously always efficiencies towards costs, both in factories as well as overheads. But otherwise, you know, certain costs have to be passed on, which have to be tackled through, you know, price increases only.

Understood. Okay. Thank you.

Thank you. Next question is from the line of Ashish Jain from Macquarie. Please go ahead.

Hi, sir. Good evening. Sir, firstly, just for clarification, the 90% number you gave on exposure to cable is only for cables, right? Because most of our wires would be copper-based.

Yes, sir.

I think that the question was about cable.

The question was specifically...

I know, I know. Yeah, I just want to clarify that.

Wires is entirely copper.

Copper, right, right. Sir, secondly, you know, this restructuring which you spoke about in terms of distribution and making it a pull product rather than push product. So, you know, in terms of consumer excitement around the brand, is it mostly advertising spend or is there something else that we are doing to create?

There are a lot of things about consumer promotions continue to happen, you know, extension, extended warranties and all that. I'm not saying that there is no push towards the consumer through either BTL or ATL, but I was generally talking about maintaining profitability margins and return on capital for the channel by not pushing too much inventories into their system.

Lastly, just from a margin point of view, given the last few days, commodities have come off, assuming that is where commodities stays, it's safe to assume that worst in terms of 2Q pricing is behind us in terms of our P&L, or there is some high-cost inventory that we are sitting on today, which can hurt us in 3Q as well from a margin standpoint?

Right now, we are not anticipating any reduction in pricing, because some abatement which has happened is, you know, that has always been there every month, every quarter. So, at this moment, it is difficult to say whether we are seeing any downtrend.

Thank you so much.

Thank you. Next question is from the line of Janakiraman Rengaraju from Franklin Mutual Fund. Please go ahead.

Good evening, Mr. Bhutta. A few medium-term related questions. One is that you spend a reasonable amount on R&D. You also have sizable teams in Delhi and Bangalore. So, what are the goals that you have set for the R&D function? And as a manager, how would you assess the effectiveness of this R&D spend?

I think, you know, very relevant question. Most importantly, one is that how do we continue to gain market share as well as try to be industry-leading margins in product categories that we are in. So, because of the premiumness, not only of the brand, but also the product and ability to charge a premium from the consumer because of the quality, because of the features of the product. That's what I would say that, you know, in a short while I can answer that that's the major focus for the R&D.

The focus will be more on product design or value engineering to make it more cost efficient?

Both, I would say. The value engineering is a continuous process which is also one part of the R&D also looks at. But major focus is also product design.

The other thing is now more manufacturing opportunities are dropping up, especially in the electronic space and that too, especially in the area of import substitution. So, as a company with multiple business lines, do you keep evaluating adjacencies where you can get into manufacturing and especially since you have a fairly deep expertise in electronics manufacturing?

We do keep evaluating. Still, I think the major focus for the company is consumer-facing through brand and channel and developing products for the consumer. As a company, we are a sizable business within the electrical industry with various product categories. So the major focus has always been to build a final product for the consumer rather than be a manufacturer for other brands. So, however, still, you know, there is always an evaluation of new business opportunities within the business, given the fact that we are a manufacturing-oriented and manufacturing-heavy business as well.

But do you think this classification of the business or the organization as largely consumer-facing?

I'm sorry to interrupt, sir. Should you have a follow-up question? Please rejoin the queue.

Thank you.

Sorry, we can take that last question from Mr. Jantiraman.

Sir, he left the queue. Next question is from the line of Umang Mehta from Kotex Securities. Please go ahead.

Hi, sir. Thanks for the opportunity. Sir, if you can, would it be possible to call out the growth in cables separately? I mean, within the cables division, how much was growth in cables? And any status update on your expansion plans? I believe you had three kind of phases going on. So, how is that kind of coming along?

I think the expansion is pretty much on online. That's what we had pointed out. And I think in the next 18 months, the full expansion will be on stream. And as we indicated, most of the expansion is on the MV and the EHV side. So that's playing out to what we had sort of explained when we started this expansion journey.

Got it, sir. And cables growth possible to share? How much was it this quarter? Within cables and wires, how much was cables?

We don't give separately, but all we can see, we have just indicated that the overall volume growth was close to.

Got it. And secondly, again, similarly on Lloyd, the refrigerator factory got commissioned in March. Any benefit have we seen in terms of pickup in that line? What is the capacity utilization right now? And how are we looking at the non-RSE businesses within Lloyd?

So, REV growth has been pretty decent. I think that has contributed well to the volume growth, but as you rightly said, before we didn't have our own factory. But I think the season will be coming up next year because it has only got fully on stream in the last couple of months. So, non-RAC, I think RAC continues to be the large part of the business, close to almost 75%. And hopefully over a period of time, we want to bring it to around 6%. Thank you, sir.

Thank you so much, and all the best.

Thank you. This will be the last question for today from the line of Rahul Agarwal from Ekigai Asset. Please go ahead.

Yeah, hi. Thank you so much. Good evening. Just one question. Sir, when I look at, you know, the overall companies from a top-down perspective, I have been known for 25% plus kind of ROC on the overall business. Now, obviously, things have been volatile post-COVID, and our investments have been higher, margins have been lower, and hence, we have seen some deterioration. Just incrementally, in your view, a more medium term, let's say next three years, how would you look at this number for the overall company? For every incremental capex you do, would you have a minimum raise to work with? And when do you expect sales to come back to that 25% plus ROC number? Just your thought on how do you look at capital allocation? Thank you.

See, if we look currently, and despite the volatility, we are close to 23. I think it will depend upon a few things. The expansion will need to be undertaken. And normally an expansion takes some time before it starts contributing to the level of the company's overall return ratio. But I think our existing assets also should start delivering more. So, this has been the case because, you know, Havers has always been expanding in newer categories and those categories are supported by the pretty decent ROC from the existing categories. So, those will continue and we believe this even couple of percentage by which it has sort of come down. I see no reason why in the next couple of years we should not be doing much better than this also. So, yes, I think overall we are pretty comfortable having ROCs, in fact, higher than what has been our long-term average.

Sir, so just to follow up on this, you know, all incremental business, right, which we see right now, renewables is something which is ramping up, will, you know, maybe some new category is what happens we try and explore going forward. Apart from that, I think we have seen similar existing business, which is growing further, right? I mean, lighting, cables, switch gears have been all there since long time. So, incrementally, every rupee which you invest, are you working with a higher ROC threshold or how is the thought process?

The thought process is similar, but all you have to appreciate is that it takes time. It doesn't start from day one. That is the only difference. And that's why we bank upon, somebody asks about renewables, are you comparing yourself We are looking at what is relevant for the consumer because ultimately when you have a distribution channel, you have to stretch it more. The biggest asset in this company which is not captured in capital is the brand and distribution. So, when you start it more, definitely you will create more return on capital. So, anything we start, we always want to improve on where we are today. And yes, on that, but it takes time, which I am sure you will also appreciate. You are not expecting this to happen from the first hour, we invest the money.

Absolutely, absolutely.

So, this entire... And this has been proven. Otherwise, how will you hold even you talked about you are not having 25, but we are from decree. So, we are not like miles apart.

Right, right. And this is going to come more from sweating of assets, right, and lesser so from margins, right? The margins have been discussed quite a bit. I think that more competition and every quarter keeps on changing. So it should come more from sweating of assets rather than margins, right?

It will come from both. This is slightly different philosophy as a company we have. We do not believe the growth and the margins are mutually exclusive or one has to come at the expense of the other. So, I think this is the philosophy. Sometimes you get challenged on that. But we do not buy this argument that if you don't have margins, you can have growth and then you can spread the assets more. Both have to work in tandem. Okay, the ratios may change sometimes, but it's A into B. Got it, Rajiv.

Thank you so much for answering the question and festive greetings to everybody at hand.

I have a great festive question. Thank you, everybody, for joining the call.

Thank you. As that was the last question for today, I now hand the conference over to the management for closing comments. Would you like to give the closing comments?

Yes. Thank you so much to the management for giving us an opportunity to host the call. We now conclude the call and wishing everyone a very happy festive season.

Thank you. On behalf of Dam Capital Advisors Limited, that concludes this conference. Thank you for joining us and you may now disconnect your lines.