Voltas Limited (NSE: VOLTAS) Q3 2025 Earnings Call dated Jan. 30, 2025
Corporate Participants:
Jitender P. Verma — Chief Financial Officer
Pradeep Bakshi — Managing Director and Chief Executive Officer
Analysts:
Krishnan Sambamoorthy — Analyst
Umang Mehta — Analyst
Naushad Chaudhary — Analyst
Dhaval Somaiya — Analyst
Ankur Sharma — Analyst
Siddhartha Bera — Analyst
Shrinidhi Karlekar — Analyst
Aditya Bhartia — Analyst
Rahul Gajare — Analyst
Presentation:
Operator
Goodies and gentlemen, good day and welcome to Voltass Limited 3Q FY ’25 Earnings Conference Call. 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 the conference call? Please signal an operator by pressing star then zero on your touchstone phone. 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.
Krishnan Sambamoorthy — Analyst
Thanks, Sima. On behalf of Nirmal Bang Institutional Equities. I welcome you all to the 3Q FY ’25 Results Conference call of Voltaf Limited. The management is being represented by Mr Prade Bhakshi, MD and CEO; Mr Barma, CFO; and Mr Nikhil Chandarana, Head Corporate Finance; and Mr Bora,.
Over to the management for opening comments.
Jitender P. Verma — Chief Financial Officer
Hi, good afternoon, everyone. This is Jitenda 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 will 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. However, inflationary pressures, particularly in food prices posed challenges leading to a cautious monetary policy stance by the Reserve Bank of India. Despite — 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 INR3,164 INR1,164 crores compared to INR2,684 crores in the same quarter last year. Profit before-tax soared by 699% to INR191 crores from INR24 crores. Net profit-after-tax also saw a substantial increase climbing to INR131 crores from an after-tax loss of INR28 crores in the corresponding quarter last year. Earnings per share was not annualized for the quarter ended 31st December 2024 was ate INR3.99 compared to negative 0.92 last year.
The company performance for nine months continues to remain robust. The company reported a 28% increase in consolidated total income, reaching INR10,890 crores, up from INR8,477 crores in the same-period last year. Profit before-tax surged by 172%, hitting INR814 crores compared to INR312 crores per. Net profit-after-tax also experienced a significant rise at INR599 crores, up from INR137 crores in the corresponding nine months of last year. This marks the highest-ever Nine-Month profit in the company’s history. Earnings per share for the nine months ended 31st December 2024 was INR18.14 compared to INR4.10 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 two major festivals falling in a single month. The segment reported a revenue growth of 20% and 42% compared with quarter three last year and nine months last year, respectively. And anticipated strong summer demand and support from our e-shop demonstrators helped us achieve — helped us achieve 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. 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 EV cooler, combo and glass top freezers. Our product portfolio, especially for coldroom is garning — garnering attention with a healthy pipeline of orders.
With the slowdown during the year, ramp-up of production in our new factories remained low, the impact of which added to our cost. However, with fresh orders in pipeline for our CR products, we envisage favorable outcome from this category in next few months. Like air-conditioners, the air cooler segment also witnessed a strong quarter in-spite of growth season. Quantity tie-ups with users 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 number two-brand in September 2024. In-the-water heater segment, partnerships with distributors and sub-wheelers have also contributed to strong performance. The commercial air-conditioning vertical recorded constant steady performance during the quarter, driven by sales of VRF and 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 and our 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 season. Simultaneously, various value engineering initiatives and cost-control measures have contributed to stable margins.
In conclusion, GPBG segment revenue for the nine-month period grew by a remarkable 38%, reaching INR7,155 crores, up from INR5,198 crores in the same-period last year. Segment result also saw a significant increase of 30% amounting to INR548 crores compared to INR423 crores of PBT in the current — in the corresponding nine months of the previous year. For the quarter-ending December 2024, segment revenue grew by 20%, totaling INR1,771 crores compared to INR1,476 crores in the same quarter last year.
Segment result for the quarter was INR104 crores against INR123 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, electromechanical projects and Services. The segment revenue for the quarter was INR1,190 INR190 crores compared to INR982 crores in the previous year’s corresponding quarter. The segment result for the quarter stood at a positive INR57 crores, a significant improvement from a loss of INR120 crores during the same-period last year.
Over the nine-month period, segment revenue increased by 17%, reaching INR3,019 crores compared to INR2,585 crores in the same timeframe last year. The segment result for the nine months was a strong — was strong amounting to INR170 crores, a substantial turnaround of INR221 crores last year, primarily due to provisions made on receivables in last corresponding period. During the current quarter, project execution across verticals and geographies were sturdy. Focus on completion certificate 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 project segment, we include an order of INR1,438 crores during nine months with the current order book standing at INR4,862 crores. In the international project sector, operations in the UAE and Saudi Arabia continue to perform well, contributing positively to both revenue and profits. We continue to remain vigilant towards collection as part of our approach to the business.
As of 31st December 2024, the carry-forward order book for international business stood at INR1,953 crores, predominantly in Malay and Saudi region. Total carryforward order book for the segment was INR6,818 crores as of the same date. Segment C, Engineering Products and Services. For the segment, the revenue increased to INR437 crores from INR431 crores the previous year.
Segment results were INR121 crores against INR158 crores during the same-period last year. For the quarter, segment revenue was INR130 crores compared to INR155 crores in the corresponding quarter last year. The segment result for the quarter was INR37 crores compared to INR50 crores the previous year. The mining and construction vertical shows 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 Mozambi 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 after-sales and post spinning business showed positive performances., World Back Home Appliances Private Limited, our international JV, continued 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 an growth in refrigerators. However, performance of products across remained remarkable. Business reported a volume growth of 59% in the quarter and 56% in the nine months of the financial year. The study 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 complemented — 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 semi-automatic 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 the refrigerator manufacturing in India and become a fully made in India brand. With the 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 STVs will help us to increase our market-share towards our goals and targets. In terms of profitability, increased volume and various value improvement measures helped us improve our margins and minimize. Continues to work towards minimizing the offer unit, aiming for EBITDA breakeven in the near-future. 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 of outlook. 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 key driver of profitability during the ensuing period.
For the projects business, we will continue to remain diligent and cautious fire for tendering the jobs. During the year, as informed earlier, as a part of internal restructuring. The 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 interest of the company in the 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 question-answers.
Questions and Answers:
Operator
Thank you very much. We will now begin with the question-and-answer session. Anyone who wishes to ask a question may press star and one on the touchstone telephone. If you wish to remove yourself from the question queue, you may press star N2. Participants are requested to use handsets while asking a question.
Ladies and gentlemen, in order to ensure that the management is able to address questions from all the participants, please limit your question to two per participant. If you have a follow-up question, you may rejoin the question queue. Participants in the call, please note that the duration of the call will be only for 45 minutes.
Ladies and gentlemen, we will wait for a moment while the question queue assembles. We take the first question from the line of Umang Mehta from Kotak Securities. Please go-ahead.
Umang Mehta
Yeah, hi. Thanks for the opportunity. My question was what was the mix of RSC, commercial, commercial referee and air coolers during the quarter? And could you please quantify the impact of liquidation in commercial refrigeration, a similar ramp-up of new factory on your current quarter’s margin?
Pradeep Bakshi
Yes. So current quarter RSE has been around 60 odd percent. Commercial refrigeration has been around 15%. Air cooler has been around 5% and commercial air-condition has been balanced.
Umang Mehta
Got it. And any color on how much impacted liquidation of inventory in commercial refore and the slower ramp-up in commercial refrigeration factory had on your current quarter’s margins.
Pradeep Bakshi
So one we are 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 comparatively rollover. So liquidation when you are saying, actually you know, 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 you know 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 which we have been producing is for the season.
Umang Mehta
Yeah. 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.
Jitender P. Verma
Could you repeat your question? I think there was some disturbance, we couldn’t hear you.
Umang Mehta
Sure. So in the press release, you have mentioned that in commercial refrigeration, there was some liquidation. And you also mentioned that there is 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?
Jitender P. Verma
Definitely, there is an overall you know whenever you set-up a new factory, there is a you know kind of a learning curve. So all that would normalize going-forward and all the pressures which had been there, the outlook is looking much positive on that. Yeah.
Umang Mehta
Got it. And just the second question.
Pradeep Bakshi
Actually, what has happened is in our new factory of commercial refrigeration, because you know, initially there were some issues for which the production was not at full sync. However, we are ensuring earlier on we were producing only one 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 little aged that we have tried liquidating and therefore that has taken a small toll on our profitability in that segment.
Umang Mehta
Got it. Thank you. And just second question was on your capex. Could you quantify how much are you planning to spend, particularly on your compressor factory, when — by when will it be up and the likely incentives you are expecting in terms of PLI.
Pradeep Bakshi
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 INR400 odd crores. Besides this, we have also earmarked additional roughly around INR400 odd crores of INR400 crores INR450 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 next one, 1.5 years from now.
You know, 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 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 INR250 odd crores, which will take a while because we are looking for some technological partnership, etc., which is taking a while until — unless it is done, we will not be able to commence production of compressor. So that’s. We’ll come back to you as and when we are ready with that plan.
Umang Mehta
Sure, sir. Thank you and all the best.
Operator
Thank you. Before we take the next question, a reminder to all the participants to limit their question to two per participant. The next question is from the line of Nosha Choudhary from Birla Mutual Fund. Please go-ahead, sir.
Naushad Chaudhary
Thank you. Sir, hi. Two clarifications. Firstly, on the backward integration strategy point-of-view. So I think we are doing 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.
Pradeep Bakshi
So you know, 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 air-based we were assembling when originally our production was happening at that plant, which was set-up in 2007 also. And now with setting up of Chennai plant and also lot of new machinery installation in, lot of backward integration has already happened. So much so the Chennai plant is almost 100% backward integrated plant. So you know the sheet is being done inside, the injection molding is being done inside and from copper tubes to creation of a heat exchanger is being done inside even so much.
So the child part for the copper tubing is also being done inside. So. So I don’t know why there is a 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 inside. There is still the large part of it is being outsourced by each one of us. So that’s how it is.
Naushad Chaudhary
Okay. I’ll take this one offline. Second, on the vehicle, sir, we have been indicating that because of the operating leverage, this entity should become a 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 you help — would help you because in terms of operating leverage, 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.
Pradeep Bakshi
Yeah. So I understand we are 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 three, four 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’ve gained on the market-share front, we’ve 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 Beco is a 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 extracting 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 vouch for.
Operator
Thank you. Reminding all the participants to limit your question to two per participant. We take the next question from the line of Thaval from Axis Mutual Fund. Please go-ahead.
Dhaval Somaiya
Thank you for the opportunity. Just one bookkeeping question for, sir. Does the reported depreciation of INR18 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.
Jitender P. Verma
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.
Dhaval Somaiya
Yeah. Sir, if you can just help me with the peak number, that will be really helpful to understand what?
Jitender P. Verma
Can you repeat your question, please?
Dhaval Somaiya
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?
Jitender P. Verma
It should be roughly about INR75 crores, INR70 crores to INR75 crores for the full-year.
Pradeep Bakshi
For all factories actually and for Bagoria, Chennai,, whatever capex have been spent and capex has been utilized. That is what is being considered here.
Dhaval Somaiya
Thanks, sir. That’s really helpful.
Pradeep Bakshi
Yeah.
Operator
Thank you. We take the next question from the line of Ankur from HDFC Life. Please go-ahead.
Ankur Sharma
Yeah. Hi, sir. Good evening. Thanks for your time. Again, on the UCP margins and the sharp fall that we saw from about 8% to about 5.9%. So just to clarify, and you did say there has been some impact from the commercial rep segment here and typically this is also a seasonally weak quarter. But if you could just also help us understand what was the RAC margins and I know you’ve been sharing that number also in some of your con-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?
Pradeep Bakshi
Yeah. So it’s quite a bit of a long question. There are so many questions embedded in it. But let me give a generic answer to all your questions embedded into one question. Firstly, when you are asking what is — why there is a pressure on UCB margin. So you know, we were trying to gain the market-share, you know, and therefore, we were spending money on ISGs, you know, 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 the 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 on a nine-month basis, our results have been pretty good, INR312 crore last year to INR848 crores. And even in the quarter also, if you look at you know, from INR24 crores, we have moved to INR191 crores as a company. And only thing is a little bit would have happened in one or two verticals because as I said is we wanted to sustain our leadership position and gain on the market-share and increase the numbers. You look at our growth kind of growth which we have registered in this particular segment is humong us. Yeah, almost we’ve been growing as well as most of the UCP products, room air-conditioners, air coolers, more than 50%, 60% growth we’ve been registering and all along these nine months. So I think you would like to appreciate that particular fact and therefore, there is a bit of cost involved in-building up these numbers.
Ankur Sharma
And your guidance, sir on…
Pradeep Bakshi
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.
Ankur Sharma
Okay. Great. Thank you so much.
Operator
Thank you. Before taking the next question, a reminder to the participants, please limit your question to one per participant. We take the next question from the line of Siddhartha Beira from Nomura. Please go-ahead.
Siddhartha Bera
Yeah. Thanks for the opportunity, sir. 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 — in the financials?
Pradeep Bakshi
So I’ll tell you, originally when we had applied in the first PLI. That time we had applied two 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 two 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 growing. So in the next quarter, I don’t think anything is coming in from Chennai, but yeah, some left over for, which we’ve already spent could you get-in the quarter-four. That is how it is.
Siddhartha Bera
Yeah. Got it, sir. And any price hike did we take-in the current quarter given that there are as many cost headwinds you are seeing in the current quarter. So will it be possible to highlight anything we have done here?
Pradeep Bakshi
Yes. No, we haven’t taken any price hike in last quarter, quarter three 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-up the numbers and we have not done anything on that and probably will 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 thing — strategy will be applied to this and we will look at it as it comes to us.
Operator
Thank you, sir. The next question is from the line of Prinidhe Karlekar from HSBC. Please go-ahead.
Shrinidhi Karlekar
Yeah, hi. Thanks for the opportunity. Sir, would it be possible to comment just the profitability of your AC business, how it has moved sequentially on a year-on-year basis, just the AC business?
Pradeep Bakshi
AC business probably how it has increased over the last few years?
Shrinidhi Karlekar
No, no, how it has behaved in this quarter on a year-on-year basis and on a sequential Q-o-Q basis.
Pradeep Bakshi
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 this —
Shrinidhi Karlekar
Not for the segment within the segment, just the AC part of it, because there were some liquidation compact impact and the new ramp-up in factory impact. So I was just wondering if we can get the clean RSC business, how it has behaved in terms of profitability. That would be really helpful.
Pradeep Bakshi
Thank you. Thanks. So it’s been about the same 200 basis-points, it has come down and I told you the reasons more ISG earlier on also because I’ll tell you some of the examples, smaller examples I can say, last year, we did not advertise during the off-season. Also in-shop demonstrator because as we have enter into all these new channels, emerging channels, and all there, we had to provide additional in-shop demonstrators and BTL activities were to be carried out that actually has been 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 their 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 hovering around 20-odd percent market-share, we would want to extract 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, you know, 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.
Operator
Thank you, sir. The next question is from the line of Aditya Bharthia from Investec. Please go-ahead.
Aditya Bhartia
Hi, good evening, sir. Sir, my question is again on these additional costs. If my memory serves me right, we had started working much more actively with modern — modern trade-in 4th-quarter of last fiscal. We didn’t see cost spiraling up as sharply in the first-half of this fiscal as we have seen in the 3rd-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 3rd-quarter, we have seen a much more pronounced impact.
Pradeep Bakshi
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, but 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 encounters. We are available in about 75%, 80% of them. So balance 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 were to compare, earlier on what was happening is during the off-season, we used to remove in-shop demonstrators from the outlets because our product was only the seasonal product. But now with all the categories, we have strengthened our product portfolios, we are into full fidget 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.
And the — if you look at our ISG number is I think probably doubled up — 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 in IPL and all. But now with all these consumer durable 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, all I think probably we need to take cognizance amount.
Operator
Thank you, sir. The next question is from the line of Rahul from. Please go-ahead.
Rahul Gajare
Yeah, hi. Good evening, sir. Sir, I have a question on your project business. Now your order backlog is closer to INR6,800 crores you also indicated the domestic order intake at closer to INR1,400 crores. Is it possible you can indicate how much is your order intake in the international? Because mathematically, it appears that you have had either cancellation in your international orders because a, there is a continuous decline in the international backlog.
Jitender P. Verma
For the — for the international business during this period, we have not taken any orders as you have indicated. The INR1,400 crores, which we mentioned is the domestic business order intake for this period. The total outstanding orders which stand is about INR6,800 crores and out of that about INR2,000 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 nine months and we expect it will continue that we do not get surprised with any hits and all.
Pradeep Bakshi
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 use 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 monies and therefore the focus was towards that, which remains still a very, very important aspect of our business industry.
And when — when we are saying that consolidation as in we wanted to — we are expanding our business or we want to do business in two main geographies, which is UAE and KSA. So there, we have been executing three, four large projects and some smaller projects put together 10, 12 projects which we have been carried out — carrying out. Therefore, we were prudent in selecting projects in those geographies. So it is — right now it’s about INR2,000 crores and we are looking at in case there are meaningful project funded by the right clients, we will look-forward to increasing or picking-up projects in those geographies.
Operator
Thank you, sir. 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.
Pradeep Bakshi
So I think you know all-in all, if you look at this year has been pretty good. First-nine months have given us lot of you know, a good momentum on-sales numbers, volume, revenue, even the profitability has been almost three times than what we had done 2.5 times 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 you know, Volta brand. In the project business is also we will try and execute projects whatever are towards you know closures and collect our dues in the last quarter to be able to deliver what we have committed to the shareholders. Thank you. Thank you. And UC with us just for the — for your information, UCB segment, this quarter whatever little bit downward trend you would have seen is, it’s a seasonal factor and we are likely to catch-up in the quarter-four.
Jitender P. Verma
Thank you. Thank you very much.
Operator
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.