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Edited Transcript of TTKPRESTIG.NSE earnings conference call or presentation 8-Nov-19 9:30am GMT

Q2 2020 TTK Prestige Ltd Earnings Call

Nov 17, 2019 (Thomson StreetEvents) -- Edited Transcript of TTK Prestige Ltd earnings conference call or presentation Friday, November 8, 2019 at 9:30:00am GMT

TEXT version of Transcript

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Corporate Participants

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* K. Shankaran

TTK Prestige Limited - Compliance Officer, Whole-time Secretary & Whole Time Director

* M. Chandru Kalro

TTK Prestige Limited - MD, CEO & Executive Director

* T. T. Jagannathan

TTK Prestige Limited - Non-Executive Chairman

* V. Sundaresan

TTK Prestige Limited - Senior VP of Finance & CFO

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Conference Call Participants

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* Achal Lohade

JM Financial Institutional Securities Limited, Research Division - VP

* Amarjeet S. Maurya

Angel Broking Private Limited, Research Division - Senior Research Analyst of Mid-Caps

* Anuj Sehgal;Manas Asian Equities Value Fund;Founder & Portfolio Manager

* Avi Mehta

IIFL Research - Assistant VP & Lead Analyst of Consumer Discretionary

* Chirag Lodaya

Valuequest Investment Advisors Private Limited - Equity Analyst

* Digant Haria

Antique Stockbroking Ltd., Research Division - Assistant VP, Equity Research

* Kunal Shah

IIFL Research - Research Analyst

* Manish Poddar

Reliance Nippon Life Asset Management Limited - Investment Analyst

* Nirav Vasa

Anand Rathi Financial Services Limited, Research Division - Research Analyst

* Srinivas Seshadri;Mirabilis Investment Trust;Investments Head

* Ashish Kanodia

AMBIT Capital Private Limited, Research Division - Research Analyst

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Presentation

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Operator [1]

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Ladies and gentlemen, good day, and welcome to TTK Prestige Limited Q2 FY '20 Post Results Investor Conference Call hosted by AMBIT Capital. (Operator Instructions) Please note that this conference is being recorded. I now hand the conference over to Mr. Ashish Kanodia from AMBIT Capital. Thank you, and over to you.

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Ashish Kanodia, AMBIT Capital Private Limited, Research Division - Research Analyst [2]

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Thank you, Zaid. Good afternoon, everyone. Welcome to 2Q FY '20 Earnings Conference Call of TTK Prestige Limited. Today, we have Mr. T. T. Jagannathan, the Chairman; Mr. Chandru Kalro, the Managing Director; Mr. K. Shankaran, Director, Corporate Affairs; and Mr. V. Sundaresan, Chief Financial Officer.

I would like -- I would now like to hand over the call to the management for opening remarks, post which we can open the floor for Q&A. Thank you, and over to you, sir.

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M. Chandru Kalro, TTK Prestige Limited - MD, CEO & Executive Director [3]

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Good afternoon. This is Chandru here, and welcome to the conference. The overall scenario in Q2 had a lot of clouds of slowdown, which I think everybody knows about. And I think under the circumstances, we reported reasonably good top line. Many parts of our business have grown quite well, actually, while the overall is looking only at a single-digit growth. The rural demand continues to be under stress, which is also causing some trouble. There's a lot of heavy discounting that's happening in the market, which we try to stay away from wherever we could, from a long-term perspective. And therefore, you see the performance as you did. Of course, the corporate tax cut has been very nice for the PAT, which you would have noticed. I now hand over to you to -- the floor to the questions.

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Questions and Answers

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Operator [1]

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(Operator Instructions)

The first question is from the line of Avi Mehta from IIFL.

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Avi Mehta, IIFL Research - Assistant VP & Lead Analyst of Consumer Discretionary [2]

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I had -- I just wanted to understand the comment that you made about heavy discounting in the market. Is this primarily in the cooker segment, where we see some divergence in the growth rates versus what the other...

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M. Chandru Kalro, TTK Prestige Limited - MD, CEO & Executive Director [3]

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Primarily it's the pressure cooker segment. You are absolutely right.

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Avi Mehta, IIFL Research - Assistant VP & Lead Analyst of Consumer Discretionary [4]

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Okay. So that essentially explains the difference between...

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M. Chandru Kalro, TTK Prestige Limited - MD, CEO & Executive Director [5]

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Yes. Yes.

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Avi Mehta, IIFL Research - Assistant VP & Lead Analyst of Consumer Discretionary [6]

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Sir, the second bit is on the margin side. Now you know EBITDA margins have been fairly healthy now. We are kind of -- you've seen a very smart expansion in the second quarter. I'm just trying to kind of understand, given this performance that we have seen, how should I look at the full year numbers? Because earlier you had said, we would kind of look to maintain some -- similar to FY '19. Do you see a possibility of expansion from there as of now?

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M. Chandru Kalro, TTK Prestige Limited - MD, CEO & Executive Director [7]

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We're still saying that we will be close to FY '19. That's where we should be by the end of the year, FY '19 numbers.

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Avi Mehta, IIFL Research - Assistant VP & Lead Analyst of Consumer Discretionary [8]

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And sir, why -- the input costs are also benign and you have been able to kind of -- you have alluded to demand picking up in the first phase. So I'm just trying to understand why?

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M. Chandru Kalro, TTK Prestige Limited - MD, CEO & Executive Director [9]

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So you've seen what the first half of the year is in terms of EBITDA margins. Largely, if you look at the 2 halves, they're very similar in the way they began. And the commodity prices have been roughly stable, right through these 2 quarters and we are hoping that it continues to be stable.

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Avi Mehta, IIFL Research - Assistant VP & Lead Analyst of Consumer Discretionary [10]

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No, no. I mean relative to last year, it was not the figures, so that's why I was asking. Last year, second half margins were relatively superior than the first half. So I was just trying to kind of get a figure from there.

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M. Chandru Kalro, TTK Prestige Limited - MD, CEO & Executive Director [11]

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Well, the growth rate in the Q3 of last year was 22%, if you recall, which actually expanded the EBITDA margin given the leverage benefit that we got because of that growth. Also, we took a price increase in the second quarter last year.

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Avi Mehta, IIFL Research - Assistant VP & Lead Analyst of Consumer Discretionary [12]

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Okay. So that essentially anniversaries, this is what could be one of the reasons why you don't want to. Okay, sir. And lastly, sir, the tax rate. I mean if you could give us a guidance on how to -- what is the tax rate that we should assume for the entire year?

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V. Sundaresan, TTK Prestige Limited - Senior VP of Finance & CFO [13]

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25.17%. Yes, offset was 25% tax.

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Avi Mehta, IIFL Research - Assistant VP & Lead Analyst of Consumer Discretionary [14]

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So the full year would be 25.17%, right, sir?

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V. Sundaresan, TTK Prestige Limited - Senior VP of Finance & CFO [15]

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Yes, because we don't have any other inventory at this point in time.

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Avi Mehta, IIFL Research - Assistant VP & Lead Analyst of Consumer Discretionary [16]

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We don't have, okay. And...

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V. Sundaresan, TTK Prestige Limited - Senior VP of Finance & CFO [17]

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The incentive does not offer further than 53%.

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Avi Mehta, IIFL Research - Assistant VP & Lead Analyst of Consumer Discretionary [18]

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Okay. And sir, sorry, one last bit, just to understand this pickup that you alluded to in the first 2 period that you are witnessing. Could you give us a sense on which segment is this pickup? Is it across the board? And what does it mean given that you did highlight it?

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V. Sundaresan, TTK Prestige Limited - Senior VP of Finance & CFO [19]

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We said extremely well in appliances. We said grinders have done very well, our gas stoves have done quite well, floor appliances have done very well. Cookware has done very well in the last 2 months. So those are the markets. And we said that it's not that the trade is -- completely don't go about the sentiment. There is a sentiment that we have to fight. Luckily for us, there was some streaming of the online platforms that actually improved sentiment towards -- closer to Diwali, which helps, but business is that way. But overall, sentiment is still not where it should be.

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T. T. Jagannathan, TTK Prestige Limited - Non-Executive Chairman [20]

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We have some new launches in the -- this quarter, which we believe that the pressure cooker is expected to grow slightly.

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Avi Mehta, IIFL Research - Assistant VP & Lead Analyst of Consumer Discretionary [21]

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And the discounting continues in the cookers, sir? Or has that also come off, sir?

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T. T. Jagannathan, TTK Prestige Limited - Non-Executive Chairman [22]

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The discount is something we use very tactically and very prudently. For competition, that's what we use. Absolutely.

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Avi Mehta, IIFL Research - Assistant VP & Lead Analyst of Consumer Discretionary [23]

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Is that continuous?

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M. Chandru Kalro, TTK Prestige Limited - MD, CEO & Executive Director [24]

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Because our new launches...

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Avi Mehta, IIFL Research - Assistant VP & Lead Analyst of Consumer Discretionary [25]

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So you're countering it by new launches, is how you are seeing it?

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M. Chandru Kalro, TTK Prestige Limited - MD, CEO & Executive Director [26]

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Yes.

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Operator [27]

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Next question is from the line of Chirag K from Valuequest.

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Chirag Lodaya, Valuequest Investment Advisors Private Limited - Equity Analyst [28]

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Sir, my first question is on the channel. So rural as a channel as well as modern as a channel, we have faced lot of headwinds in Q1, and we have seen actually negligible sales in Q1. So how are the trends there for Q2 and H2 going now?

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T. T. Jagannathan, TTK Prestige Limited - Non-Executive Chairman [29]

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So it's down in rurals, the demand is still wavering. It's not exactly very positive, but it's improving. The second quarter was far better than the first quarter. And in terms of the modern format, I think the business -- we, as a company, have gone and expanded our relationships in the modern formats and made up what we have lost with our existing customers with others mostly. So in that sense, that business is coming back. We have avoided a situation where there is a disproportionate discounting and give straightaway.

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Chirag Lodaya, Valuequest Investment Advisors Private Limited - Equity Analyst [30]

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Okay. So in H2, do we expect significant recovery in both these channel in, I would say, H1 or the trends will be muted on this? On a full year basis, I'm just trying to understand whether it will grow in this channel or we'll see significant decline?

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T. T. Jagannathan, TTK Prestige Limited - Non-Executive Chairman [31]

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We expect to grow in the modern format. We expect to be flat on the rural.

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Chirag Lodaya, Valuequest Investment Advisors Private Limited - Equity Analyst [32]

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Okay. Sir, secondly, if you can help us understand this breakup of appliances. Growth rates would also be helpful in gas stove, mixer grinder and kitchen appliances for first half.

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T. T. Jagannathan, TTK Prestige Limited - Non-Executive Chairman [33]

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Chirag, we will not give the breakup at this point in time, nevertheless we have a competitive interest in there. But what we can say is that every single appliance, we have grown by more than 10%. Double-digit growth we've seen appliances.

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Chirag Lodaya, Valuequest Investment Advisors Private Limited - Equity Analyst [34]

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Okay, okay. And sir, you said there is lot of competitive intensity in cooker segment. But when I look at your peers' numbers, they have grown at a double-digit pace and also improved their margins. So the kind of disconnect in what you are saying and we are seeing in the reported numbers of your peers. So if you can help us understand.

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M. Chandru Kalro, TTK Prestige Limited - MD, CEO & Executive Director [35]

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So basically, some of our peers, the peers you are referring to, does not have a very high sales focus market. Kerala, as you know, even this year, has not been great because of the monsoons and the various floods. Almost there was a flood-like situation, so the all number's not great, which does not impact our peers. And probably Northern markets probably have grown faster for them, and they must have expanded their kind of base.

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Chirag Lodaya, Valuequest Investment Advisors Private Limited - Equity Analyst [36]

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So it is to do with -- more to do with region than overall discounting, is that fair assumption?

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M. Chandru Kalro, TTK Prestige Limited - MD, CEO & Executive Director [37]

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Yes.

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T. T. Jagannathan, TTK Prestige Limited - Non-Executive Chairman [38]

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And there are regional in rural. Our region rural was very high last year. This is -- has been lower than last year. That is the main differentiating factor. Secondly, when it comes to modern formats, we are very choosy now. We have to ensure that our quality of sale is very important. There's no point in counting internal (inaudible) and don't get our payments at all. We are at -- we want to have a clean renewable (inaudible) in our company. And I hope you understand what I said.

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Chirag Lodaya, Valuequest Investment Advisors Private Limited - Equity Analyst [39]

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Right. But in terms of revised state policy, you mentioned Q1. So this quarter, I've seen your receivables have actually gone up. So if you can just help us understand what exactly?

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M. Chandru Kalro, TTK Prestige Limited - MD, CEO & Executive Director [40]

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Yes, if you...

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T. T. Jagannathan, TTK Prestige Limited - Non-Executive Chairman [41]

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That's exactly what Mr. Chandru was talking about. Because of that, we have expected sales to dump some big (inaudible). And so the sale hasn't affected because of nonpayment of dues.

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Chirag Lodaya, Valuequest Investment Advisors Private Limited - Equity Analyst [42]

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No, no. So receivables has actually gone up in this quarter. And last quarter, you have mentioned you're restricting your sales because of receivables. So...

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T. T. Jagannathan, TTK Prestige Limited - Non-Executive Chairman [43]

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There are 2 different markets, one we talked about, a certain grade segments where we are coverage of the receivables. That is working very well. When it comes to other format of stores that we are ensured that is exactly where the payments are, correctly reviewable. Second, if you look at the current quarter, our July-August sales were not in sync with -- talk about. Receivables started only in September. They are both receivables so if they were made in September they look higher. But we will look at October now. September billing was better than the July-August billing.

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Chirag Lodaya, Valuequest Investment Advisors Private Limited - Equity Analyst [44]

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Okay. And just lastly on gross margin front. Is it to do with product mix? We are seeing limited expansion or the flat margin Y-o-Y?

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T. T. Jagannathan, TTK Prestige Limited - Non-Executive Chairman [45]

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Product mix. No, is there anything wrong with the question?

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Chirag Lodaya, Valuequest Investment Advisors Private Limited - Equity Analyst [46]

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No, no. This is not wrong. I'm just trying to understand it is to do with product mix changes happening in our sales composition...

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T. T. Jagannathan, TTK Prestige Limited - Non-Executive Chairman [47]

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Why would we possibly put filter?

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Chirag Lodaya, Valuequest Investment Advisors Private Limited - Equity Analyst [48]

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Okay. And A&P has been maintained, sir, for first half?

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M. Chandru Kalro, TTK Prestige Limited - MD, CEO & Executive Director [49]

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Yes, yes, yes.

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Operator [50]

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

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Nirav Vasa, Anand Rathi Financial Services Limited, Research Division - Research Analyst [51]

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Is it possible for you to share the broad revenue mix that we have between Northern states and Southern part of India?

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T. T. Jagannathan, TTK Prestige Limited - Non-Executive Chairman [52]

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Technically, they're at 50-50 now.

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Nirav Vasa, Anand Rathi Financial Services Limited, Research Division - Research Analyst [53]

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So it is 50-50. And sir, are we seeing any major benefits coming out of Ujjwala scheme because I read in some of your new reading articles that our company is one of the major beneficiary of Ujjwala scheme. But what kind of growth you are seeing specifically coming out from that particular scheme?

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M. Chandru Kalro, TTK Prestige Limited - MD, CEO & Executive Director [54]

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The Ujjwala scheme is definitely going to give us benefit as the period goes on. But given the rural stress that we are seeing, it is not fully coming on to the board right now. But I'm sure that these markets will become very positive as we go along.

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Nirav Vasa, Anand Rathi Financial Services Limited, Research Division - Research Analyst [55]

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Sir, my last question would be towards our overall business strategy. Sir, as I understand, and please correct me if I wrong -- please correct me if I'm wrong. We are gradually moving towards premiumization across each and every product category in which we are there. And what kind of plans do we have to remain in the basic or the initial pricing point in each category?

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M. Chandru Kalro, TTK Prestige Limited - MD, CEO & Executive Director [56]

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Sorry, can you repeat that question, I didn't follow.

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Nirav Vasa, Anand Rathi Financial Services Limited, Research Division - Research Analyst [57]

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Sir, what I'm able to understand from -- which is based on our broad business strategy, and please correct me if I'm wrong, we are gradually moving towards premiumization across each and every product category in which we are there?

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M. Chandru Kalro, TTK Prestige Limited - MD, CEO & Executive Director [58]

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Yes.

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V. Sundaresan, TTK Prestige Limited - Senior VP of Finance & CFO [59]

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Yes.

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Nirav Vasa, Anand Rathi Financial Services Limited, Research Division - Research Analyst [60]

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So like in maybe next 2 to 3 years' point of time, are we going to actually exit the mass market or the initial level entry market across each product segment and focus only on premiumization? Or how is our broad strategy planning out?

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M. Chandru Kalro, TTK Prestige Limited - MD, CEO & Executive Director [61]

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Obviously, we are moving towards premiumization because newer products have got better technologies and will cost more because they pay more. But that does not really mean that we are exiting the mass market.

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Operator [62]

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Next question is from the line of Amarjeet Maurya from Angel Broking.

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Amarjeet S. Maurya, Angel Broking Private Limited, Research Division - Senior Research Analyst of Mid-Caps [63]

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Just wanted to ask you one thing. Cookware and appliance segment, what is your current market share? And what is the strategy to increase further market share in future? And also, just wanted to understand the -- touchpoint in the cooker, cookware and appliance segments? And how you'll increase in the future?

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M. Chandru Kalro, TTK Prestige Limited - MD, CEO & Executive Director [64]

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The cookware market share is 5 5 liters. In terms of value, we are almost 35% to 40% of the market. And in volume terms also we are 4x the size of the nearest competitor in cookware. Appliances is -- there are several categories, and we are leaders today in Gas Stoves, in value-added Gas Stoves. We are leaders in industrial cooktop, the leaders in kettles. We are leaders in rice cookers. We are not yet the #1 player in mixers, but we are almost #3 player today in mixer grinder. So that is as far as the market shares are concerned. In terms of distribution, it is a contract expansion that we aim at. We have implemented newer and newer methods of tracking at every turn. We have just now put in a secondary sale tracking software with all our distributors to track secondaries and also track distribution expense.

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Amarjeet S. Maurya, Angel Broking Private Limited, Research Division - Senior Research Analyst of Mid-Caps [65]

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Will there be any further opportunities to increase your distribution network?

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M. Chandru Kalro, TTK Prestige Limited - MD, CEO & Executive Director [66]

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There are always opportunities, and we are always looking at them.

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Amarjeet S. Maurya, Angel Broking Private Limited, Research Division - Senior Research Analyst of Mid-Caps [67]

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And sir, just -- you said on your press release, you wanted to increase more SKUs in coming quarters. So in which category you're looking for that?

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M. Chandru Kalro, TTK Prestige Limited - MD, CEO & Executive Director [68]

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Pressure cookers, as Jagannathan has said. We are launching some new SKUs, which are very exciting and fast breaking. We are launching new appliances as well in the next coming 2 quarters.

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Operator [69]

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The next question is from the line of Anuj Sehgal from Manas Capital.

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Anuj Sehgal;Manas Asian Equities Value Fund;Founder & Portfolio Manager, [70]

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Can you let me know what percentage of your sales do you get from Prestige-exclusive stores? And what has been the same-store sales growth for these stores over the last, say, 2, 3 years and this year, year-to-date?

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V. Sundaresan, TTK Prestige Limited - Senior VP of Finance & CFO [71]

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We get about 17% of our top line from Prestige-exclusive stores. And the growth in the sales of Prestige-exclusive stores mirrors the sale of the company. If the company grows 10%, we also grow at 10%.

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Anuj Sehgal;Manas Asian Equities Value Fund;Founder & Portfolio Manager, [72]

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But do you track the same-store sales? Or that is the cumulative growth of those stores?

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V. Sundaresan, TTK Prestige Limited - Senior VP of Finance & CFO [73]

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Of course, we track the same-store sales. We view -- go set up the tracking per square foot sales.

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Anuj Sehgal;Manas Asian Equities Value Fund;Founder & Portfolio Manager, [74]

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And the same-store sales is in line with the growth of the overall company?

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V. Sundaresan, TTK Prestige Limited - Senior VP of Finance & CFO [75]

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Yes.

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Operator [76]

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Next question is from the line of Manish Poddar from Nippon India.

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Manish Poddar, Reliance Nippon Life Asset Management Limited - Investment Analyst [77]

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Sir, can you please give some clarity towards discounting, which you're mentioning. Is it as per by channel or is it by certain specific players?

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M. Chandru Kalro, TTK Prestige Limited - MD, CEO & Executive Director [78]

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Certain specific players.

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Manish Poddar, Reliance Nippon Life Asset Management Limited - Investment Analyst [79]

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Okay. And this is largely in south of India, you're saying?

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M. Chandru Kalro, TTK Prestige Limited - MD, CEO & Executive Director [80]

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Yes. In the south of India, yes.

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Manish Poddar, Reliance Nippon Life Asset Management Limited - Investment Analyst [81]

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Okay. And have you taken any flash price increases now?

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M. Chandru Kalro, TTK Prestige Limited - MD, CEO & Executive Director [82]

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No.

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Manish Poddar, Reliance Nippon Life Asset Management Limited - Investment Analyst [83]

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So would that be a fair understanding then the second half of our metric, the revenue, which will be -- can be similar to what we've done in the first half?

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V. Sundaresan, TTK Prestige Limited - Senior VP of Finance & CFO [84]

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Can you repeat that question again?

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Manish Poddar, Reliance Nippon Life Asset Management Limited - Investment Analyst [85]

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I was just trying to understand, let's say, given the seasonal and also (inaudible) and I think they're still not buoyant, would -- the second half in terms of absolute number, would it look similar to the first half in terms of revenues?

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V. Sundaresan, TTK Prestige Limited - Senior VP of Finance & CFO [86]

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Similar. If not, it will be slightly better, because we've asked for -- especially new launches planned for the second half.

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Manish Poddar, Reliance Nippon Life Asset Management Limited - Investment Analyst [87]

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Okay. That's -- in the first quarter, you had said that you had rollout of new software. So now from the company level, you're able to pass out discounts properly and you can track second use cases. Is that a fair assumption now?

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V. Sundaresan, TTK Prestige Limited - Senior VP of Finance & CFO [88]

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Yes. Largely, yes. It's still work-in-progress, not 100%, but largely, yes.

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Manish Poddar, Reliance Nippon Life Asset Management Limited - Investment Analyst [89]

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And would you be able to give an update what is happening in the state of Uttar Pradesh now, for year? How is the reach panning out? Any number in terms of, let's say, what was the growth like or sales, which is in talking, let's say?

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M. Chandru Kalro, TTK Prestige Limited - MD, CEO & Executive Director [90]

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Can you come again?

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Manish Poddar, Reliance Nippon Life Asset Management Limited - Investment Analyst [91]

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Can you just provide, you know, your expansion to the -- in the state of Uttar Pradesh, in terms of your reach or...

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V. Sundaresan, TTK Prestige Limited - Senior VP of Finance & CFO [92]

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It's hard to reach at. Separately we will submit that information. That will be done.

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M. Chandru Kalro, TTK Prestige Limited - MD, CEO & Executive Director [93]

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So here wherever we're focusing on, we have certainly been focusing on. It's a matter of confidentiality for us.

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Operator [94]

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(Operator Instructions) The next question is from the line of Avi Mehta from IIFL.

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Avi Mehta, IIFL Research - Assistant VP & Lead Analyst of Consumer Discretionary [95]

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Sir, just wanted to understand the capacity addition that we were planning, which was supposed to come on stream in Gujarat and Coimbatore. Has that become operational?

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M. Chandru Kalro, TTK Prestige Limited - MD, CEO & Executive Director [96]

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Yes, from 1 October.

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Avi Mehta, IIFL Research - Assistant VP & Lead Analyst of Consumer Discretionary [97]

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Oh. So sir, would there be a related inflation or expenses that would come in and which could also weigh on other expenses? Is that what we should kind of assume? Or how did that...

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K. Shankaran, TTK Prestige Limited - Compliance Officer, Whole-time Secretary & Whole Time Director [98]

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No. It will all have additional production.

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Avi Mehta, IIFL Research - Assistant VP & Lead Analyst of Consumer Discretionary [99]

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Okay, okay. So while there will be costs, there will be also related, correct? That's how I should read. The second bit, sir, is would you -- I know there is -- it is a volatile kind of demand environment is what you're highlighting. But is it possible to give us any guidance on how do you see growth rates for FY '20? Or any comment. I mean I completely appreciate if you're not willing to give...

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M. Chandru Kalro, TTK Prestige Limited - MD, CEO & Executive Director [100]

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We don't want another debt there. We're parting with that internally.

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V. Sundaresan, TTK Prestige Limited - Senior VP of Finance & CFO [101]

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We believe we should be in the upper single digit.

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Avi Mehta, IIFL Research - Assistant VP & Lead Analyst of Consumer Discretionary [102]

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Okay. Okay. Fair enough, sir. That's what I just wanted to -- is it going to be so volatile, I mean we are -- we just wanted to understand how do you look at it, you're at a better place. That's why, sir.

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Operator [103]

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

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Achal Lohade, JM Financial Institutional Securities Limited, Research Division - VP [104]

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Can you talk a little bit about how the rural has done? Pardon me if I'm repeating the question, but I just wanted to get an update on the rural in terms of the demand scenario. Have you seen any deceleration or things are just the way they were earlier this year?

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M. Chandru Kalro, TTK Prestige Limited - MD, CEO & Executive Director [105]

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Actually, the rural demand has not dropped in spite of rural spread. The problem is that the new law that government has passed made reaching the products to the rural areas difficult. So we're working on that.

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Achal Lohade, JM Financial Institutional Securities Limited, Research Division - VP [106]

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Right. Given the issue with the NBFC sector, in terms of any impact for us and whether that impact is now sorted out, and are we looking at better days for rural?

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K. Shankaran, TTK Prestige Limited - Compliance Officer, Whole-time Secretary & Whole Time Director [107]

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The problem, again, actually, is that we are not able to get goods there. The demand is there and we want to be able to, but with the government NBFCs and we'll give you good demand.

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M. Chandru Kalro, TTK Prestige Limited - MD, CEO & Executive Director [108]

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See, it depends upon the rural credit expansion.

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K. Shankaran, TTK Prestige Limited - Compliance Officer, Whole-time Secretary & Whole Time Director [109]

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Yes.

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M. Chandru Kalro, TTK Prestige Limited - MD, CEO & Executive Director [110]

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And that why -- that is the first tranche.

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Achal Lohade, JM Financial Institutional Securities Limited, Research Division - VP [111]

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Okay, okay. And second, it was with respect to exports. Can you help us understand the way forward with respect to export to countries, products, and what kind of growth one should look at?

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K. Shankaran, TTK Prestige Limited - Compliance Officer, Whole-time Secretary & Whole Time Director [112]

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Well, export -- actually first half was disappointing because some of the orders that we expected to have, have been postponed to the third and fourth quarter. So that is one of the reasons why exports in the first half was disappointing. And the geography has -- Japan, Europe, U.S., Far East, Middle East. One wouldn't do that. See, like, Bangladesh.

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Achal Lohade, JM Financial Institutional Securities Limited, Research Division - VP [113]

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Right. And another thing was with respect to household, how the situation is. And you talk about new product expansion out there. So if you could talk -- update on the same, sir?

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M. Chandru Kalro, TTK Prestige Limited - MD, CEO & Executive Director [114]

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Sir, I don't understand the question, because we are not thinking for product and we are very confident that we're right.

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Operator [115]

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

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Nirav Vasa, Anand Rathi Financial Services Limited, Research Division - Research Analyst [116]

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Sir, just wanted to check one thing. After the commissioning of the recent CapEx, what would actually be your total installed capacity across each product category?

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V. Sundaresan, TTK Prestige Limited - Senior VP of Finance & CFO [117]

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Pressure cookers should be around INR 9 million. Cookware should be around INR 15 million. And some appliances, rice cookers and induction cookers, 1 million pieces.

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Nirav Vasa, Anand Rathi Financial Services Limited, Research Division - Research Analyst [118]

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Sorry, can you come again last number?

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V. Sundaresan, TTK Prestige Limited - Senior VP of Finance & CFO [119]

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Sorry?

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M. Chandru Kalro, TTK Prestige Limited - MD, CEO & Executive Director [120]

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Appliances will be around 1 million pieces.

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Nirav Vasa, Anand Rathi Financial Services Limited, Research Division - Research Analyst [121]

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Sir, it's how much? How many?

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V. Sundaresan, TTK Prestige Limited - Senior VP of Finance & CFO [122]

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1 million, 1 million.

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Operator [123]

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Next question is from the line of Amarjeet Maurya from Angel Broking.

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Amarjeet S. Maurya, Angel Broking Private Limited, Research Division - Senior Research Analyst of Mid-Caps [124]

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Sir, just wanted to understand, for future growth opportunities, we know that the company is growing. So apart from that, do you -- I mean you have identified any market where you see like INR 200 crores, INR 300 crores growth in next 2, 3 years?

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M. Chandru Kalro, TTK Prestige Limited - MD, CEO & Executive Director [125]

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I'm sorry, repeat the question, please?

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Amarjeet S. Maurya, Angel Broking Private Limited, Research Division - Senior Research Analyst of Mid-Caps [126]

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I mean you have -- have you identified any category -- product category, where you can see growth opportunities like you can capture almost INR 200 crore to INR 300 crore growth next -- in next 2 years?

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M. Chandru Kalro, TTK Prestige Limited - MD, CEO & Executive Director [127]

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No. We're working on it.

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Amarjeet S. Maurya, Angel Broking Private Limited, Research Division - Senior Research Analyst of Mid-Caps [128]

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Sorry?

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V. Sundaresan, TTK Prestige Limited - Senior VP of Finance & CFO [129]

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We are working on newer categories. It's too premature for us to say anything about it now.

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Amarjeet S. Maurya, Angel Broking Private Limited, Research Division - Senior Research Analyst of Mid-Caps [130]

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Sir, just like to -- you don't have food processes -- food processor. So do you think that in future, like you're in appliances segments, so go for a food processor and capture the market?

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M. Chandru Kalro, TTK Prestige Limited - MD, CEO & Executive Director [131]

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We already have food processor. The range is forever expanding. We have juicers, we have mixer grinders, we have wet grinders. But there is a new product pipeline that is constantly (inaudible).

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Operator [132]

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The next question is from the line of Kunal Shah from IIFL.

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Kunal Shah, IIFL Research - Research Analyst [133]

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My question is with respect to inorganic acquisition that you had alluded to last year. So is there any update on that front?

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M. Chandru Kalro, TTK Prestige Limited - MD, CEO & Executive Director [134]

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We're still working on it. We're in the process of tending to 2 or 3 opportunities. When it works, we'll let you know.

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Kunal Shah, IIFL Research - Research Analyst [135]

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Okay. And sir, my second question is, what would be the CapEx in FY '20 and '21, if you could share that?

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M. Chandru Kalro, TTK Prestige Limited - MD, CEO & Executive Director [136]

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Breakeven CapEx.

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Kunal Shah, IIFL Research - Research Analyst [137]

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Okay. And then can you give some quantum if possible?

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M. Chandru Kalro, TTK Prestige Limited - MD, CEO & Executive Director [138]

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INR 20 crores, maybe.

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Kunal Shah, IIFL Research - Research Analyst [139]

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Okay, INR 20 crores. Yes. And sir, finally, in the tax rate this quarter, will there be a one-off because of deferred tax revaluation, right, because of the new calculated option? So what is the quantum of that one-off?

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M. Chandru Kalro, TTK Prestige Limited - MD, CEO & Executive Director [140]

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About INR 13 crores.

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Kunal Shah, IIFL Research - Research Analyst [141]

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INR 13 crores?

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M. Chandru Kalro, TTK Prestige Limited - MD, CEO & Executive Director [142]

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Yes.

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Operator [143]

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The next question is from the line of Digant Haria from Antique Stockbroking.

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Digant Haria, Antique Stockbroking Ltd., Research Division - Assistant VP, Equity Research [144]

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Sir, my question is, you said that it's getting very difficult to transport cookers into rural areas. Would you just mind throwing light on the new laws, like is it related to the GST that we are not able to transfer cookers the same way we used to do before?

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M. Chandru Kalro, TTK Prestige Limited - MD, CEO & Executive Director [145]

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No, no, no. The NBFCs were allowed to trade. So we have branches in all the villages. So they were buying cookers from us and transporting it to the village. So the costs were not on us (inaudible) because they already had (inaudible) in the villages. Now that you -- the government has said and NBA said that a bank cannot do that. So we have to reach the cookers for the business. This is very, very difficult because this more than the cost of the cooker.

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Digant Haria, Antique Stockbroking Ltd., Research Division - Assistant VP, Equity Research [146]

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Okay, sir, the NBFCs are mostly those micro finance company, right?

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M. Chandru Kalro, TTK Prestige Limited - MD, CEO & Executive Director [147]

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Yes.

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Digant Haria, Antique Stockbroking Ltd., Research Division - Assistant VP, Equity Research [148]

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Okay. And then what -- like, what was our peak sales through them? And is there -- has it become 0? So maybe once we develop a new strategy to reach rural areas, we can again have good growth in that segment.

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M. Chandru Kalro, TTK Prestige Limited - MD, CEO & Executive Director [149]

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Our peak sales was about INR 180 crores. This year, we will be less than that. We'll be at about INR 110 crores. But we are working on it, and we shall get back to at least INR 180 crores, if not more.

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Digant Haria, Antique Stockbroking Ltd., Research Division - Assistant VP, Equity Research [150]

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Okay. So these peak sales of INR 180 crores was just the rural sales through the NBSC, right?

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M. Chandru Kalro, TTK Prestige Limited - MD, CEO & Executive Director [151]

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Yes, yes, yes.

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Operator [152]

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(Operator Instructions)

The next question is from the line of Anuj Sehgal from Manas Capital.

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Anuj Sehgal;Manas Asian Equities Value Fund;Founder & Portfolio Manager, [153]

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Is it possible to share what was the growth across your different channels, online, modern trade, general trade? And also, just to get a sense, you mentioned in your press release that online sales were very strong. So was that the only channel that grew strongly? And then lastly, can you also share the number of point of sales that you have across the country?

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M. Chandru Kalro, TTK Prestige Limited - MD, CEO & Executive Director [154]

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So the online sales -- wherever the overall online sales growth that you saw. And I think a lot of that information is in the public domains. Our business channels have also grown, but lesser than the online, obviously. Our whole franchise network has grown and that mirrors the company's growth. The modern format has also grown. So almost all our channels have grown. In terms of point of sales, we are one of the most well-distributed kitchen appliances across the country. The center gives us over 60,000 points of sales across the country.

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Operator [155]

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Next question is from the line of Srinivas Seshadri from Mirabilis.

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Srinivas Seshadri;Mirabilis Investment Trust;Investments Head, [156]

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First, I wanted to understand how the Cleaning Solutions business has trended both in terms of...

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M. Chandru Kalro, TTK Prestige Limited - MD, CEO & Executive Director [157]

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Can you speak a little louder, please? Cleaning solutions?

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Srinivas Seshadri;Mirabilis Investment Trust;Investments Head, [158]

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Yes. Sir, I wanted to understand how the Cleaning Solutions division has done in the first half, both in terms of revenues as well as how the distribution part has, kind of, expanded?

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M. Chandru Kalro, TTK Prestige Limited - MD, CEO & Executive Director [159]

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Well, it is making very healthy progress. We've had close to 50% growth over last year in the Cleaning Solutions. And I think we are on the right track there.

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Srinivas Seshadri;Mirabilis Investment Trust;Investments Head, [160]

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Okay. And how much of the potential network has been exploited as yet in terms of the distribution?

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M. Chandru Kalro, TTK Prestige Limited - MD, CEO & Executive Director [161]

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It's hard to answer that. There is enough room for growing that network as we are speaking. So that is going to be work in progress for the next 2, 3 years because there's a lot of market to be covered. We are doing exceedingly well in that area.

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Srinivas Seshadri;Mirabilis Investment Trust;Investments Head, [162]

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Okay, okay. And sir, just a clarification on the discounting, which you have been talking about. So if I got it right, this is in the cooker segment, specifically in South India?

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M. Chandru Kalro, TTK Prestige Limited - MD, CEO & Executive Director [163]

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Correct.

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Srinivas Seshadri;Mirabilis Investment Trust;Investments Head, [164]

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And this is across channels, not just modern format?

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M. Chandru Kalro, TTK Prestige Limited - MD, CEO & Executive Director [165]

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Correct.

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Srinivas Seshadri;Mirabilis Investment Trust;Investments Head, [166]

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Okay. And sir, the discounting is more driven by the regional player or, say, a national player? I mean, what is...

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M. Chandru Kalro, TTK Prestige Limited - MD, CEO & Executive Director [167]

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Regional players.

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Srinivas Seshadri;Mirabilis Investment Trust;Investments Head, [168]

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Okay. So South players are only driving this process?

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M. Chandru Kalro, TTK Prestige Limited - MD, CEO & Executive Director [169]

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Largely.

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Operator [170]

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Next question is from the line of Digant Haria from Antique Stockbroking.

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Digant Haria, Antique Stockbroking Ltd., Research Division - Assistant VP, Equity Research [171]

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Sorry, just a follow-up on the previous question about rural sales, which I asked, sir. So how

(technical difficulty)

across all categories? And where those SKUs priced much lower than the ones which we usually sell in cities?

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M. Chandru Kalro, TTK Prestige Limited - MD, CEO & Executive Director [172]

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We'll not like to tell you which SKUs, but you know that they are not necessarily the lower-priced SKUs. It's INR 118 crores that was the rural added fee. And we are planning to actually touch similar numbers this year also, except that the second half is likely to be better than the first half. What is -- because we sell, what categories we sell, I don't think I want to say at this point in time. But we are not selling the cheaper product in rural India. Rural acquisitions have become much more than what we see there too.

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Operator [173]

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Next question is from Chirag K from Valuequest.

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Chirag Lodaya, Valuequest Investment Advisors Private Limited - Equity Analyst [174]

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Sir, just a bit on rural sales. So how we are doing in rural sales now? What is the new mechanism?

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K. Shankaran, TTK Prestige Limited - Compliance Officer, Whole-time Secretary & Whole Time Director [175]

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Sir, there are some mechanisms within the company but there is still a lot to do in trading. We go with them. Some of them have dropped off. That's where the problem is.

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Chirag Lodaya, Valuequest Investment Advisors Private Limited - Equity Analyst [176]

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Okay. And we are adding new, as we said?

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K. Shankaran, TTK Prestige Limited - Compliance Officer, Whole-time Secretary & Whole Time Director [177]

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Yes.

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M. Chandru Kalro, TTK Prestige Limited - MD, CEO & Executive Director [178]

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Yes. We are adding new.

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Chirag Lodaya, Valuequest Investment Advisors Private Limited - Equity Analyst [179]

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Okay. And just on -- sir, modern trade side. In Q1, we lost one of the -- our biggest customer. So have we again started business with the same or...

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M. Chandru Kalro, TTK Prestige Limited - MD, CEO & Executive Director [180]

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We didn't lose it, we reduced his businesses. But that has become the better -- much better in Q2.

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Chirag Lodaya, Valuequest Investment Advisors Private Limited - Equity Analyst [181]

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Okay. So it is improving again?

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M. Chandru Kalro, TTK Prestige Limited - MD, CEO & Executive Director [182]

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Yes. Yes.

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Operator [183]

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As there are no further questions, I now hand the conference over to the management team for closing remarks. Over to you.

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M. Chandru Kalro, TTK Prestige Limited - MD, CEO & Executive Director [184]

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Yes. So as we said, we are looking forward to a good second half because we've got some very exciting launches planned. The market, hopefully, should improve. The demand situation doesn't seem to be vastly fantastic, but the monsoon are looking positive. And hopefully, the second half would be slightly better than the first half, and that's what we are looking forward to. And all our product pipelines are being done as per plan. So that's what we have.

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K. Shankaran, TTK Prestige Limited - Compliance Officer, Whole-time Secretary & Whole Time Director [185]

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Thank you.

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Operator [186]

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Thank you very much, members of management. Ladies and gentlemen, on behalf of AMBIT Capital, that concludes today's conference call. Thank you all for joining us, and you may now disconnect your lines.