00:00 A lot of buzz around HABELS was created right before the numbers and when the numbers came
00:05 out the revenue growth 14% was above street expectations by a wide margin led by volume
00:11 growth in both the categories.
00:13 Margins came in lower.
00:14 It will be lovely to understand from Mr. Anil Rai Gupta about why does he believe the second
00:17 half would be so much more better on the demand front as well relative to what has happened
00:22 thus far, which also I thought actually Mr. Gupta was fairly impressive.
00:26 I mean the numbers, revenue growth of 14%, volume growth of 20 and 30%, there was no
00:33 cause for disappointment out there, was it?
00:37 I think we believe that the markets have been doing well over the last one month and a half
00:44 years.
00:45 The infrastructure and the industrial side is definitely doing better.
00:49 I think we were a bit slow on the consumer offtake overall as an industry over the last
00:55 one year or so because of the inflation, which we believe that over a period of time when
01:00 the inflation is now slowing down, that should bring back the consumer demand as well.
01:05 But unfortunately we were also hit by some unseasonal rains in the first quarter for
01:11 both, which both affected fans as well as air conditioners business.
01:16 So overall, you know, it's a mixed bag.
01:18 We are positive about some parts of businesses.
01:22 We were disappointed with the fact that we couldn't take full advantage of the season.
01:27 But going forward, I think, you know, as things normalize, we should be looking at good growth
01:32 in other segments also, other than just industrial and infrastructure segments.
01:37 Yeah, and I'll come to that as well because that is showing very good growth from you
01:40 and from your peers too.
01:42 But on the consumer side, when I see you say that you expecting a much better recovery
01:47 in the second half, is it related to a particular segment?
01:50 Because otherwise winter season may not necessarily be the strongest for ACs or maybe even fans.
01:55 So what gives you this confidence, sir?
01:58 I think overall, as I said, for the last one and a half years, there was some slowdown
02:03 in the consumer side because of inflation.
02:06 So my main hypothesis is that inflation now being settling down, the prices being settling
02:12 down and we have been seeing some uptick in the construction cycle.
02:17 So that should eventually result in consumer products like fans and installation products,
02:24 water heaters, switchgears, wires, that should see some uptake in the coming time.
02:30 So that's what's giving me the confidence that in the coming times, the installation
02:35 products, including the consumer products should start gaining.
02:39 Just wondering, could the street be underestimating the velocity of growth that comes in on products
02:46 like these because you, your peers of your size, etc., are smaller than you as well,
02:52 are talking about fairly constructive growth demand.
02:55 So is this something that comes out of growth that we haven't been able to see for the last
03:01 maybe three, four years because of various disruptions, including COVID?
03:05 Yeah, I think you're right, including COVID as well as inflation, unprecedented inflation.
03:12 So I do believe that there is overall positive expectations for the coming times, given the
03:18 investments which are happening.
03:19 Look, even the construction cycle was low for the last not only a few years, but at
03:25 least five to seven years.
03:27 And that has also seen uptick in the last one, one and a half years.
03:31 So I think generally speaking, there is positive expectations overall.
03:36 Okay.
03:37 Now Lloyds, I think your stated goal, and please correct me if I'm wrong, I'm not quoting
03:41 you verbatim, is market share over margins.
03:44 Now that served you well on the market share side, not quite serving you well on the margin
03:48 side.
03:50 Does this turn around at any point of time?
03:52 Does it even now, do you change tact at any point of time in the next three quarters?
03:58 I think, you know, the philosophy behind Lloyd has been that, you know, when we acquired
04:03 the company, it was at a particular positioning in terms of manufacturing, in terms of brand
04:10 perception, in terms of quality perception, service perception.
04:13 So company has made a lot of investments in all these fields, and that takes imports and
04:19 investments.
04:20 So the whole idea is by doing the right things, we should be gaining market shares.
04:26 And you know, with distribution reach, with brand enhancement, with manufacturing, we
04:30 today are the largest producers of air conditioners from a branded point of view in the country,
04:37 as well as having a completely control on our own technology.
04:40 So I think this is requiring investment, and we will continue to do this investment.
04:46 And so we are anticipating market share gains from that.
04:49 And hopefully this will continue.
04:51 And I believe that, you know, that's where the first objective of the company is that
04:55 we should have a meaningful, rightful market share.
04:58 And eventually with economies of scale with the operating leverage, the margins will also
05:03 follow.
05:04 So from where you are, Mr. Gupta, you reckon that that could come around at a particular
05:08 point in time or is it difficult to estimate?
05:12 I would not give any particular period of time.
05:15 But as I said, Lloyd is a long term play.
05:19 It's a huge market of over 15 billion dollars.
05:24 And I think Lloyd is still a very small player, other than the air conditioners, where we
05:29 have some meaningful market share, but there is a huge opportunity for Lloyd to grow.
05:34 So I think I'll not give any particular time because, as I said, our main objective is
05:38 to become a meaningful player in this industry.
05:40 Okay.
05:41 A lot of sell side notes and analysts who track you are fairly enthused by this whole
05:47 white label opportunity that maybe you're not embarking upon right now, maybe you've
05:51 started that some while ago, but coming into prominence currently.
05:54 Can you talk to us a bit about that?
05:58 I think I would again say that, you know, Havils has always been at the forefront of
06:04 manufacturing.
06:05 So unlike the perception that electrical products, electronic products, there's a lot of sourcing
06:12 from third party manufacturers, either from India or from China, Havils has always invested
06:17 heavily into manufacturing.
06:19 So that has given us gains, as you rightly said, also in the past, almost 30 percent
06:24 of our switchgears are exported, not only in our own brand, but also for other brands
06:32 outside of India.
06:33 So that's something which we now see as an opportunity for more product categories like
06:37 underground cables with capacity expansion coming up at Karnataka, with a new air-conditioner
06:44 manufacturing facility at Shree City, we see more opportunities coming up like that in
06:49 the future as well.
06:50 Okay.
06:51 So, to the last two questions, one is on inventory, various conversations with other cooling solution
07:00 product companies as well as with other air conditioner companies seems to suggest that
07:04 inventory is still fairly high.
07:06 I heard, I think a note or I read a note which quoted apparently you are saying or Havils
07:12 are saying that the inventory is not quite that high.
07:15 Could you clear the air for us?
07:17 Yeah, I believe the inventory in the channel is not very high because March, April, we
07:25 saw unseasonal rains and hence the trade, the channel started liquidating their own
07:34 inventory rather than picking up from the manufacturers.
07:37 And June actually saw a good summer.
07:39 So we believe that the inventory from the channel has been flushed out to a normalized
07:46 level.
07:47 It's not very high inventory at the channel level.
07:49 From the manufacturers point of view, yes, there could have been a possibility of higher
07:52 inventories but definitely the channel is not stuffed with very high inventories.
07:57 Got it.
07:58 My final question, I mean, you've given the numbers on the call as well, so I won't get
08:01 into that.
08:02 But just one macro perspective, if you will.
08:04 We are in a point of time wherein everybody is talking about India being quote unquote
08:09 the beacon of growth amongst the larger economies, but the world going through a period of fairly
08:15 sharp slowdown or if not sharp, at least a prolonged slowdown.
08:18 Do you reckon that demand, consumer demand in our country as well could pick up in the
08:24 second half or would a slowing global environment impact that too?
08:31 I think generally, India is not isolated from the global events.
08:35 We've seen that in the past.
08:39 But India has also shown resilience because of the shared demographics, the overall control
08:48 on the economy for India.
08:51 And I do believe that with some minor hiccups there, here or there, but actually global
08:57 slowdown could actually be beneficial in my terms, in my opinion, for India as well because
09:03 it could lead to some deflationary trends.
09:05 And that could actually help India in some ways, to help propel the consumption cycle
09:12 in the country.
09:13 So I think the shared demographics of the country will see long term growth for our
09:18 country, despite whatever is happening in the global markets.
09:22 And some upticks on the short term because of the deflationary trends on the raw material
09:25 prices.
09:26 That's right.
09:27 Got it.
09:28 Mr. Gupta, great talking to you as always.
09:30 Thanks for taking the time out and all the best for the quarters ahead.
09:34 Thank you.
09:35 Thank you so much.
09:36 Thank you.
09:37 Viewers, thanks for tuning in.
09:37 I'm your host, Amit Bhandari.
09:38 And I'll see you next time.
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