Q1 2027 Eveready Industries India Ltd Earnings Call

Speaker #1: Ladies and gentlemen, you have been connected to Eveready Industries Limited. Q1 2027 conference call. Please stay connected. The call will begin shortly.

Operator: Ladies and gentlemen, you've been connected to Eveready Industries India Limited Q1 FY27 earnings conference call. Please stay connected, the call will begin shortly. Ladies and gentlemen, you've been connected to Eveready Industries India Limited Q1 FY27 earnings conference call. Please stay connected, the call will begin shortly. Ladies and gentlemen, good day and welcome to the Eveready Industries India Limited Q1 FY27 earnings conference call. 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 touchtone phone. Please note that this call is being recorded. I now hand the conference over to Mr. Parth Chauhan from Adfactors PR. Thank you, over to you, sir.

Speaker #1: Ladies and gentlemen, you have been connected to the Eveready Industries India Limited Q1 2027 conference call. Please stay connected. The call will begin shortly.

Speaker #1: Ladies and gentlemen, good day and welcome to the Eveready Industries India Limited Q1 2027 conference call. As a reminder, all participant lines will be in listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes.

Speaker #1: Should you need assistance during the conference call, please signal an operator by pressing star, then zero, on your touchscreen phone. Please note that this call is being recorded.

Speaker #1: I now hand the conference over to Mr. Parth Chauhan from Adfactors PR. Thank you, sir.

Speaker #2: Good evening, everyone. Thank you and welcome to Eveready Industries India Limited Q1 2027 earnings conference call. We have with us Mr. Anirban Banerjee, Chief Executive Officer; Mr. Vivek Agarwala, Executive Director and Chief Financial Officer; and Mr. Anirban Ghosh, GM Finance and Head of Investor Relations.

Parth Chauhan: Good evening, everyone. Thank you and welcome to Eveready Industries India Limited Q1 FY27 Earnings Conference Call. We have with us Mr. Anirban Banerjee, Chief Executive Officer, Mr. Bibek Agarwala, Executive Director and Chief Financial Officer, and Mr. Anirban Ghosh, GM Finance and Head of Investor Relations. Before we proceed with the call, I would like to mention that some of the statements made on this call may be forward-looking in nature and may involve risks and uncertainties that are difficult to predict. The company undertakes no obligation to update any forward-looking statement to reflect developments that occur after the statement is made. Documents related to the company's financial performance, including the investor presentation, have been uploaded on the stock exchanges and the company's website. I now hand over the conference call to Mr. Anirban Banerjee for the opening remarks. Thank you. Over to you, sir.

Speaker #2: Before we proceed with the call, I would like to mention that some of the statements made on this call may be forward-looking in nature and may involve risks and uncertainties that are difficult to predict.

Speaker #2: The company undertakes no obligation to update any forward-looking statement to reflect developments that occur after the statement is made. Documents related to the company's financial performance, including the investor presentation, have been uploaded on the stock exchanges and the company's website.

Speaker #2: I now hand over the conference call to Mr. Anirban Banerjee for the opening remarks. Thank you, and over to you, sir.

Speaker #3: Thank you. Good evening, everyone, and thank you for joining us for the Eveready Industries earnings call for the first quarter of the financial year 2027. We have already circulated a detailed presentation on the company's performance during the quarter.

Anirban Banerjee: Thank you. Good evening, everyone. Thank you for joining us for Eveready Industries earnings call for Q1 of FY27. We have already circulated a detailed presentation on the company's performance during the quarter. I hope you found the information useful. First, I would like to quickly touch upon the operating environment that we experienced during the period under review. The quarter was characterized by a dynamic operating environment. While consumer demand remained resilient across our key categories, global businesses continued to navigate persistent geopolitical uncertainty, supply chain disruptions, and inflationary pressures. Commodity markets remained volatile, with currency fluctuations adding further uncertainty to input costs. Despite these macroeconomic headwinds, our focus remained on disciplined execution, prudent price actions, and delivering sustainable, profitable growth.

Speaker #3: And I hope you found the information useful. I will highlight only the key points. First, I would like to quickly touch upon the operating environment that we review.

Speaker #3: The quarter was characterized by a dynamic operating environment, while consumer demand remained resilient across our key categories. Global businesses continued to navigate persistent geopolitical uncertainty, supply chain disruptions, and inflationary pressures.

Speaker #3: Commodity markets remained volatile, with currency fluctuations adding further uncertainty to input costs. Despite these macroeconomic events, our focus remained on disciplined execution, prudent price actions, and delivering sustainable, profitable growth.

Speaker #3: Zinc prices continued to remain elevated at around $3,500 per ton, compared to levels below $3,000 per ton during a major part of last year.

Anirban Banerjee: Zinc prices continued to remain elevated at around $3,500 per ton, compared to levels of below $3,000 per ton during a major part of last year. In addition, several key raw materials, including electrolytic manganese dioxide, electrodes, acetylene black, and lighting products and components also witnessed inflationary trends. While these factors exerted pressure on our cost structure, our calibrated pricing actions and continued focus on operational efficiencies enabled us to protect our margins and maintain profitability. During Q1 FY27, Eveready delivered another quarter of resilient financial performance, marking its 7th consecutive quarter of year-on-year revenue growth. Revenue for the quarter stood at INR 407.7 crores, registering a growth of 9% year-on-year. EBITDA came in at INR 61.5 crores while maintaining an EBITDA margin of 15.1%. Profit after tax stood at INR 37 crores, representing a growth of 22.3% over the corresponding quarter last year.

Speaker #3: In addition, several key raw materials, including electrolytic manganese dioxide, electrodes, acetylene black, and lighting products and components, also witnessed inflationary trends. While these factors exerted pressure on our cost structure, our calibrated pricing actions and continued focus on operational efficiencies enabled us to protect our margins and maintain profitability.

Speaker #3: During quarter one, FY2027, Eveready delivered another quarter of resilient financial performance, marking its seventh consecutive quarter of year-on-year revenue growth. Revenue for the quarter stood at ₹407.7 crore, registering a growth of 9% year-on-year.

Speaker #3: EBITDA came in at ₹61.5 crore, while maintaining an EBITDA margin of 15.1%. Profit after tax stood at ₹37 crore, representing a growth of 22.3% over the corresponding quarter last year.

Speaker #3: These results reflect the strength of our business model and our continued focus on profitable growth. Coming to the battery business, the segment delivered another strong quarter, recording an 11.9% revenue growth, supported by healthy performance across both alkaline and carbon zinc batteries.

Anirban Banerjee: These results reflect the strength of our business model. Our continued focus on profitable growth. Coming to the battery business, the segment delivered another strong quarter, recording an 11.9% revenue growth supported by healthy performance across both alkaline and carbon zinc batteries. Our alkaline battery portfolio continued to be the key growth driver, delivering close to 48% volume growth during the quarter. We also strengthened our position in the premium battery segment with a market share expanding to 18% within the alkaline sector, reflecting results of our premiumization strategy. The category remains a significant long-term opportunity for Eveready. We remain committed to strengthening our leadership position through investments in manufacturing facilities, innovation, and distribution channels. Our carbon zinc battery business also delivered a stable performance, delivering volume growth commensurate to the industry.

Speaker #3: Our alkaline battery portfolio continued to be the key growth driver, delivering close to 48% volume growth during the quarter. We also strengthened our position in the premium battery segment, with our market share expanding to 18% within the alkaline sector, reflecting the results of our premiumization strategy.

Speaker #3: The category remains a significant long-term opportunity for Eveready, and we remain committed to strengthening our leadership positions through investments in manufacturing facilities, innovation, and distribution channels.

Speaker #3: Our carbon zinc battery business also delivered a stable performance, achieving volume growth commensurate with the industry. Through calibrated pricing actions and a continued focus on scale efficiencies, we were able to protect profitability while reducing manufacturing costs across our legacy portfolio.

Anirban Banerjee: Through calibrated pricing actions and continued focus on scale efficiencies, we were able to protect profitability while reducing manufacturing costs across our legacy portfolio. An important milestone during the quarter was the commencement of commercial production at our Jammu facility on 29 May. The plant strengthens our manufacturing capacity, improves operating leverage, and supports expansion of our alkaline battery business. The facility provides us with scale, flexibility, and supply chain resilience required to support the next phase of growth. The Jammu facility also opens new opportunities in white labeling and export markets, strengthening our ambition to emerge as a globally competitive manufacturer in the alkaline battery segment. During the quarter, we also witnessed strong growth across our digital channels, particularly through Q commerce, quick commerce, and e-commerce, showcasing changing consumer buying preferences and the strength of our omni-channel distribution strategy.

Speaker #3: An important milestone during the quarter was the commencement of commercial production at our Jammu facility on the 29th of May. The plant strengthens our manufacturing capacity, improves operating leverage, and supports expansion of our alkaline battery business.

Speaker #3: The facility provides us with the scale, flexibility, and supply chain resilience required to support the next phase of growth. The Jammu facility also opens new opportunities in white labeling and export markets, strengthening our ambition to emerge as a globally competitive manufacturer in the alkaline battery segment.

Speaker #3: During the quarter, we also witnessed strong growth across our digital channels, particularly through QCommerce, quick commerce, and e-commerce, showcasing changing consumer buying preferences and the strength of our omnichannel distribution strategy.

Speaker #3: Moving to our flashlight business, the overall demand remains soft due to the delayed onset of the monsoon, which deferred seasonal demand and resulted in lower volumes of conventional battery-operated flashlights.

Anirban Banerjee: Moving to our flashlight business, the overall demand remained soft due to delayed onset of monsoon, which deferred seasonal demand and resulted in lower volumes of conventional battery-operated flashlights. Overall, the segment revenue declined by 6.7%. Our rechargeable flashlight portfolio remained the key growth driver, delivering over 20% revenue growth during the quarter. Growth was supported by continued product innovation, premium product offerings, and increasing consumer adoption of rechargeable solutions. As consumer preferences evolve, rechargeable flashlights continue to offset the structural slowdown in the traditional battery-operated segment. We are also actively working towards expanding the usage of flashlights beyond their traditional rural and seasonal applications by developing products suited for urban consumers and newer everyday use cases, thereby broadening the addressable market for the category. We also introduced our hybrid flashlight, Eveready's first patent-applied flashlight product, which combines the convenience of rechargeable technology with the reliability of conventional batteries.

Speaker #3: Overall, segment revenue declined by 6.7%. Our rechargeable flashlight portfolio remained a key growth driver, delivering over 20% revenue growth during the quarter. Growth was supported by continued product innovation, premium product offerings, and increasing consumer adoption of rechargeable solutions.

Speaker #3: As consumer preferences evolve, rechargeable flashlights continue to offset the structural slowdown in the traditional battery-operated segment. We are also actively working towards expanding the usage of flashlights beyond their traditional rural and seasonal applications, by developing products suited for urban consumers and newer, everyday use cases—thereby broadening the addressable market for the category.

Speaker #3: We also introduced our hybrid flashlight, Eveready's first patent-applied flashlight product, which combines the convenience of rechargeable technology with the reliability of conventional batteries. Our lighting business delivered an encouraging quarter, registering healthy 13.7% growth.

Anirban Banerjee: Our lighting business delivered an encouraging quarter, registering healthy 13.7% growth. The business benefited from strong demand across key product categories, while the pricing environment showed signs of stabilization after a prolonged period of price erosion, improving revenue visibility, and supporting margin resilience. We also witnessed healthy volume growth in our higher margin categories, particularly emergency LED bulbs and electrical accessories, reflecting the strength of our product portfolio and market execution. As the lighting industry continues to evolve with increasing adoption of energy-efficient LED solutions, we remain focused on strengthening our portfolio through premium offerings and innovative products. We also continued to expand our presence in adjacent electrical categories, with our electrical accessories portfolio gaining momentum, led by the encouraging performance of insulation tapes and the introduction of products such as wires and MCBs. Innovation continues to remain central to Eveready's long-term growth strategy.

Speaker #3: The business benefited from strong demand across key product categories, while the pricing environment showed signs of stabilization after a prolonged period of price erosion.

Speaker #3: Improving revenue visibility and supporting margin resilience. We also witnessed healthy volume growth in our higher-margin categories, particularly emergency LED bulbs and electrical accessories.

Speaker #3: Reflecting the strength of our product portfolio and market execution. As the lighting industry continues to evolve, with increasing adoption of energy-efficient LED solutions, we remain focused on strengthening our portfolio through premium offerings and innovative products.

Speaker #3: We also continued to expand our presence in adjacent electrical categories, with our electrical accessories portfolio gaining momentum, led by the encouraging performance of insulation tapes and the introduction of products such as wires and MCBs.

Speaker #3: Innovation continues to remain central to Eveready's long-term growth strategy. During the quarter, we launched India's first portable liquid mosquito vaporizer—an innovative mosquito repellent solution featuring a rechargeable, battery-powered portable design that enables consumers to carry the liquid vaporizer while traveling, or within rooms and indoors, etc.

Anirban Banerjee: During the quarter, we launched India's first portable liquid mosquito vaporizer, an innovative mosquito repellent solution featuring a rechargeable battery-powered portable design that enables consumers to carry the liquid vaporizer while traveling or within the rooms and indoor, et cetera. This represents Eveready's first patent-applied innovation in the anti-mosquito liquid vaporizer category and has been launched across select markets. The quarter also saw the launch of a rechargeable flashlight, better known as Shor, with the feature of an animal alarm for farm protection. The torch is designed to help farmers protect crops from animal intrusion through a powerful combination of light and sound, having a 100-decibel alarm combined with a red UV strobe light. Within our emergency portfolio, the company launched the extra bright emergency LED bulb, offering double the illumination provided by an emergency bulb during a power cut for a superior lighting experience.

Speaker #3: This represents Eveready’s first patent-applied innovation in the anti-mosquito liquid vaporizer category, and it has been launched across select markets. The quarter also saw the launch of a rechargeable flashlight, better known as SHORE, with the feature of an animal alarm for farm protection.

Speaker #3: The torch is designed to help farmers protect crops from animal intrusion through a powerful combination of light and sound, featuring a 100-decibel alarm combined with a red UV strobe light.

Speaker #3: Within our emergency portfolio, the company launched the extra-bright emergency LED bulb, offering double the illumination provided by an emergency bulb during a power cut for a superior lighting experience.

Speaker #3: We also continue to reinforce our position as a market leader in the organized mosquito racket category. Looking ahead, we remain optimistic about sustaining our growth momentum through the remainder of the year.

Anirban Banerjee: We also continue to reinforce our leadership as a market leader in the organized mosquito racket category. Looking ahead, we remain optimistic about sustaining our growth momentum through the remainder of the year. Our premiumization strategy continues to gain traction. Investments in manufacturing and innovation are beginning to yield results, and our distribution network continues to expand across both traditional and emerging channels. While commodity prices and currency movements remain key watch areas, we remain committed to taking timely actions to protect profitability while delivering sustainable long-term value creation. Thank you.

Speaker #3: Our premiumization strategy continues to gain traction. Investments in manufacturing and innovation are beginning to yield results, and our distribution network continues to expand across both traditional and emerging channels.

Speaker #3: While commodity prices and currency movements remain key watch areas, we remain committed to taking timely actions to protect profitability while delivering sustainable, long-term value creation.

Speaker #3: Thank you.

Speaker #1: 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 their touch-tone telephone.

Operator: 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 their touch-tone telephone. If you wish to withdraw yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking questions. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Shubham Jain from Countercyclical. You may proceed.

Speaker #1: If you wish to withdraw yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question.

Speaker #1: Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Shivam Jen from Countercyclic.

Speaker #1: You may proceed.

Speaker #2: Hello. Hello.

Shubham Jain: Hello?

Speaker #3: Yeah, you are audible. Carry on, please.

Anirban Banerjee: Yeah, you are audible. Carry on, please.

Shubham Jain: Shubham. Questions are on two fronts. Firstly, on the dry cell part, our presentation has mentioned that we have currently 58% market share. Earlier it used to be 50-ish. To what extent are we winning this market share, and what strategies are winning that in?

Speaker #2: Shivam, questions are on two fronts. Firstly, on the dry cell part, our presentation has mentioned that we currently have a 58% market share. Earlier, it used to be around 50%.

Speaker #2: So, please explain how we are gaining this market share, and in which geographies we are seeing this growth. That is my question.

Bibek Agarwala: Shivm, your voice is completely breaking and it is not audible to us.

Speaker #3: Shivam, your voice is breaking completely and it is not audible to us.

Speaker #2: Hello. Am I audible now?

Shubham Jain: Hello. Am I audible now?

Speaker #3: A bit better.

Bibek Agarwala: A bit better.

Speaker #2: Okay. So my questions are on two fronts. Firstly, on the market side. Our market share in the dry cell segment has grown from the 50-ish levels to 58 currently, as per the PPT.

Shubham Jain: My questions are on two fronts. Firstly, on the market side. Our market share in the dry cell segment has grown from 50-ish levels to 58 currently as per the PPT. I just wanted to understand on whose cost are we earning this. Second would be that Amazon Basics has launched their product SKUs around batteries. Some opinion on that front. Are we facing any competition on that? How large is our e-commerce and that part of the portfolio? Second would be on the regulatory side. If you could help us or give an update on the BIS norms and Make in India, any competition from the Chinese front and the Extended Producer Responsibility side of any calls that we are going to incur or incurring currently.

Speaker #2: So, I just wanted to understand: at whose cost are we earning this? Second, Amazon Basics has launched their product SKUs around batteries.

Speaker #2: So, some opinion on that front: are we facing any competition on that? How large is our e-commerce and that part of the portfolio? Second would be on the regulatory side.

Speaker #2: If you could help us or give an update on the BIS, NOMP, and meet in India—any competition from the Chinese front and the extended producer responsibility side of things.

Speaker #2: Any cost that we are going to incur or are incurring currently?

Speaker #3: Shivam, thank you for the question. I think the question is in three parts. You have a question on market shares, and you have a question on BIS.

Anirban Banerjee: Thank you for the question. I think the question was three parts. You have a question on market shares, you have a question on BIS, you would also like to know more about the compliance, et cetera. Right. I'll address the market share point of view. Our growth in market shares typically are coming from the alkaline sector. When we mentioned during the call that our alkaline market shares now are hovering around 18% and moving upwards. Correct? While that being said, our larger market shares are held by the carbon zinc, which are mainly broadly about flattish in nature. As a result, the more the alkaline continues to grow, and the more the sales of the alkaline within our mix also starts increasing, the overall market shares will also tend to move up in the given future.

Speaker #3: You have a—you would also like to know more about the compliance, etc., right? So, I'll address that. From a market share point of view, our growth in market share typically comes from the alkaline sector.

Speaker #3: So when we mentioned that, during alkaline, market shares now are hovering around 18% and moving upwards, correct? With that being said, our larger market shares are held by the carbon zinc, which are mainly broadly about flattish in nature.

Speaker #3: And as a result, the more the alkaline continues to grow and the more the salience of the alkaline within our mix also starts increasing, the overall market shares will also tend to move up in the given future.

Speaker #3: As far as the BIS is concerned, the BIS on flashlights took the entire year to be implemented. So, as of today, the on-paper implementation is complete.

Anirban Banerjee: As far as the BIS is concerned, the BIS on flashlights took the entire of last year to be implemented. As of today, the on-paper implementation is complete. What needs to be seen currently is the absorption and the adoption of the BIS with many of the non-branded organizations within India, and that is a compliance that will need to be driven further, and we are yet to see that being played out in the market. That being said, our flashlights are completely compliant with the BIS norms, and all our production facilities are now geared up and producing only BIS-available flashlights.

Speaker #3: What needs to be seen currently is the absorption and adoption of the BIS with many of the non-branded organizations within India. And that is a compliance that will need to be driven further.

Speaker #3: And we are yet to see that being played out in the market. That being said, our flashlights are completely compliant with the BIS norms, and all our production facilities are now geared up and producing only BIS-compliant flashlights.

Speaker #3: Shivam, and I think what you have referred to—one point, just to add to what Anirvani is talking about. So you have seen the investor presentation. This 58% market share has been given for the carbon zinc sector, okay?

Bibek Agarwala: Shivm, I think what you have referred to, one point to just add what Anirban is talking. You have seen the investor presentation. This 58% market share has been given on the carbon zinc sector. Okay? It is especially for the carbon zinc. Coming to the two point of BIS, what Anirban has said, we are fully compliant and we are looking forward that very rigorous implementation of the same. It is just January this year, early started, so it may be a two to three quarters may take time and then see. With respect to the EPR compliance, there are some operational and, with the pricing mechanism, there are some challenges for which we are working with the Ministry of Environment and Climate Change and also the Pollution Control Board. Thank you.

Speaker #3: So it is especially for the carbon zinc. Now, coming to the two points said, we are fully compliant and we are looking forward to a very rigorous implementation of the same.

Speaker #3: It is just January; this year has only just started. So maybe it may take two to three quarters, and then we will see. With respect to the EPR compliance, we are doing our—there are some operational and, with the pricing mechanism, there are some challenges for which we are working with the Ministry of Environment and Climate Change, and also the Pollution Control Board.

Speaker #3: Thank you.

Speaker #1: Thank you. The next question is from the line of Saloni from Molecule Ventures. Please proceed.

Operator: Thank you. The next question is from the line of Saloni from Molecule Ventures. Please proceed.

Speaker #4: Hi, good afternoon. So my first question is regarding the German plant. In the past, we have mentioned that since we used to import earlier and now we'll be manufacturing from our own plant, we can expect a higher operating margin.

[Analyst] (Molecule Ventures): Hi. Good afternoon. Good evening. My first question is regarding the Jammu plant. In the past, we had mentioned that since we used to earlier import and now we will be manufacturing from our own plant, we can expect a higher operating margin. Can you give us a guidance on what kind of OPM we will be earning from the alkaline sales earlier versus what we can expect to earn at INR 100 crore level, let's say in first year, and at the peak capacity level at INR 400 crore level?

Speaker #4: So, can you give us guidance on what kind of OPM we were earning from the alkaline sales earlier versus what we can expect to earn at the ₹100 crore level, let's say in the first year?

Speaker #4: And at the peak capacity level, at the ₹400 crore level.

Speaker #3: Hello. So, just as you, Anirvani, mentioned on the call, at the end of May we have done the commercial production of this plant. And as you said, with a very sustainable capacity utilization, at least we are looking for a 10% margin increment from our Jammu plant.

Bibek Agarwala: Just as Anirban mentioned in the call, just the end of May, we have done the commercial production of this plant. As we said that in a very sustainable capacity utilization, at least we are looking for 10% margin increment from our Jammu plant. This is the year of beginning. This is the first year, we will be stabilizing. After a year and so when fully stabilized, we expect definitely a 10% margin up there.

Speaker #3: So this year of beginning, this is the first year, so we'll be stabilizing. But after a year or so, when fully stabilized, we expect definitely a 10% margin up there.

Speaker #4: So, when you say the 10% margin increment, you mean 20% operating margins from that plant, right?

[Analyst] (Molecule Ventures): When you say the 10% margin increment, you mean 20% operating margins from that plant, right?

Speaker #3: No, no. So let's say, a gross margin. When you go for any SKU, in particular SKU size, what is the margin health of the particular product? It is the gross margin of the product.

Bibek Agarwala: No, no. Let's say a gross margin. When you go for any scale, in particular SKU size, what is the margin health of the particular product is the gross margin of the product. I am talking about that gross margin of the product will be a 10% up.

Speaker #3: So I'm talking about that gross margin of the product will be up by 10%.

Speaker #4: Okay. And any idea on the operating margins, sir? As in, when it's scaled up, you must have an idea at optimum utilization.

[Analyst] (Molecule Ventures): Okay. Any idea on the operating margin, sir? As in when it's scaled up and you must have an idea or at optimum utilization, some kind of a margin we would be expected to earn.

Speaker #4: Some kind of margins we would be expected to earn.

Speaker #3: Today, if you see, alkaline is around 6% to 7% of the total portfolio increase—of the total portfolio of the company, right? So, gradually, as we intend to see, more than 50% growth is coming in this category.

Bibek Agarwala: Today, if you see, alkaline is around 6% to 7% of the total portfolio increase. Total portfolio of the company, right?

Anirban Banerjee: Gradually, as we intend to see more than 50% growth is coming in this category. You can just calculate that if it is a 5%, 6% to 7% of the total portfolio and then 10% on that increase, what bottom-line impact will be there. Thank you.

Speaker #3: So you can just calculate that. If it is 6 to 7% of the total portfolio, and then 10% on that increase, what bottom-line impact will be there?

Speaker #3: Thank you.

Speaker #4: Got it, sir. The next question is regarding the cannibalization effect that is happening. So at the end of the day, the customers that we will be targeting for the alkaline product are the same as the carbon zinc product.

[Analyst] (Molecule Ventures): Okay. Sir, the next question is regarding the cannibalization effect that is happening. At the end of the day, the customers that we will be targeting for the alkaline product is the same as the carbon zinc product. It's just that the value addition is happening because of the price point being high in the alkaline category which would lead to some increment. The sales growth as such is not shifting significantly due to the cannibalization effect. Is the understanding correct?

Speaker #4: It's just that the value addition is happening because of the price point being high and the alkaline category, which would lead to some increment in the—

Speaker #4: So, the sales growth as such is not shifting significantly due to this cannibalization effect. Is the understanding correct?

Speaker #3: I'm not sure about the cannibalization effect. That is not something that we are monitoring immediately at the moment. The way the consumers are trading up has to do with devices and batteries coming into play when you have devices at home.

Anirban Banerjee: I'm not sure about the cannibalization effect. That is not something that we are monitoring immediately at the moment. The way the consumers are trading up are to do with devices, and batteries come into play when you have devices at home. What is probably going to happen over the decade is that there will be a lot of trade-up in the kind of devices that you are using. What used to be at one point in time, a lot of television remotes and clocks or torches at home, is giving way to many other devices, including smart remotes, lots of toys, blood pressure machines, and optical mouses, et cetera.

Speaker #3: So, what's probably going to happen over the decade is that there will be a lot of trade-up in the kind of devices that you are using.

Speaker #3: So what used to be, at one point in time, a lot of television remotes and clocks or torches at home is giving way to many other devices, including smart remotes, lots of toys, blood pressure machines, and optical mouses, etc.

Speaker #3: Many of these devices consume much more power than what a typical zinc battery might provide. And as a result, while the number of people consuming the batteries might remain similar, the consumption of power per household is likely to go up with the adoption and increased penetration of many of these higher-consuming devices.

Anirban Banerjee: Many of these devices consume much more power than what a typical zinc battery might throw up, and as a result, while the number of people who are consuming the batteries might remain similar, the consumption of power per household is likely to go up by the adoption and the increased penetration of many of these high-drain devices. It is in that juncture is where the alkaline chemistry comes in helpful, where they will cater to some of these increased demands. As a result, our understanding of immediate cannibalization may not be correct. It is only at the saturation of some of these high-drain device demands is where there might be a cannibalistic impact. Hope that makes it clear.

Speaker #3: And it is at that juncture where the alkaline chemistry becomes helpful, as it will cater to some of these increased demands. As a result, our understanding of immediate cannibalization may not be correct.

Speaker #3: It is only at the saturation of some of these hydrogen device demands, that there might be a cannibalistic impact. Hope that makes it clear.

[Analyst] (Molecule Ventures): Sir, a follow-up on this. Just wanted some clarity. If you see, we already have a 55%-58% market share in the existing portfolio, and it has not grown much because we've captured most of the market. This alkaline product addition, as you said, up to a point will not be a cannibalization effect.

Speaker #4: Sir, a follow-up on this. Just wanted some clarity. So, if you see, we already have a 50%-58% market share in the existing portfolio.

Speaker #4: And it has not grown much because we've captured most of the market. And this alkaline product addition, as you said, up to a point will not have a cannibalization effect.

Speaker #4: But.

Speaker #1: You did not respond. Do you want to move to the next participant? The next question is from the line of Sakib Kapoor from Kapoor & Company.

Operator: You did not respond. We move on to the next participant. The next question is from the line of Saket Kapur from Kapur & Co.. Please proceed.

Speaker #1: Please proceed.

Speaker #3: Yeah. Namaskar, sir. Hope I'm audible. Yes, sir. Thank you for the opportunity. Sir, firstly, with respect to the Jammu facility, if you could congratulations to the team for commercialization and if you could just give us our key priorities for the coming two years or three years on a holistic way, how are we going to sweat this asset realign the portfolio and as you have mentioned in the opening remarks on Invanda, about the wide level activities that also we are contemplating.

Saket Kapur: Yeah. Namaskar, sir. Hope I'm audible.

Anirban Banerjee: Yes, sir.

Saket Kapur: Thank you for the opportunity. Sir, firstly, with respect to the Jammu facility, congratulations to the team for commercialization. If you could just give us our key priority for the coming 2 years or 3 years on a holistic way, how are we going to sweat this asset, realign the portfolio. As you have mentioned in the opening remarks on Anirban about the wide level activities that also we are contemplating. Just some more color on the same, or in terms of setting the tone for the Jammu facility.

Speaker #3: So just some more color on the thing, or in terms of setting the tone for the Jammu facility.

Anirban Banerjee: See, an interesting question. The Jammu facility, you are right, it is connected to the alkaline chemistry. The alkaline chemistry is in turn connected to stronger devices appearing in India. Thus, if I were to take a view over the next 1 decade, as I was mentioning in my earlier answer, the consumers in India will soon or are continuing to trade up many devices. The number of devices per household is slowly going to increase. These devices will consume more energy and power than the earlier devices, which was much simpler. A simple remote or a simple clock compared to a medical device or a computer gadget or a remote control toy or an optical mouse, etc. Some of these will consume much more power.

Speaker #2: That's an interesting question. So, the Jammu facility is—you're right—it is connected to the alkaline chemistry. The alkaline chemistry is, in turn, connected to stronger devices appearing in India.

Speaker #2: And thus, if I were to take a view over the next one decade, as I was mentioning in my earlier answer, the consumers in India will soon, or are continuing to, trade up many devices.

Speaker #2: The number of devices per household is slowly going to increase. These devices will consume more energy and power than the earlier devices, which were much simpler.

Speaker #2: A simple remote or a simple clock, compared to a medical device or a computer gadget, or a remote-control toy, or an optical mouse, etc.

Speaker #2: Some of these will consume much more power, and as a result, our estimate is that over the decade, the growth of alkaline chemistry in batteries is going to be significant. Already, over the last two to three years, we've seen this trend.

Anirban Banerjee: As a result, our estimate is that over the decade, the growth of the alkaline chemistry in batteries is going to be significant already over the last 2 to 3 years. The CAGR of the growth of alkaline is more than 20% by value terms and volume. Thus, it is at that time with a view to the future that we have moved ahead with the Jammu plant, more from localization and setting up for the future, the capacity needed to cater to increased devices penetrations in India over the next couple of years. Right? Of course, as there is capacity, it will feed to a growing local demand which will be eventually connected to a growing penetration of battery-operated devices in India seeking much more power.

Speaker #2: The CAGR of the growth of alkaline is more than 20% by value terms and volume. And thus, it is at that time, with a view to the future, that we have moved ahead with the Jammu plant more from localization and setting up for the future the capacity needed to cater to increased device penetration in India over the next couple of years.

Speaker #2: Of course, as there is capacity, it will feed a growing local demand, which will eventually be connected to a growing penetration of battery-operated devices in India, seeking much more power.

Speaker #2: It will also be an opportunity to scout and solve for battery white labels across many other countries in the world, which might be seeking to buy it and source it from Asia, etc.

Anirban Banerjee: It will also be an opportunity to scout and solve for battery white labels across many other countries in the world which might be seeking to buy it and source it from Asia, et cetera. India, with a plant in Jammu would be a good alternate to scout for many of, probably it could be retailers, it could be large institutions wanting alkaline in their own white labels. That is something that we will also reach out for over a period of time. Between the domestic demand and potential for exporting in white label, the facility is of significance given that it's the only one alkaline facility in India at the moment.

Speaker #2: So, India with a plant in Jammu would be a good alternate to scout for. Many of—probably it could be retailers, it could be large institutions—wanting alkaline in their own white labels, and that is something that we will also reach out for over a period of time.

Speaker #2: So, between the domestic demand and potential for exporting in white label, the facility is of significance, given that it's the only alkaline facility in India at the moment.

Speaker #3: Hello? Hello? Hello? I'm online.

Saket Kapur: Hello. I'm there online?

Speaker #2: Yes.

Operator 4: Yes, sir. You may proceed.

Speaker #1: Yes, sir. You may proceed.

Speaker #3: Yeah, yeah, yeah. Correct, sir. So, to enter again, in terms of the conversation with the team regarding the EBITDA margin of 15%. And as per your opening remarks, sir, we are confident that these numbers are workable and can be exhibited during the year also.

Saket Kapur: Yeah. Correct, sir. And that again, in terms of perspective, also a conversation to the team for the EBITDA margin of 15%. As per your opening remarks, sir, we are confident that these numbers are workable and can be exhibited during the year also. I think the commodity inflation, the other variables have now become a part and parcel. Have we aligned our working in a sense that these margins should be, we can exhibit on a percent basis going ahead also?

Speaker #3: I think so, the commodity inflation and the other revenues have now become a part and parcel. So, have we aligned our working in a sense that these margins should be something we can exhibit on a sustained basis going ahead also?

Speaker #2: We are in line with trying to carry on what we have delivered. That is what the aspiration is, and that is what the plans and the discipline are there for, in order to ensure that we move ahead with the supply side.

Anirban Banerjee: I think we are in line for trying to carry on what we have delivered. That is what the aspiration is and that is what the plans and the discipline is there in order to ensure that we move ahead with a similar line. Now that being said, I think the exigencies that are happening in the world outside cannot be contained, and thus we will monitor it on a very short-term basis to keep seeing that what modifications need to be done to ensure that we broadly hit the numbers that we are looking to achieve.

Speaker #2: Now, that being said, I think the exigencies that are happening in the world outside cannot be contained. Thus, we will monitor it on a very short-term basis to keep seeing what modifications need to be done to ensure that we broadly hit the numbers that we are looking to achieve.

Speaker #3: My point was, are there any one-offs for us to factor in going ahead, or are these purely operational numbers that we have exhibited because of the efficiencies and the good work that you have just alluded to?

Saket Kapur: My point was that are there any one-offs for us to factor in going ahead, or these are purely operational set of numbers that we have exhibited because of the efficiencies and the good work that you have just alluded to?

Speaker #2: So you may take it, because there is no such one-off or any extra gain there. So this is purely due to operational efficiencies, because a lot of calibrated price actions have been considered during the quarter.

Bibek Agarwala: You may take it because there is no such one-off or any extra gain is there. This is purely an operational efficiency because lot of calibrated price actions has been considered during the quarter. Considering what the price increase, as Anirudh mentioned, our key component zinc, which was hovering less than INR 3,000 during the last whole year, now started exhibiting upwards of INR 3,500. That is why one has to get prepared for the along with the very sustainable and profitable growth. That is the way the team has taken a decision and hence the result is here.

Speaker #2: Considering the price increase, has anyone mentioned our key commodity, zinc, which was hovering at less than $3,000 during the whole of last year? Now it has started exhibiting levels upwards of $3,500.

Speaker #2: So that is why one has to get prepared for them, along with very sustainable and profitable growth. And that is the way the team has taken a decision, and hence, the result is here.

Speaker #3: Okay, I will join the queue, ma'am. Yes, ma'am, I will join.

Saket Kapur: Okay.

Operator 4: Arun, can I please ask you? May we request you to join the question?

Saket Kapur: Okay, ma'am. I will join the queue, ma'am. Yes, ma'am. I will join.

Speaker #1: Thank you. Thank you. Ladies and gentlemen, in order to ensure that the management is able to address questions from all participants in the conference, please limit your questions to two per participant.

Operator 4: Thank you.

Saket Kapur: No issue.

Operator 4: Thank you. Ladies and gentlemen, in order to ensure that the management is able to address questions from all participants in the conference, please limit your questions to two per participant. The next question is from the line of Mithun from Kivah Advisors. Please proceed. Mr. Mithun, you may proceed with your question.

Speaker #1: The next question is from the line of Mithun from Kiva Advisors. Please proceed. Mr. Mithun, you may proceed with your question.

Speaker #3: Hello. Yeah, hi. There were some news reports of one of your Japanese competitors potentially having to close their plants in India. I just wanted to understand if there are any updates on that, and could that also help you gain market share?

[Analyst] (Kiwa Advisors): Hello. Yeah. There was some news reports of one of your Japanese competitors potentially having to close their plants in India. I just wanted to understand any update on that, and could that also help you gain market share? That was the first question. The second one was, in terms of your expansion into other areas like wires and cables, just wanted your thoughts on any specific targets you have in that space and any market share that you think you can garner there?

Speaker #3: That was the first question. The second one was in terms of your expansion into other areas like wires and cables. I just wanted your thoughts on any specific targets you have in that space, and any market share that you think you can garner there.

Speaker #2: So, on your first point about the competitor, I think it is speculative in nature for me to comment on it. But in any market, at any point in time, should any brand vacate, typically the other brands would play to occupy that space.

Anirban Banerjee: On your first point on the competitor, I think it is speculative in nature for me to comment on it. In any market at any point in time should any brand were to vacate, typically the other brands would play in to occupy the space. That is all where I would put it at, given that we have absolutely no idea about what the competitive nature would be. Whatever stands out in the market will get automatically played by the brands in the market. As far as the wires and MCB is concerned, we were at the initial start. We are trying to double from where we were there at the close of the last financial year, right? Will that be significant amount of market share? Maybe not.

Speaker #2: And that is all where I would put it at, given that we have absolutely no idea about what the competitive nature would be. Whatever stands out in the market will get automatically played by the brands in the market.

Speaker #2: As far as the wires and MCBs are concerned, we've had a we have had the the initial start, correct? We are trying to double from where we were there of the close of the last financial year.

Speaker #2: Right? Will that be a significant amount of market share? Maybe not. But that is something that we are kind of contemplating—to see whether we can try and clock more than double in this current financial year, to see whether we can start making rounds of the market share by about one or two percent.

Bibek Agarwala: That is something that we are kind of contemplating to see whether we can try and clock more than double in this current financial year to see whether we can start making rounds of the market share by about 1% or 2%. It would be preliminary given that we have just started about 6 months back.

Speaker #2: But it would be preliminary given that we have just started about six months back.

[Analyst] (Kiwa Advisors): What sort of capacity do you have in that space, sir? To what level can we actually go with the current capacity?

Speaker #3: And what sort of capacity do you have in that space now? To what level can we actually go with the current capacity?

Speaker #2: The wires are sourced; we don't manufacture them. If you look at many players in the market, there are a few of them who make it themselves.

Bibek Agarwala: The wires are sourced. We don't manufacture them. If you look at many players in the market, there are a few of them who make it themselves, and there are more than a few who source it from the other players, and thus our entry is dependent on our sourcing. Our sourcing capacities look good enough for two to three X amount of growth than what we are currently doing. At the moment, it looks okay.

Speaker #2: And there are more than a few who source it from the other players. Thus, our entry is dependent on our sourcing. Our sourcing capacities look good enough for two to three times the amount of growth compared to what we are currently doing.

Speaker #2: So, at the moment, it looks okay.

Speaker #3: Okay. Thanks, sir. Thank you.

[Analyst] (Kiwa Advisors): Thanks, sir. Thank you.

Speaker #2: Thank you.

Bibek Agarwala: Thank you.

Speaker #1: Thank you. The next question is from the line of Prakash Vasa from RBC. Please proceed.

Operator: Thank you. The next question is from the line of Vikas Srivastava from RBC. Please proceed.

Speaker #3: Yeah, thank you. I wanted to know if there's any update on the GST for all investors, in terms of approvals, the con term, and the taxability as and when the GST subsidy comes.

Vikas Srivastava: Yeah, thank you. Wanted to know an update on the GST and for all investors in terms of approvals, the quantum and the taxability as and when the GST subsidy comes. That was my first question. My second question was that are we now in a position to give a three-year EBITDA or a turnover CAGR forecast? My third question was on one of our directors was paid a consulting fees, I believe, a concerned person and now a whole time director in another Burman company. Are we still paying him that INR 2 crore of consultancy fees or has that stopped now? Those were my first three questions.

Speaker #3: That was my first question. My second question is: are we now in a position to give a three-year EBITDA or turnover CAGR forecast?

Speaker #3: My third question was on whether one of our directors was paid a consulting fee, I believe, or if a concerned person is our whole-time director in another group company.

Speaker #3: Are we still paying him that ₹2 crore consultancy fee, or has that stopped now? Those were my first three questions.

Speaker #2: So thank you, Vikasji. With respect to the Jammu incentive, the status remains the same. There is not much movement, so no progress has happened on our approval at this point of time.

Bibek Agarwala: Thank you, Vikasji. With respect to the Jammu incentive, the status remains the same. There is not much movement. There is no movement that happened on our approval at this point of time, but we are in a very advanced stage of the discussion with the industries department. They keep saying that things are moving progressively, but as of now, we have not got any formal approval. That is the first with respect to that. Second, as in my last call also, I have spoken about that now this is the time has come up for which we have to give little bit of long-term things and I have requested for two to three quarters time. You have seen this is a very sustainable seven quarter growth we have given and this is one of the highest revenue and operating margin generated quarters.

Speaker #2: But we are in a very advanced stage of the discussion with the Industries Department, and they keep saying that things are moving progressively.

Speaker #2: But as of now, we have not got any formal approval. That is the first point with respect to that. Second, as I mentioned in my last call, I had also spoken about this—now the time has come for which you have to give a little bit of long-term things.

Speaker #2: And I have requested about two to three quarters' time. Because you have seen this is a very sustainable seven-quarter growth we have given. And this is one of the highest revenue and operating margin generated quarters.

Speaker #2: So now the team's confidence is on the up, because we do want to give you something which is very calculated and planned, so that the execution is also equally important.

Bibek Agarwala: Now the team's confidence is on the up because we want to give you something which is very calculated, planned way so that the execution is also parallel important. Just will I request you to bear with us for another one or two quarter before we give you for the long-term things. With respect to one of the whole-time director remuneration, our NRC and the board has approved and has seen the commitment of the directors very much to the company. He could adequately devote the time, can give a decision-making guidance, and he is a very strategic pivotal person. He is doing his good contribution to us and that is why the NRC and board has approved his compensation.

Speaker #2: So, we just request you to bear with us for another one or two quarters before we give you the long-term things. With respect to the whole-time director remuneration, our NRC and the Board have approved.

Speaker #2: And has seen the commitment of the directors is very much to the company. He could adequately devote the time, can interfere, and can give decision-making guidance.

Speaker #2: And he is a very strategic, pivotal person. So, he is making a good contribution to us, and that is why the NRC and the Board have approved this.

Speaker #2: Compensation.

Speaker #3: On the GST, you mentioned I wanted to.

Vikas Srivastava: On the GST, you mentioned I wanted to

Speaker #1: Sorry to interrupt, Mr. Vikas. We will request you.

Operator: Sorry to interrupt, Mr. Vikas. Your request is

Speaker #3: Just a follow-up question. I didn't get an answer, so I'll just hold on. I wanted to know, what exactly is our entitlement? What is the con term?

Vikas Srivastava: It's a follow-up question. I didn't get an answer, just hold on. I wanted to know what exactly is our entitlement. What is the quantum? How is it paid and how is it taxable? Just a little bit of flavor, what can we expect when it is approved? That was question number one. B, Eveready brand, is there any plan to any M&A or something now that you've spent so much time on the brand and it's such a strong brand, why are we not exploiting it in a much larger manner?

Speaker #3: How is it paid, and how is it taxable? Just a little bit of flavor—what can we expect when it is approved? That was question number one.

Speaker #3: And B, are we already a brand? Is there any plan for any M&A or something? Now that we have spent so much time on the brand and it's such a strong brand, why are we not exploiting it in a much larger manner?

Speaker #2: Okay, so first, it's like you want to understand what is the scheme, right? I think I explained this last time also, and let me tell you again.

Bibek Agarwala: Okay. First, you want to understand what is a scheme, right? I think I have explained last time also and let me tell you again. The scheme of the Jammu investment is that whatever the capital investment you do, you get 3x refund in the terms of the GST revenue calculation. This is the incentive scheme. Okay. It is on the plant and machinery. Government has in 2021 has come up with some NCSS scheme there in Jammu, and on that Jammu is that if the company is getting registered in the NCSS, then they are eligible for not on the total investment on the plant and machinery investment, which is equivalent to 3x of the plant machinery, eligible plant and machinery in the form of GST, whatever we pay in the state over a period of 10 years.

Speaker #2: So the scheme of the Jammu investment is that whatever capital investment you do, you get a 3x refund in terms of the GST revenue calculation.

Speaker #2: This is the incentive scheme, okay? It is on the plant and machinery. So the government in 2021 has come up with some NCSS scheme.

Speaker #2: They are in Jammu. And on that, Jammu is that if the company is getting registered in the NCSS, then they are eligible not on the total investment, but on the plant and machinery investment, which is equivalent to three times the plant and machinery.

Speaker #2: Eligible plant and machinery. In the form of GST, whatever we pay in the state. Over a period of 10 years. And with respect to the M&A and what are the company as I told you, this is in our this would be a part of our long-term horizon vision whether we should go on a any acquisition or we will focus on building and investment on our existing code.

Bibek Agarwala: With respect to the M&A and what is the company, as I told you, this will be a part of our long-term horizon vision, whether we should go on any acquisition or we will focus on building and investment on our existing core that we are internally deliberating and when we come up to you in the next two to three quarter our long-term firm plan in that it will be incorporated.

Speaker #2: That we are internally deliberating. And when we come up to you in the next two to three quarters, our long-term form plan, in that, it will be incorporated.

Speaker #3: Thank you very much. I think the capital amount on plant and machinery is about ₹50 to ₹75 crores, is my understanding right?

Vikas Srivastava: Thank you very much. I think the capital amount on plant and machinery is about INR 50 to 75 crore is my understanding, right?

Speaker #2: No, sir. In Jammu, it will be around 90 to 95 crore for our plant and machinery.

Bibek Agarwala: Of course. In Jammu it will be around INR 90 to 95 crore will be our plant and machinery.

Speaker #3: So, we'll be entitled to a ₹300 crore GST subsidy over 10 years, as and when it comes. Thank you. Thank you. The next question is from the line of Danesh Mistry.

Vikas Srivastava: It will be INR 320 to 300 crore GST subsidy over 10 years as and when it comes.

Operator: Sorry to interrupt, Mr. Vikas.

Vikas Srivastava: Thank you.

Bibek Agarwala: Yeah.

Vikas Srivastava: Thank you.

Operator 2: The next question is from the line of Tanush Mistry. Please go ahead with your question.

Speaker #3: Please go ahead with your question.

Speaker #4: Oh, yes. Hi. Good evening, and thank you very much for taking my question. And congratulations on a good set of numbers in these trying times.

Tanush Mistry: Yes. Hi. Good evening, and thank you very much for taking my question, and congratulations on a good set of numbers in these trying times. I just had two questions. The first is that on the Jammu plant, which is there, are we kind of capitalizing some of the startup expenses, or is it just already expensed out in the P&L? That is number one, especially as the plant ramps up. You said that you started only on 29 May. The second question is more in terms of the lighting division. After a long time, we have seen price stability in lighting. I just want to know where does it go from here, what are you seeing on the ground, and have we continued to break even in this segment? Thank you.

Speaker #4: And I just had two questions. The first is that on the Jammu plant, which is there, are we kind of capitalizing some of the startup expenses, or is it just already expensed out in the P&L?

Speaker #4: That's number one, especially as the plant ramps up. You said that you started only on May 29th. The second question is more in terms of the lighting division.

Speaker #4: After a long time, we've seen price stability in lighting. I just want to know, where does it go from here? What are you seeing on the ground?

Speaker #4: And have we continued to break even in this segment? Thank you.

Speaker #2: So I think there are two parts to your question. One is the pre-operative expenses and the other is on lighting. So I’ll take the first one. With respect to the pre-operating expenses, these are all capitalized.

Anirban Banerjee: I think two parts of your question. One is on pre-operative expenses and another is on lighting. I take the first one. With respect to the pre-operating expenses, these are all capitalized.

Speaker #2: All right. That's for accounting standards—also, any expenses till the time of capitalization, so it is all capitalized. After 29th May, expenses are being charged to P&L.

Tanush Mistry: Okay.

Anirban Banerjee: All right. As per accounting standard also, any expenses till the time of capitalization, it is all capitalized. After 29 May, expenses are being charged to P&L.

Anirban Banerjee: Anirban, if you would like to add on the lighting part.

Speaker #2: Anirban, if you would like to comment on the lighting part.

Speaker #4: So, on the pre-operating part, are we going to—how will we treat it, sir?

Tanush Mistry: on the pre-operative part, how will we treat it, sir?

Speaker #2: It has been added as an asset.

Anirban Banerjee: It has been added to the assets.

Speaker #4: So, you understood the assets. Okay. Okay. You're deprecating. Got it. Got it. Got it. Understood, sir. Got it, sir. Yes, sir. And on the lighting bit, sir.

Tanush Mistry: You added it to the assets. Okay. You have a P&L. Got it. Understood, sir. Got it, sir. Yes, sir, on the lighting bit, sir.

Speaker #2: Yeah. So on your question

Anirban Banerjee: Sir, on your question on the lighting, I think what's interesting and what's good about the lighting part is that after almost, I think, about 18 to 20 months, there has been a little bit of a softening of the value erosion that was occurring, the value erosion occurred across the subsegments. While that occurred, I think with all the macroeconomic in play, the cost push was also extremely high in Q1. Some of it looks to be softening a little bit, but not yet in the same lines as it was last year. Given that, there is seemingly the move towards growth in Q2 and in Q3 is my sense of it. How much would the growth be and how much of the cost will soften is something that we will have to have a hawkeye view in the current quarter.

Speaker #3: Of the lighting, I think what's interesting and what's good about the lighting part is that after almost, I think, about 18 to 20 months, there has been a little bit of a softening of the value erosion that was occurring.

Speaker #3: And the value erosion occurred across sub-segments. And while that occurred, I think with all the macroeconomic factors in play, the cost push was also extremely high in the first quarter.

Speaker #3: Some of it looks to be softening a little bit, but not yet in the same lines as it was last year. So, given that, there is seemingly the move towards growth in Q2 and in Q3, is my sense of it.

Speaker #3: But how much the growth will be, and how much of the cost will soften, is something that we will have to keep a hawk-eye view on in the current quarter.

Speaker #3: Will accessories and lighting accessories grow for us? They should. Do we see a lot of traction for us in the emergency bulb LED segments? We do.

Anirban Banerjee: Will accessories and lighting accessories grow for us? Should. Do we see a lot of traction for us in the emergency bulb LED segments? We do. Will there be growth in wires from our portfolio? It should. That being said, will the regular GLS bulb continue to grow? Maybe not. There are certain subsegments that will definitely do much better than the other one. In terms of cost pressures and margins is something that one needs to be watchful of and calibrate to pricing decisions in the coming quarter.

Speaker #3: Will there be growth in wires from our portfolio? It should. That being said, will the regular GLS bulb continue to grow? Maybe not. So, there are certain sub-segments that will definitely do much better than the other ones.

Speaker #3: In terms of cost pressures and margins, it's something that one needs to be watchful of and calibrate to pricing decisions in the coming quarter.

Speaker #3: Hope that is.

Speaker #4: Just a follow-up, sir. Just a follow-up. In the lighting segment, sir, this time have we broken even in Q1?

Tanush Mistry: Sir, just a follow-up. In the lighting segment, sir, this time, have we broken even in Q1?

Speaker #3: Yeah. In Q1, we have broken even. Let's watch for it throughout the year. My sense is that mostly it should hold.

Anirban Banerjee: Yeah, in Q1 we are breaking even. Let's watch for it throughout the year. My sense is mostly it should hold.

Speaker #4: Got it, sir. Thank you very much, sir, and wish you the very best of luck. Thank you, sir.

Tanush Mistry: Got it, sir. Thank you very much, sir, and wish you the very best of luck. Thank you, sir.

Speaker #3: Thank you.

Anirban Banerjee: Thank you.

Speaker #1: Thank you. The next question is from the line of Varga from Amber Investments. Please proceed.

Operator 2: Thank you. The next question is on the line of Bhargav from Ambit Capital. Please proceed.

Speaker #5: Yeah. Good afternoon, team, and thank you for the opportunity. My first question is on alkaline market share. We are at close to about 18% market share.

[Company Representative] (Ambit Investments): Good afternoon, team, and thank you for the opportunity. My first question is on alkaline market share. We are at close to about 18% market share. Now that the factory has got commissioned, is it fair to assume that market share gains should only accelerate from here on? If yes, then what could be the target over the next two years?

Speaker #5: Now that the factory has got commissioned, is it fair to assume that market share gains should only accelerate from here on? And if yes, then what could be the target over the next two years?

Anirban Banerjee: The market share gain has been almost from about 3% to about 18% over the last 30 months. That market share gain was a play of the brand and the consumer acceptance of it, even while the product was made to our specifications and was being imported into the country. As the manufacturing plant settles down and operational efficiencies improve, the quality remains the same, so the same brand continues to play its market share journey as we go ahead. Will it accelerate? It will continue on the similar kind of a momentum. Some of the margins with the operational efficiencies will look to be healthier compared to when we were importing it.

Speaker #2: So, the market share gain has been from about 3% to about 18% over the last 30 months, right? That market share gain was a result of the brand and consumer acceptance of it.

Speaker #2: Even while the product was made to our specifications and was being imported into the country, as the manufacturing plant settles down and operational efficiencies improve, the quality remains the same.

Speaker #2: So the same brand continues to play its market share journey as we go ahead. Will it accelerate? It will continue on the similar kind of a momentum.

Speaker #2: Right? Some of the margins with the operational efficiencies will look to be healthier compared to when we were importing it. And on your question on where do we see two years from now, my sense would be that we should be looking at anywhere between exit share of 25% to 30% at the end of two years from now.

Anirban Banerjee: On your question on where do we see two years from now, my sense would be that we should be looking at anywhere between a average share of 25% to 30% at the end of two years from now.

Speaker #5: Understood. Secondly, in terms of the balance sheet, is it possible to give some update? Obviously, we have been expecting some proceeds from your line sale, plus healthy operating as well as generation starting this year, given our margin expansion led by price hikes.

[Company Representative] (Ambit Investments): Understood. Secondly, in terms of the balance sheet, is it possible to give some update that obviously we have been expecting some proceeds from your line sales, plus a healthy operating cash flow generation starting this year given a margin expansion led by price hikes. When can we become debt-free as far as the balance sheet metrics is concerned?

Speaker #5: So, when can we become debt-free as far as the balance sheet matrix is concerned?

Speaker #2: So I think it's a good one. So, if you see, as of now, our debt proceedings are hovering around ₹165 crore. And if you see from the lens that we have already invested ₹200 crore-plus in the Jammu plant.

Bibek Agarwala: I think it's just one. If you see, as of now, our debt proceedings are hovering around INR 165 crore. If you see from the lens that we have already invested INR 200 crore plus in Jammu plant, that is an investment which has yet to yield a result. On that forefront, if you see that we are anyway negative borrowing. If you ask me, we see shorter in the next couple, maybe in those four to five quarters, the company should be having a positive and should be debt and like to like debt-free.

Speaker #2: And that is the investment which has yet to yield a result. So on that front, if you see, we are anywhere near negative borrowing, right?

Speaker #2: But if you ask me, we see shorter in the next couple of—maybe in those four to five quarters, the company should be having a positive and could, should be debt and a like-to-like debt-free.

Speaker #3: And just for clarification on that OPEX line, now that this facility has been commissioned, do we expect an increase in employee costs, or will the first-quarter run rate on employees continue?

[Company Representative] (Ambit Investments): Okay. Just a clarification on that OpEx front. Now that this Jammu facility got commissioned, do we expect an increase in our employee cost? Or the cost will be similar to the Q1 run rate on employees?

Speaker #2: So, your question was not clearly audible, but if we can make it out, you are asking whether, once our alkaline plant is operational, we should expect the employee cost to go up. Right?

Bibek Agarwala: Your question was not clearly audible, but if we can make it out that once our alkaline plant will be operational, do we expect the employee cost to go up, right? That is your question.

Speaker #2: That is your question?

Speaker #3: Yes. Yes.

[Company Representative] (Ambit Investments): Yes.

Speaker #2: So, of course, there could be some increase in the total employee cost, but earlier we were importing FD finished goods, which was inclusive of material cost, people cost, and everything anyway.

Bibek Agarwala: Of course, there will be some increase in the total employee cost. Earlier we are importing every finished goods, which is inclusive anyway, the material cost, people cost and everything. It will be by per in a way. At isolation, people cost may not be a thing, but overall gross margin level will be better off. On the other side, if you see that last year we have closed the Noida plant.

Speaker #2: So it will be bifurcated in the various isolations. People cost may not be a thing, but overall, gross margin level will be better off.

Speaker #2: And on the other side, if you see, last year we closed the Noida plant.

Speaker #3: Yes.

[Company Representative] (Ambit Investments): Yes.

Speaker #2: And that is why you could see the gain in our P&L in terms of the employee cost.

Bibek Agarwala: That is why you could see the gain in our P&L in terms of the employee cost.

Speaker #5: Okay, sir. Thank you very much, and all the very best.

[Company Representative] (Ambit Investments): Okay, sir. Thank you very much and all the very best.

Speaker #2: Thank you.

Bibek Agarwala: Thank you.

Speaker #1: Thank you. The next question is from the line of Stalloni from Molecule Ventures. Please proceed.

Operator: Thank you. The next question is from the line of Saloni from Molecule Ventures. Please proceed.

Speaker #5: Yeah, so I have three sets of questions. First, regarding the Noida plant that we sold off, are there any more asset rationalizations in development, or was it just this one asset sale that we were waiting for post the Realtouch Finance settlement?

[Analyst] (Molecule Ventures): Sir, I have three sets of questions. First, regarding the Noida plant that we sold off, any more asset rationalizations in development as well? Or was it one asset sale that we were waiting for post the real debt finance settlement? Second, before the settlement, we used to mention that we would happily inject capital once this issue gets resolved. Are we planning for any potential fund infusion and purpose for the same? My third question is regarding the opportunity size again, I would like to revisit. As you mentioned that obviously the basket size will increase because the alkaline value proposition will be high. Currently, if I assume an INR 2,200 crore market size, what is the market size in the next three to five years that will potentially increase from this value proposition and how much repeatedly are we looking to tap into it?

Speaker #5: And second, before the settlement, we used to mention that we would happily inject capital once this issue gets resolved. So, are we planning for any potential fund infusion and purpose for the sale?

Speaker #5: My third question is regarding the opportunity size again. I would like to revisit that. So, as you mentioned, obviously the basket size will increase because the alkaline value proposition will be high.

Speaker #5: So, currently, if I assume a ₹20 to ₹100 crore market size, what will the market size be in the next three to five years? Will it potentially increase from this value proposition?

Speaker #5: And how much, basically, are we looking to tap into it? Is there a single growth rate? Can the company finally get to a double-digit growth rate due to this?

[Analyst] (Molecule Ventures): Will the single growth rate company finally get to double-digit growth rate due to this? Will there be another driver driving the next leg of growth for the company? These are my set of questions.

Speaker #5: Or will there be another driver leading the next leg of growth for the company?

Speaker #2: Thank you, Stalloni. Good questions. I think I was expecting this. So, the Noida sale is not yet completed. As you see, there are two plots.

Bibek Agarwala: Thank you, Saloni. Good questions. I think I was expecting this. Noida sale is not yet completed. As you see that there are two plots. One we have executed and second we are expecting to close out shortly as one. As we said, last year, we have started doing the rationalization of our manufacturing footprint. As a part of that, the Noida came up as one of the prominent assets. Without taking any delay to reduce the fixed cost and inventory, we have executed. In future, if we get any opportunity, we will keep you posted as a first. With respect to the fund infusion, as of now, there is no such need of the extra fund. If you see the company is doing very well. We are paying ahead of time our debts, there is no such.

Speaker #2: One, we have executed. And second, we are expecting to close shortly. That’s the one. And as you said, last year we started doing the rationalization of our manufacturing footprint.

Speaker #2: And now, as part of that, Noida came up as one of the prominent assets. And without taking any delay, to reduce the fixed cost and implement, we have executed.

Speaker #2: In future, if we get any opportunity, we will keep you posted. That's the first. With respect to the funding position, as of now, there is no such need for extra funds.

Speaker #2: If you see, the company is doing very well. We are paying our debts ahead of time, so there is no such issue. But as a part of our long-term strategy, if we need something, then definitely this may be considered in the due course of time.

Bibek Agarwala: But as a part of our long-term strategy, if we need something, then definitely this may be considered in the due course of time. Anyone, something on a market share of

Speaker #2: So, Anirban, something on the market share of…

Speaker #5: So, Stalloni, on your sizing of the market: the market is now at 3,200, but currently, the market size for batteries hovers at about close to 4,100 crore.

Anirban Banerjee: Saloni, on your sizing of the market, the market is about INR 3,200 crore, but as of currently, the market size hovers for batteries at about close to INR 4,100 crore in MRP terms across all channels and consumers put together. Out of that, roughly about INR 550 crore would be alkaline, and that is the part that is growing at about roughly 20% CAGR. That being said, your zinc carbon remains broadly flattish. Now, assuming that if you were to do the math, the trajectory of the alkaline continues to grow, and that is what's going to fuel the growth in the country.

Speaker #5: In MRP terms, across all channels and consumers put together, out of that, roughly about ₹550-odd crores would be alkaline. And that is the part that is growing at about roughly 20% CAGR.

Speaker #5: That being said, your zinc carbon remains broadly flattish. Now, assuming that if you were to do the math, the trajectory of the alkaline continues to go.

Speaker #5: And that is what’s going to fuel the growth in the country. Over the last, say, if I were to look at about seven or eight quarters, if the concern was in terms of cannibalization, it has still not appeared. Because even in volume terms, if we were to sell more than 2.5 billion batteries in the country, the zinc volumes have either been flattish, at between minus one to plus one percent kind of a range.

Anirban Banerjee: Over the last, say, if I were to look at about seven or eight quarters, if the concern was on terms of cannibalization, it has still not appeared because even on volume terms, if we were to sell more than two and a half billion batteries in the country, the zinc volumes have either been flattish at between a minus one to a plus one kind of a range. Whereas the alkaline volumes have been at a +19 to +23 in terms of volume growth. Your question is right that eventually there might come a time where the cannibalism would start appearing. It's happened in many other countries across the world, especially in Europe and the US. But by value, the battery market will continue to grow, given that it is the more premium batteries that are now moving in roads into the consumer houses.

Speaker #5: Whereas the alkaline volumes have been at a plus 19% to plus 23% in terms of volume growth. So your question is right that eventually there might come a time where cannibalism would start appearing.

Speaker #5: And it's happened in many other countries across the world, especially in Europe and the US. But, by value, the per-battery market will continue to grow, given that it is the more premium batteries that are now making inroads into consumer houses.

Speaker #5: That is connected, as I said, to the penetration of hydrogen devices and multiple of them. So, the number of devices is increasing in the house, and the penetration of each of these devices is increasing among consumer households in India.

[Company Representative] (Ambit Investments): That is connected, as I said, to penetration of high-drain devices and multiple of them. Number of devices increasing in the house and the penetration of each of these devices increasing amongst the consumer households in India.

Speaker #5: So my sense is that over the next one year, or maybe a year and a half, you may not see too much of cannibalistic instincts as yet.

Bibek Agarwala: My sense that over the next 1 year or maybe a year and a half, you may not see too much of cannibalistic instincts as yet. As the alkaline segment starts becoming much bigger and crosses maybe the 20% saliency of the overall battery market, there might see some movement, but we will take it at that point in time.

Speaker #5: But as the alkaline segment starts becoming much bigger and crosses maybe the 20% saliency of the overall battery market, we might see some movement.

Speaker #5: But we will take it at that point in time. Okay. So just one last question on the CCI matter. Is there any update on that?

[Analyst] (Molecule Ventures): Okay, sir. Sir, just one last question on the CCI matter. Any update on that and potential INR 150 crore cash outflow that can possibly come if it doesn't in our favor?

Speaker #5: And the potential ₹150 crore cash outgo that could possibly occur if it isn't in our favor?

Speaker #2: So, there is a next hearing date around the last week of September. But I can't comment on the possibility you are mentioning because, as of now, we are holding that, at this point in time, management cannot estimate rightly.

Anirban Banerjee: There is next hearing date around the last week of September. I can't comment on the possibility what you are saying because as of now, what we are holding at this point of time, that management cannot estimate rightly. Let us see in the end of September, last week of September, there's a CCI hearing and any update, we'll keep you posted.

Speaker #2: So, let us see. In the quarter ending September, in the last week of September, there is a CCI hearing. Any update, we'll keep you posted.

Speaker #5: All right. Wish you all the best, sir. Thank you so much.

[Analyst] (Molecule Ventures): All right. Wish you all the best, sir. Thank you so much.

Speaker #2: Thank you.

Anirban Banerjee: Thank you.

Speaker #1: Thank you. The next question is of all our questions on the line of Saqib Kapoor from Kapoor & Company. Please proceed.

Operator: Thank you. The next question is a follow-up question from the line of Saket Kapur from Kapur & Company. Please proceed.

Speaker #5: Yes, sir. Yes, sir. Just to sum it up—firstly, sir, if you could just give us an understanding of what steps we are taking to manage the zinc inflationary trend, which I think is now trending upward.

Saket Kapur: Yes, sir. Just to sum it up. Firstly, sir, if you could just give us an understanding what steps are we taking to manage the zinc inflationary trends, which I think so is now trending upward and you have alluded to. How are we hedged or any price hike or how are we going to maintain our margins with zinc trending higher? Secondly, sir, I think so just a small understanding, we have mentioned about this, the Kisan Torch with animal alarms. If they are about the agriculture field protecting there, can we look out at outlets of tie-up with the agri players wherein at the time of purchases of herbicide and pesticide, the farmers would be alluded to the fact of also keeping pets or animals away with this alarm torch. If that solution went to the marketing team. That was my understanding.

Speaker #5: And you have alluded to it. So, how are we hedged for any price hike, or how are we going to maintain our margins with zinc trending higher?

Speaker #5: And secondly, sir, I think so just to just a small understanding, we have mentioned about this that Kisan torch with alarms. So if they are about the agriculture field protecting there, so can we as can look out as outlets of tie-up with the agri players wherein at the time of purchases of herbicide and pesticide, the farmers would be alluded to the fact of also keeping pest animals away with this alarm torch.

Speaker #5: So, if that suggestion goes well to the marketing team, that was my understanding.

Speaker #2: Yes, interesting questions. On the zinc part, it is like any other FMCG product where there is a commodity linkage, correct? Are the battery and zinc batteries in our case very highly linked to the prices of zinc?

Anirban Banerjee: Yes, interesting questions. On the zinc part, it is like any other FMCG product where there is a commodity linkage. Correct? The battery and the zinc batteries are linked, in our case, very highly to the prices of the zinc. Over the quarter of the last financial year and sometime in April, between these four months, we've taken adequate price increases, which is what if you see has been reflecting in our Q1 results as well. As far as the zinc prices are concerned, yes, it looks quite heavy and high at the moment, and we monitor it on a weekly basis. Now, should there at any point in time be a scenario that it is overwhelming and margins are under inflection, we will have no choice but to pass on prices to the end consumer. Right?

Speaker #2: Over the last quarters of the last financial year, and sometime in April, between these four months, we've taken adequate price increases, and which is what, if you see, has been reflecting in our Q1 results as well.

Speaker #2: As far as the zinc prices are concerned, yes, it looks quite heavy and high at the moment, and we monitor it on a weekly basis.

Speaker #2: Now, should there at any point in time be a scenario where it is overwhelming and margins are under inflection, then we’ll have no choice but to pass on prices to the end consumer.

Speaker #2: All right. And is it a good thing to do it at very short-term intervals? No. But this year is a bit of an exceptional year across various kinds of FMCG products, including batteries.

Anirban Banerjee: Is it a good thing to do it in a very short term intervals? No. This year is a bit of an exceptional year across various kinds of FMCG products, including batteries. Thus, I will not be very surprised if to manage the commodity inflation, we may have to do another round of price or margin corrections. That answers your first point. I think it's an extremely good idea when you said that should some of these flashlights with an animal alarm be taken and encouraged through agri outlets, et cetera. I think the team's trying to tie up, not only pushing it through our channels, which are deep into the rural and face farmers. They're also trying to tie up with other agricultural product suppliers, whether it is tractors or insurance or even agricultural information portals.

Speaker #2: And I will not be very surprised if, to manage the commodity inflation, we may have to do another round of price or margin corrections.

Speaker #2: So that answers your first point. I think it's an extremely good idea when you said that some of these flashlights with an animal alarm should be taken and encouraged through agri outlets, etc. I think the team is trying to tie up, not only pushing it through our channels—which are deep into the rural areas and facing farmers—but they're also trying to tie up with other agricultural product suppliers, whether it is tractors, insurance, or even agricultural information portals. At the same time, they're trying to participate in a lot of the melas and mandis across some of the key semi-urban and rural farming belts in India. This includes using a lot of rural farmers as influencers in the new age to spread the message that, in India, there is for once a torch which can drive away some of the animals that potentially harm the crops, without having to run after them or hit them with a stick.

Anirban Banerjee: At the same time trying to participate in a lot of the melas and mandis across some of the key semi-urban, rural farming belts in India, including using a lot of rural farmers as influencers in the new age to spread the message that in India, there is, for once, a torch which can drive away some of the animals which potentially harm the crops without having to run after it, without having to hit it with a stick. You can do all of it from a distance. Usually, it is done in the middle of the night. Hopefully, using all these channels, we will be able to propagate this torch amongst the agricultural community in India.

Speaker #2: And you can do all of it from a distance. Usually, it is done in the middle of the night. Hopefully, using all these channels, we will be able to propagate this torch among the agricultural community in India.

Speaker #5: Thank you.

Saket Kapur: Sir, last few points on continuing the Jammu facility. Currently, sir, what is our monthly fixed expenses that we are incurring from the Jammu facility that will flow now through the quarterly results, I think so the Q2?

Speaker #3: And lastly, a point on the conclusion regarding the Jammu facility. Currently, sir, what are our monthly fixed expenses that we are incurring for the Jammu facility that will now flow through the quarterly results?

Speaker #3: I think so, the second quarter.

Bibek Agarwala: No. Saketji, now the isolation, we can't see the expenses, right? We are manufacturing batteries, and that costs are getting uploaded in the battery cost.

Speaker #2: So, Saqib ji, the isolation—we can't see those expenses, right? We are manufacturing batteries, and those costs are getting uploaded into the battery cost.

Saket Kapur: Okay.

Speaker #2: So earlier, what we were getting was a finished cost of finished batteries. Now, raw material, manufacturing cost, and overheads are an integral part of the cost.

Bibek Agarwala: Earlier, what we are getting a finished cost of finished batteries, now raw material, manufacturing cost, and overheads are a part of the integral part of the cost. It is not directly flowing to P&L, and as we will be keep selling this will be coming as a cost of goods sold.

Speaker #2: So, these are getting loaded into it; it is not directly flowing to P&L. And as we keep selling this, this will be coming in as cost of goods sold.

Speaker #3: Okay. Sir, Vivek ji, you mentioned employee cost rationalization at some point in your earlier remarks to one of the participants. Can you explain to us what benefits you are alluding to?

Saket Kapur: Okay. Sir, Vivekji, you mentioned about this employee cost rationalization some point in your earlier remarks when you participated in one of the participants. Can you explain to us what benefits were you alluding to? I think so the Noida part of the story was I think we have paid the extra amount that will flow, there will be payback overhead. Other than that, I think so employee benefit expenses were flat on a quarterly basis. That was the point, or just if you could explain how will this number behave for the year as a percentage of sales or the rationalization activity which you were just explaining.

Speaker #3: I think so the Noida part of the story was about the I think to be a paid the extra amount that will flow that will be paid back overhead.

Speaker #3: Other than that, I think employee benefit expenses were flagged on a quarterly basis. So that was the point. Or, if you could explain, how will this number behave for the year as a percentage of sales, or with regard to the rationalization activity which you were just explaining?

Speaker #2: So that's exactly the point. Last year, in Q1, we had a full-fledged Noida, right? And this year, we did not have Noida.

Bibek Agarwala: That's exactly the point, that last year Q1, we have a full-fledged Noida, right? This year we did not have the Noida. That is why you see it is almost a flat 2% to 3% increase. While as a regular course, as a part of our HR practices, we keep doing employee optimization exercise. It is a part of our current DNA process that it is normal process. What you see there is no much movement because of the one-time disposal of Noida.

Speaker #2: That is why you see it is almost a flat 2% to 3% increase. As a regular course, as part of our practices, we keep doing employee optimization exercises.

Speaker #2: So, it is part of our current DNA process; that is a normal process. But what you see is that there is not much movement because of the one-time disposal of Noida.

Speaker #3: Okay. And last point is on the investment in EPR and the renewable energy. How are we taking these two line items in the total sphere?

Saket Kapur: Okay. Last point is on the investment in EPR and the renewable energy, how are we taking these two line items in the total sphere? For Jammu facility also, power costs, what kind of investment have we gone through in the renewable space, sir?

Speaker #3: And for the Jammu facility also, regarding power costs, what kind of investment have we made in the renewable space, sir?

Speaker #2: So this is the first. Right now, since it is only two months of this production, we have taken a grid connection, and we have also put up some solar panels there.

Bibek Agarwala: This is the first, right now, since it's only two months of this production, we have taken a grid connection, and we have also put up some solar panels there. Because we are committed to the maximum solar power or renewable power energy, that we have put it there. What exactly are the other questions of it? I just missed it.

Speaker #2: So, because we are committed to the maximum solar power or renewable power energy, we have put it there. And what exactly are the other questions on it?

Speaker #2: I just missed it.

Speaker #3: Sir, my point was about the Extended Producer Responsibility (EPR) and the total investment in the renewable energy space. What is our thought process, and how are we progressing?

Saket Kapur: Sir, my point was about the extended producer responsibility, EPR, and the total investment in the renewable energy space. What is our thought process and how are we progressing for Eveready as an entity?

Speaker #3: For everybody as an entity.

Speaker #2: So, as I spoke earlier and as mentioned, all our plants now run on renewable energy, and our focus is increasingly on a leasing or rental model. This is because we want to follow a very asset-light approach, as the capital costs of these assets are changing very rapidly.

Bibek Agarwala: As I've spoken that Jammu, I have spoken, our all the plants are now renewable energy, and our focus is more on go on a leasing model or rental model better, because we want to play very asset-light model because the capital cost of these assets are changing very rapidly. Our all the plants, all large plants are having the solar power, what is the maximum possible. With respect to EPR, as I have explained to one of the earlier things that the compliance, we are in a very advanced level dialogues. We are quite sometime engaged with the Ministry of Environment and Climate Change, and Pollution Control Board as well. There are some operational framework on a pricing mechanism and other things are in the discussion. Once we get the clarity, we'll keep you updated.

Speaker #2: So our all the plants, all large plants are having the solar power. What is the maximum possible? And with respect to EPR, as I have explained to one of the earlier things that the compliance, we are in a very advanced level.

Speaker #2: I love—we are, quite some time, engaged with the Ministry of Pollution and Environment and Climate Change, and the Pollution Control Board as well. So, there are some operational frameworks on pricing mechanisms and other things under discussion.

Speaker #2: So once we get the clarity, we'll keep you updated. However, today we are taking all sorts of initiatives, whether to promote the collection of used batteries or to conduct awareness sessions.

Bibek Agarwala: However, today we are taking all sort of initiative whether to promote the collection of used batteries, awareness sessions. We are doing from our side best possible things.

Speaker #2: So, we are doing the best possible things from our side.

Speaker #3: Okay, just to conclude—sorry for the extended part. Finally, I would just like to add, ma'am, I would put the last participant. I hope so.

Saket Kapur: Okay. Just to conclude, sorry for the extended part.

Anirban Banerjee: Sorry, interrupting.

Saket Kapur: Only to add, ma'am, I would be the last participant, I hope so. Just a point and then I'll join and wait for the next quarter. In the lighting portfolio part, although you mentioned that the price erosion exercise is over, particularly pertaining to the cost, especially employee cost in the northern part of the country, the minimum wages part. Actually, sir, in the lighting portfolio, what is our differentiation and why are we pursuing this with go ahead, with breakeven also, we are only eyeing breakeven going ahead. Other than the branding exercise, what is our thought process, going ahead with this portfolio? This is a very crowded space and designing and all changes with a blink of eye. Your fashion change. If you could just give a closing remark and thank you for all the elaborate answers.

Speaker #3: Just a point and then I join. Wait for the next quarter. So in the lightning portfolio part, although you mentioned that the price erosion exercise is over particularly pertaining to the cost, especially employee cost in the northern part of the country, the minimum wages part, actually, sir, what is the in the lightning portfolio, what is our differentiation and why are we pursuing this with go ahead with break even also we are only eyeing break even going ahead.

Speaker #3: So, other than the branding exercise, what is our thought process going ahead with this portfolio? This is a very crowded space, and designing and all changes with the blink of an eye.

Speaker #3: Your fashion board just be change of that. So, if you could, just give a closing remark, and thank you for all the elaborate answers.

Speaker #2: No, you're right. The lighting space is a very crowded space, right? That being said, your company has been in the lighting space for a long time.

Anirban Banerjee: You're right. The lighting space is a very crowded space, right? That being said, your company has been in the lighting space for a long time, but while remaining in the lighting space, it remained flat. It is over the last one or two years that one has been seeing growth. In that aspect, is there a sufficient space for many people to play? Should be. It has a reasonable amount of size and scale across the country. Do I need to play across the country or should it be regional? That is something that we are looking into, and technically, if you were to ask me, some five or six states in India accounts for more than three-fourths of our business, and that is what we push through from an electrical and a general trade point of view.

Speaker #2: But while remaining in the lighting space, it remained flat. Now, it is over the last one or two years that one has been seeing growth.

Speaker #2: So in that aspect, is there sufficient space for many people to place? There should be. It has a reasonable amount of size and scale across the country.

Speaker #2: Do I need to play across the country or should it be regional? That is something that we are looking into and technically, if you were to ask me, some five or six states in India accounts for more than more than three-fourth of our business.

Speaker #2: And that is what we push through from an electric and a general trade point of view. At the same time, we have emerging channels like modern trade where we play.

Anirban Banerjee: At the same time, we have emerging channels like modern trade where we play. I don't think one will be able to answer the full strategy in one or two lines, but I will try my best in terms of trying to tell you that are we going to play in all segments of lighting? No. We are there. We have channels. There is a need for a portfolio. Portfolios are mainly sourced. Some of the products that we think we will hero, we focus. For example, we focus on trying to expand and do a good job of our emergency bulbs. Emergency bulbs by definition are bulbs which have batteries inside them, and anything that has a battery inside them seem to resonate well with a company which originated from selling batteries and continues to do that well.

Speaker #2: Now, I don't think one will be able to answer the full strategy. In a one or two lines, but I will try my best in terms of trying to tell you that are we going to play in all segments of lighting?

Speaker #2: No. We are there. We have channels. There is a need for a portfolio. Portfolios are mainly sourced. Some of the products that we think we will 'hero,' we focus.

Speaker #2: For example, we focus on trying to expand and do a good job with our emergency bulbs, right? Emergency bulbs, by definition, are bulbs which have batteries inside them, and anything that has a battery inside it seems to resonate well with a company which originated by selling batteries and continues to do that well.

Anirban Banerjee: That being said, do we also look into parts of the product portfolio which can get help from our synergistic approach? A lot of lighting companies in India, as you rightly said, we are one of the laggards. That being said, many lighting companies in India do not have the kind of distribution that we do. We are uniquely positioned in the general trade to have a distribution which is very commensurate with the FMCG business. At the same time, we have a separate channel which is evolving and growing, which is to do with the electrical channels. Thus, our ability to take parts of the portfolio into some of these channels, which are not only electrical and not only GT, is very unique compared to many of the other players in the market.

Speaker #2: That being said, do we also look into parts of the product portfolio which can get help from our synergistic approach? So a lot of lighting companies in India—as you rightly said—we are one of the laggards.

Speaker #2: But that being said, many lighting companies in India do not have the kind of distribution that we do. So we are uniquely positioned in the general trade to have a distribution which is very commensurate with the FMCG business.

Speaker #2: At the same time, we have a separate channel which is evolving and growing which is to do with the electrical channels. That's our ability to take parts of the portfolio into some of these channels which are not only electrical and not only GT is very unique compared to many of the other players in the market.

Speaker #2: So in this context, that should I look at a focus part of the portfolio? Yes. Should it be a couple of states in India?

Anirban Banerjee: In this context, should I look at a focus part of the portfolio? Yes. Should it be a couple of states in India? Yes. Should we have the advantage of a dual channel from lighting products? Yes. Are we doing consistently well in the lighting business from a top-line point of view? Yes. My sense is we have the kind of fixed costs that are sunk to be able to deliver a top line, which is probably another 1.5 to 2x on the base of the same fixed cost. Thus, I think it is a good traction to go ahead with at the moment, and we will continue to revisit should there be any change in the story.

Speaker #2: Yes. Should we have the advantage of a dual channel from lighting products? Yes. Are we doing consistently well in the lighting business from a top-line point of view?

Speaker #2: Yes. My sense is we have the kind of fixed costs that are sunk to be able to deliver a top line which is probably another 1.5 to 2X on the base of the same fixed cost.

Speaker #2: So thus, I think it is a good traction to go ahead with at the moment and we will continue to revisit should there be any change in the story.

Speaker #3: Right, sir. My best wishes to the team, sir. Hope to connect again, and thank you. Thank you, sir.

Saket Kapur: Right, sir. My best wishes to the team, sir. I hope to connect again.

Anirban Banerjee: Thank you, sir.

Speaker #1: Thank you. The next question is from the line of Shubham Jain from Countercyclic. Please proceed.

Saket Kapur: Thank you, sir.

Operator: Thank you. The next question is from the line of Shubham Jain from Counter Cyclical. Please proceed.

Speaker #3: Hello. Am I audible? Hello. Hello.

Shubham Jain: Hello, am I audible? Hello?

Operator: Yes.

Speaker #1: Yes, sir. Yes.

Speaker #3: Yes, sir. Actually, my earlier question was around the market share of dry cell. You answered, I believe, on the alkaline cell. So, the market share that we have, I believe, is 58%.

Shubham Jain: Sir, actually, my earlier question was around the market share of dry cell. You answered, I believe, on the alkaline cell. The market share that we have, I believe, is 58%. If you could help us understand who lost market share on that front that we have gained. That is one. Second would be that what sort of collection expense would you be incurring going forward on the EPR side of things?

Speaker #3: If you could help us understand on whose I mean, who lost market share on that front that we have gained that is one. And second would be that what sort of collection expense would you be incurring going forward on the APR side of things?

Speaker #2: Shubham, we could not get hold of the first question other than hearing market share. So will you just make the question a bit sharper?

Anirban Banerjee: Shubham, we could not get hold of the first question other than hearing market share. Will you just make the question a bit sharper? I think there is a line clarity issue. What was your question on market share again?

Speaker #2: I think there is a line. May I clarify—what was your question on market share again?

Speaker #3: So the 58% market share on the PPT side of things—earlier it used to be at the 50-ish level, lower 50s. Just wanted to understand which player in the Indian market is losing that share.

Shubham Jain: The 58% market share on the PPT side of things, earlier it used to be on the 50-ish level, lower 50s. Just wanted to understand which player in the Indian market is losing that share, if you have any idea.

Speaker #3: If you have any idea.

Anirban Banerjee: Okay. Your question is related to movements in market share.

Speaker #2: Okay, so your question is related to movements in market share.

Speaker #3: Right, right. So if you could help us understand just the market share part of things that is happening in the industry and stuff like that.

Shubham Jain: Right. If you could help us understand just the market share part of things that is happening in the industry and stuff like that.

Speaker #2: Okay. So, see Shubham, both alkaline and zinc are dry cells. So, it's not that one is a dry cell and the other is a wet cell.

Anirban Banerjee: Okay. Shubham, dry cell, both alkaline and zinc are dry cell. It is not that one is a dry cell, the other is a wet cell. Both are dry cells. Now, the way the market is composed, obviously India is composed of much more amount of zinc than is composed of alkaline. As I mentioned a few times in the call, the alkaline is growing at about 20% to 22% CAGR, both by volume and value. The zinc is a bit flattish, but obviously in about a few years back, zinc accounted for more than 95% of the mix and alkaline about 5% of the mix. Today, maybe three years down the line, alkaline accounts for more than 15% to 20%, slightly above 15% of the mix, and zinc continues to dominate at 85%.

Speaker #2: Both are dry cell. Now, the way the market is composed, obviously India is composed of much more amount of zinc than is composed of alkaline.

Speaker #2: As I mentioned a few times in the call, the alkaline is growing at about 22% CAGR, both by volume and value. The zinc is a bit flattish.

Speaker #2: But obviously, about a few years back, zinc accounted for more than 95% of the mix and alkaline about 5% of the mix. Today, maybe three years down the line, alkaline accounts for more than 15% to 20%, or slightly above 15%, of the mix.

Speaker #2: And zinc continues to dominate at 85. Within that, we hold, as I said, a large part of the zinc portfolio, which is what is mentioned as the 58 mark.

Anirban Banerjee: Within that, we hold, as I said, a large part of the zinc portfolio, which is what is mentioned as the 58%. That has remained mostly flattish as far as our shares in zinc is concerned. Our growth has been more in the alkaline, where we had single-digit shares as of three years back. As I reflect today, three years later, we are sitting on 18% of the alkaline market. The alkaline market is 15%, about 13% to 15% of the Indian dry cell market. The combination of both of them puts us at an advantage of still having an overall market share excess of 50% of the Indian dry cell market. Hope that clarifies for you.

Speaker #2: That has remained mostly flattish as far as our shares in zinc are concerned, right? Our growth has been more in the alkaline segment, where we had single-digit shares as of three years back.

Speaker #2: And as I reflect today, three years later, we are sitting on 18% of the alkaline market. The alkaline market is 15%. It's about 13 to 15% of the Indian dry cell market.

Speaker #2: And the combination of both of them puts us at an advantage of still having an overall market share excess of 50% of the Indian dry cell market.

Speaker #2: Hope that clarifies for you.

Shubham Jain: Right. How large would other players be, let's say Panasonic or Nippo in India? If you have any numbers.

Speaker #3: Right. And how will that put other players, let's say Panasonic or Nippon, in India? I mean, if you have any numbers on it.

Speaker #2: Panasonic and Nippo are close followers. They are good. So, if we are close to 57–58%, the balance of the market is mainly formed in the zinc business by Panasonic and Nippo.

Anirban Banerjee: Panasonic and Nippo are close followers. They are good. If we are close to 57%-58%, the balance of the market is mainly found in the zinc business by Panasonic and Nippo. Nippo being a bit ahead of Panasonic is our understanding of the market. Within alkaline, there are also many players. One of our key competitors in alkaline is Duracell, and they continue to hold the larger pie within the alkaline shares. Both Nippo and Panasonic are both in the alkaline segment, but they might be having shares in the single digit.

Speaker #2: Right? Nippo being a bit ahead of Panasonic is our understanding of the market. Within alkaline, there are also many players. One of our key competitors in alkaline is Duracell.

Speaker #2: And they continue to hold the larger pie within the alkaline shares—both Nippo and Panasonic in the alkaline segment. But they might be having shares in the single digits.

Speaker #3: Right. And just lastly, what sort of collection expense would you be incurring in APR side of things? Do you have a ballpark number for that in projections also?

Shubham Jain: Just lastly, what sort of collection expenses will be incurring in the EPR side of things? Do you have a ballpark number for that in projection also?

Speaker #2: So as I said, the WIP and we are doing there is no absolute amount. We are because it is a part of our obligations.

Bibek Agarwala: As I said, it is a WIP. There is no absolute now because it is a part of our obligations. We are doing the initiatives. There are multiple initiatives which are costing multiple. That is the way we are taking at this point of time. Since we are awaiting some pricing clarity and regulatory clarity on that, maybe we will be able in a better position to give a clarity in the next Q updates.

Speaker #2: So we are doing the initiative that are multiple initiatives which are being costing multiple. And so that is the way we are taking at this point of time.

Speaker #2: And, since we are awaiting some pricing clarity and regulatory clarity on that, maybe we'll be in a better position to give clarity on the next quarter updates.

Shubham Jain: Sure, sir. Thank you.

Speaker #3: Sure, sir. Thank you for your time.

Speaker #2: Thank you. Thank you.

Anirban Banerjee: Thank you.

Shubham Jain: Thank you.

Speaker #1: Thank you. That was the last question for today. Aina, please hand the conference over to Mr. Anirban Banerjee. Thank you, and over to you, sir, for the closing comments.

Operator: Thank you. That was the last question for today. I now hand the conference over to Mr. Anirban Banerjee. Thank you, and over to you, sir, for the closing comments.

Speaker #2: Thank you, everyone, for taking the time to join us on this call today. I hope we have adequately answered all your questions. If you still have more queries, please do reach out to our Investor Relations team.

Anirban Banerjee: Thank you, everyone, for taking time out to join us on this call today. I hope we have adequately answered all your questions. If you still have more queries, please do reach out to our investor relations team, and we'll be happy to address those. Looking forward to connecting with you again in the next quarter. Thank you.

Speaker #2: And we'll be happy to address those. Looking forward to connecting with you again in the next quarter. Thank you.

Speaker #1: Thank you. On behalf of Every Industries India Limited, this concludes this conference. Thank you for joining us, and you may now disconnect your line.

Operator: Thank you. On behalf of Eveready Industries India Limited, this concludes this conference. Thank you for joining us, and you may now disconnect your line.

Browse all earnings call transcripts