Good day, ladies and gentlemen, and welcome to the Q2 FY 2023 earnings conference call of KEI Industries Limited, hosted by Monarch Networth Capital. 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 touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Rahul Dani from Monarch Networth Capital. Thank you and over to you, sir.
Yeah. Thank you, Michelle. Good afternoon, everyone. I would like to start by wishing everyone on the call a very happy Diwali. We are pleased to host the management of KEI Industries today, and we have with us Mr. Anil Gupta, Chairman and Managing Director of the company, and Mr. Rajeev Gupta, CFO of the company. Let us start this call with the opening remarks from the management, and then we'll move to Q&A. Thank you, a nd over to you, sir.
Ladies and gentlemen, I'm trying to connect the management. Please stay connected. Ladies and gentlemen, thank you for your patience. The line of the management has been connected. Sir, kindly proceed.
Yeah. Anil sir, we can start with the opening remarks.
Okay. Good afternoon and welcome to all of you on this Earnings conference call. I'm Anil Gupta, Chairman and Managing Director, KEI Industries Limited. I'll give a brief about the Q2 results of the company. The company has achieved net sales in Q2 FY 2022-2023 of INR 1,608 crore against INR 1,353 crore. Growth in the net sales achieved is 18.81%. EBITDA in this quarter is INR 165.85 crore. The growth in EBITDA is 11.44%. EBITDA on net sales margin is 10.31% as against 11% in the same period last year.
Profit after tax this quarter is INR 106.9 crore against INR 91.98 crore last year. Thus, the growth in the profit after tax is 16.22%. The post-tax profit to net sales margin is 6.65%. Our domestic institutional sale of wire and cable achieved INR 563 crore, which has grown by 38% compared to last year same period. However, the sale of Extra High Voltage Cable is INR 46 crore against INR 154.4 crore achieved last year. The overall growth in the institutional sale will be around 15%.
The reduction in institutional EHV sale is mainly because non-clearance of certain orders from the utilities and the delay in inspections, but it will be normalized over a period of full year. Export sale this quarter is INR 139 crore against INR 129 crore last year. The growth in export is 7%. The total in cable institutional sale B2B contribution in the total sale is 43% against 48% in the last year same quarter. However, the sales through dealer network, that is B2C, was INR 760 crore against INR 580 crore. The growth in the retail sales is 31%. The sales through distribution network contributed 47% in second quarter against 43% last year.
The EPC sale other than cable is INR 91 crore, which is at par with previous year same period, INR 92 crore. Out of the total sales of EPC, the EPC sale of extra high voltage, that is execution portion of extra high voltage cables is INR 21 crore as against 25 crore same period last year. The sales of stainless steel wire in Q2 this year is INR 70 crore against 5 2 crore last year. Thus, so the growth is 35%. It is pertinent to mention that, in all our cables and stainless steel wire categories, there is a correction in the input cost by around 20%-22% overall, because of the fall in copper, aluminum and stainless steel raw material price. The result summary of the first half of 2022.
The net sales of H1 of FY 2022-2023 is INR 3,173 crore against INR 2,371 crore. The growth in net sales is 33.85% over a six-month period. EBITDA is INR 329 crore. The growth in EBITDA is 24%. The net sales margin is 10.37%. EBITDA net sales margin is 10.37%. The profit after tax for six months period is INR 210.66 crore, which is leading to a growth of 32.41% compared to last year same period. The profit after tax of the net sales margin over six months is 6.64%.
The domestic institutional cable sale, the growth is 26% compared to last year. The sales achieved is INR 1,035 crore. The sale of Extra High Voltage Cable is INR 146 crore against INR 183 crore last year. Decline is 20%, but it is due to the delays in inspection and clearances from the utilities. Over a period of full year, it will be normalized. Export sale in H1 is INR 386 crore against INR 222 crore last year, so the growth in export is 74% over six months period. The total cable institutional sales, B2B, in the first half is 46% as a contribution in the total turnover as against 49% last year.
Similarly, the sales through dealer network has grown to INR 1,412 crore against INR 967 crore, so the growth in B2C sale is 46%. We are in the process of strengthening our dealer and distribution network, and we have added a lot of new strong dealers. The total active working dealers for the company as on 30th September 2022 was approximately 1,900. The B2C sale contributed approximately 44% of the H1 sales of this year against 41% last year. The EPC sale is INR 175 crore against INR 178 crore last year, which is at par. The sales of stainless steel wire in H1 is INR 131 crore against INR 100 crore last year. The growth in the sales of stainless steel wire is 31%.
We have pending orders as on 19th October, approximately INR 3,016 crore. In this, EPC orders are INR 706 crore. The orders of Extra High Voltage cable, which is cable plus EPC is INR 611 crore. Domestic cable orders are INR 1,617 crore, and export orders of cables are INR 82 crore. The total is INR 3,016 crore. The rating. India Ratings and Research, ICRA and CARE have upgraded our rating to AA from AA- for long-term bank facilities, and affirm A1+ rating for short-term bank facilities. The book value per equity share of the company is INR 259.85 as on 30th September 2022, as against INR 236.98 as on 31st March 2022.
The borrowing and operating cash flow. I'll just give a brief that the net cash as on 13th September 2022 is INR 109 crore. This is including acceptances against net debt of INR 270 crore, including acceptances as on 31st March 2022. During first half in FY 2022-2023, the finance cost has decreased to INR 16.85 crore in the first six months against INR 21.36 crore previous year, same period. The percentage of financial charges on net sales has decreased in this period to 0.53% from 0.9% last year.
The company has used operating cash flows for cash purchases, resulting into a substantial reduction of trade payables by INR 247 crore, including reduction in acceptances by INR 150 crore as on 31st March 2022. This has resulted in reduced finance cost. We expect a good industry outlook in the energy sector and the infra sector. Increasing in private and government investments in energy intensive industries such as steel, aluminum, cement, refineries, et cetera, is the national infrastructure pipeline in important areas such as railway, metro constructions, road and highway, overhead to underground, stations, ports and airports, et cetera, is leading to increased demand of wires and cables. Similarly, the uptake in the real estate activities has also giving new opportunities for increasing demand for wires and cables.
Such demand in the transmission and distribution sector and a lot of new orders released by distribution utilities from the funds of REC and PFC intended for improving the T&D installation infrastructure and rural electrification will be giving significant increase in the demand in the next year in the coming months and the next year as well. This is it, Keith. Thank you very much for listening to me. You may now have any questions, whatever you have, we'll be glad to answer. Thank you very much.
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone phone. If you wish to remove yourself from the question queue, you may press star and three. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Participants may press star and one to ask a question. The first question is from the line of Rahul Agrawal from InCred Capital. Please go ahead.
Yeah. Hi, sir. Good afternoon. Firstly, one clarification. On EHV, you said, sales are low because of delay in inspection by utilities. Could you please elaborate what is really wrong with that?
See, normally, these are very specific orders from transmission utilities of electricity transmission companies. Sometimes it is incidental that they delay the you know approval of manufacturing clearances in many orders because of ROW issues, right-of-way issues, and also delays the inspections because of these ROW issues, the clearances where the execution is to be done. This leads to you know disruption of supply sometimes and the quarter-on-quarter performance.
These are domestic orders, right?
Overall basis, on the full year basis, it will be a normal case and with a growth.
I understand, sir. These are India specific orders, right, you are referring to?
Yeah. These are Indian utilities.
Okay, got it. The INR 500 crore- 550 crore run rate for the full year should come back sometime in second half, right?
Yes, yes.
Okay, got it. Sir, second question was more on the industry, not specific on KEI. You know, what we understand is B2B has improved, purely post-COVID in terms of demand for cables. B2C discretionary spending has been, you know, relatively soft in first half, due to inflation and, you know, higher pricing, a lot of other issues. Obviously for KEI you have gained market share in B2C housing wires and hence your number growth is pretty high. I wanted to get your thought from the industry. Do you think after this festive season, once, you know, that gets over November, December, the B2C demand should hold up, purely from an industry perspective or you think the inflation is still catching up on demand and hence the softness might come back?
See, I don't think I'm sure that it will catch up. So far as inflation is concerned, actually, there is already heavy correction has taken place in the metal prices and polymer prices. All the input costs have been corrected by close to on an average 25%. I think the inflation effect has already gone. Now, if you compare the price what it was two years back and what is now, so we can say it is a inflation. I don't think that those levels will come back, which were two years back.
Right. Purely the entire, you know, whatever RM benefit we are getting in cables obviously is more pronounced. That is all passed through both in wire. But discretionary spend, I don't think so much of benefits have been passed through, right? The price cuts have not been very significant.
No. On our end we are always passing through the price corrections, whether it is lowered or whenever it goes up. From our side, we are always passing through the prices. Whosoever is buying wire and cable, that is not a discretionary spend. These are the essential spends. It is not something where the demand elasticity can be high.
Ladies and gentlemen, the participant has left the queue. We'll take another participant whose name is Akhilesh Bhandari from ICICI Prudential. Please go ahead.
Yeah. Thank you for taking my question, sir. So can you just give us the volume growth data for the quarter and for the first half?
In the first half, the volume growth is close to 25% with respect to metal, c opper and aluminum both.
Specifically for the quarter?
Quarter approximately 20% range. Overall, growth H1 25%.
Sir, can you also-
Volume has grown by 26% and the aluminum volume has grown by 24%.
Copper volume is at 26% growth and aluminum was?
Aluminum volume is 24%. Average is 23%.
Oh, just 25%. Okay. Sir, in quarter two, can you also call out what has been the broad price correction which you have taken in both the B2B as well as the B2C segments?
Excuse me. In quarter two also 23.69% volume growth. No, no. The price correction, you know, comes gradually, because there is always a backlog of orders for last three to four months, and similarly inventory is also there. The price correction may be around 10%-11% in quarter two.
10%-11% in quarter two.
Correct.
[Inaudible]
Okay. Quarter one had seen a destocking impact in the channel. Now, can you just comment on what is the inventory level according to you at the dealer level? Has that normalized?
Destocking. As I earlier also explained to everybody that on individual level, each and every dealer distributor holds only 25 days to 30 days inventory. They are not holding more than that. They can defer only for 20 to 25 days inventory. But ultimately in a quarter they have to buy. Ultimately average comes out the same.
But when there is a lot of volatility, they defer the purchases for days thinking that the prices will come down, and they even advise the customers maybe to hold on if they can hold for 10, 15 days or three weeks. That's it.
That's it. That's why our growth is there no?
Yeah. Okay, sir. Thank you so much.
Thank you. Ladies and gentlemen, the line of Mr. Rahul Agrawal has been connected back. May I request Mr. Rahul to proceed with his question.
Yeah, thank you. You know, the question I had was on CapEx. We did about INR 26 crore in first half. Does this delay in fact affect in terms, you know, in any way in terms of meeting its growth guidance? You know, why is there so much delay? I thought, you know, you would end up spending like INR 200 crore, INR 250 crore this year?
Actually, this land which we are procuring from the farmers, that is getting delayed. In the meantime what we did is basically we have created a new brownfield CapEx by investing around INR 35-40 crore in our Silvassa new plant, wherein we are adding approximately INR 500 crore worth of capacity for low tension power cable, which will be ready within this quarter only, third quarter only. It will take care of the growth for the next financial year.
As we have earlier guided that in this financial year we will grow close to 17% in this financial year, because lots of orders we are having in the current industry scenario. In the coming year also we will be taking care of 16%-17% growth with this brownfield CapEx. In the meantime, next two to three months, that will also clear for the land part, so that again will be on track.
Got it, sir. This helps. Last question, sir. Capacity utilization, if you would help on cables, housing wires and stainless steel. That would be all from my side. Wish you guys a very happy Diwali.
Thank you, sir, very much for the Diwali greetings. The capacity utilization on an overall basis is around 75%-78% at the moment.
Okay, sir. Thank you so much.
Thank you. The next question is from the line of Rahul Maheshwary from Ambit Asset Management. Please go ahead.
Hello. Good afternoon. I have two questions. We have seen or heard from in the past few years that during the quarter there was a judicious price revision that had taken place. The same has applied for you guys also that the passing of the prices to the dealers and because of the cut in the raw material price has been lower as compared to what it should be. First thing, and second thing, can you give some color on the channel financing which has happened on the active dealers which is there? That's all.
Yeah. Channel financing, we are doing almost 55%-60% dealer distributor. As of today, 113 crore is the resource. But otherwise, the total utilization is close to INR 250 crore.
So far as price, you're saying that price reduction was lower. Yeah. You know, price reduction is always gradual. There are two reasons. One, we are always having inventory in our depots and stocks, so we can't lower the prices immediately. Number two, even dealers are having inventories in their shelf. If the prices are lower, you know, suddenly, they will also incur loss.
It is a trade practice actually.
Hello? Huh. Hello? Hello. Yes.
Yeah, that is a trade practice that is going on actually. On the trade practice, we are doing it
Also on the active dealers, can you please clarify how much the growth rate is there, or what is the internal guidance which you are taking on, also on the geography side?
Yeah. Close to 10% number of dealer distributors we are increasing year-on-year basis.
Besides increasing the numbers, we are strengthening the existing dealers in terms of their size and helping them to grow.
Can you give throughput of the dealer? Means, as you said, every 15 days price is getting revised. The dealer has to buy it because of the inventory. What kind of throughput improvement you have seen during the years, for the mature dealers which is there?
You see, without increase of throughput of the dealer, how can we grow our sales 31%?
No, I'm not doubting on the throughput. I'm just asking the number and the project.
No, because each and every district, we use a dealer distributor sale is also getting increased. As our approach is the three-way approach, we are working on the retailers, we are working on the electricians, and we are working on the dealer distributor. While we are holding the electrician meet every month in each and every city of the country, the electrician goes to the retailers. Each month the retailer sales we are getting increased. We are also working to increase the number of retailers under each distributor. The third front, we are increasing the number of dealer distributor. As you said that earlier we were having close to 1,700, now we are having 1,900. It's a three-way strategy, increasing number of distributors, increasing number of retailer under each distributor, and increasing the sale of retailers month-on-month to the electrician.
And just follow through this. Earlier you had said that 4%-5% was the price gap between you and the peer on the wire side, wires and cables on retail side. How much that price gap has been taken? Still it remains the same?
Still that price gap is there. As we said that until the next year, we will maintain that price gap. Once we achieve our internal target to reach 50% contribution from the dealer distributor segment, which we have achieved right now 44%, and by end of year, our target is to reach 45% in this year, and next year by 50%, then only we will be going through that.
But there is no price gap so far as cables are concerned. The price gap is only in the wires. Yeah. Which are sold through trade.
Only house wires?
Only house wires.
Just sorry for extending the question. Any apart from the transmission and distribution utilities company, any private sector demand revival, any color you are witnessing on many of the segments, whether it's data center, etc.?
Yes. We are seeing very good demand from data centers which are coming up all over the country. Secondly, the demand from cement industry is coming good and some steel industries are also expanding. Miscellaneous industries are also there, where we get by the way, in pharma or, you know, very miscellaneous industry. I can't name any industry.
Overall private demand which is there, not segment to segment, but what could be the kitty that you have identified through these segments which you have told?
I think that there is a good demand coming up from private CapEx in the industries.
Okay, cool. Thank you so much, and wish you a happy Diwali to the entire team. Thank you.
Thank you. The next question is from the line of Akshay Kothari from Envision Capital. Please go ahead.
Thanks for the opportunity. Am I audible?
Yeah, yeah.
Our export would be mainly on the institutional side?
Yes. Export is mainly institutional, mainly institutional.
Do we have any plans to increase the distribution presence on the export side?
No, we don't plan to start the distribution in exports in other countries. Because our observation is that if you sell through the distributor, they load too much of margins on our prices and we are crushed. Our strategy is to directly get our approvals from the projects and sell to the EPC contractors over there. We don't sell it to any intermediary over there.
Okay. The CapEx, are we acquiring agricultural land and then we'll convert it to NA?
Yes, that's right.
We won't face any headwinds because there are sometimes clearances delay for to convert to NA, so it take a lot of time?
No, it will take some time because in the Gujarat there is a defined process. There will not be a problem.
Okay. Sir, some of the competitors, though they are not that much significant, they are coming with E-beam facility. Is there any significant advantage which E-beam wires have over the traditional ones which we have?
No. In some segments like railway coaches or engines, they are specifying that process has to be E-beam. That is one. Other than Solar Cable, we are selling lot of Solar Cable which has to be TUV certified, whether it is manufactured on CV lines or on E-beam. We are not losing that market at all.
Okay, sir, on the geographical distribution you have given, I guess we had expanded a lot of distributors on the eastern side. The revenue contribution in the quarter is still 15%, which used to be that. Are there any headwinds which we are facing on the eastern front or something like that? Because we are expanding our distribution network, but it is not getting reflected in our revenue.
Actually, we are appointing distributors not only eastern side but also in the southern side because our contribution from both the markets are low as compared to north and west. We are now appointing, which will be resulting in the coming years. At the same time, our north and west is so strong because the contribution, they are also increasing equal amounts. That's why the contribution is not increasing.
Okay.
Even on the higher base from the north and west, we are still growing in the same way.
Okay. Sir, I think Anil Gupta did explain this point in the last call, but still I have a little bit of, you know, conundrum regarding this. The gross margins, if I look around five years back, were around 30% and today it's around 25% owing to the EPC contribution and some price volatility. Sir, going forward, is it like the operating leverage which we are deriving, we'll be compensating it in our gross margins and gross margins would reduce? To grow in a way we'll have to reduce our gross margins, but it won't affect our EBITDA margins. Is there something like you go by the gross margins?
Yeah. Any contracts whenever we are selling, it's selling on the basis of the EBITDA margins. Gross margin in a clubbing of the sale, because we sell aluminum cable, we sell copper cable, we sell HV, over 400 types of products we are selling in a year. Gross margin of each product is different. While it is combining, it is looking like different actually. On a EBITDA level, it is almost same, close to 10%-11% range bound. That is basically focusing and our focus is also there only.
My question is if our gross margins would stabilize at this level and considering the-
Gross margins are, I said, for different products, are different.
Okay.
That's why, while we are publishing the result, it is on average, it is a combined, but for each product the margins are different, gross margin. Because if you talk of wires, there are only three products like, PVC compound, copper, that's it. But if you talk of the cable, then there is a aluminum, there's a galvanized steel wire, there's a lead. It is not comparable actually.
Okay.
While the product mix keep getting changed, these things you will get changed actually.
Okay. Thanks a lot and wish you Happy Diwali.
Thank you. Wish you Happy Diwali also.
Thank you. The next question is from the line of Shrinidhi from HSBC. Please go ahead.
Hi, thank you for the opportunity and congratulations on good set of numbers. My first question is on the guidance front. Would it be possible to update us, sir, on revenue and margin guidance for the full year 2023? I know you have guided for us.
Our earlier guidance is that we will grow close to 17% in this current financial year, and our EBITDA level will be close to 10.5% on a full year basis.
We are retaining that guidance, right sir?
Yes. Yes, we are retaining. We are quite confident that we will do that.
Yeah. Second, sir, I want to understand is export business appears like the overall revenue has been surprised us, but export business appears a little bit soft and sequentially it has gone down. Any reasons are there?
Actually, this year export business is increasing substantially. The first half sale is close to INR 366 crore, which is 74% up from last year. Present order going is very, very good and we'll be able to maintain a substantial growth in exports in this year compared to last year and even in the coming years. There is a jump of 74% in this in first six months compared to last year.
Yes, sir, I know, but I think I was asking more on a sequentially, is it like some of the orders shipment got impacted, something like that? Or it is expected to be a bit lumpy, like some quarter will be very strong and there could be some softness. I just want to understand that.
Yeah. That always happens because, as I mentioned, we are, you know, exporting our products to overseas countries into the projects. Sometimes, in some quarter, the projects clearances are stronger. In some quarters, you know, due to delay in receiving the cables by the client or some other issue, it may be lesser. Overall, we expect a very substantial growth in this year. I have said that 74% is this, and we should be able to maintain this momentum in this year.
Okay, sir. This is really helpful. Sir, I have one more question on order book. I know you have shared order book numbers. Is it possible to share what are typically order inflow numbers for a quarter?
Order?
Inflow numbers. Like I know we went from, I think 2017. It's institutional. It's an institutional business, right? I should just take the institution-
[Foreign Language] That is not covered in the order book. Yeah, in the retail orders, which is through B2C, are never included in the order book.
Okay. Yeah. Sir, in the INR 3,000 crore order backlog we have, typically what percentage of order backlog will have a pass-through of commodities?
Because only 10, 15% orders which we have from the government side, that is only the price variation clause. But otherwise, you know, under the institutional orders are under natural hedge because this order to be supplied within three to four months' time. Since we are having inventory of 2-2.5 months' time. Practically, it is almost under natural hedge. Little bit impact is there, but otherwise natural hedge.
Understood, sir. Last one, if I may, sir. I think we are guided for INR 100 crore release of retention money. Has that been earned in H1?
Yeah. Because last year we collected additional INR 50 crore. That's why it is reflecting in the growing side of the receivable also, which has gone down substantially. Again this year, close to INR 100 crore additional will be coming from EPC division, whatever it is due. Again, the receivable cycle will going down. From 2.9 months' time, which was last year the receivable period, which will go down this financial year, Visay, I thought at the end of balance sheet close to 2.4-2.5 months.
Right. Okay. The last one, I just want to understand, there's a bit of a divergence in the profitability of the cable company, right? I understand it comes from business mix, and it comes from the way copper is procured, whether it's a derivative and hedged or not. Just want to understand, in case of KEI, we don't do hedging. In that context, is it fair to say that in first half of this year, probably our retail distribution-driven business would have suffered on profitability a bit?
Yeah, little bit because of the inventory. Its prices are going down. Whatever inventory is close to INR 150 crore finished goods inventory we are carrying in Q4. It affects around 0.5%-1% in that particular quarter. As I said, in the future also. In the past also, when price goes up also goes down also. Ultimately-
Yeah.
On a full year basis, it is averaged out. That's why we are saying that now the prices are reasonable, and we are quite hopeful that on a full year basis, we will be maintaining 10.5%. This means the EBITDA margin in future quarters will go up.
Right. The same phenomena is much less pronounced in the institutional business, right?
Maybe some institutional business, it is a pass on business, because we are having order book of three to four months.
Yeah. You are naturally hedged.
That is under natural hedge actually.
Understood, sir. Understood. Thank you for answering my all the question and all the very best.
Thank you.
Thank you. The next question is from the line of Harsh Shah from Jefferies. Please go ahead.
Yeah. Hi. Thank you. Could you please provide the interest cost breakup for the quarter?
Interest cost for this quarter is very less, but I am giving you the figure. You can note down the figures.
Yeah.
For this quarter only?
Yeah, for the quarter.
Quarter, the term loan interest is INR 0.17 crore. Working capital interest is close to INR 5 crore. LC interest is not there. Bank charges on LC is INR 0.25 crore. Bank charges and bank guarantee is INR 1.67 crore. Other bank charges like processing PSR charge INR 0.46 crore. Total is INR 7.6 crore.
Sure, sure. Thank you so much.
Thank you. The next question is from the line of Devansh Nigotia from SIMPL . Please go ahead.
Yeah, thanks for the opportunity. Sir, can you just give an overview of the demand scenario right now? We have been guiding 17% for the guidance of sales growth. Overall, how do you see the demand environment right now?
See, as Anil Ji has explained, demand from the transmission, distribution, railways, road, metro rail projects. Solar projects. Solar projects, refineries, cement projects, and underground cabling projects. These are the few. Apart from this, now government is more focusing on the PLI schemes and lots of manufacturing companies are coming to India. Now government is focusing on the airports in almost in all the B class cities. These are the few indicators and few industries which is leading to the demand actually.
Okay. And how good we are working capital days in the institutional cable business?
You see, in the institutional side, now into institution it is close to 2.5 months. But while we are selling to the retail, because of channel financing it is hardly 0.5 months.
Okay, less than 15 days. Okay. In retail wiring, how do you think the demand?
In retail, as we have guided that we will grow close to 30%-35% on a full year basis. So we don't see any change for that.
Okay, okay. So we'll get some of that. Thanks a lot.
Thank you. A reminder to all the participants, anyone who wishes to ask a question may press star and one on their touchtone phone now. The next question is from the line of Nikunj Somani, an Individual Investor. Please go ahead.
Thank you for the opportunity. I need one clarification on your institutional segment, that in this segment you sell your products directly or through the channel.
Institutional side we are selling directly. It's a tender-based business. Directly to the customer? It's a high entry barrier case. Lots of approvals are required while we are selling to institutions.
Directly to the customer, either to the utility or the industry or to the EPC contractors.
Okay, thank you. Thank you.
Thank you. Anyone who wishes to ask a question may press star and one on their touch-tone phone now. The next question is from the line of Chirag Fialoke from RatnaTraya Capital. Please go ahead.
Hi. Good afternoon, sir. Thank you for taking my question, and wishing you a happy Diwali, and congratulations for a great set of numbers. Just one clarification, sir. This quarter, given the price correction in the commodity side, could you quantify what kind of inventory write-down would have happened? Or is it minimal write-down?
This is no question of inventory write-down because in the same quarter whenever price goes down, so the next month, means after the price correction, inventory gets sold, so it is automatically reflected through the sales price.
That's basically because overall we only keep two months of inventory, so within a quarter we have the overall turnover of the inventory.
Yeah. Basically it get adjusted. That's why the 0.5% margin get impacted, no?
Understood. Thank you, sir. Thank you so much.
Thank you. Wish you a happy Diwali.
Thank you. Ladies and gentlemen, that was the last question for today. I would now like to hand the conference over to the management for closing comments.
Yeah. Thank you very much for joining this conference call. I would like to wish all our investors a very happy Diwali and a very prosperous new year. If you still have any questions, you may reach out to us for any clarifications. Thank you very much for sparing your valuable time to talk to us. Thank you. Thank you very much, and wish you a happy Diwali to all.
Thank you. On behalf of Monarch Networth Capital, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Th anks.