Voltas Ltd

NSE:VOLTAS

Ladies and gentlemen, good day, and welcome to Voltas Limited 3Q FY '25 Earnings Conference Call. [Operator Instructions]. Please note that this conference is being recorded. Participants in the call, please note that the duration of the call will be only for 45 minutes. I now hand the conference over to Mr. Krishnan, Head of Research from Nirmal Bang Institutional Equities. Thank you, and over to you, sir.

Thanks, Seema. On behalf of Nirmal Bang Institutional Equities, I welcome you all to the 3Q FY '25 Results Conference Call of Voltas Limited. The Voltas management is being represented by Mr. Pradeep Bakshi, MD and CEO; Mr. Jitender Verma, CFO; Mr. Nikhil Chandarana, Head, Corporate Finance; and Mr. Vaibhav Vora, Head Treasury. Over to the management for opening comments.

Hi. Good afternoon, everyone. This is Jitender, and I'll give a brief snapshot of our numbers for this quarter and then we can move on to question-and-answer session, which Mr. Bakshi and myself help answer.

So as you are aware that October to December '24, the global economy experienced stable but subdued growth with a projected annual growth rate of 3.1%. The United States saw upgrades in its economic forecast and other economies particularly in Europe faced downgrades due to geopolitical tensions and financial market volatility.

In India, the economy continued to grow driven by strong performance in the services and agricultural sectors. Our inflationary pressures, particularly in food prices posed challenges, leading to a cautious monetary policy stance by the Reserve Bank of India.

Despite global uncertainties, India's economic fundamentals remain strong, positioning it as a key player in the global economic landscape. For the cooling products, October to December period is traditionally a lean period. Demand during this period is primarily driven by festive season or a second summer in the country.

In this backdrop, during the quarter ended 31st December 2024, the consolidated total income for Voltas grew by 18%, aggregating INR 3,164 crores compared to INR 2,684 crores in the same quarter last year. Profit before tax soared by 699% to INR 191 crores from INR 24 crores.

Net profit after tax also saw a substantial increase, climbing to INR 131 crores from an after-tax loss of INR 28 crores in the corresponding quarter last year. Earnings per share not annualized for the quarter ended 31st December 2024 was at INR 3.99 compared to negative INR 0.92 last year.

The company's performance or 9 months continues to remain robust. The company reported a 28% increase in consolidated total income, reaching INR 10,890 crores, up from INR 8,477 crores in the same period last year. Profit before tax surged by 172% hitting INR 848 crores compared to INR 312 crores last year.

Net profit after tax also experienced a significant rise at INR 599 crores, up from INR 137 crores in the corresponding 9 months of last year. This marks the highest ever 9-month profit in the company's history.

Earnings per share for the 9 months ended 31st December 2024 was INR 18.14 compared to INR 4.10 in the same period the previous year. A snapshot of our results for this quarter and for the financial results for the financial year has already been given. I take a brief on Segment A, which is our unitary cooling products, UCP.

Considering the seasonality of the cooling products business, the segment has given strong performance reporting both volume and revenue growth despite a shorter festive window due to 2 major festivals falling in a single month. The segment reported a revenue growth of 20% and 42% compared with quarter 3 last year and 9 months last year, respectively.

An anticipated strong summer demand and support from our in-shop demonstrators helped us achieve a better performance for all products with the room air conditioner category experiencing good demand. Both window and split air conditioners saw reasonable growth during the quarter. Voltas continues to remain the market leader in both split and window air conditioners, recording an exit market share of 20.5% as of December 2024.

The commercial refrigeration segment faced some headwinds, while all the CR product categories reported moderate growth, sales push to liquidate the inventory and challenges in the market stemming from reduced capital expenditure by customers have led to a drop in margins during the year and the quarter.

Growth in the current quarter was driven by higher sales in Visi coolers, combo and glass top freezers. Our product portfolio, especially for cold room is garnering attention with a healthy pipeline of orders. With the slowdown during the year, ramp-up of production in our new factory remained low, the impact of which added to our cost.

However, with fresh orders in pipeline for our CR products, we envisage favorable outcomes from this category in the next few months. Like air conditioners, the air cooler segment also witnessed a strong quarter in-spite of low season.

Quantity tie-ups with distributors and sub-dealer scheme for season supported placement of both air cooler and water heaters. Market share in the air cooler category was reported at 11.1% exit in September, positioning Voltas as the #2 brand in September 2024.

In the water heater segment, partnerships with distributors and sub-dealers have also contributed to strong performance. The commercial air conditioning vertical recorded constant steady performance during the quarter, driven by sales of VRF and ducted ACs. The higher volume of margin-accretive product sales, value engineering initiatives and the current mix of AMC jobs have positively impacted our bottom line.

With a positive conversion of product sales to AMC jobs and high order pipeline of retrofit jobs, the vertical is expected to continuously deliver consistent growth in the business. Elevated commodity prices and a steep depreciation of USD-INR exchange rate had an impact on profitability. Our planned consistent investments in BTL advertising costs continue to deliver anticipated results.

Consumer-centric financing scheme significantly contributed to sales growth this year. Simultaneously, various value engineering initiatives and cost control measures have contributed to stable margins.

In conclusion, UPBG segment revenue for the 9-month period grew by a remarkable 38% reaching INR 7,155 crores, up from INR 5,198 crores in the same period last year. Segment result also saw a significant increase of 30% amounting to INR 548 crores compared to INR 423 crores of PBT in the current -- in the corresponding 9 months of the previous year.

For the quarter ending December 2024, segment revenue grew by 20%, totaling INR 1,771 crores compared to INR 1,476 crores in the same quarter last year. Segment results for the quarter was INR 104 crores against INR 123 crores in the corresponding quarter last year.

Our newly established air conditioning -- air conditioner facility in Chennai continues to ramp up as planned and is gearing up for the season, and we anticipate operational efficiency to boost our business in coming months.

Segment B, Electro-Mechanical Projects and Services. The segment revenue for the quarter was INR 1,190 crores compared to INR 982 crores in the previous year's corresponding quarter. The segment result for the quarter stood at a positive INR 57 crores, a significant improvement from a loss of INR 120 crores during the same period last year.

Over the 9-month period, segment revenue increased by 17%, reaching INR 3,019 crores compared to INR 2,585 crores in the same time frame last year. The segment results for the 9 months was strong, amounting to INR 170 crores, a substantial turnaround from a loss of INR 221 crores last year, primarily due to provisions made on receivables in last corresponding period.

During the current quarter, project execution across verticals and geographies was sturdy. Focus on companion certificates and various project management initiatives continues to boost bottom line growth. The domestic projects continue to expand their order book and maintain a positive outlook.

For the Domestic Projects segment, we secured an order of INR 1,438 crores during 9 months with the current order book standing at INR 4,862 crores. In the international project sector, operations in the UAE and Saudi Arabia continue to perform well contributing positively to both revenue and profit.

We continue to remain vigilant towards collection as part of our approach to do the business. As of 31st December 2024, the carryforward order book for international business stood at INR 1,956 crores, predominantly in the UAE and Saudi region. The total carryforward order book for the segment was INR 6,818 crores as of the same date.

Segment C, Engineering Products and Services. For the segment, the revenue increased to INR 437 crores from INR 431 crores the previous year. Segment results were INR 121 crores against INR 158 crores during the same period last year. For the quarter, segment revenue was INR 130 crores compared to INR 155 crores in the corresponding quarter last year.

Segment results for the quarter was INR 37 crores compared to INR 50 crores the previous year. The mining and construction verticals showed positive momentum on the top line, ensuring continuity in operations and maintenance jobs, as well as sales of power screen machines. However, revenue mix and challenges in job renewals at healthy margins limited the ability to translate top line growth into bottom line growth.

Extended and certain new contracts in Mozambique continue to provide strong and optimal performance from the vertical. Fluctuations in cotton and yarn exports low offtake in capital expenditure across the sector continued and underperformance for the industry and resulted in a revenue decline for the vertical. Demand and margins for our agency business remained under pressure through the year. However, our aftersales and post-spinning business showed positive performance.

Voltas Beko. VoltBek Home Appliances Private Limited, our international JV, continue to outshine with a consistent growth month-over-month. During the current period ended the industry reported only a single-digit growth in washing machine and a negligible growth in refrigerators. However, performance of products across VoltBek remained remarkable.

Business reported a volume growth of 59% in the quarter and 56% in the 9 months of the financial year. Steady and a robust growth resulted in an improvement in market share across categories with the latter surprising -- surpassing the 10% mark during the quarter. This growth has further -- this growth was further complemented by a significant increase in market share during the quarter.

As of year-to-date November 2024, our market share improved to 8.3% for washing machines and 5.1% for refrigerators. We are further delighted to share that our performance in semiautomatic washing machines superseded our expectation and has become second largest player in the product category with an exit market share of 16.7%.

Further, as per third-party reports, our dishwasher category has also been recognized as a market leader in this category in e-commerce. Leaning on our manufacturing progress, we endeavor to localize all refrigerator manufacturing in India and become a fully Made in India brand. With a premiumization of technology across all product categories, we would be able to drive the growth ahead.

Our washing machine category with a wide range of products, categories and SKUs will help us to increase our market share towards our goals and targets.

In terms of profitability, increased volume and various value engineering measures helped us improve our margin and minimize losses. VoltBek continues to work towards minimizing loss per units, aiming for EBITDA breakeven in the near future.

VoltBek remains committed to enhancing its market presence across various product categories through customized market penetration strategies and growth initiatives. These efforts include expanding distribution reach, adopting channel-specific tactics to enhance market presence in key regions and maintaining a strong focus on boosting e-commerce and omnichannel development.

Our JV has also initiated engagements with Quick commerce platforms, which will aid to the growth for our products. On the cost front, localizing production for a larger portion of its product portfolio, implementing product efficiencies, value engineering and optimizing the product mix have contributed to a positive outlook for the company.

With the summers around the corner, we remain optimistic and expect robust demand for all our product categories, and we hope that the demand will remain strong and positive consumer sentiments will further support the volume.

The various strategic initiatives and new product launches planned for the season across categories will help us further improve our performance in the market and shall support us in strengthening market share in a more sustainable and profitable manner.

Optimization of our manufacturing facilities and cost efficiencies will remain a key driver of profitability during the ensuing period.

For the Projects business, we will continue to remain diligent and cautious for tendering the jobs. During the year, as informed earlier, as a part of internal restructuring, company's direct investment in existing subsidiaries is being transferred to a step-down wholly owned subsidiary of the company. Post transfer of these investments, the economic and trust of the company in aforesaid overseas subsidiary companies continue to remain intact. We will continue to monitor the market cautiously and are very optimistic in our performance across all businesses we operate in.

Thank you. And we may open the session for questions-answers.

[Operator Instructions] Participants in the call, please note that the duration of the call will be only for 45 minutes. [Operator Instructions]. We take the first question from the line of Umang Mehta from Kotak Securities.

My question was, what was the mix of RAC, commercial AC, commercial refri and air coolers during the quarter? And could you please quantify the impact of liquidation in commercial refrigeration versus a ramp-up of new factory on your current quarter's margin?

So current quarter, RAC has been around 60-odd percent. Commercial refrigeration has been around 15%. Air cooler has been around 5%, and commercial air conditioner has been balanced.

Got it. And any color on how much impact did liquidation of inventory in commercial refri and the slower in commercial refrigeration factory had on your current quarter's margins?

So one, we're referring to the overall sales that we are also talking to, not just liquidation of any inventory. Overall channel pickup and channel sales has been competitively lower.

So liquidation when you are saying, actually, we have been rather building up the inventory in our endeavor to prepare for the season. We are not having any excess inventory, which we are trying to sell barring some odd models where we may have some redundant inventory, but that's very minimal. But largely, most of the inventory, which we have been producing is for the season.

Understood. Actually, sir, the place where I was coming from was that on a steady-state basis, is this margin compression likely to continue in 4Q, that was the main reason to ask this question?

Could you repeat your question? I think there were some disturbance, we couldn't hear you.

Sure. So in the press release, you have mentioned that in commercial refrigeration, there was some liquidation and you also mentioned that there's some cost impact because of a slower ramp-up in your commercial refrigeration new unit. So going forward, do you expect these things to normalize or this pressure is likely to continue?

Definitely, there is a overall -- whenever you set up a new factory, there is a kind of a learning curve. So all that would normalize going forward. And all these pressures, which had been there, the outlook is looking much positive on that. Yes.

See, what has happened is in our new factory of commercial refrigeration because initially, there were some teething issues for which the production was not at full swing. However, we are ensuring -- now earlier on, we were producing only 1 particular category out of the factory. Now the fast-selling commercial -- freezer, which are the convertible freezers, et cetera, which we have started producing. So therefore, it has taken a while to start producing in full swing in that factory. And therefore, there was a -- it is additional cost on account of that in that factory.

And when you're talking about liquidation, as I said is, in the new factory, it is not there. However, some stocks which are a little aged, that we have tried liquidating and therefore, that has taken a small toll on our profitability in that segment.

Got it. And just, sir, second question was on your CapEx. Could you quantify how much are you planning to spend, particularly on your compressor factory by when will it be up and the likely incentives you are expecting in terms of PLI?

So you see, I'll tell you, firstly, -- we have -- if you look at -- we have recently set up our Chennai factory has started commencing production, where we had already spent about INR 400-odd crores. Besides this, we have also earmarked additional roughly around INR 400-odd crores, INR 400 crores, INR 450 crores, which is for compressor manufacturing as well as ramping up our production from 1 million to take it to 1.5 million and then 2 million. So we are earmarking all those CapEx aside, which is going to come in, in the next 1, 1.5 years from now.

But if you are talking in particular about compressor, so far, compressor finalization has not happened. And therefore, it might take a little more while. But rest of the other machineries and ramping up about whether it is an injection molding or sheet metal work or copper tubes and heat exchanges, production, et cetera. that investment continues, and that will get over in next at best 10 to 12 months from now. So this is how the CapEx will get spent.

Compressor is about INR 250-odd crores, which will take a while because we are looking for some technological partnership, et cetera, which is taking a while. Unless it is done, we will not be able to commence production of compressors. So that's how it is. We will come back to you as and when we are ready with that plan.

[Operator Instructions]. The next question is from the line of Naushad Chaudhary from Birla Mutual Fund.

Sir, 2 clarifications. Firstly, on the backward integration and strategy point of view. So I think we are doing a lot of products which are very, I think, easy to make and can be easily outsourced. So what gives us confidence that making it in-house would give you better ROC versus outsourcing it?

So firstly, I think let me make it a bit more clearer, if we have -- we were not clearer earlier. Earlier on, we were a trading company largely or at best we were assembling when originally, our Pantnagar production was happening at that plant, which was set up in 2007-or-so.

And now with setting up of Chennai plant and also a lot of new machinery installation in Pantnagar, a lot of backward integration has already happened. So much so the Chennai plant is almost 100% backward integrated plant.

So the sheet metal is being done inside, the injection molding is being done inside and from copper tubes to creation of heat exchanger is being done inside even so much the child part for the copper tubing is also being done inside. So I don't know why there is probably sort of misunderstanding that we are not a backward integrated plant. We are very much a backward integrated plant.

But if you are actually taking me to a point where you are saying that backward integration will mean that creation of compressor inside and creation of full controller inside and motor inside, yes, that is not there. But that is the case with almost all the brands. Generally, not everybody is manufacturing compressor inside and controllers inside and motor side, there are still the large part of it is being outsourced by each one of us. So that's how it is.

Okay. I'll take this one offline. Second, on the VoltBek, sir, we have been indicating that because of the operating leverage, this entity should become breakeven and then become profitable. But if I look at actually from a gross margin point of view, we work on a very thin gross margin in this business. And I don't see -- can you help us understand which line items would help you? Because in terms of operating because I believe we are already operating at very good efficiency from an operating leverage point of view. We have to work on the gross margin side here in this business basis.

Yes. So I understand where you're coming from. Actually, yes, we had also anticipated that by the end of this year, in the last quarter, probably, we will be reaching to the EBITDA breakeven which our endeavor is still there probably by the month of March, we should be able to hit that number. However, let me also share with you as to what has happened during the course of the year.

One is in our -- and if you look at our gross margins also in this category, we have already increased by almost 300 to 400 basis points in the margin in this category on the gross margin front. However, at the same time, since we were ramping up our -- accelerating our numbers and we wanted to increase the market share, all along, if you look at for last more than 3, 4 quarters, we've been giving guidance that our endeavor is towards accelerating the numbers and widening the size of the industry and scale up the numbers and thereby achieving the more market share.

If you look at we have gained on the market share front, we have gained on the volume and we have also gained slightly better off we are on the margin front also. As I said, it's roughly around 400 basis points we have increased during the course of the year.

However, at the same time to do this, we had to spend a lot of money in brand building, advertisement because Voltas Beko is relatively a newer brand. Also, as you know that we have entered into all the channels in the last few months, including the modern trade, e-commerce and all. And therefore, the cost of entering into those channels and leveraging and accepting from there is a bit of a costlier affair. So therefore, that has slightly derailed our plans. But we are very much in line. And as we move into the next year, you will get to see this result coming in, and we can bounce for.

[Operator Instructions] We'll take the next question from the line of Dhaval Somaiya from Axis Mutual Fund.

Just one bookkeeping question for Jitender, sir. Does the reported depreciation of INR 18-odd crores reflect the entire CapEx of the commercial ref capacity expansion in the Chennai plant? If not, what will be the peak depreciation number?

The reported number is based on whatever has been capitalized up to this period and you will see that this is for the relevant period only.

Sir, if you can just help me with the peak number that will be really helpful to understand.

Can you repeat your question, please?

What will be the peak number once the entire capitalization of the CapEx for both these CR and Chennai plant comes through, what will be the number once the entire CapEx is capitalized?

It should be roughly about INR 75 crores -- INR 70 crores to INR 75 crores for the full year.

For all factories. Actually, and for Waghodia, Chennai, Pantnagar, whatever CapEx have been spent and CapEx has been utilized. That is what is being considered there.

We'll take the next question from the line of Ankur from HDFC Life.

Again, on the UCP margins and the sharp fall that we saw from about 8% to about 5.9%. So just to clarify, you just say there's been some impact from the commercial ref segment here. And typically, there is also a seasonally deep quarter. But if you could just also help us understand what were the RAC margins? And I know you've been sharing that number also in terms of your on-calls. And was there pressure on those as well? And more importantly, what's your guidance for this segment going forward? Are we like sticking to that guidance of a high single digit?

So it's quite a bit of a long question. There are so many questions in it. But let me give a generic answer to all your questions embedded into one question. Firstly, when you're asking what is -- why there is a pressure on UCP margin. So we were trying to gain the market share -- and therefore, we were spending money on ISD, BTL advertisement, ATL advertisement if you look at through the year, we have been spending money to continue to remain relevant for the masses and scaling up the number.

So our cost has been incurred on advertisement, in-shop demonstrators and also sales promotions. Even during the off-season also festival season also we spend money in building up the brand. So that is one thing which has slightly -- but this blip is only very small for a particular quarter. Only if you look at it on a 9-month basis, our results have been pretty good. INR 312 crore last year to INR 848 crores. And even in the quarter also, if you look at from INR 24 crores, we have moved to INR 191 crores as a company.

And only thing is a little bit blip would have happened in 1 or 2 verticals because, as I said, is we wanted to sustain our leadership position and gain on the market share and increase the numbers. If you look at our growth kind of growth which we have registered in this particular segment is humongous. Yes, almost, we've been going VoltBek as well as most of the UCP products, room air conditioners, air coolers and our more than 50%, 60% growth we have been registering and all along these 9 months. So I think you would like to appreciate that particular fact and therefore, there's a bit of cost involved in building up these numbers.

And your guidance, sir, on...

Guidance is, generally, we will remain around this high single digit, our endeavor would be by the end of the year as a company. And on the segment also we'll try and retain high single digit in the last quarter as well.

[Operator Instructions] We take the next question from the line of Siddhartha Bera from Nomura.

Sir, the first question is on the Chennai plant. We understand this plant also has the PLI benefit. So can we expect that this will also -- you will accrue this from next quarter? Or when can we see that getting booked in the financials?

So I'll tell you, originally, when we had applied in the first PLI, that time, we had applied 2 kind of applications. One was for the compressor, which unfortunately could not happen for some reasons. However, additional one was a smaller amount, which we had done, which has largely been consumed, and I think dividends have started coming in.

And again, we have applied second time, which has just got approval, our applications have got approval. Again, we have filed 2 applications and they are the fresh ones, which is for augmenting the capacity in Chennai by setting up injection molding, further enhancing injection molding, sheet metal, copper tubing, heat exchanger, et cetera.

And also another one is for fresh application for the compressors. So I think for Chennai plant, if you are asking, in particular, probably next year onwards, the benefits will start accruing. So in the next quarter, I don't think anything is coming in from Chennai. But yes, some leftover for Pantnagar, which we've already spent could get in, in the quarter 4. That is how it is.

Got it, sir. And any price hike did we take in the current quarter, given that there are many cost headwinds you are seeing in the current quarter. So will it be possible to highlight anything we have done here?

No, we haven't taken any price hike in last quarter, quarter 3, because as it is, it's a leaner quarter for especially the air conditioners. And as I told you that our endeavor is to increase the scale of the numbers. And we have not done anything on that and probably we'll see. As we go along in our journey, if there is a continuous pressure from the commodity side, and also the ForEx, et cetera, et cetera. Then we'll have to look at as to how much can we retrieve through the value engineering and how much do we need to pass on that balancing this strategy will be applied to this, and we'll look at it as it comes to us.

The next question is from the line of Shrinidhi Karlekar from HSBC.

Sir, would it be possible to comment in just the profitability of your AC business? How it has moved sequentially on a year-on-year basis? Just the AC business.

AC business probably how it has increased over the last few years?

No, no, how it has behaved in this quarter on a year-on-year basis and on a sequential Q-o-Q basis.

So actually, it has shrunk a bit over the last year same quarter. Last year same quarter, we were nearing 8%, and this year, it's about 5.9% or whatever, 6% approximately. So I told you the reasons earlier I just explained in the previous question also. I think isn't it...

Not, sir, the segment, sir, within the segment, just the AC part of it because there were some liquidation impact and the new ramp-up in factory impact. So I was just wondering if we can get the key RAC business, how it has we behaved in terms of profitability. That would be really helpful.

So it's been about the same. 200 basis points, it has come down, and I told you the reasons more ISD earlier on also because I'll tell you some of the examples small examples I guess, right. Last year, we did not advertise during the off-season. Also in-shop demonstrator because as we have entered into all these new channels, emerging channels modern trade and all there, we had to provide additional in-shop demonstrators and BTL activities were to be carried out that actually has been an additional spend over last year. So I think that is what has eaten into a bit of a profitability. And as we go forward because these channels are emerging and continuously evolving and especially in the southern and the western part of the country we need to have the presence and as we told earlier also, the guidance was that we need to extract from each of these channels the legitimate share.

Because if we are offering our 20-odd percent market share, we would want to expect from each of these channels. And we were at a very small level in some of these counters and also Southern India, as you know, earlier on, we were not the brand leaders. We wanted to reclaim and regain our leadership position in that also. So therefore we had to spend all these -- on all these activities to strengthen the brand in these areas and in these channels. So that is what has taken a bit of a toll on the profitability by about 200-odd basis points in quarter-on-quarter basis this year versus previous year.

The next question is from the line of Aditya Bhartia from Investec.

Sir, my question is, again, on these additional costs. If my memory serves me right, we had started working much more actively with modern trade in fourth quarter of last fiscal. We didn't see costs spiraling up as sharply in the first half of this fiscal as we have seen in the third quarter. Or is it that in first half because we had very strong growth, operating leverage because of operating leverage, we didn't really see the impact in EBIT margins and then in fourth -- in third quarter, we have seen a much more pronounced impact.

So last year, it was just beginning, we were just entering into them. And I would remember that we could not enter with all of them. In fact, all the regional retail and modern trade partners, we were not fully available. Even if you ask me even today also, we are not available in all of them. And our effort is towards entering into all of them and to be meaningful with all of them and getting our reach as well as exception from all these modern trade and regional retail counters.

We are available in about 75%, 80% of them. So balances are to be -- so as we go along in our journey, you will get to see there is more investment happening on all these fronts. And see, if you want to compare. Earlier on what was happening is during the off season, we used to remove in-shop demonstrators from the outlet because our product was only the seasonal product.

But now with all the categories, we have strengthened our product portfolios. We are into full fledged consumer durable range except for electronics as well as we are into air coolers and many other categories like water heaters. So therefore, around the year, we need the in-shop demonstrators.

So this is the additional cost, probably, I think we are ignoring on the track. The -- if you look at our ISG number is, I think, probably doubled up than previous year during the course of this year. So all these costs, actually.

And also advertisement was being done in the -- only the main season -- peak season, summer season IPL and all. But now with all these consumer products available, we have to spend during the festival season also because it is meaningful to have our presence for our consumers. So that is all I think probably we need to take cognizance about.

The next question is from the line of Rahul Gajare from Haitong.

Sir, I have a question on your project business. Now your order backlog is closer to INR 6,800 crores. You indicated the domestic order intake at close to INR 1,400 crores. Is it possible you can indicate how much is your order intake in the international? Because mathematically, it appeared that you have had either cancellation in your international order? Because, a, there is a continuous decline in the international backlog.

For the international business during this period, we have not taken any orders as you have indicated, the INR 1,400 crores, which we mentioned is the domestic business order intake for this period.

The total outstanding orders which stand is about INR 6,800 crores. And the 2 out of that, about INR 2,000 crore is for the international business. There is no cancellation of orders. There have been no cancellation only execution of orders has been happening, and that's why you see there is a big uptick in the turnover volumes also -- as we had earlier indicated in our previous calls that our focus at the moment in the international business is on consolidation and doing a better KYC to get good orders and only execute good orders with the best profit. So we are continuing with that strategy, and we will continue to take projects which fit our criteria as we had been saying that. And that was only natural because of a couple of hits, which we had in the last year and last to last year. And that's why you see over the last 9 months, and we expect it will continue that we do not get surprised with any hits and all.

So just to add to what my CFO has just now said is, there are twofold strategy, which we have adapted in the international business. One is we wanted to remain vigilant towards collection of our old users as we have stated earlier also because in certain places, the collections or the exposures had gone a bit higher, and we wanted to collect those moneys and therefore, the focus goes towards that, which remains still a very, very important aspect of our business in that territory.

And when we are saying that consolidation as in we wanted to -- we are expanding our business or we want to do business in 2 main geographies, which is UAE and KSA. So there, we have been executing 3, 4 large projects and some smaller projects put together 10, 12 projects have been carried out -- carrying out. Therefore, we were prudent in selecting projects in those geographies. So it is -- right now, it's about INR 2,000 crores. And we are looking at -- in case there are meaningful projects funded by the right clients, we will look forward to increasing or picking up projects in those geographies.

Ladies and gentlemen, we take that as the last question for today. I would now like to hand the conference over to the management for closing comments.

So I think -- all in all, if you look at this year has been pretty good. First 9 months have given us a lot of good momentum on sales numbers, volume, revenue, even the profitability has been almost 3x than what we had done 2.5x than what we had achieved last year. And we will continue to strengthen our product portfolios. We'll continue to strengthen our numbers, continue to keep expanding the size and scale of the industry as well as Voltas brand.

In the project business is also we will try and execute projects whatever are towards closures and collect our dues in the last quarter to be able to deliver what we have committed to the shareholders. Thank you.

And [indiscernible] just for your information. UCP segment this quarter, whatever, a little bit downward trend you would have seen is it's a seasonal factor and we are likely to catch up in the quarter 4.

Thank you. Thank you very much.

Thank you, sir. On behalf of Nirmal Bang Institutional Equities, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.