Ladies and gentlemen, good day and welcome to Voltas Limited Q4 FY 2026 earnings conference call hosted by ICICI Securities Limited. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your Touch-Tone phone.
At the time of the question and answer session, we would request participants to please limit their question to one per participant. Please note that this conference is being recorded. I now hand the conference over to Mr. Aniruddha Joshi from ICICI Securities. Thank you and over to you, sir.
Yeah. Thanks, Rutuja. On behalf of ICICI Securities, we welcome you all to Q4 FY 2026 and FY 2026 results conference call of Voltas Limited. We have with us today senior management represented by Mr. Mukundan Menon, Managing Director, Mr. K.V. Sridhar, Chief Financial Officer, Mr. Nikhil Chandarana, Head of Corporate Finance, Mr. Manish Somani, Head of Finance Controller, and Ms. Sumana Tripathi, Head FP&A. Now, I hand over the call to the management for initial comments on the quarterly performance, and then we will open the floor for question and answer session. Thanks. Over to you, sir.
Good evening all. This is Sridhar here, CFO Voltas. Glad to connect with you all this evening. This is a quarter and year-ended 31st March 2026 results for Voltas. Voltas delivers progressive recovery in Q4, supported by cooling segment and robust performance from the other diversified businesses. To give a background on the global economy. The global economy entered 2026 amid a backdrop of cautious recovery and rising uncertainty.
Moderating inflation improved financial conditions and sustained investment momentum, supported economic activity during the early part of the year. While global trade flows and consumption trends remained relatively resilient despite uneven recovery across regions. However, as the quarter progressed, escalating geopolitical tensions, particularly across energy sensitive markets, triggered significant volatility in commodity prices, currencies and logistics networks, further elevating input cost pressures and downsized risk to global growth.
Against this challenging backdrop, Voltas continued to demonstrate resilient and progressive financial improvements supported by strong domestic demand fundamentals, structural reforms, and the company's ability to proactively navigate supply chain and operational disruptions.
Despite headwinds, including delayed summer onset in select markets, global supply chain constraints and currency volatility during Q4 FY 2026, the company delivered a progressive recovery and continued to maintain its leadership in the cooling segment through a combination of resilient-led strategy, customer-centric innovation and disciplined execution.
Over the last year, Voltas has undertaken transformative initiatives across the B2C segment, including a refreshed product portfolio, stronger manufacturing capabilities, enhanced brand investments, sharper consumer communication and deeper channel engagement. These initiatives are now beginning to deliver tangible outcomes across operational efficiency and brand momentum.
The projects business also demonstrated resilience with stable execution and healthy operational performance, further strengthening Voltas' position as a diversified and a future-ready enterprise. The agency business delivered stable performance in Q4 FY 2026. The external environment continues to remain dynamic, management remains firmly focused on sustainable growth, margin resilience, disciplined execution and long-term value creation for shareholders.
A brief on the financial performance for the quarter ended consolidated total income was INR 4,930 crores against INR 4,847 crores last year same period. PBT was INR 181 against INR 343 crores same year last period, and net profit was INR 113 crores versus INR 236 crores last year. For the year ended 31st March 2026, consolidated total income was INR 14,483 against INR 15,737 last year.
PBT was INR 557 versus INR 1,191 last year. Net profit was INR 377 versus INR 834 crores last year. A bit of detail on the segments. With regard to segment A, which is the UCP segment. Segment A was primarily driven by the RAC business, where Voltas further strengthened its market leadership position. Voltas continues to lead over the number two player, reinforcing the company's strong brand equity, extensive distribution reach and consistent execution strength across markets.
FY 2026 marked a significant transformation phase for the Voltas cooling business. The company undertook a comprehensive refresh of its RAC portfolio with sharper focus on feature-led energy efficient, intelligent cooling technologies and differentiated consumer experiences. Anchored in customer-centric innovation, Voltas launched its summer 2026 portfolio led by AI-powered Vertis split AC series with features like AI adaptive cooling, AI geo-fencing, AI energy manager designed for the discerning Indian consumer.
This was complemented by the repositioned Har Ghar Voltas campaign, which strengthened the brand's emotional connect with Indian consumers while modernizing its appeal for younger and aspirational households. Alongside product innovation, Voltas accelerated investments across branding, marketing, consumer communication, retail visibility, channel engagement and financial accessibility to enhance conversion and strengthen market presence across geographies. These transformation initiatives helped Voltas deliver one of the highest ever sales months in its history during March 2026.
Within segment A, commercial air conditioning delivered strong performance supported by healthy mix of product and AMC business. Sustained urbanization, infrastructure investments and rapid growth in digital infrastructure continue to drive a strong pipeline for the CAC business, positioning it for robust long-term growth. Commercial refrigeration also delivered a steady quarter while continuing to focus on institutional sales expansion, channel development, customer diversification, and introduction of new product lineups.
CAC, CR, and AR continue to play an important role in deepening UCP's diversification and reducing dependence on seasonal room cooling demands. Margins during the quarter were impacted by commodity inflation and currency depreciation. These pressures were partially mitigated through comprehensive cost reduction and value engineering program encompassing improved sourcing, deeper localization, targeted design innovations, and manufacturing efficiencies.
Recent geopolitical conflicts and war-related disruptions created volatility in raw material availability, logistics, energy cost, and currency markets. Voltas successfully navigated these challenges through a combination of structural preparedness and tactical agility, ensuring uninterrupted production and market servicing.
The company now enters the current season with a more clear defined segmentation strategy, refreshed product mix, sharper premium positioning, and refreshed marketing campaign with new celebrity brand ambassadors tailored for diverse customer segments across geographies. At the same time, manufacturing investments undertaken over the last two years are now beginning to deliver tangible operational benefits. The Chennai and Pantnagar manufacturing facilities are currently operating at better utilization levels as compared to previous year.
Voltas continues to accelerate investments in factory automation, manufacturing optimization, warehouse rationalization, and integrated inventory planning to further improve responsiveness, supply chain resilience, and cost competitiveness. Together, these initiatives are expected to deliver improved margin realization and reinforce Voltas' leadership across Indian cooling space. Voltas.
Voltas continues to play a strategic role in Voltas' long-term vision of building a scaled and diversified consumer durables platform with a 8.6% year-to-date market share in washing machine segment and 6.2% in refrigerators in a sluggish market. Over the last year, Voltas has accelerated its transformations journey through sharper portfolio premiumization, deeper localization, expanded channel reach, and stronger consumer engagement initiatives aimed at strengthening its position in the highly competitive home appliances market.
Continuing with its philosophy of delivering smart technology, superior cooling performance, and long-lasting durability, Voltas introduced enhanced product features in the frost-free refrigerator segment with improved energy efficiency, design aesthetics, storage innovation, and consumer convenience features. In the fully automatic segment machine category, the company launched innovation-led product ranges featuring advanced hygiene wash technologies, energy-smart solutions, and differentiated consumer-centric features tailored for evolving Indian consumers.
Alongside product innovation, Voltas continued to strengthen its brand mix strategy supported by expanded retail presence, deeper channel penetration, enhanced in-store visibility, and stronger consumer engagement across key markets. These initiatives are steadily strengthening brand preference and improving conversion across channels while positioning Voltas as an increasingly relevant player in an Indian home appliances segment.
A key strategic focus during the year has been localization and manufacturing scale-up at the Sanand manufacturing facility. The company continues to deepen localization levels across key product categories, improving sourcing efficiencies, and enhance manufacturing integration to strengthen cost competitiveness and supply chain resilience. Supported by design innovations, calibrated pricing actions include sales mix, and ongoing cost optimization initiatives. These efforts are expected to support sustainable margin expansion while building a strong foundation for long growth.
Going forward, Voltas remains focused on expanding its energy efficient and innovation-led product portfolio while steadily scaling its distribution network and strengthening its position as an integral part of Voltas' broader home solutions ecosystem. Segment B: Electromechanical Projects. Segment B continues to play a critical role in strengthening Voltas' portfolio diversification strategy, helping mitigate earnings volatility associated with seasonal nature of core cooling businesses by enforcing the company's positioning as a diversified engineering and product solution enterprise.
During FY 2026, the business maintained strong momentum through a sharper focus on execution discipline, selective order booking, working capital management, and profitable growth across both domestic and international operations. The domestic projects business continued to secure strategic orders while increased focus on fast-track and margin-accretive opportunities across high-growth sectors, including electronics manufacturing, industrial infrastructure, data centers, metro, and tunnel projects.
These sectors continue to benefit from accelerated investments driven by urbanization, digital infrastructure expansion, localization initiatives, and government-led infrastructure development. The businesses also prioritized timely execution and project delivery across multiple sites, resulting in stronger cash flows, improved execution efficiency, and enhanced profitability.
Greater emphasis on project selection, milestone-based monitoring, disciplined receivables management, and tighter operational controls continue to strengthen the quality of the order book and improve overall business resilience. Within the international projects business, geopolitical tensions and Middle East conflict created operational disruptions across travel, logistics, site execution, and commercial settlements.
Despite these challenges, Voltas responded with agility and discipline by activating dedicated crisis response teams, implemented employee safety protocols, strengthened travel controls and evacuation readiness, and establishing a rigorous daily monitoring framework covering critical operations, liquidity, and collection management, and project execution.
These measures enabled the company to effectively mitigate risks while ensuring continuity across key projects and customer engagements. During FY 2026, the international business also witnessed healthy new order inflows, further strengthening the order pipeline while improved collections, tighter controls, and disciplined risk management helped reduce overall risk and improve operational stability within the business.
As of 31st March 2026, the total carry-forward order book in Segment B stood at close to INR 6,200 crores, providing strong revenue visibility and reinforcing confidence in the long-term growth opportunities across domestic and international projects business. Segment C continues to strengthen the Voltas engineering portfolio through a balanced mix of industrial equipment, aftermarket services, and long-standing customer partnerships while providing stable and relatively non-essential revenue streams for the company.
The mining and construction equipment division delivered steady top-line growth during the year, supported by sustained demand for crushing and screening machinery, continuity in operations and maintenance, and maintenance contracts, and stable performance from the Mozambique operations. The business continued to benefit from infrastructure development activities, mining sector demand, and increased focus on productivity enhancement across construction and material handling applications.
Alongside equipment sales, the division continued to strengthen its aftermarket and service annuity business through deeper customer connect, improved lifecycle support, and enhanced service capabilities. A healthy inquiry pipeline, expanding service opportunities and stable operations across key markets provided improved visibility for future growth while reinforcing the resilience of the business model.
Within the textile machinery division, the business operated in a challenging environment marked by geopolitical uncertainty, supply chain disruptions, rising raw material cost, and cautious capital expenditure sentiment across the sector. Despite near-term market uncertainties, the business demonstrated resilience through steady execution of pending orders, strong after-sales performance, and continued traction in the post spinning segment.
The division also continued to focus on customer retention, service responsiveness, and strengthening its solutions portfolio to enhance engagement in the textile manufacturers across markets. Looking ahead, policy support measures announced under Union Budget 2026, coupled with expansion of the PLI scheme and increased focus on domestic manufacturing, are expected to support gradual recovery of the core spinning category.
At the same time, the business remains focused on accelerating growth in post spinning solutions, strengthening aftermarket service revenues, and improving operational efficiencies to drive sustainable long-term growth. In terms of balance sheet and working capital, Voltas continues to maintain a strong and resilient balance sheet, providing the financial flexibility required to navigate a dynamic operating environment while simultaneously supporting strategic growth investments across businesses.
The company's disciplined financial management approach, combined with prudent capital allocation and tighter operational controls, has enabled it to maintain a healthy liquidity position despite ongoing macroeconomic and geopolitical uncertainties. During Q4 FY 2026, focused efforts on working capital optimization led to a reduction in working capital borrowings. Net working capital remained tightly managed, supported by disciplined receivable collections, payment optimization, and prudent inventory management.
Inventory levels during the quarter remained moderately elevated, primarily driven by proactive readiness for the peak summer season, strategic stocking for new product launches, and precautionary planning in response to supply chain volatility and geopolitical disruption. The inventory buildup was calibrated and aligned with anticipated demand trends with gradual normalization expected as seasonal demand momentum strengthens.
The company exited the quarter with a balanced and well-managed working capital profile, reinforcing its ability to support future growth opportunities while manufacturing financial resilience and operational agility. Outlook and strategic direction. An environment marked by continued geopolitical uncertainty, supply chain volatility, and evolving consumer dynamics, Voltas remains firmly anchored in strategy of disciplined growth, operational agility, and long-term value creation.
Over the last year, the company has undertaken transformative initiatives across its business, including a comprehensive refresh of its product portfolio, expanded manufacturing and localization capabilities, sharper brand positioning and fresh marketing campaign, deeper channel engagement, and strong execution discipline. These strategic initiatives are now beginning to translate into cost optimizations, operational efficiency, and business resilience.
With the ongoing season, the company remains optimistic about demand trends across product categories, supported by improved consumer sentiment, increasing premiumization, rising urbanization, and continued infrastructure investments. Across the cooling business, Voltas refreshed RAC portfolio, differentiated product positioning, intelligent cooling technologies, and expanded distribution reach are expected to further strengthen market leadership while driving a more favorable product mix and improved profitability.
Voltas continues to strengthen Voltas' long-term vision of building a scaled home appliances platform through premiumization, product innovation, deeper localization at the Sanand manufacturing facility, and expanding retail and channel presence across markets. These initiatives are expected to steadily improve brand presence, market penetration, and operate leverage over the medium term.
Within the projects business, the company remains focused on selective order booking, execution excellence, cash flow discipline, and strengthening project profitability across both domestic and international operations. Across businesses, cost optimizations continues to remain a strategic priority with sustained focus on sourcing efficiencies, design innovation, localization, manufacturing productivity, and operating leverage aimed at protecting margins and improving profitability. Thank you.
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the Touch-Tone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to please limit your question to one per participant and to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Sucrit Patil from Eyesight Fintrade Private Limited. Please go ahead.
Good evening to the team. I have two questions. My first question to Mr. Menon is, in your point of view, how is Voltas preparing to capture future opportunities in cooling appliances and consumer durables while thoughtfully addressing challenges such as rising competition, input cost pressures, and evolving customer choices? What strategic levers do you see as most important for sustaining growth and being a market leader in the coming quarters? That's my first question. I'll ask my second question after this. Thank you very much.
Good evening, everyone, and thank you for joining our call. Look forward to the discussions. To answer your first question, which Patil, on the appliances business, as all of you know, we have a joint venture with a company called Arçelik, and the product is called Voltas Beko. What this partnership The strength of this partnership is that Beko is a world leader in terms of the appliances business. The technology, the product portfolio, the engineering, the supply chain, and the manufacturing is what is what they bring to the table.
The Voltas Beko appliances, that joint venture which we have, has all the ingredients of a successful marriage between two big, I would say, I think two large organizations, one on a global scale and one the largest in India. They use their technology and their manufacturing prowess and our very strong moat, which is our distribution and understanding the Indian market. That is as far as the durable space is concerned.
The cooling as far as the air conditioning business is concerned, we are pretty, as you know, we have been a leader in this space for quite some time. The strength of a Voltas brand coupled with the kind of moat we have with respect to our distribution reach is phenomenal. I think that is what we continue to leverage. You would have noticed that this year we have launched a series of new products, which is more feature-rich.
There is a lot of new features in that. We have introduced a lineup with AI, which essentially has features like as Sridhar had mentioned in his initial address, like geo-fencing, like adaptive cooling and also energy manager. These are features we are always one-up as far as this is concerned, and we will continue to introduce products which will keep us ahead of the curve. I think this combination of having the right channel with a product which is always ahead of the curve is what will ensure. We know the competition is severe. This is a area which has a lot of participants.
Almost 60 brands operate in this space. I think what we bring to the table is the Tata trust, plus the fact that our distribution reach is phenomenal. You would have also noticed that we have refreshed our entire marketing campaign this time. We had earlier, Voltas had a different style of marketing.
This year we had onboarded two brand ambassadors, celebrity brand ambassadors, Ranbir Kapoor and Neetu Kapoor, and this is helping us in a big way in terms of that journey towards becoming an aspirational brand. I think we have all the right ingredients to take it forward. The competition play is always there, and that will continue. We do not see it receding.
Thank you. My second question to Mr. Sridhar is, as Voltas continues to benefit from demand in cooling appliances and home solutions, how are you prioritizing capital allocation between capacity expansion, R&D and shareholder returns? What long-term cost efficiencies are being put into place to safeguard margins amid rising input and financial costs? Thank you.
Okay. I think, as I highlighted in the spiel, Voltas is a fairly diversified business, as you would have seen. I think it was more relevant this year. You could see the segment segregation between the three segments in terms of the profitability. The capital allocation is done sort of fairly diligently across the segments, while we'd also constantly look at any capacity enhancements where whichever needs, whether it predominantly comes in the segment A, as you can make out.
Purely from any capital allocation or any investments required, we are sort of looking at all the three segments together because it's a fairly diversified business. From pure CapEx point of view, it's a segment A which sort of needs periodic investments, and we are sort of doing investments from a capacity point of view, from an R&D point of view, ongoing. If you see the last two years, three years, and also this year, we plan to continue doing that.
In terms of the profitability angle that you're referring to, our focus is obviously to drive top line, because what we feel is the headroom for growth within the larger cooling segment and appliances is very high for us. We want to drive top line very, very actively. In the process, we hope, and I'm sure we will have the efficiencies of scale, where the margin profiles would sort of margin absolute, will sort of keep growing and continuing to grow on an ongoing basis and give back shareholder value.
That's the broad strategy that we are sort of trying to work on. Irrespective of the Obviously, you would have seen some geopolitical tensions over the last quarter or so, but Voltas as a company had started working on an active cost reduction program almost nine months back. As you see, some of these programs obviously take some time for some efficiencies to come in, but we are sort of seeing some of the benefits that we had already actioned some time back. We have started seeing the benefit.
It is also true that some of the benefits got offset by the inflation, inflationary measures and also the currency impact. The continual program for cost efficiencies is something we are trying to institutionalize and make sure that we have a continuous program of cost improvements running.
Thank you, and best wishes.
Thank you.
Thank you.
Thank you. Participants are requested to please question to one per participant. The next question is from the line of Manoj Gori from Equirus Securities . Please go ahead.
Yeah, thanks for the opportunity, sir. My question is on the margins. If we look at the reasons that we highlighted about commodity inflation and INR depreciation, when I look at the company level, our gross margins have declined by only 85 basis points. When I look at the segmental margins, there has been a bigger deterioration.
When I look at the unitary product margins, which are close to around 3.2% for FY 2026 versus 8.4% in FY 2025, probably how should we look at the margins during FY 2027 and 2028, given that you have highlighted about a lot of measures undertaken for cost rationalizations and in fact better utilizations at both the facilities. If you can give some outlook on the margins and probably how should we model margins for FY 2027 and 2028. That's my first question, sir.
Okay. Thanks. I think a very relevant point raised. I think the margins dilution that you see in the segment A, I think predominantly, as you know, we have had the discussions during the quarter, quarterly discussions also, were predominantly sort of from the quarter one and quarter two, where obviously there was a significant overhang with regard to the summer, which was a bit erratic early monsoons, because of which there was a stock overhang also in the channel and also all the manufacturers and the marketers also had.
That was a significant impact. From there, if you in terms of thought process that we have had, what we have communicated is a progressive improvement in the absolute margins and also gradual improvement in the profile. I think that is what we are actively trying to sort of work on in terms of improvement. Should it get better from the number that is sort of highlighted in FY26? Definitely, it should get better.
But as you can make out, the some of the challenges are fairly in a way structural in the sense because of the continued issues that we are having from a supply chain angle or the currency. We are monitoring it extremely actively and sort of taking corrections in terms of pricing opportunities wherever we can take. We are working on all those options. We want to gradually improve the top line and the margin profile and sort of reach to a level which is closer to what it was in FY25. It's a gradual improvement that we see at this point of time.
Sure, sir. One question on the current environment. If we look at, we are already into mid-summers, how things have progressed during the month of April and May. Also the outlook on the current season and probably how things are panning out at both secondary as well as at primary level, and how should we look at FY27 as a year?
Yeah. Manoj, this last year, this quarter was a rather weak quarter, as you know, because of the weak summer and the unseasonal rains. In comparison to that, we are seeing a very positive traction in terms of the first month, April, and that going into May. There's a serious heat wave in many parts of the country, though there are intermittent rains and such events happening in some other, some parts of the country. From a very positive kind of growth we are seeing and the secondaries are also moving fast actually.
While, as all of you know, there was a table change which happened last from January onwards, and most of the brands, including us, started delivering the new table products into the channel network from the month of March, which had taken a price increase also. There was a 5% to 10% price increase in three-star and five-star. There is a further price increase which is going on because of the commodity thing. I think the saving grace in all this was compared to last summer, this summer the GST rate has come down from 28% to 18%. The impact on the, there is some cushioning of the impact.
There is still a impact, but, it's been the enormity of that impact has been softened a little bit because of the GST reduction, which is, which couldn't have come at a better time than now, you know. We are seeing very positive growth, this quarter, Manoj.
Sir, any indication on the blended price hike that we would have taken so far on the new models?
The, actually each model, like, as far as the first round of increases were concerned, it was a 5% for the. Blended was something like 7%, 8% because the three-star is a larger portion, and the five -star is around 25%. 70 odd percentage is the three-star. A blended of 7%, 8% was only on account of the table change. In addition, there was some other impact because of the copper and commodities going on, going up even before the war started, you know. That also played a role. There has been another 1% or 2% which we have further increased.
As of now, last month we had again taken an increase because of all this dollar devaluation and all, the rupee devaluation and so on and so forth. The trend is certainly on a upward trajectory, but the only saving grace was that reduction in GST, which was tantamount to a 7.8% on selling price. 10% reduction is equal to 7.8% on MOP. That was a welcome thing. Otherwise, the entire affordability thing would have really led to a contraction of demand for. We are not seeing that at all now.
Sorry to interrupt. May we request Mr. Manoj to please rejoin the queue. We have participants waiting for their turn. Thank you. Ladies and gentlemen, we will request you to please limit your question to one per participant. The next question is from the line of Natasha Jain from PhillipCapital. Please go ahead.
Thank you for the opportunity. Good evening, gentlemen. You mentioned in your press release that March has been the strongest month for you. We understand that there was a lot of inventory pushing in March brought up by the industry itself. April, at least till mid-April, it wasn't the best of season in terms of rains. Now you've mentioned that secondaries have picked up very well. Against that, what at least we are seeing is that primaries are still soft.
In terms of the price hike also, what I've understood is the newer price hiked inventory is probably still not passed on to the trade. On that backdrop, how do you see margins in this quarter, given this is the most important quarter? Any cost escalation from here, do you think that may dent the demand itself for this season? Thank you, sir.
Natasha, you said it right. What happened was there was a. If you recall, in the month of December, the channel had stocked up heavily on the old table, and that had taken the December, the January and the February sales were a little mellowed. March was a superb month. It was a record high in our entire history, you know. We hit a very high number. April also, we have almost done very close to that number. April has also been extremely buoyant. May is also looking good.
In any kind of a price increase with the channel, when there is a price increase with the channel, the first tendency of the channel is to hold back on the purchase, assuming that things will come down. When the secondaries start picking up and then they feel there is a likely shortage, the secondaries start picking up. We are seeing a similar trend in the month of May also. The higher priced products are now started getting absorbed by the channel. We feel that this quarter will be a very good quarter, Natasha.
Sorry to interrupt. May we request Ms. Natasha Jain to please rejoin the queue. Thank you. The next question is from the line of Umang Mehta from Kotak Securities. Please go ahead.
Hi. Thanks for the opportunity. My question was again on margins. From what we understand, fourth quarter would have seen some old cost inventory, right? The bulk of the cost inflation which we've seen will likely hit you in Q1. In that context, I would like to know what was the impact of these FX losses, which is around INR 55 crore in second half.
How much of it hit you in fourth quarter? How much was the incremental spend on marketing or branding ambassadors that you called out? The price hikes that you've taken, what conviction do we have of seeing margins improve from here going forward? Thank you.
Okay. On the spent part. Sorry, first on the split, on the old inventory, new inventory for Q4, as you know, we had opportunities to continue sort of selling the old inventory during the first half. We sort of consumed pretty much the entire older inventory by around the first four to six weeks of the quarter. After that is when we started selling the new inventory. You are right in terms of cost. Obviously, the mix was there between the old and the new during the quarter. It was not entirely a new total only during the quarter. You're right from that angle.
As for as the impact of the, I think I've elaborated the fact that we have had a few rounds of corrections that has happened in terms of some of the inflationary pressures that took place even before the crisis that we had in the Middle East. Even then, some of the commodity prices increase were there, and it got sort of compounded because of subsequent increases and the currency devaluation in during March. There was a multiple impacts that sort of got happened, which impacted the margins for the quarter.
We are progressively sort of passing on, as Mr. Menon mentioned, in terms of the pass on of the price increases that we pass on. It's sort of settling down in terms of the price increase. I think that is where we are at this point of time. In terms of the marketing, it was sort of managed within the overall marketing pool. No specific sort of, it was sort of comparable to what we have been spending from a marketing side. Nothing separate that we had to I mean, obviously, we spent on the brand ambassadors, but nothing sort of, out of the ordinary.
Thank you. The next question is from the line of Keyur Pandya from ICICI Prudential Life Insurance. Please go ahead.
Thank you for the opportunity. Just one question. On the profitability side, you mentioned blended 5-6% kind of price hike. I believe inflation is much higher. Just want to reconcile the your statement that you will try to achieve FY 2025 profitability. There is more of aspiration. How should we see profitability journey for FY 2027?
Essentially the blended one of 5% and 10% increase was purely on account of the table change, the new table products. In addition, we had taken another rate increase for the commodity prices which had gone up pre-war also. Now those, as is our stock of those old materials get over, we're going forward, we are watching the pricing.
The price increase that we are seeing is quite significant, as you rightly mentioned. When the we as well as all other brands who are in this space have to start using those new commodity prices for the products, I think this will be a pass-through for most of the brands. I do not see a challenge there. That number can be significantly higher.
We don't want to guess that number now because many of the things like the dollar, the plastics, the aluminum, for example, the copper, the gas, all these are moving. Multiple movements are happening. I completely agree that these numbers are not, by any stretch of imagination, a small number. We are seriously talking about double-digit inflation, and it will get passed through as and when the cost starts hitting us.
Understood. Just one clarification on that. You think that you can go back to FY 2025 margin in FY 2027 itself?
This is a progressive movement that we are doing. Compared to those years, which was FY 2025, I think it will be a gradual step up. We have, as Sridhar was mentioning, we are very, very clear about the overall quantum of gross margin that we generate. Being in a leadership position, we just want to sort of keep that as a goal rather than look at percentage gross margins is probably not driving us, you know. That is the way it is. The quantum of gross margin is where we are looking at.
From whatever we saw in the last financial year, while the secondary market share is showing a little different picture, we have primary market share data which shows that between us and the next cluster of four brands, actually they're after us, there is a gap of 5.1% between us and the next cluster of four brands. That's the kind of lead that we have established this year, and that will hold us in good stead in terms of overall margin profitability, margin quantum maximization, actually. That's the way we see it. Yeah.
Sorry to interrupt. May we request Mr. Keyur to please rejoin the queue. We have participants waiting for the turn. Thank you. The next question is from the line of Aditya Bhartia from Investec. Please go ahead.
Hi, sir.
Hi.
Just one part, on again harping on this cost inflation point. Have the increased costs related to war started hitting us, or do you think they'll start impacting us in some time? Have we taken any further price increase in response to that? Do you think that first quarter margins can dip significantly before we start taking those price increases? Just a related question. In this particular quarter, we have seen unallocated costs going up very sharply. What could be the reason for that?
So, uh-
Aditya.
Aditya. Okay. The first part of the question. This quarter, I think it will be a mix of the costs. Some of the costs, the pre war vis-à-vis the post. Again, for a different reason, it will also be a mix. It will be sort of progressive. As Mr. Menon mentioned, we have passed on certain price increases, and we are monitoring the price situation also very actively.
We will be open to sort of pass on any further price increases that need to be done. As mentioned, our intent is to progressively work on the top line and the margin profile. It will be a progressive improvement. We are not expecting any sharp downturn in terms of the margin profile for the quarter. Yeah. Sorry, the second question was on the unallocated. Okay, that was primarily because of the forex impact and the mark to market from the treasury angle.
Thank you.
Thank you. The next question is from the line of Renu Baid Pugalia from IIFL Capital. Please go ahead.
Hi. Good evening team. Just a couple of clarifications. Will it be possible for you to quantify the exact price action that you have taken, that 7% to 8% plus couple of price hike, 1% to 2% in the second round? What is the gap in terms of you mentioned double-digit price hike, could be expected to fill up this gap? A, if you can quantify these numbers. Second, can you share what was the volume for RAC for us for fiscal 2026? Lastly, can you share with us what is the broad mix of the MEP order book between domestic and international?
Yeah. we'll
Thank you.
Thank you, Renu. The first one about the price actions that we have taken, I'd mentioned about the new table we have taken, 5% for the three-star, 10% for the five-star, then we have topped it up with a 2% to 3% increase for certain on account of the copper pricing, copper impact. Overall, this has been increased. The next round of increase will depend on how the overall prices stabilize, actually. It depends on how the war situation goes and how the dollar reacts, the rupee dollar goes. We are watching it almost on a weekly basis.
At this point in time, it looks, as I said, double-digit numbers, but it's for us, it will all depend on how the situation goes. It also depends on how soon the current stocks of our commodities and material that we have runs out, you know. Based on that, we'll have to take price action. Difficult to say a number at this point in time. We'll have to purely go by how the material costs start hitting us, and progressively it'll get passed through. The second thing on the volume, we have done.
2.25 million units last year, which is, this is what I said, there's a gap of roughly 5.1% between us and the nearest bunch of four competitors. All of them are within 10,000 machines of each other, but the lead is becoming increasingly large between us and the number two group. That is on the volume. Order book between international and domestic is INR 6,200 crores. It's a very healthy order book that we have and with a very prudently selected order mix, which will deliver very robust profitability to us going forward.
Thank you. The next question is from the line of Akshen Thakkar from Fidelity. Please go ahead.
Yeah. Hi, sir. I had couple of questions on the electromechanical-
I'm sorry to interrupt you, Mr. Thakkar. We are unable to hear you clearly, sir.
Yeah. Is this better?
Yes, please go ahead.
Yeah. Much better. Yeah.
Sorry. On the electromechanical projects business, could you just help us understand in the international or on domestic businesses, have you had any clients call out force majeure? That is question one. Question two was, you know, historically, we've seen some margin volatility when material prices goes up. Any read-through from the past cycles where, you know, you saw metal prices move up as sharply as that did? two questions on that, I had one more on UCP, which I'll follow up after.
The second one, Thakkar, Mr. Thakkar, the first one was electromechanical projects. I understood what your question is. The second one is.
Yeah
on what? I didn't get it. Yeah
First one was on force majeure being missing, and the second one was what happens to margins in that segment because you have bid-level margins, and then commodities have been volatile. Do you expect volatility in the margins in the project business as well?
Yeah. Essentially, we have not had any client, even internationally or domestic, have any force majeure applied. There is nothing of that sort. For a short period in Qatar, there was the contractors were given the opportunity for using force majeure for a short period of time, which got revoked. Nobody has used it. We are not affected in any which way. As far as domestic, of course, nothing of that sort has happened.
We do not see any impact on the margins for the MEP segment because one is almost like 40% to 50% of our project MEP order book in India, and some of them even in international has got a proper price variation clause. Any variation in terms of commodities, materials, as well as for labor gets It's a pass-through thing. We do not see that impacting in any which way. That's in a very safe zone. There's nothing to worry on that, actually. Yeah.
Excellent. One last question from my side.
Yeah.
On the unitary product business, you know, you've been kind to share the kind of price hikes that have been taken, and you did mention that you don't see impact on margins. You know, the problem for us as investors right now is to gauge what is the level of margins from which you are making that commentary because normative margins have been maybe 8%, 8.5%. This year's margins have been 3.5%. When you say you don't expect margin pressure, what is the level from which you are making that commentary?
Mr. Thakkar, the thing, as I said, the overall margin percentage profile will gradually inch up towards what we said is that number of FY 2025. How many quarters it takes, it depends on how the overall market. Essentially, in this kind of thing, the demand plays a very big role. If you were to step back for a year, for a minute and then see what got us to that high margin profile, a good margin profile in FY 2025 was the demand. What caused the pain in terms of the reduction in the margin profile was again demand. The first one was high demand, the second one was poor demand. This is one of the most important factors.
To my mind, the commodity volatility, the changes in the prices for all these things, will generally get passed through by every single, all brands, including us. What will really affect is the demand. Now, if the war continues and if there is an inflationary trend and the affordability of this product, there is a contraction in demand, the margin, we will take much longer for us to inch up. If there is the heat, the summer, the impact of the summer, there is the affordability is not very badly affected.
The third most important variable between brands is who's got stocks to be able to service the channel partner. On, the first two is an equalizer for everybody. The third one, we seem to be in a much better place since we are much better prepared in terms of our inventory to take care of the peak, peaking in demand. We seem to be at least a few steps ahead of most of the competitors, and that will play a positive role in that inching up as and when it happens. It's a pure demand supply issue, you know, we'll have to play it by that. Yeah.
Thank you. The next question is from the line of Siddharth Behera from Nomura. Please go ahead.
Thanks for the opportunity, sir. First is on the AC volume. How much was the volume for the entire year in FY 2026, if you can highlight? What are you thinking about the next year? In terms of the CR and CAC, if you can also highlight the contribution for this quarter. We had talked about some challenges in the CR side as well in the past. Has that sort of achieved the normal margin levels, or you think it will take a bit more to improve there?
Yeah. Siddharth, the last year actually for the overall industry had a difficult year. I think the industry saw a degrowth of something like 10% to 12% is what the best guess is. Last year, the primary sales of all brands put together was 14.3 million units. Actually, that was the total number. This includes all the brands, the 60 brands. Out of which there are 12 of them are big brands, and the rest of it is a bunch of other brands. Now, projection for going forward, this will certainly expected to grow at least 15% to 20% is what we feel because the last year base was a little weak. That's on the room AC.
As far as the commercial refrigeration was concerned, the industry had seen a degrowth of roughly 5%. Siddharth, if you know, the CR, commercial refrigeration is also a product which is a high impact on the intensity of the summer. For example, the product like deep freezers has got a direct relevance to the heat because the ice cream freezer demand starts peaking when there is the temperatures are high, and it reduces when the temperatures are not as good.
The people, even the OEMs, the big Amul, the Vadilal, the Havmor of the world, the Arun Ice Creams, all of them stop buying freezers when they see the season is not going too well. Same is the case with visi coolers. Visi coolers is a beverage cooler which we give to all for storing of beverages. There again, there is a direct linkage to the summer. Both these categories saw a major dip last year, and that was because of the season, unseasonal rains.
Here again, it is a pure function of summer. If the summer is strong, and this year we are seeing a good summer, so this category also is likely to grow upwards of 10% at least, if not more. Commercial air conditioner is another category which has no relevance to the intensity of the summer. It's purely a B2B business driven by the air conditioning requirement of offices, restaurants, whether it's health clubs, spas, boutiques, all these kind of things.
Of course, there is a big segment which is coming up for the commercial AC, is the manufacturing sector, which is growing very rapidly in India. A lot of manufacturing play is coming in where we are getting a lot of inquiries for the manufacturing, I think. This is another category which the industry will grow by at least 12% to 15%. We are, as a brand, are underleveraged in this, and we see a huge headroom for us to grow, and we are working on that.
What our CFO, Mr. K.V. Sridhar said is, CapEx requirements judiciously, which we put in, quite a lot of that is going into the commercial air conditioning, where we see a huge headroom for us to grow because the kind of traction that we are seeing in this space and the fact that we are underleveraged in this is likely to be the next growth engine for Voltas, in addition to our core strength of the room air conditioners and commercial refrigeration.
Thank you. The next question is from the line of Praveen Sahay from Prabhudas Lilladher. Please go ahead.
Yeah. Thank you for the opportunity. Few, you know, data points required, sir. The first is, how is the channel inventory in the RAC right now, if in terms of months or days you can, you know, give? Secondly, on the, your order book in the project, which is a INR 6,200 crore, how much is the domestic contribution? Thirdly, how is the Chennai facility operating at? Because you had highlighted that the utilization level has improved from last year, previous year. At what level of utilization that's running at?
Thank you. Quickly to give you, the channel inventory has dropped dramatically. It is less than 45 days now, probably closer to 30 days the way we see it. The order book, 6,200, 4,500 is domestic, and the rest of it is international. The Chennai factory is now built up to a capacity of 1.5 million units, which is roughly 1.2 lakh machines a month is what is happening. Overall, around 14 to 15 lakhs is what we are doing. We have increased the capacity from 1 million last year to 1.5 million during this year so that we can meet the demand.
We will wait for another two years before one to two years more before we do our next investment. We've built this factory for 2 million. All that we have to do are small CapEx to increase the capacity from 1.5 million to 2 million. We are almost ready for that. Once the demand trajectory is visible, we will do that third round of investment. Right now, it is delivering 1.2 lakh units a month, average, on an annual basis, roughly around 1.5 million.
Thank you. Ladies and gentlemen, due to time constraints, that was the last question for today. I now hand the conference over to management for closing comments.
Thank you. Thanks for all your questions and the discussion. Just to summarize, as Voltas moves forward, the company remains encouraged by the strong momentum across its businesses and significant opportunities emerging across cooling, home appliances, engineering products, and projects.
Voltas has completed a structural transformation exercise across business verticals, product portfolio, channel expansion, cost optimization, supply chain, and business processes, which should help Voltas to strengthen its leadership in the cooling segment while steadily evolving into a scaled future-ready home appliances and engineering solutions enterprise. Thank you all for the discussion. Thank you.
Thank you. Ladies and gentlemen, on behalf of ICICI Securities Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.