Q1 2027 Voltas Ltd Earnings Call

August 14, 2026

Operator 2: Ladies and gentlemen, you have been connected to Voltas Limited conference call. Call will begin shortly. Please stay connected. Ladies and gentlemen, you have been connected to Voltas Limited conference call. Call will begin shortly. Please stay connected. Ladies and gentlemen, good day and welcome to Q1 FY27 earnings conference call of Voltas Limited, hosted by PhillipCapital (India) Private Limited. As a reminder, all participants are in 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 conference is being recorded. I would now hand the conference over to Ms. Natasha Jain from PhillipCapital (India) Private Limited. Thank you, and over to you, ma'am.

Operator: Ladies and gentlemen, you have been connected to Voltas Limited conference call. Call will begin shortly. Please stay connected. Ladies and gentlemen, you have been connected to Voltas Limited conference call. Call will begin shortly. Please stay connected. Ladies and gentlemen, good day and welcome to Q1 FY27 earnings conference call of Voltas Limited, hosted by PhillipCapital (India) Private Limited. As a reminder, all participants are in 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 conference is being recorded. I would now hand the conference over to Ms. Natasha Jain from PhillipCapital (India) Private Limited. Thank you, and over to you, ma'am.

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

Speaker #1: The call will begin shortly. Please stay connected. Ladies and gentlemen, good day, and welcome to the Q1 FY27 Earnings Conference Call of Voltas Interlimited, hosted by Philip Capital India Private Limited.

Speaker #1: 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 the attached phone. Please note that this conference is being recorded.

Speaker #1: I would now hand the conference over to Ms. Natasha Jain from Philip Capital India Private Limited. Thank you, and over to you now.

Speaker #2: Thank you, Ms. Khan. Good evening, everyone. I'm Natasha Jain, on behalf of Philip Capital. Welcome all of you to the first quarter FY27 Earnings Conference Call of Voltas India Limited.

Natasha Jain Private Limited): Thank you, Muskan. Good evening, everyone. I, Natasha Jain, on behalf of PhillipCapital, welcome all of you to the first quarter FY27 earnings conference call of Voltas Limited. From the management, we have Mr. Mukundan Menon, Managing Director, Mr. K.V. Sridhar, Chief Financial Officer, Mr. Nikhil R. Chandarana, Head Corporate Finance, Ms. Sumana Tripathy, Head FP&A, and Mr. Manish Somani, Head Finance Controlling. I request the management to give their opening remarks, post which we shall open the floor for Q&A. Thank you, and over to you, sir.

Natasha Jain: Thank you, Muskan. Good evening, everyone. I, Natasha Jain, on behalf of PhillipCapital, welcome all of you to the first quarter FY27 earnings conference call of Voltas Limited. From the management, we have Mr. Mukundan Menon, Managing Director, Mr. K.V. Sridhar, Chief Financial Officer, Mr. Nikhil R. Chandarana, Head Corporate Finance, Ms. Sumana Tripathy, Head FP&A, and Mr. Manish Somani, Head Finance Controlling. I request the management to give their opening remarks, post which we shall open the floor for Q&A. Thank you, and over to you, sir.

Speaker #2: From the management, we have Mr. Mukundan Menon, Managing Director; Mr. K. V. Sridhar, Chief Financial Officer; Mr. Nikhil R. Chandrana, Head of Corporate Finance; Ms. Sumana Tripathi, Head of FP&A; and Mr. Manish Somani, Head of Finance Controlling.

Speaker #2: I request the management to give their opening remarks, post which we shall open the floor for Q&A. Thank you, and over to you, sir.

Speaker #3: Good evening, all. This is Sridhar here, CFO of Voltas. Glad to connect this evening for our earnings call. To give an overall summary, Voltas delivered a strong performance in Q1 FY27, significantly outperforming the competition and further strengthening its leadership in the cooling segment.

K.V. Sridhar: Yeah. Good evening, all. This is Sridhar here, CFO, Voltas. Glad to connect this evening with our earnings call. To give us overall summary, Voltas delivered a strong performance in Q1 FY27, significantly outperforming competition and further strengthening its leadership in the cooling segment. The company achieved a 17.3% secondary market share in room air conditioning for FY27 till for the first quarter and widened its lead over the nearest competitor to 4 percentage points, reinforcing its position as the undisputed market leader. Strong execution across marketing, product management, channel expansion, manufacturing capacity, and supply chain readiness supported the performance. During the April to June quarter, the global economy continued to face geopolitical tensions, elevated energy prices, and persistent inflationary pressures. Conflict in the Middle East added to commodity and currency volatility and supply chain uncertainty.

Speaker #3: The company achieved a 17.3% secondary market share in room air conditioning for FY27 till for the first quarter and widened its lead over the nearest competitor to four percentage points.

Speaker #3: Reinforcing its position as the undisputed market leader, strong execution across marketing, product management, channel expansion, manufacturing capacity, and supply chain readiness supported the performance.

Speaker #3: During the April to June quarter, the global economy continued to face geopolitical tensions, elevated energy prices, and persistent inflationary pressures. Conflict in the Middle East added to commodity and currency volatility, and supply chain uncertainty.

Speaker #3: Against this backdrop, India continued to demonstrate resilience supported by domestic consumption, infrastructure investments, and strong underlying macroeconomic fundamentals. The Indian consumer durables industry witnessed steady demand during the quarter continued demand for cooling products, room air conditioners remained a key growth lever supported by the summer season aided by increased penetration and expanded demand across tier two and tier three markets.

K.V. Sridhar: Against this backdrop, India continued to demonstrate resilience supported by domestic consumption, infrastructure investments, and strong underlying macroeconomic fundamentals. The Indian consumer durables industry witnessed steady demand during the quarter, continued demand for cooling products. Room air conditioners remained a key growth lever, supported by the summer season, aided by increased penetration and expanded demand across tier 2 and tier 3 markets. Against this operating environment, Voltas delivered a substantially strong performance compared to the previous year, supported by growth across its key businesses and disciplined operational execution. The company achieved a significant milestone by selling 1 million RACs in just 81 days, demonstrating the strength of its brand, product portfolio, distribution reach, and execution capabilities. Voltbek also emerged an important growth lever, substantially outgrowing the industry and recording its highest ever quarterly sales in both value and volume.

Speaker #3: Against this operating environment, Voltas delivered a substantially strong performance compared to the previous year, supported by growth across its key businesses and disciplined operational execution.

Speaker #3: The company achieved a significant milestone by selling 1 million RECs in just 81 days, demonstrating the strength of its brand, product portfolio, distribution reach, and execution capabilities.

Speaker #3: Worldpec also emerged an important growth lever substantially outpacing the industry in recording its highest ever quarterly sales in both value and volume. The projects and engineering business provided further resilience and balance underscoring the strength of the Voltas diversified portfolio.

K.V. Sridhar: The projects and engineering business provided further resilience and balance, underscoring the strength of Voltas' diversified portfolio. For the quarter ended 30 June 2026, Voltas recorded consolidated income of INR 4,765 crores compared to INR 4,021 crores in Q1 FY26. Profit before tax was INR 285 crores versus INR 203 crores for the same period last year. Net profit was INR 213 crores compared to INR 141 crores last year. Now if you go into the detail of the respective segments. In terms of Segment A, Segment A delivered a strong growth of 33%, led by exceptional performance in the room air conditioning business. RAC volumes grew by 45% year-on-year, significantly outperforming the industry and key competitors. As mentioned earlier, the secondary market share was 17.3% for Q1 of 2026 and progressively strengthened its competitive position through the quarter.

Speaker #3: For the quarter ended 30th June 2026, Voltas recorded consolidated income of $4,765 crores compared to $4,021 crores in QY FY26. Profit before tax was $285 versus $203 in the previous same for the same period last year.

Speaker #3: Net profit was $213 compared to $141 crores last year. Now, if you go into the detail of the respective segments, in terms of segment A, segment A delivered a strong growth of 33% led by exceptional performance in the room air conditioning business.

Speaker #3: RAC volumes grew by 45% year-on-year, significantly outperforming the industry and key competitors. As mentioned earlier, the secondary market share was 17.3% for Q1 FY26 and progressively strengthened its competitive position through the quarter.

Speaker #3: For Q1 '26, the company widened its market share lead over its nearest competitor to 4 percentage points, reinforcing the strength of its brand equity, product positioning, distribution network, and execution capabilities.

K.V. Sridhar: For Q1 2026, the company widened its market share lead over nearest competitor to 4 percentage points, reinforcing the strength of its brand equity, product positioning, distribution network, and execution capabilities. A sharper brand and marketing strategy was an important contributor to this performance. The refreshed brand positioning, supported by sustained investments across television, digital, retail, and consumer touch points, strengthened consumer engagements and brand salience. The true 1.5 ton cooling capacity campaign and industry first initiative highlighted the superior 5,000 watt cooling capacity of the Voltas 1.5 ton air conditioners, enabling consumers to make more informed and value-driven purchase decisions while enforcing the brand's credentials around powerful cooling and performance. Product management and innovation remain central to the growth strategy. The refreshed RAC portfolio, led by AI powered Vertis Split AC series introduced in March 2026, offered differentiated features across AI adaptive cooling, auto geo-fencing, and AI energy manager.

Speaker #3: A sharper brand and marketing strategy was an important contributor to this performance. The refreshed brand positioning, supported by sustained investments across television, digital, retail, and consumer touch points, strengthened consumer engagement and brand salience.

Speaker #3: The true 1.5-ton cooling capacity campaign and industry-first initiative highlighted the superior 5,000-watt cooling capacity of the Voltas 1.5-ton air conditioners enabling consumers to make more informed and value-driven purchase decisions while enforcing the brand's credentials around powerful cooling and performance.

Speaker #3: Product management and innovation remained central to the growth strategy. The refreshed RAC portfolio, led by the AI-powered Vertice Split AC series introduced in March 2026, offered differentiated features across AI-adaptive cooling, AO geofencing, and the AI energy manager.

Speaker #3: A sharper portfolio across capacities, energy ratings, and price points enabled Voltas to address evolving consumer requirements, increasing premiumization, and growing demand for intelligent and energy-efficient cooling solutions.

K.V. Sridhar: A sharper portfolio across capacities, energy ratings and price points enabled Voltas to address evolving consumer requirements, increasing premiumization, and growing demand for intelligent and energy efficient cooling solutions. The company continued to expand and deepen its channel presence across Tier 2 and Tier 3 markets, where RAC penetration remains relatively low. Wider distribution, stronger dealer engagement, and increased presence across traditional trade, modern retail, and emerging channels improved product availability and enabled Voltas to capture incremental demand across markets. Another key enabler was the company's manufacturing and supply chain preparedness. Capacity was progressively ramped up ahead of the summer season, with the Chennai and Pantnagar facilities operating at high utilization levels. Strong raw material planning, supply readiness, deeper localization, and disciplined inventory management ensured product availability during the peak season and enabled the company to effectively service the significant increase in demand.

Speaker #3: The company continued to expand and deepen its channel presence across tier two and tier three markets where RAC penetration remains relatively low. Wider distribution stronger dealer engagement and increased presence across traditional trade modern retail and emerging channels improved product availability and enabled Voltas to capture incremental demand across markets.

Speaker #3: Another key enabler was the company’s manufacturing and supply chain preparedness. Capacity was progressively ramped up ahead of the summer season, with the Chennai and Pantnagar facilities operating at high utilization levels.

Speaker #3: Strong raw material planning, supply chain supply readiness, deeper localization, and disciplined inventory management ensured product availability during the peak season and enabled the company to effectively service the significant increase in demand.

Speaker #3: Commercial air conditioning delivered a stable performance and continues to represent a significant long-term growth opportunity supported by urbanization, infrastructure development, data center expansion, and increased adoption of intelligent building solutions.

K.V. Sridhar: Commercial air conditioning delivered a stable performance and continues to represent a significant long-term growth opportunity, supported by urbanization, infrastructure development, data center expansion, and increased adoption of intelligent building solutions. Commercial refrigerations and air coolers recorded a relatively muted performance, primarily due to slower market uptake following price increases. The company continues to focus on institutional sales, channel development, customer diversification, and new product introductions to drive improved performance in the coming quarters. Segment A margins improved significantly compared with the previous year, despite commodity inflation and currency depreciation. These pressures were partially mitigated through progressive price increases and comprehensive cost optimization program initiated in FY26, encompassing strategic sourcing, deeper localization, product design improvements, and manufacturing product initiatives.

Speaker #3: Commercial refrigeration and air coolers recorded a relatively muted performance, primarily due to slower market uptake following price increases. The company continues to focus on institutional sales, channel development, customer diversification, and new product introductions to drive improved performance in the coming quarters.

Speaker #3: Segment A margins improved significantly compared with the previous year despite commodity inflation and currency depreciation. These pressures were partially mitigated through progressive price increases and a comprehensive cost optimization program initiated in FY26.

Speaker #3: Encompassing strategic sourcing, deeper localization, product design improvements, and manufacturing product initiatives. Overall, the combination of sustained brand investments, differentiated product sharper product management, expanding channel reach, enhanced manufacturing capacity, and resilient supply chain execution enabled Voltas not only to maintain its leadership but to materially widen its lead over competition.

K.V. Sridhar: Overall, the combination of sustained brand investments, differentiated products, sharper product management, expanding channel reach, enhanced manufacturing capacity, and resilient supply chain execution enabled Voltas not only to maintain its leadership, but to materially widen its lead over competition. Voltas has entered into a binding term sheet with Atomberg Innovation Private Limited for a proposed 50/50 joint venture to develop and manufacture high efficiency RAC compressors in India. The proposed venture will strengthen indigenous sourcing, reduce import dependency, and enhance long-term supply security. The transaction remains subject to satisfactory due diligence, product validation, definitive agreements, and necessary approvals. Voltbek continues its strong growth trajectory in Q1 FY27, substantially outgrowing the industry and recording its highest ever quarterly sales in value and volume.

Speaker #3: Voltas has entered into a binding term sheet with Attenborough Innovation Private Limited for a proposed 50/50 joint venture to develop and manufacture high-efficiency RAC compressors in India.

Speaker #3: The proposed venture will strengthen indigenous sourcing, reduce import dependency, and enhance long-term supply security. The transaction remains subject to satisfactory due diligence, product validation, definitive agreements, and necessary approvals.

Speaker #3: Worldpec. Worldpec continues its strong growth trajectory in Q1 '27, substantially outgrowing the industry and recording its highest-ever quarterly sales in both value and volume.

Speaker #3: The business achieved a year-to-date market share of 9.4% in washing machines and 7.4% in refrigerators, further strengthening its position in the highly competitive Indian home appliances market.

K.V. Sridhar: The business achieved a year-to-date market share of 9.4% in washing machines and 7.4% in refrigerators, further strengthening its position in highly competitive Indian home appliances market. The company maintained its number two position in the semi-automatic machine category, touching highest ever market share of 15.6%. The performance was supported by sharper product and premiumization strategy with refreshed product lineups across frost-free refrigerators and fully automatic washing machines. These introductions strengthened Voltbek's presence in higher value segments, improved overall product mix, and enhanced its relevance among consumers seeking differentiated features, contemporary design, and superior performance. Voltbek continued to strengthen its brand and channel strategy through an expanding retail footprint, deeper channel penetration, enhanced in-store visibility, and stronger consumer engagement across key markets. At the same time, increased focus on localization, strategic sourcing, material optimization, product design and manufacturing efficiencies is expected to progressively strengthen cost competitiveness and profitability.

Speaker #3: The company maintained its number two position in the semi-automatic machine category, reaching its highest ever market share of 15.6%. The performance was supported by a sharper product and premiumization strategy, with refreshed product lineups across Prosper refrigerators and fully automatic washing machines.

Speaker #3: These introductions strengthened Worldpec's presence in higher value segments, improved overall product mix, and enhanced its relevance among consumers, seeking differentiated features, contemporary design, and superior performance.

Speaker #3: Worldpec continued to strengthen its brand and channel strategy through an expanding retail footprint, deeper channel penetration, enhanced in-store visibility, and stronger consumer engagement across key markets.

Speaker #3: At the same time, increased focus on localization, strategic sourcing, material optimization, product design, and manufacturing efficiencies is expected to progressively strengthen cost competitiveness and profitability.

Speaker #3: With increasing scale, improved market share, and a stronger premium portfolio, Worldpec remains a key pillar of Voltas's long-term strategy, supporting portfolio diversification, premiumization, and the company's evolution into a comprehensive home appliances player, offering integrated cooling and home appliances solutions.

K.V. Sridhar: With increasing scale, improved market share, and a stronger premium portfolio, Voltbek remains a key pillar of Voltas' long-term strategy, supporting portfolio diversification, premiumization, and the company's evolution into a comprehensive home appliances player offering integrated cooling and home appliances solutions. Segment B, Electro-Mechanical Projects and Services. Segment B continued to play an important stabilizing role in Voltas' diversified portfolio, reinforcing the company's position as a leading engineering and project solution enterprise. During Q1 FY27, the domestic products business maintained strong order momentum, securing strategic wins across key growth sectors including industrial infrastructure, electronic manufacturing, metro and turnkey projects, and data centers. The company continued to selectively pursue fast-track and value-attractive opportunities, strengthening the quality of the order book and supporting healthy revenue visibility. The business maintained strong execution discipline across projects and geographies, with continued focus on timely delivery, project profitability, working capital management, and risk controls.

Speaker #3: Segment B. Electromechanical Projects and Services. Segment B continued to play an important stabilizing role in Voltas's diversified portfolio, reinforcing the company's position as a leading engineering and project solution enterprise.

Speaker #3: During Q1 FY27, the domestic products business maintained strong order momentum, securing strategic wins across key growth sectors including industrial infrastructure, electronic manufacturing, metro and turnkey projects, and data centers.

Speaker #3: The company continued to selectively pursue fast track and value-attractive opportunities, strengthening the quality of the order book and supporting healthy revenue visibility. The business maintained strong execution discipline across projects and geographies, with continued focus on timely delivery, project profitability, working capital management, and risk controls.

Speaker #3: Within the international projects business, pursuant to the code award received, Sitra Bank guarantees amounting to 167 million Kathari riyal equivalent to 433 crores were canceled during the quarter, a quarterly financial has more details.

K.V. Sridhar: Within the international projects business pursuant to the court award received, bank guarantees amounting to 167 million Qatari riyal, equivalent to INR 433 crores, were canceled during the quarter. The quarterly financials have more details. While Voltas effectively mitigated risks arising from geopolitical crisis and ensured continuity across key projects and customer engagements, new order book remained delayed following the impact of the conflict in the Middle East. Against this backdrop, the business continued to focus on operational stability and tighter project controls, disciplined risk management, and selective pursuit of opportunities. As of 30 June 2026, the total carryover order book value for Segment B stood at INR 6,345 crores, providing revenue visibility and underpinning the company's confidence in the long-term prospects of both its domestic and international projects businesses. Engineering products and services.

Speaker #3: While Voltas effectively mitigated risk arising from geopolitical crisis and ensured continuity across key projects and customer engagements, new order book remained delayed following the impact of the conflict in the Middle East.

Speaker #3: Against this backdrop, the business continued to focus on operational stability and tighter project controls, disciplined risk management, and selective pursuit of opportunities. As of 30 June 2026, the total carryover order book value for segment B stood at 6,345 crores, providing revenue visibility and underpinning the company's confidence in their long-term prospects of both its domestic and international projects businesses.

Speaker #3: Engineering products and services. Segment C delivered high double-digit topline growth during Q1 FY27, further strengthening the scale and contribution of Voltas in engineering projects, products, and services portfolio.

K.V. Sridhar: Segment C delivered high double-digit top-line growth during Q1 FY27, further strengthening the scale and contribution of Voltas' engineering products and services portfolio. The mining and construction equipment division delivered impressive top-line growth, supported by sustained demand for crushing and screening equipment, continued execution of operations and maintenance contracts, and stable performance from the Mozambique operations. The division also has continued to strengthen its higher margin aftermarket and service annuity business through deeper customer engagement, enhanced lifecycle support, and expanded service capabilities. The textile machinery division delivered double-digit growth despite a challenging operating environment characterized by geopolitical uncertainty and cautious industry sentiment. Encouraging, the market has begun to demonstrate early signs of a gradual revival, reflected in improved order booking levels. Continued focus on after-sales spinning accessories and services delivered encouraging results and further strengthened the resilience of the business.

Speaker #3: The mining and construction equipment division delivered impressive topline growth supported by sustained demand for crushing and screening equipment, continued execution of operations and maintenance contracts, and stable performance from the Mozambique operations.

Speaker #3: The division also continued to strengthen its higher margin aftermarket and service annuity business through deeper customer engagement, enhanced life cycle support, and expanded service capabilities.

Speaker #3: The textile machinery division delivered double-digit growth despite a challenging operating environment characterized by geopolitical uncertainty and cautious industry sentiment. Encouragingly, the market has begun to demonstrate early signs of a gradual revival, reflected in improved order booking levels.

Speaker #3: Continued focus on after-sales, spinning accessories, and services delivered encouraging results and further strengthened the resilience of the business. Together, Segment B and C continue to enhance the resilience and diversification of the Voltas portfolio, providing balance to the consumer businesses while contributing to sustained growth and revenue visibility.

K.V. Sridhar: Together, Segment B and C continue to enhance the resilience and diversification of the Voltas portfolio, providing balance to the consumer businesses while contributing to sustained growth and revenue visibility. Supported by strong summer season and disciplined execution, the company exited the quarter with a strong liquidity position and well-controlled working capital profile. Continued focus on inventory collections and cash flow discipline strengthened the balance sheet and provided the flexibility to support investment in brands, products, channels, and manufacturing capabilities while maintaining financial strength. Voltas enters the coming quarters from a position of strength, supported by structural initiatives undertaken across businesses. Refreshed product portfolios, sharper product management, sustained brand and marketing investments, channel expansion, enhanced manufacturing readiness, localization, and cost optimizations have strengthened the company's competitive position.

Speaker #3: Supported by a strong summer season and disciplined execution, the company exited the quarter with a strong liquidity position and a well-controlled working capital profile. Continued focus on inventory, collections, and cash flow discipline strengthened the balance sheet and provided flexibility to support investments in brands, products, channels, and manufacturing capabilities while maintaining financial strength.

Speaker #3: Voltas enters the coming quarters from a position of strength, supported by structural initiatives undertaken across businesses. Refreshed product portfolios, sharper product management, sustained brand and marketing investments, channel expansion, enhanced manufacturing readiness, localization, and cost optimizations have strengthened the company's competitive position.

Speaker #3: While Q2 is traditionally a leaner period for the cooling industry and geopolitical uncertainties continue to create commodity, currency, and supply volatility, Voltas remains well positioned to navigate these challenges.

K.V. Sridhar: While Q2 is traditionally a leaner period for the cooling industry and geopolitical uncertainties continue to create commodity currency and supply volatility, Voltas remains well positioned to navigate these challenges. In room air conditioners, the focus will remain on consolidating and extending leadership through product innovation, premiumization, sustained brand investments, and deeper channel penetration. Commercial AC delivers a stable performance and continues to represent a significant long-term opportunity supported by urbanization, infrastructure development, data center expansion, and increased adoption of intelligent building solutions. Voltbek continues to be one of the fastest-growing home appliances businesses in the country, with product segmentation, premiumization, innovation, and channel expansion expected to drive market gains and progressively improve financials. In the projects business, the company remains focused on selective and value-attractive orders booking, execution excellence and cash flow discipline, and project profitability.

Speaker #3: In room air conditioners, the focus will remain on consolidating and extending leadership through product innovation, premiumization, sustained brand investments, and deeper channel penetration. Commercial air conditioning delivers a stable performance and continues to represent a significant long-term opportunity.

Speaker #3: Supported by urbanization, infrastructure development, data center expansion, and increased adoption of intelligent building solutions, Worldpec continues to be one of the fastest-growing home appliances businesses in the country. Product segmentation, premiumization, innovation, and channel expansion are expected to drive market gains and progressively improve financials.

Speaker #3: With the Projects business, the company remains focused on selective and value-attractive order booking, execution excellence, cash flow discipline, and project profitability. The Engineering Products and Services business will continue to build on their growth momentum, with increasing emphasis on higher-margin aftermarket and service revenues.

K.V. Sridhar: The engineering products and services business will continue to build on their growth momentum with increasing emphasis on higher margin aftermarket and service revenues. Across its businesses, profitable growth, market expansion, and sustained improvement in profitability remain central to Voltas' strategy. The company continues to unlock efficiencies through strategic sourcing, localization, product and design optimization, manufacturing excellence, process improvements, and increasing benefits of scale. Thank you. Natasha, over to you.

Speaker #3: Across its businesses, profitable growth, market expansion, and sustained improvement in profitability remain central to Voltas's strategy. The company continues to unlock efficiencies through strategic sourcing, localization, product and design optimization, manufacturing excellence, process improvements, and increasing benefits of scale.

Speaker #3: Thank you. Natasha, over to you.

Speaker #1: Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask questions, let us start. Anyone on the touch-tone telephone?

Operator 2: Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the touchtone telephone. If you wish to remove yourself from question queue, you may press star and two. Participants are requested to use handhelds for asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Indrajit Agarwal from CLSA. Please go ahead.

Natasha Jain: Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the touchtone telephone. If you wish to remove yourself from question queue, you may press star and two. Participants are requested to use handhelds for asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Indrajit Agarwal from CLSA. Please go ahead.

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

Speaker #1: Ladies and gentlemen, we'll wait for a moment. All the questions are in the queue, ascending. The first question is from the line of Indrajit Agarwal from CLSA. Please go ahead.

Speaker #2: Hi. Thanks for the opportunity, and congratulations on the good numbers. I have two questions. First, if you can share some contours of the compressor JV—what kind of capex can there be, and when can we expect commercial production?

Indrajit Agarwal: Hi, thanks for the chance and congratulations on a good number. I have two questions. First, if you can share some contours of the compressor JV, what kind of CapEx can there be, and when can we see commercial production? How is the capacity shared between the two entities?

Speaker #2: And how will the CapEx be shared between the two entities?

Speaker #3: Yeah, good evening everyone. My name is Gokul Menon, and thank you for the question, Indrajit. So this JV that we've signed with Atomberg is for a manufacturing capacity of around 2.8 million compressors for air conditioners to begin with.

Mukundan C P Menon: Good evening, everyone. My name is Mukund Menon. Thank you for the question, Indrajit. This JV that we have signed with Atomberg, it is for a manufacturing capacity of around 2.8 million compressors for air conditioners to begin with. That is what we are trying to achieve. This is an effort to secure the supply chain for a category which is a very important category in the overall compressor. The heart of the air conditioner is the compressor, and we always felt that it is very important to secure this very important part within India, because with all the challenges that are happening with respect to the QCO restrictions, the quantum of imports which are allowed, the quota system, there is also something called the transition QCO rules.

Mukundan Menon: Good evening, everyone. My name is Mukund Menon. Thank you for the question, Indrajit. This JV that we have signed with Atomberg, it is for a manufacturing capacity of around 2.8 million compressors for air conditioners to begin with. That is what we are trying to achieve. This is an effort to secure the supply chain for a category which is a very important category in the overall compressor. The heart of the air conditioner is the compressor, and we always felt that it is very important to secure this very important part within India, because with all the challenges that are happening with respect to the QCO restrictions, the quantum of imports which are allowed, the quota system, there is also something called the transition QCO rules.

Speaker #3: That's what we have been sort of trying to achieve. And this is an effort to secure the supply chain for a category which is a very important category in the overall compressor.

Speaker #3: So, the heart of the air conditioner is the compressor. And we always felt that it is very important to secure this very important part within India because, with all the challenges that are happening with respect to the QCO restrictions, the quantum of imports which are allowed, the quota system, there's also something called the transition QCO rules—we felt it would be good for us to have, as a leader in the air conditioner market with a very high volume, we did not want to leave this very important component unhinged.

Mukundan C P Menon: We felt it would be good for us to have, as a leader in the air conditioner market with a very high volume, we did not want to leave this very important component unhinged. That was the reason we went for this sort of arrangement. In terms of the overall topics, it is still in the early stages. As we work out the details of the definitive agreement, we will arrive at that. It is a little early to comment on the total CapEx requirement, actually.

Mukundan Menon: We felt it would be good for us to have, as a leader in the air conditioner market with a very high volume, we did not want to leave this very important component unhinged. That was the reason we went for this sort of arrangement. In terms of the overall topics, it is still in the early stages. As we work out the details of the definitive agreement, we will arrive at that. It is a little early to comment on the total CapEx requirement, actually.

Speaker #3: So that was the reason we went for this sort of arrangement. In terms of the overall capex we still are the it's still in the early stages we are in the final as we work out the details of the definitive agreement we'll arrive at that.

Speaker #3: It's a little early to comment on the total capex requirement, actually.

Speaker #2: Sure. Secondly, while our market share in Worldpec has been gradually inching up, do we have an EBITDA break-even line of sight yet, or is it still too early?

Indrajit Agarwal: Sure. Secondly, while our market share in commercial AC has been gradually inching up.

Mukundan C P Menon: Yeah

Mukundan Menon: Yeah

Indrajit Agarwal: Do we have an EBITDA break-even line of sight yet, or it is still too early?

Mukundan C P Menon: Indrajit, this particular year was when we initially were aspiring to get to an EBITDA break-even. Unfortunately, what has happened with respect to the West Asia crisis took up prices of the commodities quite sharply, and most of the brands, including us, struggled to pass the entire thing on to the market. In a way, I think if we were to assume that we were to reach this year, I think the way it may get pushed over by a few quarters, that is the way we see it. Yeah.

Mukundan Menon: Indrajit, this particular year was when we initially were aspiring to get to an EBITDA break-even. Unfortunately, what has happened with respect to the West Asia crisis took up prices of the commodities quite sharply, and most of the brands, including us, struggled to pass the entire thing on to the market. In a way, I think if we were to assume that we were to reach this year, I think the way it may get pushed over by a few quarters, that is the way we see it. Yeah.

Speaker #3: So, this year we were, Indrajit, this particular year was when we initially were aspiring to get to an EBITDA break-even. Unfortunately, what has happened with respect to the West Asia crisis took up prices of the commodities quite sharply, and most of the brands, including us, struggled to pass the entire thing on to the market.

Speaker #3: So we had—we, in a way, I think, if we were to assume that we were to reach this this year, I think the way it may get sort of pushed over by a few quarters.

Speaker #3: That's the way we see it. Yeah.

Speaker #2: Sure, I have more questions, but I'll join back with you.

Indrajit Agarwal: Sure. I have more questions, but I will join back.

Speaker #3: Yeah. Thanks, Indrajit. Yeah.

Mukundan C P Menon: Yeah. Thanks, Indrajit. Yeah.

Mukundan Menon: Yeah. Thanks, Indrajit. Yeah.

Speaker #1: Thank you. The next question is from the line of Ajal Lahore from Nuvama Institutional Equities. Please go ahead.

Operator 2: Thank you. The next question is from the line of Achal Lohade from Nuvama Institutional Equities. Please go ahead.

Natasha Jain: Thank you. The next question is from the line of Achal Lohade from Nuvama Institutional Equities. Please go ahead.

Speaker #4: Yeah. Good evening team. Thank you for the opportunity. Sir, my first question is you know with respect to the the you know the volume growth if you could call out you know what has been the volume growth for the industry we have grown by you mentioned 45% but you know what has been for the industry and secondly how do you see it in terms of the current channel inventory and the way forward for the full year if you could comment a little bit on.

Achal Lohade: Yeah. Good evening, team. Thank you for the opportunity. Sir, my first question is, with respect to the volume growth, if you could call out what has been the volume growth for the industry. We have grown by, you mentioned, 45%, but what has been for the industry? Secondly, how do you see it in terms of the current channel inventory and the way forward for the full year? If you could comment a little bit on the same.

Speaker #3: Yeah. On the room air conditioner, as well, the industry seems to, on the secondary market, share the secondary sales. What is published by GfK Nielsen, they showed a 15% growth in secondary.

Mukundan C P Menon: Yeah. On the room air conditioner, Achal, the industry seems to, on the secondary market shares, the secondary sales, what is published by GfK Nielsen, they showed a 15% growth in secondary. That is what they have said. My sense is this primary increase would be anywhere between 20% to 22% in volume terms, and maybe around 25%, 26% in value terms, maybe the industry growth. As a business, we have done better, which is reflected in our market share growth, which we have seen our market share significantly growing from 15.9% for the full financial year last year to 17.17%.

Mukundan Menon: Yeah. On the room air conditioner, Achal, the industry seems to, on the secondary market shares, the secondary sales, what is published by GfK Nielsen, they showed a 15% growth in secondary. That is what they have said. My sense is this primary increase would be anywhere between 20% to 22% in volume terms, and maybe around 25%, 26% in value terms, maybe the industry growth. As a business, we have done better, which is reflected in our market share growth, which we have seen our market share significantly growing from 15.9% for the full financial year last year to 17.17%.

Speaker #3: That's what they said. My sense is this primary increase would be anywhere between 20% to 22% in volume terms, and maybe around 25% to 26% in value terms.

Speaker #3: Maybe the industry growth. At the end of the day, we have done better, which is reflected in our market share growth. We have seen our market share grow significantly from 15.9% for the full financial year last year to 17.1–17.3%.

[Company Representative] (Voltas): Three.

Mukundan C P Menon: 3%. So our volume growth was around 44%, was our volume growth, and our value growth on equivalent basis around 50 odd percentage.

Mukundan Menon: 3%. So our volume growth was around 44%, was our volume growth, and our value growth on equivalent basis around 50 odd percentage.

Speaker #3: So, our volume growth was around 44%, and our value growth on an equivalent basis was around 50-odd percent.

Speaker #4: Understood. If you could give us some sense in terms of what is the extent of cost inflation and how much price hike we have taken so far, and how much we are expecting now.

Achal Lohade: Understood. If you could give us some sense in terms of what is the extent of cost inflation and how much price hike we have taken so far and how much we are expecting now.

Speaker #3: So, the cost—yeah, so this year I have seen two things happening. One was that there was a table change which happened, and that took up the prices of all the three-star ACs by roughly 5% and the five-star by 15%.

Mukundan C P Menon: This year has seen two things happening. One was there was a table change which happened, and that took up the prices of all the three-star ACs by roughly 5% and the five-star by 15%, a weighted average of somewhere around 7%, 8%. Then there was the commodity price increase, the depreciation of the rupee, plus the increase in the ocean and freight charges, some increase in plastic costs. All that added up to another sort of 4%, 5%. Overall, all put together, 10% to 12% was the cost, and we have also passed on very close to that number into the market. Maybe a percentage or two less, if at all, actually. Because we had a reasonable stock of these units a little before all these disturbances started.

Mukundan Menon: This year has seen two things happening. One was there was a table change which happened, and that took up the prices of all the three-star ACs by roughly 5% and the five-star by 15%, a weighted average of somewhere around 7%, 8%. Then there was the commodity price increase, the depreciation of the rupee, plus the increase in the ocean and freight charges, some increase in plastic costs. All that added up to another sort of 4%, 5%. Overall, all put together, 10% to 12% was the cost, and we have also passed on very close to that number into the market. Maybe a percentage or two less, if at all, actually. Because we had a reasonable stock of these units a little before all these disturbances started.

Speaker #3: A weighted average of somewhere around 7–8%. Then there was the commodity price increase, the depreciation of the rupee, plus the increase in ocean and freight charges, and some increase in plastic costs. All that added up to another sort of 4–5%.

Speaker #3: And so, overall, all put together, 10 to 12% was the cost, and we have also passed on very close to that number into the market.

Speaker #3: Maybe a percentage or two less if at all actually because we we had we had a reasonable stock of these units a little before this before all this disturbances started and we also had the we were blessed with the fact that we did not have any disruption in our production during the peak summer months which is March, April, May despite all the disturbances which were there.

Mukundan C P Menon: We were blessed with the fact that we did not have any disruption in our production during the peak summer months, which is March, April, May. Despite all the disturbances which were there, we managed to keep our production running. We have utilized some of the stocks of the products that we had imported at a little better price before all this hit us. More or less, we had passed on maybe a couple of percentages, if at all, we would have held on to it.

Mukundan Menon: We were blessed with the fact that we did not have any disruption in our production during the peak summer months, which is March, April, May. Despite all the disturbances which were there, we managed to keep our production running. We have utilized some of the stocks of the products that we had imported at a little better price before all this hit us. More or less, we had passed on maybe a couple of percentages, if at all, we would have held on to it.

Speaker #3: We managed to keep our production running, and there we have utilized some of the stocks of the products that we had imported at a little better price before all this hit us.

Speaker #3: So, more or less, we had passed on maybe a couple of percentage points. If at all, we would have held on to—

Speaker #4: So, does that mean we don't necessarily have to take any further price increases? Have I understood it right now?

Achal Lohade: Does that mean we do not necessarily have to take any further price increase? Have I understood right, sir?

Speaker #3: Yeah. So the price increase—generally, we wouldn't. Normally, what we do, actually, is that if at all there is some moderation, if the costs keep moving up further, we will have to obviously take a price increase.

Mukundan C P Menon: Well, the price increase, generally, we wouldn't. We normally what we do, actually, is that if at all there is some moderation, if the costs keep moving up further, we will have to obviously take a price increase. We are watching what's happening on the overall West Asia side. If things worsen, obviously, if the costs get impacted, we will necessarily have to take a price increase. However, if it is nothing significant, what will happen is to shore up the margins, a little bit of reduction in the channel schemes. That is what we will do.

Mukundan Menon: Well, the price increase, generally, we wouldn't. We normally what we do, actually, is that if at all there is some moderation, if the costs keep moving up further, we will have to obviously take a price increase. We are watching what's happening on the overall West Asia side. If things worsen, obviously, if the costs get impacted, we will necessarily have to take a price increase. However, if it is nothing significant, what will happen is to shore up the margins, a little bit of reduction in the channel schemes. That is what we will do.

Speaker #3: Well, we are watching what's happening with the overall West Asia crisis. If things worsen, obviously, if the costs get impacted, we will necessarily have to take a price increase.

Speaker #3: However, if it is nothing significant, what will happen is to shore up the margins with a little bit of reduction in the channel schemes. That is what we will do.

Speaker #4: Understood. Just a clarification in terms of the mix for the season—if I were to ask from January to June, what would that be in terms of outsourcing versus insourcing, sir, for us?

Achal Lohade: Understood.

Mukundan C P Menon: Yeah.

Mukundan Menon: Yeah.

Achal Lohade: Just clarification in terms of the mix for the season, if I were to ask from January to June, what would that be in terms of outsourcing versus insourcing, sir, for us?

Speaker #3: Yeah. So the out of the total air conditioner that we sell roughly 7, 8% of the sale or I would say in the peak season quarter one maybe around a little more than around 10% of the sale happens to be window air conditioners.

Mukundan C P Menon: Yeah. Out of the total air conditioners that we sell, roughly 7%, 8% of the sale, or I would say in the peak season, Q1, maybe a little more than around 10% of the sale happens to be window air conditioners. Window air conditioners are completely OEM, and out of the split ACs, which is the balance 90%, we have a 70-30 mix, actually 75-25 mix kind of thing between self-manufactured and OEM-manufactured.

Mukundan Menon: Yeah. Out of the total air conditioners that we sell, roughly 7%, 8% of the sale, or I would say in the peak season, Q1, maybe a little more than around 10% of the sale happens to be window air conditioners. Window air conditioners are completely OEM, and out of the split ACs, which is the balance 90%, we have a 70-30 mix, actually 75-25 mix kind of thing between self-manufactured and OEM-manufactured.

Speaker #3: Window air conditioners are completely OEM, and out of the split ACs—which is a balance—90%, we have a 70:30 mix, actually a 75:25 mix, kind of thing between self-manufactured and OEM manufactured.

Speaker #4: Got it. Just a second question with respect to the compressor joint venture. You know what I wanted to check is that is that the energy efficient compressor we are talking about if you could give some sense in terms of a you know how soon can this go on stream and what kind of advantage it can bring to us.

Achal Lohade: Got it. Just a second question with respect to the compressor joint venture.

Mukundan C P Menon: Yeah.

Mukundan Menon: Yeah.

Achal Lohade: What I wanted to check, is that the energy efficient compressor we are talking about? If you could give some sense in terms of, A, how soon can this go on stream and what kind of advantage it can bring to us?

Speaker #3: So the compressor that is getting developed the platform that is getting developed is for the three-star as well as the five-star which has a popular categories and we begin with the the the most voluminous product the one which is a volume driver but the one and after three-star and five-star and all of them have energy efficiency levels sort of meeting the requirements of the energy table.

Mukundan C P Menon: The compressor that is getting developed, the platform that is getting developed is for the 3-star as well as the 5-star, which are the popular categories. We begin with the most voluminous product, the one which is a volume driver, the 1.5 ton 3-star and 5-star. All of them have energy efficiency levels, sort of meeting the requirements of the energy table. Really energy efficient machines, which will meet the 3-star requirement as well as the 5-star current tier requirements, current table requirement, which goes on till next year, 27 December. 28 December, there is another table change. All these products are capable of getting upgraded to a better energy efficiency. The energy efficiency of a compressor is driven by the motor, and the motor gets upgraded when there is an energy table change.

Mukundan Menon: The compressor that is getting developed, the platform that is getting developed is for the 3-star as well as the 5-star, which are the popular categories. We begin with the most voluminous product, the one which is a volume driver, the 1.5 ton 3-star and 5-star. All of them have energy efficiency levels, sort of meeting the requirements of the energy table. Really energy efficient machines, which will meet the 3-star requirement as well as the 5-star current tier requirements, current table requirement, which goes on till next year, 27 December. 28 December, there is another table change. All these products are capable of getting upgraded to a better energy efficiency. The energy efficiency of a compressor is driven by the motor, and the motor gets upgraded when there is an energy table change.

Speaker #3: So really energy efficient machines which will meet the three-star requirement as well as the five-star current tier requirements. Current table requirement which goes on till next year December 27 December 28 there's another table change the all these products are capable of getting upgraded to a better energy efficiency the energy efficiency of a compressor is driven by the motor and the motor gets the the motor gets upgraded when there's a energy table change.

Speaker #3: So, to answer your question, Natasha, these are the best in class in terms of energy efficiency today, and they can also be upgraded to the best in class when the table changes.

Mukundan C P Menon: To answer your question, Achal, these are the best in class in terms of energy efficiency today, and it will also can be upgraded to the best in class when the table changes.

Mukundan Menon: To answer your question, Achal, these are the best in class in terms of energy efficiency today, and it will also can be upgraded to the best in class when the table changes.

Speaker #4: Right. And in terms of costing, that's my last question. Sorry, sir. Thank you.

Achal Lohade: Right. And in terms of costing, that is my last question. Sorry, sir. Thank you.

Speaker #3: Yeah.

Mukundan C P Menon: Yeah.

Mukundan Menon: Yeah.

Speaker #4: Would that help in terms of cost savings compared to the regular compressor as of now?

Achal Lohade: Would that help in terms of cost savings, compared to the regular compressor as of now?

Speaker #3: Yeah. So the way we have looked at it is, currently, as we had mentioned in the beginning itself—even in Mr. Sridhar's message—it was essentially to have supply chain security, being the largest manufacturer of air conditioners with a leadership position.

Mukundan C P Menon: Well, the way we have looked at it currently, as we had mentioned at the beginning itself, even in Mr. Sridhar's message, it was essentially to have a supply chain security. Being the largest manufacturer of air conditioners with a leadership position, we have to secure the supply chain, and it was done with that intent. Most of the other things like cost, all this will be a work in progress, because as the product gets sort of commercialized over the next 1.5, 2 years, all these numbers will play out, actually. A little early to comment on that, Achal, yeah.

Mukundan Menon: Well, the way we have looked at it currently, as we had mentioned at the beginning itself, even in Mr. Sridhar's message, it was essentially to have a supply chain security. Being the largest manufacturer of air conditioners with a leadership position, we have to secure the supply chain, and it was done with that intent. Most of the other things like cost, all this will be a work in progress, because as the product gets sort of commercialized over the next 1.5, 2 years, all these numbers will play out, actually. A little early to comment on that, Achal, yeah.

Speaker #3: We have to secure the supply chain and it was done with that intent. The other most of the other things like cost all this will be a work in progress because as the product gets sort of commercialized over the next one and a half two years all these numbers will play out actually a little early to comment on that Natasha yeah.

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

Achal Lohade: Got it, sir. Thank you and wish you all the very best. Thank you.

Speaker #3: Yes. Thank you, Natasha. Thank you.

Mukundan C P Menon: Yes, thank you, Achal. Thank you.

Mukundan Menon: Yes, thank you, Achal. Thank you.

Speaker #1: Thank you. The next question is from the line of Aditya Vatia from Investech. Please go ahead.

Operator 2: Thank you. The next question is from the line of Aditya Bhatia from Investec. Please go ahead.

Natasha Jain: Thank you. The next question is from the line of Aditya Bhatia from Investec. Please go ahead.

Aditya Bhatia: Hi. Good evening, sir. My first question again is on Atomberg JV. How long is it likely to take for the plant to become operational? How would technology be sourced? Until then, how are we going to meet the QCO norms? What are the arrangements that we have done until then?

Speaker #2: Hi, good evening, sir. My first question, again, is on Attenborough JV. How long is it likely to take for the plant to become operational?

Speaker #2: How would technology be sourced, and until then, how are we going to meet the QCA norms? What are the arrangements that we have done until then?

Speaker #3: Yeah. So, Aditya, the way we have planned this out, assuming the work starts on this immediately, it's an 18-month kind of runway that we're looking at before the commercial production starts.

Mukundan C P Menon: Yeah. Aditya, the way we have planned this out from assuming the work starts on this immediately, it is an 18-month kind of runway that we are looking at before the commercial production starts. So during that period, the plant has to be put, the products have to be manufactured, the pilot batch has to be taken out. The field testing of the pilot batch has to go on, and then we start the full-fledged commercial production. So 18 months from now is when we are expecting full-fledged commercial production of the compressor. The second question, what was it, Aditya, the second question?

Mukundan Menon: Yeah. Aditya, the way we have planned this out from assuming the work starts on this immediately, it is an 18-month kind of runway that we are looking at before the commercial production starts. So during that period, the plant has to be put, the products have to be manufactured, the pilot batch has to be taken out. The field testing of the pilot batch has to go on, and then we start the full-fledged commercial production. So 18 months from now is when we are expecting full-fledged commercial production of the compressor. The second question, what was it, Aditya, the second question?

Speaker #3: So during that period, the plant has to be put, the products have to be manufactured. The pilot batch has to be taken out. The pilot testing of that, the field testing of the pilot batch, has to go on, and then we start the full-fledged commercial.

Speaker #3: So, the production—so, 18 months from now is when we are expecting full-fledged commercial production of the compressor. And the second question was—what was it, Aditya?

Speaker #3: The second question.

Speaker #2: So, until then, how are we going to manage the QCA norms? What are the arrangements that we have done for that?

Aditya Bhatia: Sir, until then, how are we going to manage the QCO norms? What are the arrangements that we have done for that?

Speaker #3: Okay. Okay. Okay. So currently, the QCA norm says that up to 30% you can import from, sort of, off your FI25 numbers; you can import.

Mukundan C P Menon: Okay. Currently, the QCO norms says that up to 30% of your FY25 numbers you can import, so that we can continue to import. That is point number one. Point number two, there are two big compressor manufacturers, which is Hyundai and GMCC. Have built up capacities in India, and we have blocked those capacities from India, so that we take it from there. Our idea is that even after these products come into the thing, our scale will be so much by the time this gets commissioned, that we will still have a mix of these compressors from these two vendors made in India, along with our own secure supply chain of compressors. So it will be a blend of that. It is not this or that. We will continue to buy from them, and we will also continue to manufacture and secure our supply chain.

Mukundan Menon: Okay. Currently, the QCO norms says that up to 30% of your FY25 numbers you can import, so that we can continue to import. That is point number one. Point number two, there are two big compressor manufacturers, which is Hyundai and GMCC. Have built up capacities in India, and we have blocked those capacities from India, so that we take it from there. Our idea is that even after these products come into the thing, our scale will be so much by the time this gets commissioned, that we will still have a mix of these compressors from these two vendors made in India, along with our own secure supply chain of compressors. So it will be a blend of that. It is not this or that. We will continue to buy from them, and we will also continue to manufacture and secure our supply chain.

Speaker #3: So that we can continue to import—that is point number one. Point number two, there are two big compressor manufacturers, which are Highly and GMCC.

Speaker #3: We have built up capacities in India, and we have blocked those capacities for the—for from India, and so that they take it from there. Our idea is that even after these products come into the thing, our scale will be so much by the time this gets commissioned that we will still have a mix of these compressors from these two vendors, made in India, along with our own secure supply chain of compressors.

Speaker #3: So it will be a blend of that. It is not this or that. We will continue to buy from them, and we will also continue to manufacture and secure our supply chain.

Speaker #3: So it's a double, two-sided thing. We wanted to ensure that we secure our supply chain both with suppliers, as well as have our own tech in indigenous technology.

Mukundan C P Menon: So it is a double two-sided thing. We wanted to ensure that we secure our supply chain, both with suppliers as well as have our own indigenous technology.

Mukundan Menon: So it is a double two-sided thing. We wanted to ensure that we secure our supply chain, both with suppliers as well as have our own indigenous technology.

Speaker #2: Understood, sir. So, my second question is that you mentioned that besides the BE norm change, there was roughly a four percent kind of price escalation, or cost escalation, that we saw.

Aditya Bhatia: Understood, sir. Sir, my second question is that you mentioned that besides the BE norm change, there was roughly a 4% kind of a price escalation or cost escalation that we saw. Given how sharply some of the commodities moved and rupee depreciated, is this 4% the hit that we saw with the benefit of lower cost inventory? Or are you saying that with these increased costs, the overall increase in terms of costing is only around 4%? Just want to clarify.

Speaker #2: Given how sharply some of the commodities moved and repeat depreciated is it is this four percent the hit that we saw with the with the benefit of lower cost inventory or are you saying that with with these increased costs the overall increase in terms of costing is only around four percent?

Speaker #2: Just want to clarify.

Mukundan C P Menon: Well, actually, if you've seen the results that we have published, we seem to have sort of done a little better than some of the key competitors. I think we did a lot of right things. One is we had planned for the season well. As I'd mentioned, there was no disruption in the factory, so the volumes came, and the absorption of the cost of the factory also was well done. We also have a very active cost takeout project which is going on, and I think it has helped us at the right time. When the things started going wrong, that cost takeout project has started sort of fructifying into some savings.

Mukundan Menon: Well, actually, if you've seen the results that we have published, we seem to have sort of done a little better than some of the key competitors. I think we did a lot of right things. One is we had planned for the season well. As I'd mentioned, there was no disruption in the factory, so the volumes came, and the absorption of the cost of the factory also was well done. We also have a very active cost takeout project which is going on, and I think it has helped us at the right time. When the things started going wrong, that cost takeout project has started sort of fructifying into some savings.

Speaker #3: So actually, if you see in the results that we have published, we seem to have done a little better than some of the key competitors.

Speaker #3: And I think we did a lot of the right things. One is, we had planned for the season well. As I mentioned, there was no disruption in the factory.

Speaker #3: So the volumes came and the absorption of the cost of the factory also was well done. We also have a very active cost takeout project which is going on and that has been one of the I think it has helped us in a at the right time when the things started going wrong that that cost takeout project has started sort of rectifying into some savings.

Speaker #3: And I think a mixture of the sheer scale, the lack of discontinuity in the manufacturing, the proper absorption of our cost because of the larger volume and lack of disruption, coupled with this cost takeout project—I think a mixture of these four things, I think, played out in our favor, I suppose, Aditya.

Mukundan C P Menon: I think a mixture of the sheer scale, the lack of discontinuity in the manufacturing, the proper absorption of our cost because of the larger volume and lack of disruption, coupled with this cost takeout project, I think a mixture of these four things, I think played out in our favor, I suppose, Aditya.

Mukundan Menon: I think a mixture of the sheer scale, the lack of discontinuity in the manufacturing, the proper absorption of our cost because of the larger volume and lack of disruption, coupled with this cost takeout project, I think a mixture of these four things, I think played out in our favor, I suppose, Aditya.

Speaker #2: Sure, sir. That's helpful. Thank you.

Aditya Bhatia: Sure, sir. That's helpful. Thank you.

Speaker #3: Thank you Aditya.

Mukundan C P Menon: Thank you, Aditya.

Mukundan Menon: Thank you, Aditya.

Speaker #1: Thank you. The next question is from the line of Siddharth Mehra from Nomura. Please go ahead.

Operator 2: Thank you. The next question is from the line of Siddharth Parekh from Nomura. Please go ahead.

Natasha Jain: Thank you. The next question is from the line of Siddharth Parekh from Nomura. Please go ahead.

Speaker #3: Yeah, thanks for the opportunity, sir. So, first question is on the UCP segment. You alluded to the fact that, while the UC revenues have grown at 50% plus, our overall revenues are up 30%.

Siddharth Parekh: Yeah. One, sir. The opportunity, sir. First question is on the UCP segment. So rightly alluded to the fact that while the UCP revenues have grown at 50% plus, our overall revenues are up 30%. Can you please share, like in the commercial refrigeration and the commercial AC segment, what has been the decline, and how do you see the outlook for the commercial refrigeration segment going ahead, given that it has remained under stress for quite some time? Some thoughts, sir.

Siddhartha Bera: Yeah. One, sir. The opportunity, sir. First question is on the UCP segment. So rightly alluded to the fact that while the UCP revenues have grown at 50% plus, our overall revenues are up 30%. Can you please share, like in the commercial refrigeration and the commercial AC segment, what has been the decline, and how do you see the outlook for the commercial refrigeration segment going ahead, given that it has remained under stress for quite some time? Some thoughts, sir.

Speaker #3: So can you please share, like in the Commercial Refrigeration and the CAC segment, what has been the decline, and how do you see the outlook for the Commercial Refrigeration segment going ahead, given that it has remained under stress for quite some time?

Speaker #3: So some thoughts there. Yeah. So Siddharth so what you said is right. The the kind of buoyancy that we saw in the in the room air conditioner segment within UCP was probably not seen in the other two categories which is commercial refrigeration which is the freezer water coolers water dispenser.

Mukundan C P Menon: Yeah. Siddharth, what you said is right. The kind of buoyancy that we saw in the room air conditioner segment, within UCP, was probably not seen in the other two categories, which is commercial refrigeration, which is the freezer, water coolers, water dispensers. Nor was it seen in the commercial air conditioning category, which is ducted VRF and chillers, and the light commercial air conditioner. It was indeed, I think, a reasonable growth in the commercial air conditioner segment, which is the ducted VRF and chiller, but a muted kind of performance in the commercial refrigeration. What you said is absolutely right. You would have heard from the other major competitors in the commercial refrigeration space. The industry seems to have de-grown by around 15% or so, and I think we did a little better than that, I suppose, compared to that.

Mukundan Menon: Yeah. Siddharth, what you said is right. The kind of buoyancy that we saw in the room air conditioner segment, within UCP, was probably not seen in the other two categories, which is commercial refrigeration, which is the freezer, water coolers, water dispensers. Nor was it seen in the commercial air conditioning category, which is ducted VRF and chillers, and the light commercial air conditioner. It was indeed, I think, a reasonable growth in the commercial air conditioner segment, which is the ducted VRF and chiller, but a muted kind of performance in the commercial refrigeration. What you said is absolutely right. You would have heard from the other major competitors in the commercial refrigeration space. The industry seems to have de-grown by around 15% or so, and I think we did a little better than that, I suppose, compared to that.

Speaker #3: Nor was it seen in the commercial air conditioning category which is ducted VRF and chillers. So and the light commercial air conditioner. So the the it was indeed a muted it it was a I think a reasonable growth in the commercial air conditioner segment which is the ducted VRF and chillers.

Speaker #3: But a muted kind of performance in the commercial refrigeration. And what you said is absolutely right. You would have heard from the other major competitors in the commercial refrigeration space—the industry seems to have degrown by around 15% or so.

Speaker #3: And I think we did a little better than that, I suppose, compared to that. But going forward, I think things will indeed settle down.

Mukundan C P Menon: But going forward, I think things will indeed settle down. This was a category where the price increase was significant. Unlike in the room air conditioner category, here the costs went up a little more significantly, like for freezers by 10%, of water coolers were around 15%, and water dispensers again by 10%. So very steep price increases, cost increases forced all the major brands to increase selling prices to that effect. And probably the channel was not fully ready to absorb that cost, so they take the wait and watch thing. But over the last few months, we are seeing them taking to that because there seems to be a normalization and a complete acceptance of the fact that this is a cost pass-through and there is no other way to manage. So we are seeing some improvement in the traction this quarter.

Mukundan Menon: But going forward, I think things will indeed settle down. This was a category where the price increase was significant. Unlike in the room air conditioner category, here the costs went up a little more significantly, like for freezers by 10%, of water coolers were around 15%, and water dispensers again by 10%. So very steep price increases, cost increases forced all the major brands to increase selling prices to that effect. And probably the channel was not fully ready to absorb that cost, so they take the wait and watch thing. But over the last few months, we are seeing them taking to that because there seems to be a normalization and a complete acceptance of the fact that this is a cost pass-through and there is no other way to manage. So we are seeing some improvement in the traction this quarter.

Speaker #3: This was a category where the price increase was significant. Unlike in the room air conditioner category, here the costs went up a little more significantly—like for freezers by 10%, for water coolers by around 15%, and water dispensers again by 10%.

Speaker #3: So, very steep price increases and cost increases forced all the major brands to increase selling prices to that effect. And probably the channel was not fully ready to absorb that cost.

Speaker #3: So they paid the wait and watch thing. But over the last few months we are seeing them taking taking to that because there seems to be a normalization and and a complete acceptance of the fact that this is a cost pass through and there's no other way to manage.

Speaker #3: So, we are seeing some improvement in the traction this quarter.

Speaker #2: Okay, sir. Got it. Thanks a lot, sir. I'll come back in a bit.

Siddharth Parekh: Okay, sir. Got it. Thanks a lot, sir. I will come back on the thing.

Siddhartha Bera: Okay, sir. Got it. Thanks a lot, sir. I will come back on the thing.

Mukundan C P Menon: Okay. Thank you.

Mukundan Menon: Okay. Thank you.

Speaker #3: Okay. Thank you. Thank you.

Operator 2: Thank you. The next question is from the line of Samir Gupta from IIFL Capital. Please go ahead.

Natasha Jain: Thank you. The next question is from the line of Samir Gupta from IIFL Capital. Please go ahead.

Speaker #1: Thank you. The next question is from the line of Sameer Gupta from IASL Capital. Please go ahead.

Samir Gupta: Hi, good evening, everyone, and thanks for taking my question. Sir, I am a little new to the company, so pardon me if some of the questions sound very naive. Just trying to get some color on the margin performance first. EBIT margin in Unitary Cooling Products is around 5.3%. Now, this is on a back of a good summer season, and you alluded to market share gains in the RAC segment. I understand commodity cost inflation would have had a negative impact. But if I look at overall company gross margin, it is flattish. I would have also expected 32% revenue growth to have some kind of operating leverage benefit. Just trying to understand this is the best quarter of the season, and we are doing a 5% kind of an EBIT margin. What can we then assume as a steady-state profit expectation for this segment?

Sameer Gupta: Hi, good evening, everyone, and thanks for taking my question. Sir, I am a little new to the company, so pardon me if some of the questions sound very naive. Just trying to get some color on the margin performance first. EBIT margin in Unitary Cooling Products is around 5.3%. Now, this is on a back of a good summer season, and you alluded to market share gains in the RAC segment. I understand commodity cost inflation would have had a negative impact. But if I look at overall company gross margin, it is flattish. I would have also expected 32% revenue growth to have some kind of operating leverage benefit. Just trying to understand this is the best quarter of the season, and we are doing a 5% kind of an EBIT margin. What can we then assume as a steady-state profit expectation for this segment?

Speaker #2: Hi, good evening everyone, and thanks for taking my question. Sir, I'm a little new to the company, so pardon me if some of these questions sound very naive.

Speaker #2: Just trying to get some color on the margin performance first. So, EBIT margin in unitary cooling products stands at around 5.3%. Now, this is on the back of a good summer season.

Speaker #2: And you alluded to market share gains in the RAC segment. I understand commodity cost inflation would have had a negative impact, but if I look at overall company gross margin, it is flattish.

Speaker #2: And I would have also expected 32% revenue growth to have some kind of operating leverage benefit. So just trying to understand—this is the best quarter of the season, and we are doing a 5% kind of EBIT margin.

Speaker #2: What can we then assume as a steady-state profit expectation for this segment?

Speaker #3: Yeah, so Mr. Gupta, what you said is absolutely right. If you look at some of the others, this has been a rather difficult quarter for the industry as a whole.

Mukundan C P Menon: Yeah. Mr. Gupta, what you said is absolutely right. If you look at some of the others, this has been a rather difficult quarter for the industry as a whole. The summer, a reasonably good summer compared to the very weak summer last year, increased the demand, as I mentioned, by around 20-odd percentage, 25% or whatever. However, the commodity price increase and the dollar depreciation, it hurt everybody. If you look at the results of most of the competitive brands, some five or six of them who are top players in this category of room air conditioners, saw a significant shrinkage in their EBIT by almost 3% down, some of them 4% down. In comparison to that, we seem to have done better. In fact, Q1 to Q1, there is an increase in our EBIT percentage last year to this year.

Mukundan Menon: Yeah. Mr. Gupta, what you said is absolutely right. If you look at some of the others, this has been a rather difficult quarter for the industry as a whole. The summer, a reasonably good summer compared to the very weak summer last year, increased the demand, as I mentioned, by around 20-odd percentage, 25% or whatever. However, the commodity price increase and the dollar depreciation, it hurt everybody. If you look at the results of most of the competitive brands, some five or six of them who are top players in this category of room air conditioners, saw a significant shrinkage in their EBIT by almost 3% down, some of them 4% down. In comparison to that, we seem to have done better. In fact, Q1 to Q1, there is an increase in our EBIT percentage last year to this year.

Speaker #3: This summer is a reasonably good summer compared to the very weak summer last year. That has increased demand, as I mentioned, by around 20-25% or whatever.

Speaker #3: However, the commodity price increase, and the dollar depreciation—which hurt, it hurt everybody. So if you look at the results of most of the competitive brands, some five or six of them who are top players in this category, in this category of room air conditioners, saw significant shrinkage in their EBIT by almost 3% down.

Speaker #3: Some of them are 4% down. So in comparison to that, we seem to have done better. We have, in fact—our Q1 to Q1—there is an increase in our EBIT percentage from last year to this year.

Speaker #3: So, we have, I think, weathered this storm much better than the rest of the people. And the reason for that is the points that I mentioned a little while earlier.

Mukundan C P Menon: We have, I think, weathered the storm much better than the rest of the people. The reason for that is the points that I mentioned a little while earlier, which is to do with the way we manage the factory without a disruption, cost absorption, the sheer scale effect, and the fact that we have an active cost-off strategy. Whether these numbers do not reflect that very high buoyancy in the sales volume completely, I agree. It is primarily because of the dampening effect of the cost increases which came, which could not get passed down typically into the market, Gupta.

Mukundan Menon: We have, I think, weathered the storm much better than the rest of the people. The reason for that is the points that I mentioned a little while earlier, which is to do with the way we manage the factory without a disruption, cost absorption, the sheer scale effect, and the fact that we have an active cost-off strategy. Whether these numbers do not reflect that very high buoyancy in the sales volume completely, I agree. It is primarily because of the dampening effect of the cost increases which came, which could not get passed down typically into the market, Gupta.

Speaker #3: Which is to do with the way we manage the factory without a disruption, cost absorption, the sheer scale effect, and the fact that we have an active cost loss budget.

Speaker #3: So, whether these numbers don't reflect that very high buoyancy in the sales volume completely, I agree it is primarily because of the dampening effect of the cost increases which came.

Speaker #3: Which could not get passed down typically into the market, Gupta, actually.

Speaker #2: Got it, sir. So, was the problem below the RM cost? Was it due to more channel financing or more discounts and schemes? Because the GM line still seems to be reasonably okay if I look at the full quarter, like the full company performance.

Samir Gupta: Got it, sir. But the problem was in below the RM cost, like more channel financing or more discounts and schemes, because the GM line still seems to be reasonably okay if I look at the full quarter for that full company performance.

Sameer Gupta: Got it, sir. But the problem was in below the RM cost, like more channel financing or more discounts and schemes, because the GM line still seems to be reasonably okay if I look at the full quarter for that full company performance.

Mukundan C P Menon: Actually, yeah. It is essentially at the, probably the material cost actually is the one which affected it big time. Yeah.

Mukundan Menon: Actually, yeah. It is essentially at the, probably the material cost actually is the one which affected it big time. Yeah.

Speaker #3: Actually, yeah. This is essentially—yeah, probably the material cost actually is the one which affected a big time. Yeah.

Speaker #2: Okay. Got it sir. Second question is on the Attenborough GV. So firstly why is there a I I and I mean I'm sorry if I if this sounds naive but why is there a import dependence in compressors in this industry?

Samir Gupta: Okay. Got it, sir. Second question is on the Atomberg JV.

Sameer Gupta: Okay. Got it, sir. Second question is on the Atomberg JV.

Mukundan C P Menon: Yeah.

Mukundan Menon: Yeah.

Samir Gupta: Firstly, I am sorry if this sounds naive, but why is there-

Sameer Gupta: Firstly, I am sorry if this sounds naive, but why is there-

Mukundan C P Menon: No worry.

Mukundan Menon: No worry.

Samir Gupta: such an import dependence in compressors in this industry? Is it that

Sameer Gupta: such an import dependence in compressors in this industry? Is it that

Speaker #2: Is it that certain RMs are not available in India, or is it just cheaper, you know, procuring it from outside? And how does—whatever this constraint is—get addressed with this GV?

Mukundan C P Menon: Yeah

Mukundan Menon: Yeah

Samir Gupta: certain RMs are not available in India, or is it just cheaper procuring it from outside? How does whatever this constraint is get addressed with this JV? Secondly, why a JV and not do it organically?

Sameer Gupta: certain RMs are not available in India, or is it just cheaper procuring it from outside? How does whatever this constraint is get addressed with this JV? Secondly, why a JV and not do it organically?

Speaker #2: And secondly, why a JV and not do it organically?

Speaker #3: Yeah. So the import content in an air conditioner currently, see, around four or five years ago, almost 75% of the BOM of an air conditioner used to be imported.

Mukundan C P Menon: Well, the import content in an air conditioner currently, around four, five years ago almost 75% of the BOM of an air conditioner used to be imported. The major components are compressors, there is copper, there is aluminum, there is controller, and there are motors. Most of it used to be imported. Currently, from that 70% import content, here I am talking about the industry, not only of Voltas. That 70% has now come down to around 30% to 35%, because there is copper getting manufactured here, controllers getting manufactured here, motors getting manufactured here. Almost 40% of the compressor requirements of the industry are getting manufactured here. So that has brought down the import dependence to around 35-odd percentage. That is point number one.

Mukundan Menon: Well, the import content in an air conditioner currently, around four, five years ago almost 75% of the BOM of an air conditioner used to be imported. The major components are compressors, there is copper, there is aluminum, there is controller, and there are motors. Most of it used to be imported. Currently, from that 70% import content, here I am talking about the industry, not only of Voltas. That 70% has now come down to around 30% to 35%, because there is copper getting manufactured here, controllers getting manufactured here, motors getting manufactured here. Almost 40% of the compressor requirements of the industry are getting manufactured here. So that has brought down the import dependence to around 35-odd percentage. That is point number one.

Speaker #3: There are the major components in compressors: there is the copper, there is the aluminium, there is the controller, and there are motors. Most of it used to be imported.

Speaker #3: Currently, from the 70% import content—for, I'm here, I'm talking about the industry, not only of Voltas—that 70% has now come down to around 30–35%.

Speaker #3: Because there is copper getting manufactured here, controllers getting manufactured here, motors getting manufactured here—almost 40% of the compressor requirements of the industry are getting manufactured here.

Speaker #3: So that has brought down the import dependence to around 35-odd percent, you know. So that is point number one. The compressor was the, is, is a thing that we felt is very important.

Mukundan C P Menon: The compressors are a thing that we felt is very important because while there are many companies who have entered into manufacturing PCBA controllers, who have entered into manufacturing these special type of tubes which are used for air conditioner, we call it inner groove tubes. For aluminum, there are many manufacturers who have entered into India. We felt that the compressor is an area where there is a gap between what is being made in India versus what is required by the industry. Being the most important component in the bill of materials, we felt it is important that we have this manufacturing sort of capability built within the organization or through a joint venture. The second question you mentioned, about why can't we do this on our own. In a compressor, the most important item within the compressor is the motor.

Mukundan Menon: The compressors are a thing that we felt is very important because while there are many companies who have entered into manufacturing PCBA controllers, who have entered into manufacturing these special type of tubes which are used for air conditioner, we call it inner groove tubes. For aluminum, there are many manufacturers who have entered into India. We felt that the compressor is an area where there is a gap between what is being made in India versus what is required by the industry. Being the most important component in the bill of materials, we felt it is important that we have this manufacturing sort of capability built within the organization or through a joint venture. The second question you mentioned, about why can't we do this on our own. In a compressor, the most important item within the compressor is the motor.

Speaker #3: Because while on the OE, there are many companies who have entered into manufacturing PCBAs, controllers, and who have entered into manufacturing the special types of cubes which are used for air conditioners.

Speaker #3: We call it inner group tubes. For aluminium there are many manufacturers who have entered into India. We felt that the compressor is an area which is there is a short there is a gap between what is being made in India versus what what is required by the industry.

Speaker #3: And being the most important component in the bill of materials, we felt it is important that we have this manufacturing sort of capability built within the organization.

Speaker #3: Or through a joint venture. The second question you mentioned was about why can't we do this on our own. In a compressor, the most important item within the compressor is the motor.

Speaker #3: Our tie-up with Attenborough is important. Attenborough is the leader in motors, and they compete with the global giants in this category.

Mukundan C P Menon: Our tie-up with Atomberg is Atomberg is a leader in motor, and they compete with the global giants in this category because of the sheer volumes that they have made in the ceiling fan category. So they seem to have cracked the code as far as the most important item on the bill of material is concerned, which is the motor. This is a capability that a company like Voltas does not have, and because we have never gone into a component manufacturing so far, this is the first time that we want to secure this, and we are doing it. So the answer is that we did not have this capability, and we felt it is better to partner with somebody who is way ahead of the curve and do it along with them.

Mukundan Menon: Our tie-up with Atomberg is Atomberg is a leader in motor, and they compete with the global giants in this category because of the sheer volumes that they have made in the ceiling fan category. So they seem to have cracked the code as far as the most important item on the bill of material is concerned, which is the motor. This is a capability that a company like Voltas does not have, and because we have never gone into a component manufacturing so far, this is the first time that we want to secure this, and we are doing it. So the answer is that we did not have this capability, and we felt it is better to partner with somebody who is way ahead of the curve and do it along with them.

Speaker #3: Because of the sheer volumes that they have made in the ceiling fan category. So, we seem to—they seem to have cracked the code as far as the most important item on the bill of materials is concerned, which is the motor.

Speaker #3: This is a capability that a company like Voltas does not have. And because we have never gone into component manufacturing so far, this is the first time that we want to secure this, and we are doing it.

Speaker #3: So, the answer is that we did not have this capability, and we felt it was better to partner with somebody who is way ahead of the curve and do it along with them.

Speaker #2: So, props, sir. That's very, very helpful. Just a small follow-up here. So...

Samir Gupta: Superb, sir. That is very helpful. Just a small follow-up here.

Sameer Gupta: Superb, sir. That is very helpful. Just a small follow-up here.

Speaker #1: Mr. Sameer, I'll just take this to you to rejoin the queue, please, for the follow-up question.

Operator 2: Mr. Samir Gupta, I just request you to rejoin the queue please, for the follow-up question.

Natasha Jain: Mr. Samir Gupta, I just request you to rejoin the queue please, for the follow-up question.

Speaker #2: Sure, I'll do that. Thank you. Thank you so much.

Samir Gupta: Sure, I will do that. Thank you. Thank you so much.

Sameer Gupta: Sure, I will do that. Thank you. Thank you so much.

Speaker #1: Thank you.

Operator 2: Thank you.

Natasha Jain: Thank you.

Speaker #3: Thank you. Thank you so much.

Mukundan C P Menon: Thank you. Thanks, Samir.

Mukundan Menon: Thank you. Thanks, Samir.

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

Operator 2: Ladies and gentlemen, in order to ensure that management is able to address questions from all the participants in the conference, please limit the question to one question per participant. If we have follow-up questions, we request you to rejoin the queue. The next question is from the line of Rahul Agarwal from Ikigai Asset. Please go ahead.

Natasha Jain: Ladies and gentlemen, in order to ensure that management is able to address questions from all the participants in the conference, please limit the question to one question per participant. If we have follow-up questions, we request you to rejoin the queue. The next question is from the line of Rahul Agarwal from Ikigai Asset. Please go ahead.

Speaker #1: Do you have any follow-up questions? We request you to please rejoin the queue. The next question is from Rahul Agarwal from Ikigai Assets.

Speaker #1: Please go ahead.

Speaker #4: Yeah. Hi. Good evening, Mr. Menon, and everybody on the call.

Rahul Agarwal: Yeah. Hi. Good evening, Mr. Menon and everybody on the call.

Speaker #3: Good evening.

Mukundan C P Menon: Good evening.

Mukundan Menon: Good evening.

Rahul Agarwal: Sir, just one question I had. Obviously, the UCP margin last year is not something to look at in terms of sustainable numbers, right? I mean,

Speaker #4: So just sir just one question I had. You know obviously the UCP margin you know last year is not something to you know look at in terms of sustainable number right.

Speaker #4: I mean, Voltas had a very bad year last year, right?

Mukundan C P Menon: Yeah

Mukundan Menon: Yeah

Rahul Agarwal: L&T has had a very bad year last year, right?

Mukundan C P Menon: Correct.

Mukundan Menon: Correct.

Speaker #3: Correct. Correct.

Speaker #4: Obviously obviously first quarter this quarter is you know better than last quarter. QOQ 30 bids increase which is good. But I wanted to understand from you you know if plants are you know at peak season they are fully utilized.

Rahul Agarwal: Obviously, Q1, this quarter is better than last quarter, QOQ, 30 bps increase, which is good. I wanted to understand from you, if plants are at peak season, they are fully utilized. You have gained so much market share and volume growth is 45% on RAC, 44%. If that is played out, that peak capacity utilization, pricing being not so much in favor, but you have passed through. Does that mean that going back to 6% to 7% is going to be extremely difficult for the company going forward? You can talk about either this year or next two year, as you feel comfortable. Second question was also on the project side. I understand that there were execution issues. We have seen some top-line softness. I do not know why. Execution softness. But on margins over here, I thought we are getting into more shorter gestation projects.

Speaker #4: You have gained so much market share—your volume growth is like 45% on RSE, 44%. If that's played out, at peak capacity utilization, pricing may not be so much in your favor, but you have passed through.

Speaker #4: Does that mean that, you know, going back to six or seven percent is going to be extremely difficult for the company going forward? And you can talk about either this year or the next two years.

Speaker #4: You know, as you feel comfortable. And the second question was also on the project side. I mean, I understand that, you know, there were execution issues.

Speaker #4: We have seen some top-line softness. I don't know why—execution softness. But on margins, over here, I thought we are getting into more shorter gestation projects.

Speaker #4: Our margin should get better here because, you know, the quality of the order book is getting better. So just your comments on the next 24 months—where should we see EBIT margins for UCP and for the Project segment?

Rahul Agarwal: Our margins should get better here because the quality of order book is getting better. Just your comments on next 24 months, where should we see EBIT margins for UCP and for the project segment? Thank you.

Speaker #4: Thank you.

Speaker #3: Yeah. Also for the UCP as if you see last year's quarter was a very weak quarter. So 3.7% versus 5.3%. So there's a significant gain in the it's it's it's it's quite a improvement.

Mukundan C P Menon: Well, also, for the UCP, if you see, last year's quarter was a very deep quarter, so 3.7% versus 5.3%. So there is a significant gain, and it is quite an improvement, and the numbers would have been a little better if the cost increases had not hit us the way this entire crisis played out and things became very volatile. The entire advantage of the huge scale-up would have played out a little better. So whether there is a room for improvement going forward over a long period of time over the next eight quarters or so, the answer is certainly yes, actually, because eventually, we have had margins of upward of 7% in these quarters earlier. So our aspiration is indeed to improve this year-on-year improvement. That continues. So we are working towards that. The second question was more on the project's margin, actually.

Mukundan Menon: Well, also, for the UCP, if you see, last year's quarter was a very deep quarter, so 3.7% versus 5.3%. So there is a significant gain, and it is quite an improvement, and the numbers would have been a little better if the cost increases had not hit us the way this entire crisis played out and things became very volatile. The entire advantage of the huge scale-up would have played out a little better. So whether there is a room for improvement going forward over a long period of time over the next eight quarters or so, the answer is certainly yes, actually, because eventually, we have had margins of upward of 7% in these quarters earlier. So our aspiration is indeed to improve this year-on-year improvement. That continues. So we are working towards that. The second question was more on the project's margin, actually.

Speaker #3: And the numbers would have been a little better if the cost increases had not hit us the way this entire crisis played out. And things became very, sort of, volatile.

Speaker #3: If things would have—that entire advantage of the use scale-up would have played out a little better. So whether there's room for improvement going forward over a long period of time, over the next eight quarters or so, the answer is certainly yes, actually.

Speaker #3: Because that eventually we've had margins of upward of seven percent in these quarters earlier. So we are aspiration is indeed to improve this quarter to quarter quarter on quarter year year on year improvement.

Speaker #3: That that that continues. So we are working towards that. The second question was more on the projects margin actually. So what has happened is the the the this was a very volatile period.

Mukundan C P Menon: What has happened is, this was a very volatile period, and we could see that things were looking a little hazy in the thing. So we were very calibrated and careful in picking up orders, because having an order book at a fixed price without an escalation clause would have hurt us more. So this calibrated order booking and calibrated execution actually is a saving in disguise. Because once you lock in a price with a client, you cannot change it irrespective of any of these. So in a way, we see it as a blessing in disguise. As things settle down, we are continuing to focus, as you rightly said, Rahul, on being very selective of what projects we are getting. We are looking at more of manufacturing data center kind of jobs, MEP jobs.

Mukundan Menon: What has happened is, this was a very volatile period, and we could see that things were looking a little hazy in the thing. So we were very calibrated and careful in picking up orders, because having an order book at a fixed price without an escalation clause would have hurt us more. So this calibrated order booking and calibrated execution actually is a saving in disguise. Because once you lock in a price with a client, you cannot change it irrespective of any of these. So in a way, we see it as a blessing in disguise. As things settle down, we are continuing to focus, as you rightly said, Rahul, on being very selective of what projects we are getting. We are looking at more of manufacturing data center kind of jobs, MEP jobs.

Speaker #3: And we could see that things were looking a little hazy in the things. So we were very calibrated and careful in picking up orders.

Speaker #3: Because having an order book at a fixed price without an escalation clause would have hurt us more. So this calibrated order booking and calibrated execution actually is a saving in disguise, you know.

Speaker #3: So, once you lock in a price with a client, you can't change it irrespective of any of these. So, in a way, we see it as a blessing in disguise.

Speaker #3: As things settle down, we are continuing to focus, as you rightly said, Rahul, on being very selective about which projects we are taking on. We are looking at more manufacturing and data center kind of jobs.

Speaker #3: MEP jobs—our focus is shifting to fastest-gestation jobs, more in the private sector and less to do with government, where payment delays will bother us.

Mukundan C P Menon: Our focus is shifting to faster gestation jobs, more in the private sector, less to do with government, where payment delays will bother us. So we are altering a little bit of our course of our entire journey, and this will start playing out well over the next few quarters.

Mukundan Menon: Our focus is shifting to faster gestation jobs, more in the private sector, less to do with government, where payment delays will bother us. So we are altering a little bit of our course of our entire journey, and this will start playing out well over the next few quarters.

Speaker #3: So, we are altering a little bit of our course in our entire journey. And this will start playing out well over the next few quarters.

Speaker #4: Mr. Menon, just one follow-up. This seven percent aspiration—

Rahul Agarwal: Mr. Menon, just one follow-up. This 7% aspiration.

Operator 2: Rahul, I am sorry to interrupt you.

Natasha Jain: Rahul, I am sorry to interrupt you.

Speaker #1: Mr. Rahul, I just—I'm sorry to interrupt.

Rahul Agarwal: Yeah. Just a follow-up. It is not a new question. Mr. Menon, just one follow-up. On the 7%, could you take us to the bridge in terms of two, three points which could help us achieve this? Thank you.

Speaker #4: Yeah, yeah, just a follow-up. I mean, it's not a new question. Mr. Menon, just one follow-up: on the 7%, could you take us through the bridge in terms of, you know, two or three points which could help us achieve this?

Speaker #4: Thank you.

Speaker #3: Sir, yeah, okay. So just to add to that question—for example, I think one of the things which has played out for us, as Mr. Menon alluded to, was in terms of the cost on projects. For example, it is something that we are actively working on, which should actually help us.

K.V. Sridhar: Yeah. Okay. Just to add to that question, for example, I think one of the things which I think has paid off for us, I think as Mr. Menon alluded to, was in terms of the cost on projects, for example, is something that we are actively working on, which should actually help us. Some of the investments in CapEx that we had done, say about 18 months back, which was a bit of a deterrent last year, is playing out favorably for us. These are some of the things which would help us to get better. Again, the focus, as I think we have said consistently in the past, has been we want to grow top line very aggressively. We want to make sure that we continue to gain market share.

Mukundan Menon: Yeah. Okay. Just to add to that question, for example, I think one of the things which I think has paid off for us, I think as Mr. Menon alluded to, was in terms of the cost on projects, for example, is something that we are actively working on, which should actually help us. Some of the investments in CapEx that we had done, say about 18 months back, which was a bit of a deterrent last year, is playing out favorably for us. These are some of the things which would help us to get better. Again, the focus, as I think we have said consistently in the past, has been we want to grow top line very aggressively. We want to make sure that we continue to gain market share.

Speaker #3: Some of the investments in capex that we had done, say about eighteen months back, which was sort of a bit of a deterrent last year.

Speaker #3: Is playing out favorably for us. So these are some of the things which sort of is would help us to sort of get better.

Speaker #3: Again, the focus, as I think we have said consistently in the past, has been that we want to grow the top line very aggressively. We want to make sure that we continue to gain market share.

Speaker #3: So I think that's something we want to continue doing. And the profile, per se, I think will sort of take care of itself.

Mukundan C P Menon: I think that is something we want to continue doing, and the profile per se, I think will take care of itself. We compare it with the same period last year and look at improvements. I hope that answers the question.

Mukundan Menon: I think that is something we want to continue doing, and the profile per se, I think will take care of itself. We compare it with the same period last year and look at improvements. I hope that answers the question.

Speaker #3: I think—and we sort of compare it with the same period last year and look at improvements. I hope that answers the question.

Speaker #4: Yes, sir. Thank you so much. Thank you for answering all my questions, and all the best for the rest of the year.

Rahul Agarwal: Yes, sir. Thank you so much. Thank you for answering all my questions, and all the best for the rest of the year.

Speaker #3: Thank you Rahul. Thank you.

Mukundan C P Menon: Thank you, Rahul.

Mukundan Menon: Thank you, Rahul.

Rahul Agarwal: Thank you.

Speaker #1: Thank you. The next question is from Kalyana Bhavya Gandhi from Bajaj Ultimate Investment Management Limited. Please go ahead.

Operator 2: Thank you. The next question is from the line of Bhavya Gandhi from Bajaj Allianz Life Insurance. Please go ahead.

Natasha Jain: Thank you. The next question is from the line of Bhavya Gandhi from Bajaj Allianz Life Insurance. Please go ahead.

Speaker #2: Yeah. Hi. Thanks for taking my question. So, my question is regarding the outsourcing opportunity versus insourcing. While the outsourced players claim that the outsourcing pie is increasing, I just wanted your understanding—how is it going?

Bhavya Gandhi: Yeah. Hi. Thanks for taking my question. My question is regarding the outsourcing opportunity versus insourcing. While the outsourced players claim that the outsourcing pie is increasing, just wanted your understanding, how is it going? Is it the insourcing which is increasing or the outsourcing is increasing? If you can comment on the overall industry, what is the mix and how do you expect this mix to be going forward? Yeah.

Speaker #2: Is it the insourcing which is increasing, or is the outsourcing increasing? If you can comment on the overall industry, what is the mix and how do you expect this mix to evolve?

Speaker #2: See it going forward. Yeah.

Speaker #3: Okay. In our case, the outsourcing has not increased because we have built a large capacity in Chennai. We have a capacity of around 1.4 million in Pantnagar.

Mukundan C P Menon: In our case, the outsourcing has not increased because we have built a large capacity in Chennai. We have a capacity of around 1.4 million in Pantnagar, almost the same 1.2 kind of thing in Chennai. So for us, I think those plants having come fully upstream, we do not see our outsourcing increasing. It is a steady level. Fairly steady level. I think the proportion, I think Mr. Menon did answer earlier, I think broadly it will broadly be the same level. Yeah. Got it, sir. That is it from my end. Thank you so much. Thank you.

Mukundan Menon: In our case, the outsourcing has not increased because we have built a large capacity in Chennai. We have a capacity of around 1.4 million in Pantnagar, almost the same 1.2 kind of thing in Chennai. So for us, I think those plants having come fully upstream, we do not see our outsourcing increasing. It is a steady level. Fairly steady level. I think the proportion, I think Mr. Menon did answer earlier, I think broadly it will broadly be the same level. Yeah.

Speaker #3: Almost the same, 1.2, kind of thing in Chennai. So for us, I think those plants having come fully upstream, we don't see our outsourcing increasing.

Speaker #3: It's a steady level. It's a steady level. It's a fairly steady level. I think the proportion—I think Mr. Menon did answer earlier—I think broadly, it'll broadly be the same level.

Speaker #3: Yeah.

Speaker #4: Got it, sir. That's it from my end. Thank you so much.

Bhavya Gandhi: Got it, sir. That is it from my end. Thank you so much.

Speaker #3: Thank you.

Mukundan Menon: Thank you.

Speaker #1: Thank you. The next question is from Kalyana Keshav Lahoti from HDFC Securities. Please go ahead.

Operator 2: Thank you. The next question is from the line of Keshav Lahoti from HDFC Securities. Please go ahead.

Natasha Jain: Thank you. The next question is from the line of Keshav Lahoti from HDFC Securities. Please go ahead.

Speaker #4: Hi, thank you for the opportunity. So, in the last question, have I understood correctly that going forward also your outsourcing and insourcing mix will remain similar? And technically, what is your RSC mix in the UCP segment this quarter, and normally how would this be for a year?

Keshav Lahoti: Hi. Thank you for the opportunity. Sir, in the last question, have I heard or understand correct, going forward also, your outsourcing and insourcing mix will remain similar? Secondly, what is your RAC mix in UCP segment in this quarter, and normally how would this be for a year?

Speaker #3: Oh, Keshav, the outsourcing will continue in the same ratio. As I said, window air conditioners will continue to be 100% outsourced. Between the—

Mukundan C P Menon: Keshav, the outsourcing will continue in the same ratio. As I said, window air conditioners will continue to be 100% outsourced. In the split AC bucket, we will have that 75/25 kind of mix. That will continue. Yeah. The proportion has not changed very much. Obviously it is a quarter wise, obviously the proportion within the segment and the RAC keeps obviously changing within the quarters. But in overall level, broadly it will remain the same we see it at annual level, I think. Yeah.

Mukundan Menon: Keshav, the outsourcing will continue in the same ratio. As I said, window air conditioners will continue to be 100% outsourced. In the split AC bucket, we will have that 75/25 kind of mix. That will continue. Yeah. The proportion has not changed very much. Obviously it is a quarter wise, obviously the proportion within the segment and the RAC keeps obviously changing within the quarters. But in overall level, broadly it will remain the same we see it at annual level, I think. Yeah.

Speaker #3: In the split PC bucket, we will have that 75-25 kind of mix. That will continue. Yeah.

Speaker #4: And the and the proportion has not changed very much. I mean this obviously it's a quarter wise obviously the proportion within the segment and the and the RSC keeps obviously changing within the quarters.

Speaker #4: But at the overall level, broadly, it'll remain the same when we see it at the annual level, I think. Yeah. Okay. How much was this in this quarter?

Keshav Lahoti: How much was it in this quarter? RAC mix in this quarter?

Speaker #4: RSC mix in this quarter.

Speaker #1: Oh Keshav, I just request you to rejoin the queue for the follow-up question, please. The next question is from Kalyana Sonali Solankar from Jefferies.

Operator 2: Keshav, I just like to request you to rejoin the queue for the follow-up question, please. The next question is from the line of Sonali Salgaonkar from Jefferies. Please go ahead.

Natasha Jain: Keshav, I just like to request you to rejoin the queue for the follow-up question, please. The next question is from the line of Sonali Salgaonkar from Jefferies. Please go ahead.

Speaker #1: Please go ahead.

Speaker #4: Yes, sir. Thank you for the opportunity. I have two questions. Firstly, on the current demand dynamics in terms of AC channel inventory—specifically, the demand in July and August so far, maybe in terms of volumes.

Sonali Salgaonkar: Sir, thank you for the opportunity. Sir, I have two questions. Firstly, on the current demand dynamics in terms of AC channel inventory, the demand in July, August so far, maybe in volumes and the festive season, any initial thoughts that we have, how are the channels behaving, are they restocking, et cetera? My second question is on FY27, 28 CapEx estimates for you, as a company, especially, because of the JV of Atomberg, will the CapEx be also split in 50/50? From where will Atomberg get the technology for manufacturing the compressors?

Speaker #4: And the festive season—any, you know, initial thoughts that we have? How are the channels behaving? Are they restocking, et cetera? And my second question is on FY27 and FY28 capex estimates for you.

Speaker #4: As a company, especially because of the JV with Attenborough, will the capex also be split fifty-fifty? And from where will Attenborough get the technology for manufacturing compressors?

Speaker #3: Okay, so I think Cedar here. In terms of the initial feedback that we are hearing from the channel, I think the channel has broadly been fairly cautious.

K.V. Sridhar: Okay. Sridhar here. In terms of the initial feedback that we are hearing from the channel, I think the channel is broadly been fairly cautious in terms of the stock that they are maintaining. I think we feel that the channel inventory would be in the range of around four weeks, as what we have maintained in the past. I think that has been the thing. Based on the secondaries is where the buildup will happen. I think for the festive season, it is a bit early. It may be more relevant maybe for the home appliances where I think it will be more relevant, and I think that is something we will have to monitor over the next four to six weeks, and that is when we will have a better view of it.

Speaker #3: I think, in terms of the stocks that they are maintaining, we feel that the channel inventory would be in the range of around four weeks, as we have maintained in the past.

Speaker #3: I think that's been the thing. And based on the secondary, that's where the buildup will happen. So, I think for the festive season, it's a bit early.

Speaker #3: It may be more relevant, maybe for the home appliances, where I think it will be more relevant. And I think that's something we'll have to monitor over the next four to six weeks, and that's when we will have a better view of it.

Speaker #3: In terms of the capex for '27–'28, there is no material major capex. I think we already had done the capex for Chennai a couple of years back. As you know, the benefit that we are sort of yielding now.

K.V. Sridhar: In terms of the CapEx for 2027, 2028, there is no material major CapEx. I think we already had done the CapEx for Chennai a couple of years back, as you know, the benefits that we are sort of yielding now. It will be more a maintenance CapEx, that we will sort of continue to have. No major sort of commitment from our side. The CapEx, from the Atomberg side, yes, should be ideally on a 50/50 basis. The exact quantum, et cetera, is sort of getting firmed up. Once we have better clarity, we will be able to share it with you.

Speaker #3: It'll be more of a maintenance capex that we will sort of continue to have—no major sort of commitment from our side. The capex from the Attenborough side, yes, should ideally be on a fifty-fifty basis.

Speaker #3: The exact quantum, et cetera, is sort of getting firmed up. Once we have better clarity, we will be able to share it with you.

Speaker #4: And so when we say eighteen months' runway for the commercial production, it means—correct me if I'm wrong—but our majority capex for this JV should happen over FY28 and FY29.

Sonali Salgaonkar: When we say 18 months runway for the commercial production means, correct me if I am wrong, but our majority CapEx for this JV should happen over FY28 and 29. That is correct?

Speaker #4: That correct?

Speaker #3: Yeah, that will be a fair assumption. Whatever quantum we agree on should be—yeah, should be around that time. That's a fair, fair assumption.

K.V. Sridhar: Yeah, that will be a fair assumption. Whatever quantum we agree should be around that time. That's a fair assumption.

Speaker #4: Understood, sir. Thank you, and all the best.

Sonali Salgaonkar: Understood, sir. Thank you and all the best.

Speaker #3: Thank you Sonali. Thank you.

K.V. Sridhar: Thank you, Sonali. Thank you.

Speaker #4: Thank you.

Speaker #1: Thank you. The next question is from Kalyana Bram from JV Marvin. Please go ahead.

Operator 2: Thank you. The next question is from the line of Ram from JP Morgan. Please go ahead.

Natasha Jain: Thank you. The next question is from the line of Ram from JP Morgan. Please go ahead.

Speaker #4: Sir, I have two questions. The first is regarding how much is the loss in Boltback in the current quarter? I understand that we are still not making money in that.

[Analyst] (JP Morgan): Sir, I have two questions. The first is regarding how much is the loss in Voltbek in the current quarter? I understand that we are still not making money in that. The second question is, will the margins improve in Electro-Mechanical Projects services? Because in the current quarter, I see on a comparative basis, the results are not good. What could be the future outlook in this segment?

[Analyst] (JPMorgan): Sir, I have two questions. The first is regarding how much is the loss in Voltbek in the current quarter? I understand that we are still not making money in that. The second question is, will the margins improve in Electro-Mechanical Projects services? Because in the current quarter, I see on a comparative basis, the results are not good. What could be the future outlook in this segment?

Speaker #4: And the second question is, I mean, will the margins improve in electromechanical projection services? Because in the current quarter, I see on a comparative basis the results are not good.

Speaker #4: And what could be the future outlook in this segment?

Speaker #3: Yes. So, I think the share of the JV loss for this is mentioned in the financials. Thirty-seven is what we have booked for our share.

K.V. Sridhar: Yes. I think the JV loss for this is mentioned in the financials. So INR 37 is what we have booked for our share. I think that is visible in the financials. In terms of the Electro-Mechanical Projects, I think the quarter was a bit soft from a top line, due to the execution challenges that Mr. Menon, I think outlined earlier, because of which the top line was a bit lower, also obviously the related impact from an EBIT point of view. We see the situation sort of getting gradually better. Maybe Q2 also may not be very much better. But, I think post that Q3, Q4, I think is when we feel that it should get really better, and I think that is where the recovery should ideally happen.

Speaker #3: I think that's visible in the financials. In terms of the electromechanical, I think the quarter was a bit soft from a top line.

Speaker #3: Due to the execution challenges that Mr. Menon, I think, outlined earlier, the top line was a bit lower and, obviously, there was a related impact from an EBIT point of view.

Speaker #3: We see the situation sort of getting gradually better. Maybe Q2 also may not be very much better, but I think post that—Q3, Q4—I think is when we feel that it should get really better.

Speaker #3: And I think that's where the recovery should ideally happen.

Speaker #4: Okay. Thanks.

[Analyst] (JP Morgan): Okay, thanks.

[Analyst] (JPMorgan): Okay, thanks.

Speaker #3: Thank you Rafi.

K.V. Sridhar: Thank you, Ram.

Speaker #1: Thank you. The next question is from Kalyana Arjit Shah from Three Sixty One Capital. Please go ahead.

Operator 2: Thank you. The next question is from the line of Archit Shah from 360 One Wealth. Please go ahead.

Natasha Jain: Thank you. The next question is from the line of Archit Shah from 360 One Wealth. Please go ahead.

Speaker #4: Thank you, sir, for the opportunity. Congratulations on a good set of results. So, just two questions on the compressor side. First, how much will be the localization of the compressor?

Archit Shah: Thank you, sir, for the opportunity, and congratulations on good set of results. Sir, just two questions on compressor side. First, how much would be the localization of the compressor? Like you said, motors will be manufactured by Atomberg because they have good technology. I understand that certain parts, like magnetics or something, China has an upper hand in terms of some rare earth metals. Do we need to import any components and anything? Secondly, in terms of competitiveness of this cost of compressors, while we are doing this to secure compressors for future growth, in terms of cost, how would we be placed in like for Chinese imports or Haier or EMCI who are doing here, and also in terms of LG or TE who are doing here? Just both the questions on compressors. Thank you, sir.

Speaker #4: Like you said, motors will be manufactured by Attenborough since they have good technology. I understand that certain parts, like magnetics or something, China has an upper hand in terms of some rare earth metals.

Speaker #4: Do we need to import any components or anything? And secondly, in terms of the competitiveness of the cost of compressors, while we are doing this to secure compressors for future growth—

Speaker #4: In terms of cost, how would we be placed, you know, like to like for Chinese imports, or highly, or EMCC, who are doing their— and also in terms of LG or PG, who are doing their—?

Speaker #4: So, just both the questions on compressors. Thank you, sir.

Speaker #3: Yeah, I think actually the most important item in the compressor is the motor. So that Attenborough has sort of mastered it.

Mukundan C P Menon: Well, actually, the most important item in the compressor is the motor, so Atomberg has sort of mastered it, and so that 40%, 50% of the BOM is covered from an indigenous manufacturer. There may be a few things within the compressor which is imported, that is true. But gradually, that dependence also will come down. The rest of the items initially will be imported, but gradually we will try and indigenize it at a cost-optimized kind of thing over a period of time. Our expectation is that this will be able to compete with the imports for sure. That is the way we are looking at it. The way we see it is, one is it should secure our supply chain in a complete manner that there is very low risk of anything going wrong with the supply chain.

Mukundan Menon: Well, actually, the most important item in the compressor is the motor, so Atomberg has sort of mastered it, and so that 40%, 50% of the BOM is covered from an indigenous manufacturer. There may be a few things within the compressor which is imported, that is true. But gradually, that dependence also will come down. The rest of the items initially will be imported, but gradually we will try and indigenize it at a cost-optimized kind of thing over a period of time. Our expectation is that this will be able to compete with the imports for sure. That is the way we are looking at it. The way we see it is, one is it should secure our supply chain in a complete manner that there is very low risk of anything going wrong with the supply chain.

Speaker #3: And so about 40-50% of the BOM is covered from an indigenous manufacturer. There may be a few things within the compressor which are imported.

Speaker #3: That is that is true. But gradually that dependence also will come down. The rest of the items initially will be will be imported but gradually we will try an indigenize it at a at a cost cost optimized kind of thing.

Speaker #3: Over a period of time, our expectation is that this will be able to compete with the imports, for sure. That is the way we are looking at it.

Speaker #3: So the way we see it is, one is it should secure our supply chain in a complete manner, so that there is very, very low risk of anything going wrong with the supply chain.

Speaker #3: Second is, this will certainly not hurt our competitiveness by making the product costly. That's the first sense that we have on this, actually.

Mukundan C P Menon: Second is, this will certainly not hurt our competitiveness with making the product costly. That's the first sense that we have on this actually.

Mukundan Menon: Second is, this will certainly not hurt our competitiveness with making the product costly. That's the first sense that we have on this actually.

Speaker #4: Okay, thank you. Thank you so much, sir.

Archit Shah: Okay. Thank you so much, sir.

Speaker #3: Thank you Arjit. Yeah.

Mukundan C P Menon: Thank you, Archit.

Mukundan Menon: Thank you, Archit.

Speaker #1: Thank you. The next question is from Kalyana Aditya Vikram from DB Security. Please go ahead.

Operator 2: Thank you. The next question from the line of Aditya Vikram from DAM Capital. Please go ahead.

Natasha Jain: Thank you. The next question from the line of Aditya Vikram from DAM Capital. Please go ahead.

Speaker #4: So, hi sir. I only have one question. In the last phone call, you had mentioned that the target to achieve 7–8% is a gradual process.

Aditya Vikram: Hi, sir. I only have one question. In the last con call, you had mentioned that the target to achieve 7% to 8% is a gradual process. Currently, as we stand, even during the peak summer cycle, we have not been able to significantly scale up the EBITDA margin. Do you foresee this getting a little prolonged in terms of achieving that target, or do you see that there are more benefits and scales? It seems like there is a cautious commentary coming along all the way. Just wanted to get your thoughts on that, because at 5.6%, it doesn't look like it would be. Some of your competitors have called out that it might be tricky to achieve significant increase in margins from where we stand. Thanks.

Speaker #4: Currently, as we stand, even during the peak summer cycle, we have not been able to significantly scale up the EBITDA margin.

Speaker #4: So, do you foresee this getting a little prolonged in terms of achieving that target, or do you see that there are more benefits in scale?

Speaker #4: It seems like there is a cautious coming commentary coming along all the way. So just wanted to get your thoughts on that because at five point six we are it doesn't look like it would be a and and some of your competitors have called out that it might be tricky to achieve significant increase in margins from where we stand.

Speaker #4: Thanks.

Speaker #3: Yeah. Yes, a fair question. So, if you see the results, I think—I mean, I'm sure you are keeping track of, obviously, some of the peer group also.

K.V. Sridhar: Yes, a fair question. If you see the results, I am sure you are keeping track of some of the peer group also. I think it has been a bit of a difficult quarter because of the events that are well documented, so do not want to elaborate on that. Because of that, obviously, there was an impact from a cost side. But I think most had a bit of a decrease, while we were able to get better in terms of from a margin profile versus same period last year, I think. I think some of the initiatives we called out earlier, I think has become a bit of a differentiator for us and sort of helping and supporting us.

Speaker #3: I think it has been a bit of a difficult quarter, in terms of, because of the events that are well documented. So, I don't want to elaborate on that.

Speaker #3: So, because of that, obviously there was an impact from a cost side. But I think most had a bit of a degrowth, while we were able to get better in terms of margin profile versus the same period last year, I think.

Speaker #3: So I think some of the initiatives I think we called out earlier I think has become a bit of a differentiator for us and sort of helping and supporting us.

Speaker #3: We sort of feel that this will help us. This cannot continue to help us better, and I think we want to make it a sustainable type of thing in terms of working on some of these initiatives.

K.V. Sridhar: We sort of feel that this will help us, it will continue to help us pan out better, and I think we want to make it a sustainable type of thing in terms of working on some of these initiatives, and we feel that it will sort of gradually start getting better. I think that is broadly where we see it at this point.

Speaker #3: And we feel that it will sort of gradually start getting better. So I think that's broadly where we see it at this point.

Speaker #4: Okay. So so just to follow up on that one. So should we assume that the current quarter EBITDA margin is a steady state for at least some time till the time things pan out or till the time things sort out on their own?

Aditya Vikram: Okay. Just to follow up on that one. Should we assume that the current quarter EBITDA margin is a steady state for at least some time till the time things pan out, or till the time things sort out on their own?

Speaker #3: No, I think if you sort of go through the margin profiles, if you're purely looking at the margin profile, the quarter-on-quarter margin profiles are fairly variant if you see.

K.V. Sridhar: No. I think if you sort of go through the margin profiles, if you are purely looking at the margin profile, the quarter-on-quarter margin profiles are fairly variant, if you see. From that angle, I think we will have to sort of go on a quarter-on-quarter basis and see how it sort of goes.

Speaker #3: So from that angle I think we'll have to sort of go on a quarter on quarter basis and see how it sort of goes.

Speaker #4: Okay, thanks. Thanks very much. Appreciate it.

Aditya Vikram: Okay. Thanks very much. Appreciate it.

Speaker #1: Thank you. We'll take the last question from Kalyana Ravindranath from Nirman Bank Securities. Please go ahead.

Operator 2: Thank you. This is the last question from the line of Ravindranath Naik from Nirmal Bang Securities. Please go ahead.

Natasha Jain: Thank you. This is the last question from the line of Ravindranath Naik from Nirmal Bang Securities. Please go ahead.

Speaker #4: Good evening sir. Thank you for the opportunity. Sir regarding this again this compressors so for how many in a compressor's volume we have you know the joint venture is envisaged and whether the what is the it is a whether it is a greenfield expansion greenfield investment by Attenborough and us and otherwise you know whether the the Attenborough has already taken some investment we are just augmenting the investment with the joint venture and what is the uptake for Voltas from this compressor and what is the total capacity of the compressor envisaged?

Ravindranath Naik: Good evening, sir. Thank you for the opportunity. Sir, regarding this again, this compressors. For how many compressors volume we have the joint venture with Envisage? Whether it is a greenfield expansion, investment by Atomberg in us, and otherwise, whether Atomberg has already taken some investment, we are just augmenting the investment with the joint venture. What is the uptake for Voltas from this compressor, and what is the total capacity of the compressor in Envisage? If you can deal on this. Thank you.

Ravindranath Nayak: Good evening, sir. Thank you for the opportunity. Sir, regarding this again, this compressors. For how many compressors volume we have the joint venture with Envisage? Whether it is a greenfield expansion, investment by Atomberg in us, and otherwise, whether Atomberg has already taken some investment, we are just augmenting the investment with the joint venture. What is the uptake for Voltas from this compressor, and what is the total capacity of the compressor in Envisage? If you can deal on this. Thank you.

Speaker #4: If you can deal on this, thank you.

Speaker #3: Sir, the factory that is being put up will be gradually ramped up. We will begin with smaller quantities initially, and that beginning will be eighteen months from now.

Mukundan C P Menon: The factory which we will put up will be gradually ramped up. We will begin with smaller quantities initially, and that beginning will be 18 months from now. Then we will ramp up over a period of time, starting with maybe less than 1 million, then taking it to between 1 and 2, and then eventually taking it to 2.5 plus million. That is the plan, actually. The technology exists. The product has already been made, and it is being tested right now, actually. The designs are sort of new. This product has been in development for the last year or so.

Mukundan Menon: The factory which we will put up will be gradually ramped up. We will begin with smaller quantities initially, and that beginning will be 18 months from now. Then we will ramp up over a period of time, starting with maybe less than 1 million, then taking it to between 1 and 2, and then eventually taking it to 2.5 plus million. That is the plan, actually. The technology exists. The product has already been made, and it is being tested right now, actually. The designs are sort of new. This product has been in development for the last year or so.

Speaker #3: And then we will ramp up over a period of time, starting with maybe less than a million, then taking it to between one and two.

Speaker #3: And then eventually taking it to two and a half plus million. So that is the plan, actually. And the technology exists. The product has already been made and it is being tested right now, actually.

Speaker #3: The product is, it is not that it is the designs are sort of new. We have this—this product has been in development for the last year or so.

Speaker #4: Okay. And what is the, you know, in terms of pricing, what would it be?

Ravindranath Naik: Okay. In terms of pricing, what will it be?

Ravindranath Nayak: Okay. In terms of pricing, what will it be?

Speaker #3: The price, so the economic angle, as I think Mr. Menon did elaborate, obviously the key thing was from a supply security point of view that we are sort of looking at, and also linked to the Q2 angle that Mr. Menon mentioned.

K.V. Sridhar: The economic angle, as I think Mr. Menon did elaborate, the obviously key thing was from a supply security point of view that we are sort of looking at, and also linked to the Q2 angle that Mr. Menon mentioned. The economic aspects are still being finalized as we speak, and then we will come back to you when we have better clarity.

Speaker #3: The economic aspects are still being finalized as we speak, and then we'll come back to you when we have better clarity.

Speaker #1: Thank you. As that was the last question for the day, I will now hand the conference over to Ms. Natasha Jain for closing comments.

Operator 2: Thank you. As your final last question for the day, I will now hand the conference over to Ms. Natasha Jain for closing comments. Over to you, ma'am.

Ravindranath Nayak: Thank you. As your final last question for the day, I will now hand the conference over to Ms. Natasha Jain for closing comments. Over to you, ma'am.

Speaker #1: Over to you ma'am.

Speaker #5: Thank you, Mr. I request—I request you all to please give us your closing remarks, if any.

Natasha Jain Private Limited): Thank you, Nishtha. I request Sridhar, sir, to give his closing remarks to come in.

Natasha Jain: Thank you, Nishtha. I request Sridhar, sir, to give his closing remarks to come in.

Speaker #3: Yeah. Thanks, Natasha. Just some closing comments from my side. Supported by stronger brands, differentiated products, expanding channels, enhanced manufacturing capabilities, rapidly scaling home appliances business, and disciplined execution across this diversified portfolio.

K.V. Sridhar: Yeah. Thanks, Natasha Jain. Just closing comments from my side. Supported by the stronger brands, differentiated products, expanding channels, enhanced manufacturing capabilities, a rapidly scaling home appliances business, and disciplined execution across this diversified portfolio, Voltas remains well positioned to strengthen its leadership and deliver sustainable, profitable growth over the medium to long term. Thank you all. Thanks for joining the call today.

Speaker #3: Voltas remains well positioned to strengthen its leadership and deliver sustainable, profitable growth over the medium to long term. Thank you all. Thanks for joining the call today.

Speaker #4: Thank you everyone for joining in. Have a great weekend and a happy happy independence day to all of you. Day to all of you.

Mukundan C P Menon: Thank you everyone for joining in. Have a great weekend and happy-

Mukundan Menon: Thank you everyone for joining in. Have a great weekend and happy-

K.V. Sridhar: Happy Independence Day to all of you. Yeah.

Speaker #4: Yeah.

Speaker #1: Thank you. On behalf of Philip Capital India Private Limited that concludes this conference. Thank you for joining us and you may now disconnect your lines.

Operator 2: Thank you. On behalf of PhillipCapital (India) Private Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.

Natasha Jain: Thank you. On behalf of PhillipCapital (India) Private Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.

Speaker #1: Thank you.

K.V. Sridhar: Bye.

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Q1 2027 Voltas Ltd Earnings Call

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