V-Guard Industries Limited (NSE: VGUARD) Q4 2025 Earnings Call dated May. 15, 2025
Corporate Participants:
Unidentified Speaker
Natasha Jain — Investor Relations
Ramachandran Venkataraman — Chief Operating Officer, Business Responsibility Head and Whole Time Director
Mithun K. Chittilappilly — Managing Director and Executive Director
Sudarshan Kasturi — Chief Financial Office
Analysts:
Unidentified Participant
Rahul Aggarwal — Analyst
Naushad Chaudhary — Analyst
Keyur Pandya — Analyst
Aniruddha Joshi — Analyst
Achal Lohade — Analyst
Aditya Bhartia — Analyst
Presentation:
operator
SA. SAM. Ladies and gentlemen, the conference of VGuard Industries will begin shortly. Please stay connected. Ladies and gentlemen, the conference of VGuard Industries will begin shortly. Please stay connected. Thank you. Ladies and gentlemen, good day and welcome to The VCard Industries Q4FY25 earnings conference call hosted by Philip Capital India Pvt Ltd. As a reminder, all participant lines will remain in the listen only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal the operator by pressing Star then zero on your touchstone telephone.
Please note that this conference is being recorded. I now hand the conference over to Ms. Natasha Jain from Philip Capital India Private Limited. Thank you. And over to you.
Natasha Jain — Investor Relations
Thank you Ryan. I’m Natasha Jain on behalf of Philip Capital. Welcome all of you to the fourth quarter FY25 earnings conference call of Vegard Industries Limited. From the management today we have Mr. Mithun K. Chitalapalli, Managing Director Mr. Ramachandran B, Director and Chief Operating Officer and Mr. Sudarshan Kasturi, Senior VP and Chief Financial Officer. I would now request the management to give their opening remarks post which we shall open the floor for Q and A. Thank you. And over to you sir.
Mithun K. Chittilappilly — Managing Director and Executive Director
Thank you Natasha and Philip Capital for hosting today’s call. A very warm welcome to everyone joining us today to discuss our company operating and financial performance for the fourth quarter of FY24 25. I trust that all of you have had the opportunity to review the investor presentation shared earlier. We have delivered a robust performance in Q4 marked by strong growth in both revenue and profitability. Consolidated revenues for Q4FY25 stood at 1538 crore a year on year increase of 14.5% representing the highest ever quarterly revenue in our history. The electronics segment comprising of stabilizers, UPS, systems and inverters continued its strong momentum recording a growth of 26.3% YoY.
The performance builds on the solid start the segment saw earlier in the year. The electrical segment which remains our largest revenue contributor and includes wires, pumps, switchgears and modular switches, registered a YoY growth of 14.6%. In the consumer durable segment covering fans, water heaters, kitchen appliances and air coolers, we reported a 11.9% YoY revenue growth supported by a good start to the summer season and healthy demand for cooling products. Sunflame reported a YOY top line degrowth of 24% in Q4. While the kitchen appliance industry continues to face headwinds, this decline also reflects a high base effect from Q4 of the previous financial year.
Additionally, the business has been impacted by continuous slowdown in the CSD channel. Integration efforts for the Sunflame business are already underway. Once completed, we expect improved momentum in the general trade, modern trade and E commerce channels. While recovering the CSD channel could take time, we have a clear roadmap of the strategic steps to get the business back on a stronger growth trajectory. In Q4 FY25 revenue from non south markets grew by 18.6% while the south market grew at 15.3% YoY for the full year the non south market contribution reached 47.5% excluding sunshine, we have reported a gross margin of 35.5% this quarter compared to 34.5% in Q4 of last year, an increase of 100 basis points.
We have driven a meaningful improvement in gross margin through the year and believe that the margin recovery is largely complete. This recovery has been driven by increasing share of in house manufacturing cost efficiency initiatives and gradual shift towards more premium product portfolio. We will continue to pursue further incremental gains in the gross margin going ahead, EBITDA excluding other income for Q4 stood at 143 crore reflecting a YoY growth of 11.9% for the full year. We report an EBITDA of 513 crore, an increase of 20%. EBITDA margin was 9.2% compared to 8.8% in the previous year.
Consolidated pat for the quarter was 91 crore up 20% YoY compared to PAT of 76.2 crore in Q4 of FY24 for the full year, consolidated PAT was 314 crore, higher by 21.8%. YoY in recognition of the strong performance, Board of Directors recommended a final dividend of 150% equating to 1.5 rupees per equity share. Working capital remains efficient ensuring strong cash flow generation. We have repaid ahead of time the entire term loan related to the Sunflame acquisition and back to being a debt free company. Overall it has been a satisfying quarter and a strong year marked by strong double digit growth in both revenues and profitability.
This growth has been broad based with meaningful contribution from all key segments. We are also progressing on initiatives aimed at structurally enhancing the performance of the Sunflame business. With that I conclude my opening comments and I would like to thank Natasha and the team at Philip Capital for hosting this call and we’ll request the moderator to open the floor for Q and A. Thank you.
Questions and Answers:
operator
Thank you ladies and gentlemen. We will now begin the question and answer session Anyone who wishes to ask a question may press star and one on their touch tone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use their handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question comes from the line of Rahul Aggarwal from Ikigai Asset. Please go ahead.
Rahul Aggarwal
Yeah, hi, very good afternoon to all of you and congratulations for another good quarter. Two questions essentially. One is there are a lot of highest ever for Vgaard. I think this year I am looking at two things, gross margins and working capital. I think in history of Vgaard’s both these numbers looks like best ever. Just wanted some outlook on gross margin as well as working capital cycle. How will this shape up over the next two, three years? Obviously you mentioned that we’ll continue to improve this but my sense is further improvements on gross margins will really need a lot of internal efforts as well as on working capital.
I think we are very tight on receivables now. So just some outlook on this. That’s my first question.
Mithun K. Chittilappilly
Yeah, I think as far as gross margins are concerned, as I mentioned in the opening remark, we are largely back to the pre Covid levels. I think of course some more small improvements in gross margins are possible. I think we will be working on it but I think largely it is recovered from all the commodity inflation and all that. So as far as working capital is concerned we may not see a very huge improvement but some more possibilities are there. Like we had mentioned that we are working on a more premium portfolio in each category.
So which also should kind of give gross margin a slightly improved trajectory as far as working capital is concerned. I think yes, we are at a very good place. I think as far as debtors are concerned. Yes, I don’t think it can go much lower than this. But inventory wise I think we still have a little bit of more inventory than we would like to. So maybe from the inventory side some more small improvements is possible. But I think even working capital wise we are largely in line with you know, whatever has been our steady state.
Rahul Aggarwal
Got it, got it. Fair point. And the second question was on alternate energy business. You know, across I mean you have announced about battery manufacturing capex. So just bit on that, you know why this decision and you know what, what do you see going forward? Something on Gigadyne if you can, you know, explain as in what’s really happening there and solar rooftops which is essentially part of electronics. How do you look at these businesses and any single segment which you think can be like a 500 crore top line annually, it could highlight what could be a potential opportunity across these line items.
That’s all from my side.
Mithun K. Chittilappilly
So the solar rooftop business is growing very strong. It’s housed within the electronics. We’ve had very, very strong growth. Although we don’t give out product wise numbers. I think in about four to five years time we should hit really good numbers. And I think once it’s large enough, we’ll start disclosing the numbers. So solar rooftop is something that’s doing very well for us. We’ve always been in the inverter business but you know, solar rooftop was something that was carved out about four years back. And I think we were right on time to take advantage of all the incentives given by the government.
The government is giving a lot of incentives for individual houses moving to rooftops and that’s, you know, driving a lot of demand. I think we still have a lot of headroom because this entire demand is from some 7 or 8 different states out of the 35 states. On the second thing. Sorry, what is the second part of the. On Gigadyne. Okay, Ram, you want to take this question on Giga rank?
Ramachandran Venkataraman
Yeah, I think you know, we had invested in Gigadyne to help them to support and establish the technology. And I think where Gigadyne is today, I think you know, the, you know, about 1824 months back they had put up a pilot plan based on the funding that we had extended and they have kind of stabilized to achieve their technology goals. Yeah. And you know, we have validated and you know, it’s working well. Yeah. So now you know, they are in course of figuring out, you know, how to scale up and how to move forward. Yeah.
And how to prepare for a commercial launch. But that will be at least another couple of years away because they will have to establish, you know, capacity for that. But yes, I think, you know, the progress on technology development has been good and they have met the development objectives for which they were funded.
Rahul Aggarwal
Got anything on the battery expansion for VGuard?
Ramachandran Venkataraman
Yeah, Mithun, you want to or shall I?
Mithun K. Chittilappilly
No, you can, please.
Ramachandran Venkataraman
Yeah. So we, about three years back we had initiated a project for setting up battery capacity in Hyderabad. And about 18 months back, you know, this capacity was commercialized. And as we sit today, you know, factories operating on full capacity utilization. There are. The business has been growing in high double digit. And that is warranting, you know, further increase in capacity together with, you know what I would say some shortfall or scope for us to feed some of our outsourced revenues through the factory. So I think, you know, this plant is expected to come up in the next 18 to 24 months and you know, we expect to be able to feed our growth, you know, on the, from this plant.
This plant may, may, may take about another six to nine months to fully stabilize beyond the commercialization date. Yeah. So we are looking at this capacity coming up two and a half years from now. I mean, getting fully stabilized two and a half years from now.
Rahul Aggarwal
Yeah, the 50 crores can make how much, how many, how much amount of sale? What’s the asset on here?
Ramachandran Venkataraman
This. See we are, you know, this investment is purely on machinery. Okay. And we are looking at the possibility to install this machinery, you know, around our existing facility. In terms of throughput, I think, you know, this should give about 3, 400 crores of throughput, you know, you know, it should support this investment in, you know, net sales sums.
Rahul Aggarwal
Got it. Thank you so much for answering all the questions. All the best.
operator
Thank you. The next question comes from the line of Naushat Chaudhary from Aditya Birla Mutual fund. Please go ahead.
Naushad Chaudhary
Hi. Thanks for the opportunity. So question first on the confluencer, I think last quarter also we indicated that the cleanup has been done and sequentially we should experience improvement. But this quarter also we have seen sequential decline in the margin as well as. And also on the top line. Any thought of clarity, what exactly are we doing here? How should we look at this piece of business?
Ramachandran Venkataraman
And yeah, firstly, you know, Q3 is a high quarter compared to Q4 because you know, Q3 is when you know, you have the festival season and generally Q3 sales are higher than Q4. So you may not make a sequential comparison. However, that being said, you know, I think you know, compared to last year our results have already been published and it is challenged. So notwithstanding that, I mean the business is under stress. We are okay as far as, you know, emerging channels are concerned. We are okay as far as even GT is concerned. Yeah. In line with market, I think we have a bit of stress.
I think last year base was high as Nitun has already explained. And you know, also we have some stress in the CPC channel now fundamentally, you know, in terms of what we are going to do going forward, I think, you know we are working on business integration of sampling with VGuard. Right. This is a journey and I think, you know, it will take some more time before the integration is complete. Yeah, we, we have a, you know, we are Also, as I, as we had indicated last, last quarter, we are working on a project and you know, more or less we are, you know, we are at a stage of closure on defining the way forward in terms of the strategy and pathway that we will take to grow the business.
Again, I think that, you know, the, the business integration has taken a bit more time because we had a few challenges. We had to refresh the product portfolio. Typically the cycle for product refresh is about, I think we had explained last time also the cycle for refresh is about 18 months and we also had the team on board the seven or eight months after the integration had happened. So I think those are some of our setup delays which, which are impacting us. We remain hopeful that, you know, we will be able to get the business back on growth path on the back of improved product offerings and integration of some of their, you know, some of our capabilities into sunflame, particularly in the area of customer service, logistics and quality which we, these three, quality management, these three areas.
We expect that, you know, by September or October we should be able to fully integrate and extend the similar, you know, delivery as what one witnesses in Bhat. So this is a journey. It’s taking time and it’s taking time longer than what we had anticipated.
Naushad Chaudhary
So for FY26 on a low base of 25, should we, should we expect growth in this business and margin improvement or should that remain.
Ramachandran Venkataraman
Sudarshan.
Mithun K. Chittilappilly
Yeah, you’re talking about sunflame, right?
Naushad Chaudhary
Yeah. Should we expect growth and margin improvement or should it remain a pain point for us?
Ramachandran Venkataraman
On the GT&E commerce side, we are confident that we will see growth. However, on the CSD front, we really can’t predict how long whether that slowdown is going to continue or not. But as Ram was saying, most of the business integration efforts are towards strengthening the product back end as well as selling capability and Primarily in the GT&E COM channels. So yeah, short answer. Growth will depend on how CSD sort of turns up, but on the GT we are more confident.
Naushad Chaudhary
And GT and E Com would be 50% plus of the overall revenue.
Ramachandran Venkataraman
Yeah, about 60.
Naushad Chaudhary
Okay. And last question on the how the success of GigaDyne would help help our base business. If you can, you know, run us through what exactly we are thinking and if this goes well, how it will help in our base business.
Ramachandran Venkataraman
So I’ll take this. So I think the, the, the investment in GigaDyne has been anticipating shift in battery technology, which we expect to happen. Right. I think over a period of time, alternate energy, battery Costs are coming down and they are at the TCO level already. I think alternate chemistry batteries are having a better TCO compared to lead acid batteries. I think as the unit economics of the, as the unit price of the alternate chemistry batteries start to come down, there will be a shift in the market towards alternate energy batteries. Right. And that’s the play that, you know, in which we are invested in as far as Rivetan is concerned.
I think the, as I already explained earlier, I think, you know, it will take a couple of years for the benefit of GigaDyne to materialize because these batteries are to be commercially produced for which a capacity has to be set up. I think the technology targets are met and you know, we have given them a go ahead to, you know, figure out, you know, how to, you know, what I would say commercialize the battery output. Right. So, so I think that work on that is underway.
Naushad Chaudhary
And supposingly if this goes well, three, four years down the line, would this kind of change help the industry to consolidate further and the guys who are ready with the technology and integration should benefit more. How would you be position from 3, 4 years point of view? If, if you succeed in this, would you have better advantage versus what you are today?
Ramachandran Venkataraman
Yeah, so two, three things. So one is that, you know, GigaDyne has its own journey. Okay. And you know, our business is a small part of GigaDyne’s, you know, journey and future. Right. Because we are basically, you know, we have invested in this fundamentally to support our inverter battery business and also wherever there is possible, to have, you know, energy storage integrated with our existing products and categories. Yeah. So that’s our scope. And so our scope is a narrow part of, you know, the overall journey which has far more significant potential multiple times. Yeah, but our, you know, as far as we got is concerned, you know, our objective is fundamentally centered around growth, you know, for our battery business.
And you know, and it will help us to obviously grow because, you know, the, this is a differentiated product. Right. It doesn’t have lithium. It gives a far longer life than even lithium based batteries and it is far more stable and safe as a technology. So I think that it has benefits to help us to be able to price and probably earn a better margin. Right. Compared to other alternate chemistry. So, so I think that’s how it will benefit Vega. Yeah. And probably, you know, we will have the comfort of having a more stable and reliable, you know, battery which we can launch in the market.
Naushad Chaudhary
Any plan on increasing the staking of this company? And if they have to come up with the commercial plant how much minimum capex would require?
Ramachandran Venkataraman
I think that depends on the size of the capex and that also depends on you know, the plans of, you know, the, you know, the promoters of Gigadyne. I think you know the shareholders of Gigadyne will take that call in terms of what is the size and what the investment will be.
Naushad Chaudhary
Right sir, do we have any exclusive rights with this company?
Ramachandran Venkataraman
Yeah, we have exclusive rights for our categories which is for the inverter, battery space and you know, for any potential application for our categories.
Naushad Chaudhary
Thank you sir, all you best.
Ramachandran Venkataraman
Thank you.
operator
Thank you. The next question comes from the line of Kur Pandya from ICICI Prudential Life Insurance. Please go ahead.
Keyur Pandya
Thank you. Congratulations to the team for great results. So I just want to understand from the electronic segment perspective. So stabilizer as a category of electronic segment has grown for last two, three years in high single, in high double digits. And in the backdrop of such high base and the recent news of relatively weaker summers, how do you see performance of electronics as well as the ECD that is fans and coolers performance in FY26? Some thoughts would be useful.
Mithun K. Chittilappilly
Yeah, so I think this year April we had intermittent showers in south and eastern part of the country and summer here has been more less warm when we compare with last year. So definitely the sales of cooling products will get impacted like air conditioning stabilizers, air coolers, fans, pumps, you know and to some degree inverters as well. But we are not yet completed so we still have you know, 45 days to go I think till June 30th. We have summer in many parts of the country so we’ll wait and see. But yes, so it depends on what will happen in the next 45 days.
But some parts of north etc are warm. But yes, we have a bigger skew towards south so there could be some challenge in terms of, you know, these categories for south India.
Keyur Pandya
Okay. And in your earlier remarks when you talked about margin, I mean in the longer journey of the stable margin or improving margin, do you see this year’s margin get impacted because of either mix change or negative operating leverage if season is bad? No, I don’t think you have levers option on south or some other levers or say own home manufacturing which would offset the margin contract.
Mithun K. Chittilappilly
I think we are not only dependent on, you know last year we had a tailwind in first quarter definitely. But the following quarters we did not have any, you know, support from the summer categories. Definitely first quarter of last year we had A very good tailwind from that perspective. So to some degree we could expect a muted first quarter but I think for the full year we don’t expect a huge impact because we are also having other categories and like you said we also have summer still. You know there is a chance of summer still, you know being warm in the northern part and the other you know western part of the country which should support some demand.
So I don’t think it’ll be a huge impact. We are quite confident as far as margins are concerned I don’t think we’ll have a huge.
Keyur Pandya
Understood sir. This last question, some some thoughts on how the demand has been for the housewives segment or other categories related to real estate and your non south initiatives. Any specific regions focus regions in previous year or since FY26. I mean more detailed or specific of the non south initiatives and wires demand.
Mithun K. Chittilappilly
So vias has grown by about 10 odd percent in the. In the fourth quarter there were some challenges for the growth because of you know reduction in. There was some you know fluctuation in reduction in copper prices. But in April we have seen that there has been a improvement and increase in copper prices. So I think this quarter we should, you know it should do better than previous quarter. The second question is on certain regions I think today we got is fairly well diversified with you know almost every part of the non south market almost contributing equally.
Of course the western markets, the east has a slightly higher you know weightage when you compare in the non south but otherwise it’s pretty much well, well spread. We have you know barring the small states, almost all the large states we are getting good contribution.
Keyur Pandya
Noted sir. Thanks a lot and all the best.
operator
Thank you. Ladies and gentlemen, if you wish to ask a question please press star and 1. The next question comes from the line of Aniruddha Joshi from ICICI Securities. Please go ahead.
Aniruddha Joshi
Yeah, thanks for the opportunity. So now considering the steep impact on the business of Sunflame and if I look at the goodwill as well as the intangibles let’s say between the standalone and console balance sheet. So I guess there is a 700 crores of intangibles. I guess it is primarily linked to Sunflame. So has the NMA management thought about about almost 700 crores intangibles? Any like write off or in a way revaluation of at least these intangibles?
Mithun K. Chittilappilly
No, there is. We are required to review carrying value of intangibles on an annual basis. Okay, we have done that and you know There is. We sort of consider it for impairment. That is something we will review again next year. So at that time we’ll see.
Aniruddha Joshi
Okay? Okay, sure, sir. Understood. And. In a way, what are the other ways we are looking at sunflame? Because the VGuard part of the business is doing phenomenally well. If we exclude Sunflame part of the business, Vgaard has done wonderfully well. So what are the triggers that we are looking at to in a way improve the sunflame business? Or what can be the innovate potential? Because I guess the way Sunflower’s doing the business earlier it was high on trade margins and even data days etc were materially higher to the trade. So now since we have changed that proposition against the value proposition for the trade may not be working out the way it was working out earlier.
So, so what can be the potential here? Or like rebranding under it V Guard or like V Guard Sunflame or something like that? So, so what can be the potentially change that we can do? Or increasing the share of voice materially in that? Something like that.
Mithun K. Chittilappilly
Okay, so. So there’s a couple of things. One, is the GT part of Sunflame growing? It is the Sunflame has two main channels. I mean three, but where the CSD which is canteen, stores department and defense canteens contribute about 35 to 40% of Sunflame’s revenues. What happened is about one and a half years back they have added many brands and even Vgaard was added. For example, Vgaard, which was doing 10 crores of business between CPC and CSD today does close to 140 crores of revenue. The same Sunflame team only sells the Vega products into CSD.
So we have a single team managing it. So in that sense it has not been a complete issue. So one of the reasons that Sunflame CSD business has come under pressure is, you know, CSD which used to have four or five brands, today is having 12 to 15 brands in each category. So they have, they’ve added a lot of brands and that has created a lot of problems for them in the sense of a lot of overstocking has happened. Now they are in a course correction mode and they are only ordering whatever is selling and stuff like that.
That is one of the reasons why sunflame business has got into trouble. The GTE has not had an issue. We have not changed much. We are continuing with whatever the earlier promoters were doing. Most of the distributors are continuing for sunflame so the GT business has not been much impacted and CSD margins for Sunflame were higher because the overhead cost for Sunflame for doing CSD was lower. So when there was a drop in the CSD business, it has impacted margins. Aram, you want to add on to this?
Ramachandran Venkataraman
Yeah, I think we haven’t changed much. Fundamentally what has happened is it’s a small entity. I think, you know, they lost about two and a half years in Covid and then as they came out of COVID you know, we did the transaction. So three, three and a half years, not much activity on product refresh has happened. Right. And after that, you know, our team, you know, came on board about eight months later and they took some time to settle down. And then they have initiated, you know, interventions on refreshing the product portfolio in the last three, four months. You know, and in the upcoming three, four months, I think most of these SKUs are coming to market. So this is the first issue. Second issue is I think that, you know, the service infrastructure has also been a challenge. And we are working on the integration of service with Vgaard. I mean, we got service or we got the quality management systems and these logistics systems.
These are far, far more efficient. And I think those are the areas which will witness changes in the next three to six months and which are beneficial changes. Yeah, I think the product refresh is ongoing exercise and it will happen. Also what had happened is, you know, in E commerce, I think, you know, that, you know, we got goes to E Commerce directly as a company. Sun claim is to go through intermediaries. And so we are transitioning this and it has taken us some time to set up the required infrastructure and systems and also to build, you know, recommendations before the, you know, what I would say, growth can be triggered.
So I think fundamentally now, you know, these areas, organized retail, modern trade. Okay, is, sorry, organized retail, which is, you know, E commerce plus modern trade is already integrated now with vgat and you know, as we make the differentiated offerings and you know, our approach is to have a differentiated sku. So even in E commerce, we are not pushing the button aggressively because the pricing dynamics on E commerce is very different from general trade. So a lot of the challenges are fundamentally related to resetting our product portfolio and offerings. In the meanwhile, the market had significantly refreshed the portfolio.
So the issue is not one of business system or brand. The issue is one of the competitiveness of offerings because of limited product refresh before we took over the business.
Aniruddha Joshi
Okay, no, so thanks for that elaborate answer. In a way, this CSD CPC issue is kind of a structural I guess it is with many consumer brands including Sunflame. So now with so much new brands coming in, plus they going for inventory correction also. So do we see the growth rates coming back? In a way means the business recovering back to let’s say FY23, 24 levels immediately or it will be a course correction over next two, three years.
Ramachandran Venkataraman
I think our business across the other channels will grow. I think KG cpc, we don’t have a view at this stage, but I would think that whatever damage has to happen has happened. It should probably be better going forward because I’m sure that they have taken aggressive action. I think, you know, it’s but natural, you know, the market is limited. So you know, when more brands get in, rediscovery will happen and you know, some things will move and some things will not move and they will correct it. So, so I really hope that, you know, this is what we have to do and we will, we will do better than where we are today.
But this is something that we cannot control. So we don’t want to give a point of view on that subject. Right. Because we don’t know how it will evolve. As Mithun said, look, you know, one side we have been hurt, another side we’ve been beneficiary also. Right. Because you know, you know we have been able to, you know, significantly grow our business because more SKUs we could launch. Yeah. So on an aggregate the company has done well. But you know, it’s, you know, the, you know, one, one side has benefited, the other side is a bit stronger.
Aniruddha Joshi
No, no sir, this is very helpful. Just last question. If we divide the market for the channel as per the channels, general trade, modern trade, E Commerce, MFI and this CSD cpc. So what will be the share of all the channels for the market or for vgard per se? Yeah, that’s it. From asset. Thank you.
Mithun K. Chittilappilly
Ram, you want to take this?
Ramachandran Venkataraman
Yeah, I think we, you know, it is similar for the my. I mean it’s. It’s hard to answer this because you know, the portfolio of every company is different, product portfolio of every company is different and the share of different channel is also different. But for example, right. If you were to look at the, you know, the portfolio or the bundle that VGuard is in terms of categories, right. I think it would be fair to say that, you know, let’s say if we exclude wires, maybe about 40 to 50% of the business, 40 to 45% of the business may come from non GT yeah.
Which is modern trade, RSS, E commerce and you know, CSG, CPC. Right. So and MFI and all these things. Yeah. So GT is now about 66, 55 to 60%. 60%, right. So I think, you know, in electrical categories like the wire switches and switch gear, I mean, you know, these guys, you know, these channels are not, you know, that significant in any way. So it’s a more or less GT oriented, even pumps. Right. So I would say wire switches, switch gear and pump. It is, it is more or less 98% E commerce. 98% GT.
Aniruddha Joshi
Okay, sure. Sir, many thanks.
operator
Thank you. We take the next question from the line of Natasha Jain from Philip Capital India Private Limited. Please go ahead.
Natasha Jain
Yeah, thank you. Sir, I have two questions. One, in terms of other expenses, there is a very sharp increase this quarter. So can you highlight what is that about?
Mithun K. Chittilappilly
Yeah, one second. You want to take this? Yeah.
Sudarshan Kasturi
So other expenses gone up by about 16% compared to, compared to a turnover growth of about 14. But some portion of it is related to, you know, factory expenses and some manufacturing expenses also get captured under that line. And as new factories come in and you know, they scale up so that cost goes up. The routine overheads are pretty much normal. So much of it is contributed by factory related costs and some increase in A and P and volume related stuff.
Aniruddha Joshi
Understood. So my next question is on the stabilizer business. So when I was on the ground I saw certain of your peers, especially Voltas has also come out with AC stabilizers and even Everest pricing of Everest is way cheaper than vguard while vguard still remains the leader. I just want to understand from your perspective how you seeing this competition coming up, especially Voltas. Because what I saw later on in the season was Voltas even started giving its stabilizer along with it with its ac. So any comment on that, sir?
Ramachandran Venkataraman
Yeah, yeah, yeah, yeah. See these competitors have been around. I mean they are not new competitors. They’ve been around for many, many Everest pricing vis a vis always, you know, remained the way it is presently. It has not got adverse. Yeah, I think that there have been some challenges in the air conditioning industry. And it may be that, you know, some of these kind of measures may have been taken up practically maybe by voltage or something like that. But generally, yes, you know, you know, we are only, you know, around the 55% of the market.
55, 60%. There’s a remaining 40%. This keeps changing. Brands come and brands go and brands become active and brands become slow, meaning, you know, they taper off. But that, that’s, you know, that’s what I would like to say, Mithun, you want to add anything more?
Mithun K. Chittilappilly
No, I think, yeah, I think lot of air conditioner companies have stabilizers like an accessory. And when I guess maybe the season is slow this year, they must be, instead of discounting the product, they may give free accessories. And this is not a new thing. It has been going on for some time. I mean, it’s at least in last 10, 15 years, starting with Godrej and all that, we have seen companies launching like Ram said they will launch and they will sometimes discontinue, sometimes continue. But anyway, we don’t hope to own 100% of the market.
Like Ram said, we will be at 40, 45% of the organized market and that’s comfortable for us.
Aniruddha Joshi
Understood, sir. Thank you so much.
operator
Thank you. We take the next question from the line of Achal Lohade from Nuama Institutional Equities. Please go ahead.
Achal Lohade
Yeah. Good afternoon, sir. Thank you for the opportunity. Congratulations for good numbers. My first question is pertaining to wire. You did mention about 10% growth. Is that the volume growth? You talked about 10% YY in 4Q.
Mithun K. Chittilappilly
Okay, we need to come back on that. Whether it is. We talked about a 10%. It’s a value growth, sales growth
Achal Lohade
in 4Q.
Mithun K. Chittilappilly
Yes. In Q4, yes.
Achal Lohade
Oh, does that mean the volume was pretty much flattish given the average copper prices were about 10, 12% up yoyo.
Sudarshan Kasturi
I think price growth was about 8% and volume growth was 2%. Something like that.
Achal Lohade
Volume growth is about 2% 2 to 3. Okay. And you’re saying that 1Q it is improved. Improving. Have I understood, right, the volume growth?
Ramachandran Venkataraman
Yeah, yeah. First quarter sequentially we are seeing an improvement because there was an uptick in copper prices in April.
Achal Lohade
Understood. The second question I had was with respect to pumps business, right towards the.
Mithun K. Chittilappilly
End of March we were talking full year numbers until now. Q4. Q4 volume growth is 5% price growth of 12%.
Sudarshan Kasturi
Okay, sorry, Q4, sorry, Q4, sorry. That. That is a full year number. Q4 growth is 70%. 5% volume growth and 12% value growth. 12% price growth.
Achal Lohade
So 17% revenue growth in cables and wires. Have I understood right for fourth Q.
Mithun K. Chittilappilly
Yes.
Achal Lohade
Okay, understood. The second question I had was with respect to the pumps business, you know, do we have any exposure in terms of solar pumps? The way we have gotten to solar rooftop. Is there any case for solar pumps as well?
Mithun K. Chittilappilly
So something that we looked at it, but the go to market is through, you know, the agricultural department of various states. So we typically don’t like dealing with you know, these kind of customers, we have not got into it. No, we don’t do solar pumps.
Ramachandran Venkataraman
Actually the problem is, you know we, the channel is very different. You know as far as most of this is agricultural pump. The channel is very, very different from our remaining part of the business. Right. And we don’t have a pathway. And, and this, this, this space is also highly volatile. The, the agriculture business. It is very much dependent upon rains. And also you know the, the size and type of pump, you know, varies also across. Right.
Mithun K. Chittilappilly
Sorry Ram, you’re talking about solar pumps?
Ramachandran Venkataraman
No, no, I’m just saying that it’s the agriculture. See basically it’s for agricultural application. And yeah, a lot of it I know either travels you know through you know, similar channel or it is through government business. Right. So and yeah, the skills required there, you know we, we don’t, you know, we don’t have teams which are focusing on you know, this kind of business.
Mithun K. Chittilappilly
Right. So it’s primarily government tender. So that we are not, we are not, we are not present in that.
Achal Lohade
Fair point. Fair point. And just last question with respect to capex. How do we see current year and all next couple of years do we see any substantial step up and the.
Mithun K. Chittilappilly
Outsourcing mix around 100 crores per annum? I think we don’t expect any major increase from this. In fact a lot of our plants are up and running and there are a couple of more factories that has to come. And there is of course going to be more active investment in molds. Investments in molds have gone up in the last five, six years and that will continue. And that is going to be a major part of the capex.
Achal Lohade
Got it. Thank you. I wish you all the best. Sir. I will fall back in the queue. Thank you.
operator
Thank you. The next question comes from the line of Aditya Bhartia from Investec. Please go ahead.
Aditya Bhartia
Hi Mithran. Hi Ram. My first question is on employee expenses and OPEX expenses.
Mithun K. Chittilappilly
There is an echo coming.
Aditya Bhartia
Is this better still there.
Mithun K. Chittilappilly
Okay, now it’s better.
Aditya Bhartia
So I was asking about employee expenses and OPEX which have almost doubled in the last three years. Just wanted to understand is there an element of factory overheads not being absorbed properly given that we are still in the ramp up phase or is it just a function of us doing more business in house and therefore gross margins correspondingly increasing but associated costs now getting recorded in staff expenses and other expenses.
Mithun K. Chittilappilly
Okay, so I don’t think the employee expenses has doubled last not doubled in three years.
Sudarshan Kasturi
But you know, when what is against the published numbers when we look at it showing about a 26 28% growth and some of it rather the increase is basically because there were some write backs last year.
Mithun K. Chittilappilly
Okay. So if you look at Q4, I think there were some write backs the previous year of ESOP and stuff like that.
Sudarshan Kasturi
ESOP and variable pay. Some write backs were there this year. The full provision is there.
Aditya Bhartia
But I was looking from a three year perspective that on a three year basis, let’s say in FY22 we used to have roughly 270 odd crore rupees of employee expenses which now are 520 crores. Other expenses used to be 470, 480 crores which are now almost thousand crores. So from that perspective I was saying that is it also because of the change in mix of procurement wherein we are doing lot more in house.
Sudarshan Kasturi
So if you take employee expenses, the underlying growth rate of for the last three years about 15 to 16% which is really the routine increments and some headcount increases and so on. The rest of it are explained by, you know, when new factories come up, there are people getting added there the other expenditures, even people cost similarly on other expenses. There are manufacturing expenses going in where the new factories start coming in. And then you know, we see that the growth rate is higher. Once all the factories are set up and they’ve had one full year of operation, then the this starts getting into normal, into into normalized level of growth.
Mithun K. Chittilappilly
So you can say at least maybe if you look at other expenditures and in as a percentage of sales close to 1 to 1.5% is because of factory.
Aditya Bhartia
Okay.
Mithun K. Chittilappilly
Employee cost is mean largely. Okay, maybe last. I mean there has been addition of sunflame employees into our Sunflame.
Sudarshan Kasturi
Sunflame is an addition that last three years.
Aditya Bhartia
Okay. And do you think some of these costs are today not being properly absorbed? And there’s this scope of increasing capacity utilization at our facilities and therefore operating leverage benefits should be playing out or all that has already happened and we are at a reasonable utilization level at factory.
Mithun K. Chittilappilly
So for example the first factory that was set up in the fan factory and the Uttarakhand factory for electronics. They are largely stabilized and delivering the results. Even battery factory to an extent it started. But the Wapi plant for kitchen is not operating at the full capacity. There is some factories
Sudarshan Kasturi
typically in the. First year of operation you will find that there is under absorption. But it takes about that much time for the factory to up and reach its this thing, you know, potential.
Aditya Bhartia
Sure. Sure, sure. And so my second question is on the outlook that you gave in the presentation wherein you’ve mentioned that there was strong pre filling in the channel in anticipation of a good summer and at the same time you also mentioned that you’re excited about the new product launches. So just two clarifications on that. Given that summer so far has been weak, does it mean that channel has much more inventory than what is required? Excess inventory and to that extent primary sales in the next few quarters could be very weak. And the second question is the new product launches that you’re speaking about, are these usual product refresh, product refreshes that you’ll be doing, usual product launches that you would be doing or is there something more to it? Maybe a new product category or a complete change in product profile?
Mithun K. Chittilappilly
So as far as the new product, I think one of the key launches we’ve had last month was for fans. We have launched a mid market range of BLDZ fans which comes in various configurations. And I think this segment is so vgard slightly less than index session in BLAC was slightly less than what we would have liked to be. And this should address that. This launch should do well. I think the initial response has been great. I was there when it was, I mean when we had the great launch with all the key retailers of the country.
So I think whether there is summer or not summer, I think this product would sell. So that’s point number one. We are also having a key launch for water heaters going to happen in the next couple of weeks that is also addressing the premium end of the water heater market and that also we are quite excited about. So these new launches should do well because in some sense they are addressing a new pricing segment where either we were not present or our models were not. Our models are not very desirable. So in that sense they should do well whether the summer is good or bad.
The second thing is in case of South India, yes there has been strong pre season filling and sellout has been quite weak. But I think the other parts of the country there has been reasonably decent summer. So we’ll wait and see. We are not yet, you know, we are not yet over in terms of north at least till June 30th we typically get sales. So some of this issue is only related to the southern part where last year in South India we had a very very warm summer.
Aditya Bhartia
Understood sir, that that’s helpful. Thanks. Thanks John.
operator
Thank you. Ladies and gentlemen, we take the last question from the line of from Aditya Birla mutual fund. Please go ahead. I do apologize N. Your audio is not clear.
Naushad Chaudhary
Yeah, I hope hope it is better now.
operator
Yes, please.
Naushad Chaudhary
Just one clarification on FY26 outlook. As the second summer cycle is not doing well, do we still maintain our 14 15% top line growth and consistent EBITDA margin expansion for 2016?
Mithun K. Chittilappilly
So I think like we said, you know, we are really looking at one part of the country, you know, where summer has been impacted there also we have time till May 30. But you know, South India typically April, I mean March April is the peak of summer. But the other parts of the country, it is still warm. So we will wait and see. And like I said last year, if you look at it only Q1 was very, very strong. After that, in fact, Q2 and Q3, the performance is not that robust. So we are not sitting on a very high base.
So we could have a situation where Q1 growth could be slightly impacted. But for the full year we should see still try and hit that 14, 15% growth and margins. We are quite confident of maintaining the margins. We are not so far that worried.
Naushad Chaudhary
Okay, thank you sir. All the best.
operator
Thank you, ladies and gentlemen. With that, we conclude the question and answer session. I now hand the conference over to the management for their closing comments.
Mithun K. Chittilappilly
Thank you all for taking time out to join our earnings call. I would like to thank Natasha and the team at Philip Capital for hosting this call. We look forward to interacting with all of you in the next quarter. Thank you.
operator
Thank you on behalf of Philip Capital India Private Limited. That concludes this conference. Thank you for joining us. And you may now disconnect your lines.