Orient Electric Ltd (NSE: ORIENTELEC) Q2 2025 Earnings Call dated Oct. 25, 2024
Corporate Participants:
Ravindra Singh Negi — Managing Director & CEO
Saibal Sengupta — Chief Financial Officer
Analysts:
Nirransh Jain — Analyst
Natasha Jain — Analyst
Aniruddha Joshi — Analyst
Paarth Gala — Analyst
Naitik Mutha — Analyst
Rahul Gajare — Analyst
Presentation:
Operator
Ladies and gentlemen, good day, and welcome to the Orient Electric Limited Q2 FY ’25 Earnings Conference Call. [Operator Instructions]. I now hand the conference over to Mr Nirransh Jain from BNP Paribas. Thank you and over to you, sir.
Nirransh Jain — Analyst
Yeah, hi. Thank you and good evening, everyone. On behalf of BNP Paribas, we welcome you all to Q2 FY ’25 results conference call of Orient Limited. We have with us, Mr. Ravindra Singh Negi, Managing Director and CEO; and Mr. Saibal Sengupta, Chief Financial Officer. Now I hand over the call to the management for initial comments on the quarterly performance and then we’ll open the floor for a question-and-answer session. Thanks, and over to you, sir.
Ravindra Singh Negi — Managing Director & CEO
Thanks, Nirransh. Good evening and a very warm welcome to all of you. At first you have the chance to review our presentation, which we have made available on the stock exchanges and our company website. Thank you for your participation also for taking the time out to review our results. Let me start by with a quick overview of quarter two. Quarter two has been a tale of two halves for the industry. This is reflecting insights from various third-party reports and my market interactions. The first-six weeks lack the momentum we anticipated after very strong summers in quarter one. This was evident in the subdued regional festivals and the online region. Global spending in the first-half of Q2 on projects and infrastructure also saw a slow start during this period. And on top of it, commodity prices fluctuations impacted the margins. However, the later half of the quarter showed promising signs of recovery across most of the categories Orient operates in that including lighting, appliances and fans. This was largely driven by the pre-season of festive buildup that began taking shape in September both for online and offline. Given this backdrop, Orient’s performance has been very encouraging. Our growth journey continues steadily across segments and all our strategies are on-track and yielding results. I’m pleased to report our top-line of INR660 crores, representing 16.5% year-on-year growth for quarter two. The lighting and switchgear segment clocked INR221 crores, growing at about 8%, while ECD registered a robust growth of 21% with a revenue of INR440 crores. Our strategic initiatives were designed to improve our gross margins, a key indicator of our investments yielding results. And I’m happy to share that our gross margin has expanded by a healthy 240 [Phonetic] bps year-on-year to 32.4% of revenue. Our better mix of products, coupled with cost optimization through Spark ‘Sanchay’ program is continuously enabling gross margin improvements and helping us mitigate commodity shock. We are now back to our pre-COVID levels of gross margin delivery. With a strong focus on premiumization and mix improvements, we expect to stabilize this and be in the same range. We are enhancing our premiumization efforts across all categories as an initiative step to identify key gaps and launch relevant products.
Let me highlight our efforts in the lighting segment, a clearly articulated focus area for us. Despite continued value erosion, we are performing well in the lighting segment with high volume growth in the B2C segment. Our focus on increasing value-added premium products in the lighting portfolio such as COB range of products, high-wattage lamps, emergency lamps, down lighters, spotlight and panels is helping us deliver growth. Our value-added portfolio is inching towards 60% of our overall business, which is significantly better than the industry average. We’ve launched our digital campaign, “Thoughtfully Curated Lights for Your Home” and introduced more NPDs in this value-added segment in H2. The B2B market in lighting also shows promising potential, particularly for infrastructure in facade lighting projects. During this quarter, we executed the Pune Metro project and the Wadi flyover project in Nagpur. Our ongoing efforts to secure large orders and expand our portfolio in this segment are using positive results, positioning us well for continued growth in B2B segment of lighting. While the lighting segment achieved double-digit value growth, the B2B segment grew by high-double digits with healthy inquiries and a strong order book. We are leveraging our successful experience to enter new subcategories in the B2B space such as town lighting and stadium lighting. Our B2B share of business in lighting, which is approximately around 20% is set to rise further.
In our fan segment, we continue to push premiumization, resulting in a better mix, higher realization and value growth. We’ve identified BLDC as a focus segment for premiumization and are seeing good results. As we speak, we have achieved a 25% share of BLDC revenue through our total ceiling fans revenue, with most of our new product development driven by the BLDC portfolio expansion. To ensure better quality and reduce complaints, we are also producing PCB for BLDC fans in-house fulfilling around 75% of our PCB requirements through captive production. Our premium portfolio in fans today stands at about 30% of the revenue and we aim to increase it to above 40% to 45%. Our efforts in premiumization across all categories, whether it’s BLDC fans, value-added premium lighting, tech-enabled products in street lighting or in appliances are demonstrating effective strategies for better realization, stronger product mix and better margins.
Our Spark “Sanchay” program aiming for cost leadership has delivered INR36 crores for the first-half of this financial year and we are committed to surpassing our standards by the end-of-the year. This initiative is supporting gross margin delivery by both expanding and protecting it from commodity changes. Switchgears and wires experienced muted growth in the quarter due to commodity fluctuations and pricing pressures. However, this segment has grown sequentially and we continue to expand our distribution to engaging with the electrician, introducing festival schemes and conducting other market development activities to enhance our presence.
In the fan, our transition of 10 MD states to DTM is completed and is stable. DTM states have outpaced the growth rates in fans and has grown by 35% for the quarter, showing market share gains in many states. DTM now contributes about 30% of the fan’s share of business while MD states have also grown at a fast double-digit growth. Appliances had a strong quarter with high double-digit growth, supported by festive tailwinds in e-com and quick commerce across all categories, including coolers, water heaters and small appliances.
Our premiumization journey is supported by consumer centricity with service identified as a key differentiator. We are transitioning our fan servicing from master distributors to direct company services, effectively creating a DTM portfolio. Currently, 21 states in Union Territory are serviced directly by the company. Overall, we covered 19,000 [Indecipherable] with a widest network of service centers. Consequently, we have significantly improved our service experience with almost 80% of the complaints resolved within 24 hours. Emerging channels of business are another pillar of growth for us. Our digital and retail channel delivered high double-digit growth in the quarter, primarily backed by water heaters and small appliances. We’re seeing positive traction on sell-offs from e-commerce platforms, indicating market-share gains. Quick commerce is also gaining momentum and we’ve started listing on Blinkit and Zepto in this regard.
Finally, our pursuit of growth is reinforced by enhanced manufacturing experience. Our greenfield plant in Hyderabad has been fully commissioned and has been geared up for stability, efficiency and scale-up for the forthcoming season in H2 for this financial year. Faridabad plant has also been upgraded in terms of manufacturing excellence and quality.
Now turning to our overall financial performance for the last quarter, we report an EBITDA margin of INR36 crores at about 5.3% of the revenue, an expansion of 180 bps year-on-year due to improved gross margin and better operating leverage. The PBT for the quarter was at INR14 crores, representing a normal [Technical Issues] up adjusting for the base effect of landing. In conclusion, we remain optimistic about our strategic initiatives and the positive impact on our performance. We are committed to navigating the evolving market landscape while delivering sustainable growth and value to our shareholders. Wishing the best of sales and happiness to each one of you for the coming festivity. Thank you and now we are open for any questions that you may have.
Questions and Answers:
Operator
Thank you very much, sir. We will now begin the question-and-answer session. [Operator Instructions]. The first question is from the line of Natasha Jain from Nirmal Bang. Please go ahead.
Natasha Jain
Thank you and congratulations, sir, on a good set of numbers. My first question is, can you give us an update as to where we are in terms of our export order for switchgears in Europe as in have we exported our first batch? What is the preliminary feedback that we’ve got there? And where do you see that scaling? And also visibility in terms of TPW export to Europe from your Hyderabad plant?
Ravindra Singh Negi
Thank you Natasha for the questions. Let me take the first question. On the switchgear, we’ve been exporting switchgears to the Europe market for some time. There was a new product that we sent two months back. We’re still waiting the first feedback of consumers because this has to go to Ukraine and is in-transit. Once we get that, then we’re expecting some more orders and lot of inquiries to flow in. So that’s work-in progress. On the second question on the TPW, we started doing exports and TPW and that’s almost about 30% of our exports and fans coming in TPW. The Hyderabad plant is under stability. While we are still in the production, that’s largely for domestic that we’ve done in the last couple of months. For exports, we will now get into the season and start using Hyderabad facilities next year.
Natasha Jain
So should I assume that for both switchgears and TPW fans, export is a higher-margin business?
Ravindra Singh Negi
So for TPW I can definitely say that it’s a very competitive market. China pricing was very, very competitive. So exports on TPW is not a higher-margin business. While our efforts in Hyderabad would be to control the cost, but you are kind of capped on the pricing ability in the market when you go on TPW. Switchgear versus domestic, it’s not that high a business, but still a reasonably okay margin that you’ve made on exports.
Natasha Jain
Understood, sir. Sir, and my second question is on the cost-savings worth INR36 crores in H1 ’25. So can you please call-out as to what line items did we make the savings on? And can we expect this number to continue as a run-rate going forward?
Ravindra Singh Negi
So, Natasha, Spark ‘Sanchay’ program is not for one particular line-item and there are — you kind of look at all the 360 degree or 360 degree facets of all your efficiencies. You look at everything where you can possibly save cost and the large bit of it is, you know the VAV exercises that we do, process engineering, re-engineering that we do. So it’s — it’s difficult to say that this one part will be more. We’ve done INR36 crores in H1. Last year, we did about INR75 crores. Our aim is to definitely surpass last year and that will help us deliver better margins. Yes, last year was INR75 crores for the full-year, just to clarify.
Saibal Sengupta
Natasha, to add, these franchise savings come from — mainly from — spread-out between the consumption, raw materials, the wages, power and fuel, transportation. So it’s a spread of items. It is not one single thing.
Natasha Jain
Understood, sir. Thank you so much. That’s helpful and happy Diwali.
Ravindra Singh Negi
Thank you, Natasha, wishing you the same.
Operator
[Operator Instructions] The next question is from the line of Aniruddha Joshi from ICICI Securities. Please go ahead.
Aniruddha Joshi
Yeah. Thanks. Thanks for the opportunity. Sir, in terms of overall market outlook, how do you see the market overall? Because we have seen a lot of people indicating rural offtake has improved or even the offtake in North and East has been better. So how do we read these, means, do you — are you seeing really the uptick on-ground and especially for the — our category of the products?
Ravindra Singh Negi
So, Aniruddha, as I said, there were two-parts of — if I were to look at quarter two, there were clearly two distinct parts. The first-half was where we didn’t see the momentum of quarter one flow into the quarter two, specifically for summer products. But the second-half is where we’ve seen some green shoots, both at the urban and the rural side. We closely monitor our sell-outs both in the online and the offline space. I think we are seeing green shoots in most of the categories that we deal in. The real test is this year Diwali is 1st of November. The real test is post-Diwali, how does it sustain. So we’ve seen some festive sell-outs after the season. So to be fair, to give any number post Diwali would be just a guesstimate but clearly last couple of weeks have been much better than the entry to quarter two.
Aniruddha Joshi
Okay. Understood. Sir, in terms of the margins, if we look at the EBITDA margin over a period of FY ’18 to ’22, it was pretty healthy. In fact, it averaged around 9%, but we have seen the margins in ’23 and ’24 have corrected materially somewhere around 5%, 5.5%. In fact, this year also somewhere around 6% most likely FY ’25 also. So when do we see the margins going back to near the historical levels? Any indication or how should we read about the margins or is there a structural headwind that’s stopping from moving the margin upwards?
Saibal Sengupta
No, I don’t think so. There is any structural headwind that we foresee in the business. In fact, all the investments that we had to do to start delivering a higher double-digit better than market growth seems to have been put on-ground. We’ve got investments in terms of the right functions and right BUs that we put in. We’ve made the investments in Hyderabad, the structure there. So from a cost perspective, I don’t think so as these are headwinds. These are the right investments. It’s just that there was a lead-lag effect and that’s why you see margins in the range of about 5.5% to 6%. Now going-forward, we expect all our operating leverage to start kicking-in and you will see exit this year better margins. Will it go back to the earlier 9% level in the next two quarters, maybe not, but definitely next year onwards, we should start paying half-inching towards that.
Ravindra Singh Negi
And that’s why a lot of our premiumization efforts are efforts in getting the right product mix, not just only in one category, but across different categories that we deal in, that’s what will help us deliver this.
Aniruddha Joshi
Okay. Okay. Understood, sir. And last question from my side. In terms of — while we are pretty strong in fans, I guess 60% plus turnover, but more expansion in other categories, I guess that’s where I guess the growth can be materially higher considering the favorable base or a smaller base for us. So any update on the other categories where we can have a materially higher-growth like kitchen appliances or even other new segments that we can look at? Any update on that? That’s the last question. Thanks.
Ravindra Singh Negi
Yeah. So I did spell out saying that in the appliances, we grew at very-high double-digit growth in terms of water heaters and coolers. Coolers, in fact slightly lower-risk, but our growth was 5x, 6x in this quarter. So that’s one segment which is helping the ECD grow overall. But the other segment which we clearly called out and said this is our focus area is lighting. And if we were to look at lighting and within the lighting industry, we would be amongst the only few brands which have been consistently beating the industry numbers and gaining market share. Even now out-of-the declared results, we are the ones who are now in the lighting of declared about 8%, while switchgears and wires had a little muted growth, but lighting had a double-digit growth. And within that, the B2B is a clear strong focus. And that’s how we are trying to balance our portfolio, keep pushing which is our strength on-hand. We will drive the water heaters and coolers in appliances and lighting is clearly called out and then lighting both plays a value-added game in the B2C side, protect the margins where in the industry there is headwinds of price erosion which is happening and build our capabilities and drive B2B significantly better.
Aniruddha Joshi
Okay, sure, sir. Very helpful. Many thanks. And wish you all a very Happy Diwali.
Ravindra Singh Negi
Again, same to you.
Operator
Thank you. [Operator Instructions] The next question is from the line of Nirransh Jain from BNP Paribas. Please go ahead.
Nirransh Jain
Yeah, hi. Thank you for the opportunity, sir. Sir, my first question is on the gross margin side again. So I just wanted to better understand that like since you’ve guided that these gross margins are expected to remain in a similar range. So the Spark ‘Sanchay’ program that you had initiated for the cost checkout programs, so are we calling out that program has mostly been concluded and that ideally would now take us towards stable gross margins? And the follow-up to that is that if the gross margins remain at a similar range, are we confident that we can inch up on operating margin to close to double-digit levels that we had always aimed for?
Ravindra Singh Negi
So Ansh, thanks for your question. And I think if we were to look at our gross margin trajectory for over the last eight to 10 quarters, we have dropped. If we were to look at in a market where there’s been — which has been very competitive, we would be amongst the only few brands who inched up significantly on the gross margins. While we dropped, but we’ve come back very sharply. Spark ‘Sanchay’ program definitely is a continuous program and we see finding opportunities both in the product we process in the engineering and it’s a program which will not stop, but we keep evolving. The second part, which I highlighted about premiumization, which will give us a better mix, which will make sure that if there are any of commodity fluctuations or price fluctuations or competitive pressures in the market that comes in. So both these things will help us either increase our gross margins or remain within that range. The other part on the overall margins or EBIT margins, yes, there is investments that we’ve done in terms of structures and our investments in manufacturing, all this will start giving us operating leverage. In the next couple of quarters, we will inch up from where we are right now. And in the next year, we should move earlier level.
Nirransh Jain
Sure, sir. Sir, and my second question is on the wires segment. So I just wanted to better understand what led to the muted growth in this quarter for the wires portfolio because generally we are seeing a better numbers from the peers group considering that the commodity went up significantly higher during the last week of the quarter, so that gave the — that gave the incentive for the players to push up in the channel.
Ravindra Singh Negi
Yes, for wires, firstly, there are two aspects to it. We are not a very big player in wires and this is a segment that we’ve looked at complementing our switchgears business. When the commodity prices increase, you can push the wires in trade. It’s just that we do a lot of trading and hence at a certain point of time versus somebody who makes an ounce, we get a little disadvantage of how much to buy at what rate and at what rate to push. So that’s where I think that’s what impacted us a little bit from quarter two, now that the commodities are stable and in fact, there’s been a price downward revision sorry upward revision one more that happened, so we hope to get back in the wire segment.
Nirransh Jain
Thank you, I fall back in the queue.
Ravindra Singh Negi
Thank you.
Operator
The next question is from the line of Paarth Gala from HDFC Securities. Please go ahead.
Paarth Gala
Hi, good afternoon, gentlemen. Thank you for the opportunity. Just a couple of questions. One was on the DTM states. Now all the states that we had gone directly into have more or less — more or less stabilized. Are there any more states under consideration going-forward? If you can shed some more light on that.
Ravindra Singh Negi
So Paarth, there are two aspects. One, every time you do and last-time also I spoke about it, every time you do a transition, it takes a little time to the market and the DTM market has stabilized. We’ve done about 10 DTM markets. One of the large ones that we did last year was Gujarat, while we did in quarter one but those are smaller markets. Gujarat is now fully stable. We’ve grown by 35% overall in our 10 BTM markets. I think more or less we are stable. We’ve put in our people, we’ve seen distribution expansion happening. And I think our going direct is helping us gain and drive our own synergies and the agenda that we want to drive-in the market. As far as adding more to it concerned, we are evaluating, we’ll keep evaluating more sales. As and when we are ready to do this, we will let you know. We don’t give a prior announcements to the markets that we want to do.
Paarth Gala
Okay. And secondly, you know, this quarter now the consulting cost has come off, right? But if you just look at the analytical expense, there is still some increase from around INR48 crore- INR49 crores, we’ve gone to INR50 crores. Can you just shed some more light on that? I mean, are there any more investments being made or it’s something to do with preponement of the festive season and some ad spend on that name.
Ravindra Singh Negi
So there are no investments to be done. And if we were to look at it largely, there is from an accounting perspective, I will tell you that the EPR which is — which was not there last year in Q2, that’s one add-on element in that, plus the depreciation would also be a there come separately, but EPR would be the large one.
Saibal Sengupta
Paarth there are two, three factors. First of all, there is a couple of base effects. While you are seeing the consultancy side of it on the reduction, which is not there from Q2. But as far as EPR is concerned, if you recall, we had done the entire provision in Q1 last year. This year it is spread all over the four quarters. So therefore, as a result, there are these two base effects. On-top of that, the other expenses also includes a good chunk of variable costs, which is essentially transportation and service costs, which is proportional to the volume growth and the volume which is transported A2B and which has a little bit of higher impact for the digital e-commerce channel as well. So all those factors are contributing. There is no separate investments either in the lineup now that nor planned or nor is it happening.
Paarth Gala
Understood, sir. Yeah, that’s it from my side. Wish you very Happy Diwali. Thank you.
Ravindra Singh Negi
Paarth, I am wishing you the same.
Operator
Thank you. [Operator Instructions] The next question is from the line of Naitik from NV Alpha Fund. Please go ahead.
Naitik Mutha
Hi, sir. My first question is, I wanted some detailed understanding about the other expenses. If I look at the absolute amount, it’s been quite volatile quarter-on-quarter. I’m not looking at the percentage, but the absolute amount. So one, I understand the consultancy cost has reduced, but now what I want to understand is what percentage of this would be variable and what percentage is fixed in nature so that we can understand the nature of the cost better.
Ravindra Singh Negi
Naitik largely about — almost two-third would be variable and about one-third is fixed in this.
Saibal Sengupta
And also there is a marketing component as well.
Ravindra Singh Negi
Yeah, including the marketing, that will be about two-third.
Saibal Sengupta
And not to forget, Naitik, what I mentioned in the previous question is that leads– account for the base effects as well as far as EPR is concerned.
Naitik Mutha
No, so I’m — I’m just looking at Q1 and Q2, I’m not even looking at last year and just looking at it from quarter-on-quarter basis. So there is a wide variation. So that’s why I wanted to understand what causes this much of a shift. So one, I understood that is consultancy, but apart from that is what I wanted to understand.
Saibal Sengupta
In the Q1, the volumes — Q1 please understand it is a peak period for us, for fans, coolers, the summer season where the volume movement, the volume throughput is higher…
Naitik Mutha
Yeah, so 66. I got — I got my answer sir also. A large chunk is variable. That’s why there is the variation, I got that.
Saibal Sengupta
The proportion of variable and width is adding dramatically.
Naitik Mutha
Right, right. Got it. Could you share the split of lightning and switchgear in this span?
Ravindra Singh Negi
We don’t usually split capex, but as I said, we’ve had a double-digit growth in lighting business and we are slightly muted in switchgears and wires.
Naitik Mutha
No. So what I — where I’m coming from is there is huge structure in the margins also, which I understand growth in switchgear, which is in this quarter. So our margins are significantly higher in the switchgear segment than other segment.
Saibal Sengupta
At a gross margin level, yes, but not at the EBITDA level, as Ravi already mentioned, the share of business of switchgear and housewires are far lesser and with the accelerated growth of lighting, lighting holds a much higher — EBIT delivery. So that’s what drives the segment results.
Naitik Mutha
And last question, regarding this pricing erosion in the ’19, what’s your — how long is it going to go over? It’s largely done, or what’s your take on that?
Saibal Sengupta
So, Naitik, we were hoping that quarter two onwards because last year-around the same time, the bulk and batten whatever the efficiency of DOV, which was helping bring the cost-down was passed on to the market and to the consumer. We thought that we will start seeing some slowdown in it. I think it’s largely regional players and smaller brands who’ve gotten where they have compromised further on the quality and pushed the envelope down. So we hope to see stabilize. But as we speak, it’s still prevalent in the market. But we’re driving it very differently. We are focusing on the value-added part, not that we’re not participating in the bulk and batten, but we are driving the other part of the business far stronger and far better with new products and new product introductions, which is helping us to navigate this price pressures in the market.
Naitik Mutha
Got it. Thank you.
Operator
Thank you. [Operator Instructions] The next question is from the line of Rahul Gajare from Haitong Securities. Please go ahead.
Rahul Gajare
Hi, good evening, gentlemen, and thanks for the opportunity. I just have one question and maybe this is following-up with one of the earlier questions on the call. I wanted to understand if you can give us a qualitative angle on the ECD growth in terms of demand, whether it was coming from urban, semi-urban, smaller towns, etc. So that’s the first part of the question. And the second part of the question is, if DTM has grown, I mean if DTM states have grown by about 35%, it means non-DTM have grown at a single-digit. So I wanted your thoughts on that also. Thank you very much.
Ravindra Singh Negi
So Rahul, thanks, and I will give you a little sense to it. First, let me take this whole conversation about DTM and non-DTM. That’s only on the GT, which is the general trade part that we’re speaking about, then there is e-com and other part also. So our DTM states have grown by 35%. Our MD states have grown by a good double-digits also. This is on the other parts of the business, which is the emerging channels like CSD, CPC or e-com where we’ve seen — we focus on sell-out and not pushed in much where we’ve seen a single-digit growth. But we’ve seen growth, which has been like a secular growth all across all categories. As far as markets are concerned, we’ve driven two things very hard and which is where we’ve seen our results come in is that on the new products, BLDC and premiumization, we’ve seen urban and semi-urban drive those growth for us, whereas, as I said, in the second-half of the quarter, we’ve seen some bit of green shoots in the rural part also. First-half of the quarter, I would say that the rural market did not kick-in at all.
Rahul Gajare
Okay. Thank you very much and festive greeting from my side to the team.
Operator
Thank you. As there are no further questions from the participants, I would like to hand the conference over to the management. Okay. The next question is from the line of Nirransh Jain from BNP Paribas. Please go ahead.
Nirransh Jain
Hi, sir. Just a follow-up on the EPR cost. So you had mentioned around, I think, 4th-quarter that the EPR cost first FY ’25 would be roughly around INR20 crores to INR21 crores. And so just wanted to check, so if this number has changed and how much price hike we have taken to recover this cost? That’s my question.
Ravindra Singh Negi
We’re still in-line with what we had projected for the year on the EPR and that’s the calculated EPR cost. We had taken one price hike in quarter one. And if we were to look at it, by and large, we have put in about 1% in the price hike for catering to the EPR impact. We have taken one more price increase in quarter three as we speak about 10 days back and that’s largely to take care of the BIS implementation that’s happened on TPW and a some bit of commodity increase in the ceiling that we have done. While there is a new gadget from the government which is now putting an environmental compensation rate and that may have an impact. But as we speak, there are representations from the associations, both from an ELCOMA perspective or ESMA perspective, that’s gone to the government. We will wait for the response from the government to see how EPR and its consequent impact will be there for the industry. Even the NEPI has put forward their reservations on this new environmental compensation.
Nirransh Jain
Sure, sir. That’s helpful. And sir, lastly, on the TPW side, so last quarter we saw some kind of a capacity constraint in a seasonally strong quarter. I just wanted to check that is that capacity constraint being resolved now, especially from the Hyderabad facility coming up or there is still some constraint to it?
Ravindra Singh Negi
No, no, so with Hyderabad now functional and we scaling up in the next couple of months. We’ll be fully there for our capacity requirement and for our growth requirements in the coming season.
Nirransh Jain
Got it. Thank you so much, sir and that is a great sense.
Ravindra Singh Negi
Thank you so much.
Operator
Thank you. We have a follow-up question. It’s from the line of Natasha Jain from Nirmal Bang. Please go ahead.
Natasha Jain
Yeah, thank you for the follow-up opportunity. Sir so just one question on capex. Can you please tell us what kind of fund rate can we expect for current year and in the medium-term?
Saibal Sengupta
We have– Natasha, we have already capitalized the Hyderabad projects. There is no more further project coming up. As we always maintain that INR50 crores to INR60 crores is our normal — normative capex for the year. So we hope to be range-bound around that.
Natasha Jain
Understood. And sir, in terms of working capital days, what can we expect in terms of settling in the medium-term?
Saibal Sengupta
We have already reduced the working capital substantially end of September. It’s about nine days reduction has already happened to 19 days, which is an impressive move which has happened on a like-to-like basis. We — obviously, we strive to maintain the similar kind of pace. But only thing is that be mindful of the fact that during Q3 and part of Q4, we have to go through strong buildup for the season and we have to go through for extra credit support also for the season pickup. So those things and that — so that will be on an like-to-like basis with the corresponding period and the previous year as well. So that same trend will continue. But yes, our aim is to maintain the working capital at these lower levels.
Natasha Jain
Understood, sir. Thank you so much.
Operator
Thank you. That was the last question for today’s conference call. I would now like to hand the conference over to the management for their closing comments.
Ravindra Singh Negi
Thank you, everyone. And from Orient, we will continue to deliver better than market growth like the one we’ve delivered in quarter two and wishing all of you the very best of health and festivities. Thank you everyone.
Saibal Sengupta
Thank you everybody. Wishing you all a very happy Diwali.
Operator
[Operator Closing Remarks]