Orient Electric (NSE:ORIENTELEC) Q2 2027 Earnings Call

0:00 Ladies and gentlemen, good day, and welcome to Orient Electric Limited Q2 and FY 'twenty seven Earnings Conference Call hosted by Dan Capital Advisors. 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 conclude. Please note that this conference is being recorded. I now hand the conference over to mister Tanesha from DAM Capital Advisors. Thank you, and over to you, Tane. Thank you, Dinesh. Good afternoon, and welcome to the Orient Electric q two FY twenty seven earnings call. Today, we have with us Mr. Andar Singh Negi, Managing Director and CEO Mr. Arvind Vats, CFO and Mr. Sambal Jain, Head Investor Relations.

0:52 Now without any further delay, I will hand over the call to the management for opening remarks, post which we will begin the Q and A session. Thank you, and over to you, sir. Thank you, Dane. Good evening, ladies and gentlemen. Welcome to Orient Electric's conference call to discuss the results for the quarter ended 09/30/2026. Thank you for joining us today. I trust you've had an opportunity to review our financial results and earnings presentation. Let me begin by briefly touching upon the broader operating environment before taking you through our performance for the quarter and the key developments across our businesses. During the quarter, we continued to face persistent commodity inflation, particularly in copper and aluminum.

1:38 Crude lending movements added further pressure on raw material costs and in turn on our gross margins. At the same time, global and geopolitical uncertainties continue to affect supply chain visibility and business planning. To mitigate these pressures, we've taken price increase of 3% to 6% across various categories in quarter two and another increase of approximately 3% in October in some of the categories and complemented them with improved product mix and productivity initiatives. While input cost inflation has yet not been fully offset, we remain disciplined in our approach, balancing pricing with market competitiveness and sourcing efficiency. Against this backdrop, Orient Electric delivered broad based growth with revenues increasing 25.2% air on air during the quarter.

2:33 Our one orient and three fold strategy continue to anchor our growth agenda as we build lighting, wires, switches and switch gear, alongside our established core fans and appliances businesses. Premiumization and innovation, along with portfolio diversification, remain key priorities, enabling us to leverage our existing ecosystem more effectively while keeping consumer needs and disciplined execution at the center of our strategy. Let me start with our Lighting and Switchgear business, which delivered a strong performance during the quarter. With revenues growing INR 25.7 crores year on year to INR $3.29 crores. Within Lighting, Consumer Lighting delivered double digit growth, supported by continued traction in premium products.

3:23 High value rooms remain consistent at 66% of the room mix, reflecting our continued focus on premiumization and a richer product portfolio. Professional lighting also delivered high single digit growth, supported by a strong inquiry pipeline and our continued focus on new product development. We also are encouraged by the momentum across our other categories. Wires more than doubled year on year, while switchgear and switches delivered high double digit growth. Our electrician engagement programs, along with distribution synergies across categories, are helping us deepen channel reach and capitalize cross selling opportunities. We continue to focus on quality, dependable service and our relevant product portfolio to further strengthen retailer confidence.

4:16 Moving now to our core strength of electrical consumer durables business. ECD revenue stood at INR $5.50 crores, representing an air on air growth of 24.9%. Fans delivered a high double digit growth, outperforming the industry and resulting in market share gains. The performance was broad based with both our direct to market led and master distributor led markets delivering double digit growth. Within fans, BLDC continued to see strong traction, growing approximately 26% year on year, supported by both premium and innovation led launches. Premium products accounted for approximately 40% of the fan mix. Our focus on innovation and premiumization continues to yield encouraging results.

5:07 With new products contributing more than 30% of the fans' revenue during the quarter. Energy efficient products, differentiated design and consumer element innovations remain central to our product strategy. Appliances also delivered double digit growth, led by water heaters and garment care segments. As we move into the festive season and the second half of the year, our focus remains on ensuring the right product assortment and availability across channels while maintaining a measured approach to the broader demand environment. On the distribution front, we continue to scale our direct to market model with further expansion across Madhya Pradesh, Chattisgarh and Jharkhand, strengthening our go to market execution.

5:55 We also took over the service for Punjab and Nagpur region. Our digital channel also maintained healthy momentum with e commerce growing by high double digit, strengthening our presence across marketplaces. Quick commerce now contribute approximately 15% of our digital revenue and grew by almost 100% air on air, reflecting the evolving consumer buying landscape. On the brand front, we continue to strengthen visibility across airports, outdoor and digital media, with a focus on engaging premium audiences and reinforcing our technology led positioning. We're also strengthening the consumer experience with a deeper even deeper through Project Samvad, our customer service enhancement initiative, which is helping us sharpen consumer insights and enable faster resolution through AI led capabilities.

6:49 Turning to the financial performance. Overall, the revenue grew 25.2 year on year to INR $8.79 crores during the quarter. Gross margin stood at 29%, impacted by continued input cost pressures during the quarter. Despite this, EBITDA grew 49.7% year on year to INR 57 crores, with EBITDA margin expanding by 106 basis points to 6.5%, supported by operating leverage and continued cost optimization. For H1, we have grown by 24.3% with a revenue of INR $18.29 crores. Gross margin stood at 29.4% for H1, while EBITDA grew by 46.9% year on year.

7:37 EBITDA margin stood at 6.7% for H1, which expanded by 104 basis points, supported by operating leverage across. Our cost optimization program, Project Sanjay, continued to deliver results, generating savings of approximately INR 13 crores during the quarter and approximately INR 23 crores for H1 through focused cost initiatives. PAT more than doubled to INR 27 crores during the quarter and INR 59 crores for H1, again close to 100% growth. We closed the quarter with working capital of thirty four days. Cash discipline remains a key priority as we balance investments in our portfolio and a continued expansion of our distribution footprint.

8:25 Over the long term over the longer term, trending towards a double digit EBITDA margin remains our aspiration, supported by mix improvement, productivity and sustained cost optimization. Looking ahead, our focus remains on premiumization, innovation, expanding distribution and strengthening consumer engagement while maintaining disciplined investments across the businesses. As we move through the festive season and the second half, we remain confident in our outlook given the brand preference, market share gains and our refreshed consumer centric innovative portfolio of products across all three stages of the world. On behalf of the entire Orient Electric family, I would like to wish all of you and your loved ones a very happy Diwali and a joyous festive season ahead. Thank you.

9:26 We're now open for questions. All right. Thank you so much, sir. Ladies and gentlemen, we will now begin with the question and answer session. Anyone who wishes to ask a question may press star and one on their touch tone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are request to use handsets while asking a question. Ladies and gentlemen, we'll wait for a moment while the question queue assembles. First question comes from the line of Anirudhaji with ICIC Securities. Yes. For the opportunity, and congrats team for great set of numbers in Q2.

10:13 Sir, two questions from my side. I guess we have taken price hikes in October. So has that led to any inventory of stocking in September month and or September quarter per se? Or is there any one off performance in growth, which would have led either inventory of stocking or any low base or something like that? So that is question number one. And question number two, do you... How do you see the BLDC fans business shaping up? Because now, I guess, with the another rating change and again, next rating change in January 29, there will be far more focus on BLDC fans. So how is BLDC fans as percent of our total sales?

11:03 What will be the plans on driving BLDC sales also? Yes, that's from my side. Thank you, Anand. I'll take your questions both. First is on the price hike. And if you look at right from April onwards, there have been very consistent price hikes that we've taken. None of these price hikes typically when you were if I were to go back a couple of days back, each price hike would have a primary upstocking that will happen. So today, the trade is also kind of now, I would say, literally tired of price hikes, but it is not leading to any abnormal primary upstocking that happens.

11:50 It's been consistent with the demand and a pull that we've been able to see. And one of the big things that we've seen across most of our categories that response to our new products. For fans, we spoke about 30% revenue coming from the new products. All of our products, as we do a very close tracking of commercialization of these products across categories, I would say the success rate is 90% plus for us. And that is what is giving us market share gains and helping us gain volume value. On the base and everything, while industry had a lower base, we still had a slightly better growth versus industry last year, Q2 also.

12:37 If anything, from a season upstocking, last year, the Diwali was slightly up. Last year, September had a little bit of upstocking. This year, if anything, it's split between September and October. So there is no abnormal one off that we see. On your second question on the BLDC growth, we've been seeing consistent growth for last eight quarters in BLDC. This quarter, we had 26% growth on BLDC, almost 30% of our ceiling fan now comes on the VLGC portfolio. And it has happened over a period of understanding closely what a consumer wants from a tech perspective, from a design perspective, solving for those, converting those insights into new products and ensuring that the core of the BLEC, which is the PCD, the quality is much, much better than what a consumer experiences across the industry and peers.

13:43 So we are very confident on our portfolio, our quality and the tech as well as the design language that the consumers are getting. So VLGC will continue to grow. While we are 30% of the ceiling fan industry, by and large, if we take some of the larger VLGC out, would be in the range of over 17, 18% of the ceded corn. So we continue to drive this in a big way. Trust that answers, Anirudh. Yes. Sure, sir. This is very helpful. And congrats once again to the team for solid performance. Thank you. Thank you, Anil. Thank you.

14:39 Our next question comes from the line of Balasubramanian with ORIENTE Capital. Please go ahead. Hi, mister. You may please proceed ahead with the question. Hello. Hello. Evening, sir. Am I audible? Yes. You are. Thank so you much for the opportunity. Sir, NPD contributed 30 percentage of the revenue. I think you rightly mentioned it covers 90% plus success rate and the focus is on tech and design. Just want to understand what is the R and D spend as a percentage of ACV revenue, especially in the France? How do you measure, like, in the ROE side on innovation led launches versus the cannibalization risk to existing SKUs?

15:34 Thank you, Bala, for the question. And so as we said, there are multiple things that we're doing on the R and D side. And it all starts from first changing the core DNA of the organization to be a very consumer centric, understanding the insights, understanding the consumer needs and solving for that. And for that, we are strengthening some of our projects and programs like Project Sambar, which gives us deeper insights into the consumers. We not only go to the consumers, we also go to the influence certain specifiers like architects and interior designers, pick what is the trends happening and then we convert that into our products. The way we measure our success of products is what is the reach that particular segment or a particular price bracket if we launch a product, what is the reach that's supposed to happen and what are the repeats that we get.

16:36 And then we measure from a third party whether they start coming into our overall market share, and those are the products that we look at, and that's how we define our success there. In terms of our R and D spend, we do about 0.8 to 0.9 of our turnover. And it's deeper, and we have a design, R and D, a lot of efforts that gets in behind this. Sir, my next question, I think we have launched Shield MCP and isolator as well as the modular features. Is that six ks MCP cap is now fully addressed? Or it's further launches as expected maybe in this year or next year?

17:25 So thanks for picking this up. We've just launched Nixa Shield, which is a six ks. That was a segment which was not being addressed by us. And largely from a B2C side, that's a good segment that's growing faster than the industry. So we've covered that gap. We're doing a phased launches of it geography wise. And as we move forward, we will continue to add to it. From a NCV perspective, that's largely covering the segments. So we've got 10 ks, six ks and we have a technology advantage where we are a technology tie up with ETI, Slovenia and we have a Eurotech range, which is the upper end range. So from a range perspective, we've covered it. From a geographical go to market, it's a phased rollout, which is happening.

18:21 Delhi has happened. UP West has happened. And now you see UP and rest of the places getting covered in the next few months. But we're getting a very good response to it. Our next question comes from the line of Madhu Rathi with Counter Cyclical Investments. Sir, firstly, I wanted to understand regarding our operating margins versus some of our competitors like,, who do high single digit to low double digit. So where does Orient set...

19:08 Because we've constantly mentioned that we would like to take it to double digit. So when can we expect to achieve that? Madhu, so obviously, if you look at it, yes, that's the aspiration, and that's what we've always give a guidance saying that double digit is something that we are working towards. If you look at from a improvement perspective, we've improved in the last two years. I would say if you were to look at only from last year, it's about 104 basis point improvement. If I take a year before, that's about 130 basis points improvement. And typically for us and for a large part of the industry, quarter two is a little low from a seasonality perspective. You look at our results in quarterly trending, you will see H2 being much better, Q3, Q4 being much better in terms of EBITDA percentages.

20:06 Our effort is to had the inflation or this unprecedented inflation not been there, I would have had a very different confident time line to give you on the double digit margin. But I see at some point in the next four or six quarters, at least in H2 onwards, you will see us trending far closer to that. In terms of our percentage improvements, in terms of our absolute EBITDA, absolute bad growth percentage, we would be far better than most of our peers in that sense. Sir, but sir, what I'm trying to understand sir, this is always a four to six quarters down the line story. What I understand is that we are not able to achieve this answer, Similarly, our working capital days have increased from closer to, like, fifth... Sixteen, seventeen days in FY twenty four to thirty four days during this quarter. So is it that the... Whatever revenue growth is coming, we are giving higher credit terms of... Or terms of trade are getting deteriorated for us versus some of our competitors who operate in a negative working capital scenario? So if I'm not able to understand this.

21:32 Our revenue growth is coming at the No. Madhu, I think that's a wrong inference to take. Look at what we've done in the last three years, we've moved from a MD to a DTM structure, okay? MD, the days of outstanding AR would be very different from when you go to direct to market market. Now that when you're comparing with peers, there are larger things that you need to look at. Look at inventory days, we are in line with the industry number of inventory days. Look at payables, There are large players who are giving payables at one hundred days plus. We are far better than. So from our philosophy perspective, we pay our partners and suppliers well in time. From a overall perspective of days of inventory, we're absolutely in line. There is one part, which is where we've gone and got into newer segments and gone DTM.

22:35 That's where our days of sales outstanding or ARs moved up, which is where we put some of the programs of channel financing and all, which is work in progress. You should see improvement there. We've moved our working capital thirty, thirty four days. In the next four to six quarters, it should come back to about twenty days, given the point that we're doing in terms of our channel financing and other things. Got it. Sir, just one final question from my end, sir. The cost improvement from Project Sanjay, how much further cost improvement can we expect during H2 of this year? So last year, we did a full year of about 70 crores.

23:27 So a large part of my accrual start to come in the H2 and you will see currently we're at about INR 23 crores. We should cross the last year number in terms of our because my spend base goes much on the H2 and my accruals start flowing in much better than the H2. Sir, also, I'm I am not able sorry to interrupt, but you may please Thank hear you. And gentlemen, in order to ensure that the management will be able to address all the questions from the participant, we request you to kindly limit your question to two question only per participant. If you have a follow-up question, you may please rejoin the queue. Thank you.

24:13 Our next question comes from the line of Naushal Chaudhry with Agita Builders and Life Insurance. Please go ahead. Yes. Hi. Thank you, sir. Two questions. Firstly, on the growth side, I hope I hope I'm audible. Yes. You are. Yes. You are, mister. On on the growth side, I remember it correctly, we have taken roughly 10 to 15% price hike across category. And earlier, our aspiration was to have 15% kind of CAGR in three to five years band. But with this price hike and the growth which we have experienced in last two quarters, should the expectation for FY 'twenty seven move in similar line of what we have done in last two quarters?

25:06 And then thereafter, there should be a 15 kind of expectation? Nishad. So I think if we were to split our growth and obviously, the numbers don't give you that split of volume value. For the last two quarters, we've been and we look at each category. I think we've added double digit growth at an overall volume level also. So it's not just the price growth, which is doing. And yes, you're right, we had given a guidance of about 15% plus CAGR. Currently, we are at about for the H1 at about 24.3%. As we move forward, we really can't predict the inflation at all, but our entire effort is to make sure that the volume led growth starts to creep in more as a percentage of our revenue growth. So currently looking at everything, my guidance would be that we would be more than 15% of Syriania.

26:10 How much more? We don't give a future listing. But yes, definitely, we can look at slightly more aggressive number than what we had given earlier. And on the gross margin, last quarter, we indicated with the price hike, which is getting absorbed, we should quickly come back to 30% or 31%, 32% kind of gross margin in the immediate quarters. So should there be an expectation in coming quarters assuming last quarter would be a half absorption? So next quarter, I'm not sure we expect that range? Nashat, when we gave a guidance last quarter, we thought we were flattening out of the inflation.

26:57 And we have taken price increases with planned price increases for Q2 also. Unfortunately, as we speak, there is no predictability on the inflation. The controllable factors with us are how fast and how well we can be competitive and yet pass on the prices to whatever extent possible, and that's what we've been passing on, except for our emerging categories and all the other categories, we've been ahead of the curve, ahead of our peers in passing on the pricing and being very disciplined in ensuring that those prices are absolutely newly passed on. Our gross margins have come down, and that's largely led by inflation.

27:43 Our efforts in terms of execution discipline, passing on, even if it means slightly ahead of the industry averages, that will continue to happen. We are hoping that the inflation will slow down, if not stop. And that rate of inflation led pricing that we passed will catch up on the gross margin. My guidance in the long run stays at about 30%, and that's what we are working. What we can mitigate through pricing, we are maximizing that is what I can assure everybody on the call. Thank you.

28:32 Our next question comes from the line of Tanesha with DAM Capital Advisors. Please go ahead. Yes, sir. Thank you so much for the opportunity. So my first question is, we spoke about a 3% to 6% price hike this quarter as well. So I just wanted to understand right from the beginning of the CY or even FY for that matter, what would be the quantum of price hikes which you've taken across our key categories? And how much does that cover as a percentage of the overall inflation? That would be really helpful to sort of understand how our margins would move going forward. Suneet, thanks for the question. And we'll have to get into multiple categories to do this. Largely, if we were to speak about it, in quarter one, we had taken in fans about close to 9% price increase.

29:25 In quarter two, close to about 3%. As we speak, October 3 in fans, we've taken about 3% price increase. In appliances and appliances have various subcategories. I'm giving a broader overall distinct. We have taken about 6% rise in season quarter one. We took another about in some categories on an average, we've taken about 3% rise in fees in Q2 in appliances. Lighting, we've taken about 6% to 7% in Q1. We've taken about close to 6%, and we've taken about 2% now in October. Switch gear, we took about 7% to 8% in Q1, another 6% in Q2.

30:11 And whilst every literally every two to three weeks, we've been taking a price increase, although in wire since we are a new entrant versus peer, we are not leading this price increase, but we are following and we are a fast follower on that. Does that answer, Praneeth? Yes, sir. That's really helpful. If you could just give as a percentage of the overall cost increase, have we covered chunk of it via price hikes? Or is there some bit of under absorption which is yet left? Yes. So if you look at it and different category wise, just range from about 80% on a, say, a fans and appliances close to about 90%, wires closer to 100% and rest of the world, we in the range of 80% to 100% of what the inflation rate. So there are gaps to be covered.

31:08 Yes, and that's a competitive intensity that's there in each of the categories, and that's what we've always looked at. How we are also what doesn't get answered in all this is a large part of that balance to be covered is also being covered through premiumization and a mix change. So it's that's how we are trying to look at the gross margin improvements. Sure. So that's really helpful. And my second question would be if you can just spend some more time on the DTM strategy. We are almost implemented across 15 regions or states right now. And how are we sort of, you know, improving our metrics for, you know, the earlier states in terms of market share or in terms of even growth for that matter? And maybe if you could just, you know, touch upon how is DTM margin dilutive or accretive in nature and why would that be so, sir?

32:06 I've already in the previous calls, as I've said, it's going to be a balanced approach for us. It's never going to be 100% DTM or 100% MB. It's going to be a balanced approach. We've always looked at from an input perspective, quality of distribution, depth of distribution, quality of infrastructure, relationship. From an output perspective, growth, market share, premiumization. And those are the parameters that we look at when we look at each market. And at a certain point, when we decide on any of the markets, those are the opportunities that we see and feel that we can drive better than the MD in those markets, and that's how we do a transition of those markets.

32:55 We've done Madhya Pradesh, Chattisgarh and Jharkhand in this quarter. All the parameters from an output input perspective, that's what we've been doing in all our DTM markets. From an output perspective, our DTM markets are performing well on growth. We are seeing consistent market share gains. We are seeing premiumization improving. We are seeing BLEC growth happening much sharper there. And we are seeing the depth of distribution getting better. Your other question or a sub question within that was, is it margin accretive? Yes. Because of all the things that we're doing, we, at a margin level, get a better output.

33:44 And even on the NPD side, while overall 30% of our revenues come from NPD, in these DTM markets, the contribution of NPD is almost about 500 to 600 basis points more. Got it, sir. Got it. Thank you so much for the detailed explanation. I'll come back in the queue. Thank you, sir. Thank you. Thank you. Our next question comes from the line of Lakshmi Narayana with Tungla Investments. Please go ahead. Yes. A few questions. Sir, what is the B2B mix for H1 and how it compares with last year? My second question is that you have talked about new product led growth.

34:32 I want to understand how the dealership or distribution expansion has led to the growth. I mean, if you just disaggregate the growth, how do you what has actually resulted from the expansion of distribution? And how many touch points you've actually added? And my third question is that we have taken a price hike. I want to understand the I think your COGS, what is the mix of steel and plastics? And where do you see these in a higher inflation? Because what we hear, at least in the last one, two quarters, is that there have been a prohibitive increase in steel as well as plastic prices. And it's I mean, you have tremendously managed the margins. Just would love to hear your perspectives on this.

35:19 Yes. So thanks for your question. So there are three large questions that you've asked. One, how is the B2B mix and how is it moving up? Our dealership and expansion, what is the value or growth that is coming from expansion and then the price that you've asked for. So let me just start from B2B mix. Overall, as an organization, we are double digit on our B2B. But when you look at some of the segments like lighting, we are at about 25% of our business coming from B2B. Overall, if you look at from a B2B perspective, the growth for the industry and for us have been slower than what we've seen in the B2C.

36:09 And that also has our ability to pass on the pricing in B2B is lesser. And all the peers or people who got larger share of B2B must be facing this pressure far differently. Because you go do contracts and annual rate contracts at a point where you don't know what the next three months or a four months inflation would look like. So B2B mix is more or less stable for us. While the growth rates have been slightly better in the B2C side. We continuously keep monitoring our expansion and especially for our core categories. We've been expanding. So if I were to give you account on a large base of about one lakh plus direct and indirect distribution that we do on FAM, we would have added about 3,000 to 4,000 more outlets.

37:08 Difficult to measure the revenue coming from this, but we largely look at our volume growth. So we are seeing a volume value growth in most of our categories. In fact, sorry, if I were to say in all of our categories, you've seen a volume value growth both coming in. The third question was on the inflation from some of the categories like steel, plastic, while as we look at from a commodity perspective, there's all commodities that fit into our form of almost 100% of our products, they've all gone up for the industry, whether it's steel, which has moved from over 65 to about 80 plus, Plastics have gone up. Copper is touching a new high every two weeks.

37:54 Aluminum has gone up and been very volatile. So for each product, each SKU, the warm is differently, but it's unfortunate that the inflation is so secular across all commodities that it impacts the entire portfolio for the industry there. Does that answer, Lakshmi? Yes, that answer. Just one question. I saw that another large company has reported numbers and they've also reported an increase in margin and appliances also I see it. It seems that the price increase is easily passed to the customer. So is it a fair assumption that this time price increases are easy to be passed on?

38:39 Because a couple of years back, there has been difficulty by the industry to pass on price. But I at least anecdotally as well as numerically, I see that price increase by the consumer durable companies seems to be easily passed on, and it is without any effect on the volumes or the value growth. I just want to hear your thoughts. Yes. So price increase is passed on. I have a little issue with the word easily. So I don't think so that it's getting passed on easily because if it was easy, the entire industry would have passed on 100% of it. So there is a mix that happens. There is this competitive intensity that happens. Obviously, when you pass on the thing, there is one factor which never gets picked up. And maybe in your channel side, you would get and pick it up.

39:28 Most of the categories in FMEG industry or other industries, you would see a share of unorganized players getting more. So and that affects the bottom of the pyramid products. And hence, when Orient took that journey of premiumization about three, four years back, it has helped us soften that impact because unorganized segment is growing and the arbitrage when you keep taking pricing fees starts to become large enough for a consumer to drop our organized brand and take unorganized local brand. So that's the difficult part and that's the balancing act that most of the organized players are doing right now.

40:16 Currently, everybody is forced to pass on the price because the inflation is unprecedented there. Everybody is passing on, not being able to pass on 100 and hence not a fair term of easily, but otherwise, you're seeing broadly everybody passing on some percentage of the inflation. Got it. Got it. Got it. Thank you, sir. I'll come back in queue. Thank you. Our next question comes from the line of Nikhat Kaur with Doll Capital.

41:09 Hi. Thank you. Thank you for the opportunity. My question is regarding the Hyderabad facility. So, sir, what is the capacity utilization for fans at this facility, and what is the mix of PPW and ceiling fans at Hyderabad facility? And my second question is on wires. Wires continues to see strong growth of 2x growth kind of. So has this category been launched Pan India? These are my two questions. Thank you, Rajit. Firstly, I'll take the question on Hyderabad. Hyderabad, as I said last time also, it's about 40% capacity utilization on a single ship. We continue to see that. As we move forward, and it will be the higher production cycle that we'll start seeing in Q3, Q4, which is preparedness for the next season, the capacity utilization will improve further there. Currently, we do about 75% to 8075% TPW and about 20%, 25% ceiling fan there.

42:15 It's largely PPW facilities, but what we are also doing is we are picking up all our models in its fields, which do well in South to be produced there so that we save on the logistics and warehousing costs. So that's on the side. On the wire side, we've not done a Pan India launch. As I've always maintained that what is our core reason to get into wires and our right to get a placement in an outlet and then our right to be picked up by electrician is that 45% of our fans selling outlets do sell wine.

43:00 We have picked up a strong fan selling markets where our market share is good, where our brand preferences are. And those are the markets where we've launched. So largely, North And East is where we've launched, some parts of South. As we move forward, our wide spaces of rest of the states will also start helping us in building wires much better. So we are not spreading thin. We are going deeper into the states where we've launched, building a robust preference for the brand, giving electricians a first time experience of dealing with Orient. And that's how we'll keep expanding over the next six to eight quarters. Sure. Thank you, sir.

43:49 Thank you, Nick. Thank you. Our next question comes from the line of Yash Jain with Ambit Capital. Please go ahead. Continuing with the last question, is the new facility contributing to margin improvement? Or are we yet to see the impact from that facility in terms of margin? Can you quantify what will be the kind of margin improvement that we are expecting from that facility? Well, on a steady state where inflation is not taking away the benefit and the utilization going up, we should see about a 20, 30 basis points coming from Hyderabad utilization. Okay. Okay. Thank you. And another question is on BLDC.

44:38 We are seeing improvement on for your portfolio here, but is the industry growing at that rate? Or what are we doing differently that is helping us gain significant market share in this space? I think industry is growing in BLDC also. We are outpacing industry, and that's why we are seeing growth in BLDC and market share. I would say that what we've done differently is that we've understood we've firstly corrected the core of the technology, which is the PCB. 8070% to 80% of the PCBs that get into our VLDC fans is manufactured by my own lighting factories. So that's where we control the quality.

45:25 We continuously work on improving the output there. We've also done a huge amount of consumer studies to understand and understand the design language and what are the needs of the consumers. If you look at some of our recent launches, like AeroSilent, which is a Red Dot Award winner, India's first most silent fan with less than 50 dB. We've done BLDC fan with EcoTech volt, that's India's first ceiling fan with a battery backup. We've done Aero O2, which is India's first oxygen generating fan. We've done a Harrier wall fan, which is India's first BLDC with a gesture control.

46:17 With a hand movement, you can switch on, switch off, control the speed. So those are the and these are coming from a deep consumer insight that we have coming from our project, which is translating into products, which are ahead of the curve of others in the industry. And that's what is giving us the preference at the retail preference at the consumers' preference with the specified segments. Our next question comes from the line of Niraj Jain with BNP Paribas. Sir, firstly, if you can just call out the A and P spend this quarter versus the last quarter?

47:12 Yes. So typically, our quarter one is slightly higher because of the seasonality and other things. But fair to look at it on an year on year perspective, we've spent more than 10% of what we had spent last year on our advertising and marketing spend. Because sequentially, it may not be a right way to look at it because quarter one is obviously heavy fan season. Understood. And sir, secondly, again, just wanted to get more sense on the gross margin side. So if I look at the nine months, we have taken roughly around fifteen to 18 kind of a price hike. Alongside, we... Our BLDC share is increasing, and our premium mix has continued to increase across the categories. Despite that, our gross margins had declined roughly two fifty bps over the last 0.5.

48:08 So just wanted to get a sense, I mean, is that the competitor intensity has increased because of which that's not actually adding up back to the realization? Otherwise, like it's a sharp gross margin cut for the amount of price hikes we have taken. And then we are also calling out that we have covered almost 80% of the inflation. So in that case, if you can just help us understand more on why the sharp two fifty bps drop there? Naj, so firstly, you've spoken only about fans. In general, I've spoken about all the other categories. Just the gross margin is also a factor of other factors of mix and everything. There's housewares, switchgears and those mixes are also changing in our portfolio.

48:54 But largely, what we also do it is and if the underlying question is that, are we being aggressive and not passing on as the industry is passing on passing lesser than that, and that's what is impacting, the answer is no. And what we do is through a third party, we also look at indexing. So we've done that indexing across most of our categories through a third party. We've seen an improvement on indexing. So just to give a little BLDC context, if 100 or one is the average ASP and index of the industry of BLDC, we are at about 1.11. And over the last six quarters, we moved from a 1.04 to a 1.11.

49:43 That's also a factor of the mix and a higher ASP and a superior premium products that we put. So we measure that also from a perspective that if there is a possibility to get X, we make sure that we're getting X plus and not X minus from the industry on that perspective. Yes, it's a sharp drop of over two fifty basis points, but that's not because we've not passed as much as our competitive intensity analysis to us. We've passed on more than that. But still, the inflation has outpaced far higher and far sharper than what we could take as a price increase. Thank you. Ladies and gentlemen, due to the time constraint, that was the last question for today. I now hand the conference over to the management for the closing remarks. Thank you and over to you, team.

50:42 Thank you, everyone, for your good wishes and all the sharp questions. Wishing you all a very happy Diwali and a festive season ahead. Look forward to meeting some of you in the next three to four weeks. Thank you so much. Thank you so much, sir. Ladies and gentlemen, on behalf of DAM Capital Advisors, that concludes today's call. Thank you for joining us, and you may now disconnect your lines.