Ladies and gentlemen, good day and welcome to Havells India Limited Q2 FY 2027 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 touchtone phone. Please note, this conference is being recorded. I now hand the conference over to Mr. Tanay Shah from DAM Capital Advisors Limited. Thank you, and over to you, sir.
Thank you, Nazneen. Good afternoon, everyone, and welcome to Havells Q2 FY 2027 earnings conference call. Today we have the management with us being represented by Mr. Anil Rai Gupta, Chairman and Managing Director, Mr. Rajesh Kumar Gupta, Whole-time Director and Group CFO, Mr. Ameet Kumar Gupta, 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, Tanay. 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 Switchgears, 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 raw material 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 the strong base last year. For H1, cables contribution margins were approximately 15%, broadly in line with the long-term average.
In rest of the portfolio, margins held up well, supported by pricing actions that helped offset raw material inflation. 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%. PBT 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 margins. 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 one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Natasha Jain from PhillipCapital. Please go ahead.
Thank you for the opportunity. My first question is on Switchgears segment. The growth has been quite strong. Could you break it down in terms of what is the spillover impact of quarter one orders here, and how much pricing growth we have taken here?
There's not much of quarter one, I would say, spillover, because as you would realize, that our major business comes from residential switchgear, which is not really order input based, in terms of long-term orders. 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 raw material 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.
I think overall, volume growth has also been healthy, closer to double digits, because switchgear value growth is not the same as cables and wires . So switchgear volume growth has also been healthy.
Understood, sir. 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 Switchgears margins?
I think Switchgears margins are actually coming back to normalized levels, which always used to remain between 38 and 40. We had seen some reduction in the last year due to sharp raw material volatility. As we had maintained that we will be taking pricing actions as the markets stabilize. So that has now started coming to our 38%, 39% contribution margins. Having said that, we do see raw material challenges even in the second quarter, for which certain more actions are being taken in the third quarter as well.
Understood, sir. That's helpful. My second question is on Lloyd. If I see the top-line growth, that's been quite strong. Margin, while you've mentioned there has been under absorption. 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 Havells segment. Also, I had mentioned in my previous calls that we've taken some distribution actions, which are now settling down. So volume growth has started coming back in both Havells as well as Lloyd. 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. 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. Got it. Sir, one last question on renewables. The scale-up has been quite healthy in this segment. Just from a very long-term perspective-
Sorry, can you repeat? Sorry.
Yeah. Sir, in renewable segment, the scale-up has been very healthy, both in terms of top line as well as margins. 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. 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. 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 retail business.
Understood, sir. Thank you so much, and wishing you all a happy Diwali.
Thank you. Next question is from the line of Sameer 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 wires, just wanted to basically understand the thought process here. Two new competitors have recently entered. One is Crompton, one is Ultravolt. While I understand it is still early days from their entry perspective, just wanted to understand the strategy of Havells to tackle here. Will the immediate priority be to maintain shelf space or kind of protect profitability or a balance between the two? 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 will be the first question, sir.
I guess, I think wires is a very interesting category because, as we all know, over the last few years, this industry had limited amount of unorganized sector. It was reducing, but over the last couple of years, unorganized sector has started increasing because of the high inflationary trends in the market. I do believe always when there is more organized players who come into an industry where there is unorganized players, 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. I guess, this is where 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, maybe a slight compromise on the contribution margins or profitability.
I think these are all, I would say, generally speculative things that we are discussing here right now. We just have to see how competition pans out in the market, how trade channel behaves to that or looks at them. Because it is not just the consumer, direct-to-consumer business, it is also a lot based on trade relationships, building a network, influencer management as well. I think right now, early days. We are very hopeful that the kind of growth, it is after some time that we started getting industry-leading growth in this wires business. We will continue to strive to improve market share in this business.
Got it, sir. Any initial signs of the competition? Is it a more pricing strategy that they have employed in the initial part of their strategy, or it is still very early days?
You see, I think as far as you mentioned, one competitor, Crompton, it is 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 channels. So it seems more like a strategy like that. But the other competition which have put in investments and wanting to build it as a long-term business, I would treat them with more respect as well as I would say that is a good thing for the industry.
Got it, sir. That is 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 this, what would be Havells' basic right to win in this segment? And any targets that you are working with, that today this is clocking around INR 300 crores on a quarter basis, but this is where we want to take it up to by FY 2029, let us say. Just also wanted to understand versus the larger players like a Tata Power or a Waaree or an Adani who are more integrated in the transmission and distribution chain, what would be Havells' positioning and right to win?
I think the Havells positioning is very clear. We are not looking at the large players who are manufacturers 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 us say, solar panels, but it is fully integrated as a kit and the channel supplies it to either to an industrial or a residential consumer.
Got it, sir. And currently, we are not doing any manufacturing in this part of the business, right?
As you know, we have tied up with Goldi Solar, so a lot of manufacturing is done by them for Havells.
Got it. But in our entity in the Havells business, this margin is still more of a trading margin, right?
As I said, trading is considered when you just buy and sell. Basically, it is our own technology development of the complete product kit, and then using our brand and channels. You can say whenever there is an outsourced manufacturing, I do not know whether it is just a trading margin, but there is brand and channel play in that.
Got it, sir. This is helpful. Just last follow-up here. Basically, we do understand that overall industry has a lot of players who are entering, who are just trading here. If, let us 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 will come back in with you for follow-ups.
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 Switchgears segment. I just want to understand how you are looking at the revenue build-up from a slightly 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? What proportion of this revenue growth is likely to have come from exports?
Just looking at the numbers, but the export percentage to the overall thing is about 15%. I think after some quarters, both volume and value mix, there is decent traction. I think it is also related with some market share gains as well. Hopefully, a positive trend should continue in the coming quarters as well.
Sure. Sir, my related question was also on the point that you earlier referred about Switchgears, that in the past when we had taken some price increases, there was maybe some channel de-stocking or some back on demand. Now, just a bit intrigued with this phenomena. Given that in cables and wires 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. First of all, I didn't say there is de-stocking in the first quarter. There was delayed price movement by some competition. See, industry to industry, it varies. Sometimes certain industries which have not really seen sharp increases in the raw material 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 downwards. 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.
Understood. That's helpful, sir. Thank you.
Thank you. Next question is from the line of Sonali from Jefferies India. Please go ahead.
Sir, thank you for the opportunity. My first question is, you did talk about calibrated price hikes, and it is showing in our operating margin being held at the current level as well. Could you let us know which categories took average how much price hikes?
See, across the board, we've seen varying between 10%-25%. It depends on the period also. In cables and wires, if over last one year we've seen more than 30% price hikes, but in certain categories it's about 10%-15%.
That would be in the last two quarters or YTD?
No, I'm saying over 12 months.
Over the past 12 months. Got it, sir. Secondly, in terms of volume versus value mix, you did mention that in Switchgears it is double-digit volume growth, which by the way, congratulations for that. In the cables and wires, as we understand, it is largely commodity-led, but, if you could let us know the volume growth, that would be helpful.
The volume growth overall, if you see cables and wires, it is about very close to double digits.
Okay. Good to hear that, sir. In terms of Lloyd, have we retained market share and any color on the A&P spends, also the channel inventory, across the products, especially the air conditioners, since we are getting into the festive season.
I think for market share, this is probably not the best quarter because our major 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 the whole year. First quarter, we pulled in a lot of advertising spends, and second quarter has been more in line with our budgeted spends. Any other question on Lloyd? Sorry.
Sir, channel inventory.
As far as channel inventory, again, in the second quarter usually, even if there is 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 will 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?
No, 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 is the time when we have seen sharp raw material price increases. So it could range between, product to product, 5%-7%.
Got it. Sir, just last question from my end. On the CapEx, are we retaining our estimate of about INR 14 billion CapEx in FY 2027, largely for C&W?
Cables and wires, R&D centers.
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 Pawan Kumar from Global Conscient Research. Please go ahead.
Thank you for the opportunity, sir. Sir, my first question is on the cable business. The contribution margin have declined by around 350 basis points year on year . I understand that there has been some volatility in aluminum prices, but could you help us understand what measures you are taking to improve this? Also, how should we look at the margin trajectory over the coming quarters? Is there any possibility to cover the cable margin to last year's level?
I think I have 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 have said in the first half we have retained 15%, which usually is the normal contribution margins overall with the product mix that we have between 15%, 15.5%.
Okay, sir. Sir, my next question is on the margins. I understand that you do not provide 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, we have always given general views on the trends of margins of various businesses. Now, it also depends upon the growth of various businesses that we achieve. But usually, our 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.
Okay, sir. And sir, my last question is on the Lloyd business. The segment continues to face some profitability challenges. Could you help us to understand what steps we are taking to improve its margins and reduce its losses? Also by when we can expect the segment to turn profitable? Any broader timeline if you can give will be very helpful.
See, I have always maintained that in Lloyd, we will continue to build out the brand and distribution channel, which is an ongoing process. 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 we would like to avoid.
Okay, sir. Thank you so much, sir. I wish you a very happy Diwali.
Thank you. Next question is from the line of Saurabh Jain from Sequent Investment. Please go ahead.
First of all, sir, congratulations on good set of numbers. My question is, what is your revenue guidance for FY 2027? Secondly, you mentioned that you hiked your price around 10%-12%.
I am 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, what is your revenue guidance for FY 2027? Secondly, you already said that you raised your price around 10%-12%, so it is Y on Y then or it is quarter- on- quarter rise price.
We do not give any revenue guidance for the year.
Yeah.
I've not understood your second question, sorry. The voice was not audible at all.
I will join the queue again.
Thank you.
Thank you. Next question is from the line of Achal Lohade from Nuvama Institutional Equities. Please go ahead.
Yeah. Good evening, sir. Thank you for the opportunity. Sir, two questions first. You mentioned about the sales and distribution rejig in Lloyd as well as the Havells business. If you could elaborate a little bit as to what kind of changes, and has that got stabilized or is there any further impact you are seeing? Is there anything left as well in terms of the certain changes? If you could help us understand that would be great, sir.
I think last year I had mentioned that, starting October in Lloyd, in January in Havells, we have moved towards the distribution system where it is more pull-led rather than push-led. Basically what it means is that we are not using pricing or schemes to push product into the trade channel. We want more and more consumers to buy the products from the channel. I think, I had 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 is more pull-led rather than push-led.
That is on the distribution. But in terms of the personnel side, there are certain changes which are done. If you could call out 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 rejigging the management teams and what we announced in the start of the year is a part of every three to four years. It is more like people development process. People handling different parts of the businesses to be ready for taking bigger responsibilities and different challenges. I do believe that it is a very regular thing, nothing major, which has happened in this particular year.
Got it. The second question I have with respect to the cables and wires space. In terms of the CapEx for last couple of years, we have seen that larger amount got allocated to cables and wires segment and particularly cables. So wanted to understand where are we in terms of the product portfolio as well as the distribution on the cables front, given it is more B2B, given it is more tender oriented. 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
If you look at the underground cable business, few things. One, we have maintained that we were a bit delayed in terms of CapEx, which we have caught up in the last couple of years. This is a business where there is huge opportunity for growth as well with more customer segments opening up. We do believe that in the overall, not only Indian market, but export markets also, there is a decent traction for cables in the next five, seven years. So we will continue to invest in this business. 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 in underground cable as well.
Just a follow-up, and that is my last question, sir. Within cables, is it fair to say that in terms of competitive intensity, it will be much higher in case of LV compared to the medium voltage and the higher voltage cable? In terms of our portfolio, will it be more of LV or it will be
In the last 20 years or so, LV has always been more competitive as compared to medium voltage and high voltage, and that will continue to remain in the future as well.
In terms of our mix, would it be possible to call out what would be the mix of LV cables within cables?
The recent capacity expansions in Havells has been more towards medium voltage and high voltage.
Got it. Great, sir. Thank you and wish you all the best.
Thank you.
Thank you. Next question is from the line of Karan Gupta from Asit C. Mehta Investments. Please go ahead.
Hi. My question will be on the cable side. Looking at the comparison in those spheres, the cable side margins are more impacted on half yearly basis. What is our product mix or category mix in terms of cables? Are we more on the aluminum side of the cables or what?
Yeah. If you look at cables, we are more aluminum heavy because still almost 80%-90% of our sales come from Indian markets, which is more aluminum heavy. Yes, we are more aluminum heavy on the cables business.
Okay. Going forward on the aluminum, what's the growth you are expecting, and normalized level of margins you are expecting on the cable side?
I mentioned just before you, I mentioned to the other person also, that the overall underground cables business, we're 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'll continue to expect good growth. We are not the leading people in terms of margins in the cables business. As I said, we maintain certain quality standards, and it's a bit more commoditized, hence our focus has always been on more consumer-oriented wires business. 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 cable business as well.
Okay. 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. And we have enough capacities for low voltage.
That is copper cables, right?
Everything is aluminum.
Everything is aluminum. You are seeing a good growth prospect in the aluminum cable side also.
I would like it to be restricted to two questions per person.
Yeah, I know. Thank you.
Thank you. Next question is from the line of Nikhil S from Lister Ventures. Please go ahead.
Hi, good evening. I have my queries regarding the Lloyd consumer segment. Wherein, we can see the revenue has almost come halfway down from around INR 1,460 crore in the last quarter to around INR 650 crore right now. May I know, is the shift 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 El Niño news and other things, the summer is still in place in almost most parts of the country. 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. 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. 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. When we are looking at growth, you have to see growth over a quarter on, Y on Y, rather than quarter- on- quarter. This trend which you are seeing is a bit less pronounced last year because we had a very bad April, May, June. Otherwise, generally, this has been a trend. It happens so in the second quarter, that 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, and raw material continued to increase, and it took some more time for the industry to pass on the price increases.
May I know what are the measures taken to tackle that inflation? Any aggressive measures from the company's end?
No, I think one is obviously always efficiencies towards costs in both in factories as well as overheads. But otherwise, certain costs have to be passed on, which have to be tackled through 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 one 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. I think that question was about cable only. The question was specifically about cable.
I know. Yeah, I just want to clarify that. Sir, secondly
Wires business is entirely copper.
Copper. Right. Sir, secondly, this restructuring which you spoke about in terms of distribution and making it a pull product rather than push product. So in terms of consumer excitement around the brand, is it mostly advertising spend or there is something else that we are doing to create consumer?
There are a lot of things about consumer promotions continue to happen, extended warranties and all that. I am 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 systems.
Okay. Sir, lastly, just from a margin point of view, given last few days, commodities have come off. Assuming that is where commodity stays, it is safe to assume that worst in terms of Q2 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 Q3 as well from margin standpoint, especially for aluminum.
Right now, we are not anticipating any reduction in pricing, because some abatement which has happened, that has always been there every month, every quarter. At this moment, it is difficult to say whether we are seeing any downtrend.
Right. Okay. Got it, sir. Thank you so much.
Thank you. Next question is from the line of Janakiraman Rangaraju from Franklin Mutual Fund. Please go ahead.
Good evening, Mr. Gupta. A few medium-term related question. One is that you spend a reasonable amount on R&D. You also have sizable teams in Delhi and Bangalore. What are the goals that you have set for the R&D function? As a manager, how would you assess the effectiveness of this R&D spend?
I think 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. 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, 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. That 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 cropping up, especially in the electronic space, and that too, especially in the area of import substitution. 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. However, still, 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, this is likely-
I am 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. Janakiraman.
Just give me a moment, sir.
Mr. Janakiraman, are you on the call?
Sir, he left the queue.
Okay, thank you.
Next question is from the line of Umang Mehta from Kotak Securities. Please go ahead.
Hi, sir. Thanks for the opportunity. Sir, would it be possible to call out the growth in cables separately? Within the cables division, how much was growth in cables? Any status update on your expansion plans? I believe you have three kind of phases going on. So how is that kind of coming along?
I think the expansion is pretty much on our line, that what we had pointed out. I think in next 18 months, the full expansion will be on stream. 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. Cables growth, possible to share how much was it this quarter?
Which growth?
Within cables and wires, how much was cables?
We do not give separately. All we can say, we have just indicated that the overall volume growth was close to [audio distortion].
Got it. Secondly, similarly on Lloyd, the refrigerator factory got commissioned in March. Any benefit have you seen in terms of pickup in that line? What is the capacity utilization right now? How are we looking at the non-RAC businesses within Lloyd?
Ref growth has been pretty decent. I think that has contributed well to the volume growth, because as you rightly said, before we didn't have our own factory. I think the season will be coming up next year because it has only got fully on stream in the last couple of months. I think RAC continues to be the large part of the business, close to almost 75%. Hopefully, over a period of time, we want to bring it to around 60% with growth in the non-RAC products.
Sure. Got it, sir. Thank you so much, and all the best.
Thanks a lot.
Thank you. This will be the last question for today from the line of Rahul Agarwal from Ikigai Asset. Please go ahead.
Yeah. Hi. Thank you so much. Good evening. Just one question. Sir, when I look at the overall companies more from a top-down perspective, Havells have been known for 25% plus kind of ROCE 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 range to work with? When do you expect Havells to come back to that 25% plus ROCE number? Just your thought on how do you look at capital allocation. Thank you.
See, if you look currently, 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 ratios. I think our existing assets also should start delivering more.
This has been the case because Havells has always been expanding in newer categories, and those categories are supported by the pretty decent ROCE from the existing categories. 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. Yes, I think overall, we are pretty comfortable having an ROCE is in fact higher than what has been our long-term average.
Sir, just to follow up on this, all incremental business which we see right now, renewables is something which is ramping up. Maybe some new categories is what Havells will try and explore going forward. Apart from that, I think we are seeing similar existing business which is growing further. I mean, lighting, cables, Switchgears have been all there since long time. Incrementally, every rupee which you invest, are you working with a higher ROCE threshold or how is the thought process?
No, thought process is similar, but all you have to appreciate that it takes time. It doesn't start from day one. That's the only difference. That's why we bank upon, somebody asked about renewable, are you comparing yourself with the large players? Somebody mentioned Adani or somebody mentioned Waaree.
That's not our model. That's not what we are doing. We are not looking gigawatts here. You see, we are looking at what is relevant for the consumer, because ultimately, when you have a distribution channel, you have to sweat it more. The biggest asset in this company which is not captured in capital is the brand and distribution. So when you sweat it more, definitely you will create more return on capital. So anything we start, we always want to improve on where we are today. Yes, on that, but it takes time, which I'm sure you will also appreciate. You're not expecting this to happen from the first hour we invest the money.
No, absolutely. This entire-
This has been proven. Otherwise, how will you hold even you talked about you are not having 25%, but we are 23%. We are not like miles apart.
Right. This is going to come more from sweating of assets and lesser so from margins. Because margins have been discussed quite a bit. I think that's more competition. Every quarter it keeps on changing. It should come more from sweating of assets rather than margins.
It will come from both. Because 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. I think this is a philosophy. Sometimes we 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 sweat the assets more. Both has 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 you and your loved ones.
Have a great festive season. Thank you. 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. Ladies and gentlemen, the management's line has been disconnected. Please hold till we reconnect. Tanay, would you like to give the closing comments?
Yes. Thank you so much to the management for giving us the 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.