Voltas Ltd. Earnings Call for Q4FY26 & Full Year

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[00:00:00]Ladies and gentlemen, good day and welcome to Walas Limited Q4 FI26 earnings conference call hosted by ICA Securities Limited.

[00:00:09]As a reminder, all participant lines will be in the listenon 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 touchstone phone. At the time of the question and answer session, we would request participants to please limit their question to one per participant. Please note that this conference is being recorded. I now hand the conference over to Mr. Ranir Jooshi from ICIS Securities. Thank you and over to you sir.

[00:00:44]>> Yeah, thanks Ruya. On behalf of ICICI securities, we welcome you all to Q4 FI26 and FI26 results conference call of Voltas Limited. We have with us today senior management represented by Mr. Mukundan Menan, managing director, Mr. Ki Shrar, Chief Financial Officer, Mr. Nikil Chandrana, head of corporate finance, Mr. Manish Sanmani head of finance controller and Miss Sanatriati head FPNA.

[00:01:17]Now I hand over the call to the management for initial comments on the quarterly performance and then we will open the floor for question and answer session. Thanks and over to you sir.

[00:01:30]>> Good evening all. This is Srid here CFO Boltas. Glad to connect with you all this evening.

[00:01:37]uh this this is a quarter and year ended 31st March 26 results for Voltas. So Voltas delivers progressive recovery in Q4 supported by cooling segment and robust performance from the other diversified businesses. Uh to give a background on the global economics uh the global economy entered 2026 amid a backdrop of cautious recovery and rising uncertaintity. Moderating inflation improved financial conditions and sustained investment momentum supported economic activity during the early part of the year while global trade flows and consumption trends remained relatively resilient despite uneven uh recovery across regions. However, as the quarter progressed, escalating geopolitical tensions, particularly across energy sensitive markets triggered significant volatility in commodity prices, currencies and logistics networks, further elevating input cost pressures and downsize this to global growth.

[00:02:35]Against this challenging backdrop, Voltas continued to demonstrate resilient and progressive financial improvement supported by strong domestic demand fundamental structural reforms and the company's ability to proactively navigate supply chain and operational disruptions.

[00:02:52]Despite headwinds included including delayed summer onset in select markets uh global supply chain constraints and currency volatility during Q4 FI26, the company delivered a progressive recovery and continued to maintain its leadership in the cooling segment through a combination of resilient strategy, customercentric innovation and disciplined execution. Over the last year, Voltas has undertaken transformative init in initiatives across the B2C segment, including a refreshed product portfolio, strong stronger manufacturing capabilities, enhanced brand investments, sharper consumer communication, and deeper channel engagement. These initiatives are now beginning to deliver tangible outcomes across operational efficiency and brand momentum. The project's business also demonstrated resilience with stable execution and healthy operational performance, further strengthening Voltas' position as a diversified and a future ready enterprise. The agency business deliver stable performance in Q4 FY26. While the external environment continues to remain dynamic, management remains firmly focused on sustainable growth, margin resilience, discipline execution, and long-term value creation for shareholders. A brief on the financial performance for the quarter ended consolidated total income was 4930 crores against 4847 4847 crores last year same period PBT was 181 against 343 crores same year last period and net profit was 113 crores versus 236 236 crores last year for the year ended 31st March 26 consolidated total income was 14483 against 15737 last year PBT was 557 versus 1191 last year and net profit was 377 7 versus 834 crores last year. A bit of detail on the segments. Uh with regard to segment A which is the UCP segment, segment A was primary driven by the RAC business where Voltas further strengthened his market leadership position. Voltas continues to deliver continues to lead over the number two player reinforcing the company's strong brand equity, extensive distribution reach and consistent execution strength across markets. FYI26 marked the significant transformation phase for the Volta schooling business. The company undertook a comprehensive refresh of its RAC portfolio with sharper focus on featureled energy efficient intelligent cooling technologies and differentiated consumer experiences. Anchored in customercentric innovation, Voltas launched its summer 2026 portfolio led by AI powered vertice split AC series with features like AI adaptive cooling, AI geo fencing, AI energy manager designed for the discerning Indian consumer. This was complemented by the repositioned her voltage campaign which strengthened the brand's emotional connect with Indian consumers while modernizing its appeal for younger and aspirational households. Alongside product innovation, Voltas accelerated investments across branding, marketing, consumer communication, retail visibility, channel engagement and financial accessibility to enhance conversion and strengthen market presence across geographies. These transformation initiatives helped Voltage deliver one of the highest ever sales months in its history during March 2026.

[00:05:57]Within segment A, commercial air conditioning delivered strong performance supported by healthy mix of product and AMC business. Sustained urbanization infrastructure investments and rapid growth in digital infrastructure continue to drive a strong pipeline for the CAC business, positioning it for robust long-term growth. Commercial refrigeration also delivered a steady quarter while continuing to focus on institutional sales expansion, channel development, customer diversification, and introduction of new product lineups.

[00:06:26]CACR and AR continue to play an important role in deepening UCP's diversification and reducing dependence on seasonal room cooling demands.

[00:06:36]However, margins during the quarter were impacted by commodity inflation and currency depreciation. These pressures were partially mitigated through comprehensive cost reduction and value engineering program encompassing improved sourcing, deeper localization, targeted decide innovations and manufacturing efficiencies. Recent geopolitical conflicts and war related disruptions created volatility in raw material availability, logistics, energy cost and currency markets. Voltas successfully navigated these challenges through a combination of structural preparedness and tactical agility ensuring uninterrupted production and market servicing. The company now enters the current season with a more clear defined segmentation strategy, refreshed product mix, sharper premium positioning, and refreshed marketing campaign with new celebrity brand ambassadors tailored for diverse customer segments across geographies. At the same time, manufacturing investments undertaken over the last few years are now beginning to deliver tangible operational benefits. The Chennai and Punagar manufacturing facilities are currently operating at better utilization levels as compared to previous year. Voltas continues to accelerate investments in factory automation, manufacturing optimization, warehouse rationalization, and integrated inventory planning to further improve responsiveness, supply chain resilience, and cost competitiveness.

[00:07:48]Together, these initiatives are expected to deliver improved margin realization and reinforce Voltas' leadership across Indian cooling space.

[00:07:57]Voltec Voltec continues to play a strategic role in Voltas' long-term vision of building a scaled and diversified consumer durable platform with a 8.6% 6% year-to- date market share in washing machine segment and 6.2% in refrigerators in a sluggish market. Over the last year, Volv has accelerated its transformation journey through sharper portfolio premiumization, deeper localization, expanded channel reach, and stronger consumer engagement initiatives aimed at strengthening its position in the highly competitive home appliances market.

[00:08:27]Continuing with his philosophy of delivering smart technology, superior cooling performance and longlasting durability, Volbec introduced enhanced product features in the frosty refrigerator segment with improved energy efficiency, design, aesthetics, storage innovation, and consumer convenience features. In the fully automatic segment machine category, the company launched in innovation product ranges featuring advanced hygiene wash technologies, energy smart solutions and differentiated consumer centric features tailored for evolving Indian consumers.

[00:08:57]Alongside product innovation, Bullbee continued to strengthen its brand mix strategy supported by expanded retail presence, deeper channel penetration, enhanced instore visibility and stronger consumer engagement across key markets.

[00:09:09]These initiatives are steadily strengthening brand preference and improving conversion across channels while positioning Boldte as an increasingly relevant player in an Indian home appliances segment. A key strategic focus during the year has been localization and manufacturing scale up at the sins manufacturing facility. The company continues to deepen localization levels across key product categories, improving sourcing efficiencies and enhance manufacturing integration to strengthen cost competitiveness and supply chain resilience. Supported by design innovations, calibrated pricing actions improve sales mix and ongoing cost optimization initiatives. These efforts are expected to support sustainable margin expansion while building a strong foundation for long. Going forward, Volbec remains focused on expanding its energy efficient and innovation-led product portfolio while steadily scaling its distribution network and strengthening its position as an integral part of Voltas' broader home solutions ecosystem.

[00:10:06]Segment B, electromechanical projects.

[00:10:09]Segment B continues to play a critical role in strengthening Voltas' portfolio diversification strategy, helping mitigate energy uh earnings volatility associated with seasonal nature of core uh cooling businesses by enforcing the company's positioning as a diversified engineering and product solution enterprise. During FI26, the business maintained strong momentum through a sharp sharper focus on execution discipline, selective order booking, working capital management, and profitable growth across both domestic and international operations. The domestic projects business continued to secure statistic orders while increased focus on fasttrack and margin accurative opportunities across high growth sectors including electronics manufacturing, industrial infrastructure, data centers, metro and tunnel projects. These sectors continue to benefit from accelerated investments driving driven by urbanization, digital infrastructure expansion, localization initiatives and governmentled infrastructure development. These the businesses also prioritized timely execution and project delivery across multiple sites resulting in stronger cash flows, improved execution efficiency and enhanced profitability. Greater emphasis on project selection, milestone based monitoring, disciplined receivables management and tighter operational controls continue to strengthen the quality of the order book and improve overall business resilience. While the international project business, geopolitical tensions within the international projects business, geopolitical tensions and Middle East conflict created operational disruptions across travel, logistics, site execution and commercial uh settlements. Despite these challenges, Voltas responded with agility and discipline by activating dedicated crisis response teams, implemented employee safety protocols, strengthened travel controls and evacuation readiness, and establishing a rigorous daily monitoring framework covering critical operations, liquidity and collection management and project execution. These measures enabled the company to effectively mitigate risks while ensuring continuity across key projects and customer engagements.

[00:12:03]During FI26, the international business also business witnessed healthy new order inflows, further strengthening the order pipeline while improved collections, tighter controls, and disciplined risk management help reduce overall risk and improve operational stability within the business. As of 31st March 2026, the total carry forward order book in segment P stood at close to 6,200 crores, providing strong revenue visibility and reinforcing confidence in the long-term growth opportunities across domestic and international projects business. Segment C. Segment C continues to strengthen the Volta's engineering portfolio through a balanced mix of industrial equipment, aftermarket services, and long-standing customer partnerships while providing stable and relatively non-essential uh revenue streams for the company. The mining and construction equipment division delivered steady topline growth during the year supported by sustained demand for crushing and screening machinery continu continuity in operations and maintenance uh and maintenance contracts and stable performance from the Mozambi Mozambi operations. The business continued to benefit from infrastructure development activities, mining sector demand and increased focus on productivity enhancement across construction and material handling applications.

[00:13:15]Alongside equipment sales, the division continued to strengthen its aftermarket and service annuity business through deeper consumer uh customer connect, improved life cycle support and enhanced service capabilities. A healthy inquiry pipeline, expanding service opportunities and stable operations across key markets provided improved visibility for future growth while reinforcing the resilience of the business model. Within the textile missionary division, the business operated in a challenging environment marked by geopolitical uncertaintity, supply chain disruptions, rising raw material cost, and cautious capital expenditure sentiment across the sector.

[00:13:50]Despite near-term market uncertainties, the business demonstrated resilience through steady execution of pending orders, strong after sales performance and continue traction in the post spinning segment. The the division also continue to focus on customer retention, service responsiveness and streng strengthening its solutions portfolio to enhance engagement in the textile manufacturers across markets. Looking head ahead, policy support measures announced under union uh budget 2026 coupled with expansion of the PLI scheme and increased focus on domestic manufacturing are expected to support gradual recovery of the core spinning category. At the same time, the business remains focused on accelerating growth in post spinning solutions, strengthening aftermarket service revenues and improving operational efficiencies to drive uh sustainable long-term growth. In terms of balance sheet and working capital, Voltas continues to maintain a strong and resilient balance sheet providing the financial flexibility required to uh navigate a dynamic operating environment while simultaneously supporting strategic growth investments across businesses. The company's disciplined financial management approach combined with prudent capital allocation and title operate tighter operational controls has enabled it to maintain a healthy liquidity position despite ongoing macroeconomic and geopolitical uncertainties. During Q4 FI26, focused efforts on working capital optimization led to a reduction in working capital borrowings. Net working capital remained tightly managed, supported by discipline receivable corrections, payment optimization, and prudent inventory management.

[00:15:20]Inventory levels during the quarter remain moderately elevated, timely driven by proactive readiness for the peak summer season. Strategic stocking for new product launches and precautionary planning in response to supply chain volatility and geopolitical disruption. However, the inventory buildup was calibrated and aligned with anticipated demand trends with gradual normalization expected as seasonal demand momentum strengthens. Overall, the company exited the quarter with a balanced and well-managed working capital profile, reinforce reinforcing its ability to support future growth opportunities while manufacturing financial resilience and operational agility.

[00:15:54]Outlook and strategic direction in environment marked by continu continued geopolitical uncertaintity, supply chain vulnerability and evolving consumer dynamics. Voltas remains firmly anchored in strategy of discipline growth, operational agility, and long-term value creation. Over the last year, the company has undertaken transformative init in initiatives across its business, including a comprehensive refresh of its product portfolio, expanded manufacturing and localization capability, sharper brand positioning, and fresh marketing campaign, deeper channel engagement, and strong execution discipline. These strategic initiatives are now beginning to translate into cost optimizations, operational efficiency, and business resilience. With the ongoing season, the company remains optimistic about demand trends across product categories supported by improved consumer sentiment, increasing premiumization, rising urbanization, and continued infrastructure in investments across the cooling business. Multas refreshed RSC portfolio, differentiated product positioning, intelligent cooling technologies, and expanded distribution reach are expected to further strengthen market leadership while driving a more favorable product mix and improve profitability. Volteb continues to strengthen Voltas' long-term vision of building a scaled home appliances platform through premiumization, product innovation, deeper localization at the Sanon manufacturing facility and expanding uh retail and channel presence across markets. These initiatives are expected to steadily improve brand presence, market penetration and operate leverage over the medium term. Within the project's business, the company remains focused on selective order booking, execution, excellence, cash flow discipline, and strengthening project profitability across both domestic and international corporations.

[00:17:30]Across businesses, cost optimizations continues to remain a strategic priority with sustained focus on sourcing efficiencies, design, innovation, localization, manufacturing productivity, and operating leverage aimed at protecting margins and improving profitability.

[00:17:44]Thank you.

[00:17:50]Thank you very much. So we'll now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the touchstone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to please limit your question to one per participant and to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles.

[00:18:23]>> The first question is from the line of Sukrid Patel from Isite Fentre Private Limited. Please go ahead.

[00:18:29]>> Good evening to the team. I have two questions. My first question to Mr. Man is uh in your point of view, how is Volta preparing to capture future opportunities in cooling appliances and consumer durables while thoughtfully addressing challenges such as uh rising competition, input cost pressures and evolving customer uh choices, what strategic levers do you see as most important for sustaining growth and uh you know being a market leader uh in the coming quarters? That's my first question. I'll ask my second question after this. Thank you very much.

[00:19:01]Yeah, good evening everyone and thank you for joining our call. Uh I look forward to the discussions and to answer your first question uh that with on the uh appliances business as all of you know we have a we have a a joint venture with a company called Archelic and the product is called Voltar BO. Um so what uh this partnership uh sort of uh the strength of this partnership is that Veco is a is a world leader in terms of um the appliances business. So the technology, the product portfolio, the engineering, the supply chain and the manufacturing is what uh uh uh is what they bring to the table and uh so uh yeah so so the voltage appliances that joint venture which we have has all the ingredients of a successful marriage between two big uh uh I would say I think two large organizations.

[00:20:06]one on a global scale and one the largest in India. So uh they use their techn we use their technology and their manufacturing progress and our uh very strong mode which is our distribution and understanding the Indian market that is as far as the durable uh space is concerned.

[00:20:27]the cooling uh as far as the air conditioning this is is conc concerned the we are pretty as you know we have been a leader in this space for quite some time and um the uh strength of a Voltage brand uh coupled with the kind of mo we have with respect to our uh distribution reach is phenomenal. I think that is what we continue to leverage. uh you would have noticed that this year we have launched a series of new products which is uh more featurerich. There is a lot of new features in that like we have introduced a lineup with AI um which essentially has features like uh as Shreza had mentioned in his initial address like geo fencing like adaptive cooling and also energy manager. These are features we are always one up as far as this is concerned and we will continue to introduce products which will uh keep us ahead of the curve. So I think this combination of u uh having the right channel with a products which is always uh uh ahead of the curve is what will ensure we know the competition is severe. uh this is an area which um has a lot of uh participants almost 60 brands operate in the space but I think what we bring to the table is uh the Tata trust uh plus the fact that our distribution reach is phenomenal. Uh you would have also noticed that we have refreshed our entire marketing campaign this time we had uh earlier uh Voltas had a had a different style of marketing. This year we had onboarded two brand ambassadors, celebrity brand ambassadors uh uh Ranir Kapoor and Nitul Kapoor and this this is helping us in a big way in terms of that journey towards um becoming an aspirational brand. So I think we have all the right uh ingredients to take it forward. The competition play is always there and that will continue. We do not see it receding.

[00:22:30]>> Thank you. My second question to Mr. uh Shar Mr. Sha is uh as Boltas continues to benefit from demand in cooling appliances and home solutions, how are you prioritizing capital allocation between capacity expansion, R&D and uh shareholder returns and what long-term uh cost efficiencies are been put into place to uh safeguard margins amid u rising input and financial costs. Thank you.

[00:22:57]>> Okay. So I think uh as I highlighted in the uh the spiel, Voltas is a fairly diversified business as you would have seen and I think it's it was more relevant this year to see the segment uh segregation between the three segments in the profitability. So the capital allocation is done sort of fairly diligently across the segments while we also constantly look at the any capacity enhancements where whichever needs whether predominantly comes in the segment A as you can make out but purely from any capital allocation or any investments required we are sort of looking at all the three segments together because it's a fairly diversified business but from pure capex point of view it's a seg which sort of needs periodic investment and we are sort of doing investments from a capacity point of view, from an R&D point of view, ongoing if you see the last two years, 3 years and also this year we plan to continue doing in terms of the profitability angle that you're referring to. Our focus is obviously to drive topline because what we feel is the headroom for growth within the larger cooling segment and appliances is very high for us. We want to drive topline very very actively and in the process we hope and I'm sure we will have the efficiencies of scale where the margin profiles would sort of margin in absolute will sort of keep growing and continuing to grow on an ongoing basis and give back shareholder value. So that's the broad strategy that we are sort of trying to work on and irrespective of the obviously we would have seen some geopolitical tensions over the last quarter or so but Voltas as a company had started working on an active cost uh reduction program almost 9 months back and as you see some of these programs obviously take some time for some efficiencies to come in but we are sort of seeing some of the benefits that we has already actioned some time back we started seeing the benefits it's also true that some of some of the benefits got offset by the inflation inflationary measures and also the currency impact. But the continual program for cost efficiencies is something we are trying to institutionalize and make sure that we have a continuous program of cost improvements running.

[00:25:12]>> Thank you and best wishes.

[00:25:14]>> Thank you. Thank you.

[00:25:16]>> Thank you. Participants are requested to please question to one to participants.

[00:25:23]The next question is from the line of Manoj Kohi from Aquarius Capital. Please go ahead.

[00:25:28]>> Yeah, thanks for the opportunity sir. So my question is on the margins. If you look at the reasons that we highlighted about commodity inflation and I am depreciation but when I look at the company level our gross margins have declined by only 85 basis points. But when I look at the segmental margins there has been a bigger deterioration.

[00:25:51]when I look at the unitary products margins which are close to around 3.2% for FI26 versus 8.4% 4% in FI25 probably how we look at the margins during FI27 and 28 given that you have highlighted about lot of measures undertaken for cost rationalizations and in fact better utilizations at both the facilities if you can give some outlook on the margins and probably how should we model uh margins for FI 27 and 28 that's my first question sir Okay. So thanks. I think a very relevant uh point raised. uh I think the uh margins dilution that you see in the segment a I think predominantly as you know we have had the discussions during the uh cost quarterly discussions also were predominantly sort of from the quarter 1 and quarter two where obviously there was a significant overhang with regard to the summer which was a bit erratic early monsoons because of which there was a stock overhang also in the channel and also all the manufacturers and the marketeers also had so that was a significant an impact.

[00:27:02]So from there if you in terms of thought process that we have had what we have communicated is a progressive improvement in the absolute margins and also gradual improvement in the profile.

[00:27:14]So I think that is what we are actively trying to sort of work on in terms of improvement. Should it get better from the number that is sort of highlighted in FI26? Definitely it should get better. But as you can make out the some of the challenges are fairly uh in a way structural in the sense because of the continued uh issues that we having from a supply chain angle or the currency. So we are monitoring it extremely actively uh and sort of taking corrections in terms of pricing opportunities wherever we can take we are working on all those options. We want to gradually improve the uh uh topline and the margin profile and sort of reach to a level which is closer to what it was uh in FI25. It's a gradual improvement that we see at this point of time.

[00:28:04]>> Sure. So one questions on the current environment if you look at uh we are already into midsummers. How things have progressed uh during the month of April and May? also the outlook on the current season and probably how things are panning out at both secondary as well as at primary level and how should we look at FI27 as a year.

[00:28:28]>> Yeah. So um so Manoj this um the the last year this quarter was a rather weak quarter as you know because of the uh weak summer and the uh unseasonal rains.

[00:28:41]So we are seeing a comp in comparison to that we are seeing a very positive traction in terms of the u uh the first month April and that going into May there are there's a serious heat wave in many parts of the country so there are intermittent rains and uh uh such uh events happening in some other some some parts of the uh country. So a very positive kind of uh uh growth we are seeing and uh the secondaries are also moving fast actually. So while as all of you know there was a stable change which happened last uh from January onwards when most of the brands including us started uh start started uh uh delivering the new table products into this into the channel network from from the month of March which had taken a price increase also there was a five to 10% price increase in three star and five star and uh there is a further price increase which is going on because of the commodity thing but I think the saving grace in all this was compared to last summer. This summer the GST rate has come down from 28 to 18%. So the impact on the um there it is there is some cushioning of the impact there is still the impact but uh it's it's it's been the the enormity of that impact has been softened a little bit because of the GST reduction which is which couldn't have come at a better time than now you know. So we are seeing very positive growth uh this quarter. manage.

[00:30:17]So any indication on the blended price hike that we would have taken so far or the new models >> the uh actually each model like uh as far as the first round of uh increases was concerned it was a 5% for the uh so blended was some something like a 7 8% because uh the three star is the larger portion uh and the uh five star is around 25% 70 odd percentage is the three stars. So a blended of 78 was only on account of the u uh the table change. There was in addition there was some other impact because of the copper and commodities going on going up even before the war started you know. So there that also played a role. So there has been another 1 or 2% which we have further increased and as of now uh last month we had again taken an increase because of all this dollar devaluation and all the rupee devaluation and so on and so forth. So uh the the trend is certainly on a upward trajectory but uh the only saving grace was that that reduction in GST which was tantamount to a 7.8% 8% on selling price 10% reduction is equal to 7.8% on M OP that was that was a welcome thing it otherwise the entire affordability thing would have really led to a contraction of demand for we are not seeing that at all now may request Mr. miners to please rejoin the queue. We have participants waiting for the turn. Thank you. Ladies and gentlemen, we will request you to please limit your question to one per participant. The next question is from the line of Natasha Jen from Philip Capital. Please go ahead.

[00:32:05]>> Thank you for the opportunity. Good evening gentlemen. You mentioned in your press release that March has been the strongest month for you. Now we understand that there was a lot of inventory pushing in March brought by the industry itself. April at least in midappril it wasn't the best of season in terms of rains and now you've mentioned that secondaries have ticked up very well but against that uh what at least we are seeing is that primaries are still soft and um in terms of the price hike also what I've understood is the newer price hike inventory is probably still not passed on to the trade so on that backdrop um how do you see margins in this quarter given this is the most important quarter and any cost escalation from your do you think that may dent the demand itself for the season? Thank you sir.

[00:32:54]>> So uh the way I you you said it right actually the um uh what happened was there was a uh if you if you recall in the month of December the channel had stocked up heavily on the old table and that had taken the December uh the January and the February sales were a little mellow. March was a superb month.

[00:33:17]It was a record high in our entire history, you know. So we hit a very high number and April also we have almost uh done very close to that number. So April has also been extremely buoyant. May is also looking good. uh in any kind of a price increase with the channel uh the when there is a price increase with the channel the the first tendency of the channel is to hold back on the uh purchase assuming that things will uh come down but when the secondaries start picking up and then they feel that is a likely shortage the secondaries start picking up so we are seeing a similar trend in the month of May also the high price the higher price products are now started getting absorbed by the channel and we feel that this quarter will be a very good quarter. Natasha, >> sorry to interrupt. May we request Miss Natasha Jan to please rejoin the queue.

[00:34:13]Thank you. The next question is from the line of Umang Meta from Kotek securities. Please go ahead.

[00:34:18]>> Hi. Uh thanks for the opportunity. My question was again on margin. So from what we understand fourth quarter uh would have seen some old cost inventory, right? the most bulk of the cost inflation which we've seen uh will likely hit you in one Q. So in that context I would like to know what was the impact of this FX losses which is around 55 cr in second half. How much of it hit you in fourth quarter? Uh how much was the incremental spend on uh marketing or brand uh uh ambassadors that you called out and uh the price hikes that you've taken? What conviction do we have of seeing items improve from here going forward? Thank you.

[00:35:01]>> Okay. So on the uh on the spent uh part uh sorry first on the uh split on the uh old inventory new inventory for Q4 as you know uh we had opportunities to continue sort of selling the old inventory uh during the first half. So we sort of consumed pretty much the entire older inventory by around the first four to six weeks of the quarter.

[00:35:24]So and after that is when we started selling the uh new inventory. Uh you are right in terms of cost obviously the mix was uh there between the old and new during the quarter. So it was not entirely a new uh table only during the quarter. So you're right from that angle. uh as far as the uh the impact of the uh I think I've elaborated the fact that we have had a few rounds of uh corrections that has happened in terms of some of the inflationary measures that took place even before the crisis that we had in the Middle East. Even then uh some of the uh commodity prices increase were there and it got sort of compounded because of subsequent increases and the currency devaluation in in during March. So there was a multiple impacts that that sort of got happened which impacted the margins for the quarter. We are progressively sort of passing on as Mr. Manin mentioned in terms of the pass on of the uh price increases that we pass on. Uh it's sort of uh settling down in terms of the price increase. I think that is where we are at this point of time. Uh in terms of the uh marketing uh it was sort of managed within the overall marketing pool. no specific sort of uh it was sort of comparable to what we have been spending from a marketing side. Nothing separate that we had to sort I mean obviously we spent on the uh brand brand ambassadors but nothing sort of uh out of the ordinary.

[00:36:50]>> Thank you. The next question is from the line of K Panda from ICIC Credential Life Insurance. Please go ahead.

[00:36:58]>> Uh thank you for the opportunity. uh just one question uh on the uh profitability side. So you mentioned uh uh blended 56% kind of price hike. I believe inflation is much higher. So just want to reconcile uh the uh your statement that we will try to achieve FI25 profitability is more of as expiration. So how should we see profitability journey for FI27?

[00:37:27]So, so essentially the uh the the blended one of five and 10% increase was purely on account of the table change the new table products. In addition, we had taken another rate increase for the commodity prices which had gone up pre-war also. And now those as this our stock of those old materials get over we going forward we are watching the pricing the the price increase that we are seeing is quite significant as you had rightly mentioned and uh when when uh we as well as all other brands who are in the space have to start using those new commodity prices for the products. Uh I think this will be a pass through for most of the brands. I do not see a challenge there. Uh that number can be significantly higher. We don't want to get that number now because uh many of the things like the uh dollar, the plastics, the aluminium for example, the copper, the gas, all those are going multiple movements are happening and I completely agree that these numbers are not by any stretch of imagination uh a small number. We are seriously talking about double double digit uh inflation and it will get passed through as and when the cost starts feeding us.

[00:38:49]Understood. Just one clarification on that. So um you you think that you can go back to FI25 margin in 20 FI27 itself?

[00:39:00]>> Uh this is a progressive movement that we are doing. So compared to those years which was FI25 I think it is a it will be a gradual step up. We have as Celer was mentioning we are very very clear about the overall quantum of gross margin that we generate and being in a leadership position. Uh we just want to uh uh sort of uh keep that as our goal rather than look at percentage gross margins is probably not driving us you know. So that is that is the way it is the quantum of gross margin is where we are looking at and um from whatever we saw in the last financial year while the secondary market share uh is uh uh showing a little different picture we have primary market share data which shows that between us and the next cluster of four brands actually there after us there is a gap of 5.1% between us and the next cluster of four brands so that the kind of lead that we have establish lish this year and that will hold us in goodstead in terms of overall margin profitability margin quantum maximization actually that's the way we see it yeah >> sorry to interrupt may request Mr. KO to please rejoin the queue. We have participants feeding for the turn. Thank you. The next question is from the line of Adita Bhartya from Invest. Please go ahead.

[00:40:25]>> Um hi sir. Uh just one part on on again hopping on this cost inflation point. Um have the increased costs related to war started hitting us or do you think uh they'll start impacting us uh in some time? uh and uh have we taken any further price increase in response to that or do you think that first quarter margins can dip significantly uh before we start taking those price increases and just a related question uh in in this particular quarter we have seen unallocated costs going up very sharply uh so so what could be the reason for that >> so uh okay so the first part of the question.

[00:41:11]Uh so the this quarter I think it will be a mix of the costs some of the cost the pre uh war vis the post again for a different reason it will also be a mix so it will be sort of progressive as Mr. Menon mentioned we have passed on certain price increases and we are monitoring the price situation also very actively and we will be open to sort of pass on any further price increases that need to be done. As mentioned our intent is to progressively work on the top line and the margin profile. It will be a progressive improvement. We not expecting any sharp downturn in terms of uh in terms of the margin profile for the quarter.

[00:41:55]Yeah, sorry the second question was on the analysis. Okay, that was primarily because of the forex uh impact and the uh the mark to market from the treasury.

[00:42:06]Thank you.

[00:42:08]>> Thank you. The next question is from the line of Reo Pavalia from Capital. Please go ahead.

[00:42:15]>> Yeah. Hi uh good evening team. Um just a couple of clarifications. Will it be possible for you to quantify the exact price action that you have taken that 78% plus couple of price hike 22% in the second round and what is the gap in terms of you mentioned double digit price hike could be expected um to fill up this gap so a if you can quantify these numbers second um can you share what was the volume for RC for us for fiscal uh 26 and lastly um can you share with us what is the broad mix of the NAP order book between domestic and international.

[00:42:52]>> Yeah. So uh yeah, thank you Renu. This was the first one about the price actions that we have taken. I'd mentioned about the new table. We have taken a 5% for the three star, a 10% for the fivestar and then we have outped up with a two to 3% increase uh for certain uh on account of the uh of the copper pricing copper impact. Um overall this has been increased. The next round of uh increase will depend on how the overall prices stabilize actually. So uh it it it depends on uh how the war situation goes and how this how the dollar react rupee dollar goes.

[00:43:35]So we we are watching it almost on a weekly basis. So at this point in time uh it looks as I said doubledigit numbers but it's for us it it will all depend on how how the situation goes and it also depends on uh how soon the current stocks of our commodities and material that we have runs out you know so based on that we will be uh we we'll have to take price action. So uh difficult to say a number at this point in time. We'll have to purely go by how the how the uh material cost starts hitting us and progressively it will get passed through. On the second thing on the volume we have done 2.25 million units last year which is uh this is what I said there's a a gap of roughly 5.1% between us and the nearest bunch of four competitors. All of them are within 10,000 machines of each other. But the lead is becoming increasingly large between us and the number two group. So that is on the volume. Order book between international and domestic is 6,200 crores and u uh that it's it's it's a it's a very healthy order book that we have and um with a very uh very prudently selected order mix uh uh which which will deliver very robust profitability to us going forward.

[00:45:05]>> Thank you. The next question is from the Nina Vakshin Tar from Fidelity. Please go ahead.

[00:45:11]Yeah. Hi sir, I have couple of questions on the electro mechanics.

[00:45:14]>> I'm sorry to interrupt you Mr. Tak. We are unable to hear you clearly sir.

[00:45:18]>> Is this better?

[00:45:20]>> Yes, please.

[00:45:22]>> Sorry. Uh on the electromechanical projects business. Could you just help us understand in the international on domestic businesses?

[00:45:32]Have you had any clients call out major?

[00:45:35]That was question one. And question two was uh you know historically we've seen some margin volatility when material prices goes up. Uh any read through from the past cycles where you know you saw metal prices move up as sharply as that did. Uh two questions on that and I had one more on UC which I'll follow up after.

[00:45:57]>> The sec the second one takromechanical projects. I understood what your question is. The second one is on what I think that is. Yeah.

[00:46:07]>> So, so first one was a force major being listing and the second one was what happens to margins in that segment because you you have bid level margins and then commodities have been volatile.

[00:46:17]So, do you expect volatility in the margins in the project business as well?

[00:46:22]>> Uh yeah. So, essentially on the we have not had any clients even internationally or domestic u have any force measure applied. So we there is nothing of that sort. For a short period in the in Qatar there was uh the contractors were given the uh opportunity for using force module for a short period of time which got revoked. So nobody has used it and we have not affected in any which way.

[00:46:48]As far as the um domestic of course none of the nothing nothing of that sort has happened and uh we do not see any impact on the margins for the MEP segment because uh uh one is uh almost like 40 to 50% of our project uh MEP order book in India and some of them even in international has has got a proper price variation clause so any variation in terms of commodities materials as well as for labor gets it's a pass through thing. So we do not see that impacting in any which way. So that's in a very safe zone. There's nothing to worry on that actually.

[00:47:29]>> Excellent. One last question from my side on the uh unitary product business.

[00:47:36]uh you know you've been kind to share the kind of price hikes that have been taken and you did mention that you don't see impact on uh margins but you know the problem for us as investors right now is to gauge what is the level of margins from which you are making that commentary because normative margins have been maybe 88 8 and a half this year's margins have been three and a half so when you say you don't expect margin pressure what is the level from which you are making that commentary >> yeah so uh Mr. Tak the thing as I had said the uh overall uh uh margin uh percentage profile will gradually inch up towards the uh uh towards what we said is that uh number of FI25 how many quarters it takes it depends on how the overall market uh uh see the essentially in this kind of thing the demand plays a very big role. What if you were to step back for a year for a for a minute and then see what is the what what got us to that high margin profile a good margin profile in FI25 was the demand. What caused the pain in terms of the reduction in the margin profile was again demand. The first one was high demand. The second one was poor demand.

[00:48:55]Now this is one of the most important factors. So uh to my mind the commodity volatility uh the uh the changes in the prices for all these things uh will generally get passed through by every single uh all brand including us. What will what will really affect is the demand. Now if if the war continues and if there is uh there is an inflationary trend and the affordability of this product there is a contraction in demand the margin we will take much longer for us to inch up. But if there is a uh the the heat the summer the the impact of the summer there is a u there is the affordability is not very badly affected. And the third most important variable between brands is who got stocks to be able to service the channel partner. So uh on uh it the first two is a equalizer for everybody.

[00:49:58]The third one we seem to be in a much better place since we are much better prepared in terms of our inventory to take care of the uh peaking in demand.

[00:50:08]So we seem to be at least a few steps ahead of most of the competitors and that will that that will play a positive role in that inking up as and when it happens but it's a pure demand supply uh issue you know so we'll have to play it by that yeah >> thank you the next question is from the ler Sadhhat bera from Nomura please go ahead >> yeah thanks for the opportunity sir uh first is on the AC volume so how much uh was the volume for the entire year in FI20 26 if you can highlight and what are you thinking about the next year uh and uh in terms of uh the CR and CAC if you can also highlight the contribution for this quarter uh and we had talked about some challenges in the CR side as well in the past. So has that sort of achieved normal margin levels or you think it will take a bit more to uh improve there?

[00:51:04]Yeah. So see that the last year actually the overall industry had a difficult year. So uh I I think the industry saw a degrowth of something like 10 12% is what the best guess is. Last year the primary sales of all brands put together was 14.3 million units. Actually that was the total number and um uh this includes all the brands the 60 brands. So out of which there there are 12 of them are big brands and the rest of it is a bunch of other brands.

[00:51:35]Now projection for going forward this will certainly uh expected to grow at least 15 to 20% is what we feel because the last year base was a little weak. So that's on the room. As far as the commercial refrigeration was concerned last year has seen a degrowth of roughly around the industry had seen a degrowth uh of roughly 5%. Uh Sidas if you know the CR commercial refrigeration is also a product which is a high impact on the intensity of the summer. For example, the product like defreezers has got a uh uh direct relevance to the heat because the ice cream uh freezer demand starts peing when there is the temperatures are high and it it reduces when the temperatures are not as good. So the people uh even the OEMs the big Amul the Wadilal the have or the world the Aron ice creams all of them stop buying freezers when they see the season is not going too well. Same is the case with Vic coolers. Vic coolers is the beverage cooler which we give to all for storing of beverages. Um and there again there is a direct linkage to the summer. So both these categories saw a major dip last year and that was because of the season unseasonal rains. So uh so here again it is a pure function of summer.

[00:52:57]If the summer is strong and this year we are seeing a good summer so this category also is likely to grow upwards of 10% at least if not more. Commercial air conditioner is another category which has no relevance to the intensity of the summer. It's purely a B2B business driven by uh the air conditioning requirement of offices uh restaurants uh whether it's health clubs, parks, boutiques all these kind of things. This is and then of course there is a big segment which is coming up for the commercial AC is the manufacturing sector which is growing very rapidly in India. So a lot of manufacturing play is coming in where we are getting a lot of inquiries for the manufacturing thing. So uh this is another category which the industry will grow by at least 12 to 15%. And we are as a brand are underleveraged in this and we see a huge headroom for us to grow and we are working on that. So what our CFO Mr. KB Shreza said it's capex requirements just judiciously which we put in quite quite a lot of that is going into the commercial air conditioning where we see a huge headroom for us to grow because uh the kind of traction that we are seeing in this space and the fact that we are under underleveraged in this is going to be a growth this is likely to be the next growth engine for fortas in addition to our core strength of the room air conditioners and commercial refrigeration Thank you. The next question is from the line of Pravin Sahai from Prau Silad.

[00:54:36]Please go ahead.

[00:54:38]>> Yeah, thank you for opportunity. Few uh you know data points uh uh required sir.

[00:54:43]uh the first is uh how is the channel inventory in the RAC right now if uh in terms of month or days you can uh uh you know give secondly on the your order book in the project which is 6,200 cr how much is the domestic contribution and uh thirdly how is the chen Chennai facility operating at because you had highlighted that uh the utilization level has improved from last year previous year uh at what level of utilization Dr. >> Yeah, thank you. So, quickly to give you the channel inventory is dropped dramatically. It's less than 45 days now. Probably closer to 30 days the way we see it. The order book 6,200 4,500 is domestic and the rest of it is international. The Chennai factory is now uh built up to a capacity of 1.5 million units. So, which is roughly uh uh 1.2 two lakh machines a a month is what is happening. So overall around 14 to 15 lakh is what we are doing. We have increased the capacity from 1 million last year to 1 and a half million during this year so that we can meet the demand and we will wait for another two years before we one to two years more before we do our next investment. We have built this factory for 2 million. All that we have to do a small capex to increase the capacity from 1 and a half 1.5 million to 2 million. So we almost ready for that and once the demand uh trajectory is visible we will do that sec third round of investment. Right now it is delivering 1.2 lakh units a month average uh on an annual basis roughly around uh 1.5 million.

[00:56:26]>> Thank you ladies and gentlemen. Due to time constraints that was the last question for today. I now hand the conference over to management for closing comments.

[00:56:40]Thank you. Thanks for all your questions and uh the discussion. Uh just to summarize uh as Voltas moves forward, the company remains encouraged by the strong momentum across its businesses and significant opportunities emerging across schooling, home appliances, engineering products and projects.

[00:56:59]Voltas has completed a structural transformation exercise across business verticals, portfolio, product portfolio, channel expansion, cost optimization, supply chain and business processes which should help Voltas to strengthen its leadership in the cooling segment while steadily evolving into a scaled future ready home appliances and engineering solutions enterprise. Thank you all for the discussion. Thank you.

[00:57:25]Thank you ladies and gentlemen on behalf of ICA Securities Limited that concludes this conference. Thank you for joining us and you may now disconnect your lines. Thank you.