Crompton Greaves Consumer Electricals Limited (CROMPTON) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Crompton Greaves Consumer Electricals Limited Conference Call hosted by Axis Capital Limited. [Operator Instructions] Please note that this conference is being recorded. I'll now hand the conference over to Mr. Aditya Bagul from Axis Capital Limited. Thank you, and over to you, sir.

Thank you. Good afternoon, ladies and gentlemen, and a warm welcome to the Crompton Greaves Consumer Electric Limited Conference Call to discuss the business implications of COVID-19 virus outbreak. We have the management here today represented by Mr. Shantanu Khosla, who's the Managing Director; Mr. Mathew Job, who is the Chief Executive Officer; Mr. Sandeep Batra, CFO; and Mr. Yeshwant Rege, Vice President, Strategy and Financial Plan. We thank the entire management team for taking out the time to get on this call with us. I shall hand over the floor to Mr. Shantanu Khosla for his opening remarks, post which we shall open the floor for Q&A. Thank you, and over to you, sir.

Thank you so much. Thank you, everyone, for dialing in, and welcome to the call. First and most importantly, I hope each and every one of you is taking due precautions to stay safe, and you and your family members and friends are all healthy and safe. At times like this, that is truly the most important thing. Before we get to questions you may have, I just want to give you a brief overview, and then we'll throw it open. I'll start actually a little bit prior to the current COVID crisis. Through January, February, and in fact, in the early part of March, our business was actually performing very well, if anything, slightly above our own expectations. The ECD business continued the momentum that it has been displaying, and all key segments were performing well. Even the Lighting business execution, especially on the B2B side, were showing improvements. And on the B2C side of the business, we continued to be registering good volume growth. Obviously, I won't get into specific numbers, but the net message is really till the first half of March, our business was doing well, and we were very, very positive. At that time, prior to this crisis, obviously, there was a concern earlier on in around February about suppliers for China. Just very briefly, let me inform you all that we worked through that, and really, there's no challenge at all from a supply side from China as we stand. Of course, the situation, as you are all well aware, turned around and changed dramatically starting around the 19th, 20th of this month, March. And now, of course, we are all in complete lockdown. For us, the first and most important priority during this period really was the safety and health of our employees. We did a number of communications. We did a lot of training. We put in a lot of steps, in advance, of the lockdown to ensure that our people stayed safe and understood what they and their families need to do. We had already successfully commenced work from home from all our office locations. We had banned travel, domestic and international, and had done a lot of education even of our dealers. The lockdown, of course, again matters further, really starting with the Janta Curfew day of Sunday and then moving in into the lockdown. As you're well aware, like everyone else, we are essentially completely shut down. Our factories are all shut. Our warehouses are shut. We have encouraged all our vendors also to shut down. The markets and shops and supply chain, as you are aware, are shut, and as per the government's recent announcement, they will stay shut in that manner till, at least, the next 21 days. All other back-end systems we are continuing to operate, and they are working off our work from home processes which we developed and a detailed business continuity plan we had put into place. So transactions, banking and treasury operations, payments importantly to our statutory and creditors, statutory compliances, employee reimbursement money which needs to get into the hands of our employees, payroll, accounting, all of that continues to work wonderfully well with our business continuity practices essentially happening virtually, and that's going good. Business, of course, is shut down. And while the fact that business is shut down from our suppliers all the way to our customers, personally, we feel that this is the right thing to do. In the long run, it's absolutely critical that this virus has got in control in a country like India. Our -- the state of the business and our basic franchise health, based on how we were doing till the middle of March, is strong. We believe that this business, the moment the virus issue gets resolved, will continue and come back to normal very, very fast. So we think it's the right thing to do for the sake of the nation, frankly, for the sake of the world as it stands. Really, while we're doing this, we're beginning to focus on what we need to do to obviously minimize all nonessential costs. Variable costs, of course, will automatically come down. But even where we can look at other costs which potentially can be delayed, cut without significantly impacting our people, our organization or our business in the future, we will do that. We've also -- and obviously, we're working detailed plans with upgraded kind of gates and dates since there's still uncertainty. All that is certain is the next 21 days. The benefits we have, really, as we look forward is, one, our organization and our people. Very, very happy to inform you all that till date, all of our employees are safe and healthy. As you're aware, we have also, with our continuing work, maintained a very healthy balance sheet and a very strong cash position. We believe in times like this, that will stand us in good stead, relatively better than a lot of our competition. And finally, of course, we've got a brand and a brand franchise, which continues to be extremely strong. So all these elements we think will -- the moment things become okay, get our business back and firing on all cylinders soon. With that overview, really, I'd just like to toss it over to questions you may have. And as always, we'll do our best to answer them transparently.

[Operator Instructions] The first question is from the line of Nitin Arora from Axis Mutual Fund.

Thank you, first of all, to the management for coming out and talking to the investors in such a situation. My first question is nothing to dwell on growth, but more to do with how you're tackling the issue with respect to the cost element. You started that topic, but if you can just quantify, just to understand that, let's say, if the shutdown and the lockdown remains for 2, 3 months, what should be a monthly fixed cost at this point in time? What's the cash flow? Do you think you can anticipate this kind of a cash flow will be required to support the fixed cost and as well as certain unanticipated cost, which you obviously must be thinking at this point in time? That is broadly the question. And second...

Okay -- I'm sorry, Nitin, let's hold it to one question and then we can come around.

Sure.

Okay. Let me just give a very kind of overview philosophical response to your question, and then I'll toss it over to Sandeep to provide you any more details which you may have, okay? First, one of the things which we are very clear is we do have a healthy cash position. We do have a fundamentally healthy business model. We do believe we are in a position, given the strength of our balance sheet, that we should be able to weather the storm over this period for a month, maybe even longer. As things stand, we are very clear that our people are important, and we will continue to support our people and spend on that through this entire period. Sandeep, do you have anything to add?

Yes, sure. Just to give him -- just to give some specifics, our fixed overheads, which is -- excludes all discretionary spend, is around INR 40 crores a month. We have a cash balance -- I mean, a treasury balance of in excess of INR 550 crores, which can easily be scaled to nearly 2x of that if the need so arise. But with a balance -- with the cash balance of INR 550 crores and a monthly overhead bill of maybe INR 40 crores, INR 50 crores, I think we are more than well positioned to ride out this disruption.

Got it. Got it. And when I talked about the unanticipated parts, for example, I mean, any thoughts of the management in -- any thinking that how to support the time, the way you're supporting your employees, and in the longer run, how to really support the dealers and the distributors? Because even if we come out of this issue, things will take time to pick up. So anything on those lines, just from a business and from the unanticipated part?

Okay. Let me give 2 responses on this. One is our responsibility as a good corporate citizens, not only to the society at large, we don't make products which are directly of use as essential products in this crisis. So what we are doing is we're already donating cash as a company to the appropriate relief funds. We will continue this donations also through the month of April. So it won't just be a onetime thing. Secondly, we have been looking at and this is ongoing continuous work as we are in touch with these folks, but we've been looking at our key dealers and also our key vendors. And we've been making sure, for example, with our key suppliers. We are supporting them, especially the ones which are having challenges in terms of paying their onward employees. Similarly with our dealers, we have communicated to our dealers that -- because our trade tends to run on quarterly and annual incentive basis, we've told them that given this unique situation, we will figure out a way working together with them, so they don't suffer from their long-term incentive basis, both them, and also, frankly, our own sales force. For our own employees, frankly, we'll cover any need they have from health point of view. For us, that goes without saying.

The next question is from the line of Aaron Armstrong from Aviva Life.

My question is around the outlook for FY '21. And please, could you give an update on your pre-existing strategy for FY '21, be that in terms of new products, new segments, CapEx on new markets? And then any changes to that or any adjustments that you've made given the uncertainty and the challenges that we face in the short term, please?

Well, 2 things. The first is that, obviously, we don't know how long we will be in a lockdown. And how much of a quarter 1 it will impact. I think it's a safe assumption at the very best that the first month, April, is kind of going to be a write-off. Now assuming only April is a write-off, there is only one area where we'll be adjusting our plans to some extent. And that is driven by the fact that we have some businesses, for example, like coolers, which are extremely seasonal. So we may, because of the seasonality, be forced to postpone some of the initiative investments that we had for such highly seasonal businesses. Coolers is our most seasonal business. Fans, assuming we start up in April some time, we don't see a huge adjustment in our plans for fans because the fan season tends to continue all the way to the monsoon. For the rest of our initiative programs which we have planned, actually as things stand, we see no reason why we should pull back or adjust anything. Because one of our objectives and we're trying to work those plans right out now, and frankly, we've got time to work good planning right now is how do we get a really good strong vertical start-up? Starting whenever the lockdown ends. Because we believe that inventories in the entire system literally maybe a little low. We need to bring back stocking. We need to bring back the sales, bring back advertising. So there's no reason to -- as things stand, of course, it's such an unknown black swan event, but assuming things turn out for the better, we should not really have to have a significant holdback or adjustment. I think this is one of the benefits we get because we've got fundamentally good strong margins in a business model with good cash flow. Mathew, do you have anything to add to that? If you can -- if your line is working?

No, nothing, nothing. I think, as Shantanu mentioned, obviously, with the last 10, 15 days of March being wiped off, which is actually a period where a lot of stocking happens really, especially for fans. So I think once things start to resume, as Shantanu said, we feel we should be pretty much able to cover up -- except for coolers, we should be able to cover up because this 15 days obviously is the period when a lot of stocking would have otherwise happened. That's all I have to add. And just one more point, maybe for B2B Lighting, the orders are already in hand. It's a question of when can we execute. So those orders are not lost at all. So even in B2B Lighting, I think it's nearly a question of a few weeks postponement of orders.

That's great. If you can still hear me, is it okay if I ask one follow-up question, please?

Yes, sure.

Great. My question was around, if we could compare this period of disruption in terms of the competitive landscape to other periods of stress the economy has faced in the past few years, perhaps could you compare what you're seeing right now maybe to demonetization and in terms of cash flow restrictions because some of your less well-established and less-profitable competitors would have suffered with? And any kind of competitive gains or market share gains that whilst it's a very unfortunate situation, there are some opportunities for high-quality company to take some market share?

Well, overall, this is far, far more severe. Demonetization was less sharp and shorter. I, in my 35-plus years of working in India, never faced a situation where nothing can be made, nothing can be transported, nothing can be sold, right? So there's just no comparison with any event as far as our business goes. The competitive advantage, I believe, which we will have, is when we start up, whenever that may be. And that competitive advantage comes because we have the balance sheet strength, we have the cash and we have the brand franchise to bring it back on path. So for example, your first question, we don't really, until now at least, see that we're going to have to flash our plans once the event is over. And that's a competitive advantage we'll have, but that will be whenever this ends.

The next question is from the line of Akshen Thakkar from Fidelity.

Thank you, guys, for doing this call and update, and I wish everybody in the conference the best of the health through this difficult period. I just wanted to understand one thing that assuming thing, the curfew, et cetera, lifted from 15th April or whichever date, how much time does it take for channels to get back to regular level of inventory? And the reason that I asked this question is in some of your products like coolers and in fans, Q1 is seasonally important. So just wanted to understand that typically would you still hit the same sort of sales number if things were to get back to normal by 15th? And how much time does the channel take to stock up back on the inventory? Just 2 questions from my side.

Matthew, you want to take that?

Yes. I think as I mentioned, in terms of -- I look at the key businesses, with the exception of the highly seasonal coolers, I don't think it should take too long. Of course, it depends on whether the lockdown is completely lifted or in phases. In any case, if the lockdown is completely lifted on April 15, I think within the quarter, we should be able to get back on track on all these businesses, probably with the exception of cooler because the cooler business does tend to start winding down end of April, early May. So that's -- that obviously will have an impact. But coolers for our total business is still a small portion. So I think if things do get back on track from April 15, we do not see any significant impacts to happen on a going basis. That's what I would say.

And from my point of view, I think the process of filling up because what you got to recall is kind of buckets of inventory are sitting all over the place. Our factories, our in-house sales, frankly they are some even in transit sitting in truck somewhere. So I would say, within maybe at least 3 market, a week, 10 days, maybe 2 weeks maximum, we would want to be absolutely back to normal. Because fundamentally, there has been no impact on demand. It's just -- the business has stopped. So there may even be a little bit of positive coming off later as inventory buildup, which would have normally happened in March. It may happen end of April. There may be a little pent-up demand for people, but we'll have to see how those things pan out. And frankly, this is all a function of if things get sorted out in 21 days or not. There's still a very big what if.

Sure. Appreciate that. And just one follow-up question to Sandeep, if I may. Could you just repeat what was the cost base that you said in the month, which is nonvariable, fixed or discretionary cost or what is it per month?

It's about INR 40 crores, which is our fixed cost, nondiscretionary spend, nondiscretionary, nonvariable, okay?

The next question is from the line of Harinder Bhattacharya (sic) [ Arnab Bhattacharya ] from Genesis.

Just a follow-up to an earlier question, inventory. At this point given, the uncertainty and we don't know how long it will take and in what form the lockdown will end, it could be in stages as it's withdrawn. What impact do you expect? And how are you preparing in terms of on the smaller dealers, it could actually send a lot of smaller dealers into shutting shops. So do you see more channel consolidation over a period of time, more sales through online? And how are you thinking about your sort of distribution strategy, if anything needs to be adapted to a growing trend in that direction?

Assuming this continues only for, let's say, a month more and not 6 to 9 months in a worst-case kind of scenario, I don't think that there is going to be any significant channel realignment happening. I don't think our channel partners are likely to shut up shop. There may be an odd guy here or there. But I don't think there's going to be a significant change if this lasts for a period of a month. If, of course, it goes on for 6 months, 9 months, frankly, that's a situation, at this point, we don't even want to think about. In terms of e-commerce, e-commerce is an important channel for us and was an important channel prior to this issue. The fact of the matter is e-commerce is very small for our categories apart from small appliances and -- though it is growing -- or was growing reasonably fast. So we continue to disproportionately invest in e-commerce, and we will continue to do that. But again, for our categories, once -- especially if you think about some of the experiences of the short-term habit changes that's happened in demonetization, and then rapidly, people shift back to the old habit of using cash, my judgment and my opinion would be that if it is only for a month or so, there's not likely to be any long-term changes in buying behavior.

Okay. And if I could just follow up with one other question. Earlier on, you mentioned support for the key suppliers, vendors, et cetera. Do you -- in a period like this, do you provide any sort of guarantees in terms of any debt they might have? Can you share anything specific in terms of how you may support them? And what that could cost the business, if at all?

Again, Sandeep, correct me if I'm wrong, but in general terms, there's nothing specific and no guarantee kind of thing. It's much more because we have very good relationships and one-on-one relationships, and we understand our vendors because that's so critical as part of our business model. So it's more conversational that how we can help, and how we can help can vary from party to party. Sandeep, anything to add?

No, not really. I think from the vendor side, we have all -- we have a fair amount of vendors who are micro, small and medium enterprises. Obviously, we pay them within their contracted period of 45 days. And bulk of our -- and we have opened up separate arrangements where we use the cash on our balance sheet to allow the vendors to take early payments of his bill. So that's one facility that we've had, and we've found huge use for that facility. We continue to keep that facility open. And to our channel partners, we are more than fair. We've, in different markets, announced some amount of relaxation for the credit days that we give them. For example, if we, as a company, charge interest, if a channel partner does not pay us in 42 days in few markets, we have extended -- in fact, pan India, we've extended that by about 15 days. And that's a call that we will take as and when demand or a need for that may arise from our channel partners.

The next question is from the line of Bhavin Vithlani from SBI Mutual Funds.

One question. Do you see any impact on discretionary demand given the current situation? And if you can draw parallel with your past experiences, would there be a brief period where there could be subdued growth?

Well, this, again, like I mentioned earlier, is a little different because till the middle of March, we were seeing no subdued growth. And from the Janta Curfew, Sunday, everything has halted. So there's no question of discretionary demand. There's no question of demand because there is no market where you can go and buy anything, right? So it just becomes 0. The question now is, like I had mentioned earlier, how quickly we can vertically start up. Personally, I don't see -- and looking at how things happened during demonetization and watching the consumption -- consumer consumption trends, there is no reason that we have to believe that there will be any impact on consumption trends. Like I mentioned, there's a possible upside because if you really needed a fan because your fan is broken, you cannot buy a fan today in India. So that is -- that pent-up consumption demand may also come in as a positive, but that is kind of unknown.

The next question is from the line of Amar Kalkundrikar from HDFC Mutual Funds.

Thanks for the opportunity and thanks for holding this call. Lighting has been a space where we have seen pricing-led competition over the last couple of years. In the view of this disruption as well as the fact that you have a stronger balance sheet and cash flow the benefit that you emphasized, how do you see this category shaping up for you over the next maybe 6 months to 1 year?

Matthew, you want to take that?

Yes. I think even if I see the -- as Shantanu mentioned, January, February, we have had -- continued to have strong volume growth in B2C Lighting. And in B2B Lighting, while the demand remains a little sluggish compared to a normative period, I think our execution and the fulfillment of orders have significantly picked up in the early part of January and all through February until March 15. And also in the recent past, most of the competitors for the first time we've seen that in B2C Lighting, the prices have started to increase after a period of almost, I don't know how many years. For the first time, we saw that prices have started to move up almost across the entire B2C category. So we started to see continued good volume growth, and with the reversal of the price decline or I would say a decrease in the pace of price decline that we have seen in the past, I think going forward, we should start to see revenue growth coming back in Lighting as a whole. That's what I would say. And we -- in the last month or so, we have seen most of the competitors, and including Crompton, have announced a price increase in B2C Lighting.

That is across bulbs, battens, everything?

Yes, bulbs, battens and panels, primarily across B2C.

The next question is from the line of Renu Baid from IIFL.

My first question would be what would be the kind of impact on your GTM strategy given the disruption that we have seen? So will one expect some material derailment? Or they would probably continue as expected?

Once business restarts, we would expect our GTM strategy and execution to absolutely continue because we've been seeing a lot of benefits through the last 2, 3, 4 months. Our distribution has been increasing. We have now got secondary data coming in through our tally patch of -- in excess of 50% of our business. And frankly, that data was -- the secondary data was a very good guide for us to take decisions in the periods of the first half of March when the concerns started happening, but the lockdown had not happened. So we see that all those -- these things is positive. Our dealer portal is continuing to expand and is working well for the dealers. So all these elements of our go-to-market strategy, we think, are working. We think they are a key part of what's been driving our share growth in our core categories. And we definitely intend to continue driving them as one of our key investments moving forward.

Right. And aligned with this, we understand coolers is extremely seasonal sales for just 1.5, 2 months, given the fact that lockdown situation broadly there until end of April, would this also impact some summer seasonal offtake? In our view, probably, we shouldn't see any material because 1Q is typically a very strong quarter for us. So do we see that portion of demand actually getting impacted?

See, the segment of ours which is likely to have the biggest impact over this entire period is likely to be coolers because it is sharply seasonal.

But that's not significant in our revenue pie.

But it's not that -- absolutely, it's not that significant in our total company revenue pie. So it was -- like our appliance businesses, like we've talked, has been one of our growth focus areas, geysers in winter, coolers in summer. And coolers are doing really, really well in Jan, Feb. But -- so we'll have to see what happens to coolers, whether the demand -- how quickly we can restock, how quickly the lockout lifts and then how we can drive the demand. Fans, I feel more comfortable with because it tends to have a more steady season, relatively speaking.

Sure. And sir, just one last question. You did mention initially that until mid-March, the performance was exceptionally better than your internal expectations. So even if the last 2 weeks of March have been missed out because of lockdown, you think the impact in 4Q would be material or should not be as significant for the company as a whole?

It will be material. And part of the reason is because our primary sales tends to be more in the second half of a month than the first half of the month. But when I look at secondary sales, that is far more even.

The next question is from the line of Aadesh Mehta (sic) [ Alpesh Mehta ] from Motilal Oswal Asset Management.

Sir, you mentioned that Lighting is actually seeing improvement in pricing after quite some time. Just wanted to understand what is the reason for this improvement? Is it due to supply constraints in China or is it because the competitive intensity is coming off or channel consolidation is happening? Just wanted to get some sense on that.

Matthew?

Yes, I think if you look at our own cost structure and coming in on China, while there may be a short-term change because of the situation that was there in China for a few months and supply having dropped, on a going basis, we don't see significant change in the cost structure of the product or the components that come in from China. But I think what's happening is in most of the categories in Lighting, especially in B2C, we have, I think, reached pretty much close to the bottom of where it can go. So I think also, over time, I think the pricing actions have played out. And this is what we also mentioned 6 months ago or 3 months ago when we had the last quarter call, that we really do see things that the prices will -- the pricing, the competition or pricing decline will start to come down and should start reversing at some point of time. I think it just happened that at this time, the time has come and companies have started picking up the price. So I don't -- I wouldn't link it very much to the cost moves coming out of a China disruption. I think it's more likely to remain in this trajectory from now on.

The next question is from the line of Dhaval Shah from Birla Mutual Fund.

I just wanted to understand any kind of a slowdown typically impacts unorganized sector much more. And given if the lockdown continues for long, do you see any change in trends across segments where you could think that unorganized pie could actually fall and that would help the organized players, per se?

See, like I mentioned before, by and large, there is not a huge amount of unorganized players. But the second thing I would rely on is this is a conversation that happened when GST was implemented, this was the conversation that happened when demonetization was implemented. And if I just go by those 2 experiences in our categories, we did not see a dramatic realignment between organized and unorganized. Maybe that's because unorganized sector in our categories is really not that large. I think the only one which -- and Mathew jump in if you have anything to add on this, where there could be more of an impact of the shift is in Lighting. Because in Lighting, there tended to be a lot of small players. They might -- whether you call them organized or unorganized, they may end up getting consolidated, but we will have to see that as we move forward. Anything to add, Matthew?

No, no, nothing. I think that's helpful. Nothing more to add.

So in Lighting, when the price increases have actually happened because of primarily supply issues from China when actually -- further price increases actually happened, do you see these marginal players also taking that kind of a price increase? Or how are they behaving, the guys like Indiabulls or Jaguar and others?

Mathew?

Yes, I would say that once the leaders have started -- or the leading players have started taking prices up, they have followed. Because it is not that they were doing very well in terms of their Lighting business profitability. So obviously, all of them have followed. Once the bigger ones started moving, the price is up.

And my second question is, typically in these times, you have many desperate promoters who wanted to cash out possibly looking aggressively. So are you finding more acquisition targets, specifically in kitchen appliances, where one segment that you always mentioned historically that you're trying to look at. Are acquisitions have increased over the last few days? Or do you think that would happen over the next many weeks as we move forward?

As we've been doing in the past, we continue to look all the time at inorganic opportunity, and we are continuing to do so. Beyond that, I don't think it's appropriate for me to comment on specifics.

The next question is from the line of Baidik Sarkar from Unifi Capital.

Most of my questions have been answered, but if I could request Mr. Shantanu for his comments on the financial strength of the channel to be able to absorb the kind of inventories that the entire system might come down on them in, say, April and May, you could just expand on that a bit. Because I'm assuming that channel financing from formal institutions is also under pressure, there is systemic liquidity risk. So I'm just trying to understand how you'd read that situation.

See, as we build inventory, I don't see that there's going to be a huge necessary issue. And the reason is our key channel partners, especially the larger ones, are used to this in a normal cycle because the business is seasonal. Normally, in the month of March, they do build a significant inventory in anticipation of demand coming through summer. That is why March and April tend to be our biggest primary sales month. Now assuming that this virus crisis ends like we all hope it to in the not-too-distant future, basically, that inventory stocking will get postponed by a month. Now that's the best case scenario. Obviously, what we will do, we work very closely with all our channel partners. Now Sandeep can comment more, but we're not going to suddenly say we are changing our formal credit policy or things like that because we don't really believe in stuffing inventory. That being said, we will work with channel partners, and wherever we have key channel partners who have genuine issues created by this stoppage, we will help them bridge those issues in various ways. Anything to add, Sandeep?

Yes, yes. In fact, in contrary to his concern, I actually see it more as an opportunity. Because generally what would happen is, like the primaries would happen in March and the secondaries would happen maybe April and May. In this case, actually, if primaries are getting postponed from March, and they probably will happen once the lockdown lifts, then you will see very close overlap of primary and secondary. So in my hypothesis, if demand -- underlying demand is good and things get back to normal immediately after the lockdown, we probably won't see any major stress. Because the March end planned inventory buildup in the channel would not have happened because bulk of our primary sales happen or shipments happen towards the second half of the month. So I don't see -- even if it were to be so, we have always been very, very agile. We were very agile at the time when demonetization happened in terms of reaching out to our channel partners and making sure we worked with them to tide over it. In this similar situation, we are equally prepared to help them tide over any short-term liquidity issues that they may face.

That's helpful. Shantanu, just to close my last question. You -- in your opening remarks, I think you mentioned that between the 1st of Jan and 18th of March, business was performing above expectations. So considering the delta, that was strong, I think in reply to another participant's question, you said that for the quarter as a whole, there might be a prospect of revenue degrowth. I'm just trying to understand mathematically between the 19th of March and 31st of March, how much of inventory channel happens anyway?

2 factors come into play. One is because of the seasonality, traditionally, March is the biggest month from a primary sales point of view in the quarter. Second, typically, our Lighting would have -- a larger percentage of our primary sales in a normal -- historically tends to happen in the second half of the month. So our typical primaries don't happen, 50%, 50% through the month because that's how the trade behavior has historically been.

And I think at this stage, also, we will not be in a position really to give any kind of a color on what this would have -- what this disruption would have in terms of sales growth for the quarter. I don't think it will be fair to give any guidance. But certainly, as Shantanu said, the impact will be material, yes.

We'll be able to take one last question. We take the last question from the line of Charanveer Singh (sic) [ Charanjit Singh ] from DSP Mutual Funds.

So just 2 questions from my side. One, in terms of -- if you look at our mix of maybe Tier 1 versus Tier 2, Tier 3, how is that right now? And do you think that Tier 2, Tier 3's ability to bounce back will be as fast as what Tier 1 cities can see from demand perspective? And secondly, we have seen a good amount of innovations now happening in the last couple of quarters on the fans front from Crompton consumer site. So how has been the response on those new innovations in the market? And how you've strengthened that entire product portfolio now? Yes, that's all from my side.

Okay. Let me talk the first and then Mathew can talk to your second question. See, on the first question, we have not seen such a significant difference except like I mentioned in the last quarter in our agricultural pumps in terms of our growth trends which are happening in urban and rural. Both have been growing. Now of course, the situation that everything is 0 and will stay 0 for a while, I don't think the consumption trends will change that much. But what will happen is the whole process of refill, restart, the smaller towns will take a little more time just simply because it takes -- it's more difficult to reach them, they're more multi-tiered in terms of the channel. But from a demand and from a consumer consumption point of view, I don't see why there should be any significant difference. Mathew, the fans question.

Yes, the fans, I think, the recent innovations that we launched, especially the energy-efficient fans and the [ plastic ] fans have been doing as per our expectation. It has delivered in terms of improvements, both in distribution and in terms of our portfolio mix as we had expected. So they are on track. Of course, before March 15, I would say there have been ahead of where we expected them to be.

We'll take that as the last question. I would now like to hand the conference back to Mr. Aditya Bagul from Axis Capital for closing comments.

Thank you, everyone, for joining into the call. Thank you to the management team of Crompton for taking out the time and answering our questions in great detail. Sir, would you have any closing comments before we log off?

Yes. Really just one, please, please, please, everyone stay at home, stay safe, make sure your families are safe. I think that's the best we can all do as individuals to get everything back to normal as fast as we can. Thank you for taking the time. If you have any further questions, do give Yeshwant a call, right? But most important, just stay safe and healthy.

Thank you so much.

Thank you.

Thank you.

Okay. We're logging off.

Thank you. On behalf of Axis Capital Limited, that concludes the conference. Thank you for joining us, ladies and gentlemen. You may now disconnect your lines.