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Ladies and gentlemen, good day, and welcome to Crompton Greaves Consumer Electricals Q3 FY '18 Earnings Conference Call, hosted by Prabhudas Lilladher Pvt. Ltd. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Kunal Sheth from Prabhudas Lilladher Pvt. Ltd. Thank you, and over to you, sir.
Yes, thank you, Amann. I would like to welcome the management of Crompton Greaves Consumer Electricals on the call and would like to thank them for giving us this opportunity. From the management, we have Mr. Shantanu Khosla, Managing Director; Mr. Mathew Job, Chief Executive Officer; Mr. Sandeep Batra, Chief Financial Officer; and Mr. Yeshwant Rege, Vice President, Strategy and Planning. I would like -- I request the management to give us some opening remarks, then we'll open the floor for a Q&A. Over to you, sir.
Thank you. Good morning. This is Shantanu here in Bombay, and thank you all for joining the call. As usual, I'll try and provide some overall comments and perspective, and then we'll try and spend as much time taking your questions. First, as you're aware, the Board of Directors released our quarterly results yesterday evening. Total income for the quarter, at INR 938 crores, was a comparable revenue growth of 12.2. Just to remind you, comparable is exactly the same way we talked about the numbers trying to equalize for the GST changes and impacts as we have done last quarter in exactly the same way. Profit after tax, at INR 69.5 crores, was up by 27.9%, close to 28%. And our PAT margin increased from 6% in the year-ago quarter to 7.4% this quarter. From a segmental point of view. Our ECD segment had comparable revenue growth of 7.4%. And our Lighting business comparable revenue growth was close to 23%. Last quarter, definitely, we have seen things gradually settle down, both GST implementation and market conditions and the trade largely smoothening out. Our retail audit shares from a third-party retail audit. Our market shares on our core categories of Lighting and Fans continues to show healthy growth until the latest period, and the latest retail share audit data we have is up until November. Our key focus areas briefly, which we have been talking about quite consistently, continued to deliver strong results. As you're aware, a key part of our business strategy has been driving premium fans. For the quarter, premium fans grew at 28%. The salience of premium fans has now close to 20% of our total Fans business. Just to put this in perspective, when we made the strategic choice and we started driving this business about 2 years ago, we were kind of nonexistent in the premium fan segment, and it was only about 6% to 7% of our business. That's now grown to close to 20% of our business. And as we stand today, we are one of the leading premium fan players and not just market leader in total fans. Our second focus area, of course, has been LED lighting, where our LED business is now greater than 70% of our total Lighting business. And for the quarter, our LED business grew at close to 57%. Again, just to put this in a slightly longer-term perspective, when we made this choice and we put all our energy behind LED, believing that, that was the way of the future, again about 2 years ago, really, we were nonexistent, we were a real small player in lighting overall. Today, as we speak, based on the numbers we have seen, we are now the second-largest lighting company, as per reported results, after Philips. So really, in 2 years, we believe this strategy is really paying a strong dividend. Finally, of course, the third area was agro pumps, which also had a strong quarter. And our agro pumps business grew at 19% for the quarter.Now all that being said, we did face a couple of key challenges over the past -- this recent quarter on our ECD business while, clearly, our Lighting business has performed strongly as per expectations. In fact, we continue to grow share, and we believe we delivered market-leading growth levels. Our ECD total growth was subdued, driven specifically by 2 factors. The first is domestic pumps, where, as you -- as we've talked in the past, in this segment, we are actually leaders. However, what's happened is, over the recent period, we've faced a significant competitive pressure, especially in the North and the East, where we have strong leading positions due to the introduction of a number of mid-tier and lower-tier-priced pumps. What we have done is we have introduced a range of mid-priced pumps ourselves recently under the Crest Mini brand name. And we have been rolling this out across the nation over the last couple of months because we believe that that's the right thing to do given our leadership position. And though it's very early days, initial results are encouraging. But that's a step we believe we had to take given the competitive pressures on pumps over the last quarter or so. The second key area where we had challenge on our ECD business was at geysers business. In fact, geysers segment was one segment which, after a long time, it was actually a segment which had volume decline over the last quarter. And as you're aware, the last quarter was a critical quarter for the geysers business given the seasonality of the business. Here again, the reason really was 2. The first hand is that, without a doubt, there has been a significant enhancement in competitive intensity in the geyser business, and that has had its impact. And we think we probably, over this period, lost share in the geyser segment. The second is we have not been able to innovate as fast as we would have liked to do on the geyser business. So this is a segment -- again, unfortunately, it is a very seasonal segment, so it will take a little bit of time to really begin to restore growth here. But we have, we believe, strong plans moving forward as we begin to think about next year, both in terms of consumer meaningful innovation on our geyser segment and also driving greater channel penetration. But these are the 2 reasons which really led to a lower than we had hoped for growth on the ECD segment. Finally, as we look forward, we continue to obviously invest in our strategic choices. I would just like to talk and give you a little bit of update on progress on 2 of them, so I'm not really repetitive. First is we are continuing to invest in our go-to-market program. As you're aware, we talked in the past, we had very strong initial results when we first began this program on our Lighting business and have been in the process of expanding it. We currently are running programs in -- primarily in the Western region. The objective of these programs is really to work with, to develop high-capability, scaled-up distribution partners and leverage significant technology to improve our sales execution and our sales planning via the usage of real-time data. We have actually been partnering for the last few months with BCG to develop, and now we're in the execution phase of this program in a number of areas in Western India. This not only includes a complete transformation of distributor capability, greater scale and quality of our distributors, but importantly, it also involves a rollout of sales force automation, which will enable us, our sales force and our sales management to collect and work on real-time sales data, which has been one of the challenges in our industry. So that is going well. But like you're aware, these kind of go-to-market transformations do take some time. And as we're executing it, we're continuing to balance the risk of managing the trade through the transition, managing inventory through the transition, et cetera. But we're convinced it's the right thing to do, and we continue to get positive results as we keep executing these programs.The second key program which -- in this area is, we have now moved, as we had mentioned earlier, to begin to leverage the benefits of GST in our supply chain to develop a supply chain which is not only more efficient and cheaper but, importantly, is more responsive and delivers better customer service. We have partnered with the Future Supply Chain, the logistics arm of the Future Group, who have, in our opinion, a highly capable network of -- hub-and-spoke network of distribution hubs and some outstanding capability in automation. And we have implemented a program, starting with the North of India, which is going into market as we speak literally. We believe that leveraging this partnership, leveraging the scale of larger distribution hubs, which we can now do because of the GST implementation, leveraging the technology which our partner has available, will provide better service to our customers at a lower cost. So that's a second, if you will, transformative supply chain program which, currently, is in the process of execution. The rest of our strategies, obviously, and elements continue to deliver strong results, and we stay focused on them: consumer meaningful initiative which we invest behind, like LED, anti-dust, and obviously, for the summer season in France, we have more which we plan to do; and our extremely important cost-reduction program, which continues to deliver benefits, continues to help us generate funds to reinvest in our business and business growth. With that really, I'll stop talking and then just throw it open to any questions, and all of us here are happy to answer them to the best of our ability.
[Operator Instructions] The first question is from the line of Venugopal Garre from Bernstein.
When I look at the performance in the -- not just this quarter but the last 5, 6 quarters or so, you seem to have had a fairly steady revenue growth with margin expansion almost every quarter, quite contrary to peers despite the volatility in the market. But at this stage, from a strategy perspective, when you look at the next 12 months, 24 months, how do you actually sort of look at balancing revenue versus margin or to sort of deliver a certain growth rate on the revenue front? And number two, do you think that this is probably where you're reaching a stage where it is essential for you to sort of start seeding new product categories? It could be specific products or new categories altogether, things on which we have sort of -- you've referred to in the last couple of calls, too. But where are we on that stage of evaluation? That's my first question.
Okay, first, like we have said before, we would like to grow our top line faster than the market, and we would like to grow our bottom line at least as fast as top line. That is the way we see the balance coming out. Now clearly, if you look at our performance over the last 12 months, we've done better on our bottom line goal than our top line goal, right?
Yes.
Okay. So obviously, that is, to some extent, in the long-term rebalancing which we would believe needs to be done. And it's not a huge gap. You can look, given the couple of segments we talked about, the difference in total ECD growth versus the market. But the reality is, on where we measure, we are growing market share in -- which means that we are growing faster than the market in fans and lighting. There's a second point. I mentioned that in lighting, really, if you think about -- go back 2 years ago when we made this choice, we were hardly a player in lighting. We were #5, 6 or 7, pick whichever you want. And we have been able to change that and transform that and make ourselves from that position in about 24 months to the #2 player in lighting. Similarly, in premium fans, we really were not much of a player. And in 2 years, we're a leading player, not too far from being the #1 premium fan player. Our next task, we -- while we are working on new entries and new categories, we believe is that there are still a number of categories in which we are present, where our position is kind of what it used to be like in lighting or premium fans 2 years ago. The 2 first obvious ones are geysers and coolers. So the first priority for us -- and we are working on it, and we are at a level where we should be seeing, in both of these, interventions in the marketplace over the coming period. So our first task is to get from a #6, 7 or 8 position in geysers and coolers to at least a #2 position. This sort of also merges into questions you've asked about before on where does acquisitions and mergers, et cetera, play. If there is an acquisition, which is good value, available, which could help us accelerate this route to #2, of course, we'd be open to evaluate it. We did exactly that some months ago in one of these segments. But you cannot ever guarantee that there will be, A, an acquisition available; B, it will be something which we judge as good value. So we're independently working it internally, [ organically ]. The third thing -- question then is, what are the new categories or the adjacent categories? We are working those also. Those are critically important for -- over that -- especially if you look at a framework of the next 2 to 3 years, to continue to sustain growth levels once we have achieved the aspirations in geysers, coolers and our existing categories. And -- but we will launch when we know we have a proposition which has a right to succeed. And for us, right to succeed means that it has a right not just to be in the market as a #5, 6 or 7 player but to have a high probability of becoming at least a #2 player. Why do we believe that's important? Because as we look at the marketplace and the success rate across the industry, we believe most of the value is captured by the people who are #1 or #2, sometimes #3, in each of the subsegments. So that's all of our sequence and approach.
Sure, sir. My second question is a small one. ESOP expenses in this quarter, if you can just -- if you could just share that number?
ESOP expenses.
ESOP charge has been about INR 14 crores in this quarter, same as what it was in the first 2 quarters.
Yes, but last year, it was INR 8.5 crore. right, in the same December quarter? So just looking in Y-o-Y, yes.
Yes, last year was INR 8.5 crores if you look at the intrinsic value method of accounting. But this year, since we have moved to Ind AS, our charge this year is based on fair value. And we've also had to restate last year's results, particularly for ESOP expenses basis fair value. So last year, what was reported at INR 8.5 crores has become about INR 13 crores this year.
We have the next question from the line of Inderjeet Singh from Macquarie.
My question is somewhat related to what Venu was asking. Given our stated objective of trying to grow faster than the market, if I like -- look at the 2 key segments you talked about, the geysers and the coolers. Now geysers, clearly, we are towards the end of the seasonal cycle, so that leaves us only with coolers. Do you really think that with that one product, we can have growth rate much faster than the market for the next 12 months or so? And do you think -- because, again, even in the pump side, it might take time for us to kind of regain sort of market share. So where does that come or where does it leave us in terms of, if trying to put a ballpark number, can we achieve that goal in the next 12 months, in the coming 12 months?
To achieve that goal in the coming 12 months, we have to have strong initiatives in both coolers and geysers, i.e. the coming season on coolers and the season which follows on geysers. And that's how you'll have to balance it. So both of those segments will have to have a program which starts generating growth, and that is the basis on which we are developing our plans.
The right-to-succeed strategy, do you think we have that proposition kind of ready in the coolers business?
We believe we do. Obviously, final end-market success, this can never be guaranteed deliver to market, but we believe we do. We have done a reasonable amount to the extent you can premarket testing, et cetera. And we will also, like we do with all these initiatives, and show we have significant investment to drive both the distribution and the awareness.
Sure. If I can just squeeze in one more. Can you talk about what more can be done on the cost side? Or we've -- in the last -- most of the low-hanging fruits in the last 2 years have already been taken out in terms of cost side?
We -- costs -- and I think I mentioned this before. Cost reduction is not -- the way we look at it, it's not a onetime effort. Cost reduction is an ongoing program. You have to take costs out of your system forever and ever. For example, as we are working our cost program right now, we are not only working on projects which can help reduce our cost in the next quarter, but we're also working on projects which will take more time and may reduce our cost 18 months out, 24 months out. So there's always -- it's just ongoing work. Now this -- like I said before, the objective of cost is really to enable us to keep investing in the business. You can never stand still on it.
[Operator Instructions] We have the next question from the line of Bhargav Buddhadev from AMBIT Capital.
Sir, I've got 2 questions. Firstly, I just wanted to check that employee cost has sequentially gone up by 6%. So is there any sort of new lateral hires that we would have done this quarter?
Yes. Before Sandeep gives you the details on the numbers, again, like we talked before, as we -- since we developed this strategy and focus areas, et cetera, 2 years ago, part of that was identifying what are the key capability gaps which we'd need to continue to fill. And these could be filled from either internal capability or external capability. That process has been an ongoing program, and we've been continuing to add people, design people, for example, people with expertise in supply chain, people with expertise in purchase. So this is an ongoing process of capability enhancement, sales -- the people with sales capability, et cetera. So this is just an ongoing thing which has continuously been happening. And I said that Sandeep will talk about the exact numbers, right, but it's a strategically important thing, where we need a capability. For example, on -- if it's going to start doing consumer insight work and develop innovations which are based on consumer needs, then, of course, we need it to be for our design capability and [ it meets ] our design capability. Sandeep?
Yes, so there -- I mean, there is no major change in the underlying organizational structure. There would have been a few positions that have got added in the third quarter, which would explain why the costs are up by about INR 4-odd crores. And some of them, there are a few onetime charges here, namely some provisioning done for our sales incentive scheme, which varies from quarter-to-quarter, but nothing very significant.
We have the next question from the line of Snigdha Sharma from Axis Capital.
Can you tell us what was the volume and value growth in Lighting and Fans?
In Lighting, I can tell you the value growth. The like-to-like value growth in Lighting was 23%.
23%.
23%. And the volume growth?
30%.
The volume growth would have been about 30%, right? So there was -- so as has been happening in LED, there was a little bit of price erosion. In Fans, I -- we don't -- like you're aware, we don't break up our numbers specifically, but what I can tell you is a lot of the value growth was largely driven by volume growth. There was a slight -- a little bit of positive mix, which comes in as we increase the salience of…
Premium.
Premium. The second thing I can tell you is our Fans growth rates quarter-on-quarter is reasonably in line with the growth rates which we've had in the past quarters, ignoring the first quarter where it was negative because of GST -- because of the GST transition. But if I ignore that quarter -- the first quarter, and I go back about 4, 5 quarters, our Fans growth is kind of in line. It's about the same levels of growth.
We take the next question from the line of Gunjan Prithyani from JPMorgan.
I just needed a little bit more clarification on this ECD segment. Clearly, the overall revenue growth here is being masked by the degrowth that you've seen in the pumps and the geyser segment. But could you share some color on how we have actually -- I mean, I appreciate you can't give exact numbers, but how the market has grown and how much we would have gained in the Fans specifically? And secondly, does pumps now -- again, given there has been competition, how soon you think we'll be able to recoup the market share that we've lost in the recent past? I mean, how much time do we think that it will take for us to get back growth in these residential pumps?
Okay. First, just a small clarification, we have declined in geysers. In pumps, we've not actually declined. Our rates of growth have come down from what it was historically. Okay, secondly, on pumps, like I've mentioned, the primary reason we believe that rate of growth has slowed down in domestic pumps has been because of the competitive entry of lower-priced pumps. We have already taken action on this by introducing our own Crest Mini, which is competitive in price in those areas. That product is beginning -- in the process of rolling out to the marketplace as we speak. The initial areas where we rolled it out, we were getting strong positive results, i.e. growth was coming back, so I expect the pumps growth should restore reasonably quickly. The second, I think, was on -- I think it comes back to really the Fans question. I guess the -- here is the data we have, and the data I can share, okay? First, how is the market growing? Now the data I am quoting now is the data we get from our third-party retail audit company called RetailPulse, which is similar to the data Nielsen provides in other categories. This data indicates that year-to-date, over the past 12 months ending November, the market is flat. This data indicates that for the first 6 to 8 months of this past 12-month period, which starts from the demonetization time, the market was declining, but the market has begun to come back to where it was, therefore, the cumulative it's showing as flat. Hopefully, that means, moving forward, the market will continue to show at least its historical traditional growth of 6% to 8%. How have we done in this period? I guess, again, I'll just refer you back to the answer I gave for the previous question. This quarter, our Fans growth rates were in line with the growth rates we've had on Fans for the past 3, 4 quarters, except for first quarter of this year, when our Fans business actually declined, but that was the unique year -- quarter of GST implementation.
We have the next question from the line of Renu Baid from IIFL.
Just 2 quick questions from my end. A, are you more on the GTM strategy both with respect to the supply chain as well as distribution? How are you planning to do it in the ECD segment in terms of the phased pilot projects? And what could be the time lines and cost which would be associated with it? And second, sorry for harping back here on Fans in particular, but if we look, 28% in premium fans, it is approximately 20% of our sales mix. It's 5% incremental growth, which means, in this quarter, the growth in Fans would have been -- overall, as a segment, would still be in single digit for us. And when we compare with some of the other peers who have reported the results, they have been in high double digit. So you think market in this particular quarter would have grown much better than what you would have expected or they would have had market share gain from unorganized players? If you can help us understand a little bit whether it was some prebuy happening ahead of [ summer ], they have pushed inventory, or how have things been at our end? That's it, sir.
See, it's difficult, obviously, but I can't really comment on what competition may or may not have done, right? But in terms of our business, first, to be clear, our nonpremium fan business also grew, right? Please do not -- it's not that premium grew and nonpremium declined. No, that's not the case. Second, as we look forward, we definitely think that there will be a recovery of the fans market back to historical levels. As I've mentioned, I think, before, one of the things which determines long-term consumption of fans is housing starts because there is good past data to indicate a strong correlation between market and housing starts if you look on a sustained slightly longer-term period. Housing is still the unknown in the pack because though there may be some early green shoots, there's not yet clear data yet on when that's going to recover. But from our sense of the market, we think that the market growth is beginning to definitely go back to normal as we look ahead.
[ And kind of ] share in the quarter also, past.
And even if I look at our consumption share, the retail audit data, the fact that it is flagged for the past 12 months but was declining in the early part of the year, the consumption for the recent quarter is positive. It's not declining now.
We have the next question from the line of Venkatesh Balasubramaniam from Citi Research.
I had just one data question and one more general kind of a question. The data question was what -- how much did you spend on advertising in the current quarter? That is the first one.
[ Stick to one ].
[Operator Instructions]
That was INR 16 crores.
You spent INR 16 crores in the current quarter?
Yes.
Okay, any change in your -- the broader question, any change in your make-versus-buy strategy or from where you are sourcing your goods in terms of your factories in the new GST scenario? Once GST has been implemented, are you thinking about making any changes?
We are definitely scenario playing and evaluating because opportunities will arise. We have started with making the modifications like this tie-up with the Future Group; first, on the logistics end. But definitely, we are in the process of evaluating what is the right option or where the opportunities are because, obviously, those will have more longer-term opportunities, if at all.
[Operator Instructions] We have the next question from the line of Rohit Kadam from Credit Suisse.
Sir, on the input cost inflation, last quarter, you had mentioned seeing like a 25% kind of input cost inflation, and we had not taken any price hikes then. So any update on input cost trends or any pricing we've put in?
We -- I mean, last year -- last quarter, we didn't see 25% increase in...
On commodity...
Some commodities.
Some commodities may have been. But if we look at the overall basket of the raw materials that we buy, quarter-on-quarter, index is up 2% -- 2 percentage points. So let's say, if it was 100 in second quarter, it is now 102. We've always maintained that it is not possible to pass on the entire cost increase by way of price increases, and we have 3 levers to offset that, namely mix enrichment, cost reduction and then price increases. Having said that, we did take some price increases in Fans in the middle of November. That increase would have been about 1.5%, 2% on a -- on the basket of all the products.
We have the next question from the line of Pulkit Patni from Goldman Sachs.
Sir, I wanted to understand. You spoke about the fact that we probably did not have the right product in the geyser segment, which is why we lost on some of the market share. Can you please highlight, A, what changes would we have made since then; and secondly, what gives you confidence that as we get into the summer season, the same thing is unlikely to be repeated with the coolers segment. So some highlight on what measures have been taking there?
No, I think we've spoke about this maybe in the last quarterly call as well that -- in the last -- sort of last 1 year, we have been working with an external party to identify specific consumer concepts in both water heaters and coolers. So in -- for coolers, we're -- we are in the final stages of bringing that concept to market. We have spent the time in the last few months in adjusting the concept, and we feel now confident enough to bring it to the market in this selling season. So that is one on coolers. On geysers also, of course, a lot of work has been done. But obviously, this current season is now winding down, so we expect that in the early part of the next season, we will also be able to bring the geyser concept to market. So with both of these, I think these 2 areas will be well taken care of, and we can see growth coming back for coolers and geysers.
We have the next question from the line of Abhineet Anand from SBICAP Securities.
Just on the [ cooler ] expense for the quarter, is it some one-off there, or shall we work on that as an average going forward?
No, I think the costs for the third quarter do have some one-offs, largely expenses around some of the capability, building initiatives that are underway. So that would not be the representative cost. If you look at what the [indiscernible] were in the second quarter, I think that will be more representative.
So going forward, 2Q is a more representative if you go into 4Q and 1Q of next year and all?
Yes, please.
We have the next question from the line of [indiscernible] from [ Reliance Mutual Fund ].
Sir, in one of your previous question, you did answer that you are fixing the product gaps in air coolers and geysers. If you can also elaborate what would be the distribution gap in these 2 segment considering that these 2 segments will have a very different distribution lineup vis-a-vis Lighting and Fans.
In fact, in geysers, I think in geysers specifically, the electrical channel is still the main channel for geysers, just like as in Fans and Lighting. So here I think it's most -- the critical part is to fill the -- totally fill the existing product gap will bring some superior propositions to market. We are not looking at just matching what the competition is offering but really looking at bringing some unique differentiated propositions to the market. In coolers, you are right, of course, the channel is -- it's primarily the consumer electronics and home appliance stores, so a lot -- and I think bringing these new concepts to market of coolers also gives us a good opportunity to make a strong entry into some of those areas where we have not been able to make inroads in the past because this is like a mature cycle, one leads to the other. So I think when we are able to get this cooler concept to market, it also gives us an opportunity to get into some of these channels.
We have the next question from the line of [ Abhishek Jain ] from Vallum Capital.
How [ government context ] are working on fan? And how is -- what is happening in fan export? Is India becoming an export hub as point of view from the fan is concerned?
In terms of fans, of course, the EESL continues to be active on fans. EESL is the primary government in orders of fans. In the last quarter, we completed the previous LOA which we had received of about 50,000 fans having supplied in the last quarter. We also look at a new -- a new order for about 400,000 units of fans, which will be serviced over the next 6 months. So in the recent tender, of course, we want the maximum quantity. That will take about 6 months to get executed. In terms of fans export, I think the trend has been basically -- I would say, basically flat. There is no significant uptick in terms of fans exports from India.
We have the next question from the line of Shrinidhi Karlekar from HSBC.
Sir, will it be possible to know the ballpark percentage of fans demand that is driven by the replacement market and how is it different for premium category of fans?
I think, our estimate is that the 80% of the fans demand, 80% to 85% is actually new points, and the rest would be replacement. I believe, we do not think it will be any significantly different for premium fans.
We have the next question from the line of Achal Lohade from JM Financial.
Just wanted to understand in terms of the Lighting business, how much is EESL and how are you looking at EESL? Has it slowed down? Do you see it picking up by -- in any case?
EESL continues to be active. I mean, in the last quarter, we were -- we supplied both the lamps and light fixtures. Going forward, of course, we do see that the lamps part of EESL could come down. This is our assessment. But we still have some pipeline of orders from EESL in Lighting business. But the big part of the unexecuted is actually in the B2B part, where there's still almost INR 50 crores of orders pending for execution.
And how much we booked for 3Q, sir, EESL-related revenue for Lighting?
About INR 20 crores. INR 20 crores in B2C. No, sorry, we had about INR 20 crores in street lights and about INR 22 crores, what, in both -- in B2B. Correct?
Yes.
INR 22 crores in the B2B in the last quarter.
INR 20 crores.
And INR 20 crores in B2C. Total of INR 40 crores, out of which half was in B2B and half was in B2C in the last quarter.
We have the next question from the line of Aditya Bhartia from Investec.
Sir, for the fans business, you mentioned that growth rates have been similar to last few quarters, with the exception of Q1. Does that mean that we are yet to see any significant inventory restocking happening post GST? And the second question is -- and the related question is that some of your peers, like Havells and V-Guard, specifically in fans, appear to be recording a fairly strong growth. So do you expect this to be normalizing going forward?
First, I think V-Guard part of the numbers is because of -- their growth numbers have a very low base in terms of the total market share of V-Guard. Havells, of course, is a significant player, right? And we see ourselves -- if we're going to meet our objectives of continuing to build our premium position and continue to build our leadership position, then we see ourselves moving forward, growing at a faster rate than they do on fans. Obviously, this quarter, we believe that's not the case, but moving forward, yes.
We have the next question from the line of [ Pavan Kumar ] from [ Unified ].
Sir, I just wanted to understand our strategy towards launching the new products and what is -- like geysers, coolers. And anything else we are getting into? And what is the -- what are the kind of time lines it might take for us to become maybe 10% or 15% of its -- of our overall revenues?
Okay. First, I just want to -- okay, reclarify because I've mentioned this earlier. We believe that there is no point just launching stuff in the market if what you launched in the market doesn't have the reasonable potential of becoming at least a #2 player. The reason we believe that is because, if you look at the current marketplace, most of the value is captured by -- in any segment by the players who are #1 or #2, sometimes #3. The person who are #6, 7 or 8 in these categories does not tend to capture much value. So that's an important choice we have made. And the reason is because, in this category, we have seen so many entries by competitive companies and, frankly, in the past, by ourselves, which have not succeeded in creating value. Just think of the number of companies who introduced LED bulbs. Think of the number of companies who have introduced, over the last 2 years, air purifiers. Think of the number of companies who, in the last 3 years, introduced air fryers. Those, we believe, have not added value to the companies but potentially have destroyed value for quite a few of the companies. So a starting point is, have something which we believe can become to #2. Our first task is to create that on geysers and coolers because we are already somewhat present in the market. Then there's a whole host of other small appliances in which we play. Then there are other segments in which we do not play. So all of these are on the game board. Like I said, our first priority in the near future is to try and get to a #2 position in geysers and coolers.
We have the next question from the line of Harshit Kapadia from Elara Capital.
My question is, on Lighting segment, we have seen a very high double-digit growth. Can you please give us a reason of which segment within this Lighting -- I'm talking from the customer side, is it residential, is it more of professional lighting, luminaries, which has given this growth? And what is your expectation going forward?
Both B2B and B2C have grown, but if would ask -- in the quarter, B2C business has grown faster than B2B, but both segments have grown strongly. And then in going forward, we expect that both the segments will continue to expand.
We have the next question from the line of [ Paresh Raja ] from [ Catalyst Global Equities ].
Sir, you mentioned about focusing more towards geysers and coolers to get it to #2 position. I just want to know, considering there's a huge potential that the air cooler offers and the brand image that the company carries, what is the strategy -- or what are the strategies that we are going to adopt to achieve this, since the leading cooler companies are launching new products every -- more frequently. So what would be the strategy from our side in terms of innovation, R&D, marketing spend, launching new products?
Okay. First, from a product point of view, it needs to be a product which is superior and seen as distinctive for a significantly large number of consumers. It will not just be a me-too product. Because like you rightly said, we have got some very strong competition in the -- in that category. Number two, it will need to be cost competitive, so it can be price competitive. Number three, we need to invest in advertising to create sufficient awareness of the new product and its superiority. Number four is we need to deliver competitive distribution.
We have the next question from the line of Naveen Trivedi from HDFC securities.
Sir, if you can give some idea about geysers as in the opportunity now, and this can -- how this can be, over the next 3 years. And if you can also give a breakup between the organized and unorganized, between volume and value terms?
Geysers. I -- it's very difficult to -- because there is not a real or third-party data available in terms of the split between organized and unorganized. But if you see the top 5, 6 players, it accounts for 70% to 80% of the market, so I guess the unorganized is not really significant.
This is in value or volume, sir?
Both.
We have the next question from the line of Bhargav Buddhadev from AMBIT Capital.
Sir, I just wanted to check the market share we have on the premium ceiling fans in terms of market share of the overall premium -- of the overall ceiling fans, how much will be premium fans, sir?
It's 8%?
Yes.
8%? 8% to 9%.
No, sir, in our other ceiling fans, what is the share of premium ceiling fans?
20%.
20%.
20%. So, sir, just wanted to clarify one thing that Havells has about 2/3 of ceiling fans which are premium. And so is there a disconnect when we say that we are sort of very close to being a leader in ceiling fans?
No, there isn't because our total Fans business is much, much larger than Havells, right? So Havells is -- has a very -- relatively very low presence in...
Nonpremium fans.
Nonpremium fans, right? And the second thing, I'm not certain about how Havells defines premium. When we quote our premium numbers, we are talking about fans with an MRP greater than INR 2,500.
We have the next question from the line of Nishit Jalan from Kotak.
Sir, can you quantify the size of the geyser and the cooler market in terms of industry size and where we are currently in the geyser market where we have some presence?
See, the estimated geyser market is approximately INR 2,000 crores and when we have a mid-single-digit share, so it's not very big. Cooler also, we think the market size will be approximately INR 2,000 crores. Again, we have low single-digit shares.
We have a follow-up question from the line of Snigdha Sharma from Axis Capital.
So sir, can you just talk a little bit about this -- the supply chain partnership with the Future Group? Can we talk about the nature of partnership and what exactly we're doing in terms of technology there?
Okay. First, like you're aware, historically with GST, you would have to have a warehouse/branch in every state. So we would transport from factory to the branch in the state. And from the branch in the state, it would get onward distributed to customers in the state. Now with GST, you can significantly consolidate your supply points, your distribution centers. So you have larger distribution centers, where you bring your products from your 20 different factories, contract factories and own factories. And from there, you supply directly to customers across state boundaries. So you have a more efficient supply source because of the scale and its closeness to the customer. Think of it almost like hub and spoke, which typically happens with large global courier companies. We can now do that, and we have now modeled it. So you -- we need -- so for example, now in the North, you have one large distribution center, where all your product comes and from where it gets sold out to your different customers in that area. Future Supply Group -- Chain, actually, is the logistics arm of Future Group. They are specialized in this business. In fact, they've got some of the highest warehouses and the best data. So you're actually cracking your inventory flow all the way through from factory to customer most efficiently and pretty much in real time. So they are essentially going to be the people who'll run our distribution centers.
Ladies and gentlemen, that was the last question. I now hand the conference over to the management for their closing comments. Thank you, and over to you.
Thank you. Appreciate you all taking the time, as always. I hope we've been able to clarify some of the questions. As always, if you have more questions, want more details, please feel free to contact Yeshwant or anyone in this group. And we are happy to spend this much time because we would like you to understand how our business are doing. Thank you.
Thank you very much. Ladies and gentlemen, on behalf of Prabhudas Lilladher Pvt. Ltd., that concludes this conference. Thank you for joining us, and you may now disconnect your lines.