Q4 20/21

Jun 7, 2021

Ladies and gentlemen, good day and welcome to Polycab India's Q4 FY 'twenty one Earnings Conference Call. 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. We would like to remind you that certain statements made by the management in today's presentation may be forward looking statements. These forward looking statements reflect management's best judgment and analysis as of today. Actual Please refer to Safe Harbor disclosure in the presentation. Please note that this conference is being recorded. I now hand the conference over to Mr. Gandhav Tongya. Thank you and over to you, sir. Thank you, operator, and a very good afternoon, everyone. I hope you all are staying healthy and safe I'm Gander Tongyam, CFO at Polycab India Limited. We are very happy to have you on the call today to discuss our Q4 fiscal 2021 business performance. I know this call has been long overdue. Thank you for being considerate. Unfortunately, the night after our Board meeting on 13th last month, I started observing few common COVID symptoms, which aggravated the next morning. So as a precautionary step, we decided to postpone the call. However, I'm fortunate to have recovered well and feeling much better now. Moving on, please note, during the call, we will be referring to the presentation, Financial results and financial statements, which are available on the stock exchanges as well as Investor Relations webpage of our website. It can also be downloaded through the link or QR code on Slide 10 of our earnings presentation. From our management team, we have with us our Chairman and Managing Director, Inderjasinghani, let me now hand it over to Indergai for his comments. Good afternoon, everybody. Welcome to all. FY 2021 has been a year. Sorry to interrupt, sir, but your voice is a bit feeble, if you can come a bit closer. Good afternoon, everyone. Welcome to all. FY 2021 has been extraordinary year marked by disruption, resilience, competition and transformation. Our endeavor to ensure safety of polycarbon and health of society at large remain untapped Concurrently, we also issued undertake operations through the Agility and Technology, which helped us leverage the favorable market trends and report robust business performance in the 4th quarter. We are excited to commence a journey towards our 5 year vision, which will shift orbit our brand positioning, operations and Business Growth, along with the strong emphasis on the governance and sustainability. Considering our ongoing transformation initiative, I believe we all are well placed to take a leap and create long term value for everyone connected to the Polycap. I now request Gander to take you through our earnings presentation as well. Thank you very much, Indadai. Overall, we had strong Q4 with healthy market share gains. The underlying business performance of was fairly good across the board. The domestic demand trend remains supportive. Pandemic related disruption across all facets of economy was relatively minimal in Q4. As a result, infrastructure and construction activities picked up in full swing. Central and state government as well as private project Activity showed an uptick. Private sector investments have been evidently higher in the second half. Consumer sentiment improved its unlocking and vaccination drive, leading to buyout demand for B2C products. We continue to remain cautious and agile in the face of ongoing second wave of COVID-nineteen. While the severity of it seems high, I believe we as a country are much better placed than last year, given increased safety awareness and fast paced vaccine rollouts. Even as a company, we are well putted from an operational standpoint. Hence, we don't foresee any significant disruption. Our teams continue to perform at a very high level while adopting a nimble approach to seize all opportunities regardless of business environment. Moving on to presentation to Slide 4. For the quarter ended March 31, 2021, our consolidated revenue at INR 30,300,000,000 Grew by 43% year on year. Performance has been quite strong even if we normalize it for the impact of Pentium. B2C portfolio continued to outpace B2B, thereby increasing its overall contribution. EBITDA grew by 43% year on year, resulting in 13.9% margin led by pricing actions, Ladies benefit cost saving initiative offsetting sharp input cost inflation. Our stock cost at INR 997,000,000 was higher versus last year. Polycab will ensure that employees are well rewarded for the effort and commitment, especially during such challenging times. Accordingly, hikes, promotions and variable pay were rolled out for FY 2021. Moving on, AMT spend at INR144 1,000,000 or 0.5 percent of sales was lower versus last year as we reorganize our marketing strategy to better suit The business objectives. Hence, we can't take this quarter as an aberration. Our annual increase spend are likely to be of INR 1,500,000,000 to INR 2,000,000,000 for fiscal 2022. Finance cost was broadly stable, while other income was lower on a year on year basis to higher Mark to market gains in base quarter. A detailed breakup of our other income and finance costs have been provided on slide 13 of our earnings presentation. Our profit before tax at INR3.8 billion and profit after tax at INR2.8 billion increased by 36% year on year and 32% year on year respectively. On Slide 5, for the fiscal Year 2021, I am delighted to highlight that we surpassed last year despite a dismal start to the year. Our revenue grew on a year on year basis with B2C contribution rising by over 1 50 bps from 32.6% in fiscal 2020 to about 40.2 percent in fiscal 2021 on a standalone basis. Adjusting for a large export order, it would have been increased further. Requesting all the participants to please stay connected. We'll hold the line for the management. Ladies and gentlemen, thank you for patiently waiting. We have the line for the management reconnected. Thank you, and over to you, sir. Since our apologies, participant, there was some technical issue in the line. Let me just go back to Slide 5, which I was trying to explain and then let's continue from there. So if we go to Slide Hi. For the fiscal year 2021, I'm delighted to highlight that we surpassed last year despite a dismissal start to the year. Our revenue grew on a year on year basis with B2C contribution rising by over 7 50 bps from 32.6% in fiscal 2020 to about 40.2% in fiscal 2021 on an share loan basis. Adjusting for a large export order, it would have increased further. EBITDA margin was relatively stable, which again is a decent achievement, I would say, considering the adverse leverage and sharp rise in input costs seen during the year. Fed grew 16% year on year, partly led by few one off gains in Q1 as highlighted on Slide 10. Moving on to segment on Slide 6. Wires and Cable business clocked a healthy growth of 35% year on year, led by pickup in construction activity, higher realization, increased distribution reach and portfolio enhancement. On the domestic side, Institutional business outperformed distribution business during the quarter. However, this was on the back of a soft base and hence it may be a A bit early to call out full recovery. Having said that, the business certainly continued to gain traction on a sequential basis. Exports portfolio, excluding the large order, declined by 7% year on year, mainly on account of the stalling of few large projects on account of pandemic. However, we continue to build presence in many key geographies through appointment of distributors and expanding product offerings. We believe the business will get back to growth trajectory soon. For the year as a whole, our domestic market assessment suggests We would have gained at least 200 bps of market share in fiscal 2021. However, we await the market and industry data as of now. On the profitability side, segment EBITDA margin at 13.4% was broadly stable versus previous quarter. This was supported by pricing action to offset the double digit inflation seen in our raw material basket. Moving to Site Tables. FME Group posted an impressive 89% year on year growth in Q4 on the back of strong execution. All categories as well as regions witnessed strong growth with market share gains. Consumer demand remained healthy on account of Returning novelty, SMG contribution to overall sales increased over 2 90 bps year on year to 11.4%. During the quarter, fans posted healthy growth despite stiff competition and cost push. Lighting Products business nearly doubled, led by better demand and supply alignment. Switches and switchgear grew 2.5x, while other categories also witnessed strong uptake. Profitively continued to move in and upward trajectory despite input cost inflation, helped by pricing intervention, Premiumization, better working capital management and cost optimization. Segmental EBIT margin stood at 7% in Q4 and 5.5 While the ongoing phase of intermittent lockdown do pose a challenge, we are well placed from a supply perspective to cater demand across the nation. We have also observed some resilience in retail channel as the retailers are now delivering directly at home. While this may not be meaningful, it does offer some optimism and showcase resilience of Indian trade. On Slide 8, other investments, which is largely our strategic EPC business witnessed a decline on a severe impact of pandemic and higher base of last year. The copper segment, as disclosed in the financial results, largely reflects Dicus, which is a part of our backward integration initiative. Moving on to financials from Slide 10 onwards, our balance sheet grew stronger with over INR9 billion of net cash position As of March 2021, which is a 5.5x of same period last year, ROCE and ROE in Q4 At 32% 24%, respectively, working capital looks optimally stable on a Y o Y basis. However, there has been decent underlying improvement. The numbers should be correlated to the fact that the prices of key imports Copper, aluminum have nearly increased. As a matter of fact, copper has doubled over last year. And this inflation reflects in mark to market inventory as of 31st March 2021. Besides financials, during the year, we have made tremendous progress on expanding our Our authorized dealers and distributors count as of March 2021 grew by about 17% year on year to over 4,100. Our retail outlet reach increased by about 32% year on year to over 165,000 Electrician, while our influencer program grew by about 33% year on year to over 180,000. We now have 7 knowledge and experience centers across several large cities across India. Furthermore, we are also now redefining our retail marketing approach Through different outlet formats, first is Polycab Galleriaum, which we also call it as knowledge centers. These are large showrooms with virtual reality showcase as well as audio visual facilities. They also serve as training hubs for influencers and a Sears back office for our employees. 2nd is Polycab Arena. These include experience centers as well as Polycab exclusive retail outlets. And the 3rd format is Polycab Shopee, which is a shop in shop model where we designed the exclusive EMR space granted by the retailer. We believe this concept will As a project shikhar or sales acceleration program, we have also launched the EXPRESS Experts program, which is a robust 360 degree Influencer management initiative promoting inclusive growth. The electricians and retailers enrolled in this program Provided loyalty based monetary incentive in conjunction with training in their respective fees by industry expert. Once trained, they are certified as expert by Polycab. The certifications will be provided to government recognized institutes. The aim is to help them build soft skills like people, social, communication skills and time management along with professional knowledge. Leveraging on this program, we will also be piloting Bulge or Basket offering soon. A glimpse of our new product, the Polycab Galleria, opened in Cochin is on Slide 14. We have some exciting stuff on the next few slides. It gives a foretaste of our 5 year vision project, which we have titled It has Project Leap. This year marks the 25th anniversary of Polycab as a structured entity. Since 1998, we have recorded a robust 43% compounded annual growth rate in business. Even in the last 5 years, the growth has been relatively healthy at about 11% CAGR while maintaining market leadership and Tackling challenges like the pandemic. By diversifying our portfolio, building robust manufacturing capability, creating a strong IT backbone And in strengthening our brand positioning, we have created a very functional platform, which has the potential to unlock significant amount of net and growth. Now is the time to leverage these competencies to the fullest and challenge ourselves to realize our future vision for the company over the next 5 years. Accordingly, we have embarked on a multiyear transformational journey with an aim to cross RMB200 1,000,000,000 in sales by fiscal 'twenty six. We can't possibly win business without thinking of the environment, social development and good governance. And hence, we are also aim to significantly up the pedal on our sustainability agenda as well. Now let us come how do we formulate our directions towards distribution. For this, we believe simplicity is excellence. We have essentially created 4 core areas that is B2B, B2C, Capability and Sustainability. I will probably touch each one of these briefly over the next few slides. Slide 16. On the left, we have highlighted proof of Q dropped target, while on the right, we have Key work streams to achieve the targets. On the B2B side, we want to reenergize the business and strengthen our leadership position. This will be done by defining our business model to win in large towns, announce value proposition to explore untapped opportunities, Enable demand generation through micro market analytics and have a strong business development up. On Slide 17, for B2C business, we wish to activate achieve breakout growth and position ourselves to win in these categories. We want to make our product an integral part of consumers' day to day life. We are aimed to build a comprehensive portfolio Slide 18 highlight 3 core growth enablers, which will guide us through the journey. We will build an operating model, which cost us performance, Innovation and customer first driven culture with increased autonomy and accountability, We plan to take our IT capabilities to the next level by having digital analytics driven decision making across all facets of business. Slide 19. Lastly, but most importantly, we believe our progress will be analogous to our sustainability initiative. While we have made wonderful progress in terms of reducing environmental impact and promoting inclusive growth, we believe there is lot of work which can be done And what is it? And further augmenting social development contribution. We have already taken baby steps by appointing an environment consultant who will help us with our green initiative. Our Polycab Social Welfare Foundation will help us drive significant and focused CSR initiative. We have also embarked on an integrated reporting journey starting fiscal 2021, which we hope will meaningfully increase transparency and Form of base for good governance, environment, sustainability and governance focus will be ingrained Further into core business and we aim to achieve leading ESG score in Indian corporate space. In the coming period, We will also develop long term ESG target. Now next, there are a couple of updates which I would like to share with you. Firstly, considering the healthy financial position of the Board has recommended for payment of final dividend of rupees spent per equity share For the year ended 31 March 2021, subject to the approval of the shareholders, our dividend payout ratio on shareholder profit Will sequentially improve to 18% in fiscal 2021. 2nd, there has been some reorganization in the Board of Directors. On the executive director's side, Mr. Ajay Singhani, Mr. Ramesh Jasingani and Mr. Shyamdar Bajaj have stepped down from the Board. Mr. Balajiasingani, Mr. Nikhil Jasingani and Mr. Akhil Salati have been appointed as Executive Director, subject to approval of the member at the ensuing and why general meeting of the company. This change was a part of our larger succession planning. Bharat and Nikhil have been working in different areas of sales, marketing, production, IT and others for nearly 15 years now. And both have played instrumental roles in driving several important projects within the company. On the independent writer side, we had two changes. Firstly, Ms. Irumichandrani had resigned from the force of Independent Director with effect from 12 May 2021, in order to rebalance our board portfolio in line with her professional and personal goals, We really admire the guidance and knowledge she provided, which helped the company grow. We wish her good luck for her future endeavors. For the second change, I'm very pleased to announce Mrs. Suppupa Banerjee has joined the Board as an Independent Director with effect from May 13, 2021. Mrs. Banerjee comes with over 30 years of professional experience, adding many large financial services Kamthi, Mr. Banerjee is a Gold Medalist, Economics and Advanced Leadership Fellow at Harvard University and visiting faculty with IIM Ahmedabad. Mrs. Banerjee is also an adjunct faculty with IIM with Indian Institute of Corporate Affairs, the Government of India Think Tank under the Ministry of Corporate Affairs. With this appointment, she adds Polycab to the list of esteemed companies like Gorges Properties, JHCC, Zomento, Manapuram Finance And Azar, where she is a Board member. Lastly, we have entered the new financial year, and we are progressing well across all facets of our business. We are gearing ourselves to a leap into the future. I feel confident about our organization's vision and Thank you, and we will be pleased to answer your questions now. Over to you, operator. Thank you very much. We will now begin the question and answer session. Ladies and gentlemen, we will wait for a moment while the question queue is First question is from the line of Ravi Swaminathan from Spark Capital. Please go ahead. Hi, sir. Good afternoon. Congrats on understood of numbers. Mr. Swaminathan, if you can speak closer to the handset, please. Yes. Hi, sir. Good afternoon. Congrats on a good set of numbers. My first question is with respect to the pricing action that we had taken At Cables and Wire segment over the past 3 to 6 months, what kind of price hikes that we had taken and how much is More or less, given the fact that commodities has been on a rising trend. Sure. Thanks, Ravi, for your kind words. On the pricing action, if I reflect on the quarter gone by, The raw material costs at the basket level increased in almost double digit, whereas the Price hike on a weighted average basis, we would have taken in lower teens. So that is where slightly You see the margins have improved at contribution level. And you know this industry already, Ravi. Every month, A player like us, we are revising our prices after considering the increase or decrease in the input cost, for Corporate or change in foreign exchange rate between U. S. A. And INR. So we'll continue to follow the factors which we have been following consistently over the period. And Wherever there is a need to adjust our prices, we will continue to do that. Yes. And are we confident that so basically we will be able to In spite of the fact that buyers and other products, higher margin products have increased in proportion, so Would we be able to maintain gross margins, which we have seen, say, last year, let's say, FY 2021? So Ravi, the business model which we have gives us flexibility to price our input cost, Particularly copper when we have significant visibility on the sailing price and that is how we have been able to maintain our margins. At times, because of lag impact or the inventory in the distribution, there could be some delay. But if you take a 12 month view or annualized view, I generally believe that we should be able to give and take few 100 basis points here and there, generally we should be able to maintain our EBITDA margins. Got it, sir. And with respect to traction, with respect to the Q1 so far, April, May and some part of June, how has it been in terms of So if I compare April May of 2020, we'll say In May of 2021, I think 2021 is significantly better than the base. I know there are restrictions, there are lockdowns, but those are more I mean, in comparison to last year, these are slightly less negative on the business side of it. And since In the current month, most of the states have started relaxing the lockdown restriction. We expect that in the coming quarter, the performance will continue to improve. I believe that second quarter will be better than Q1. And directionally, it seems that the second half of the fiscal Will be better than the first half of the current fiscal. Got it, sir. And with respect to, say, the breakup of revenue for FMAE, if you can Sure. So on the CapEx, We anticipate that we would incur our INR 300 odd crore this fiscal. Around 35% will go for SMEG, Which would have, say, for example, new CapEx on 20 factory, TPW factory as well as Factories for pipe and all that. So that's around 35%. Balance would have a combination of a bit of a backward integration as well as In Cable and Wire, predominantly, it would be because of special cables and export cables We have been able to make some investment. And Special Cable, if you recall, in earlier quarters also had talked about that we are focusing on something called import And we have been able to secure several approvals in the last few quarters. We want to now set up our facility so that we can manufacture These products in India include split of Make in India and Aap Nirbhar Bharat and supply to the Indian customer. So that's a broad blueprint. There will be some slight maintenance cost and all that, but overall the CapEx would be around INR 300 crores thereabout. I think the second part of the question was around the breakup of SMEG business. You would have already noticed that this year we have entered the 1,000 crores club in SMEG. And I think it's a commendable performance by the team Polycab to reach that number in 5, 6 years. If I break it down For you, it would be around 35% to 40% off trend, followed by lighting, which would be around 25% to 30%, followed by switches and switch gears around 15%. And Pipe would have touched almost double digit now. So there's a broad breakup of SMEG revenue, The next question is from the line of Pritik Cheheda from Lucky Investment Managers. Please go ahead. Sir, I have one broader question. So from your Project E, Bandhan and Project Josh, which have been mentioned over the last 1 year now, Over the next 3 to 5 years, where do you see your company's revenue sum total rising to? What kind of margins do we see 3 to 5 years from now? What CapEx do you would you incur to derive that Size of the business, what would be your reach as a percentage of the market by then? And what is the organizational building Activity that would that has been done or needed to achieve that? Yes. So let me demystify it for you. I think there's 2 or 3 different projects. Let me spend some time on project lead. This is a new project, which we have just started barely a month back. We are working with our consultancy firm, Boston Consultancy Group, BCG. The objective is to transform the organization, and I told about it in my opening remarks as well. We want to work on B2B. B2C I have the IT capabilities as well as the process and organization in place. By end of fiscal 2026, It's a forward looking statement. We expect that we will be able to touch almost INR 20,000 crores on top line, which is more than double than the current year. There could be several activities which will be carried out to build each of these blocks, which are B2B, B2C organization, Process and IT Every half year, we will come back to you on your specific questions on EBITDA margins, CapEx and what we have done All that. At this stage, I would be able to give you color only on revenue. And as we go along, we would be happy to give you additional input. Directionally, it appears that our EBITDA margin will improve because the proportion of B2C You see business is increasing and that is where the margins are expected to go up. But I think we should wait for a fairly update where we can come and update you on the activities which we have implemented or carried out annual results thereof. On the specifics on the market share and all that, I think We have already covered a part of it in my presentation that we are gunning for 1.5x in one particular business category and 2x in other business category As far as growth is concerned, yes, in comparison to industry growth, but I think I would love to give you more information and color when we come to the September presentation. The second project is Quran, which we initiated almost a year back, it was a cost optimization project. As of now, we have already identified cost Optimization initiatives translating to almost 80 to 100 bps of our top line. These are in the process of implementation, And we expect that these benefits will accrue over the period to the P and L of the company. But at the same time, the project is ongoing and it's Quite possible that we are able to unlock values in addition to what we already unlocked in the quarters to come. And on JOS and others, the 3rd project is actually the Project Shikar, which is a sales acceleration program, which in a way covers both Bandar as well as Jhoosh. And that is on how we are going to penetrate the poker geographies And Empower and Cream, our influence. So these are the 3 projects on which we are working on and would be happy to update you on half Sir, what is our distribution reach as a percentage of the total Market after this 165,000 retailers? So we have almost 4,100 authorized dealers and distributors, Around 165,000 retailers, we believe we have a sizable Significant presence as far as authorized details and retailers are concerned. But the way the universe is defined, it's slightly Difficult to come to a precise number, and that is very difficult for me to give you an absolute number as an answer to your question. But every year, we have been able to improve our number of dealers and retailers, and we'll continue to do that. Okay. So just one last Clarification, I missed it. You mentioned CapEx for 2022 was INR300, it will be INR300, and the mix that you gave for SMVG For FY 2021, was 30% France, 20% Lighting? And I missed the other part. These are 2 different topics. 1 was on the revenue. So revenue breakup is what I We're in the pan, it's almost 35% to 40%, lagging almost 25% to 30%, switch switch gear around 15%, followed by I think it is just about double digit. On the CapEx side of it, for fiscal 'twenty two, not for fiscal 'twenty one. Fiscal 'twenty two, we believe that we would be able to incur almost INR304, thereabout. And around 35% will be invested in FMEG and balance will be invested in Cable and Wire, Particularly in special tables, export tables and part of network integration. And then there's an element of maintenance CapEx elsewhere. How much did you spend in 2021 CapEx? In the presentation, it's just shy of INR 200 crores, INR 191 crores. It's on Slide number 12. Thank you very much and all the best to you sir. Stay safe. Thank you. Thank you very much. Thank you. The next question is from the line of Rahul Agarwal from INGRED Capital. Please go ahead. Yes. Hi. Good afternoon and good to see you back, Andar. Just and congratulations for a good performance in a tough year. Just two questions. One is on the capacity expansion. So you answered it partly on the fiscal 2022 side. I was more focusing on the 5 year plan to reach INR 20,000 crores. I would imagine the company would read significant investment into capacity. And since the efforts of the group is to manufacture in house, Even if I take an average of INR 300 crores a year into INR 5, INR 1500 crores of CapEx, it could help us understand What are the areas of investment you're thinking to reach that 200,000 crore goal over 5 years will be really helpful in terms of what Factories, what products are you thinking bringing in house versus with the outsourced right now? That is one. And secondly, on the B2B slide where you mentioned that 1.5 times or 2x type growth for core and emerging products, it would help understand what are these products we're talking about, If you're splitting them into core and emerging, will be really helpful. Thank you so much. Thanks, Rahul. Thanks a lot for your fine words. I'm glad that you liked our On the capacity expansion and CapEx for next 5 years, around on this particular project, I must admit that These are early days. We have barely embarked on the journey almost a month back. Though we have a broad picture available in terms of the top line and how we are going to do it, There's a fair amount of detailing which is being done by the team, both by Polycab as well as the consulting partner. I Expect that by Q2 of the year, sometime in October, when we have the earnings presentation, I would be able to give you a bit of And then I will continue to update you on half yearly basis. I think for the time being on LEAP, I think we should Pick up the key messages. One is we are committed to growth, And we want to ensure that we are value additive for all the stakeholders, including the investors. And that is why We have empowered on the journey with a very credible consultancy group. The second is the top line target is INR 20,000 crores. But beyond this detailing, if you allow me to come back to you in the month of October as part of Q2 presentation, I think that would be a good approach to have. Okay. So one small thing on inventory, I'm not sure about the project name, but my sense is Polycab was working on inventory rationalization and improvements. If I look at last 5 year numbers, broadly, we have stabilized about 80 days of sales. I'm looking at it as a number on sales and not on GOGS. Could you help me understand, I mean, we cannot I have not seen real improvements there. Could you help me understand the entire project is already completed and the numbers have already come through or there is something Yes. That's my last question. Thank you. Yes. So you're right. If I see up on absolute number of days, while optically, it would look like that there is no significant improvement. But if I play it with the top line growth and increase in market share, that would help us in understand the ability of each of these SKUs at the different sales point has So that is where the science has been implemented. There is a fair amount of work which we have completed on financial goals Right from having the right architecture in place, what we need to store where, whether at the mother warehouse or at the plant or whether we need to add to distribution and all that. There's a bit of a work which we haven't completed yet on the RM side, on the raw material side, which is going on. Directionally, we believe that we can certainly We'll highlight the inventory levels further. But in last couple of quarters, there was a bit of a challenge on availability. I'm sure you would have also heard about the Affiliability and pricing pressure are on the raw material side. And that is where we have to at times take a step back and see whether we need to relook on the overall approach. But to answer your question that whether the inventory can be further optimized or not, I believe that yes, certainly, it can be further optimized. But what we want to, at the same time, ensure is that we increase the availability because that is the key clear differentiator for us in at the marketplace. And the OTIP or on time in full is generally between 95% to 98% as Now which has improved significantly in, I would say, last 3 to 4 years. And we as a company would like to reach 200%. I know it sounds impossible, but directionally we would like to reach 200 percent and that is where we all of our work Perfect. Thank you so much. All the best. Thank you very much. Thank you. The next question is from the line of Aditya from Axis Capital. Please Go ahead. Hi, Gander and team. First off, congratulations on great share of numbers. I hope, Gander, you are doing well. Ghazan, I have 3 questions. One is on our FY 2026 roadmap that we've put through. I would assume that the SMED growth of high teens to early 20s would be a key cornerstone of that strategy. Just wanted to understand from you some nuances as to which segments is it that we are targeting such high growth and how are we likely to That's my question number 1. My question number 2 is in terms of cash conversion, right? We've done INR 1200 crores of operating cash And it's a stellar number. I just wanted to understand on a steady state basis over the next 3 to 5 years, what is the kind of Cash conversion that we can expect. And the third is with 900 plus crores of cash on our sheet, are we looking at Thanks, Arita. Thanks a lot. I think these are great set of questions, and thanks for Highlighting our performance. So the first one, I believe the real growth drivers of growth engines Between now and FY 2016, it would be export as well as B2C revenue. B2B will continue to play its role, I think that in terms of growth percentage, B2C will outshine B2B. There will be some element of adjacencies, But I think the core product categories where we are present, these product categories will drive the most of the growth And look back to 20,600,000 core. On the cash conversion, as I mentioned in one of the I was trying to come back to you on a single month basis because we are still very early to this particular initiative. We want Big these numbers and decide what all we want to externally communicate and then commit ourselves to those numbers so that every quarter, every We can go back to the investors and update them on the outlook. So I'll come back to you on that in October. But I believe that cash conversion will continue to improve in the years to come. On M and A, we are actively involved in few of these activities, Including identification of the focus areas, 0ing on the target and then doing the procedural aspect of it, I'm hopeful that we would be able to update you soon on the POCs M and A activity as well. Sure, Gander. Two follow-up questions. One is within our target of assuming INR 20,000 crores, We are looking at B2C, B2B kind of a split rather than cables and wires and SME, plus exports obviously. Is that a fair way of understanding things? Because then we would be also building in a fair bit of growth when it comes to housing wire and other B2C wire segments as well. Just trying to understand your thoughts on that. Absolutely. I know that's a way to To review our performance, we have 2 growth engines. 1 is B2B, which has traditional cable business and then we have B2C, which has Retail wire as well as SMG business and then on top of it we have the export business. So that is how we are internally trying to Just one last question with regards To our 20,000 crores target, we've not built in any inorganic additions, right, Adi? You're talking about this nonorganic branch? Yes. So as I mentioned, as I said, I'll come back to you in the month of October and to the extent possible, I'll give you additional color on this. And then from there, we can take Perfect. Thank you so much. Congratulations once again and best of luck for the quarter Thank you. Appreciate it. Thank you. Before we take the next question, a reminder to the participants, Please limit your questions to 2 per participant. Should you have any follow-up, maybe request you to rejoin the queue. The next question is from the line of Yelapu Santosh from Asian Market Securities. Please go ahead. Thank you for the opportunity. Congrats on the good set of numbers. I had a couple of questions. So when you're internally targeting for a 12% EBITDA for the SME business by FY 2026, what would be the approximate top line that you're having internally in that Okay, thought process when you are building. And what are the initiatives we're taking to reach that kind of milestone on the top line front as well as on the margin Hi. If you could give some color, Amit, that's the first question. And the second question, from a long term, from a 3 to 4 year cycle point of view, What are the initiatives we're taking so that the exports distribution strategy pans out the way we are thinking? What specific geographies, Any specific products we are targeting? Having we have won recently few export orders from Australia to South America to North America, so we are gaining a lot of export orders. So what are your thoughts on this there? If you could give me some color on both the points, we'd be thankful. Yes. So the first one, the growth will continue to come from B2C and export followed by B2B. But as I mentioned to Adeep, I'll announce in October where we can come back and give you more color on how this 20,000 core will be achieved. On the export, we have been able to improve our presence across the globe in the last around 24 months. We have additional approvals in place. For example, basic approvals or URL approvals and all that. If we just slice and dice our Export, I would say that almost 50% of theirabor is coming from U. S, followed by Asia and Australia and then rest of the world. We believe that having this twin approach of going after few identified sectors as well as having local presence In identified geographies would help us in improving our top line, and that is why we believe that And sir, one follow-up question, if I may. Sir, what is the timeline have you put to the top 3 mid cities we want to penetrate? So there is still Samu, to go ahead and penetrate the top three messages, any timelines, any targets and how it could contribute to your growth, if you could just give some color or some numbers, That will be very insightful. Yes. So as you stated in the quantified targets, I will be able to give you a top line target of INR 20,000 crores by fiscal 'twenty six. Within that, the breakup, it would be a bit difficult for me to give you because we have just embarked on this particular journey. So if you just allow me time till October, I'll compare to you on the targets which we will be able to talk about externally and along with the investors. And then after that, we can then do a for no pay every 6 months, yes. Perfect. Thank you, sir. Thank you for your time. Thank you for your questions and time. Thank you. The next question is from the line of Chetan Gindoria from AlphaCredit Advisors. Please go ahead. Hello, Ghandav and team and congratulations for a great set of numbers. I had just one question. Can you give us a Thanks for your fine words. You know this Thanks for your kind words. You know this industry already. It's a bit difficult to give volume data and that is where Most of large players can all get it. And I tell you why this is difficult because if I sell copper cable So length of 1 kilometer, whether there is an aluminum cable of the same length, the pricing will be significantly different. I think the best way to analyze From your perspective, a particular company's performance is to compare it with peers' performance. And if it is this growth rate It's slightly better or worse than the spear that is where you can break the company because the quantitative information is not necessarily going to get add any value. Okay. Okay. Still, if you can give some sense on whether the volume growth in this quarter Was in double digits or at least something that would help us analyze whether what is the underlying growth? Yes. So most of the growth has come predominantly from the B2C business categories, both from FMEG as well as retail wire. FMEG has already touched Across 1,000 core clubs and retail wire continues to grow at a rapid rate. Outside that, the NDC business is Growing significantly. On the cable core cable side, there is some sort of sluggishness on the institutional. But overall, the effective order is like this that B2C followed by Q2. Okay. And just a clarification, you said that our B2C Business contribution is currently 40.2 percent in FY 2021. So this is for the overall revenue including FMEG or this is just a breakup of Fios and This is over or including FMEG, which is B2C plus wire business, retail wire business, which is outside, So FMEG and ZFIR, both put together is almost 40.2%. Okay. Thank you. Thank you, Gandal, and all the best to the entire team. Thank you. Thanks a lot. Thank you. The next question is from the line of Manoj Gauri from Ikuris Securities. Please go ahead. Yes. Thank you for the opportunity, Gamba. I'm glad to see you My connection, couple of things, one would be on the cable front. So if you look at currently in the current system, We witnessed strong traction for the wire's business. However, the institutional business was related to the lagars. And We were able to see industry was able to see some green shoots during February in March. So because of the second COVID wave, Do you feel like this business is back on track or there would be some delay like for this business to be normal? Okay. So the cable 1, the distribution was anyways with back to Almost pre COVID levels after the wave 2, but the challenge was on the institutional side. There also we have seen some bit of traction in the Q4. But I think we'll have to wait for wait for a month or 2 before we I'll just decide and conclude where we are back to whether we are back to the pre COVID levels on the tables, this thing. But directionally, I agree that second half of the year or the current year should be better both for institutional and for the distribution business. Right. And also does it indicate that I suppose of last year whatever institutional business that has been lost for the industry. So there might be some pent up demand when the situation normalizes and move back to the pre COVID level and volume dumps and this, yes. Yes. So I think the element of pent up demand is expected to be there. I think item demand will take us back to the pre COVID levels or not. That would have been difficult for us to comment at this stage. But I think directionally we should be able to move forward. Indian Malaysia? Obviously, it will be soon after the Q1. Right. So lastly on exports, I think on the call you have explained very well regarding the long term strategies and everything. On the exposed, you have been focusing a lot on the U. S. Markets. So what's your shaping up over there? And what's the overall outlook? And in terms of your So now we are trying to do is further penetrate the market and see if we can introduce additional product category. This will continue to be a continuous process of penetrating all the overseas geographies including U. S. And why U. S. Is top priority is because as of today, U. S. Contributes almost 50% to our exports top line. But outside the U. S. As well, there are geographies, for example, just to illustrate, Australia or part of Asia where we can That was very helpful and wish you and the entire team All the best. Thank you, Madhu. Thanks a lot for your kind words. We appreciate it. Thank you. The next question is from the line of Sandhya Sathwati from Ampersand. Please go ahead. Yes. Hi, sir. Congratulations once again on a good set of numbers. Just if you can share with us the gross margin of your SMEG business And the main reason why I'm asking it is that like how do you compare in terms of profitability at gross level? We appreciate both in terms of pricing as well as product footprint point of view. So in the mature product categories within SMEG, We have already reached to the industry level gross margin, which are give and take few percentage points here and there around 50% or thereabout. And in the product categories, which are comparatively smaller than the FMEA market, There is some scope for improvement in margins. And as far as EBIT margins are concerned, those you would have already seen have improved in the periods to come. That's mainly because we have slightly higher cost base, which will get optimized with increase in the top line. And these projects like Udaan, which is a cost optimization project as well as project LEAP would also help us in improving this margin. We take the next question from the line of Rajesh Kothari from AlphaCredit Advisors. Please go ahead. Good afternoon, sir. Congrats for good set of numbers. Sir, I think you talked about next 5 years, in the FMG segment, Are you planning to enter into the new product categories in that segment? And whether it will be Existing segment or it will be complete new segments? So at this stage, Radeesh, we are at growing stage, board stage. Theoretically, it is possible, but we have not closed our thought process there. The focus remains that we continue to grow the Existing product categories, for example, fan, lighting, lume, switchgear, compute pipes, agro. But as I mentioned as a response to one of the earlier questions, allow us time till October by then we'll come back to you in case we have any mature thought process. But within FNVG, I would like to call out one specific thing that you would have noticed already that we are trying to play a level up as well as level down In the existing pricing portfolio, so for example, we introduced home automation around a quarter bet, which is a premium category, which will be revenue accredited as well as will help us in augmenting our top line. Theoretically, this is slightly different from the acquisition product category because it's on automation side, But this would help us in giving a boutique product or a bouquet of product to our customer. Okay. And my second question is, since company has drawn a very ambitious plan for next 5 years, Are there any major new recruitment at the senior leadership level? And if you can disclose the thing, that will be great. Absolutely. So we can't reach top line of 20,000 core without having right set of people, processes And capital, processes, I have already talked about when I was cleaning the lead. It turns upon the fact that we have re Shafar, the Board, and we have younger and high energy individuals who are going to lead us from the Board. We have independent director like Sutapa. So, she has significant amount of experience and she's competitively younger. On the management team, there are a couple of changes. We have recently hired Mr. Rajesh Nayar as our C HR. He was with Tata Motors for almost 28 odd years. And I'm very confident that he will be able to help us in improving our HR practices and people management practices because When we are thinking about ambitious target, we have to ensure that these ambitious targets are well knitted With the PMS and KRAs of the business and function head, and that is where someone who is joining us from Tata Group would help us immensely. Milesh joined us almost a year back as Head of Marketing. He was instrumental And shaping the brand architecture as well as marketing plan at JSF This Steel. And he is doing Tremendous work on the marketing roadmap for and broad architecture for Polycab. And I'm expecting results of that would start reflecting in the quarters to come. We continue to augment on our senior Management team, as you know, we have an attractive compensation strategy, both in cash as well as through SOPs, And we would we are very confident that we'll continue to do that. As a matter of fact, if I'm not wrong, we would have almost 25 odd individuals who will be drawing more than INR1 crore Our package on analyzed basis excluding the stock compensation. So that shows the quality of manpower which we have assembled over the period. And these high Energy, highly driven in future, would help us in implementing the Project LEAP and other projects which I talked about. Great. Thank you, sir. Wish you all the best. Thank you very much for your kind words. Thank you. Question from the line of Vikas Mistry from MoonFort Ventures. Please go ahead. Hello. Am I audible? You are. Please go ahead. Ghandur, my question is that, would we be looking for the new product lines like microinverters and something software, IoT based automation system, as you mentioned, we are also looking towards energy efficient home solutions to the customers and all that. Yes. I think your question is around whether are we going to get into home automation, IoT and all that. The answer is yes. We have already taken a busy step by launching Home and we'll continue to take steps to expand on this side of SMEG business. We believe that the consumer business will get a significant amount of traction through this IoT automation route and will continue to make investment accordingly. My question is mainly pertains to our software side. Are we looking at strategically thinking about giving customers better energy efficient Solutions in form of software and coupled with the hardware such that they could save energy on account of doing that? Absolutely. In fact, that is the key differentiator for us. Most of our products come with energy efficiency. And if I may say, We can easily be considered as industry leader on that aspect. And we recently launched BLDC fan, which would be Energy efficient product and there are several other products in pipeline. So we'll continue to do that so that our consumer Okay. My follow-up question is to Same is that how many workforce is in innovation and new product development and how we are looking to ramp up this human resource capabilities To make sure that we come up with cutting edge new innovative products and Yes. So it's a combination of both internal team as well as external team. Externally, we partner with several industry leaders and consultancy organization. Internally, we have around 100 to 150 manpower team who are doing only R and D Very recently, we picked up a large team from an existing Indian arm of a large German player, And that team will also continue to help us in improving our R and D as well as innovation aspects of our business. It's good to hear, Venal, and we hope that you keep on driving the innovation thereon. Thank you. Thanks a lot for your kind words and wishes. Thank you. I would now like to hand the conference over to the management for closing comments. Over to you, Sam. Thank you, everyone, for your time. In case if you have any follow-up questions, please write to us at investorrelationspolycap.com. Stay safe and take care and follow social distancing norms. Thank you, operator. Thank you. Ladies and gentlemen, on behalf of Polycab India, that concludes this conference. We thank you all for joining us and you may now disconnect your lines.