Eureka Forbes Limited — Q2 FY26

Eureka Forbes Ltd Q2 FY2025-26 Earnings Conference Call https://www.youtube.com/watch?v=1DwDMG__7v0 Published: 6 months ago

0:00 Ladies and gentlemen, good day and welcome to Ureka Forbes Limited's Q2 FY26 earnings conference call. 0:09 9 seconds We have Mr. Pratik Pota, managing director and CEO and Mr. Gorav Gandhel, CFO Eura Forbes with us. 0:19 19 seconds As a reminder, all participant lines will be in the listenonly mode and there will be an opportunity for you to ask questions after the presentation concludes. 0:29 29 seconds Should you need assistance during this conference call, please signal an operator by pressing star and then zero on your touchtone phone. Please note that this conference is being recorded. 0:41 41 seconds Before I hand it over to Mr. Pratik Pa, please note the disclaimer. Certain statements made by the management in today's call may be forward-looking 0:50 50 seconds statements. These forward-looking statements reflect management's best judgment and analysis as of today. The 0:57 57 seconds actual results may differ materially from the current expectations based on a number of factors affecting the business. 1:05 1 minute, 5 seconds I now hand the conference over to Mr. 1:07 1 minute, 7 seconds Pratik Pota. Thank you and over to you sir. 1:13 1 minute, 13 seconds Good afternoon and I welcome you all to the Q2 FY26 earnings call of Eureka Forbes Limited. I'm extremely pleased to 1:21 1 minute, 21 seconds share that quarter 2 was an important milestone quarter for us. 1:27 1 minute, 27 seconds We delivered a strong revenue growth of 14.9%. 1:31 1 minute, 31 seconds Driven by high teams growth both in our products and in our service business. 1:37 1 minute, 37 seconds For the first time ever, we added more than rupees 100 crores of revenue year in a quarter. 1:45 1 minute, 45 seconds This growth was not only in the context of a challenging external envi environment but also on the high base of 1:52 1 minute, 52 seconds a 13.6% growth of last year. Our focus on building and expanding our 1:59 1 minute, 59 seconds product categories is playing out well in water purifiers. Our 2 years range 2:06 2 minutes, 6 seconds aimed at lowering the lifetime ownership cost for customers has expanded well and driven growth. In addition, our smart IoT range also began scaling up well. 2:19 2 minutes, 19 seconds We saw very very encouraging traction to our products during the festive season both in online and in offline channels. 2:28 2 minutes, 28 seconds In cleaning, our focus on driving convenient cleaning continued and it gave us encouraging results in the 2:36 2 minutes, 36 seconds quarter. Our robotics range grew at a very strong pace on the back of the premium additions to the portfolio. the 2:44 2 minutes, 44 seconds Forbes Smart Clean auto bin and the Forbes Smart Clean fully automatic cleaning station. 2:49 2 minutes, 49 seconds With the growth and the growing salience of robotics, which now contributes to nearly 60% of VC sales, the cleaning 2:57 2 minutes, 57 seconds category has now emerged as a powerful growth engine for us. 3:03 3 minutes, 3 seconds With this quarter, our products business has delivered consistent and broad-based double-digit growth in every single 3:11 3 minutes, 11 seconds quarter over the last two years. We expect this momentum to sustain in the periods ahead. 3:20 3 minutes, 20 seconds I'm also pleased to share that we have recently inaugurated a revamped R&D center in Bangalore and this will add 3:27 3 minutes, 27 seconds more muscle to our product innovation capabilities. Excuse me. 3:33 3 minutes, 33 seconds On the service side, the business turnaround continued and indeed gained momentum 3:41 3 minutes, 41 seconds after a double-digit growth in quarter 1 in a service AMC bookings. Our growth trajectory accelerated in quarter 2 with 3:48 3 minutes, 48 seconds overall service revenue including AMC bookings growing in high teams. 3:54 3 minutes, 54 seconds This growth came on the back of both growth in our AMC count as also in an increase in ASP driven by a higher mix 4:02 4 minutes, 2 seconds of multi-year AMC's which as you can imagine lead to a better customer lock in going forward. We have strong plans 4:10 4 minutes, 10 seconds lined up for service and we expect this momentum to continue without a shadow of doubt. 4:17 4 minutes, 17 seconds In addition, we strengthened the interventions aimed at improving customer experience. This in turn led to our customer service KPIs stepping up 4:26 4 minutes, 26 seconds significantly and reaching an all-time high. 4:31 4 minutes, 31 seconds On the profitability front, quarter 2 adjusted IBIDA crossed rupees 100 crores for the first time ever with a lifetime high margin of 13.1%. 4:42 4 minutes, 42 seconds Ourida margin expanded 162 basis points yearon year during the quarter even 4:48 4 minutes, 48 seconds after a 21% increase in advertising and promotion spends. 4:55 4 minutes, 55 seconds It is clearly evident that operating leverage is playing out for us going forward as we increase the scale of the 5:02 5 minutes, 2 seconds business with gross margins remaining healthy. This will create a positive and virtuous cycle giving us additional 5:09 5 minutes, 9 seconds headroom for both growth investments and profitability improvement. 5:15 5 minutes, 15 seconds Our profit after tax in Q2 was rupees 61.6 crores at a pat margin of 8% growing 32% over last year. 5:27 5 minutes, 27 seconds In summary, in a difficult market environment, we delivered a very strong quarter in Q2 with a very healthy growth 5:35 5 minutes, 35 seconds in a product categories and in the service business along with a step up in our profitability. 5:42 5 minutes, 42 seconds Looking ahead, our focus will remain on category creation and on driving growth through increased awareness, 5:49 5 minutes, 49 seconds affordability, availability, and affinity for all our categories. 5:55 5 minutes, 55 seconds In addition, we will deliver a significantly improved and best-in-class customer experience and also drive service revenue growth both through AMC's and through filters. 6:06 6 minutes, 6 seconds We remain confident of driving sustained double-digit growth with a year-on-year margin expansion in the periods ahead. 6:15 6 minutes, 15 seconds Finally, before I conclude, I just want to say that we are looking forward to hosting you at our upcoming investor day 6:22 6 minutes, 22 seconds on November 27th in Mumbai. Uh meeting you in person and sharing our plans for the next phase of our exciting 6:30 6 minutes, 30 seconds transformation journey. With that I now hand you over to Gorov to give some more flavor on our performance. Gorov, 6:38 6 minutes, 38 seconds thank you Pratit and good afternoon everyone. 6:41 6 minutes, 41 seconds Starting off with the Q2 headline numbers. Our revenues at rupees 773 crores grew by 14.9% on a year-on-year 6:50 6 minutes, 50 seconds basis. Product business continued its momentum and registered high teams growth. This growth was volume and mixed 6:58 6 minutes, 58 seconds and we saw strong growth in both the economy and the premium segments. On the service side, we continued to witness 7:05 7 minutes, 5 seconds good traction which began from Q1 this year. AMC bookings growth accelerated and grew by strong double digits in 7:12 7 minutes, 12 seconds value. This was driven by both volumes and ASPs. Within that, the multi-year AMC mix improved which helps in driving customer retention. 7:23 7 minutes, 23 seconds While the reflection of service bookings and financials will come with a lag due to service amotization, this provides a healthy revenue stream for the quarters 7:30 7 minutes, 30 seconds ahead. Our transformation interventions have taken us to a place where we believe that we will be able to drive double-digit bookings growth and service 7:39 7 minutes, 39 seconds in the quarters ahead. As well as we have communicated previously, while the revenue is amotized over the tenure of the AMC, the cost is recorded up front. 7:49 7 minutes, 49 seconds After absorbing this higher upfront upfront cost and a year-on-year increase of 21% in growth investments, adjusted 7:58 7 minutes, 58 seconds EBIDA for Q2 cross 100 crores with a lifetime margin of 13.1%. 8:04 8 minutes, 4 seconds Up 162 basis points yearon year. Moving to gross margins, our Q2 gross margins 8:11 8 minutes, 11 seconds at 56.5% were rangebound versus 56.3% last year and 25% 25 basis points higher 8:18 8 minutes, 18 seconds on a year-on-year basis. While on a sequential basis you may see a 322 bits contraction, it is important to clarify 8:26 8 minutes, 26 seconds that this has been the trend where Q2 margins tend to be lower due to seasonality led product changes. 8:34 8 minutes, 34 seconds We believe that our structural advantages and guardrails on gross margin in the form of a healthy product and service mix portfolio straddling 8:42 8 minutes, 42 seconds various price points and effective cost management give us several levers on gross margin. Gross margins from Q2 8:49 8 minutes, 49 seconds onwards will go up again. Profit after tax for the quarter grew 32% on a year-on-year basis. 8:58 8 minutes, 58 seconds I will now cover H1 in summary. Revenue at rupees 1381 crores was a growth of 12.7%. 9:07 9 minutes, 7 seconds Adjusted aida for H1 was rupees 168.5 crores resulting in a growth of 20% year-on-year. 9:14 9 minutes, 14 seconds Our margins are up 70 basis points on a year-on-year basis. Our strong cost management program has help deliver COG 9:22 9 minutes, 22 seconds savings and this is reflected in our gross margins being rangebound. 9:27 9 minutes, 27 seconds Reported PAT for H1 was at 100.1 cr with a growth of nearly 29%. 9:34 9 minutes, 34 seconds Cash flow in H1 was impacted due to work due to working capital deployment. This pattern is consistent with previous 9:41 9 minutes, 41 seconds years. Within working capital, dattors increase due to three main reasons. 9:47 9 minutes, 47 seconds Number one, Q2 is always a seasonal quarter due to monsoons and prefestive billing. 9:54 9 minutes, 54 seconds Within that the revenue mix is biased towards channels like ecom and modern trade. The standard terms of trade are 10:00 10 minutes given. 87% of the increase in dattors that you see is attributable to these two channels alone. 10:09 10 minutes, 9 seconds Lastly, ahead of the GST 2.0 rollout, customer orders were backended and more closer to the GS2 GST 2.0 applicable 10:18 10 minutes, 18 seconds dates and this also impacted working capital cycles. 10:22 10 minutes, 22 seconds These will unwind in H2 as has happened in the past. On the inventory front, besides the impact of seasonal buildup, 10:30 10 minutes, 30 seconds we've also consciously increase the stock levels of the import portfolio to ensure supply security as we progressively move to more 10:38 10 minutes, 38 seconds indigenization. This will go down. On that note, I would once again like to extend to you a warm invitation for the 10:46 10 minutes, 46 seconds upcoming investor day and we look forward to hosting you there. Thank you. 10:55 10 minutes, 55 seconds Thank you very much. We will now begin the question and answer session. 11:00 11 minutes Anyone who wishes to ask a question may press star and one on their touchstone telephone. 11:06 11 minutes, 6 seconds If you wish to remove yourself from the question queue, you may press star and two. 11:12 11 minutes, 12 seconds Participants are requested to please use handsets while asking a question. We also request you to please restrict yourselves to one question and one 11:20 11 minutes, 20 seconds follow-up. For any further questions, you may rejoin the queue. 11:24 11 minutes, 24 seconds Ladies and gentlemen, we will now wait for a moment while the question queue assembles. 11:33 11 minutes, 33 seconds Our first question comes from the line of Anerod Jooshi from ICIC Securities. Please go ahead. 11:40 11 minutes, 40 seconds Yeah. uh so congrats to the entire team for uh really excellent set of uh numbers in this quarter uh despite 11:47 11 minutes, 47 seconds having a very uh strong base. So uh two three uh uh questions one uh the vision 11:55 11 minutes, 55 seconds uh is mentioned in the uh PPT as uh D2C healthc company. So uh urope is already 12:02 12 minutes, 2 seconds doing exceedingly well in uh general trade. So why do we want to become a more of a D2C company? Uh or or the 12:11 12 minutes, 11 seconds understanding about D2C is incorrect uh in this context. Uh just just need one clarification on that. Secondly, uh it 12:18 12 minutes, 18 seconds is also mentioned about some loss of revenues uh due to GST transformation uh GST 12:26 12 minutes, 26 seconds uh shift period. So, so what would be probably the loss of uh uh revenues uh during the anticipation of uh GST uh 12:36 12 minutes, 36 seconds changes that is second and uh third in terms of if you can update on the pet care products that uh we had introduced around uh three or four quarters. 12:46 12 minutes, 46 seconds Yeah. Thanks. 12:49 12 minutes, 49 seconds Uh thank you Aneru. Thank you for the wishes. Let me take your first question first. um on uh our vision to to to be a 12:59 12 minutes, 59 seconds D2C health and uh hygiene company and how does that play out given our historical strength or our historical 13:07 13 minutes, 7 seconds legacy. Uh actually if you take a step back and uh we believe that URA for was 13:14 13 minutes, 14 seconds actually India's first D2C company 40 years back um through our direct sales channels albeit in a very very physical and a brick and mortar way. 13:25 13 minutes, 25 seconds Um we have uh as we speak now a first party data of nearly 15 million customers. 13:33 13 minutes, 33 seconds Uh we reach our customers through both a direct sales channel and through a service network. We are the probably the 13:41 13 minutes, 41 seconds only durables brand that has privileged access to customers homes. More recently, we built on that that legacy 13:49 13 minutes, 49 seconds uh uh using a digital platform to build our own app. Our app now has uh more 13:57 13 minutes, 57 seconds than a million and a half monthly active users who come to us who who come to us for transacting, who come to us for looking at products and of course for 14:06 14 minutes, 6 seconds service interactions. We believe that this this uh strength that we have of being able to reach customers directly 14:13 14 minutes, 13 seconds both physically and digitally gives us a tremendous advantage as a case in point 14:20 14 minutes, 20 seconds at this time of the year where there is a lot of discussion around air quality and air pollution. uh we have mounted an aggressive campaign targeted our 14:29 14 minutes, 29 seconds installed base our existing customers to uh using just D2C channels to drive the cross-elling of air purifiers and we are 14:37 14 minutes, 37 seconds seeing some encouraging results. We believe this is a sign of things to come. So our vision of transforming into 14:43 14 minutes, 43 seconds a D2C company is merely a logical but digital extension of where our legacy lies. I hope I was able to answer that 14:51 14 minutes, 51 seconds question but happy to talk in more detail as investor. Yes sir. on the second question. 14:57 14 minutes, 57 seconds Yeah, second question. Uh uh I I'll request Gorov to just chip in here. 15:03 15 minutes, 3 seconds Excuse me. Yeah. So I think uh quarter two was an interesting quarter because there were two factors at play. Uh first 15:10 15 minutes, 10 seconds was the GST GST roll out because what it led to was a situation that ordering for nearly a 30-day period is something 15:19 15 minutes, 19 seconds which had slowed down quite a bit. So that was a negative factor which played out but equally there was an element of a positive factor as well which was a 15:27 15 minutes, 27 seconds relatively earlier festive period compared to last year. So between the two it kind of canceled each other out 15:35 15 minutes, 35 seconds and hence bring the quarter I wouldn't call out any meaningful impact on a net basis. I think from our perspective the key the key metric which is looking 15:43 15 minutes, 43 seconds quite good is the tertiary and secondary sales growth. That is what we've been focusing on and that is moving in the right direction. 15:50 15 minutes, 50 seconds Uh if if I can take the third question on uh about pet care um you're right we had launched a pet care range as part of 15:59 15 minutes, 59 seconds our first set of innovations about 2 and a half years back it met with uh with uh I think a reasonably good response from 16:07 16 minutes, 7 seconds pet owners uh and it was uh you know uh it was uh it was actively being sold 16:13 16 minutes, 13 seconds until about a couple of quarters ago are learning from the sales of the pet cleaner a pet care cleaner was that why 16:21 16 minutes, 21 seconds consumers like the the pet care vacuum cleaner. I think they were looking for slightly more comprehensive cleaning solutions. So we have now evolved the 16:31 16 minutes, 31 seconds pet cleaning and pet grooming functionality using a robotics range. So if you see a robotics range one one of 16:39 16 minutes, 39 seconds the use cases for robotics is the cleaning of pet hair that that's shed. 16:44 16 minutes, 44 seconds So uh uh we are seeing the use case of pet care and cleaning of pet hair as a big driver of robotics preference and as 16:53 16 minutes, 53 seconds we've called up talked about also in the uh you know in our presentations in earnings presentation uh robotics was a big driver of growth for us last quarter 17:01 17 minutes, 1 second and like I said one of the drivers of that also was pet care. 17:10 17 minutes, 10 seconds Yeah, sure sir. Sure. That's very helpful. Excellent. Thank you. 17:18 17 minutes, 18 seconds Thank you. Our next question is from the line of Kesha Loti from HDFC Securities. Please go ahead. 17:26 17 minutes, 26 seconds Hi, thank you for the opportunity. 17:28 17 minutes, 28 seconds Firstly, sir, congratulation on strong set of number. I want to understand one thing as you highlighted Gorov's key it is netted off. One was the festive and 17:36 17 minutes, 36 seconds second was the GST thing. So it will be a fair understanding possibly Q3 at least because of you know early festive there won't be a loss because of GST 17:44 17 minutes, 44 seconds sales and secondly in Q1 call you highlighted you know working capital because of working capital Q1 sales was impacted so has because of better 17:52 17 minutes, 52 seconds working capital at dealer labor led to better sales in Q2 or should we see more like a you know now 15% is kind of a sustainable growth rate it possibly can 18:01 18 minutes, 1 second speed up because of pick up in you know service business yeah only Your first question Keshu I 18:09 18 minutes, 9 seconds think we don't see any meaningful impact happening in quarter 3. Uh so your understanding of that is right. I think from our perspective what we are seeing 18:18 18 minutes, 18 seconds is that that the product momentum that is there is quite good. It remains quite strong. I think what is now adding to it 18:25 18 minutes, 25 seconds is is is the service turnaround. So we don't expect any meaningful impact to come through there uh because of because 18:32 18 minutes, 32 seconds of GST or or festive in quarter three. I think the only call out that I would have is that you know as you would have noticed the consumer sentiment does 18:40 18 minutes, 40 seconds continue to remain mixed you know and that is that is still getting reflected in various sectors and parts of the economy so that's the bit that you know 18:49 18 minutes, 49 seconds to what extent that plays out is there but I think outside of that uh we we don't see any impact coming through from a working capital standpoint yes in 18:57 18 minutes, 57 seconds quarter one in the initial parts of the quarter as we had mentioned trade working capital was blocked because summer products were Okay. But towards 19:05 19 minutes, 5 seconds the end of the quarter uh that had kind of evened out. So that is something which kind of you know in quarter two we 19:12 19 minutes, 12 seconds don't see any impact of that playing out and nor do we see the impact of that playing out in quarter three as well. 19:18 19 minutes, 18 seconds Uh if I can just add to that Kesher uh a couple of points that I want to underline. Uh I think the demand 19:26 19 minutes, 26 seconds environment continues to remain challenging. 19:29 19 minutes, 29 seconds uh notwithstanding that we have a strong set of plans to drive growth uh both in products and in our service business. In 19:39 19 minutes, 39 seconds products you have seen sustained also many quarters now. We we grew by high teams last quarter and uh the good news 19:46 19 minutes, 46 seconds now is that we have not just one growth engine but multiple growth engines. We have a strong growth engine in of course water. Robotics and cleaning is a big 19:55 19 minutes, 55 seconds growth engine now as are the other smaller categories of softeners and air purifiers. So we have multiple engines firing on growth. We also have renewed 20:04 20 minutes, 4 seconds momentum in our service business. We talked about an acceleration in quarter 2 and we also said that we expect this to sustain. So we are confident about 20:13 20 minutes, 13 seconds the growth prospects going forward. How that will show up in terms of given the service revenue accounting etc. So that that that will that time will tell. But 20:21 20 minutes, 21 seconds in terms of our growth vectors and our confidence in in the in the growth that lies there, I think I think we have a high degree of confidence. 20:30 20 minutes, 30 seconds Understood. Got it. Uh so my second question would be as I see your margin have expanded you know quite by 260 bits 20:37 20 minutes, 37 seconds this quarter. So when we see the brand spend is high margin you know expanding. 20:43 20 minutes, 43 seconds So is it fair to assume this year we'll see a strong expansion in margin how should we see in upcoming quarters? 20:51 20 minutes, 51 seconds So Kisham our view on margins is that you know we always look at it on a full year basis and and given the performance 20:58 20 minutes, 58 seconds that we've had in H1 uh we will continue to aim for a full year margin improvement. So that is something that you know we we'll aim for. I think very 21:07 21 minutes, 7 seconds clearly what's come across is that and you made a very good point that this is after a very high growth investment. So even the 162 bits improvement is after 21:16 21 minutes, 16 seconds the 58 bits increase in ANSP spends. So I think there are two main things I would call out. One clearly the impact 21:25 21 minutes, 25 seconds of operating leverage and number two our cost cost programs are giving us very very good outcomes. So we will we will continue aiming for a full year margin 21:34 21 minutes, 34 seconds improvement. Whether it would be similar to last year where it was nearly 120 125 basis points higher perhaps not because 21:42 21 minutes, 42 seconds that may mean that you know maybe we are we are we are holding back on on growth investments but you can expect our margin expansion to come through. 21:52 21 minutes, 52 seconds Thank you. But still I'll have a follow. Uh Kesha, sorry to interrupt. 21:56 21 minutes, 56 seconds We request you to please rejoin the queue if you have any further questions. Quesa, thank you. Sure. 22:02 22 minutes, 2 seconds Our next question comes from the line of Arenu Bed from IIFL Capital. Please go ahead. 22:08 22 minutes, 8 seconds Yeah. Hi, good afternoon and congrats team for the strong performance. Uh my first question is um can you highlight 22:16 22 minutes, 16 seconds uh how has been the mix of your products and services portfolio for the first half of the financial year and within 22:23 22 minutes, 23 seconds the product mix have we seen a material change in uh the share given that robotics has been growing at a much faster pace. So the cleaning portfolio share would have increased in the mix. 22:36 22 minutes, 36 seconds Uh thank you Reo. Um let me talk about uh your first question. Um I think as 22:43 22 minutes, 43 seconds you mentioned earlier uh we have seen a a strong momentum in our uh products and 22:50 22 minutes, 50 seconds in our service business uh last quarter and indeed in the first half of this year uh products grew by high teams last 22:59 22 minutes, 59 seconds quarter uh on the back of both strong volume growth as also an increase in ESP on the back of a premium products launch. 23:08 23 minutes, 8 seconds uh we also saw a high team growth in a service business coming like I said both from AMC as also from filters and within 23:17 23 minutes, 17 seconds AMC's it was both a volume growth as also growth in multi-year AMC given the strong momentum that we seen in service 23:24 23 minutes, 24 seconds and product there has been no material mixed change in the first half between service and product that remains uh 23:33 23 minutes, 33 seconds pretty much in the same range within the product categories uh you talked about cleaning being in robotics. Uh robotics 23:40 23 minutes, 40 seconds of a smaller base has shown very strong growth as we mentioned. Uh we've built a strong portfolio products and robotics. 23:48 23 minutes, 48 seconds We built a very uh detailed playbook uh which which works off our strengths, our strengths across multiple channels, our 23:57 23 minutes, 57 seconds strength in D2C, our strength in service. Um uh and it it's really helped grow the portfolio. So uh uh the 24:06 24 minutes, 6 seconds robotics growth and the cleaning growth therefore has been ahead of the other categories in last quarter. So the mix did move in favor of robotics and in 24:14 24 minutes, 14 seconds clear favor of cleaning last quarter. Uh I think that said it's important to also underline the fact that our gross 24:21 24 minutes, 21 seconds margins in this category are healthy and they're not they're not going to be dilutive to overall P&L as we go forward. 24:31 24 minutes, 31 seconds Sure. Um second if I may also let me also add sorry to interrupt you but just if I may just complete the answer is one more point to add. Yeah. 24:40 24 minutes, 40 seconds Um in robotics our growth has come also from a premium end of a portfolio. The full fully automatic cleaning station as 24:48 24 minutes, 48 seconds also the autobin station which come at higher gross margins and which are therefore more more clean. In water as well we have seen strong growth coming 24:57 24 minutes, 57 seconds from the premium end of of the portfolio along with economy range. So between the growth that we see in various parts of the category, we do not expect to see any margin dilution going forward. 25:08 25 minutes, 8 seconds Sorry, over to you. 25:09 25 minutes, 9 seconds Sure. And just in continuation to that, typically our volume tends to see a much better acceleration in the second half of the financial year. Uh in uh and if 25:18 25 minutes, 18 seconds that is to happen along with um sustainance of this premium portfolio makes supporting gross margins. uh do we see operating margins actually uh 25:27 25 minutes, 27 seconds heading better than first half and the second half given operating leverage as well as um sustainance of the mix that 25:34 25 minutes, 34 seconds we have seen you know that could be a possibility I think the only call out that I would have is that you know what we are what 25:42 25 minutes, 42 seconds we are seeing is and on on now a sustained basis is that all our product segments are growing so whether it is water whether it is VC whether it is air 25:51 25 minutes, 51 seconds whether it is softener and I Think hence equally the key consideration for us is also the fact that you know how do we kind of keep pushing this growth higher 25:59 25 minutes, 59 seconds and higher and whether it it makes sense to you know make slightly ahead of time investments as an uh you know as an 26:07 26 minutes, 7 seconds example if you look at quarter 1 in quarter one our our margins were down year on year but we had made ahead of time investments which have played out 26:15 26 minutes, 15 seconds now so we will keep that consideration in mind uh when we look at when we look at margin expansion but yes you know I 26:23 26 minutes, 23 seconds think with with our gross margin profile the operating average possibility is there. Uh but I think uh at this stage 26:31 26 minutes, 31 seconds to say whether it will be better than H1 maybe a bit too early but you can expect our yearon-year margin expansion to be healthy given the fact that H1 itself has clocked in at 70 basis points. 26:43 26 minutes, 43 seconds Sure. And lastly um Patik did mention that overall the demand environment continues to remain challenging. Um we 26:51 26 minutes, 51 seconds have now seen almost 20 25 days post the festive season. Uh true. Uh so have we seen a meaningful tapering down of the 26:59 26 minutes, 59 seconds volume momentum at tertiary and secondary level or it was just a timing issue and business demand is not that 27:07 27 minutes, 7 seconds weak as it was initially at the start of Tokyo. 27:13 27 minutes, 13 seconds No reu like I said uh the overall demand environment remains makes remains challenging. Um that said post festive 27:23 27 minutes, 23 seconds uh while uh while the demand environment hasn't changed materially uh we see the off takes and the tertiary 27:31 27 minutes, 31 seconds sales momentum being reasonable and in line with what happens after a typical festive peak right got it 27:39 27 minutes, 39 seconds so that's number one number two uh in that difficult de demand environment as I mentioned earlier in my in my comments 27:47 27 minutes, 47 seconds u we have a very powerful set of of initiatives to drive growth um in water 27:54 27 minutes, 54 seconds in cleaning in air and in the other other parts of the business including in service. Let me talk about water 28:00 28 minutes purifiers first. Uh in water uh we have scaled up during the quarter or 2 years 28:08 28 minutes, 8 seconds filter life range and that as you can imagine lowers the cost of ownership significantly. Uh and when we did a dipstick check to look at the profile of 28:16 28 minutes, 16 seconds the new users get we were getting we were extremely uh uh you know reassured to see and we were very pleased to see 28:24 28 minutes, 24 seconds that almost 70% of users who are buying the two years purifiers are first time category entrance. So it's ticking the box and playing to the thesis of growing penetration. 28:34 28 minutes, 34 seconds Equally our premium portfolio uh did well in quarter 2 and continues to do well in this quarter as well. Uh so 28:43 28 minutes, 43 seconds while we see the environment being a little soft as indeed it was last quarter and you saw our number delivery, we expect our numbers to be uh uh uh 28:52 28 minutes, 52 seconds reasonably good and strong and healthy notwithstanding what we see in the environment outside. 28:57 28 minutes, 57 seconds Got it. Perfect. Thanks much and best wishes team. Thank you. Thank you Ru. 29:03 29 minutes, 3 seconds Thank you. Our next question comes from the line of Umang Ma from Kotak Securities. Please go ahead. 29:10 29 minutes, 10 seconds Hi. Uh thank you and congratulations on a good set of numbers both Pratik and Boro. Uh my first question was on 29:17 29 minutes, 17 seconds competition. So uh while your numbers uh are quite robust uh we've seen a couple of new entrance kind of talk um uh about 29:25 29 minutes, 25 seconds very kind of healthy uh initial traction which they've got uh in their water purifier portfolio. uh any increase in 29:33 29 minutes, 33 seconds competitive intensity that you're picking up and uh does it concern us u in terms of our trajectory or is the 29:41 29 minutes, 41 seconds market big enough uh for us to accommodate uh these new entrance that's first question thanks u thank thank you thank you for the 29:49 29 minutes, 49 seconds wishes and I think it's a great question uh I think first of all to before I respond to it specifically I think it's important to sort of recognize that 29:58 29 minutes, 58 seconds increasing competition and the and the presence of you know the arrival of New entrance is a very clear signal that this category has promised and has 30:07 30 minutes, 7 seconds potential and uh all new entrance when they come in they create new news they create 30:14 30 minutes, 14 seconds excitement they uh they create awareness of the category and they end up driving category growth. So we welcome all 30:23 30 minutes, 23 seconds competition because we believe it's going to be creating this virtual cycle of higher growth. Uh we are the strongest brand unequivocally the 30:31 30 minutes, 31 seconds strongest brand in this category. Uh we are synonymous with trust with service with care and as the category grows we 30:38 30 minutes, 38 seconds will stand to benefit. Um our growth last quarter was healthy across all categories including in water. uh in 30:47 30 minutes, 47 seconds water we are sustaining our investments in growing penetration in growing the category and you just heard my answer 30:54 30 minutes, 54 seconds earlier about the two-year filter life c products which are draw you know drawing a lot of new users into the category and we'll also keep investing in driving 31:02 31 minutes, 2 seconds penet in driving premiumization and driving faster replacement cycles um some of the new entrance working off 31:10 31 minutes, 10 seconds a very small base may have had higher growths but I think clearly what we see as market leaders does is that there is 31:17 31 minutes, 17 seconds no impact on our market share. Indeed, in e-commerce where there was some early competitive activity a couple of years 31:24 31 minutes, 24 seconds ago, we have managed to recover and grow share to highest ever across both our our ecom platforms. Uh so while uh we 31:34 31 minutes, 34 seconds see competition, we see more activity as the leading brand in this category, we are not impacted right now and we see that it will only help drive growth for the category. 31:44 31 minutes, 44 seconds Got it. very clear and the second one was on service. So I heard you mention high teams growth in service uh uh 31:52 31 minutes, 52 seconds revenues is it because of spares uh or I mean uh if you can share some more color because if we take high teams growth in 32:00 32 minutes product then the implied revenues for service would have been lower right growth wise. 32:06 32 minutes, 6 seconds So just to clarify the high teams growth that is there is a combination of the growth in the revenue growth in filter 32:14 32 minutes, 14 seconds and the bookings in AMC. Yeah. So since it is the bookings in AMC that will come with a lag otherwise you rightly pointed 32:22 32 minutes, 22 seconds out a high teams growth in product and a high teams growth in service would logically lead to high teens growth on an overall basis. It is just that the 32:31 32 minutes, 31 seconds service amotization would come in with a lag. But the good news is that you know we are seeing growth both in our AMC bookings which will get reflected in the 32:40 32 minutes, 40 seconds quarters ahead and also in a filter business. 32:44 32 minutes, 44 seconds If I may add um to what Korav said uh our service AMC booking growth uh just the AMC bookings without the filter part 32:53 32 minutes, 53 seconds uh actually accelerated over last quarter u and therefore both parts of the service business both of filters 32:59 32 minutes, 59 seconds portfolio as also our AMC bookings have shown very healthy growth. 33:05 33 minutes, 5 seconds Understood. Very encouraging. Thank you so much and all the best. Thank you man. Thank you. 33:11 33 minutes, 11 seconds Thank you. Our next question is from the line of Mr. Achal Lohade from Noama Institutional Equities. Please go ahead. 33:23 33 minutes, 23 seconds Yeah, good afternoon team. Uh, congratulation for the great set of numbers. Um, just uh the first question, you know, in terms of premium, how do we 33:31 33 minutes, 31 seconds define premium um uh you know in the water purifier? And uh if you could just talk a little bit about the mix, what 33:38 33 minutes, 38 seconds was it like 3 years back? What is it now? what potential it has. I think that would uh be helpful. 33:47 33 minutes, 47 seconds Uh thank you Achel. In water purifiers category uh the premium segment is defined as products which are above 20,000 price point in the ARO segment. 33:56 33 minutes, 56 seconds Uh which as you can imagine is the the bulk of the water purifier category almost 90%. Over the last two or three 34:04 34 minutes, 4 seconds years uh we have driven uh you know innovations we've driven growth across the spectrum of the water purifier 34:12 34 minutes, 12 seconds portfolio. In the beginning our growth was on the back of aquagard shore which is entry-level water purifier which led 34:19 34 minutes, 19 seconds to significant volume growth and an increase in the economy part of the mix. 34:24 34 minutes, 24 seconds uh thereafter we've invested in building a premium innovation and building a premium portfolio and we saw strong growth come to us last year through the 34:32 34 minutes, 32 seconds premium business uh so on a three-year business if I zoom out our mix of economy uh has remained the same 34:40 34 minutes, 40 seconds increased marginally our mix of premium has increased and the mix of the midpric segment has shrunk a little bit because people have upgraded to premium 34:50 34 minutes, 50 seconds okay understood uh second uh sim Similarly, if you could call out in terms of the distribution mix uh the 34:57 34 minutes, 57 seconds channel mix uh you know in terms of the uh D2C um uh general trade and the uh 35:04 35 minutes, 4 seconds modern trade stroke ecom so I think as you're aware I think we have a strong omni channel presence and 35:13 35 minutes, 13 seconds all our channels contribute uh roughly symmetrically to our uh to our sales and to our revenues uh between the channels 35:22 35 minutes, 22 seconds uh last quarter We saw very strong growth in organized trade and modern trade. We saw very strong growth coming 35:30 35 minutes, 30 seconds from e-commerce. Uh and we saw strong growth coming also from a direct sales channel. Uh the channel that has been 35:38 35 minutes, 38 seconds under pressure for some time now and this is not just for us for the entire category indeed for the entire space of appliances and durables is traditional 35:46 35 minutes, 46 seconds trade which is under pressure from the organized trade channel. So that the the general trade channel uh grew it grew 35:54 35 minutes, 54 seconds but it grew less than the other channels and the engines of growth were both modern trade and e-commerce. 36:01 36 minutes, 1 second Would you be able to give the mix? 36:05 36 minutes, 5 seconds Our our revenue is by and large evenly uh spread out between the four channels give or take three to 400 basis points 36:13 36 minutes, 13 seconds between each other. Uh having said that progressively if I were to step back and take let's say a a three-year view of 36:20 36 minutes, 20 seconds the business the share of modern trade and e-com has gone up uh and the share of direct and GT has gone down 36:28 36 minutes, 28 seconds but they are by and large we we have we are by and large even and in some ways you know that also provides us a hedge you know because at any point of time if 36:36 36 minutes, 36 seconds there's a particular channel under pressure there are other levers that are available which help in kind of driving uh driving driving growth 36:45 36 minutes, 45 seconds Understood. This last question uh just to clarify. 36:48 36 minutes, 48 seconds Sorry to interrupt. We request you to please rejoin the queue if you have any further questions please. Thank you. 36:55 36 minutes, 55 seconds Our next question is from the line of Harshett Kapadia from Ara Capital. Please go ahead. 37:01 37 minutes, 1 second Yeah, thanks for the opportunity and congrats for a great set of numbers to the Eureka team. A couple of questions. 37:08 37 minutes, 8 seconds Just wanted to check uh what's the status on the rental model that we were looking to launch in the water purifier segment. Is it still on cards? Uh second 37:17 37 minutes, 17 seconds on product side just wanted to know have we still now crossed the 50% mark in water purifier for the organized uh 37:25 37 minutes, 25 seconds segment for aquag guard. Uh third is on the filter side on the as in the service side. uh has large part of the growth 37:33 37 minutes, 33 seconds come through uh you know conversion of nonureka filter customers to ureka filter customers or has it been 37:40 37 minutes, 40 seconds completely more new booking uh that we have seen growth that's the third question thank you 37:48 37 minutes, 48 seconds uh thank you both uh let me respond to your first question first uh on subscription or rentals uh as 37:57 37 minutes, 57 seconds you're aware we looked at the rental sub model a couple of years ago, we had tried a pilot in Chennai 38:04 38 minutes, 4 seconds um and uh which had gone reasonably well and we had distilled some learnings from the pilot. Um we have all the 38:12 38 minutes, 12 seconds capabilities ready now to do a scale rental play uh when when when we want to 38:19 38 minutes, 19 seconds uh however given what we are seeing as the growth opportunity and the growth runway in the conventional product business as of now we do not intend to 38:28 38 minutes, 28 seconds get into subscription. It's a readiness that we've got and that we keep on standby and activate uh if and when required. 38:36 38 minutes, 36 seconds Um on the second question that you asked uh I wasn't entirely sure of the question but let me try and respond to it and then you know in case there is 38:44 38 minutes, 44 seconds any if you need any clarifications happy to respond. uh uh as we said earlier uh the organized trade channel uh has been 38:53 38 minutes, 53 seconds a a a big driver of growth for us not just in the last quarter but over the last two or three years. Uh the organized trade and the modern trade uh 39:02 39 minutes, 2 seconds channels comprises the national modern trade players like Roma like which I say is like Reliance Digital as also regional modern trade chains. All of 39:10 39 minutes, 10 seconds these players have grown strongly over the last two or three years and have grown geographically and using the same 39:18 39 minutes, 18 seconds stock growth as well. In each of these partners, we have a strong presence and we are market leaders in the modern trade channel across the country. 39:27 39 minutes, 27 seconds Um and our share position has if anything grown even stronger. Your third question on filters uh and our service 39:35 39 minutes, 35 seconds revenue. I think uh our service revenue has grown as as we mentioned earlier on the back of both AMC bookings and with 39:44 39 minutes, 44 seconds filter growth. uh we have a large base of our Aquagard customers who are not in our AMC's and for whom filter 39:52 39 minutes, 52 seconds replacement becomes a monetization opportunity and our filter replacement uh uh growth has come a filter growth 40:00 40 minutes rather has come from tapping into the base of out of warranty out of contract customers who otherwise would have gone to the local filters market and that 40:09 40 minutes, 9 seconds will remain a big source of growth for us going forward. just to just to take a step back and remind uh remind us forbes 40:16 40 minutes, 16 seconds has historically focused mostly and in fact solely on the AMC business. It's only the last one year that we are building out a playbook for playing 40:24 40 minutes, 24 seconds participating in the filters opportunity and you'll see more of that coming along over the next two or three quarters. 40:31 40 minutes, 31 seconds Fair enough sir. Uh wishing you all the best and thanks for answering all the questions. Thank you. Thank you. 40:40 40 minutes, 40 seconds We have our next question from the line of Balas Subramanyan from Ariad Capital. Please go ahead. 40:46 40 minutes, 46 seconds Good afternoon sir. Uh thank you so much for the opportunities sir. This 2ear filter life uh I think is a key innovations and uh it will reduce the 40:54 40 minutes, 54 seconds cost of ownership for customers. Is is there any risk of canopying the high margin recurring revenue from further 41:02 41 minutes, 2 seconds replacement sales and associated uh service visits? And uh secondly, service business uh is growing doubledigit uh 41:11 41 minutes, 11 seconds AMC booking growth. The growth is coming from the existing installed base or it's heavily reliant on new product sales. 41:18 41 minutes, 18 seconds And what is the retention rate for uh AMC after the first year? 41:25 41 minutes, 25 seconds Uh thank you B. Uh on your first question, you're absolutely right. uh in that the two years filter life product 41:34 41 minutes, 34 seconds for us address a fundamental barrier uh which is the high cost perceived high cost of ownership and by addressing that 41:42 41 minutes, 42 seconds barrier uh they uh end up driving growth for us. Um the 2-year filter life 41:50 41 minutes, 50 seconds products uh make the category more affordable and more accessible and we've seen the impact of that play out. We have seen growth coming from the 41:57 41 minutes, 57 seconds adoption of the 2-year filter life products and as I mentioned earlier on the call more than 70% of customers who bought these products are first time 42:05 42 minutes, 5 seconds category entrance. So indeed they are helping uh and they're serving the objective of driving category expansion. 42:14 42 minutes, 14 seconds Um if you if you recall uh we had uh about 2 years ago launched 2 and a half years ago launched an affordable 42:20 42 minutes, 20 seconds Aquagard Aquagard shore uh to drive category growth that two has seen strong growth and this therefore is the second 42:27 42 minutes, 27 seconds step in driving category penetration uh from a from a service revenue perspective I think as we've said 42:34 42 minutes, 34 seconds earlier as well only a small proportion of our large installed base of users uh are in our AMC offering 42:43 42 minutes, 43 seconds We see immense potential to grow a service revenue by tapping into this base of customers who are outside our 42:52 42 minutes, 52 seconds AMC perview right now by driving filters and by driving access to them through the through the network of market 43:00 43 minutes technicians which are out out there in the ecosystem. 43:03 43 minutes, 3 seconds uh so between between growing our AMC revenue and tapping into this uh into this uh filters opportunity we do not 43:11 43 minutes, 11 seconds expect to see any meaningful risk on our service revenues going forward on the retention rate that you that you asked 43:20 43 minutes, 20 seconds um I think given given the fact that we have uh record levels of customer sat and customer service our retention rates 43:28 43 minutes, 28 seconds remain very healthy uh we would not be able to share and divulge the for competitive reasons. 43:36 43 minutes, 36 seconds Okay sir son that's smart question beyond water air and cleaning what are the specific new health tech uh product 43:44 43 minutes, 44 seconds categories you are exploring when we can expect to see first launches from this new new initiative 43:52 43 minutes, 52 seconds uh so ba all our current categories are in the space of health and health tech 43:59 43 minutes, 59 seconds as you may be aware we've transformed a meaningful part of our portfolio in water to being smart and being connected. Uh all our robotics products 44:08 44 minutes, 8 seconds are are you know are are smart and are are connected. Uh uh two of our top selling air purifiers also smart and 44:16 44 minutes, 16 seconds connected. Uh and therefore uh it is our objective to weave these products 44:22 44 minutes, 22 seconds together and create a network which is uh D2C which allows customers to know exactly what the consumption is of water, their air quality etc. 44:34 44 minutes, 34 seconds uh to your second part of the question uh we remain uh open to looking at new category entries but for the moment we 44:43 44 minutes, 43 seconds believe that we have an abundant runway to grow in our current categories themselves you're aware that penetration of water purifiers is merely about 6 and 44:50 44 minutes, 50 seconds a half%. Uh cleaning is even lower and error error hasn't even got started. So just between these three categories we 44:59 44 minutes, 59 seconds see a lot of headroom to grow before we start exploring other categories. Got it sir. Thank you. 45:08 45 minutes, 8 seconds Thank you. Our next question is from the line of Parikhit Kabra from PKday Advisor LLP. Please go ahead. 45:16 45 minutes, 16 seconds Hi, thank you for the opportunity and congratulations on a great set of numbers guys. Um I just had two questions. Uh first uh first is actually 45:24 45 minutes, 24 seconds the question, second is just an observation. The observation let me just say first is uh are you guys planning on giving out dividends or some kind of cash buyback uh sorry share buyback now 45:33 45 minutes, 33 seconds because um you know you're generating enough money so unless there is an acquisition that is that you have something in your sites why not give it 45:40 45 minutes, 40 seconds back uh but the question I wanted to ask was on the services part which was that uh you know historically we have been discussing about how there are edge 45:48 45 minutes, 48 seconds cases in our service services uh that create horrendous experiences for our customers and that has a massive overhang on the overall all feel the 45:57 45 minutes, 57 seconds perception of our services uh quality of our service. So how have you like you know what incremental steps have you guys taken in that space to improve and 46:06 46 minutes, 6 seconds you know reduce the number of edge cases and specifically if you can comment on one of the issues that I have raised in the past which is the tenants issue 46:15 46 minutes, 15 seconds the 210 issue we got it you want to answer the first question first yes I I I think on on the on the 46:22 46 minutes, 22 seconds dividend and share buyback uh option I think you're right that it's a Hindi cash position and and this will only 46:29 46 minutes, 29 seconds improve improve going ahead. So I think that uh that that remains an option. 46:35 46 minutes, 35 seconds Having said that, you know, our our bias at this stage of the transformation would be towards looking at growth opportunities uh and that is an ongoing 46:43 46 minutes, 43 seconds process. Uh but yes, at an appropriate point in time, if the board feels that you know uh it has to be in the form of 46:52 46 minutes, 52 seconds you know rewarding shareholders through dividend or share buyback, we would be open to it. But as I mentioned, our bias would be towards uh growth investments. 47:01 47 minutes, 1 second Thanks thanks DK and P if I may turn to your uh second question on how we are 47:08 47 minutes, 8 seconds handling edge cases. Uh I think uh first of all I think we are acutely aware and cognizant uh of the importance and the 47:17 47 minutes, 17 seconds need to contain and to mitigate the impact of edge cases. Um like I said earlier uh our our customer sat scores 47:26 47 minutes, 26 seconds on an average have improved both in the last quarter and more longer term as well. Um and like I said our customer 47:36 47 minutes, 36 seconds sat scores for installation or for indeed for complaints etc um have have uh reached all-time highs. 47:44 47 minutes, 44 seconds I think on managing the edge cases uh we are now going to make a meaningful improvement in uh uh in in addressing 47:52 47 minutes, 52 seconds the edge cases and extreme service failures. 47:56 47 minutes, 56 seconds We have set up a a special desk both here uh in in in at the central level as also in the regions uh at managing 48:04 48 minutes, 4 seconds escalations. uh our escalation tats uh where there is noise on social media or where there's other kind of 48:12 48 minutes, 12 seconds escalation uh has the tsats have improved meaningfully over the last uh last 3 48:18 48 minutes, 18 seconds months. Uh we have put in a a small team to proactively preempt escalations when we see that there is a pattern emerging 48:27 48 minutes, 27 seconds of a customer complaining repeatedly or a complaint open for more than x number of hours or x number of days. uh we have a team which moves proactively to reach 48:35 48 minutes, 35 seconds out to the customer and address and resolve the complaint before it becomes an escalation. Uh we also put in a small team which is focused only on social 48:44 48 minutes, 44 seconds media escalations and closing the loop with them very quickly. 48:49 48 minutes, 49 seconds uh we've also moved to align uh our our partner and the technician incentives uh as also the the the rewards for you 48:58 48 minutes, 58 seconds know incentives for our team members uh based on how fast we resolve uh escalations. In other in addition, we've 49:06 49 minutes, 6 seconds also we've also put in place a dedicated work stream to improve the spares availability at our business partner 49:14 49 minutes, 14 seconds points because as you can imagine sometimes lack of spares becomes a reason why there's an escalation and I'm happy to report that our spares availability has improved meaningfully 49:23 49 minutes, 23 seconds again in the last uh two or 3 months. Uh we also have strengthened our digital assets uh to make sure that a complaint 49:31 49 minutes, 31 seconds cannot be cannot be parked unless and until it's resolved and that helps a technician not to or prevents a tech 49:39 49 minutes, 39 seconds technician from sometimes gaming the system. uh equally if there are technicians who customer does not want 49:47 49 minutes, 47 seconds we found a way digitally to make sure we assign technicians uh who are who are effective and who are who are who are 49:55 49 minutes, 55 seconds able to resolve the customer's issue. So a lot of small things we've done uh and you know I could go on but all of them 50:01 50 minutes, 1 second are helping us materially improve uh the edge case resolution. You will see that play out I think much more visibly in the next 3 to 6 months. 50:13 50 minutes, 13 seconds uh anything on the ten on the on the question of your sorry on on the bit around tenency uh related you know 50:21 50 minutes, 21 seconds number changes and asset tagging we did try out a few pilots I think however one large part of the learning that came was 50:29 50 minutes, 29 seconds that it was susceptible to to gaming uh and leakages so that is something which kind of you know we've gone a bit back to the drawing board to see what is the 50:38 50 minutes, 38 seconds other way because as you can imagine this is an area where uh you know a technician could game and we've seen that happen. So we're just very mindful of that implication. 50:49 50 minutes, 49 seconds We are looking to to resolve that through other solutions and you will you will again which are which have better control better governance but but are 50:56 50 minutes, 56 seconds also effective in addressing the very real pain point of tenants that that you mentioned. So that's work in progress and you see the something coming out in 51:04 51 minutes, 4 seconds the next in fact in the next two or three months. 51:07 51 minutes, 7 seconds All right great. Thank you guys. Thank you. Thank you. 51:13 51 minutes, 13 seconds Thank you. Our next question is from the line of Shria Narayan from Boda BNP Parib Asset Management Company. Please go ahead. 51:24 51 minutes, 24 seconds Uh thank you for the opportunity. Uh so firstly I wanted to know where uh we are in the journey of uh negotiating our uh 51:33 51 minutes, 33 seconds uh contracts with the vendors uh wherein we had some levers to expand our gross margins. 51:43 51 minutes, 43 seconds Got it. Uh thank you for your question. 51:47 51 minutes, 47 seconds uh I think that that process has already started and I would say it started nearly a year back and the key trigger for that was the fact that the business 51:55 51 minutes, 55 seconds u had seen and continues to see good volume growth. So that is something which gives us a very very important lever in negotiating costs. So that is 52:04 52 minutes, 4 seconds something which uh which is already an ongoing process. uh I don't think at any point in time we can say that that that 52:12 52 minutes, 12 seconds activity is over because constantly new opportunities come up, new things come up, new ideas come up. So that's an ongoing feature. At a principal level, 52:21 52 minutes, 21 seconds one important change that we've done is that we now discuss with our vendors uh the forward plan for the year and are 52:29 52 minutes, 29 seconds able to give them visibility of the volume and the growth ahead and hence able to extract and and negotiate prices from them in a win-win manner. So that 52:37 52 minutes, 37 seconds is an ongoing process and I think one of the key reasons that you know you see our gross margins to be very very stable 52:44 52 minutes, 44 seconds uh is the fact that you know there are cost efficiencies which are flowing in. 52:49 52 minutes, 49 seconds If you were to step back you know and take a three-year view of the business on a three-year period we've been able to drive a penetration strategy. We've 52:57 52 minutes, 57 seconds driven volume growth. We've our service business has lagged the product business. we've been able to expand into newer categories and yet you see a gross 53:06 53 minutes, 6 seconds margin impact every year to be a 50 basis point uh and no more and one big part is the the efficiency benefits that 53:15 53 minutes, 15 seconds have come on the cog site. So this is an ongoing ongoing process and where we stand today you know we quite we feel quite comfortable with how the program 53:24 53 minutes, 24 seconds is there is structured it's got institutionalized within the organization and we expect this to be a source of savings going ahead as well. 53:33 53 minutes, 33 seconds Uh no sir I I you know if you can highlight more in terms of quantification maybe let's say the percentage of vendors with whom you have 53:41 53 minutes, 41 seconds already ne renegotiated or the total value of purchases wherein this has been done this has been done and how much is 53:50 53 minutes, 50 seconds spending so that will help in forecasting future gross margins. 53:56 53 minutes, 56 seconds Sure I think I think two or three parts to it. one if I just start off with your last bit in terms of what you should assume for the gross margin to go going 54:04 54 minutes, 4 seconds ahead I think our gross margins will remain rangebound I think a good reference point is the journey that you've seen over the last 3 years and 54:11 54 minutes, 11 seconds that could be one way to to kind of see the gross margin stability that's point number one in terms of what percentage 54:19 54 minutes, 19 seconds of our vendors we've we've addressed for the high value items we've we've reached out to 100% of the vendors but I think 54:27 54 minutes, 27 seconds Important point to say is that it's an ongoing recurring process. It's not that one you negotiate once and then there is no other negotiation because constantly 54:36 54 minutes, 36 seconds we are also working on changing our product design you know bringing in newer specs removing removing features 54:44 54 minutes, 44 seconds which may be not needed. So there are a bulk of things that keep happening. So it's an ongoing process that is there but all our vendors all the high value 54:52 54 minutes, 52 seconds vendors have been touched by the program. We partner with them. In terms of the exact quantification of the values as you can imagine that is 55:00 55 minutes something which uh which you know uh we would not be in a position to share but suffice it to say that it is making a 55:07 55 minutes, 7 seconds very meaningful impact as far as the gross margins are concerned. 55:12 55 minutes, 12 seconds And similarly on the IT spends it spends again if I were to draw your attention if you look at again the last 55:21 55 minutes, 21 seconds uh last three year trends the IT spends have been stable which effectively means that operating leverage is playing out. 55:28 55 minutes, 28 seconds I would also draw your attention to the fact that during this period the extent of digitization in the organization has 55:36 55 minutes, 36 seconds also gone up substantially. So you see a reasonably stable spend profile but with 55:43 55 minutes, 43 seconds a much higher degree of digitization uh which then indicates that there are efficiencies being driven there as well. 55:50 55 minutes, 50 seconds So we will continue to remain focused on that. If I were to just give you a flavor and and you would have it in the in the annual report as well but FI23 55:59 55 minutes, 59 seconds our spends were 53 crores. FI24 it was 54 crores. FI25 it was 48 crores. So on 56:06 56 minutes, 6 seconds a three-year basis, tens are are flat to marginally down for a business which is much larger in size and which is far more digitized. 56:15 56 minutes, 15 seconds Got it. And uh lastly on the demand side so you said we are facing some 56:23 56 minutes, 23 seconds challenges. Uh so basically are these challenges uh on the customer side or because of competition let's say from 56:32 56 minutes, 32 seconds unorganized or you know private labels of few companies. So what is uh impacting the most? 56:41 56 minutes, 41 seconds No, I think the the when we said that uh the the challenging demand environment, it was more in the macro context that we 56:49 56 minutes, 49 seconds talking about as you would have seen you know in in quite a few sectors and parts of the economy. Uh the demand 56:56 56 minutes, 56 seconds environment as reflected in the numbers have been relatively muted. So that is the reference that that we were making 57:03 57 minutes, 3 seconds to it was not in the context of either competition or unorganized players. Just to kind of reiterate, as far as 57:12 57 minutes, 12 seconds competition is concerned, our shares remain stable and we believe that more competition is helping the category expand and we don't see uh you know any 57:21 57 minutes, 21 seconds any risk on that front. Uh number two, unorganized players. I think the more this category innovates and it is going down that path, the more organized 57:29 57 minutes, 29 seconds players come in, the more there is consumer awareness about health and hygiene. unorganized segment will you 57:36 57 minutes, 36 seconds know will will get a lesser salience. So but our reference was in the context of the larger macro demand environment and 57:45 57 minutes, 45 seconds nothing specific to to us or or you know any factor attributable to the company. 57:51 57 minutes, 51 seconds Okay. Okay. Thank you so much and all the best. Thank you. 57:57 57 minutes, 57 seconds Thank you ladies and gentlemen. We will take that as our last question for today. I would now like to hand the conference over to the management for closing comments. Over to you gentlemen. 58:08 58 minutes, 8 seconds Uh thank you for joining the call today. 58:11 58 minutes, 11 seconds Uh and I hope that we able to address the questions uh to your satisfaction. 58:16 58 minutes, 16 seconds Uh in case there are any queries that remain unanswered or should you need any more clarifications, please feel free to reach out to us and we'll be happy to 58:23 58 minutes, 23 seconds respond. Uh look forward to seeing you all in Mumbai next fortnite. Uh thank you so much and have a great evening. 58:30 58 minutes, 30 seconds Thank you. 58:33 58 minutes, 33 seconds Thank you. On behalf of Eureka Forbes, that concludes this conference. Thank you all for joining us. You may now disconnect your lines. Good night.