HPL Electric & Power Limited (HPL) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the conference call to discuss Q4 and FY '21 results hosted by Elara Securities Private Limited. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Harshit Kapadia from Elara Securities Private Limited. Thank you, and over to you, sir.

Thank you, Malaika. A very good evening to everyone. On behalf of Elara Securities, we welcome you all for the Q4 FY '21 and FY '21 conference call of HPL Electric & Power Limited. I take this opportunity to welcome the management of HP Electric & Power represented by Mr. Gautam Seth, Joint Managing Director. We will begin the call with a brief overview by the management followed by a Q&A session. I'll now hand over the call to Mr. Seth for his opening remarks. Over to you, sir.

Sure. Thank you, Harshit. Good afternoon, everyone, and a very warm welcome to all of you present on the call to discuss our financial results for Q4 and financial year '21. Before we discuss the company's financial and business performance, I hope all of you and your family and loved ones are healthy, safe and sound. HPL maintained its strong momentum gained during Q3 FY '21 and delivered the highest quarterly revenue in the last 8 quarters at INR 308 crores in FY '21, Q4, thanks to a healthy performance in both metering and consumer B2C segments. The company's consolidated revenues surged by 26% quarter-on-quarter and 45% year-on-year. The metering business, as expected, experienced improved performance in Q4 FY '21 than the previous 3 quarters due to the rise in inspections and dispatches. The metering business posted a revenue of INR 142 crores, thereby recording a notable growth of 93% year-on-year and 29% quarter-on-quarter. The company expects good traction in the meter business in FY '22 with an increase in inspections and inquiries. The smart meter segment is a sunrise sector and HPL is well equipped to tap the opportunities present in this segment, with growing emphasis on installing the smart meters by the SEBs and the government. With a focused thrust on the latest R&D, we are continuously strengthening our smart meter technological base, targeting to be the market leader in the smart meter segment. The consumer business recorded revenues of INR 166 crores in Q4 FY '21, registering a double-digit growth of 24% year-on-year and 20% quarter-on-quarter, led by stupendous performance by the lighting segment and wire and cable segment. The lighting segment revenue surged by 31% year-on-year and 37% quarter-on-quarter to INR 89.2 crores in the fourth quarter. The wire and cable segment revenue at a healthy rate of 99% year-on-year and 31% quarter-on-quarter to INR 26.3 crores in the same period. The revenue share of the consumer segment, the B2C segment stood at 61% during Q4 FY '21. We have a diversified portfolio of electrical equipment, catering to various needs of the market and are confident about the long-term growth trajectory of the consumer segment fueled by a pickup in the economic activity, improved consumer segments -- sentiments and increased government funding. The company's order book stands at INR 704 crores, ensuring revenue visibility for the current year despite the lockdown in the first quarter of the current financial year, which has caused a few disruptions. We have recently won an order of over INR 372 crores for switchgears, wires and other related accessories, enhancing our position as one of the leading electrical equipment manufacturer in the country. Another area where HPL is looking to capitalize for future revenue growth is exports. We are happy to disclose that the wide product range of HPL backed by world-class in-house R&D capabilities helped to gain 69% year-on-year growth in exports. Our EBITDA margin grew by 62% year-on-year to INR 44 crores in FY '21 Q4. The EBITDA margin expanded by 146 basis points year-on-year to 14.2% during the quarter, owing to various cost rationalization initiatives and the implementation of lean methodology. We also witnessed improvement in the EBITDA margins during FY '21. Our PAT grew to INR 14 crores in Q4 FY '21. HPL incurred a low CapEx in FY '21 and hopes to maintain its low CapEx stance as it has adequate capacity for fueling its future growth. Looking beyond the short-term challenges, the company is eyeing huge opportunity in the smart metering and consumer segment. HPL is armed with a diverse product portfolio, state-of-the-art technology and capacity for tapping the opportunity in the industry. The company continues to focus on widening and strengthening its touch points and distributor base as it remains positive on the growth trajectory of the consumer segment. Overall, HPL is confident of growing and creating sustainable value for its stakeholders. I would now request the operator to open the floor for Q&A. Thank you.

[Operator Instructions] The first question is from the line of Vijay Sarda, an individual investor.

Yes. Congratulations on a good set of numbers. Sir, just wanted to understand how are the things shaping up on the metering side. Government orders, which got delayed on account of COVID as well as there was some bit of slowdown when we -- when you'd spoken last, you said there was some bit of slowdown that you expected. So are those orders now coming? Or how is the RFQ happening there? If you can dwell more on that smart metering that will be great.

Right, sure. Yes. So if you look at -- when we look at the metering business, I'll just take you back about a couple of quarters. Since the last lockdown, the metering business started off very slow. But by the time we came to the third quarter, the activity had started picking up. And we had also talked about the fourth quarter being a good complete quarter for the metering. So, in terms of revenue, in terms of orders and even activities with regard to the tendering had really picked up during that time, and it was expected to continue on like that. When we look at right now, the tendering inquiries that are there, I can say it is probably at an all-time highest right now, in terms of the number of tenders which are there and also in terms of the smart meter tenders which have come out. So we are currently seeing tenders and inquiries coming out from the central government for the smart meters and as well as various state governments, which have come out with the smart meter tenders. And this is over and above the regular meter tenders which are already in float, which are by the various state governments. So in terms of activity, in terms of the tenders which have come out and which are under evaluation, that activity is on a very -- quite high right now. When we look at the order closures, there, we have seen certain slowdown within the first lockdown and also during the past 2 months where most of that is due to the lockdown, the second wave, not much activity has happened on the utility side. So most of the tenders which are ongoing have been postponed. But nevertheless, we see them to be -- by second quarter or third quarter, most of these tenders will get finalized. And if that happens, it would be a fairly very large number of tenders which are getting evaluated. If you see HPL Electric's meter business, we are currently -- we had a fairly good quarter in the -- the Q4 quarter. And our order pendency as on date is almost INR 293 crores, so -- which is also fairly decent in that. But if you look forward, the business seems to be good. There would be a lot of tenders which are coming out. So on the medium or long term, it is good. When we look at the 2 months, which have -- the April and May, which have gone by, there, of course, the activity has been very low, and that has been disrupted due to the second lockdown.

Manual and conventional smart meter?

Sorry, I missed your full question.

Yes, I just wanted to understand, out of the inquiry that you said, if you can put a number to that first? And secondly, what is the ratio between the conventional and electronic smart meter? And third, how -- what is our kind of winning ratio if we bid for a certain project? Means what is our -- like are we winning 20%, 25% of the bidded portion?

Yes, sure. So if you look at -- in terms of the pending inquiry, I can just put an estimated value because -- that would be anywhere between INR 2,000 crores to INR 2,500 crores. And with smart meters, obviously, the value goes much higher. In terms of the inquiries, currently, if you look at the -- on a value term, it is about almost 50-50 in terms of the smart meter and the conventional electronic meters. That is how the breakup of the orders are -- or the inquiries are.

And in terms of this order, mostly are from the central government or mix of state governments? So INR 2,200 crores you said is all about conventional? Or is put together both?

No, just put together. It's an estimated value because the value is finally determined by how the tender -- how are people quoting and the final orders what they are giving. But approximately, this would be -- if you compare with the last couple of quarters, I would say the inquiry level is at a much higher level, and it could be anywhere between INR 2,000 crores to INR 2,500 crores. It can be even more than that.

Okay. And basically, sir, what is our winning ratio in this?

We have been maintaining an over 20% to 23%. That is what has been estimated by even Frost & Sullivan and other reports which are there. But roughly, I would say, going forward, we definitely would look at, at least say -- let's say, a 20% to 25% share in the smart meter market.

The next question is from the line of Karan Sharma, an individual investor.

Hello? Am I audible?

Yes, sir.

Yes, sir. Please go ahead.

I'm Karan. Congratulations, everyone, for excellent numbers. Two days back on 28th, our finance minister has announced INR 3.03 lakh crores on reform for power distribution scheme, which includes 25 crore smart meters. So my question is, can our company also get some of these related orders like directly or indirectly? And my other question is we received a notification few days back like approval and production clearance from a private distribution company. So I would like to know what is this private distribution company. Like why do we need some approval from private distribution company?

Yes. Thank you. If you see the government has announced 2 days back -- they have announced some kind of a help and support to the DISCOMs. Basically, it's about INR 303,000 crores, and that is based on the reform-based result-linked power distribution scheme, which is for the DISCOMs. And this, of course, is based on individual DISCOMs, matching up to what kind of results they are going to -- in the reforms. And basically, this is also for purchasing certain equipment, which are like the smart meters, feeder pillars and other overhead lines. So smart meters has been a very important aspect for the central government to improve the health of the overall utility. And the figure what we have been always talking about, the bigger opportunity of smart meters is for this 25 crore smart meters, which needs to be installed. So day before, they have just reiterated the importance of that and also given out a way of funding to the various DISCOMs, out of which about INR 97,000 crores will be the central share and balance will be at the state level. So I think the details are awaited of this thing. But definitely it will help the utilities in terms of the liquidity and will help equipment suppliers like us with a better and more steady cash flow. The second thing on -- yes, the other thing regarding the use of the NB-IoT, I will just explain that the smart meters are used in various forms of communication, be it an RF technology or cellular or other things. There is now -- this is the first time being used in India where through a cellular operator, a company like us and a private utility we have worked together to create a much more robust and a much more efficient way of communication through the NarrowBand IoT. And with this sort of communication, there will be -- the communication will be much more robust, much more steady, faster and it can carry much more data. And with this, the meter gets connected to the -- directly to the cellular tower and thereby gets transmitted to the server of the utility. So in the long run, it's going to be much more economical. And by us getting the approval was that, this was something that the new technology was getting tried and tested. And we have integrated it. We have worked with the cellular provider and the provider in this, it was Reliance Jio with whom -- which -- with whose technology we worked on this, integrated with our smart meter and with the utility, the IT infrastructure and the software. And in the long run, we feel that this will become a reference for even other utilities adopting this technology.

[Operator Instructions] The next question is from the line of [ Kritika Jain ] from [ Sequent ] Investments.

So my first question is, do you expect the revenue momentum that HPL has gained during Q4 FY '21 to continue in FY '22? And my second question is, how do you see export business potential? Kindly explain how your R&D strength is aiding you for export markets.

Yes. Thank you, [ Kritika. ] Yes, in terms of revenue, we have seen a steady increase in revenue right from the second quarter. And there have been momentum across our product lines and across our various business segments. And that momentum has gone on to increase right from Q2 to Q3 and thereafter well in Q4. So when we look at the Q1, unexpectedly and it's something which is beyond anyone's control, we have seen the -- almost the first 2 months really getting knockdown and getting washed away. So the momentum definitely has been broken right now. But looking as we go ahead, in Q2, we see the revenues to come back to -- hopefully, to the levels of the pre-COVID level and that's what we see. Since the last lockdown, we have seen -- while we came up, it took us almost about 6 months to come back. And I think this time with already our prior knowledge and the way we have seen the pandemic behave, we would look at to come back much faster than this. I personally believe that in the consumer segment, there is pent-up demand right now, which will get unleashed, so the revenues will pick up definitely. On the metering side, again, we see -- we are already having the orders at hand. So some more activities already starting in June. So by the next quarter, well within Q2, we must -- we hope to see the revenues come back. Overall, based on the last 12 months of working, we have been very -- quite bullish and positive on the overall business scenario and our internal workings as well where we see our products in terms of sales and in terms of the marketing and the reach to really grow like that. So we would continue to maintain that positive outlook, barring the 2 months, which has gone due to the lockdown. In terms of exports, despite the various lockdowns, what we have seen last year, we still have been able to maintain a steady order flow and sales of -- in terms of our international business. Now this is of course -- this was possible due to the last 2 years working by our factories on various technologies. We have been investing in a lot of new products. And as you know, reaching out to almost 45 countries. So we are dealing with various international standards. There are a lot of local requirements in each country, which needs to be adapted to. So our high-technology products coupled with the kind of manufacturing infrastructure what we have, which is able to adopt and tune to the products as per the customer needs. So I think that has helped us to penetrate in the market. We have been growing in the last few years, but this year, post the lockdown, we definitely saw a much faster growth. And even going forward in this year, we see our sales -- our export sales to really rise exponentially. And we've already seen a good first quarter as well. So hopefully, this is a segment where in future the company can really develop the international business and look for a better revenue and margins from this business.

The next question is from the line of [ Shah ] from [ SS Capital. ]

Hello?

Sir, there is a disturbance coming from your side.

Is my voice audible now?

Yes, sir. Now you may go ahead.

Yes. I have 2 questions from my side. What is our current overall capacity utilization? And how can we maintain our low CapEx stance? And can you guide us when can we go for the next capacity expansion plan?

Yes. All right. Thank you. So currently, we can see our capacity utilization is anywhere between 70% to 75%. Over the past couple of quarters, we have seen an improvement and Q4 has been a much better quarter in terms of the capacity utilization. As I said in my opening remarks also, the CapEx has been at a little lower end in the last financial year because earlier in the couple of -- the last 2 to 3 years, we have been doing a sufficient amount of CapEx. And so that has resulted in the increase in business and coming with us focusing on a lot of new products and new ranges. So that is happening. But currently, in the year going forward also, we just hope to see the maintenance CapEx only and not any major CapEx to happen.

Okay. So the maintenance CapEx would be again in the range of INR 15 crores to INR 20-odd crores?

Yes, yes. It should be around that.

[Operator Instructions] The next question is from the line of Vijay Sarda, an individual investor.

Yes. Sir, just wanted to understand on the overall working capital cycle. So what we have been seeing in our company all throughout is we are having a kind of working capital cycle, which is very, very high. So basically, if I look at the receivables as well as the inventory, which is more than INR 950 crores, whereas our turnover last year was around INR 875 crores. So I'm just trying to understand how we are going to -- how we are trying to better it and what is it going to be going forward?

If you see the nature of business, we have 2 larger segments, one being the metering, this is primarily supplied to the utilities, and the other is on the trade side, where -- which goes in through the dealers and distributors. One needs to understand both these segments in a much more detail. If you look at the utilities, our normal debtor period is anywhere between 6 months, about 180 days. That's how it happens. And during these periods of sporadic lockdowns, we have seen this one being almost there or maybe even going up by another 30 days. So this is how the business has always been. In terms of the inventory, if you look at it, basically, we have seen the raw material costs only going up, while the WIP and the finished goods have been lower. Now here, we have been focusing on 2 aspects. One, a lot of new products have been -- are under development, which we have seen in the fourth quarter. Because during the lockdowns, we have put in a lot of internal focus because we felt that if the markets were not completely open as well we could do a lot of work on the new products, which lot of development and even the procurement and the production have started. The other thing when you look at the orders which we get from the metering, here, the -- we normally like to cover the electronic procurement, especially the ICs and others, where if you understand globally, there has been certain IC shortages across the world. So right now, for any confirmed orders, we try to procure the entire lot in this. The nature of business also involves the pre-inspection clause, where a lot of material has to completely -- has to be ready completely then offered for the inspection and thereafter the dispatches happen. So the nature of the business is like this. In terms of -- when you look at the consumer business, the debtor period has been relatively much better. In fact, we have been -- over the past couple of years, made a lot of considerable progress on that by introducing the channel financing and other things. During lockdowns, we have seen certain -- the number of days go back in certain stages going up and then coming down. But I think that is something of a more temporary phenomenon. And as we go forward, the debtor days would again come back. But yes, the 2 lockdowns have to some extent increased the debtor days, especially from the channel, and that's what it is. So we are -- so when we look at the increase in -- right from the third quarter to the fourth quarter, although the business has gone up, the overall credit cycle, the working capital has remained quite stable. And if you look at even -- looking at even the debt equity ratio, we have been able to insert better rate and maintain it around 0.74. So that's still at a healthy level. So -- but yes, continuously, we have been working on it. And in future also, we hope that the working capital across the business segments would improve.

Okay. In the past also, we were at 150 days in terms of debtor days. And currently, we are at 215 days last year. And there may be some impact of COVID definitely. But as your B2C mix is improving, this should go down rather than it is increasing. So I'm not able to understand. This year may be a slight aberration but last year was also on the same comp. So I'm not able to gauge where things are getting.

Yes, I'll answer that. If you look at the sales of the last year, the majority of the sales have happened in the fourth quarter, almost more than 35% of the sales have happened. So in absolute terms, if you look at the debtors, they are at a high level, but they are actually freshly billed in the fourth quarter. So that's how it remains. So if you look at, let's say, about INR 512 crores of debtors, almost -- inclusive of GST, almost INR 356 crores have been billed only in the last quarter. So in terms of that because we are not seeing the spread of sales very evenly. Like the first quarter, of course, was very low because of the lockdown, but then it picked up in the second quarter. But the majority of the sales you look at -- you look from that point of view, in absolute terms, it is -- that would get justified.

Are we looking at the kind of growth that you're talking about?

No. What I'm saying is that the sales of the last year has not been even on a quarterly basis. So we have a majority of the sales happening only on the fourth quarter.

Yes, Q4. Yes.

Yes. Yes. So that's why the better in absolute terms at the end of the year is at a higher level.

Okay. And what about inventory, sir? Do we need to keep inventory also on a higher side because inventory is also quite high, so it's 0.5x of the sales that we're doing...

So to some extent, as I said, the nature of business is such that we need to maintain, especially in the electronics, especially in the -- especially because there is a lot of business we do where the orders are coming on firm prices and with firm specifications. So sometimes, yes, we have been keeping a larger inventory. But time and again, we are relooking at that. And hopefully, we look at it that we should be able to manage with a much better working capital cycle as we go ahead on the growth.

Right. And sir, just last thing, in terms of the inventory turn, do we see inventory turn going up to 3, 4x or it will remain like 1, 1.25x or 1.5x?

As our consumer business is also -- the ratios are going up. But ideally we should be able to have an inventory turn of at least 2.5x. I think, yes, there is definitely a scope of improvement on that. And we have been doing that. We have been working on that. I'm sure we should get somewhere there.

Sorry to interrupt you, Mr. Sarda. Sir, I would request you to rejoin the queue for follow-up questions. The next question is from the line of Priyadarshi Srivastava from Monarch Networth Capital.

I just wanted to understand what is the margin difference between the conventional and the smart meter, sir?

Yes. Yes, what I can do, I can give you [indiscernible] the unit cost and other things, not the budgeted cost, but that will give you some idea. So overall, if you look at it, traditionally, our metering business is anywhere between 16% to 17% on the normal conventional electronic meters. When we look at the smart meters coming in, we can see that probably rise to a 20% to 22% in terms of the margin. So definitely, the scope is there. But one needs to also understand what the smart meter is dependent upon their respective specifications, what each utility is doing. So right now, if you look at -- there is a central utility, which is out for the tender, but there are also various state utilities, which have come up with their own specifications. So the margins based on those specifications could vary between each of them, but broadly the unit cost, which normally is, let's say, INR 1,000 for a single-phase meter, the conventional meter, goes up to INR 3,000 to INR 3,500 in a smart meter. Similarly, if you have the 3-phase meter being around, let's say, INR 1,700 to INR 2,000, a normal 3-phase meter. While if you look at the smart meter, that may probably go up to even INR 4,000 or INR 4,500. So the per unit value goes up. And that definitely has a bigger opportunity for us to gain on the margin. And then this -- we are talking about the smart meter, but there are other aspects whether they are of the communication or the IT infrastructure, which are related services, which get attached to the smart meter. So definitely, there's a business potential. So although we'll see the quantities go down, but the values will really jump up -- the per unit value. And definitely, the margin should pick up.

Hello?

Yes.

Sir, my second question is, are you looking to -- you are bidding for any big project globally, some big tender or something for the coming financial year, this current financial year?

So currently, as I said earlier, there are very large tenders and inquiries floating around from the central as well as various state governments with regard to the metering product.

I mean not in the country within, but for the exports market.

No, in export markets, right now, we are focusing on normally, the trade market, except the SAARC countries where we are participating in the government tenders. But other than the SAARC companies, currently, we are not participating directly in any of the government tenders globally. So I think it would take some while because it's a different ballgame. And as we progress further in that, then we will probably take it up at the right time.

The next question is from the line of Shriram Gurjar, an individual investor.

Hello. Can you hear me, sir?

Yes, sir, you may go ahead.

Yes. My question to you is that, as you mentioned in the presentation, the 37% business is B2B and 63% is B2C. So as [indiscernible] order book is mentioned. So can you give a breakup of...

Sorry to interrupt you Mr. Gurjar. Sir, there is a disturbance coming from your line, sir.

Do you hear properly?

Yes, sir. Now you may go ahead. There was a slight disturbance coming before.

Yes. First of all, congratulations for a fantastic quarter. I have a question regarding your order book stands at about INR 700 crores, and you have 63% business coming from B2C and 37% from B2B as mentioned in the presentation. So this order book, can it be break down into B2B and B2C segment, if possible?

If you see the B2B segment, we are very clearly giving it that, that includes the meters for the utility as well as the orders coming in from the central government agency, which is the EESL. Now EESL is, of course, a very large procurement agency by the government. So that is what we are classifying as a B2B. And normally, if you have to just do a simple thing the -- almost INR 300 crores of orders of meters are all from the utility, barring maybe INR 5 crores or INR 10 crores, which could be from the trade market. The balance are all orders from the trade or different -- it could be various projects or other things, which are -- which we are right now classifying as -- more as a nonmeter in that. So that is it. Of course, the large order which we have got from the low-cost housing are all classified into switchgears and wires.

The next question is from the line of [ Shah ] from [ SS Capital. ]

Sir, HPL, as mentioned previously, you have stated that our debt to equity is at around 0.7:1. So what are your plans? Do you have any debt repayment plans?

So when you look at the debt, immediately, we don't see it coming down, although we would like to have a strong growth, keeping the debt at the similar level. But on a longer term, at least we do see or we are now working out that how our -- at least the consumer business can become debt free in maybe, let's say, in the 3, 4 years going ahead. But right now, that is something what we would like to have. Of course, it requires a lot of strategizing and working. But I'm sure in the long term, we should be able to work on something. And at least looking at the way the business -- that kind of business is structured, we should be able to work out and come with a way. Anyway, our long-term debt is very low. The entire borrowing is more on the working capital, which is again based on the current business and based on the stocks and debtors.

Okay. And -- that was helpful. And sir one more -- there is one more question if I may be allowed. Sir, our EBITDA margins are in the range of 14%. So do you see any -- is there any scope of expansion in the coming years?

No, if you look at the -- from the last couple of quarters, I think in a few quarters, we have started coming up to the 13.5%, 14%. Earlier, it was at a much more subdued level. So although as a company, we are always striving to improve our margins and look at it in a better way, but on a sustainable level, I would say, 13.5%, 14% is -- right now looking at that. Because one has to also keep in mind that globally, there has been certain commodities going up and even the cost of business going up in various states. But post the last lockdown, internally, we have put in a lot of different programs where we are looking to have a much more leaner organization and leaner manufacturing, even reviewing all the operational costs. So therefore, we are able to maintain or even grow the EBITDA margins. So right now, on a sustainable basis, I would say 14% is something what you would see in the coming quarters.

The next question is from the line of Harshit Kapadia from Elara Securities.

Congratulations for good set of numbers. A couple of questions from my side. Just wanted to check with you further, in the initial remarks, you mentioned that there has -- that you expect some pent-up demand post the Q1. Do you find that there would be a difference in the demand recovery that you have seen in the first lockdown and possibly second lockdown will be much more lower, is that something that you read from your market?

Yes. Yes, I would say there would be a certain difference because last year, if you look at the increase, and that increase almost came very suddenly as we started off in May -- or May or June, whenever. So the business grew up, and that was, I would believe, based on 2 factors. One, a large pent-up demand being there. The second, that the unorganized segment that started -- that business started getting converted to the much more branded and more organized players. So companies like us also gain during that. Right now, when we look at this one, there would definitely be a pent-up demand because although certain industries have been working, but a large part of the markets were still closed. And then the effect was into various states, like we have seen even in Kerala or Tamil Nadu or even Maharashtra being extendedly locked down and then parts of other countries as well. So the pent-up demand will definitely come back. But maybe the shift from the unorganized to organized may not -- that part of thing may not happen in the second lockdown. So there could be a change in the demand pattern, which will come out. But I think with everyone looking at the business activity to resume, so I would still be quite optimistic on this and look at that -- that the business would pick up. And I think with our -- our team is also gearing to go. So I'm sure we are looking at the things very positively. Only if let's say a third lockdown down the line happens, that could affect this. But otherwise, on normal terms, like looking at a good double-digit growth, I think that should be easily possible under the present circumstances.

And somewhat related question. So as your expectation at the start of the quarter, that is, let's say, post March, whatever was your expectation, by how much would that come down or revise downward after the second lockdown? You can give a sense on that.

No, sorry, can you just repeat the question?

Yes. So for -- at the start of the quarter, at the end of March, you may have estimated that FY '22 may have grown -- should grow by X amount. And because of the second lockdown, it would have hurt a bit May and June. So by how much has your expectation come down, sir? Can you give a sense for FY '22?

So we were -- I said -- maybe to just quantify a number may be difficult. But the sense what we were getting when we were in the fourth quarter, right, from Jan to March, definitely, there was something that we were expecting a very good growth across all our product segments. And overall, there was quite a good feel overall in the market and the way we were positioned in the market. Now of course, we've had 2 months almost with a very low sales and with now June also coming up. So the first quarter, again, although it will be better than the first quarter of last year, but still, it will be a subdued quarter. But going ahead, I would still be -- I would say we would be well above this. So it's -- let's say, looking at overall, as you said, 15% growth in this year, net on net despite the 2 months of lockdown, we still maintain a good growth rate going ahead. Originally, had this lockdown not happened and if everything was the same then we would have probably been looking at a much more higher growth for sure.

And second thing is on the commodity inflation. We have seen companies within your sector taking significant price hike. And sir, you would have also taken a price hike as well. So are you completely covered at gross margin level? Or do you expect some more price hike to happen possibly in July or August? Like what is your take?

No, we have been continuously passing on the -- because this needs to be answered based on different product segments. So if you look at the wires, probably since the last 1 year, we must have had maybe 8 to 10 different price increases happening. So based on how the -- only thing, the price increase is happening with a time lag. So if you look at -- as the increase happens, maybe by the time it gets passed on to the channel and the customer, there could be a certain gap. But continuously, that has been happening. Even switchgears, we have had the price increase almost 2 times in a matter of almost 4 months. So that's again like that. So I would say right now, looking at the current pricing, what is going on, we have done the price increases, and there's nothing which is pending from our side. But then it depends how the commodities react. So if it again goes up, so definitely, we will also have to review the pricing once again for that.

Understood. Understood. So what would be the quantum of hike you'd have taken in your wires segment and switchgears segment, sir? Put together, just any sense?

In the switchgear segment, of course, we are talking about hundreds of SKUs, different varieties of them. But in both of them, you can say almost ranging from 10% to almost 24% in 2 different lots. The prices have gone up, depending upon the impact the commodity plays on the product segment. Similarly, wires has been much more. But each time the increases is anytime between 3% to 5% but the frequency has been much higher in the wires segment. In fact last time also I had said in the last call that after many years, we have seen certain increase happening even in the lighting segment because LEDs over the years, we have basically been seeing the cost coming down and down each time. But this year, I'm talking the year ending FY '21, we have seen certain increases happen for the LED products as well.

Okay. Okay. And, sir, just a final question from my side on the large order that we received from the new housing project in Andhra Pradesh. Now is this order, sir -- by when it will be executed completely? And second, what should be the margins? Will it be at the same similar margins which you have? Or it could be margin dilutive, sir?

In terms of the dispatch schedule, we would expect about 50% of that to be executed in the current year and the 50% goes to the next year. In fact, I think since we have got it, because of the lockdown, almost 2 months, the whole process is you can say shifted by about almost by 1 quarter. But yes, there may be -- we need to anticipate some more lockdowns or certain maybe delays happening. But broadly, you can say about 50% of that should get executed within the current year. So in terms of the margin, I would say it is -- we are -- because these are larger orders and this is a good opportunity to play on the economies of scale, so we have been working on it, but I think roughly we should be able to get it in line with our existing margins across the various segments. So we should be able to get it to there.

Malaika, do we have any questions?

[Operator Instructions] As there are no further questions, I would now like to hand the conference over to Mr. Harshit Kapadia for closing comments.

We would like to thank Mr. Seth for giving us an opportunity to host this call and answering all the questions very patiently. We also thank all the investors and the analysts for joining for this call. Any closing remarks, sir, that you would like to highlight for HPL for the year?

Yes. So I'd like to thank everyone for coming out and attending our FY '21 earnings con call. So HPL -- I would just like to reiterate that HPL has a strong product portfolio, and we are likely to benefit from the growing smart meters and the B2C segment and simultaneously create value for our esteemed stakeholders. So for anything, you can all reach out to Dickenson or us directly, should you have any further queries. So I wish you all a great evening, and stay safe. Thank you.

Thank you. On behalf of Elara Securities Private Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.