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Ladies and gentlemen, good day, and welcome to the Q3 FY '23 Earnings Conference Call of Bajaj Electricals hosted by ICICI Securities. [Operator Instructions] Please note that this conference is being recorded.I now have the conference over to Mr. Aniruddha Joshi from ICICI Securities. Thank you, and over to you, sir.
Yes. Thanks, Ryan. On behalf of ICICI Securities, we welcome you all to Q3 FY '23 results conference call of Bajaj Electricals. We have with us senior management represented by Mr. Anuj Poddar, Managing Director and CEO; and Mr. E.C. Prasad, CFO.Now I'll hand over the call to the management for initial comments on the quarterly performance and then we will open the floor for a question-and-answer session. Thanks, and over to you, sir.
Thank you. Good evening. This is Anuj Poddar. Thank you, everyone, for joining this call. I'll just make a few brief opening comments and then you can ask us your questions.I will start by saying we're extremely pleased with our performance in Q3, and this is despite what I'm sure you're aware is a tough environment in terms of muted demand for consumer goods [ as we see around us ].A few highlights for us. We are back to having crossed INR1,000 crores of revenue in our Consumer Products segment. Our Lighting business while on a revenue basis has been flat, our profits from Lighting business has increased substantially, and that's the guidance that we maintain that we will be driving profitable growth for the Lighting business with the margin expansion.Our EPC business, which has broken even about 3 quarters ago, continues to be at a breakeven to a positive level, but also more positive for us is that in terms of revenue and order books that is expanding again in the direction that we want it to go. We see it now achieving a certain amount of traction and revenue [ size ] that we think will make that business viable and profitable into the future, while yet maintaining our approach of being selective [ on the nature and ] quality of orders that we take such that it remains profitable at the project level. In times as such, we are in the cusp of demerger in a quarter or so, and so as that demerger happens, this business will also be a healthy business going forward.Lastly on the cash flow front, like we've always maintained, that remains an area of focus for us. Q3 also has been very strong in the cash flow basis for us. Our cash from operations just within Q3 has been about INR197 crores.So that's my opening comments on overall performance. I do want to call out and explain, which we explain in the deck also, you will see a line of Other Expenses that has risen substantially. I will explain that briefly what that is. Firstly, there is what we have under our RREP scheme we have formulated something called the Retailer Bonding Program, which is a form of loyalty points that retailers accumulate. For us, this is in form and manner of schemes and discounts that we've been running under the guise of the RBP loyalty program as a structured approach to doing that. We continue to review -- and we'll continue to review the scheme [ and manner ] of this RBP program now and going forward as part of our overall review of our schemes and discounts that we're putting into the marketplace.The Q3 impact of that is we've been driving a substantial redemption program to encourage our retailers to opt for redemption rather than continue to accumulate points. Couple of reasons that. One reason has been that the entire provision for RBP is -- of course, we had maintained a [ conservative ] provision policy. It had been accumulating on the balance sheet few quarters ago, but it had risen to a very high level in the balance sheet. It was not something healthy for us to continue to carry. Therefore, we wanted to start encouraging including the redemption of these points.Second, it's a more operational tactical decision from a business standpoint. We are starting to offer various forms of schemes that are more targeted at certain product categories, et cetera. And as part of the composite review of that, for RBP, we've been driving redemptions of that. The impact of this RBP redemption and change in policy has been that there's been a slightly upward of INR15 crores upside to the revenues because of this and a slightly upwards of INR50 crores impact on other expenses because of this. The net impact is about INR12 crores on that.At the same time, there are 2 or 3 other elements in this quarter, our schemes and discounts in this quarter have been heightened, particularly on fans, as part of a destocking of non-star-rated fans. So that is also baked into -- that's obviously a negative impact in terms of margins, but that's baked into our Q3 financials and EBIT that you see. Our investments in brand have gone up significantly in Q3. It is a further about on a quarter on quarter about 2% incremental spends in advertising and Y-on-Y slightly above 1% increase in advertising. On an absolute basis, about INR14 crores incremental spends on advertising in Q3 Y-on-Y basis.And lastly, we are in the process of moving back our logistics from Mahindra Logistics to in-house logistics. As part of that transition, we've had a transition cost of that in this quarter, which should again be in the range of about 1% of our Consumer business revenues. So I'm just highlighting these. These are reasons for Other Expenses line to go slightly higher, and also related to it, there are notes that you see in this financial. The consolidated net impact of all of this is already baked into the financials.I've explained a lot of that, but happy to take further questions on any of these comments. Back to you. Thank you.
[Operator Instructions] Our first question comes from the line of Chirag Lodaya from Valuequest.
Yes. Sir, I had a couple of questions. First, if you can help us understand demand trends in across categories like appliances, fans, lighting, are you seeing any improvement in the overall underlying trends?
So, demand, I think we've been seeing all kinds of commentary around us and from us also. Demand has been muted, particularly post-Diwali. Since November, it has been muted. Appliances in particular has been a more muted demand. And Bajaj, typically, if you go back last year Q3 also, more than 70% of our revenues, particularly in this quarter, comes from appliance, which has been a category or segment that has been seeing muted demand.Within that also if I dive into that, room heaters and water heaters, you've had a late onset of winter this year, post 15th, 20th December. So there has been an impact on the heating category we saw. Coming back to very current trend. I think post the onset of winter, I would say, firstly, sales started then and, therefore, some amount of primary selling happened in Q4, but that's been a limited sale that has happened of heating, but the positive news on that is because of that winter setting, at least tertiary and secondary sale has happened, and therefore, there's been a certain amount of destocking of that inventory at the retailer store, distributor end, and therefore, at least for next season we are fine.On overall demand trend basis, a little early to say, but I want to say that to you empathetically that I think last 3 to 4 weeks we're starting to see some improvement in demand also on the rural side, and I'm also alluding to some commentary or datapoints quickly from the FMCG sector.I'm also [ alluding ] to some commentary or datapoints from the FMCG sector because as that happens, we think that will also transpire back to us. So it's very early days. In summary, I think there was muted demand environment through most of Q3. Last few weeks we're starting to see some green shoots on that, but we'll wait a little while to have a more emphatic view on that.
And on lighting front, distribution rejig, et cetera, are we done with that and can we expect strong momentum next quarter onwards, or how to think there?
The lighting for us in Q3, professional lighting has grown, consumer lighting has degrown. Consumer lighting degrowth is a combination of overall demand trend and also our internal rejig that we did. I think another quarter away from the rejig of our go-to-market [ rejig ], so much better off than we were 3 months ago. So there's certain team expansion and distributor dealer expansion for consumer lighting. That will be a WIP. So most of that should be getting over or done by March.We will see incremental momentum on that, but it will be by Q1 that we'll see a full momentum on that. At the same time [ although ] on the GTM front and the product level, as we've showcased a few products in our investor deck, we continue to expand our consumer lighting portfolio and product offering and make it both wider and go up in terms of value-added offering. So as and when our GTM is also fully in place, next you will see the benefits of our GTM regions as well as our expanded consumer lighting portfolio.
Great. And sir, just lastly on the profitability side. Sir, you had highlighted couple of points why margins are subdued in this quarter. So adjusting all this, what could be the margins in this quarter? And secondly, slightly longer picture, in FY '22 we did around 9.8% EBIT margins. Last few quarters because of inflation and weak demand, we are at 7%, 7.5% kind of EBIT margin. So by when can we touch at least double-digit EBIT margins in FMEG business, put together like that?
I'll won't do any projection on that, but just to answer your point, as of this quarter, like we said, the RBP part that you see it has a net positive impact of INR12 crores, the incremental brand spend has been -- incremental has been over INR14 crores, the incremental impact the cost of the logistics transition has been about 1% of our top line, so add another 1% there. And then finally, while the RBP part, which is loyalty [indiscernible] actually is compensating other schemes and discounts that we've given, which have also been fairly high this quarter as part of the fans destocking.So net-net, I don't want to put out a specific figure, but I would say the margins having netted out all of these things will actually be at least 1.5% better.
Got it. And is this a sustainable number now going ahead?
Couple of things that you will see. We will continue to, as a business, operational side continue to relook at our loyalty program and alternative schemes and measures that we have for this particular push that we want to do. There is no firm answer to that. But over next few quarters or as on a perpetual basis we will keep looking at that -- the impact of that. Sometimes we will net it off, sometimes it will be called out in different line items. But to my mind, those are purely operational costs.The one part that will be on one-time basis that will continue in Q4 is the logistics transition. That's an impact will continue in Q4 and then should normalize in Q1. The brand spend is again a more tactical call, but I don't expect a significant deviation in Q4 on brand expenses.
Our next question comes from the line of Akhilesh Bhandari from ICICI Prudential AMC.
Yes. Sure. Sir, firstly, can you speak about the volume growth which the company has seen across the various categories? We have seen a very sharp revenue growth in fans and muted -- and a slight degrowth in appliances and also lighting you mentioned that B2C has regrown. But can you also speak on what has been the volume growth during this quarter?And also for us, what is -- you typically, of course, have a replenishment model but what is the -- at the industry level, how do you see the inventory level for the fan segment?
So volume on overall has been flat. I would say, appliance there's been slight degrowth. Fans, of course, has been a growth. Blended level is flat because appliances is higher in terms of contribution for that. Within that, it varies by subsegments. But like I called out, heating category has been a degrowth. Kitchen category has been flattish. Coolers actually has a upside for us here in terms of advanced sales that happened on coolers.Coming back to in terms of fans and inventories, et cetera, we have completely destocked all the non-star-rated fans that we've had, and that's in terms of compliance with regulation. I would say there is a fair amount of stock now, not just us but of all brands, in the market of these non-star-rated fans with the channels in the market. I think that will take anything between 3 to 6 months to normalize. At the same time, we think in another -- towards the end of Q4, you should start seeing traction on volumes growth for the star-rated trends even from primary sales point of view.
Understood. And sir, a bit more on the logistics transition. So if you can give us more details on what is the thought process or rationale for going back on the transition. And initially, of course, you had some benefits which you thought you would get from moving to Mahindra Logistics. And what has changed from that perspective? If you can just give a bit more detail that would be helpful.
Sure, Akhilesh. To be candid, 2 years ago or 2.5 years ago, when we embarked on this 3PL outsourcing, we were looking at both financial and strategic benefits from that. We knew we were slightly ahead of the curve and planning for that. To cut a long story short, I don't think we've achieved either the financial or strategic benefits from that decision. And we've tried to make it work over a couple of years, but at some point we took a decision that if that's not serving our purpose, then you're better off pulling it back in-house. So that's the reason to pull it back in-house. Since then, while there's a certain transition cost of that, our actual service levels to our customers, distributors, channel partners has gone up, which is our primary focus of doing that. That's most important for us. We believe we're managing that well in-house.And then we'll continue -- while there's a transition cost of doing that, well, our first endeavor is to get the service levels right, which we are doing. Over the next 3 to 4 months, we will get the cost optimization also done. And therefore, we've taken this decision.
Understood. And sir, the distribution rejig in lighting, you mentioned it will take maybe another quarter or so, but in terms of the key geographies, so what proportion of your key geographies would you have covered by the end of the fourth quarter?
Can you just repeat? Your voice is slightly cracking.
Yes. So you mentioned that your distribution rejig in lighting will take another quarter or so, but by the end of March, what proportion of your key geographies in terms of would you have already covered under the distribution rejig?
Understood. So I think to take a numerical range, I guess, we would be 65% to 70% there both in terms of our team putting their feet on street in place and the distributor rejig that is happening over there, and therefore, the reach out to the lighting [ counters ].
Our next question comes from the line of Renu Baid from IIFL.
Sir, my first question is to understand a bit more on the fan segment. A, now with the new BEE norms, what has been the average impact on the pricing of the new star-rated fans for us, across the key ranges average price increase?And second, you did also highlight that there is sufficient channel inventory now build with the old non-star-rated fans, which will take about six months to clear up. So does that imply that usually that up-stocking or the nonseasonal stocking that we see would be fairly soft in the fourth quarter, and depending on how the season pans out, we'll see the signs of revenue uptick happening subsequently in the next fiscal?
So Renu, firstly, in terms of the cost side of the price impact, I think the impact of this is -- cost to us is between 10% to 12%. We would have liked to have passed it all on, but we passed on between 7% to 9% of that and part of that is also competitive reason because we do not believe competition has also passed it on as much as we'd have liked everybody to pass it on. We believe, therefore, there will have to be a second round of price hikes. Timing will be dictated by both market conditions as well as competitors' decision making.In terms of the stocking and volumes and therefore impact on star rated, we'll wait and see how that plays out. But my guess is, while I said it takes six months or so to clear out, that is for completion of that clear out. But incrementally every month that will keep clearing out. At the same time, I do see an uptick that will happen for star-rated fans. We will, as we approach somewhere in the season for fans, of course, engage in consumer awareness and campaigns for star-rated fans. So I do think there'll be a large segment of the market that will start purchasing that. So I would remain optimistic on star-rated fans also selling as we approach the season.
Got it. And since you also mentioned that the entire cost is not fully passed on to the consumers yet, as in the volume uptick is yet to happen there. But do you think the tail impact of this could be seen in the margins because commodity prices have also started to slowly inch up now. So how should we read in terms of the margin outlook going ahead for the end of this year and next year? In your view the double-digit margins -- EBIT margins that you were expecting for the consumer business, has that been pushed back by another 6, 9 months to second half of '24 or it should be possible for the entire fiscal there?
I think I'll answer the second part first, Renu. As we get to that and we start getting to '24, we'll have a little better visibility of that. So I don't want to move or change guidance on that right now. More specifically on the fans part, I think my personal view remains that if I'm a leader, I would not shy away from taking a full price hike. That is the job of a leader. #2, I think is the decision to not take the price is assuming demand elasticity playing out, that is not playing out. I think both of these to my mind, as a rational mind, would only force players, including our competition, to take a price hike sooner rather than later and make sure our margins are protected. I would assume that that decision would be made by multiple players, and we will not be found wanting for not taking that decision.
Sure. And generally, what is your sense as in now it's been almost the entire year we have broadly struggled on a relatively soft consumer offtake and tertiary offtake which has been soft? So while there have been some green shoots, some commentary from consumer companies, FMCG also, but especially for us, the economy segment is a reasonable large part of the pie. East, as a region, is a large segment of the market. So how are we seeing on ground demand offtake from these segments and some color on the strategy to increase the premium portfolio within Bajaj umbrella, how is that doing?
We are working on all of these aspects, firstly, on the rural or the lower demand, et cetera. When I was asked back in November, December, I was less optimistic about that. I thought we were at least 6 months away from that.When I speak today, I think that 6 months' timeline to my mind has come down to 3 to 4 months. So I would think we're starting to see the green shoots like I said earlier, but I'm just waiting to see that continue. And if that continues, then I think you will see that by March, April itself the demand over there starting to kick in. I do think -- again, I've not read the fine print of the budget, but some of the changes on the income tax -- personal income tax, et cetera, I think are positive for consumption sentiment, et cetera. So that takes care of the middle class, urban middle class, et cetera. So if you add both of these factors, I would yet today be slightly more optimistic than I was 2, 3 months ago. Having said that, the external environment and economy is not something that we can necessarily control. Our job is to navigate through all of these things like we've done in the last few quarters.Therefore, coming back to your other part of the question, we continue to broad base our portfolio and offering. Some of those examples are investor deck. If you look at those products, that clearly cue a greater premiumization journey that we are on in terms of product, product features, technology, quality, designs, et cetera. So our journey on that will continue, and I think that will derisk us probably. Not just derisk us but also help expand the margins, and therefore I yet hold to our directional view on FY '24 and going beyond. Our margin expansion should continue irrespective of economic demand cycle.
Sure. And approximately what -- how large is the premium portfolio in our consumer mix today, approximate percentage?
So that varies by categories. Like I say, for fans, we used to be 6% contribution. That's up to about 19% contribution in fans in terms of revenue if you look at in terms of, let's say, mixers in 750 watts and above mixers, that is up to about 35% of our contribution today. If you look at, I would say, LED, I don't know LED as a stock is premium or not because our range moving from non-LED to LED and now from LED to actually lamps to value-added products, we keep seeing that journey. I don't really have number offhand in terms of contribution here.Coolers we're continuing to upgrade, doing that. Again, I don't have a number there. So the cross direction in each of these categories, there is this clear move or higher contribution from the coolers segment.
Our next question comes from the line of Achal Lohade from JM Financial.
Yes. My question was with respect to third quarter, you mentioned that there has been a significant channel selling, so to say, with respect to non-rated fans. Can you help us understand what is the extent of impact on the margins this had in terms of given it was -- it would have gone with a discount or a price reduction?
Achal, I couldn't hear you fully, but I think you're talking about channel selling [indiscernible] for schemes, et cetera, right, in Q3?
Yes. Let me just explain once again. So third quarter you've mentioned that the fans growth is 65%. And you said partly it has to do with the destocking of the non-rated fans from our end. So I'm just curious to know what is the impact it had on the margins for the third quarter with respect to these schemes, discounts, et cetera, to clear out these non-rated fans.
So Achal, I would look at it, there's 2, 3 levers of margin impact on this, okay. First is actually discounting and schemes that we've done, and again that's not been even through the quarter, so it was higher in October and November. And then we restructured that in December also. But while we restructured that, this is all cross-categories, including kitchen, et cetera. In December we focused little more on the non-star-rated fans. Therefore, there was an impact of that. So I don't know what the blended number to that could be, but we had differential stuff offering through that quarter. If I was to hazard a guess, it's be 0.5 to 1 percentage point because of that, okay, #1.#2 actually is also the portfolio mix between appliances and fans. Like I said, historically Q3 is strong in margins led by heating appliances. This quarter heating appliances was muted and, therefore, we did not get a benefit -- upside benefit of those margins. On the other hand, our fans contribution is being higher, which typically are lower margin. And also, lot of our push [indiscernible] in December has happened on fans, that is further subdued in terms of margins on fans. So the margin that you see is a blended impact of all of these 3 things, the discounting, the portfolio mix moving from appliances to fans, and within fans also certain push that has happened in December.
Right. If we were to see from an annual perspective at 5.24%, 5.25%, how will you look at the gross margins, assuming the, A, the raw material prices still being stable and whatever desired price hike to offset the -- to meet the compliance you are able to take, how do we look at the gross margins for our CP business? Would we see that it's improving 3 to 4 percentage points given the cost inflation hit we had in FY '23, or do you think it would be lesser than that and hence double-digit could be little difficult?
Well, Achal, again, I don't want to put a specific figure projection, but I think 3% to 4% expansion would be very aggressive as a target. I do think margin -- gross margin should expand 2%, 3% -- the 2 levers on that. One is the commodity cost which has cooled off significantly between April to November. December, Jan, like one of the earlier questioners mentioned, you are starting to see some increase in commodity cost. My view is today so far it is not alarming. I don't expect that to become significant. I think we can take that in our stride.I think the other big lever will be pricing in the market and that pricing I think to some extent will be driven by the consumer demand. My view remains that demand should start looking up from March, April like I said, and that will bring back pricing power not just for us but for everybody, and therefore, limit this discounting game that is on. So that to me between both of these aspects, I do see gross margin expand. That said, the 3% to 4% in a single year may be very aggressive is my view.I'm sorry, one more third lever for that is on the premiumization. You will keep seeing us do a little more of that. As that happens, for us, the gross margin should also expand because of our change of portfolio mix towards premiumization.
Understood. And at the operational level, you mentioned that there has been 100 bps impact of the logistics cost of transition. Would that continue incrementally in FY '24 as we go ahead, or do you think that is by and large done now?
No. So, again, I'll explain, that logistic transition is happening on a phased manner. Between 1st of October and 15th of January, we've taken over all the transportation which is both preprimary, primary, and secondary transportation. And some of this logistics impact that has happened right now in Q3 is because of this transport-led logistics transition cost that has happened, including some double spends, et cetera, there as we start to put the routes in place and take that over.Right now we are in the process of taking over all the warehouses. I think that will take anywhere between 4 to 6 months, more like 6 months before all of them are transitioned to us. You will see some impact of that transition in Q4. I see very limited impact of that happening in Q1 next year of this transition.
Understood. And just one last question if I may. With respect to that discounting part of it, could you elaborate a little bit with respect to the other appliances? Are we seeing the other brands actually resorting to aggressive discounts, et cetera, or it is more driven by the regional or tier 2 players?
So my view on the discounting, et cetera, like I said, we also in October, November had some of that. But in December, as far as appliances, which is non-fans, is concerned, I think we're fine with that. We don't have a discounting or price challenge on appliances in general. And also as being a leader, et cetera, I think we're able to manage the market views on pricing and discounting on the appliances much better. So we are comfortable with that. Our challenge or concern has been on fans, and also because of this transition from non-star rated to star rated which also has an impact on cost. I think there the discounting, both to get rid of stock as well as not to take a price hike commensurate to the cost increase, I think that's been a bigger challenge for us, and that is not something we can drive as a non-leader player. So we would want to see some more rationality and sanity on that. And like I said earlier, we are more than happy to keep pushing on that to protect margins on that.
[Operator Instructions] Our next question comes from the line of Rahul Gajare from Haitong Securities.
See, with respect to the logistical moves, when in 2021 you'll decided to move to Mahindra for logistic arrangement, at that point in,time we were looking at a saving of about 1% to 1.5%. Now with this shifting back in-house, what are your thoughts on the strategic and the financial benefit that you are looking for? Can you elaborate on that aspect?
So, Rahul, to be candid, like I said earlier, we've not derived that benefit, either the financial or strategic, and that's the reason to move it back in-house. My view is there was certain reason for us to have done this to actually for us to defocus from logistics and focus on the market end, but not to let logistics become a weak point for us. And therefore, our primary objective will always remain that logistics cost optimization, while that's desirable, that's secondary to ensuring efficient logistics, which we are now focused on, which we're delivering on, to satisfy all our channel partners and customers. That we've achieved as far as this transportation transition, and we are managing that well.That said, we will optimize logistics costs. It may not be to the extent that we may have originally envisaged, but we will keep looking for those avenues to do that, but without compromising on our other core objectives.
Okay. And you did indicate that A&P spend has increased by about INR14 crores in this particular quarter. Can you quantify how much was the actual A&P spend because in the first quarter, second quarter you did indicate it?
It was about INR51 crores in this quarter and about 4.4% of our consumer lighting business.
Our next question comes from the line of Rohit Suresh from Samatva Investments.
My question is based on the BLDC fans that we have, just wanted to know the motors -- the BLDC motors that are used in the fans, are we importing it from China or is it being procured from a domestic manufacturer?
No, there's no import of the motor from China. It's a combination from a domestic supplier as well as we are creating certain in-house capabilities also there for that. So with certain components, we're able to make that in-house. So it's a combination of both. Right now, the reliance on a supplier is higher, but we do want to try and enhance our ability to do that in-house also.
Got it. Sir, and a related question is that, what will be the share of those BLDC fans to the revenues right now and how do you see it moving in the next 2 to 3 years, considering the star rating that have just been applied to the fans?
So right now it's extremely miniscule for us. We have been a laggard to the BLDC offerings. Having said that, we do have a couple of SKUs in that, but you will see us, for the next one year, have many more SKUs in that. As that range of BLDC expands for us, that's when we'll start seeing a meaningful contribution of BLDC. But I do think that will remain in single digits at max 10% of revenue. May not even touch 10% of revenue for us there.As we move to star rating, I think 1-star rated fans will yet dominate the purchasing at the consumer end going up to 3 star. I do think 5-star fans, which BLDC are, will remain if not in single digits, will remain in the teens at an overall market level also.
Our next question comes from the line of Girish from MS.
Sir, my questions have been answered thanks.
Our next question comes from the line of [ Harsh Vora from Praj Financial ].
Yes. Sir, just wanted to know what's our distribution reach expansion in the last 9 months and what has been our market share in each categories in appliances? Have we seen market share increases in any of the appliances categories?
Reach has been fairly flattish, as I've shared in the past. And our reach has always being best-in-class. Our focus has been to actually expand our WD [ not R&D ], that is our weighted distribution, and therefore, our growth from urban metro counters and SSSG, which is same-store sales growth. So while we continue to look at reach, our greater focus is not reach, but actually mining that reach much better. That's point 1.Point 2, in terms of market share, I think on overall I'll just give a very macro answer on that. On appliances we've been maintaining market share, but within that we've been growing market share in coolers and coming to fans, in particular, where we're growing market share on an overall basis.
Okay. And what would be the premium categories of fans in our overall fans portfolio?
So our revenue contribution from premium in FY '22 was 19%. This was about 6% about 3 years ago or 2 years ago. Let us complete this full year, so we have a full year basis to compare that with.
[Operator Instructions] Our next question comes from the line of Achal Lohade from JM Financial.
Sorry, if I missed the volume growth number for the categories like appliances, particularly fans, what has been the volume growth for fourth quarter -- sorry, third quarter?
So Achal, for appliances, it has been flat to negative, for fans must be about 50% plus. Yes, I've not, to be honest, done a very deep math on that. Our overall growth was 64%. That includes certain amount of price increases.
Right. And what would be the industry growth according to you? This is disproportionately higher compared to industry I presume. Please if you could throw some light at how the growth would have been for the industry broadly? Like are we disproportionately high?
[indiscernible] while everybody has destocked, but you've seen the numbers from everybody else. The leaders has to come out now. I haven't seen that number yet. Today it's due. But I'm sure the industry growth is much, much lesser than this, both volume and value terms.
Is it like we had the disproportionately high share of non-rated as we went into it or it's more conscious strategy here?
I think again it's a combination of things. We've just planned our inventory and our selling the way we had planned it. It's also a function of base effect, to be honest. Our base is lower than others, so it could be a function of that, but also a reflection of us continuing to increase our market share. So if you look at -- sometimes a quarter can be skewed, but if you look at a longer arc and if you look at all of FY '22 also, our growth rates on fans have been higher than industrial competition, so Q3 similarly you're seeing that, but hopefully on a full year basis also you'll see us deliver higher growth rates on volume and value in fans.
Got it. And just if you could throw some light in terms of what is the in-house manufacturing mix for fans, home appliance, kitchen appliance and lighting as we speak, and how do you see it evolving over next 2 to 3 years timeframe?
So on an overall basis, it's about 15% in house, 85% outsource, and in particular you will see that change happened next year. We just put in a new paint workshop at our Chakan factory to support our superior premium fans. And that's part of our journey towards premiumization of our fans portfolio. As that -- what should I say? -- the initial trials of that in production of that is on, but from February you should see a pickup in our in-house production or fans, particularly the premium fans.As that gathers overall pace and capacity, debottlenecking minor expansions that we're doing, I think next year you will see us also up our overall in-house production, particularly for fans.
Our next question comes from the line of Vandit Dharamshi from Alpha Invesco.
I just wanted to check on the lighting division in terms of how is the competitive landscape playing out? Is there some aggression from other competition or in general if you could just talk about the lighting segment?
It's a bit of mixed trends. Firstly, on the consumer lighting, demand has been soft. We're seeing that across. Our own transition is separate aspect. But having said that, I think there's a certain amount of consolidation that is happening in consumer lighting, particularly a lot of the long tail players, we are seeing market share move towards the leading players, including ourselves. And also given our journey on expanding our product portfolio on that and premiumizing, I think there we should be fairly strongly set and gaining share fast.On the professional lighting space, it has always been a lesser of a long tail, et cetera, and more consolidated space always. There, like I've mentioned in the past, we see ourselves being close #2/adjacent #1. I think there we have seen some increased, what should I say, ability offerings or competition from a few of the other leading players, too. That said, we remain confident of our approach and strategy there. Therefore, not something that we see any loss of share happening for us.
Okay, sir. And one more question, sir. In terms of what would be our in-house production for lighting and what would be the rough working capital days for this quarter and maybe going full year for FY '23?
I think the in-house for lighting will be slightly higher, closer to about 20%. We continue doing a little rejig on that between our factories, what lighting we're making there and again between professional and consumer lighting. So you'll see some rejig of that. That 20% may go up slightly more next year for the lighting part in terms of in-house. What was the second part of the question?
On terms of working capital for lighting segment, maybe if you could just throw some light for this quarter water and say for FY '23 ending, what would be the working capital days?
The number on that. It'll be lighting total working capital in the range of about INR150 crores.
Our next question comes from the line of Rahul Gajare from Haitong Securities.
This particular quarter we've seen a increase in the interest cost compared to last year or sequentially significant increase on a sequential basis. I do understand your explanation that you talked about vendor financing. This discounting of EESL will be a one-time cost, right? So your steady state interest ideally should go down given you improve your balance sheet side. Is that a fair expectation on the interest?
Yes, that's right. So EESL is a one-time impact because this was a retention, which is due to us after 7 years which we have discounted now. So that's the INR5 crores impact there. That's a one-time cost. And the balancing, even the EPC advances that we are taking, so it's an interest-bearing advance, that's an operational advances that will keep happening as we take on more projects.
And in the second quarter, we had a very high profitability on the EPC side. And this particular quarter it was significantly low. Any specific thing that we should read into this?
No, I think we have explained this last quarter. As most of our old projects were coming to an end towards the last quarter, and we're actually starting out the new order book. So because of that, when you start off a new project, the margin recognized is actually lower. So as we do our surveys and get into the operations, the margins should improve there.
And I think in the opening comment, I think Anuj did indicate that the demerger could actually take a quarter or 2 from here. Earlier I think that was expected sometime now, right? Is there something you've heard adversely?
So Rahul, I'll answer that. The SEBI approval took a long time. That came through in December. Post that, we've managed to get the first NCLT order actually fairly fast, which has happened in Jan. Our initial target was to have this demerger done within this fiscal by March. Right now, next step is a shareholder meeting that will be convened on 2nd of March. That's part of the normal process post the NCLT order. Once it is approved at the shareholder meeting, it has to go back to the authorities and there's a certain process after that. We can't exactly pinpoint the time that it takes for them to approve that. But I think it could be anything 2 to 3 months from there. So I think May, June. If we're lucky, it could be earlier, but not later than that.
Our next question comes from the line of Chirag Lodaya from Valuequest.
Just follow up on this finance cost. If suppose -- what could be the finance cost for consumer division?
Actually, there is no finance cost. This is a cost of discounting of the bills of the vendors. So about 4% is the cost of discounting.
Okay. So, no, what I'm trying to understand is in a demerged balance sheet, in finance cost as a item, on a full year basis, it could be in the range of INR15 crores, INR20 crores? Is that the fair understanding?
Yearly, yes, you're right.
Ladies and gentlemen, we have reached the end of the question-and-answer session. I now hand the conference over to the management for closing remarks.
Thank you, once again, everybody for joining us. I won't repeat my opening comments. You heard us all. We think it is a tough environment. In that we continue to both delivered good performance in Q3 and directionally strategically also we'll be in sync with all the -- whether it's on product innovations or brand, et cetera, we're moving in the same direction as we've always guided. Thank you very much.
Thank you. On behalf of ICICI Securities, that concludes this conference. Thank you for joining us and you may now disconnect your lines.