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Hello, everybody. Good morning. On behalf of ICICI Securities, we welcome you all to Q4 FY '23 and FY '23 results first-ever interactive webinar with senior management of Crompton Greaves Consumer Electricals. We have with us today Mr. Shantanu Khosla, Executive Vice Chairman; Mr. Promeet Ghosh, Managing Director and Chief Executive Officer; Mr. Rangarajan Sriram, Managing Director, Butterfly Gandhimathi Appliances Limited; and Mr. Kaleeswaran Arunachalam, Chief Financial Officer; and Mr. Yeshwant Rege, Vice President, Strategy and Financial Planning. Now I'll hand over the mic to the management team for initial comments on quarterly as well as annual performance. Post that, we will start the question-and-answer session. Thanks, and over to you, sir.
Good morning, everyone. This is Shantanu here, and thank you all for joining our year-end and Q4 analyst call. With me, I have Promeet, our Managing Director and CEO; Sriram; Kaleeswaran and Yeshwant. I'll start as usual by making a few overall comments and I will comment largely on overall full year perspective, and then we'll move on finally to questions. In an overall challenging environment, our consolidated revenue grew a strong 27% over the fiscal with a stand-alone growth of 8% on Crompton. Most importantly, in spite of the environment and the external challenges, we continued to ensure that we maintained and, in fact, stepped up our investments which will pay dividends in building our long-term strategic choices and business. Firstly and most importantly, we continued to invest in our key acquisition of the Butterfly business. As you're aware, this was the first full year of Butterfly operating along with Crompton. We have, over this period, transitioned from the erstwhile promoters, made key growth interventions and have begun efforts to consolidate and execute the joint business of the 2 companies. This has resulted in this fiscal in Butterfly delivering its highest ever profits with an EBITDA of INR 97 crores and the full year revenue growth of 10%. Secondly, we continued to step up our investments in strengthening the brand and brand awareness, and made consistent efforts to reach closer to consumers through our wide-ranging activities across various touchpoints. It included the launch of digital LED campaigns, defining a new brand architecture, structured digital marketing, in-store transformation, increasing influencer connect, et cetera. Over the full year, our advertising and promotion spending stood at 3.6%, a significant increase over the 2.8% of the previous fiscal. Thirdly, as we have been doing over the last couple of years, we have significantly been investing in innovation and R&D, which we believe is a long-term lifeblood of our company. As you are aware, we made a significant step by creating an independent R&D center a while ago. This year, that investment in capabilities, people and infrastructure continued, and our R&D investment this year increased 50% over the previous year and is now almost INR 80 crores. Thirdly (sic) [ Fourthly ], we have continued to invest in the critical new category entry in the kitchen area, where we entered built-in kitchen appliances segment in Q1 of '23 with a comprehensive range of chimneys, hobs, built-in ovens, built-in microwaves and dishwashers. Close to 10 months of launch, the business performed well and is progressing as per our clients. Significant efforts and investment went on channel development and building strong back-end processes. The focus has always been to have a differentiated portfolio with superior features. The built-in kitchen segment is INR 2,200 crores as a market and is growing at 10%. We are currently in the investment phase and we'll continue to spend towards distribution and marketing to achieve our goal of being a top 3 player with at least a 10% market share in the next 2 to 3 years. Finally, we have continued to invest in significantly improving our processes and stepped up investment in driving manufacturing excellence through Project Udaan. Our Project Unnati has delivered savings of INR 248 crores over this fiscal, which would be a key source of our ability to make the investments I mentioned above. Additionally, I would like to touch on the key critical transition, which we went through at the end of last quarter and through the beginning of this quarter on our biggest business, fans, with the new BEE norms. As we talked in our last quarterly call, we do a conscious calibrated call on how we should transition with an objective of getting superior products into our customers, and thereby, into the hands of our consumers faster than competition. As we look back on the results of this quarter to the beginning of the [indiscernible] program, it looks like this call is working as we have delivered competitively superior results across our fan business through this transition as compared to competition. Finally, I would like to touch upon an area which we are proud of. I actually had done this work obviously with an objective of building our business and delivering superior shareholder return. We are seeing that we are being more and more recognized in terms of rewards and recognition from outside parties, and we received a significant number of awards this year, which is laid out in our Investor Day. We were ranked among the top 500 companies in India by Dun & Bradstreet. We won the title of India's Best Managed Companies by Deloitte. We were among the 10 companies to be recognized on the Next Leaders category by the Institutional Investor Advisory Services. We received a National Safety Award from the Global Safety Summit 2022 in the consumer electricals sector. Personally, something I'm very proud of, Crompton was recognized as one of the best organizations for women in 2023 by The Economic Times. We also very recently, literally over the weekend, won 2 awards in the prestigious E4M Prime Time awards. These awards recognize excellence in advertising and brand building. Before I hand over to Promeet to update us on Q4 performance, let me share your company's Board has announced a dividend of INR 3 per share versus INR 2.50 per share in the previous year. This is in line with our policy on dividend, which we have brought back up to a 40% payout ratio after the payout ratios having dipped during the COVID years. With that, thank you, and I'm just trying to pass it over to Promeet to talk more details of our quarter 4 performance. Promeet?
Thank you, Shantanu. Good morning, everyone. Hello. This is the first time I'm addressing you from this boardroom. So there will be possibly mistakes. But before I get into the details, I just want to talk a little bit about our new go-to-market strategy, which is going to leverage the combining strengths of Crompton and Butterfly. And the first step, we are in the process of clearly defining the brand architecture of our kitchen appliances portfolio, which comprises of both Butterfly plus all domestic appliances business of Crompton [indiscernible] large domestic appliances business of Crompton. This will help us to lay down the road map of where to play and how to win. Crompton's might of pan-India distribution network, along with Butterfly's product portfolio, will help us move in the direction of making Butterfly a national brand. As you know, Butterfly is a very strong brand in the South [indiscernible] brand. This will also be supported by redesigning our combined organization to serve the channel in an optimal manner. To start with, we will conduct a [indiscernible] project. Now coming to how Crompton as a whole has performed. Consolidated Crompton Q4 revenue stood at INR 1,791 crores, which is a growth of 16% in the last year, while stand-alone Q4 revenues stood at INR 1,604 crores, a growth of 5% in the last year. Now particularly, we are happy so far as fans concerned, our largest business. To give you a sense of color, value growth was flat in Q4. In FY '23, we recorded volume both of about 3% and a value growth of about 5%. Q4, as Shantanu noted earlier, was the first quarter post BEE implementation and we took a calibrated approach to managing our inventory across the last 2 quarters. And if you look at the last 2 quarters, Q3 and Q4, as a combined performance, you'll see that we've performed quite relatively versus competition. For the BEE transition, we had adopted a 3-prong strategy, which has been out quite well. We took the lead in educating consumer, being market leader, on star rated fans. Secondly, we focused our efforts on mitigating the impact of cost increase, [ which have to be claimed ] for setting up the rating of our fans. And finally, the plans on strategic pricing interventions, thereby improving the competitiveness. Now importantly, our focus -- segment that we focused on was the BLDC segment, which, I'm happy to say, grew 4.5x the previous year in the last quarter and it grew 2x year-on-year. Close to 3 lakh BLDC fans were sold in Q4. We rolled out the active BLDC campaign, and I think this is the air delivery, an innovative technology that goes behind our energy-efficient fans. Through these efforts, we've seen growth across key markets including Ahmedabad, Pune and Bangalore. Going forward, we plan to add more decorative offerings in the BLDC range. We've launched BLDC fan, Roverr, which is a smart 5-star rated underlight fan, featuring active BLDC technology, anti-dust and fluidic telescopic design. With these efforts, we are now already among the top 2 BLDC players. Continuing the focus we've had on improvisation, our premium ceiling fan segment continued to grow quite strongly in both value and volume about 20% over the previous year. Apart from ceiling fans, the TPW category grew greater than 10% also last quarter. This -- there has been now focus on in-housing TPW, which improves our control over quality as well as give us a cost advantage. As you are aware, the fan segment has been quite competitive. The competition is multiplied ninefold in the last 5, 6 years. However, we continue to gain market share in every quarter over the previous last 4 years, and we've maintained our overall market share every year while improving our share of premium fans. Going forward, from a value consciousness and inflation point of view, consumers are more likely to be inclined towards a change of technology to create improved energy-efficient fans, which is a positive long-term [ pavements from segment ]. Further, post pandemic, there has been a pickup in housing, which provides another structural [ pavement ]. Okay. Now let's turn to pumps. In Q4, as you might already be aware, we took 2 important actions to bring our pumps business back on track. Firstly, we rolled out a new brand architecture for the mini pump series, and strengthened our brand offering by introducing sharply differentiated products. Then we undertook some strategic pricing decisions to ensure that the price premium is at the level that the consumer is willing to pay for. And now this is showing up in the business with pumps growing at a value of 15% last quarter. Overall, in the last year, the value growth for FY '23 has already been about 9%. With this, the pumps performance, as we said, has improved. And this is an important part of what we are undertaking to continue to strongly grow -- give an impetus to our pumps business going forward. Along with the growth in the trade channel, we are focused on improving tractions in the modern retail channel as well as in the retail [indiscernible] channel, which grew 2x in Q4 over [indiscernible] from previous year. If you recollect, last year, we launched a starting program from a loyalty program, which is technology driven. And I'm happy to say that, that is playing out quite well. One of the key actions that you'll see in the past -- in the near future include strengthening in the northern market. The plan is to roll out targeted ATL and BTL activities, along with the category [indiscernible]. Now appliances. Appliances, I'm happy to report that we had a value growth in excess of 40% in Q4. And FY '23, we had a value growth of about 30%. The appliance business continued to show strong growth momentum. The core categories, water heaters air coolers combined, had a growth of 34% in Q4. And one of our focused and fast-growing categories, mixers and grinders, grew in excess of 70% and close to 2 lakh pieces were sold in Q4. Forty-six new SKUs were launched in the small domestic appliances category, which is [indiscernible] application appliances. And focus on secondary sales -- and we focused on secondary sales by setting up nearly 100 distributors, and [indiscernible]. This resulted in significant growth in the business in small domestic appliances of about in excess of 60% in the last quarter. Gearing up for the summer, a few new products have been launched, one of them is Cool Breeze air cooler, cooler with modern aesthetics and [indiscernible] pump which works even with hard water. The other is Optimus Window Cooler, which is an extension of the Optimus series and has the highest air delivery and wider-angle throw.
Now to our flagship business, the large kitchen appliances business. This is a business that we are mentioning at the beginning -- at the point. And after close to about 10 months of launch, the business has performed well and progressing according to plans. The focus is to have a differentiated portfolio with superior and industry-first features. Significant efforts were spent on channel development wherein 55 brand stores, signature stores in some cases and exclusive stores in others, are heavily opened across [indiscernible]. Lead generation campaigns and performance marketing has generated quality leads with good conversion rates. NPD, the new product development roadmap, has been designed on the basis of unmet consumer needs. By 2024, we plan to be present in 26 city clusters with 100-plus brand store and continue our trust on lead generating campaigns. The kitchen segment has always been a focused area for us, [indiscernible], and entry in the built-in appliance segment will further consolidate our position in the space, in addition to driving growth and premiumization of the Crompton brand. With the above initiatives, the ECD segment in Q4 showed a revenue of INR 1,326 crores, growing at 8% versus last year. EBIT margin showed -- stood at 16.4%, an improvement of 60 basis points for Q3.
Now lighting. Lighting, as we know, has been [indiscernible] an area of improvement. Importantly, in this business, we have our value growth in the year has been flat, but also in Q4, our volume growth has been flat, while the value growth was in the negative, which means that we invested [indiscernible] volume growth. Now clearly an area of focus. What we have, as we speak, decided to do is to address our go-to-market in that segment. And what we are doing is we are -- we have now integrated our lighting D2C sales and brought it under the category head. Earlier, as you are probably aware, this used to be a part of the central sales structure. This will be the much needed focus in alignment in the same. We have, by the way, also, a few days ago, hired a new D2C sales head, who will be overseeing this segment. Some of the other initiatives that we are undertaking is launching some innovative products, especially in the lamps and battens area with a low-cost [indiscernible]. We've also recently entered some categories like tube light and gate lamps, night lamps, et cetera. We continue to drive aggressive cost reduction through our programs like Unnati and Udaan. And finally, we are expanding our go-to-market [indiscernible]. And we are also building [indiscernible]. Now strategic initiatives. We have been continuously focusing our efforts on the implementation of identified strategic initiatives, which includes in-store detailed transformation which aims to improve overall customer experience in store [indiscernible] transformed, covering 80% of the states and planning to cover another 500 additional stores in H1. Go-to-market acceleration, we've already spoken about that. We spoke about the go-to-market initiatives that we are taking, both in looking at the overall kitchen appliances area, which improves the smart domestic appliance area as well as [indiscernible] and separating out the lighting D2C businesses [indiscernible]. Project Udaan. I expect that we talk about [indiscernible] from time to time. It's focused on manufacturing and supply chain excellence. Unnati, we've been talking from time to time, continues to generate [indiscernible], now our focus has gone beyond direct costs, also embedded cost. And we hope to see [indiscernible] from that. ESG. Finally, sustainability is something that is very close to our heart. Our sustainability efforts have been geared towards achieving energy savings, reducing supply chain [indiscernible] promoting water conservation and management. We are ramping up our investments in R&D for long-term [indiscernible] and in order to improve our consumers' experience in sustainable and eco-conscious products.
Finally, consolidated balance sheet and liquidity. Consolidated cash and cash equivalents at the end of FY '23 stood at INR 657 crores. And net debt at that time stood at INR 344 crores. Consolidated net working capital has increased by INR 104 crores versus March '22, mainly due to stocking for inventory buildup [indiscernible] strong balance sheet position and very well placed to invest in the long-term development of the business and to continue to grow our business strongly. Let me hand over to Sriram [indiscernible].
Thank you, Promeet. Good morning everyone. The Board of Directors of Butterfly Gandhimathi approved the results for the quarter and the year ended on 31st of March 2023 on 12th May. So as per the results, our Q4 revenue stood at INR 187 crores with a margin decline of 2% versus last year. And our gross margin stood at 31.9%, and our EBIT margin stood at 2%. The key highlights for the quarter is as follows. We continue to remain focused in improving the retail mix to drive the healthy business across the channels. That has resulted in one of the fastest growing and the retail continue to grow faster, it grows around 19% in Q4 with healthy improvement in margins. And I feel that e-commerce risk -- is actually derisked and is behind us. Yes, getting the growth back in the e-commerce channel is critical, but we also plan to do so by fully listing the existing portfolios and launching channel-specific products. And we continue to remain focused on building capabilities [indiscernible], functions in sales, category marketing and R&D and in back-end manufacturing. So which actually strengthened our entire operations, and we have started to hire experienced people and capable people. From a market position point of view, in the Q4, the market share remains almost flat for across all the core categories with a marginal increase in share in mixer grinders. And then our retail continues to be the growth driver. And we continuously invest in new product development, and especially in the last quarter, our share of business from new products tend to be significant, launching over more than 23 [indiscernible]. That's the update as of now from Butterfly.
Thank you, Sriram. Some quick final remarks from me. While the Indian consumer durable market is rapidly evolving [indiscernible]. While commodity prices started to ease off during the year, we expect some time to pass before this translates into inflation [indiscernible]. The demand has improved in [indiscernible] but we must closely monitor inflation levels which remain largely unchanged in the past few quarters. We expect demand metrics to stay for a few months, but we will continue to work towards growing our revenues [indiscernible] and growing profits, at least in line with revenues, which would lead to cash generation. With this, let me just really go through the numbers. The Board of Directors again last weekend approved the quarterly results from the company. The total revenue for the quarter was INR 1,604 crores. The consolidated number would be INR 1,791 crores. The ECD revenues stood at INR 1,326 crores. EBIT margin stood at 16.4%. Lighting revenues stood at INR 278 crores. EBIT margin stood at 10.9%. Material margins were at 30.7% while on a consolidated basis they were 31.5%. Gross margins on a stand-alone basis were 25.5% while on a consolidated basis, they were 26.2. EBITDA margins, stand-alone, 12.2%; consolidated, 11.8%. PBT, INR 172 crores, stand-alone; consolidated, INR 170 crores. PAT, INR 132 crores; consolidated, INR 132 crores. And as you can see, we do have the metric of having good growth, having strong volumes, and I move forward to come to the -- continuing to strengthen the core as we build for the future. Thank you. With that, we'll accept questions [indiscernible].
[Operator Instructions] We have with us first question from Mr. Siddhartha Bera.
This is Siddharth here from Nomura. I had a question on this BEE channel transition and the current inventory levels, if you can share what is in the system. And given the demand you are looking at in the first quarter, how do you think how long it will take for the current inventory to sort of get normalized. And second is on the cost side, if you have taken up the entire costs in the pricing side or there is still some recovery which you need to pass it on?
Insofar the cost side is concerned, yes, we have mitigated some of those with the cost management programs as we indicated. And there has been some price increases. We've actually passed on those [indiscernible].
Insofar as the BEE channel inventory is concerned, there is the idea of presence of nonregulated fans in the segment. But as you are aware, we approach this quite differently from the rest of the industry. So my sense is that the extent of [indiscernible] fans is lower than...
I just have one more point on that. As you are aware, the expectation of the lower star, the 1 star, 2 star product was that the pricing would be higher than the pre-BEE today. And that's one of the reasons a lot of competitive companies loaded a lot of non-BEE stock. However, as Promeet mentioned, given the competitive nature of the product, a lot of that pricing initially did not happen. Therefore, the BEE 1 star, 2 star product in the marketplace, in the initial period was the same price as non-BEE. Therefore, competition, which have put in a large non-BEE, did not even have the price advantage to the consumer. And that has led to potentially competition inventory of the 1 Star product being even higher.
We have now next question from Mr. Renu Baid.
I'm Renu Baid from IIFL Securities. I have 2 questions. My first question is on the core business. In fans, if you can help us understand what is the kind of price and cost bridge required in the B rating which essentially entails the kind of cost increases, the price increases required from us over the next 12 to 18 months to bridge this gap? And accordingly, by when do we expect the margins in the ECD segment to normalize back to 18% levels? Or do we think structurally, there is now a readjustment to the EBIT margins in the ECD segment for the core business? That's the first question on fans. And if you can also highlight the market share, current market share that we have in this category.
Yes. So thanks, Renu. To start with, from an overall costing perspective, the transition meant there is about 15 percentage increase in costs via the Unnati program that we have discussed earlier. This cost increase has been mitigated through various BEE activities, and we have got it down to about say 5% to 7%.
Initially, the thought was we will be able to pass a large part of this cost increase to the consumers in Q4 itself. That has not happened. And we expect this cost delta to remain for some more time, considering where the inflation is today and probably see the demand scenario outlook. So right now, we are can't get any price increases. As things move forward, we will see a calibrated approach net of further Unnati reduction that is possible, can we pass on the 4% to 5% delta that is available.
Part would be addressing in terms of the margin model that we're looking at. I think eventually, we believe as an organization there's a lot of growth opportunity in fans as a category rather than looking at EBIT margin percentage. And you have seen the last quarter that's planning out in some of the activities that we carried out in Q4. Significant uptick has happened in terms of investments behind our plants, let it be on the innovation side or a bit beyond the advertisement and marketing side. As we move forward, we do believe a sustainable absolute EBIT which is going to deliver growth for us, and that would in turn expanding EPS is probably a better strategy for us than looking at the EBIT percentage to and looking to restore that. Fundamentally we believe volume and value growth is more critical than EBIT margin.
The last thing I'd add to that Renu is, if you look at the gross margin, I see that the gross margin declines are significantly less than the EBITDA decline versus historic peak levels. So we are in the process of recovering pricing as Promeet mentioned, the cost increases. The EBIT is a choice driven by the stepped-up investment level.
Specifically in really 3 areas, and you can see this across our numbers. Number one, advertising; number two, innovation and R&D; and number three, our continued investments in go to market. As these translate they do better and better revenue growth, which we believe they will do over time. The absolute profit we feel will end up in the right place.
Got it. Second question is on Butterfly...
Renu, I am sorry [indiscernible] if we can direct the questions and move on. We can always connect separately.
Next we have a question from Mr. Baidik Sarkar.
Baidik from Unifi Capital. First up, the increased disclosure numbers are welcome, and I hope the level of disclosure get better from here on. Could I request for a deconstruction gentlemen, what is exactly that's ailing our lighting segment? Because I'm not sure if there's an industry event because Havells on their much larger base for lighting has delivered in Q4 as well. So if you take us a few steps and help us understand how you're imagining this going forward.
Okay. First, just I think it's important to, let's separate and talk two separate parts of lighting, B2C and B2B, right, because clearly the dynamics are different. Let us talk B2C. There is no doubt, as we mentioned before, that we have relatively underperformed in our B2C business. One of the most important interventions we believe that Promeet already talked about the interventions we're making in go-to-market. Let me try and sort of clarify that. Our sales force for lighting was part of our integrated national sales force. Now we believe that because of that, there was always a tendency to not get the right level of focus that the lighting business go-to-market required. Frankly, we had exactly the same issue on our small appliances business, and about 12 months ago, we separated this out from the fans distribution infrastructure, and we see extremely positive results of that well above most of the industry. So that's given us confidence. Because what happens is actually at the retail level not that much of an overlap between the fans, retailers and the big lighting retailers.
Because of the nature of our business, if you keep the sales force integrated, they invariably tend to be more focused on fans because it's a bigger business. The choice that we have made now -- is it we are separated and created as a BC in the tender, go-to-market organization for B2C lighting, which does not report into the overall national sales operations but reports into the business and category. We believe that this focus on go-to-market that make us step change distribution. And that's the first big change. Of course, as Promeet mentioned, that has to be followed and supported by the other enablers of product innovation, continuously refreshing the line, getting the right pricing in the market and marketing support.
And also costing.
Right, and costing so that we get the right pricing, et cetera. This will start beginning to get executed as we speak. So we should start seeing the positive results of this as we look out into the next couple of quarters. But the small appliances experiences we've had gives us new confidence that this is the right way to go in this kind of business.
If I can just squeeze just one last one. How's the season been so far? We're almost halfway through Q1. How should we imagine the operating leverage from each of initiatives play out this year?
The season has how do I call it, heavy mix. Obviously, our business has done relatively well especially our seasonal product, I mean we should add great results this quarter because we've had outstanding results on overall fans and in fact particularly TPW which tends to be more seasonal. But when I say mixed, it's mixed in the sense of -- up till now, at least, we've got certain details or maybe there's [indiscernible] market by market. This tends to sort of unsettle trade day, what's happening.
But overall, we're quite happy with the way our businesses performed. If I look at in terms of the first quarter, in terms of percentage of the full year, it looks like a decent season on the whole. However, as Promeet very clearly mentioned, the overall inflation picture moving out is still somewhat uncertain. So we have to watch the market over the next couple of quarters I would say.
Next, we have a question from Mr. Ravi Swaminathan.
This is Ravi from Avendus Spark. My question is regarding the broad-based revenue breakup across the ECD and the Lighting segment. Lighting, if you can give how much is B2B, B2C and B2G. And ECD between fans, pumps and small appliances, rough numbers that will be fine, sir.
Ravi, as you would know, we do not give the category specific details at this point of time. We have given a broad overview in terms of our additional disclosures that we made during the call. However, just as a construct, if you have to look at it, our lighting business is split almost equally between B2B and B2C. Over a period of time, the strategy has been to probably derisk B2B so that we come out of something which is not predictable and does not have a patent to whether a government order or a noninstitutional order as part of the B2B segment operator.
The focus as we move forward will be largely on the B2B side of business. And on ECD, if you look at it, largely we are [indiscernible] with the next 2 categories being pumps and appliances. With small domestic compliances being a nascent part of the journey, the appliances of Crompton is largely led by geysers and coolers at this point of time.
Got it, sir. And from a profitability perspective, within the fans, is there any marked difference between the BLDC fans and the regular fans that we sell?
The absolute profits are always fired when you start looking at the premium range and BLDC range as compared to the entry level section. Yes, we tend to move more on the absolute profit basis on the higher range of fans.
[Operator Instructions] Next, we have a question from Mr. Rahul Agarwal.
I'm deviating a bit from the results. Just 1 question to the management and everybody who is here. Sir, I'm Rahul from Incred Capital. In our interaction with investors, there is a lot of discussion that happens if synergies can be drawn from Crompton Greaves consumers. In case going forward, the management thinks of merging with a suitable large brand in the country, the names which come out generally are CG Power and Polycare. I just want to get your thoughts. Like is there any kind of possibility for that to happen or the team right now is clearly determined to run the business independently and we should just ignore these thoughts at our end? That's the only question I have sir, thank you.
Absolutely no is the answer, Rahul. I think...
We are -- as a team, we are single mindedly focused on running the business to maximize revenue growth, profit back and thereby shareholder value. That is our focus for the short, medium and long term.
Just adding to it, Rahul, I think today as you would know, we are very well placed as a brand and we've got leadership in the categories that we operate in. Our unit economics are pretty strong. The fundamental market leadership in the categories are clearly established, and we've got a very strong and robust balance sheet in hand. Coupled with that, the Butterfly acquisition is also very in line with what we wanted it to do and the opportunity to do significantly higher at this point of time. So we have a focused team with the right amount of capital distribution and capabilities to create shareholder value. So we do not see the need of strategic partner at this point of time to change that value.
Next, we have a question from Mr. Achal Lohade.
This is Achal from JM Financial. Sir, if you don't mind, could you please just remind us in terms of FY '23, what is the value growth in fans, pumps and appliances, once again, please?
Just give me a second, I'll check it up.
And meanwhile if you could talk about -- yes sorry please.
Sorry, go ahead Achal.
So in terms of the butterfly margin, now since you have mentioned that in terms of the derisking the channel part, ecom channel part, how do we look at the margins from here on? Earlier the expectation was it could be closer to mid-teens, early teens to mid-teens. Are we still sticking to that? Or it could be around the current levels from a full year perspective?
So let me start with the Butterfly part of your question, Achal. I think the business, if you look at it prior to acquisition, pre-COVID era was largely government-led. And subsequently, it was e-commerce led. Over a period of time, it has been moving around 5% to 7% EBITDA. I'm really happy to share that in our first full year of operation, Butterfly has delivered its highest ever profit and this profit has come on derisking e-commerce and establishing Butterfly as a brand in the retail channel.
And now if you look at the margin point, I think it has moved from 5% to 7%, and we are moving towards a steady state of anywhere between 8% to 9%. And there's an opportunity to hit double digit sometime in the future. Having said that, I think Shantanu referred to this in the earlier call also that one thing that we wanted to take it as a learning and apply to Butterfly in our 7-year journey is, we do not want to cut down the investments behind brand, people, innovation and the business side of it. So that is something is going to be a priority. And we're here for long term to make Butterfly create value. And the objective is not to change the mid-teen margin, and therefore, yet no one goes. It's about how you deliver sustainable growth, deliver categories of -- strengthen your categories and get market leadership or improve on your market share to where we are. And therefore, those investments should take us closer to 8%, 9% stable EBITDA moving to about say, 9%, 10% over a period of time.
Now the first question that you asked is in terms of where have we landed on our category growth on a full year basis. Fans is a 5% value growth. Pumps is a 9% value growth portfolio. Appliances is 30%, large kitchen appliances in the new category and therefore there is no base to it and light is a minus 1% or almost flat on a full year basis.
Next, we have a question from Mr. Aditya Bhartia.
This is Aditya Bhartia from Investec. Sir my question is on the distribution team that we are having. You mentioned that lighting distribution team now we are kind of segregating and earlier, we have done it for appliances. Just want to understand how we're working for pumps. And is there any change that we want to be making over there as well.
Pumps I think to start with Aditya, it's a very different problem that we have to solve for. If you look at -- we continue to be a leadership position in the -- category of it. And largely, it is the surface pumps, which is driving the growth for us. The step 1 that we did there is to get the brand architecture designed so if you look at our mini pumps today, it has got a clearly refined architecture from something that delivers a face value to something that can even go to a [ ISB ] feature. That is the ability to fill the tank faster and the efficiencies that it adds in we have a pricing level that has been brought in, which helped us to grow the pumps business, what we did in Q4 after a multiple quarter of challenges that we had on the pumps side of it. Lighting slightly a different strategy when we were referring about the distribution might that we need to improve there. The numeric distribution of our lighting footprint as compared to fans or pumps or appliances is far different at least 5 to 8x more than the potential that you have for any other ECD category that is there. So when you have a centralized sales system, your ability to focus on lighting and ensure that your peer objectives on the market or the go-to-market strategy to get it, it's pretty difficult to look at it. So what we are looking right now is we have hired a new head of sales who will report to our category head of Lighting, who will focus on the B2C lighting into the distribution. And we think over a period of time, this should help us to arrest our decline in lighting, along with the innovation work that we are doing on the products.
If you talk only about pumps, we are now seeing good success in this model, which we have put in the marketplace on pumps, however this is basically on mini our MonoBlock pumps. There is another segment of pumps where we are not as strong, which are the multistage pumps. The stuff that into bore levels. So the next opportunity of growth that we're working on is applying the learnings of brand architecture and product innovation which we did on the MonoBlock and mini side and now also got to replicate that on the submersible and bore-well side. And that, we believe, will give the next incremental leap for growth on pumps over the years to come. On top of the ongoing opportunity, which we continue to see in our area of strengths, which is the mini.
And apart from that all this will be overlaid with our trust on premiumization in the pumps, so now we have a brand architecture and that brand architecture in moving off the chain there in the important part of the pumps.
We have a question from Mr. Subham Agarwal.
Yes, actually, this is Venkatesh from Axis Capital. Just a few data questions what was the advertising and sales promotion spends in Butterfly in the full year of FY '23? And what was the corresponding number for FY '22. And just one more, we ended FY '23 at the Crompton level at around INR 1,005 crores of debt. How much of this do you plan to repay in the current year?
See, our overall debt at the end of Q4 after parting away with INR 600 crores in March stands at about INR 900 crores at this point of time. Of the INR 900 crores as per the calendar schedule, we have another INR 325 crores going out in January '24. The subsequent fund comes in June, July '24. So therefore, around that time, we have a good opportunity to get rid of the entire debt on the balance sheet. Now coming on to the marketing spends, Sriram, would you like to add, I think it is about 5.5% for this year.
Yes, the NGL marketing spend this year is around INR 60 crores versus last year INR 54 crores.
We have next question from Mr. Devansh Nigotia.
In the presentation, we mentioned that you're #2 in BLDC fans. So can you elaborate on why there is such a big market share shift between our leadership in traditional fans versus becoming #2 in BLDC?
Two things. One is why we are overall market share leaders in fans. As we've been mentioning in these calls, we have started off as market share leaders in premium fans, pre-BLDC even if I go back 4, 5 years ago. And Havells was the market share leader in premium fans, pre-BLDC.
Over the years, as we've been driving premium, we actually definitely reduced that gap on premium fans. Separately, BLDC is a part of premium fans. So just talking about BLDC, and we believe that's important because that's what is the direction for the future. As you are all probably aware, the first mover of significance in this market was Atomberg because it was the only real leader there about 12 months ago in a very small BLDC market, they own most of it.
As we have all got more active, us, Havells is very much our competition, there has been an increase obviously in total BLDC segment, but there has been a significant decline in the leader share which is Atomberg. So Atomberg is still #1, but we have outstanding fan sales in the last quarter as a very clear number 2. I fully expect that this gap will keep narrowing over time as we get more and more of our programs and variance, et cetera, into the marketplace.
Some soft points, if you can help us understand...
I would just add a couple of points here. Look, we probably are fresh off the block on BLDC than we could have been. What I take a lot of comfort from is -- once it becomes an area of focus, you'll see the impact in the market. And that's going to continue over the next several quarters. But more importantly, I think I see a lot of opportunity in the overall premium segment. We do have relatively though our overall fans business comes from the premium segment and you can already see what we can do when if we put focus on that area. So really, as growing our premium segment as well as bolstering our BLDC figures have [ tightly ] strong upsides that I can see in our Fans business going forward.
We have the last question from Mr. Aakash Javeri.
I'm speaking from Perpetual Investment Advisors. My question is how much BLDC as a percentage of our overall fan portfolio? And how do you expect it to be over the next 2 to 3 years? And what are top-selling models currently in fans?
Aakash, BLDC for us is a new division into the fan family. It's pretty early days. The number of fans that we say -- sell in the country in terms of absolute volume on the economy segment is far high. BLDC right now will be about roughly 2 to 3 percentage of our overall portfolio. And one is looking at BLDC, the way we would also request people to start looking at this as an opportunity on the start rated segment. So if you divide the portfolio and start looking this as premium and then you start looking at within premium how do you start moving towards a 5-star rated fans, which is where your BLDC is typically gets anchored.
We see this portfolio as an industry itself there is a -- there is a pretty more to grow. And we as a market leader, we think with what we have in the pipeline and the innovation that is holding in for we think there is substantial journey that has to be made on the market share gain which is something that we can talk about as we come to the future quarters.
The one thing I just add on this data is the entry pricing for BLDC today in the market is around INR 3,000. The mass market of fans which still contributes about 70% to 75% of the market is around INR 1,500 to INR 1,800, right? So there will be growth, we believe, significantly, not just in the price itself which maybe at disproportionate level but there's got possibility, with energy savings and other innovations, definitive, et cetera, across this entire pricing level with the most categories in India, a greater rate of growth at the top end of the market.
And just our top-selling models in fans, if you could name a few.
High Speed is our single largest category, obviously you know.
Ladies and gentlemen, that was the last question. We thank the management of Crompton for giving ICICI Securities the opportunity to host the interactive webinar. Now I hand over the call to the management for closing comments. Thanks, and over to you, sir.
Well, thank you very much. Thank you for joining, and I hope to keep in touch with you across the coming quarters and weeks. And please be in touch with our team, should you need any further clarifications. Appreciate you taking the time.
Thank you, everyone.