TTK Prestige Limited (517506) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to TTK Prestige Limited Q2 FY '21 Post Results Conference Call hosted by AMBIT Capital Private Limited. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Dhruv Jain from AMBIT Capital. Thank you, and over to you, Mr. Jain.

Thanks. Welcome to the 2Q FY '21 Earnings conference call of TTK Prestige. We have with us from management of TTK Prestige represented by Mr. T. Jagannathan, the Chairman; Mr. Chandru Kalro, Managing Director; Mr. K. Shankaran, the Whole Time Director; and Mr. R. Saranyan, the CFO of the company. Thanks, and over to you, sir, for your opening comments.

Good afternoon. This is the Q2 conference of TTK Prestige. In Q2, we had a very, very good second quarter. We bounced back from the lockdown and so on, and we did not anticipate this. So we could have done much better if we had the stock or if our vendors had ramped up as quickly, but because of the lockdown a lot of their labor had gone away to their parent states Bihar, Orissa and so on. So we could not ramp up quick enough, but we're happy with the result. I'll leave the floor open to questions.

[Operator Instructions] Your first question is from the line of [ Disha Seth from Anvil ].

Sir, I just wanted to check what is your outlook for cooker and cookware considering the environment?

Well, the cookware outlook is excellent, actually very, very good. The pressure cooker outlook also had improved dramatically since August, and we are seeing double-digit growth, in fact, near 20% growth for the last 3 months. I'm including October in this in the first month of the third quarter. So we are pretty buoyant about these 2 categories.

So sir, when you mentioned that 20% growth, you are saying about pressure cooker?

Pressure cooker and -- yes.

And cookware both?

Cookware will probably be more than 20%, if we can supply.

Okay. Sir are the supply issues solved? Better than Q2?

Yes, they're much better now. Yes.

Yes. And sir, secondly, I just wanted to ask last 2 questions. What is the market share of us in cooker -- pressure cooker and cookware?

Well, the -- in pressure cooker, the market share in volume terms are near 30%. And in cookware, we are over 35%.

Okay. And which was -- how much it was last year?

Around similar range only.

Okay. And sir, in terms of steel pressure cooker, how many products -- like from the pressure cooker sales, how much is steel products? And how much is aluminum pressure cookers? Like is it 75%/25% or...

Around 70%/30%.

It will be 70%/30%? And sir, in terms of competitors, are they in the same line or they are still with more aluminum?

Sorry, say that again?

So in terms of competition, I'm just trying to understand is their mix around same, 70%/30% aluminum and steel cookware or cooker, pressure cooker or...?

I think our share in stainless steel would be higher.

Next question is from the line of Sameer Gupta from IIFL Securities.

I have a few questions, if I take on one at a time. Sir, so the supply chain issues that you have highlighted in your press release, could you elaborate a little more on these? Was this an industry-wide phenomenon? Or it was specific to your own? Because, sir, the peers in this field have seen pretty good growth this quarter, like Gandhimathi has seen a 20% growth, Crompton and its appliance business has seen a 30% growth. So just trying to understand this July decline for you?

So when we've opened from the lockdown, obviously, no one had an idea of how the demand was going to pan out and many of -- you know that in some cases, especially in the product that you just mentioned of Gandhimathi which is pressure cooker -- I mean mixer grinders and gas stoves. For us, they are outsourced out of vendors. Now our vendors had lost their labor during the lockdown and they couldn't get them back because each of these places had very different quarantine rules and it was very difficult for them to get back the labor. It took a good 2 or 3 months. Unlike that, Gandhimathi, for example, has their own manufacturing on these products. So some of these problems came in. So we -- by the time we actually stabilized were well into the second quarter middle, that's where we were coming in. And also the fact that the demand was far higher than what we had anticipated. And therefore, you are seeing this. That is why I'm saying to you that you must look at the August-to-October period, which has been very, very robust for us during this period. And we are at the 20% level of growth after the things are stabilized.

Great, sir. And this kind of trend has not been visible in cookers, is it? Because cookers have been a big -- cooker has actually seen a decline for the quarter despite this good growth. So is there a similar problem you faced in cookers also in July?

Even the pressure cookers, and I'm talking about volume growth has been in the region of 20% during the period of August to October.

Got it sir. That's very helpful, but what I was asking was in July, the similar issue of labor was impacting our pressure cooker segment also?

That is what I was about to tell you, we had to also realign our promotion. We have an exchange scheme, which we had to realign to 1-month later because we had the lockdown and we lost the month of April. So it was also a promotion-driven issue. And that is why our growth started from August because things had to come fall in place on that month onwards. So all got [indiscernible].

Got it, sir. That's very helpful. And secondly, sir, this 20% kind of a growth, how sustainable do you think are these demand trends? I mean is there an angle of pent-up demand here or there is just because increased in-home cooking and demand for convenience products, will that offset? Or is it enough to offset? Because why I'm asking this is because even before COVID, our growth was growing in low-single digits and the overall macro in terms of purchasing power and income level, that has only deteriorated because of COVID. So how do you see this demand trend is sustainable?

For the short term, it does seem like it's going on well. I don't want to comment on what will happen in the medium and long term.

Focusing on the next 2 quarters. Long term, once the economy improves, we will know whether it will go back to the '18, '19 [indiscernible] or there will be further growth. All of us are keeping our fingers crossed on that.

Got it, sir. And one last question, if I may squeeze in. This is -- particularly on the margin front, sir, and this quarter, actually, across players where there is a large unorganized component, we are seeing a significant margin expansion driven by the lower trade discounts, cash discounts and all. And we are not witnessing a similar kind of margin expansion in TTK. Input cost, you can correct me if I'm wrong, in general, are on the benign side, so what is happening on the margin side? And any outlook you can share?

So listen, we were very clear that we were going to protect the interest of all our stakeholders in the system. So we have made no knee-jerk reactions, no changes to our pricing policy, no changes to our advertising policy. We haven't saved advertising money to shore up margins. We haven't thrown out people to shore up margins. We have done things to keep things as stable as ever. And I am sure our channel partners are appreciating the fact that we have not shortchanged anybody. In this entire process, even though we had a difficult time supplying, we were being as fair as possible to all channels so that we do not upset anybody. So we have looked for stability and sustainability rather than any short-term gain.

Next question is from the line of Achal Lohade from JM Financial.

My first question was with respect to South versus non-South, if you could comment about the recovery part? And specifically, with respect to the cooker, cookware as in the rural growth?

So we are seeing that the South is relatively speaking at a lower growth than the non-South. That is one thing. Secondly, we are also seeing that, relatively speaking, the lower pop strata, which is the Class 1 town downwards, you're seeing a higher growth than your metros. So that is for sure. I think the rural market demand, which is getting satisfied out of feeder towns, we are seeing a very positive development there also. Even from the online sales, we see that the smaller towns are showing a higher growth than the bigger towns. Those are the trends that we are seeing.

And any comment on the rural part for us in terms of the growth in absolute numbers, like in terms of the mix? What is it? And the status of the tie-up with the MFIs?

So as you correctly said, the rural, which I spoke to you was the non-MFI part of the business. The MFI part of the business was not active for most of the quarter last quarter. Because they were waiting for the moratorium to get lifted before they could start their operations. And remember that we were piggyback product line for them. Their primary product line was to give loans for occasion. So that has now started, and that is also looking good going forward into the Q3.

Right. Would you be able to comment on what has been the mix from the MFI in second quarter or first half?

Negligible last quarter, virtually nothing. But the good thing is that it started happening -- it started coming into being towards the end of the quarter.

October was robust?

Yes.

That's great. Sir, I wanted to ask -- sorry, I'm not harping about the same question. You said in the first quarter earnings call, you said July is looking good. So I was curious that August, September, we are talking about 20% growth. What -- had July seen a double-digit decline, a significant decline in the month of July?

As was mentioned, our schemes are such that we had a sale in July last year. And we did not run that scheme in July this year. So there was a decline in July, but the same scheme we ran in August this year, which showed a double-digit growth.

Okay. Okay. That is to do with the base thing.

That is correct.

Understood, sir. And just last question, if I may, with respect to exports, the exports have seen a good number. So are things picking up? Have you seen any new client addition? And how do we look at the exports from let's say, for next couple of years perspective?

Unfortunately, for exports our orders far exceeds our capacity. And so whatever capacity we have, we diverted to the domestic market. So we are putting exports on the back burner. Once we start building capacity, our exports could grow by double.

And by when you would think we will be able to add capacities in next...

Hopefully by end of December, early January.

What is the current utilization? Would you be able to comment on for cooker and appliances?

Both 100%.

Next question is from the line of Manish Poddar from Nippon India (sic) [Nippon Life India].

I just want to understand a few things. Sir first was, have you all taken any price increase during this quarter or let's say, in the month of October?

Not in the Q2, not in October. But yes, we have announced a price increase in November on some of our appliances.

So would you be able to call that out? How much is it on blended basis?

So on some of our products like mixer grinders and gas stove, the price increase is between 4.5% and 6%.

And this sales pickup which you've seen in Q2, do you believe this is end-market retail sales? Or there was some amount of channels which has closed in Q1. So this is the normalization of inventory which has happened in Q2?

No, no. All of it is the retail sales.

Okay. And just one final one, if I can. Is it -- how much is e-commerce contribution to our overall sales in Q2?

25%.

Okay. And just one option to that is that, do you see your category having material purchases during this event done by the online shares because generally your -- traditionally, your category has not been too online oriented. So I'm just trying to understand in this month of October, when the online sales are running a lot of this sale days, does your category see significant demand in those things?

Yes, but we could not supply.

Next participant is [ Akshat Haria from Multi-Act ].

Sir, my question was that what percentage of our overall sales would be manufactured in-house? And what would be outsourced? This I'm asking with regards to -- because there is a very strong demand environment. And in such case, maybe the outsourced participants that the OEM, the contract manufacturers would be wanting to squeeze in some higher margins because of this high demand environment, so...

Let me [indiscernible]. Our contractors, our vendors are long-term vendors. They've been with us more than 10, 15 years, and they won't take a onetime opportunity to squeeze us, they will not and they do not. And for your first question, how much is in-house? How much is outsourced? About 2/3, 1/3.

Okay. So we are not seeing any pricing pressure over...?

No, no, no, categorically, no.

Next question is from the line of Nirav Vasa from Anand Rathi.

Sir, as I believe, we are feeding 2 new growth categories, that is cleaning solutions and premium products. So would it be possible for you to share some outlook across both these categories, especially the premium products. And the third one, I believe, is going to be the dinnerware category. So how do you intend to expand these? Arguably first 2 categories are already there in initial stages, but by what time do you see these 3 categories playing a meaningful role?

Sure. If you look at the cleaning solutions, in fact, irrespective of the lockdown, they are positive vis-à-vis last year and by a substantial margin. So we are looking at some health-related, hygiene-related products that are doing exceedingly well. For example, our fruit and vegetable cleaner and things like that. We have many new products in the pipeline in that area. The other side, which you're talking about the premium products, I'm not sure what you're referring to. I don't know whether you're referring to the Prestige Lifestyle Store that we launched?

Yes.

That is still work in progress. As I said -- as we said to you, we have started off in Bangalore as a starting point and a test marketing point, and you will see some activity happening around those products in the next couple of months. And hopefully, after 3 months of that activity, we'll be in a better position to answer that question as to how much that is going to give us in terms of contribution to overall sales. Coming to the last point on dinnerware. Yes, we've launched stainless steel casseroles as a start point. Too early to say how much that will do, but it's a nice category for us. If that succeeds, then we have many other things in the pipeline based on the success of this category to actually come back. Again, we require a couple of quarters to decide how this is because it's a sizable market. We'd like to do it carefully.

Next question is from the line of Charanjit Singh from DSP Mutual Fund.

Sir, if you can give us some color in terms of what is the kind of market growth rate for the categories, which we are in -- during this last quarter?

It's very difficult to predict, very difficult. Because the quarter is just over, market growth rates will get only after surveys are done, it will take another 3 months or 4 months for us to get that data.

Okay sir. And sir, what we have seen is that the across companies, companies have got this timeframe during the COVID on the lockdown time in terms of looking at the cost structures and maybe taking some actions in terms of rationalizing the cost structure, be it ad spending moving to digital or rentals. So those kind of things. So have you done any kind of those kind of exercise while it's good to see that we maintained our level of operating levels what we wanted to do. But is there inward looking in terms of the costs, which could have rationalized and then that benefits can come through?

Yes. Chandru?

Yes. So there are 2 parts to this. One is there have been several initiatives that we have undertaken in the company towards digitization, if I would like to use that word. This is towards many of our processes, for example, transacting with our channel partners, for example, doing travel when it's necessary, otherwise keeping the job going, et cetera, et cetera. Factories themselves have shown higher levels of productivity in the past few months. The -- there is a lot that we are doing in terms of moving advertising to digital because of the way the customer is also moving in that direction. But we have also decided to keep the main structure going until these things start bearing fruit. Because for us, in all these years, you will notice that we've had a very stable allocation to advertising and brand building, which has done us good things in the past. And unless these new initiatives start very soon, we would not like to cut costs.

So is there kind of a quantifiable number in terms of the share benefit we can gain from this cost rationalization? Is there a targeted...

We cannot give you that number now. We need those initiatives to bear fruits first.

And let me answer that differently, we did not take initiatives to short term cut cost. That is very dangerous for the long-term growth of the company. The digitization effort that we have taken is to improve working -- to improve the efficiency and to improve the market access.

Okay. Okay, sir. Sir, and on the supply chain part, so now at what level of supply chain in terms of our vendors they are at? And do we foresee that all these things -- are we trying to now have kind of multiple vendors or sourcing, alternatively, are we working on that to some extent?

You see, we told the market that we will stop import from China in this quarter, second quarter. And that added a double revenue to us because as it is the production with vendors was low and then we stopped from China. So we had to make that up. So it is true that we did have shortages in the quarter, second quarter. But that has improved fairly dramatically. Now we're back to where we were.

Okay. Okay. Fine. So if I can just squeeze a last question. On the MFI channel, sir, do we think...

Can't hear you. Come closer to the phone.

Hello, can you hear me, sir?

Yes. Now we can.

Yes, sir. So just on the MFI channel, do we think that the normalization can start coming from Q3?

Yes, it has started already.

[Operator Instructions] Next question is from the line of Bhavin Vithlani from SBI Mutual Fund.

Congratulations for good number amidst difficult time. I have a couple of questions. First, on the growth rate, it will be useful if you could break up month wise and what was the growth in the exit month of the quarter? You did mention that the growth in the last 3 months is about 20%.

So if you're looking at August, we were about 20%. If you're looking at -- we were at what, much more than that. If you're looking at -- I don't have exactly the month wise, but August and September put together was 23%. October last year was the Diwali month. It was our highest month ever. On that, we've grown by 15%. Cumulative August, September, October is at about 20%.

And any color on the performance of the newly launched Svachh branch? What percentage of the total portfolio it is now? And how are you seeing the growth rate because of this new introduction that we have seen?

95% of our sales of pressure cooker currently is in the Svachh platform. The 5% is there because if there's any old stock left over, we probably are clearing that stock. So this platform has met with very good success. We've used this platform as a distribution enhancement in the non-south markets in some of our relatively weaker geographies. We've added several new towns in a big way. We've done specific promotions to add 2,000 plus outlets in the last single 1 quarter. And we are looking at -- we're looking at our all-time high inner lid cooker sales in October. So we're looking at a very good situation here and going forward, we think it will continue that way.

Sure. Okay. On the appliances side...

Come closer to the phone, please?

Sure, sir, is it better now?

Can't hear you, no.

Okay. Okay. Sir is it better now, sir? Can you -- am I audible now?

No, come closer to the phone.

Sir, I'm as close as I can get, sir. Maybe I'll come back in the queue, sir.

Okay.

[Operator Instructions] Next question is from the line of Devang Patel from NAFA Asset Management.

Sir, my question was on receivables. Did we have any problem in collecting money from debtors because debtors have gone up even though our Q1 sales was not that great? And we've seen a lot of consumers...

Debtors have come down dramatically from about 48 days to 32 days. Lately [indiscernible].

No, I mean on an absolute number.

The absolute number would be high because our August, September sales were very high. But in terms of the aging of the receivables, it's probably at its best in the last 5 years.

35 days.

It's about 35 days, which is brilliant. We have had no problems at all in collections. They've been very robust.

Next question is from the line of Bhavin Vithlani from SBI Mutual Funds.

I hope I'm audible. Would it be useful if you could give more color on the appliances segment, the growth within the categories? And how do we see over the next 1 year? That is all.

I would suggest we wait for a quarter before we can put any color on these things. We can tell you that all our core categories are growing extremely well in the trade and in our channel partners. And it's been a very good situation. How it is going to come -- keep continuing, I think we need 1 more quarter for that.

Sure. But sir, the quarter gone by, if you could give us some color on the growth in the mixer grinder?

Mixer grinder, we have grown -- overall, we have not grown because we had a certain proportion of the rural MFI channel, which did not work this year. We also had several large-format sales last year, which was not there this year. But if you look at our general trade sales, we've grown by 45% in mixer grinder, if not by high-double digits in gas stoves. So if you're looking at some of the other products like induction cooktop, we've grown by 47% this year. If you're looking at kettles, it's almost double. So -- but how does that sustain? I don't know, honestly.

Next question is from the line of Srinath V from Bellwether.

Sir, just want to understand the role of online going forward, and what are our market shares in the e-comm segment versus general trade? So just wanted your views on that, sir.

So we believe that the consumer has gravitated towards online after the COVID issue, and I think that trend is going to continue. You are looking at more and more people shopping online and going outside less and less. Having said that, I think we continue to be leaders in the online platform as well, largely mirroring our off-line market share on that side.

Okay. So we do have similar market shares both in online and offline. Okay, great.

And you would know that we were one of the early people of the block to have e-comm fulfillment centers. We have 5 of them across the country. So we have invested quite substantially in the online business.

Got it. Sir, also wanted to understand the unorganized to organized shift, given the kind of difficulties in many categories and unorganized sectors faced, are you -- as the festive season kicks in, this is a peak shopping season in South, so just want to understand, are you seeing the reemergence or some of these factories reopening? Or have they not come back to the market after leaving the market in April, May, June?

No, they have started coming back. Many of them have started advertising as well as you might probably see. But I think in the minds of the consumer, I think it's way beyond just price today. The lockdown told them that buying a good brand gives them the assurance of good aftersales service. So I think over a period of time, there would be a gain of brands, not just TTK Prestige, but good brands in this post-pandemic world.

Next question is from the line of Achal Lohade from JM Financial.

Yes, thank you for the follow-up opportunity, sir. Just wanted to understand in terms of the supply disruption, would you have any estimate as to how much sales would have -- we would have lost in second quarter?

As of September, we were carrying forward INR 70 crores of orders, which we could not fulfill.

So is it fair to say that the sales are not really lost permanently, but just the...

Most of that sales will not happen because, for example, if there was -- if they were orders online during the sale day, that sale is gone.

Okay, okay.

That'd be -- that will be carry -- we carry forward orders into October also.

Understood. And any particular categories where we had supplies in disruption, which was major one? Or it was across the board in appliances?

No largest in cookware.

Cookware, I was under the impression that most of that is in-house production?

It is all in-house production, yes. But there's a huge shortage. We have the capacity to produce 4 lakh pieces per month. Last year, we sold about 35 lakhs, which is roughly 3 lakhs per month. Now the demand is 6 lakhs per month.

So, let me tell you this way. Even the export orders had multiplied during this period and we had a huge demand situation in India as well. And therefore, all of this coming together put huge pressure. I mean, luckily, for us, we had large opening stocks. So we managed for some time. But now -- by towards the end of the quarter, we've obviously couldn't handle that kind of demand. We have sold our highest ever sales of pressure -- cookware in this quarter. We crossed more than 2 million pieces actually. But yes, we could have sold even more.

So that's more on the short capacity, I would say. But like you said, supply disruption, I imagine that is for the vendors.

1 second. It's not just our suppliers. For example, I need handles, which I don't make in-house. I need my handle supplier to give me handles. I need glass lid. I need glass lid. Now those are downstream suppliers who weren't necessarily at their full capacity because they've lost their labor. That's what we were trying to tell you.

Right. Understood. Understood. So vendors for our raw material or consumables as well as the finished goods?

Yes, yes. Exactly.

Understood. Understood. And with respect to -- so would that be the case even for the competition or wasn't that the case as such?

I think you should ask the competition.

And inform us also.

Okay. And in terms of the CapEx, what is the number we're looking at for FY '21, '22 broadly? And how do we plan to deploy our cash flow, given the significant cash we have in the balance sheet?

Well, I suppose we will be spending about INR 50 crores in terms of CapEx for 2021. And we will -- looking at acquisitions, we look at [indiscernible] for the CapEx that we've got. Since we have just declared an additional dividend today.

Right. And just one more comment, if you could also comment on Horwood, where are we in terms of the recovery? I know the numbers are positive for the quarter, but we have seen that the base has been fairly weak for a while now. How do you look at that acquisition?

They were doing brilliantly in the -- this year. And then there's -- then COVID happened. So they've gone into the second lockdown in Britain for a month. So we'll have to wait and see how this pans out. But they're doing very well compared to last year.

So I think more than anything else. I think that, that company has completely transformed itself in terms of its online presence. For example, it's actually set up a very good online marketing and sales setup, which is why the company is doing exceedingly well at this point in time in England.

Any target you could talk about? Like what kind of revenue or something we could look at?

Second lockdown has allowed -- has completely removed any guidance prospects from our side on that front over there.

[Operator Instructions] Next question is from the line of [ Disha Seth from Anvil Shares and Stock ].

Yes. Sir, we wanted to ask that...

We can't hear you.

[ Disha ], you voice is...

You've got [indiscernible] of the phone.

Okay. Sir, I wanted to ask September of your sales were 23%. I was not understanding why our sales are up only 22%, while -- because July was down double digits? And what is the reason, I was not getting?

Okay. Let me explain, try and explain that again. We normally have a major trade promotion as a follow-up to the first quarter sales in July every year. This year, we lost the month of April and half of May. So that trade promotion was not run in July. It was announced well in advance that it could be run in August. So therefore, the sales shifted from July to August. That is why I'm telling you this period of July, August, September, I mean you had in August, September, October. So it was primarily because we had to reshape the trade promotion because of the lost 1 month in the first quarter.

Okay. So it was...

We had to also organize the supply chain to meet that demand. We needed that time.

So it was almost nil to negative sales for July. That's why the whole thing...

There was no nil to negative. I can put it another way for you. If you add July plus August of last year and compare it to July plus August of this year, it was exactly on par.

It was exactly on par. Okay. Okay. Got it, sir.

Shall I give you some more light on that?

Okay, okay. And this is across all your segments, like cooker, cookware and appliances?

As we told you, the pressure cooker charge started in August. And from then on, the pressure cookers have also grown. So if you do the July plus August, it will be on par. If you take August, September, October, we are have 20%-plus growth.

Okay, sir. And sir, I mean, what you said is pressure cooker demand was low in July or is the same promotion thing for July?

Same promotion thing.

Next question is from the line of Janakiraman from Franklin Templeton Investments.

This August and September, where you mentioned that the sales was quite robust for you. Is there any way for you to tell us whether the secondary sales were also as good as the sales that you had?

Yes. The secondary sales was quite robust. The pipeline has not been overloaded. We are seeing secondaries and tertiaries because we are seeing sustained demand in October, which we have filled and we are seeing sustained demand continue to November sales. It's not as if we've been loading the pipeline.

And remember that online goes straight to the consumer.

Of course, there will not be any inventory buildup in online. And since you mentioned this order book, that you had some order book entering into the October month also. So typically, how does it work? Do your dealers actually place an order -- order with you at the beginning of the month?

They place order with us whenever they want to place an order with us. We accumulate those orders and keep supplying. And then by month end, some orders will not be supplied.

Okay. So this is a rolling kind of an order book?

Yes, yes, it is not onetime is not -- once a month only we take orders.

Let me try and explain that. What Chairman told you was that there was a fill rate that was less than 100%. And those orders, some of them came back in October, some of them were new orders in October, some of them were lost orders. This is something that happens on a regular basis. The point he was trying to make was that if we had more inventory, we probably would have been doing even better than what we have shown you [indiscernible]. Have I answered that?

Yes. I think you also mentioned that the demand momentum has continued in the December quarter also. So now do you have -- have you built up your supply adequately to cater to this demand?

Yes.

What adequately is difficult to define. We have built up our supplies to meet what we think is demand. But if the demand outstrips that, we still won't. Hello?

Right. Because some of the statistics that you threw that as against 35 or 3 lakhs per month of cookware last year. So this year you said just in 1 quarter, you have done 20 lakhs. These are like very impressive number. What is leading to this kind of sharp increase in demand?

Your guess is as good as mine. Everybody says it's because people are working from home, they are cooking more at home. They're not going out to eat, so they want better vessel [ but newer ] products in the kitchen. That's what they're saying.

Let me tell you, cookware, especially nonstick cookware demand increasing is not just an India phenomenon. What we are seeing is it's a worldwide phenomenon. Hello.

Right. And just one more specific question, sir. I actually personally felt this experience. There seems to be some meaningful price difference between some of your popular products, online [Audio Gap] or even the smart kitchen [indiscernible]. And what is your philosophy on pricing on these channels? Do you follow some difference in pricing? How do you manage this channel pricing conflicts?

Our attempt is to keep a constant pricing across channels. Now that is a very utopian desire. What we do tell all our channel partners is this is the kind of pricing we have given you to sell to the retailer.

They're free to sell.

But by law, you know they are free to sell at whatever prices. So what we try and do is actually try and make -- give them advices. The second thing is, as far as online is concerned, sometimes, you might find a price that is cheaper because they want to burn money on that month or we would have given them an exclusive offering, which is not there on offline. Similarly, we give exclusive offerings to offline, which is not there online to ensure that they retain their competitive edge.

Right. So the price at which the online merchant decides to sell their stock, that is not under your control, is it?

No, it is not under anybody's control. You're not allowed to control that by law. Hello.

Right, sir. Suppose, say, I buy a Prestige cookware online on Amazon, will the invoice be [indiscernible] under Prestige or Amazon?

Who is the seller on the marketplace? You will not get an invoice from Amazon. You will get an invoice from the seller on that marketplace, not Amazon. That seller could be TTK [indiscernible] another seller, et cetera.

Next question is from the line of Bhavin Vithlani from SBI Mutual Fund.

Sir, just 2 questions. We saw drop in the gross margin. Any reason, if you could attribute, is it mix change or is it certain pricing pressure that we were facing because of increased raw material prices?

No. It is mix change and channel change. Different channels give us different margins. So if online product mix is growing faster, our margin will be marginally smaller and these things happen. I mean if there are products with -- some products will make less, some products will make more. So the product mix is different, will also be lower margin. But our margin never changes.

You would have also seen that our EBITDA is very stable. Compare it with last year's Q2, you will see it's very, very stable.

I understand. So would it be possible to share the mix that you have been sharing normally between the channel this quarter versus last quarter?

I suggest we leave that out. We've told you already online is between 24% and 25%. Now we've also told you that the large format did not pick up till the second half of the quarter, really. Let me also tell you that our general trade is rock steady, stable at the same contribution as what we've shared earlier, and it's always the case with PXL, you can join the dots after that.

Sure. And how about CSD? Any change in the mix from that?

CSD have gone down -- has gone down because there's been an active effort by the canteen store department to actually limit customers due to COVID in the canteens and that is changing in the Q3. So you're seeing a positive outlook for Q3.

Thank you very much. Ladies and gentlemen, that was the last question for today. As there are no further questions, I will now hand the conference over to the management for closing remarks.

We've had a very good quarter when we began by saying and we are looking at that very positive outlook continue all the way through to October and even till today, and we are hoping that the sale continues till the end of this Q3. The festival sales because Diwali has been delayed has been quite good for us. Overall demand has been good. The channels have been -- supply have been quite positive, and most of the channels are now active. So things are looking quite positive, and we hope to come back with good results in Q3 as well. Thank you very much.

Thank you very much. On behalf of Ambit Capital Private Limited, that concludes this conference. Thank you for joining us. You may now disconnect your lines. Thank you.