Crompton Greaves Consumer Electricals Ltd

NSE:CROMPTON

Earnings Call Transcript 2022-Q3

[Operator]

Ladies and gentlemen, good day, and welcome to the Crompton Greaves 3Q FY '22 Earnings Conference Call hosted by Batlivala and Karani Securities India Private Limited. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Kunal Sheth from Batlivala and Karani Securities India Private Limited. Thank you, and over to you, sir.

[Kunal Sheth, Research Analyst]

Yes, thank you. I would like to welcome the management of Crompton Greaves Consumer Electricals Limited on the call and would like to thank them for giving us this opportunity and hope everybody in the Crompton consumer family is safe and sound. From the management today, we have Mr. Shantanu Khosla, the 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 will now request Mr. Shantanu sir to give us some opening remarks, post which we will open the floor for a Q&A. Over to you, sir.

[Shantanu Maharaj Khosla, MD & Executive Director]

Thank you, Kunal. Good afternoon, everyone, and thank you for dialing in, and welcome to our quarterly call. I hope you are all well and safe during these tough times. In line with the health and safety first policy, considering the steep rise in COVID infections across the country since early Jan, we implemented a strict work-from-home policy across all our offices through the month of January. Encouragingly, 92% of our total workforce has received both doses of the vaccine. Revenue for the quarter was up about 7% versus a year ago. Growth over pre-COVID Q3 '19/'20 was 32%, representing a CAGR of 15%. We have now consistently been maintaining this robust 15% CAGR growth for the last few quarters. Getting a little bit more into the details of our revenue growth, ECD revenue grew at 6%, delivering a 2-year CAGR of 18%. However, as we dive into the subcategory, both fans and appliances grew well. Pumps, after several quarters of robust growth, has been impacted by an overall industry slowdown over the past couple of quarters. Net of pumps, our ECD business grew by 11%. Fans growth was 11%, representing a 2-year CAGR of 22%, driven by premium and deco fans. Super premium fans as a category continued to gain traction and grew 30% over last year. Appliances grew by 13%, representing a 2-year CAGR of 28%. Our appliance business continues its growth trajectory, demonstrating our previous investment in developing a superior product portfolio and investing in advertising is continuing to pay off. Lighting revenue was up 8%. As we look at the subsegments, however, we see that in B2C, the focus continuing LED business grew robustly at 22%. We do have a legacy conventional lighting business, which now contributes 11% to 12% of our total business and is steadily declining. However, this is clearly a legacy business, which has been drifting down. And while our focus stays on the future, which is the robustly growing LED business. As we look at our B2B business, the nongovernment tender business grew a healthy 22% as orders and execution of the orders have started to recover. The government tender business, of which EESL is a big part, remains a drag and declined by 92%. As per third-party retail final panel data on a 12-month rolling basis, we have gained 2.3 points in market share in fans. We are continuing to expand our leadership and our November monthly share was at its highest level ever. This gives us confidence that our product innovation, advertising, investment and go-to-market interventions are sustainably building the business. Our geysers also continued to gain market share and is up a further 0.7 points. Our go-to-market program focused on secondary sales, expanding direct coverage enabled by technology and data supported by continued capability building, continues to deliver strong results. Based again on third-party retail panel data on fans, we have consistently built our distribution lead over our competition. And have expanded reach more than any other company, improving by plus 6 points over the past 12 months. 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 not ever seen before. We have focused over the past few quarters in meeting this challenge. As we said last call, it's essential that we recover these costs and not allow the structural profitability of the business to erode. We have consistently been addressing these through, one, aggressive cost savings via our long-standing UNNATI program, where we saved INR 46 crores this quarter. Two, continued focus on premiumization, where this quarter, our super premium fans business grew 30%. And finally, where required, price increase. We have also worked to use our cash to book advanced contracts on commodities. All these steps have enabled us to recover our gross margin levels. This approach has enabled us to counter the headwinds better than our peers and sustainably deliver competitively superior margins. Cost inflation is still not behind us, and we continue to work these areas, but are confident that with our strategic approach to manage this challenging environment, we believe that our margins continue to be sustainable. On working capital, during the quarter, we witnessed marginal improvement. Our working capital position improved by about INR 50 crores. Our cash position stands at INR 1,359 crores stand-alone as on quarter 3 FY '22. We have maintained a very healthy balance sheet and cash position, which we believe in times like this will help us stand relatively better than a lot of our peer set. We are best placed to tie over any future uncertainty, aggressively ramp up as market demands and invest in long-term development of our business. Our manufacturing and operations in all our factories continue to function smoothly. Norms of safety laid by government and social distancing continue to be strictly adhered to in all our premises. Our entire distribution network, warehouses, et cetera, continue to function smoothly. Our key go-to-market initiatives are continuing to steadily help our business grow. Superior partnerships with trade partners. We have been empowering our channel partners to help them grow their business and continue to support them during these tough times. This strong relation is clearly visible in our ability to maintain our percentage regularly bill dealers at 56%. As mentioned earlier, we have a strong focus on improving our reach. We have made continuous efforts to improve the number of retail points where our products are available and which we service. Our efforts are visible in improved reach across all our categories, fans, lightings, appliances. Improve our secondary sales tracking. Information gathered from our tally patch has enabled us to make more informed decisions that have helped in the growth of the business. We continue to track in excess of 80% of our secondary sales this quarter. Alternate channels is another area we have focused on for growth. For example, with our strong capability building and dedicated efforts, we continue to harness the potential of rural channels, which are delivering strong results. Our rural sales delivered exponential growth of 198% in quarter 3 over last year, albeit of a small base, we continue to gain share in this market. The rural channel's contribution to overall sales has increased by 3.2 points from 1.6% last year to 4.8% of our business this year. It also witnessed sequential growth over quarter 2. One of our key objectives, identified some years back, was to develop premium category products and drive the saliency in our business over time. The performance of our top end range of fans has clearly highlighted the importance of this decision. Our premium plus decorative fans segment grew by 10% in quarter 3 over the same period last year with a CAGR of 28%. Super premium fans continues its outperformance and grew by 30% with a 2-year CAGR of 172%. Consumer-centric product innovation. The key to be a sustainable leader in the marketplace is to develop products that are meaningful to consumers, futuristic in design and application. Our continued investments in R&D has enabled us to introduce consumer meaningful products, which has contributed to increasing our market share. We continue to ramp up our investments in R&D, EBITDA, new R&D center opening in quarter 3 in a 50,000 square feet state-of-the-art facility in Mumbai, with an R&D staff of over 100 people. This has led and helped us provide a strong range of new initiatives across all our categories. On brand building, we are continuing to commit to invest in the long term. This will aid in the long-term development of the business. We continue to drive consumer meaningful engagements through both above- and below-the-line activities. Our investment in advertising and promotion stood at INR 29 crores for the quarter. During the quarter, we commenced our new lighting commercial, Mood Jaisa, Lighting Vaisa, and further invested in water heater brand building activity. We have witnessed a marginal softening or at least stabilization of commodity prices in Q3. We need to wait for a couple more quarters to be more confident in assessing how this moves looking forward? We are monitoring the situation, obviously, very closely and continue to take mitigating actions in terms of driving improved mix and accelerating our cost-saving initiatives. As we look at the immediate periods, really starting from the Omicron wave in -- towards the end of December and flowing through January, we have seen a slowdown in demand as there has been a very, very high level of infections, sporadic lockdowns, curfews et cetera, in various markets and also, to some extent, a level of consumer uncertainty. However, as we see that the infection waves are coming down city by city, geography by geography. We are quite optimistic that demand will bounce back as the infections come down and consumers and markets fully open up. This is pretty much what we saw in terms of the earlier Omicron -- sorry COVID waves, which hit us. Especially as this -- the coming quarter will be the period, which is a key period for our industry leading up into the season months. We think that the opening up and the coming down of COVID infections should result in a robust rebound as we look at the February and March periods of this quarter. Finally, just taking you through the numbers. The Board of Directors at the meeting held on Jan 28 approved the quarterly results of the company for the quarter ended 31st December. Total income for the quarter was -- on a stand-alone basis, INR 1,410 crores. ECD revenues stood at INR 1,099 crores. EBIT margins at 19.4%. Lighting revenue stood at INR 311 crores. EBIT margin stood at 10.5%. Material margins stood at 31.7%. PBT on a stand-alone basis of INR 1,99 crores. PBT margins were 14.1%, and profit after tax was INR 148 crores. I would like to stop here now and we are happy to take any questions any of you may have. Thank you so much.

[Operator]

Thank you very much. We will now begin the question-and-answer session. [Operator Instructions] The first question is from the line of Nitin Arora from Axis Mutual Fund.

[Nitin Arora, Equity Research Analyst]

The first question was more to do with the demand side. Just to understand things better. Volume growth across category looks flattish and that's what the trend or negative, that's what the trend on Crompton are reporting on the growth side. If you can throw light on the volume part? But the question more on the longer term, things are actually very opened up even as you mentioned, the infection rates are not that high in third wave. What's your assessment that the Q4 or going into Q1, next 6 to 8 months, the volume will remain tepid because of the high base? Or you think whatever the growth Crompton will try to achieve it more from a market share gain perspective. That's my first question. And second question, from my side is that you articulated a very interesting point in the last quarterly call saying that you don't want to sacrifice the gross margin of a category just for the sake of the growth because it will not help in the longer run for that category to achieve that kind of a profitability you are looking at. But in such kind of a high inflation environment where every company is looking out for growth and at the ground level retail sales are weak. How would you now address to that? That's my second question. Don't have any other questions.

[Shantanu Maharaj Khosla, MD & Executive Director]

Okay. Let me take the first one. Over the previous quarter, on an overall basis, yes, growth is largely value led. As I look out, however, further we do expect, based on our experience of the past COVID waves that as this January wave passes down, we should pretty much be back to normal demand situations as we go through the rest of the quarter and quarter 1. Also, I think it's important to remember that the seasonal parts of our business, there is some level of trade stocking up, which happens going in to the summer period from the back end of February through March. Now assuming COVID sorts itself out, I would very much see the underlying demand coming back to normal. In fact, if you look at it in many ways and that's why we keep looking at 2-year CAGR. Over these 2 years of COVID, it's hit at different times. And therefore, necessarily quarter-on-quarter, the timing of COVID and COVID rebound might have been different, which is why I do believe the 2-year CAGR for this particular period gives us a better feel of the underlying growth. And that we are seeing is consistently coming in at mid-double digits, which is actually a higher level than it was pre-COVID on a sustainable basis. The last thing I would mention, as you look at our growth over this period is the pumps business. Now compared to a lot of our peers, we have a significant pumps business. And pumps, definitely over the last few quarters, there has been a significant slowdown overall in the industry. And therefore, on a mix basis, that sort of reflects in our overall ECD growth. Your Second question, I forget now. I'm sorry.

[Mathew Job, CEO & Executive Director]

I can answer the second question. You spoke about gross margin. So yes, our stance has been that we should not allow our structural profitability of gross margins to erode beyond a point. While it is obvious that we cannot mitigate the rapid increase or inflation in commodity costs on a quarter-on-quarter basis. We have been very clear that if we allow the margins to erode beyond the point, it is very difficult to get them back to normative levels. Now having said that, I want to reiterate that if you factor in the point made by Shantanu, regarding pumps and you actually look at, for example, fans. In fans, for example, we have, one, managed to deliver in what we believe is industry-leading growth. In terms of market share gain, during this period, we have made more market share than any other player and also managed to sustain our gross margins better than anybody else. And that is also true in water heaters, for example. So I don't think it is a question of making a trade-off of margins versus volume growth. I think we have managed. We have shown that it is possible to manage both pretty well even in such a difficult environment. Yes.

[Operator]

The next question is from the line of Bhavin Vithlani from SBI Mutual Fund.

[Bhavin B. Vithlani, Senior Analyst]

My question is on the lighting segment, and we have been seeing Crompton underperforming in the PS, like of Havells, Orient or maybe when you look at the Dixons segment. So in your view, what are the reasons? And what are the measures that you are taking so that you get back to the industry level growth?

[Shantanu Maharaj Khosla, MD & Executive Director]

Yes. I tried to point this out in my opening comments, but when we separate our business out, the first separation is B2C versus B2B. In B2B -- sorry, in B2C, we had our business historically used to be all conventional lighting, and that is gradually eroding. So obviously, we are not interested in propping up this legacy business. It needs to die and it is gradually in fact, quite quickly dying. So if you pull this part of the business out, which some of our peers never had, and you look at only the LED business, which is the future and which is -- which all the focus is. Like I said, our growth rates are at 22%. So that is not significantly below industry growth rates. Similarly, if you look at the B2B business and I pull out the ESL part where we were actively participating over the past few years, that ESL government tender business has really almost become 0. So if I look at the ongoing B2B business, that is also growing in excess of 22%. So the drags on the business are not because of any fundamental lower growth in our lighting business, but are more because we have this conventional lighting legacy, which is gradually dying, for example, this quarter that business declined in excess of 30%. And we had this ESL business. Now both these will ultimately die farther and not be in our base at all. So the future business and the focus business on Lighting is growing both in B2B and B2C at a rate of about 20% plus for this quarter, which is pretty much a competitive rate, which if we go look back at our retail audit panel shares, are also reflecting the fact that we are not losing market share. In fact, in the recent quarter, if anything, gained a little in some segments.

[Bhavin B. Vithlani, Senior Analyst]

Just a follow-up, what would be the share of the conventional lighting business currently?

[Shantanu Maharaj Khosla, MD & Executive Director]

I think this quarter, the conventional lighting business has come down to 11% or 12% of the B2C business.

[Mathew Job, CEO & Executive Director]

Yes.

[Bhavin B. Vithlani, Senior Analyst]

Sure. The second part is, could you just help us with what has been the growth, I mean, or decline in the comps segment? And are you actually seeing some amount of impact for Crompton because some young pump brand has been launched and so do you see some cannibalization because of this?

[Shantanu Maharaj Khosla, MD & Executive Director]

Mathew?

[Mathew Job, CEO & Executive Director]

Yes. The pumps, of course, as Shantanu mentioned, has been seeing a slowing growth rate in the last few quarters. And in fact, in the quarter, we just crossed -- there has been a marginal decline in pumps, which, of course, has impacted our ECD growth. Now if you look at the growth of all the pump players including Crompton, over the last, I would say, 1 year, almost all of them have had a significantly slowdown of growth in pumps. So I think it is an indefinitely, from what we see in all the numbers of all our competitors, it is definitely an industry-wide phenomenon. Now do we see any impact of the launch of the brand you alluded to? Obviously, they have been -- that brand has launched pumps almost more than 2 years ago. We have done enough analysis to see where and what impact that's been having and we have taken enough steps to ensure that our business is protected because I think the opportunities are large, be it in residential, primarily in the south and the west where we are not market leaders and in nonresidential pumps, which is agri pumps and so on and so forth, the opportunities are many. We remain focused on capturing those opportunities. And we feel pretty confident that the recent slowdown in the pumps industry is a passing phenomenon. And we should soon see the return to growth in this industry in the next few quarters?

[Operator]

The next question is from the line of Sonali Sagar from Jefferies.

[Sonali Salgaonkar, Equity Analyst]

My first question is, if you could approximately quantify the price hikes that we have taken over the past 12 months and particularly in Q3 as well? And is there any further possibility of us taking price hikes in Q4?

[Shantanu Maharaj Khosla, MD & Executive Director]

Mathew?

[Mathew Job, CEO & Executive Director]

Yes, we have -- in most of the businesses, we have had 4 to 5 rounds of price hikes we take from January last year in December, the whole of the last calendar year, in most of the businesses we are in, we have had between 4 to 5 rounds of price increase, they're on an average of around 17% to 18%. In the last quarter also, we had some price increase. Will we have price increases going forward? It all depends on how the commodities have -- are going to play out. As Shantanu mentioned in his opening remarks, there has been a little more stable commodity price environment in quarter 3, but we cannot conclude that all the inflation is behind us. So it obviously depends. And I know, like we have been doing so far we will mitigate any commodity cost increases through a mix of action on pricing on mix and also on cost reduction. So like we have been doing until now. So it's very difficult to predict the further price increases will be required in the near term.

[Sonali Salgaonkar, Equity Analyst]

So how is the inventory position in the channels right now?

[Shantanu Maharaj Khosla, MD & Executive Director]

Mathew?

[Mathew Job, CEO & Executive Director]

Yes. I mean the inventory levels are -- compared to the same period last year, I would say, definitely a little higher -- if you see in the quarter 3 of last year, there was a lot of pent-up demand because of the fact that the trade couldn't stock in, and as Shantanu mentioned the trade typically stocks in February, March, April, -- and I think last year, if you remember also or the year before that, during that period, the channels did not stock in as much because of the COVID wave happened in the peak of the season. So last year, we had pretty robust consumer demand and stocking up by the channel. That's why you see most companies in the quarter 3 last year had declared very robust results. And this year, all the companies also has declared the results which are in terms of growth, while still very strong over a 2-year period, obviously, not as strong as last year. That's one of the reasons is because the trade does have now, while it's higher inventory than is normal. So that's how I think the situation is, yes.

[Sonali Salgaonkar, Equity Analyst]

Sure, sir. Sir, I have just 2 more questions. Firstly, if you could quantify the market share segment-wise that we are enjoying right now? And lastly, you do have a notable cash balance. So what are your plans on the cash utilization?

[Mathew Job, CEO & Executive Director]

I'll answer the first quarter on market share. I only mentioned market share where there is a third-party measurement. In terms of fans, our market share is around 27% as measured by retail funds. On water heaters, other category is about 11%, and so also in the lighting categories, with the exception of ceiling light, we are around 10%.

[Shantanu Maharaj Khosla, MD & Executive Director]

Okay. On the second part, Sandeep, do you want to take that, cash balance?

[Sandeep Batra, Chief Financial Officer]

Yes, yes, sure, I'll take that. So the cash we have about INR 1,200 crores, INR 1,300 crores of cash on the balance sheet. And as we have always maintained the best way to deploy the cash is within the business. And we are looking and we continue to look at opportunities, could be in the form of CapEx or in the form of an inorganic opportunity where this cash can be best deployed. And that remains the priority and the focus area for the present. So beyond that, I don't think at this stage, I have any more information to share.

[Operator]

[Operator Instructions] The next question is from the line of Siddharth Bera from Nomura.

[Siddhartha Bera, Associate]

On the appliance business, if I just look at the growth here also seems to have come down from the strong double digits we have seen in the past. So some thoughts here going ahead structurally how to think about this business? Which are the areas you think you can continue to see a very strong double-digit revenue growth probably in the next few years if you can share some thoughts there?

[Shantanu Maharaj Khosla, MD & Executive Director]

Yes. First, in terms of the growth, I'd just like to clarify, yes, the growth this quarter was 13%, but the 2-year CAGR, which we believe is a better way to look at the trend of the growth was close to 30%. In terms of what are the opportunities and what we're working in terms of the growth areas? Obviously, a key focus of ours now that we've got a program going on geysers and assuming that we have no disruption this summer on coolers, we have -- we are a focus area for us is a small domestic appliances, which have also been growing very well in this period, but we still have a very small share relatively. We have, over the last periods began investing in advertising in this. We have begun to invest in product development and consumer insights. So some time ago, we introduced a strong superior performing mixer, on the technology which gives finer grinding, which is something which the consumer is looking for. So this is an area where we see significant potential upside in growth as we've actually talked before. So geysers, we still have room to grow to reach our aspirations of about 20 share. Coolers, we will see. Unfortunately, we missed 2 seasons, but the large segment with a lot of potential growth, which we are being focused on over the recent parts is appliances, where we are relatively still underdeveloped.

[Siddhartha Bera, Associate]

Got you. Sir, a follow-up on that is any new category we are planning to enter in this part like Kitchen or anything else in the next near term?

[Shantanu Maharaj Khosla, MD & Executive Director]

I think as Mathew has mentioned in some calls discussions earlier, yes, we have a definite plan to enter into a new category. I'm sorry, but I can't talk more about it than that.

[Siddhartha Bera, Associate]

Got it, sir. And lastly, on the light side, I mean market share, if you look at has trended in that 9% to 10% range for quite some time now. But can you share some thoughts about how you are planning to take that up in the next couple of years? And any aspirational target here as well?

[Shantanu Maharaj Khosla, MD & Executive Director]

The quick one on lighting. Lighting basically has 3 strong segments, the bulbs, the tube lights and the ceiling lights, which make up the bulk of the market. We have been relatively underdeveloped in ceiling lights, while we are stronger in terms of our share position in bulbs and battens or tube lights. Ceiling light and innovations on ceiling light, such as the Star Lord initiative, which we launched supported by the advertising is a key focus area for driving incremental growth in share. Initial results of that are quite strong, where the last quarter ceiling light growth on LED was significantly higher than our total lighting growth. I don't know, Mathew, if you have the exact number with you.

[Mathew Job, CEO & Executive Director]

It's over 80%.

[Shantanu Maharaj Khosla, MD & Executive Director]

Right? So that program is showing initial results because roughly, our share in sealing lights is about half our share in battens and bulbs. So there's a lot of headroom for growth there. And we are seeing that our programs are delivering the initial results. So we are very hopeful as we look forward on restoring share growth on LED lights.

[Operator]

The next question is from the line of Renu Baid from IIFL.

[Renu Baid, Vice President]

My first question is on the Lighting segment. Lighting margins, while you were expecting that these mid-teens kind of margins should be broadly sustainable. However, in the last few quarters, they've just ranged to early between 10% to 11% levels. So any comments in terms of the reasons for relatively weak lighting margins despite price actions and discipline in the market, and by when are we expecting -- and broadly, what would be the expectation of margins catching up in this category back to materials?

[Shantanu Maharaj Khosla, MD & Executive Director]

The primary reason on the margins because if you look back at track our gross margins, our gross margins are strong is because we have restored and we plan to continue to invest in advertising and lighting, which for the previous 18 months or so, we had low levels of advertising investment in lighting relatively speaking. We think that this 10% to 11% margin is a sustainable margin, but including what we believe is the right level of going advertising investment behind this category. Anything to add to that, Mathew?

[Mathew Job, CEO & Executive Director]

No, no. That's it. I think yes, the primary reason why you saw a lower margin is, one, in terms of advertising, which is 1 of the 3 things we want to focus on to restore strong robust growth in lighting. One is apart from the range improvements we have made, primarily focused around ceiling light. Second is consistent ongoing advertising in lighting, which is something which we have not done in the last 2 to 3 years, which is, I think, learning for us that going forward, we will need to invest consistently in lighting. And third is driving the distribution in both urban and rural market. So that's how we think the lighting business is going to shape up going forward.

[Renu Baid, Vice President]

Sure. And secondly, on the ASP, just a bookkeeping question. The presentation mentions advertisement INR 30 crores and similar Y-o-Y numbers have been mentioned accordingly. But in the opening remarks, Shantanu mentioned this is advertisement and sales promotion. Historically, we have always shared total ASP spend. So just wanted to reconfirm the 30 crores was only advertisement spend or advertisement and sales promotion combined? And going forward, would we be broadly maintaining this at similar 2.5 to 3 percentage of revenue or trend on a broad annualized basis?

[Shantanu Maharaj Khosla, MD & Executive Director]

Sandeep, you want to take the bookkeeping one?

[Sandeep Batra, Chief Financial Officer]

I think this is all advertising. This is not sales conversion. The INR 30 crores is all largely advertising, largely.

[Renu Baid, Vice President]

So what is the comparable ASP number for this quarter?

[Sandeep Batra, Chief Financial Officer]

I'll get back to you.No, I don't have that off the cuff.

[Renu Baid, Vice President]

No problems. And annualized a broad expectation of maintaining a similar 2.5% to 3% of ASP. Is that intact? Or we see relative -- I would upgrade in terms of the spending?

[Sandeep Batra, Chief Financial Officer]

These numbers may go up a little bit. On depending upon how the business conditions are and the products that you will be putting this money behind. But it will be around the 3% mark.

[Renu Baid, Vice President]

Sure. And lastly, on new category expansion, while we have -- we had mentioned they're looking to enter new categories organically as well by the end of this year. So the disclosures would be as and when they come, but are the time lines broadly intact? Or we're seeing some delays or realignment on the scheduled new launches as well?

[Shantanu Maharaj Khosla, MD & Executive Director]

Broadly intact, maybe a month here or that kind of thing, right? Given the disruption which happened in the marketplace are broadly intact. Yes.

[Operator]

The next question is from the line of Charanjit Singh from DSP Mutual Fund.

[Charanjit Singh]

So one thing which I wanted to understand was on the regional perspective, if you can touch upon, there were certain regions where we are trying to get stronger in terms of our product availability in terms of reach and also market share expansion, which was an incremental growth perspective from our side? That's my first question. And second question is in terms of our appliances, the journey which we have seen. In terms of availability of the product in the channel, what kind of availability is there, what percent of channel right now we are able to cover? And what has been the feedback till now for our product while we have a very good product positioning, but in terms of the feedback which we are getting from the channel, if you can touch upon that also on the different appliances as a product category?

[Shantanu Maharaj Khosla, MD & Executive Director]

Mathew?

[Mathew Job, CEO & Executive Director]

Yes, yes. In terms of -- like Shantanu mentioned in some of the previous calls, we had put in place a specific program, especially to improve our market share in the North and Eastern regions because those were 2 regions where we were not having leadership share. So I would just like to say that especially in the North, we went from being #2 or #3 in France to being #1. So I think a lot of the actions that we have taken have already delivered results in North where we have now come back to a leadership position on fans. In Eastern region as well, we have seen significant improvement in share, while we are still some distance away from getting the leadership position there. So that's on fans. On lighting, of course, our shares have been basically stagnant, although we start to see some improvement in ceiling lights from this from quarter 3. In terms of appliances, like I mentioned in one of the previous calls, for example, in geysers, we have moved from being #7 to being #3, #2, depending on which region you look at our availability of products have improved a lot. But if I compare, say, with fans, where we have #1 availability, there is still a long way to go before, even in geysers, we can get into reach of 30% plus. So it's still, I would say, a long way to go before we say that our reach is where we want it to be.

[Shantanu Maharaj Khosla, MD & Executive Director]

Yes. In terms of -- Yes. Yes. Just one quick one there. Actually, if you go back 4 to 5 years ago, though Crompton fans were the largest selling plans in the country. Our reach was not the highest.

[Mathew Job, CEO & Executive Director]

Yes. That's true.

[Shantanu Maharaj Khosla, MD & Executive Director]

Today, our reach is not only the highest, but every period, we're building the gap and increasing the gap, and on our latest data, which is the month of November, it is at the highest level it has ever been. Sorry, Mathew. Go ahead.

[Mathew Job, CEO & Executive Director]

Yes. In terms of product feedback, obviously, I think eventually the way we look at it is when the consumer is opening his wallet to buy Crompton. We say that -- that's what this is all about. If you see the first actions we took in water heaters, water heaters, I think the continuous improvement in market share, the fact that we have been the fastest-growing player in this industry in water heaters for more than 2 years, that we are very close to the market leader in terms of share now. I think all these proves is that in water heaters, that journey has been working pretty well. Second, we started on air coolers, but unfortunately, the last 2 seasons have been a washout. So there is -- we cannot -- although we have been the fastest-growing company even in these 2 years, of course, off a low base. I think the season was not full. So I wouldn't read too much into it. We still need to travel that journey in small domestic appliances, which is where we are putting a bulk of the effort going forward.

[Charanjit Singh]

If I could just squeeze in one more question on the pump side. So while we have seen you talk about how challenging quarters in the past, we have seen that completed well with the Mini Crest mini pumps and very cost effective pump. So if you can talk about the outlook for the pumps industry as such or any particular product launch we are expecting to do in that segment in terms of the price segment, which can actually bring in change in the overall trajectory for the pumps as a category?

[Mathew Job, CEO & Executive Director]

Yes. I think it's a very good point you raised, the fact remains that, like I mentioned, the pumps industry has been going through a little bit of a slow patch in the last 2, 3 quarters. And this is not the first time we have seen this. We have seen this happen about 3, 3.5 years ago. And that is when we had this entire new launch of the Crest series which actually helped get strong growth back to the pump business again. So over the last few quarters, obviously, while it's an industry-wide phenomenon, we have been working our plans to see which categories, which markets have been more impacted? And I have worked up plans to counter that and get our act in terms of getting growth going again. So while I can't share the details of which products will get launched when, I think we have a lot to go by from the success of the Crest launch that we got last time. And that, I think, learning is being put to good use as we speak. Let's see how it pans out as we go forward.

[Operator]

The next question is from the line of Anil [ Joshi ] from ICICI Securities.

[Unknown Analyst]

So 2 questions. One, obviously, one of the earlier participant had also asked this similar question, that a competing product with a similar name is in the market. So what are the 3 to 4 key initiatives that the company is working on so as to reduce the consumer -- or retain the confidence? Or reduce confusion with the customers for even trade? That is one question. And question number two, in fans, we are leaders. Can you indicate what will the market share positioning in the economy segment as well as the premium segment? And roughly in a normal, let's say, fan, what is the profit percentage in economic versus a premium fan? Yes, that's it.

[Shantanu Maharaj Khosla, MD & Executive Director]

Okay. Mathew?

[Mathew Job, CEO & Executive Director]

Yes. Like this question was asked before, of course, there is a similar -- a brand which has launched a couple of years ago. And obviously, there is bound to be some level of confusion. Obviously, the first thing for us was to understand how big the confusion is. So we have done our research to figure out the extent of the confusion of what kind of confusion is it? And we are taking steps at multiple levels. One is, of course, at the consumer level to minimize or to eliminate, I would rather say, minimize any confusion that exists. There are many ways they're going to do it, both in-store and outside the stores, there are multiple actions we have put in place. Second is we have a very loyal trade base, which has been the fulcrum on which we have built our extremely strong pump business. We have taken adequate steps to ensure that the core of our channel is fully protected and once you would like to continue to do business with us. So there's a whole course of actions in terms of our product development. We have always been ahead of the curve in pumps. And we -- one of the things we have not done in the past is to really talk in up to the consumers on pumps and why our pumps are the best of the lot. So there are actions being taken at that level. So all these together, I think we're very confident not only will help us fight this battle against similar brands, but also strengthen our leadership position in the market. So that's what I would say on CG. In terms of market share, I think it doesn't make too much sense to look at market shares across categories. For example, I can -- just in premium fans, our market share is close to 35%. And that is higher than the market share that we have in fans as a whole, which is 27%. But in fans, we are #1 with 27%. In premium fans, we have 35% market share, but we are #2. Although in parts of the country, we have gone from being #2 to #1. So in terms of margins, obviously, the premium fans make much better margin than the economy fan. That's what -- that's where I would limit it.

[Unknown Analyst]

Yes. Yes, and other trend is now in fans too -- is apart from pumps it is in fans. So that's what our -- at least our channel is sure that it has been launched in North India. So pumps is a relatively smaller -- still smaller category. It's not a consumer category per se completely. Fans is a completely consumer category and is one of the most important category for us also. I guess pumps also important, but fans is the largest segment too.

[Shantanu Maharaj Khosla, MD & Executive Director]

So the approach on fans is exactly the same as what Mathew articulated on pumps. We are taking all steps at the customer and the trade. At the consumer level to directly advertise and communicate to the consumer and also in our product development and innovation. The other thing to realize the difference between fans and pumps is the trade channel is slightly different. In the case of pumps, this particular competitor also has a motor business, small motor business and the trade channel of small motors and pumps tends to be the same. Fans, on the other hand, tends to be a completely different set of dealers. So there is relatively less potential for this any kind of trade confusion and disturbance in fans because they are different dealers.

[Operator]

[Operator Instructions]The next question is from the line of Mayur Patel from IIFL AMC.

[Mayur Patel, Principal & Fund Manager of Listed Equity]

So I just want to check, your core business is firing well and you have been delivering very strong steady growth in fans and other core businesses, while ESL and the [ DJC ] Lighting business, as you mentioned, has been a drag. But ultimately, that impacts the overall company level growth. So in terms of new launches or what are the initiatives that you're planning to take to offset these segments which are dragging the overall company level growth. So that at a company level, we are above industry growth rate. Just wanted to understand that.

[Shantanu Maharaj Khosla, MD & Executive Director]

Two things, and I'll talk to the company level, not at the lighting level. The first thing is we are coming towards the end of the drag in a sense, right? So a lot of this over the next few quarters will stop being a drag because it would have bottomed out, if you will. Conventional lighting, for example, has already only come down to about 10%, 11%. The second thing is, as we mentioned briefly, we have clear plans to introduce new category, which -- and those plans are pretty much on track. Additionally, apart from everything we're doing on fans, getting the product and the growth on pumps, building our share by investing in distribution and advertising on ceiling lights. As I mentioned earlier, we had a huge runway on small appliances. And that is a key area of focus. So when you add these things together, we believe they will more than make up for this segmental drag on legacy parts of the Lighting business. Anything to add Mathew?

[Mathew Job, CEO & Executive Director]

No, I think no, nothing more. I think we have covered that.

[Mayur Patel, Principal & Fund Manager of Listed Equity]

Okay. And Mathew, just recorrecting our previous conversation about these new launches likely to happen this year. Is it still on or it will move to...

[Mathew Job, CEO & Executive Director]

As Shantanu mentioned sometime back to a previous question, I think they are more or less remaining intact in terms of time line. A few weeks here and there, I wouldn't consider as the major change, remaining on track, yes.

[Operator]

The next question is from the line of Keyur Haresh Pandya from ICICI Prudential Life Insurance.

[Keyur Pandya, Equity Research Analyst]

Just two quick questions. One is on the small domestic appliances. I think that itself is a very large category with so many small subcomponents. And earlier, we have highlighted -- I mean, we have -- what we have done is like focused on 1 or 2 key categories where we can gain large market share. So within small domestic appliances, are there few focus categories for near term or medium term? That is just first question. And second, quickly, when you talk about lighting margins, 10%, 11% sustainable but with higher A&P, so should we infer that higher A&P should give us higher growth basically since we are reinvesting the money, it should pay back us in terms of higher growth, right?

[Shantanu Maharaj Khosla, MD & Executive Director]

The quick answer to the second question is, yes. But advertising, as you're aware, is a long-term investment in continuing to brand build. On the first question, as we mentioned in the past, the largest, by far, segment of small domestic appliances as the category is today, is mixers and grinders. So obviously, if you're going to win in small domestic appliances, you necessarily have to win with mixers. That being said, based on our understanding of the consumer and the market, you also need to offer some form of meaningful range of other subcategories also. So that's how we're thinking about it. There will be a range. The first focus on innovation and investment will be to build a position in mixer grinders, but supported by a range of selected other small appliances.

[Operator]

The next question is from the line of Achal from JM Financial.

[Achalkumar Lohade, Vice President]

Sir, just a quick question. One is in terms of the B2B lighting, is it possible to get some more understanding in terms of the range what we have, is it matching with the existing market leader? And what is the time line? If not, what is the time line by when we can have that kind of a range? Given the kind of distribution we have. And also a comment on the distribution for the B2B lighting?

[Shantanu Maharaj Khosla, MD & Executive Director]

Mathew?

[Mathew Job, CEO & Executive Director]

Yes, I can take that. You see in the categories, B2B now is there are multiple segments. Of course, for example, there is road lighting. There is infra, there is commercial, there is sports. There is a whole host of categories, there's retail. In the categories that we want to focus in, occasionally, for example, we desire very clearly that we won't become -- we won't participate, for example, in shop lighting or retail lighting for example. So in the categories or segments that we want to focus in B2B, we have a range that is both complete and competitive with respect to the leading players in the market, which is why as Shantanu mentioned, if I remove the ESL and the legacy government tender business, our B2B business has grown in the last quarter by 23%, which I would be fairly confident would be the best, and if not the best, it's one of the top 2 in the industry. So I think that is -- that is one. Your second question was in terms of the go-to-market of B2B. What is that?

[Achalkumar Lohade, Vice President]

Go-to-market of B2B.

[Mathew Job, CEO & Executive Director]

The B2B go-to-market like we have been mentioning, we have invested a lot in terms of go-to-market, especially about 2 years ago. We invested in this whole CRM, which is the salesforce.com package, which gives us full visibility -- end-to-end visibility from leads to bids to orders to order execution. So that full investment is actually, I think, definitely put us in good shape. And as and when the market really starts to revise for B2B, I'm confident that we are well positioned, even if I look back at the last 4, 6 quarters on B2B, if I remove the ESL business, we will definitely be among the top in the industry in terms of growth.

[Achalkumar Lohade, Vice President]

Got it. And just one comment, if you look at last 18-odd months, we have seen a fair amount of supply chain disruption for the unorganized and that leading to market share gain for key organized players in general. So my question is, is it fair to say, a, there is a market share gain, which is there in the base, so which makes the incremental growth a little bit higher or difficult? And number two, is it also fair to say that there is an element of preponement of demand which could have come over a period of time, got bunched up in the last 18 months? I just wanted to have your comment on the sale, sir.

[Shantanu Maharaj Khosla, MD & Executive Director]

On the second one, definitely, as you look back over the last 18 months of COVID, there were periods of demand stopping and then there were periods of demand getting bunched up, right? Simple example, last year, October, November, December, demand got bunched up, which is why, as Mathew said, across the industry, people -- everyone is growing at 30% levels. If you go back to last year, April, May, June, demand got compressed, right? So that was simply a function of the behavior of the consumer and trade as impacted by COVID, which is one of the reasons to smoothen out and look at the trend over the current period, we keep looking at 2-year CAGR. Right? Mathew, the first one?

[Mathew Job, CEO & Executive Director]

Yes. The supply disruptions for the small players was primarily in the year 2020 because when the COVID first, both in terms of the maturity of the supply chain and in terms of capital -- working capital, in 2020, there was a massive impact. That is why the smaller players or the unorganized players had it much tougher in that year. I would say near 2021, calendar year 2021, I think the disruptions on the supply side were few and far between even in wave 2. It was only the demand side that was really impacted, not the supply side. And so I would say even the smaller state players in 2021, the supply situation was much better than 2020. Having said that, I think the only area where I see some challenges at this moment is in lighting, specifically because there is still some sort of issues in terms of semiconductor supplies. But otherwise, I wouldn't think that there is any -- even for the smaller players, any significant issues as far as supply is concerned. So all the market share gains that have happened in the recent past, I would say, in the calendar year 2021, I wouldn't attribute it to any loss by the small players, while that was true in the calendar year 2020.

[Operator]

Yes. In interest of time, this was the last question for today. I now hand the conference over to management for closing comments.

[Shantanu Maharaj Khosla, MD & Executive Director]

Thank you. Thank you, everyone, for engaging in this call. Hopefully, we were able to address most of your questions. As always, if you have any further follow-ups, which we could not get to because of lack of time, please feel free to contact us, and we'll do our best to respond. So thank you all, and please stay safe, stay healthy. And if you haven't yet, please get vaccinated. Thank you so much.

[Mathew Job, CEO & Executive Director]

Thank you.

[Operator]

Thank you very much. On behalf of Batlivala and Karani Securities, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.