V-Guard Industries Limited (532953) Earnings Call Transcript & Summary

Good afternoon, respected Chairman Emeritus, directors, shareholders and others. I'm Jayasree, Company Secretary of V-Guard Industries Limited. Welcome to the 24th Annual General Meeting of the company. Before the formal address by the Chairman, I would like to make some regulatory updates. Normally, the company convenes town hall annual general meeting. However, due to COVID-19 pandemic as per the directives issued by the central and state governments and other regulatory authorities, 24th AGM of the company is convened through videoconferencing or other audiovisual means. The company has engaged National Securities Depository Limited to provide Webex facility to enable shareholders to attend the AGM and 1,000 shareholders can participate through this Webex facility. Shareholders are encouraged to participate in the meeting through laptops for better experience. Further, members will be required to use Internet with a good speed to avoid any interruption during the meeting. We have received some requests from some of the shareholders for registration as speaker shareholders in the annual general meeting. Nonspeaker shareholders, who are attending this meeting, can raise their questions through the chat box facility provided. The queries will be answered after receiving all the questions. All the shareholders will be in mute mode, and the speaker shareholders will be unmuted when their turn for raising questions comes up. Remote e-voting and voting during the meeting is provided by NSDL. The procedure for e-voting is mentioned in the notice, which is circulated to all the shareholders. Those members whose names are recorded in the register of members or register of beneficial owners as on the cut-off date that is August 5, 2020, are entitled for voting rights through remote e-voting and voting during the AGM. Remote e-voting began on Sunday, August 9, 2020, at 9 a.m. and ended on Tuesday, August 11, 2020, at 5 p.m. Members who have not casted votes can vote during the meeting, and the e-voting module is kept open throughout the meeting. All the statutory registers, including register of directors, key managerial personnel and their shareholding and other documents related to the ordinary and special businesses are made available [Technical Difficulty] The auditors of the company have issued certificate on compliance of provisions relating to employee stock option. If any of the members wants to inspect any of the documents, they are requested to place their request to [email protected] for getting the soft copy of documents. The Board's remark to the observations of the Secretarial Auditor is included in the Directors' report. Now I request Mr. Cherian N. Punnoose, Chairman of the Board, to formally welcome the shareholders and deliver his address. Thank you, sir. Over to you.

Hello. Good afternoon, dear shareholders, Chairman Emeritus, directors and all attendees. We have more than 30 members present and attending this meeting through the audiovisual medium. As we have the required quorum present, I call the meeting to order. I am Cherian Punnoose, Chairman of the Board, and I'm attending this AGM from the registered office of the company in Ernakulam. I take this opportunity to inform you about the important changes at the Board since our last meeting. Mr. Kochouseph Chittilappilly, Founder of V-Guard, V-Guard Group and the Chairman of the company opted to step down as Chairman for his personal reasons at the end of the last financial year. In the best of interest of the company, the Board requested and he has consented to be the Chairman Emeritus, and this decision was taken effective from 1st April 2020. Mr. B. Jayaraj joined the Board as Additional Director effective from April 1, 2020. That is for the changes in the Board. On behalf of all the shareholders and the Board of the company and on my own behalf, I extend my sincere gratitude to Mr. Kochouseph Chittilappilly, the founder of this esteemed company for building a robust brand in the consumer electric space. He has built the organization with great values, and the Board and the management is committed to take it forward by meeting the aspirations of all stakeholders. Thank you, sir, for building an organization, which is highly respected and regarded for his value. As briefed by the Company Secretary, considering the outbreak of COVID-19 and adhering to the directives issued by the central, state and other administrative authorities, this meeting is being held through other audiovisual means. Now I welcome all the shareholders to this 24th Annual General Meeting. I extend a warm welcome to Mr. Kochouseph Chittilappilly, Chairman Emeritus; and other colleagues on the Board of the company for this 24th AGM. I request the directors to please introduce themselves. Mithun?

I'm Mithun Chittilappilly. I'm the Managing Director of the company and joining from the corporate office of V-Guard Industries Limited.

I'm Ramachandran Venkataraman, Director of the company and the Chief Operating Officer. I'm joining this meeting from my home at Delhi.

Good afternoon, everybody. I'm C. J. George, Director of your company, joining this meeting from my home at Cochin.

Mr. Ullas Kamath?

[Audio Gap] Director of the Board and I'm joining this AGM from Bangalore.

Ms. Radha Unni?

Good afternoon. I'm Ms. Radha Unni, Independent Director of the company. I'm joining this AGM from my residence in Chennai.

Mr. B. Jayaraj? Ms. Joshna Johnson Thomas, Director, is not present for this meeting due to personal occupation. Mr. Sudarshan Kasturi, Chief Financial Officer, has joined from Bangalore for this meeting. I welcome Mr. Sudarshan. I extend a warm welcome to Mr. Sandeep Karnani, Partner, M/S S.R. Batliboi & Associates LLP, statutory auditors; also, Mr. Keyul M. Dedhia of M/S Keyul M. Dedhia and Associates, secretarial auditors. I also welcome Mr. M.D. Selvaraj, Scrutinizer appointed for scrutinizing the remote e-voting as well as voting during the AGM. The notice convening this meeting and the auditor's report had already been circulated to the shareholders, and I request the shareholders to consider the same as read. I request Mr. Kochouseph Chittilappilly, Chairman Emeritus, to please address.

Good afternoon, everybody. Dear respected Chairman, Cherian Punnoose, dear shareholders and dear Board members and friends, it gives me immense pleasure to address you as the Chairman Emeritus of V-Guard. As by the request, you all agreed me to continue as the Chairman Emeritus of V-Guard. And I know that it is a honorary post. In this prestigious moment, my memories goes back to 43 years back when I started a small company, a tiny company with just 2 workers, blessing with my father, borrowed a capital of INR 1 lakh from him and started a tiny industry. And this company started growing well and within 5 years, I got a strong pillar, Sir. K. Vijayan, who had an experience of 15 years from Air Force, and he joined as a supervisor with me and we together literally built a strong and ethical company called V-Guard. I used to say we in V-Guard, we are very ordinary people, are doing extraordinary things. We are not doing any magic. We were not doing any magic. Only thing we uphold the values, we -- all the values and ethics of the company and the quality consciousness of the product as well as customer care and that is the only success -- the reason for success of V-Guard. And friends, I'm really happy that V-Guard took a big leap when we completed our IPO public issue. And I'm much happy that we could create number of millionaires within the company as well as outside the company and with the able leadership of Mithun assisted by Ram, definitely, the company started progressing well, and we took a quantum leap as our kangaroo do. And as you know, even in this pandemic time, V-Guard is growing better and better in spite of all these issues. Friends, in this context, I have to thank our independent directors, especially, my good friends, C. J. George, Cherian Punnoose, Ullas Kamath and Ms. Radha Unni for helping me, for guiding me, for taking the company to the next level. My special thanks to all of them, and I'm happy that you Board members inducted one of my real right hand, Mr. Jayaraj, who had an experience of 35 years in V-Guard Group, even he's still continuing in one of our concerns as a director. He has been inducted as an independent director recently and shareholders approved it. Anyway, let me conclude with my special note of thanks to each and every shareholders to take our V-Guard and you -- I hope that you also got benefited out of it. And I will try to give my suggestions and guidance whatever possible. I am with you all. Once again, thank you. Thank you very much. All the best.

Thank you, Mr. Kochouseph. Now I request Mr. Mithun Chittilappilly, Managing Director, to address the shareholders.

Dear, shareholders, Chairman Emeritus, Sri Kochouseph Chittilappilly; Chairman of the Board, Sri Cherian Punnoose; other esteemed directors of the Board, colleagues and my dear friends. I have made a small statement to convey to you what has been happening in the company in the last financial year ending March 2020. But more importantly, to tell you what we've been doing post the pandemic hitting us in India in March. So I'll start with the COVID preparedness and response, and then I will go to the next section, which is talking about the performance of last financial year. All the employees of the company working across various locations are being educated and as -- so are the channel partners. And largely, they are all safe. We have not had any fatalities so far. All our vendors, service providers, et cetera, have been told, and we are also monitoring them that they are following COVID protocols. This includes not only our own factories, but the factories of our vendors and even some of our suppliers. Post-COVID, that is mainly March 2020, we mainly focused on secondary sales, which means sales from distributor to retailer or from direct dealer to customer and ensure that we don't push more inventory into the channel. What this meant is we had very strong collections in May and July. Our cash position, which was close to INR 138 crores at the end of March, has gone to INR 352 crores by the end of June. This gives us a war chest without any borrowing to go after the market growth when that starts happening. The channel partners are only having very required inventory. In fact, they're operating with less than normal inventory these days, and the pipeline is very, very healthy. That means whenever the demand comes back, we are in a very, very strong position to supply. Our supply chain operations have been extensively worked on in the last 3 months to make it as flexible, as responsive as possible. We believe the game will be won by those companies, which have the fastest responsiveness and most flexibility in this time. Because we know that we don't know which are the markets that are going to be open, and we don't know which are the factories that are going to remain open. We believe that at any given point of time in the next few months, every market -- some markets, some percentage of the markets and some percentage of our factories will remain shut due to containment zones. We expect all the national brands, including V-Guard to gain once the pandemic is over and small players have been severely affected. What we saw in World War II, and there was the great depression of 1930 is that after these 2 very catastrophic events, there was a period of about 15 to 20 years of very, very fast growth globally. Every single country, every single company had a very fast growth. So I believe V-Guard is in a very good position when we are -- when we do get to the months where we are on the other side of this pandemic, we will do gain from this. Now I'm moving to the highlights of the last financial year. We did a revenue of INR 2,482 crores, which was lower by 3% over last financial year. Our profit after tax grew to INR 185 crores, up by 12% over INR 165 crores of the previous financial year. We've been experiencing a macroeconomic slowdown even before the COVID hit us in India. We've been feeling the slowness in the market. We've been feeling the slowness in collection, and our channel partners were extremely strained. The revenue loss in Q4 due to a nationwide lockdown in March had severely impacted not only the March quarter but the entire year figure. We ended, as I mentioned earlier, the March quarter with a cash position of INR 138 crores. Now we are in a much better position, as I earlier mentioned. Considering the improved profit till the end of Q3, an interim dividend of INR 0.90 per share was paid in March. The new products, we also got -- I mean, we also launched a few products in the course of the last financial year. We launched a product called Arizor platform, which is the one of the first inverter AC stabilizers. It is a product that is the culmination of 3 years of research and development with at least 2 or 3 external agencies. And we can say that safely, it has been well received, and we are actually not able to meet the demand for this product. We believe that in the coming summer season, this will be the star product for the stabilizer portfolio. We have also launched breakfast appliances. We also launched a new water heater platform called IRIS. It's after 7 years after the launch of our blockbuster product, Pebble platform. After 7 years, we have launched this platform called IRIS, which is, again, selling very well. We also launched Finesta platform, which is basically a pedestal fan. Usually, pedestal fans are coming with 3 blades. This is a fan with 5 blades, which means we get more air with less RPM and less noise and less energy consumption. We also launched smart inverters up to 10 KVA, which can take in power from solar, the electric board or mix of both. And it has a lot of features, which is meant to enhance the consumer experience. We also implemented a lot of projects. Some of these projects are multiyear. Some of these projects are ongoing. We implemented the product life cycle management tool, which basically is going to manage the entire bill of materials, research and development document management, the [ core ] standardization, simplification and platformization approach. The software is basically going to centralize a lot of the procurement for the company. The tool is also intended to force the product development teams to first consume parts which are already in running. That means we basically consume less parts, create more SKUs, thereby driving down cost. It is a very proven model, mainly followed by automotive companies. We are also doing a lot of work on the market side, and we are basically building an omnipresence channel, which means we will be present on general trade, which is basically mom-and-pop stores. We will be present in modern trade, which is your organized trade. We will be present in defense and police canteens, which is the government trade, and we will also be present on the e-commerce platform. Today, we are not present in both modern trade and the government canteens. Which are the things we need to work on. We have a pretty good presence in e-commerce, and we have a pretty good presence in general trade. We have sustained investments in brand building in the last financial year. We had a budget of almost INR 4 crores for corporate social responsibilities, and we have completely spent that through our own foundation called V-Guard Foundation. Now I'll talk a little bit of the first quarter of the current financial year. Revenue during April 2020 was 0, practically 0, we had 0 revenues, 0 manufacturing, 0 cash flow, 0 purchases. We did better in May, and we did -- the June was better than May. We did almost 70% of sales of last year May. And in June, we did almost 90% sales of last year June. For the revenue for Q1, because of the bad performance in April, was lower by 42%, and the profit after tax was down by 93%. In the current financial year, our CSR budget is INR 4.23 crores. It has been decided by the CSR Committee, a subcommittee of the Board members that a substantial amount of this INR 4.23 crore will go to combating COVID, to giving support to government and nongovernment agencies in the fight against COVID. Already an amount of INR 1.25 crores has been spent on CSR till date. Ex of April, that means if you remove the performance in April, the performance this year is pretty good, and we expect to make a good recovery in the coming months, and we are financially very healthy, and we believe that when the market does improve, V-Guard will be one of the first companies who will be able to pounce on that opportunity. Thank you, dear shareholders, for your support, and thank you, directors, for your guidance. And thank you very much.

Thank you, Mithun. Now we are moving to the main agenda of the meeting that is taking up the ordinary and special business to be considered. I request Company Secretary to brief the ordinary and special business to be transacted.

Yes. Thank you, sir. This e-voting -- remote e-voting was begun on August 9 and it ended on August 11. But starting from 3:30 of this day, this voting during the meeting -- the voting module for those shareholders who have not exercised their voting rights is now open and it will be kept open even after -- 15 minutes after the conclusion of the meeting. So any shareholders who have already not exercised their voting rights can now cast their voting by logging into the e-voting sites of the NSDL. Now the businesses to be transacted as ordinary businesses are adoption of stand-alone financial statements for the financial year ended 2019-'20, along with the report of Directors and auditor's report thereon and the consolidated financial statements for the financial year ended 2019-'20 and auditor's report thereof. Confirmation of payment of interim dividend of INR 0.90 per equity share already paid for the financial year 2019-'20. To appoint a director in place of Mr. Mithun K. Chittilappilly, who retires by rotation and being eligible, offers himself for reappointment. To reappoint -- special businesses, to reappoint Mr. Ramachandran V. as Whole Time Director for a period of 4 years. To consider appointment of Mr. B. Jayaraj as Nonexecutive, Nonindependent Director. To ratify the remuneration payable to Messrs BBS & Associates, cost auditors for the financial year '20-'21. Payment of remuneration by way of commission to Mr. Kochouseph Chittilappilly, past Chairman and Nonexecutive Director for the financial year 2019-'20, about 50% of the total annual remuneration by way of commission payable to all the nonexecutive directors of the company. To create further number of options of grant under the existing employee stock option scheme of the company. To increase overall managerial remuneration payable from 11% to 15% of the net profits of the company for the financial year 2021. To increase managerial remuneration payable to Mr. Ramachandran Venkataraman, Whole Time Director, in excess of 5% of the net profits of the company. Thank you, sir.

Now I request speaker shareholders registered with the company to raise their questions. [Operator Instructions]

Thank you, sir. [ Mr. Karthikeyan ], one of the shareholders of the company has registered as a speaker shareholder. Now I invite [ Mr. Karthikeyan ] to raise his question. [ Mr. Karthikeyan ], you may please proceed.

My question is how has V-Guard been impacted by the recent geopolitical [ incidents ] between India and China? And as a continuation of the impact, how is V-Guard seeing itself positioning the Government of India's policy of [ Aatmanirbhar Bharat ]?

I think it's not audible. Audible?

We could hear, but there were some disturbance. I think the question, please note, was on the geopolitical issues between India and China. And what is the impact on V-Guard. Please note it. Okay. Okay. Next question?

Yes. [ Mr. Karthikeyan ], do you have any other question or are you done with?

I'm done.

Yes. Okay. Now the next speaker who has registered with the company is [ Mr. Giri ]. Yes, [ Mr. Giri ], you can raise your question.

Yes. Am I audible?

Yes, You're audible.

Yes.

Yes, I heard that V-Guard recently acquired a new company named Guts. May I know how it contribute to the profitability? And if it is profitable, whether V-Guard have plan to acquire -- continue with more acquisition or acquiring start-up or something like that?

Mr. Giri, do you have any other questions or you are done with?

Yes, I'm done.

Yes, the next speaker who has been registered is, [ Mr. Bejoy ]. Yes, [ Mr. Bejoy ], you can proceed.

I'm going through the annual report. And on Page #24, there it's mentioned about marketing transformation, sir. I would like to know more detail about what company mean by that marketing transformation, sir.

Yes, the next speaker is [ Mr. Pratish ]. Yes, [ Mr. Pratish ], are you able to hear?

Yes. Is it audible?

Yes. You are audible. You may proceed with your question.

Yes, yes. Recently, I could see V-Guard presence in e-commerce like Amazon, Flipkart, et cetera. What is your strategy on online marketing? And how much market share do you expect from online business?

Yes. The next speaker is [ Mr. Satyanarayanan ]. Yes, [ Mr. Satyanarayanan ]?

Yes, my question is, I'm really appreciating the management in rolling out new products, especially in adjacent categories, like earlier we had pumps, then we have wires. So -- and now we have introduced new switches categories and all. So it is really very appreciable. And when a customer goes to a shop, he can get what he wants. So that's a delight part of it. So I would like to request to throw some light on future plans in new products upcoming. That's my question, ma'am.

Okay. You are done with?

Yes, I'm done.

Thank you, [ Mr. Satyanarayanan ]. The next speaker registered is [ Mr. Abishek Kalra ]. Yes. [ Mr. Abishek ]?

Hello?

Yes, you're audible, [ Mr. Abishek ]?

Okay. Respected Chairman and Board of Directors, I'm [ Abishek Kalra ] from Chennai, attending meeting through video audio. Sir, first time it was -- question is what step you are taking to face COVID-19 effects? And what step you are taking to improve your working capital? Next sir, have you any plan to cut management and directors' fee, remuneration fee, sitting fee, by 30% [ to save cost ]? Sir, what is your per-employee income of the company? Next, sir, what is your -- do you have any -- given PM CARES Fund. And what is the expense of this videoconference meeting and physical meeting last year? Tell me.

Thank you, [ Mr. Abishek ].

Was it audible for you?

Yes, no, not all the questions.

Okay. Can you repeat your question, the last 2 questions? I think the first 2 questions were clear. The last 2 questions were not.

Yes. What is given, what fund you've given in PM CARES fund?

PM CARES fund, okay.

Have you given any electoral bond to any political party? Next. Next, what is expenses of videoconference meeting? And what was the expense was the last physical meeting, including annual report printing, notice printing and venue arrangements and other refreshment costs? 1 minute, ma'am. And how many shareholders today attended the videoconference meeting?

Okay, thank you, sir.

Are there any more questions from shareholders, Jayasree?

No, sir. Actually, we have only 6 shareholders registered. Let us see whether -- are we getting any questions through the chat box?

Please take the chatbox. Thank you.

Okay. We have questions through the chat box. [Technical Difficulty]

Jayasree, you can read out the questions, so everyone can hear the questions from the chatbox. Please take a print also parallelly.

Yes, print also. Sir, actually, we will be answer -- speaker shareholders, we will be answering your -- replying your questions shortly. So please be in the line.

Questions. We are collecting the questions, and please wait for 2 minutes. Okay. Thank you, shareholders, for your questions. I will be acting as a speaker and a moderator. The first question is on geopolitical issues with China and its impact on V-Guard? Am I audible? Okay. The first question is about geopolitical issues in China and its impact on V-Guard. Ram, please take this.

Can you hear me?

Yes.

Yes. So fundamentally, our dependence on China is related to 2 parts of the business. One part is the import of full value products. And the second part is the import of raw materials. In respect to full value products, today, more than 90% to 95% of our business is being sourced or made in India. So our dependence is limited to 5% to 10% of our revenue. Already about 18 months back, we have made investment in setting up water heater manufacturing plant in Sikkim and this plant is able to make sure that the entire water heater requirement will be fully made and not -- almost fully made and supplied from India. The other major category, which we are importing is TPW fans, and we are in the course of exploring, what I would say, opportunities for locally making or sourcing TPW fans, and this is actively underway as we speak. The third category where small quantities are imported are some parts of the kitchen appliances business, where like small kitchen appliances and so on, where we, just like others in the industry, are importing from China. And we are exploring other sources also in this respect. And even as we are exploring the potential to make kitchen appliances ourselves in India. So that is the first part on the geopolitical part. Mithun, do you want me to address the second part of the question?

No, no, I think it's fine. We'll go to the next question. How was the acquisition of Guts helping V-Guard on profitability? Okay. How was the acquisition of Guts helping V-Guard? On profitability, what's the impact? Second part of the question, any further acquisition plans, like start-up? Ram, please take it.

Guts has been extremely favorable to V-Guard. I think when we had hired Guts, Guts was in a very challenging position. The profitability of the business was impacted, the cash position of the company was challenged. And borrowings were significant at that stage. We are happy to say that over the last 2 years, we have been able to grow the Guts business. And with the growth in Guts business and with the intervention by bringing our capability in running a business in an efficient manner, the combined collaboration of V-Guard and Guts has been able to reposition Guts in a profitable manner. Yes. So I think the Guts is now financially healthy, both in terms of operational cash flows. Borrowings have significantly been bought down. And as far as the profitability is concerned, profitability has been decent, and we have been ranging between 8% to 12% EBITDA over the last 2, 3 years, yes. And we believe that Guts has been a very favorable acquisition for V-Guard. In terms of further acquisition plan, V-Guard has built a cash chest over the last few years. And over the last 18, 24 months, we have been exploring the market for various opportunities. Whenever a suitable opportunity for V-Guard arises, which we feel will be value-creating like Guts was, and we felt Guts can create value. And we did that. I think that when we are up against something where we believe we can create value and we are able to fulfill the acquisition plan, we will communicate at that time to the market.

Thank you, Ram. The next question is talking about -- in the annual report of the company, it has mentioned that the company is embarking on marketing transformation project. Could you share some light on it? Ram, please take this one as well?

Yes, sure. I think over the last 4, 5 years, V-Guard has been progressing on transformation on the supply side. We've been focusing on that, and we have embarked on a significant journey on supply chain transformation. The consequence of that has been the steady improvement in our margin and the improvement in our cash position, right? And we have a few more initiatives on the supply side in pipeline, arising out of our focus on supply side over the last 4, 5 years, which will create some limited further value in that area. And some of the activities, like Mr. Mithun talked about, where he talked about product life cycle management. And now we feel is the right time for us to shift our focus to the front end, having built a very nimble and efficient supply chain, which is giving us the surplus to enable investment in building our supply capability, which you have seen in the manufacturing facilities we have put in and to make investment at the front end. The focus of marketing transformation is fundamentally going to help V-Guard to prepare for this change in the channel landscape, which is happening. E-commerce is rapidly growing as a significant channel. And V-Guard has taken significant steps, and we believe -- although our revenue may not justify it, but we believe, operationally, we made the first step in terms of being organized the right way to build and grow the e-commerce business in India, right, in terms of the capabilities. And there will be significant further work, which is required to be done in terms of building the tech stack and in terms of building the ways of working so that every part of V-Guard, right, is working to drive the growth of V-Guard by integrating the different functions in V-Guard into the e-commerce pipe. I think Mithun also talked about the need to -- over the last 4, 5 years, the growth in the market has fundamentally shifted to e-com and organized trade. And we will, through marketing transformation, be addressing the capability and the go-to-market dimensions, right, to address this new and emerging channel. So that is the second pillar of work that we will be doing. Working with organized trade and working with e-commerce will require significant investment and effort in building new capabilities in area of pricing and trade terms, in the area of content management, right, and in the area of digital customer acquisition. So these are 3 important pillars that we will be further addressing in marketing transformation. Going beyond that, within the traditional trade, right, the easy growth for V-Guard, which was fundamentally focused around spreading our distribution across the country has been realized. Now we need to shift our focus to building growth through deeper intervention, which fundamentally will involve a better extraction by working on levers that support the retail extraction. So this is the other piece that we will be focusing on as we work through marketing transformation. We believe that these initiatives together will significantly help V-Guard to grow faster than market and improve our profitability.

Thank you, Ram. There was a question on e-commerce already answered. The next question is company is launching new products every year in adjacent categories. Can you throw some light on the new products that are upcoming? Ram, can you take this?

Sure, sure. I think V-Guard has built outstanding brand equity and an outstanding consumer franchise over the years. The equity of V-Guard was fundamentally built through the philosophy and approach to the way the product has been constructed and the quality and reliability, which was built into the product and the consumer service mindset, which has been built. This has enabled V-Guard to introduce successfully newer categories to exploit the V-Guard brand equity among its consumers who had previous experience of using extremely high-quality and reliable products. This journey of growth continues for V-Guard, and we are building V-Guard as a consumer franchise, right? And we would like to expand the addressability of the V-Guard brand equity to major products of use in the household. Mithun had talked about some of our recent interventions like small kitchen appliances. More lately, we have launched hoods and hobs. We are also in the course of exploring entry into water purifier and the product development towards that is underway, and this will eventually come to the market. We believe that we will build V-Guard as a strong consumer franchise, delivering products which will enhance the quality of consumers' life and bring unparalleled reliability in consumer experience.

Thank you, Ram. Thank you. The next question, I will answer. So one is, what are the steps taken to cater to COVID-19? I mentioned in my speech earlier that the first thing we did was, told our sales team not to go and dump products into the market, but focus only on secondary sales. So we spent over the month of -- the half the month of March and the full month of April over phone, video calls and all that to our distributors and dealers to ensure that their inventory got sold out. What this meant is we had one of our best cash flows from operations. We had almost INR 220 crores of cash flows between 1st of April to 30th of June. Like I mentioned, our working capital is very, very strong. In fact, we are having close to INR 350 crores of cash as on end of June. And I think now we have stepped the foot on the supply side, and we have started to manufacturing as and when the demand comes. I think the next one is on cut in management fees, director fees. No. We have not taken a salary cut. No, we have not taken a cut in salary. We are of the belief that employees are not a liability, but an asset and in these tough times, we have to support our employees, not further torture them by reducing salaries. So we have taken a call as V-Guard that we will not cut salaries until the company is in a very, very bad shape. For your information, like I mentioned, if you remove ex of April, actually, the company's margins and performance are very, very strong, and you will see that in the second quarter. The next one is per-employee income. Our revenues are about INR 2,400 crores, and we have about 2,200 employees on rolls. So roughly about INR 1 crore a person is the per-employee income. Have we contributed to PM CARES Fund? Sudarshan, would you like to answer it? In my memories, we have not. Sudarshan, can you -- Sudarshan or Jayasree, can you supplement this, have we contributed?

I can answer that. As MD mentioned in his address, we have earmarked a substantial amount for CSR spend this year, and we are focusing it on COVID-related relief activities. Prioritizing mostly the communities around which we operate. Substantial amount has been spent so far in Q1 itself. We have not specifically contributed to PM CARES Fund, related to that.

The next question, Sudarshan, again, is for you, is it we have made any contribution to fund of any political party? I'm assuming that, by law, we have to declare this in the annual report. I don't have the right page with me right now, Sudarshan, do you remember, have we made any contribution?

It's given in the notes. It's a very small amount. It's about INR 5 lakhs for the year. That's the political contribution.

What is the difference between physical and VC meeting? What is the difference between costs? Jayasree, can you answer it? What is the cost difference between the last AGM where we had a physical meeting and this AGM, where it is an audiovisual meeting?

Yes, Sir. Sir, when we have the physical AGM, we will be spending an amount of around INR 3 lakhs towards the hall rent and also for providing refreshment to the shareholders who come to the venue of the AGM. And there will be a requirement of company sending the physical annual report to the shareholders who have not registered their e-mail ID. So last year, actually, 10,000 annual reports -- we were actually required to send 10,000 annual reports to the shareholders. And the cost was coming around, somewhere around INR 5 lakhs towards the same. So the cost of conducting a physical AGM will be somewhere around INR 8 lakhs to INR 9 lakhs, whereas the cost of conducting AGM through videoconferencing or other audiovisual means will be INR 90,000.

Thank you, Jayasree. 1 more question. How many shareholders have attended this AGM? If you're able to answer it, please answer.

Yes, sir, at the time of we starting the meeting the quorum -- the number of attendees who reported was 131.

I am now moving into the chat box questions, the next part. What are the prospects of the company in FY 2021? What are the future plans? I'm sorry, we cannot make any forward-looking statements at this time. But like I said, ex of April, performance has been very strong. We are very strong that -- we are very confident that we'll make a very strong comeback in the coming quarters. The next question, what is our company doing to take care of employees in this COVID time? The first answer is that, yes, we have not cut any salaries. We believe that we should not negatively affect their morale during this very, very tough time. So we have ensured that no employee, no salary has been cut, including factory workers, including the contract workers, everyone's salary has been paid in full when it's supposed to be paid. And this is what has helped us when the markets reopened to be the first one to reopen our factories. All our employees have reported to work. They have crossed the borders. They have went to quarantine and they have reported to work. And we are functioning with full steam. I'm sorry. The second question is not very clear, work from home implemented in how many roles? We are enabled with Microsoft Teams. So all the 2,200 employees with an e-mail ID can access videoconferencing through their phone, through their iPad, through their desktop or through their laptop. And that's the facility we've been having for the last 2.5 years. We also have something call Degreed, where we help employees to take courses from about 14,000 universities and institutions. And we also use this for our own content. So for us actually work from home, I mean, apart from the mental strain that I think our employees are going through because of lack of social interaction, I think it's been amazingly great. Like Bata, could you send us some discount coupons for our purchases and recognition of shareholders? I think, by law, we are not allowed to give any discounts. So that answers that. How many sales are happening online versus offline? Ram, you want to take this online sale as a percentage of total sale?

Yes.

I think -- sorry, 1 more thing. After COVID, has this gone up?

Yes. I think 2 parts to this question. The first part is if you look at relevant categories, and I say relevant category because I'm excluding categories like wires, switches, switchgears, maybe pumps also. Yes. I would say that today, we are hovering between 4% to 6% -- more close like 6% now as a percentage of revenue. Second question is, has it gone up? Yes, it has gone up. It has gone up significantly. And as an example, I think growth through e-com is at least 40% to 50% higher than regular market at this -- in the last 2 months.

Okay. The next question is, I am from Chennai. Some of your products are not available in the Chennai market. Chennai, Tamil Nadu is probably the third largest market after Karnataka and Kerala for us. So I'm assuming that our market position is pretty strong. But we don't sell everything everywhere. We take a phased approach. So maybe some of our new launches like switches is not available. Some of our new launches like breakfast appliance and hoods are not meant to be sold by off-line traders. It's only meant for e-commerce. So that again is only available on Amazon. Otherwise, pretty much almost all the products you should be able to get in Chennai provided the shops are open. The next question. Please explain how many retail shops have restarted? What are plans to replace Chinese products that are coming in the unorganized market? Ram, you want to take this?

Yes. So the opening of retail trade is very dynamic. As an example, if I were to take the month of July. The opening of the month, around 80% of shops were opened and which progressively came down to around 54%, 55%. This we are talking about the part of the business that we are addressing. And as we exited the month, this went back up to around 70% to 73%. Now this 80% and 55% and 70% to 73% is the proportion of trade, which we address and that gives you an idea of the underlying opening and closing of stores. So store closing -- store opening is a very dynamic situation right now. And as different places go into lockdown and containment, the store opening universe is also getting impacted.

Thank you...

Sorry. There was something on China. I think we have already addressed that earlier.

Yes. China, I think, has been addressed. Sorry. Sorry to cut you off, I forgot. One more question. The last question. I keep hearing from companies that about increasing digital presence, what will be V-Guard's strategy to increase digital presence in the marketplace? Ram, you want to take this?

Yes. Actually, V-Guard has started working and preparing for digital from 2014, 2015. In fact, we started with the transformation of our customer service process, right, where the entire customer service process has been digitally enabled right up to the last mile technician and the franchisees. However, being a fairly large, midsized company, it takes time, and this is a progressive journey. Where we are today is that over the last 5, 6 years, right, all the transformation initiatives that we have undertaken, be it customer service, be it the supply chain, which is significantly done, but some parts still underway, be it finance and in the future that we are talking about marketing transformation, all of them, digital is embraced in the process. So that's one of the reasons why we could deal with COVID extremely well, and we continue to work as if it's life as usual. And this Degreed platform, which Mithun talked about for training or our -- what I would say as the capability that we have for video communication, this has been in V-Guard since 2015. And more recently, we have enabled it on every device, right, on the go. So that's the only difference. So we are continuously working, and there is still work to be done. But it's a journey we've been on for the last 7, 8 years. Yes. At the front end, it will connect with consumers. At the back end, it will connect with our operations.

Thank you, Ram. Jayasree, that was the last question's answer. You may please continue with the proceeding. Thank you.

Yes. Sir, we are done with all the questions that were raised by the speaker shareholders and also through the chatbox. Now I think the discussion on all the ordinary and businesses -- ordinary and the special businesses are also over.

Now I request Mr. Ramachandran, Director and Chief Operating Officer, to propose a vote of thanks.

Thank you, Chairman, sir. Thank you, Chairman Emeritus. Thank you all my board colleagues, Mithun, and my -- and fellow shareholders. Thank you for being here today and connecting with us in this difficult period. I would like to take this opportunity to thank a few other people who have helped us to put this together. Firstly, my colleagues and shareholders -- sorry, my colleagues and employees of V-Guard, who've been of great support and help, and they are helping us navigate COVID and are a pillar of demonstration of passion and commitment, right, which is keeping our organization going and supporting this event. I would also like to take this opportunity to thank some of the people who have made today's event happen. I think Mr. Dedhia from Keyul Dedhia; Mr. Selvaraj, scrutinizer; our auditors, E&Y, represented by Mr. Sandeep. Special thanks to our IT team who have made this possible and all other participants who have -- I may have failed to name at this stage. Thank you all. Thank you for making this possible.

Thank you, Ram. Now all the business items are discussed and transacted. The meeting is concluded.