Crompton Greaves Consumer Electricals Ltd

NSE:CROMPTON

Earnings Call Transcript 2021-Q4

[Operator]

Ladies and gentlemen, good day, and welcome to the Q4 and FY '21 Earnings Call of Crompton Greaves Consumer Electricals Limited hosted by Batlivala & Karani Securities India Pvt. Ltd. [Operator Instructions] Please note that this conference is being recorded.I now hand the conference over to Mr. Kunal Sheth from B&K Securities. Thank you, and over to you, sir.

[Kunal Sheth, Research Analyst]

Thank you, Malika. I would like to welcome the management of Crompton Greaves Consumer Electricals on the call and would like to thank them for giving us this opportunity.From the management team, we have Mr. Shantanu Khosla, the Managing Director; Mr. Mathew Job, Executive Director and Chief Executive Officer; Mr. Sandeep Batra, Chief Financial Officer; and Mr. Yeshwant Rege, Vice President, Strategy and Financial Planning.I will now request Mr. Shantanu Khosla to give us some opening remarks, and then we'll open the floor for any Q&A. Over to you, sir.

[Shantanu Maharaj Khosla, MD & Executive Director]

Thank you. Good morning, everyone, and thank you for dialing in to our analyst call for the quarter. Firstly, I hope all of you and your family are safe and healthy during these extremely challenging times.As always and as has been for more than the last year, health and safety of our employees continues to be our #1 priority. The infection count among our employees, unfortunately, in this wave has been higher as compared to the previous one. We are extending all support required to all our employees as well as their families. We have set up unit-wise WhatsApp groups with senior members to assist with COVID-19-related emergencies, and these groups have actually been extremely successful in helping us manage on the ground individual, logistical challenges, such as hospital beds or oxygen availability, et cetera.Our focus to curb the virus has also been to strictly follow work-from-home policy for all our offices, which we have been doing since the first half of April. We are tracking vaccination very closely among our employees and, in every way, helping and encouraging them to get vaccinated as soon as possible. Up till now, 508 of our employees have received their first dose. Greater than 80% of employees above 45 years of age has been vaccinated. We have collaborated with hospitals and 1mg to organize scans and are continuing to do so for the 18-plus year segment, as vaccinations become more available. We will, of course, bear all the costs of this vaccination program for all our employees and family members. We continue to stay closely in touch with all our employees and have been conducting regular town hall meetings to address concerns and identify areas where we, as a company, can help our employees and our broader stakeholder community through this crisis.Moving on to the business and a few comments on the business. Overall, in the quarter, our business momentum continued its upward trajectory in the quarter. We witnessed robust growth in all months of Q4 over the corresponding period last year, and this growth was broad-based, with all our product categories, geographies and channels logging strong growth. Our ECD portfolio continues its stellar performance, driven by all segments.The lighting B2C segment has continued its growth momentum, which is driven both by volume and also value. The one segment of our business which continues to face some challenges is our lighting B2G, business to government, which largely is our key strategic [ place ] business. And this is continued to be challenged due to slow uptick from EESL and government orders in the quarter.The other challenge, of course, has been commodity headwinds. We have taken 2 price increases in tranches. Despite our pricing action taken over the last few months, we have only been able to cover part of the hike in commodity costs, which is continuing to build up pressure on material margins. The commodity price escalation is unprecedented, as I mentioned before, and during this quarter, commodities were sequentially up by about 12% versus quarter 3. And this has continued unabated, with over May -- April and May commodity prices up a further 8% versus Q4.Obviously, our cost-saving program, UNNATI, which has delivered such fantastic results on a consistent period, continues to be a key program. We have saved approximately INR 60 crores under this program in this quarter. Our focus on efficient management of working capital has helped us further strengthen our cash position to INR 1,373 crores. We have maintained a healthy balance sheet and cash position, which, as we had said last year during the same time, we believe this will help us stand relatively better than a lot of our competitive sets.We are best placed to tide over future uncertainty, aggressively ramp up once things normalize and also ensure that we continue to invest in the long-term development of our business. We continue in this period to invest in development of R&D capability, alternative channels like rural, MOR and e-commerce, the benefits of which have started showing results. And long-term results will be realized even more over the years. We remain committed to develop innovative consumer meaningful products that offer superior value proposition, flowing both into the top and the bottom lines.Moving into a brief overview of segment price performance. Here, just to clarify, we don't normally talk about this, but I will also, to help provide perspective given the base period, talk a little about our sequential growth quarter-to-quarter and also January, February growth. This is simply to provide some additional perspective to all of you given the March base period issue of last year.Our ECD business continued its momentum and delivered a 15% sequential growth quarter-on-quarter. In this quarter, our appliance business grew 59%, growing close to 30% in January, February alone, on the back of strong performance across the entire range and product portfolio. Our strategic focus on premiumization continues, with premium fans delivering 76% growth and premium decorative fans delivering 72% growth. Our entry into the super premium fans segment also continues to gain traction, with business momentum improving sequentially. Our range of new offerings over the last couple of months has been received well by the market. In the rolling 12-month period, we have gained a 1 point of market share in the overall fan business. Our pumps business witnessed a 61% growth, with Jan and February growth at 18%. Both residential and agro pumps witnessed value growth of 64% and 53%, respectively.Our renewed focus on building a leading appliance portfolio continued to deliver exponential growth of 74%; Jan, Feb, 40%. The growth was driven by all our key-focused choice segments. Air coolers grew 74%; geysers, 87%; mixer/grinder, 81%; and irons, 86%.Moving on to lighting. Our lighting business continued its Q3 momentum, and the B2B -- sorry, the B2C business delivered about a 10% sequential value growth. Lighting revenues was INR 329 crores, registering a 15% growth over last year. However, the critically strategically important B2C LED business continued its growth strategy, with B2C LED value growth of 41%. As I mentioned earlier, lighting B2G was down significantly, as the business faces major challenges due to slow order pickup by the government and EESL.With capacity ramping up, cost-saving initiative delivered the desired results, and sustained growth in our B2C businesses has helped maintain lighting EBIT margins in double digits in Q4 at 16%. Very importantly, after the past few years of price erosion in lighting, which, as you're all aware, has been an extremely turbulent period, prices, especially in the key B2C segment, have largely stabilized, and category structural profitability has now been restored.On the supply chain over this quarter, all our factories are up and running. Productions of fans in our in-house units was 55% higher in Q4 over corresponding period last year. We have fully followed down all the safety norms and more laid down by the government, and social distancing has continued to be strictly adhered to in all our factory premises.The continued momentum of our business gives us confidence that our key strategic choices are working to deliver superior results. In spite of the challenging environment, we continue to invest in these areas. First, on go-to-market, our superior partnerships with trade partners, where we have been empowering our channel partners to help them grow their business and continue to support them during these tough times, has resulted in continuous improvement in monthly [ best ] dealers, reaching a record level in March. We are focused on improving reach. We have been making continuous efforts to improve the number of retail points that our products are available. Our fans' rolling 12 months reach has gone up by 3.3 points.Secondary sales tracking, which is a backbone of our new go-to-market through the information gathered from our Tally patch, has enabled us to make more informed decisions and improve productivity and effectiveness of our program. Our Tally patch now covers secondary sales data of greater than 80% of our total business.We are also continuing our focus and investments to harness the potential of rural channels, and that has been paying off handsomely for us. Our rural sales delivered exponential growth of 117% in Q4, 72% in the Jan, Feb months over the same period last year and growth of 60% sequentially. We continued to gain share in this critical opportunity market.Our presence in channels like e-commerce and MOR, along with meaningful consumer engagement, has helped us deliver growth of 85% in Q4, 25% in January and February. We continued our consistent market share growth in this channel.Driving premiumization stays a critical strategic choice of ours and which we had identified a few years ago, and it continues to drive our business. Our premium fans segment, as I've mentioned, grew exponentially by 76% in Q4 over the same period last year. Super premium fans volume has doubled as compared to the same period last year.Our investment in consumer-centric product innovation continues. For us, we have to be the leader in developing products that are meaningful to consumers, futuristic in design and application. Our revamped portfolio in appliances is clearly being rewarded with exponential growth, while our broad range of product portfolio in fans, lighting and pumps have helped us gain market share year-by-year. Even this year, when we have been continuously hit by the COVID pandemic, we have continued to invest in introducing a range of new products across all our categories, with more than [ 30 ] strong new product innovations having been launched across our categories.Moving on to talk a little bit about the current situation. With the ongoing COVID second wave in India, clearly which is far more virulent and penetrated much deeper as compared to the last one. Previously, the virus largely was spreading in urban towns and cities. However, this has expanded to go deeper into rural India. Even though there has thankfully been a reduction in case count over the past few days, we still are very much within the peak of this pandemic.While restrictions had eased in Q4, and that resulted in our strong performance, from the back end of April through the whole of March, we are seeing essentially the entire country and most retail markets in a state of lockdown. These closures started impacting the business in the second half of April and have essentially led to a complete shutdown through May. The situation in April and May is really not very different in terms of market closure as compared to March and April last year.Depending on the extent of improvement in circumstances, we believe we can expect a gradual return to normalcy in Q2. This is again similar to what we saw in the last year wave. We believe that the demand recovery would follow like it followed last year post reduction of COVID cases and ease of restrictions. As we were last year, we believe this year, we are equally well positioned to go back with a vertical start-up as we see markets opening hopefully through the second half of June.The second key dynamic which I would like to just touch upon is commodities. As you're aware, all key commodities are currently at unprecedented levels. This increase has happened in an extremely short span of time. As I had mentioned earlier, in Q4, we saw a 12% increase in our overall commodity prices as compared to peak Q3, and this is not easing off. We have continued to see about an 8% increase through April and May.As we talked before, our focus on recovering on commodity prices is based on 3 key areas: premiumization, accelerated cost savings and pricing actions. While obviously, as I'd mentioned, we are doing very well on improving our mix and also on our accelerated cost saving UNNATI program. That being said, these commodity prices are unprecedented, so pricing, as we have done in the recent past, will continue to play a key role. However, all that being said, we do expect continued margin pressure over the next couple of quarters.Finally, to just take you through the final numbers, the Board of Directors, at its meeting on March 21, approved quarterly results of the company for the quarter ended 31st March. Total income for the quarter was INR 1,522 crores. ECD revenue stood at INR 1,193 crores; EBIT margin at 18.1%.Lighting revenues stood at INR 329 crores. EBIT margin expanded by 840 basis points versus corresponding period last year and stood at 16.1%. Improved operating leverage due to ramp-up in activity in this quarter aided EBIT. Material margins stood at 38% -- 30.8%. PBT stood at INR 231 crores versus 137 crores last year, growing 69%. PBT margin stood at 15.2%. Profit after tax for the quarter was INR 249 crores. However, this included an adjustment for the impact of an IT assessment order. Like-to-like PAT, after taking that into account, grew 63.5%.With that, I'd like to stop and address any questions that you all may have. Thank you.

[Operator]

[Operator Instructions] The first question from the line of Ravi Swaminathan from Spark Capital.

[Ravi Swaminathan, Assistant Vice President]

Congrats on a good set of numbers. My first question is with respect to the price increases where we have taken across each products. If you can give a broad overview would be good.And secondly, I mean, many of these price increases will be really steep. So post all these lockdowns are lifted, do you think -- what's your view on the elasticity of demand? And while you're juxtaposing the price increase that is likely to be a little there, so basically, can demand take a hit to an extent because of all these price increases? If you can give a view on that, it would be great.

[Shantanu Maharaj Khosla, MD & Executive Director]

Yes. Mathew, do you want to take that?

[Mathew Job, CEO & Additional Executive Director]

Yes. In terms of the price increases, we have already taken around 2 rounds of price increases already. One's been around January, February and one in May actually, April, May. So I would say the price increases between January and May, the 2 rounds, and in some cases, it is 3 rounds, the prices have increased by roughly 10% on an overall 8% to 10%.Now obviously, the first round of price increase happened in February. So at that point of time, we did not see any significant slowdown in demand, and that's what you see in the numbers for the last quarter. Now in this quarter, the price increases have been announced and implemented effective April -- April, May. Now it is very difficult to predict what kind of impact that would have because now, at the moment, there is lockdown, so we really do not know if and what kind of impact it could have on the demand. It is almost impossible to predict. But the fact remains that the commodities are in a major bull run. And I think all -- there is no other choice, but for the -- all the players to take some level of price increase.Typically, you would -- one round of price increase does happen around this period every year. But of course, we have had this time one done already before that. So that's -- how that will impact is very difficult to predict.

[Shantanu Maharaj Khosla, MD & Executive Director]

The only thing I'd add to what Mathew said is this -- obviously, this commodity is -- doesn't affect us. It affects the entire industry. So it is leading brands with stronger go-to-market who tend to come out better in these situations. So I think the strength of our brand, the strength of our go-to-market, plus the fact that we're continuing to invest in innovation while we're doing this, will enable us to emerge, relatively speaking, in a better situation.

[Ravi Swaminathan, Assistant Vice President]

Got it. And in terms of other costs, especially ad spend, et cetera, how much ad spend we had done as a percentage of top line the entire year? And how is it likely to be over the next 2 years, if you can give a view?

[Shantanu Maharaj Khosla, MD & Executive Director]

Over the next 2 years -- obviously, this year, there was a reduction in ad spend because in the summer quarter last year, we had cut back on spending due to the first wave of COVID. This year, however, in the summer quarter, we have continued to invest some amount because we were on IPL, et cetera, but not at the same levels that we would have normally invest in. Moving forward, once we get back into normalization, we would expect the ad spend levels to continue to increase.

[Ravi Swaminathan, Assistant Vice President]

Will it be on par with FY '19 levels, sir, FY '19, '20?

[Shantanu Maharaj Khosla, MD & Executive Director]

Just to be fair, let us move on to someone else. I mean, I don't want to cut you short but just to give everyone a chance. And then you can come back, and feel free to contact us separately if you want more details.

[Operator]

The next question is from the line of Mayur Patel from IIFL Asset Management Company.

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

Congratulations for robust results. And just want to highlight that it's really happening to see that very transparent commentaries on your side and with the numbers in terms of margin pressure and commodity prices...

[Operator]

Sorry to interrupt, Mr. Patel. So this is the conference operator. There is a slight airy disturbance coming from your line, sir. [Technical Difficulty]The next question is from the line of Ankur Sharma from HDFC Life Insurance.

[Ankur Sharma]

Congratulations on the great numbers. I just had 2 questions. One on the fan industry. So if you could just talk about what would have been the growth or the de-growth we would have seen for the industry overall for FY '21 and also what would have been a similar number for Crompton. The reason I ask this question is to understand the kind of share gains we may have had either from the unorganized or because of our own efforts in terms of new product launches and premiumization, et cetera. And more importantly, either the share gains or unorganized, do you think that can sustain or even accelerate with the second wave?

[Shantanu Maharaj Khosla, MD & Executive Director]

On share, on share, like I think I talked before, we measure share based on consumption share from retail audit data, third-party retail audit data. Based on that data, that's a share we report. On fans, over the past 12 months rolling period, and the latest data is as of March, we have gained 1 point in share -- market share. We are the largest share gainers in the category.This share gain has largely come not from organized, unorganized players as such, but people who have got very small brand positions in the finance category, even though they may be organized players with a major player in some other electrical categories. So we are gaining shares the fastest in this category over the past 12 months.

[Ankur Sharma]

Okay, okay, okay. Fair. And sir, anything on the overall industry growth versus our growth for '21, if you have those numbers?

[Shantanu Maharaj Khosla, MD & Executive Director]

Yes, obviously -- yes, Mathew?

[Mathew Job, CEO & Additional Executive Director]

Yes. Like we have mentioned in the previous calls, I think in the first half, the margin was obviously declining. But if I look at the last 2 quarters only, let me -- let's separate the year into 2 halves because the growth first came into the market only in the second half of the year. So in quarter 3 and quarter 4, the market pulse data shows the market has roughly grown around 9% to 10%. And obviously, we have grown much faster as you have seen. In the last quarter, our fans growth was also around 30% to 40%. At this time, again, it's pretty strong. So -- and that's how we have continued to gain share, as Shantanu mentioned, yes.

[Operator]

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

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

Just want to thank you guys for guiding us in an extremely transparent way in terms of the margin pressure and the commodity prices. And Mathew was the first person and the only person in the sector in the conferences in February to highlight this trend very clearly, maybe most painting a very rosy picture on the margin. So thanks a lot for that.Just one clarification I wanted. This 8% increase in April and May, is it fair to say that we will either need to increase prices by 8%? Or through mix and cost reduction, that 8% has to be mitigated? Or some part of that already have taken a price hike in April? That's the only question from my side.

[Shantanu Maharaj Khosla, MD & Executive Director]

Mathew? I didn't catch it because the line is unclear.

[Mathew Job, CEO & Additional Executive Director]

Yes, so I will answer the question. As we mentioned before, in quarter 4, there has already been in a commodity increase roughly to the extent of 12%. This is in quarter 4. In April and May so far, the commodities have further increased, and so there's another 8% impact. So obviously, the impact so far in terms of -- from Q4 from now, because of the commodity inflation, is roughly 20%. Now obviously, as I mentioned some time back, between 2 to 3 rounds of price increase, I would say 10% to 12% out of the 20% has been passed down to the market.Now like I mentioned and Shantanu has mentioned in previous calls as well, the mitigation of the commodity increase has to happen through the combination of one price increase, of which I mentioned roughly commodity has gone up 20% within the 5 months. And through price, we have past half, okay? And the other 2 levers which is mix, and as Shantanu has also mentioned. For example, in the last quarter, while fans grew, the premium fans have grown by a factor of 1.5x, the overall fans growth. So overall fans is very strong, but premium fans have grown nearly 70%. So obviously, the continued drive to improve mix. And number three is the UNNATI program, the cost-reduction program, which we have very successfully run for many years. Now through a combination of these 3, we try to offset the commodity increase. But I think what one needs to keep in mind, it is not going to be possible or it is not even the right approach to try and negate on a quarter-on-quarter basis. Our intention and objective is to retain our profitability, not in a quarter-to-quarter, but in a way that sustains our top line growth while getting our margins back to normal levels within a 2 to 3 quarter kind of a framework. That's how we should -- that's how we have been approaching this, and that's why I believe we should be approaching this, not trying to offset on a month-on-month or on a quarter-on-quarter basis.

[Operator]

The next question is from the line of Siddharth Bera from Nomura.

[Siddhartha Bera, Associate]

Sir, my question is on, again, on the ECD side of the business. We have done really well on the new product launches in the past, like geysers, fans also. Going ahead for FY '22, if you can possibly highlight some of the new product launches which you are looking to do. And given that the second wave of COVID has come, so any change on the timeline side? If you can highlight, it would be great to understand how this part of the business shapes up going ahead.

[Shantanu Maharaj Khosla, MD & Executive Director]

Okay. First, in terms of COVID impact, yes, right now, in April and May, the markets are shut. So there is a short-term impact in terms of the timeline. But like I had mentioned earlier, given the strength of our balance sheet and our long-term commitment to investment in our business, we will continue, like we did last year, to invest in the appropriate superior new product introductions across our appliance range as the market opens up, just like we did last year.Now we have had great progress in our appliance program over the last 12, 18 months. But we still have huge opportunity for growth. We have made significant improvements in our share position in geysers, which we started the earliest, but we have literally just begun filling in the gaps in our portfolio, putting the right high-quality, superior value propositions in various segments like mixers. So there is a lot of new product innovation planned in the existing categories to continue to gain our market share. We are still very low on share in small kitchen appliances, and we will continue to drive that. And we see a lot of headroom for share and revenue growth, just like we did in geysers.

[Operator]

The next question is from the line of Ashutosh Garud from Ocean Dial Asset Management Company.

[Ashutosh Garud, Analyst]

Am I audible?

[Shantanu Maharaj Khosla, MD & Executive Director]

Yes.

[Ashutosh Garud, Analyst]

Yes. Sir, my question is, last year in Q2, Q3 and even in Q4, we have seen our market share gain because of the [indiscernible] difficulty from business angle for many of your competitors as well. So having said that, we are again into the second wave and even the commodity increase as [indiscernible]. So how do you see the -- would this be beneficial for you to further gain your market share accelerated, basically? I think someone else in the call also briefly mentioned about it. Going ahead, do you see, from a market share angle, gaining angle, helping you for a volume growth from Q2, Q3 angle quarters?

[Operator]

Sorry to interrupt, sir. Mr. Garud, I would request you to mute your line while the management answers your question. There is a slight airy disturbance coming from your line.

[Shantanu Maharaj Khosla, MD & Executive Director]

The simple answer to your question is yes. Like I mentioned, I think, a little earlier, as the markets open up, we have learned and we successfully did it last year in terms of an ability to quickly have the vertical start-up faster than most of our competition. We believe that as the markets open up, that learning will stand us in good stead, and we will be able to open up quicker than most other players.Secondly, during challenging times like this, and this is a scenario which is even more unique than last year because they are challenging times both on COVID and the lockdown, and therefore, demand. But there are also challenging times in terms of the significant commodity price increase. At times like this, we believe that the investments we have made in our processes, systems and capabilities, the investments we have made over this period in our people and our brand will enable us to come out stronger than most of our competition.

[Operator]

The next question is from the line of Sonali Salgaonkar from Jefferies India.

[Sonali Salgaonkar, Equity Analyst]

Sir, could you quantify our current distribution strength pan-India and also the breakup of rural versus urban? And lastly, your thoughts on utilization of robust cash on your balance sheet and CapEx, if any.

[Shantanu Maharaj Khosla, MD & Executive Director]

Okay. Mathew, do you want to take the first one? And then...

[Mathew Job, CEO & Additional Executive Director]

Yes, yes, yes. In terms of our distribution, we measure it by what we call reach. If I look at -- let's take fans, for example. In fans, today, this year, during the entire financial year, we've improved our distribution reach, availability of our reach of our product fans by almost 3 percentage points. So yes, today, available almost 55% of outlets. This is by far -- even within the year, the biggest gain in terms of driving reach improvement has been by [ grinders ]. That's one of the primary reasons where we have also got a significant improvement in share. So if I look at other categories, for example, in water heaters, there, we have been rapidly gaining in share. Also, our reach has almost grown by 60% in the last 18 months. In lighting, our reach is only around 30%, and that's an area where we intend to focus as we go forward.Sandeep, you can take the question on cash.

[Sandeep Batra, Chief Financial Officer]

Yes, yes, sure. Sure, I'll take it. So we -- our business model remains quite asset-light. And with negative working capital, the business has been able to convert over 100% of the profit before tax into cash. And that gives us among our peer set most healthy balance sheet. And that certainly has come in very handy in these disruptive times because we've obviously ensured that in times when market is disrupted and our collection cycle gets disturbed, we've ensured on time payment to all our vendors. And a large number of our vendors are micro and small and medium enterprises.Having said that, obviously, beyond a certain point, we do not want to keep idle cash. The objective is to reinvest that in the business. I think it has been referred earlier or has been mentioned in one of the earlier calls, may remain on the lookout for inorganic opportunities, which we will be pursuing. So that would be the first and the best way to reinvest and redeploy the cash. And in case over the period we are not able to close any such transaction, we would look to give it back to shareholders in the form of dividend or some other way.

[Operator]

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

[Bhavin B. Vithlani, Senior Analyst]

Congratulations for a great set of numbers. My question is specifically on the appliances portfolio and, within that, any specific air coolers and mixer grinders. I would appreciate if you could answer my question into 2 parts. One is in terms of new products and the gaps that you have filled, and second is in the reach. And how are we seeing the ramp-up? And also related here, last year, in the same time, you highlighted because of the COVID events shutdown, investments in air coolers was decelerated.

[Shantanu Maharaj Khosla, MD & Executive Director]

Yes. Mathew, do you want to take that?

[Mathew Job, CEO & Additional Executive Director]

Yes. So like as you know, we have picked 3 categories, which was focused on to grow our appliances business. One was water heaters, air coolers and mixer grinders. Of course, the first one we talked about was water heaters, and that's why, as I mentioned before, we moved from being #6, #7 to being #3 and close to being #2 in water heaters. The air coolers, I would say, the journey is roughly 12 to 18 months behind what it is in water heaters. So if I look at the last 18 months or even 24 months, we have been the fastest-growing company in the air coolers business. Last year, we -- a lot of our business was driven through a range refresh in desert coolers. Unfortunately, last year, of course, during the peak period, we had the COVID impact, which meant that we could not get the full impact of the introductions we made. This year, we have expanded that -- the range enrichment from desert coolers also to tower coolers and personal coolers. So now we have a fully enriched range across the entire air cooler category now.However, of course, this year, again, as you know, April, May, it's peak period for air coolers, and the lockdowns have impacted even this year as expected, like it impacted last year. But for us, I think it does not change our long-term strategy in air coolers, which is to drive growth through offering differentiated propositions. That's one.Second, in terms of mixer grinders, I would say in the last 6 months or since the end of May 1, we have been growing -- we have been doubling our mixer grinders business. But mixer grinders business starts from a very low base. We have a low single-digit share. So even with doubling the sales, it's not good enough. So we have a full-fledged product program in place. The objective is to revamp our entire product portfolio in a period of 12 to 18 months, like we did for water heaters and air coolers. So I think mixer grinders is also forming the trajectory, and our objective is to get disproportionate growth in all the 3 categories going forward, yes.

[Operator]

The next question is from the line of Aadesh Mehta from Motilal Oswal.

[Aadesh Mehta, Investment Analyst]

Sir, just a bookkeeping question. In terms of tax write-backs, how much amount do we have available for next year or so?

[Shantanu Maharaj Khosla, MD & Executive Director]

Sandeep?

[Sandeep Batra, Chief Financial Officer]

So these are -- we have taken a certain position in our tax return than in our accounts, which we wanted to get validated or confirmed during the assessment process. And it was -- so I think -- so that back -- so in our books, we did not consider the benefit. And only when it was finalized or considered by the tax authorities on a year-on-year basis, we have written that tax component. Bulk of that is done. I think only 1 more year would be left.

[Operator]

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

[Keyur Pandya, Equity Research Analyst]

Congratulations for good results. Sir, my question is on -- so if you can just give more idea about how the April and May have been for us. And just want to ask that, how the inventory in the channel would impact the recovery for our primary sales? I mean, what is the situation of general inventory. Is it high considering that we have done quite a good sales in Q4?

[Shantanu Maharaj Khosla, MD & Executive Director]

Mathew?

[Mathew Job, CEO & Additional Executive Director]

Yes. Obviously, if you are going to compare with last year, okay, because that's compared with last year, you are right, last year, in the last 15 or 20 days of March, there are no sales, and it was shut down. And typically, the second half of March, but actually the whole of March is a period when there is significant loading of inventory in the trade, as the trade loads of inventory and expectation of April and May sales. Last year, it did not happen because of the lockdown that happened in March. This year, in March, the sales was good. Both the sell-in and sell-out was good. So if you ask me on the 1st of April this year, obviously, the stocks were slightly higher than what it was last year. But if you consider the year before or a normal year, the 1st of April inventory is not high. But compared to last year it is high. So if you ask me, when the pandemic -- when the wave 2 subsides, is the pickup in primary sales going to be as sharp as last year? It's difficult to say because it also depends on the underlying demand and how the underlying demand comes back. So there is -- but of course, one needs to factor in the fact that the trade stocks are higher than last year.But eventually, how the subsequent months will play out will actually depend only partially on the opening stock of the channel. It will more depend on how the demand comes back eventually because otherwise, it's just a question of 15, 20 days here or there. So that's something on which the trajectory of the next few months will be determined, yes.

[Operator]

The next question is from the line of Shreyas Bhukhanwala from Canara Robeco Mutual Fund.

[Shreyas Bhukhanwala, Equity Research Analyst]

Sir, my question was on the lighting margins which we have delivered this quarter at around 15.5%. So what has driven that? And how should we look at it on more sustainable basis?

[Shantanu Maharaj Khosla, MD & Executive Director]

Okay. I'll let Sandeep take that, but just one point before Sandeep takes that. As far as the lighting margin goes, we need to recognize that the past few years was extremely turbulent as there was a huge amount of price erosion, which was supported over time by cost reduction also. That price erosion, especially on the B2C segment, had largely stopped. And as the costs continued to come down, the margins are improving, right? So that's what I mentioned. But now with the price erosion on B2C largely stopping, this critical strategic categories' fundamental structural profitability has been restored, right? So that's a very positive thing for, I believe, for not just us, but for the industry as a whole.Sandeep, if you got anything more you want to add on the margins?

[Sandeep Batra, Chief Financial Officer]

No, no, I think you've covered it very comprehensively. And we see no reason why margins should -- while yes, they're not going to hold the same line, but structurally, double-digit margins are very much sustainable in lighting.

[Operator]

The next question is from the line of Rahul from Haitong.

[Rahul Gajare, Research Analyst]

Sir, firstly, congratulations on a good performance in the quarter. You've given a lot of segmental information for the fourth quarter. Could you give the revenue breakup of important categories like fans, appliances, pumps, LED for the full year?

[Shantanu Maharaj Khosla, MD & Executive Director]

Sandeep, do we share that information?

[Sandeep Batra, Chief Financial Officer]

No, no, we don't share that information. We can -- so that information, I'm sorry, we will not be able to share, detailed breakup of the categories below the segment.

[Operator]

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

[Renu Baid, Vice President]

Congratulations for the strong results. My 2 questions are, firstly, since you mentioned that among the other segments, lighting is the segment where the reach is the lowest. So would it be right that the next M&A should be expecting the lighting segment largely to expand the reach of the market share? And if so, do we have any timelines or any prospects on cards for this segment? Also, what would be the kind of cost savings from project UNNATI that we're targeting for FY '22? Do we have any broad numbers or targets for this category as of now -- for this savings as of now? Yes.

[Shantanu Maharaj Khosla, MD & Executive Director]

Renu, on the first question, obviously, I can't comment. It's not appropriate for me to comment.On the second, UNNATI, Sandeep?

[Sandeep Batra, Chief Financial Officer]

So our target this year would be around -- I mean, obviously, the target assumes a normal year, would have been around INR 175 crores of savings.

[Mathew Job, CEO & Additional Executive Director]

Yes, INR 175 crores, correct.

[Sandeep Batra, Chief Financial Officer]

Yes. But that assumes, as I said, a normal year. If few months are going to get washed out because of lockdown, then that target will have to be suitably recalibrated.

[Operator]

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

[Achal Lohade, Vice President]

One question is with respect to market share, if you could give the market share we have in fans, pump, lighting and appliance sector.And secondly, just a clarification on the cost savings in the UNNATI. What are the key heads here where we see the cost reduction, sir? If you could comment on that as well, that would be very helpful.

[Shantanu Maharaj Khosla, MD & Executive Director]

Okay. Mathew, do you want to take that?

[Mathew Job, CEO & Additional Executive Director]

I couldn't hear properly. Can you repeat?

[Achal Lohade, Vice President]

Sir, with respect to...

[Shantanu Maharaj Khosla, MD & Executive Director]

I think the first one was market share in the sub categories. And the second question was what are the broad heads in which we're getting cost saving in UNNATI.

[Mathew Job, CEO & Additional Executive Director]

Okay. Let's -- so market share in appliances, you asked, right?

[Shantanu Maharaj Khosla, MD & Executive Director]

In the different categories: fans, appliances.

[Mathew Job, CEO & Additional Executive Director]

Okay, okay. Sorry. Yes, it sounded now a little clearer. Okay, anyway, in fans and pumps, residential pumps, we have market share of roughly 27%, 28%. Now again, in -- if I look at lighting, the market share is lower. The B2C LED market share is only around 8% to 10%, in that range, depending on which quarter you're talking about. In appliances, of course, in water heaters, it is the one in which we have roughly 15% market share. In the other categories, which is mixer grinder and air coolers, our estimated market share is in single digits.In UNNATI, of course, the cost saving is on different heads. I think the bigger saving is still in terms of the product costs. The product costs are primarily -- there are different levers on which the UNNATI has delivered multiple-year results. One is in terms of what I'd call some level of product redesign. So that would mean, for example, use of alternate materials. That is one of -- the one lever. It could be redesigning the product in terms of eliminating those features for which the consumer doesn't see any value. So eliminating what I'd call non-value-added features, which actually add a cost but doesn't add any meaning to the consumer.Number three would be negotiating better. So one of the things we have done over the years is to set up central purchase organization so that we can negotiate as 1 company rather than as 4 businesses, looking at alternate [ business ] where it makes sense, looking at alternate country sourcing where it makes sense. That is one [ set ], the cost. Second one is optimizing the processes within the sourcing locations and the factories, how do I make our factories and our copartners more efficient in terms of manufacturing, and so on and so forth. So the whole gamut of cost. Then there is also an indirect cost. So can we have our logistics cost more efficient, and so on and so forth. So I would say pretty much every element of cost is being worked on. That's only way we can have 5 years of such huge savings. So that's how that is proceeding.

[Operator]

The next question is from the line of Ashish Jain from Macquarie.

[Ashish G. Jain, Analyst]

Sir, my first question is, again, in project UNNATI. So if I go by the number you gave at INR 175 crores, but if I look at it on a second half revenue basis, that translates to roughly 1.5%, 2% on margin. So if not in fiscal '22, like do we have fairly high visibility that maybe with a lag of 3 to 6 months, this is like low-hanging fruit for us?

[Shantanu Maharaj Khosla, MD & Executive Director]

Well, see, you're right, our ongoing goal on UNNATI has been to save about 1.5 points every year. However, it is important to realize that this then gets reapplied in different ways. For example, part of it definitely has to get reapplied against commodity inflation. Part of it gets reapplied in greater investments in capability and brand building.If you think of our business over the years, we have made significant investments in almost every area of the business. Key investments, for example, which we're making today in building our R&D capability or our go-to-market capability, all of this is reapplication of savings which we are creating through the UNNATI program. So that continues unabated. In fact, given the commodity increases, we double down and try and accelerate some of that. But it's not right to necessarily assume that this will all flow into margin, no. This is, if you will, the source of funds for investing in our business and brand growth.

[Operator]

The last question is from the line of Shrinidhi Karlekar from HSBC.

[Shrinidhi Karlekar, Analyst]

Yes. Congratulations on great set of numbers. Sir, I just had a question on pan-industry demand coming from rural India. According to your assessment, sir, how much of the volume demand of fan comes from that 6 lakh villages we have? And how is the demand? Like in terms of brands, is it very different what rural villagers buys compared to, say, Tier 2, Tier 3 town customer?

[Shantanu Maharaj Khosla, MD & Executive Director]

Mathew?

[Mathew Job, CEO & Additional Executive Director]

Yes. See, look, so in terms of our penetration into the rural market, to be honest, is very limited, okay? Bulk of our sales comes from the urban markets and more so from the towns which are 1 lakh and above, okay? Now our current -- when we say rural or urban distribution expansion, we are basically talking about expanding our reach of our products to towns which are 10,000 population to 1 lakh population, okay? So I would say it's still largely urban. Maybe we might just touch the higher end of the rural area. So I don't think we are really talking hardcore rural in to that extent. But what we have seen, at least in the lower tier of urban market and the bigger towns, we don't see a significant difference in the kind of products that sell. Because I think that there's expectation that what sells in rural or urban is only the lower specified -- specification products is not really borne out by data. So we don't think that a significantly different portfolio will be required to satisfy to decide -- to cater to the demand in the urban markets, yes.

[Operator]

I would now like to hand the conference over to Mr. Shantanu Khosla for closing comments.

[Shantanu Maharaj Khosla, MD & Executive Director]

Thank you. Thank you so much. Thank you for taking the time to join the call. As always, our objective in these calls is to try and be as transparent and open as we can to give you a better understanding of our business and how we're looking at our business. As always, if you've got any questions in terms of follow-up or we weren't able to get to, please feel free to contact any of us. We'll be more than happy to address them.Finally, please stay healthy. Stay safe. Look after your families. That's the most important thing. And if you have the opportunity, get vaccinated. Thank you so much, and take care.

[Mathew Job, CEO & Additional Executive Director]

Thank you.

[Operator]

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