Eureka Forbes Limited (BSE: 543482) Q3 2025 Earnings Call dated Feb. 11, 2025
Presentation:
Operator
Good afternoon ladies and gentlemen, you are connected to the Eureka Forbes Limited Conference Call. Please stay connected. This conference will begin shortly. Participants, we thank you for your patience. You are connected to the Eureka Forbes Limited Conference Call. Please stay connected. This conference will begin shortly Good and ladies and gentlemen, good day and welcome to the Eureka Forbes Limited Q3 FY ’25 Earnings Conference Call. We have Mr Pratik Pota, Managing Director and CEO; and Mr Gaurav Khandelwal, CFO, Eureka Forbes with us. As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference, please signal an operator by pressing star and then zero on your touchstone phone. Please note that this conference is being recorded. Before I hand it over to Mr Pratik Pota, please note the disclaimer. Certain statements made by the management in today’s call may be forward-looking statements. These forward-looking statements reflect management’s best judgment and analysis as of today. The actual result may differ materially from the current expectations based on a number of factors affecting the business. With that, I now hand the conference over to Mr Pradeek Pota. Thank you, And over to you, sir. Thank you. Good afternoon, and I welcome you all to the Q3 FY ’25 earnings call of Yoreka Forbes Limited. Before I start, I would like to apologize in advance for my voice quality. As you can tell, I have a really sore throat and my voice will therefore sound a little hoarse. In-quarter three, we reported a revenue growth of 11% over last year with a revenue of INR597.8 crores. Excluding the impact of discontinued operations, our quarter three revenues grew by 11.3% year-on-year. This was the fifth successive quarter of double-digit growth for our continuing business and it was underpinned by a product business which grew in mid-teens. I would like to point out that the quarter three growth came on-top of a high quarter three FY ’24 base and amidst challenging demand conditions. In-line with our strategy, we stepped-up our advertising and sales promotion spends, which grew by 19% year-on-year. This was on the back of a 40% year-on-year increase in Q2 and a 21% increase in-quarter one. Stepping back, a key factor contributing to our growth has been our focus on innovations. In the first phase of our transformation, our focus was on building capabilities and on catching-up. With both these objectives achieved, we are now in the phase of claiming a rightful role as innovation leaders and indeed as thought leaders in the category. Our premium innovations launched over the last nine months have been the biggest engines of growth for us. Products like Blaze Insta hot water purifier and the Designer NXT under-the-counter water purifiers have both grown to be market leaders in their respective segments and have helped drive overall water purifier growth. In-line with this, I’m pleased to share that towards the end-of-quarter three, we have launched what is India’s first truly smart water purifier, the Aqua Guard Rids Pro with IoT. The functionalities of the product include preventive alerts, water quality monitor, water consumption and hydration monitor, device health check, etc all of which are available on the EFL app. This device and more such smart devices going-forward will make water purifiers a much more integral part of consumers’ lives and indeed drive daily customer engagement with our products. On the cleaning side, the vacuum cleaner category continued its pivot towards convenient cleaning with robotics devices being the engines of growth. Our Forbes SmartLean Pro Robotic vacuum cleaner, the Forbes Robo and mop EZ and the Forbes all helped drive strong growth in the robotics segment. I’m also pleased to share that our air purifier business grew 3 times year-on-year in the seasonally critical quarter three. From a channel’s perspective, growth was broad-based across all channels with particularly strong growth in e-commerce, followed by direct sales. Growth in the retail segment was a little muted and further softened after the end-of-the festive period. On the service side, I’m pleased to share that as customer service KPIs showed significant improvement in-quarter three. Our investments in technology and on driving organizational focus have helped drive this improvement. More work remains to be done and we will continue on this journey of customer-centricity in the future as well. The impact of growth and associated operating leverage was visible on all profitability parameters. On the profitability side, the adjusted EBITDA margin increased to 10.8%, expanding 94 basis-points on a year-on-year basis. This margin improvement was delivered despite a deliberate choice of significantly dialing up our advertising and sales promotion expenditure. Our profit-after-tax grew 53.6% year-on-year to INR34.8 crores for quarter three. Looking ahead, notwithstanding the relatively soft demand conditions, our focus will continue to remain on driving growth. We will sustain growth investments and stay the course on driving penetration, increasing innovations, improving customer experience, digitizing our business and extracting cost efficiencies. We remain confident of driving sustained and profitable growth in the periods ahead. With that, I would like to hand you over to Gaurav. Good afternoon, everyone, and thank you,. Starting off with the Q3 numbers, our revenues at INR597.8 crores grew 11% on a year-on-year basis and adjusted for discontinued businesses, our revenues grew by 11.3%. Adjusted EBITDA margins expanded 94 basis-points year-on-year to 10.8% in-quarter three. Adjusted PBT grew 28.7% year-on-year and PAT at INR34.8 crore grew 53.6% year-on-year. On the revenue side, product business continued to register growth in teens with premium innovations and robotics being the key growth drivers. Our Q3 growth of 11.3% was in the context of a base effect caused by 16.8% growth in-quarter three FY ’24 and an earlier festive season this year. Added to this was the relatively muted demand environment. A combination of product innovations, sustained advertisement and sales promotion spends and attractive consumer offers led to this growth in-quarter three. In-line with our strategy, our A&SP spends grew 19% year-on-year in-quarter three. Our Q3 gross margins at 57.5% were higher by 125 basis-points on a sequential basis as Q2 margins are impacted by seasonality. Year-on-year margins were down 142 basis-points, largely due to a continuation of consumer offers period and channel mix. Driven by operating leverage, our expenses, excluding ESOP as a percentage of revenue were lower by 236 basis-points versus previous year. Our focus on cost program will continue to drive further efficiencies. Our expenses remained range-bound both on a year-on-year and quarter-on-quarter basis. On a year-on-year basis, expenses were up 5.7% with ANSP spends being higher by 19%. On a sequential basis, expenses were down by 7.2%, largely due to Q2 being a seasonally stronger quarter. This was reflected both in the form of lower NSP spends and people incentive cost. Non-cash ESOP charges at INR5.7 crores were at similar levels as Q2 and INR10.7 crores in-quarter three. We expect ESOP charges to stabilize at these levels. Other lines below EBITDA remained largely stable. Depreciation for this quarter stood at INR8.1 crores, an increase versus previous quarter and year. Several technology and product innovation investments have now gone live and is now being reflected in the depreciation charge. I’m pleased to share that our credit rating has now been upgraded to A-minus stable by care. I must point out that this is the third upgrade in the last two years. In this quarter, rating coverage was also started by CRISIL at similar levels. Let me now give some color on the nine-month year-to-date performance. Our revenues have grown 11.5%, EBITDA margins have expanded by 120 basis-points and PAT has grown by 60.3%. An important aspect of these nine months numbers is the sustained performance in each of the quarters. Our revenues have grown double-digits and product revenues within that have grown in teens all through. Year-on-year margin expansion has been in the range of 94 basis-points to 166 basis-points in the 3/4 on the back of sustained A&SP spends. A combination of the steady top-line growth and margin expansion has led to PAT growth of 40.7% in-quarter One, 83.2% in-quarter two and now 53.6% in the current quarter. In summary, Q3 is a continuation of the improvement we have seen in our business since the last few quarters. Given the relatively muted consumer sentiment, our immediate focus will be on driving growth. The sustained and steady performance seen in all the quarters of this year give us the confidence in our strategy of driving sustained profitable growth. Thank you. Thank you very much. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press star and one on their touchstone telephone. If you wish to withdraw yourself from the question queue, you may press star and 2. Participants are requested to please use handsets while asking a question. Ladies and gentlemen, we will now wait for a moment while the question queue assembles you. We have the first question from the line of Umang Mehta from Kotak Securities. Please go-ahead. Yeah. Hi, thanks for the opportunity and congrats for high team product sales growth. My question was on the volume growth in this quarter. Would you be able to share some color? And also how is the base variant doing, the ones you launched last year? Thank you, Umang. Let me respond to your question on water purifier volume growth. I think our performance in-quarter three was on the back of both volume growth in water purifiers and on the back of our premium innovation is doing well. If I — if I wind the clock back a little, you would recall that in the first phase of our transformation, we had stepped-up our investments in driving penetration, which had led to a strong volume growth in the first year. I’m happy to report that both on a YTD basis and like I said in the most recent quarter, that volume growth sustained and we saw good strong volume growth continue. But what also helped us this quarter and indeed in the last two quarters as well is the increasing role that our premium innovations are playing, which was part of our strategy for this year. So our growth this year in water and this quarter other in water was a combination of both. Good robust volume growth along with premium innovations. And looking-forward, I think — and back to your question on the base variant, I think, again, the base variant across all our channels continue to do well and drive growth, volume growth as well. And we expect that to continue among them. If you look at our category, the reality is that even with the volume growth that we’ve delivered over the last couple of years, penetration levels still remain very low and we see a significant runway continuing to grow penetration even as we drive a premium innovation. So we expect this to continue in the future. Got it. Thank you. And the second one was on — so Kent’s filing showed some numbers on the channel mix. And while I understand that you do not share exact numbers, difference in GT channel seems quite dark between Yoreka and Kent. So any steps which you’re particularly taking to address that or do you think that their mix is unusually high and this category should set us with a lower GT mix? No, thank you, Umang. Yes, you’re right. We have studied Ken’s DRHP closely to gain insights on their business, on their portfolio, on their channel mix, like you said, on the growth profile and the profitability profile as well. And based on that analysis, we see many areas in which we can learn and we can change and drive our operations. One instance, for example, as we’ve spoken often in the past is in the area of profitability. Their margin profile gives us — gives us evidence of now that we needed it of the headroom that we have to drive profitability. There may areas like that where we’ve looked at the data and drawn up our benchmarks. Beyond that, I don’t want to comment on specifics, except to say that we are truly an omnichannel company. We have very, very strong channel mix between traditional trade that you spoke about, our modern trade, our direct sales channel, which is, as you know, our unique strength and of course, the growing strength that we have in e-commerce and in online plays. So we feel comfortable with the channel mix. But that said, we’ll of course continue to learn from whatever our competitors are doing and seeing how we can improve our operations. Okay, sure. Thank you and all the best. Thank you thank you. The next question is from the line of Aniruda Joshi from ICICI Securities. Please go-ahead. Yeah. Sir, thanks for the opportunity. So while product growth is in a strong double-digit, so is it a fair assumption that services have grown in probably mid to-high single-digits on a year-on-year basis. That is question one. And secondly, now obviously, we have taken multiple initiatives to drive the services revenues and in a way reduce the services cost also, also to reduce the loss of revenues and even reduce the costs in servicing as well. So is it a fair assumption that now almost most of the initiatives and the benefits are in the numbers and probably here on the profitability should remain at similar level, is Q3 a representation of a normal margin or should we see more efforts and in a way of increase in profitability in ’26 also. Yeah. Thank you,. Let me let me start by referring to your first question on our performance and service. I think there were several aspects to our service performance. Excuse me. The first one was, as I mentioned in my opening remarks, we saw very clear and a very significant increase in our customer satisfaction scores and therefore in a service quality and customer experience. That improvement has been an ongoing feature since the early part of this year and that improved — continue to play-out in-quarter three as well. On the service revenue side, our service revenue underperformed product like you mentioned and our growth was well below product growth. That said, we have rolled-out, as you mentioned, a number of initiatives towards driving service revenue. Many are already in play, some are in the pipeline. Between them, we expect our service revenue to gain momentum in the periods ahead. And while it’s still early days, I must say that we are beginning to see some green shoots already. And progressively, we see our service revenue becoming more robust and growing better as we go-forward. On your — on your second question about, therefore, is this the end-state margin or not? I will request GK to in,. Sure. Finally. No, I think clearly, you know, there is a very clear headroom which exists as far as profitability is concerned. I think just to remind ourselves, we are nearly at the end-of-the second full-year of the transformation and it would be way too early to kind of say that are we reaching — reaching a steady-state? Certainly not. And let me disaggregate this for you at three different levels. First, at an aggregate Eureka Forbes revenue, the very key driver that you see is operating leverage. If you look at this year’s number as well and I look at quarter three, for example, an 11% growth has given an operating leverage of nearly 250 basis-points on cost and that just tells you how much more opportunity is there. So that is one clear headroom that we see just sheer scale will drive operating leverage and profitability. If I were to disaggregate this even further, first on the service side, there are still opportunities that are there. Besides growth, I think plugging leakages, extracting efficiencies is an ongoing process. At no point in time can one say that we’ve reached an endpoint. It’s an ongoing process. You extract certain efficiencies, we invest back-in business, certain things you let it flow to the bottom-line, but this is going to be an ongoing feature and we still have several work streams to drive those efficiencies. When I look at the product side of the business, there again, the very fact that in aggregate, if we are at a 11% margin with the service business, it tells us that our product portfolio is at a margin which is lower than where we would want it to be. And there also we see very clear opportunities in terms of driving cost efficiencies and there are several work streams that are there. So big-picture, if I were to step-back, I think we are
Questions and Answers:
Operator
Not even close to seeing where we are — where we would be from an endpoint perspective. There’s still a fair amount of runway that we see. And if you can look at this year’s YTD number, the margin expansion on a year-on-year basis has been 120 basis-points. And that is something that from our perspective, our aim would remain to keep on driving year-on-year margin efficiencies and we expect that to sustain going ahead. And if I may add to what Gaurav just said, I think as we look at the competitive context and competitive benchmarks, as I just mentioned in my response to Umang’s question earlier, we see clearly headroom for improving profitability. So I absolutely agree with. There is no — we have a lot of room for us to expand profitability and expand margins and we are nowhere done yet. Excuse me. Okay, sure, sir. That’s very helpful. Just last question. Air Purifier has the biggest in winter at least in North India. So now we are seeing demand rising in other major cities like Mumbai, Bengaluru also. So any update on the growth in air purifier, especially considering this is a peak season for air purifiers. Yeah, yeah. No, you are right, this is absolutely the peak season for air purifiers. And as I mentioned, we saw a very healthy increase. We had a tripling of revenues from air airpurifiers in the last quarter. A significant portion of those revenues came from the North as-is true for the category, but we began seeing momentum also in the other markets. That said, this category is still not centric and we expect that mix and that SKU to start balancing out progressively in the future. And we start seeing the category scale-up in other markets where we see air pollution as a very real problem. So while the market is still very nor-centric, that mix will change. Okay. Sure, sir. That’s very helpful. And Pratik, sir, please take care. You have a really bad thought. Thank you. Thanks. Thanks. Bye. Thank you. Thank you. The next question is from the line of Beira from Nomura. Please go-ahead. Yeah, sir. Thanks for the opportunity. Sir, first question is on the sustained action in the premium segment. Possible to get some color on how much was the growth in the premium portfolio and the mass portfolio in the quarter and what would be the premium salience for us compared to competition? Just to understand — how sustainable and how in the longer-term we can continue to see stronger traction from this portfolio? Thank market. Thank you, sir that. First, I think again to reiterate that we’ve seen overall volume growth and that volume growth has not been restricted to premium portfolio, but also to our economy portfolio. Second, I think clearly premium for us has been over-indexed in this particular quarter and it’s a continuation from what we’ve seen in the previous quarter. I think one clear learning that is coming across is that you put out the right quality of product with industry-first features. That is something that works really well with consumers and we continue to see very good demand for our premium portfolio. What it has done in this particular quarter is that since it’s outgrown other segments within water purifier, its share in the overall pie has increased. But having said that, we still retain a very, very balanced portfolio between economy net and premium. The second point to draw attention to would be that I think we’ve — we’ve gone from in some ways being laggards on innovation to now very clearly moving to a space where — where we are taking the lead. I think the latest example being an industry-first IoT smart water purifier and you will keep on seeing more such innovations going ahead as well. So we do expect our growth in our premium portfolio to continue. If I may add to what Gaurav said, I think another interesting feature of our performance in the premium segment was that we saw very clear upgradation from the mid-price segment to the premium segment. Consumers who were in a lower-price point upgraded when they saw the premium propositions, for example, the blaze and product and that helped move the needle and move the mix in the more towards the premium segment compared to what was there last year. Got it, sir. Second question is on the service side. So we had launched multiple tires to expand the service base. So can you share some color on where — in which tire have we seen the maximum adoption? Just trying to understand if that has been the reason for a slightly slower service growth for us. So some color there will be helpful. Thank you. Yes,, as you mentioned, we had launched segmented or tiered AMCs earlier last year. And I think what we have seen very clearly this year is a robust volume growth, robust growth in unit AMCs that we have sold. So the objective that we had when we made our AMCs more affordable was to drive greater AMC adoption. And we were encouraged to see that volume growth trade-out as we had expected. Going-forward, as I mentioned in my earlier response, the multiple initiatives that we have taken even post the launch of Tiered AMC are now beginning to land impact. And going-forward, we see service revenues, therefore gaining in momentum. But specifically, the launch of the Tiered AMC has indeed worked the way we had hoped it would, which is to drive volume growth and drive EMC adoption. Excuse me. Got it, sir. Thanks a lot, sir. I’ll come back-in the queue. Thank you. Thank you. The next question is from the line of Rahul Ranare from Goldman Sachs Asset Management. Please go-ahead. Yeah. Hi. Hi, am I audible? Yes, please. Yeah, yeah. Hi,. Hi, Gaurav. Just one question. So just a clarification here. So in terms of, let’s say, any consumables that are used in the service business, those still get classified under service income, right? Is that the right understanding? The consumers that are consumables, consumables? Yes, sir. Consumables, that happens and that are consumed by the are they part of service revenue or so, Rahul, the consumables that are used as part of our service revenue business, the service business order are indeed reported as part of service revenue. Excuse me. Okay. Okay. And any, I think or any other consumables that we had started to sell, which were kind of used by third-party service people, those are reported as product revenues. Is that the right way to look at it? No, they are all field of filters, no matter which channel it goes through, comes under service revenue reporting. Oh, okay. Okay, understood. So product is basically just the new machines that we sell there. That’s right, Rahul. Absolutely. Okay. Okay. Okay. Fair enough. And just in terms of the service revenue, like this kind of repetition of the earlier question, but what kind of volume growth are we seeing in terms of the services? And should we look at it as a plus kind of a positive volume, but a slight drag in terms of ASPs because of the tiered AMC structure that we had rolled-out and that is why the service overall revenue as such seems to be a little muted. Is that the right way to look at it? Yes,. As I mentioned, we have seen a robust volume growth in our — in our service business. Our unit AMCs have grown in volume and grown in numbers and this was in-line with our strategy to grow our AMC penetration and drive greater AMC adoption. However, that has come as you — as you mentioned, with a dilution in ASP as consumers have gravitated towards a portfolio of different tiers within the ANC. And as a result of which, the revenue growth in-service has been muted with the ASP dilution over the volume growth that we have seen. Got it. Got it. And let’s say in the mid to interrupt we request you to please rejoin the queue if you have follow-up questions. Yeah. Thank you. The next question is from the line of Naushad Chaudhary from Aditya Birla Mutual Fund. Please go-ahead. Yeah. Hi. Two questions. First on the service business, I know I we just — I just wanted to know if the — if you are able to share the AMC advances growth in the balance sheet on a year-on-year basis. That would be helpful. Thank you. Yeah. So, we — we report our balance sheet every six months as part of the regulatory requirements. Having said that, you know, I’ll just reiterate that we’ve seen volume growth in our AMC franchise. Our strategy was to drive volume growth because again, it was — it was a portfolio which had not seen volume growth for a while. So that is a path that we pursued. In some ways, it’s a replication of the strategy that we adopted for product as well. This, as you can imagine, also came in with an ASP dilution, which is there. But importantly, we’ve seen volume growth in the franchise. And going ahead, we are seeing an uptick in the business even in value terms because the franchise is becoming bigger? Okay. Second, last quarter we had rolled-out the buyback offer for Purifier. And so can you share some more on this? How is the response? And anything on this strategy? Yes. No, this is something which has worked quite well. Interestingly, we did not keep it restricted only to a buyback of our own device. We had kept it open-ended for even other brands and the response has been — has been very good. In fact, it’s been one of the reasons which has contributed to consumers upgrading from mid-segment to premium segment that spoke about earlier because it was an offering which was very attractive for consumers and has been a contributor to the growth in the premium portfolio. Given the response that we have got, we’ve also kind of extended this in-quarter three as well beyond — beyond the festive period. And the other important dimension to add is that in a GTM like ours and specifically when it’s a direct sale, offers like these end-up with a very-high conversion ratio because you have a salesperson sitting inside a home and is able to very quickly, you know, identify for a consumer what could be an old device and offer a new device at a great price. So from our perspective, the buyback offers have worked very well. Importantly, we’ve not kept it limited only to Urica devices. And given the success that we’ve seen, we continue to operate these things even now. And in-service business, can you share request you to please return to things, sir, if you have follow-up questions. Thank you. The next question is from the line of Prolin Nandu from Public Alternatives. Please go-ahead. Yeah. Hi, Pratik. Thank you for giving me this opportunity. And sorry we are asking you a question when your road is quite bad. But Pratik, one highlight, let me start with the request, right? Service is such a key element of our business, right? I would appreciate if you can deliberate, if you can start giving quarterly numbers on that, right, on the revenue part, which is coming from services, because otherwise, lots of questions are on that, right? And we have to probably not determine as to what is the service revenue growth. So one is — I mean that’s one suggestion. But my question to you, Pratik, is that this whole service part, right, it’s lagging the product part and you started this whole transformation journey on the service part a bit later than product. But what is it that is taking a bit longer-than-expected, right? What are the issues that you are facing, right, apart from the lower ASPs that you have implemented, right, to increase the adoption. Is it the existing base of 8 million, which was there a year or so back is bringing them into the organized net cutting the leakage, is there an issue or is the new conversion an issue? Can you just give us some color of — and also some quantification on how fast have you been able to stop the leakage or to say or bring back some of these customers who were not in our net-back to the — back to the company’s stream of revenue both on filters as well as on the service part. That’s number-one question. No, thank you, Rohit. Thank you for your concern. And thank you for your suggestion. Excuse me. Thank you for your suggestion on sharing of quarterly numbers for service. It’s been duly noted. I think you ask a very interesting question on the service revenue and why the service revenue and the growth best lagging the product business? I think one reason for that is what you began by mentioning yourself, which was that by design, in our phasing, we had rolled-out a product interventions earlier and as evident in the robust product growth that we’ve been delivering for the last few quarters. In Stage 2 of the transformation, we began rolling out our service interventions, whether it was dialing up the service quality, whether it was launch of tiered AMC or launching of a D2C and a website and many other interventions in the field to help manage our technician workforce better. The reason why the impact will take time to come or has taken time to come is because of two or three reasons. One is that there are existing behaviors, legacy behaviors from many, many years which take time to change and I say behaviors, I mean behaviors from consumers, behavior from channel partners, behavior from technicians. So these take time to change and for the impact to play-out. The second reason is that as you are aware, there is a very large unorganized market, parallel market which keeps interplaying with the organized Aqua for service market and while we have worked systematically to cut leakages, leakages co-opting a much larger share has taken time that said I must also in the same breath point out that we have taken a number of number of steps number of interventions to cut-down the leakages. And we are seeing each one of them make incremental impact. And cumulatively, where we are today in-service. So we feel a lot more confident now than what we were possibly a year-ago. And we feel confident that these impact — these initiatives will land a cumulative impact in the periods ahead. And like I said earlier, green shoots are beginning to get evident, but I must say that these are early days, but we are seeing green shoots. And systematically, we keep chipping away at some of these barriers at driving customer behavior change and driving greater customer awareness, driving filters, differentiation and filters availability and distribution, co-opting a much set of technicians, both our own and from the parallel market in driving our filter sales, our AMC sales. All of these, we believe very we are very confident actually that going-forward, these will make an impact. Sure that was — sorry, go on. No, no, please. No, now just letting my throat, sorry. Oh no. So thank you for that. That’s very clear.. My second question is, see, we are a very unique consumer durable company, right, where a large part of — I mean, decent part of our revenue comes from annuity income in the form of service. Also, we have a very unique proposition in terms of a direct salesperson who have access to some of the customers whom we can cross-sell across different products that we have in our basket. So when you think about your company from a lifetime value that it provides to the customer of how you value a customer from a lifetime point-of-view. Where was it, let’s say, two years back when this whole transformational journey started, where-is it now? And where can you take it, let’s say, next two to three years, right? How do you think about Forbes as a brand and a company from a lifetime value of a customer to cost of acquisition of a customer point-of-view? No,, that’s a really good question. And I think you’ve sort of you distilled the essence of what makes Eureka such a powerful business. The fact that we have a very large installed-base of customers, very happy, very loyal customers built over the years. We have both an annuity that sustains from a service business, but we also have a very strong direct sales network, which with the service business allows us to reach customers’ homes, homes to resolve their complaints and issues, but also to be able to cross-sell and upsell. I think in an earlier response, we spoke about the very encouraging feedback and the uptick we saw in the buyback offer. One big reason was that we have these channels, we have these possibilities. Ever since we began the transformation We have rolled-out very specific steps to help create and unlock much greater lifetime value. I think the first step was to roll — roll-out a very powerful digital back-end. We’ve often spoken about us being a really a D2C company, but we were a D2C company in a very physical, very brick-and-mortar way. But by strengthening our digital back-end, we have complemented the physical access with a very, very strong digital backbone. And we are beginning to see that play-out both in-service and in-product. So for instance, a very significant part of our service revenue now comes from our digital assets and that number has grown every quarter-over the last eight quarters. Equally, we had mentioned in the last earnings call that we had rolled-out a product commerce functionality online on our website. And we’ve seen that also pick-up the momentum this quarter. And we ran a sustainable program during Diwali on our own D2C assets and we saw a very, very strong response to that. So that’s one example of the way we have used our — our direct and our service network to drive and unlock much more lifetime value. So that’s one example. Let me give you another example of cross-selling. The fact that we’ve got a very large installed-base and that we bought — the access that I spoke about also allows us to sell and cross-sell categories which are evolving, which are still very small, but which need to be incubated and nurtured. For example, robotics. The fact that our direct sales network can take a robotic device to a customer’s home, even if it’s a water purifier inquiry and demonstrate the robotic device and very often land that sale if not there and then subsequently. So that’s an example. And one reason, by the way robotics — robots has done so well for us is because we have this unique access. So that’s another example. The third way we have tried to secure a lot more of customer value is in ensuring that we protect our customer data. And I spoke earlier in your — in response to your earlier question about leakages, et-cetera and the parallel market. I think it would be fair to say that a couple of years ago or earlier, our customer data was available a little bit more widely. A year and a half ago, we rolled-out customer number masking and we’ve secured customer data. And therefore, it will not be easy for anybody to take-out and to extract value from our customers. That’s another example. The fourth example is the way we strengthened our direct sales network and we strengthened a service network. The fifth example is the buyback offer that we spoke about earlier. And I could go on all of noon, but there are a number of things we’ve done, which have meaningfully helped to unlock our customer value. That said, given the relatively early phase of a D2C evolution, we see a significant runway to do much, much more and if anything, extract even more lifetime value. So we’ve just got started on many of these things. And, you want to add to that? No. Okay. No, Greg, great. Thanks a lot and take care,. Yeah. Thank you,. Thank you. Excuse. The next question is from the line of Palak from MIV Investment Management. Please go-ahead sir, my question is, I was going through our annual report of the — in the other liability, we have a line-item, which is basically income received in advance. If I add the non-current and the current liabilities, the amount is approximately INR500 crores. When I was going through the note, I understand that this is basically income, which was received in advance for the maintenance services, which is for the period of one-to-four years. But in our revenue recognization policy, 75% of this revenue we are recognizing in the fourth year — first financial year. But if the period is for the four years, then is in this 75 a very aggressive revenue recognization policy that we are following? Yeah. Let me just clarify — clarify pull it. So the revenue recognition happens exactly basis the tenure of the AMC. So the tenure of the AMC could be a one year, two year or three year and hence, it happens exactly basis that. The range that you are referring to is the one to three year period that you mentioned is the range that is given out. It does not mean that the revenue or the AMC that are sold-out of an even period that it’s 25% in one year and a similar levels in each of the years. So the range is just indicative of what could be the tenure of an AMC. The revenue recognition is bases the exact tenure of the AMC. On an average, our AMCs end-up with a tenure of anywhere between 18% to 20%, you know, and hence you will find roughly 70% of our revenue coming within the year. But basically, there will be certain products where the tenure could be one year, two year, three years. So that is an average of all the product that we sent. That’s right. The largest chunk, if I go by the count of AMCs sold, the largest chunk comes from the single year AMCs. But equally, there are consumers who want to buy a longer tenure AMCs and hence, the revenue recognition happens the weighted-average that comes through. Okay. So then this 75%. We request to please return to the queue for follow-up questions. Thank you. Thank you. The next question is from the line of Gang from Family Office. Please go-ahead. Yeah. Thank you, sir for the opportunity. Am I audible? Yes,. Yeah. So you mentioned that our AI purifier business has grown by 3x Y-o-Y. But I think at the overall revenue level, it is still not playing a great role, right? So how are we investing on spreading the awareness of the use-case as well as presence in the category because I did some analysis on Eureka’s presence in this category as well as like on YouTube and Amazon and our presence looks very tepid. Like for example, when I search for AI on Amazon, we are not even on the first page of search, right, let’s say, 2025 searches. Like if a prospective customer searches for AI Purifier on Amazon, there is a chance that they will not even find us choosing our product versus someone else’s next question, right? Also, the sales-through platform like Amazon looks very low prima-facy. Let’s say, for the products that you have, the number shows like 50 plus bought in past month, whereas for competitors, it is 500, 1,000 plus bought in past month, right? So how do we plan to tell people that we are a dominant player in this category and we are very serious about it? Yeah. Yeah. So I think let me start-off by saying that air purifier in general as a category within the country is relatively small. And the same applies for each of the individual players who are there in the category. So hence even in our case, the business is relatively small at this point in time. But on that base, we have indeed grown 3x. That’s one. Number two, from scaling up the category, it is certainly on the horizon, but obviously from our perspective, we’ve kind of prioritized growth in water purifier, vacuum cleaners and service because that growth is giving us the headroom to kind of then start growing air purifier business. As a first start, what we are doing is to use and leverage our direct channel, because if you were to go to the e-com platforms, there are considerations of ROI, et-cetera, which have to be there and for a category which is still not large-enough that ROI may not work-out. What we are adopting as a strategy is to use our direct channel because that is giving us complete access to home and using that as a first port of call on a GTM lens. The second thing that is happening in parallel is to get-in product innovations and it’s still early days there and drive this particular category. It’s for this particular reason that you will not find us on the first few pages, on the first few searches of any e-com platform that you would go because we are largely using our direct channel for a GTM standpoint. But this is clearly a category. I think if I were to just wind back you winters back, this was seen as an NCR problem. I think pretty much there is consensus now that it extends to most of the cities, including Mumbai. So clearly, the category is beginning to — beginning to gain traction. But this is something which will have to-be-built over a period of time. Also the opportunity to cross-sell, right? So let’s say, I am an active AMC user of Eureka Forbes. I bought to direct platform only and I have not received a single message till-date from, right, to what I understand for cross-selling, right, a robotic vacuum cleaner or air purifier, right? This is such a low-hanging fruit. I am actually looking for buying an air purifier, but Yureka has never sent me a message. Yeah, okay, we also sell AI purifier. So why is it not happening? Yeah . No,, it’s a fair feedback and you and what you point out is clearly a an early win opportunity. We do it in a few cases, but in a few cases, we still have learnings. So thank you for the feedback. And we’ll make sure that we incorporate it in some form. And just to add to that, sorry, excuse me. Just to add to that, we do have a very structured cross-selling program. And as I mentioned earlier, you know, many of our products in this quarter have benefited from that cross-selling program. I talked about robotics. Indeed, Gaurav mentioned Air as well. So we would love to understand why we did not reach-out to you and how you got excluded and that’s something we’ll figure out after this call. But your feedback is well taken. And all that I want to say and add is that cross-selling is and will remain a very important area for us to drive growth. And we have the base on the customer data for us to do that. Excuse me. Because for the AI purifier thing, right, people don’t — but request you to please rejoin the queue if you have further questions. Thank you. Thank you. Thank you. We have the next question from the line of Parikshit Kabra from PKW Advisors LLP. Please go-ahead. Hi, I got it. Hi, Prade. Thank you so much for the opportunity. I wanted to actually go back to the services business again. And I obviously have been paying attention to the entire conversation so-far. So I appreciate the fact that the volumes have gone up and the ASP has come down and hence the growth has not remained as far. But then can you give us a sense of how much has the volume going up? I know you’re not going to share numbers, but can you tell us how much of the incremental customers that are coming? Are we increasing our penetration in terms of AMC being sold along with the machine? Has that been happening? How are we trending there? Thank you, Parikshit. No, so the metric that we measure is, you know, since the machine comes with a one-year warranty, at that point in time, there is no — there is no reason for an AMC to be bought by a consumer. So that’s not something that is a point-of-sale and hence we don’t measure that. But the matrices that we measure, the primary metric that we measure is actually volume growth for a simple reason that this again has been a franchise where there is a large unorganized market that is there. And I think just getting a part of that would start driving volume growth. Also, it is in sync with our strategy of using pricing as a lever to drive volume growth. So that’s the primary metric that we drive. Associated metrices that which are there are certain conversion matrices. On the volume growth, I wouldn’t be able to give out specific numbers, but this is something where we’ve seen healthy volume growth compared to the past trends that we’ve had. But more importantly, I think it has now achieved a particular scale where we also have line-of-sight to value growth also coming through. See, so Gaurava, that’s the part. The last part statement is the part that I’m not able to understand because one would think if you’re only going to talk about in terms of volume growth, if the overall numbers are not risen adequately in the sense that the elasticity that we expected, the price elasticity that we expected this category to have is not how it’s played out, right, because the reduction in ASP has not given us a more than compensatory increase in volumes, then maybe this strategy of reducing prices was not the best strategy. I think see at the end-of-the day, it is not the only strategy, it is one of the levers that we’ve exercised. But bear in mind the fact that this is an annuity business. So you have sustained periods of volume growth that then indeed starts translating into a value growth. So that is something which will play-out. Having said that, there are equally learnings that are there certain places where you know pricing may not be a lever. Those cost corrections are something which are an ongoing exercise. So that is something that we keep doing if in certain segments and there are certain segments where we’ve seen pricing not give us the elasticity. So those are the corrections which have been done to make sure that we don’t lose out value there. But importantly, I think given where we stand from our perspective, the key thing that we are having the line-of-sight to is value growth to start coming through. All right. All right. Thanks. Thanks a lot, sir. Thank Gaurav. And the other parts. Sorry to interrupt, we request you to please rejoin the queue if you have any follow-up questions. Okay. Thank you. We have the next question from the line of Siddharth Purohit from InvesQ Investment Advisors Private Limited. Please go-ahead. Yeah. Hi, sir. Sorry if this question is repeated, but can you say what would be the ESOP charges on an annualized basis and like tentatively for FY ’26, what could be the charges? Yeah, the ESOP charges that we are currently trending is INR5.7 crores. It was similar in the last quarter as well. And going ahead also you should expect a similar range of ESOP charges. So roughly you can assume the ESOP charges to be anywhere between INR23 crores to INR25 crores on an annual basis. No. Okay. Thank you. Thank you. Ladies and gentlemen, we will take that as a last question for today. If you have any further questions, you may reach-out to the company Investor Relations team. I would now like to hand the conference over to the management for closing comments. Over to you, gentlemen. Thank you for joining the call today. I trust that we were able to address the questions today to your satisfaction. In case there are any queries that remain unanswered, please reach-out to us and we will be glad to respond. Thank you, and have a great day. Thank you. On behalf of Eureka Forbes Limited, that concludes this conference. Thank you all for joining us. You may now disconnect your lines.