Blue Star Limited (500067) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Blue Star Limited Q1 FY '27 Earnings Conference Call. We have with us today from the management, Mr. B. Thiagarajan, Managing Director, Blue Star Limited; and Mr. Nikhil Sohoni, Group Chief Financial Officer, Blue Star Limited. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. B. Thiagarajan. Thank you, and over to you, sir.

Thank you. Good morning, ladies and gentlemen. We are here to share with you the highlights of Q1 FY '27 financial results, which were approved by our Board yesterday. Thank you for joining this call. Before I hand it over to Mr. Nikhil Sohoni, I wanted to point out a few things. The first one is you might have seen the results, particularly the margins for segment II would have been disappointing to you. We will clarify the facts behind these numbers. Broadly, we have fallen short of the expectations, but the fundamentals are strong. We expect to bounce back in the next 9 months. You need not to worry, I will provide that outlook as well. Now if you specifically look at the segment I, you would have seen that we have grown more than 15%, actually 15.1% in terms of revenue and the margins were down by around 112 basis points, primarily due to input costs on commodity prices, the exchange rate. That is the impact that's going to be further more in segment II as well. In segment II, the revenue growth you will be seeing is around 13%, but a significant drop in the EBIT margins by around 300 basis points. In other words, what was last year Q1, 5.8% dropped to 2.9%. Now if you look at the Jan to June period for this segment, the EBIT margin has been more or less flat. It is 7.3% to around 7.1%, and the drop is not significant for the H1 part of it. Now in terms of the market share, the -- you would have seen -- some of you at least would have seen the GfK reports. In April, we lost around 50 basis points for Room Air Conditioners. And in May, we gained around 10 basis points. In June, we gained around 50 basis points. This is where the full story lies about the numbers. We entered the financial year with the hope that we will be able to pass on the commodity price and other input cost increase to the consumers. The total impact that we wanted to pass on was around 13%. What we could pass on was only 5%. In April, the summer set in much later. You will recall that it was around the April 20 in the May Investor Call itself, I had pointed out that it was a late summer. And we hope that in the last week of April, when the summer season picks up, we will be able to manage our margins and pass on the entire cost increase, which didn't happen. We lost the market share, and that's why 50 basis points in tertiary sales was the erosion in terms of market share. We embarked on corrections from the second half of May itself, and we gained market share. I told you 10 basis points. In June, additional 50 basis points. Q1 as a whole in the secondary tertiary sales, our market share erosion is just 30 basis points, which is not significant. Now we closed the year with around 14.25%. We will be marginally lower than 14% market share. Now this market share management has happened basically by maintaining the prices in line with what is prevailing in the market and incurring huge expenditure in terms of consumer schemes because we wanted the tertiary sales volume to go down because at some point of a time, primary sales will have to begin. Now the segment II revenue growth, one may wonder, while GfK is reporting a decent growth, why the revenue growth is this. GfK is a secondary tertiary data, which more or less correlates with the primary sales data. The real problem is the Commercial Refrigeration business, which has degrown by around 15%, and it is primarily due to deep freezers and the cold rooms. The -- specifically the ice cream as well as the frozen food and the quick service business segment did not do well. On the whole, segment II revenue drop is appearing to be 13% or it is 13% because of commercial refrigeration. So the bottom line is as follows: that we took a hit in the operating margin in order to more or less maintain our market share. And still the -- as we speak, the commodity prices are going up. Our expectation is that this should correct over the rest of the year because at some point of a time, we expect market prices also to go up. Now the outlook, I am without waiting for the questions, I'm disclosing here. Our estimate is that the revival will happen sometime end of August to September as the festival season begins. And the corrections are going to happen significantly in Q3 as well as Q4 because we are taking several actions, including rejigging our product portfolio. That exercise has begun. And as of now, we have a visibility to close the year with an operating margin of over 6.5% for segment II in financial year FY '27. As far as segment I is concerned, the margin outlook remains the same, 6.5% to 7%. Now our big focus is to manage between the market share and the margins. And in Q1, which is an aberration, we could manage the tertiary market share more or less at the same level as we were last year. We took a hit in the margin. Now the focus will have to shift to rejig the product portfolio. Otherwise, the fundamentals are strong, and we look forward to closing the year on a higher note. The 2 significant things that have happened or silver linings are: Number one, our continued leadership position in the data center MEP projects segment. We have close to around INR 1,500 crores of order inflow from this segment alone, taking the pending order book or the carried forward order book as on 30th June 2026 to over INR 7,700 crores. And we expect the order inflow for the full financial year from data center MEP projects to be around INR 3,000 crores. And in revenue terms, it should translate to close to around INR 1,400 crores. And as I had stated in the last conference call and many other media interactions or one-on-one interactions, the data center MEP projects will constitute close to 20% of our revenue at around INR 4,000 crores coming from the data center MEP projects alone by FY '29. So that segment is the one which is performing exceedingly well. The second highlight will be the net cash position. We have managed our working capital well. The inventories are under control and our debt position is very strong, and we are having a net cash position of INR 900 crores, more than INR 500 crores higher cash than last year. Last year, it was some INR 371 crores of cash. The carried forward order book is very healthy. So the B2B part of the business should be doing well with around INR 7,764 crores. So the singular focus in the next 6 months to 9 months will be improving the margins for the room air conditioners specifically. We are certain that we will hold on to the market share. That's not the issue. The issue is we have to rejig the product portfolio. And even as the competition intensifies, how we will close the year with a margin of over 6.5%. Ideally, we would like to be 7% to 7.5%, which I do not have the view as of now. So we will wait for the war to end and how the exchange rate, how the commodity prices are going to move. So on the whole, I mentioned to ET Now this morning, it's a 4 test match series. The first match is lost, and there are 3 more matches, which you have to bounce back and win, and I'm certain we will win. With that, I hand over to Nikhil. Thank you.

Thank you, Mr. Thiagarajan. Good morning, ladies and gentlemen. This is Nikhil Sohoni, and I will be providing you an overview of the results of Blue Star Limited for the quarter ended June 2026. Since many of you would have gone through the results, I'll keep this brief so that we get more time for Q&A session. Coming to financial highlights. As we had indicated previously, Q1 FY '27 was a challenging quarter with many headwinds, including unprecedented escalation in commodity prices, depreciation of rupee, delayed onset of summer season and a huge inventory pile up of room ACs in the trade. While the revenue growth for the quarter was 13%, the margins were impacted. A key positive was the strong inflow of data center MEP project orders, reflecting the sustained momentum in this high-growth segment. The financial highlights for the quarter ended June 2026 on a consolidated basis are summarized as follows: Revenue, as you've already seen, revenue from operations of Q1 have grown by 13.3% to INR 3,378 crores as compared to INR 2,982 crores in Q1 of FY '26. And the PBT before exceptional items dropped by 23.7% to INR 125.6 crores as compared to INR 164.6 crores in Q1 of last year. The carryforward order book as on June 30, 2026, grew by 13.5% to INR 7,764 crores as compared to INR 6,843 crores as on June 30, 2025. Carryforward order book as on March 31 stood at INR 6,923 crores. The quarter ended with a strong net cash position of INR 900 crores as on June 30, 2026, as compared to a net cash position of INR 371 crores as on June 30, 2025. The improvement was driven by release of working capital during the quarter. Coming to segment-wise highlights. Segment I, that is Electromechanical Projects and Commercial Air Conditioning. The order inflow for the quarter was strong at INR 2,435 crores in Q1 of the current year as compared to INR 1,963 crores in Q1 FY '26, a growth of 24%. Within this, Electromechanical Projects business, we recorded strong order bookings in the projects business during this quarter, driven primarily by data centers. While in the other market segments like commercial office, factories, infrastructure, order inflow remained sluggish as cost escalations due to West Asia crisis led to deferment of order finalizations. Given the escalation of the input material cost, we continue to exercise caution in this business. We are also in the process of accelerating the closure of large infrastructure projects. Coming to Commercial Air Conditioning Systems. During the quarter, this business reported growth on back of reasonable demand from industrial, retail and health care segments. All key product categories like ducted, VRF and chillers registered growth during the quarter. From the inquiries and order inflow, growth prospects for the rest of the year appear reasonably good. However, escalating commodity prices and a depreciating currency will continue to put pressure on margins in this business. International business, our international business witnessed good growth in Q1 FY '27 despite of supply chain and logistics disruption. With product approvals in place for a few customers, we are looking to scale this business to generate additional export revenue of USD 100 million per annum from FY '28. While the demand is good, the future prospects of U.S. business is largely dependent on U.S. trade tariffs. Overall segment I revenue grew 15.1% to INR 1,625 crores in this quarter as compared to INR 1,412 crores in Q1 of FY '26. And the segment result was INR 111 crores, which was 6.8% of revenue as compared to INR 112 crores, which was 7.9% of revenue in Q1 of FY '26. The margin for this segment is influenced by the projects and product mix, and hence, it may vary quarter-to-quarter. Coming to segment II, that is Unitary Products. For cooling products, the quarter began with a delayed onset of summer season, there was a pressure to liquidate the inventory pile up with the trade. As far as primary sales are concerned, we are attempting to pass on at least part of the cost escalation impact, but market operating prices remained low. You may recall, we had deferred certain discretionary costs, which were incurred during last quarter. In short summer window with investments in advertising, trade schemes and consumer finance offers, while we succeeded in good performance in tertiary sales, we could not succeed in achieving desirable primary sales volume growth. All of this impacted our margins. If we normalize the timing impact of discretionary cost, our margins for this segment from Jan '26 to June '26, stands at 7%. Going forward, with continued escalation in input costs and weakness in Indian rupee, we expect margins to be under pressure. Our endeavor will be to further tweak the product portfolio with a basket of competitive entry-level products to accelerate revenue growth and improve profitability. Coming to Commercial Refrigeration business. The commercial refrigeration business witnessed degrowth during the current quarter as demand for deep freezers from ice cream OEMs was muted. We expect the demand to pick up during the festive season. So in this -- even though we maintained the market share, the degrowth was to the extent of around 15% in deep freezers itself. So consequent to the above, the segment II revenue grew by 12.8% to INR 1,689.3 crores in Q1 of FY '27 as compared to INR 1,499 crores in Q1 of FY '26. And the segment result was INR 50 crores, that is 2.9% of revenue in Q1 of FY '27 as compared to INR 87 crores, which was 5.8% of revenue in Q1 of FY '26. Coming to segment III, that is Professional Electronics and Industrial Systems. The revenue degrew by 9.7% to INR 63.6 crores in Q1 FY '27 as compared to INR 70.4 crores in Q1 of FY '26. And the segment result was INR 9.5 crores, which was 15.1% of revenue in Q1 of FY '27 as compared to INR 7.6 crores, which is 10.8% of revenue in Q1 FY '26. The segment revenue declined mainly due to continued challenges in MedTech business. Finally, coming to business outlook. Overall in FY '27, the Electromechanical Projects business will benefit from strong inflow of orders from data center MEP projects. Commodity prices and exchange rates continue to be highly volatile, and our endeavor will be to balance volume growth and margins prudently in our products business. While the fundamentals of Blue Star and the medium-term outlook for the freezer industry continue to be strong in view of the West Asia conflict and market uncertainties, we remain cautious about the outlook for this financial year. So we will now request questions from the...

Shall we open the line for questions?

Yes, Yes. Please.

[Operator Instructions] The first question comes from the line of Manoj Gori with Equirus Capital.

Sir, my question first on the RAC to revive margins. while, you highlighted...

Maybe a little louder?

Is it better now?

Yes.

Yes. So to revive margins in the Unitary Products segment and especially for room AC, one we highlighted about the product rejig. Can you also highlight what would be the other things that they would be -- and one thing in Q1, what was the impact of this deferred cost? Because Q4 obviously looked optically higher and Q1 is optically looking far weaker. So adjusted for that, what would have been your Q1 margins? And probably what are the other initiatives that we are taking to revive our margins for unitary products for rest of FY '27? And my second question on MEP business. So here, we have been very positive even in the press release and even in the opening remarks. So earlier, we were talking about 8% to 10% kind of revenue guidance for this business for the entire FY '27. Are we looking to upgrade our guidance on MEP business? Yes, those are my 2 questions.

Hello?

Yes.

Mr. Thiagarajan, you there?

I am there. Am I audible? .

Yes. Yes.

Yes. So thank you for your question. First of all, there is no deferred cost from Q4 at all because you mentioned something like what is the deferred cost. The margin that we declared in Q4 is the right margin. Now it was a double-digit margin, if you recollect, okay? And there is no deferred cost into Q1 or anything. It is an actual cost that was incurred in Q4. The -- how it has to be understood is that there is -- when you do the material accounting, it is on a rolling basis. So you will have an inventory of some old material also being there. And as you move into the season, there will be a fresh material that will be coming in, okay? Now the price increase that is to be passed on has not been passed on fully. That is the first part of it. There is a second part, we wait for, okay, April last week summer has set in. In May, whether the market situation changes, Unfortunately, it did not change because many of our competitors had material, and they were maintaining lower prices. So in the process, having understood that we lost a 50 basis point market share in April, what we should be doing. We should be doing that, look, it is important in the business to be not losing the market share to what extent you can go ahead and do. So our immediate thing is that our tertiary sales should be improved through consumer finance and other schemes so that the dealers are able to liquidate. So we incurred those costs. The in-shop demonstrators, advertising, field marketing and the consumer finance. So these costs came in May and June in a significant manner, which resulted in our bouncing back with a 10 basis point market share in tertiary sales. And again, in June, I think we performed exceedingly well in the industry with a 50 basis point gain market share. Now suddenly in June, the summer ends after the first week because the consumer sentiments also changed the moment the petroleum prices started going up, et cetera. So you asked about the second part. So the margin that is declared is not due to any deferred costs and all, it's an actual margin that is what has taken place. Now what needs to be done? You have to, hopefully, in old inventory all of the industry is getting exhausted. So the market operating prices one hopes will go up. And the second part is, fortunately, it is a lean season. The second quarter is not a quarter. It will pick up from Onam season, Ganpati onwards towards the festival season. That is the place where we have to look at what we can do in taking out the cost out of the products with -- very quickly. That is the second part of the exercise. So the third part of the exercise is by Q4, we should have rejigged our product portfolio. There are numerous opportunities that -- look, we have demonstrated it again and again. Now the -- our -- that's I'm saying that you may see a slight improvement in Q2. Q3 should be much better. Q4 would be a defining period. So our calculation with the cost saving opportunities that we have got and our view of the market. I'm saying that 6.5% for full year may not be a challenge. And we have to look at 7% to 7.5%. That's what I've been saying that this business should operate at. And we are the industry benchmark for ROCE. That part of it is not an issue at all that we continue to do well there, even in terms of working capital we have seen. So the real challenge is the market operating prices in the industry vis-a-vis what cost and what market share goals we have got. And that's how you have to understand it. Commercial refrigeration products could have helped in terms of the revenue growth, the margin profile, there is not significantly different. Only in the cold rooms it will be different. In the deep freezer is again a unitary cooling product. Unfortunately, that has been doing bad -- the industry itself. Now one hopes in the festival season that also revised because for a long period, it cannot be muted. This is the answer.

Sure, sir. And lastly, on the MEP business, if we are...

Sorry. Sorry, I will tell you. I have never stated about 8% to 9% margin at all. There may be...

On the revenue side, on the revenue side?

Yes. So I had indicated the CAGR for the room air conditioners as a category for the industry, over a 5-year period, 18% is looking good. I had also stated commercial air conditioner of the MEP projects in terms of CAGR, you should look at only 8% to 10% kind of growth. It is not a sector which is going to grow. But what has significantly changed is the data center segment, where there is a huge rush to block the capacities of the vendors, that many data center operators are blocking our capacity. Can you take this order? Can you sign a 3-year contract that is all is happening. . And at the same time, you would understand there is an infra projects business that we have. We have a building vertical we have. And our principle is very clear that I cannot for a data center segment, go ahead and expand my team exponentially. I am expanding my team. I am investing in manpower, but also significant amount of my manpower and my resources are getting diverted from infra and building sector. So probably, the growth what we indicated as 8% to 10% may go up to 12% for a couple of years. It can. And I have given you the figure. That is today, this financial year, you can take that our order inflow will be INR 3,000 crores, and our revenue will be INR 1,350 crores from segment alone. And this is likely to become an order inflow of around INR 4,500 crores next year and around INR 2,100 crores of revenue next year. That's where it is. So this segment can accelerate the growth, but this is limited to this particular segment. And it may be -- again, we think that there will be a cycle. There is a huge rush, and it will be a dip and again it will be coming back. So it is not on a steady state. There is in room air condition because of the penetration, you can say, over an 5-year period, 18% CAGR is assured like that.

Next question comes from the line of Natasha Jain with PhillipCapital.

Sir, 3 questions. One, in terms of the import costs, especially in quarter 2, given that we'll now be importing compressors, heavy lifting there and 40% of the BOM cost we import. Additionally, copper sequentially is also up 9%, which we have not taken or the industry has not taken the entire price hike. So on that note, and given that volumes are already tepid, do you think that margins will look more blown out of proportion on the negative side in quarter 2? And therefore, 6.5%, which you just guided on the segment II EBIT, do you think that could also see further tapering going into the year? First question that. Second question, sir, is on the trade scheme. So could you call out specifically what these schemes were? And just want to know if it was more a direct discounting or not? And more so from -- was it competition that took so much of discounting that we had to follow through? Because usually, Blue Star is a company do not engage in such kind of discounting. And going forward, how difficult will it be to roll back these discounts and then sell without all this? And lastly, sir, on the data center MEP work. Is this more a margin accretive business or this is more of a top line story?

So I'll answer the last one first. The data center business is not a top line alone. Out of the MEP project verticals, if you take buildings or the infra projects like metro railway or electrical water. Compared with that, the data center segment is attractive for the simple reason, these are 8 to 12 months commissioning projects. It doesn't last 3, 4 years. The second thing is the payment terms are very favorable. Third is there are enough price escalation provisions on the metal prices, specifically and on electrical items. So we are very happy with the MEP projects. The execution pressure will be high, and we are leaders there today basically because we deliver these projects well. And therefore, we are -- I may not say that -- we are being given a premium or something like that, but we are the preferred contractors. It is -- compared with other segments, it is very attractive. So it is not a top line story alone. It is a highly profitable business with good cash flows. And we will be also investing there in modernizing the execution, improving our efficiency and it requires specialized professionals. We are investing in human resources as well. So that is the first part of it. Come to the room air conditioners, your question is a combination of strategic as well as current operational issues. The -- you are right. The Blue Star would like to be in that high-end premium segment. For us, the profitability has been more important than the market share. Our behavior would have been like that had it not been for the unprecedented increase in the input costs. And our behavior would have been different if it is not the year after a bad summer year, okay? So we started with -- look, Q4 was a stellar performance, you are aware of it, more than -- it is close to 10.4% operating margin that we delivered. And we ended the year with a market share gain. And despite being a bad summer year. So we felt that this strategy is going to work in the month of April. It didn't work. And suddenly in 1 month alone, with around 50 basis points. And the input we had from the trade was that, look, you are going on increasing the prices, and we are not able to lift, we are not able to sell. So the immediate decision was that I have to help the dealers sell. And that was through the promotions and specifically the consumer finance. So this consumer finance cost had significantly gone up, but it paid off. And we saw in the 15 days in May when we took the decision, our reversing the whole trend and gaining 10 basis points of market share. In June, even though the summer ended, we ended up gaining around 50 basis points market share. So it is about managing tactically in order that -- we were very sure, 6 months, nothing will change. If we don't act now, let us do that. But all along, the hope was that at some point of a time, you know this, this war is going to end or it happens, then it suddenly starts, but it is lingering. So having said that, I do not foresee in Q2, anything dramatically going to change in terms of the cost structure. Input costs are going to be higher only. What I'm expecting is the market operating prices should be better than what it is. It's not going to be dramatically different, but it will be better than what prevailed in Q1 because I'm estimating that the old inventory that was there would have got liquidated. You also keep in mind, because of the energy label change, the trade bought excess material of the old energy label material and continued till April with that material because only manufacturers cannot bill. The trade can keep stocking that and selling that product. So I am expecting the market operating prices to go up. From our side, we are trying to see that how we can make certain products more competitive. So as you can imagine, this will take time. It is not over. You have to do the testing, et cetera, then alternate component or some product we were developing, we were waiting for 6 more months to launch it, we are expediting that. All these actions have to take place or beginning to take place from now on. And Q3, if the festival season is doing well, we should be improving the margin further. But we are determined. We will get back to our conventional margins in Q4. But these are our plans that the entire thing depends also on the West Asia crisis, exchange rate, then you have got how the competition is going to behave. My outlook, I had said that once upon a time, it was a 12% margin industry, and it came down to 9.5% to 10%. It came down to 8% to 8.5%. Of late, I have been saying it is going to be 7.5% to 8%. And I'm only hoping that -- but for this commodity price increase, it should go back to 7.5% to 8%. It will be unfortunate if this growing industry also settles down to some 6.5% industry basis combined all put together. I don't think it will happen because the opportunities are plenty. And I think because of the energy label changes, because of the regulatory changes, because of Make in India, and this should change. One more thing you have to remember is the PLI schemes, the people are at their peak, and it will be coming to an end. this INR 4,000 crores of PLI is going to anyway get diluted because PLI is not based on the production. It is based on an incremental sale. So over the base year of 2022, if [indiscernible] Khumsaar is going to sell more, they are going to get more incentive. It is a SLI, not really a PLI, though it is called a PLI. So you have to be conscious of that fact as well. That money is also getting diluted into the pricing. Now bottom line, how confident I am that we will reach 6.5%? I'm certain we will -- I'm very -- unless something completely untoward happens of a full-blown war in the Middle East and the economy collapses, global economy. Otherwise, 6.5% should be possible. There are enough levers we have already identified. Whether it will be 7% or 7.5%, we are unable to state. Whether Blue Star will maintain its market share, that is the decision now that because of 1 year of unprecedented commodity price escalation and market not able to pass on, whether we should slide back in our market share. May first week itself, we -- May second week, we made a [indiscernible] permight that we should not allow the market share to deteriorate. This period will be over at some point of time.

[Operator Instructions] Next question comes from the line of Saumil Mehta with Kotak MF.

Sir, two questions from my side. First, in terms of the commercial, where you told that there was a degrowth because of the deep freezers and ice cream. Was it got to do with the industry-wide demand destruction? Or was it specific market share loss because of higher competitive intensity or pricing?

We have held on to our market share. There is absolutely no problem. Unlike your room air conditioners where you have a GfK data, we do not -- have to go by industry data that is available. That business is through -- predominantly through the OEMs. I don't think there is a residential market of significant size. So we know which are rate contracts, which are -- whether it is Amul or Mother Dairy or Havmor, so many ice cream brands what they are lifting from there. So this is not a market share loss. The industry has not grown. That's why we are hopeful at some point of time it has to revive.

Sure. And in terms of the MEP division, where incremental ordering from data center is going up, now you mentioned that the terms of trade are better, and obviously, it comes at a slightly better margin, I believe. So if I now -- but from a structurally 2 or 3 years' perspective, is it fair to assume that the Unit 1 division can see margins north of 8%, 8.5% on a structural basis with far better ROCE because of a better payment terms?

Certainly, the -- as we move towards that peak golden period of data center dominated MEP segment, the margin should go up.

Sure. And my last question, sir, in terms of the revenue growth for the UCP, broadly, if you can split not the exact number, but what was the volume growth and value growth for the current quarter?

So the -- yes, in terms of how the market would have, ,the primary basically comes from the industry estimates, actually. You have multiple points of taking that how it is. And you do get the data from the retailers, large retailers like Croma, Vijay Sales and Reliance Jio. So you can -- that's the basis of that. My estimate is in Q1, room air conditioners market in volume terms grew by 21% is my estimate, and Blue Star grew by 18%. Okay?

Blue Star volume?

Yes, in volume terms. In revenue terms, the market grew by -- I'm talking only about the Q1 period. Our estimate is it grew by 25% and Blue Star grew by 21%. These are all on the primary sales basis because your market share is based on primary, right? So the GfK talks about the tertiary. So the revenue terms market had grown by 25%, Blue Star grew by 21%. You are seeing the revenue growth at 13% because commercial refrigeration has pulled it down, okay? . Now -- so this data will correlate with what GfK tertiary is saying as well. But if you look at July, August, September, this should play out in this manner that we do have the lag between the industry and ours. So what it translates to. In secondary sales, Blue Star lost a market share of 30 bps compared with March or compared with FY '26, which is 0.3% drop in tertiary sales. In the primary sales because of that April huge dip, Blue Star lost 0.65% or 65 bps. This is the data.

Next question comes from the line of Praveen Sahay with PL Capital, Prabhudas Lilladher.

[indiscernible]

Mr. Sahay, sorry for interrupting. We cannot hear you. Your voice is breaking. Can you come in the range and talk?

Am I audible?

Yes. Please go ahead.