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Ladies and gentlemen, good day, and welcome to Crompton Greaves Consumer Electricals Limited Q4 FY '18 Earnings Conference Call, hosted by IIFL Capital Limited. [Operator Instructions] Please note, this conference is being recorded. I now hand the conference over to Mr. Renu Baid from IIFL Capital Limited. Thank you, and over to you, ma'am.
Thank you, Vikram. Good morning, everyone. On behalf of IIFL Capital, I would like to welcome everyone for the fourth quarter '18 conference call of Crompton Greaves Consumer Electricals. Today, we have with us the entire senior management team of Crompton to discuss the performance of the fourth quarter and overall for FY '18 as well. Management is represented by Mr. Shantanu Khosla, Managing Director; Mr. Mathew Job, CEO; Mr. Sandeep Batra, CFO; and Mr. Yeshwant Rege, who's Vice President, Strategy and Financial Planning. Without taking much time, I would like to hand it over to Mr. Shantanu Khosla for his opening remarks. Thereafter, we can start with the Q&A. Thank you, and over to you, sir.
Thank you, Renu. Good morning. This is Shantanu here in our offices in Bombay, and thank you for dialing into the call. As usual, I'll give a bit of an overview and try and add some perspective and then we'll leave much time as we can for questions.Let me start, actually, this call by talking about our ECD business, since I think that's probably something which I -- you have the most interest in more color. Overall, I suppose -- I assume you've seen the numbers. Our ECD business grew close to double digits, and we continue to grow margin and bottom line. Now let me get into the ECD segment, of course starting with the largest and most important segment, Fans. Fans for the quarter grew close to double digits, and we continue to build our margins and profitability. As we've talked in the past, there are really 3 things that we're focusing on to sustainably continue to grow our Fans business. First, consumer-based innovation, introduced new innovative products that truly make a difference to the consumer. For example, as you're aware, one of the ones which we did on this approach last year was our anti-dust fan which has been extremely successful. Over the last fiscal, which was the first full year of anti-dust fans, we sold in excess of 200 crores of the anti-dust variant, which probably makes it the largest single new innovation initiative in the fans industry. We continue to drive this. And recently, we introduced another consumer best innovation called Air 360, which is another truly innovative product. Basically, what Air 360's unique design delivers is 50% more coverage of the breeze and the circulation created by the fan. In fact, in our consumer testing, Air 360 was preferred 2-1 versus any other fan. One of the strongest results we've ever got. This went into market in the -- towards the back half of the quarter under discussion. And initial results are extremely encouraging, though obviously, there is a great bit of opportunity -- great opportunity to drive this further. These innovations are really at the core of building our Fans business by, as you said before, growing premium. Our Fans business, which grew close to double digits this quarter, has continued to grow market share. As you're probably aware, the fans market is still essentially flat and our sales growth represents share growth. Also, when we look at our retail audit data, that also indicates continuing share growth for our Fans business in the quarter under discussion, primarily as we had planned, driven by premium fans. The second leg of our approach on Fans, and frankly, across all our businesses, has been to truly revamp our go-to-market. Create a go-to-market which is much, much more based on driving distribution and the quality of display and visibility in retail stores via a strengthened distributor partnerships and via leveraging data and technology. As you're aware, we began this journey a few years ago because this is something which takes literally years to complete, and we've been [indiscernible] in the South with Lighting where we had wonderful results. And that was the first market and category we went to. South continues to be our lead market, if you will, for our go-to-market approach, and it is delivering extremely strong results. In Fans in the South, we grew close to 25% in the previous quarter and close to 25% in this current quarter under discussion. So we're really seeing the results. We have, over the past couple of quarters and months, been expanding this approach, as we've talked, to other geographies and other categories. Recently, over the past 3, 4 months, we began changes in the North of India also. As most of you are probably aware, the North is probably one of the most challenging trade environments to make these changes, because the changes involved price stabilization, stronger coverage. Historically, we have, in the North, like most of the industry, been extremely wholesale dependent. So the North actually is the area which, while we have been beginning to do these changes, has been declining over the last couple of quarters, which is something we actually anticipated because this happened to us even in the South when we first implemented Lighting, as inventory levels settle, as a focus shift happens from wholesale to retail. But we are extremely confident and truly believe, especially given the results we have got in the South, emerging results which we're getting in the West, that this is the right way to go, focus on retail, focus on superior service to the shopper, superior availability to the shopper. So our business has responded where this program has been running for a while. We're beginning to see the business begin to respond, though it will definitely take a couple of more quarters as we continue to expand this program. One of the reasons why we chose not to do this in a big bang across the country and category at one time is because we were aware that there are short-term impacts when you implement it in a particular market. So we've been balancing that as we move along, to keep total growth and share intact. The third key focus element, obviously on our Fans business, and again, across the company, has been really driving down costs and really focusing on operational efficiency. This, along with our extremely successful approach of driving the premium segment, has continued to be the key contributor of profit and margin growth on Fans. Next, we're quite happy with our progress in Fans. We're quite happy with the fact that we are continuing to grow share. And as our go-to-market changes, begin to mature, we believe we will continue to drive accelerated share growth and focus growth behind our critical innovations. The second area in our ECD business I'd just like to talk about briefly was -- is pumps. As you'll recall, we had talked in the last quarter about some competitor challenges we were facing in pumps which was -- had impacted the growth rate. We were still growing. We were still growing share, but the rates of growth had come down. And we had briefly talked about our plans to quickly address this. And our program which we talked about was looking at a redesigned pump which we called Crest Mini, which could go head-on with the lower-priced pumps. That has been exceedingly successful. We have actually grown MINI volume sales close to 25% in the quarter under discussion. Our total pumps business has now really pulled back up to strong growth rates, market-leading growth rates. And in this quarter, we grew 13% to 14% in terms of value in pumps in total. The last thing I'd like to briefly mention in the third segment is our small appliances segment where we talked about the need to get strong innovations. We have developed and introduced, on a pilot basis in some markets, a truly unique cooler. This cooler, based on its innovative design, offers 60% better cooling than the leading cooler in the market, which is truly an outstanding breakthrough in performance. It's a window cooler. It provides other advantages, therefore, in terms of space, in terms of maintenance, in terms of look. And we have put this out in pilot because we still want to learn a bit more, especially about the model of installation, et cetera, which we are providing with launch. But we are optimistic that this will continue to build our cooler business. Obviously, like we've talked before, I can't mention details, but we've got a series of such meaningful large innovations across our other categories also which will come in the course of this year. Moving on from ECD to Lighting. Lighting, obviously, continues to grow extremely well. Our Lighting business grew in excess of 20% this year and sustained that level of growth driven by a strong focus on our B2C business where we are continuing to drive distribution and availability, not just of the bulbs but also the tube lights -- LED tube lights and panels, and our continued work in the B2B segment, which stays an important focus area for the Lighting business. While versus a year ago, our Lighting margins have continued to improve significantly, in the quarter under discussion, versus the previous quarter, there has been some reduction in gross margin. This reduction in gross margin was driven partly by the fact that pricing still continues to decline in the market, and the market is extremely competitive, as you're probably aware. But secondly, most of the decline in the margin was caused by one-off provisions, warranty provisions and some other provisions, which we have charged because that's appropriate to do in the quarter. Next, we've had, we believe a nice, solid consistent quarter. If you recall, our goals and targets were always set at growing faster than the market and building our bottom line faster than our top line. We think we are continuing to build the right sustainable interventions, such as our go-to-market, the innovation capability we're building, the supply chain capability we're building. We're also, as we move forward, stepping up our investments in digitization, automation, which is critical for us to really leverage our new go-to-market infrastructure that is rolling out as we speak. We look forward to the year ahead. Hopefully, we will not get the nature of external shocks which we got in the current fiscal, especially at the beginning of the fiscal with the GST implementation. And markets, such as real estate markets and the economy, will continue to be a tailwind as opposed to a headwind, which should set us up, given our current position, for another strong year of performance in the year ahead. With that, I'll just end my remarks and then we're happy to take questions.
[Operator Instructions] We have a first question from the line of Arnab Mitra from Credit Suisse.
On this go-to-market changes, I just wanted to understand a couple of things here. So one potential issue, as you're saying, could be that there is a destocking at some levels or not which is causing the primary sales to be low. Or is it also that actually there is a market share shift at the consumer level because of these changes? And therefore, even if they're stabilized, it's going to be some permanent loss that you have taken. And is it driven more by changes in discount, credit kind of policies, or is this just a transition where you need to change distributors, maybe consolidate and things like that? So any kind of a bit more color on this will be helpful.
Okay. It's actually a combination of different weightages of all the factors you mentioned. Obviously, as we want to drive more retail focus, we have to build new stronger distributor partnerships, build their information systems and capability. And that is a -- while the appointment of a distributor can happen, if you will, instantly, the building of that capability of the distributor, the familiarity of the distributor salesman with the retailer all takes some amount of time. There is also definitely a focus on establishing clear price stability for every channel. And this is important if we want to implement the changes which we wanted. That causes some amount of market disturbance. We went through this, if you recall, when we first implemented this program for the first 3 months in Lighting in the South. So in -- so that leads also to some inventory adjustments with the large wholesalers. These issues tend to be greater in North India than other parts of the country. So we are diligently working through each of these issues. Even when you talk the North, we are not implementing everything everywhere. Even there, we're taking it branch a branch, phase by phase, to make sure that you get the right balance as you go along. So you begin to see -- so you see a dip for 3 to 5 months, which is sort of coming to the end we believe in our judgment in the North. And then you -- it begins to stabilize and then it begins to grow. We've seen this pattern in South across categories. We've seen this pattern in the East. In the East, for reference also, where we've been doing this program in the previous quarter, our Fans business grew about 25%. And this quarter, it grew in excess of 15%. We saw this pattern in the West. In the West, we were also declining in the North. In this quarter, that decline has been arrested and when we've come to flat and we're definitely looking at growth in the quarter to come.
Sure. Just one follow-up. So it was related to this. My question was that are you confident that there's not been much of a secondary or let's say an offtake kind of lossage, more of a channel distinct? And any way to quantify the primary effect? I'll come back for any other question.
Well, we're reasonably confident because we have -- that we have not lost anything significant from a consumer offtake point because our retail audit data indicates that we're continuing to grow share. In terms of quantification, well, it's difficult to quantify exactly. But clearly, if the North is declining, the difference between a decline and an average growth is a fair estimation, I would guess, of the temporary loss. And I guess, if you trace back, that is not very different, and it was easier to quantify then because it was sort of a single category. That's not very different from what we experienced about 2 years ago in Lighting in the South.
[Operator Instructions] We have the next question from the line of Venkatesh B from Citibank.
Sir, a very simple question. Is it possible to give this GST an excise adjusted growth category-wise? What was the growth in fans for the full year, fans, pumps, appliances and lamps?
I mean, at the moment, we will not be able to share these numbers. But at an overall level, I think the impact of GST, you could use the company level average across all the individual categories. I mean, Lighting is quite transparent, right, because you have segmental growth numbers. And we are now saying that -- and in fact, in Lighting, the impact of this whole GST adjustment was the highest. It was nearly 8%, 9% in Lighting. And in all the others would be in the range of 4% to 5%.
And like Sandeep says, within the ECD categories, there's not a significant difference in the adjustment factor, because largely, we have a strong -- that's the other one of our key strengths, which is our asset-light model, right, which gives a kind of ROCE which that is industry-leading. And that sort of plays across all the 3 categories.
We have the next question from the line of Chirag Shah from CLSA.
I'll limit my question to just one. You mentioned on the cooler side, we have done some pilots in some markets. I mean, without elaborating on which markets you have looked at, can you just explain to us as to what is -- whether these markets are really relevant and what is the kind of geography that we have covered so far? And if this products are successful, the rollout would be in the next season?
We have covered, I would estimate, and Mathew, correct if I'm wrong, about 15% to 20% of the market. Okay, the reason we chose to pilot first is because of the nature of this product, unlike the coolers we're used to, this gets installed like an air conditioner. And we are offering, because we believe that's important, free installation. So we wanted to make sure that we had built up and have confirmed the capability to deliver this installation at a high quality to our consumers before we expanded nationally. That was really what we wanted to qualify, since it's a capability we've not had before, more than qualification of the product and the benefit. We feel very, very strong about that. Early signs where we have gone are all extremely positive and receptive. We will, of course, go whole hog on this in the coming season at the right time.
We have the next question from the line of [ Sagel Kalkannis ] from Motilal Oswal Securities.
I just wanted to understand on the premium fans. You mentioned that in this [indiscernible], we have seen a 25% growth in this quarter as well as in the last quarter. So is it that our share of premium fans is higher in the South versus the other region? And you could throw some light in that context.
The share of premium fans is definitely highest in South and in the West. These are the 2 regions which have a high share of premium fans.
So is that what has been driving the growth in the South market?
Not -- I mean, one, premium fan growth in general has been what has been driving our growth nationally. I'm putting the difference in the South growth largely behind the fact that we are much further along go-to-market path. And I guess the other data point which helps us believe that is the second region where we had begun to broaden the implementation of go-to-market was East. And actually in the East, historically, we've had the lowest market share for fans. And in the East, we grew Fans 25% last quarter and we grew about 15%, 16% this quarter on Fans.
We have the next question from the line of Gunjan Prithyani from JPMorgan.
I just have one clarification on this go-to-market. Is it now that for Lighting, it has been rolled out across geographies? And for Fans, the only pending geography is North?
Okay. No, not entirely true. Lighting is a little ahead of Fans on a national basis. Fans still is in the process of rollout, both in West and North. North is about a quarter or so behind West. So it's not such a discrete thing, it's a continuous process. Also, it is not that South is done and dusted. We are now moving to what we call our go-to-market, if you will, 2.0, which brings in certain other capabilities. For example, much stronger IT-enabled and data analytics capability to support it, salesmen with handhelds, dealer portals. So all of that is also coming. So it's more -- instead of thinking of it as something which is discrete, I would urge you to think of it which is something which is a continuing journey.
No, sure. I'm just clarifying this from the perspective that you've been able to curb the growth decline or the growth -- slowdown of growth in East and South. Now if North and West maybe it takes 3 months or 6 months, these markets should stabilize in terms of growth. Is 3 to 6 months a fair assessment for stabilization of the market or it could take longer?
That's a fair assessment.
Okay, and a second was a more bookkeeping question...
Ma'am, I'm sorry to interrupt. Please come back in the queue. We have the next question from the line of Ashish Shah from Goldman Sachs.
Sir, my first question is on this new cooler pilot that you have started. I just wanted to understand, in the third quarter, we missed out on some revenues on the water heater side because we are slightly late to introduction of the new models. Similarly on the cooler side, since that we are pretty much in the summer season, probably if the pilot continues for some time, even the next quarter would not hit the full impact. So I just wanted to understand the reason on why some of these launches have taken longer than when the actual season for them should have started. That's my first question.
Okay, I think the kind of innovations we are trying to do now are completely new to industry. They require significant work in the entire design and development stage. So they take relatively longer to qualify. They have relatively higher risk, but on the flip side, they have relatively greater payout. Like I was talking about the cooler, it's a whole new capability for us, this ability to go and install product in consumer's home. We have not done that before. We have to create a network. We have to make sure the network is working. And in our judgment, because obviously, it's a trade-off, we believe that you need to get that right. So we believe we needed to learn that before we commit to national expansion.
Okay, understood, Sir. So we should expect the -- I mean, this is a continuation of the discussion. We should expect that this quarter we will see the impact of the cooler business, or do you think it will still take 1 quarter for it to get to that stage?
Well, the cooler business is really so seasonal in terms of primary sales that the bulk of primary sales of coolers really happens up until April. So it's in the pilot, we keep learning. And it's next season where we expect it to make a dramatic impact.
Understood, sir. So my second question.
Sorry to interrupt. Please come back in the queue. [Operator Instructions] We have the next question from the line of Atul Mehra from Motilal Oswal Asset Management Company.
Sir, just coming back to the air cooler part of the business. So while we innovated here, what is the, in terms of shelf life of the innovation, given that the product itself was supposed to be low-tech and normally what you've seen in the air cooler is people replicate whatever is the latest innovation? So according to you, what is the shelf life of this innovation and how long do you think it will take for competitors to copy this?
Let's take the example of -- let's learn a little bit from what has happened in the past. For example, we were the first ones to bring anti-dust fans to market. So obviously, we are the ones who did drive research. We had the ability of having a longer time frame to get to market the best technology that will deliver anti-dust. And if you see others have copied it. But the fact is there is no other organization which has built anywhere near similar kind of business like we did in anti-dust. And if you look at the cooler, I think a part of it is to the extent possible IP protected, and part of it is, of course, not IP-able. So of course, the possibility exists that somebody can copy parts of it in the future. But in that sense, I think what we mentioned earlier, in terms of having a pipeline of [indiscernible] innovation, it's not just one. This is just the first step in the journey, so we're very sure that we are also having in the future subsequent innovations which will continue to help drive our growth in the time to come.
As we've defined it, you need on the coolers business, at the very least, one big innovation every 2 seasons, ideally 1 every season. Again, if you take the fans example, last year, we did anti-dust, this year, we're building Air 360, both which we believe are big, significant consumer meaningful innovations. So you need that base. And on a seasonal business, once a season would be our goal. You may not -- we may not hit it every season but that's what we would aspire to do. But you definitely need 1 every 2 seasons.
Right. And sir, on the economics for the consumer on this product, how -- so while you deliver 60%...
One of our objectives in this innovation, and you saw that in anti-dust, is to make sure that we develop innovations and cost structures that keep the product within a meaningful price band. So for example, this Air 360 which is actually, I mean, for me as a consumer, I think the 360 benefit is much -- even better than the anti-dust benefit. But keeping our margins intact, Air 360 will sell cheaper than our anti-dust product. Similarly, when we developed this cooler, one of our design objectives was like-to-like parity. So this cooler is what, it's 50-liter capacity...
It's right at the heart of the competitive [ threat ] for that product.
Correct. So it's a 50-liter capacity, even though it has all these additional benefits and better cooling et cetera. We priced it parity to 50 liters in the market. And worked the cost structure from design phase onwards so that it could -- so it didn't have a margin impact.
We have the next question from the line of Venugopal Garre from Bernstein.
Sir, on the revenue front, I just wanted to understand that since last year, there were several market disruptions, and you seem to be entering the year on a fairly strong note in terms of the new products that you're launching in the key categories that you operate in. Would it be -- from a growth perspective, would it be fair to say that FY '19, especially for ECD, should pan out to be a much stronger year, assuming the market doesn't really support you in terms of growth?
Well, I can assure you that my Board of Directors expects it to be.
We have the next question from the line of Bhargav Buddhadev from AMBIT Capital.
Sir, just one question. Sir, how committed is the company to go to the part of rolling out go-to-market on a pan-India basis? The reason I'm asking is this, obviously, is very painful in the near term but has very long-term advantages. We've already seen that in the case of Bajaj launching TOC 2 years away back, but now things are turning around. So if you can just throw some light on this.
Yes. First, to be absolutely clear, we are exactly where you are. We believe it is the right thing to do for the business. It is the right thing to do for the shopper, consumer and customer. So we are fully committed to it. Now I think there are 2 things we are doing, and we've continued to do it. Because again, I would just want to reclarify, we didn't start this go-to-market program this quarter, nor is this go-to-market program going to end next quarter. We actually -- it was almost the first thing we started when the company was formed. Our approach has been twofold. Number one, to balance the risk, expand and move forward incrementally. Because again, just to clarify, while we do have these challenges in transition in the North, our total business has grown at around 10% -- close to double digits in a flat market, and we've grown share. So we're balancing this pragmatically by moving forward incrementally step-by-step. The 25% growth which I'm getting when I'm further ahead in the South is giving us the space to continue to take the risks for the short term in the North. That is the approach we will continue to follow. That being said, we are also continuing to learn. I can assure you that since we started expanding this plan 2.5 years ago, it is quite different executionally from what we are expanding now, because we're learning at each stage. We're learning how to continue to work with wholesalers, even in the new model, because that's also important, because there are certain stores which we cannot reach effectively, nor can our distributors which wholesalers might service. We are learning how to better select distributors. We are putting in, like I said, a lot more data system so we can get the data to help the distributors build a building. So it's a journey. We do not, at all -- for us, it is not acceptable to sort of say we're doing go-to-market for 2 years so we're going to decline for 2 years on a national basis. That is not acceptable. That's not our approach. We're doing it incrementally and managing the total business to hopefully be in a much better end state and a stronger sustainably growing business.
So sir, clearly, credit to the team that, despite this transition, the margins are still being maintained so, sir, the credit for that.
Thank you.
We have the next question from the line of Naveen Trivedi from HDFC Securities.
Sir, can you just share your premium share in the Fan market for the quarter and for the year?
Can you please -- I couldn't hear.
Premium share in Fans.
For the market?
Yes.
For the market, we think the premium would be around 8% to 10% of the total market.
No, our market share in premium.
Our market share in premium? See I think [indiscernible] because we don't look at share specifically within the segment, we look at our overall share and how premium is contributing to driving our share growth in the total Fans business. If you ask me, out of the total market share gain that we have made in the last 2 years in Fans, about 80% of that gain has been driven by our improved growth in premium fans. That's how I would look at it. That was our plan and we delivered. So if we look at the 2.5-year period, our market share has grown by approximately 3 percentage points in Fans. Obviously, 80% plus is contributed by growth in premium.
So our share used to be around 20%.
Our share used to be about 23%, 24%. 2.5 years back, the later deliverables we have is about 27%.
Sorry to interrupt. Please come back in the queue. We have the next question from the line of Charanjit Singh from B&K Securities.
Sir, on the go-to-market approach, is there any quantifiable number in terms of what percentage of our overall channel we have done with the go-to-market approach and our [ capability ]? And by when you see that -- because we have seen in the other companies that they are also [ lingering ], in fact, of even after we have done the go-to-market approach, then the market share and the numbers keep on remaining weak for maybe 6 to 9 months and then only the recovery starts. So if you can help us with some quarterly time line, maybe it will take 2 to 3 more quarters. And what is the kind of channel expansion which we'll see post this?
Okay. Again, I think I mentioned all this. Where we began our transition 2.5 years ago, yes, 2.5 years ago, we've been doing that, which is South Lighting is where we started. The last 2 quarters are showing robust growth, frankly even before that the quarters were showing good growth. Where we just began, the business is declining. In areas which we began around 6 months ago, it has declined and come back to flat, and we expect growth in the next quarter. So like I mentioned, in a particular market where we do it, our learning and data indicates about -- within 3 to 6 months business in the growth rates begin to come back. How? Like I've mentioned to a previous caller, we are not doing it in 100% of the markets at the same time. For example, in the West, we've done it in Goa and Gujarat. We are only just now doing it in Pune, right? So when you look at it -- and the way we are doing this is in a way that we balance the total risk.
Okay, sir. And just a last question from my side on the small appliances side, if you can give us an update in terms of how the market is shaping up and what are the product offerings which we might have in this market?
Small appliances, I wouldn't like to talk too much about our innovation because it's still work in progress. Like I've mentioned, the way we define the appliances category, our first innovations have gone in, in cooler, which is now in the market on a pilot basis. And we have some strong innovations coming up this season on geysers.
We have a next question from the line of Prateek Singh from Haitong Securities.
This is Jay here. So just one question, when you are making this changes in the GTM -- the distribution side. Are you also making any changes in the supply chain side of -- so sourcing side also? And if you can highlight, because of these changes, how would be the South market now in terms of margin improvement and working capital reduction?
On your first question, yes, we are making the supply chain side changes. And think I've talked about some of them in the past. Because to support the go-to-market, you have to step up your service and availability for your customer. The first change which we put in, and I think again I mentioned this quite a few quarters ago, was we put in place an entire S&OP process and a demand forecasting process. That is a process which we've been running now for coming on 2 years. It didn't exist before that and is now pretty stable and is largely automated and runs off our systems. And that's step 1. Step 2, like I mentioned last -- I think it was last call. We're beginning to rework our distribution centers and transport systems, A, leveraging what is now possible due to state borders, barriers eliminated post GST. Like I've mentioned last time, in the North of India, we have got a program running in partnership with Future Logistics who we partnered with to be our logistics provider, right? So of course, this entire program is an end-to-end program. It includes the supply chain. It includes a high level of data digitization and automation, ultimately all the way from the frontline salesman back to the factory, building off the backbone of the latest version of SAP which we implemented a couple of years ago. I can't comment because I don't have the data, because we don't break it down that way in terms of profitability in South, et cetera, et cetera. Maybe you want to have a conversation in terms of whatever we can share after this call with Yeshwant and he can provide you whatever data we have and is appropriate to share.
We have the next question from the line of Bhoomika Nair from IDFC Securities. We have the next question from the line of Harshit Kapadia from Elara Capital.
Sir, we have spoken innovation on ECD side of the business. What about innovation on the Lighting side of the business? Anything on LED side that you are looking at which can also give growth, or do you believe there is enough demand for LED bulbs, tube lights and other sources that innovation may take a few years and then you are looking at?
Okay. The answer is an emphatic yes. Let me just quickly remind you of our approach. We have LED lights 2 opportunities for ongoing growth. First is the fact that, in spite of the tremendous growth of LED over the last couple of years, which we have got disproportionate share of, only about 20% of current lights have converted to LED. So firstly, there continues to be a huge growth opportunity to convert more and more of traditional CFL lighting, et cetera, to LED. That's point and growth opportunity 1. Growth opportunity 2, and I think I have talked about this in the past, is that where we will now grow LED is by giving value-added benefits which the LED technology allows you to. CFL was very limited in terms of what all you can offer. LED has huge probabilities of innovation, all the way from smart lighting, colored lighting and various other meaningful benefits. That is the second way that we will continue to create, if you will, a premium segment which doesn't exist today of current LED light users. So these are the 2 growth approaches. For the second approach, consumer meaningful innovation is absolutely critical. You can expect that we will have at least one such really big consumer meaningful innovation within this year. That's what we're working to, as we've talked earlier. Not 2 to 3 years from now because we have to work both of these simultaneously.
We have next question from the line of Snigdha Sharma from Axis Capital.
So I joined the call slightly late so I apologize if I'm repeating the question. I believe -- so the reported number of growth for consumer appliances during the quarter is 2%, but you've mentioned that in Fans, we've grown double digits and also maintained share during the quarter. Is that right?
In Fans, we've grown close to double digits and we have grown share in the quarter. The reason -- the data we have to indicate that we have grown share is, one, our growth is close to double digits, and the market all data indicates it's flat. The second data point we had is the retail audit data which we regularly share, and that also shows in the quarter we have grown market share driven, as has been over the past periods, by the premium segment.
Sure, sir. And secondly, congratulations on a commendable, just really quickly on this.
Ma'am, sorry to interrupt. Please come back in the queue. [Operator Instructions] We have the next question from the line of Ansuman Deb from ICICI Securities.
I had one question regarding the cooler segment. So in line with our right to win philosophy, when do we expect to get to that #2 or a #3 position in the cooler market?
It's very difficult to say exactly when we will become #2 or #3. But I think -- the innovations that we are bringing into the market I'm sure will help us work our way upwards from the current position that we have. And then I think a 2- to 3-year time frame is a reasonable time frame to expect, where we target to become 1 of the top 3 players.
We have the next question from the line of Aditya Bhartia from Investec.
Sir, I just want to know what has been the ESOP charge in fourth quarter and how is it likely to shape up going forward? And how do we intend to utilize surplus cash?
So the total ESOP charge in this quarter would have been about -- the total charge for the year was about INR 57 crores, and that has got charged out equally over the 4 quarters. Going forward in this year, FY '18, '19, the ESOP charge will be about INR 31 crores, INR 32 crores, again, equal over the 4 quarters. As far as cash is concerned, we have about -- as we -- in end of March, we had about INR 550 crores of cash. We have 2 large payouts. One is the interest on the bonds which gets paid in June, and the board yesterday has recommended a dividend which, once approved and if approved by the shareholders at the AGM, will take up another INR 150 crores of cash. We also have a debt repayment scheduled for next year in the month of June, for which we will have suitable cash reserves. And of course, whatever other cash remains on the balance sheet, A, will be invested and will be made available for any growth opportunities that the company may have.
We have next question from the line of Shrinidhi Karlekar from HSBC.
Sir, I just wanted to understand the demand outlook for the fans category, not just for you but the industry as a whole. It seems like it hasn't grown much for the quarter as well as full year, despite a benign base. So what is really driving the sort of weak growth for this year and how does the outlook look like going into FY '19?
Okay, it's obviously difficult to predict, but there is only 1 factor which I would personally look at. We have a lot of data, and I think I've mentioned this in the past, that there is a strong correlation between housing starts and the fan market, right? So for me, the leading indicator of market growth coming back, because the fans market has historically grown at 6% to 8% year-on-year-on-year, some years higher, some years lower. But the most correlated factor to the market growth in a particular year has tended to be housing starts.
Okay, fair enough. So basically, that remains a weak market. But then, sir, the way we understand that the large part of the fans was a replacement market. So isn't that the correct understanding that the correlation is so strong?
No, a large part of fans is not replacement. The larger percentage of fans is new points.
We have the next question from the line of Sonali Salgaonkar from BOB Capital Market.
I have just one question. In your Lighting segment, how much contribution was from the EESL segment? And how do you look at the segment going forward?
INR 3 crores. In the quarter, it was basically a little over INR 40 crores in Lighting.
Okay. Sir, and how do you look -- in terms of orders, how do you expect to ramp up in EESL?
I think it's -- of course, it's difficult to say exactly how it will pan out in the next few quarters, but I think we have similar kind of expectation, at least for the next quarter.
Sure. And of this INR 40 crores, half was B2B or...
Operational [indiscernible] For total lighting, B2C and B2B put together.
I think the change in trend in EESL over the past few years has primarily been that EESL has started with most of its volume on B2C, really bulbs. And now, as they have sort of ceded bulbs in most of the geographies, which was always the stated intention, the business is shifting more and more to things like street lights, et cetera, and B2B orders through ESL in [ effect ]. So that shift is happening.
We have the next question from the line of Kunal Sheth from Prabhudas Lilladher.
Sir, just wanted to check, have you set any time lines for implementing this go-to-market strategy across all categories and markets?
Like I said, it is not a onetime effort. It is a continuous, ongoing thing. I don't normally do this, but let me just refer to the 10 years, 12 years I spent in P&G. The first project we started was a go-to-market and it was still going on when I left P&G and is still going on today. Like I mentioned, as we speak, and as sort of, if you will, Phase 1 is being implemented in the North. We are moving to Phase 2 in the South. Maybe 6, 9 months from now, Phase 2 will move to the North, and then we'll start Phase 3. So it's a never-ending journey. I guess, the best way to think about go-to-market is what is the most efficient way of making our brand available wherever, whenever the consumer wants to buy it. And that's a never-ending journey. Now if you talk about temporary things like channel switch which leads to inventory adjustments and things like that, that will complete through this year.
Ladies and gentlemen, that was the last question. I now hand the conference over to Miss Renu Baid from IIFL Capital Limited for closing comments. Over to you, ma'am.
Thank you, everyone. I would, on behalf of IIFL Capital, I would like to thank the management for giving us the opportunity to host this call. An extremely informative call on the key strategies that the company's implementing. Thanks, and over to you for any closing remarks.
Thank you, Renu. Thanks again, as always, for joining in the call. Please feel free to connect with us if you have any more questions. Our intention is to be as transparent to help you understand our business and our thinking within the -- while being obviously competitively what we can't share, we can't share. And thank you for your support there. Thank you, guys.
Thanks.
Thank you very much, sir. Ladies and gentlemen, on behalf of IIFL Capital Limited, that concludes this conference call. Thank you for joining with us. You may now disconnect your lines.