Ladies and gentlemen, good day, and welcome to the Earnings Conference Call of Whirlpool of India Limited. We wish to inform you that all participant lines will be in listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference call, please signal the operator by pressing star and then zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Ms. Roopali Singh, Company Secretary. Thank you, and over to you, ma'am.
Thank you. Good evening, ladies and gentlemen. A very warm welcome to the company's financial year 2024-2025 quarter one first earning call. Today I have with me Mr. Narasimhan Eswar, our Managing Director, Mr. Aditya Jain, the Chief Financial Officer. A presentation on the business as well as the financials has been updated on the company and the stock exchange website. You may please refer to the same during the presentation. Before we move forward, I would like to inform you that there is a cautionary statement in the presentation. Kindly take note of the contents of the same. With that, I would now hand it over to Mr. Narasimhan Eswar for an update on the business.
Thank you, Roopali, and a very warm welcome to all of you, ladies and gentlemen. I'm Narasimhan, and I will take the first 20-25 minutes to walk through the business overview and our strategic initiatives and our progress on that, and then hand over to my colleague, Aditya Jain, who's the CFO, to talk about the financial performance, after which we will take questions, of course. Next slide, please. We are now on slide number six, which is a business overview. If you can move to slide number six, basically, India, we've called out before, is a strategic focus for the Whirlpool Corporation globally. A couple of things. Basically, the value creation opportunity for Whirlpool and for all other appliance manufacturers in India is huge.
The reason is obviously the market GDP growth that we are seeing, also compared to the fact that appliance penetration is quite low. You're talking about refrigerators, mid-30s%, washers, mid-teens%, air conditioners, less than 10%. You've got a growing affluent demographic, which, as we know, the booming upper middle class and the middle class in India. Therefore, the opportunity for the durables business itself is very significant. The question comes as to whether Whirlpool has the right to succeed. Well, Whirlpool has got a track record of value creation in this country, and talk about four very critical things that it has. As I've said before, Whirlpool has played a pioneering role in the Indian durables industry and has been associated with several industry first. I'll cover these later.
Whirlpool is a very well-reputed brand with great integrity, on quality and performance, straddling geographies. So for example, North, East, West, South, all regions, Whirlpool is strong and economic strata. So Whirlpool has got products and consumers in not just the premium end, but the popular end as well, the mass market as well, where it's got its strength. And as India becomes, stronger in the mass market, as it is in the premium market today, Whirlpool will be very much there to reap the benefits of that across straight up. Whirlpool has also got a diverse product portfolio, as you know. We continue to innovate on premium product segments across categories. This is particularly important because we are not just innovating on premium segments and frost-free or on top loaders or front loaders.
You will see later in the presentation, we are innovating very much on semi-automatic washing machines premium, as well as premium segments in the DC, direct cool, refrigerators as well. And we've got a very strong manufacturing footprint, refrigerators and washers being made in multiple factories, in Hyderabad, in Pune, and in Puducherry, in India. And last but not the least, we've got a powerful pan-India sales, distribution, and service network, and we've also got excellent relations with our customers, combined with strong investments in building detail and creating demand. So those are the reasons why India is a great market, which you very well know, and why Whirlpool, we believe, has got a tremendous reason to succeed in India, and therefore, India is a big strategic focus for the Whirlpool Corporation.
Moving on, let's take a look at the growth and profitability record of Whirlpool. So very simply, I'd like to call it out as a set of, you know, moving kind of intervals and then latest year. So from 2008-2009 to 2019-2020, Whirlpool had a revenue CAGR of 12% and a PAT CAGR of 20%. Those are numbers I would take any day of the week on a growing basis. But then from 2020 onwards, we had a tougher time, where the results, the revenues were not really growing significantly, and the profits came down as well. What actually happened was, obviously, COVID was the major factor. You also had significant competitive intensity coming in, and you had significant regulatory changes.
Now, all of these regulatory changes came commodity cost increases. So all of these basically hit the revenue as well as the profits. Now, what happened in 2023-2024 is the year that just finished? Very simply, in 2023-2024, the revenue grew by about 2%, and our profits basically stayed at about close to 4%, 3.9% as opposed to 4% of last year. So that would look on the face of it like not a lot of progress. But if I walk you to the next slide, slide number eight. Really, this 2023-2024 financial year was basically a tale of two halves. In the first half of the year, as you can see on the left-hand side, the revenue growth year-on-year was there. In the first half of the year, we were down -4%.
This was strictly driven by price adjustments that we needed to make strategically in the January, April period, and regulatory costs were going up, which hit the profit. The second half of the year, we've actually grown revenue by 10%. So we've grown double digits in the second half of the year, for us, leading to a yearly result of about 2%. So it is actually a tale of two halves from a revenue point of view. How does it look from a gross margin point of view? Gross margin in the first part of the year grew by about 60 basis points, from 27.5 to 28.1, and in the second half of the year, went from 27.8 to 30.0, which is a 220 basis points growth.
Now, that was driven by a lot of cost productivity actions. We call this P4G, or profitability for growth, really coming into action in a significant way. A very, very deliberate strategy and plan that we do now, and we will keep doing into the future. As a result, our profit, which in the first half of the year was 3.4% of sales, which was actually -29 versus the previous year, same time period. In the second half, the profits grew by 58% versus the previous year, so the percent going up to 4.5%. So the full year revenue growth and profits are actually benefited from the positive momentum in the second half of 2024. Now, all that's well and good, but how are we doing in April to June?
So really, if you go to slide number nine, we are happy that we're sustaining the momentum through April and June. Revenue growth for standalone business is 24% versus last year. PBT growth is 128% versus last year. So we are very happy that our strategy of profitable market growth, market share growth, is clearly working. What I think makes us happiest is that we've had strong share gain in triple digits, 30 points versus last year in both refrigerators and washers. So it's not one or the other. Both refrigerators and washers, we've had very strong share gain in triple digits, basis points. We were also helped by not just the market share growth, but also a strong growth in the refrigerator industry.
So after a long period, April to June has been a period in which the refrigerator industry actually grew strong double digits. Washers didn't. So that's fair, because both refrigerators and the AC market really grew massively. We are much, much more represented in refrigerators and we have a much smaller share in air conditioners. So our benefit really was from the ref market growth. Washers market growth, not really. So a combination of share gain in refs and washers and strong growth in AC is what actually got us those results. As you can see, we were able to grow the market share profitably, which, as I explained to you last time, is always the same time. The results have actually come based on a very, very disciplined ROI-based investment strategy.
So we are calculating what we do, what we put, and what we get out of things, basically, quite rigorously. And that is the basis on which we invest. We've called out very clearly, we've identified for ourselves what are the growth levers? What is the magnitude of the growth lever? What is the momentum of that growth lever? How much runway does the growth lever have? And therefore, how long should we keep focusing on it? Where we are confident about the growth lever for all these factors mentioned, we invest fearlessly. Where we are not very sure, we make sure that we learn and we assess the ROI before we roll it out. So that is basically the strategy that we're following. Excuse me.
If you look at the profitability, it's not just coming from our top line growth, but it's also coming from significant gross margin and bottom line improvement. This comes from the productivity of growth program, which is a cost program that leads to this gross margin improvement. We're also quite happy that not only the sales and the profits are growing in the right direction, but operationally, we've also been able to make sure that we focus on inventory, receivables, and payables as well. As a result, our cash position is at about INR 485 crore that we generated. So we're quite happy about that as well. So these are the numbers presented for you.
Revenue is at INR 2,384 crores, year-on-year change, 24%, driven by strong market share improvements in washing machines versus last year, and a strong double-digit growth in refs, as well as in air conditioner industry. Both the refrigerators and the washers business have grown by high double digits for us, which I think is the other notable part. So we are not counting only on the market growth, as I said many times before, we're counting on growing through share. EBITDA and PBT improvement is being driven by the volume growth, which obviously helps our industry a lot, but also by a lot of cost productivity actions across every line of the PNL in this P4G program that leads to better margins and improved mix.
We've also focused on driving the mix a lot, whether it be through our marketing strategies or it be through incentivization of the sales force and things. That seems to be working well as well. So though we've had the price impacts and the regulatory impacts, these things are helping us, you know, get to a better position. And cash flow obviously derives from a strong EBITDA, but also a significant improvement in working capital that we've been able to drive. Next slide, please. If you go to slide 11, this is the one that I think that's the piece we're happiest about, and we really hope we can keep this up. So I think this is going to be the cornerstone. If we can keep this up, this will be a wonderful wonderful story for us. Just walk you through October 2022 to March 2023.
This is a chronological timeline that explains what has happened to our business. October 2022 to March 2023, the market was growing by single digits. We had a significant problem because the volume market share was declining quite substantially, triple-digit basis points. It was impacted a lot by several issues, competition, et cetera, but the biggest one was price index challenges. We corrected this price index challenge in around January to April of 2024, sorry, 2023. And we also introduced the different cold ranges in January to March of 2023. Despite that, the volume market share, though it improved, it was still declining versus a year ago. If you go to April to September, which is the next time period, the market was actually flat.
What we were able to do is really step up our focus on execution of, of marketing, execution of supply chain, execution of sales. And we also introduced the frost-free ranges fully in our stores. And these were these incredible ranges, where we have between the 265 liters and the 360 liters. We've got claims like, converts from 30 fridge in just 22 minutes, which is a best-in-class claim in the market. So completely new technology that we brought in. And there was an improvement in the market share versus the previous trend, but we were still kind of slightly declining versus a year ago. October 2023 to December 2023, that quarter, and the market itself grew by very low single digits. But we had deployed some incremental regional executives in the field.
They had come of age, in a manner of speaking, in terms of their experience and so on and so forth, and we started the mix drive in right earnest, along with some tests, that we were doing in certain areas. So we started seeing the market share grow. January to March 2024, was a period of significant consolidation of market share growth, continuing on the growth momentum. Though the market was flat, we had a significant impact of all our ROI-based investments, our new products, and also our execution of stick ups. Therefore, you can see that volume market share increasing year-on-year, quite significantly, and now we are talking both refrigerators and washers. Last April to May 2024, the market itself finally grew double digits, which was very welcome.
But at the same time, the full effect of our retail executives that we've added across time, the new products that we've brought in, the clear focus on mix drive, the change of the sales force incentive plan, and many, many other changes that we've done, including, major programs for customers and so on and so forth, has led to that triple-digit growth in basis points in market share for both refs and for washers. So if I then move on very quickly to Elica. Elica continues to do well. We've increased our ownership in Elica, as you know, from 49% to 87% in 2021. Very strong capabilities in local manufacturing.
Elica, I would call as a pioneer or an innovator in, in this space, in terms of coming up with real quality products, great technology, good distribution, good brand awareness, but still opportunities to grow in both distribution and brand awareness, which augurs well, because this market is also a very low penetration market. We believe that Elica is going to be a great long-term play here. We've also established Whirlpool as a mass premium cooking brand, along with Elica. If you look at our revenues and margins, the growth has been very significant. Across the last three years, double-digit CAGR, with the strong margins. Obviously, the margins operate between 13.5-17.5%, 17.5 being the peak in 2024.
But expect on a going basis, the margins to be more between the 15%-16% kind of range, as we seek to invest to drive this wonderful business. Next, please. So I move on now to the strategic imperatives that we have. So what are the strategies that we are following as an imperative to drive our business? And there are five, basically, and I have spoken to you about this. Inspiring consumers and generations of consumers with our brands. Second is building with product leadership. The third is building a competitive and resilient supply chain. The fourth, my favorite, excellence in execution, and the fifth is growing our consumer lending business. So let's take a look at it one by one. If you look at our next slide, please, slide number 3. Inspiring with our brands.
If you look at our history, inspiring consumers with our brands, Whirlpool, as you know, was the first to introduce pedestals in DC, in this country, which is now a significant proportion of the entire DC business, not just Whirlpool's business. Whirlpool was the first to bring in auto defrost technology, and still remains the largest by far, player of auto defrost in the country. Whirlpool was one of the early pioneers in CMF in colors and finishes, basically. It's not just DC, Whirlpool was the first to bring in the three-door refrigerator into India, the Proton series, which continues to do very well. They also brought in the Platina range, which is dark interiors.
But in washers, Whirlpool introduced not just the incredible Bloom Wash 360, which is our top, let's say, most premium top loader, but also the first top loading heater in the country, which we now have across our top load range. So in a sense, this is what I told you about earlier. Whirlpool is a pioneer in the durables industry, in inspiring trust, for consumers with our brands. Now, how are we actually bringing it to life now? Go into the next slide. We are very, very proud and happy to work with one of the great Indian companies, a company that I've always admired, Unilever. We have announced a strategic collaboration on the twelfth of June, that we, do with Unilever. So Whirlpool and HUL have decided to collaborate to enhance the Indian consumers' laundry experience.
The whole logic is a very, very simple logic, which is, penetration is a massive opportunity for washing machines in this country, and penetration is also a massive opportunity for liquid detergents and washing machines in this country. That is, in a sense, the opportunity that we see. This opportunity can take several forms. At this point in time, we've made a grand start with a joint media campaign, a TV and digital, which is a co-branded campaign between Whirlpool and Surf Excel. I apologize, I'm not able to play this for you because it's an audio call. I think the link has been sent along with the video, which you can look at at leisure. It's an advert that we really love. I'm sure the Unilever guys like it as well.
My father, who lives in Chennai, has reported seeing it several times. He's my people meter, you know, literally. He monitors and lets me know every time he sees the ad, and I believe that he's seen it a reasonable number of times. We also are doing... Sorry, just go back, please. We are also doing sampling and on-pack endorsement on both the machines as well as the products of Unilever Surf Excel, which is a brand, Surf Excel Matic, which is a brand that we're working with. So at this point in time, it's media, it's sampling, it's on-pack endorsement, and plenty of opportunity to do much more in this area to drive penetration in washing machines and in liquid detergents. Next slide, please. So that's not all.
We are taking inspiring trust to the next level because we just said we've got amazing products on both semi-automatic as well as front load, and we've got opportunities to improve our market share in both these places. We took a look at these products and said, "We are so confident of these products, let's put our money where our mouth is." So we have moved first from offering 2 years of warranty, comprehensive warranty on semi-automatic machines, from 2 years to 4 years in January this year. So on every semi-automatic washing machine that we sell, in India, we basically give 4 years warranty on Whirlpool. And following the success of that program, we've offered a 5-year comprehensive warranty, on our front load, fully automatic washers.
This is the new line that we set up in 2022, which is doing really well, and the products are fantastic. So we said: All right, so let's offer, you know, that trust to the consumers to say, "This is how confident we are in our product, that we are willing to give you five years of comprehensive warranty." And that is something that we did from, I think, April this year. So those two are in the market, and we look forward to seeing significant revenue growth from these. Can I move on to the next point, which is product leadership? We've done some new product launches we're very, very proud of. Now both these product launches have been done in the space of the last 12-14 months, basically.
So that's been great work by the team to bring commercial innovation to market so quickly. The first one is the DC Glass Door, the direct cool refrigerator, the single door refrigerator, the Glass Door range. As you can see, fantastic new designs. They look stunning in the store, and right now we are not able to produce enough to meet the demand. And so I hope that continues, and we hope to, we hope to continue gaining the, benefit, benefits from this, but also able to provide the products wherever it's needed by the consumer. So this is the first one. And moving on, this is something that we are inordinately proud of.
Semi-automatic washing machines is one thing that everybody would think, you know, the only way to kind of grow this business is just bringing in more capacity, you know, 7 kg to 8 kg, to 9 kg, to 10 kg, to 11 kg. Just this one way, and we'll follow that as well. But what we've done is we've brought in a premium offering into semi-automatic washing machines. We're looking at the single biggest pain point for semi-automatic washing machine users, which is detergent patches. So you can see the left side of the screen, on that blue shirt, you see those patches. This is without Dynamix. That's the kind of patch that you can get as a consumer when detergent and water don't mix properly in semi-automatic washing machines.
But what we've been able to do is come up with a technology called the Dynamix technology, where hydrodynamic fins in a compartment mix the detergent with water, ensuring no detergent coagulation and offering an incredible experience, right? Zero detergent patches. Zero, okay? We are incredibly proud of this, initiative that we brought to market, and this has just hit the market a couple of months ago, and we look forward to driving this really hard. Move on, please. The next slide, slide number 20. Elica continues to dazzle with its innovative ranges. The one on the left is a particular favorite of mine, the Auto Sense chimneys that we've brought in with, brushless DC motors. See the insight here, again, the consumer insight here, inspiring trust, we talked about.
Consumer insight here is that when you've got a chimney, you often, and I'm sure you've experienced it yourself at home, you often forget to turn on the chimney when you're cooking, and so you end up having this, you know, smoke in the room, for about 15 minutes, and then you switch it on, and by then your eyes are watering. So there is incredible Auto Sense chimneys. What they do is there's a, there's a thermal sensor, that as soon as the flame comes on, it detects the flame, and it comes on automatically. Now, that's a great consumer benefit. And on the right-hand side, you see the IX Series and Lotus Series of hobs. There, there are triple burners here, and these have a heat shield. So if you see those heat shields that you can see on the screen, that avoids your knobs from heating.
Just imagine, such thoughtfulness that's gone into the design of these products. Heavy-duty burners and obviously looking incredibly good. World-class design. So on that, we move on to the next, slide number 21. We talk about excellence in execution. Like I said, you can do a lot of strategy, but if your execution is not brilliant, then the consumer doesn't get to see your strategy. We are focusing on, with respect to sales and service, winning every day in every store with every consumer. How do we do that? We have brought in much stronger visibility, which we track up our premium lines and our new ranges that we bring into the market, focusing more on premium. Second, we make sure that we get our pricing strategy right, especially on the premium lines, where there's an opportunity for us to grow much, much more.
We've got great products, maybe not enough market share compared to our popular ranges, and therefore, a great opportunity. We have really got much stronger sales and service execution, including, like I mentioned, incentive plans to drive premiumization, to drive the right things, that drive value, at the consumer level, basically at the market level. And then we also leverage our great customer relationships that we've built up over three decades. Round after round of, management has basically engaged with our customer partners to develop great relationships, so we leverage that as well. And of course, we continue to drive e-commerce marketing. If I look at the service part, it's a very good story.
As you can see from the graph there, the NPS or the Net Promoter Score that we get, which is basically consumer score, rating us on how they felt about the installation or the servicing. The scores continue to go up quite strongly. We do that through a variety of things. We've got differentiated call centers, we've got dedicated desks for premium customers, for the top 20 cities. We've got escalation desks. We use technology like WhatsApp, APIs, video calling, et cetera, to service the consumer. We've also got in-house service centers that we set up in 2022, that not only drive an excellent service experience, but actually are financially viable. So all in all, you know, from a service and a sales point of view, we are happy with the progress that we're making.
We need to do much more of this, but we're happy with the progress that we're making. Next slide, please. Slide number 22, and I'm coming to the end of my piece, is basically two main things to highlight on the Supplier Excellence program. First of all, we're very, very proud that all our three manufacturing sites, Puducherry, Pune, and Faridabad, have achieved the bronze in world-class manufacturing, which, as you know, is not an easy thing to do. Very, very proud of that. And the other thing is that I mentioned probably about six or seven times in this call, the P4G cost leadership program that we do across all lines of the P&L, productivity for growth.
So the whole idea is save money across all lines of the P&L, put some into the bottom line, put some back into the business, to drive you know, marketing and sales so that you can drive the volume. And there's a significant step up that we've done on that. I would say that's very, very important, especially given that going forward, there are going to be commodity headwinds, as we know. There are going to be ocean freight headwinds that are already happening, which the whole industry is suffering from. And these challenges are going to be ahead of us from a cost point of view. But we continue to drive our P4G program, because that's in a way for us, a little bit of an antidote to these kind of issues.
With that, I'm going to hand over to Aditya, the CFO, for the financial performance.
Thank you, Mr. Eswar. Again, a warm welcome to everybody on the call. I'm on slide 24, and I'll talk about the financial performance of Whirlpool of India. This slide talks about standalone results for full year 2023-2024. We delivered a top line of INR 6,333 crore. Our full year revenue was up 2%. This is despite the industry was soft amidst weak summers, especially on the left side of the business. In the second half, our revenue was up by 10%, which was driven by market share-led growth, which was in turn driven by stronger execution and the mix of upgrades and innovation. This was in contrast to our first half decline in revenue of 4%.
If you just look at from a two core categories for ourselves, the refrigerators grew in low single digits, and the washers from a full year point of view, grew in double digits. Coming to profits, the EBITDA, we delivered an EBITDA of INR 312 crore at 4.9%. EBITDA 4.6% on a YoY basis. And on profit before tax, like, exceptional items, we delivered a profit of INR 250 crore at 3.9%. Actually, we arrested the three years decline in profits. So over the last three years, because of COVID, competition and costs, we saw a decline in profit, but this was the year we saw that arrest. We arrested that decline, and the profits grew marginally by 1%, year-over-year.
Just to give a little bit of color on the profits, the profits in the first half are improved by the price adjustments, which we were forced to take, to correct our competitiveness in the marketplace, and the significant impact of the regulatory cost change, cost changes which happened, which impacted our cost. However, in the second half, because of the significant volume growth and the cost productivity action which we took, also helped by the softening of the commodity prices and all the actions into the high ROI-based investment, which Mr. Eswar spoke about, and the focus on driving mix had led to a 58% growth in profit in the second half of the year, ultimately leading to a full year profit growth of 1.4%.
On the cash side, we generated INR 535 crore of cash in full year 2023-2024. Cash was driven by obviously EBITDA, as well as the improvement in working capital. Improvement in working capital was led predominantly by the inventory management and the organization-wide effort to improve the quality of inventories and reduce slow-moving, non-moving and obsolete stock, which significantly reduced inventory for us, and as a result of which, we saw an improvement in working capital and hence the cash generation. On slide 25, this is the—this slide talks about the financials on a consolidated basis. The difference versus last slide and this slide is about the Elica performance. On a full year basis, we delivered a revenue of INR 6,860 crore.
Our revenue was up 2.4%. We already spoke about standalone business. On the cooking side, Elica grew revenue in high single digits, so Elica revenue grew by about 8%. On profit side, on a consolidated basis, the highlight is that we grew profits in high single digits. Both EBITDA and EBT grew by about 8.8% and 9.8%. Elica continues its good sense of profitability, and the profit for Elica business grew 40% YoY. On a consolidated basis, we generated INR 610 crores of cash, again, driven by EBITDA and strong working capital improvement versus last year. Moving to s lide 26, this talks about the quarter one financial performance, while Mr.
Eswar spoke about the standalone performance, so hence I'm covering the consolidated performance, which includes Elica. From a top-line point of view, we delivered a revenue of INR 2,497 crore. I'm happy to say that this is the highest ever revenue we've clocked in any quarter in a financial year, and this is a growth of 22.5% versus last year. This revenue growth was driven by strong market share improvement on the back of previous action we've taken around strategic imperatives, also helped by the double-digit growth in refrigerators as well as the aircon industry. A point worth highlighting, both refrigerators and washers grew in high double digits for us. EBITDA, we delivered a consolidated EBITDA of INR 211 crore at 8.4%.
EBITDA grew by 71% last year, and there was an improvement of 230 basis points. Profit came in at INR 1.6 crore. That was almost double versus last year. PBT percentage was 7.8%, an improvement of 300 basis points versus last year. On color and profitability, both EBITDA and profit improvement was driven, A, by the strong volume growth. We saw a 22.5% growth on top line, which automatically translates to a significant improvement in DCM. Cost remaining tracks, everything flows into the bottom line. Plus, a significant improvement also came from the cost productivity actions. A lot of work happened on the commercial negotiation and activities or the market forces of commodities of flattish versus last year.
But all internal efforts on cost and the P4G actions led to the margins improvement, coupled with the entire focus on driving mix of high DCM and premium portfolio of the business. And this helped us offset the pricing and the regulatory cost impacts, which we had. On the cash side, on a consolidated basis, that remains a good story. The efforts on managing working capital inventory and the accounts receivable remains. And in this quarter, we've generated, actually, on a consolidated basis, a cash of INR 491 crores, which is significantly higher than last year. With this, I've covered the financial performance, and I'll pass it back to Ms. Roopali.
Thank you, Aditya. I would take an opportunity to thank both Mr. Eswar and Mr. Jain for such a detailed presentation. I would now hand this meeting back to the moderator to open up the Q&A session.
Thank you, Roopali. We will now start the question and answer session. Present on the audio bridge, who wish to ask questions may press star and one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. For clarity of questions and better audio experience, participants are requested to ensure while asking questions, they're using headphones to avoid background noise. In the interest of time, we sincerely request participants to limit their questions to two. We will now begin the question-and-answer session. The first question comes from the line of Aniruddha Joshi from ICICI Securities. Please go ahead.
Sir, two questions from my side. In the previous call, you had indicated revenue guidance in high single digits, but now we have seen very strong performance in quarter one. So, will there be any change in the guidance, and if you can indicate the revised guidance that you are looking at? That is question number one. And then, question number two is, while the company has gained market share, is there any strategy with which the company is working in terms of gaining market share? For example, 1% market share gain each year, or market share gains in premium and, or anything that you would like to elaborate? And, what will be the key triggers to drive the market share growth?
Is it distribution in newer regions or gaining market share in the existing regions itself, or launch new products, or in a way price cuts or aggressive ad spend? So just wanted to more clarification and data on this from you. That's it from my side. Thank you. And congratulations for great set of numbers.
Thank you. Thank you, Aniruddha. Much appreciate. I kind of knew this question would be. Well, I would say that we are not giving any guidance at this time for the full year. What I can assure you is that, investors with us, I can assure you that we are putting in every effort to make sure that we try to meet your expectations. That's about the maximum guidance I can give. We as you know, we're a listed company here, a listed company in the U.S. I don't want to talk too much about, guidance that we've not given elsewhere. So, we've done... I think we've had a very good first quarter. You know, everything depends. The growth actually for the year depends on a couple of things with respect to the revenue, right?
First, it depends on the market, which is very difficult to predict what happens to the market. Second is your market share. So those are the two things that basically help to go towards your inorganic business growth. While market is very difficult to predict what will happen or not happen, our focus will be to try to keep our market share strong, because at the end of the day, profitable market share growth is actually what, as I said last time, is what we want to focus on. So growing market share, but growing profits at the same time. The intent is not to grow the market share and drop the profits, because that's not a sustainable model in our view.
Now, the second question I can answer in a little bit more detail, which is how do we look at gaining market share? What are the triggers to driving the market share? So firstly, the key for me would be to drive market share profitably, which basically means if I grow revenue, ideally I should be growing profits ahead of revenue. That is the intent. There could be quarters in which we are not able to do that, but the intent would be to do that all the time, right? That is, what I would say a good company does. There are many triggers, as I think you know much better than me. The obvious, new products and innovation is obviously one big trigger. The right pricing for the right product is another trigger.
All of the sales fundamentals and execution, you called about distribution, being available in more stores, but you can also imagine extraction, which is basically taking out more volume from the same store, from the same number of displays that you have in the store. So your display share is also a driver. Your different categories can be drivers. Some categories growing faster than the others. The lower penetrated categories, which have momentum growing faster than the others, can also be one something that grows. Within this, obviously, we try to drive our premium market share harder than our, let's say, popular, for lack of a better word, market share, the entry-level products. But of course, you know, sometimes, you know, the season is great, the entry-level market share will go up. So that's okay.
So long as your premium market shares are going in the right direction, where you want it to. There are times, given the Indian market, where if the entry-level segment really grows very well, and being a leading player, your market share grows faster, you will end up with an entry market share growth faster than your premium market share. We're okay with that, so long as we're growing in premium. So our strategy would be exactly what you called out, which is driving all these levers, having a very clear idea of which lever to use when, having a very clear focus on return on investment in each of these levers, because as you can imagine, I only detailed some of the sales and marketing levers. There are many of them, right?
We are trying our level best to do this in a scientific and rational way, so that we can always try to get to our goal of profitable market share. I hope I answered your question.
Yes, many thanks for the question, and I will come back to you. So we are seeing e-commerce is becoming a very major force in the entire consumption market, especially in white goods also. Now, with ONDC platform also becoming a bigger, so in next 10 years, this will be a major driving force in the entire distribution. So what are the strategies of Godrej in this entire thing? And, what are the market shares in e-commerce platform compared to, let's say, GT or LG? Means I don't want exact numbers—higher, materially higher or lower or materially lower? Anything directionally would be very helpful. And, thanks for my time.
Oh, thanks a lot, Aniruddha. So, to answer your question on e-commerce, well, we obviously we are present on all the things that you mentioned. We're present on the key e-commerce platforms. We're also present on ONDC since the last year. Like you rightly say, it is, it is, it is growing, and it will continue to grow on a going basis. I think the way we look at this is that, we don't want to favor any one, segment or platform at all. These are just different ways of reaching our consumer, right? And we also include in this our own, D2C business, as, as you recall. We've called that out also as a strategic focus going forward, and that's something that we'll continue to introduce, going forward as well. We already have a D2C website or platform.
So, to answer your question: Yes, very much e-commerce is part of the plan. We have no aim to grossly drive one channel versus the other. Absolutely not. We plan to basically drive all the channels, with respect to the financial return that we get out of the channel, and also the long-term ability for that channel to kind of contribute to the industry and contribute to our growth, right? So that is the basis on which we make our investments, and we continue to make investments in both e-commerce and in D2C, including ONDC. That's the first part of your question. In the second part of the question, the market shares are pretty much of a muchness. It's very difficult for me to give you an exact idea.
The reason is because, the numbers are slightly different across different, but I would say it's more or less in the same ballpark. So it's not like we're massively below in one versus the other. It's more or less in the same ballpark between e-commerce and the traditional play. Which also shows that, like I told you before, this brand straddles geographic strata, it straddles premium and popular, it straddles different channels, it does pretty well across the board.
Okay, thank you. Thanks a lot.
Thank you.
Thank you. The next question comes from the line of Priyank Chheda from Vallum Capital. Please go ahead.
Yeah, hi, team. Congratulations for the great set of numbers. So my question is on the gross margin, particularly for the June quarter, which we saw, which is seasonally a strong for refrigerator, but we have seen seasonally slightly lower than what we see for the rest of the nine months. So is refrigerator a lower margin business versus washer re- on a relative basis? If yes, then why? B, how should we think, when it comes to the full year gross margins and all the price corrections that we have taken, vendor negotiations getting initiated? So where should we end, gross margins for the full year?
On the P4G program, if you can talk if there are additional savings that are below gross margin, which is trade, employment, employee cost or equity events, is there anything that we should approve in this year below gross margin as a savings? That's my first question.
Yeah. Thanks, Priyank. This is Aditya, and I'll pick up this question. First thing, I just want to say that because we are not giving short-term guidances, so I won't exactly be able to tell you, like, how will my full year gross margin will look like, et cetera, et cetera. Having said that, to your question, on whether ref versus washers, the margins are significantly different. So not significantly different. Both of them are ballpark in the same range, so it is not that one will—one is significantly different than the others. In this quarter, we've seen a year-over-year improvement in gross margins, predominantly coming from the benefit of the productivity actions, and hence you see roughly 1.5-2 percentage points improvement coming from the material cost line.
So as we've explained, we have a very structured P4G program. There are teams both on commercial negotiation sides and the technical side, who work on driving those productivity initiatives for us to deliver those cost savings, apart from whatever happens on the commodity side in the market. To your points on line items below material cost, which is your employee costs and all other expenses, we also have a P4G program in which we capture the indirect costs. So while the material cost is a direct cost, we also capture indirect costs, and the teams are working on it.
The idea is not here, the idea is not here to cut the cost, but we work on cost optimization as a principle that how can we get more from the same level of costs, or how can we do the same level of work at a lower, cost principle. So there are teams are working on each of the line items, but then, material cost being the significant part of the P&L and roughly 70% of the cost of material cost is entire P&L. Hence, that's where you'll see the biggest amount of productivity, which is reflected in the P&L.
Okay, perfect. Coming to the season, which is on the washers, if you can elaborate overall strategy for the season, which has already started, how do you see industry growth panning out, given the strong monsoons? And we are slightly weak on the, you know, current flow side as far as the whole category goes. So how are we bridging the overall portfolio, making the overall portfolio ready for to gain the maximum out of the current ongoing season? And if you can also elaborate on this washers as a category, which has seen a lot of competition coming up from the entry level, from players like Whirlpool, Beko. How is the overall competitive intensity panning out for you, particularly for the washers? Thank you.
That's a great question. I'll try to answer it as best as I can without revealing too much, because as you can imagine, we are a listed company and some of our competitors are not. So I would be absolutely loathe to give out any information that would prejudice us in any place. How do I see the washer season coming through? Very frankly, like I said, right at the beginning, very difficult to predict. I wish I could predict it, and I could share that with you, because it would be helpful for me as well. But it's very, very difficult to predict how the washer season could be. I think the summer season was better than what anybody expected. The best of the best did not expect as good as summer season, especially for the conditioners.
And so I am only hoping that the washer season is good. But to be honest, like I said, what we focus on is trying to focus on market share, so that we can be sure. If your market share grows, you can be sure of at least some of your growth. If you're counting on market growth, that can be, in the short run, a little bit of a misleading thing, because if it doesn't come, then you're in a soup. So everything that we do is based on trying to drive market share, like I said, profitably. So we've basically got three businesses, which is our front load business, our top load business, and semi-automatic washing machine business. So I think you talked about competition.
I'm not going to go into which brands and so on and so forth, but it is quite competitive, and that's great because it's good for the consumer when it's competitive. We welcome that competition. It's very inspiring for us. So we have special plans for the washer season. You will see it in the market. We have already taken some actions. Actually, to be honest, I don't want to say it on the call, but if you actually make some inquiries in the market, you will already know actions we've taken on semi-automatic. You will know the actions. For example, I already spoke to you about one thing on front loading that you asked about. We've actually gone to a five-year comprehensive warranty on the front load washing machines. So fantastic new products with a five-year front load washing machine.
If you look at our top load business, which is basically the top load vertical axis machines, we've just got advertising on after many years with the Unilever Whirlpool ad. If you see that ad, you will see that what is featured in that ad is the Bloom Wash series, which is our flagship product in top loaders. And in semi-automatic washing machines, which has historically been a big, say, success for us, of late has been something in which we've had some challenges in share. We have taken a couple of steps. We have taken some corrections in pricing. That should help us through the season. And the second thing that we've done is we've launched the Dynamix detergent sensor in the semi-automatic machines, which is a premium end of semi-automatic machines.
So all in all, more to come, but, I think we have a decent plan for the washer season. For us, the critical thing is, we're not so bothered about other people. We just want to do what we need to do, which is grow our market share profitably. And that's, that's basically our focus.
Okay, last question on the market share gains. The three levers which you have alluded to, which is additional brand promoters, secondly, new product launches, and third is mix. Would it be by any chance possible to break down contribution from each of the three levers which are contributing to the market share gains? And a resultant, most likely the Koreans would have lost market share, given the large share that they would have. Any reason would you like to ascribe, why such that is happening in your industry? That will be my last question. Thank you.
Sure. I think, to be honest, we can't really give that breakup because, you know, like I said, you know, that would literally serve the answers up to everybody on a platter, and, and it's taken us a lot of hard work to get this far. Unfortunately, I can't give more color on what contributes how much. Needless to say, it's not just these three. There's a lot more actually, which I haven't detailed out. There's a huge amount of work. If you remember, I also talked about the sales incentive structure. There are. It's not just stuff that costs money, it's also how we use the stuff, like what Aditya was saying. Incentive structure is another big thing. There's several, several things that we've done, whether it's display shares, with distribution, whether it's extraction.
So there's a lot of work that's gone in. It's not only these three levers. These are three of the levers, which are a little prominent, but there are many others that have led to this. I think the combination of these things done the right way with the right investment behind each is... That's what we need to get right to get profitable market share growth, basically. And as far as other players are concerned, I think. Look, I mean, let's be honest, it's not a one-way street for anybody. I think we've seen years in which our market share has gone down. I think those numbers I shared with you in the beginning, that was the same story. And does it mean it can never happen again? Yes, it can happen again.
We are paranoid about making sure that it doesn't happen again, but this is a competitive market, and people take competitive actions. All we can do is focus on what we need to do. We are really not, you know, desperately focused on others. We look at competition, what they do is the market, to understand what they're doing and to understand the impact of what they're doing, surely, through the market shares, but we spend a lot more time on making sure that we are running the race we need to run, if that makes sense. That way, we can be sure of ourselves, other than looking over our shoulder at somebody or looking ahead at somebody and saying: How do I catch up? I think we just need to pace ourselves and just do it right. That's all.
Wonderful. Congratulations and all the best.
Thank you very much, Priyank.
Thank you. The next question comes from the line of Ravi Swaminathan from Avendus. Please go ahead.
Hi, sir. Thanks a lot for taking my question, and congrats on a good set of numbers. I know this quarter had been good because of the strong summer season. But in general, the demand environment, especially post-COVID, had been slightly soft. If you could give some commentary on the demand scenario on a normalized basis, how it is on a Pan-India level. Probably, if you can give a commentary on how good rural is, urban is, that will be great.
... That's a great question. So I think this is actually the, the, let's say, one of the trickier questions to answer. What has actually happened that we can see post-COVID is that there was a big bump post-COVID, basically, where people came back to the market. There was, I would say, a significant market growth. We're talking about 20% odd growth, basically. Unfortunately, we couldn't participate in that growth for various reasons at that point in time. But then what's happened post-COVID, as we see on an ongoing basis, is outside of these big spikes the market growth has been a little subdued, okay, to be honest. And the reason that's happening is because what we can see for sure is that the premium segment of the market has certainly been growing really fast.
But the belly of the market, the entry level of the market, that has not been growing massively in the last few years. Okay? Now, I do believe that, of course, I'm not an economist at all, by any stretch of imagination, but I do believe that, you know, kind of having the GDP growth that we have, the trickle down should happen. I do believe that post-COVID, consumers were spending on a lot of things that they didn't spend on during COVID. If you look at house prices, they went up so much, basically, extraordinarily. Rents went up extraordinarily. Travel, I mean, we all know how brilliant travel was, but people only get a certain amount of money every year.
Say, you get INR 100 last year, next year, you get INR 110 or INR 109 salary increase. You choose where you put the extra INR 9, because the 100 is already accounted for. So I do believe that a lot of people in the last three years put their money in a lot more travel, wanting to see the world, wanting to visit different places, you know, almost catch up on all the stuff that they didn't do. So there was a significant increase in travel, as you know from the reported figures. Hotel costs went up because of the travel. So all of these were inflationary in nature. And I think durables really didn't get the full benefit of, of, of this growth.
So I am hoping, being an optimist, that at some point in time, and hopefully that is from this year onwards, but we never know, that this growth comes back and we start growing, at least at the rate at which normally the country would be expected to grow. A country like India, with this rate of growth, would be expected to grow. So I think that is the one thing. And the second thing is, you know, the other thing that usually drives growth is inflation. So the inflation in this industry typically has not been very good at all in the last few years. Driven by intense competition, and I'm sure by decisions that different companies are making on their own. So there are two components to it, therefore.
One is the volume growth, and the second is value growth on top of the volume growth. The value growth has been very muted, only driven by premiumization, more or less, I mean, predominantly. And the volume growth has not been that great in the entry and the mid-level. Basically, it's been much more on the premium segment. But I do believe that in a country like India, the kind of population that it has, the rate at which the middle class is growing, some of the lovely announcements that have been made with respect to the number of houses that will be built going forward, et cetera. When you build a house, the house will hopefully need a refrigerator at a minimum, maybe it needs a washing machine. Some of the houses, maybe some of them need air conditioners, surely.
I am hoping that these things are actually going to start contributing to the growth, not just to the top end of the market, but to the belly of the market as well.
Understood, sir. My second question is with respect to pricing. We know it's a very competitive market. It has been competitive, it is competitive, and likely to be competitive, but some parts, like, pricing probably would be at the margin. At the margin, have things improved over the past couple of years, or is it at the same level or worse? The elbow room for you to increase prices in your products has improved.
I would say, what we are very clear about is that it's a very competitive market, like you said. In this category, because the cost of the product is very high, the price impact is quite significant. I think we've overly discussed that, basically, and talked about how that affected when we were at a price premium versus, say, competition, you know, how it affected our market shares and so on and so forth. So I would say, it is market determined. If there are opportunities in the market to take pricing, I think companies will take them, and everybody takes it independently. In the absence of, any, companies taking up pricing, obviously, the value of the market would continue to be depressed. So it's a very difficult one to predict or plan for.
Obviously, the one variable in this is commodity prices, you know, ocean freight, all these costs going up. So just common sense says that at some point in time, you know, that should be something that we, you know, look at, basically.
Mm-hmm.
I'm sure everybody will do their own mathematics on this topic.
Understood. My last question is with respect to the premium products. You had mentioned that the premium products have grown faster than the entry-level products, so the percentage of share would have obviously gone up over the past few years. I mean, if you can share the number of what is the premium product share, say, double door refrigerator in the overall mix and automatic washing machine in the overall mix, and how we can read over the three, four years?
Yeah, sure. I, we don't give out share data by segment or so on and so forth. That's just something that we don't do. But I can kind of tell you that our—typically, our shares are higher in the entry level, historically, than they are in the premium level. And therefore, the... I'd say the room for us to grow in premium is more. And so what we try to do is make sure that we get a certain amount of growth in the premium segment. Like I said before, there are some times when the entry level actually grows faster because the market is faster and we are quite strong in entry, so we end up getting a higher growth there. But strategically, we'd like to see the premium shares growing ahead of entry on a going basis.
On an absolute, you know, a percentage basis-point growth year-on-year. So, for example, if your, just making up numbers, if your premium share is 12% and your regular share is, or the entry-level share is, say, 50, right? You'd like a higher percentage of growth on your premium shares than on your entry share, so that your financials work out better, your mix is better. Obviously, the more premium products that you have, you know, the more you can drive them, the better off you are as a company, from many points of view. And so that's what we really try to focus on. Unfortunately, numbers, percentages, et cetera, we are not able to give out.
Understood, sir. Thank you.
Thank you. Thank you, Ravi.
Thank you. The next question is from the line of Amit Mahawar from UBS. Please go ahead.
Thank you. Narasimhan, first of all, congratulations on, you know, achieving a lot of operational turnaround, if I can call it, since you joined. You know, it's a very difficult time, and it's reflecting also in the cash flows, not only in the P&L. Yeah, my first question is more on if you see what you've done in last couple of quarters, a lot of lot of you know representation, which was missing for Whirlpool in the trade channels. Right, you have more people on floor, shop floor to market Whirlpool products. You've actually expanded the SKUs, both in ref and washing machine across 4-5 categories. Can you just help us understand, sir, what is the segments where you've gained more market share in ref?
It seems it's more in DC versus FF. Can you just help us quickly to understand the change in market share across categories in both the key categories of ref and washing machine?
Yeah, I think. Thank you, Amit. Look, I think you know more than me, yeah, honestly. So, you're right. Pretty much everything you said is right. We have done a lot, to be honest, Amit, on a lot of areas, because execution was something that we were very keen to get right. Like I said before, you know, strategies are great, but if you can't execute them in the market, then they, they're meaningless to the consumer. We have invested a lot, in great channels. Basically, as you talked about people on the shop floor, you know, explaining our products to the consumer, which we see actually as a way of marketing. So we have done that. We have done a huge amount of training for them.
We have made sure that they are kind of comfortable with not just the products, but they're proud ambassadors of the products. We have brought in new products. Just to give you a couple of examples, you know, the DC, we brought in 5-star after a couple of years basically. We've brought in the 5-star range, that's doing very well. We brought in the Frost-free range. We brought in the 3-star after quite some time, so that's been doing pretty well as well. Like we just talked to you now, we brought in the glass doors into DC that we never had before, which is quite a cool thing, because you know, a brand like Whirlpool bringing in glass doors, it's wonderful.
You know, it's like, you know, I popped across a random market in Bangladesh to basically see, and pretty much the whole market there is in glass doors. So glass door is a wonderful thing that we've brought in here as well. So we've brought in a lot of new products, but that's not all. We've done a lot of executional change in a lot of areas. And therefore, I think focusing on that and driving that is what, you know, we really are clear about. Like I said, we put down so many different things, basically, and we say, okay, which ones—what are the kind of bullets that we have for each of these?
So obviously, a direct, I mean, I'm sure you know about this, but our direct cool performance has been, we're very happy with that. And frankly, our interest will be to make sure we continue with that kind of growth. We don't want to say too much, but if you see the shares, you'll figure out what I'm talking about. The direct cool refrigerator business, we've had some very good success. We started seeing the turnaround on Frost-free as well. And I think, you know, for us to kind of even think that whatever share increase we've got is ours to keep, that would be folly. It is a very, very hard fought battle, and it's got great respective competitors, who I genuinely respect. Therefore, I think we've got to be on our toes all the time.
In washers, for example, we had some very, very good success in our top loading washer business. But we... You know, I'm pretty sure that we will try to bring that success to bear in our front-loading washers business as well, where our share opportunity, as you know, it's been active for the last two years, other than been active for more than a decade. In front loaders, we have a tremendous opportunity to grow the business, and we will absolutely focus on trying to do that. For me, there is, there is a lot of opportunity that we have, basically. Obviously, the key is to invest in, invest in areas that can give you return, so that we can focus on profitable market share growth. But I must say that you pretty much, you pretty much answered your question.
Thanks. Sure. Second question is, you know, a lot of low-hanging fruits is what you seemingly have achieved or in the course of broadly achieving it. You also have some of the competition now in Beko, which was non-existent, you know, when the last big management change happened. And I'm not, you know, worried about competition for Whirlpool, maybe Whirlpool and Beko and as a, as players who have to agree and down the tail. Do you think for you, in the next three years, say by 2027, the SKUs that you track and you, you, and you plan in the market for these two categories, will you, you'll, will you cut down the gap vis-à-vis, say, if you compare with LG, Samsung particularly, if I can, you know, name them?
Do you think that's a very strong, and important market for you and in that category, but even that, it needs a lot of innovation, which anyways you are trying to drive?
... So any color about how the SKUs across the categories will move in the next three years? I understand the limitation with which you can answer this, but anything incrementally is helpful. Plus, the category you have now, you have much, much less imports now, so something around that. Thank you, Sir.
Sure. I think, it's a very good question, actually, and I was expecting this question. I think it's a very good comment that you make, and it's a very fair thing to say that there are low-hanging fruits. But to be honest with you, what we've tried to do, is we've tried to figure out all the fruits. Okay? Some of them are low-hanging, some of them are medium-hanging, and some of them are high-hanging. So the critical thing that we've tried to do is figure out where are these fruits? How big are the fruits? What is the momentum of these fruits? Okay, how big is the runway for these fruits? That's what I was trying to explain at the beginning.
So what we've tried to do is come up with a menu of things that we could potentially invest in, and what returns could that get? And so, in a way, while this is a bit theoretical, but you have to invest money according to a certain theory. So we work that piece out. Obviously, it's not an exact science, but we work that piece out to say, what should we be doing at what point in time? So I think we are not counting on any low-hanging fruits. Obviously, if they are there, we'll pluck them, but we are not counting on low-hanging fruits to basically drive success going forward. Now, I think the question that you are asking me, basically, if I can reframe it, is to say, what is the ambition that we have?
I will not state a specific number or something, but to be honest, I think you play games or you play in arenas, or battles, with only one intent, isn't it? Win. So that's what we want to do. We want to win. And we know that it's a long, hard road to win eventually, but you got to win year after year, quarter after quarter, month after month, week after week, day after day. That's how you win in the long run. And in the battle, sometimes you lose, sometimes you win, but if you win much more often than you lose, that's how you get to your goal.
Our intent is, like I said, very simply, to drive profitable market growth through identified levers, which we are fairly clear on, which we track and measure with discipline financially, that we try to execute as a team. I think what I'm happy about is that the entire team is basically thinking this way. Whether you talk to the leadership team here or you talk to people who are executing in the field, they're all kind of trying to think in the same way. We're not perfect at all, nowhere near that, but we are trying really hard. I think the intent will be only one, which is profitable market growth, sensible market growth, market share growth continuously. Whatever market growth comes on top of the market share growth for me is like, wow, that's a bonus, basically.
But your salary is market share. Your bonus is market growth. That's the way we like to look at it, and we like to invest it in sensible ways. I think if you have an open mind and if the organization is harnessed properly, there are so many opportunities that can be leveraged. In fact, just to give you a small example of how the organization is working now, the idea to do a consumer promo on the front load washer machine, it actually came from a sales team in Hyderabad. It did not come from the central office. So it doesn't mean the central office doesn't give ideas. They give a lot of ideas which are implemented. But we are very proud of the fact that ideas are coming from the ground up, basically, and we are implementing those.
We implement them fast, and if we see the proof, then we go really quickly. So I think we have a lot of stuff to do, a lot of battles to overcome, but it's a very interesting fight, and we are happy to play this fight.
Thanks, Yashir, and thank you and the team.
Thank you.
Thank you. The next question is from the line of Umang Mehta from Kotak Securities. Please go ahead.
Yeah, thank you for the opportunity. Sir, just wanted to understand, for this low double-digit growth that margin did in first quarter, what would be the growth for economy end, so basically just direct cool range. Any sense around that?
Yeah, I think most of the growth, as I'm sure you know, the most of the growth actually in the first quarter, actually came from refrigerators. So not most of the growth, all of the growth between refrigerators and washers came from refrigerators. So refrigerators had a very strong, growth pattern. So the direct cool range and the frost-free range actually grew quite significantly. Strong double digits.
Understood. And the second question was again on gross margins. So while I understand on YoY basis, the reasons which you explained, on a QoQ basis, is there a mixed element at play, for the contraction? Just, that was my last question.
Not a significant one, which will impact the QoQ margins. So mix, as I explained earlier, like the margin between ref and washers is not significantly different, so that is something which doesn't impact margins. The mix is not a significant impact on margins.
Then, what is the main? I mean, there is a substantial contraction on a QoQ basis, so just wasn't able to understand the reason behind that.
What really happens in the April to June quarter is, A, your mix of the products, for example, AC becomes significantly higher, which has a relatively lower margin compared to our code E2 products, so that is one factor which impacts quarter-on-quarter margin. The second factor is about the summer, for example, there are a lot of promotional schemes which are run in summer, which is not there in your January to March quarter. So because of these two reasons, you see that, sequentially, you see your gross margins could be a little lower in quarter two versus quarter one. So those are the two big reasons which impact your sequential margins.
Understood. Thank you so much, and good luck.
... Thank you.
Thank you. The next question comes from the line of Rahul Agarwal from Ikigai Asset Manager. Please go ahead.
Hi, good evening, and compliments on not only 1 Q, but what your and the team has achieved over the last 12 months. It's really commendable. My first question, essentially, was on the import content. My sense is just wanted to know, you know, how much are you importing right now from a material perspective, both for Voltas or Elica? And, where are we right now, and what kind of changes should we expect any changes over there?
Okay, so you're talking about finished goods, right? So most of our, almost all of our business is basically made locally. Refrigerators, washers, air conditioners, everything is made locally. There's a very small, extremely small proportion of business that's imported. I think, over time, the intent will be to make everything in India. I think that's the intent, very frankly, that the country has, overall, as a country, and that's the intent that we would have as well. Crack down on a lot of supply chain inefficiencies and complexities and so on and so forth. But obviously, all of that, you know, localization, whether it be on finished goods or on components, is going to depend a lot on A, readiness of the local market, which is very, very varied, depending on what the situation is.
Depends on the regulatory kind of rules and regulations that come in about what should be done by when. Also depends a lot on the competitive environment with respect to cost and quality between local producers and international producers, right? So there's a lot of factors that go into this. I'm not going into the detail because I cannot share with you, unfortunately, again, because we're a publicly listed company, I cannot share that information in detail. But what I can do is tell you that as a team, we've put down all of the stuff, and then we've prioritized what should be done by when. That piece of work has been done, and we're working on it.
All of them, as you can imagine, fairly complex projects, and we're working on those projects to, you know, make those come through. I think it will take a few years because there's a lot of, let's say, a lot of things to be done before everything can be done locally. As you can imagine, in every industry, it's the same story. Certainly, we are no exception as an industry. So we also closely work with industry bodies to make sure that the opportunity of making here versus the cost of making here, as well as the regulatory requirements, all of those are basically managed in such a way that it's become viable for the industry, and not unviable. I think that's the key here.
Just a follow-up on this. So in terms of, you know, I will actually refer to the consensus also, how much are we importing right now?
Yeah. So that is something that we will not be able to speak about, to be honest with you, because we don't share that information publicly. We haven't shared it, and we don't plan to share publicly as well. It's something that, you know, to be honest, pretty much if you know the industry number, it's pretty much in the same range, more or less, you know. There'll be one or two players who are more localized, there'll be one or two players who are less localized. Quite a few of the players will be right in the middle.
Got it. The second question was, you know, of course, we've done enough to recover, you know, back to, you know, what positions we are right now. But in terms of your team, where are, where will you be spending your time on over the next 12 months, in terms of top three, four challenges in your mind, which are still, still a gap or a challenge, which you see and you will spend time on?
Yeah. I think, I think basically, if I look at what, what do we as a team basically spend time on? I think the first thing that we spend time on is, very frankly, profitable market share. How do we basically secure market share, and continue to grow market share, but how do we do that profitably, right? So that's the first big one, because it's a very competitive marketplace. Very, very good competition, very tough competition. People, nobody wants to kind of take a step backward in this game. So the first thing that we look at is profitable market share. Then we basically look at working on our own cost programs, basically, which is absolutely crucial. So first is to drive the revenue. Second is to make sure that we're working on costs.
We are always conscious that there are headwinds that come. Sometimes the headwinds are very, very strong. I would say right now, with all of the stuff that's happening on ocean freight and commodities, et cetera, it is, it is, harder headwind than has been some in the past. It's true not only for us, it's true for entire India. It's actually true for the whole world as well. Commodity headwinds are quite significant. Competition, I think, is the other one. Like I said, what we do is we understand what we're doing in the marketplace based on our actions in the marketplace, and we figure out if we need to adjust our strategies or not.
The other thing that really is very critical for us is to make sure that we have a very clear vision, we have very clear strategic imperatives. All the people in our organization are aligned to those strategic imperatives, and we march to the same drum beat. So making sure that the organization is marching to the same drum beat, and everybody's singing the same song is an extremely important thing, for the leadership team, which is what we focus on.
Got it. Thanks very much for answering my questions, and really appreciate to hold this call. I think as a shareholder, just request that we have these periodic discussions. It really helps to understand the business better. So hope to meet on, you know, future calls as well. Thank you so much, and all the best.
Thank you, Rahul. Thank you very much.
Thank you. Next question is from the line of Srinidhi Karle from HSBC. Please go ahead.
Hi, thank you for the opportunity and congratulations on the numbers. Just a couple of clarifications. You mentioned that both economy range as well as premium range of product did excellent for the category in Q1, and you have had gains in both direct as well as sub-categories.
... yes, please. When you say economy and premium, you're talking about Direct Cool and Frost-free, I presume. Because the way we kind of look at it is within Direct Cool, we look at entry, middle, and high kind of thing, right? So I think if you're asking, did the Direct Cool business as well as the Frost-free business do well in the first quarter? The answer is yes, both did well from an industry point of view.
Okay. So within the DC as well, did entry also did well?
Yeah, yeah, yeah. Yes, it was—I mean, it was a very hot summer, as you can imagine. So entry from a market point of view also did reasonably well. What I think is also—So all, all the segments actually grew as far as refrigerators concerned, entry, mid, and premium across DC, direct cool, as well as frost-free. So all of those segments grew. Yeah.
The share gains you have had in both DC and Frost-free?
Yes, yes. I will not be able to share the details, but yes, we've had... Obviously, they are differential. Our share gains in DC have been more than frost-free, but both have grown. We've had some very good success in DC.
Okay. Just a second question I have had is, we are seeing that the channel mix is shifting in India. It is moving more from general trade to e-commerce and modern formats into it. How do you see this as a headwind? Do you see it as a headwind to the established industry and therefore to select growth and creates a lot of channel, or do you think it doesn't really change much from the established industry perspective?
That's a fantastic question, actually, honestly. You're right, there is that kind of a shift. But I think first, I think based on all the experience that we've seen across the world, not only in this industry, but also in FMCG, where I worked for many years, it's not going to be a complete shift with nothing happening in traditional trade. That's never going to be the case in a country like India. You're always going to have a traditional trade business, purely because of scale, and a lot of other reasons, right? So, you will always have the traditional trade business in India, and it will always be a reasonable chunk of the total business, firstly.
So I think, while on the one hand, you know, margins can be affected by shifting to a more organized trade for obvious reasons, the other advantage that you have is because you are displaying and you're driving the visibility, and you're providing a nicer environment to shop in, et cetera, et cetera, propensity, you increase your basket also increases. So I think, to be honest, the way I look at this, India is an amazing story going forward, because if you grow at a GDP growth of what, 7%-8% a year, hopefully even more going forward, with the real rate of growth being that nominal, you add on top of that, you're looking at a business that is going to... I mean, a country that's going to grow GDP significantly. It's hopefully going to double its per capita by 2030.
And then you're talking about a lot of people coming into the purchasing space. Okay? So the belly of the market, if I can call it that, is going to become bigger and bigger, right? And when the belly becomes bigger and bigger, there is more and more opportunity. So if you imagine today, so it's not a zero-sum game. That's the point I'm trying to make. It is not a zero-sum game. That is the beauty of India, right? So I am super happy that e-commerce grows and modern trade grows, and traditional trade grows because all of them will grow. And the reason I'm saying that is because, again, I want to reemphasize, India is not a zero-sum game.
It is not a, "I will only grow by 3%, so, you know, if you grow, I've got to de-grow." Not at all. There's space for everybody to grow in this amazing place. It is not the case for the next 5 years. In my view, it's the next case for the next 30 years, hopefully, right? So at least in my lifetime, and I'm sure you're much younger than I am, but I think both of us, we don't have to worry about lack of growth. So, I think the propensity, when refrigerators are selling mid-30s in penetration, refrigerators can go up to mid-60s, mid-70s, right? Washing machines are mid-teens. Washing machines can comfortably go up to mid-30s, without a doubt. ACs are less than 10%. Why can't we go up to 20%?
So the point I'm trying to make is, in modern trade or on e-commerce or wherever, you have a basket, a bigger basket, because you have more space, you have more people, blah, blah, blah. And so therefore, whatever you lose in a percentage, you might pick up in an absolute. So I think the beauty of India is that one doesn't have to worry so much about it. Of course, year-on-year, you've got to manage your P&L, absolutely. But in the long run, this is going to be a, a great story for the durables industry.
One more, one more, if I may ask. So it's, it looks like your margins have improved quite sharply. So they continue to be, like, good 5-6% lower than what you used to do before COVID. So just wondering, do you think that margins are structurally gone down? Some of the players in the industry call it out, the structurally margins in India probably are, have gone down. So I want to hear your perspectives and possibilities, like, structurally can go back to the margin you have had before COVID, which in first quarter were particularly good.
Yeah, so to be honest, it's very difficult to predict, but what I can tell you is that the market is much more competitive than it was pre-COVID, right? Much more competitive. You know, somebody on the call else has mentioned about, you know, very strong pricing action being taken by different people, et cetera. From our point of view, we are very clear that the long-term guidance that we've given is high single-digit profit margins. That's what we've given, and we absolutely stick only with that. And that's a long-term guidance. That's not tomorrow morning's guidance. It's a long-term guidance. And the reason we are saying that is because we recognize that the market is a lot more competitive than it was in 2018. 2018, 2019, you had people exiting the market. Today, you have people entering the market.
Everybody wants to come into India and grow their business in India, right? Every global CEO has declared India as their most important growth market going forward.
...This is just the reality. This is a fact of our great country. And so everybody will want to come in, everybody will want market share, which means there will be pressure on profits and margins and so on and so forth. And therefore, I think, you know, having massive margins probably is not very likely. At some point in time, I can tell you, when all the regulatory pressures as well have gone, because keep in mind that when you have regulatory changes every two to three years or three to four years, that also brings in a significant amount of cost into all players. Nobody is an exception to this, okay? So you've got competitive pressures, you've got regulatory pressures, all of these will impact margins. And therefore, I think steady progress year-on-year is the best thing to look forward to.
We have called out high single digit in the long term, and that's what I think we can, we can aspire to.
Thank you for answering my question, sir, and all the very best.
Thank you very much, Randy. Sabrina?
Moderator, we will take... We are already over time. So we'll take one last question before concluding the call today, please.
Certainly, ma'am. We have the last question from the line of Varun Jain from BNP Paribas. Please go ahead.
Yeah, hi, sir. Thank you for the opportunity and congratulations on a so obviously wanted to check on the working capital. So, if I'm not wrong, like, we are a company that is already operating at close to nil working capital over the years. But what we've seen in this result also, like, we are a very strong cash flow, so because of continuous improvement. So I just wanted to check, I mean, what—like, do we have a scope for further improvement in the working capital and the actual using target for how much working capital can go down? And secondly, I have a question on the discounting part. So we have seen a consistent like an increase in discounting over the past few years.
But now, considering that we have taken a significant price correction, realigned our strategies, in line with our competitors, can we expect some moderation, in the part of discounting? So, these are my questions. Thank you.
Yeah, I think the question on working capital. So, improvement in working capital right now has been driven more by inventories. What we've done, as I said, in my earlier part of my performance and results back with an organization-wide, we've been working on improving the quality of the inventories. We have done significant effort then behind liquidating slow-moving, non-moving inventories. Now, given the levels we are at under inventories, is there a further optimization possible? Yes, you can always look at opportunities, but are the big opportunities available? Probably no, unless you significantly improve your capacities. For example, and when you say that you have significant increase capacity, then you can work on a significantly lower inventory. So that's one. On the receivable side, again, it's a published number.
The days we operate at, we operate pretty healthy days. And, the third lever on working capital is accounts payable. So, have we reached the end of it? Obviously, no. We will keep looking at opportunities to improve working capital across all the three levers, between AP, AR, and inventory. What are we targeting? Again, it's a matter of guidance again, and we don't disclose the exact numbers, but then, opportunities will always be there in various areas as we look at each and every nook and cranny of our business. On the discounting side, just want to give your perspective, the numbers, if you look at published numbers on the balance sheet, year-over-year, we've not seen any increase in discounting percentage. It's more or less the flattish.
If you look at the discounts or the D as a percentage of revenue, we've not seen any change on those numbers. Pricing is a factor of more consumer and competition led, so that will keep calibrated between what's happening in the market and what's working can absorb. But the intent would be to hold the discounts flat to where we are largely.
Sure. That's very helpful. Thank you, and all the best.
Thank you.
Thank you. Thank you, Mr. Eswar and Mr. Jain, for today's session. And thank you, ladies and gentlemen, for joining us today. With that, I hand it over to the moderator to close out the session.
Thank you. On behalf of Whirlpool of India Limited, that concludes this conference. Thank you all for joining us. You may now disconnect your lines.