Hi, good evening, everyone. Welcome to the Q2 FY 2027 earnings call of Crompton Greaves Consumer Electricals Limited, hosted by Ambit. Before we start, Crompton would like to point out that some of the statements made in today's call may be forward-looking in nature, and a disclaimer to that effect has been included in the earnings presentation shared with you earlier. Kindly note that this call is meant for investors and analysts only. If there are representatives from the media, they are requested to kindly drop off this call immediately. Today, from the management side, we have with us Mr. Promeet Ghosh, Managing Director and Chief Executive Officer. Mr. Kaleeswaran Arunachalam, Chief Financial Officer. Mr. Sachin Phartiyal, Business Head, Home Electricals. Mr. Shaleen Nayak, Business Head, Lighting, Solar Rooftop, and Wires. Mr. Anand Kumar, Business Head, Pumps, and Kitchen Appliances. Mr. Rajat Chopra, Global Sales and Service Head.
Ms. Swetha Sagar, Chief Business Officer, Butterfly Gandhimathi, and Mr. Ruchir Jain, Head Investor Relations and Corporate Strategy. As a reminder, all participants' lines will be in the listen-only mode, and participants can use the raise hand feature to ask any questions post the opening remarks. Now I invite Mr. Promeet Ghosh to take us through the key highlights of the quarter, post which we will open up for Q&A. Thank you, and over to you, Mr. Ghosh.
Thank you, everyone. Thank you, Dhruv. Good evening, everyone. Welcome to the Crompton Greaves Q2 FY 2027 earnings call. At this time, we have also already uploaded the investor deck, so you would have had some detailed understanding of what we are doing. Nevertheless, I will try to give you more color as a part of this call. Also, thank you to the team at Ambit for hosting this call. My team here is joining me. Their names have already been introduced by Dhruv, so I will not go into it again. Very happy to share that Crompton's momentum of strong revenue growth and profit growth continues to strengthen. This is the third quarter of double-digit revenue growth and is accompanied by excellent profit growth. This progress has been driven by sustained brand building, relentless focus on innovation, and excellence in execution.
As a reflection of this transformation, in August 2026, we launched Crompton's refreshed brand identity, featuring a new monogram, Cephyr, with a new tag and a distinctive sonic identity. Underpinning this evolution is our innovation agenda, anchored in three strategic vectors: design-led innovation, technology forward, and smart and connected. By combining these three vectors across business units, we are continually developing and delivering industry-first products that translate into patents, awards, and most importantly, differentiated customer value. Now, coming to execution. To begin with, and this might be something that may be at the back of your minds, the supply chain disruptions which impacted us in Q1 are behind us now. We have appropriately stepped up inventory levels. Days of inventory, which were low going into Q1, as you will recall, have now normalized to similar levels as they were one year ago.
Moving to our quarterly performance, the benefits of our efforts in repositioning the business are clearly visible. Crompton delivered robust double-digit growth across all our business segments in Q2, driven by sharp and focused execution and meaningfully differentiated product launches, some of which I think you will see in the Investor Day, amidst a challenging macro environment. Our consolidated Q2 performance firmly validates the trajectory that we are on. Revenue grew by an impressive 18.2% YoY to INR 2,263 crores.
EBITDA delivered INR 205 crores, surging 24.1% YoY, with margins expanding 40 basis points to 9% compared to a year ago. Operating leverage and Unnati program drove the bottom line growth in a tough macroeconomic environment with respect to commodities. PBT, excluding exceptional items, grew by 36.2%. We had an exceptional item of INR 20 crores, as some of you will recall, in Q2 FY 2026, which was towards Baroda plant restructuring.
This led to PAT growing at 65% ahead of PBT. PAT margins expanded 160 basis points. This is not strictly comparable. The PBT number, excluding exceptional, is what is comparable. While we are very optimistic about our structural growth, we of course remain vigilant regarding macroeconomic headwinds. The industry is currently facing commodity cost pressures and unpredictable geopolitical developments. We have and are continuing to address these through disciplined combination of strategic price increases, consistent execution of Unnati cost savings, and these are accompanying the benefits of operating leverage, which are showing in our risks. As far as overall Crompton channel performance is concerned, general trade and rural trade, which are areas of particular strength of Crompton, both delivered double-digit growth. E-commerce, however, was subdued on the back of efforts to reposition our go-to-market in the e-commerce channel to improve channel profitability.
You may recall that a similar exercise had been undertaken in Butterfly some quarters ago, and is helping us handsomely in that business today. Now, coming to segment level performance. Our category leadership continues to be firm across our portfolio. In ECD, we delivered stellar 19.4% YoY growth, with EBIT margins improving YoY to 11.6%. This is a 30.7% growth over the previous year. Fans delivered double-digit growth this quarter. Our BLDC fans continued the strong momentum, especially in general trade, with a growth of 40%, aided by focused portfolio interventions and improved reach. Pumps. Our conventional pumps business, which includes residential, agri, and specialty pumps, delivered double-digit growth. Solar pumps witnessed a slowdown as order inflow from KUSUM 1.1, which is nearing completion, tapered. We are aware that this will pick up in the next quarter, with GOI having announced PM-KUSUM 2.0.
We expect the business to ramp up accordingly in the coming quarters. Solar pumps, importantly, continues to support our conventional agri expansion, widening our distribution and our portfolio range. This is aiding a strong trajectory in our agri business. Appliances. Large domestic appliances also grew at double digits, driven largely by water heaters. We continue to gain market share in our water heaters business during this quarter. Small domestic appliances also continued its momentum and grew yet again in excess of 20% this quarter, led by air fryers, induction cooktops, and mixer grinders. The consistent improvement in top line in SDA is now translating into disproportionate growth in profitability. As previously announced, we are restructuring our LKA business. As a part of the restructuring, going forward, both LKA and Leon are being led by Swetha Sagar, the Chief Business Officer of Butterfly.
Moreover, Leon and LKA will leverage the broader Butterfly ecosystem. We expect this to materially reduce the overall cost structure and drive profitability in this segment. New businesses. Wires and solar rooftop continued to build strong on-ground momentum. We launched our wires business in South India in Q1 FY 2027, and based on positive early traction, we have now extended it to Punjab, Delhi N.C.R., and Gujarat in the previous quarter. Our execution of solar rooftop is also stepping up strongly. We have executed more than 50% of our order book with the AP government. The business-to-consumer and commercial and industrial business of solar rooftop has also commenced in six states, and we are in the early stages of building this aspect of the business up. Lighting. Sustained performance with 14.3% YoY growth to INR 298 crores. This has been driven by ceiling lights and our outdoor range in B2C.
This is something that I've been repeatedly calling out quarter-over-quarter. This is still the case here. Alongside this, industrial and indoor commercial segments in B2B are driving growth in B2B area. Both these segments have delivered, that is to say, industrial and indoor commercial segments have delivered strong double-digit growth this quarter. EBITDA stood at 12.9% in lighting. This is fully disclosed, as all of you know. It is lower than it was last year, largely due to the B2B business being impacted by pre-contracted orders. Butterfly. In Butterfly, mid-tier growth has sustained with 15.9% YoY growth. This is after excluding what was an in-house sale of mixer grinders, which was there in the base last year. This quarter is also marked with sustained revival across core categories in Butterfly, as well as the retail sales channel.
While the salience of cooktops has increased in Butterfly, a large bulk of the growth continues to be led by share gain in core categories. This is sustainable growth and high-quality growth as well as improvements in the share of premium portfolio in the sales of Butterfly. I'm very happy to also report that our emphasis on developing international business is also beginning to bear fruit. Exports grew at more than 70% this quarter, and of course, recorded the highest-ever quarterly revenues. We expect that the momentum in this channel will continue to build, and it is our belief that international presents a significant opportunity for this company over the next couple years. Evaluation of greenfield manufacturing plant is in advanced stages. With this, we expect to raise our manufacturing capabilities in fans, appliances, and wires.
Looking ahead, having delivered consistent double-digit revenue and profit growth for the past three quarters on the back of various interventions in improving the quality of revenues and investing for the long term, we believe we are very well on track for our medium-term guidance. We are entering the second half of the year with tremendous momentum, a leaner cost structure, and a brand that is resonating deeply with consumers. We look forward to continuing to update you on our progress. Thank you.
Thanks, Promeet. We will now move on to the Q&A session. Anyone who wishes to ask a question may use the Raise Hand feature. The first question we will take is from Aditya Bhartia. Aditya, you can go ahead and ask your question, please.
If you can just introduce yourself, that would be wonderful. Go ahead, Aditya.
Aditya, we cannot hear you if you are speaking.
Hello.
Yes, we can hear you now. Please go ahead.
Okay. Hi. Good evening, Promeet. This is Aditya Bhartia from Investec. My first question is on RM inflation and the kind of price hikes that may be further required in third quarter and beyond to take care of the way RM costs have continued to go up. If you could throw some light on how much of cost increases would have already been passed on, and what level of price increases may be further required, and how the near-term margin outlook is looking like.
Yeah. Aditya, as you have correctly noted, RM price increases have been quite sharp in our business. We have said this before, and I'll say this again: as leaders in this business, we have taken the lead in passing on price increases. As I look at the kind of price increases that we've done over the last six months, in various businesses, our price increases have been between order of magnitude 15%-16%. I don't want to get into specific numbers, but order of magnitude, most of our businesses, outside of lighting. Lighting is a bit lower, obviously. Lighting is coming through a period of deflation. We're suddenly having to inflate prices, so that's a little bit different. But order of magnitude in various businesses, you could say between 11% and 15% is the kind of price increases that we have taken. We continue to be vigilant on this front.
I would say that while we've heard of some of our competitors taking price increases or expressing the interest, intent to take price increases somehow, not all of them always seem to justify, but be that as it may. We have gone ahead and taken most of these price increases. I would say this is something that is continuing to build, and we will, as appropriate, pass on price increases as we go ahead. About 80% of the price increases has been passed on. Part of this has to be dealt with the cost optimization, which, as I noted earlier, we have a very vigorous program called Unnati.
So, I think the margins in this company will be a factor of price increases, of operating leverage, which we are beginning to see, and of cost improvements. You would also remember that we had said earlier that from a cost point of view, we've invested ahead of time in brand building, in innovation, et cetera, and some of the operational scale benefits are also coming through there.
Perfect. That's great to hear. My second question is on solar rooftop, wherein you have indicated that roughly half of the contract has gotten executed. Would it be fair to assume that roughly half of the value of the contract would have gotten recognized as revenues, and bulk of that would have flown through in first quarter?
Actually, it's a mix. Half has been done, as you are correctly It's actually been executed over the last quarter and this quarter.
Okay. Any idea that you can give what could have been the quantum of revenues that we would have recognized in first quarter? And bulk of the remaining, is that likely to get recognized in second quarter itself? How are we thinking about building this business, both from the perspective of B2C and new tenders that we are participating in?
Yeah. I do not know if we can give out a percentage breakup. Maybe we can just quickly see if we can come back to you on that, Aditya. Like I said, part of this was done in the first quarter. A larger number of projects—
Yes.
—were executed this quarter. I would expect that this, again, it gets completely done in the coming quarter.
Quarter three.
Pretty much, with some spill over to the quarter thereafter. The continuing growth in this business outside of this would be partly with the B2C business that you are saying. B2C, by the way, includes C&I. Which, as I just said, we have now rolled out in seven states. We should start seeing the benefits of that beginning to come through with hiring people. We have onboarded channel partners. We have a fit-for-purpose product which we have rolled out into the market. All of those have happened. We may also selectively participate in some more government tenders, but that will be selective, like we have done on each design. We are pretty keen that the profitability characteristics have to be worthwhile for us to participate. I think there is clearly momentum building up in this business.
Perfect. Thank you so much.
Thanks, Aditya. The next question is from the line of Siddharth Bera. Siddharth, you can unmute and go ahead.
Yeah. Hi, team. Good evening. This is Siddharth from Nomura. Sir, first question is, on these fans, we have mentioned in the presentation that the price hikes there have been in the range of low single digits. You mentioned a 15% overall increase. Is it that in fans we have taken lesser price increase compared to the rest of the portfolio?
[crosstalk]
Year-on-year, there is actually Siddharth, probably you are referring to Q2. What we talked about is the cumulative price increase of last two quarters. If you look at the commodity cost trend, a large part of the commodity increase happened from February to June, and a large part of the price increase that we have taken at that point of time. Whatever is left out to get to about 80% of our cost coverage has been taken in Q2. As we talked earlier, if we do see some of the commodities further going up, we will be disciplined enough to pass that also, net of any cost saving that we get from Unnati.
Understood, sir.
Price hikes, as you could imagine, Siddharth, are a continuing process.
Yeah. So another point follow up to that has been also that you have mentioned that the new business is around 10% of the revenues in quarter two, assuming large part of it is coming in ECD. So the entire margin moderation in ECD, is it only the cost pass through, or is there some impact of the new businesses which may have lower margins initially?
See, to start with fundamentally, if you look at the gross margin or the material margin compared to the last two quarters, at Crompton level, excluding some of the solar rooftop and other things, we are similar to Q2 levels on our gross margin. So that has been by and large restored. Some of the mix impact does come in on account of solar rooftop and pumps, but we do get a high operating leverage on that because that being a pass through to EBITDA.
[inaudible]
This g uy.
Anyway, that's great.
Yeah.
But actually, let me just find further.
Yeah, that's the share of revenue, not the book.
Okay. Share of revenue, not book.
That's share of revenue, Siddharth. Yeah.
Share of revenue. Historically also, you would have solar pumps which would be your share of revenue, which has come down, and a share of solar which has gone up.
Rooftop.
Sorry.
Solar rooftop.
Solar rooftop, which has gone up. I should clarify once again, this will be a completely fair, insofar as fans is concerned, when I said we have approximately 15% price increases, fans would be at that top. If you look at the price increases that we've taken in the last two quarters. Some of which, of course, were taken towards the end of last quarter, and grow through obviously this quarter.
Yes.
Got it, sir. Thanks a lot. I'll come back in the queue.
Thanks, Siddharth. The next question is from [Samir Gupta]. [Samir], please go ahead.
Hi. Good evening, everyone. Thanks for taking my question. Am I audible?
Yeah.
Yeah. Go ahead.
Hey. Sir, just wanted to understand the solar part of the business, which is including pumps and rooftops. How should we look at it, let's say from a medium term view? Is there a landscape? This can be very big. We are looking at other competitors scaling it up as we speak. What would be our right to win here? How do we go about this? Is there a target in our mind that we are looking at, let's say in FY 2029, we're targeting this part of the business to clock, let's say, this much of the revenue. Also, the AP part is now done. Do we expect any repeat of these orders or similar orders from other governments?
Yeah. Let me answer the second question first. Like I said earlier, we do think that there may be some further orders that we will secure. That will add to the order book. Having said that, as with the earlier solar rooftops, as with earlier solar pumps, we remain very particular about the profitability characteristics of new orders. Absolutely, your point is bang on. This is a large business. Solar rooftops by themselves are a INR 26,000 crore business. This is exactly the kind of business where Crompton has a very strong right to win. Don't take my word for it. This is also the reason why our solar rooftop business ramped up so quickly, albeit the size of the market there is smaller.
Remember, when a person is buying a product, which is, let's say INR 1.8 lakhs, INR 1.6 lakhs, which he expects will last over the next 20 - 25 years, the one thing that they care most about is trust. The one thing that they care most about is ability to service the product should something go wrong. This is a product in which visually you cannot tell the quality of the product, right? You cannot tell whether the quality of the panel that is being used is A, B, or C grade, right?
As we are making a foray into this business, we are very optimistic about this product, particularly because the B2C and the C&I part are similar to our other businesses as being high ROCE and strong cash flows. There are also adjacencies in this business. As BESS develops, as inverters become a large part of the market, these are all adjacencies which will be available to us going forward.
Yeah.
Yeah. There is a lot of potential in this space.
Got it, sir. Just a follow-up here. What would be our revenue, let's say, per household from this solar rooftop project? I understand there is a INR 2 lakh outlay from a customer point of view. How much of that value are we capturing?
No, hold on. When I say INR 1.8 lakhs or INR 2 lakhs, INR 1.8 lakhs is the amount that is outlaid for a 3 kW unit. Right? Part of that, as we know today, is paid for, part of this is subsidy that the government pays, and part of it the consumer pays. For us, the product sold is INR 1.8 lakhs.
Got it. Installation is over and above INR 1.8 lakh, is it?
Not really. This is inclusive of installation. It's like a turnkey thing. The guy buys this product from you and you install it and give him a product, and of course, you help service it over a period of time.
Crompton would be involved in even installing the product. They are not going to give it out to a contractor.
In each market, we have people who are capable of installing. This will be a clear guide. In Andhra Pradesh, we have an order for 38,000 units, out of which 20,000 units have been installed by Crompton. We are also selling only a product. This is the entire value chain of getting the kits, supplying it to various parts of the state, and then installing it. All of that eventually falls into Crompton. Of course, we have people who are doing it for us.
Sorry, I am just belaboring on this point, but earlier during the call, I think the CFO sir mentioned that the gross margin is lower, but it flows through completely to EBITDA.
Yes.
The understanding was that there is no other cost item of installing or—
Let me explain. Good point. Let me explain. We have an agency with whom we have gotten into partnership with. That agency undertakes the job of installing the product. That is why the costs are pretty much mixed between gross margin and the EBITDA. That does not mean that Crompton doesn't take an active role in ensuring that it gets done.
Got it, sir.
It's going on in our name, no.
Got it, sir. This is very clear.
It is an agency which is acting on our behalf.
Got it, sir. This is very clear. Just one follow-up, sir, one bookkeeping question. What would be the total quantum of price hikes, let's say, in the last nine months, starting from BEE rating changes and inflationary pressures in fans that you would have taken?
For fans, if we have to look at it is somewhere around 17%-18% is what we would have taken cumulatively in the last nine months. Large part of that falling between March to June of largely this financial year and late last year.
Got it, sir. This is very helpful. Thanks again for patiently answering. I will come back in the queue for any follow-ups.
And also, probably I am just adding in the impact of this is also the strength of the brand. One of the things that we always ask is how do you validate the investment that you are putting behind brand? It is validated by general trade, which is a large business, and some of our core categories have strongly grown in volume after the price increase also.
Thanks. The next question is from Praveen Sahay. Praveen, please go ahead with your question.
Yeah, hi. Thank you for the opportunity. I am Praveen Sahay from PL Capital. Sir, my question is related to the inventory. So for this quarter, the inventory has been increased, and you said that is normalized now. Is it correct?
That is right. So what I said is, going into Q1, you will recall that our inventory levels were low. Now the inventory levels, as they have said, is pretty much identical to what we had one year ago. That is right.
Okay, so by end of Q2, the inventory level has been normalized.
Yes.
Okay. Second question is—
The supply disruptions that we had, we are past those.
Perfect, sir. Second question is related to the export. Can you give some more color on the products and the geographical location for the export where you are doing and the 70% of growth in the Q2, what you had achieved? Also some color like as a percentage of contribution, where you want to take this export to.
Yeah. This is something I said a few quarters ago. We have identified exports as an area, which there is a lot of potential for a company like Crompton. We have also, therefore, appropriately hired a team which has been on the job. Currently, our exports is largely fans range, with some exports being in pumps, in LDA and SDA. This is today largely in Africa, in Middle East and Southeast Asia. South Asia and Nepal.
Today it is in these segments. What I am at liberty to tell you is this growth has come. If you do not mind, I will not tell you which countries, because from a competitive perspective, it would be compromising us. But this has come from not only selling more into countries that we sold, but also entering in a big way adjacent countries. I do believe that exports can potentially be much larger. Much larger. Hopefully this rate of growth will sustain over the next couple of years. Something similar. Yeah, tell me.
Yeah. Two things related to that. One, is that the Param brand you are selling—
Yes.
—in these geographies? Secondly, how is the margin profile of export versus domestic B2C?
Yeah. First of all, we are a consumer product company, so these products are sold under the Crompton brand name. The margin profile is similar to the one that we have in our domestic sales. Actually, a little lower, but compensated by the fact that we don't give credit in the export business. It's cash.
Thank you, sir, and all the best.
Thank you. The next question is from the line of Keyur Pandya. Keyur, please unmute your line. Go ahead.
If I may, I forgot to mention this. I should. Our confidence on the export market also arises from the fact that we are the largest ceiling fan company in the world. If anybody has scale, it is us in ceiling fans. Presumably, that will help us in selling our products in various parts of the world. And it is.
Keyur, you can unmute your line.
Hello. Yes. Keyur from ICICI Life Insurance. Sir, the question is on A&P spend. We have seen for last couple of quarters or three quarters, A&P spend going down as a percentage of sales this quarter in absolute terms as well. Is it more tactical to manage the cost? Also, how should we think of it for FY 2027 as well as going ahead, since we are launching many new categories and you have always talked about more sell-out. Just in that backdrop, this discrepancy, if you can just enlighten on this. Thank you.
Yeah. So, good question. The A&P spends are a factor of both advertising and promotions, A and P. First point I want to make is you will recall, I said earlier that we have been, if you will, repositioning our e-commerce channels in order to optimize profitability in e-commerce. What that does mean is that some of the promotion spends which go into e-commerce, which go into your A&P, have therefore been, as a conscious tactical approach, being curtailed. So that’s one of the reasons that your A&P is not strictly comparable. This quarter, incidentally, was also a quarter where we incurred a lot of quasi-advertising spends, which are not going into A&P. We relaunched our brand. There was a huge brand relaunch event, et cetera. Those costs actually, while they do the same good job as A&P, are not classified as a part of A&P.
To 1/3, a smaller extent as some of these new businesses that we are in, they do not require A&P, right? If you look at, like we said, if 10% of revenues come from some product which does not require an A&P, then the percentage of A&P will fall. But that is to a small extent, I must say, currently. But these are the reasons that our A&P spend this quarter is not strictly comparable to the previous quarter. But as we have said time and again, we are very clear that Crompton's brand is our greatest strength, and hence the investment in Crompton brand refresh and so on and so forth. So yeah, we are not looking at brand and promotion expense as a cost management.
Okay, just a follow-up. So annually, what should we think of A&P as a run rate or in percentage terms? And this one-time cost have been added to some other spend. If so, differentiation on capacity that we can modulate accordingly. Thank you.
Do you want to take that?
All the best.
Yeah. So typically, if you look at it, our spend rate has historically been around INR 250 crores - INR 260 crores. Right now in H1, if you look at it, has been around INR 100 crores. Depending upon how situation pans out, we would try to keep absolute similar to last year, but it also depends upon how the macro headwinds come through. If there is any call that we need to take at that point of time, we will evaluate. But currently, we will continue to invest and take it forward.
Thanks, Keyur. The next question is from the line of [Nilesh Toshi]. [Nilesh], please unmute your line. Go ahead. [Nilesh], can you unmute and go ahead with your questions, please? Since there is no response, we move on to our next participant. [Viraj], can you go ahead and ask your question, please?
Yeah. Hi. Thanks for the opportunity. Just couple of questions on the Butterfly side. Firstly, sir, if you can just give some color in terms of mix between what is the kind of volume, price, and new product contribution has been, either for the quarter or H1 2027. That is one. Second is, in the press release we talked about that we expect infrared cooktops to be a new growth engine. So can you give some more perspective what gives us the confidence, considering that the competition is much higher now? So is it that the industry tailwind we expect to be very strong, or we expect to gain share? If it is the latter, then what initiatives you are banking to differentiate and gain? That is second. I have two more. I will just maybe wait for your answer and then—
First is mix between volume and price on growth.
Just show me the volume. I think we may be screening that.
Butterfly overall, the core business grew at 16%. Compared to last year, the large part of the growth has been price led at this point of time. To your second question on infrared category, what we said is an emerging opportunity that we have. Fundamentally, what we believe is, there is an opportunity for kitchen to get more and more electricals as much as we look at as a new trend that is emerging. What we have seen is a one-time spike that people have backed up in their kitchen with the infrared cooktop being bought.
As we move forward, it is an emerging opportunity that we should also be well-positioned to capture that. You know that Butterfly today is a leader in cooktop on a Pan-India basis, largely the stainless steel to start with. With that strength coming in, we do think there is a right to win in infra also. In the long-term basis, we wanted to capture that opportunity.
Okay. See, in terms of distribution. Sorry, one is on the gross margin impact. How much is driven by new category entry versus, say, new category entry and aggressive pricing versus cost on the gross margin? Post GST normalization, how is the demand shaping up? Lastly on the distribution. See, we are predominantly south-based. Now next two to three years, how do you expect this mix to change? Given Crompton is also much stronger in west and north, is this more of a low-hanging fruit or any color in terms of initiatives you are taking?
I will take one by one, [Viraj]. I think you talked about new product. I think more at a high level, what we would like to say is the brand architecture that Butterfly has put across, which introduced Idea First series as one of the biggest levers of growth. We have to say that is more than double-digit contribution to overall share of business for Butterfly. Second is in terms of GST. GST has not been benefited across all categories, but it is in cooktop, sorry, pressure cooker, which is where the GST rates have come down. We continue to see disproportionate growth in pressure cooker category, and we see the trend to sustain as we move forward also. The last question on Butterfly looking at Pan-India opportunity, yes, that is a priority that we are working upon.
But that is not to look at only Crompton strength, but also independently look at how can Butterfly win nationally. We would be first starting with few selective markets, Maharashtra being the first one, where you will very soon see our regional campaign that will start for our five-star cooktops that we have launched recently. That will be our entry route, and as we succeed, you will see us penetrating into other markets also. At a very early signs, if I have to see it as a green shoot at this point of time, compared to last year, we are already seeing reasonably strong disproportionate growth in Northeast and West as compared to South. While the base is still small, but these are encouraging signs to start with.
On gross margin, sir?
I think I talked about it through Idea First series today.
No, the impact on gross margin, sir. Was it some —in Butterfly in the quarter.
Gross margin, if you look at it is largely, again, as we said, it is price-driven. Whatever is the commodity cost that we have to absorb, largely we have passed it down. There is a marginal difference between what we delivered last year to this year, but we would like it to keep it at that level because key is to capture the market share for Butterfly.
Thanks very much. The next question—
I think the point that was made, and we should just clarify it because we are being a little about infrared cooktops. The point being made by Butterfly is that each salience of the leadership cooktop market is very low.
Yeah.
All of this growth that has come through in the last quarter, and indeed in this quarter, is really in its core products. A part of the reason is because we have taken whatever call we had taken some quarters ago about cooktops. We had some history about cooktops back in the day. As we have now addressed the supply chain, as the salience of cooktops goes up, of electric cooktops, I must say, goes up, that's an opportunity, promising opportunity for us. I must tell you also that in the regular cooktops, the glass cooktops, delighted to say that Butterfly, being at the forefront of innovation, has come up with a five-star cooktop, which nobody else has. Which translates into saving of two cylinders annually, which is huge, not only for the consumer but also for the country.
I do believe that that will help drive cooktop, the gas cooktop sales as well. Indeed, that's likely to be the way that they start to sell, that they make penetration in the Maharashtra and the western markets. One final point I want to make, which is something that goes towards improvement in the Butterfly quality of sales. In business after business, we've been very focused on quality of sales. In the NEW market, Butterfly is growing. But what they have done is that they have shrunk the footprint and are focusing on a smaller footprint and getting high-quality sales from there. Once you start to get high-quality sales, they will increase the footprint. So similar to what we've done in the South, focus on the core, get your core right, and then expand it. Yeah, sorry.
Great.
I hope that satisfies.
Thanks, Promeet. We'll take the next question from Umang Mehta. Umang, you can unmute your line and go ahead with your question, please.
Hi. Thanks for the opportunity. This is Umang here from Kotak Securities. My first question is on raw material inflation and outlook. Just to clarify, you mentioned that 80% is already passed through, correct? If that is the case, should we expect, in terms of gross margins or gross profit growth of double digits, which you have seen this quarter, is it fair to assume that it will be better and not worse going ahead?
Tough to say, Umang, because this is a commodity market which is pretty unpredictable just now. You know how it is, right? If I could predict how the geopolitics is going to go, then I would have a better grip on how commodity prices would go. But the point we are making is that we do want to be pretty consistent in passing through cost increases to the markets.
Sometimes, like we did in the last quarter, we will pass this on, albeit towards the end of the quarter, sharp price increases, because that is what we did. Or sometimes we would do it in small single-digit package. But we will pass these on. But when we do it in single-digit package, we do them regularly. When we do them in sharp increases, then of course, they are one-off. Tough to say. But yeah, we have been very vigilant in this.
Understood. The second one was on the changes in LKA which you are doing. You mentioned that there will be some cost savings. Possible to quantify how much was the channel? I understand that you had a separate go-to-market, right? In terms of standalone stores.
Yes.
What are the changes we are looking to make over there?
To give you a sense, we have, at various points in time, disclosed the EBITDA loss that that business was making. At various times, the EBITDA loss was between INR 25 crores and INR 16 crores, INR 17 crores. That's the quantum. Hopefully that should give you a sense of when we say this is a business which is being restructured to move towards profitability. That should give a sense of the kind of loss/profits that are in play.
Got it. Thank you so much and all the best.
Thanks, Umang. The next question is from [Rishabh Bothra]. [Rishabh], you can unmute and go ahead.
Yeah, good evening, sir. I'm slightly new to the space, but looking at your slide number five, where you have mentioned the unlocking of INR 160,000 crore TAM, I would like to know the new adjacent categories. What kind of CapEx will be required, and with respect to manpower, what kind of front-loading can be there, which can impact the margins?
Which is that, [Rishabh]?
Solar rooftop and wires. What is the revenue as of now from the new adjacent categories?
[Rishabh], I think if you look at it, we have provided an ambition where we said about 14%-15% of our revenue would come from new businesses in the long run. We think our trajectory is moving in the right direction towards that. Some of the businesses that we have already started and reaching to reasonable level of scale is solar pumps and solar rooftop. Wires is a very nascent entry at this point of time. The second question is on CapEx towards some of these facilities. I think Promeet did call out that when we are looking at Greenfield, wires is also going to be a part of it from our CapEx strategy perspective, because we believe it is a long-term play for us, and we have a very strong right to win, and we want to leverage that. The third question is in terms of manpower.
I think somewhere we touched upon during the course that one of our strengths is we have a go-to market that can carry many categories. That just means that we have to leverage the strength of our one sales team that we have, large LDA and ECD platform. That engine can carry more. So idea is not to create multiple dedicated sales or manpower for this, but leverage the existing team. Yes, there will be marginal increase in category specialists and other teams being created for this, but not significant.
To give you a sense, one of the takeaways from the LKA business, which we had built on the basis of a separate sandbox. One of the lessons we have taken away from that is that as we introduce new businesses, we will not create fresh cost centers and heavy people expenses for them. The solar pumps business leverages off our pumps business, pumps infrastructure. Our solar rooftop and wires business leverages off our lighting infrastructure. Now the LKA business is also going to leverage off our Butterfly infrastructure. Having an existing and robust go-to market is one of our greatest strengths, and therefore it allows us to build on these businesses without having to spend a lot of money on building a fresh go-to market.
Secondly, if, yeah.
Indeed, I must tell you, this was just the go-to market. Even the back end leverages off the scale that we have brought, so both solar pumps and solar rooftops leverages off a common supply chain infrastructure. LKA, which is the kitchen product, will do the same. The same holds true also for our innovation strengths. Yeah, go on.
Secondly, if you could throw some light on what is the spare capacity we have for existing businesses, headroom for growth.
Spare capacity regarding? Sorry, didn't get the question.
The existing business, we have facilities. How is the utilization in existing capacity or what kind of revenue top-up we can do from current sweating of the assets?
[Rishabh].
[Rishabh].
He's talking about manufacturing, is it correct?
Yeah.
I assume you're talking about manufacturing, [Rishabh].
Correct. Manufacturing, sir.
Since you are relatively new, just to brief you, Crompton has historically had a mix of outsourcing and own manufacturing. Insofar as our pumps business is concerned, it has largely been an outsourced model for the last 85 years. So has been our case for our internal appliances businesses. These new businesses currently are also on an outsourced basis. One of the signature strengths of Crompton has been to be able to source products, ensure that they meet the quality standards of Crompton, and therefore, particularly initially, optimize capital costs. So, that's the way that we've approached it. As we go forward, as Shaleen is saying, we look at whether we are better off investing in manufacturing capacities.
Thanks, [Rishabh].
Today, there is no issue of supply constraints.
Thanks, [Rishabh]. The next question is from Manoj Gori. Manoj, please unmute your line and go ahead.
Yeah. Thanks for the opportunity. Manoj Gori here from Equirus Securities. I have one question. If I look at the price hikes that the company has taken across various product categories, and when I look at the ECD growth numbers, plus the volumes and the revenues were impacted in the base quarter as well. So how should we look at the volume growth across product categories? Because as we have, again, for fans, we have roughly taken around 17%-18% kind of price hikes since last year. So how should we read on the volumes front, and probably how the underlying demand environment currently stays for product categories across our portfolios? That's all the questions are.
Yeah. So volume growth, I'd say, since you first raised fans. Particularly at our largest sale is in GT and rural. Our volume growth, actually in both GT, which is general trade, as well as rural, has been quite robust, I'd say. In fans, since that's the specific question there. Sorry, there's somebody who's asking a question. What is that?
Louder.
Oh, louder. Okay. All right. Let me try and be a little louder. Did you guys hear what I said?
Yes.
Okay. All right.
Yes.
Price, insofar as volume growth is concerned, in both GT as well as in rural, we have seen volume growth. As I tell you earlier, this quarter, for instance, our GT growth is strong double digits, right? I am not exactly telling you the number, but that should give you a sense. Of how our presence has grown. This is obviously a much more profitable business as well as an area of signature strength for us. Insofar as lighting is concerned, again, I think I should try to say that we had volume growth.
Yes.
Volume growth—
And strong ASP.
—and strong ASP growth and volume growth. Part of the thing is B2C continues to be the improving share of business of flood and—
Ceiling and outdoor.
—and ceiling and outdoor. I'll say, do you want to comment on the volume growth in Butterfly? Yeah.
Basically, I just was more eager to understand from an ECD point of view.
Manoj.
Yeah.
Yeah. Yeah. Manoj, fundamentally what we are trying to say is, if you look at category after category, Q2 is the first time where price increase has been largely passed down, and we see positive volume growth coming across all categories. Particularly, we are a general trade-driven company, and which is 80% of our business that is showing very strong signs of growth. As we move forward, in the Investor Day we clearly called out that as for fan as a category, we want to be at 1.5x - 1.7x the category growth, which means that there is going to be underlying volume growth also going to come in. We see that being driven by BLDC, which is something where we have headroom to grow significantly. We also see at standard and SEED, we clearly called out, which is our entry-level fans.
Regulation will drive consolidation to drive volume growth. TPW, which is largely the table, pedestal and wall fans, we continue the trend to be positive on volume growth coming in. As we move forward, considering where we are at a leadership position in fans and in many other categories, we are only emerging, whether it is small domestic appliances or large domestic appliances or Butterfly, we don't see volume growth to be a challenge at this point of time.
Got it. Very clear. This was very helpful. Thank you and wish you all the best.
Thanks, Manoj. The next question is from [Nilesh Toshi]. [Nilesh], please unmute yourself.
Yeah. Am I audible, sir?
Yeah.
Thanks for the opportunity. Sir, in the presentation, slide number 12, you have mentioned that the company has an ambition to achieve the EBITDA margin of 11%-12% by FY 2029. But I would like to say that historically even in the FY 2025, the EBITDA margin was 11.8%, which has dropped to 10.4% in FY 2026, and in the first half of the current year it is 9.6%. So by saying achieving the 11%-12% EBITDA margin, you are saying you will regain the margin, but not growth in the margin, and so our profit growth will be the revenue-driven rather than the margin expansion. Is it correct, sir? Please explain.
Probably you are looking at the organization recently, is what I believe. Just to give you a perspective, when we launched the Crompton 2.0 strategy, the underlying principle was to double our revenue, which is growing business at about 15%. That is something, if you look at our Investor Day presentation, the phase one of Crompton, we have been growing at about 6% on an average. So we are taking our growth rate to up by 2.5x from where we have been in the past. That means that we need to put money behind innovation, people, and brand.
That means that as we build on that, absolute growth will ensure that operating leverage will kick in. So when we reach a 12% EBITDA at that point of time, that's on a higher revenue base. Idea is to focus on revenue growth. In a market like India, that is most critical, then follow it up by continuing leadership by gaining market share in the categories where we are present.
Thanks, sir. Sir, just how the earlier participant had asked about the fan business, because Crompton's one of the core business is the fan, and currently most of the houses, offices or any premises, fan is already there. So in such situation, what will be our future volume growth drivers for the fan business?
[Nilesh], we just answered it. Maybe you can reach out to the Investor Relation team again to get some details on it. Thank you.
Okay, sir. Thank you.
Thank you. That was the last question. Any closing comments from the management?
Do you want [inaudible] ?
Thank you, Dhruv and everybody. All we wanted to say is, this is our third year into Crompton 2.0, and we are getting into a quarter where we see a lot of positive trajectory in terms of outcome. All our three engines firing strongly in meeting growth, with margins expanding most importantly by 20 basis points. We are pretty much confident that we are entering into many quarters double-digit growth trajectory backed by positive revenue growth and profit growth also. Thank you, and thanks a lot for your time today.
Thank you. You may now log off.