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HPL Electric & Power Ltd
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[Operator Instructions] You can also view HPL's IR deck and press release for Q2 and H1 FY '25 from the documents made accessible in the webinar chat box.
As a reminder, this conference is being recorded.
Some statements in today's call may be forward looking based on current expectations and subject to risks that could cause results to differ materially.
With that, I now hand over the conference to Gautam Seth for opening remarks. Thank you, and over to you, Gautam.
Yes. Thank you, Shankhini. Good afternoon, everyone, and thank you for joining us. It's a pleasure to connect with you all as we review HPL Electric & Power Limited's performance for the second quarter and first half of FY '25.
I would like to start by sharing a brief overview of our financial performance.
Getting into the Q2 numbers. For this period, our revenue grew by 20.5% year-on-year to INR 422 crores, while H1 marked a 21.5% increase reaching INR 815 crores. Both are milestone top line numbers for the company. This growth reflects sustained demand in our Core Metering & Systems segment, which saw a 29% increase in revenue in Q2, reaffirming our position within India's metering market. Supported by an order book exceeding INR 3,500 crores by end of H1 with smart meters now making up over 90% of these orders, we are well positioned to contribute meaningfully to the nation's smart energy transition.
Our focus on smart meter solutions allows us to meet the evolving requirements of the energy infrastructure landscape, a responsibility we approach with both enthusiasm and careful planning.
Our Consumer and Industrial segments have also demonstrated positive momentum. In particular, our Wire and Cables division achieved 57.5% growth in Q2, driven by demand across various market sectors. This segment continues to gain traction within the B2C market, driven by our focus on quality and innovation. In Lighting, we are seeking a stabilization and should see a growth by the year-end.
Meanwhile, our Domestic Switchgear segment delivered over 34.5% growth, reflecting our alignment with customer needs and market dynamics. To support this growth, we have expanded our distribution network of over 900 dealers and over 83,000-plus retailers nationwide. This network expansion has allowed us to deepen our market presence, ensuring that HPL's high-quality products are more accessible to customers throughout India. As we move through the second half of FY '25, we intend to keep expanding our network to deepen our market penetration even further.
In terms of profitability, we have seen encouraging progress. Our EBITDA increased by 28.4% in Q2 to INR 60 crores and 33% for H1, reaching INR 116 crores. The EBITDA margin improvement to 14.34% in H1 highlights the benefits of our efficiency measures and operational discipline. Likewise, PAT growth, which nearly doubled, speaks to our ongoing efforts to balance growth with profitability, while earnings per share reflects our dedication to delivering sustainable value to shareholders.
Looking ahead, apart from smart meters, we are committed to driving healthy growth, particularly in our Consumer and Industrial segments where relatively shorter working capital cycle support enhance cash flow and returns. We will continue to invest in advanced R&D and manufacturing capabilities to foster innovation and meet the changing demand of the industry. As we introduce new technologies and solutions, we remain focused on contributing positively to India's journey to a more connected energy-efficient future.
So let us start with the Q&A sessions.
Thank you very much, Gautam. We'll now begin with the question-and-answer session. [Operator Instructions] we'll begin with the first question from the line Sahil Pattani.
Congratulations on a great set of numbers. I wanted to understand the margin trajectory. Obviously, we had really good margins this quarter. So we think that these margins are sustainable for the next few quarters? Or how do you look at the margin trajectory going forward?
Yes, Sahil, so if you look at the margins, broadly, I would say they are sustainable. We have seen an improvement. The overall, whether we are talking about Q1 or H1 -- sorry, in Q2 and H1, if you look at, the EBITDA is nearly around 14.3%. In terms of both the segments, the meter has seen a much better improvement as the execution is increasing. So those -- the EBIT margins are around 16.5%. So more or less, I think if you look at the metering segment, anywhere at 15% to 16%, is a sustainable EBIT margin going forward.
Now of course, we are today in -- we are seeing a lot of geopolitical activities and even war-like situations happening across the world. But I think those till now have not affected us in terms of supply chain or even any spikes in the pricing happening. And we have taken necessary steps to mitigate any types of whether they are on -- we are talking on semiconductors or industrial plastics and all, we have taken our due precautions.
But still right now, looking at almost a scenario which is almost -- which is happening in the next 6 months, if that were to continue, I think those margins what we have are currently sustainable, at least for the next 2 quarters. When we look at the EBIT margins for the consumer and industrial, that has come down by a little more than 1.7%. And that's mainly because of the fluctuation we saw in the copper prices, mainly in the wire and cable business, and mainly in July, where we did see a drastic drop in the copper prices.
So I think going forward, there also, we should see an improvement, and we should probably come somewhere around, let's say, about 11.5%, 12% somewhere. So overall, lighting also, we have started seeing certain stabilization happening in the overall business. So the margins, again, should improve as we approach the year-end.
So to just summarize your -- my answer, I would say, yes, the margins, what we have, are sustainable, and maybe anywhere around 14%, 14.5% as an overall EBITDA margin should be there going forward.
Got it. Got it. And my second question is, obviously, in the investor presentation, you mentioned there are tenders about for about INR 10,000 crores in the metering space that are floating around. So what is the kind of time line for that? Like do you see anything that's coming out in the next few months or few quarters, orders being awarded, like I just wanted to understand what the landscape is looking like.
Yes. So I'll just like to probably add something to what we have written on that. Actually, now the inquiries for us and the orders are coming through the AMISPs. So when you look at the overall figures, and I'm talking about the figures, what we see in the public domain, roughly, I would say, about 12 crore meter orders have been given out to the AMISP by the various state utilities.
Now those orders are eventually getting finalized on the meter manufacturers. And we, being a prominent player, definitely, we do stand a good chance. So I would say, instead of tenders, you can say probably those -- these are -- we are talking about inquiries, which are going to come in that. So right now, also, we -- when you look at the active inquiries, what we have are fairly good enough. And we are probably engaging with most of the AMISPs who are right now active and independent in the market.
So there are a lot of inquiries. So I think right now, our -- we are not worried on that because eventually, these orders will come in. We are supplying already to most of the AMISPs. So as more and more suppliers are going to them, we do expect further orders to be released to them. Certain new AMISPs also we've been talking. But overall, as -- I think now it's a continuous process as in a business where, as more and more orders will be going and depending on our delivery schedules, the quality of what we have, what the product promises, I think we are confident of getting many more orders in the future.
Our next question will be from the line of Viraj Mahadevia.
Congratulations on all the visible positive trends in the business that you've been talking about. Two questions, Gautam. One is, can we expect the pivot in a meaningful way to smart meters to commence Q3 onwards, would you say?
No, sorry, I didn't understand the...
Sorry, I was just -- can you expect a meaningful pivot to the smart metering business in revenues to commence from Q3 onwards?
No. We would see -- like we are currently -- like if you see the growth what we are doing from the last year, we are talking about almost like 29% in this second quarter, 34% in the overall H1. So going forward also, we will keep seeing growth happening like this. Now I don't see a sudden spike happening overall like this. Now what -- because we are into the supply business. We are supplying to the AMISPs, and now it is getting broad-based each time.
So as we have more and more AMISPs whom we are supplying plus they have multiple projects in different states, what each single AMISP is doing. So broadly, the business is getting broad based, and we will see a continuous growth. I don't see a big spike happening into this. But yes, the business is growing, and we would continue to see the supplies happening.
I appreciate that, Gautam, but my question is slightly different. Historically, you have obviously electricals and branded electricals business. And you've done more of the conventional meters. Now your order book has shifted more in favor of smart meters, as you mentioned in your presentation, almost 3,200 crores out of 3,500 crores is smart meters, 99 -- 95% of 3,500 and 99% of that, right? So now would you expect this positive mix change for smart metering to play out starting Q3 onwards is my question.
Yes, I think that's already happening.
Already happening.
Yes, it's already happening, and that would continue to happen. But as -- like you might have seen also that there have been like some smaller delays, a little bit here and there, small challenges are happening while the implementations are going on.
In an interim period, definitely, the utilities -- because they would need some meters and even for the areas where they are not implementing. So that business, that smaller part will keep continuing on the legacy meters. Our overall mix, because already when we have 95% of our metering orders are smart meters. So the change is happening and it will further happen like that year.
Excellent. My second question is what is the average price of a smart meter versus a conventional meter? How many times?
Normally, I would refer...
Roughly.
Like that. But the figures what, normally, people talk in the public domain, maybe they're a little older right now, but people talk about 3,000 or 3,500 per meter.
It's just number of times. So what is the conventional meter versus a smart meter? Is it...
The conventional meters were typically at a ballpark figure of INR 11,200 normally.
Okay. So we're talking at least minimum 2 to 2.5x, right, roughly?
Yes, exactly.
The next line of questions will be from Arpit Maheshuri.
Firstly, thank you so much for arranging this cyber conference, sir. I have 2 to 3 questions that you have talked about the domestic switchgear business, about the 34% growth was in cables, around 57% growth in lighting equipment. It will grow in the [indiscernible]. But sir, what about your fans business? You have entered recently into the fans business. And what about the solar, which is the talking point of the, I think, this year or the next years to come. What type of growth do you see in these type of businesses and also about this industry and switchgear business? That's my first question.
Yes, sure. So I'll take one by one. So if you see, we launched the fans in the overseas market initially because the Indian market in fans were seeing certain change happening typically because of the BEE markings happening on the star rating. So there was some churning happening in the local market. So we thought instead of entering during those times, it's better when the market stabilizes and offers us growth. But -- and I think that was a good decision at that point in time.
We have currently launched in 3 states in the fans. And now from next month, in December, we hope to now start scaling up and spreading ourselves to much more other areas. Typically because the fan season is slightly more season based, it's a little cyclical trends we see. And from December, January onwards, we see the -- that part of business picking up.
So we have done a lot of back-end work. And hopefully, by March, we should be present in over 50% of the Pan-Indian market. Of course, we -- the strategy here has been that because we have to align the aftersales servicing, we have to align a lot of manpower and while launching, so the strategy was that we would go state-wise. And I think wherever we have currently launched and the figures what are coming out, the acceptance is good.
But now, until now, the season has not started from a procurement, from a trade point of view also. But from December, we will see starting numbers. Overall, our idea is that we will be a pan-India company by next year. And from next year onwards, from April onwards, we should start seeing certain good numbers and growth in terms of fans.
But one thing, if you see the -- what the fans were there 3 years back and now, a lot of changes has happened in terms of design, in terms of technology. The BLDC is really picking up. So that is where we find, as HPL, our focus on electronics has always been there for last now 2.5 decades.
So I think there are some advantages which we can leverage when we are entering new segments like a fan. And plus, it gives us a good add-on along with our other consumer products so that we go with a basket to our trade channel partners, to our customers even in the building segment. So that is it.
Now coming to solar, yes, we are seeing a good traction on the solar, especially on the solar cable, the net metering and even on the switchgears. But this business -- this reporting gets clubbed with our existing internal product verticals. So when we look at consumer and industrial, the solar products of cable gets added in the cable business, reporting the meters, the net meters going to the metering reporting. So we are not giving out a specific reporting on the solar part. But yes, we -- there's a good traction. Even the new schemes of rooftop solar, which the government has come out with, that also will give us a pan-India growth in the next 3 to 4 years.
Now when we look at the industrial switchgear segment, last 2 years, we have seen a very good growth. This year, because of certain procurements of the government and certain -- through the contractors, of course, this happens all through the dealers and distributors through the contractors, there, the offtake has been slightly slow in the Industrial Switchgear segment. But hopefully, that should pick up in the second half of the year.
Sir, can you do that in the solar major, the solar products? Bifurcation wise, like what is the growth in the solar net meter? And you are clubbing those right now and the main segments only. So can you do it in a separate way in the future years to come, in the [indiscernible]
We can look at it. But solar -- but when we talk about solar products, there are a lot of it. If you look at only the solar switchgear, we are talking about over 30 to 40 different products. So it's not about 1 product because we have the string junction boxes, we have the AC/DC converters, we have this. So it's a huge range. And eventually, when grids are changing to -- from the fossil fuel to the solar and a lot of that is happening.
So for us to go to minutely in our reporting, then we probably lose the broader picture at least when we are giving out our results. Yes. But one thing is there. That's definitely the solar is the future. And as the R&D, what we have and the manufacturing capabilities and the products which we have already launched, we definitely have a good opportunity going forward.
So sir, you have talked about that the fans business, you are full facing through April of the next year, but I want to know that are you manufacturing these fans in-house? Or there is a third-party manufacturer for that?
No, right now, these are vendorized with a lot of tooling and design being done in-house. But as in -- with HPL, the way we see -- once we see a growth coming in and we reach a critical mass, then probably, we would look at -- we would be open to looking at manufacturing in a bigger way going forward. But many of our other products also, we have started the same way. But as we see a good traction in the market and when a critical business comes in, then I think it's a good time to invest and then go forward into the manufacturing.
Our next question will be from the line of Suraj Jain.
I just want to know what we have offering for the 5G products, what we have in the 5G technology.
Yes. So if you look at the -- currently, we are supplying certain switchgears to the telecom companies and the wire and cable. So a lot of growth what we have seen in the past couple of years, we are -- is mainly on the wire and cable side where we are also doing further infrastructures, including the tower installations. So there we are seeing and we are supplying to almost every major contractor who is doing business in the telecom business and also to the largest telco, we are supplying directly also. So it's -- that's a good segment for us. And I think we are looking at even some more products in switchgears, which can go into their installations.
So what will be the share of revenue over a period of time and going forward?
No. So although these are like the way we look at telecom business, we also have the real estate segment, we also have a lot of OEM segments, like different segments are there. Infrastructure segment is one. So although telecom and cable and wire, I will probably not have put a number, but they are decent enough.
But still, we are not, as a company, dependent only on 1 or 2 segments. So although it's a very important part of it, but roughly as a share of the overall wire and cable, it's still -- it will not be so dominating because we are -- as HPL, we are very well spread out in terms of our customer segments here.
And our growth comes from all across. So if you look at wire and cable, right from a residential segment, commercial segment, we are seeing good growth. The real estate has been good. Even on the industrial side, it's going to industries or OEM panel, that's also been growing. The domestic wire, of course, has been growing. So similarly, the telecom also has seen a good growth from last 2 years.
Okay. On the smart meter, I just want to know, if the smart meter demand is moving as per the plan, are there any challenges out there? And overall market, I just want to know the overall market of the smart meter going forward? Yes.
So the overall market for smart meters is, of course, huge. And I think that is well stated by the government because the originally 25 crore smart meters are to be replaced from the conventional ones and 22.5 nearly are sanctioned. So -- and I would say the orders, almost of 12 crores have been given out to the AMISP. So the business overall is large.
When you look at from a -- like we have been a supplier -- leading supplier to the AMISP. So our challenges are quite limited because we have been doing manufacturing. We have got a huge capacity in terms of R&D development. We are already there in this. So the challenges for us are less.
While the AMISPs, when they are implementing, there could be some challenges at the ground level, which may be coming up. And whenever there is a change in technology, a change in -- because it's a change from a single installation meter to a complete system. So there are a lot of work which happens at the utility level, which the AMISPs are due to do that.
So there will be definitely challenges. But I think overall, the segment is moving. And I'm sure these challenges and the roadblocks would open out and the overall system gets implemented. What is important is that the overall implementation is happening at a good level and even the awareness levels. And once people see the benefit, the utilities are seeing the benefit, definitely, the government, both central and the state governments, are seeing the benefit, and therefore, they are pushing the smart meters across the country.
Our next question will be from the line of Shaurya, Shaurya Punyani.
Am I audible?
Yes. Please proceed.
Sir, given that you have grown 30% in H1, so can we say we'll grow around 20% to 25%, 25%, 30% in this year and next year, overall top line?
Yes. So overall -- so we -- our growth, if you see is about 20% -- 20.5% in the Q2 and 21.5% as a company in the H1. So I think a similar growth would be expected going forward, for sure, yes. And as I said earlier also that apart from the smart meters, the cable and wire is performing well. The domestic switchgear is performing well. We do see towards the end of the year, even lighting part, to start having real-term growth. And even the industrial segment to come back. So overall, yes, we see the market in a good way and a high double-digit growth definitely looks certain going forward.
And sir, that order book, that 3,500 crore order book. So what is the execution time frame for that order book usually?
So in this, if you see almost -- we can say 90% is smart meter than this. And almost probably almost 95% is the overall metering. So if you see the smart meter, the -- normally with a time lag of 6 months for preparation, the execution is supposed to be in 2.5 years. So overall, 2.5 to 3 years is what the execution time line schedules are for the smart meter. So based on that how these orders are structured and that's how we are supplying these meters.
Our next question will be from the line of Pranjal Mukhija.
Am I audible?
Yes. Please go ahead.
So I had a couple of questions with regards to the smart meter division. So currently, are we only like just manufacturing the meters? Or are we also like forward integrating into the whole AMI part of the chain?
Yes. So our main focus currently is on the manufacturing and supply of meters. So if you look at most of our orders, almost bulk. Other than one which we took up in West Bengal, I think entire order book is basically on supply, developing and supplying manufacturing these meters to the -- for the AMISPs, and that is where the focus would remain.
Okay. So we're not going to have any future plans to get into the communications or the like HS side of things?
No. So we are -- so apart from the meter supply, we have already, like earlier also, if you see we did a tie-up. So there are some things -- there are certain value adds which are along with the smart meter which we are doing. So if you look at the whole hog AMISP work, which is actually involves installation, financing, giving the complete support on the whole thing that we are not doing. But there are the value adds, whether they are of the software of the HES, the MDM and the communication part. So that we are already doing. Selectively, we are already doing, and we have supplied those also to certain of the private utilities or the AMISPs. So that we are doing. So that becomes a good value add for us. But overall, looking at the AMISPs as a full system integrator and doing the financing and the installation part that we are not pursuing that.
So currently, like since you're saying that you guys also include communications and side of things. So currently, like what sort of communication types do we have? Is it like cellular? RF? What are we doing?
Yes. So I think that depends on the customers' demand. So we can do all, whether it is RF, cellular or even NB-IoT. So we can give all the 3 options. And -- but I think the major demand right now probably is cellular right now, but that will keep changing as we go ahead. And -- but as a company, as a technology, we can give all the 3 of them or rather we have been giving all 3 of them.
Our next question will be from the line of Neha Gupta.
My question is, with the growth in both the wires and cable, 57.5% growth in domestic switchgears, 24.5% growth segments, would you discuss the strategic moves that led to these results? Furthermore, what market dynamics are you observing in the Tier 2 and the Tier 3 cities where you have expanded your retailers and distribution network? And how do you plan to leverage this network for your continued growth?
Yes. So if you see, of course, we have been quite upbeat on the wire and cable segment. And I think it's a basic -- the marketing push and expanding the channel, what we have been continuously doing. But now in this quarter, we did see a good growth across all the customer segments. So whether we look at the residential, commercial, the domestic part, the infrastructure, telecom. So we have seen all-round growth in wire and cable.
And similarly, when you look at the domestic switchgear, there, the focus on real estate has been strong. So as a company now with -- because now we have almost 5 segments of products which can go into real estate in a good manner, so if you look at, we have MCBDBs, we have switches, we have wire and cable, we have LED lighting and we have fans.
So overall, these 5 segments now can be pushed into real estate in a bigger way. So in all the states now we are putting in almost like a separate vertical within our teams where the focus on real estate and key accounts would be strong. So I think there are a lot of actions we have taken on that.
Even if you look at on the branding part, I think this first half and more specifically, the Q2 has seen certain growth in our brand visibility. We are reaching out to more people, a lot of activities happening at the ground level whether they are the electrician, connect programs or retailer needs, even with Consumer Connect.
So somewhere, I think, to some extent, on the branding part, distribution part, we have been reaching out in all the segments. So that's what we have seen, I would say, good growth in these 2 segments. In fact, if you see wire and cable, almost 30% growth in the first H1. And the domestic switchgear has been almost 27% growth in the first H1. So overall, I think these are -- certain of our strategies definitely have paid us the results.
In terms of the market dynamics, when you look at -- on the geographical areas, what you were asking, there, our focus, although the cities and metros are always covered, but I think the growth, if we were to analyze, is probably a lot of it is coming from the Tier 2 and Tier 3 cities and the big towns, what are there. And I think the growth in terms of our channel, what is happening, the retailer maximum growth is probably in the Tier 2, Tier 3 segments. So I think these are the segments where -- or these are the areas where in future, we would, as HPL, we would see a lot of growth coming in from these nonmetro and noncity segments.
Our next question is a question that's been sent in from Harsh Ritesh Johan, excuse me. So the question, Gautam is, what is your action plan for the smart meters that seem to be banned in many states like Gujarat, Maharashtra, for households?
Yes. So while we are looking at the implementation and supplies, which, of course, right now, a lot of work is going on across the country, so there have been certain protests which probably are in the news, and we are seeing it. But I think these are, I would say, temporary and in certain pockets, these are happening. And as more and more consumer awareness comes, we will see a go ahead on these supplies to be happening.
So we -- of course, looking at our product portfolio, this is still a smaller part being supplied to these states. But overall, if you see, I do expect, in the next couple of months, both these states will be buying again. And they have probably reshifted their focus to more on the commercial side, industry side and other things. And the domestic part will obviously be taken up, which as per us, is my -- personally, I feel this will come back in a bigger way.
Whenever the new technology is getting implemented, we have seen it even in 1996, 2000, then the electronic meters came in. So there were a lot of protests. There were sometimes delays happening because people felt that the electronic meters would be like the meters would go faster, they would have to pay more. But I would say those -- we have seen those times also. So similarly, here also, as we look at the consumer awareness going up, I think government is also doing a lot of work to give out the information on the education part of the benefits of smart meters.
So smart meters definitely have a huge benefit for the utilities and the government because that cuts the AT&C losses. Especially I think a lot of thing is also on the prepaid part, changing from a postpaid to prepaid. So I think these things happen, but the technology is good. I think even in individual consumer with the data, what he gets, the way he can analyze and the accuracy what is there. I think the people will see the benefit and eventually, they would be rolled out. That's the way we look at it.
We'll take another question from the line of Deepak Mehta.
Sir, my question is around what is the runway for smart meter implementation? So can we see 10 to 15 years of run rate for the same?
No, I think the -- so the current scheme what you look at, I think the implementation probably in the next 3 to 4 years should be done because the way it is picking up. And now the implementation probably is happening in multiple states through multiple AMISPs, and even single AMISPs is doing multiple projects in different states. So I think those things are definitely the pace is picking up.
Right now, because a lot of it initially when the orders are given out to the AMISP, there is a time lag of 6 to 8 months by the time they get the local level integration done or certain pilot meters are tested and then go live happens. But once the pace picks up, definitely, the implementation would happen.
And to just add on to what your question is that if you look at the long-term benefits, because right now, the first 10 year, the supplies are to happen in almost 3 to 4 years and then we have a 10-year period. But even going forward, we would see, by the time we reach the 10-year period, probably a new generation of smart metering coming in, new technologies coming in. And over a period of time, you will see the metering getting enhanced. And again, a new set of meters coming in. So whether we look at 15 years or 20 years, it's definitely a long-term story when you look at the smart metering as far as smart metering is concerned.
[indiscernible]
Sorry. We can't hear you.
Manufacturing in house, let's say, total cost is 100%, INR 100.
No, sorry. Can you repeat your question, Deepak?
So my question is around -- yes. So you manufacture the smart meters. So what is the percentage you outsource the materials from vendors or third party?
Yes. So we are very well backward integrated. I think among, I would say, all the manufacturers in India, probably we would have almost the highest levels of backward integration, what we do. So we do right from engineering plastic, tooling, electronics, a lot of components, everything we do mostly in house.
Only thing where we are dependent on others for components is items which are not made in India. So certain parts, definitely, like components could be coming from outside, but within India. And when you look at the semiconductors or the active-passive electronic components, since they are not made in India, they have to be imported. But I think we are well ahead of what the industry currently is doing. And even going forward, we are looking at making much more components even which are critical to be backward integrated so that we can have a better supply chain management, maybe the pricing coming down, the consistency in quality and technology. And then obviously, the overall, the Make it in India, what we are promoting is I think that would also get enhanced.
We have another question that's been sent in. The question is, Gautam, would you be able to share the success rate of new tenders released specific to smart meters? And secondly, since HPL is not focusing on financing meters, is there cases of deals being lost? If yes, any numbers to share?
No. So like as I said, earlier, we are not directly participating in tenders for the AMISP. So our business is now dependent upon interacting and negotiating with the AMISPs and getting the orders based on our merits. So that is it. So there is no success ratio what we have based on direct tendering.
So right now, our business from a B2G, where we were focused mainly 100% supplies going to the government, are today now more of a private -- like a B2B, but completely to a private segment. That is how it is.
Now when you look at it, yes, there could be only, I think there are about one-odd AMISPs who are focused with only 1 manufacturer combined together, like kind of a JV arrangement. So yes, those kind of businesses we stand to lose because we are not part of their consortium or JV, which was done prior to the tendering. But overall, that still gives us a big opportunity to deal with all the independent AMISPs. And since we are not competing with our AMISP in those tenders, so definitely, we do stand a chance to be a preferred partner with multiple AMISPs to do that.
And I think our focus has been on the R&D design manufacturing of smart meters. And I think that is where we are playing on our strength right now in this first phase of the RDSs.
We'll take another follow-up question from the line of Viraj Mahadevia.
What will be helpful is to get an understanding of the landscape of sectors or subsectors that you're looking to cater to, whether it's gas meters, water meters, solar meters, and where you already have this capability or where the capability is lacking and you're not looking to play?
Yes. So already, if you look at within the smart meter, I think that we are anyway doing, we are doing the solar meters, the solar net meters, we are anyway doing that.
How big is that opportunity, Gautam, solar net meter?
That gains, I think to some -- in an interim period, on the rooftop solar, it gains certain traction for sure, which we are supplying. But overall, I think once the smart meters come in, then that would cover the bulk of it because they have multiple features which would also cover the net metering part. So that can technically...
But it's only at the household level or it's also at a solar farm level?
No, all this thing. Like we are -- if you see our meters, we do grid metering, we do even in the industries where the loads are different, commercial complexes we do, and then also on the domestic place we do. So that's we've been always doing right from...
But that opportunity is increasing now?
Yes, that is increasing because all around, the retail would go into a smart one into communication, so that would happen. Now regarding the other segments, yes, we have been working on the water meter part, but again, nothing right now to share. But as we have it, I think we'll be happy to share the information and what kind of business then we can look at it.
Understood. This is all indigenous technology or you're looking for partnerships?
No, no. I think ourselves. Now I think we -- I would say, not to boast of it, but I think the Indian industry, the way the smart metering is developing and the leading players. In future, the way things are coming, definitely, I think the industry could be a technology provider for the world. That's how -- because the Indian landscape is pretty challenging. And even in -- if you see electricity meters, we do have problems of theft, of a lot of pilferage, the heat conditions are different. The weather conditions, you have right from minus 10 to a 50-degree in Rajasthan. So our meters that way, as an industry, are pretty robust. And with a 10-year warranty and like if you can supply in India, you can supply anywhere else. One meets that kind of robust technology to be there. So I think overall, it's good evolution for the industry and for a company like us, for sure.
Great. My second question is, why did gross margins trend down in Q2? Was there a mix change? Or was it more sale of wires and cables which are lower margin?
You're talking about the Consumer and Industrial segment?
No, overall in your business. Your Q2 gross margins were lower, I think, than Q1. Any specific observation on that?
Maybe just -- it could be on the product mix because if you see the...
Product mix.
The Consumer and Industrial segment, the margins have come down in the Q2, mainly on the fluctuations of copper and mainly with wire and cable occupying a bigger space and then the margins slightly dropping down because of the fluctuations. So that could be it. It's just that -- but overall, if you see it still maintained around 33%, 35%.
Our next follow-up will be from Arpit.
Sir, can you throw some light on the new launches? And what will be the margin on new products that you have mentioned in your investor presentation? And secondly, about your consumer industrial, you are talking about that, but missed that. Your consumer, industrial margins, down from 11.56% to 10.46%. So do you expect to go up in the future years to come?
Yes. So I'll first take the second part of your question. The margins have come down. It's mainly because of the fluctuations in the copper prices on the wire and cable. Also, the lighting part has been seeing a little flat business happening over the last quarters. So going forward, maybe not in a few years, but maybe in the next 1 or 2 quarters itself, we should see the margins coming back. I do expect that even the lighting margins should see an improvement because the fall in prices and -- although there is a volume growth, but the values have been quite a little lower. But that should improve even the wire cable business, looking at -- I think there also the margin improvement should be there. So we should come back on that, for sure.
Now when you look at the individual product launches which we have, because we do that almost on a month-to-month or quarterly basis, a lot of products in each segment are getting added. So now although they have their individual profitability levels, but broadly as a policy, they do get aligned more positively on the segment-wise profit. So if, let's say, we are launching a new lighting product, so whatever the current margins are there, normally, we look at that the individual new products added should have at least a more positive individual net -- like a unit margin as we are adding them to the basket. So if that is not compliant, then we do go back on the drawing board. We make sure that the pricing of launch or the costing and others will get aligned. So that overall, we are able to, in the short, long term, improve the margins of each of the divisions there. So that is it, Arpit. But I don't think we report them individually, but yes, because lighting today may have over 200 products. So if there are, let's say, next 10 products added, we make sure that at least they have a better margin profile than the existing product. So that overall, we move to a more positive level.
I will take the next follow-up from Pranjal.
So again, a couple of questions on the smart meter bit. So could you talk about the competitive landscape in this industry and like the impact of like this competition coming up on the margins, let's say, 2, 3 years out? So the reason I'm asking this question because we're seeing new players like coming up, right, like listed players like Sasa and with cans also like acquiring like sort of acquiring [indiscernible]. And they also have some good plans of capturing some markets. So generally, I wanted to understand like what are the barriers to entry in this business?
No. So there are no barriers for sure. The natural barriers are, of course, competing getting the technology right, getting the overall mix of what the business requires. So like every business, what we are in and even traditionally, in the last 25 years, there have been no barriers in the metering industry. And we have seen at times over 50 companies being in the metering industry. And with the way the technology moved up, with the way the competitive scenario was there, so most of them, almost 80%, 90% of the companies went out of the market.
And okay, now it's a new opportunity. A lot of new players are coming in. So we are, I think, well geared up for the competition. We do have a big competitive edge in terms of our technology, our R&D manufacturing. So I think a lot of them, the list goes on and on. And I think we will -- we are really working to grow up and make sure that the market share, let's say, of 20%, 25% of the industry, and it's a fast-growing industry, that we maintain that.
But yes, the competition will come in for sure. The -- it will be competitive. Rates will go down in the future. And -- but the costs are also going down. The volumes are going tremendously high. So -- and we are also doing a lot of automation at our end to look at the peak demands, which would come in the next 1 to 2 years. So it's an open market. And I think the more competitive it is, the better benefit for the entire industry, for the utilities and also for the consumers. So I think that's how the landscape is. And it is going to be definitely competitive, but that's in every industry.
Sir, secondly, like by when will we see the government coming out with the tenders for the second half of that 25 crore smart meter target?
So I think the evaluations are already on. So if they have given 12 crore orders to the AMISPs, and this is as per government figures. I'm not -- these are not my figures. These are as per their websites. So I think they're already getting evaluated. But I think maybe in the next 3, 4 months, there could be some gap because it takes time to evaluate. And what the orders they gave also, they were very early starters. So they also spend a lot of time evaluating. But I think that would happen maybe end of the year or maybe in the first half of next year. The balance should come out. So there's no time line of stoppage or orders to be given. It's just a natural process, what we are seeing that there seems to be some gap probably while the orders are getting finalized to the AMISPs and the tenders are coming out.
Since we're nearing the end of time for this earnings webinar, I'd now like to close the Q&A session. If anyone has any more questions, you can feel free to write to us at Dickenson, and I'll ensure we get them answered to your satisfaction.
I'd now like to hand over to Gautam for some closing remarks. Gautam, over to you.
Yes. Thank you. And I just want to extend my gratitude to everyone here for their support. At HPL, we remain dedicated to a path forward guided by a long-term perspective and a commitment to the operational excellence and market expansion. Thank you once again for being with us, and have a pleasant afternoon.
Thanks, Gautam. On behalf of LVs and HPL, thank you for attending our call today. We'll be sharing a feedback survey with all participants shortly. This will help us improve our overall communication. So please do respond there. So thank you to everybody for attending today on behalf of HPL. Cheers, and have a good afternoon. Thanks, Gautam, for your time as well. Cheers, everyone. Please disconnect your lines. Bye-bye.