Hello. Yeah. On behalf of ICICI Securities, we welcome you all to Q4 FY 2025 results conference call of Crompton Greaves Consumer Electricals. We have with us today the Senior Management, represented by Mr. Promeet Ghosh, Managing Director and Chief Executive Officer; Mr. Kaleeswaran Arunachalam, Chief Financial Officer; Ms. Shweta Sagar, Chief Business Officer, Butterfly Gandhimathi Appliances Limited; and Ms. Natasha Kedia, Head of Investor Relations. Now, I hand over the call to the Management for initial comments on the quarterly as well as annual performance, and then we will open the floor for a question and answer session. Thanks, and over to you.
Hello, everyone. Thanks for joining us. The second call we are doing from this room, which is our new office. I hope many of you have had the opportunity of visiting us here. If not, look forward to seeing you here. Let me kick off the earnings call. Firstly, quickly introducing the people around the table: Kaleeswaran, who you know.
Recording in progress.
Shweta, as you may know, as well as Natasha. Right. Okay. Firstly, I assume you've also looked at the press release we've made as well as the investor deck, which has been uploaded, right?
Yes.
Natasha?
Yeah, it has.
That's been uploaded. Right. Beginning with fans, the category was led by robust growth at TPW, strong margin improvement, YoY . During the year, as you would have seen, our margins are now back to pre-BEE 1.0 levels. Pricing actions and the spate of new launches have helped us enhance competitiveness. You would have seen that we announced two platforms for the next generation of motor technologies: one for BLDC and the other for induction motors. We have very consciously decided to adopt a Platform-First approach, and that has culminated in the launch of Nucleus and X-Tech. Frankly, it's, I think, an important strategic decision which sets us apart from our peers.
It's something that I anticipate will, in due course of time, over the next few quarters, bear significant fruit for us, including as we launch the next generation of BLDC fans, including as the industry and we get ready for the next big leap in energy transition. Really, our Platform-First strategy or the kinds of benefits that it offers: greater control over product development, enhanced agility to adapt to evolving consumer needs, improved after-sales service turnaround, and builds on deep industry expertise that we have. We have felt for some time, for instance, that industry as a whole needed to further strengthen the reliability of the BLDC products that are available in the market.
We went to work at developing something that we believe will significantly address those issues so that we are able to fundamentally address the products that we put out and assume over a period of time the market itself will move a different trajectory. That is why Nucleus, which is the advanced in-house BLDC technology, enhances both performance as well as reliability. Meanwhile, we have also invested, again, as market leaders, we felt this was important. We have also invested significantly on the induction motor technology, and we are calling this X-Tech. This is a platform which you will see gradually being rolled out for all our fans. It has already been incorporated in many of our fans, but over a period of time, all our fans will have it. This embodies our commitment to energy efficiency and durability.
The hallmark of our products has been durability, and this technology will provide both that as well as exceptional levels of energy efficiency going forward. I do believe this Platform-First approach will materially help us strengthen our leadership position in the future. Now, in view of our some time ago, you've seen us announce Crompton 2.0, focus on a bunch of areas that you are familiar with. I am not going to go into Crompton 2.0 strategy. In view of our confidence of continued revenue growth in the future, volume growth in the future, and the growing focus on the next generation of technologies, as we position ourselves, I am very pleased to announce that the company is very actively exploring the development of a greenfield manufacturing facility. This will involve a proposed investment of about Rs 350 crores.
We should be in a position in the next few weeks to come back to you with much more details of how, when, where, and all of those details because those are, as we speak, being worked upon and tied down. Needless to say, this is a major strategic initiative, and this will go a long way in overall bolstering the strength of our supply chain and supporting our long-term growth trajectory. We do believe that with this step, we will have the right balance between expanding our in-house capabilities as well as leveraging off the trusted and long-term relationships that we enjoy with our vendors. With this state-of-the-art facility, we aim to elevate overall quality, resilience, and responsiveness of our supply chain ecosystem, ensuring that we consistently meet and exceed market expectations. There will be a couple of phases in this project.
Like I said, the first phase is expected to have a outlay of about INR 350 crores. The first phase will primarily focus on fans with plans to upscale going forward, adding other production lines and laying the foundation for sustained innovation and growth in the company in the years ahead. Like I said, we should be in a position to share more details with you over the next near- term. Now, further, this is a question I get asked very often. What are the new categories that we are going to be entering? How are we expanding the TAM of our products? You are familiar that our approach has always been to announce them when we actually are already entering them or are on the verge of doing that.
Now, I'm happy to inform one more category, a large category that we are entering as a part of our Crompton 2.0 strategy. We are expanding into the rooftop solar business. Many of you are familiar that the size of opportunity in the solar rooftop business is significant. It's order of magnitude about INR 20,000 crores. Now, needless to say, our approach has been to first build up the capability and give ourselves the confidence that we are able to, when we enter a business, be able to execute really well. Now, you will be familiar that we similarly did something similar with solar pumps, and I'm happy to report that that's a business that has scaled up significantly since we entered that area about a year and a half ago or a year and nine months ago.
Now, this year, in the year that's just gone by, we recorded approximate sales of about INR 200 crores. Now, that should tell you that's come out of practically zero three years ago. That gives us the confidence that we have both the product capabilities, the supply chain capabilities, as well as the execution capabilities to be able to get a material share of the solar rooftop business. I actually anticipate that in the near term, we will also be making further announcements, including in adjacencies of areas that we are already in, but material-sized TAMs. We will keep you posted about some of those in the weeks and months to come. Now, as far as our segment performance is concerned, I spoke about fans.
Pumps continue to perform very well, bolstered, as you know, both by market share gains in the residential pumps business, where, as you know, we are market leaders by some distance, and significant growth in the solar pumps business. In Q4 specifically, we won orders from MEDA and MSEDL on the solar pump side. We are now moving ahead into the next level of stepping up our investments in the solar pumps business. We have, in fact, also materially strengthened our organization structure on the solar pump side. Now, appliances delivered a high- teens growth. As you know, appliances comprises two parts. One part of it is what we call LDA, which is the Large Domestic Appliances, which is the air coolers and water heaters business, and separately, the kitchen appliances business, which we call SDA.
Since we've talked about appliances together previously, I'm going to talk about them together here as well. High-t eens growth, stand-on performances in air coolers, 50%+ growth, mixer grinders, again, 30%+ growth. Despite a delayed summer, we've actually had pretty good results on the air cooler side. Large domestic appliances, large kitchen appliances clocked a revenue of about INR 60 crores, while EBITDA remains negative. Losses have continued to narrow, and Crompton is also gaining traction online. I think we are apparently third on Amazon. Earlier in the year, about a couple of months ago, we have had a change in the team structure there, and I'm happy to report that the changes are helping bolster the trajectory of that business. In our Lighting segment, revenue rose by about 2%, holding steady through the year despite continued pricing pressures.
Now, this is one of the bright spots, again, of our business. I remember over a half year ago, there was a lot of talk about where our lighting business is going, and we have seen the trajectory there change. While the revenue growth this quarter is 2%, I'm very glad to say that we have managed to change the product mix in this segment, I have to say, quite a lot, both on adding new products as well as growing our panels business. For the year gone by, the panels business is now, for a company which has always been very heavy in lamps and battens, panels is now our largest business. A pretty large share of business is now contributed by products which are outside of panels, lamps, and battens.
In fact, the lighting business is now going to lead the foray into solar rooftops as well, as well as other announcements that we may make in allied areas shortly. Right? Having said that, a little more detail there, B2C segment saw top-line growth as well as mix improvement, like I have said. B2B segment, we have been building up our capabilities in street, flood, industrial, and indoor areas. As you may recall, we have earlier been kind of a street, we have had great strengths in street lighting, and I am glad to see that we have added other capabilities there. EBIT performance was robust. Margins expanded to about 11.8% in FY 2023 and a sharp rise to 15.9% in lighting supported by rich product mix and new product introductions.
Again, I keep telling you that we do not want to lose sight of profitability because that is what enables us to go out and get market share gains. That is what allows us to introduce new products, and I think you can see that in play. Moving on to Butterfly, another area where I think people have, and I am smiling here, over a period of time, we have been asked a bunch of questions about where that is. Similar to lighting, we initially took some time off to get the basics right. Sometimes when you get the basics right, it does not look pretty. When those begin to deliver results, then they look nice. I think you can see some of that happening in Butterfly. The annual revenue was at INR 865 crores. The Q4 revenue is INR 187 crores, marking a 12% growth YoY.
You see a return to growth, and that growth has been driven by strong performance in key categories such as mixer grinders, cookers, and wet grinders, all of which had double-digit growth increases. Sequential market share has obviously grown as well. Importantly, the gross margin has improved materially as well. This has come from efficiency improvements, price increases. Now, we've been telling you that this is something that we've been doing. That has meant resetting terms of trade with many of our trading partners, but we've taken the pain, and now you can see some of the benefits, optimization of input costs and of trade scheme. This resulted in EBITDA margin of 8.6% for Q4 FY 2025. The business delivered a sharp turnaround in profitability YoY , with EBIT rising to INR 42 crores in FY 2025 and a Q4 swing of INR 11 crores.
Pricing actions were implemented across retail, modern trade, and exports. Finally, although consumer demand continued to be, I have to say, subdued in Q4, we are quite optimistic about the trajectory that the business is taking and the fact that many of the issues that the business had been able to address. I can tell you that our optimism of the future is also bolstered by upcoming product launches and efforts that we are making on enhanced channel engagements, which I think you will hear of sooner rather than later. We have invested the time to build the right to win, and I think those will start to show.
Irrespective of the macroeconomic situation, weather conditions, and forecasts, our focus has always been on long-term sustainable growth, and we continue to be disciplined about our execution, responsive in our actions and operations, and have continued to build a strong innovation pipeline to drive performance while remaining closely aligned with evolving consumer needs. In terms of overall financial performance, we have FY 2025 marks a second consecutive year of double-digit revenue growth, a testament to our continued efforts in line with Crompton 2.0 strategy. Our stand-alone FY 2025 revenue grew 10% to INR 7,028 crores, led primarily by a robust performance in the ECD segment. In FY 2025, we achieved the highest-ever stand-alone EBITDA of INR 819 crores. Our margin profile has strengthened, with margins improving to 10.5%, driven by reduced input costs despite higher A&P spends. Encouragingly, our bottom-line growth has outpaced our top-line growth, with profit growth of 21% in FY 2025.
Q4 revenue grew by 5% to INR 1,879 crores, reflecting subdued demand conditions, but also underscoring our ability to hold ground even when external tailwinds soften. In Q4, margins held up very well and are at 11.9%, with EBIT growing at 8% YoY to INR 223 crores for the quarter. In the ECD segment, which grew 11% in FY 2025 and 6% YoY in Q4, we saw solid performance across all subcategories. With this, I'll conclude my remarks for the quarter and the financial year, and thank you for your patience listening. I think what we missed is we talked about the revenue growth, but not the consolidated profit growth, right? What's a consolidated profit growth?
28%.
28%. Okay. Yeah.
So consolidated revenue growth is also about 5%, and consolidated profit growth is about 28%. I'm sure they have all those details, but I should just mention that.
With that rather long opening remarks, I shall pause and take questions.
Yeah. Thanks, sir. Now we will begin the question- and- answer session. Those participants who wish to ask questions, please raise hand, and then we will unmute your line. First, we have a question from Mr. Aditya Bhartia. Please unmute your line and go ahead with your question.
Yes, Aditya. Please introduce yourself.
Hi, sir. It's Aditya from Investec. My first question is on the solar rooftop business. We kind of spread out the overall opportunity size. Just wanted to understand how we're thinking of scaling up the business and what is—
Sorry, Aditya, you're not audible anymore. Hi, Aditya.
Can you hear me?
Yeah, this is better.
I was just asking that you've spelled out the overall opportunity size.
I just wanted to understand how we are thinking of scaling up in this business, what are the kind of targets that we have set for ourselves. Given that we are a slightly late entrant in this business, what's going to be our competitive edge?
Firstly, Aditya, you are probably aware that the size of the market is actually larger, but I specifically talked about INR 20,000 crores because that's the segment that we'll be targeting. What we have done so far is hired the right people, figured out a bunch of detailing about how we—about the product and about the execution that is needed in order for us to succeed in the business.
Now, the reason I think that we'll be able to do a reasonable job of it is, one, brand comes from a lot in this business, and that has been demonstrated to us in the pumps business, combined with the execution capability and the sourcing capability that we brought to the pumps business, which, again, we were an entrant while lots of other people had already entered. We think a combination of factors, including the fact that it's a consumer product and the Crompton brand is deeply trusted by many, we do think we'll be able to do quite well. I don't want to tell you about specific numbers that we should be able to get, but I think you can already tell from the way that we've done in our pumps business that we should be able to ramp up quite quickly.
We have now a pretty decent team there.
Sure. You spoke about sourcing capability in this business. If you could just kind of explain what do you really mean by that, what's the advantage that we'll be having over some of our competitors, especially because we have also seen Havells acquiring a stake in Goldi Solar?
Yeah. I don't want to spell out too much just now, Aditya, if you don't mind. Suffice it to say these are things that we've been working on for a while, and so yeah, we should be competitive in our sense.
Perfect. Perfect. My second question is on Large Kitchen Appliances business. While it's good to kind of note that EBITDA losses have started coming down, it seems that revenue number has broadly remained flattish on a year-on-year basis.
Just wanted to understand what has really been happening around that, what is the longer-term ambition that we have for that particular business?
Yeah. You're absolutely right. The revenue growth has not been what we anticipated, and hence my remarks earlier about the way that we are approaching this, including changes in the team, etc. Having said that, Aditya, we are very convinced that we actually have a very good product. We actually have a differentiated product offering, and our understanding is that consumers are quite willing to buy our product, and it's a decent-sized TAM out there. What we needed to do is to improve our execution, our targeting, our product mix, and that is what we are working on now.
I think what you will see is both a narrowing of the losses going forward as well as a pickup in the trajectory to what really this business deserves. If you recall, we had spent a lot of money in innovating and getting the product right, and nobody is probably in a better position to get a product right other than us because we understand fans and really chimneys are a fan, right, with electronics thrown in, which we understand pretty well. As you are probably aware, we are investing a fair amount of money in the kitchen side of the business with tablets, with hobs, with—and Shweta is here as well because obviously both Butterfly as well as the Crompton kitchen products benefit from the investments that we are making. I do believe that there are good times ahead for this segment.
That's helpful, sir.
Thank you so much for your answers.
Yeah. Thank you. Next, we have a question from Mr. Siddharth Bera. Please unmute your line and go ahead with your question.
Yeah. Thanks for the opportunity. Sir, first question is.
Go ahead, Siddharth.
Oh, sorry, sir. I was on mute. Sorry. Thanks for the opportunity. Sir, first question is on the ECD segment, you did allude to that the demand sentiments were a bit subdued at an industry level in the quarter. For the coming year, how do you expect the recovery to play out? Given that we had done a couple of premium launches and tackling across segments, was there any contribution from those launches in quarter four, or should we expect that to be the key driver of growth in the coming year?
There was the contribution of some fun new launches in the fan segment. I have to say that because we did a limited launch last quarter, as you ramp up production, it takes some time. It is fair to say that the contribution of the new products was fairly limited in the last quarter. You will begin to see some of the benefits of that this quarter. There is another very big launch which is happening in fans as we speak. We have launched the Fluido Fan. Now, as you guys remember, this is the product which has got a Red Dot Award for design. It is a very differentiated-looking fan, very differentiated colors, and we do hope that that is something that will also start contributing this quarter.
It's fair to say that the weather conditions, which are a contributor, typically Q1 tends to be the quarter where the weather is something that helps drive a lot of the growth. That appears delayed, right? We have consistently had rains across the country, particularly in the South, even in the West, and East, and also in the North. We do believe that things will change going forward, and that will add momentum to the business.
Got it, sir. Second question is on the pump side. I mean, you did allude to the fact that last year we did do a strong solar pump revenues.
Now, if I look at the coming year, given that you indicated close to maybe INR 25 crores orders pending, should we expect that momentum sustains what you did in FY 2025, or it will depend on the number of orders you take now going ahead?
Look, the order book—I did not actually talk about the order book, actually. We do think that we should continue to have good momentum in solar pumps.
Got it, sir. Thanks, sir. I'll come back in the queue.
Thanks. Next, we have questions from Mr. Pulkit Patni. Please unmute your line and go ahead with your question.
Yeah. Hi. Thank you for taking my question. Regarding this CapEx that you have announced of INR 350 crore in a manufacturing facility, could you give a sense of whether in the first phase you will only sort of do fans or something else?
Because INR 350 crore sounds like a pretty big amount for a fan factory. Is it that the land initially would cost a lot more? Some breakdown on how this CapEx in different phases will look like.
Okay. Yes, this is initially for fans. Yes, this will in due course also include in the next phase other products. Obviously, the first phase includes the cost of the entire land. Yes, that does get loaded on the first phase. Remember that we are a large fans company, so our requirements are large, and they are getting ever larger.
I don't know what size of fans capacity you are thinking about, but this is expected to be—if you don't mind, since we haven't currently announced a few I's which are being dotted and T's which are being crossed, I will come back to you with greater details about where, what, how, etc. Yes, this should be a state-of-the-art facility. This should be something that is pretty well integrated, and it should be for a material size of plot.
Okay. What is the time period over which we should model this CapEx in our estimate?
Yeah. My guess is that we should be producing two to three years is when we should be producing this. I mean, fortunately, as you know, our capital position continues to be quite strong. We are a strongly cash-positive company or net-positive company, let me put it this way.
Yeah, you should expect that this comes into production in about two and a half years, so to say.
Great. That's useful. Thank you so much, and we'll wait for more details on this CapEx later. Thank you.
Yeah. Yeah. Thanks. Next, we have a question from Mr. Umang Mehta. Please unmute your line and go ahead with the question.
Yeah. Am I audible?
We can hear you, Umang.
Yes. Thanks a lot for the opportunity. The question was again on the CapEx. If I'm not wrong, I mean, the fans' volume growth this year wasn't that high as such. I mean, so would it be fair to assume that you'd be in-sourcing most of the incremental production which you do, and effectively, you could basically look to go from 50% outsourced to entirely in-sourcing after, say, three years? Is it the right way to look at it?
Not really, Umang. We do expect to have—we are not going to go to a fully insourced model. Our own expectations of volume growth imply that we will continue to have a reasonable amount of outsourcing going forward. What will happen is that the overall quality of our supply chain, I think, will improve. While this year, the fans' growth has been—volume growth has been modest, from what we have planned, what we are seeing happen, some of which you may see today, some of which you may not see today, means that we will actually continue to have a mix of both in-sourcing and outsourcing. Needless to say, what we in-source, there are lots of advantages of in-sourcing, and those will obviously come to us. It is not that we will be entirely an insourced company.
That is true. Add to what Promeet said, Umang.
I think two perspectives. One, in a year where you have modest growth, at the scale at which we operate, we add about 1 million-1.5 million fans to the volume. That is the size at which many companies have their total fans business. Therefore, we do not build projects like greenfield looking at a quarter or two or a year. It is from a view of the next five years, how do we see the demand panning out, and how are consumer behaviors going to move towards various aesthetics and technology-driven segments. From that perspective, I think this is something that we need considering our future projections.
Got it. Very helpful. The second one was on solar pumps. You did reply to the previous participant partially.
Just to understand, do we look at it as an episodic business, or can we build on the revenue which you already achieved so far? Just asking from a modeling perspective because INR 200 crore, what we are factoring in is the growth on that. Would that be correct to build or not?
Umang, I think the entire solar business is not built in with the thesis of there is a PM KUSUM scheme, and that will continue to build this business. This is something similar to EV. You have all seen FAME-I , FAME-II . Subsidy is now out, but still the business is continuing and probably accelerating in growth. Our hypothesis is that solar pumps will fall in that space. For a player like us who's a market leader in residential, we always said Agri is going to be an area of focus for us.
Now, solar pumps is helping us to position that pretty well. It is starting with a backing by the government on PM Kusum scheme. Even beyond that, the real need for a farmer to have continuity in power is probably the primary reason to transition to a solar pump. Therefore, we do not see this as a sporadic business, and this is something that is sustainable for a longer period of time.
Great. These are my questions. Thank you so much, and all the best.
Yeah. Thanks. Next, we have a question from Mr. Viraj Kacharia. Please unmute your line and go ahead with the question.
Hello. Hello.
Yeah, Viraj, go ahead.
Yeah, just a couple of questions. See, most of the questions on Crompton have been answered, just on Butterfly.
Just trying to—you talked about NPD for Crompton, but for Butterfly, how are you going about with NPD, and how are you going about measuring the effectiveness and tracking the efficiency in terms of the new product introductions? That is one. Second is largely in terms of the brand positioning and the brand architecture. If you can just—I think last few calls, you have been talking about the exercise by and large through for Crompton and us looking at similar exercise in Butterfly. Can you give some color? How is the brand positioned? How would the brand be positioned both for Crompton and Butterfly in common markets and both in those regions and in those price points? Will it be a mid-premium? Any color you can give on that?
You want to take a shot at what you're doing with—look, Viraj, what I—let me just reiterate and say that you should be able to see some of these things play out fairly soon. One, I'd say watch the space. If Shweta is willing to give any more—yeah. Look, there's a fair amount of activity on the brand as well as on the new product launches at Butterfly. The idea would be that we get those out, particularly ahead of the season, right? Because the kitchen appliance season is different from the fans and air cooler season, right? It's important to get those out ahead of season. Yes, you should see some activity, quite a bit of activity there. You will get clarity on the questions that you are.
Needless to say, it's not fair to kind of lay it out just now ahead of the actual launch.
Okay. Just two questions there. One is, so when we acquired Butterfly, it was a brand which was strong in the South. So will there still be opportunities? Will we still be looking into the cross-pollination, instead of the brand going pan-India and leveraging those synergies in the network and similarly for Crompton and South? Any color you can give on that aspect?
You want to take that?
Okay. If you wish, I'll—yeah. Firstly, absolutely, Viraj. It is our intent over time to take Butterfly to other parts of India. What you're seeing happen just now is Butterfly focusing on strengthening the core.
It's a brand that is very strong in the south, but there are actually things that we needed to do to ensure that our core was further strengthened, our products were strengthened, our brand is strengthened. Some of those actions you've already seen, and you are already seeing the benefits of those. You will see some more of these happen soon enough. Even as we do that, we do see the opportunity of taking Butterfly to other parts of the country and leveraging of that.
Okay. I'll come back. Thank you. Thank you.
Yeah. Next, we have a question from Mr. Parag Thakkar. Please unmute your line and go ahead with the question.
Parag, you're on mute.
I think we can go to the next question.
Yeah. Next question is from line of Mr. Indrajit Agarwal. Please unmute your line and go ahead with the question.
Hi.
Can you hear me? Yeah. All right. Thanks for the opportunity. I have two questions. First, again, coming back on CapEx, Crompton historically has enjoyed very high ROCEs and the flexibility of sourcing because of the outsourced model. So with this CapEx, is the objective to have a better view on sourcing or better returns or both?
Both.
Both .
So this will be ROCE accretive.
Yeah.
All right. Second. Look, at the end of the day, again, do not want to get into specifics as you head, but we do think that this investment will generate good ROC for us. More importantly, this is something that will elevate the Crompton supply chain from new products, new technologies, quality, faster to the market, etc. Let's understand what's happening here. I think you should be able to put together and join the dots.
We've announced investments in the next generation of fan platforms, right? Now, you will also see that translating into differentiation into the market. The investments that we are making, we do think will help us quite a bit in the market.
Thank you. Secondly, you talked about the unseasonal rain and cooler weather. With that context, how is the inventory trade, inventory levels currently? Is it significantly higher than normal seasonality, or do you think it's something that can be drawn down if things improve in the next couple of months?
The trade does stock up ahead of the season, right? That is obviously a feature of how the market behaves. If unseasonal rains arrive, then obviously the trade is holding higher stocks than they would have anticipated at this point in time. Having said that, it is our belief that it's not like the season is gone.
It's just that it shifted. I think we do have to understand that this is not a one-off in the future. It is quite possible that the timings of seasons will move, right? We've had extended winters. We've had shorter winters. That's the trick that you have to have an agile system, both at your supply chain as well as at the front end to be able to deal with these. Yes, I do think that as the weather gets warmer, this will get addressed. It is beginning to get warmer in some parts of India. Again, somebody was asking about supply chain earlier and new greenfield, etc. This is, again, an indication that you need to have an agile system which is quickly able to pivot as you go forward and everything helps. Everything that you can do to get that helps.
Sure.
Thank you so much.
Yeah. Next, we have a question from Bhoomika Nair. Please unmute your line and go ahead with the question.
Yeah. Hi. So my first question is on the margins that we're seeing in the Lighting segment, which is driven by improvements as you alluded earlier. Now, is this something which is very specific to this quarter where we've seen this sharp jump, or is this something that we can now start seeing an improvement towards these high double-digit or teen- levels kind of margins?
I think Lighting as a segment, if you look at it, we have been calling out clearly for the last six or seven quarters. Prima facie price decline is not something in our control from an output product perspective. And we have been sharp enough to ensure how do we make some of these products fit- for- purpose.
You know that our flagship cost reduction program, Unnati, is helping us to ensure that both direct and indirect costs, not only at lighting level but across the organization, have been reduced. Third, our mix is improving compared to where we used to be in our LED bulb-led category. We are moving towards panels and ceiling. That is also helping us to move the margin model. Now, the idea, as we always talked about as part of the Crompton 2.0 strategy, is not to continuously expand the margins. It is also to look at growth. Some part of this margin, we have started to reinvest behind the brand for Lighting as a category specifically. You saw some of those campaigns that were run during last year. We will be accelerating that during the course of this year to ensure that we are able to capture the revenue growth opportunities too.
By the way, the margin improvement is despite the fact that we've stepped up investments in the brand, right? If I remember correctly, we used to be at—whatever. Rather than getting into details, this is despite the fact that we've made more investments in the brand. We will continue to do that. These are not sudden one-offs that have happened in this quarter. No. Fundamentally, in every business, you have to strengthen your profitability position so that you can give back.
Basically, the lighting where there was a lack of growth, either in terms of top line or in terms of the margin profile, now that is coming back towards the balanced growth. That is the way we should think about it as we move on.
That's right.
That's right.
Also, I'd say that some of the growth initiatives which are adjacent to lighting will also now get announced as we get comfortable with the fact that we have the lighting business is back on track.
Yeah. My second question is on Butterfly. We've obviously done a very good job. We've seen an improvement in terms of margin profile and the—
I can't hear you, Boomika.
Again, the double-digit growth with margins further improving to a historical 9-10%.
I think if you look at it, we called out a strategic roadmap for Butterfly about a year back, somewhere around last year, Q4, where we said the first job that we need to do is get the channel mix right, get the pricing actions right, and get some of the go-to-market work started. Also get the team in place.
We said that end of Q4, we should be able to arrest the decline and get back to growth path. Phase one has been well done, and we are on the right track, and it is moving in the right direction. In far as phase two is concerned, which is effective FY 2026 onwards, we did talk about in the previous question that there is a brand repositioning and a bunch of NPDs that are going to get into the market in a differentiated route. We expect this one to auger or augment the revenue growth. Our endeavor in Butterfly is to grow the revenue in double-digit and start expanding margins. We are at about 7%-7.5% EBITDA margin. The idea is to take to about 8%-8.5%.
That's also on the back of significant investments that will go behind the brand, considering FY 2026 is going to be a year of relaunch and repositioning. In the medium to long run, in the next three to five years, we expect Butterfly to grow at about mid-teens and reach close to double-digit EBITDA margin.
Sure. That's very helpful. Thank you very much. All the best.
Thank you.
Thanks. We have a next question from Acher Lohade. Please unmute your line and go ahead with the question.
Aniruddh, you can take the next question, please.
Yeah. Next question we have from Natasha. Please unmute your line and go ahead with the question.
Yeah. Hi. This is Natasha from Philip Capital. Sorry. Sir, I just have one question. The last time when we had come for the investor meet, you had showcased the induction fan, the five-star induction fan.
Now, when I went to the channel, I did find your products. I could not find other 5-star indexed fans in terms of your competitors. I know the season has been lean, but can you just give us a feedback how the channel is accepting that? That's it. Thank you.
When we talked about the HS 5 S tar, as we said, it's an industry first. The idea is that there are two kinds of 5-star. It is probably your best energy-saving fan under an induction motor, which is similar to BLDC. The market today is positioning this largely towards BLDC as a segment to drive energy efficiency. Considering that one is on an induction motor platform and one is on an electronic platform, the durability and the consumer experience is far better in an induction motor 5-star.
We have been one of the pioneers to start the initiative towards this. At a point of time, we expect this to scale up at the industry level also.
Thank you. Thank you so much. That's all.
Yeah. Next, we have a question from Ashish . Please unmute your line and go ahead with the question. Next, we have a question from Ashish Jain. Please unmute your line and go ahead with the question.
Hi sir, good evening. My first question is on the solar rooftop panel business opportunity that you spoke about. Can you give some more color on both sourcing and distribution? At least in the initial period, will it be margin accretive for us, given it could be more outsourcing-based business to begin with?
Fundamentally, as we talked about earlier, it's a market size which is a target addressable market of about INR 20,000-INR 25,000 crore. From an overall ecosystem perspective, we did do something similar in solar pumps. In about five quarters, we have reached a run rate of almost INR 240 crore per annum. The business is highly profitable and cash accretive, as we have seen it time after time on multiple tenders that we have participated in solar pumps. Now, coming to solar rooftop, one of the fundamental differentiators is going to be having a very, very strong brand that is going into the household. Many of the Indian households have grown with the brand Crompton. That brings in a lot of trust for a consumer to go with a rooftop which has got Crompton on it. That's the first reason.
Second is distribution is very, very strong, both in B2B and B2G. We have got very strong experience that has been built in over a period of time across categories. Primary AC led by lighting first, and then we have got this through in solar pumps also. From a sourcing perspective, I do not think so that is a big differentiator. Category after category, we have demonstrated our capabilities to do a very good model of outsourced vendor sourcing at the same point of time, ensuring that the quality and consumer experience is not compromised. Equally, when time is required, we have also not shied away from getting it to in-house. Right now, it is going to be an outsourced business. Brand Crompton is going to play a significant role to make an inroad into this category.
It is a business that will be margin accretive, similar to what we have seen in solar pumps.
Can you just, I know, one clarification, like how much of this business is incentive or tender-based? How much is government support directly or indirectly driving growth or demand in this sector today?
Yeah. See, as we discussed earlier, we talked about EV, which went through a FAME- 1 and FAME- 2, and similarly, solar pump, which is going through a PM KUSUM scheme. This is also starting with an initiative from the Government of India, which is a subsidy-driven business. The payback for the consumer is very, very strong, which is what is driving the move towards a solar rooftop compared to other modes of electricity.
As we have seen in EV and as we would see at a point of time in solar pumps, this would also become mainstream even when the government initiative or subsidy goes away. In the medium term, we do not see any challenge of a government subsidy going away. As we all know, the initiative was just started in fiscal year 2024, announced by the Prime Minister. At least for the next four to five years, the subsidy is here to stay. Our hypothesis is that the business will be independent after the subsidy also.
We keep getting, since the question is repeating, about how you build up sales in a product like this. Remember that this is a product that the consumer is spending INR 1.5 lakhs , INR 2 lakhs .
Trust is a key part of that, a key part of the element if you want to buy a product like this. I do not need to tell you that we have a very different consumer brand for that, that exemplifies trust in home electricals. Also, remember that this is bolstered by the fact that on a service, the product should be quickly serviced and so on and so forth. I think the consumer experience over the last 85 years, together with the capabilities that we have in sourcing and in execution, will stand us in good stead. This is a little bit different from the solar pumps business, where this is a direct engagement with the consumer. Actually, the cash flow characteristics of this are even better than the solar pumps business because the money is pretty much paid upfront.
Got it, Promeet.
Thank you so much.
Thank you. That was the last question for the day. I thank the management on behalf of ICICI Securities and hand over the call back to the management for closing comments. Thanks and over to you, sir.
Thank you, guys. Thank you, folks. I think quickly to summarize, we started Crompton 2.0 about two years back. There are four key facets we announced as part of it. One is on our entire lighting turnaround, which is now complete. The second was getting Butterfly back on track. We are seeing green shoots of that. Third is working on supply chain. We did announce a greenfield project that is going to be coming in very, very soon. The fourth is on GTM transformation. That is also another area where we have started work. We will talk about that in detail in the coming quarters.
That's all from our end, and thanks a lot. Thank you.