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Good day, ladies and gentlemen, and welcome to Crompton Greaves Consumer Electricals Limited Q4 FY '19 Earnings Conference Call hosted by IIFL Securities Limited. [Operator Instructions] Please note that this conference is being recorded.I now hand the conference over to Mr. Renu Baid from IIFL Securities Limited. Thank you, and over to you.
Thank you, Inba. Good morning, everyone. On behalf of IIFL, I would like to welcome you all to the fourth quarter FY '19 earnings call of Crompton Greaves Consumer Electricals Limited. Today, we have with us the senior management represented by Mr. Shantanu Khosla, Managing Director; Mr. Sandeep Batra, CFO; Mr. Yeshwant Rege, Vice President, Strategy and Financial Planning. Without taking much time, I would like to welcome the management and hand over the call to Shantanu for his comments and opening remarks. Thanks, and over to you, sir.
Thank you, Renu. Good morning, everyone. First, I'm sorry we're a couple of minutes late. We had a little bit of a technical problem.So without further ado, let me just dive straight into an overview set of comments. And then as usual, we're happy to take as many questions as you may have. I'll just get straight into the details by segment first, and let me first talk about our ECD segment. Now we are quite happy with our overall ECD performance which grew close to 10%, because this was in spite of, as you are most are aware, of late onset of summer and quite an extended winter which to some extent has impacted the seasonality. The growth was really driven by all subsegments within ECD. We -- while our gross margins in ECD this quarter are pretty much in line with the previous quarter, they are lower than the same quarter in the previous year. This is largely due to the impact of commodity prices and even the relative downturn in the market, we were not really able to take a planned price increase. That being said, our continued efforts on driving us out of the system and also the fact that commodity prices are now easing, make us feel quite confident that this dip in margin is relatively temporary, and we should recover it soon.We have had a significant focus towards the back end of the quarter on driving some significant, meaningful new innovations. On the Fans business, we put in 3 major innovations at the back end of the quarter, all which we believe are unique to the industry and should, over time, generate significant incremental demand. So first and potentially largest is our Aura Fluidic ceiling fan. Now this is a first-in-industry where we have not only ramped up and improved the esthetics, but more importantly, we have reengineered the entire fan to make it significantly more durable and reliable than any other fan in the industry. In fact, so much so that we are at a confidence to offer first-in-industry 5-year warranty on this fan as compared to normal industry warranties of 1 or 2 years. This will also continue to drive Crompton's equity of reliability and durability.The second key one was very nice innovation, a specialty fan designed specifically to deliver focused air, which we originally -- initially marketing towards usage in areas like the kitchen which is what we call the air body, which is a premium unique-design unit.The third key initiative and innovation we put in is a fan called V-sense. This fan is designed specifically for geographies which has voltage fluctuation. We have a unique design here where we have designed a controlled system which ensures that even if the voltage drops to 140 volts, the fan speed and therefore the airflow is maintained. Our all 3 initiatives went in at the back end of the quarter, initial progress and results, trade acceptance and to some extent, consumer acceptance are all positive for all 3 of these initiatives. We are all -- we have also commenced significant marketing and advertising support specifically behind the Aura Fluidic initiative to drive awareness and trial among the consumers.We have also had, over this quarter, we continued to have sustained good growth on our geyser business, especially in the first half of the quarter while the winter season was still progressing. This essentially continues the progress we've been having on geysers post our revamp and redesign and relaunch of the entire range in -- during the past. Importantly, we have also seen towards the back end of the quarter continued growth and strong growth on our air cooler segment as we have launched a new desert cooler range, which is having a significant impact especially in the northern region which is the key market for this area.As we are looking out, we do see that the temporary decline due to seasonality -- or not decline, but a slower growth rate due to seasonality is something very temporary, and as we are seeing our early business performance going into the first quarter of this year, we are clearly seeing growth rates at a significantly higher level than what they were during that extended period.Also importantly, even though there was a hypercompetitive scenario especially in the area of fans, even our new go-to-market strengths and as we're deploying that, we did not, in any way, increase our incentives or scheme, and we've entered a new quarter with absolutely normal levels of paid inventory across this business, and that's reflecting in how our business is doing as we enter this current quarter.Pumps continues to do strongly. We continue to have strong performance in Pumps as we've been having for the past few trailing quarters. The growth continues to be driven really by 2 key areas. One is initiative of Crest Mini, which we've been talking about for a while. This is now particularly showing encouraging results with high double-digit volume growth in areas where traditionally we've been underdeveloped in Pumps such as South India.Our agricultural segment also continues to perform strongly. And as we've talked before, this is an important focus area for future growth for us. And in this quarter, our agri segment grew by 20%.Moving on to our Lighting segment, where overall, the top line was more or less flat. Let me sort of break that down for you. First, if you look at LED Lighting, net of EESL, our Lighting business grew in the quarter by 11% in value terms and about 25-plus percent in volume terms. Out here, importantly, we have -- as we've been talking for the last 2 quarters, we have fully recovered our margins with an aggressive set of cost and design optimization program, and we are back now what we have always seen as the growing level of margins on Lighting of double digits that this particular quarter, our margins were about 11% on Lighting.In Lighting, we are also seeing now a moderation in the price decline in the B2C segment largely in the bulb segment. So that price decline seems to have flattened out in this segment, so we continue to see some amounts of price erosion still in battens and also in our B2B segment.On -- as we look forward on our Lighting, now that we have our margins back to what we believe is a right and growing level, our focus really is to get back to overall strong top line growth over the next few quarters. There are a few things that we are doing to help drive that. First, of course, just in terms of arithmetic, our LED business is now about 85% of our total business. So the traditional Lighting business which has been consistently declining at about 30% quarter-on-quarter, now starts becoming a smaller and smaller part.Secondly, a key focus for us now is to drive strongly the B2B segment of our business. It represents about 50% of our Lighting business. In order to do that, we have invested significantly in our capabilities here. First, we have created a new role and staffed it of a separate national B2B sales manager. Under him, we have now created a dedicated Lighting B2B national go-to-market infrastructure. This comprises also of, for the first time, a series of key account managers who will focus on managing large customers where we see significant potential for the B2B business.We've also invested in technology and we have equipped this new sales force with Salesforce.com, which is going to enable them to operate on a more consistent basis in terms of tracking and delivery to better meet their key customer needs.The second key area is -- we have -- is obviously innovation in the B2C business behind which we will keep driving more and more distribution.Our key initiative, and this is truly something which we believe is unique and absolutely first-in-the-industry pretty much anywhere, this is the antibacterial light bulb which we introduced at the back end of last quarter. This bulb is a unique design, a design that1 we have developed in-house working with some key partners, a design for which we have taken some application. What this does is while providing you everything you want from a lightbulb, it also kills up to 85% of bacteria. So it's simple. It just makes your home purer and healthier. We are charging about 15% premium on this, and this is part of our strategy of continuing to provide consumer-meaningful, value-added distinctive propositions to rebuild the value of the Lighting category. Initial results of this are strong. We are driving distribution visibility, and importantly, significantly stepped up advertising expense, including, as you will see in the coming quarter, we will be advertising and investing behind the World Cup on this and also on our Fans initiatives.In terms of go-to-market, we are continuing, we believe, to reap benefits in terms of greater availability and greater productivity among dealers. We are expanding our tally patch to more and more customers which is giving us real online data of secondary sales. We believe this is important, and this is one of the capabilities which has actually enabled us to manage the fall/winter season on Fans, without resorting to teched up schemes and has allowed us to maintain and monitor inventory levels and trade at normal level.Secondly, we are also in the process of expanding a dealer portal which provides connectivity between us and our dealers to improve our service and the visibility of our service to the dealers. This is also in the process of national rollout and has had a strong positive feedback as we are expanding it.Net, overall, we feel we are now in a good position to continue to drive market-leading growth in the ECD segment. And now over the quarters to come, this store from top line growth in Lighting at a profitable level.The final thing I'd just like to comment on and for this, I will hand over to Sandeep. As you're aware from our accounts which we released post our Board meeting yesterday, we had a onetime write-back of about INR 28 crores, INR 29 crores on tax. I just handed over to Sandeep to explain to you what this is, why it is and what are the ongoing implications of this.
Good morning, everybody. Just to give you a bit of background on this tax write-back. At the time of the demerger, there was a goodwill of about INR 780 crores which was reflected in the books of Crompton. Now as per the existing accounting standards for the terms, this goodwill is tested for impairment and no amortization is required. However, in the tax books, the company claims this as an allowable deduction -- the company claimed it as an allowable deduction. However, given the uncertainty regarding the admissibility of the same in the tax assessment, the company continues to provide in the books as well as pay its advanced taxes without considering this benefit.In the current year and in the current -- in the last quarter, the company got an assessment order that -- which are the first adjustment under accounting consumer post the demerger was completed, and the claim of amortization of goodwill was appointed by the assessing officer. And therefore, that resulted in a returned of about INR 28 crores in -- relating to the financial year 2015-'16. That is how we had to reflect it as a credit in the current tax.Now the stand that the company has taken and based on advice of experts is to recognize credit for this refund only on completion of assessment as a fair amount of uncertainty still prevails, and we cannot recognize the results of future years simply based on 1 assessment which has been done. So as we go forward and we get subsequent year's income tax assessment order, if this claim of amortization gets upheld, then it could -- it will reflect in a credit in the tax books because for FY '16-'17, '17-'18 and for the year just gone by, '18-'19, we have not considered this as computing tax. And just to give a sense of what would be the limit if we were to be getting this admitted in the assessment order, so for the next year, which is FY '16-'17, the refund could be about -- the credit could be around INR 55 crores. For the subsequent year, it could be about INR 42 crores, INR 43 crores. Essentially, it will diminish by about 25% every year. So that is sometimes some kind of a background. And over the full period, because the amortization in the tax books happens at about 25% on reducing balance, the total benefit would be about INR 250 crores.
Okay. Thanks. That's kind of all we had in terms of our opening statement and some amount of clarification on the tax matter.With that, we're open to questions.
[Operator Instructions] Our first question comes from the line of Baidik Sarkar of Unifi Capital.
Two broad questions. The 14% Y-o-Y growth that we've seen this year in the ECD segment was, I think, largely driven by a combination of our leadership in housing Fans and new Crest Mini is doing well. And of course, the full look this year effect from competitors. Do we run the risk of having exhausted the benefit of the low base in the last 2 product categories? And therefore, run the risk of a lower blended growth and what we experienced last year? Our growth could still be category-leading, but it could be still lower than what we've seen this year. Your comments, sir?
Let me make my comments by subcategory. First, appliances, where you've mentioned geysers. Well, if you look at total appliances, we are actually quite small in terms of share. And our focus, like we said, started with geysers. This summer is moving to coolers. And then, of course, we have small appliances. So as far as our appliance segment goes, I actually I see it the other way around. We have significantly more potential moving forward than we have actually delivered in the past.When I -- when we come to Pumps, I think they're 2 aspects of potential in Pumps, one is a strategic choice which we've always talked about, and that seems to be consistently delivering where we are relatively underdeveloped, which is the agri segment.The second, which is also important to note, is though in residential pumps we are market leaders, if you start looking at it by region, this is really driven by dominant leadership positions in the east and the north. We are relatively underdeveloped even in residential pumps from a share point of view in south and west which is why Crest Mini actually has a long-term strategic role for us, and initial results of its first year are positive in terms of getting fresh air in these underdeveloped regions.Finally, let me come to Fans. I think driving innovation across the tiers, not just in the premium tier, which is obviously more critical, but across the tiers still has significant upside potential. So we do not see any diminishing potential in Fans at least for a few years ahead. We also expect, for example, like we mentioned before, in Fans, there is a high correlation with housing start-ups. We do expect housing start-ups to gradually, over time, only continue to increase, urbanization increase. So we don't see, if you will, a hockey-stick opportunity, like we see in some of our other categories but we don't see any diminishing potential in Fans either.
We'll take our next question comes from the line of Bhavin Vithlani of SBI Mutual Fund.
If you can highlight on Fans in specific and breakup into what was the eco growth and the eco range, the premium range and the premium eco range, and how do you see the growth going forward? And continuing on that, we see -- we've seen some soft growth by the ECD players because of extended winter and they are now speaking about strong growth in the first quarter. So your views on that will be helpful.
Okay. Firstly, in this quarter, overall on Fans. Fans was kind of in line with total ECD growth. We don't give specific numbers by subcategory, but it was kind of in line. Secondly, if I look at top, mid and low, our growths have been about consistent across all 3 segments. And I think that's very important. The reason that is important because if I -- if we look at the competitive context and all our competitive players in Fans, they tend to either have strength in the top end or they tend to have strength at the bottom end. One of the reasons we are market leaders is because we actually, after now -- after about 3 years of driving a premium program are reasonably strong and cover all the segments, which is why, for us, we do expect a disproportionate level of growth to come from premium, which is why initiated such as Aura Fluidic or AirBuddy, but it's equally important for us to continue to innovate.In the mid-segment, so for example, one of our key success drivers in the mid-segment over the whole of last fiscal was actually our mid-segment decor. And now V-sense, because that is our competitive strength really, and we will keep innovating in these. You can expect -- we expect that we will have a higher growth level in the premium end, but we will innovate and grow at -- in all segments to maintain our leadership.
We'll take our next question from the line of Venkatesh Balasubramaniam from Citibank.
Yes. Sir, can you please share what was the revenue growth in each of the categories in the electrical consumer durable segment? For example, Fans, Pumps and appliances. What was the revenue growth for the full year?
So the full year, what was ECD?
Not ECD. ECD growth is 50%...
I understand. I understand. Okay, for the full year, the ECD was -- the total segment was 16%. Okay, in ECD, the total subcategory was 16% for the full year. Each subcategory was plus/minus 16%. We don't -- the only reason I am giving those numbers is because in general, we don't give the subcategory-specific number. But each subcategory was plus/minus around the same amount. It's not that one subcategory was much higher than 16% and one much lower.
Our next question is from the line of Ankit Agrawal of Bernstein.
Just one question from my side. Given the fact that there are signs of general consumption slowdown based on the commentary from different companies especially in the consumer space, so just wanted to understand from you, are you witnessing any slowdown on that front or is it like the business is running a normal course?
The only slowdown which we saw was what we believe is a temporary slowdown because of the season impact. We are not seeing any slowdown per se. And one of the reasons, I believe, that compared to some other categories there is not the general slowdown happening is because if I think of consumer durables, white goods, big ticket items, a lot of those purchases tend to be done on EMI and availability of cash, et cetera, makes a difference. In our case, our industry, there's really no EMI. So I think that insulated us from the fact there is a cash shortage.The second thing is, and this is just my judgment, and I guess putting my FMCG past hat and my consumer durable new hat. This industry is more urban-focused than my old industry, right? So I think part of the slowdown difference which gives FMCG industries are commenting on maybe because of a slowdown in the higher growth rates which used to be there in rural. And because this industry is relatively less impact -- less rural-dependent in terms of -- maybe there is less. But we are, to be honest, not seeing any -- even in Lighting, where there is a value slowdown, the volumes are growing very nicely. So from a consumer consumption point of view, pricing is -- consumption is going up.
We'll take our next question from the line of Tanuj Mukhija of Bank of America.
So you earlier mentioned in the call that you're seeing still some price erosion in the Lighting segment in B2B category. And then you followed it up by mentioning that going forward, you plan to increase your share in the B2B category. So does this imply that your Lighting segment margins could come under pressure going forward?
No. We do not think so. And one of the reasons is, in the B2C segment, we are far more advanced in our cost reduction. In the B2B segment, there is still potential to adapt some of those cost reductions. So we do believe that both B2C and B2B should be about the same in terms of margin, and that's kind of how they are now also. And we believe that the double-digit -- low double-digit margin is the right sustainable margin for Lighting.
Our next question is from the line of Aditya Bhartia of Investec.
Just wanted to understand the rough split between fixtures and lamps in the Lighting business. And whether patterns and tubes are considered as a part of fixture space or as a part of lamps?
One second. We just -- Mathew is on leave today, so I'm just digging out the numbers. If you could give me a minute. It's -- for our B2C business, about 30% of the business is lamps and is bulbs, and about 70% of our business is what is called fixtures, but essentially it's 2 types of things: patterns and panels. Patterns and panels make the bulk of fixtures.
And is it possible to split it between those 2 also, sir?
They're about equal.
Okay. Understood. And lastly, just on EESL. What would have been the composition of EESL in this quarter as well as full year revenues?
EESL was INR 47 crores for the quarter and INR 140 crores for the year.
Our next question is from the line of Mayur Patel of IIFL Asset Management.
Sir, just one question. Like you have been showcasing consistent innovation in the existing categories like Fan and Lighting. So apart from these new innovations, how is the pipeline looking in terms of the new verticals? Like we have littered in air coolers at a nascent level. But is there any other new vertical in the pipeline which we should look forward to in the next year?
There are, and I mentioned this before. Over the next period, we need to be successful in a couple of new verticals. Vertical number one, which you could look for is after geysers and coolers is the rest of our small appliances business. I don't want to talk more about which part of that or what of it. But clearly, we are currently very underdeveloped, and we are working to see how we begin to really drive that business. And for all practical purposes, given our size in that, it'd be really a new vertical, a new subcategory. The next one which we talked about multiple times is, well, our current decision is to look inorganically, and we are in constant conversations on different options there. Obviously, it's nothing I can talk about at this stage. It will happen when it happens.
We'll take our next question from the line of Nitin Arora of Axis Mutual Fund.
Well, you have answered the question in a qualitative term, just I'm asking a very shorter-term question here. On the ECD, where you had based in your favor over the last 4 quarters, whether agri's growth was not more than 1% or 2%. And this year, you're showing a 14%, 15% growth. Going forward, do you think from a shorter-term perspective again I'm repeating, and you have shown there is no slowdown barring the seasonality slowdown which you saw, if we're growing 15% on that growth rate of 15%, 16% which you have shown is possible for the next 1 year or so?
Well, that's what our objectives are set on.
That's where you're guiding at?
I'm not guiding just to be clear because these are just guidance. But that is what my objectives are set on.
All right. And...
Mr. Arora, could you please return to the queue? Our next question is from the line of Sonali Salgaonkar of Jefferies India.
Sir, just wanted to know what is our current market share in Fans? And what is the kind of ad spend to net sales that we expect considering that we have beefed up our advertisement?
Okay. First, in the coming fiscal, we are planning on spending about 2.5%, which kind of is around INR 100 crores. Second, our retail of take share in Fans in terms of value, and I'm not -- I'm talking retail offtake shares from the retail audit, which will be different from industry shipment share. For the quarter, our retail offtake share on Fans in value terms was 25.1. For the full year, our value market share was 23.8. So as I mentioned before, through the year, we've actually seen a going trend upwards in our market share.
Our next question is from the line of Vinod Bansal of Franklin Templeton.
Two questions on Lighting business. One, ex of EESL, what would have been your business growth rate for the quarter in the B2C and B2B as well? And second, you had some order, last quarter you've mentioned about -- from some Orissa municipality or the state part, somewhat INR 30-odd crores, which had to be finished in 4, 5 months. Any update on that? Any revenues of that booked in the quarter?
Yes. Let me take the second part of the question first. No revenues booked in the quarter. That order is still very much there. We are all ready. It is simply being delayed at the request of the Orissa government due to the elections. So we do expect that now that order will start getting executed in the coming months, but nothing has been [indiscernible] in this particular quarter. In terms of excluding EESL, like I mentioned, our LED Lighting grew 11% in value terms.
Can I ask one more question, Ms. [indiscernible]?
Mr. Bansal, could you return back in the queue. We'll take our next question from the line of Kirti Dalvi of ENAM Asset Management.
Just a question on Lighting segment again. 140 crores were our revenues from EESL in FY '19. How much one can expect in FY '20 based on orders if we have it? And you did mention that you're targeting double-digit growth in the Lighting segment. Was it excluding EESL or including EESL?
Okay. First, just to clarify on this, right? I said we are targeting double-digit bottom line on Lighting. And I also said that given the plans which we are putting in place in terms of antibac advertising and B2B, we expect that over the coming few quarters, a flat overall top line could begin to deliver meaningful growth, right? So I just wanted to clarify that. Second, in terms of is EESL included or not. Yes. When I talk about these overall goals or numbers, it is inclusive of EESL. Third, our current order book for EESL is about INR 90 crores for the coming year.
Our next question is from the line of Pulkit Patni of Goldman Sachs.
Sir, this year, we have some significant debt repayment, and you alluded about the possibility of inorganic growth subsequently. Would it be possible for you to talk about the segment that we are looking at on the inorganic side?
No. It would not, because obviously that, for us right now, is in a level and stays where it's confidential. I can tell you that we are not looking for traditional consumer electronics and stuff like that. We are still focused in terms of our kind of business.
Sure. Sir, so no white goods per se?
Well, you get a lot of white fans, for example. But leaving that side, I really don't want to get more into what categories because that is not appropriate and it's at a very different stages in different categories. And it's -- in inorganic, we know what kind of segments we're looking at, what kind of opportunities. But you can't really control whether a deal will happen or not necessarily.
No sir, the reason why...
Mr. Patni, I've got several participants waiting. We'll take our next question from the line of Achal Lohade of JM Financial.
Sir, just wanted to understand the level of supply discounting, and what kind of benefit have we seen for FY '19 in terms of the margins?
We have, during the year, used some of our surplus cash to pay our vendor early. Total amount that -- which is whatever prepayment we did, as of March, was about INR 300 crores. And total benefit -- because the period from which we discount varies from vendor to vendor. I think the total benefit in excess of what we would have got had we invested that money in a mutual fund would be about INR 6 crores, INR 8 crores in the year.
Sorry. I meant basically the cash discount against this prepayment, sir.
Yes. So the cash discount in excess of what -- the very compute it is that, had that money been invested in some mutual fund, it would have earned maybe 7% or 8%. Our discounting is around 15%. So the delta again is about INR 6 crores, INR 7 crores for the year.
Our next question is a follow-up from the line of Vinod Bansal of Franklin Templeton.
Sir, just one more question on the Fans industry. Would you have any color on what kind of growth the overall market has seen -- all the players put together given -- in the current quarter?
Current quarter, difficult. We don't have really a good number yet. But it has been operating at about 6%. So I would just imagine and say maybe a couple of points lower than that in the previous quarter because of the weather.
What I mean by the current quarter was the fourth quarter actually. So you're answering for the fourth quarter?
Yes. Yes. For the fourth quarter because the fourth quarter was the one which had the extended winter, the current quarter under discussion. So if I look at the last 3, 4 quarters, it's probably around -- been around 6%, which would indicate to me that the fourth quarter was maybe a couple of points lower. So 3% to 4%, maybe.
Our next question is from the line of Bhavin Vithlani of SBI Mutual Funds.
I had just one question. Have you seen a reduction in the working capital? When the increase in the working capital cycle due to reduction in the payable days, how should we look at fiscal '20 on a sustainable basis?
Our operating working capital, and if you exclude this prepayment that we do, it remains in line with what has been the traditional model. So if you look at our, again, capital cycle, if anything, it would have improved. This adjustment that we do, this prepayment that we are doing is very tactical. It is only done because we have surplus money. So there's some amount of arbitrage that we are enjoying. So if, for example, the cash that is there in the company is used for any other application, then working capital will go back to normal levels. My way will be to look at working capital independent of this adjustment.
And what is that number according to you?
About 300 crores as on end of March. But we paid ahead of due date to our vendors.
We'll take our next question from the line of Abhineet Anand of SBICAP Securities.
Yes. Can you let us know the Fans proposed in terms of top, mid and low category presently? And what was it last year?
Okay. So on premium, which is the top, has now moved to 20 -- above 25%. Last year, it was 20%, 21%, 3 years ago, it was about 12%, 13%, 3, 4 years ago. So we had moved from -- we've almost over this period, doubled the salience, if you will, of the premium segment.
We'll take our next question from the line of Ronak Vora of AUM Advisors.
Yes. Sir, what is the market share of Crompton in the family business?
I'd mentioned this and I'll just mention it again. On a full year basis, detail offtake share in value terms for Crompton is 23.8 for the full year. For the latest quarter, it is 25.1. So we're actually having a growing retail offtake share.
Our next question is from the line of Arnab Mitra of Crédit Suisse.
You mentioned on the changes you're making in the B2B Lighting focus. So wanted to understand, the new payoff GTM, is it substantially different from what you were doing till now? And in this segment, other than pricing, are there other strong levers of market share available in the B2B side of Lighting?
Yes. Firstly, the GTM program that we were doing, just for clarity, was for our trade and B2C business. It did not really have anything much to do with the B2B. So this is the B2B intervention which we are making. Actually, in B2B, there are many factors more than just pricing. For example, it starts with technical specs and what is the specifications which are required. Power consumption, when you are putting up lighting for a factory, becomes a more relevant factor. Service, ability to deliver on time, ability then to provide ongoing warranty and service. So all these factors actually add more than a simple price transaction. Of course, price is important, but there are many, many other factors which are equally critical in the case of B2B.
We'll take our next question from the line of Bhoomika Nair from IDFC Securities.
Sir, just wanted to understand the water heater segment a little better. You said we've introduced a lot of new products and revamped the entire category. So given this, how would have 4Q -- given the extended winters played out for us in terms of growth and our market share gains as versus what industry has seen in terms of growth?
Again -- okay, I guess. Can I give your segment? Yes. Okay, Sandeep has given me permission to share the -- this number -- the segment number. On geysers for the quarter, the value growth was 19%, 1-9.
Okay. And our market share, sir?
We don't really track retail market share, but we -- our current market share is about 6% to 7%. We think that we are probably improving market share over the season.
We'll take our next question from the line of Naveen Trivedi of HDFC Securities.
Sir, could you give us a bit more -- explain about the ECD margin contraction this quarter? So you mentioned that delayed price hike during the quarter has impacted the margin. So have we taken enough price hike during the quarter? And what can we expect margin's rate being in the coming quarters?
Okay. First, we think that a going margin should be -- the right going margin for ECD which we should get to and sustain is about 29%, okay? Gross margin. And we believe that this is achievable. This is achievable, we believe, through 3 actions. And I talked about this before. First, we want to continue to improve mix. So for example, our whole program of disproportionately growing premium Fans is helping us improve the mix. The second thing is our ongoing cost-reduction program, where we're continuing to get more efficient at every level on cost as we leverage, operate -- our operational efficiencies and scale. The third, which is the balance, is pricing. So what you can't cover with these first 2, we cover with pricing. So that's how we plan, and we think we can be operating at around the 29% gross margin for ECD. The margins which dipped in this quarter really was driven because of the commodity prices increase being higher than they have traditionally been. So we could not cover them all with cost and mix. Now as we have seen commodity pricing pan out for a future, and as we're looking at our current cost reduction and mix programs, we think we should be able to cover and deliver. We also think, as we have been doing in the past, that pricing we will take and so will the industry. We have -- it is only, I think in the immediate recent quarter because of the winter slowdown and the fact that a lot of competition was increasing schemes, it was challenging to take pricing at that point in time. But I don't think that changes significantly our long-term opportunity to recover part of the cost through pricing.
And also just to add. If you see the margin trend of ECD, the margin that we had in the fourth quarter would be the highest that we had in any quarter in the year. However, previous year first quarter, margin was substantially higher. But during the year, and particularly sequentially, margin has improved. But we have recently compared it with Jan, Feb, March of 2018, it was about 200 bps lower.
We'll take our next question from the line of Ravi Swaminathan from Spark Capital.
Just wanted to know how was the growth across regions, north, south, east, west?
We had growth across all the regions. Obviously, given the overall situation, the growth in ECD across all regions was higher than the growth in Lighting across all regions, right? So they largely were reflecting actual trends.
So south and non-south, how the growth would have been? I mean [is there a way you can] if you can describe the number?
Well, slightly higher. South was about 11%, right? So it's not that it was being disproportionately driven by any 1 region or state. The results are reasonably broad-based.
We'll take our next question from the line of Kirti Dalvi of ENAM Asset Management.
Sir, just a question on GTM strategy. If you could little bit elaborate the current status of it, and have you seen any disruption because of this in our fields in FY '19?
Maybe a little in the beginning. But frankly, in the last 2 quarters, we are not seeing disruption. We are only seeing now the benefits of expanded reach, as we're now driving strong programs to get even further in the 50,000 kind of sizedowns. And the reflection of that is, if you look at our ECD business, if you said go-to-market, which is taking our ECD business and our Lighting business. So if you look at the consistent, steady growth on our ECD business, part of that benefit which we're getting is a reflection at least especially in the second half of the year of how our go-to-market is gradually becoming stronger and stronger, how the use of real-time data is helping us to take better decisions, et cetera.
Ladies and gentlemen, that was the last question. I now hand the floor back to Ms. Renu Baid for closing comments. Over to you, ma'am.
Yes. Thank you, everyone. I would like to take this opportunity to thank the management to give us a chance to hold the call. I would now ask Shantanu for his closing remarks before we close the call. Thank you so much.
Thanks, Renu. I really thank you all for joining in. We appreciate the time and effort you take. Our objective is -- always is to be as transparent as we can and just help you understand how we are looking at the business. As always, if you have any further questions or want any more details, please feel free to contact us. We're more than happy to talk.
Thank you, members of the management. Ladies and gentlemen, on behalf of IIFL Securities Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.