Crompton Greaves Consumer Electricals Ltd

NSE:CROMPTON

Earnings Call Transcript 2019-Q3

[Operator]

Good morning, ladies and gentlemen. I'm Pavit Shah, moderator for the conference call. Welcome to Crompton Greaves Consumer Electricals 3Q FY '19 Business Conference Call, hosted by HDFC Securities. [Operator Instructions] Please note, this conference is recorded. I would now like to hand over the floor to Mr. Naveen Trivedi from HDFC Securities. Thank you, and over to you, sir.

[Naveen Trivedi, Research Analyst]

Yes, good morning, everyone. On behalf of HDFC Securities, I would like to welcome the management of Crompton Greaves Consumer Electricals for this fiscal 3Q financial results. Here with us today, this is the management of Crompton Greaves Consumer Electricals, represented by Mr. Shantanu Khosla, Managing Director; Mr. Mathew Job, Chief Executive Officer; Mr. Sandeep Batra, Chief Financial Officer; and Mr. Yeshwant Rege, VP, Strategy and Financial Planning.I would now hand over the call to Mr. Shantanu Khosla for his comments. Thank you, and over to you, sir.

[Shantanu Khosla, MD & Executive Director]

Thank you. Good morning. This is Shantanu here in our offices in Bombay with Mathew, Sandeep and Yeshwant. Thank you, as always, for joining in this call. I will make some overall comments, and then we'll take as many questions as time permits. Starting first with our ECD segment. Our core ECD segment, which, over the quarter, continued its strong growth trend, with the ECD business overall growing 16% in value terms. Importantly, in spite of all the cost pressures, our ongoing cost program, which we've talked about quite a few -- for quite a few quarters, continues to deliver strong results. So EBIT on this segment grew ahead of top line, with EBIT up 19%. This growth was broad-based across all key parts of our ECD business. Our Fans segment continued to demonstrate strong growth. And our latest retail market shares indicate that we're continuing to grow share, with top line growth on Fans at 16%. This was driven by a number of key initiatives which we've been driving over the past few quarters, especially on the decorative segment, which actually delivered a volume growth of 47%.At Pumps business, the key Crest Mini initiative, which we launched now coming on a year ago, is continuing to drive industry-leading growth in this segment. Our total Pumps volume was up 20%. And most encouragingly, we are seeing that in the areas of the country, for example, South India, where Crompton pumps had been traditionally relatively weak, we are beginning to make significant inroads with the introduction of Crest Mini. Our 2 broad segments both demonstrated strong growth. Our agricultural segment in Pumps grew strongly, as did our domestic Pumps business. The agricultural Pumps business delivered a volume growth of 44%; and domestic Pumps, close to 20%. The other key focus area, of course, for us over the last quarter was our geysers business, as we've talked, as really the winter quarter is the critical part of the year for the geysers business, and that was a focused choice to try. As you're aware, we completely revamped our entire geyser range over this period, and we delivered strong initial results, but of course, there's a long way to go. Our total geyser volume was up 37% for the quarter. And in value terms, it grew above 30%. So this was a strong beginning of our growth expectations from the geyser segment through the winter period.Moving on to Lighting. Lighting overall, the numbers, the top line was a slight decline. However, very importantly, the critical LED business, if we net out EESL, which, as you're aware, is a lumpy business, the core LED business net of EESL grew in value terms by 18% over the quarter, which is bringing back strong growth into this segment from a top line point of view. Price erosion continues to happen in some key segments, especially battens and panels. And our LED ex EESL business in terms of volume was up.[Technical Difficulty]

[Shantanu Khosla, MD & Executive Director]

I'll just continue?

[Unknown Executive]

Yes.

[Shantanu Khosla, MD & Executive Director]

Now the other key area which we, of course, talked of in Lighting was the fact that -- the other key area which we talked about for Lighting in the last couple of quarters was obviously the fact that due to the price erosion, we were having a margin decline. And as we've talked last quarter, we were doubling down on our cost reduction efforts to restore margins to double-digit levels over the next 2 quarters. I'm pleased to report that these efforts are, if anything, ahead of track. And we significantly grew our margins on LED business on a sequential basis, adding almost 260 basis points. And this quarter itself, we've restored margins to almost 9%. So we feel comfortable and confident that with these continued efforts on cost reduction, we will get our margins in the not-too-distant future back to double-digit levels.Finally on Lighting, we have been talking in the past of how we bring value-added items with meaningful consumer benefits and, therefore, start building value back in the LED business. We have recently commenced launching towards the end of this month, and we will complete the national launch over the coming months of February, a fully unique new innovation in the Lighting business. We have just introduced a bulb which kills up to [ 80% ] of the bacteria in the home, providing a healthy and safer home environment. Now this has a really meaningful benefit, which truly improves the lives of the consumer. It will lead to healthier homes, less illnesses as a real strong add-on benefit. This is based on unique proprietary technology. It has been recommended by the Indian Medical Association. And we have commenced the launch of this product, and this [indiscernible] at a premium, but the premium of only about 15% to the best lights.So this is one of the innovative products we've been working on for a while, which we believe will, moving out into the future, supported by a very strong distribution and marketing plan, continue to help us accelerate our growth in Lighting and also help us continue to build value in the Lighting LED business. Next, overall, we believe we've had a reasonably strong quarter. Our ECD business continues to grow at strong levels on a broad base of segments. We have managed to grow our ECD profits ahead of top line growth with our disciplined cost programs. And we have restored our margins or on track to restore our margins to target levels on the Lighting business while growing our core LED business, which now contributes almost 80% of our total Lighting business in IT.With that, I'll just pause, and then I'm happy to take questions. We did have some operator interruptions during the call, so I hope I was clear, and you managed to hear everything. Thank you.

[Operator]

[Operator Instructions] First question comes from Mr. Chirag Shah from CLSA.

[Chirag Shah, Research Analyst]

Congratulations on the encouraging trends that we have seen on the Lighting business margins. My question is around what has held the Lighting business margins, I mean, there were 4 pillars that you spoke about last quarter in terms of social technology, social strategy, backward integration and product design. What -- I'm sure each of that would have contributed. But going forward, what are the levers that you see in terms of each of these areas, particularly in the context of the fact that price erosion still continues? And on the related question, can you also elaborate a bit on the Orissa opportunity and the new subsidiary that you've incorporated?

[Shantanu Khosla, MD & Executive Director]

Okay. First, in terms of what has helped on the Lighting margins, the answer is all of the above. And it's not that 1 of the 4 dominates more than the other. What will help us moving forward, we still have opportunities in all 4 areas. Now moving to the Orissa project, first, the project is really a street lighting project in 2 parts of Orissa. The reason we have created an SPV to do that, it's simply because that was a requirement of the Orissa government. Operationally, really, it goes on just like we do any of the other street lighting projects which we've done in the past for various municipalities or localities. We have obviously a third-party, qualified EPC vendor, we've got a vendor who is highly qualified in supplying the pole. We supply the lights. So it's pretty much operationally like we do any of these projects. The SPV is only because that was a requirement of the Orissa government.

[Chirag Shah, Research Analyst]

Sure. And one more question, if I may. On the geysers side...

[Shantanu Khosla, MD & Executive Director]

I'm sorry, Chirag, but just to keep it fair, if we could just keep it to 1 or 1.5 questions and then you can come back if we have time. I'm sorry but...

[Operator]

The next question comes from Renu Baid from IIFL.

[Renu Baid, Vice President]

Two questions from my end. First, can you help us understand. Overall, you've mentioned in the Fans category also volume growth. What was the kind of value growth in the segment? And also aligned, if you can throw light in terms of given the kind of competitive intensity, how is the pricing environment in the market? Are we able to take the price hikes across fans and other categories? And also, what would be the kind of share of decorative fans segment or utility fan segment and the total fan category as a whole today?

[Shantanu Khosla, MD & Executive Director]

Okay. First -- the first one was? I'm sorry.

[Renu Baid, Vice President]

On value growth, if you can share the market growth.

[Shantanu Khosla, MD & Executive Director]

Yes, yes. Sorry, sorry, Renu. The past total category value growth was 14% to 15%, right? The reason for the negative mix was plant and [ contacts ], and that is because we are fully driving this superior-value initiative called Crest Mini. But the value growth also continues to be pretty much market leading if you look over the last few quarters.

[Mathew Job, Chief Executive Officer]

Not being able to pass pricing in the market across function sets.

[Shantanu Khosla, MD & Executive Director]

Okay, on pricing in the market, it's always a bit of a challenge given the competitive intensity. Now that being said, if I look at what I'm seeing from competition and ourselves, I think we are in a better position because of the fact that we've managed to continue to grow margins, driven by our ongoing strategic cost-reduction program. So while most of our competitors are seeing margin reductions, we are in a better position competitively. And I think that will hold us in good stead. We definitely believe that we should be passing on some amount of the inflation costs to the consumer, and we believe our products are strong enough to -- and the brand is strong enough to carry that, but we will always ensure that we stay competitive in the marketplace.

[Renu Baid, Vice President]

Sir, just a small clarification here. You mentioned margin was delivered by cost actions agreed. But is there a contribution of also the GTM program which you're implementing in the ECD segment, which is actually also helping the improvement in gross margins? Or is it entirely product-driven strategy in other words?

[Shantanu Khosla, MD & Executive Director]

The go-to-market program is not really focused on improving costs. What the go-to-market program is focused on is including [ research ] distribution and, therefore, top line.

[Operator]

[Operator Instructions] The next question comes from Mr. Nitin Awasthi from Edelweiss.

[Shantanu Khosla, MD & Executive Director]

I don't think he's asking a question, so maybe we can just move on to the next question.

[Operator]

The next question comes from Inderjeet Bhatia from Macquarie.

[Inderjeet Singh Bhatia, Head of Research]

Now if I look at the ECD segment, you bridged here some volume numbers for some segment, and they all look very encouraging, with kind of close to 20% plus. But if I still look at the ECD growth, which is at 16% and I benchmark it with some of the industry leaders either for this quarter or first 9 months, we are still some distance away from them. Do we think we can kind of grow at, say, 20% or something like that, or is the market growth -- so any comment on what is our underlying market growth in the segment that we have to maintain, that would be truly appreciated.

[Shantanu Khosla, MD & Executive Director]

.Well, one, we need to look at ECD of different companies is -- the actual businesses which comprise ECD can be significantly different for different companies. One common business -- obviously, one large common business which floats in energy was the ECD, its fans. And I think in Fans, plus/minus, we are growing at about the same levels as the competition. And this is reflected in the fact that the retail audit indicates that our market share is growing. Now if you start breaking it up into others, then for us, for example, the next biggest segment is Pumps. Now very clearly in pumps, we are among the fastest-growing pipeline participants, especially compared to some of our leading competitors. One of the other [indiscernible] obviously where we do not play so significantly is areas such as personal electric items, water purifiers, et cetera, right? So I think it's important that you want to understand the differences to really break out what are the key parts of different people's ECD business. I think the second part of your question, which is, can we get to a 20% growth in ECD? Yes, I think we can. Now that's not going to come just because of market growth because the markets are not growing at that pace, but I think it's a combination of our product innovation and driving our go-to-market broader and across more geographies.

[Inderjeet Singh Bhatia, Head of Research]

Got it, sir. Just one, is it possible to share if these are the volume actual numbers, revenue numbers?

[Shantanu Khosla, MD & Executive Director]

I don't -- we don't normally share that, right? But whatever we can share, if you want more details, do feel free to speak to Yeshwant after the call. But we don't normally share that specific level by segment.

[Operator]

The next question comes from Niket Shah from Motilal Oswal Asset Management.

[Niket Shah, Vice President of Research]

Just had 2 questions. First, on the ESOP part of it, what will be the ESOP cost for this year and next year? I presume this year, you had a lower ESOP number as compared to the last year. So how much of that is kind of benefiting in terms of kind of margin? And the second question was on the margin of the ECD business, which sequentially has kind of come off. I was just trying to understand that if geyser is a very large proportion of revenue in the third quarter, logically, geyser margins are higher than the blended margins was my assumption. [ If you can just correct that ], that would be really helpful.

[Shantanu Khosla, MD & Executive Director]

So on ESOP part, cost this year will be about INR 36 crores. Last year, it was about INR 54 crores or INR 55 crores. Next year, from whatever INR 36 crores, it will become about INR 24 crores, INR 25 crores next year. As far as blended margin is concerned, yes, geyser margin, maybe that is still a very, very small -- fairly small share of our ECD business. The ECD business is largely fans and pumps. And as you mentioned, in pumps, our drive is still to expand the market, definitely, the Mini Crest range of products. So that is not something which is margin favorable. But overall, I think given whatever effort we have taken to improve our cost structure, our margins are better. Yes, are better.

[Mathew Job, Chief Executive Officer]

It is the biggest quarter. For the last year, business is down. But with the last year -- or in the last quarter, the integration margins are actually up by almost 270 bps in -- at gross margin level.

[Niket Shah, Vice President of Research]

At the gross margin level. But I'm just trying to understand, on the EBIT margin per se, while geyser is higher margin, Crest Mini has kind of pulled up a little bit and, hence, the blended is [ 18.7 as such ]?

[Shantanu Khosla, MD & Executive Director]

Yes.

[Mathew Job, Chief Executive Officer]

Yes.

[Operator]

The next question comes from Arnab Mitra from Crédit Suisse.

[Arnab Mitra, Research Analyst]

My main question was on decorative fans. So you highlighted the high growth in that segment. So I wanted to understand the gap in your portfolio in terms of the [ failures ] of the segment and your Fans segment versus the overall market. And is it basically about a large number of product launches here, or did -- it's more about geographical expansion here?

[Mathew Job, Chief Executive Officer]

That is -- in decorative approach, we launched an entirely new range of decorative fans at the beginning of this fiscal year, and that obviously has helped drive strong volume growth in decorative fans, not only in this quarter but also in the previous quarters. If I look at the -- if we look at decorative plus premium in total, so I would say the products which are primarily selling to the consumers around 2,200 and above, in our overall portfolio, it's roughly 1/4 of our sales. In the market, we estimate anywhere between 15% to 20%.

[Operator]

The next question comes from Mr. Venkatesh from Citibank (sic) Citigroup.

[Venkatesh Balasubramaniam, Director and Vice President]

One is just a small data question. I mean, what was the advertising spend in the current quarter, and what was the spend in the previous quarter? That is one data question. At a broader level, the question is, when I -- based on the data you share, it looks like across categories, across segments, your volumes have grown very, very strong, but your value growth is much, much lesser. So is it like a conscious strategy by Crompton consumers that you will cut prices and grow your market share similar to what you did at the start of the price war in the LED segment.

[Shantanu Khosla, MD & Executive Director]

The very clear answer to that is no. And differences come out for specific group of strategic choice reasons. Let me clarify one point of data which may help on that. In the case of fans, our value growth for the quarter is a few points ahead of our volume growth. In the case of geysers, our volume growth is higher than the value. The reason for that is that in the case of geysers, we had a much greater opportunity in the instant geyser segment versus storage. And the value per unit of the instant geyser is lower. So it came out for a purely geyser reason. In the case of pumps, if you recall, about 18 months ago, we were seeing competitive strengths and, frankly, also an opportunity to get into the race here where we were not present, which is one of the reasons why we were weak in the South. So it was a specific strategic choice to drive the mix here, which has led to the difference in volume and value on Pumps. So it's absolutely not that we got right or close at all because we are actually on an item by item not characterized anywhere.

[Venkatesh Balasubramaniam, Director and Vice President]

Okay. So the advertising spend in the current quarter and the previous quarter, sir?

[Sandeep Batra, Chief Financial Officer]

Yes. So in the second quarter, it was INR 9 crores, advertising and sales promotion. And in this quarter, it is INR 19 crores.

[Shantanu Khosla, MD & Executive Director]

And let me just make one comment. I just want to make one comment or perspective on advertising, right? Our advertising varies from quarter-to-quarter basically based on 2 things. One is, in the season, we advertise more obviously for products like fans, with a significantly higher spend in season months and significantly lower in other months. The other key factor which adjusts the timing of our advertising is when we have new, meaningful, innovative initiatives. So for example, this antibacterial bulb which we have just launched, because we are launching it now, we did not advertise lighting last quarter. But obviously, in the quarters to come, you can expect strong levels of advertising on this initiative. So these are the 2 factors which will affect the quarter-to-quarter levels of spend on our advertising.

[Operator]

The next question comes from Jay Kakkad from AMBIT Capital.

[Jay Kakkad, Research Analyst]

Sir, I just wanted to understand the segmental numbers a little better. There is a decrease in net analog cable expense. Why was that? Also, is the increase in the capital employed mainly to do with the reduction in creditor this quarter also?

[Shantanu Khosla, MD & Executive Director]

Our increase in analog cable is largely because of higher treasury income, which has reduced the analog cable expenses. And the increase in capital employed is -- compared to the previous quarter, we have increased our early payment to our vendors by nearly INR 70 crores. If you compare it to the same period last year, it is up nearly INR 250 crores, so as we have paid vendors before their due dates at reasonable discounts, okay?

[Jay Kakkad, Research Analyst]

Okay, okay. Sir, this GTM initiative, would it start impact our working capital, say -- or it will be working capital neutral over the next 2 years? Just wanted to get...

[Sandeep Batra, Chief Financial Officer]

With the working capital, it will remain positive because most of the distributors that we are appointing, they are all operating on cash and carry terms as opposed to 42 days of credit that you are giving through the normal channel.

[Jay Kakkad, Research Analyst]

Okay. And will there be any point in time, say, in the next 1 or 2 years, that you will have to reduce wholesaling significantly at least in a feeder market like Bombay?

[Shantanu Khosla, MD & Executive Director]

Not necessarily. Again, if I think back over my experience over the years of having done this even in FMCG, there is still so much rich opportunity available in this country in smaller towns, unserviced areas that the wholesale continues to stay a critical segment for supplying that. So these 3 channels, if you will, the distributor, large retailers and wholesalers will all be important channels for us, and we anticipate that all of them will grow maybe at different levels.

[Operator]

The next question comes from Deepak Krishnan from Goldman Sachs.

[Pulkit Patni, Equity Analyst]

Sir, this is Pulkit from Goldman. Sir, could you just give an update on the go-to-market strategy in terms of rollout, what are geographies, what have you been able to achieve and in terms of expected time line by which we think we would have completely achieved the objective?

[Shantanu Khosla, MD & Executive Director]

Okay, the end part, which is the time line by which we will ultimately complete this program is, frankly, in a country like India, never because there is always opportunity to keep growing. Where are we today? We are in about -- we are fully implemented. And by that, I mean the IT systems, the data, plus everything else, in about 25% to 30% of the West. In other places, there is different levels of implementation, but this is where we're kind of fully implemented. In the areas implemented, on an average, areas where this go-to-market has been implemented versus areas where it's not been implemented, we are growing about 5% to 7% ahead in terms of top line. We will keep, as I've always said, pragmatically, sensibly, sequentially expanding this. We expect to have roughly 70% to 75% of our current base covered over the next 12 to 18 months.

[Operator]

The next question comes from Kunal Sheth from B&K Securities.

[Kunal Sheth, Research Analyst]

Most of my questions have been answered. Just one question. Where does our market share stand in the Fans segment? And how has it moved over the last, say, 9 months?

[Shantanu Khosla, MD & Executive Director]

If we look at the detailed order share data, and the latest data point is November, in the month of November, on ceiling fans' value share, we're about 1.5 points up year-on-year. On a year-to-date basis, if I look at the same data, we're about 1 point up. We are still very clearly market leaders.

[Kunal Sheth, Research Analyst]

Okay. What about -- where would we stand in terms of market share in a sense in that?

[Shantanu Khosla, MD & Executive Director]

We are very clearly [ now ] the market leaders and #1. Now why I'm hesitating to give you an absolute number is because if I look at shipment share, I get a number of about 26%, 27%. If I look at the retail audit share, I get a number of about 24%, 25%. But either way, it is growing, and we're still clearly the #1.

[Operator]

Next question comes from Mr. Venugopal from Bernstein.

[Venugopal Garre, Senior Analyst]

Shantanu, I just wanted to know that given that innovation is one of our key strategies eventually to drive growth, and we've been trying a lot to launch new products for the last 2 years, how truly innovative are these products? And are these incrementally going forward patentable, and you can stop competition from launching similar-sounding products? And number two is, when you actually launch these products, the new innovations, these are actually new for India. But because when I look at the international markets, there seems to be such products already existing in the U.S. Same with the case of anti-dust fans, there's a U.S. company which used to have it a couple of years back; and same thing with the antibacterial lighting. So when you develop these products, from a point of view of you being able to differentiate with the existing products internationally, you would have seen different technology all together which you are able to sort of protect yourself with in terms of retail? So I just want to understand the construct around that, or is trying to market more critical for you than the innovation itself?

[Shantanu Khosla, MD & Executive Director]

Okay. Let me take antibacterial as an example. First, in the case of antibacterial, we have patent an application, right? So there are some areas which are patentable, and those are currently in application. And obviously, the process of patenting takes time. Your second point is the speed to market and owning the idea first. That is also obviously a critical factor, and a good example of that is anti-dust. Nearly everyone launched the anti-dust after us but today in the marketplace, there really is only one anti-dust, and that's Crompton. The second point you made as how innovative are these products proving, this killing bacteria, an antibacterial bulb, the fundamental technology, that exists. However, this technology today in the West tends to be used in operating theaters, and it costs about $500 a bulb. I think where the innovation came in, and this was largely in-house innovation from our R&D folks who we built up over time, is the ability to take that technical concept or proof of concept and deliver the same functionality at a price that is only, what, $1.50, 15% more than an LED bulb. So -- and that required a lot of innovation. It wasn't easy working with vendors. Our folks worked with universities in [ Glasgow ] to get it, and that's a sort of network which I've talked about before. So that is truly innovative because I don't think we'd have had much success with a $500 speciality bulb in this case. So we aspire to have 2 streams of this innovation. One is what we feel is breakthrough innovation, things that have truly changed the game. And the second stream is what we have done, for example, on decorative, which addresses to the growth of decorative, which we thought about sustaining innovation, with the modification, meaningful [ ideas ], [ better-looking ] staff, more reliable staff, et cetera. So Crest Mini I will call sustaining innovation. So that's sort of how we think about it.

[Operator]

The next question comes from Aditya Bhartia from Investec.

[Aditya Bhartia, Analyst]

As we are implementing go-to-market strategy in -- [ other retail ], should we be expecting some fierce construction happening? Or do you think that things are now normalizing and the company can continue growing at the pace that you should grow here?

[Shantanu Khosla, MD & Executive Director]

In the last 6 to 9 months, we have learned a lot on how best to execute this in the market -- in the marketplace, where you minimize channel conflict. So as we look forward and expand, I do believe we will expand in a manner that truly minimizes the disruption based on those learnings.

[Aditya Bhartia, Analyst]

Okay. And sir, if that is the case, then should we be expecting Crompton to be entering into a new category or new product category or looking for some kind of attributed growth with the base business now stabilizing?

[Shantanu Khosla, MD & Executive Director]

The answer is yes. Now obviously, as I've talked before, one of the -- at this point in time, our primary approach to enter a new category is organic. However, like you folks are probably aware better than me, an inorganic deal is something which is not really necessarily in our control. First, there has to be a willing seller, the business has to make strategic sense for us, then the value has to be right for both parties. So it is difficult to commit as to when it is or when it isn't. But it's very clear that over the next period of a few years, we have to make a successful entry one way or another in a new category.

[Operator]

The next question comes from Latika Chopra from JPMorgan.

[Latika Chopra, Senior Analyst]

My first question was on Lighting. Could you share any thoughts on what could be the size, time line and profitability of the street lighting projects that you have got?

[Mathew Job, Chief Executive Officer]

Yes, street lighting. Okay, street lighting, we always said these street lighting projects have, I would say, margins in the mid-teens, so I think it's a fairly -- a reasonably profitable project, as you know, and the timing is going to be over the next 4 to 5 months.

[Latika Chopra, Senior Analyst]

Okay. And any sense on the size?

[Sandeep Batra, Chief Financial Officer]

It is -- it will be about, I would say, 10% of the annual Lighting business, around 10%.

[Operator]

The next question comes from Rahul Gajare from Antique Stockbroking.

[Rahul Gajare, Research Analyst]

Yes, sir, most of the questions are answered. I think [indiscernible] while LED has seen a decent growth, how much of the EESL order seems [ linked ] in the backlog overall? And what are the EESL share in this particular quarter?

[Mathew Job, Chief Executive Officer]

EESL has -- in the quarter, this part is -- I mean, there has been significant decline in EESL business.

[Unknown Executive]

[indiscernible]

[Mathew Job, Chief Executive Officer]

Yes, so it's dropped to almost 50% of what it was in the same quarter the previous year. In this quarter, we have approximately INR 50 crores of orders that need to be serviced, that sort of magnitude. How much of that will get executed also depends on the schedule that, finally, EESL should deliver on. But the total unexecuted order backlog which we expect after the next 3 months is about INR 50 crores.

[Rahul Gajare, Research Analyst]

Okay. So basically, it that executed in the fourth quarter basically?

[Mathew Job, Chief Executive Officer]

Fourth quarter, and we could -- some of it could spill a little bit to April, but that depends on the schedule that, finally, EESL should deliver against.

[Rahul Gajare, Research Analyst]

Okay. And this particular quarter, how much was EESL? Because the battle of -- in the end of...

[Mathew Job, Chief Executive Officer]

INR 27 crores, INR 27 crores. INR 27 crores, yes.

[Shantanu Khosla, MD & Executive Director]

Yes.

[Mathew Job, Chief Executive Officer]

That was for quarter 3.

[Shantanu Khosla, MD & Executive Director]

So it was almost half of what it was in the same quarter the year previous. And we understand that EESL business, we always had to look at it separately because it is, by definition, lumpy.

[Operator]

The next question comes from Rahul Ranade from Goldman Sachs.

[Rahul Ranade, Research Analyst]

I actually missed the volume terms' number for the LED business, which was net of EESL. So deliverable value growth was 18%, right.

[Shantanu Khosla, MD & Executive Director]

Volume, 38%.

[Rahul Ranade, Research Analyst]

38%, okay.

[Shantanu Khosla, MD & Executive Director]

You can see, while price erosion has moderated on bulbs, as I think we had talked over the last couple of quarters, price erosion on battens and panels continues.

[Rahul Ranade, Research Analyst]

Okay, okay, okay. Got it. And sir, could you talk a little bit on the cooler segment of the upcoming season?

[Shantanu Khosla, MD & Executive Director]

Well, obviously, it is a peak season, and obviously, we have some key programs lined up. There are just 2 things I'd like to [indiscernible] context. Number one is, given the way the cooler season was last year, then it's a lot of inventory which is carried forward through by the trade, and that is across the entire industry. So that may have an impact. The second thing is, particularly in Bombay, I feel it. We're having a pretty cold and extended winter, so I do expect that also to cause somewhat a pretty late season in coolers. The rest -- but our programs are lined up. We have -- obviously, it's going to be a key area of focus over the next quarter. How that pans out, we will talk at the end of the summer quarter.

[Operator]

The next question comes from Mr. Amar Kalkundrikar from HDFC Mutual Fund.

[Amar Kalkundrikar, Senior Equity Analyst]

Sir, you -- in connection with GTM, you made 2 points. One is that you are about -- you have implemented about 25% to 30% of the West region and plan to take it to 70%, 75% of total business about next -- in next 12 to 18 months, right?

[Shantanu Khosla, MD & Executive Director]

That's right.

[Amar Kalkundrikar, Senior Equity Analyst]

So of national, how much will be implemented right now? 20%, 25% in terms of West?

[Shantanu Khosla, MD & Executive Director]

Going to call it about 8% to 10%.

[Amar Kalkundrikar, Senior Equity Analyst]

Okay. And then you sound very confident about managing the channel conflicts and disruption going ahead. But can you give us some more data on what is it that is helping you to mitigate the issues?

[Shantanu Khosla, MD & Executive Director]

Really it's recognizing that each channel has a role, recognizing that existing channels' business needs to be structured; the -- in terms of trade, needs to be protected; and thinking about how you appoint the right type of distributors and the right programs. Really what we want and which we believe is wasteful, and we've seen that and it drops out, is people who are really not servicing either the consumers [indiscernible] but people who are essentially doing a business in [indiscernible] by Crompton in Delhi to ship it to Hyderabad. That's inefficient. So the last thing which we've learned is the importance and that's why we have been careful, the importance of getting the data systems in place. So we're actually able to partner with each of our customers and understand exactly how their business is doing. All of this together is -- helps us -- you'll never eliminate channel conflict but minimize.

[Operator]

The next question comes from Baidik Sarkar from Unifi Capital.

[Baidik Sarkar]

Shantanu or Mathew, could you explain to us the factors that are really driving this outperformance in the Pumps segment? I'm sorry if I missed this in the opening remarks. And maybe especially given the small segment in which you operate, sir, there's a lot of [indiscernible] -- I know we're a respected player. So what exactly is the key to our success here?

[Shantanu Khosla, MD & Executive Director]

In Pumps, okay, there are 2 things. One, in terms of our base business, not talking about Crest Mini, our base [indiscernible] business, we actually have an outstanding product in terms of performance. Our product is one of the best products for domestic pumps across its range. The -- and that does make a difference. The second thing is, in the case of pumps in our strong geographies, which tend to be the East and the North, we have one of the strongest set of channel partners. And what happens in Pumps, a little bit distinct from all our other businesses, the role of the channel partner in terms of selection of the type of pump, you need 0.5 horsepower or 1 horsepower. The role of the channel partner in guiding the installation of the pump, which really affects its reliability and performance, all this becomes much more important. So the channel partners we have in pumps are really very critical. Finally, in terms of the Crest Mini. I think it was a great example of identification of certain segment of consumers. And what we saw, and I'll just tell you this very briefly, is our regular pumps, let us say, could pump water 20 meters. Now there's a whole segment of consumers who did not need water pumped 20 meters. 10 meters was good enough for them. So we were able to deliver this 10-meter pump in -- pump at obviously a far more efficient cost. But from that consumer point of view, there was no difference in performance. And that is what enabled us to truly, in that segment also, become a superior product and competitive. So I do believe it starts with the product and the product performance, supported secondly by great channel partners and as we're trying to strengthen ourselves in areas traditionally where we've been weak. But frankly, we have much more local competitions, like areas in the South. It is these 2 things which we are focusing on, which is helping us get still relatively a small set position but wonderful volume growth, which is, from our perspective, great because we're getting the Crompton brand out there into their homes.

[Baidik Sarkar]

Got it. Shantanu, so what kind of volume growth are we looking at? Or have you achieved this, sir, in the Pumps segment? And you have given that it's been a good year. Are we potentially carrying it at a high base effect as we're gearing for next season?

[Shantanu Khosla, MD & Executive Director]

Well, for this quarter, the volume growth was 37% for the quarter and...

[Mathew Job, Chief Executive Officer]

20 growth. No, no...

[Shantanu Khosla, MD & Executive Director]

Sorry, geysers -- sorry, the volume growth is 20%, sorry. I gave you the geysers volume growth. So the Pumps volume growth was 20%. Are we standing therefore at a high base or low base? Well, I guess that's part of the challenge. The base is the base. So we have to keep growing faster than the market whatever our base is.

[Operator]

The next question comes from Nishit Jalan from Kotak.

[Nishit Jalan, Research Analyst]

Actually, just wanted to get some sense on the Fan consumption industry as to how much of the industry demand is coming out of new demand and how much is replacement. And secondly, we have seen a lot of decline in the commodity prices roughly. Do you think that we will be able to retain a part of it? And are we seeing a decrease in data margins? Or do you think that because of complementing entities, especially in the Pumps and Lighting segment, a large part of that will be passed on to the consumers?

[Mathew Job, Chief Executive Officer]

Yes, so I think if I look at the replacement versus new demand, our overall estimate is both in Fans and Pumps, I think more than 80% to 85% of demand is actually new. When the company moves into a new home, because the replacement prices are still very long, so I think that is 80% to 85%. Suffice to say that a big part of the market is actually new -- new [ points ]. That's one. The second question was on?

[Sandeep Batra, Chief Financial Officer]

I think the commodity costs, they have fallen. In a way, we are not seeing any impact on our material build or really commodity costs coming down. A little bit, yes, some softening may have happened, but that's been in turn offset by whatever impact was of the currency if you look at last quarter versus same period last year. So overall, index of inflation for us in Q3 has remained same as Q2. Whatever may have softened has been offset by our currency.

[Mathew Job, Chief Executive Officer]

As Shantanu mentioned before, in terms of particular market, obviously, we have to be watchful of all the competition actions that we were -- we need to remain competitive in the market. But as we have seen in the past many quarters, we have managed this kind of pass-through as and when required pretty effectively, which is the reason why I think in terms of profit performance, compared to most of our peers, we have been delivering now reasonably well.

[Nishit Jalan, Research Analyst]

Just one quick follow-up on Fans. When you say that the new demand is too high, then hiring with the seasonality in the business should be much lower, right? But in Fans, what we see is that the first half of the calendar year, because seasonality is visibly high, because if it's new demand -- the demand will depend more on the finishing of the construction and all rather than the summer season or winter season impact, right?

[Mathew Job, Chief Executive Officer]

Yes. And the question is if somebody is moving into a home in November, December in Delhi, I think we -- in certain areas -- the fans are already settled in because the most required fans. So [ we'll be developing ] to remain. Because if you actually look back and can actually try to link this [ fans ] industry growth, the biggest correlation is at build construction rather than to gear GDP growth. Which is why [indiscernible] growing more, total 10%, while the industry growth are now at single digits -- in low single digits actually.

[Nishit Jalan, Research Analyst]

Okay. Just so first of all, what you are trying to say within the first half, you have the fans delivered in Jan to June. On account of roughly what percentage of your -- on the overall fans annual revenues?

[Sandeep Batra, Chief Financial Officer]

55% or 60%.

[Mathew Job, Chief Executive Officer]

[ 60% ].

[Shantanu Khosla, MD & Executive Director]

About 60%.

[Mathew Job, Chief Executive Officer]

And we're talking about Jan to June.

[Nishit Jalan, Research Analyst]

Jan to June, yes?

[Mathew Job, Chief Executive Officer]

Yes, yes. Okay?

[Operator]

That will be the last question.

[Shantanu Khosla, MD & Executive Director]

Okay, then thank you all. I appreciate you investing this time because it is -- as I've always said, it is our intention to try and help, be as transparent as we can, so you can better understand our business. As always, if you folks have a few more questions or anything, feel free to call us, and we'll happily share with you whatever it is appropriate. Thank you so much.

[Sandeep Batra, Chief Financial Officer]

Thanks.

[Mathew Job, Chief Executive Officer]

Thank you.

[Operator]

Thank you, sir. Ladies and gentlemen, this concludes your conference for today. Thank you for your participation and for using Door Sabha's conference call service. You may disconnect your lines now. Thank you, and have a pleasant day.