Thank you, Yusuf. Good evening, everyone.

A warm welcome on behalf of Investec India to Q4 FY '26 earnings call of V-Guard Industries Limited. We have with us the senior management team of V-Guard represented by Mr.

Mithun Chittilappilly, Managing Director; Mr. Ramachandran V, Director and Chief Operating Officer; Mr.

Sudarshan Kasturi, Senior Vice President and Chief Financial Officer. Now I'll hand over the call to the senior management for their initial remarks, post which we'll open the floor for Q&A.

Thank you. Over to you, sir.

Thank you, Vineet, and the Investec team for hosting today's call. A very warm welcome to everyone joining us today to discuss the company's operating and financial performance for the fourth quarter of FY '26.

I trust that all of you had the opportunity to review the investor presentation shared earlier. We delivered a robust performance in Q4 marked by strong growth in both revenue and profitability.

On a consolidated revenue for Q4 FY '26 stood at 1,755 crore, a YoY increase of 14.1% for the full 14.1%. For the full year, we achieved a top line growth of 7% with almost all growth coming from the second half.

The electronics segment comprising of stabilizers, UPS systems, inverters, and batteries delivered a strong growth of 22.3% YoY. All categories delivered growth during the quarter.

The electrical segment, which is our largest revenue contributor and includes wires, pumps, switchgears, and modular switches, registered a YoY growth of 15.9%. Under consumer durables segment covering fans, water heaters, kitchen appliances, and air coolers, we reported a 4.1% YoY revenue growth.

Fans and air coolers witnessed a decline, while water heaters and kitchen categories grew strongly. Sunflame reported a YoY top line growth of 8.6% in Q4.

The slowdown in the CSD business continues, but the non-CSD business grew by about 16%. The GTM integration has been completed, and the business is experiencing strong traction.

In Q4 FY '26, the revenue from South markets grew by 16 16.2%, while non-South markets grew at 11.8% YoY. For the full year, non-South market contribution is at 48%.

The gross margin remains healthy. We have maintained gross margins at 35.3% this quarter, which is at similar levels of Q4 of last year.

This is on the back of significant improvements achieved in the last 3 to 4 years. EBITDA, excluding other income, for Q4 stood at 171 crore, reflecting a YoY growth of 19.3%.

For the full year, we reported EBITDA of 527 crore, an increase of 2.6%. EBITDA margin for the full year was 8.8% compared to 9.2% previously.

Consolidated PAT for the quarter was 112 crore, up 23% YoY compared to PAT of 91 crores in the previous year. For the full year, consolidated PAT was 308 crore, lower by 1.7% YoY.

In Q3, we recognized an exceptional one-off charge of 22 crore towards gratuity and leave encashment arising out of the new labor code. Without this impact, the underlying PAT growth for the full year would have been 3.6%.

Working capital management continues to be efficient, leading to strong cash flow generation. We have a net cash of 231 crore as on March 2026 as compared to 64 crores in the previous financial year.

Considering the financial performance and healthy cash position, the board of directors has recommended a final dividend of 150%, equating to 1.5 rupees per equity share. The West Asia war has created challenges in terms of commodity inflation and supply uncertainty.

Far, we have navigated these challenges well, which reflects the inherent resilience of the business. We continue to monitor these risks, and we have mechanisms in place to take appropriate and timely actions.

Overall, FY '26 was a challenging year with the first half experiencing weak summer and tepid demand. The business performed much better in the second half with the momentum of Q4 and indications of a supportive summer.

We are hopeful for a strong start to FY '27. With that, I conclude my opening comments, and I would like to thank Vineet and the team at Investec for hosting this call, and would like to request the moderator to open the floor for Q&A.

Thank you.

Thanks for the opportunity, and congrats for a great set of numbers. Sir, in terms of the price hikes, if you can indicate, because all commodity prices have increased materially, what will be the price hikes across segments or at the portfolio level aggregate?

Have we passed on the entire impact of increase in cost to the consumers, or do we need another rounds of price hike, and what will be the quantum? That is question number one.

Question number two, whether the kitchen appliances segment has now really come out of the, in a way, bear phase, and now we should see pretty healthy growth in the segment considering the strong numbers posted by Sunflame also? How should we think about for FY '27 for kitchen appliances as a category itself?

Three, how is the fan market shaping up post March? Because we had understood that Kerala as a market had seen some amount of softness, Kerala and Karnataka, how are we looking at the fan and cooler market post March?

Thanks.

I'll take up the second part, which is on kitchen appliances. Yes, we do believe that there seems to be I think the improvement in demand for kitchen, we are seeing traction both for V-Guard as well as Sunflame.

I think the GT business of Sunflame is growing well, but we have also taken some actions in terms of business integration, which is also helping. We have more boots on the ground as far as selling Sunflame is concerned, and now Sunflame has access to all the networks and capabilities of the sales system of V-Guard.

That's definitely helping that. We do also believe that kitchen business is slowly coming out of the woods after the lull which happened post-COVID.

Now I'll go for this first part. Sudarshan, price hikes?

The quantum?

Okay. There have been some significant increases in input costs across representative categories.

We are seeing in a range of somewhere between 8% to 13% kind of cost increase. This has happened over a period of time, and what that translates into is eventually, when the high-cost inventory comes in, a 13% price hike would be required.

At the moment, prices are getting passed on. We've probably landed about 75% of what price increases are required so far, and that's something we will have to watch in future.

I think we have landed most of the pricing action, and I think most companies have announced and taken pricing action, and I think the balance 25% should happen as and when the high-cost inventory start hitting the inward in the month of May and June is what we feel. The third is on the fan.

I think fan business has degrown in Q4. I don't think it's been Kerala.

I think for us, the Eastern markets, especially the summer products have not grown in Q4. The part of that is also pulling down fans.

Maybe in the South markets, including Kerala, fan would have been a flattish kind of number for Q4. However, April, the summer sales has been reasonably good in South India, but we'll wait and see what happens for the full quarter.

Yeah.

Okay. Sure, sir.

Very helpful. Just one last question.

V-Guard has a high revenue salience from state of Kerala, and post the war in West Asia, we believe some of the remittances, etc., there might be some disturbances to that. There is possibility of some impact on the overall economy at Kerala level.

How do we see that impacting, let's say, FY '27? Because probably so far there was no impact considering it's just two months only.

Do you see any impact, and what will be the strategy to mitigate the impact if any? That's it from my side.

Okay. Far, we are not seeing any special impact in Kerala.

In fact, the summer in Kerala has been pretty supportive. Then Kerala numbers are pretty good.

Kerala today is not that large like which used to be, it's about 15%, 16% odd percent. It may not impact the overall company that much as it used to do earlier.

Far, we are not seeing any impact even when we talk to real estate companies. They are actually seeing still traction happening because we also will see some improvement in demand because people are evaluating to relocate only the earning member staying back in those countries and sending their families back home.

All these things are going on. Having said that, Q1 is not about that.

Q1 is primarily going to be summer, and Kerala as a state has done well as far as summer is concerned. Yeah.

Okay. Sure, sir.

Many thanks. Very helpful.

Hi, sir. Sir, I have a couple of questions.

One is from FY '27 perspective. How do you see demand shaping up considering one, the summer season, number two, possible inflationary pressures and its impact on consumer sentiments?

That's my first question. Second is from the next couple of years' perspective, how do we see margins trending given bulk of the investments in the new capacities already done, ramp-up as we speak is on its way, if demand momentum is conducive, do you think we are heading towards double-digit EBITDA margin over the next year or two?

I think if you look at FY '27, we, we've just completed one month, and South India has done well. South, the temperatures were warm in most parts, and I think South India, the summer has started.

Non-South, it is still, it was raining in many parts of the geography. Non-South also has a longer window, at least till June 30th, we are expecting the demand to pick up.

The expectation and the prediction from the IM IM IMD as well as Skymet and other agencies are for a pretty warm summer. That is that is hopeful.

South India, it has already started, and the the numbers are pretty decent. As far as the medium term is concerned, yes.

If you can see after even having such a adverse year, we had a very bad Q1 in the first quarter in the current in FY '26, we have come back strongly, and our, our exit to EBITDA is in the region of around 9 9 9.5%. We are already close to double-digit numbers.

Yes, there are some concerns because the the the cost inflation is very high. There across categories, across raw materials, prices have gone up.

Even metals, the metal prices are also going up. Because we have to also understand that West Asia also produces a lot of aluminum.

They have a lot of aluminum smelters, which are out of action now because of the blockade. I think we'll wait and see, but I think the inflationary trend is pretty severe, and we it is as as bad or a little worse than the Ukraine war inflationary trend what we experienced.

The good news is, this time, we are ahead of the curve in terms of pricing, and if you see our our margins are fairly, protected in Q4, and we hope to do that. If yeah, but in the medium term, I think yes.

Once this is over and the raw material prices come back to normal, we are pretty confident of hitting double-digit EBITDA. Yeah.

Vineet? Hello?

Hello, sorry. I was on mute.

Just follow-up to your earlier response, what I understand is this time around, industry has been a lot more proactive, and margins to that extent could remain resilient. Has this been a case across players where most players have taken price increases, or it is us and couple of maybe the larger ones who have been proactive, or it's the industry-wide phenomenon?

No, I think we have seen a pretty much broad-based reaction by the industry to increase prices. In seasonal categories like summer categories, this action is getting delayed.

For example, in South India, a lot of this pricing is getting passed on, whereas non-South, where summer is yet to start or it's starting slowly, some of it is getting slightly pushed. I think the intent is pretty strong.

We are seeing this across because the quantum of price increases are high. This is not only about price increase, but in some cases, there is genuine shortage of raw materials, we're all scrambling to secure raw material supply.

You could see some of the smaller players not even being able to produce products. We are in a state of supply shock, and that's also another reason why there has been a very strong, almost cohesive action by all players to increase prices because and the quantum is very large.

There's no way that almost all these categories, the quantum is so large that you can't absorb the shock.

Understood. Understood.

Thank you. Thank you so much, sir.

Thank you.

Thank you for the opportunity. My questions are on Sunflame.

My first question would be, have we incurred most of the transition and integration-related costs for Sunflame? Going forward, what could be the expected benefits from these initiatives taken?

Okay. Ram, you want to take this?

On Sunflame integration?

I think Sunflame integration is progressing well. In functions like service and quality, we have fairly progressed with integration, and we are seeing results also.

There are improvements in cost, and there is improvement in performance and customer satisfaction. In sales, I think the integration happened over November-December, and it's still underway.

We are seeing early results in terms of being able to place Sunflame into stronger counters where we enjoy traditionally good relationship. I think that's encouraging.

On supply side, in terms of planning, sourcing, this integration has happened over the last quarter. In general, of course, there will be some benefits in indirect costs, warranty charges, and even cost of quality.

Those are areas where we expect to see some benefit. The most significant benefit will come from the sales integration, and this is something that we should expect over the next three quarters and into the subsequent year, because I think the initial benefit will come as we spread Sunflame into our network, but I think deeper benefits will come from second half of this year, as progressively our NPD pipeline starts to hit the market over the subsequent three or four quarters, yeah.

I think, progressively, we should see better outcomes because the actions are underway, and we are already seeing these benefits in functional domains like service and quality, as I already spoke to you about, or even warehousing and logistics. Yeah.

Next question.

Hello?

Yes.

Yes. I just wanted to know about the initiatives taken for the GT and the e-com channel for Sunflame.

GT is fundamentally in terms of sales integration and branch integration, sales force integration and branch integration, and integration of sell-out management capabilities. That's as far as GT is concerned.

E-com integration is fundamentally so we are having the same team and the same systems driving Sunflame. It's taking longer time because I think we're also working on the offerings on the platform, and we had some challenges with listing some categories, voluminous categories.

GT, I think we are seeing traction already. I think we had some decent growth for full year, and I think Q4 was better, and we expect Q1 to be also reinforcing the direction of growth, yeah.

Okay. My second question would be, given that the innovation cycle in the kitchen appliance industry is very fast-paced, and we too have refreshed our portfolio, and the benefits of this portfolio would be visible after a year.

Will we be able to sustain or improve our profit margins, and how is this new portfolio different, both in terms of industry-led innovations and our previous portfolio, and how would this redefine our position in the industry?

No, I think two, three things. One is, as far as our See, I think we are refreshing products as we speak.

It's just that the significant part of our refresh will land towards later half of this year, yeah. That being said, already portfolio enhancements are happening.

Now there are multiple layers here. I think at one layer is some of our offerings are dated, and they are being upgraded.

Some of it is about addressing white spaces. Some of it is about getting the line-up to reflect emerging technology trends like BLDC.

These are the kind of things. Fundamentally, the addressability of the market, the freshness of the offering, and wherever, right, particularly I think we have fans in CSD, or we have, what I would say as in we had gaps in built-in, and we had gaps in BLDC-based offerings in hobs.

These are getting addressed, yeah. I think as far as the, as I said, right now this year, you will start to see benefit as we strengthen the reach with the help of our branch and our sales force, and also as we strengthen the sell-out capability for Sunflame.

That's our focus. I think the larger benefit of product rollout will be more visible in second half of this year and also going into next year, yeah.

Okay. Understood.

Thank you.

Thanks for the follow-up. Just two questions.

Now with integration of Sunflame largely done and debt repayment also over, the cash accumulation should start on the balance sheet. Just some of the capex may take some cash, but still there might be cash accumulation.

What will be the strategy with the cash? Is the management or the company looking at another inorganic growth opportunities, or how should we think about that?

That is question number one. Question number two, we see BLDC as a technology is making rapid inroads even in kitchen appliances like mixers also.

How does the management see Sunflame prepared for that kind of product innovation? Overall, how do we see the BLDC fans also market shares shaping up for V-Guard?

That's it from my side.

Yeah. As far as the cash is concerned, we are done with debt repayments, and yeah, barring capex, we should be having reasonably good free cash flow.

We have not taken any call of making any acquisitions or anything like that. If you get an opportunity at a good value, we will look at it, and it'll be a case-to-case basis.

We have nothing to report on that. The other part is on BLDC.

I think already, if you look at ceiling fans, V-Guard's BLDC is contributing roughly

40-odd

percent of the ceiling fan sales, which is pretty good. Our growth in BLDC has been very, very good.

Our complaint rates, reliability, and offerings are very, very competitive, and we are continuing to launch as we go forward. As far as the BLDC in kitchen is concerned, there are two areas.

One is on mixer grinder, and second is on chimney. Chimney, I think we have already launched BLDC chimneys.

In mixer grinder, I think this is a device that is used for half an hour, 40 minutes daily, it's not a device that is running constantly like a fan or a AC or something like that. There, I think, we have not yet launched.

I think that's more difficult to explain to customers the rationale of payback when something is running only for half an hour or 45 minutes every day. In the other two cases like chimney, the running time is longer.

It'll be a few hours every day, there seems to be some traction. I still don't think it'll be as much as the fan because in the case of ceiling fans, it's running for almost 8, 9 hours a day, assuming that you're putting fan through the night in your bedroom, and the payback hypothesis is very strong there.

Okay. Sure, sir.

Thank you. Thank you.

Hello, sir. Thank you for the opportunity, and congrats on good set of numbers.

I have a few questions on the revenue side. I'll ask all of them together.

Firstly, on the electronics division, we've seen good growth this quarter. If you can break up this into volume and value split, and if you can help us how the secondary growth, that is the channel growth in April has been?

That's one. The second question, the durable segment, I understand, have been hit this year because of bad summers.

What is our strategy to revive growth again in the segment? If you can share your product and channel-level strategy.

Third, sir, wires, we understand that the competitive intensity has increased, and one more big player is entering this segment end of this year, how should V-Guard be able to tackle this and be able to grow? At an overall level, Mithun, if you could share what kind of growth rates one should envisage for your company going forward, because you've had a bad year, and looks like summers have been good and there is recovery, overall, what kind of growth should we aspire?

I'll start the second part. If you look at the consumer durable segment, both air coolers and fans have performed badly, especially TPW fans.

That's primarily related to a lot of the impact of Q1, where we had extremely poor summer, and TPW is a very, very seasonal business, if it does not get sold in the summer window, then the inventory typically sits with the trade and continues so forth. Having said that, and as we speak currently, we are having shortage of TPW fans because, like I said, the South Indian summer has been pretty decent, and sell-out has been good.

That's as far as the consumer durables is concerned. I think this year we should have a good growth in consumer durables because of the low-base effect.

The third part is on wire. We are cognizant of the fact that a large player is entering, plus some of our peer companies from lighting are also entering wires, wire competitive intensity is expected to be more than what it was.

It's a very peculiar category. It's a category with low gross margins, and you need a scale of at least 1,000-odd crores to make money in this business, and there is also fluctuation of raw material prices upwards and downwards, and when it goes downwards, you have to also write off your inventory.

I think the new players will take some time to figure out the mechanics on how to crack this industry. It's not an easy industry to break into.

We've also had entrants before who have entered and left. Yes, we are cognizant of this, and we have also taken some measures to strengthen the sales system.

On the volume and value growth of electronics, Sudarshan, do we have a number roughly for Q4?

Roughly speaking, about 3% is price growth. The balance is volume.

In Q4, about 3% would be because you have to understand the pricing and the actions would have started towards the later part of the quarter.

It's mostly volume growth. I think price growth is about 2%, 3%, yeah.

Thanks. That was very clear.

Mithun, if you could share your view on the overall growth rate of the company for the next year.

I think as a company, we strive to grow between 10% to 12% in volume, and there is a 1% to 2% price growth culminating into a 15% growth, which is what we aim to do. Current year, the price growth could be higher because, like I said, we are seeing significant cost inflation, we will wait and see what happens.

Far, we are confident of holding our volume growth. Like I said, if we have a reasonably good summer, the summer categories should perform well.

We have to also be cognizant that Q1 of last financial that is FY '26, we had a degrowth in some of the summer categories, we should have a healthy volume growth this year because the base is on a lower side.

Sure. My next question was on margins.

If you can help me understand, see, we've been talking about double-digit EBITDA margins, and we've done well on the gross margin side. For the next year, if you can break this double-digit EBITDA margin, how should we look at it segment-wise?

How should it play out in the consumer durables, which has seen a very sharp deterioration in margins? How should we look at the recovery in electronics?

By double digit, are we targeting somewhere around 11%, 12%, or 10% is a broad guidance?

Ideally, this year we would have loved to claim that we will hit 10% EBITDA margins as double digit, but we are going through a fairly significant cost inflationary period. The things are quite volatile, and it doesn't look like the conflict in West Asia is going to end anytime soon, right?

We probably going to have a prolonged period of high cost going forward. If it was a normal kind of inflation, we could have been much more confident to say that.

In this case, we probably would like to finish a couple of quarters and then come back and comment on the margins. Far, like I said, we have been proactive to sense this and start pricing actions early, and a lot of our peers companies have also announced pricing actions as they've come to realize the quantum and size of the price increases are high.

Now I think for a company like us, I think we also need to have a good summer to help us. South India pretty much we've had a decent start to summer, and if non-South we also have good traction for summer, I think we should be confidently hitting that number.

I wouldn't say 11%, 12%. I would say at least 10% is what we would like to expect here.

Like I said, the inflation is still something that is going to be a challenge. Yeah.

What we see this year is that apart from the summer challenge, you've controlled your expenses quite well. The employee cost is flat, and the other expenses has not gone up much.

Should we see the same trend playing out even in FY '27, which could provide you some buffer in terms of cost management, etc.?

Some part of the employee cost is a variable pay. Definitely as a company, if you don't achieve the top line and bottom line numbers, the variable payout also comes down, so that's there.

We also are not expecting any huge increases in manpower this year. Like I said, we are watchful.

We have taken actions to control some costs. If we get a good Q1 and good summer, then we would be more confident to spend in the following quarters.

That's the way we look at it.

Understood, sir. Last question.

Since you said April was good, any qualitative feedback that you could give us in terms of how the secondaries have been in terms of the growth rate and in terms of the channel demand?

You are also following the same news articles and predictions by the meteorological department as we are. I can say that South India usually the summer starts early, March-April, and that has been on track largely.

Non-South, it's been a mixed bag. There are rains in some parts of non-South.

Even if you look at non-South, East is a big market for V-Guard, East also has to fire for the company to do well. I think we still have time.

I think we still have another one and a half months more than one and a half months left for the quarter. It'll be too early to comment on this.

Just keep in mind the base is already on the lower side, because last year we had a decline in some of the categories. Sir,

how is the channel inventory in all these categories?

Like I said, it's a mixed bag. If you look at TPW fan, neither we have inventory nor our partners have inventory, and we are having stockouts.

It's a mixed bag. It's not the same for everything.

Certain categories, we are having supply challenges. Like I said, in South India, I don't think there will be an inventory issue with any trade partner.

Non-South, the summer is yet to start, summer sales have yet to fully start.

Okay. Thank you.

All the best.

Thank you for the opportunity, sir. Two questions.

One, broadly across categories, be it your stabilizer, wires, or fans, when I've gone on the ground, what I've understood is there was a lot of inventory that got pushed in 4Q because of cheaper raw material cost and therefore cheaper product prices. But 1Q has been broadly disappointing in terms of at least start of summer.

You yourself pointed East and North was also a little bit of flip-flop here and there. South also, what I've heard is the channel was stocked with inventory for more than what's usually required.

On this backdrop, while secondaries have moved faster across cooling products, can you throw some light how is the sell-in or the primaries happening against the secondaries? The second question is, if you could also point out in case you do channel financing, for which product categories?

Okay. If you look at fans, the star rating change happened primarily for ceiling fan.

The sales for ceiling fans was very high in December because all the brands had to sell all the ceiling fans before 31st December, 2025. Because of that, there was a lot of channel inventory as we entered.

Okay. This doesn't hold true for TPW, because TPW BEE star rating norms are yet to start.

It's expected to start the next year. Okay.

When I said that TPW inventory is not there, this is the reason. Ceiling fans, we don't have any inventory issue.

There is sufficient inventory with us and with the trade. Also, TPW fans, most of it is made out of plastic, and there is a challenge in procuring that particular type of plastic in India, so as we understand.

This is the reason. Okay.

There is a raw material shortage for that particular type of plastic that is most widely used to make TPW fans, and many of our vendors are not having requisite inventory to make them. That's the one reason.

Channel financing, I think, on the whole, it's about 10% of our retailers. If you look at the debtor book, 10% Retail finance, we don't.

We do channel financing. You're talking about channel financing, right?

Yes, sir. Channel financing.

Yeah. Channel finance That's for our primary customers.

It is our primary customers.

Approximately 35% of our business goes through channel financing arrangement. It's not category-linked.

It is customer-linked.

It is not a category thing, it's a customer. For example, if you have a distributor for a bunch of products like water heaters, fans, and air coolers and all, the entire customer is under channel finance.

It is not a category thing. It's more of a distributor-level arrangement.

If you look at the entire portfolio of debtors, 35% of the portfolio is under channel finance.

Understood. Sir, could you throw some color in terms of are the grade B, grade C dealers, distributors facing any problem in terms of working capital management and therefore slower payments to the brand?

Is that something that you are observing?

No, I don't think so. In fact, our collections have been pretty strong in the March quarter.

We are not facing any issue. We have a pretty strong commercial team which independent of the sales team actually tracks and manages the credit limit of each of our customers, and decides which customer should be increased credit limit, which customer should reduce, which customer should be offered channel financing, and which customer should not be.

We don't have this problem, and we also have a tool wherein which we also are able to see the inventory of our partners, wherein which we know whether they're sitting with inventory or they've diverted money from the business and so on and so forth. As far as V-Guard is concerned, we don't have this issue.

Whatever sales we typically do, these are usually real sales. We don't encourage and we don't allow dumping.

We have mechanisms to stop that practice. There is a tendency by sales guys to dump stuff, we have an independent way to try make sure that doesn't happen, yeah.

Understood. Sir, one last question.

I think this is more longer term in nature than near term. For the longest time across cooling products, we've been hearing that there will be consolidation, be it cooling on the AC side or coolers or fans.

A lot of competition has come in, and right now the situation is such that costs have increased multiple times and the price hikes are not enough to offset that cost. Do you think now is the right time when you could see consolidation happening, or industry is going to remain fragmented and therefore competition probably will be the same and continue to compete?

See, what is happening is the core growth in the country is not that high. What is happening is every company in every category is thinking like, okay, maybe if I get into this category, growth will happen.

That is why you see everyone in the lighting business trying to enter into wires. There are companies which are in the water purification business that have entered into fans.

I think everyone is entering everything, okay? This process has not stopped.

It is an ongoing process. It's something that has been going on since 2016, '17.

It's an almost 8, 9-year phenomenon. What we at V-Guard, we have pegged our growth, and we have to grow despite all these macro headwinds, and that's what we aim to do.

We have done this by integrating our manufacturing. For example, from a sourcing company, we are now a completely integrated manufacturing company, which allows us to build products which are sufficiently differentiated.

We are not selling your me-too economy and sub-economy model kind of products. We want to build and sell premium and masstige products, for which you need to own as much of the supply chain as possible.

That's why we spent close to 300, 400 crores last 8 years to build so many plants and to get into the manufacturing. It is an incredibly tough thing to do, but we have done it, because this is the only way we can fight this overcrowded market.

I don't see consolidation happening, but one thing is sure, when such shocks happen, when you have a environment where you'll have to take 15%, 20% price increases, and when you have an environment where a lot of raw materials are under shortage or you're not getting raw materials, that's when the better, more organized companies, companies which have better supply chain capabilities, will probably do better than some of the other players. That's the broad thing.

Far, I've not seen any move for consolidation. Because we are still seeing everyone trying to get into every other category.

Sir, follow-up on that when you say everyone trying to get into every category. Again, a broader longer-term question.

We've seen a lot of brands entering across electrical space, right? Some of peers who were predominantly, say, a fan player have now entered wires, and vice versa, predominantly wire and cable player tried to enter fan market in the last couple of years.

Just want to understand your view. What is the strategy that works here?

Is it that if you have a fantastic channel, you can push anything?

No, it is not. For example, if you want to profitably build a business, you have to take 15, 20 years, build it SKU by SKU, you can start with sourcing, but I think unless you are really investing in the R&D, unless you're really investing in the manufacturing, I don't think many of these companies have any hope to make money out of it.

They can show revenue, but barring the top four, five brands in each of these markets, most of them will not end up making money. That much I can guarantee.

In V-Guard, for example, we have always remained a multi-product company. It's not that we have got into multiple categories for the sake of getting into it.

We've always been and organized as a multi-product company with very long-term view. We are okay to seed a category for 10, 15, 20 years, and I don't know how many of the companies you spoke about are able to do it.

Like I said, wire is a completely different category, and when they enter wire, they'll understand that winning in wires is very, very different. The skills required is probably very different from what it requires to win in fans, and similar, a wire company may not be able to be successful in fans.

Everyone will not be able to do everything. For example, as a multi-product company, our cost structures are fairly high because we have to carry people for all our categories.

These are some of the trade-offs we do. Good news is, company like us, our risk is very less because all the categories will not get into trouble at the same time.

We will see lesser impact on fluctuations in each category. I can say that I've seen the cycle, for example, 8 years back, everyone wanted to get into kitchen appliances space, and now, Every day is out of kitchen.

A lot of the other brands that are got into kitchen have got out. Now only the key core companies are still remaining.

We'll have a similar kind of a clean-up after 4, 5 years.

Understood, sir. Sir, just one last observation.

I'm actually on the ground right now to get some channel feedback, and I came across a lot of players who've been keeping a solar inverter, and I got fantastic feedback on the product, and the support from the brand was also very positive, just wanted to drop that feedback. Thank you so much, sir, and all the very best.

Thank you for the follow-up opportunity. Just a couple of things.

Mithun, we've realized solar business for you has been growing extremely fast. Can you give some idea about what the size of that business could be, number one?

What I understand is it could be more than 500 crores in terms of top line now. How do we see it growing?

Are there further legs to growth, as in can it grow in very high double digits for another few years?

I think we don't like to give out numbers, but it is not reached the 500 crores mark. We only ventured into this business fairly recently 3 yeah, about 3 about 36 months back, but it's growing very fast.

If you ask me, this business has potential to become very, very large, but we have been very careful and choosy. For example, we are primarily selling solar inverters for residential uses, and small institutions.

We have not got into the very large institutional orders and such like that because there are associated risks along with it. We are very confident that pretty soon, maybe in 3 to 4 years, this will become one of the larger categories for V-Guard as we have an inverter battery business today which is quite large.

Similar size, or it can be even more than that. As on today, we have tried to sell to customers where it is more of a B2C kind of a play, and it is not a institutional sales.

We do do institutions, but it's very small. It's mostly residential consumers, where we have equity and where we have pricing power, and where our sales and service network have a differentiating factor, whereas institutional sales where it's most of a price-based.

We are very bullish on this category, and we do believe that, and given the recent challenges with fuel and all that, government is under huge pressure to diversify away from fossil fuels in one way or the other, and this is already have good traction in India, and I think it'll continue. One more thing is, I think West Bengal and Tamil Nadu are two markets which were till now not encouraging this adoption of rooftop solar because it was BJP government-initiated.

Both these states, we hope definitely West Bengal will open up, and I think Tamil Nadu also the new government policy will be definitely to push for cleaner energy.

Understood. Wonderful.

That is helpful, Mithun. Lastly, on the lighting foray, where are we, if you can give some timelines, how are we progressing in terms of product, distribution, sales, any color on that?

It's still a work in progress for us. I think sometime towards early next quarter, we look forward to bringing it into market.

Understood. That's it from me.

Thank you so much.

Thank you.

Hello, sir. Thank you again.

I just wanted to check how many months of inventory of each raw material do we maintain at the factory level? Aluminum, copper, plastic, etc.

This availability issue that you mentioned, how are we sourcing our materials from different channels, if you could explain? If there is an issue, is it a big issue that will probably lead to lower production, if you can just highlight that?

These two are my questions.

I think as far as availability is concerned, it's primarily on the polymer or crude derivatives where there are availability issues. For example, our batteries require sulfuric acid.

Sulfuric acid is also used for production of pesticides. That is a controlled substance now, because the government is rationing it.

We are still okay. We have tied up and locked up supplies for the next 1 month or more than that.

The same is the case with certain type of raw material. Like I mentioned, TPW fans, there seems to be some shortage.

I think, as soon as the war broke out, we had set up a war room, and we identified these sensitive items very well in advance, and because we are a fairly cash-rich company, we've gone and secured supplies from wherever we could. We are pretty much okay.

I think till end of June, I don't think we'll have any issue. I think, largely, we should be fine.

For example, if the demand is 110, the supply will be like 105, there'll be some bit of shortage here and there. I think a company like us will be largely okay because we have a diversified supplier base and we've gone and secured supplies for most of our production.

Sulfuric acid is still challenging because we cannot store a lot of that material. We don't have the capability to store it.

It's an acid, our ability to store it is very low. Wherever we can store, we have tried to store, or we have stored it at our vendors' places.

We don't foresee any supply-related challenges at least for Q1. We are largely covered.

This is a potential issue for many, could be for smaller brands, regional brands, who don't have the kind of clout a company like V-Guard will have over its suppliers.

Sure. Understood.

Last question. You mentioned that we've taken a bulk of our price hikes, has there been any resistance that you have seen demand falling off for our categories, or any loss of market share that you have seen, if you can highlight?

With any price hike of this much of a quantum, this is not a natural price hike, right? Usual price hikes, our retailers are used to is for 2%, 3%.

When it's 10% and 12%, definitely there is going to be some negotiation, pushback and all. Like I said, as far as we see it, I think by the time this kind of the high-cost raw materials starts hitting in, we are fairly confident that it'll get passed on, because a lot of it has been accepted.

Wherever there are some challenges, for example, if it's a summer category and it's in a geography where summer has not started yet or there is some rains and stuff, we've given case-to-case support for our distributors and retailers. Largely it's looking okay, because I think I didn't think any company can absorb the quantum, I think everyone has announced, and I think there is definitely an intention to pass on these prices.

Like I said, only in cases where the weather is not supporting, only those places we have given case-to-case, but largely it is been passed on.

Sure. If you can share what's your raw material mix for the whole company, copper, plastic, and aluminum, roughly?

Copper is the biggest. What is the second biggest, aluminum or steel?

Copper will be the largest, followed by polymers, and then

Followed by polymer, then aluminum, then steel. Then

steel, yeah. I don't have exact number for that, yeah.

Because it's not a single category, right? Each category has got a different mix.

Sure. Understood.

Everything has gone up, right? It's not that anything has not gone up, right?

So. Okay.

Got it. Chalo, thanks.

Thank you all for taking time to join our earnings call. I would like to thank Vineet and the team at Investec for hosting this call.

We look forward to interacting with all of you in the next quarter. Thank you.