Voltas Limited (VOLTAS) Earnings Call Transcript & Summary

On behalf of Nirmal Bang Institutional Equities, have great pressure in welcoming each and everyone of you for our today's session, which is held as a part of weeklong conference. For our today's session we have with us management of Voltas represented by Mr. Manish Desai, Head Corporate Finance. It's always a great pleasure of hosting you sir. Thanks for giving us an opportunity to host you. As for the format for today's session, what we will do is we will request you to give an overview of business as it stands today. Post that, we will open the session for Q&A. Hope that suits you sir?

Okay. I'm fine with it. So good afternoon to all of you. Yes, in fact, it's almost a month now since we announced the results for the quarter 4 and what we have -- and journey thereafter, I would say, is supporting this category. We have seen us catching weather in the month of April and the May as well. There is no comparison of the volume growth between the current year vis-a-vis the past 2 years because there's a complete season period, which you are getting it in this year, which was not there for the year 2021 and '21, '22 because of the pandemic situation. So we are not actually comparing the volume growth of the last 2 years. But if I take to the '19, '20 volume, which was considered to be a normal year, I would say the volume, its closure to that particular -- closure to be peer or the kind of volume, which you have seen the year '19, '20. As far as the industry is concerned, I'm sure that each player has done their best in this particular quarter, given the complete season period available to all the players in this industry. If I look from the competition perspective, we have the market share data as of March. We are expecting for the month of April very shortly from the agencies. Looking into the market share of the kind of competition landscape, there is no much change what we have seen in the laddering of the competition. Landscape vis-a-vis what we have seen in the year before. The difference between, yes, we all know, we have seen a drop. If I look from a widely perspective, as of March by almost 180 basis points. If I look on a quarter-on-quarter basis on the widely numbers, the drop is even close to higher than 200 basis points. And if by analyzing further on that, we all -- the when -- which we highlighted in the investors' spiel as well. We have lost to Lloyd, the larger market share. And this is largely, I would say, attribute towards a price reason and not for anything else. As far as the overall inventory is concerned in this cooling product business, I would say that the growth, which we have seen in the month of April and March was unprecedented and unkind of plan for that matter leading into some of the SKU dispatch. And I'm sure this situation is universe or uniform across all players in this industry. However, we have certain materials going into it continuously, which should help us to navigate this volume till the end of the season. As we all know, South and West probably will come closer to the season end by the -- in the next 1 or 2 days, whereas North will continue until probably end June till we see a regular monsoon setting place across the states in the country. If I look from the general partner inventory perspective, they all are running hand-to-mouth depending upon the -- based upon the secondary, what we are seeing in the market. And accordingly, we are not expecting even more than 25 to 30 days inventory with the channel partners when they come currently and will probably come to a season end, probably there will be much lesser than that. This is our reading based upon the ground field. More data and more second can flow once we get the third-party independent GFK data on the market share side of further insight into it. If I look from the subcategories of the cooling product business, commercial refrigerator continues to do well. It was doing well in the year, '20, '21 and '21, '22 as well. We have seen the growth over those bases as well when we are going for 2023. And this growth is largely attributed towards the, I would say, the expansion of the market, the changing the lifestyle of the people and as we all know, home and cook stores are expanding to Tier 2, Tier 3 cities, where the taste of the people going more towards ice cream and chocolates and all finding good kind of support for this category to grow. If I look from the air cooler perspective, the air cooler despite having a higher kind of inventories with the general partner, it's doing well, I would say, in this period. I would not like to quantify any such for the growth for these categories, given the forward outlooking statement and the kind of restrictive environment in which we are working under this regulation. So that's what I have for the air -- the UCP segment. If I look from the VoltBek as a continuation of the appliances, the growth over there also is good compared to the last year. If I want to attribute towards the overall performance of the VoltBek categories, I would say that we achieved close to 4% market share in the washing machine and an exceeding of 3% for the refrigerator in a short span up to 2.5 years. Having the substituted way of sourcing for refrigerator category for VoltBek, probably we should be in a more better situation, a better position to feed the local market at a regular frequency or as per the demand from them and should go well for this category as we move forward. As we have highlighted during our investor's spiel, we have localized or we have started manufacturing of the top-loaded washing machine as well in our factory, in the Sanand factory. So it's a mix kind of volume. We are doing certain models through OEM and certain models based upon the value addition, higher value addition attributable to the category, we are doing in our own manufacturing location. That also should help us in terms of strengthening or positioning our product as well as a margin accretive as we move forward in the future for these categories. So this is where we have -- I have to say about the VoltBek. If I come to the project side, we have seen good amount of execution during the better half of the last year after the COVID situation got improved. Better execution, good control on the working capital and consistently, I would say, a customer-driven approach. [Technical Difficulty] I'm getting some disturbance. Yes, resulting into a better margin for this category for this segment. In terms of the order inflow, yes, there was a slow progress, also amount of order intake in the last year. I would attribute this low intake on actually 2 grounds. One thing is there was a delay in the announcement of the project itself. If I look from the domestic environment side because the first half the more attention was there to control the pandemic because it was more severe than the COVID first wave. And later on, we have seen some kind of movement, but that movement was short compared to what the original explanation is. If I look ... I request all to go on mute, please.

Yes.

If I look from the international market, it was attributed largely towards deferment of some of the projects. Given the economy looking -- or facing the headwinds of lack of tourism as well as the oil prices was not supporting for the country to go for expensive of the infrastructure projects. If I look from that perspective to a '22, '23, I'm sure that international market is going to bounce back because the markets have opened for tourism as well as oil price, what we are seeing today gives enough cushion to those countries to look for expansion on the influential projects, which have been abandoned in the last year. Similarly, domestic market. We have seen a higher allocation of the capital on the F1 or location towards the international projects, country do need -- country does need the infrastructure. So I'm sure in all aspects of water, electrical airport and all motor infra, the order intake in the current year should be going back for the Voltas with old trajectories where we started with. However, second reason, what I was about to narrative over there is, we ourself has taken a selective approach while picking up this order given our past experience, based upon the customer profile, credit and the risk-mitigated kind of approach, which may result into some of the projects, which probably government may announce or may fall into [ our kitty ], but we may not pick up because given the nature or maybe a kind of project which probably we'll not like to bid for it given the past history of our experience in billing such kind of projects. But in summarized way, I would say that the order inflow for the '22, '23 will certainly go up compared to what '21, '22. And we are hopeful to go back to the old trajectory of order intake, given that competition itself in this business is getting reduced to a few players in this market. On the balance sheet front, we remain strong in terms of the cash and cash equivalents. If I look from the CapEx perspective, given the PLI and the expansion of our manufacturing capacity, we are planning to incur close to INR 400 crores to INR 500 crores of CapEx in the 2 phases over the next 2 to 3 years. This -- given this strength of the balance sheet, we are not looking into sourcing of this budgeting or meeting those capital expenses from any other sources. Other than the internal cores what we are going to generate over a period of time. I would say this will be the overview from our management side, and I'll open this floor for a question-and-answer session from the participants.

Thanks a lot, sir, for a very comprehensive overview and update. [Operator Instructions] We have query from [ Ruchika Bhatia ].

I would like to understand the pricing scenario vis-a-vis the new standards that are coming in and how do you find the commodity markets like going forward? Is there more inflation? What is your view on it?

Ruchika, if I look from the pricing aspects, given the interval change which is happening from 1st July. What we have seen in the past, similar kind of cost escalation will take place and if I look from the consumer perspective, what they are paying today for 5-star, that will be applicable for the 4-star kind of category. I'm not putting the quantification to it, Ruchika. The reason being is because there are very much variance into it, like a 1 ton, 1.5 and 2 ton. And that I have given a general answer in terms of what difference you are finding between these 2-star today, probably that will be the cost escalation if we were to go for under the [indiscernible] guidelines, which is getting implemented or which is coming into force from 1st July. If I look from the commodity perspective, we have seen some kind of softening train in the early April. However, the trend is short line. We are again seeing upward movement and some of the commodity, especially copper and aluminum, still has seen some kind of softness. But looking into our bond, the copper/aluminium cost or compromise or consist of higher percentage. So we won't see any much kind of relief coming to -- flowing to the manufacturer in the current particular year '22, '23. And it seems that the commodity price will remain elevated for almost entire year of '22, '23, considering the demand/supply gap, which is prevailing right now. In such scenario, the major question comes is how the company is going to react on it. If commodity price remains at the level at which we were there until March and all, we won't see any further price hike coming up in a short tenure except of table change, which is applicable to the across all the industries. If you are seeing and the price gap today what we have a sizable, I would say, because the competition is not... sorry?

No, nothing from my end. Please continue.

So looking into the competition today in the respect of demographies in which you operate, so we try to -- I would say, I would not put the word absorbed, but we'll try to do a price hike in a [indiscernible] way to ensure that we give tough stand to the competition. At the same time, those steps walks towards protecting margin without impacting the market share.

Yes. Because like we've already seen that Lloyd and few players have not been that strong in pushing the prices because of which there has been some market mismatch. So that was the reason why I wanted to understand. And another thing on the supply side, sir, like, is this the supply to the Southern market being normalized and anything I'm like going forward, is there going to be some supply side issues?

I'm not seeing currently any headwinds, only which I have toward about it is the growth which you've seen in the current first quarter was much higher than what any of the manufacturer has projected for the period, which means that your inventory, you will find some kind of mismatches in your scales, which may not be aligned with the demand from the market side. So in that case, the only supply chain issue will be there. The market in China is also opening now. So we won't see any much kind of disruptions. On novel disruptions in terms of logistics and all other kind of issues, what we have seen in the last year probably will have a lesser kind of impact in the current year because markets are generally opening up, unless we see some kind of COVID variants or COVID, I would say, disturbance impacting again the entire operation for that matter. What you said about the Lloyd and all, yes, the market has seen it in my opening remarks as well. We have -- I have told you that the -- if I had my analysis says we have lost a larger market share in terms of the Lloyd but that's where the strategy the Lloyd may be approaching towards it. We won't see immediate reaction to it because in the past as well, we have seen some of the brands have actually played their card, but could not move successfully for a longer period of time. So we have to do a wait and watch. But as I said, we will do what we're required to do on the market front to ensure we remain competitive and with the given objective of protecting margin as well as spending over the market share.

[Operator Instructions]

Sir, you alluded in terms of the price hike in the system, but is there a lead lag in terms of price hike across players? Are the others also following you in terms of price hike, say, post the March region. That is number one. And secondly, while obviously, the GFK data is not out as yet. But depending upon your -- depending upon your understanding on the ground feedback, do you see market share to a certain extent coming back for Voltas in that perspective?

So [ Rita ], there will always be a time lag between the leader do the price hike, I mean, followed by the other players. As we said in the past as well, we have seen this kind of time lag. And if you look from the current year, I'm sure that none of the brands actually have done the price hike, including Voltas. We thought to do a price hike in the month of April, but withheld ourselves given the ground realities and to a certain extent, as I said, softening of the commodity price that could give some kind of cushion in terms of the weighted average cost of the inventory. But that said, the price gap, the difference is still there between the input cost increase is obviously, a price to the channel partners. It cannot be breached. The gap is not so little in order to breach or to observe ourselves. As I said, we have to find a collaborated way in order to ensure that whenever we find, wherever we can do, we can pass on those increased input costs to the [indiscernible]. Now having said that, in terms of the market share, we have -- as we said, we have taken corrective actions in the month of April in this particular quarter. And in our own estimation, we should be able to recoup most of the lost market share by the quarter 1 itself. That's what our reading as of now data and we can give -- it can be confirmed or it can be, I would say, certain only when the GFK comes up with the market share data.

The second question is more in terms of medium term. There's a lot of competition and regression in the market. And we've seen these phases multiple times in the past also, especially in the AC segment. So incrementally, say, maybe 3, 4 years down the line, how do you see saliency in terms of the entire AC market, this along with margins because you'll see the prudency coming in terms of margins? Or do you see the aggression being higher and continues and we're moving from this 13% kind of margin down to 10% or 11% kind of margins? From a 3 years perspective.

So when I look into the midterm kind of scenario from where we are today, I would not see a competition landscape will go any substantial amount of change over there. But even in the last -- when I say last 3, 4 years, buying Samsung was then the reentry to this product category. All players are remained same, probably in the same order, which were there only between third to fifth or sixth [indiscernible] addition, change takes place in some of the quarterly basis where one player is taking lead over the others and accordingly, suit follows over there. In terms of the margin, I would say that the -- it remains -- it's going to remain competitive. 13%, 14% even though earlier when we have used to interact with the investors, we used to tell about 11% to 12%. However, looking to the current situation of the scenario in which we are and looking into the intensity of the competition as well as the price or the kind of acceptance level from the customer end, I would see that it still looks difficult to get into 11% to 12% although some of the PLI benefits will follow from the government based upon the backward integrations or the expansion plant, which we all are eyeing for. However, with that as well, we are seeing that margin near to 9.5% to 10% looks reasonable. It is still in closure to double digits, but to exceed 10%, probably although the efforts will be there to achieve that level. But today, it looks difficult. Not because of the -- as I said, because of changing the competitions and all. But I would say that if we remain competitive in the market, and the kind of affordable lever work we have seen at the customer end that's what the conclusion comes. Although in the current year, looking into the weather, the inflation has not played any role and the customers actually lapping up on this product because of the extreme heat. But we are talking about margin for the entire year on an annualized basis and not on a quarterly basis. So during those kind of, I would say, a customer demand may go slow when you have -- when you are not looking for a product or during the lot period of time where this product doesn't have any seasonality over there.

Just 2 follow-ups here. So while the margins you can not -- does not fall down to significantly lower levels. So do you think the growth in the system is significant enough to give you maybe a PBT CAGR of, say, 15% over the next 2 to 3 years, even if you get a hit in terms of margins?

If I look from the industry perspective and obviously, when Voltas is planning to do a higher growth compared to the industry. The industry itself is expecting to grow in addition, in excess of 10% in the next 3 to 5 years' time frame. And having that, obviously, by margin percentage to the turnover may get subdued knowing the reasons what I've given. But in terms of the absolute value probably, we should be able to achieve it, the growth postage which we just discussed. So it should fall in line with the revenue growth slightly, as I said, the margin may get set in the current year itself. But in the long term, on a bit tough for that matter, reasonable to have a CAGR closure to the industry or the volume growth for that market.

Just one last follow-up on this is -- what is the level of the industry volumes do you need in the system? Say, you're at 7 million volume, if I understand right, as of now, what levels of the industry volume is needed in the system for players to reach to the next level in terms of margin profile considering the regulation normalizes and there is enough for every one of the player ?

See, I would say that it is not a volume, which you can decide in terms of the scale among the players. It all depends upon how much the player would like to keep a margin with them in order to further do investments in this category. Because that is driving factor today, because volume, even though in the year '19, '20, when the industry touch to our highest volume, some of the players were still having a single-digit margin. So it all depends upon the business and the manufacturers at what level they would like to do the operation or like to continue or be in this business. And that's what in that reference only, we said about in our own aspirations. We would like to have both market share and the margin as a twin objective. And we feel that the closer to double digit should be a reasonable one to be there in the business.

Next query, we have from [indiscernible] and on behalf of her the query is basically, she wants to know what are the initiatives recently taken to capture increased market share?

I would not like to quantify them given the competition intensities and all. I would say that we have also seen in the past this kind of price game and disruption being played. So we have a learning with us in order to navigate those kind of situations. As I said, I would give more attribution towards the price and other stuff. Supply chain to a certain extent and price to a certain extent for the reserve for loss of the market share. So the supply chain issue been addressed immediately in the month of April itself to ensure that we are providing the material what market needs it. Regional balance itself got adjusted seeing having the hit spread across all parts of the country. As far as price is concerned, we have then we have followed a calibrated approach to ensure that we remain competitive across demographies and wherever we can do or get advantage, we follow the same and capture those kind of opportunities. So there are various many steps, but I would not like to say -- to elaborate more into this but are -- probably the action itself will take once we get the -- action itself will show the outcome probably when we are getting the market share data from those agencies in a short period of time.

[Operator Instructions] Next, we have from Mr. Pulkit Singhal.

Sir, if you could just help us understand the INR 400 crores to INR 500 crores CapEx over the next 3 years. Can you break it up and tell us which are the areas, particularly are want to spend that?

So Pulkit, we have applied for a PLI scheme under 2 different headings. One is for on our own, which is our component manufacturing. Another one is also a component compress out under the joint venture. So a joint venture is obviously the subject to the necessary approvals from the ministry, having the joint venture partner coming from the common land sharing area. So those 2 will take away roughly around INR 300 crores to INR 350 crores of investment. And the balance would go into a capacity augmentation, which anyway we are planning to do it and which is already underway for expanding our manufacturing capacity for air conditioner as well as commercial refrigerator.

So if you can just elaborate on the manufacturing strategy. So if I look at AC manufacturing pre-COVID and if I were to look at the bill of materials, roughly what percentage value add will be doing earlier? And what is it likely to be, say, 3 years or 5 years out, when you have this manufacturing strategy in place? So will say 10% value-add go to 30%, 35%? Or if you can give some sense for those?

See, Pulkit, what will happen is, as we said, with this even expansion, what we are doing it, we will be not having the 100% of our requirement flowing into it. It will still catering around 50% to 60% on the component side on a small component. However, the compress of rent, maybe in the 2 years time frame, we will be able to... Just a minute [indiscernible] of some calls. Just a minute. Sorry, Pulkit. So where I was? Okay. So with this -- just a minute again. Sorry. So if I -- so it is very difficult to say how much value addition pre-COVID to post COVID or PLI after application will flow into it. But I can say that the intensity of manufacturing will certainly go up compared to what we used to have earlier. We have -- and when I say value addition I would give one example of the indoor unit, where you say there is a value addition to show. I can say we have 2 benefits which we flow over there. One, we have substituted our import to a local one by investing in the mold. We still didn't have a molding capacity because the molding capacity is fully available across [indiscernible] corner of the country. But to a certain extent, the assembly of the IDU will flow into it when you're looking for expansion of the manufacturing facility. So it is difficult to ascribe to a particular percentage to the value addition, but the efforts are there to have balanced supply chain between our own in-house manufacturing plus the OEM. Support on the OEM will not be stopped altogether, will still depend upon the OEMs. The absolute quantum remains same, but the percentage what we used to have 100% earlier, as an example, will certainly come down to less than 50% when I have the complete not Phase 2 or -- Phase 1 and Phase 2 getting over in a part of a factor liquidity.

And lastly, what kind of benefits do you see for this strategy, either in terms of, say, margins or in terms of demand planning, I presume the whole inventory cycle and planning comes down? But if you could just elaborate on the benefits, 3, 5 years...?

So, Pulkit, one thing is that once you have attained the volume, probably you need to balance your supply chain and you need to get the advantage of the scale by doing the -- some components in which we have -- we are seeing a good amount of validation as a part of your backward integration strategy. That's actually driven us to have this change in our manufacturing or change in the business model. You may not see a margin accretive immediately on some of the move in the first 2 -- in the first year of the operation. But certainly, in the long term, there are various associated costs will certainly come down by virtue of this initiative on the manufacturing side. When I said certain cost is, it goes into a logistic cost, it accounts as a part of the inventory holding cost. And third, more important, we all know, if I look from the import to localization the government is anyway eyeing for under the phase manufacturing program, a continuous increase in the custom duty, which means if I'm not doing those necessary steps today, my lending cost will certainly go up as we move forward in the future period. So these are the things about the -- I would put that attribution towards the government initiatives, government involvement or a consideration in terms of promoting the local manufacturing as well as attaining this kind of huge volume where you need to have a balanced approach towards the supply chain and sourcing. Result will definitely result into our overall benefit as we look from the operational perspective as we move forward in the 3 to 5 years time frame.

Just one quick data point in FY '23, what is the share of e-commerce to, I mean, likely going to be for the industry?

FY '23 which is current year?

Yes. Current likely because [indiscernible] as well, right? So.

No, I would say that the e-commerce, if I look from the date of journey since it started, yes, it's improving, but it's not showing a huge growth compared to the other categories, if I look from the appliance perspective. So in those scenarios, I would say that the contribution may remain somewhere between 8% to 9% at the most compared to what we are seeing currently for that part.

Next query, we have from Mr. Chinmay of Reliance Life Insurance.

So basically my question is with respect to -- I mean, what happened in South, I mean, have managed to gain share order on pricing. So -- but why that has not happened or didn't happen maybe in geographies like North and West where it would have also played the pricing game?

Chinmay, I just want to reconnect on the point of South. What we said is South was a larger imbalance. The reason being is because the summer starts early in South, but the other part of the country, you don't see those kind of weather in the early part of February and some first week of March. Then actually -- and then we were traditionally second player and not the leader in this particular South region, whereas we were having a leadership position in all the balance sheet East, West and North for that matter. So that gives some advantage when you're actually having a leadership position to do -- or to play around on the pricing, to play on the product side, to play on our strategy on the ground on those 3 regions. So that is largely a reason for it. Otherwise, price card can be played by any brand anywhere in all parts of the country, but they also need to see where they are strong and when it's going to be a large impact on that.

And my second question is basically when we say you want.

Sorry, Chinmay, I'm losing your voice.

Yes. Can you hear me now?

Yes.

So second question is basically when we say we want to recoup our market share and I mean, most probably do it by this quarter or so. So then we are -- what we mean is maybe we will come back to say, exit market share of, say, maybe 25%, 26%. That is what you are kind of indicating or it's like -- I mean because we have also substantially gained the market share like last couple of years. We -- earlier it was more of a 22% or 23% kind of a number. So what do you exactly kind of target when we say that we will recoup our market share?

Chinmay, I would not like to give any quantification to that. I only can say that the maximum recoup of the market share loss will take place by end of quarter 1. Let the data itself talks about where we can hear into it, but that's our efforts, which you put on the ground to ensure that the maximum recoup took place in the period itself.

[Operator Instructions] As a question queue lines up. [indiscernible] you would like to take up yours?

Yes, sir, I have one question on -- basically, is there a main customer profile difference between South or a North region?

I would not say a customer profile difference. The only difference, which I can see in terms of South generally, we have seen more kind of advanced customers when I say advances, split largely contribution is coming from South and West market. A window is still, as I said, prevailing in the North, which we all know about it. Inverter category adoption is also largely being seen in the South and West market followed by North over there. So that much only, I would say, a customer profile difference. Otherwise, there's not much kind of differentiation over there.

And my last question would be certaining to -- we are planning to introduce some WiFi ACs. So how does this board with given the low penetration, we will be having a lot of first-time buyers, so how does this strategy board given the price sensitivity of our customers as well?

WiFi's are anywhere. There is nothing which we are going to introduce now. It's already there in the market. It's available in the market itself as of now.

Next query we have from Mr. Rupin Shah of InCred Wealth.

Sir, in your commentary, you mentioned twice that historically, also, you launched market share and then because of the competitive pressure and then you regain the market share. So if you can give some like 1 or 2 examples of the obvious competitive pressure? And if you can also specify on like how much time it had taken like to regain the market share, this data would be helpful, sir?

Rupin, I'm just standing correct to it. I have not said that we have lost market share in the past. I've said in the past, we have seen such kind of price disruption being played by a few brands. I will not like to name the brand name because it is not our practice to know or practice to fall over there. Industry knows about it, and I'm sure you are following the industry, so it's nothing new to you as well. In terms of we have when I say price card being played. But in that point of time, we could balance our market share. Our growth would have come down, but not, I would say, on an overall basis in some of the markets, we did have a setback on that ground of the price disruptions. In terms of recouping, the same, as I said, that's what we are targeting in the current year itself, and I'm repeating that, maximum loss of market share can be recoup, and that's what our efforts are by the quarter 1 itself.

Sure. Understood. And sir, secondly, if you can specify localization level and with the JV like -- which is under process, what kind of localized level we are aiming in the next 2 years?

So today, if I look from the import perspective, larger component, which we're importing today is restricted to compressor only because in the absence of ecosystem prevailing in India or available in India. Motors and controllers are still getting imported, but the quantum or the contribution has come down substantially because we started developing, working with the local vendor as well in order to our substitution. So if I look from next 3 years, probably, we may not have import of any of the components and all should be available within India on a best effort basis. Leaving aside if anything, on a competitive side on balancing on the supply chain or to get some kind of advantage if you were to go for import, then that also for the contribution will be so high compared to what we have today, almost 100% we are doing for compressor, which certainly will come down substantially. So joint venture sourcing and the other efforts which are doing it in the next -- in the near future.

[Operator Instructions]

Sorry. Just one last question. In terms of why we're doing the tie-up with highly in terms of compressor, do you think any technological hindrances would you face tying up with just one compressor? Or you still keep yourselves open from buying from Green in that perspective.

In fact, the Highly is the second largest manufacture of the compressors and we have our current sourcing also coming from both GMCC as well as Highly. As we all know, GMCC is also going and they're going to have a manufacturing setup within India. And their commercial production also will start as we move into the new year. The factories and the -- a lot of -- because of pandemic, it got delayed. Otherwise, they would have a commercial commitment in this year itself. So we have all the sources open, the -- and our objective to go with the joint venture is to doing the criticality of the component. It's sort for inverter compressors because we are not expecting any major change to go into this component. And the objective is to sustain or I would say, consistent or ensuring a consistent supply of this component. And because of which the strategic move has been made this will allow us to go on a long-term agreement. Now the question comes that can be done with the other players as well. But knowing the capability of these players and largely just 2 players accounting for almost 80%, 85% of the world compressor manufacture [indiscernible]. You will see that the joint venture with Hitachi -- the Highly should help us out in ensuring and sustaining, I would say, or sensitive or sensibly secure our procurement of the components of manufacturing plan for our growth in the future period. [indiscernible] technical hindrance as such on this ground. As I said, we are following -- we are going for inverter kind of compressor. And in the near future, we are not seeing any kind of any technical change which is taking place in those components for that matter.

Yes, for want of time, we have to close the session. Thanks a lot, Manishji for taking time of giving us an opportunity to host you. And the participants, thanks a lot for participating and taking time of this [indiscernible]. Thanks, keep safe.

Thanks [indiscernible] . Thank you.