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Ladies and gentlemen, good day, and welcome to the Crompton Greaves Consumer Electricals Limited Q2 FY '19 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded. I would now like to hand the conference over to Mr. Praveen Sahay from Edelweiss Broking Limited. Thank you, and over to you, sir.
Thank you, Janice. Good morning, everybody. Thank you for joining to the earning call of Crompton Grieves Consumer Electrical Limited. On the behalf of Edelweiss Broking, I would like to welcome management team of the Crompton Greaves Consumer Electricals Limited to discuss the result. We have with us Mr. Shantanu Khosla, Managing Director of the company; Mr. Mathew Job, Chief Executive Officer; Mr. Sandeep Batra, Chief Financial Officer; and Mr. Yeshwant Rege, Vice President, Strategy and Planning -- Financial Planning. I would now request Mr. Khosla for his opening remark, post which we can open the floor for Q&A. Over to you, sir.
Thank you, Praveen. Good morning, everyone, and thank you for dialing into our call for talking about our results of the second quarter. As usual, I'll try and give some color and flavor around the numbers and then we'll try and keep as much time as we can for any questions you all may have.Let me again -- let me start by talking about our segments. First of all, ECD segment showed a strong growth of close to 15%. All our key product sides in this segment have shown double-digit growth. The real drivers of ECD were fans, pumps, and also towards the back end of the quarter, geysers. We have, in spite of, continuing cost pressure and FX pressure, we have managed through mix and continuing cost-reduction programs, to not just grow the top line on this segment but importantly, also grow bottom line, improving our margin of the segment by about 100 basis points. This really is a reflection of our key strategies as we are continuing to implement and drag the business behind them. We introduced a lot of new products in fans, especially in the critical INR 2,000 to INR 2,500 price segment. Not just Air 360, which we've talked about, but also variance called Senorita, Splitz, Dignita.And most of these have shown good initial results and through this quarter, the growth of this critical segment was 35%, which was one of the prime drivers behind not just the total fan mix but also the continued improvement in mix of the Fans business. Pumps also continues to perform exceedingly well, especially behind the ongoing initiative of Crest Mini (sic) [ Mini Crest ] where we clearly are growing our business faster than the competition. So volume was strong. We increased our Pumps volume by 25% in the current quarter. Importantly, a key future growth area of agricultural pumps, which we've been driving for sometime, trying to get deeper in our distribution and marketing, et cetera, grew by about 70%. We see this as a critical segment, and we see this looking forward to continue to be a critical growth contributor along with Fans. Geysers also, we've talked about in the past, but really now this is the season where we plan to really drive geysers. We have revamped our entire range of geysers and upgraded it across the board, instant as well as storage, introducing a number of new items like Gemma, Solarium, Neo, Amica et cetera. With a strong focus on both performance and also importantly, product aesthetics. We began to, obviously, roll this out in the back end of this quarter and initial growth has been strong. But clearly, it is going to be one of our key drivers as we go into the critical winter season for geysers in the next quarter onwards. So that's ECD. And ECD, we think is performing strongly. We see it continuing to have potential for growth. We think our strategies of driving better distribution, driving better visibility in-store, driving constant innovation are all now consistently delivering results, top and bottom line. Let me move on to our other segment, which represent about 25-plus percent of our business, Lighting. Now Lighting is, without a doubt, it's been a challenging period, as we've been talking about for some time. The story of Lighting is very, in some ways, simple, in other ways it's complicated. Our volumes behind our LED program continue to grow nicely. Our volume growths on basins and panels is in excess of 20% and our lamp volume growth is also in excess of 20%, ex EESL. In fact, LED Lighting even in value ex EESL grew 14%. The challenge is that price erosion is continuing and at the same time and we estimate that over this period, the price erosion was something in excess of 10% to 12%. And at the same time, while we're continuing to have price erosion, we are also facing significant cost challenges, especially due to the foreign exchange headwinds. Since a significant amount of everyone across the industry, the LED cost is dollar-based. What is this resulting in, and why we're continuing to grow volume across the board, we're continuing to grow distribution, it is resulting in, obviously, the value due to the price erosion not growing and also the margins getting impacted. For us, which is clear that Lighting is strategic, and we will continue to drive the Lighting business with a combination of distribution, advertising and also product innovation. We now have a program to recover margin in spite of the headwinds we are facing. We have a very clear program to recover 400 to 500 basis points of margin via cost reduction. This program is already in place and it has a number of legs. Leg #1 is we are continuing to look at optimizing our design of key components, things like drivers, et cetera. This has been one of the elements which have helped us in cost reduction in the past. We are continuing to do that. The second, from a pure sourcing point, we are looking to source components directly from suppliers in China as opposed to only going to aggregators. Thirdly, we're using technology in purchase significantly by moving more and more of our purchases to reauctions which are also delivering savings. Finally, we are also in the process of moving more and more of our LED production in-house in our own factories. We have already moved a reasonable amount of bulbs. By Q4, we'd have moved the majority of our bulbs to in-house. From September onwards, we are beginning to produce streetlights also in-house and by quarter 3 and quarter 4, we'll have stepped up the in-house production of battens and panels. So all these programs together, which we have defined well, because we've recognized how important it is to keep driving cost and bring back margins somewhere around the double-digit range, we expect to be going in, as we speak. They will obviously, gradually ramp up, and we are aiming to get our -- restore our margins back over the next 2 quarters on Lighting. While we are doing this, we are going to continue to focus on what has worked to deliver all of this great growth in Lighting. Distribution is key. Advertising is going to be key. We are also introducing more premium value-added items. For example, we introduced the 5-star LED bulb in the beginning of this quarter for LYOR, which is a totally redesigned bulb in terms of shape and packaging, apart from being 5-star, and we're selling it at about a premium of 20% to 25% versus the base product. So this continues the introduction of premium initiatives over the next quarter that'll also help the top line growth. So next on Lighting, we believe that we still have huge opportunities for growth, and we will keep driving these opportunities for growth. We now had to accelerate the execution of our identified cost reduction programs over the next 2 quarters to get our margin back to what we believe is the right margin for '19, which is about double digits. So with that, I just like to now sort of toss it over to you folks for questions with the final summation, sort of, of by commenting, ECD is actually growing for us broadly. Margins continue to be healthy and on the growing end. Lighting, we do face price erosion and cost challenges, but we're confident that we have plans to address this erosion over the next 2 quarters. We expect that price erosion will reduce but not disappear. We think that price erosion will kind of stabilize on the bulb business, but it's difficult to predict. But we are planning, assuming that some price erosion continues on other segments of the Lighting business. So thank you, and I'll now just toss it over for our questions.
[Operator Instructions] We will take the first question from the line of Renu Baid from IIFL.
My question is just to understand a few more on the margin profile. For this quarter, as we see on a sequential basis, Lighting and ECD margins haven't actually compressed as much as the EBIT level. Part of the gross margin the decline has been substantial. Few reasons that we've already elaborated. So how should we look at the company-wide gross margins moving ahead. Assuming the Lighting is expected to be back to double-digit levels for the next 2 to 3 quarters. Can we expect the gross margin to be back at the previous level? And also if you can just mention the reasons for decline in the analog cables this quarter.
Decline in the?
Analog cables.
Analog cables.
Okay. First, overall gross margin, and let me start with ECD. I think one thing to keep in mind is historically, our margin profile always includes in the summer season months. Due to the seasonality factor where the volumes of the higher-margin products, such as fans, is more. So effective comparison on margin progress is the look on margin progress versus same period year ago. Second thing to keep in mind is on ECD again, since we talk a lot of Lighting, on ECD, we are -- while we have got strong overall value growth, volume growth is ahead of value growth. And one of the reasons for this is that we are getting this proportionate growth from the different many initiatives, which we're extremely happy with. So while that may have some downward pressure on gross margin, we think that it is strong -- it's a strong driver of overall top line growth and overall profit growth. And the last thing I toss to Sandeep, take that.
You see the analog given cost, they are largely in line with what was given in the immediately preceding quarter. INR 26 crores, it is INR 24.5 crores -- INR 25 crores. But compared to the same quarter last year, that's largely because of the reduction in the ESOP charge [indiscernible] expenses.
Next question is from the line of Venugopal Garre from Bernstein.
I have just one question. In this quarter, it's Lighting as well as the first half, was there anything EESL business and more so, how is the order book incrementally developing on the EESL side? And also want to understand that -- I mean if EESL -- as I understand it will be probably low than what it was last year, so does that also have a role to play in the margins and how that is weighting because [indiscernible] and it seems like the margins have fallen. Do you expect the EESL in the higher margins?
The EESL -- in the previous quarters -- the EESL business has been typically lower in the same period last year. If I look at LED fixture, there have been almost a 35% drop in the EESL value compared to the same period last year. And in bulbs, which was basically -- it was 10% down. So I think overall the EESL has come down. If you consider the LED business without the EESL. LED business without the EESL is growing 14%. So I think the -- and going forward, you asked also about the order book for EESL. The order book for EESL end of September, around INR 35 crores.
And then just one more thing I'd like to mention about EESL especially looking forward and this is partly, of course, based on public comments made by EESL. The EESL business -- we've got to remember really consists of 2 parts. Part #1 has been -- what has been the largest part of this business up till now, which is simple bulbs. Now as the EESL has declared, this bulbs business they have basically done their job and now, they're going to gradually get out of. However, there's a second segment, which is the Streetlight segment, which historically EESL was not involved in. And this business was done directly with various municipalities or localities or governments. Now EESL, a lot of these are getting aggregated through EESL. So in a sense, EESL sort of becomes central purchase operation to supply streetlights to not all but quite a few of these. So this in essence, the Streetlight is sort of a new business for EESL and this is gradually developing. And if I read what EESL has decided public, this is their focus area for Lighting in the future.
We take the next question from the line of Venkatesh from Citigroup.
The question is something like this, it's a broader strategic level question. You mentioned that your value growth was lower than your volume growth in the ECD segment and it is also reflected the fact that...
Sorry, sorry, I'm sorry to interrupt. Not in the ECD segment. In times, for example, the value growth was ahead of volume growth because we were driving the more premium end of the market like we've been driving. Only in pumps, where, for the last 2 -- about 6 quarters, we have really been driving the Crest Mini, which is at a lower price point is the volume growth higher than mix growth. So when you bring ECD together, you do have positive mix. And I do believe this starts because if you recall, about 3 to 4 quarters ago, we were facing competitive challenges with pumps. And then we brought in Crest Mini and the good news is not only is Crest Mini growing, but other segments also growing. And today, that's looking as -- the last couple of quarters of pump competitor reports. Our top line and bottom line on pumps is actually growing faster than at least all the numbers I've seen up till now.
Okay, so let me rephrase my question. Now in pumps, for example, the value growth has been, let's say, [ trendy ] volume growth similarly on the Lighting you mentioned a similar thing happening. Now especially focusing on Lighting, when we talk to people in the channel, the response, which we are getting is there was initially a price cut, which happened through 2 new entrance Indiabulls Power -- Indiabulls LED and Jaguar, and actually very -- there were only a few people who reacted may be Syska reacted but among the top 3, 4 peers, it was basically Crompton who's leading the price fall in Lighting. So if there's a conscious strategy by the management that you are actually cutting prices to grab market share in the current environment. Because we don't see a similar thing happening with Havells' numbers. Their margins doesn't seem to be getting impacted. And neither are they telling that they're cutting prices. So do you think there's specific strategy from your side that you're cutting prices to grab market share in lighting? And the second, if you could just tell us what are the advertising spends in the first quarter and the second quarter of the current year?
So I think you're right, I think, incidentally the trade in lighting such as the B2B segments, there has been significant price erosion and that's -- you're right, it was led by 2 new entrants to start with. And of course, companies at this time many of us reacted. I think definitely we have a very clear pricing policy, which is basically benchmark with current lead competitors, but a basket of competitors. And they've done on the price move we've observed, we have, of course, all go active to active to ensure that we protect our share. But I think we need to keep -- when we compare the margin movements of competitor I think the other thing to keep in mind the LED, non-LED portion of the overall Lighting mix. I think we have one of the other issue we have been facing is because the non-LED lighting business has been going down, has been declining both in terms of top line, bottom line much, much faster in the last couple of quarters when -- in the periods -- so before that. So depending on the mix of LED and non-LED you'll -- you see some difference between competitors. But in terms of pricing, we have -- in terms of price setting for the 3 competitors, we -- it is unmoved. Similarly through the last 3 quarters. And in fact, starting October, we have actually increased the prices of LED bulbs and again, some of the competitors also have responded similarly. So I think our pricing policy will remain consistent, and we continue to execute the pricing policy that we have set in place.
Yes, and to be absolutely clear, in the current period, we did not initiate any price reduction. It was purely a response and it was not just a response to small new players. It was a response where large players also started dropping their price.
Okay. Sir, if you could just give us the advertising costs for the first quarter and the second quarter.
It's about INR 25 crores across the quarters.
Sir, could you keep the split between the 2 quarters?
Before the first quarter.
Most of it was in the first quarter.
INR 125 crores.
No, INR 25 crores.
IND 25 crores.
[indiscernible] In the first quarter then were -- then we see the seasonality.
Your next question is from the line of Arnab Mitra from Crédit Suisse.
A question on the GTM change agenda that you have, so you had a adverse effect last year in the second half when you were starting to roll it out. You -- you've given the layout over the next couple of years on this, but I just wanted to get a sense of when do you think the adverse effect of the rollout stops happening and when does the positive effect of the incremental distribution start coming in over the next year or so?
Okay. Like we've talked in the past, we are not doing this all at one go across the country. It's in stages. And it's really focused on creating stable prices, creating good coverage and regular beat work by salesmen. So as you can see from our ECD, or if you just look at our ECD business, and if you track the growth of our ECD business over the last 4, 5 quarters, ignoring or adjusting for last quarter's growth because last quarter's growth was obviously high because of the GST base being low. You will see a continuing increase in the growth rates quarter-on-quarter. So it's actually pleasing to deliver of an aggregate India basis, it is continuing to deliver results. If I go back, we were growing the ECD business about 9%, 10%, that has went up to about 11%, 12% and now, this quarter, it's 15%. Again, I'm not counting the 25% of the GST quarter because that's obviously a reductive number. So there is already unsteady. Now that is not only because of GTM. GTM I mean the better distribution is one of the enabler, but it's also the product, it's the innovation, et cetera.
Next question is from the line of from Nitin Arora.
My first question, you talked about in sourcing some of the products if I heard you correctly lighting products and so [indiscernible] you said that I might change the procurement directly from the vendors abroad rather than -- well, we must be doing some business to aggregate as well the BMS companies. So is that a change that we largely will take everything from abroad on our supply chain and we will just remove the middle man of the invested [indiscernible] company from here.
Not obviously everything at one go. It's a gradual shift because we also have to make sure that we're getting high, we're getting -- it's not just about low price. We have to make sure that the quality, the reliability, et cetera. This was shift over time and as we're doing that, we are, obviously, want to make sure the reliability and quality, if anything keeps improving, but the same cost benefits as you move does change. The second thing is that like I said on this whole area we are seeing e-auctions are beginning to kick in, and they are working well for us. And the final thing is, which is also a gradual change over the next couple of quarters is in-housing, so we're gradually bringing in more and more of the final lighting manufacture into our own plants. And we're seeing that, okay, it has 3 benefits: better reliability, better quality and we are getting cost benefits. So the cost benefits of all these things if what is adding up to our plan to get back to the 400, 500 bps on margin.
Possible to quantify how much in the Lighting business you outsource to a company like -- U.S. company like Dixon and [indiscernible] possible Lighting can we get insourced by you. Is it possible, Sir?
I can tell you, for example in LED bulbs for a year back, we were having 80% outsourced. By the end -- I think by -- even in this current -- in the current quarter, we would be less than 10% outsourced in the LED bulbs. I just well -- I don't think we're completely outsourced till September. But now, I think in this quarter, almost 25% will come in-house. And plurally there is also a move in streetlights so over time, of course, a bigger percentage of our overall sales will be coming out the process.
We will take the next question from the line of Ankur Sharma from Motilal Oswal Asset Management.
Sir, so my question was on the Lighting segment, now, if I remember my numbers correctly, close to about 70% to 80% of lighting is LED. And within that, again, up for the 16%, 17% is fixtures, right? Now and the other way to also look at the Lighting segment, is that close to about 50% is to B2B. But my question really is that, is this price erosion across the fixtures and also on the B2B side? Because my guess would be -- it should be more to the B2C side, right? So what's sort of driving this very sharp margin erosion? Isn't in that -- even in fixtures, even as B2B, are you seeing similar price erosion?
Yes, it's across the board. If you go back to the LED growth program sort of started, both with us and then industry. At first the price erosion -- at that time, driven by cost. First started on bulbs then it moved to panels and buckets and now, it's very much there in B2B. In fact, as I was mentioning in my opening remarks, we think that price erosion is now not going to happen much on the bulbs. In fact, a couple of leading companies, including Philips and us have announced our price increases in bulbs, but we think there's still possibility of erosion to happen in the other segments. Also I'd just like to put this in context because we tend to look at quarter-to-quarter, which is absolutely right. If you recall, if we go back 2 years ago, and you look at our numbers, we were small but we did not receive at high margins we were only about 4%, 5% margin. And then gradually as we build scale, moving to this #2 position in terms of total size. We also managed to build margins to a peak of about 10% to 12%. And over the last 2 quarters, price erosion happened even more and frankly, the last quarter, our Lighting margin has come down to about 6.5%, a little higher but not too different from what it is this quarter. Now you need to build it back up to the -- to that 10% and the only way is cost.
Next question is from the line of Charanjit Singh from DSP Mutual Fund.
So you talked about these price increases on the LED side, if you can just quantify like how much price increase you've taken, what could have been the absorption in the market. And in any other categories, have we taken any price hikes?
Price hikes, we have effective some price increases from October only in LED bulbs, to start with roughly 3%. That's what we have done so far. And some -- as Shantanu mentioned also a couple of our competitors also have announced price increases. And I think that would happen also because there are significant ForEx-related cost pressures. So that -- we expect that the trend will continue. So more of the competitors would announce cost increases and price increases and then the volume could -- [indiscernible] a negative response get reversed for the price increases we have taken so far.
Yes.
Okay. And any other categories where you've taken price hikes?
Yes. I mean that's an ongoing process and it tends to be a couple of points because the reality is that commodity cost for next year's cost affects everything. Maybe lighting proportionately more, but that's what -- we will grow our value higher than our volume. And we will cover the cost increases with a little bit of pricing, a little bit of mix and a little bit of cost reduction projects. And that is what has been playing out in most of our business for quite some time and continues to play out in ECD. It has been seen that in Lighting, in this near term, that incremental cost and the pricing at the same time was for, a point in time, creating this extreme volatility. Because even -- it should not take, for example, ForEx. Now -- and this is not just for us, but in the industry, LED has about 45-ish percent, 35% to 40% imported components, dollar-based. And the dollar has got from 65 to 75. So that's the real cost everyone has to cover. And ultimately, it's done by reducing other costs and some price hikes.
Okay. And sir another kind of like you're getting more and more insourcing now in the LED side. You are doing some other categories also, do you see that this insourcing trend can pick up and as you know, maybe, for example, in Fans, you're having more control on the paint shops or something. So if you can just give more depth, insourcing versus outsourcing, how you balance out in the longer term. That's what I...
We're in the process of doing a more long-term study on which we will take some basic decisions. And obviously share them at appropriate time. But up until now we have not taken any decision. Lighting, you must remember that all our categories over the last 2 years, Lighting has been the most dynamic. It has grown the fastest, brought up the chain the fastest. Not long ago, a bulb cost INR 300, now it costs INR 70 for the consumer to buy. So in Lighting, yes, insourcing brings us cost benefit but that is not the primary driver for Lighting insourcing. The primary driver is really to improve quality and customer service. The second thing you want to realize in Lighting is we already have the asset because we were making non-LED traditional CFL lights. So it's also a matter of, in the case of lighting, the asset utilization because you're not having to build new factories, we're really just replacing CFL capacity with LED capacity.
Next question is from the line of [ Venal Sheik ] from BNP Securities.
My question is regarding the Fan segment. So over the last few quarters, you have been focusing on the mass premium segment, that is a INR 2,000 to INR 2,500 range. So what would be the share of that segment in the overall Fan sales right now for us, sir?
We have to check the perfect number for a second and get back, right. But this is key one, let me -- while they're checking the number, let me tell you that this segment is significantly larger than the INR 2,500 plus segment, right. That's the way the segment [ made ] it. The other one is that's where you -- I don't think I mentioned this in my opening comments, but the other thing, which is happening on Fans is one big chunk of growth is coming from INR 2,000 to INR 2,500, where most of the new products are. But we are also seeing a lot of growth due to our investment in driving deeper distribution in the sub-eco and eco segment. This is also growing -- grow this quarter in excess of 20%, right. So it's really about new product innovation, advertising at this mass premium then driving deeper distribution at the bottom of the market.
Sure, sure. And sir, what was the market share for Fans segment?
Market share for Fans, if you look at it retail order-wise, it's about 25% to 26%, somewhere in that range. So we continue to creep up market share. Admittedly, we're not growing market share as fast as we were growing 18 months ago, but we estimate that the market is growing maybe at about 6% to 7% on a steady-state basis and quite optimally. So it's growing our market share, but not as fast as we want.
Next question is from the line of Nilesh Bhaiya from Macquarie.
This is Inderjeet here. My question is on this new category especially the water heater that you mentioned and for various products had been launched. Can you talk about what kind of impact you intend to make in the first year, and what kind of aspiration we have? And how quickly you can get to see a credible #3 player, #4 player? And it translates into what kind of revenue size?
I think our -- the range of heaters which we used to sell was, I think -- was something which we have launched many, many years ago. So I think the 10 -- 12 watts. Second there were some specific problem gaps especially in the five-star entry-level segment we had no offerings. So what we have done so far is revamp the entire range and fill the gap. So the product we spoke about Amica, Gemma, Solarium Neo is basically, one, refreshes the existing range, and second, bridging the critical gap, which is a five-star entry-level range. We have launched this towards the tail end of the last quarter, and some are still being introduced in the coming quarter. So as we grew our Geyser business by roughly 20% in the last quarter, we hope the business, because of these new ranges, will continue to have strong growth in the quarters ahead. In terms of the time frame to reach a #2, #3 is very difficult to predict. But in market of electrical water heaters, it's roughly INR 2,000 crores, INR 2,500 crores. So I think there is -- even with a 10%, 12% share, I think there is still a significant upside for us in the next few quarters.
So the effect of this and I have -- we don't want to talk about it too much because this winter is really the first critical winter. And we can talk much more about it with more data by -- in our next quarter call. But if this program works, it will not be insignificant.
Okay, just one -- an extension of that. In every category you talked about bringing in a differentiated product. So is there that kind of a flagship differentiated product in the geyser segment we had -- you have launched or about to be launched?
Here, geyser segment, as we mentioned, we have 3 things we wanted to do in the short term, one, a complete range refresh. Because our existing range was dated, it was many, many years old. So a refresh of the existing range was number one. Number two is it must be -- the biggest gap that we have, which is entry-level five-star, that is what we have done so far in the last quarter. We continue to do it in the current month. Going forward, of course, is to create a differentiated offering, which is also in progress. The exact timing of which, we cannot mention for obvious reasons, but that's also something which is in the works.
So the idea of having a flagship differentiated product is a key element of the strategy.
Next question is from the line of Praveen Sahay from Edelweiss.
Sir, in the ECD business, you had given a good growth. But if I look at other competition, they have given flagship business growth as compared in the past, so can you give some sense like from where they are getting enough -- really as strong as compared to the us?
I think better to ask them. And I guess you are not talking about anyone else apart from Havells, right, because we've got, for example, we've got all the numbers and their growth was significantly lower than ours. [ The upside ] in pumps was also significantly lower and I have not seen any other numbers. But out there, these are because in -- I cannot -- you probably have more information than me. I can only relate to what they talk about in their public comments. But one of the comments they made was to do with the fact that it was off the lower base of the previous year. In fact, here obviously, I have no understanding or details. All I can say is our business is growing, continuing to grow at an accelerating rate over time and quarters. Do we have opportunities to drive even more growth by framework, by geography? Of course, we have. And we're continuing to work there.
Okay, okay. Even in the last 4 quarters, not this quarter, even in the last 4 quarters -- I'll take this number, we'll discuss detail in off-line I suppose, sir. And sir, one more question, can you give some your CapEx plan for '19 and '20.
While we are looking at initiatives like what more could we make in-house, overall CapEx for rest of the year this year and next year will be all around 25, 50 crores.
Next question is from the line of Rahul Ranade from Goldman Sachs.
Just another question on the GTM, just get a sense of the degree of progress on that and what kind of disruption are you seeing in the business, if any?
Okay. Like I said, if I look at it on a national basis, and if I keep out Lighting because I believe the challenges in lighting right now really had nothing to do with distribution, et cetera, and I look at ECD, our growth trends are continuing to accelerate over time. So on an aggregate national basis, it's difficult to -- we're managing it in a way so there is no big disruption nationally. Like I said earlier, this is executed town-by-town, literally. And in our particular town, where you try to bring in price stability, et cetera, for that town, typically, it is about a 2- to 3-month period before we see business picking up. We saw that when we first did lighting in the south. As we continue to see that is roughly the amount of time it takes. But like we've always said, we're managing this pragmatically. We're managing it so that we continue to build on the receiver business while we add on stronger distribution business. And on a national basis, as long as our growth continues to accelerate, we think that it is coming -- being managed fine.
Sure, sure. So right now, I think we are, sir, we first started with the western part of the country and now have ventured into the north. So I kind of remember you saying that, in the last call, that in the north there's more wholesale-dominated and it could be a little bit of a challenge vis-a-vis the west. So any -- yes, yes?
So again, we're seeing progress in the north and again, north also that splits up. For example, in Delhi and NCR, which is a little more developed, we are seeing much more growth coming back quicker. By the time we went to areas of Eastern UP, which has more plants, it takes a little more time. So it varies, but the general principle, let's say, in ordering through, which is in a particular town, when you begin to make the changes, you'll see starting the positive in that town after about 3 months on an average.
Okay, okay. And are new products -- like suppose for geysers, are they introduced directly in the new kind of a distribution network or is it kind of then...
Again, I just want to clarify, right. We always had dealers. Some of the dealers were retailers. Some of them were wholesalers and some of them were distributors. We are continuing to work with the wholesalers and large retailers. What we are doing is these people who are distributors, we are improving their distribution capability. We're making sure they've got more salesmen who are better trained. We're making sure that they're using data to make their choices. We're making sure they have rigorous, big plants. So obviously, when we do anything, be it geysers or a new plant initiative, it goes to everyone. But in each of them, each of these channels plays a different role.
[Operator Instructions] We'll take the next question from the line of Ashish Jain from Morgan Stanley.
So my question, for the insulate fixture business within Lighting. Correct me if I'm wrong, I think fixture account probably 60% of the Lighting revenues. So what are the trends we are seeing on that front both from cost and more importantly from pricing perspective?
Ashish, fixture is -- fixture are the bigger part of the Lighting business, but again the volume growth having very strong in, really, fixtures, more in B2C and B2B because -- and B2B is primarily battens and panels and B2B is pretty much everything. Ashish, as Shantanu mentioned already, the kind of price -- cost pressures which we found and pricing pressure are there in CFL as well. In fact, it's only LED bulbs where we feel the pricing pressure abated in both the B2B...
[indiscernible] some more price will [ adjust ]...
Yes. Because you have to be -- the patents, which you should sell at INR 400 in about a year, 1.5 years max is now down to INR 200 or even lower. These lighting prices have crashed to almost 25% over the last 1 year. So I think that's why the pressure has continued in fixtures, and we think it will continue for some more time. Only in bulbs we are seeing the pressures abated actually.
Next question is from the line of Abhineet Anand from SBICAP Securities.
Just wanted to know what have been the Fan growth in terms of value and volume for 1H or quarter, whatever is possible.
Again, we don't give exact numbers for our subcategories but let me say that our Fans have been a key part of the total ECD growth. And number two, Fans have delivered a positive mix, value growth is ahead of volume growth.
Okay. But you did mention that within the INR 2,000, INR 2,500 range, the growth was -- you came out on 30%-plus, right?
Yes, that's right.
Okay. And if you say that the market in Fans have grown by 6% to 7% and we have gained market sales. So at least 200, 300 basis points higher than that would have grown. Is it a fair assessment?
I would not make that math, right, because market share exact figures of our retail share tends to be flatter and more long term. So I would be wary of saying 200 basis points or 300 basis points so that leave us a gap. We are growing share. We are not growing share as fast as we were 18 months ago when we just introduced anti-dust and we, for the first time, started driving premium.
Next question is from the line of Ansuman Deb from ICICI securities.
I want to understand about the agri pumps businesses and that you are also seeing signs of improvement, and if you could share some number on agri pumps, that would be great.
[indiscernible] agri pumps.
Agri pumps. I think agri pumps ...
Yield -- value, value.
Agri pumps for this quarter had about a 60% value growth. It's still a smaller segment of ours. But like we've always said, it's an important segment for the future because that's a shared development opportunity. And a lot of our key competition in pumps actually has a bigger business in agri. And I think, at least, I mean, this is my own hypothesis and I'm looking at some of the pumps competitor numbers, I think what seems to be happening is we are winning in the agri segment. And that's reflecting in both our higher growth and the fact that their growth tends to be lower than ours but that's just my hypothesis.
That's very helpful, sir. And one -- another question I had, you mentioned our Fan share of around 25% to 26%. If I'm not wrong, it used to be around 27-odd percent, so we are gaining market share, right?
Yes, we are gaining market share and the reason you might have the different number was because in the past when you quote share, we used to quote the company primary sales divided by the industry number. But our standard is now we talk about the retail order share. So it's actually the production share coming from retail audit third-party vendor.
Next question is from the line of Harshit Kapadia from Elara Capital.
I just wanted clarification. You had mentioned at the start that the new products in Fan segment grew by 35%? Or was the share of the new product segment was 35%?
No. I -- what I -- just to clarify, there is this key, let me call it, mass premium segment, which is really a segment, which is right between 1,900 and 2,500. This segment in total was where we had introduced a number of new products, including Air 360. This segment, for the quarter, grew 35%.
Okay. And sir, during the last meeting you had mentioned that you are planning to launch a few more products in the H2. So are we on track in the Fans segment for that? Are we...
Yes, yes, because when we move it -- and again, that's another part of continuing to deliver on time as we move into the season because obviously it still was a critical part of Fans. That is when we start ramping up our Fans, marketing support, the advertising, the new product introductions in different segments.
So generally, sir, what are the net trend of new product as a percentage of revenue for you over, let's say, this year or last year, if you can mention.
I'd be hesitant to mention that because it's all about the definition of new product. You mean something, which was not sold 12 months ago, 24 months ago, et cetera. But new items, which are coming in, the -- I mean, like in Lighting, for example, nearly everything that we sell today was not sold 12 months ago. If I take pumps, Crest Mini was not sold 12 months ago. And that's a critical driver, plus a number of other ones. It also is a [ widening ] context as opposed to just one number.
Okay. Because your trend has been that new product introduction in each of the category has been in the range of 25% to 35%, between those categories that you have. So that's just a little bit different on that.
Yes, so our focus obviously is to accelerate that.
Okay. And then just last question, could you share your Lighting break up in number of LED line of fixture for this quarter?
82% is LED, and probably 18% non-LED. Fixtures, I think would be 2/3. Fixtures is 2/3 of our total business, yes.
Next question is from the line of Arnab Mitra from Crédit Suisse.
I have a follow-up question, so agri pumps is a segment, where I think you had started putting some effort a few years back and initially have not delivered the required results. So if you could highlight what are the challenges and what have you changed now which is giving this much faster growth in that segment.
Okay. First, I would just like to confirm that it is still early days. So I think it's much too early to declare that everything is working in agri pumps, okay, first. The trends are looking good without a doubt. The 2 key areas of -- or let me say, 3 key areas: area number one was get the right product, get the right competitive products, which meets the need of the agri consumer because they are slightly different, at the right price. Area number two, and this is what has taken us time to work is where we're going with the program, you need to make sure that you've got a dealer or distributor network, which grows deeper because the agri pumps business is much deeper. It's not a big city business, right. So it's the dealer, it's the service network. It's everything which you need. That is what has -- takes a lot of time and investment. Our approach, like I said right in the beginning, was to learn on this by going state-by-state. And that is how we're continuing to do it, as opposed to trying to do this all at once, go nationally. So those are the key things which we've been doing. It's beginning to look positive but, of course, it's early days. So I would not, in any way, say, okay we have sold it, everything is perfect.
Right. So there's nothing you have -- systematically different you've done in the last one quarter to see this 60% kind of growth? In the time of...
No, there have been some differences and also importantly what's happening is our ability to actually learn who is the right distributor, which is the right geography, et cetera, seems to be all coming together. Because you need all these 3 things to kind of work together have the product but not the network, so indeed there's not much use, and vice versa.
Next question is from the line of Aditya Bhartia from Investec.
Sir, our tables have been going down over the last few years -- in last few quarters. But do you think that the payments -- are we getting discounts from vendors, which in turn is boosting margins to a certain extent?
I mean, our payments whatever you see created a value is more in line with the seasonality. But yes, we have moved our surplus cash of about -- what we have about INR 200-odd crores to pay these vendors early, and get some discount. So that is definitely embedded in the performance.
And so this quarter, we -- in first half, we've seen borrowings declining but other financial liabilities have risen sharply. Is this on account of current portion of long-term borrowing, which is being shown under other financial liabilities?
That's correct. Because we have about INR 300 crores of debentures, which are due for repayment next year. And because that has now become less than 1 year liability and has been reclassified into the current liability portfolio. That's the reason.
Thank you. And ladies and gentlemen, that seems to be the last question for today. I would now like to hand the conference over to the management for their closing comments.
Thank you. As always, appreciate you all dialing in. Our intention is to, as transparently as we can, share everything with you folks. If you have any more questions and any more details which we weren't able to get to because of lack of time, please feel free, you can call back Yeshwant. And we are more than happy to get into as much details as anyone of you may wish to. Thank you, and appreciate your support.
Thank you so much.
Thank you very much. Ladies and gentlemen, on behalf of Edelweiss Broking Limited, we conclude this conference. Thank you all for joining, and you may disconnect your lines now.