Q2 21/22

Oct 23, 2021

Ladies and gentlemen, good day, and welcome to Orient Electric Limited 2Q FY 'twenty two Earnings Conference Call hosted by Philip Capital, India Private Limited. As a reminder, all participant lines will be in a listen only mode and there will be an opportunity for you to ask questions after the presentation concludes. Please note that this conference is being recorded. I now hand the conference over to Mr. Deepak Agarwal from PhillipCapital India Private Limited. Thank you, and over to you, sir. Thanks. Good morning, everyone. And many thanks for joining in Pornay Electric Limited Q2 FY 'twenty two Earnings Call. Today, we have with us management, Mr. Praveen Nar, Mr. Lakish Khanna, Managing Director Mr. Sabir Singh Gupta, Chief Financial Officer. We thank management for giving us the opportunity to host this call. Without taking much of time, I would like to hand over the floor to the management for their opening remarks. Post which, we will open the floor for Q and A. Thank you, sir, and over to you. Thank you, Deepak. Good morning, everyone. Thank you for attending the second earnings call of Orange Electric, and thank you, Dean Philip Capital, for organizing the call. Though situation across the country has substantially improved over the past few months, the risk continues to remain, and exercising caution is the need of the hour while we roll back to normal life. We, at Orient Electric, have resumed our normal ways of working with every possible precaution at all locations. The central COVID response team remains on high alert, monitoring the health situation every day. All eligible employees of the company are now fully vaccinated. Coming to the market scenario in quarter two. Penta demand was noticeable in the early period of the quarter as the economy recovered from second wave. General trade, large format stores and e commerce remained the dominant drivers, whereas encouraging upsells came in exports business. B2B business has also shown significant improvement with strong inquiry funnel. However, tender business continued to remain quite sluggish in the absence of risk tenders and slow paced execution of the current orders. Towards the end of the quarter, starting from September, we have witnessed tapering off of pent up demand on the consumer side sellout. We remain optimistic that sellout levels will accelerate through the festive period. Orientedly continues its journey in the fans premium category while also effectively meeting the growing bottom up dynamic demand across categories. Multiple new products have been launched in the quarter under the review with best in class features and contemporary aesthetics. A new range of switches, STELAR, has been launched in the market, powered by consumer insights and user centric features. Featuring unique anti weld technology, in built LED and a long lifespan of one lakh clicks, the product range has been receiving good traction in the market. Distribution strengthening continued and was supported by BMS and SAT to drive accelerated growth in select territories. Visibility on e commerce platform has been enhanced, and e commerce capabilities are being ramped up. Consumer lighting continued to do well and further improved the product mix towards consumer luminaire, building on the premiumization journey. Non tender B2B Lighting business has witnessed increased inquiry activity and is likely to witness execution traction from quarter three. Our Facade and Landscape Lighting business continues to grow substantially. We have recently completed Facade Lighting project at Thakra Nangal Dam and are working on illuminating Kidarnav Temple premises and Habib Ganz Railway Station in Bhopal, among some others. The commodity cost escalation trend continued unabated through the quarter. Steel, copper, aluminum and engineering plastics experienced price escalation in excess of 20% in the quarter over previous year. ICs continue to remain in short supply. Commodity price escalation has been countered through price increases and aggressive cost reduction programs. Cost saving initiatives through the Sensia program have helped to offset the steep cost increase impact by over 1% of the costs. The impact of commodities has been more severe in our ECD portfolio as compared to our Lighting and SwiftScape portfolio. To ensure supply continuity and to reduce from any supply chain disruptions due to Wave three, OEL stocked up on critical raw material and finished goods inventory, established alternate sources of raw material and developed alternate components to those in short supply. This planned strategic inventory stocking has resulted in increase in working capital, which will normalize over the next two quarters. Subsequently, the cash position underwent a change to accommodate this strategy. Lighting driver unit has been successfully installed at our lighting plant in Noida. The greenfield manufacturing project in South India is on track, with final possession of land being completed. Coming to the financials. The company posted a 37 increase in revenue with uniform growth across segments. Trends grew in line with NTT, primarily led by premium, entry level range and portable fans. Water heaters and small appliances grew by over 50% over last year and more than doubled from pre COVID financial 2020 levels. Consumer lighting grew by over 50%, aided by favorable mix, product availability and distribution expansion. Expos recorded a high growth of 50% on a suppressed base of last year. Despite the increase in commodity costs, gross margins increased sequentially by 125 bps, but have reduced by over four ninety bps compared to a high base of last year. As commodities have a significant play in ECD segment, the adverse gross margin impact in the ECD segment has been higher, whereas in Lighting and Switchgear, the margins have been stable. Employee expenses grew 16% year on year during the quarter to support higher activity levels over last year by engaging more manpower at plants, strengthening key functions, combined with salary increases over an eroded basis last year. Other expenses have grown by 32% over last year as travel, administrative expense, logistics and distribution expenses and A and P expense has resumed at normal operating levels post lockdown. But on a percent to revenue basis, they have reduced by 40 basis points. Finance costs increased by 11% year on year due to higher utilization of vendor financing that supported liquidity of all vendors, thus improving price negotiations while also maintaining strong partnerships. Amortization and digitization spend and increased capitalization have resulted in the decision increase. Effective working capital as of thirtieth September 'twenty one has increased by fourteen days from last year levels. Subsequently, the cash surplus dropped from INR77 crores to INR34 crores sequentially, mainly due to planned ramp up of inventory. Further details are available on investor release document uploaded on website. Thank you all once again for your constant support and encouragement. I wish you and your families good health. Thank you. Thank you very much. Ladies and gentlemen, we will now begin the question and answer session. First question is from the line of Ravi Swaminathan from Spark Capital. Please go ahead. Hi, sir. Good morning. Thanks for taking my question. You had mentioned that so, basically, the demand in the month of September had been slightly soft. And with that in mind and with input costs going up further, so just wanted to check with you. So how much more room is there for us to do more price revisions going forward in the second half of this year? Ravi, when I say the demand has tapered down, what I meant is the pent up demand has tapered down. Consumers continue to buy. And once again, it it reaffirms our belief that the total size of the wallet, the product categories we are in, they form a very small part of the size of wallet of any consumer. Therefore, we did not see any much of reluctance from customer in buying the product, and we are very hopeful as the season comes, the demand will again be good. It is just that the pent up demand tapered down. Okay. Got it, sir. And second half of last year was slightly on a higher base. So are we confident that we will see growth over that base, Or it will be kind of flattish, how we view that? Ravi, that we will be able to tell you only by end of quarter three. We will also see how the market responds and how the consumers respond. But yes, we remain bullish on as of now. We believe consumers are continuing to be there in the market. The buying is good. We will see by end of the quarter. Got it, sir. And it would be great if you can give a breakup of the revenue between hands, quarter liter, switch gears, lighting as a percentage term or a whole number would be great. So we we generally do not give that much of a recap. As I told you earlier to to all of you is that, basically, there are SKUs. We have operating cycles in between the quarters. So therefore, it is not advisable to look at the breakup on a quarterly basis. On an annualized basis, as you would have seen between ECD and Lighting switchgear, it is more or less a seventy-thirty, seventy-two 28, that kind of a mix step keeps continuing and lighting obviously is on a good growth footing. And on top of that, fans and appliances within the ECD, it is it again fluctuates in between 80% to 85% between fans and appliances. And lighting switchgear, it is predominantly lighting switchgear as of today is just about hardly 1% or 2%. So that kind of an equation normally prevails. But again, with a little bit of caveat, would like to say, when you see our distribution amongst the four categories, please see it on an annualized basis because of the cyclical nature of business. Mr. Swaminathan, request to join the queue for any follow-up. Also participants are requested to limit the question to two per participant. If time permits, you may join the queue for any follow-up. We have the next question from the line of Nitin Arora from Axis Mutual Fund. Just again, sorry for dwelling on the demand side. If one has to draw any confusion, I know you don't give the breakup of the fans and all, but if one has to draw a conclusion on the ECB part, can you tell us more how was the volume versus value growth? That's number one. And second, how is the channel inventory as of now? Because we keep hearing that channel is not taking much of the stock because overall mass consumption is slowing down a little bit. Just need your comment on that. So yes, in terms of volume versus value, I would put it close to fifty-fifty, although in different product segments, will behave differently. But, yes, there is a fairly significant amount of value growth also because of price increases. A lot goes towards mix. In terms of the channel inventory, I would say it's just at a healthy level. The channel inventory is neither very high nor less. Retailers have stocked well. As an organization, we are also reasonably well stocked. And as we said that we have stocked a little higher than normal because of a planned move to derisk any kind of a supply chain disruption, which could have possibly come in case of Wave three. So our inventories are at very healthy level and trade inventories are at reasonably good level. Got it. Got it. Thank you. Thank you very much. I'll come back in the queue. Thank you. Thank you. The next question is from the line of Renu Bhed from IIFL. Please go ahead. Yeah. Good morning, and thank you for the opportunity. So the first question is, while you did mention that on average, we did witness about 20% overall increase in the cost structure on a Y o Y basis. If you could help us understand what was the quantum of pricing action that we have taken till date across some of the larger categories. And given that commodity has started to look up again, do you think the customer would be willing to absorb a further price hike? If not, do you foresee risk of down trading to be seen with customers, whether they might move to a lower price SKU or a different product within the same range or different brands? So your thoughts on this would be appreciated. That's the first question. Great, thank you. First thing I would say, we're not seeing any significant down trading from the customer. That's not happening. Our product mix is fairly good in terms of all the categories, the premium, etcetera. It's fairly good. There is enough of customers coming for high end products as much as the bottom up pyramid is expanding. Both are playing equally well. In terms of will consumers take higher price increase? Well, as of now, we have been able to pass significant cost increase in the market, and the demand has not really come down. It's more a question of the competition landscape, what also is one of the drivers on how much we can pass on in the market. We will have to see how the overall competitive landscape behaves, and we will accordingly take the action. Sure. Second would be, can you and so can you quantify here what was the quantum of pricing cumulative pricing pricing action that was taken till date? That's very difficult to say. You see, we have settled whole lot of product categories. As a category, at least for that, because that was more impacted by commodity. Again, difficult. You know, what you can do is a little mathematics of how much the cost has gone up and how much the margin has come down. The difference will tell you by and large a kind of a price increase that has been passed on in the market. But there are various at some level where it is not very competition sensitive, we have been able to pass on nearly 100%. Some products which are competition sensitive, we had to hold on to the price increases. So it's all a mix. It's it's it's not possible that I can put one kind of a percentage increase across all the products that doesn't happen. Got it, sir. Secondly, if you can help us share what is what has been the kind of cumulative, say, over the last one and a half years, market share gains that we have had in some of the key categories like fans, consumer lighting? And do you perceive now with with the inflationary pressures or some supply chain disruptions, which could still be seen around, these kind of market share gains will be sustainable from a longer term perspective? Unfortunately, there is no very good and reliable data available in the market that I can talk about. However, by going by the growth that we have been seeing in many of the categories, there is definitely an increase in our market share, be it in terms of water heaters, kitchen appliances, lighting, luminers, fans, in some of the categories of fans, we have done brilliantly well. So we have gained market shares across, but there is no syndicated data which is fully reliable that I would want to quote. Thank you, Mr. Bid. Request to join the queue for any follow-up. Next question is from the line of Daval Shah from Swan Investments. Please go ahead. Hello. Yes. Thank you for Sir, questions on the price high. So typically, in such an inflationary scenario, at one point in time, what sort of price increase would be you would have taken or would be absorbed by the customer? And the frequency of the price increase you would be taking, the time gap between the different price increase? That's my first question. And the second question is to go back to, say, your last year's margin, what sort of price increase would you want to take considering the there's no further inflation in your raw material? Yes, that was a good question, but very, very loaded questions, very difficult to answer by anyone. According to me, I think customer will take the price increase. As you said, it's more a question of the competitive landscape, which allows the price increase because, you see, the dealers are carrying stocks, okay, and you can't simply go and increase the prices, okay? So so really speaking, we have been taking small, small price increases over a period of time, and these have not been onetime price increase on everything on one go. They always happen depending on the pipeline inventory, depending on how the customers are behaving in different categories at different times, you take your price increase. Okay. So in terms of how much price increase is required, once again, if you would just take the last year gross margins versus this year gross margins, you would know the combination that you have to take up to match the price margins. So that's a simple math. When you say small price increase, that would be 2%, three % or higher, lower than that? There have been times we have taken even 8% to 10% price increases at one time in some categories. Even in some categories, we have taken in small, small bits of 4%, five % at higher frequencies. I think there's good rules to this. Sure. I agree. I know. I'm just trying to understand the market reaction in terms of how much it can absorb and, you know, that I'm trying to understand. And and lastly, what would have been the minimum gap between two price increases so far in last six, eight months from the time market has started, you know, growing? By and large, we try to ensure that there is a a forty five days to two months time between two price increases, but the way the cost has been going up, there have been times that the price increases have been even a little faster. But once again, they're not being across the categories. For some products, the prices go up even in the Q. Got it. Got it. Okay. So thank you very much. I'll come back in the queue. Thank you. Our next question is from the line of Sharanjit Singh from DSP Mutual Fund. Please go ahead. Yes, good morning. Thanks for the opportunity. So my first question is you talked about that inventory levels in the channel are fairly stocked up. So if you can just talk about in terms of months of inventory and at these levels that they've already stocked up, you will see that maybe incremental stocking for the sector will not happen. And generally, from the other companies, we are getting to know that the inventory levels in the channel are much more leaner. So in terms of our strategy versus other players and even from the dealer's perspective, the propensity to stock up, how is that looking like? The market behavior will be more or less consistent across, Sharmaji, because the trader thinks alike for all the brands. It's a fact that when the price goes up and trader is stocked up, trader sometimes is a little reluctant of buying further stock at a higher price. There is definitely a kind of a hope that the prices will stabilize and they will come back to normal levels. And given that, traders don't want to always stock up unless it's very clear to the traders that, look, the cost is definitely going to continue to go up. So the kind of behavior that you said you've been hearing from other places, that behavior will be consistent across. Okay. And sir, high chain impact and, you know, while if you look at lot of companies in consumer electric cars, there has been always this hypothesis that there's not much of the, you know, imports which are involved. So can you just give us more clarity on the supply chain impact, which components you are seeing, how much of this is import related? Yeah, that'll be the second question. So we are largely dependent on all the domestic production. We are one of the largest manufacturers, as you are aware, and even what is outsourced is largely domestic. There are a few things which we all are dependent on imports. Electronics is one of them. ICs is one of the critical ones, which in India, the supplies are not available. Semiconductors is also there. So to that extent, we are dependent on imports. But there also, we don't see much of a disruption. If the planning is good, we've not faced any crisis or any disruption as of now. Well planned, can be managed because it's a small value in the total game plan. Okay. So just last question from my side on the license segment. So if you can touch upon, you know, how are the growth prospects going forward, you know, especially now b to b. B to c has done well, but b to b is still lagging behind. And when do you see that coming through? In b to b, there are two parts. One is the b to b and non tender, second is the tender part. The non tender started showing very good traction. The the funnel is growing very fast. Our order executions are happening. Sorry, can you hear me? Yes, sir. I can hear you now. We can hear you now. Please go ahead. Yes, sir. In Tenther, there has been a slowdown, but we do expect that, that will also come in place because government spending has to continue because they're all infrastructure based investments, and those investments will continue. I think for some time, government has been more focused on fighting COVID. And as that goes behind us, the focus will again get more into infrastructure development, and this tenders will also start. Thanks for taking my questions. That's all from me. You. Thank you. The next question is from the line of Paragol Putadir from Kotak. Congrats for a good set of performance. So my first question is on our accounting financing book, So out of our receivables of about INR $2.92 odd crores, how much would be sort of now, how do you think from the current financing front? Sorry, Farooq, can you repeat the question once again, please? So how big would be our channel financing book now for ORION? The channel financing now is at the current levels of about 35% to 40% of the trade receivables, the domestic receivables. Okay. So is it fair to say around INR 80 crores to INR hundred odd crores would be the book, right? Roughly, you can assume, yes, more or less estimated around that level. But just be mindful of the fact this is dependent on the volume scaling up and down, Not 100% of distributors are covered under this. So therefore, a good amount comes through the volume. So as and when we scale up maybe in H2, these ratios will also go up. So just to understand the trajectory, I mean, in the next two to three years, is there any plan to ramp it up to maybe 50%, fifty five %? And as that happens, can our receivables base further go down? Yes, absolutely. We are definitely aiming towards getting at a 50% mark by close of this year, hopefully, if the volumes and the distributors have already been onboarded. So we are expecting that, yes, directionally, that is what we are aiming for. And all this is non vehicles, right? Yes. The second question is that earlier, Orient was primarily known as a finance company, but no longer now with great acceptance seen on the appliances and the lighting side. Switchgear, obviously, is one of the products which sort of remains still very small as compared to our peers. Obviously, in the presentation, we did read that we are looking at offering our programs and other programs. So is it fair to say that over the next two to three years, the missing leg of switch gears will also sort of be accepting as we extend them our inclusive program. Obviously, our product portfolio and pricing seems to be very attractive. It was just a marketing push which was a bit lagging. So what are your thoughts on that, sir? So Switchgear, definitely, we believe that it's a very healthy product portfolio for us, and it has a lot of potential. We will ensure that Switchgear becomes an important part of the portfolio. Any broad guidance on that front? What size are you looking at? Or as a percentage of overall revenue, can it be double digit or any broad sense? Difficult to come to that. No. We don't normally give any kind of a future guidance. But all I can say is that Switchgear is important. We believe it has a huge potential. It's a profitable product, and we will ensure that it becomes a healthy part of our portfolio. And we'll go after marketing spending, right, on the product, meaning obviously that will be the precursor to being a successful. So, Bhagav, let let me put this way. We are already spending marketing money on the switchgear. Are we spending disproportionately high? The answer is no. Okay? Yeah. Yeah. That's good. Because Because in marketing, what's important is when we spend money on marketing, we also have to ensure that the product is available, product the distribution is adequate, etcetera. Currently, is more focused marketing, which is BTL influencing, training, giving lot of training and spreading awareness on the benefits of the product to the trade, to the electricians, to the contractors. That's where the marketing money is going. Thank you. Mr. Buthadeh, we request to join the queue for any follow-up. We have a next question from the line of Rahul from Haitong. Please go ahead. Yeah. Hi. Good morning. Sir, following up on an earlier question, you know, which was pressing on the import aspect. You I want to understand, you know, while you may not have a very substantial part of direct imports, lot of your vendors whom you basically outsource things from. So you would have a lot of second level imports. Do you have some sense on what is that in the overall scheme of things? That is the one part. The continue to that, even though there was a container shortage that a lot of companies are facing. So I wanted to understand from you how are container shortage issues with you all now? So that's the first question. So Rahul, yes, when I spoke about the electronic components, be it the semiconductor or ICs, I meant it is the first level or the second level both combined. Beyond that, there is not much of dependence on imported products. Now if you can say what part of imported steel comes to us, that's a little mixed bag, very difficult to isolate each one of them. But largely, we are dependent on the domestic supplies. In terms of containers, yes, we all know containers has been an issue, and we do face difficulty in containers. There are delays in terms of our exports. But I think, by and large, we are learning to liquidate and plan a little better so that the delay in containers doesn't affect us much. There are cost increases, but but that's all built into the total cost. Okay. I think that is very interesting. The second question I've got is, you know, on the price increases that you talked about. What I want to understand is, you know, I mean, while all companies have taken, you know, staggered price increases over the past several months, but I think even the discounting aspect has increased. It basically means, you know, a lot of cost is basically borne by the company. So I wanna understand, you know, if if there is any way you could tell us, you know, how this funding has changed over the past, say, six months or so, you know, so we actually can get a sense of, you know, the impact that will come on the profitability. So, Rahul, I don't know have I understood your question completely. The discounting is a part of pricing. Now one can take the price up by changing the billing price or one can take the price up by reducing the discounting. These are various ways of managing the pricing. So actually speaking, there has been a cost increase, which we all know to the level that it has been. And there is a pressure on the margin, which we also can see what pressure. And there is a difference that there is a lag in terms of ability to pass on the entire cost increase immediately to the market. But as I said earlier also, by and large, we have been able to pass on the cost increases to the market. Market is able to accept these price increases because the kind of space we are operating in, the cost is not a very big part of the wallet size of a customer. So customers are able to accept the price increases. Have you answered your question? I don't know. No. Yeah. I mean, partly, yes. But, you know, what I was actually trying to understand was, you know, I understand the discounting and pricing fees aspect. You know, but when things have been slow in terms of pricing and all those kind of things, know, that goods are not moving very fast. I think additional schemes or incentive, that is essentially what I was trying to refer to. So have you had to significantly step up those kind of, you know, cost, basically, of incentives and, you know, quick higher discounting and all? That is what I was referring to. No. Not really, Rahul. No. No. There has been no such kind of very significant changes that I can talk about. Okay. Think that's it from my side. Thank you. Thank you. The next question is from the line of Srinivi Kandhikar from HSBC. Please go ahead. Yeah. Hi. Thank you for the opportunity, and congratulations on good set of numbers. Sir, I just want to know, was there any noticeable divergence in revenue growth across regions for you? Sandeep. Thank you. Yes, different regions have do perform differently, and there are seasonality trends. There are other trends. For example, there are some places which which suffered floods, etcetera. They did not do as well. Some some other places which were prospering and doing well and not much of COVID issue, they they did much better. So, yes, there were there were different there are differences, but by and large, it was consistent across the country that you saw the growth. Okay. And, sir, there seems like a good acceleration in consumer lighting of the portfolio. So what according to you has driven that? And sir, is it possible to like the way you bifurcated ACD revenue growth, like 50% volume, ballpark 50% price and mix, would it be possible to share similar number for lighting as well? Yes, sure. In lighting, the material cost increase has not been very high. And therefore, the price increase is substantially because of the growth in volumes and largely it is a mix. Consumer luminaires has grown a lot more and consumer luminaires average price is much higher. So it's also a reflection of the consumer behavior change, the consumption pattern of consumer. Consumers are more indulgent in now lighting, and they tend to go for more luminous rather than simply better than bulk. So those are the reasons why we are able to see significant growth. And a lot is led by distribution expansion, new product introductions, range expansion in luminars. All of them have been responsible for improvement in lighting. Great, sir. And just one more, if I may. Sir, if you compare our portfolio of consumer lighting versus large two companies, and how is it different on the professional lighting part? As in I want to understand, are there any product gaps that need to be filled, particularly on the professional luminaire side? Definitely, there is still a gap, and we are still small when it comes to professional luminaires. I'm not talking about the tender based professional luminers, street lights, etcetera. There, we are equally good, and we have in some of the cases, I think we are even faster than our leading competitors. But in terms of other B2B professional lighting, the range is much smaller because our size is smaller. And the range has to be in line with the business size. We are more focused on the important categories, fast moving categories as of now, but we are adding very, very fast. There is no other betterment or restriction for us to increase the range. It is just the size of the business at the speed at which we can expand to accommodate the range expansion. So we are on that journey. The range expansion will happen as the business continues to kick off. Thank you, Mr. Kartikar. Request to join the queue for any follow-up. We have the next question from the line of Keur Harishvandhya from ICIC Potential Life Insurance. Please go ahead. Thanks for the opportunity. Congratulations for the team for good results. Sir, first question on the exports. This time, you have mentioned about the strong export. Even before COVID, there were some solutions in exports. So anything which we need to know and what has changed in export? Or is this a normalization of demand on the export front? In export, of course, there have been difficulties, as you know, internationally in terms of logistics, in terms of supply chain. So definitely, are some opportunities where we are able to respond faster. We are able to gain some of those opportunities. And to some extent, the market's coming back to the pre COVID levels that's helping us, so on both sides. Sir, second question on the cost front. Probably, I mean, in the last five or six quarters, this would be more normalized quarter than the earlier one. So when the cost have normalized or anything which is yet to come back from precordial. So this is bearing some of the structural cost changes that we have done. Just to understand where are the current cost levels, what is normalized cost structures, which we expect? Yes, very good question. I think most of the costs are normalized now. There'll be very little more that should come up. But by and large, we're completely operational now. All the kind of costs that should be there are already there now. So it's fairly normalized structure as of now. Okay. Understood, sir. Sir, thanks a lot. All the very best. We'll get back in the queue. Thank you. Thank you. You. We have the next question from the line of Achal Rohade from JM Financial. My first question is you said that the channel has stocked up. So were you referring to the channel for us or the industry aggregate level as well? Hi, sir. Thank you. Good question. When I said channel, I meant the complete channel. Aggregate level. Aggregate level only. Okay. Understood. The second question I had was with respect to the distribution, is it possible to give us a broad sense in terms of what is the penetration level we have in terms of dealer, the retailer count? And what's the thought process there on next three to five years? Actually, in terms of the distribution, let me say there are two parts of distribution, the visible and the not visible. Okay? The visible is what is visible to us, what we are directly handling, managing and influencing. The not visible is the next level of distribution where the product goes because there is a consumer demand and there is an established, old established product distribution system, which we do not directly influence. We do influence, but indirectly we influence. If I look at the total distribution of the penetration, sufficient number of reports that we have, a lot of them are not very immediate. They are one year, two years old reports. But the distribution of OEM products is in the range of 125,000 plus retail outlets. Although we directly do not influence all of them, we are working on improving our own distribution. So that's a separate number. I would not want to talk on that number. But there, what we are addressing is a large part is the quality of distribution. We are working on our store presence. We are working on our market shares. We are working on training, education, service levels, etcetera. So these are two separate things. You. Mr. Varadiv, please request to join the queue for any follow-up. The next question is from the line of Vipirajesh from Bannen Capital. I'm sorry. Yes, please go ahead. Yes. Hi. Thanks for the opportunity. Just two questions, Mr. Kumar. If you can just talk about the price CTG you have taken here and the corresponding increase in the raw material that you have seen for the year till September 30? Price increase in the corresponding? In last month, even, roughly across your product portfolio, what is the expected increase in price you have done in the market? Can you reframe your question, please? Sorry, we were unable to follow that question properly. Okay. Yes. Let's see, earlier in last year, was like a September, your revenue was INR100 million. Given the price increases that you have taken, what impact in September this year? It's a little difficult to answer an average to average price increase. I think we'll have to do a little mathematics to give you an answer. Essentially, if we understand that our cost increases have been in the range of 20%, you can take the margin depression and that's the difference which has been passed on in the market in terms of price increase. Okay, got it. That's very helpful. Second question is you called out some of the compound projects that have received for sales. So I was just curious what is the size of the size of these kind of projects that you are seeing in Central or in Mogad, Mandal Dam, etcetera? In Prasad Lighting? Yes. Okay. The Prasad Lighting projects, what do you want to know? You want to know what is the average size of the project? Yeah. So for us, the revenue that is coming up from this type of project, which are sort of market projects for you. Okay. Okay. Okay. So currently, revenue size is not very large. They would be in the range of anywhere INR 1.5 crores to INR 3.5 or 4 crores. That's the kind of range they will come in. What's important about Facade is it's a different it's a different skill set. And Facade is growing, and it provides a lot of visibility, and we're glad that we are progressing well in that direction. Thank you. Our next question is from the line of Praveen Sahai from Edelweiss Financial. Please go ahead. Yes. Thank you for taking my question. So the only question I have is how much of a saving as a percentage have you achieved from the Sanjay program, which you are running? And how much of further room for improvement or saving percentage increase is going to happen? If you can give some color on that. So let me say, Sanjay is one of the cost saving program, which is focused on largely focused on the manufacturing efficiencies, etcetera. And through Sunshade, we have as we said that nearly 1% of the cost is what we have been able to realize. It will be in similar range. It will be a little higher, but there are other cost saving initiatives that we are taking in terms of reengineering, redesigning completely. So those are over and above. Hi. Is it question and answer? Yeah. So can you quantify, like, a a segment wise? Like, any color on that? Like, as you heard a mention that one part is of the manufacturing. So another how much you are like 1% as you achieve, how much in the other segments you can achieve? Is it possible to quantify that? Difficult to answer this question. As I said, in Sanjay, we can talk that we're currently at 1%, and we should be looking at higher than this in the by end of the year. But the rest of it, how much is coming because of reengineering and completely redesigning will be a little difficult to state. Okay. Thank you, sir. Thank you. Our next question is from the line of Ashish Pohdar from Systematics Institutional Equities. Please go ahead. Yes. Thank you, Orient team for a great set of results, especially on the top line. My question is more on the competition. So just wanted to know how are the small business players reacting to the current inflationary environment? Are they really cutting on the price and that is forcing large players not to take reasonable or inadequate price, right? And how are the organized players also behaving in the current scenario? Because when we hear from large organized players, everybody says that they have gained market share, then who is actually losing market share. So my question is that. And on the CapEx side, how is that running in the cloud? Thank you. Yeah. You are right, actually. A lot of lot of players, the smaller players have found difficult, and therefore, a lot of organized players do say that they have gained market shares. Yes. But we're not seeing any major retaliation from any of the smaller players. Please understand it's very difficult for them to retaliate with any price aggression because the costs that are going up are actually going up for all. And it is for the it is towards the advantage of more organized players that they can plan well, they can leverage their balance sheets and ensure that they are able to control the cost better than others. Where the smaller players are finding difficult is in terms of ability to control the cost and maintain their cash flows. So we're not seeing any aggression from the smaller players as of now. CapEx side? Sorry? The CapEx program. Yes. CapEx program, as far as the normal CapEx is concerned, as we normally do every year, generally, it is at an average of INR 40 crores a year in the normal CapEx. This year, we will be probably in the region of INR 60 crores because we have done some onetime CapExes and includes the Hyderabad land also, which we have firmed up in the last quarter. So we are seeing it an estimated at around INR 60 crores, INR 60 5 crores by the end of the year. About half of it is already spent by now. As far as the Hyderabad part is concerned, it is absolutely live and active. We have got possession of the land, and we will be kicking off the project on the ground in another three months or so, maybe early next quarter. And when is it expected to commission? Around Q4 of FY 'twenty three. Thank you so much and all the very best. Thank you. Next question is from the line of Tawar Shah from Swan Investments. Please go ahead. Sir. Sir, when was the last price increase taken? Devil, normally, as was mentioned, we do it on a staggered basis normally. And it is not across the board. It is category dependent. It is SKU dependent. So it is spread over a period of time. It may happen in bits and pieces in one or two months also, but it is not staggered. It's not when price increases are taken. It's not that across the board for all product lines of a particular business. So therefore, price increases keep on happening for the categories, and it's spread across over a period of time. Okay. So maybe for the last part of your category, if possible, if you can share when was the last price increase? For example, likely, we had taken early part, we did not take in this quarter. The end of the last quarter, we took which rolled over to me this quarter. Some part of fans was taken in very early part of the last quarter. So that's how that's what I'm trying to say. Got it. Got it. It. It. Okay, sir. Thank you, Ed. Thank you. We have the next question from the line of Rahul Agarwal from Inquired Capital. Go ahead. Sir, if I understand correctly, the commentary is basically you're doing better in premium as well as entry level products. Broadly, the question is on margins. Going ahead in second half of this year, obviously, the base is unfavorable, right? In last year, second half was very strong because of pent up demand in India opening up. Would you foresee that second half, basically go back to your average yearly margins of 10.5% to 11% in second half? How does the premium and entry level mix of products impact the overall company margins? Rahul, let me first tell you that it is not a given rule that premium will have higher margin and economy will have lower margin. That's not the rule. There would be many premium products where the margin can be lower and there can be many entry price point where the margin can be very good. Having said that, last year, our margins were very high, not for us, but for the industry, essentially because that the commodities had softened so much, and there was an advantage that we had. And this time, it is like the commodities are really going very, very fast upwards, and that's what is hitting the margins. These commodities are likely to correct in some time. It's as of now, everything is under demand shock and some other related kind of shocks. The commodities should correct. Whenever they correct, we will see an upswing in the margins. When that happens, I have very little visibility. But logic says that, that should happen. And how has been your start to the festive season in terms of ECTs, appliances and how has that been in October? We remain optimistic. We remain optimistic. Right. Okay. Thank you so much. All the best. Thank you so much, Rahul. Thank you. Thank you. Ladies and gentlemen, that would be our last question for today. I now hand the conference over to Mr. Deepak Agarwal for closing comments. Thank you and over to you Deepak. Thanks everyone for joining this call and thanks a lot management for giving us a positive business call. Manu, any closing remarks that you need to make? Thanks. Thank you, Deepak, and thanks to you and thanks to entire TeleCapital team for organizing this event. And thanks once again to all participants who have spent their time joining us. I would just say that I wish all of you good health with the, I think, is behind us. Festive season is coming. I wish you all the best, very, very happy and blessed festive season. I do look forward to good times ahead. Thank you all very much. Thank you very much. Ladies and gentlemen, on behalf of Philip Capital India Private Limited, that concludes this conference. Thank you all for joining us, and you may now disconnect your lines.