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Ladies and gentlemen, welcome to the Q2 FY '22 Results Conference Call of Crompton Greaves Consumer Electrical Limited, hosted by Emkay Global Financial Services. [Operator Instructions] Please note that this conference is being recorded. I would now like to hand the conference over to Mr. Naval Seth from Emkay Global Financial Services. Thank you, and over to you, sir.
Thank you. Good morning, everyone. I would like to welcome the management and thank them for this opportunity. We have with us Mr. Shantanu Khosla, Managing Director; Mr. Mathew Job, Executive Director and CEO; Mr. Sandeep Batra, Chief Financial Officer; and Mr. Yeshwant Rege, Vice President, Strategy and Financial Planning. I shall now hand over the call to Mr. Khosla for his opening remarks. Over to you, sir.
Thank you. Thank you very much. Good morning, everyone. Thank you for dialing in, and welcome to our quarterly call. I hope you are all safe, healthy and doing well in these tough times. Health and safety of our employees continues to be our top priority. During the quarter, we organized and successfully conducted second dose vaccination drives for all our employees and family members across the country. With this, 77% of our employees are now fully vaccinated. We have also resumed our offices at 50% capacity only for fully vaccinated employees and are adopting a hybrid model. Overall revenue for the quarter on a stand-alone basis was up 16% versus a year ago. Growth over the pre-COVID Q2 full year '20 was 29%, representing a 2-year CAGR of 14%. We believe that growth over previous pre-COVID period is a good way at looking at the underlying demand scenario given the variations in the base year due to differences in COVID opening up, pent-up demand, recovery of supply chain that -- et cetera, that happened last year. Next, our revenue has grown robustly over the pre-COVID situation. Over the coming quarters also, we will continue to look at 2-year CAGR as a critical metric to give us a good picture on the real demand situation versus just simply quarter-on-quarter. ECD revenue grew at 18%. Within this, it's important to note that net of Pumps, ECD grew at 21%. Pumps grew a relatively slow at 8%. This was driven by the fact that we had a strong widespread monsoon, and historically, the pumps category has lower growth in years that the monsoon is plentiful. Fans growth was 17%, disproportionately driven by super premium fans at 40% and premium fans at 45%. In Appliances, the growth was broad based with geysers up 33%, mixer grinder 50% -- 56% and irons up 31%. Within a short span of time, our Appliances business has resumed its strong growth trajectory, demonstrating our previous investment in developing superior product portfolio is continuing to pay off well. Our Lighting revenue was up on a stand-alone base of 8%. However, within this, it's important to note that the key B2C LED business was up 19%. The key drag on the overall Lighting business continues to be essentially our B2G business, primarily EESL, which you are all aware, has declined significantly. Lighting EBIT margins have sequentially grown from 10% to 11.5% stand-alone this quarter. The sequential margin improvement is on account of high utilizations, improving operating leverage and our continued progress in cost-saving programs. As we've talked before, we continue to be confident of sustaining double-digit margins in this business going forward. Moving on to a few comments on market share. Again, to clarify, the market share, which I am reporting is retail offtake market share from RetailPulse, a third-party retail audit. As we keep expanding our product portfolio and market reach in the rolling 12 months, we have gained 2.7% of market share in the premium category on fans and 1.8% market share in the overall Fans business. Crompton is the only company to have gained market share in the past 12 months, which demonstrates the increasing acceptability of our fans and initiatives among the consumers. Our market share in Fans in August, which is our latest most recent data is at an all-time high levels, and we continue to build our lead in the Fans segment. We've also gained close to a point of market share in the water heater category with our wide range of geysers. In lighting LED bulbs, our market share also has increased to 9%, and our reach has further increased to 21%. We continue to innovate across our portfolio and drive our reach among consumers. Moving on to our margins. As we have talked before, we are in an extreme inflationary environment. Basic commodity costs have gone up significantly over the past few quarters at rates that the industry has never seen before. We have been focused, as we have talked, over the past few quarters in meeting this challenge. As we have said last quarter, we believe it's absolutely essential that we recover these costs at a gross margin level and don't let the structural profitability of the business erode. Erosion of the structural profitability is -- would have created a long-term challenge for the business. We have continuously been addressing these through: one, aggressive cost savings via our long-standing UNNATI program, where we saved about INR 48 crores this quarter; two, continued focus on premiumization where this quarter, our premium fans business grew 45%; and finally, price increase. We have also worked to use our cash to book advanced contracts on commodities to ensure that we would protect ourselves from future inflation. All these steps have enabled us to recover our gross margin. As the top line has recovered post opening up after COVID this quarter, these margin improvements at the gross margin level has flown down to the bottom line. Cost inflation is still not behind us and we continue to work these areas, but I'm confident that with our strategic approach to manage this challenging environment, we believe that these margins continue to be sustainable. On working capital, during the quarter, we witnessed a reduction in working capital as compared to the previous quarter. In Q2 FY '22, on back of production inventory rationalization, focus on collections, we could reduce INR 153 crores of working capital. However, we continue to have higher-than-normal working capital driven by: one, advances mentioned earlier that we have paid for securing materials at lower commodity rates; and two, production that we continue to maintain to cater to market demand and opportunities. We do expect this working capital to continuously reduce over the next quarter or so. Our cash position stands at INR 1,186 crores on a stand-alone basis as of this quarter. We have maintained a healthy balance sheet and cash position, which we believe in times like these will help us stand relatively better off than a lot of our competitors. We are best placed to tide over any future uncertainty and aggressively ramp up as per market demands and continue to invest in the long-term development of our business. On operations, our manufacturing and operations at all our factories, Vadodara, Baddi, Kundaim, Bethora, Ahmednagar, continue to function smoothly, norms of safety laid out by the government and social distancing continue to be strictly adhered to in all our premises. Our light distribution network, warehouses continue to function smoothly. Our focus over this period has continued on our key long-term strategic choices. On our go-to-market initiatives, we continue on focusing on superior partnerships with our trade partners, and our key measure of this relationship is percentage of regularly better dealers, and this continues to increase quarter-on-quarter. We focus on improving reach. Our efforts are visible in improved reach. Our rolling 12 months up till August, our overall Fans portfolio reach has increased by 7%. Secondary sales tracking is a critical part of the information we are gathering, which helps us improve our program effectiveness. We are now tracking 83% of all our secondary sales. We continue to focus on alternate channels and have made significant investments in both our rural and e-commerce channels, which continue to deliver outstanding results. Our rural business over this quarter grew 196% over last year and also had a sequential growth of 62% over the previous quarter. E-commerce has continued robust growth on an upward trajectory, growing at 35%. Driving premiumization was one of the critical areas, which we identified some years ago to continue to strengthen our brand in the consumers' hearts and minds and also continue to strengthen the inherent profitability of our business. Our performance on our innovative new entries at this end has -- is delivering strong results. As mentioned earlier, our premium and decorative segment fans grew 44% and our super premium fans with key initiatives such as Silent Pro grew 40%. We have continued to invest in innovation focused on the consumer. We believe this is the key not only to the current, but also very importantly to the future. Our continued investments in R&D have enabled us to introduce consumer meaningful products, which has been a key part of our market share growth. We are continuing to ramp up this investment and are inaugurating a new R&D center in Mumbai with a staff of close to 100 people. In the last few months, we have launched a number of new initiatives across all our categories, fans, appliances, pumps and lighting, focused on better meeting consumer needs. Brand building, though has been impacted somewhat over the last year also driven by COVID, our commitment to invest in our long-term brand building remains intact. We continue to drive consumer meaningful engagements through above-the-line and below-the-line activity. Our investment in advertising and promotion for this quarter stood at INR 18 crores. As we look forward, we do need to recognize that though the business has clearly improved, the business has grown significantly over pre-COVID periods and margins are back to the level they have historically been in spite of the huge inflationary pressure. We still face uncertainty looking forward. While we all hope and pray that COVID is largely behind us, we cannot yet be certain. We continue to take precautions among our people and our stakeholders. So COVID moving forward remains a level of uncertainty. While we have managed extremely well, we believe the inflationary pressures of cost, it needs to be clear. And we need to understand that looking forward, the commodity environment is still very uncertain and we need to keep this in mind as we think of the coming periods. However, we believe that our strategic approach and the execution of our plans to manage this better than most of the industry will stand us in good stead. With this, let me just quickly take you through the numbers. The Board of Directors, at its meeting held on the 22nd of October, approved the quarterly results of the company. Total income for the quarter was INR 1,385 crores; ECD revenue stood at INR 1,096 crores; EBIT margins at 21%, sequentially improving by 340 basis points. Lighting revenues stood at INR 288 crores on a stand-alone basis. EBIT margin stood at 11.4% on a stand-alone basis. Materials margins were at 32%. Profit after tax for quarter 2 was INR 170 crores on a stand-alone basis and grew by 24% year-on-year. I would now like to stop and address any questions that you all may have. Thank you very much.
[Operator Instructions] We have the first question from the line of Nitin Arora from Axis Mutual Fund.
I have 1 question, which has 2 parts. So the first question is, despite a very, very significant commodity pressure in the first half, it looks like you had no commodity impact. So you're maintaining the gross margins at the same level. Can you highlight in detail how much would that mix contributed? How much your cost savings programs would have contributed? Why I'm asking this because if I look forward where you're guiding commodity pressure is still continuing, I'm just asking more from a relative perspective. Do you still believe that you can maintain these gross margins at the industry level? It looks company would still be maintaining these gross margins relatively compared to the other competitors? That's my first part of it. And second, if you can comment on the channel inventory because there were few calls, which happened recently and also on the commentary on the demand side because there's a lot of mixed commentary that the consumption is getting hit because of this high commodity inflation. So these 2 parts.
Okay. let me start with the second part. As I mentioned, we now have a very good tracking mechanism where we're tracking our secondary sales, so we actually have good data on what's happening on channel inventory. And our primary and secondary sales are very, very much in line. So we don't believe that there's any significant channel inventory build. On the demand scenario, like I mentioned, we think the best way of looking at the underlying demand is look at what are the 2-year CAGRs over the unaffected year. And like I mentioned, our 2-year CAGR is about 14% for the quarter. And we see that the current -- or obviously, it's very difficult to predict, that the overall demand scenario moving forward would -- should be able to provide a similar level of CAGR. Why we think it's important to look at this is because the base period month-to-month is different. For example, last year in the base period, there was pent-up demand, which came in September, October, November, which may or may not happen this year. So from a 2-year CAGR level, we think that this is a sustainable level of demand moving forward. In terms of your gross margin question, we do believe that our programs can maintain and sustain this levels of gross margin assuming there is no huge, sudden spike in the input levels higher than what has already once spiked, but they're just a normal kind of trend increase which we see. Again, the reasons are 3 and these we consistently followed. Our cost-saving program, which we've been running, we have accelerated some of those programs. And like I mentioned, in terms of quantification, that delivered INR 48 crores. Then of course, there's the mix, which has helped. And finally, we have taken pricing, as you're aware. I think it's important to note that these actions did not begin this quarter. These actions have actually been going on from about November last year, which is why if you look at our financials, you will see that at the gross margin level, we had largely recovered gross margin last quarter itself, but a lot of this recovery did not play down into the bottom line because of the reduced overall revenue due to the COVID lockdowns. And now as the revenue has come back, we are seeing that it's flowing down to the bottom line.
[Operator Instructions] The next question is from the line of Venugopal from Bernstein.
Just one question from me just to get a sense of how much of the revenue growth is actually driven by pricing. I know that you have so many different products that it might be tough to give a product by product sort of a view. But broadly across categories, if you could share us on a year-on-year basis compared to previous year second quarter. And If you want to give it from the pre-COVID quarter as well, it would be great. Just the reason I'm asking this is, given that there's been a pricing increase, I'm assuming volume growth would have been probably low single digits. So that's my assumption, but I think you can probably correct me on that. So -- and since you have had a fairly strong margin, I'm assuming that you decided to prioritize margins and the market could have probably taken more volumes, but you decided to sort of veer more towards the margin side of things of profitable growth. So that's why you could have got more volume growth, but you decided not to. So this is the broader query I just wanted to check. And hence, wanted to get an idea of what is the actual volume growth.
Okay. Let me first start, again, referencing on a 2-year basis because that's more a steady-state. Like I said, our revenue growth over Q2 full year '20 is close to 30%. Now if I look at this and look at it on that basis, slightly more than half of the growth -- of my position now versus that base would be volume and half would be value. As I look at versus the immediate FY '21 Q2, on a company basis, most of the growth is value. There is some volume growth, but most of the growth is value. However, as I unpeel this and not category by category, but as I unpeel this, we see that in the more premium part of the market, for example, premium fans, I have strong volume growth along with the value growth, i.e., the pricing growth. So what has happened is given these unprecedented pricing levels, we see that in the initial period of pricing, frankly, as one would expect, at the more premium end of the market, we have seen less impact on volumes. At the lower end of the market, during the initial period, the price elasticity has tended to be higher. This, again, is not surprising given the extent of the pricing. But as the new pricing even at the lower end of the market begins to settle down over time, we believe that more volume growth will also be restored there, which is why -- again, I want to be clear, which is why we believe it is not just a short term reason to work to recover gross margins, but it's an important long-term reason because healthy gross margin, and recall that -- please note I'm talking gross margin as opposed to PBT. Maintaining that is very important for our ability to continue to invest in the future. If you allow your gross margins to fall 5, 6, 7 points, it is very challenging to recover those gross margins again in the future, which is why we took this approach which we believe has resulted in strong balanced growth, which puts us in a good position as we think of the long term.
Thank you very much. The next question is from the line of Mayur Patel from IIFL AMC.
Yes. Congratulations for a very impressive set of performance. So sir, just want to understand about your new product strategy say, in the near term and medium term, if you can share anything, it would be helpful, either completely new verticals or any other new products planned in the pipeline.
Yes. Almost just to give you some numbers. I think, now roughly 10% of our sales actually come from products launched in the last 1 year and roughly 55% of our sales come from products launched in the last 3 years. And these numbers, both the 1-year funnel and the 3-year funnel, have been improving over time. So if I look at this, the first year revenue as a contribution of sales, a year -- a couple of years ago, it was close to 5%. That has come up to 10%. So in our existing businesses, obviously, we continue to bring to market innovative products. So be it in the water heater range, in appliances and in the mixer grinder range, we have had a fair number of launches in this period. In fans as well, especially in the premium end of the market, we have continued to bring new products to the market, which is also one of the reasons why we have been able to drive the 40% to 45% growth in fans, in mixers grinder and also in water heaters. Also, there are other, as we mentioned the last time, we are looking at some completely new categories and hope to bring some exciting propositions to market in the short term. Yes.
So sir, is it fair to assume that with this...
Mr. Patel, I am sorry to interrupt you. Please come back in the queue. [Operator Instructions] The next question is from the line of Charanjit Singh from DSP Mutual Fund.
Congratulations on great set of numbers. So I have 2 questions. One, in terms of the end markets, now real estate cycle is looking up. So from each of the product category's perspective, if you can touch upon the growth rates, which you can see over the next 2 to 3 years. And secondly, in terms of our cost-saving initiatives, we have achieved maybe 70%, 80%, if you can quantify that, where we are in that journey. Yes. Those are the 2 questions from my side.
Okay. On the first point, obviously, I won't make forward-looking statements on growth expectations, but recovery of sectors such as real estate, recovery and strengthening of things like infrastructure investment, et cetera, all are potential tailwinds, right, which reflect pretty much on all our categories in terms of tailwinds. So that is a positive as and when that happens. The second, cost -- the second question was on cost. We don't think of our cost reduction on the basis of we're 60% complete, we're 70% complete, we're 90% complete. I think I had mentioned this before. We have now been driving cost reduction and efficiency improvements for the last 5 years, 6 years. So it's an ongoing journey. We expect that we have to keep driving 1 to 2 points of cost and efficiency improvement every year from here to eternity. This is very critical for any well-run company because these cost reductions and efficiency improvements is what enables us to invest in business growth. And of course, when you have challenges like commodity spike, minimize the price increase you have to do it. So we don't think of it as a finite program at all, but an ongoing every year, let's get new ideas and do new things.
[Operator Instructions] The next question is from the line of Renu Baid from IIFL.
Congratulations for the strong performance. My question essentially is, first, to understand the company's strategy in terms of the -- the planned strategy for a slight change in the manufacturing mix. So what is the approach for various segments which you already have, whether it's fans, appliances, lighting? Is there any level of manufacturing mix that we have in mind over the next 4 years across these segments and the quantum of CapEx, which is planned? And second is now that we are hearing one of your -- as in you filed from the parentage, which was that CG is launching -- entering into appliances and fans business. So how does the company plan to mitigate the potential risk with respect to brand confusion, which could be there in the minds of consumers or the channel? Though technically, the brand and the logos are different, but there would be a bit of confusion which could be there. These are the 2 questions from my end.
Okay. Let me talk the first and then Mathew can talk the second. Okay. We are currently developing our mid- and long-term sourcing plan. It is in the process of finalization. To be clear, what we are -- our criteria are superior quality, better service, lower cost and greater agility. These are the criteria which we are applying to select the optimal scenario. Will this result in some potential simplification and consolidation, it may, but we have not yet finalized. On the second one, which is CG, I'll let Mathew talk to that.
Yes. Yes, you're right. I mean CG has, of course, launched pumps some time back and currently launching fans. Obviously, you're right. I think there is some potential confusion because of the brand. However, what -- of course, what we are doing is like we have been articulating before, we have been running a consistent program to strengthen our Crompton brand by bringing to market, one, innovative propositions; and then building our brand through these differentiated proposition. That's something, which we have been doing for 5 years and which we continue -- and we will continue to going forward. Of course, in parallel, we are doing our work to figure out what kind of potential confusion exists in the market and taking steps at all levels, be it through our above-the-line communication, be it through communication in-store and all other means available to ensure that any potential confusion is minimized. So we feel confident with the quality of plans that we have that we should be able to get over this without too much of an issue. That's our point on this.
And the only last thing I'd mention, Renu, is at the consumer level, CG is not known. Crompton is known at the consumer level. I'm not talking the trade level. In fact, we need to recall that the Crompton brand of fans has been around for 70, 80 years and it was only called CG when it was rebranded about -- for about a period of 4 to 5 years and then went back again under our stewardship to Crompton. So from a consumer point of view, Crompton is the brand, which the consumer knows. Obviously, like Mathew said, we will make sure that we significantly focus and continue to invest on our innovation and our brands and develop the appropriate customer education programs to ensure that, at the store, confusion is minimized.
Your next question is from the line of Ravi Swaminathan from Spark Capital.
Most of my questions have been answered. So anything on acquisitions, which are there on cards in the near term? Any category that we are looking at over the next 6 to 12 months?
Like we've talked before, we are -- it's almost a constant process for us and have been for some years to evaluate opportunities. Our criteria for evaluation of opportunities remains the same. First, most importantly, it has to be a strategic fit, which we believe is value accretive, i.e., 1 plus 1 can become greater than 2. Second, once we believe it's a strategic fit and 1 plus 1 is greater than 2, obviously it has to be something which where the price makes value accretive sense to us as opposed to destroying value. We are -- and I've always been in ongoing discussions. Obviously, it's something that I can't talk anymore about, but the moment we have something which is appropriate to share, we will share it.
Any sense on the category at this side, will it be in the existing product categories or something that is very new one?
It could be in either.
The next question is from the line of Keyur Pandya from ICICI Prudential Life Insurance.
Congratulations on good set of results to the team. Sir, question is on Lighting. So just want to understand if you can break it up Lighting into B2B, B2C because B2C is witnessing good growth while B2B still sluggish. I just want to understand what is on annual basis breakup because quarterly aberrations can be there? And do they differ in terms of profitability or ROC?
Yes. So like we mentioned, our B2C growth has been improving over the last few quarters. If I look at quarter 2, our B2C has grown by roughly 15% and B2C LED has grown even faster at close to 20%. You're right, B2B growth is slower. And there again, I would like to split into B2B excluding -- and B2B into nongovernment and government. So the governmental orders, which are primarily ESL and so on and so forth, have declined sharply over last year. But if I look at B2B, excluding B2G, we have low double-digit growth. But of course, it's still significantly slower than B2C. So we still see that it's going to take some time before the B2B growth will come back to normalized levels. But overall, if I look at B2C over the last 3 quarters, our growth has significantly accelerated, and that is the trajectory we would like to keep going forward.
Okay. And sir, there will be changes as we move from B2B to B2C?
Profitability -- in fact, I would say, profitability of Lighting total, as you have seen, has improved significantly over the last few quarters. We have a double-digit EBIT. In fact, of course, both B2C and B2B have improving profitability. Definitely, on B2C where we think the price erosion has been is mostly behind us. We see margins, which are -- gross margins which are very close to our top categories like fans and pumps. Yes.
The next question is from the line of Bhoomika from DAM Capital.
Yes. Just wanted to understand the color on the demand a little deeper. If you look at it, if you could just comment in terms of how is the geographical mix. And now that things are normalizing, but last year we have seen rural growing very fast, e-commerce growing very fast, which is continuing. But seeing the normalizing, are we seeing more off-line kind of stores doing much better and in terms of rural urban mix, if you can kind of highlight? The second part is in terms of as we take price hikes and the industry takes price hike, as you mentioned, while premium is not really yet seeing an impact, but do you see a risk of down-trading as we move ahead?
In terms of the -- let's talk about the urban/rural thing we have been talking about. For us, because what we talk as rural or rurban basically towns of population between 20,000 and 100,000. So it is really not that rural in strict terms. And we turn our moves to gain direct access to rural only about 18, 24 months ago. So that is why we continue to see robust growth. Like Shantanu mentioned, the growth in the quarter was 16% on Rural. And so e-com as well, e-com is a category in which we are developing our capabilities. And I think that one of the reasons we have been -- in the last year, for example, in e-com, we registered nearly 2x growth and we saw that in this quarter, again, [ 50%, 60% ] growth in e-com. So in terms of rural-urban split, I would say we are not really that impacted because in rurban, we are still only gaining access. I think we have only covered even now 25% of the total number of towns in the population bracket of 20,000 to 100,000. So urban-rural, I think there is -- for us, we are not really affected because there is still a lot of runway for growth in rural.
The second question.
What was the second part of your question?
Sir, on the impact of price hikes in industry, which you...
I mean, like Shantanu said, in the premium end of the market, we have seen good volume and value growth. And the pressure has more been in volumes in the entry level. And so we -- from this, we have not seen any significant down-trading of people in the premium and slipping down to middle or to entry level. In fact, I would say that entry level, volumes are a bigger pressure because obviously we think that people are more price sensitive there. And there could be some level of down-trading within the low end, but I don't, we have not seen any significant move of people from premium or to lower, which is why you see that in the premium end 45%, 50% growth. This is one of the highest levels of growth we have had in the recent quarters.
Okay. And sir, just one thing on unorganized, are we continuing to see gains from unorganized or smaller organized players that we've seen in the past?
See, in quarter -- till about quarter 2 of last year or early quarter 3, there was significant supply disruption to the smaller players. I would not necessarily call them unorganized, but players who are 0.5%, 1% share, they had supply disruption till quarter 3, but that has gone away. So I don't see the kind of marked gains that we saw last year from the small players happening now. I think it's from across -- all the -- across different segments of players that we're seeing share gain now.
The next question is from the line of Siddhartha Bera from Nomura.
So my first question is basically on this new R&D center we have just inaugurated. Will it be possible to throw some light on what are the products we are probably working on with either, say, coming to market in the next few quarters? So some color on that. And are we doing anything on the Lighting side also because I mean if I just look at the B2C Lighting growth, it is still, I would say, probably slightly on the lower side than what some peers have done. So basically, what are the further areas where you think our products can lead to a slightly stronger growth from what we are seeing currently?
Obviously, I can't talk about specific products that they're working on, right? But suffice to say that they are working on all our existing categories plus potential areas, which could bring in new technologies, which could be leveraged either in existing or in new categories. As I think I mentioned before, some of the focus areas are energy savings, materials, connectivity and IoT, right? So health and well-being. So these are some of the areas or vectors on which the work and the investment is happening. It definitely, like I said, includes all categories, so also includes lighting. In fact, we have just launched a really cool lighting innovation in panels called Star Lord where you can get different temperatures by changing the switch from the same fixture. It's not an IoT product, but it's obviously a significantly better value. But by clicking the switch, you can move from warm white to cool white to daylight, et cetera, based on the needs, right? And that's an innovation, which has just gone into market and we believe it's going to strongly help our B2C Lighting business. So I think that's about all I can talk about it. I can't -- obviously, I'm sorry, but I can't talk specific product ideas they're working on.
Okay. Sir. And will it be possible to share the market share in the mixer and heater currently as of quarter 2?
Yes. Mixer grinder is still low single-digit share. Our estimate of our share in water heater is roughly 15%.
The next question is from the line of Praveen Sahay from Edelweiss Financial.
[indiscernible]
Sorry, Praveen, you're breaking up. You are not very clear.
Am I audible, sir, now?
Yes, you are now.I cannot hear, Praveen, so maybe you can move to the next question if anyone has.
The next question is from the line of Achal Lohade from JM Financial.
My question is in terms of the distribution with respect to go-to-market, So is it possible to give some sense in terms of the reach and what kind of reach are we looking at over next 3 to 5 years in terms of the total universe? And where are we in terms of the Fans, Appliances and the Lighting business?
I just shared some historical numbers. And then for example, in Fans, 5 years ago, our reach was 40%. Today, it's at 65%. So we have roughly added half the number of outlets in the last 5 years based on what we had as a base 6 years ago. Similar in Lighting, we moved reach from around 10% to roughly 35%. But because 35% still means that 2/3 of the market is still left to be covered, and I'm talking really urban. So it's going to take time because this is not an overnight move. So -- but given the scale of the reach growth we have got, one more number I would like to say, for example, in 2015, we were the #3 most distributed fans brand. Today we have become the #1. In Lighting, we were #5 or #6, we have become #3 in terms of distribution. But that's a journey, an ongoing journey, which will take time. In Appliances, for example, we started first with water heaters. We had a low single-digit reach. Today, our reach is close to 25%. And that's also what helped us move our market position to #6, #7 to top 2. So -- but the runway is still ahead of us. Even now with only, I would say, roughly 25% reach, we have already reached #2 in water heaters. So we think that there is significant opportunity we can get by covering the rest of the counters over time.
Right. But any number target, anything we could look at in next 3 to 5 years?
For example, in Fans, like I mentioned, we moved from 40% to 65%. We would like to repeat the kind of reach expansion going forward. In many industries, the market leaders have more than 80% numeric reach and 95% to 98% weighted distribution. There's no reason why we should not be able to reach those levels first in urban. But if I talk about rurban, it's a long way behind. So it's going to take time to scale up those numbers in rurban. And there is still a lot of place behind below rurban because below 20,000, you still have plenty of hundreds of thousands of villages. So that's another opportunity area. So there's a lot more to be done to reach all these areas. So I think it's a logical progression that we are making.
The next question is from the line of Rakesh Roy from Indsec Securities.
My first question regarding, sir, how much market share we have in Fans, sir?
Roughly 27% as per market pulse, which is a third-party agency.
In economy and premium segments, sir?
Very difficult to break up as you get into these segments. In fact, I would say my share in premium is higher than overall, but that is because there are fewer players in premium. So it doesn't really make sense to look at it that way. And also the data becomes less accurate as we start subsegmenting it into smaller and smaller levels. So very difficult to say those with any level of accuracy.
All right. Sir, my second question regarding, sir, how much price hike we have taken in Q2, sir, overall?
It depends on product category to product category. But I would say roughly 3% to 4%.
The next question is from the line of Ankit Babel from Subhkam Ventures.
One question. Sir, was there any no-compete agreement with the CG Power for the switchgear product?
Yes.
So is it still continuing or it's ended?
No, it just keep -- if we continue with the Crompton brand, we cannot enter this year.
So this is for eternity?
Yes. This is for eternity.
The next question is from the line of Sonali Salgaonkar from Jefferies India.
Sir, if you could quantify the YTD price hikes and how many rounds of price hikes you have taken? And also the second part of the question is what is the current demand scenario that you are witnessing especially in the festive uptake and also the inventory situation? That's it, sir.
Let me answer the second and third part, okay? In terms of the demand scenario, like I said, in our judgment, the best way of looking at the underlying demand scenario is to look at what is a 2-year CAGR versus the pre-COVID period as opposed to just looking at quarter-on-quarter because different months and different quarters were impacted last year in various ways. This quarter, we have had a 2-year CAGR of about 14%. The way we're seeing the demand scenario moving forward is unless something changes, and of course, there's an uncertainty in the forecast is that level of demand, which is a 2-year CAGR of 13%, 14%, 15% is -- should be sustainable over the coming quarter. In our business, we don't really have a huge festive spike because of the nature of our categories. There is some small amount of impact on small appliances. But otherwise, we don't really -- we have a summer seasonality, but not a festive spike. On pricing, with the other questions?
On price hike, we have taken roughly 6% to 7% price hike over the year so far being the 6 months from April onwards till now, 2 rounds of price hikes adding up to 6% to 7%.
And that includes the 3% to 4% in Q2.
Yes.
We will take our next question from the line of Hitesh from ICICIdirect.
Sir, my first question from the Pump segment. The segment had grown on a very slower pace. I know that, that has grown, but in a slow pace. Can you throw some light on the Pump segment. And from the Lighting segment, sir, the B2G segment, which is, we were expecting that would be largely driven by the street lighting segment from the government. So just wanted to know your view on the same, sir. These 2 questions from my side.
On -- let me start with the Lighting. B2G, yes, I think we have traditionally been very strong in street lighting. And as I mentioned, the B2G segment, especially EESL, which used to do a lot of the street lighting business, has pretty much -- has come down to almost 0 during the first 6 months. Of course, there has been a slowdown on the B2G in general. However, we have been very active especially in smart cities. That's an area where we have invested -- we've been building capabilities. So in smart cities, the better projects have come up, we have had a very good success rate. Of course, a lot of the execution of that will only happen in the future. That's one. In terms of Pumps, as Shantanu mentioned, of course, because of a very strong monsoon and lot of rain in certain parts of the country, there has been an overall slowdown in the Pumps business, especially in the East, where we are very strong, I think we have been disproportionately impacted. That is why Pumps is having a low -- a high single-digit growth. And I think this will be true for most of the industry players because there has been the data saying that there has been 30% to 40% slowdown in the manufacturing of pumps by many of the manufacturers. So let's wait and watch how this thing plays out. But in terms of share, I think in residential pumps, we have continued to grow our share over the last 6 months. Yes, that's it.
Thank you very much. So that was the last question for today. I now hand the conference over to the management for their closing comments. Over to you.
Thank you. Thank you all for your engagement. Thank you for your questions. As always, our objective in this is to try and provide transparent information to help your needs. If we have not been able to answer everything or if you have more questions, please, please feel free to contact us. No problem. We're happy to answer them. And as always, finally, please continue to take care, continue to get yourselves vaccinated and stay safe. Thank you very much.
Thank you.
Thank you very much. On behalf of Emkay Global Financial Services, that concludes this conference call. Thank you for joining us, and you may now disconnect your lines.
Thank you.