Refused to commit on solar pumps revenue order.

On the solar rooftop business, where we had won some reasonably large-sized tenders, what is the progress? Have we started recognizing some revenues from that, or can we expect something starting from fourth quarter? Is it from state tender order only or direct sales to consumers?

We have started recognizing revenues. We have booked about Rs.18-19 crores in the solar business last quarter and we expect this to keep ramping up in the coming quarters. Currently, it is from the state tender orders, B2B orders. This quarter, I am expecting that the other direct-to-consumers will also kick in.

On wire and cable, will it be limited to wires or do you at some point also plan to enter cables? By when should we expect full pan India launch of the wires? Would we also target institutional clients or only the retail network?

We are currently entering residential wires, which is an overwhelming majority of the market. Cables will be an area that we potentially keep looking to evaluate and enter as we go along. Currently, we are going to be available in limited markets, and over a period we will become available pan India, like our other products are.

On water heaters, sometime back management had highlighted that we were number one on E-com but number five or six on GT. Have you gained significant market share in that space?

In water heaters, I am now delighted to say that we are number two by market share in GT. So, we wanted to ramp up our presence in GT. That is what's been happening over the last couple of quarters.

In terms of fans, the price hikes in induction fans will be far higher than in BLDC fans. Do you see the category of induction fan phasing out in five-six years like CRT televisions? Will that automatically lead to premiumization of BLDC and Crompton? And second, on synergies between new categories like mobile accessories, cable wire, solar rooftops, fans where distribution overlap will be very minimal?

I don't necessarily agree. The kind of cost increases in induction motors depends on the technology and work being done inside, which we have been working on for the last one and a half years. I do not think that induction motors will necessarily get priced out in this market. An induction motor fan delivers air delivery that cannot be matched by any other technology, not now and not for some time. We are the largest ceiling fan company in the world and that leverage will allow us to competitively offer both induction and BLDC fans in the long run.

On synergies between new categories like mobile accessories, cable wire, solar rooftops, where the distribution network overlap will be very minimal (mobile accessories largely e-comm), how do you see synergies between all these products working out?

Fundamentally, we had a clear called out strategy that TAM expansion is going to be crucial, divided into play-to-win and play-to-participate. The large categories that we are entering as play-to-win include solar pumps, solar rooftop, and now wires. With this, the TAM is moving from Rs.80,000 crores to almost Rs.1.5 to 1.6 lakhs. Mobile etc. is a simple play-to-participate category. While Crompton is extremely strong in general trade, we are also the number one e-commerce player in the segments that we operate in.

Just to follow up on wires with regards to channel synergies. Retailers would be largely the same, but for distributors, you need to get distributors on board. How do we plan to progress wires reach into a greater number of states?

We have good synergy on many categories where distributors overlap. Groundwork has already been done amongst the number of distributors we have, where we have synergies, which market we need to appoint a new distributor and how to go about it. Consciously we are entering in few states, there is a value proposition with which we are going to test these markets. As the value proposition gets accepted, there is a national scale up that would happen. Right now, it is a very cautious, clear capital allocation on a growth category to expand our TAM.

On Butterfly, what is the primary driver of gross margin improvement given raw material prices have remained volatile?

We did talk about our change in go to market sometime back, and that is paying us off. We have two parts: first, premiumizing our own portfolio - we launched the Idea First Series in Q2 this year, which started doing well and our contribution is now significant. Second, we are in sync in terms of taking our price increases in line with price increases happening in the market. So, it is a mix of price increases and premiumization.

Every time a leading company in our industry enters an adjacency, the rationale is leveraging brand and distribution, but very rarely does that company become a top two player. Even with meaningful revenue share, profit share is minuscule. We have seen it with wires and cable - leading peer who did fans never really got profits. Even our lighting business over the decade has not done much in growth or profits. Why will wires and cables be any different?

I cannot tell you what other people have done. As far as Crompton is concerned, we entered an adjacent category of solar pumps two and a half years ago and our business has steadily and profitably grown. In the last quarter alone where the solar pumps market de-grew, we more than doubled our sales, meaning significant share improvement. Our lighting business had a marked time for a few years earlier, but over the last two years, it has been an area of significant focus, with leading growth and leading margins. We do believe that wires is another area where we have a right to win.

(Follow-up context on track record.)

I would urge to go back and look at history. While fans followed lighting, today we are India's number one and world's number one player in fans. In pumps, today we are India's number one company in residential pumps. In water geyser, we are number one in e-commerce, number two in GT. In kitchen, we got Butterfly from a top six and we are a top three player. In air coolers, we came from seven or eight to top three. Solar pumps is already touching top three. In the past 10 years, we have not entered a category to fish around for short-term duration; category strategy is very well thought through.

We are the number one company in the world in Fans. How about thinking aggressively in terms of exporting these offerings and probably garner more market share outside India?

As the world's leading ceiling fans company, exports are an area of focus. I am very happy to announce that in the last quarter, we have demonstrated our focus on this area by hiring a very well experienced team on that segment. We have always had a team, but the idea is to take it to the next level. To that extent, we have significantly strengthened our team in exports the last quarter itself.

Can you mention how is the situation of channel inventory when it comes to fans, both with the company as well as with the channel partners on the new rating fans and the old rating with the channel partners?

It's fair to say that the channel had a fair amount of old star rated fans, some of which they have sold off in the last month. We, of course, being Crompton, from day one started selling only the new star rated fans from the 1st January. I do believe that the season so far has been shaping up decently.

We are the goods company and now recently entered solar related business - solar pump and solar rooftop. What are the strong reasons to enter the solar business? Does the company have enough bandwidth to compete with the established players? Is it because there may be a slow growth in electric goods?

We are great believers in doing things that we understand well. We have been a pumps company for the last 50 years and are the leading residential pumps company in India. The heart of solar pumps is pumps. We are continuing to grow our business at 100% plus every quarter and have quickly become one of the largest players with a strong profitability profile. For solar rooftops, this is very much an adjacency. Shortly after we entered, we announced an order book of close to Rs.500 crores. We are not interested in entering businesses in which we are not going to be leaders.

But our growth in the electric goods will remain constant or will it grow faster?

Last year, our traditional businesses pumps and fans suffered along with the entire segment because of adverse season. But these businesses will continue to be great profit and revenue growth drivers going forward. In fans, we have been stepping up our BLDC range - sequentially our BLDC range has grown materially 50% plus, gaining market share 5% plus. In pumps, we now have a full product range including Agri and specialty pumps, and while that segment has been degrowing for the rest of the market, we are growing very strongly.

On solar rooftop, there is a Rs.365 crore order book and you highlighted it's not B2C, it's more B2B. Can you give some more color, like is it B2B or B2G, and the procurement strategy - are you procuring from a domestic manufacturer or importing?

The order book that we started with in our solar rooftop business is not Rs.365 crores, it is Rs.500 crores. While this ordering has been through the medium of the government, the product we are selling is the same product we are selling in the B2C business. We are installing rooftops at homes in Andhra Pradesh in 38,000 homes - it is just that the government has intermediated in that order. The supply chain we built up alongside our solar pumps business, with ongoing arrangements with panel suppliers, inverter suppliers, AC/DC suppliers - because we are buying products at such large scale, that is leading us to be more competitive.

On the solar rooftop business, when will the Rs.500 crore order be executed? Secondly, as it is a government order, will it lead to stretch on working capital days?

The expectation is that this order book will be executed over approximately the next 9 to 12 months. This last quarter, we have already executed about Rs.19 crores of solar rooftop sales. These are government orders, but we have a reasonable payment schedule agreed with the government. Working capital will be above expectations in this segment and has already been baked into our margins. We have been making reasonably quick recoveries of receivables from the government in our large solar pumps business.