Firstly, on outlook for fiscal '27, both on volume and revenue growth, given that fourth quarter has ended weak, my sense is, should we expect double-digit volume growth plus some price hikes into FY '27? Any outlook could you share, please?
In today's environment, what do you expect an answer from me? You know, we are just looking at month to month, who knows where the war goes? We are seeing sharp increases in prices for most of the product categories. So, how much will volume growth be? It is difficult to say at this point of time. At this point of time, it is very difficult to say what the growth will be. We are very positive, hopeful, the summer has started off at a good note. But the demand is yet to be seen. And our focus will be to continue to strive towards getting more efficiency.
The base case, even if you do like mid-single digit volume, along with the price hike, we should still reach like mid-double digits next year, right? In terms of value growth. Is that a reasonable assumption?
As I said, it's right now it would not be right for me to give any number.
On the margin side, given various amount of price hikes, and what we are seeing on the RM inflation side, should we assume that whatever RM inflation forex issues, in terms of cost inflation, we are seeing most of that is actually pass through and there should -- the entire absorption is actually getting done from Havells side. Is that understanding correct?
We are striving to do that. Again, we are in a competitive world, and we have to see how it holds up. We are striving to pass on the cost. But, again, as I said, we have to compete in the market, our focus will also be to retain or gain market share. So, we'll just play a balancing game.
On the after sales service, we've seen a lot of premium product launches across all segments from Havells over the last six months. Is it really possible to have a separate team for luxury and premium products so that the customer experience is not compromised? Any thoughts on this?
I think these are very operational issues, which we continue to ensure that we will give the best service to the consumer. But these are very operational issues. And one part of the business that I think there's no point of us to spend time about this on this call. But what you are saying is our objective is to continue to give the best service as well as best customer experience always. But it's good to know that you've noticed that Havells is coming out with premium products. That is a reflection of our continued investment in innovation.
In terms of monsoon, last year also was impacted by monsoon. So logically, the impact of monsoon this year is probably less compared to what it was last year. So, on that favourable base, should all these segments report strong growth or still the impact is so high of monsoon this time also?
No, it's difficult to predict what will happen in the monsoon. But you are right, last year was a low base. So, we should be seeing good growth in this year.
Any internal target estimate that the company would be working on summer products that you can share with us?
I think we do not give any guidance on the numbers. And frankly, in this scenario, we are hoping for a faster growth. As I've already said in summer products, last year was a very low base. So, we are hoping to get a good growth in this first quarter.
On the ECD side in Q3 is majorly described as largely volume driven, not price led. But in Q4 we saw volume decline, but there is no major price reversal. So I'm trying to understand if you could share volume growth or de-growth for fans, water heaters and OFR for Q4?
We don't give separate volume details for fans and water heaters. So but as I said overall there was a de-growth in value terms in fan segment, because of the initial push in the third quarter because of the energy efficiency and a delayed summer as well.
On the 'other' segment margins that we are seeing - is it operating leverage benefits that are now starting to help us? And in that context should we expect high-teens kind of contribution margins to be sustainable from here on?
Right now solar is sunrise industry for us. We are evaluating this. Our major focus is continue to gain market shares. And get the tailwinds of this industry. And difficult to say what the final margins will be but they will continue to improve as you rightly said about the operating leverage.
Related to the switchgear. So you highlighted that the margin impacted because of a lag in the pricing of the cost. So do we believe that in the coming quarters, it is possible that we'll go back to our 38% of contribution margin?
Yes, we are striving towards that. As I said, in certain cases, the cost increases are so high that there was a lag in passing on the entire price increase. We'll continue to strive towards moving there. But I've also said that our eyes will also be on retaining market share. It's not only also gaining. So this is something which we have to see how it pans out.
Why I had asked, because the growth for the entire year for Switchgear is also quite low. So it's more focused on the growth the way forward or major target is to achieve our contribution margin?
I think it will always remain a balance between growth and profitability.
If you could give us some sense, if possible, on the full year growth in terms of fans, wires, water heaters, etcetera. Just trying to understand if we have gained market share, we have seen some market share loss in any of the categories?
Generally, we don't give product-wise growth rates, but fans, we have degrown in the entire year. Fans, ACs and air coolers, there we have degrown. So that's what I can say. But talking about market shares, we do believe that we've been able to at least retain, if not gained.
Second question - top-down thoughts from a positioning of our products, would it be possible to get a sense in terms of the economy and mass premium and premium mix? Like are we under-indexed in the volume segment where probably the growth could be better and premium is facing a challenge in terms of growth?
Achal, look, the strategy of the company, I think the Chairman just talked about how the long-term strategies have gone up. So I think looking with a very short-term lens, I think we can't decide about the brand positioning. You are aware, we have REO, we have Havells. So, I think within those segmentations, we'll play. But just because there could be volumes in the lower end of the market. And we even don't know. You see the data is not really supporting that. So, I think it is a brand positioning, which has been painstakingly built over decades, something you can't really tinker with based on a particular quarter or a seasonality.
The question was more from an annual / medium-term perspective. Given the positioning what we have, given the category sub-segment growth within the segment, is there a constraint in terms of growing at a higher pace and there is a price difference gap between us and the other brands have widened. Is there a case for that?
Maybe you would be right, but I hope you appreciate this is something what we do every day. And based on, as I said, brand ethos are built over decades. Even a year, actually is nothing in the overall history of a business and a brand. So yes, I think your point understood, but I think this is something we evaluate very closely. That's what we can assure you.
Again on the cost side and investment in talent and capacity building. When we look at the fixed cost across segments, while FY25 there was an increase as you were investing. In FY26, barring cables and wires, we have seen the fixed cost being broadly flat across all other segments. So when you look at FY 27, do you see that FY27 is also going to be very similar to what we have seen in FY 26, whereby fixed costs may be increased in cable and wire because of capacity addition, but other segments remains broadly where they are? Or do you think that because FY26 have not seen major investments, so '27 could see a bump up in investment across segments?
Yes, there will be some investment across segments. So, this year specially it was with cables and wires and other have not seen. But there will be a balanced approach across all segments. However, last year also we said, this year also we'll try and get more operating leverage, which means revenue growth should outpace the expenses growth, except in advertising and promotions where we are taking conscious decisions to up our strengths.
My first question is with respect to the Cables and Wires segment. During the quarter, we had registered a 14% growth. If you look at the copper prices, year-on-year, it would have increased by a much higher number. So had we seen a decline in terms of volumes at the cable and wire segment level? If so, why was it so? And was it just related to dealer destocking alone or the end market was also on the weaker side?
On an overall there was 6% volume growth. The industrial cable segment has grown much faster than the domestic wire segment. We saw destocking in wires in first half of Q4 and there was a high base of last year. If you remember, fourth quarter of FY2025 saw a major copper price increase leading to higher channel stocking. While in Q4 FY26 there was some amount of price correction in copper before the West Asia war. So, overall volumes were down during the quarter. So you see wire segment remained flat, but the cable segment has grown.
With respect to AC and fans, how much amount of price increase we would have taken over the past few months to compensate for the raw material price increase in both these products? And how much are we likely to take?
First price increase happened due to the energy efficiency ratings change during the quarter. And then with war breakout, there is increase of raw material prices. There are calibrated price increases happening not only in fans & ACs, but in all our categories.
In terms of wires and cables, you mentioned that the volume has been flat, but margin increase has been very sharp. So, could you point out what could be attributed to inventory gains and if there is any mixed change that has led to such a sharp margin spike despite volume degrowth?
I would say rather than just looking at this particular quarter, because there is usually in this quarter year-end adjustments also are there because of the final dealer incentives and all. But overall, there were inventory gains because of copper and aluminum as well. But volume growth was only 6%, not flat, but volume growth was 6%. But we have seen slight degrowth in domestic wire segment, but much higher growth in the industrial segment.
My second question is on lighting. Now, revenue there again has been broadly flat, but margin has increased extremely sharply. Your contribution stands at 37% and you've mentioned in your presentation that the long-term average is 30% to 32%. So, does that mean that there is some one-off even in lighting and that should normalize to 30% levels going forward?
Yes, you can take that as well. As I said, during the year, sometimes in the fourth quarter, there are certain year-end releases, and that is for the entire year. So, one can say on an average, you can expect 30% to 32%, but sometimes the first three quarter releases also happen. In certain cases, sometimes it's the other way around. But in lighting, this has happened. And so, I would say a long-term would be 30% to 32%.
In terms of Lloyd, fourth quarter, we understand that the summer was bad. And in fact, it continued probably till beginning of April. Could you throw some color how the channel inventory right now is and a little color on sell-in and sell-out both?
I think your analysis is absolutely right. The first half of April was also slow. So, there were some channel inventories, but now it's evening out. And south and west have started with a good summer. And I think it's now coming in the north as well. So, hopefully, by the end of this month, there will be normalized inventories at the channel level as well.
As a solar business, we have seen almost 48% growth in 'other' segments. And even the EBIT margin has also seen a good expansion. So, if you can share more details on the solar business, have reached a normalized run rate or there is a still good scope to potentially grow in this business? And margins of solar business have they reached to an optimal level or there is still further scope to see margin expansion?
In your first question on solar, I think most of the growth that you see in the 'others' segment is coming out of solar. The way to look at it is that we are building capacities, both in industrial cables as well as solar. Solar through an investment in Goldi Solar. And because of the short supplies, more capacity that we have, we're able to take advantage of the tailwinds that are there in these two segments. And going forward also, in the coming year also, we do feel that there is enough opportunity in the solar segment to continue to grow. But we'll be also expanding our product ranges in the entire renewable space in coming time. So, again, difficult to say about the margins. One, of course, volumes will benefit, but it is a competitive space and we also need to see our market shares growing. And also, we'll try and maintain or increase margins through better product additions and expansion of the product range in the renewable space.
On the volume growth in fans, coolers, as well as the refrigerator. So how it would have panned out because probably there was no excess sell in December for these products. So, have they also seen some impact on volumes or is there healthy growth in these products?
In fans in the third quarter, there was a change in the BEE norms. So, there was some stocking in the end of the third quarter, which impacted some volumes in the fourth quarter, but also the seasonality aspect also came in, in the fourth quarter. So, hopefully, we should be seeing better volume growth in the first quarter.
The weighted average price hike at the company level would be more than 10%? Is it a fair assumption?
No, I think we would like to see that in many product ranges, it ranges between 5% to 20%.
Trade receivables fallen drastically from INR1,254 crores to INR782 crores, almost 38%. Even debtor days, it used to be 20 or 21 range in last five years, but right now it's came to 13 days. So, I'm trying to understand, this is majorly because of faster collections or changing payment terms with the distributors. And how do you understand in upcoming years?
No, this is normally, this is the last day through channel financing. So, these kinds of fluctuations are normal. There is no structural change in our payment terms or the billing. Depending upon the mix, sometimes these things happen. But I think you should keep them as normalized or normally and not see them as anything exceptional happening in this particular March quarter.
First on Lloyd. Can you highlight broadly how much price hikes have been taken till now and how much is required to sort of go back to that double-digit contribution margin level which we had last year?
Work in progress. We have already said that there were quite a few price hikes especially in case of Lloyd because of the energy efficiency (three star, five-star) change. So a lot of that happened during Jan to March. And now as I said, work in progress because now we're really seeing the impact of the cost increases post war. So that is now being passed on. So there is a work in progress. It ranges between at least 8% to 15% depending upon the AC.
On the cable and wire side, what will be the utilization levels of the new cable plant which we started? And phase two should come sometime this year as well. So if you can just give us some colour on that as well?
Right now whatever capacities got added. We've been still operating at high-capacity utilization. And more capacities will come up as you rightly said during the year. So hopefully by the end of this year early next year first quarter we'll be having the entire capacity which was planned.
Given that some of these price and price increase announcements for fans and room ACs could have been made by March end. Did we not see any element of pre-buying given the sharp price increases that you would have announced?
On the first part yes there was some pre-buying in March, especially in cooling products. But generally that is the case also in most of the years because it's also the upcoming season time for April and May. So but that was also accentuated by the fact that the price increases were happening.
You did allude to the fact that current environment has been extremely difficult to predict. Do you think consumer offtake in broad is likely to remain slightly muted in the near term in the next couple of quarters? And the entire thesis of expectation and recovery in consumption is getting prolonged?
Yes. I've not seen this kind of a price escalation in the recent past in the recent memory. Usually it happens but it is not so steep and not across all product categories. Sometimes there are more fluctuations in the cables and wires. But this time, we're seeing its across categories. So while we are very hopeful of the overall structural things which have happened within India as well as within Havells. But ultimately, we are bound by the fact that the consumer offtake can get affected if the price hike is too high. Let's see how it pans out. Let's see how the war pans out. And hopefully we should have some respite in the coming months.
But for us, the priority would be to ensure to retain the market shares are retained or improve in the current environment, even if it remains slightly challenging?
Yes usually we have tried to be more efficient during these times and more efficiency leads to market share gain. So our investments continue to be there -- whether it is innovation, whether it is in brand building, distribution reach also. So our reach and all these things, those investments don't slow down during a tough period. If it means some pain in the short term also, but we are again wanting to play a long-term game here.
Looking at the capex band in the last couple of years, we clearly stepped up our investment plans across manufacturing facilities, particularly cables and wires and Lloyd. So how should we look at the investment plans for fiscal '27-'28? Any notable segments you would want to highlight apart from the annual spend budgeted for the next two years?
Yes I think by '27-'28 major capex would go into cables and wires which is already panned out. And I think this is -- a lot of that is happening in this financial year also, INR800 crores. The rest is, big investment is going into the new R&D centre. And that will happen over the next two, two and a half years. There is no major new capex in the Lloyd segment.
Linked to the cables and wires. We recently gathered that one of the large players with presence on the cement side, who was pouring into cables and wires. They have preponed their entry into the housing wire market by a quarter or two. So do you think in the current environment where the market is struggling but on the volume side, a large entrant entering in the space could put incremental pressure on the existing peers and the industry pricing trends?
Generally speaking, cables and wires especially wires there has been a lot of consolidation in the past also from unorganized or regional brands or small brands to organized brands. More and more this industry has absorbed newer players. And I think going forward also companies that should continue to invest in innovation, brand building and distribution will be the winners in this segment. So, hopefully new players will also come with the right investments. They'll definitely gain some market share but some readjustments may happen between the unorganized and organized sector.
You've always spent enough energy and money in terms of distribution reach. Across regions north, south broadly taken care of. How do you look to tackle the western region in terms of penetration for Havells products except cables and wires on the B2C side?
I would say that Havells continues to invest not only in the western region, but also certain parts of the southern markets like Tamil Nadu where our market shares are lower as compared to other markets. Those investments are going both in distribution but also localized brand building as well. So we are seeing good growth. If we actually break down this growth into those areas that we are investing heavily towards. We are seeing good traction in these markets, whether it's west or Tamil Nadu.
As you had highlighted, the next investment focus area is towards the industrial, whether it's a cable or renewable. So how we are going to see the B2B - B2C mix evolve for the company in the next few years?
I think in cables also underground cables is something where we are investing, where we were to some extent, underinvested. But in the past, our B2C to B2B has remained between 75% - 25%, 70%-30%. We hopefully, in the next couple of years, we should continue to grow even in the B2C segment, especially where we see a lot of growth opportunity in Lloyd and ECD. I think there will not be a meaningful move from B2C to B2B.
In light of whatever is happening globally, can you just discuss any supply chain disruptions that you have faced or navigated? And secondly is there a scenario right now likely wherein again stronger companies like you emerge stronger given better supply chain controls in the current environment?
On the supply side, there have been challenges over the last couple of months, especially more on the production side. Those have been navigated and we like not to go into each detail, but those have been navigated on the raw material side as well as on the production side due to the gas supply. Going forward, we'll continue to navigate those things. I think your question about where stronger companies are in a better position to manage, not necessarily also in the supply chain, but also continued investments. And that's what we'll continue to strive for. There is innovation, brand, distribution, we'll do that and have a long-term thinking rather than a short-term thinking. I would rather say quarter-to-quarter thinking would not be in our mind, more of how do we continue to invest for the long term.
We have about INR4,000 crores of capital now deployed in Lloyd, which at this stage is barely generating any profitability. If I was to look at this, say, further next 2 to 3 years, what is going to be the strategy to get our returns higher in that particular segment?
So the biggest thing about any consumer-oriented brand build, brand-oriented business is something where it's an easier answer that you can't really say okay, if I have to fully utilize my capacity, I will lower down my price and start selling more. It doesn't really happen as you can very well understand. It requires long-term investment in brand building. So our focus in Lloyd will continue to be towards bringing out better products through innovation, which means improving image through brand building and innovation for a better margin and utilize the capacities that have been created for better operating leverage. So that's where the profits will come from on higher sales due to capacity utilization, brand building as well as improved margins.
Any of the category where you think you could have lost market share?
I don't believe so.
In the past calls, you did highlight there is a possibility of over 2 percentage point improvement in margins over the medium term. Given what you have kind of highlighted in the call about renewed investments in the R&D and the A&P, is there a change in that particular thought or that remains as is?
No, that remains as is because we are continuing to wanting to be more efficient, get operating leverage out of better volumes. See, the whole investment behind innovation and brand building would be to put in more innovative products at a premium to the consumer and hence, get better margins for the company. So again, as I said, short term, there may be some pain. But long term, the whole idea is to have better growth and profitability. Through growth also operating leverage will be coming.
Just wanted to check, you had said in terms of cables, the volume growth is 6% and the value growth is at 14%. So just trying to do the math here. Is it just the 8% price hike that you've taken? I think relatively copper has substantially increased and even aluminium if I see even on a Y-o-Y basis.
No, this is what we are saying over the quarter-on-quarter. And if you would recall, there was actually a dip in copper in the month of February. The entire increase that you are seeing is post the war. So that has actually started increasing. So yes, so overall cable and wire, 6% volume growth and 14% value growth. Blended for cable and wire.