EPACK Durable (NSE:EPACK) Q2 2027 Earnings Call

0:00 Ladies and gentlemen, good day, and welcome to EPACK Durable Q2 FY 'twenty seven Earnings Conference Call hosted by DAM Capital Advisors Limited. As a reminder, all participant lines will be in the listen only mode. There will be an opportunity for you to ask questions after the presentation concludes. Please note that this conference is now being recorded. I now hand the conference over to mister from DAM Capital Advisors Limited. Thank you, and over to you, sir. Yeah. Thank you, Anam. Good morning, and welcome, everyone, to EPACK Durable's q two FY twenty seven earnings call. Today, we have the management being represented by mister Raja Idi Singhanya, managing director and CEO, mister Rajesh Kumar Mittal, the chief financial officer, and mister Nitin Gupta, GM finance.

0:55 At this point, I would hand over the call to mister Rajesh Mitra for his opening remarks, post which we will open up the floor for q and a. Thank you, and over to you, sir. Thank you,. Thank you all, and very good morning, everyone. Welcome to our earnings conference call of the second quarter and first half of the financial year twenty twenty seven. I would like to thank DEN Capital for arranging today's earnings call. The key financial highlights for the quarter two of financial year 'twenty seven are as follows. For the second quarter, revenue from operations stood at $4.39 crore, registering a strong growth of more than 106% on a year on year basis compared to INR $2.13 crore in the corresponding quarter of the previous financial year.

1:46 EBITDA for the second quarter stood at INR 7.1 crore compared to INR 0.5 crore in quarter two financial year 'twenty six, representing an improvement of approximately INR 6.6 crore. The EBITDA margin improved to 6.10.62% compared to 0.23% in the corresponding quarter of the previous year. I would also like to highlight an important point regarding the comparability of EBITDA margins. The company has not accrued any PLI income in quarter two for the financial year 'twenty seven, whereas it has accrued a PLI income of INR 8 crore in quarter two on a year on year basis, which said within that quarter revenue.

2:31 And because it carries no associated cost, it directly followed the entire amount into the EBITDA. Excluding the PLI income for the previous revenue and EBITDA for quarter two financial year twenty six, EBITDA would have been negative rupees 7.5 crore compared to positive EBITDA of rupees 7.1 crore during the current quarter. Accordingly, on a comparable basis, excluding PLI income, the company has achieved an EBITDA improvement over approximately 14.6 crore on a year on year basis, reflecting an improvement in underlying operating performance. This will also point here that this this EBITDA margin does not include the... If I ignore the forex loss, the EBITDA EBITDA would have been improved by rupees 10 crore on a half year basis.

3:22 Now I would request our managing director and CEO, mister Ajay D. D. Singania, to brief you on the operational highlights. Over to you, please, sir. Thank you, Ajayi. And once again, good morning, everyone. Let me begin with industry first. Primary sales for new market conditions in July to September quarter were better than last year. Last year, wherein unseasonal rains destocking around GST transition late on the industry, the quarter has been completely much better both in terms of primary and secondary sales. Secondary sales have remained healthy and general inventory is at a comfortable level, This gives industry a cleaner starting point for the coming season, and we are seeing this in our December 30 production. Commodity prices, particularly copper, aluminum, plastics, the FX situation have been volatile throughout the year.

4:14 Our contracts provide passing this cost, but passing is an ongoing process with a line, especially when prices are moving as sharply as they are today. In such periods, some compression in persistent margins is measured, and it narrows as pricing catches up. In larger appliances, washing machines continue to grow ahead of broader market driven by shift to fully automatic and front group models and by rising penetration beyond the top cities. In smaller prices, kitchen categories such as air fryers, mixer graters, induction cooktops continue to see strong direction as consumers and brands increasingly begin to source those categories from global domestic manufacturer. Air woodlands that is software year, internally inventory normalized, and plastic cost savings.

5:02 Against this big backdrop, I'm pleased to share that EPACK Durable delivered its highest ever first half revenue of $30.25 crores in H1 of 'twenty seven, up 51.3 year on year. In second quarter, revenue more than doubled to rupees 439 crores. The quarter also shows our diversification network. Small domestic and large domestic appliances grew 57%. Washing machines and air flights led the growth, and non energy business contributed 63 of the revenue for this quarter. For half year, SDA and LDA grew 62%. Our RFC business grew 58% in first half supported by share gains with existing customers and contributions from new ones. In second quarter, RFC revenue grew in the 61, partly on a low base of last The non signal range of destocking around logistic condition.

5:58 Copper has grew 45% in the quarter, and we continue to implement captive integration in heat exchangers, copper tubing, PCBs, cross loop ends, and bullet parts. We now serve 72 customers across 19 categories, and top two customers has come down to 32% from 72% earlier in FY '23. During the year, we launched vacuum cleaners, power fan, nuclear vendors, and added new end customers. For FY '27, our pipeline includes oil free vehicles, sushi machines, air and device, and couple other products, which are under the need. On our Hypers partnership to, our wholly owned subsidiary, Seal City, though the last week season, we produced roommate edition for Hypersons, the next milestone is washing machine.

6:47 Pilot production for front load washing machine for license is scheduled for end of November twenty six with commercial production to. Front load washing machine is a premium growing segment of washing machine market, and this takes PMD place from a single product category to. The board has taken decisions to sharpen our focus on the core business. We're transferring our 50% stake in the power electrical joint venture with who will hold now. We're also winding up two subsidiaries, India auto products, and EPACK Electric Company Limited. Both of them neither had any operating facility, and nothing commenced on both of us. Our share of losses from EPACK was 12 crores for FY twenty six and FY twenty seven, and that trend now.

7:39 Going forward, our capital and management attention will be fully on EPACK Durable and. On margins, now we're hitting this state forward. We are scaling up the top line strongly and winning share, and like for like EBITDA grew 77% in the half. Reported profitability is being handled by depreciation and interest for new capacity. The lag in passing through commodity costs, the absence of the income and seasonality, not by any weakness in demand for competitiveness. As facilities we have built up, pillar fixed cost absorption will support margin. Our priorities remain three foot. First, scale growth engines, sustain our efficiency share gains by wrapping up washing machine, including front door and and small domestic appliances, which remain our fastest growing and most margin accretive category.

8:29 Second, deeper strategic partnership position EPACK as preferred manufacturing partner across multiple categories we developed with our key customers. Seven, build the margin, convert scale into operating leverage, and new facilities is our goal. Localization depends on value and addition, and mix moves forward higher margin. We have robust pipeline of new products and customers across segments, and our near term priority is converting the into software profitability. With this, we now open the floor for. 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 2.

9:18 Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question comes from the line of Tanay from DAM Capital. I have a few questions, if I may. So the first one I wanna understand is that, yes, we've seen very strong top line growth this quarter for RAC on a favorable base. Maybe if you can sort of help us break it down into value and volume. Volume wise?

10:08 Yes. For the quarter. Right. So volume wise, I I think it will be difficult to that. It's not handy, but overall, we we see for... We grew good over 60% on every week last year same quarter. I see... I I have a segment with breakup, which was a part of the investor PPT already approved it. Yes, sir. No. I I wanted me to say the $1.60 crores of RAC, which we've done, if you can sort of help us break down how much was it led by volume and how much was pricing benefit. Okay. In that sense, So the pricing overall compared to last year same quarter, the increase has been approximately 15 to 20%, very commodity model. So so that's the approximate price increase, which has happened on... Because of the commodity and the ForEx listing. So overall price increase is varies from 15 to 20% market demand.

11:03 Sure, sir. Sure. And so the other thing I wanna understand is that, yes, while you've taken a 15 to 20% price increase, gross margins have seen, you know, a sharp contraction on a Y o Y basis. Can you maybe split the contraction into two pieces? Because one piece would be the under recovery of price hikes, and the second would be also a portion of higher ASPs impacting your margins optically. So maybe if you can sort of help us understand what percentage of price hike is yet to be taken versus the cost escalation which has been seen. So on this, actually, if we compare like to like, last year, h one or q, we had secured, like, Rajeev mentioned, the income of eight koroutine, and overall 20...

11:48 Approximately koroutine h one. So if if we neglect the PLI, the gross margin, the last year was approximately 12.4%, which now is 12.8%. So on a like to like basis, the gross margins have improved. Although there has been a lag in passing the commodity impact, but because of the model mix change, especially with the focus of the small and large domestic appliances, overall, margins have actually increased. Understood. So so fair to say that the 15 to 20% tie, like, which we've taken sort of covers all the escalation till date? What did you Come again? I'm saying, sir, fair to say that the 15 to 20% price hike which we've taken for our customers sort of takes care of all the cost increases which we've seen?

12:39 Largely, yes. But like I mentioned earlier, there is a lag. I did... Not passed on. We said that there's always a lag, but, yes, in general, mostly based on our contract, any escalation or decrease in commodity is passed on in subsequent quarter. So that's an ongoing message, but there's always a lag. But, largely, yes, the increase has been passed on to one of our. Sir, sir, the question was, obviously, you know, we've been seeing the secondary sales have been far better. So if you can sort of help us understand what are the current industry levels, you know, in terms of inventories at both brand and channel, if there's any indicative, you know, number or any indication that you can sort of provide will be helpful.

13:26 So, Sandeep, in terms of inventory levels compared to last year to last year wherein, again, due to additional range, the inventory had quite up with the customers as well as with the general partners. I think we are looking at a significantly improved situation. And my only guess, what would be... Like, last year, I I I remember, we were talking about somewhere around 5.5 to 6,000,000 of inventory in grade towards the end of. I think that was the condition last year. It's probably 40, 50% lower. So this this, again, is an estimation based on the kind of outlook we are get... Getting for q three and q four. So there's a good pull in q three and q four as well. So that gives us the confidence that, yes, the main limit is rather comfortable or we can we can... Because the sales continue, they are at a lower level. Right?

14:18 Sure. Sure. So the other thing was also, you know, we've seen a lot of CapEx, which has been put over the last couple of years. Right? We've almost had a 400 drop plus sort of a plan in terms of expanding capacity. You know, that's yet not translated into meaningful revenues for us yet. So, you know, what is our road map, let's say, for the next three to four years in terms of, you know, scaling and utilizing these capacities, sweating these assets? And I think a lot of it is also for Hisense. So how are we thinking about, you know, scaling up Hisense as a, you know, brand for us as a partner over the next two to three years in terms of revenue scale up? In terms of the overall CapEx, the announcement that we made almost eighteen months ago was that we are looking at a CapEx of close to 470 crores, of which 370 is what has been actualized till end of September.

15:12 So... And with this, mostly, has been already put to use, and the plans are largely done. So the balance in this growth will further be staggered in the next six to twelve months. That's the medium term vision, and now the focus is very clear. Like, the... We are withdrawing from a couple of joint ventures and couple of, like,. And also the focus is very clear. We are looking at segments only wherein we see good growth. And the balance 100 crores, which are the dividend earlier, is also now being stretched, and we will take another 60% by the time we see growth in those sectors will be invest. So, yes, investment in HyFin is largely completed with commencement of 24 motion mission expected in end of November.

15:58 And then the rest 100 crores, which is now budgeted, would be the second in the next six to twelve months to further ramp up capacities of products like washing machines and look at newer models of. But there are no significant investment plans in any meeting. Got that, sir. Got that. Maybe I'll fall back in the queue and join, you know, back again later. Thank you so much for answering my questions, sir. Thanks. Thank you. A reminder for all the participant, in order to ask a question, you may press star and one on your touch tone telephone. The next question comes from the line of Shriyaj Jain from three a Capital Services. Please go ahead. Hello. Am I audible? Yes. Yes. Thank you for the opportunity.

16:45 Couple of questions, sir. First, since this year being the last year for PLI, so post PLI, how do you see margins going forward? Will we have to take further price hike to maintain margins? Thanks, Puneet. Thanks,. So, yes, this is the last year for the EPACK Durable. And for last year and this year, currently, we are not incurring any income in terms of the. So based on our current discussion and the industry representation done to the ministry and the, the the budgeted amount with... For the for the, which was at roughly 5,000 crores, and it has largely remained unutilized with the government. There is an ongoing discussion wherein we believe there could be some extension happening.

17:32 So that's very... But at the same time, yes, whatever PLI income was secured by us was largely passed on to the customers to get... To be competitive in the market. So as you can see, we have we have been discussing about increasing the overall gross margin in the product. The initiative has been taken to increase the prices wherever the discounts were being being given in terms of EPLA. So in the medium term, I'll I'll be... Let's see some normalization and beyond that, but the normalizations will happen and SPLI discounts get reversed quarter on quarter. Great to hear that, sir. Next question, sir. Could you please provide sales number from Hisense? And have you had any talks with the Hisense team? What are the response they're getting from the Indian markets?

18:21 Overall, on the Hyphen side, Hyphen is already a very strong brand. It has already gained a significant market share in India in terms of their end user market, and that's how the brand is getting created. For AC, the current year being the first year for them as as as the market, they have already sourced those to getting other day attentions from us in this year, being the first year till now, until September. So that gives us sort of confidence in terms of the overall penetration and the channels which they have created. And now with the automatic good... That's the... We covered, like, washing machine and etcetera. We need... I sense is on the right track, and our association will spend their time in terms of the outlook and the intent with which we have partnered with them.

19:10 Sir, could you please provide the sales number from I sense? It would be helpful. Approximately, for H1, it is close to 90 crores. 90 crores. Okay, sir. Thank you so much, and all the best. You. The next question comes from the line of from Mount Intra Finance. Please go ahead. Hi. Am I audible? Yes, sir. Yeah. Hi. Thanks for taking my questions, and congrats on a good top line performance. So I just wanted to ask when it comes to our overall debt on our balance sheet. If we look at the the... A pair... A a pair of ours that is almost twice our scale, they seem to have the...

19:55 This kind of debt. And so what is our outlook here, you know, on our finance cost? I believe last quarter also the management had pointed out that we can do better on this front. So can you just give me an idea going forward how the debt levels will go... Debt levels will, sorry, turn out? So so,, overall, you can see compared to last year in terms of the debt position, the debt was across that of the company with $7.70 crores and 70 or $7.75 crores would be overall gross debt of the company. But certain areas where the company has been focusing and improvement has been achieved, especially important to is in terms of inventory reduction. And payments have been done to the suppliers and also supposed to $225.01 crores of payment has been done to the suppliers for the inventory which we are getting.

20:48 We've reduced inventory by almost $125.01 crores, and 100 crores have been capitalized in terms of the investments in the last quarter. So, yes, the debts remain similar currently, but in terms of the plans of EPACKS, like I shared, a 100 of investment is planned in next six to twelve months. The company is not looking to raise any new capital and significantly new capital. So for the medium term, the overall debt positions will remain similar, which is almost point eight times the equity. And then we will see normalization happening as the capacity that have been created are. Okay. And just to kind of deep dive here a little bit. So most of our debt is, I think, the short term working capital debt. So as we projected strong growth going ahead. So as that growth comes in, we don't anticipate again a corresponding constant increase in our finance cost, so we can get some of that leverage into our bottom line, so we can effectively make a more uniform profitable profile. Is that correct, sir? So our just what I'm trying to ask here is that our finance cost should not see much more of an increase going forward even with the strong revenue growth that we are projecting ahead.

22:02 Right. You look at the numbers also, the total finance cost last year versus this year with revenue deferred in terms of value has almost remained same. So there is... There hasn't been any increase in refinance cost overall finance cost. That's the number. And then going forward, yes, definitely, as we are rationalizing or increasing our SD and in which the payment terms are significantly much better as compared to HD, we believe the... But we have a good requirement would remain normal within the same limits what we currently have. Okay, sir. And, again, I was comparing with some of our peers that are indexed to air conditioner manufacturing. Even if I look at some other players, we seem to have the lowest margin in the peer group, even a player that is small and smaller in scale and, you know, shares one of our anchor customers.

22:52 They seem to have margins in range of 8% to 9%. A player that is larger also has 89%, but we are kind of in the 6% rate that too on an annualized basis. So why is it that we have the lowest margin, and what can we do here to improve this profile... Margin profile? But my understanding is concerned. Definitely, yes. There is is an area of improvement for us, especially with the large set of backward integration and the cost associated. Currently, the margins look slightly stretched for us, but I think capacity is created are good to use especially in the off season, which for an easy heavy company, two of this looks stressed. But as the capacity in terms of the components sales wherein we are improving this model, especially air fryers, induction cooktops, and washing machine, which are being scaled up. I mean, you will see the overall share of non AC business has grown to almost 45% to now nearly 50% on a year to year basis. So as we improve and we keep that momentum up, we will see lot of things getting normalized as capacity get utilized better.

24:06 Okay. And just one clarification, please. Regarding the washing machines for the Hyphen, the... I believe you had pointed out pilot production and the timeline. Could you please reiterate the line wasn't clear. I wasn't able to hear. So what is the commercialization status of the washing machine for HySEN? The the HySEN's washing machine we're talking about is the control washing machine, which is the type transfer then from HySense. And with the pilot production, currently, the price production is ongoing. We complete all the pilot production by end of November. And then from December onwards, the mass production is done. Okay, sir. Yes. Thank you. Those are my set of questions. Thanks for taking the best of luck for the quarter's coming in. Thank you, sir. Thank you. A reminder for all the participants The next question comes from the line of Ramanranath Nayak from Nirmal Bank Institutional Equity. Please go ahead.

25:05 Thank you for the opportunity, sir. Sir, just, you know, your voice is a little bit, you know, mockful. I cannot listen it properly. So can you please correct that? That would be helpful. Sir, sir, first of all, let me... In the last year, without PLI benefit, your gross margin was about around 12.4%. And this quarter, in in quarter, your gross margin is 12.8%. So... And also there is a increase on high-tech. You mentioned that the 90 crores of uptake from HighSense. Am I right, sir? Mister, is the the offtake from Hisense is not what you needed this quarter. The number was approximate number for the entire.

25:55 Okay. So the last year, without PLI, your total revenue sales in ROC was 53 crores. And this year, like to like basis, it is INR 161 crores. There is a significant rise in RAC business. And also with last quarter, your gross margin was 14% despite the higher contribution from Hisense and also growth in the RSE, the gross margin has declined on a quarter to better basis. But it should have increased. So whether the Hisense margin is low and also there is a significant traction in the small durable appliance on domestic appliances and also component component has gone up from INR 44 crores to INR 109 crores and the small durables has gone up INR 107 crores to INR 163 crores. So despite that, your gross margin is slow, low on a quarter to quarter basis, whether the high sales margin is low and also this component and other segment, non RIC segment, is margin is still low. That is why our gross margin is still low. Whether the if in the coming periods, whether the RAC margin will contribute with the growth of the RSE segment, will the... Will the contribution from the RSE margin will grow in the coming quarters, or it is not like that?

27:20 So, mister, let me just just put the correct number. I I hope you already had them in front of you. So for for the current quarter, I mean, to to to... Why why this is this yes? The RSP revenue has increased from 61 perus to almost 161 perus. So that's a 160% growth. Similarly, one and other three appliances has grown from 107 crores to a 168 crores. So that's, you know, 57% increase. Components have grown from 32 crores to 47 crores, so that's 45% increase. And others is... So Overall, yes, there has been an increase of 106%. And at the same time, like you rightly stated earlier, the gross margins have improved on a like to like basis, excluding PLA income. So for last year, the gross margin was 12.2%, whereas the gross margin was.

28:11 So the gross margin level, yes, it has increased. The increase can be attributed to couple of things, especially especially one is the growth in the non RFC sales, like the SD and the component. And the the... But what we intend to see is the increase would have been much better reflected if the RAC, the commodity impacts were being passed on much more in the real time, especially in the the the current situation, there's always a lag. So so that has slightly dragged down, but overall, still there has been increase in the gross margin one. Two, what Rajesh just stated is opening demand. The company has booked ForEx loss of approximately 10 crores, which has also led to a reduction in the gross margin, what we've seen in the numbers.

28:57 So if both were not there, yes, the gross margins would have been much better. Okay. Okay. And you know, you showed this set up this for the DC motor joint venture. So what is the game plan here? Whatever... We require the DC motors for our applications. What is the game plan here? In terms of our exit from EPACKU, hence, we we have the stake here to around the. I have the new and the different stakes in the key plan is clear. Last two years, the company had almost booked a loss of 12 crores, which has reduced its equity from 22 or two almost 20 crores. So there was a loss of 12 crores.

29:44 And wanted to further scale up the business, and they're they're trying to... And they're looking to venture into other businesses, other motors, the non VLTP segment as well, and the high FXP motors and that's which is not of great interest to EPACK Durable. And EPACK Durable also has options to source motors. While we will continue to work closely with EPACKO even after this late stage in terms of developing with the customized VLDC motors, but the exit opens the doors for us to explore opportunities of buying motors from elsewhere as well, which we are really agreeing. So motor... MLC motor asset is not some... An area of concern for us where, otherwise, EPACK Durable already has in house capabilities to manufacture almost all the other components, like controllers, heat exchangers, moldings,, everything in house. So the core competence remains within EPACK Durable and motor, which we already have an option to buy from several other suppliers, we we have to get open for us.

30:49 So the sense, you know from... We see our exit from EPACKU as more of maintaining the capital discipline and not as a victory. This brings the management focus into our core business, which we see is already showing a great increase quarter on quarter. And going forward, also, we believe that with the continued focus and capital discipline, we continue. Okay. And lastly, one question regarding this RAC business. How much, you know, we do and with, you know, the outdoor and indoor unit? How much in in favor of outdoor and indoor? Can you please give me that number in terms of percent? How much how much revenue would you... Indoor units?

31:35 How much is the outdoor units? That's what I'm asking. See, overall revenue was 160 crores in this quarter and almost $7.80 crores for the... Actual for this year. The revenue is not calculated separately for indoor and outdoor units because I see it's a single subject set to a customer. So we have... We are we are doing two categories here, window ACs and split ACs. And our total installed capacity as of date is almost 2,300,000 in set terms. Okay. And you you have actually the compression inventory or, you know, completely tie up with the compression for this entire year, whatever you are going to manufacture fully, 100%?

32:22 Yeah. So in terms of compression, the current domestic manufacturing capability within India, which is now gradually developed, is we can claim that in terms of overall the pressure capacity available and the requirement. So we we have tires in place. We have already been securing the pressures from the two large players, and GMC, and they have ramped up their capacity. So we don't see any shortfall, and we will be working with them in competitive risks. Okay. What what is the total volume you are expecting this year,? So AC market, the market is on a track to definitely grow this year, and our estimation is that for the complete year, AC industry is looking at a definite growth of anywhere between 20 or 25% compared to last year. No. No.

33:14 For you... Your volume, I'm asking, for '27... For '27. If we don't give forward looking numbers, but looking at the trend, for h '1, we see this especially has grown in value terms by almost 58.4%. In volume terms, it could have grown by close to 40, 45%. That's my estimate because there is an increase in the. So you meant to maintain that in a 45%? I mean, we don't give up forward looking numbers, we are looking at industry to grow anywhere between. And as EPACK continues its focus on increasing its share of business and we look at grow partnership with newer customers, we definitely believe that we should outgrow the industry.

34:03 Okay. I'm sorry, sir. I could not resend you properly. Anyway, all the best, sir. Thank you. Yeah. Thank you. Thank you. The next question comes from the line of Rajiv Mehta from US Securities. Please go ahead. Yeah. Hi. Good morning. Sir, I mean, your voice is not very clear, but still, I'm I'm gonna ask you on margins. Sir, on the margin side, is there any pass through left from our side to our customer and which will reflect, say, from October onwards or in the second half? Is there anything is the lag pricing impact left for us, which will be reflected and will support a better margin trajectory in the second half of the year? And if you can also tell us what will be your explicit margin guidance for the whole year, maybe next year also, so that we need to understand how the operating leverage how the leverage at the PAT level, earnings level will play out because we've been seeing that while the top line is increasing significantly, but your EBITDA and your PAT numbers are have been not commensurately growing.

35:14 So if you can just give us whether any margin pass is left and what is your expected margin guidance and earning growth guidance maybe next year, whether you will see earnings growth being better than top line growth. So thank you. On pass through, yes, there is the portion still to do because this is an ongoing process. So at any given point of time, we intend this will always be a lag because our pricing agreement that moves to the large customers is on the basis of quarter to quarter. Last year... The last quarter's pricing is a passcode in the following quarter. That's how it has been working since several... Possible years and probably entire industry. So at any given point of time, yes, there will be some lag. But having said that, overall, I would say there is not any significant gap left in terms of working on the commodity inflection... Inflation to the brand customers. That is point one.

36:10 So here in, like, I shared earlier, the biggest then for us has been the the forex fluctuation, which definitely is an area of concern, and we are working on it. So forex fluctuation is something which is... Which cannot be passed on real time, and the payment... Then the payments are made to the customer that the rupee has been depreciating with regards to US, especially with regards to is an area of concern, and we are we're we're keeping a bit continuous watch on it. So so that is something where we need to definitely work to improve our overall margins one. Again, in terms of the outlook for margin growth in the future, Two areas, which I mentioned earlier, one with our discipline on recovering the discount with the pass on to the brands earlier as we roll back in the face, definitely, the margins would improve going forward. So so that's one thing I... We we see and we are working on. And two is the protect mix.

37:10 So with especially the largest, more domestic appliances being margin accretive As the overall mix of the product is changing, definitely, that will also help us improve our overall product margins. So in terms of outlook, though we cannot give any definitive number, but, yes, to be first which are put to work and on which we are working are ruling back the incentives of the incentives partner to the brands and improving the overall product mix. And, sir, in line with the capacity expansion that we're doing, you know, besides Isense, So whatever capacity is tied up for high sense, high sense will hopefully scale up. But for the other capacity, I mean, have we tied up with customers?

37:55 How are you thinking about utilization of those capacity coming through in the next year or next next year? What is the visibility on utilization of the upcoming capacity? So the only thing, we're also seeing capacity, especially in our previous two plants, which is mainly which is the other one and. The capacity is very much better, and we have been... So those two plants have been delivering good capacity for us and and the revenue and the margins as well. But as the challenge since last couple of quarters was always utilizing this capacity. Now one with the production commencing and now with the with machine as they are also ramping up, and they're gaining penetration in India market. That will definitely help us improve this this utilization.

38:45 And at the same time, as most of the brand customers who would put up capacity in that area are have reached a scale wherein their capacity are also likely to live. That's another set of businesses that come to us down south. So with both this, we definitely see a better utilization of our newly created extra capacity electricity now we put to use. And with that, deliver on the overall capacity utilization is going to. And do we get some money by, you know, divesting that 50% in that JV to Ramdas Group? I mean, would we get some consideration? Will be that consideration? Consideration.

39:30 Consideration, what is the... That 50% stake is 15 crore rupees. Okay. Got it, sir. Thank you, and that's it, sir. Thank you very much. Thank you. Ladies and gentlemen, who wishes to ask a question may press 1 on your touch tone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handsets while asking a question. We will wait for a moment while the question queue assembles. Ladies and gentlemen, we will take this as the last question for today. I now hand over to management for closing comments. Over to you, sir. So thank you all for participating in the earnings conference call today. I hope you have been able to answer your questions satisfactorily, and thanks to them for organizing the conference today. Thank you all. Thank you so much.

40:29 Thank you. On behalf of EPACK Durable and DAM Capital Limited, that concludes this conference. Thanks for joining us. You may now disconnect your lines.