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

Hello, everyone. It is my pleasure to welcome you to Dickenson's webinar event with HPL, titled Building Strength From a Confident India. Today, we have with us the management of HPL's panelists to answer your questions and to give us more insights about strategy, the future and the prospects of the company. To begin with, we'll start with a brief introduction. We have with us here today, Sonam, my colleague from Dickenson; Mr. Rishi Seth and Mr. Gautam Seth. HPL is a leading electrical equipment company in India, manufacturing a diverse portfolio of electrical equipment, including metering solutions, switch care, lighting equipment, wires and cables. It is positioned as a leader at the waypoint of Confident India's move towards electrification. HPL enjoys a sizable market share of the electric energy meters market in the mid- to upper 20s with one of India's most comprehensive portfolios of meters. The company is also a recognized Advanced Metering Infrastructure or AMI service provider. Another top-performing product in its portfolio is its LED lamps range, in which the company is amongst the top 5 players in India. HPL's manufacturing edge is supported by strong R&D, robust prequalification credentials, established brand presence and a widespread distribution network with a pan-India presence. Thank you for joining us today, panelists. To begin with, it would be great if Mr. Gautam can share a brief introduction on the company for those who are not fully familiar with HPL. Over to you, Gautam.

Yes. Thank you, Shankani. Good afternoon, everyone. So I'll give a brief background on HPL. We started off in 1992. Of course, the group was based way back from 1956. But our focus largely has been on the electrical equipments, covering the entire gamut of metering, lighting, complete switchgear and also on the wire and cable. So anything on electrical equipments and metering, we have been covering. So broadly, our product range is into 4 verticals, which are metering. So in metering, we cover the entire basket of metering products, starting from the single phase, 3 phase, [indiscernible] meter going up to the panel metering. And now when the industry and the technology is changing, so we are into the smart meters. So the complete basket of metering. Any application right from a -- for a domestic household, for an industry or even on a grid level we train. We have been doing that, the meter as a product and also as a complete solution. The other products are the switch gears where we are again having a complete basket of products starting from a near circuit breaker, the complete industrial range covering the MCCBs, contactors, relays, the auto-transfer switches, the onload changeable switches and then going up to the domestic range where we have the MCBs distribution boards and the model of switches. So again, a complete basket of products. Lighting, we are focused on the energy-saving LED lighting. And the range covers the LED bulbs, the consumer luminals, commercial luminals, which are, again, for the offices and the malls and all the commercial establishments, then we have range for the industrial as well as the street lighting solutions, including the smart street lighting solutions here for the smart city. So again, a complete basket of products. In wire and cable, we are focused on the specialty cables and the flexible wiring. So in all, if you see in HPL, we have -- whatever range of products we are into, we are very well invested into that in terms of design, development, the complete manufacturing, which is very well backward integrated and then up to the sales, marketing after sales. So in complete of these products, our revenue streams come into 2 broader verticals, which are meters and systems where, of course, we are talking about the metering, the complete range, the smart meters and the related projects along with that. And the consumer and industrial -- the division where we are talking about the entire basket of products, which is more on B2C. Now if you see, HPL as a company has been able to very well mix the B2B and the B2C businesses and has been able to put in the focus and has been able to grow both of them independently. And I think that is something which really defines HPL as we go forward. And we shall be discussing it later, hopefully during -- in today's time. In all, we are covering the entire Pan-India geography. We are also exporting our products to 42 countries. So in all, in terms of product certification, we have our own laboratories. We have a huge R&D team, over 120 people, who are working on R&D for all the complete range of products, including the newer technologies of smart meters or even communications, software, IT infrastructure. So all the related technologies involved in implementing and making the products connectable are all being worked on directly by us. We have a lot of certifications. IC [indiscernible] or lot of international certifications, which are again -- which help us to export and make our products acceptable in global markets. So this is how our focus is, and this is how we are moving on those lines, looking at the great opportunity, what is -- what lies ahead for us.

Thanks for that introduction, Mr. Gautam. Moving on to our first question. The company is in an expansion phase. Can you please share what HPL's growth strategies are?

Yes. If you see our product verticals are into 2 segments. The meter and if you see the smart meters, which are coming in, they have a huge potential in terms of in terms of the market size and the way the government is going ahead with the RDSS scheme. So in terms of strategy, our aim will be definitely to cater to this big demand, which is coming in. Just to put some broader figures, the government is investing almost INR 3 lakh -- INR 3,000 crores in the RDSS scheme. And smart meter forms a very important part of that scheme, where the government is talking about replacing INR 25 crore smart -- INR 25 crore meters with smart meters and -- with prepaid smart meters. So it's going to be a huge opportunity. There are, of course, internal -- there are deadlines what happens until March 2023 and then thereafter, the government is looking to incentivize the states. Again, a part of the meter cost is also borne by the central government. So overall, if you see the scheme has been designed in a very big way with a view to cut the AT&C losses to 12% to 15%, what the government is targeting. So with this scheme in the background, our company has -- we have been since many years working on the smart meters, we have been, in fact, one of the leading manufacturers of that. And thanks to our R&D and the implementation of technology, we have been completely ready to exploit this kind of a huge opportunity which is coming in. So in terms of our CapEx, in terms of our manufacturing capacity, the product, certifications, everything is currently in place. We are, in fact, out of the over INR 400 crores of pending order book as on date in meters, more than 50% of that are already smart meters. So we have already been doing it. But now under the new scheme, the bigger volumes are going to come in, and that is where we have a very strong strategy to exploit the metering part of it. While we look at the other products other than the metering, which cover the consumer and the industrial products, here again, we have a clear strategy of expanding the market. We are working on the general expansion. Our product range are again pretty -- in each of the categories where we are present, we have a very wide range of products. And each time each of our factories, each of our verticals are working continuously to expand those product range. So a wide product range, a complete diversified consumer base. So if you look at HPL, we are one of the companies in the space, which cater to every kind of customer, be it a utility, be it a municipal corporation, any government department, industries, OEM or a panel builder, even a builder or an individual homeowner. We are, in a way, we have customers who are -- we cater to all these types of customers. So it's a very diversified product portfolio, a very diversified customer base, what HPL currently has. And that's what our strategy is. We are also working on encouraging the cross-selling happening because we do have a lot of our customers who are meter customers or switchgear customers or even lighting customers. But trying to cross-sell between these customers, trying to push in the basket of products through our dealers, distributors and the retail channel, what we have. So that is going to bring in a lot of the growth going forward. So that is it. Apart from that, in terms of when you look at the B2C market, we are focused on the brand building. So this covers both the ATL and the BTL activities. Post the lockdown, our focus had shifted more on the BTL part for obvious reasons that a lot of the economy was shut down or there were a lot of disruptions happening, but over -- since the last quarter when we have seen the economy really pick up and our own sales after the first quarter, which have picked up. So we have again come back to establish the HPL brand in a bigger way. And what we are normally known as is more on a -- more as a technology brand, we are -- our focus always remains there. So that gives us an edge, which will definitely put us on a growth path going forward.

Thank you for that insightful answer, Gautam. Moving on to our next question. We know that the company is in the metering and systems and consumer and industrial segments. So what does the future outlook of these 2 segments look like?

Rishi, you'd like to add something on the metering part on this?

Yes, sure. I'll add. So in the metering area, our current market share is between 23% to 25%. And we are one of the leading manufacturers [Technical Difficulty]

Is there some audio issue?

Mr. Rishi, can you hear me? I think we're facing some issues with his video and audio. Let's just... We move on to the next question and circle back as we -- Mr. Rishi rejoins us. Yes. So can you give us some guidance on margins in the consumer product business?

Yes. So if you see our -- overall as a company, our EBITDA margins are anywhere between 12% to 13%. But more specifically, if you look at the non-metering business, the EBIT margins on switch gears are generally much higher. They have been around 15% to 17%, Lighting being around maybe 10% to 12%. And the wire and cable being much more commodity-driven has been much lower at 3% to 5%. So overall, the consumer business also is almost anywhere between 11% to 12%. Now since the last 1.5 years, we have been seeing certain global inflationary pressures. The metals have been on a continuous rise. We have seen copper prices really go up. We have also seen the steel prices or even the nickel and all the other metals or industrial plastics really go up at a much unprecedented pace. So that has, in a way, put pressure on the complete consumer business margins. Now because of being in the B2C nature, the advantage what we have is that our prices get eventually -- any increase in prices get passed on to the consumer. But of course, the pass-on happens with a slightly lag in time because any increase what happens today, it may take some time other than wires and cables, which have maybe 2 to 3 weeks of lag by the time they get implemented. When one looks at the lighting, switch gear or even for that matter, the meters, which are selling in the local market, the increase generally takes a little time to happen. But nevertheless, in the last 1.5 years, we have had almost 3 to 4 increases in the market. So eventually, the increase in cost did get passed on, but with, again, as I said, with a slight lag. So the margins have been under some pressure since the last 1.5 years. But thanks to our R&D, we've been working on changing certain designs or even trying to vary the product mix, trying to keep up the margins to a double-digit level, which I think successfully, we have done that. Now going forward, since, in fact, almost from March, we have been seeing certain drop in the -- or cooling off in the commodity prices, even the supply chain disruption, what was there for most of the products have also been sorted out. So as we go forward, of course, we -- the inventory, what we are already carrying it takes time for it to get consumed. And eventually, the newer purchases or the newer inventories, then eventually, that should give us a much better margin opportunity to increase our margins. And that's what we hope that in the future coming quarters, we hope to see better margins coming in if the commodity and -- commodity prices remain at these current levels. So that should give us something of an upside going forward.

Sounds good, Gautam. I think since we have Mr. Rishi here again, we'll circle back to the previous question. So HPL is in the metering and systems and consumer and industrial segments. What does the future outlook of these 2 segments look like? I think you're muted, Mr. Rishi.

Yes. Sorry, it slips my mind. So in the metering segment, as Mr. Gautam clearly explained that the next 7 to 8 years to 10 years are highly robust because the entire metering systems, not only the meters, but even the metering systems of the MBC, the metering, billing collection and the entire landscape is getting changed. So we are seeing a highly robust time, and we are highly excited about it. And we are fully geared up to handle this particular onslaught of increased business. In the field of consumer and industrial areas, again, we are seeing a good growth, a big jump because in the -- the entire CapEx cycle has started to grow up and we are getting increased inquiries from there. So we feel that both consumer side is also growing because our number of channels have increased. Our number of -- our touch points have increased and our performance, which was -- is already good because of the strong design and the strong product manufacturing. We will -- we are likely to be rewarded in a very handsome way from both these segments of consumer and industrial. Thank you.

Thanks, Rishi. So it's evident that smart meters are one of HPL's leading products. How much of the market are we catering to in the smart meters segment? And what does the future of this product look like?

So currently, our market share is between 23% to 26%. And we hope that because the industry size is going to increase, so we hope to maintain this particular market share even while the industry is going to grow. The future is extremely bright because that is what the future is now. And it's a globally acceptable system. It's not only in India. It's a global program to switch over to smart meter.

Thanks, Rishi. So our next question.

Yes. So I'd just like to -- yes, Shankani. Yes, thank you. So if you look at the smart meter opportunity in India, now this -- I normally say that this is probably the world's largest -- it's going to be the world's largest deployment of smart meters anywhere in any country. And the way the government is mobilizing it, making the policies. And with the new -- through the nodal agency, the AMI SP approvals, the panel meant what has happened. I think the opportunity, what lies ahead is going to be very large. And this, in fact, is going to grow the overall metering industry to a very different level, what is current [Technical Difficulty] change and this is something which is [Technical Difficulty]. This puts HPL because we are currently fully ready to exploit the opportunity with our R&D certifications, with our manufacturing capacity, all the CapEx has already been done. And the only thing we need to now do is to roll out. And I think -- so this is something what, as Rishi was saying, is definitely a good time ahead for us in terms of the smart metering.

Thanks, Gautam. So our next question, what is the EBITDA outlook for financial year 2023?

We see the EBITDA currently is anywhere between 12% to 13%. So I think some bit we just discussed, but I'll just like to highlight that all our different product ranges, we have a different margin structure for each of our product categories. And -- so the challenge for us is always maintaining the procurement to the right level so that we are able to maintain the gross margins and also to have a good product mix. So that also makes a very important contribution towards the EBITDA and the overall margins, what we have. So -- going forward, I think we hope to -- in the current year, I would say the -- anywhere between 12% to 13% would be a good EBITDA margins. But in the longer term, if you ask me the company is definitely working on -- as the dynamics are changing and as newer technologies are coming in and new market avenues are opening up, we definitely see the shift in the EBITDA margins to be growing higher, maybe even going up to 14%, 15%. Now I'll just give you some examples of how HPL is catering to certain new age technologies. So now if you see smart meter is definitely a technology for the future. We are very well placed into that. If you look at the smart cities, what the government has been rolling out with such huge investments. We have our street lighting, smart street lighting solutions, which we have been supplying. We have already completed 2 cities street lighting, which is Bhopal and Jalandhar. We are already doing 2 more cities currently. So we are well placed in that also. If you look at the -- anything on the smart grid, what is where we have a lot of our products which go into that. If you look at the EV, the EV infrastructure right from the charging infrastructure, we have our equipments going there, even including the 2-wheeler EV vehicles, we have been supplying our breakers into for those vehicles. 5G is going to be a very big opportunity. And the company has also placed very well on the 5G opportunity. Incidentally, we have been a large supplier even when the 4G technology was being rolled out. in terms of our cables and even the other switchgear parts. And the way 5G is coming out with such aggressive plans by the government, we again are very hopeful of doing that. So all the new age technologies, what you see, which are coming around, HPL, thanks to the R&D, what we have, thanks to the focus on technology, what we have, I think that places us very well. And each of these adoption of new technologies gives us an opportunity to enhance our margins because then we are not playing in the average market. We are not -- obviously being a large player, we are also into that. We are also playing in the mass market, also in that. But definitely, the focus on these types of technologies is going to give us an upside on the margins. So going forward, in the longer term, I definitely see that there will be a shift in the EBITDA margins of the company going forward. But on a short term, for the current year, I think anywhere between 12% to 13% levels would be a good level for us. Thank you.

Thank you for that insightful answer, Gautam. So going on to our next question. Which market looks more promising for HPL? And what are some of the company's internal targets to achieve? Are there any topline or bottom line targets for the company into the next 3 or 4 years?

Yes. So in terms of our market, we address a pan-India market. We are present in every state, in fact, looking at even not only the state capital, but also looking at the -- every city, town, whether it's a Tier 2 or Tier 3 city, HPL has its presence everywhere. So we are currently targeting a retail network of over 100,000 retailers. And I think going by the past 2 years, the target is very well achievable in the next maybe 18 months or 2 years, we should reach that figure. So that's a -- the network expansion is happening continuously. In terms of our customers, as I said earlier, we are one of the few companies in the country in this space where -- our focus has been on the retail side. It is also on the commercial, industrial, whether it's a city infrastructure, the municipal corporations, utility for the government. We are very well diversified in terms of our customer base. So in terms of markets, I think although North and West markets are sometimes -- from a trade point of view, they are stronger. But otherwise if you look at our B2B segment or even a lot of other focus, where we reach out to the customer wherever they are. And in fact, -- if you look at top maybe 500 companies, I think, well, a very large majority of them are all our customers in some way or the other, whether it's switch gear lighting, wires or somewhere or the other, we are connected or reaching out to them. So in terms of our growth on an immediate basis, I think in the next 3 years, definitely, anywhere between -- any figure over INR 2,000 crores to INR 2,500 crores is somewhere where we see our business going forward. Now one has to keep in mind that the estimates what -- even if one goes by a reasonable estimate of what the meter -- the upside meter is, I think this figure is easily possible because in terms of smart meters, maybe next year or the year after that, we definitely would see a very, very big upside going forward. In terms of the market size, in terms of the current inquiries which are there, they're very large. They run in to thousands of crores. And with -- as Rishi was saying, the market share, what we maintain nearly up nearly 25%, even if you have to maintain that and then as we -- as the industry is growing, we try to enhance those with the advantage of what we have. Definitely, in the next 3 years, we see our sales to be on a much higher side. On a short-term basis, for the current year, we definitely see almost over 20% growth. We have already projected that to the investors, and we see that -- we see HPL being on track for that. Last year also, we did see a high double-digit growth. So overall, the way the opportunities for both our business segments are, the way the current preparedness of the company is definitely, we -- the targets what we are talking about seems achievable.

Pushing further into the future, what is HPL's long-term plan? And where do we see ourselves say, in the next 10 years from now?

Rishi, do you want to go for it?

Yes. So we see ourselves -- I think Gautam, that figure, you should be able to take it because you have done the analysis.

Yes. So if you look at the -- I just say then I'm sure Rishi can add to that. So if you look at the -- let's say, on the 10-year horizon for the company, we are very well entrenched into the -- like on the metering or on the consumer and industrial side. And both these have a reasonable -- if you look at the medium and the long-term outlook, we definitely have a -- both of these have a very strong medium- and long-term outlook. Now meters, of course, we have discussed at length. But these outlooks are going to -- of course, the technologies are going to change. What makes us confident to approach these next 10 years is going to be that we have the technology in our control. We have a very strong R&D, which can adapt to any other technologies or technological changes, what are happening. We also have a very strong manufacturing setup, several factories, all of them very well backward integrated. So that is again going to give us the strength to go forward. So in terms of numbers, of course, I will not -- here, I will not talk very conservative because I feel looking at the company going ahead in the -- for the 10 years, I think for us, the aim would be anywhere to reach to cross INR 10,000 crores of sales, look at EBITDA maybe 15%, 17% higher. So that is something where we look the company to be in the 10 years. But again, it's not a far-fetched, something of what we're talking about because at the current levels, the way we see the preparedness what we have and the way the technologies are changing, we are very prepared to adapt to those sustaining technologies -- and that is going to probably put us [indiscernible] area.

Thank you for that insight into the future, Gautam. So our last question before we move on to questions from the audience is how does HPL differentiate itself from other peers in the market? [Operator Instructions] Okay. So I'll just repeat the question, and then we'll go ahead. So how does HPL differentiate itself from other peers in the market?

Yes. So HPL has certain key differentiating parameters from its peers. So at length, we have discussed about technology. So even in the field, forget about the metering because we have discussed it at length. Even in the field of switch gears, we are specializing in LB switch gears. And in the field of lighting, in the field of communication, smart lighting, in the field of the domestic switch gear products, in the field of wires, and certain amount of cables, specialized cables. Technology differentiates us from the rest. We have the ability to gear up the technology of the latest, covering the latest standards, covering the latest aspects of the business. Plus, our key focus when we develop the technology is the requirement of the customer in future. We always consider its future requirement when we attempt to develop a particular technology. So that puts us 3 steps ahead of the current competition. That's one area. Another area where we have a differentiation between others is our track record. Our performance is very strong because, as you know, that all the electrical products are run and governed by global standards, the IEC global standards. So when we put our products into certain applications. In last many years, we have always got strong performance as our reward for that. So that we feel that going forward, that is a big winner, and the customers do have a large amount of faith in us. So that particular thing brings us a lot of repeat customers. And so even if you take a new area where we enter, for example, a 5G cable which we give, today, we are -- sorry, 4G cable, which we give. Today, we are recipient of a repeat from the same customer. Otherwise, these are new areas and the customer could have always gone to any other player, but he reposted the faith on us and we came in. Similar in the case of the smart cities, again and again, we have been called to do the demonstration. We have been called to give talks on the technology because that particular thing is working. And so the third aspect is we are getting a lot of repeat customers. The fourth area is again that our domain knowledge, both of the product and at the -- of the experience at the particular field level is very, very strong. We have an in-house team, and we have strong domain knowledge, which helps us to put ourselves much ahead of the competition. And today, when you take the case of backward manufacturing, our Chairman's motto was always backward manufacturing. We went into the listing even before the [indiscernible] airbus initiative of the government was put in. So we are always a backward integrated company. And if you witness and see our plants, they are always a backward-integrated company. So that is today helping us a lot when we go forward. And that puts a very strong differentiation with our peers. Thank you.

Thank you, Rishi. So it's interesting how you emphasize the backward integration of HPL. I think at this time, we'll move on to some questions from the audience. I'll now hand over to my colleague, Sonam, to moderate the questions from the audience. Over to you, Sonam. Thank you [indiscernible]. Thanks a lot. Thank you, Mr. Gautam and to Rishi for giving your insights. We have a lot many questions, which are posted by the participants. So I'll be taking questions one by one, and I'll be selectively taking those questions which are not already answered by both of you. The first question is about debt level. What is your outstanding debt level currently? And what is the ideal debt level that you'd be looking forward in the medium term?

Yes. Yes. Our net debt levels are steady around INR 500 crores. And our -- the debt-to-equity ratio is around somewhere around 0.75. That's again quite steady for the last 2 to 3 years. So in a way, the way we are looking at growth, what we have seen last year and the current year growth and even probably the next year growth, we do not see any increase in the net debt. And so our internal aim is that we increase our business on a double-digit growth, almost, let's say, 20% this year without adding any new debt. So that would make our internal ratios much more better -- but also for us, that the debt-to-equity ratio, we would like to maintain it anywhere below 1. So that would keep us on a healthy way going forward. Now you must realize that a certain part of our business, almost more than 40% of our business is to the utilities where the debtor levels are high. So the nature of business is such that it does entail a high level of working capital requirements that is there. But nevertheless, as I said earlier, thanks to the product mix, thanks to a lot of other strategies what we have adopted, we have been able to keep our debt equity ratio at a comfortable level. And going forward, we see certain improvements in terms of even our debt ratio. For the simple reason that the consumer business has been seeing a lot of implementation of the channel financing. As the -- our channels are getting expanded, the channel financing penetration is improving, so that is going to help us quite a lot on reducing our working capital requirements in that business. Even when we look at the way the entire smart metering is getting structured, hopefully, by next year, as the either AMISP procurements start becoming larger, maybe we see a very strong improvement in our debtor realization and the working capital. And if that were to happen, then definitely, we can see a big shift in the overall thing, and we can definitely target a much higher debt reduction in the future. But right now, in a short-term basis of, let's say, 6 months or even up to 18 months or so, we would -- we can generally say that we will keep -- our debt levels will be at the current comfortable levels and with the sales going up.

Okay. Okay. Thank you so much for the detailed answer. So next question is about your business segments. How has been the trend been for our share of business between B2B and B2C segments? What positive qualities do each bring to the table in terms of building quality revenues?

Sorry, the last part was not clear. Can you just repeat the last part?

Yes. So let me speak the question again. How has the trend been for our share of business between B2B and B2C segments? What positive qualities do each business segment bring on to the table in terms of building quality revenue?

Okay. So if you see, especially if you were to pick up our, let's say, the last quarter results, it's nearly 50/50. But broadly, if you were to go back, let's say, last 5, 7 years, the ratios have always been almost 45, 55 or 50/50. So on a broader basis, both the segments are equally strong, both are a major contributor to the revenue and the margins practically equally. Now coming to -- now obviously, why -- if you look at the benefits what are there, -- the B2B has a very big upside as we discussed on the smart meters. And in terms of large-scale manufacturing and to give us a very healthy margin, that is where we -- as a company, we look at the smart meter segment to be in the future. And that will be not only a revenue driver but also a big margin driver for the company, and that's how we look at it. Of course, the working capital may be a little stretched there, but definitely very strong on the margin side. And with the huge volumes, the number -- if you look at the amount of tenders which are there, the active inquiries which are there and the sheer volume in terms of value and volume in terms of numbers, it is mind-boggling figures. We are talking about really a very huge infrastructure rollout when we look at the meters. But when we look at the other part, the B2C part, which is more consumer-facing, here, of course, the brand plays an important role. We are, of course, working on the brand. The network expansion plays an important role. So here again, it's got an upside on the volumes. But the working capital cycles are much better. And definitely, but there is definitely a lot which the company needs to do to increase the channel, to increase the market awareness to make it much more like that. So obviously, both sides have a lot of benefits and the internal strengths what the company has. And obviously, they have their specific challenges. What is interesting for HPL Electric is that we have been able to mix both the B2B and B2C. And when I look at a lot of peers in the market what we have, either they are totally B2B or they're totally B2C. But we have been very, I would say, ably and successfully been able to mix both these to put a very strong focus right from a design development into manufacturing, into sales, marketing, and after-sales and then look at how we are able to grow this. And when we talk about the next 3 years and the next 10 years, I think both these segments have a lot to contribute in terms of the revenue, the margins and also from the value creation when we look at from the stakeholders, what are there. So I think this is something what is unique to HPL. And definitely -- of course, the meter, if it goes in a big way, the ratio may change. But broadly, we see the ratios going forward, at least in the near future to be maintained.

Okay. Just one follow-up question to this question. So going forward, where would the management like to take this B2B and B2C ratios in the medium term?

Well, I think we look at business from the potential point of view and from the market share point of view. So we do have dominant market share in smart meters. We also have in certain category of switchgears, also in LEDs. In certain part, when you look at certain segments of, let's say, specifically the -- certain of our products going to the telecom industry or other things, definitely, we are building up a market share. So for us, the -- we need to grow each and every of our product range, each of the segments to the highest level we can. So there is no target as such for us to manage the ratio on this. It happens that each industry has its own opportunity, it has its own challenges. But broadly, when we look at it, as I said earlier in my last answer, that we are looking very positively for both these segments to grow. In the near future, we see the ratio almost to be at these levels. But maybe going forward, if certain market dynamics turn upwards, then definitely, we will exploit it. So the idea is not to have a ratio which is very well controlled. The idea is that the individual businesses must grow and to their best potential, and we definitely look at a market share. So I think that's what our endeavor would be.

Okay. Thank you so much for answering that. The next question is about your meter segment. Are there more opportunities of growth within the meter segment as well? And what are your strategies in expanding the reach for other products towards more growth beyond meter segment?

Can you repeat the question, please?

Yes, sure. The question is, are there more opportunities for growth within the meter segment [indiscernible]? And what are your strategies concerning expanding the reach for other products toward more growth beyond smart meters?

Okay. So meter domain is full of opportunities right now. Apart from the energy meters per se, there are huge opportunities on the system side and the software side, okay? So we are in the HPL inside those also. And we have taken up a few projects for the software and the systems also. Apart from that, we are also there in the -- what is it called, the AMISP, which is the advanced metering infrastructure solution provider. So we come as a solution provider under one roof, we have all the domains they are currently. Yes, the share of that is smaller because these are new opportunities which are coming. We are very confident that in the next 5 to 7 years, they will themselves grow to the level of the metering businesses, because the opportunities in these fields are very high, and we are not leaving any opportunity unturned. We are exploiting, trying to exploit all the opportunities available to us.

Okay. Thank you so much for answering that. The next question is about the Empanelment Certificate, which we have recently received. The company has recently received Empanelment Certificate from Ministry of Power. What are the prospects that we are targeting in the tender businesses?

Yes. So we are very fortunate to have become an empanelled bidder in the AMISP projects. But currently, we see next 2 years itself, the tendering worth around INR 20,000 crores to come up. And we feel that we can safely ourselves bid in at least 6,000 to 7,000 worth of tenders.

Okay. Thank you. The next question is about capacity utilization. So what is the current capacity utilization [indiscernible] growth in tender business expected to -- when is it expected to grow significantly, do you see we need to enhance HPL's capacity to certain extent?

Yes. Our capacity utilization is broadly around 60% to 70%. Of course, in the last 2 quarters, the Q4 of last year and the Q1 improvements in the capacity utilization. Nevertheless, we still have a good upside to grow in terms of our capacity. Now in terms of preparedness, when we look at all the opportunities we talked about, especially the smart meters and then, of course, even in the consumer and industrial, when we look at the other opportunities, we broadly have the capacity to exploit these opportunities. So in near term, we don't see any specific CapEx to happen. But definitely, there would be maintenance CapEx is happening. And there are 2 -- there are areas which as a company we have picked up, especially on automating a lot of our lines. So currently, we have seen a lot of our, let's say, like the smart meter line is getting much more better automated, we are seeing even our circuit breaker lines getting automated. The idea is that -- so that we become much more efficient, faster in our production. And we definitely have a saving in the labor cost. So overall, of course, these are all projects which are -- which have a turnaround time of, let's say, 2 to 3 years, where the paybacks are there. So our factories, we are working on automating a lot of our processes, also on working on the industry for opportunities what are there. So somehow, certain investments are going into that. But all this, I would still include more in the maintenance CapEx as we go forward. Just to summarize on your question, we are currently only at 60% to 70%. We can easily handle the upside going forward.

Okay. Thank you for answering that question. And next question is once again about metering. So the question that you mentioned, we have a market share of 23% in metering. Can you just elaborate on what is the replacement percentage as of now versus 3 years back? And replacement here means from conventional meters to smart meters?

So this is technically the first financial -- first one year for the smart meter to have taken up as an initiative to go up. So if you take it 3 years down the line, it was primarily only the, you can say, the [indiscernible] cable meters, but conventional [indiscernible] meters, electronic conventional meters. So it's only the first one year has passed, in which the trial phase was over and the smart meters got into the play. So our market share before also was the same, around 25%, and it still continues to be the same, in spite of smart meters being introduced.

Okay. Okay. Thanks for answering that. The next question, if I can about smart meters. So can you elaborate on what type of smart meters we sell, for example, single phase, 3-phase smart meter, group meter, the kind of meter we are selling?

Okay. Thank you. So we give entire range of smart meters. They include single phase, 3-phase, LTCT, HT meter, grid meters. And they include net meters, which is for solar applications. They include dual-source meters, which is for 2 sources of power, et cetera. So we give the entire suite.

Okay, okay. Thank you. The next question is about the phase light -- so phase light is the upcoming segment? And how are you seeing this segment? Can we see LED will keep on reducing and government lighting or phase lighting to take the existing product space of us? Can you elaborate?

No. Can you repeat the question? What lighting?

The question is about phase lighting segment, how can we improve this segment?

Phase lighting?

Yes.

So by phase lighting, are you meaning the smart city lighting or?

Yes, smart city lighting.

Okay. So smart city lighting has got 2 key areas of expertise. One is that the light needs to be dimmable. The light needs to be without an on-off switch. It has to be based on the conditions of the weather for on or you're putting it off. And then third thing is that it has to have a time of the day dimming cycle. So you have to preprogram the dimming cycle for the duration of the whole day. And the last benefit, the most important benefit, it has to be communicable. And for communication, it has to be a recipient of various sensors built within the light to take the data and then communicate with the server or the head-end system. So the future is extremely bright. We anticipate -- it's maybe a little futuristic to say today. But like the smart meter, which has happened, the story of smart meter, which has happened, very shortly, the story of smart lighting will also be the same, whereas every single light will be shifted to smart lighting. That time may not be far off, but today, it may be a little far-fetched. But that is where the time and when that time comes, we will be -- we are already ready, and we'll be fully geared up to take that challenge.

Okay. Thank you so much. The next question is about dealers network. Can you elaborate on dealer network? How is it different from our competitors, which we make our channel partners to give us equal or more stickiness than our peers, at least in our B2C business?

Yes. So -- so our endeavor is to enhance our network of dealers and our retailers, the sub-dealers. So definitely, we have a strategy while we map the markets. We are looking at having our dealers well placed across the channel. Now what may differentiate our dealer to come to us or rather go to the competition is that we have a huge basket of products. So there are a couple of things what we normally look at. We are -- today, we can replace any or a couple of companies by giving our complete basket of products. So a retailer dealing with HPL can today sell the complete range of consumer luminaires, you can sell the bulbs, the complete consumer lighting, he can do wires, he can do MCBs, he can do switches. So a very broad range of products he gets from a single source. So that is something what we exploit while we go into the market. Our strength over the period, over the last 50 years, what the group has always built up has been on a personal relationship. So be it our supply partner or retail partner, the relationship has been something that has kept the whole thing bonded together, all the stakeholders bonded together. So there are -- apart from this, we are also doing a lot of channel-level activities. So as I said earlier, probably ATL marketing has been a little on the backside post the lockdown. But on the BTL side, we have been very strong. We have been doing a lot of channel-connect programs, a lot of electrician training programs. And I think having a large team of people, what we call like an [indiscernible] team, which are visiting each -- like each person. There are hundreds of people who are visiting every day, like 15 to 20 sales points. and they are all geo-tracked through the software. So in a way, the company has adopted a lot of new strategies, what we are doing for channel expansion and which ensures a greater penetration of our products in the market. So definitely, every company goes with its strength, have a different unique character. So similarly, HPL also goes with a very wide range of products. We are known for our quality and consistency in quality. The -- as I said, the kind of connect what we have through the relationship, that definitely differentiates us and a dealer wanting to stick around with us rather than move to the competition. And over the past 2 years, the consumer electrical business has seen a strong double-digit growth over the last 2 years. So I guess the strategies what have been put in more recently are showing results. And I think this year also seems very promising. So hopefully, we will definitely innovate and look to really enhance our network going forward.

Okay. Thank you so much for answering that question. The next question is about India is going on all fronts toward becoming a $5 trillion economy within a few years. How is HPL expected to leverage India's confident growth story?

Yes. Rishi, you'd like to go for this or?

Yes, sure. So HPL is very confident to take upon the hugely confident India story. And 3 platforms, which our strength is based upon is the fact that we are a backward-integrated company. So we are already modeling the AatmaNirbhar Bharat, which has been our front story from the earlier time. As -- and our performance track record is very, very strong. And we cover all LV applications. So when you talk about the electrification right going on, we cover the entire electrification right on the LV side. So based on that particular thing, we are extremely confident to cater to all the segments such as real estate, utilities, the hospitals. You can say public works, entire public works infrastructure area, national highway infrastructure, state highways infrastructure area. And the smart cities, which is the pet project of the government to take up smart cities and spread it all across the cities -- or spread it all across the country, which will also lead to smart villages, smart towns, et cetera, et cetera. Then we are very -- getting specialized also, which is our slightly newer application, but we have taken it with a lot of strong strength is a rural application. So we have made our products and our systems and our processes go with the ruggedness required for rural applications. And that, again, is going to become our quota areas. So apart from that, the regular commercial, industrial, institutional clients, 5G clients. So all these areas represent the new model India, solar application, we have very strong in giving the systems and the supplies for gigawatts scale of solar applications. We have already completed more than 72 gigawatts worth of solar installations of the electrical products. So the new energy areas, which the government is stepping forward is of the 5G, is of solar, is of wind and also the smart cities, the smart metering, we are the centerpiece in all of them.

Okay. Thank you so much for answering that. With this, we are moving toward our last question. Last question is, do we have any plans to hive off any business, maybe the low-margin business?

No, no, we don't have any plans to hive off any of our business. In fact, all the different divisions, what we have are combined together with a very clear strategy that we present ourselves as a basket of products. So of course, there are -- the businesses what we have -- some of them are higher-margin categories and some are lower margin. And within those categories also, there is a product mix play what happens. So although Switchgear is a high category, again, when one goes deeper into it, on a product-wise or SKU-wise analysis, there are some products having much higher margins and some lower. But I think for us, it is important that we offer the complete basket to our products. That is what are -- to our customers because that is what our customers expect from us. We are a single-source supplier of all low-voltage electricals, metering, lighting and including wire and cable, now getting into even solar and other things. And I think that basically is the biggest strength. So for us to just drop out if one product or one category is, let's say, having a little lesser margin. But I think overall in bringing the business, maybe a wire could be a little lower-margin, but in a building installation, that is some -- that is one product which is typically installed first. And if a wire gets into, let's say, any builder or any apartments, probably then the probability of supplying the switchgear and other products also becomes very high. And once that is pulled in, the overall margins improve, and the opportunity to sell the higher-margin products also increases. So eventually, as I said, cross-selling is definitely something what we are working on because that is going to enhance our turnover in the next 3 to 5 years. And that is it. So all these have been well thought about and placed. And so right now, as I said, there is no plan to hive off anything or do like that. In fact, there are certain other related categories or related products, which constantly we are working. So if you see every quarter, the R&D department in each of the factories, each of the product categories are churning out new products, new variants of products which are coming on -- coming into way. Also, we are -- as we are exporting, we are present in 42 countries. So there are a lot of requirements coming out, which are more country-specific. So some things could be based on getting certifications done in other countries or certain -- the customer requirements come in, which are very typical of that specific country. So our R&D is very well equipped to cater to those adjustments or the new variations, what need to come out in our existing products to cater to the customer requirements. So that's how we are working.

Okay. Okay. Thank you so much. There is one more question here, which all online website HPL is [indiscernible] selling products online? Are we all -- this is about online selling, which websites are we using? Or are we selling our products online?

Yes. We are currently available on the leading websites, mainly on certain lighting products. But I think that is definitely an area which we need to look at in the future. So we have done a sizable amount of business, but I think the way the markets are evolving, definitely, we see a big opportunity, not only in the B2C, but now there are a lot of B2B online opportunities which are coming up. So we have exploited those opportunities also. But I think, yes, -- that is one area which we would see ourselves to be doing much better and to be growing in a bigger way, definitely in the future.

That was the last question from our end. Thank you so much, Mr. Rishi and Mr. Gautam for your detailed insights.

Thank you. Thank you very much.

Thanks, Sonam. So before we wrap up our session for today, I'd like to ask Mr. Gautam to share some concluding statements with us.

No, it's been, I think, good interacting on this platform, and we really thank you. And from HPL side, from Rishi and myself, I think what we can say is that definitely, the opportunity for our businesses are very strong in the near and even the long-term future. And as a company, we are definitely looking to exploit them and really add value to all the stakeholders. And I think our commitment definitely is there very strong for that. So thank you all for coming here, and thank you, both of you for interacting with us. Thank you very much.

Thanks, Gautam. Thanks, Rishi. Thank you to all our viewers now and in the future. This event was hosted by Dickenson, which is HPL's Investor Relations representative. To know more about HPL, about Gautam and Rishi, do refer to the Investor Relations resources present on the HPL website or feel free to reach out to Dickenson directly. Thank you to our panelists. Thank you to Sonam. Please have a great day.

Thank you.