Note: This is a preliminary transcript and may contain inaccuracies. It will be updated with a final, fully-reviewed version soon.
V-Guard Industries Limited (NSE: VGUARD) Q4 2026 Earnings Call dated May. 12, 2026
Corporate Participants:
Mithun K. Chittilappilly — Managing Director
Ramachandran V — Director & Chief Operating Officer
Analysts:
Vineet Prasad — Analyst
Aniruddha Joshi — Analyst
Rachana Kukreja — Analyst
Unidentified Participant
Deepak Lalwani — Analyst
Natasha Jain — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to the VGuard Q4NFY26 earnings conference call hosted by Investec Capital Service Private Limited. As a reminder, all participant lines will be 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 an operator by pressing Star then zero on your touch tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr.
Vineet Prasad from Investec Capital. Thank you. And over to you sir.
Vineet Prasad — Analyst
Thank you yourself. Good evening everyone. A warm welcome on behalf of Investech India to Q4FY26 earnings call of Vgaard Industries Limited. We have with us the senior management team of Vguard represented by Mr. Nitin Chitlapalli, Managing Director, Mr. Ramchandran V Director and Chief Operating Officer Mr. Sudarshan Kaswari, Senior Vice President and Chief Financial Officer. Now I’ll hand over the call to the senior management for the initial remarks post which we’ll open the floor for Q and A.
Thank you. Over to you sir.
Mithun K. Chittilappilly — Managing Director
Thank you Vineet and the Investec team for hosting today’s call. A very warm welcome to everyone joining us today to discuss the company’s operating and financial performance for the fourth quarter of FY26. I trust that all of you have the opportunity to review the investor presentation shared earlier. We delivered a robust performance in Q4 marked by strong growth in both revenue and profitability. On our Consolidated revenue for Q4, FY26 stood at 1755 crore, a wide increase of 14.1% for the full 14%.
For the full year we achieved a top line growth of 7% with almost all growth coming from the second half. The electronics segment comprising of stabilizers, UPS systems, inverters and batteries delivered a strong growth of 22.3% YoY. All categories delivered growth during the quarter. The electrical segment which is our largest revenue contributor and includes wires, pumps, switch gears and modular switches registered a YoY growth of 15.9%. In the consumer durable segment covering fans, water heaters, kitchen appliances and air coolers, we reported a 4.1% YoY revenue growth.
Fans and air coolers witnessed a decline while water heaters in kitchen categories grew strongly. Sunflame reported a YOY top line growth of 8.6%. In Q4. The slowdown in the CSD business continues but the non CSD business grew by about 16%. The GTM integration has been completed and the business is experiencing Strong traction Sunflame reported in Q4FY26 the revenue from south markets grew by 16.2% while while non south market grew at 11.8% YoY for the full year non south market contribution is at 48%.
The gross margin remains healthy. We have maintained gross margins at 35.3% this quarter which is at similar levels of Q4 of last year. This is on the back of significant improvements achieved in the last three to four years. EBITDA excluding other income for Q4 stood at 171 crore reflecting a yy growth of 19.3%. For the full year we reported the EBITDA of 527 crore an increase of 2.6%. EBITDA margin for the full year was 8.8% compared to 9.2% previously. Consol consolidated PAT for the quarter was 112 crore up 23% yoy compared to PAT of 91 crores in the previous year.
For the full year Consolidated PAT was 308 crore lower by 1.7%. YOY in Q3 we recognized an exceptional one off charge of 22 crores toward gratuity and leave encashment arising out of the new labor code. Without this the impact the underlying PAT growth for the full year would have been 3.6%. Working Capital Management continues to be efficient leading to strong cash flow generation. We have a net cash of 231 crore as on March 2026 as compared to 64 crores in the previous financial year. Considering the financial performance and healthy cash position, the Board of Directors has recommended a final dividend of 150% equating to 1.5 rupees per equity share.
The West Asia War has created challenges in terms of commodity inflation and supply uncertainty. So far we have navigated these challenges well which reflects the inherent resilience of the business. We continue to monitor these risks and we have mechanisms in place to take appropriate and timely actions. Overall, FY26 was a challenging year with the first half experiencing weak summer and tepid demand. The business performed much better in the second half. With the momentum of Q4 and indications of a supportive summer, we are hopeful for a strong start to FY27.
With that I conclude my opening comments and I would like to thank Vineet and the team at Investec for hosting this call and would like to request the moderator to open the floor for Q and A. Thank you.
Operator
Thank you very much sir. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchstone telephone. If you wish to withdraw yourself from the question queue, you may press star and two participants are requested to use handset while asking a question. Ladies and gentlemen will wait for a moment while the question queue assembles. First question is from the line of Aniruddha Joshi from ICICI Securities. Please go ahead.
Questions and Answers:
Aniruddha Joshi
Yeah, thanks for the opportunity and congrats for great set of numbers. So in terms of the price hikes, if you can indicate because all commodity prices have increased materially, so what will be the price hikes across segments or at the portfolio level aggregate and have we passed on the entire impact of increasing cost to the consumers or do we need another round of price hike and what will be the quantum? That is question number one. Question number two, whether the kitchen appliances segment has now really come out of the in a way bare phase and now we should see pretty healthy growth in the segment considering the strong numbers Posted by Sunflame also.
So how should we think about for FY27 for kitchen appliances as a category itself and see how is the fan market shaping up post March? Because we had understood that Kerala as a market had seen some amount of softness Kerala in Karnataka. So how are we looking at the fan and cooler market post March? Yeah, thanks.
Mithun K. Chittilappilly
Yeah. Okay, I’ll take up the second part which is on kitchen appliances. So yes, we do believe that there seems to be some, I think the improvement in demand for kitchens. So we are seeing traction both for VGAD as well as Sunflame. And I think the GT business of Sunflame is growing. Well but we have also taken some actions in terms of business integration which is also helping. So we have more boots on the ground as far as selling Sunflame is concerned. And now Sunflame has access to all the networks and capabilities of the sales system of VCar.
So that’s definitely helping that. But yeah, we do also believe that, you know, kitchen business is slowly coming out of the woods after the lull which happened post Covid. The third is part. Okay, now I’ll go for the first part. So selection price x the quantum. Yeah, okay.
Ramachandran V
Yes, there have been some significant increases in input costs across representative categories. It would typically we are seeing in a range of somewhere between 8 to 13% kind of cost increase. This has happened over a period of time and what that translates into is eventually when the high, high cost inventory comes in, 13% price hike would be be required. At the moment prices are getting passed on. We probably landed about 75% of what price increases are required so far and that’s something we would have to watch in future.
Mithun K. Chittilappilly
Yeah, so I think we have landed most of the pricing action and I think most companies have announced and taken pricing action and I think the balance 25% should happen as and when the high cost inventory start hitting the in the month of May and June is what we feel the third is on the fan. So the fan business, I think fan business has degrown in Q4. I think, I don’t think it’s been Kerala. I think for us the eastern market especially the summer products have not grown in Q4. So part of that is also pulling down fans.
Maybe in the south markets including Kerala sand would have been, you know, a flat, flattish kind of number for Q4. However, April the summer sales has been reasonably good in South India. But we’ll wait and see, you know what happens for the full quarter.
Vineet Prasad
Yeah,
Aniruddha Joshi
Okay, sure sir, very helpful. Just one last question. We got high revenue salience from state of Kerala and post the war in West Asia we believe some of the remittances etc there might be some disturbances to that. So. So there is possibility of some impact on the overall economy at Kerala level. So how do we see that impacting let’s say 527 because probably so far there was no impact considering just two months only. So. So do you see any impact and what will be the strategy to mitigate the impact if any?
Yeah, that’s it.
Mithun K. Chittilappilly
Okay. So far we have not seen any special impact, you know, in Kerala. In fact the summer in Kerala has been pretty supportive. So the Kerala numbers are pretty good. Kerala today is not that large like it used to be. So it’s about 15, 16, 60 naught percent. So it may not impact the overall company, you know, that much as it used to do earlier. So so far we are not seeing an impact. Even when we talk to, you know, real estate companies, they are actually seeing still traction happening because we also will see some improvement in demand because people are evaluating to relocate, you know, the only learning member staying back in those countries and sending their families back home.
So all these things are going on. But having said that Q1 is not about that Q1 is primarily going to be summer and Kerala as a state has done well as far as summer is concerned.
Aniruddha Joshi
Okay, sure sir, many thanks, very helpful.
Operator
Thank you. Participants to ask a question you may press star and one. Next question is from the line of Vineet Prasad from Investec. Please go ahead.
Vineet Prasad
Hi sir, I have a couple of questions one is from FY27 perspective, how do you see demand shaping up considering one, the summer season? Number two, possible inflationary pressures and its impact on consumer sentiments. That’s my first question. And second is from the next couple of years perspective, how do we see margins trending? We’ve given bulk of the investments in the new capacity is already done. Ramp up as we speak is on its way. So if demand momentum is conducive, do you think we are heading towards double digit EBITDA margin over the next year or two?
Mithun K. Chittilappilly
Yeah, I think if you look at FY27, we just completed one month and South India has done well. So south, the temperatures were warm in most parts and I think South India, the summer has started. North, south, it is still, you know, it was raining in many parts of the geography. But north south also has a longer window, at least till June 30. So we are expecting the demand to pick up the expectation and the prediction from the IMD as well as Sky Met and other agencies are for a pretty warm summer.
So that is hopeful. And South India, it has already started and you know, the numbers are pretty decent as far as the medium term is concerned. Yes. So if you can see, after even having such a adverse year and we had a very bad Q1 in the first quarter, in the current, you know, FY26, we have come back strongly and our H2 EBITDA is in the region of around 9.5%. So we are already close to double digit numbers. Yes, there are some concerns because the cost inflation is very high across categories. Across raw materials prices have gone up, even metals, you know, the metal prices are also going up.
So because we have to also understand that West Asia also produces a lot of aluminium. They have a lot of aluminum smelters which are out of action now because of the blockade. So I think we’ll wait and see. But I think the inflationary trend is pretty severe and weak. It is as bad or little worse than the Ukraine war inflationary trend, what we experienced. But the good news is this time we are ahead of the curve in terms of pricing and if you see our margins are Fairly protected in Q4 and we hope to do that.
But in the medium term, I think yes, once this is over and the raw material prices come back to normal, we are pretty confident of hitting double digit ebitda. Yeah. Vineet,
Aniruddha Joshi
Hello.
Vineet Prasad
Hello. Sorry, sorry, sorry, I was on mute. Just follow up to the question, your earlier response. What I understand is this time around industry has been a lot more proactive and margins to that extent could be, could remain resilient. Has been a case across players where most players have taken price increases or it is us and couple of maybe the larger ones who’ve been proactive or it’s the industrial.
Mithun K. Chittilappilly
No, I think we have seen a pretty much broad based reaction by the industry to increase prices. But in seasonal categories like summer categories, you know, this action is getting delayed. For example, in South India a lot of this pricing is getting passed on. Whereas non south where summer is yet to start, or it’s starting slowly, some of it is getting slightly pushed. But I think the intent is pretty strong. We are seeing this across because the quantum of price increases are high. This is not only about price increase but in some cases there is genuine shortage of raw materials.
So we are all scrambling to secure raw material supply. So you could see, you know, some of these smaller players not even being able to produce, you know, products. So we are in a state of supply shock. And that’s also another reason why, you know, there has been a very strong, almost cohesive action by all players to increase prices. And the quantum is very large. So there’s no way that most, almost all the categories, the cost hike is, I mean the quantum is so large that you can’t absorb the shock.
Vineet Prasad
Understood. Understood. Thank you. Thank you so much. Thank you.
Operator
Thank you. Before we move to the next question, a reminder to the participants. To ask a question, you may press star and one next question is from the line of Rachana Kukreja from SL Ventures. Please go ahead.
Rachana Kukreja
Thank you for the opportunity. My questions are on Sunflame. My first question would be have we incurred most of the transition and integration related cost for Sunflame and going forward, what could be the expected benefits from these initiatives taken?
Mithun K. Chittilappilly
Okay,
Unidentified Participant
So I think the sun claim integration is progressing well. We, in functions like service and quality, we are fairly, we have fairly progressed with integration and we are seeing results also. There are improvements in cost and there is improvement in performance and customer satisfaction in sales. I think, you know, the integration happened over November, December and it’s still underway. We are seeing early results in terms of being able to, you know, place, you know, Sunflame into stronger counters where we enjoy, you know, traditionally good relationships.
So I think that’s encouraging. On supply side, you know, in terms of planning sourcing. This integration has happened over last quarter. In general, of course there will be some, you know, benefits in indirect costs, warranty charges and you know, even, you know, cost of quality. So those, those are areas where you Know, we expect to see some benefit. The most significant benefit will come, you know, from the sales integration. And this is something that we should expect over the next three quarters and into the subsequent year because I think the initial benefit will come as we spread Sun Plain into our network.
But I think deeper benefits will come from second half of this year as progressively our NPD pipeline starts to hit the market over the subsequent three or four quarters. So I think progressively we should see better outcomes because the actions are underway and we are already seeing these benefits in functional domains like service and quality, as I already spoke to you about. Or even warehousing and logistics.
Mithun K. Chittilappilly
Yeah, that’s it. Next question.
Rachana Kukreja
Hello.
Mithun K. Chittilappilly
Yes,
Rachana Kukreja
Yes. So I just wanted to know about the initiatives taken for the GT and the E Com channel
Unidentified Participant
Is fundamentally in terms of sales integration and branch integration. Salesforce integration, brand branch integration and sell out, you know, integration of sellout management capabilities. That’s as far as GT is concerned. E COM integration is fundamentally, you know, so we are having the same team and the same systems driving sunflame. It’s taking longer time because I think, you know, we are also working on the offerings on the platform and you know, we had some challenges with listing some categories, you know, voluminous categories.
So GT I think, you know, we, we are seeing traction already. I think we had some decent growth for full year And I think Q4 was better and we expect that Q1 to be also, you know, reinforcing the direction of growth.
Rachana Kukreja
Okay. My second question would be given that the innovation cycle in the kitchen appliance industry is very fast paced and we too have, you know, refreshed our portfolio. So and the benefit of this portfolio would be, you know, visible after a year. So will we be able to sustain or improve our profit margin? And how is this new portfolio different both in terms of industry led innovations and our previous portfolio? And how would this redefine our position in the industry?
Unidentified Participant
I think, you know, two, three things. One is, you know, as far as our, see, I think, you know, we are refreshing products as we speak. It’s just that, you know, the six significant part of our refresh will land, you know, towards later half of this year. Yeah. That being said, you know, already, you know, portfolio enhancements are happening now. There are, you know, multiple layers here. I think, you know, at one layer is, you know, some of our offerings are dated and you know, they are being upgraded.
Some of it is about, you know, addressing white spaces. Some of it is about, you know, getting the lineup to reflect, you know, emerging technology Trends like bldc. So these are the kind of things. So fundamentally the addressability of the market, the freshness of the offering and you know, the wherever. Right. Particularly I think, you know, you know, we have fans in CSD or you know, we have what are, I would say as in, you know, we had gaps in built in and you know we had gaps in you know, BLDC based offerings in Hobbs.
These are getting addressed. Yeah. So I think you know, as far as the, you know, as I said, you know, right now this year, you know, you will start to see benefit as we strengthen the reach with the help of our, you know, branch and our sales force and also as we strengthen the sellout capabilities for sunflame. So that’s our focus. I think, you know, the larger benefit of product rollout, you know, will be more visible in second half of this year and also going into next year. Yeah,
Rachana Kukreja
Okay, understood, thank you.
Operator
Thank you. Participants to join the question queue you may press Star and one next question is from the line of Aneruddha Joshi from ICICI Securities. Please go ahead.
Aniruddha Joshi
Yeah, thanks for the follow up. Just two questions now. With integration of Sunflom largely done and debt repayment also over, so the cash accumulation should start on the balance sheet. Just some of the capex may take some cash but still there might be catch accumulation. So what will be the strategy with the cash? Is the management or the company looking at another inorganic growth opportunities or how should we think about that? That is question number one and question number two. We see BLDC as a technology is making rapid inroads even in kitchen appliances like mixers also.
So how does the management see sunflame prepared for that kind of product innovation? And overall how do we see the BLDC fans also market shares shaping up for vgad? Yeah, that’s it from my side.
Mithun K. Chittilappilly
Yeah. So as far as the cash is concerned we are, we are done with the debt repayments and yeah, barring capex we should be having a reasonably good free cash flow. We have not taken any call of, you know, making any acquisitions or anything like that. If you get an opportunity at a good value, we will look at it and it will be a case to case basis or nothing to report on that. The other part is on vldc. I think already if you look at ceiling fans Vgaard VLDC is contributing roughly 40 odd percent of the ceiling fan seals which is pretty good.
Our growth in BLDC has been very, very good. Our complaint rates, reliability and offerings are very, very competitive. And we are continuing to launch as we go forward. As far as the BLDC in kitchen is concerned, there are two areas. One is on mixer grinder and second is on chimney. Chimney. I think we have already launched BLDZ chimneys but in mixer grinder I think this is a device that is used for half an hour, 40 minutes daily. So it’s not a device that is running constantly like a fan or AC or something like that.
So there I think, you know, we have not yet launched. I think that’s more difficult to explain to customers the rationale of, you know, payback when some something is running only for half an hour or 45 minutes every day. But in the other two cases like chimney as well as, you know, chimney, the running time is longer. It will be a few hours every day. So there seems to be some traction. So that, that. But the I still don’t think it will be as much as the fan because in the case of ceiling fans it’s running for almost eight, nine hours a day.
I mean assuming that you’re putting fan through the night in your bedroom and that’s the payback hypothesis is very strong there.
Aniruddha Joshi
Okay,
Mithun K. Chittilappilly
Sure sir, thank you.
Operator
Thank you. Participants, if you wish to join the question queue you may press star and one next question is from the line of Deepak Lalwani from Unifi Capital. Please proceed.
Deepak Lalwani
Hello sir. Thank you for the opportunity and congrats on good set of numbers. So I have a few questions on the revenue side. I’ll ask all of them together. So firstly on the electronics division we’ve seen good growth this quarter. So if you can break up this into volume and value split and if you can help us how the secondary growth, that is the channel growth in April has been. That’s one. The second question. The durable segment I understand has been hit this year because of bad summers. So what is our strategy to revive growth again in the segment?
So if you can share your product in channel level strategy. And third, so buyers, we understand that the competitive intensity has increased and one more big player is entering the segment end of this year. So how should we be able to, you know, tackle this and be able to grow and at an overall level, Mithin, if you could share what kind of growth rates one should envisage for your company going forward because you’ve had a bad year and looks like summers have been good and then recovery. So overall what kind of growth should you aspire?
Mithun K. Chittilappilly
Yeah, I’ll take the start with the second part. So if you look at the durable, consumer durable segment Both air coolers and fans have performed badly, especially TPW fans. That’s primarily related to a lot of the impact of Q1 where we had extremely poor farmer and TPW is a very, very seasonal business. So if it does not get sold in the summer window then the inventory typically sits with the trade and continues so on, so forth. Having said that, and as we speak currently we are having having a shortage of TBW fans because like I said, the South Indian summer has been pretty decent and sellout has been good.
Vineet Prasad
So that’s as far as the consumer durable is concerned. So I
Mithun K. Chittilappilly
Think this year we should have a good growth in consumer durables because of the low base effect. The third part is on wire. Wire is we are cognizant of the fact that a large player is entering plus some of our peer companies from lighting are also entering wire. So wire competitive industry is expected to be more than what it was. But it’s a very peculiar category. You know, it’s a category with low gross margins and you need a scale of at least thousand odd crores to make money in this business.
So. And there is also fluctuation of raw material types upwards and downwards. And when it goes downwards you have to also write off your inventory. So I think the new players will find it some fine, some it will take some time to figure out the mechanics on, you know, how to crack this industry. I don’t think it’ll. It’s not an easy industry to break into. We also had entrants before who have entered and left. But yes, we are cognizant of this and we are also taken some measures to strengthen the sales system on the volume and value growth of electronics.
Sudarshan, do you have a number?
Ramachandran V
Roughly, Roughly speaking about 3% is price growth. The balance is volume.
Mithun K. Chittilappilly
So in Q4 about 3% would be. Because you have to understand the pricing and the actions would have started towards the later part of the quarter. So I hope
Unidentified Participant
It’s mostly volume growth. It’s mostly volume growth. I think price growth is, you know, about 2 to 3%.
Deepak Lalwani
Thanks. Yeah, that was very clear. Mitun, if you could share your view on the overall growth rate of the company for the next year.
Mithun K. Chittilappilly
So I think as a company we try strive to grow between 10 to 2012 percent in volume and there is a 1 to 2% price growth culminating into 15% growth which is what we aim to do. But current year the value, I mean the price growth could be higher because like I said we are seeing significant cost inflation. So we will wait and see what happens. But so far we are confident of holding our volume growth. So like I said, if we have a reasonably good summer, the summer category should perform well. We have to also be cognizant that Q1 of last, that is FY26 we had a degrowth in some of the summer categories.
So we should have a healthy volume growth this year because the base is on a lower side.
Deepak Lalwani
Sure. My next question was on margins. So if you can help me understand, we have been talking about double digit EBITDA margins and we have done well on the gross margin side. So for the next year, if you can break this double digit EBITDA margin, how should we look at it segment wise? How should it play out in the consumer durables which has seen a very sharp deterioration in margins? How should we look at the recovery in electronics? And by double digit are we Targeting somewhere around 11, 12% or 10% is, is a broad guidance.
So
Mithun K. Chittilappilly
Ideally this year we would have loved to, you know, claim that we will hit 10% EBITDA margins double digits but you know, we are going through a fairly significant cost inflationary period. So you know, the things are quite volatile and there is no, it doesn’t look like the conflict in West Asia is going to end anytime soon. Right. So we are probably going to have a prolonged period of high cost going forward. But if it was a normal kind of inflation, we would have been much more confident to say that.
So in this case we probably would like to finish a couple of quarters and then come back and comment on the margins. But so far, like I said, we have been proactively, we have been proactive to send this and start pricing actions early. And a lot of our peers companies have also announced pricing actions as they’ve come to realize the quantum and size of the price increases are high. Now I think for a company like us, I think we also need to have good summer to help us. So South India pretty much we have had a decent start to summer and if non south we also have good traction for summer, I think we should be, you know, confidently hitting that, you know, number.
But I wouldn’t say 11, 12%. I would say at least 10% is what we would like to expect. But we, like I said, inflation is still, you know, something that is, you know, going to be a challenge.
Deepak Lalwani
So what we see this year is that, you know, apart from the summer challenge, like you’ve controlled your expenses quite well, like the employee cost is flat and the other expenses have not gone up much. So should we see the same trend playing out even in FY27 which could, you know, buffer. We could provide you some buffer in terms of cost management, etc.
Mithun K. Chittilappilly
So yeah, some part of the employee cost is variable pay. So definitely, you know, as a company if you don’t achieve the, you know, top line and bottom line numbers, the payout, variable payout also comes down. So that’s the there. We also are not expecting any huge increases in manpower this year. So like I said, we are on a. We are watchful. We have taken actions to control some cost and we will like I said, if we get a good Q1 and good summer then it would be more confident confident to spend, you know, in the following quarter.
So that’s the way we look at it.
Deepak Lalwani
Understood sir. So last question since you said April was good, any, any, any qualitative feedback that you would give us in terms of how the second in terms of the growth rate and in terms of the channel demand. So
Mithun K. Chittilappilly
I mean like you are also following the same, you know, news articles and predictions by the meteorological department as we are. But I can say that you know South India usually the summer starts early March, April and that has been on track largely non south. It’s been a mixed bag. You know there are rains in some parts of north south. You look at North, south, east is the big market for weaker. So you know, east also has to fire for the company to do. You know, I would like, I mean so I think we still have time, I think we still have another one and a half months, more than one and a half month left for the quarter.
So it will be too early to comment on this but, but just keep in mind the base is already on the lower side because last year we had a decline in some of the categories
Deepak Lalwani
And so how is the channel inventory in all these categories?
Mithun K. Chittilappilly
Like I said, it’s a mixed bag. So if you look at TPW fan, we are neither we have inventory nor our partners have inventory and we are having stockholds. So it’s a mixed bag. It’s not, it’s not the same for every everything. So certain categories are, you know, we are having, you know, supply challenges. So like I said in South India I don’t think we be an inventory issue with any trade partner but nonsense. The, the summer is yet to start. So it’ll be to, you know, the summer sales are yet to, you know, fully.
Deepak Lalwani
Okay, thank you. All the best.
Operator
Thank you. Participants, if you wish to join the question queue you may press star and one next question is from the Line of Natasha Jain from Philip Capital. Please go ahead.
Natasha Jain
Thank you for the opportunity, sir. Two questions. One broadly across categories, you know, be it your stabilizer wires or fans. When I’ve gone on the ground, what I’ve understood is there was a lot of inventory that got pushed in 4Q because of, you know, cheaper raw material cost and therefore cheaper product sizes. But OneQ has been broadly disappointing in terms of that you start for summer. You yourself pointed east and north was also a little bit of flip flop here and there and south also. What I’ve heard is the channel was stocked with inventories for more than what’s usually required.
So on this backdrop, while secondaries have moved faster across tooling products, can you throw some light? How is the selling or the primaries happening against the secondaries? And the second question is if you could also point out in case you do channel financing for which product categories.
Mithun K. Chittilappilly
Okay, so if you look at fans, the, the, the star rating change happened primarily for ceiling fan. So the sales for ceiling fans is very high in December because all the branded, all the brands had to sell all the ceiling fans before the 31st of December, you know, 2025. Because of that, there was a lot of channel inventory as we enter. Entered. Okay. But this doesn’t hold true for TPW because TPW BE star rating norms are yet to start. It’s expected to start the next year. Okay. So when I said that TPW inventory is not there, this is the reason ceiling fans, we don’t have any inventory issue.
There is substantial inventory with us and with the trade. Also TPW fans, most of it is made out of plastic. And there is challenge in procuring that particular type of plastic in this in, in India. So as we understand, this is the reason. Okay. There is a raw material shortage for that particular type of plastic that is most widely used to make TPW fans. And many of the, our vendors are not having, you know, requisite inventory to make them. So that, that’s the one reason. Channel financing, I think on the whole it’s about 10% of our retailers if you look at the data book.
10%. We do channel finance. You’re talking about channel, you’re talking about channel finance, right?
Natasha Jain
Yes, channel finances.
Ramachandran V
Yeah, yeah. So channel finance, that’s for our primary customer. Yes, our primary
Mithun K. Chittilappilly
Customer.
Ramachandran V
Yeah. So approximately 35 of our business. Okay. Goes through channel financing arrangement.
Mithun K. Chittilappilly
Yeah,
Ramachandran V
It’s not category linked, it is customer.
Mithun K. Chittilappilly
So it is not a category thing. So it’s a customer. So for example, if you have a distributor for a, you know, bunch of products like water heaters, fans and air coolers and all. The entire customer is under transfer. And it’s not a category thing, it’s more of a distributor level arrangement. And if you look at the entire portfolio of debtors, 35% of the portfolio is under transfer.
Natasha Jain
Could you throw some color in terms of, as the grade B GHC dealers, distributors facing any problem in terms of working capital management and therefore slower payments to the brand. Is that something that you’re observing?
Mithun K. Chittilappilly
No, I don’t think so. In fact, our collections have been pretty strong in the March quarter. We are not facing any. So we have a, we have a pretty pretty strong commercial team which independent of the sales team actually tracks and manages the, you know, credit limit of each of our customers and decides which customer should be increased credit limit, which customer should get reduced, which customer should be offered channel financing and which customers should not be. So we don’t have this problem.
And we also have a tool where, in which we, we also are able to see the inventory of our partners wherein which we know whether they are sitting with inventory or they have diverted money from the business and so on and so forth. So as far as Vgaard is concerned, we don’t have this, you know, issue of, you know, so whatever sales we typically do, these are usually real sales. And it’s not just, you know, we don’t encourage and we don’t allow dumping.
Aniruddha Joshi
So we have mechanisms
Mithun K. Chittilappilly
To stop that practice. You know, there is a tendency by sales guys to dump stuff which. So we have an independent way to try, you know, make sure that doesn’t happen. Yeah.
Natasha Jain
One last question. This is more longer term in nature than near term. So for the longest time across cooling products, we’ve been hearing that there will be consolidation. You know, be it cooling on the AC side or cool or fans, a lot of competition that’s coming. And right now the situation is such that cost has increased multiple times and the price hikes are not enough to offset that cost. So do you think now is the right time when you could see consolidation happening or industries going to remain fragmented and therefore competition probably will be the same in terms of intensity?
Mithun K. Chittilappilly
See, what is happening is the core growth in the capacity is not that, that high. So what is happening is every, every company in every category is thinking like, okay, maybe if I get into this category growth will happen. So that is why you see everyone in the lighting business trying to enter into wires. There are companies which are in the, you know, water purification business that have entered into fans. So I Think everyone is entering everything. Okay, so it’s not that, you know, and, and this process has not stopped.
It is an ongoing process. It’s something that has been going on since 2016 17. So it’s an almost eight, nine year phenomenon. So we at Vegas, we are going to, we have pegged our growth and we have to grow despite all these macro headwinds. And that’s what we aim to do. We have done this by integrating our manufacturing. So for example, from a sourcing company, we are now a completely integrated manufacturing company which allows us to build products which are sufficiently differentiated. So we are not selling, you know, your, me too, you know, economy and sub economy model kind of products.
We want to build and sell, you know, premium and master products for which you need to own as much of the supply chain as possible. And that’s why we have spent like close to 300, 400 crores last eight years to build so many plants and to get into the manufacturing. It is an incredibly tough thing to do. But we have done it because this is the only way we can fight this overcrowded market. I don’t see it, you know, I don’t see consolidation happening. But one thing is sure, when such shocks happen, so when you have an environment where you have to take 15, 20% price increases and when you have an environment where a lot of your raw material price, raw materials are under shortage or you’re not getting raw materials, that’s when the better, you know, more organized companies, companies which have better supply chain capabilities will probably do better than, you know, some of the other players.
So that’s, that’s the broad thing. So so far I have not seen any, you know, move for consolidation. But because we are still seeing in everyone, everyone trying to get into every other category.
Natasha Jain
Follow up on that when you say everyone trying to get into every category. So again a broader longer term question. We’ve seen a lot of brands entering across electrical space, right? Some of your peers who were predominantly say a founce player have now entered wires and vice versa. Predominantly wire and cable player. Enter, try to enter fast market in the last couple of years. So just want to understand your view. What is the strategy that works here? I mean is it that if you have a fantastic channel, you can push anything?
Mithun K. Chittilappilly
No, it is not. So. So for example, if you want to profitably build a business, you have to, you know, you have to take 15, 20 years, build it SKU by SKU, get into, you know, you can start with sourcing, but I think unless you are really investing in the R D unless you’re really investing in the manufacturing. I don’t think many of these companies have any hope to make money out of it. I mean they can show revenue but making money is a different. Barring the top four, five brands in each of these markets, most of them will not end up making money.
That much I can guarantee. So in Vega for example we have always remained a multi product company. It’s not that we have got into multiple categories for the sake of getting into it. We have always been an organized technology. As a multiple product comes in we have very long term view. You know we are okay to see the category for 10, 15, 20 years and I don’t know how many of the, you know, the companies have spoke about are able to do it. Like I said, like wire is a completely different category and when, when they enter wire they’ll understand that winning in wires is, you know, very, very different.
The skills required is probably very different from what it requires to win and fight. And similar a fire company may not be able to be successful in fan. So everyone will not be able to do everything. And we have given up a lot of our, for example our cost structures. A multi product company. As a multi product company our cost structures are fairly high because we have to carry people for all our categories and these are some of the trade offs we do. So good news is like company like us, we are more, you know, the risk is very less because we all, all the categories will not get into trouble at the same time.
So we will see lesser impact on fluctuations in each category. But I can say that I’ve seen the cycle like for example 8 years back everyone wanted to get into kitchen appliances space and now we don’t have like everyday is out of kitchen. A lot of the other brands that have got into kitchen have got out. So now only the key core companies are still remaining. So we’ll have a similar kind of a cleanup after four or five years.
Natasha Jain
Understood sir. And sir, just one last observation. I’m actually on the ground right now to get some channel feedback and I came across a lot of players who’ve been keeping a solar inverter and I got fantastic feedback on that product and the support from the brand was also very positive. So just wanted to drop that. Thank you so much sir and all the very best.
Operator
Thank you participants. If you wish to join the question queue you may press star. And one next question is from the line of Vineet Prasad from Investech. Please go ahead.
Vineet Prasad
Thank you for the follow up opportunity Just a couple of things we’ve realized solar business for you have been, has been growing extremely fast. Can you give some idea about what the size of that business could be? Number one, what I understand is it could be more than 500 crores in terms of top line now. And how do we see it growing? Are there further legs to growth as in can it grow in very high double digits for another few years?
Mithun K. Chittilappilly
So I think we don’t like to give out numbers but it is not, you know, it is not reached 500 crores. Mark. We only entered, I mean we only ventured into this business fairly recently. Like you know, yeah, about three 36 months back. But it’s growing very fast. If you ask me, this business has potential to become very, very large. But we have been very careful and choosy. So for example we are primarily selling solar inverters for residential users. So we and small, you know, institutions. So we have not got into the very large institutional orders and you know, such like that because there are associated risks along with it.
But we are very confident that pretty soon, maybe in three to four years this will become one of the largest larger categories for VGuard as we have, you know, an inverter battery business today which is quite large, similar size or it can be even more than that. But as of today we have tried to sell to customers where it is more of a B2C kind of a play and it is not a institutional sales. I mean we do do institutions but it’s very small. It’s mostly residential consumers where we have equity and where we have pricing power and where our sales and service network, you know, have a differentiating factor when sort of institution sales are most of a price base.
So we are very bullish on this category and we do believe that and given the recent challenges with fuel and all that government is under huge pressure to diversify away from fossil fuels in one way or the other. And this is already have good traction in India and I think, you know, it will continue. And one more thing is I think West Bengal and Tamil Nadu are two markets which were till now not, you know, encouraging this adoption of rooftop solar because it was BJP government initiative and both these states, we hope definitely West Bengal will open up and I think Tamil Nadu also the new government policy will be definitely to push for, you know, know, cleaner energy.
Vineet Prasad
Understood that that is helpful. And lastly on the lighting foray, where are we if you can give some timelines, how are we progressing in terms of product distribution, sales? Any, any color on that?
Unidentified Participant
It’s still work in progress for us I think sometime towards, you know, early next quarter. You know, we look forward to, you know, bringing it into market.
Vineet Prasad
But that’s it for me. Thank you so much.
Unidentified Participant
Thank you.
Operator
Thank you. Next follow up question is from the line of Deepak Lalwani from Unify Capital. Please go ahead.
Deepak Lalwani
Hello sir. Thank you again sir. I just wanted to check, you know, how many ones of inventory of each raw material do we maintain at the factory level? Aluminium, copper, plastic, etc. And this availability issue that you mentioned. So how are we, how are we sourcing our materials from a different channel that you could explain and if there is an issue, if you can, is it a big issue that is that will probably lead to lower production? If you can just highlight that these two are my questions.
Mithun K. Chittilappilly
So I think as far as availability is concerned, it’s primarily on the polymer or crude derivatives where there are availability issues. So for example, our batteries require sulfuric acid. Sulfuric acid is also used for production of pesticides. So that is a controlled substance now because the government is rationalizing it. But we are still okay. We have tied up with, you know, tied up and locked up supplies for the next one month or you know, more than that. The same is the case of certain type of raw material.
Like I mentioned, TPW fans, there seems to be some shortage but I think we, as soon as the war broke out, we had set up a war room and we identified these sensitive items very well in advance and we have gone and because we are a fairly cash rich company, we have gone and secured supplies from wherever we could. So we are pretty much okay, I think till end of June. I don’t think we will have any issue and I think largely we should be fine. I mean there is definitely. So for example, if the demand is 110, the supply will be like 105.
So there will be some bit of shortage here and there. But I think company like us will be largely okay because we have a diversified supplier base and we have gone and secured supplies for most of our production. Sulfuric acid is still challenging because we cannot store that material. A lot of that material, we don’t have the capability to store it. It’s an acid. So our ability to store is very low. But wherever we can store, we have tried to store or we have stored it at, in our vendor. So we don’t foresee any supply related challenges.
At least for Q1 we are largely covered. But this, this, this is a, you know, this is a potential issue for many, could be for smaller brands Regional brands who don’t have the kind of cloud we have, something like we got will have over its suppliers.
Deepak Lalwani
Sure. Understood. So last question, you mentioned that we’ve taken bulk of our price hike. So has there been any resistance that you’ve seen in demand, that demand falling off for our categories or any lose of, or any loss of market share that you have seen? If you can highlight.
Mithun K. Chittilappilly
So with any price hikes of this much of a quantum, this is not a natural price hike. Right. Usual price hikes retailers are used to is for 2%, 3%. So when it’s time, 10% and 12% definitely there is going to be some negotiation pushback and all. But like I said, it’s, it’s it. But as, as far as we see it, I think by the time this kind of the high cost raw material starts hitting in, we are fairly confident it’ll get passed on because a lot of it has been accepted. But wherever there are some challenges.
For example, if it’s a summer category and you know, it’s in a geography where it’s summer has not started yet or there is some rains and stuff like that, we have given case to case, you know, support for our distributors and retailers. But largely it’s looking okay because I think it’s not that. I mean I don’t think any company can absorb the condom. So I think, I think everyone has announced and I think there is definitely an intention to pass on these prices. And like I said, only in cases where the weather is not supporting, only those places we are given case to case.
But you know, largely it is, you know, been passed off.
Deepak Lalwani
Sure. Sir, if you can share, what’s your raw material mix for the whole company? Copper, plastic and aluminum. Roughly.
Ramachandran V
Copper is the biggest. What is second biggest is aluminum or steel. Yeah,
Mithun K. Chittilappilly
Copper will be the largest, followed by polymers and then polymer,
Ramachandran V
Then aluminum, then
Mithun K. Chittilappilly
Steel. Yeah, we don’t, I don’t have an exact number for that. Yeah, because it’s, it’s not a single category. Right. It’s multi. Each category has got a different mix.
Deepak Lalwani
Understood.
Mithun K. Chittilappilly
But everything has gone up. Right. I mean, so it’s not that anything is not gonna operate.
Deepak Lalwani
Yeah. Yeah. Okay, got it. Thanks.
Operator
Thank you. Participants, if you wish to ask a question, you may press Star and one. Ladies and gentlemen, if you wish to join the question queue, you may press star N1. As there are no further questions from the participants, I now hand the conference over to the management for the closing comments.
Mithun K. Chittilappilly
Thank you all for taking time to join our earnings call. I would like to thank Vineet and the team at investech for hosting this call. We look forward to interacting with all of you in the next quarter. Thank you.
Operator
Thank you, sir. On behalf of Investec Capital, that’s concludes this conference. Thank you all for joining us. And you may now disconnect your lines.