Annual Report Review of Crompton Greaves Consumer Care – Factsbeyondnumbers

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I had first written about this company and management in 2017 which is available here

It is good to see management having a clear cut communication and delivering continuously (keeping share price aside). Here is notes from 2020 annual report

Notes from AR 2020

Key business updates:

  • Company is a major player in fans, LEDs, pumps and appliances category with number 1 position in fans and number 2 position in LEDs
  • Company has total 8 manufacturing plants in Goa, Vadodara, Ahmedabad and Baddi
  • Resumed production in all plants post covid shutdown

Business Segment:


  • Launched Aura fluidic with 5-year warranty, first in the industry
  • Launched silentpro and energion in premium fans category
  • AS new BEE norms come in picture in FY21, company is in good position to transition the existing portfolio


  • Significant traction in mini crest models
  • Focus on tier 2 and 3 towns
  • Launched solar power pumps which provides 20-30% more wster output than required guidelines

Water Heaters:

  • Revamped entire portfolio with innovative measures
  • Great results in FY20 with market share and volume gains
  • Launched new products like Regalio, Wube, Rapid Jet

Air Coolers:

  • Steady growth in air cooler segment
  • Launched desert cooler range optimus, Genie neo and marvel neo


  • Have started revamping portfolio in kitchen and laundry care segment with launches like meo, Apollo, elie, brio and instalgide

Financial Performance:

  • Last 4 years since new management took over, revenue is up from Rs 4017 crore to Rs 4512 core, however, PAT is up from Rs 283 crore to Rs 495 crore due to product mix change and margin improvement
  • YoY PAT growth is 24% at Rs 495 crore and 4.76% growth in PBT (tax reduction benefit)
  • ECD revenue at Rs 3389 crore with 5% growth over previous year. Lighting segment revenue at Rs 1131 crore over Rs 1265 core in previous year. 75% revenue from ECD and 25% from lighting segment
  • Spent 2.2% of revenue on advertising and promotion (Rs 99 crore with respect to Rs 91 crore in previous). Advertising cost up from Rs 28 crore to Rs 49 crore
  • Finance cost reduced from Rs 60 crore to Rs 41 crore due to repayment of debentures of Rs 300 crore
  • Rs 18 crore spent on R&D
  • Net debt of Rs -237 crore with gross debt of Rs 350 crore maturing in next few months to few years
  • Considering Covid, not recommending any dividend this year to have cash position
  • Out of current Rs 350 crore NCD, Rs 170 crore matured in June 2020, however, considering Covid, company planning to go for fresh NCDs (Rs 300 crores) to have enough cash.
  • Company has maintained ~>50% ROCE for last 4 years
  • ECD segment displayed 5.5% revenue growth. Before Corona, this segment displayed double digit growth for the year.
  • Portfolio refresh of water heater and air coolers delivered significant traction in the market
  • LED segment delivered high single digit volume growth but pricing pressure continues though bottomed out during second half of year
  • Saved Rs 144 crore through cost control in project Unnati
  • Depreciation is up from Rs 12 crore to Rs 26 crore
  • Rs 410 crore of cashflow and average cash flow of last 2 years along with growth could be around Rs 350 crore
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Annual Review of Management:

  • Go-to-market has enabled us to add quality channel partners and also improve distribution in existing geographies
  • Developed robust data infrastructure pan-India to enable smooth data flow, data collection and utilize data analytics including tools like tally patch, fieldf assist, dealer portal and utilization of
  • Company continued to work and delivering on these 5 aspects leveraging analytics capabilities in some of them
      • Ramped up brand awareness to increase consumer recall for Aura ceiling fan with 5-year dura tech warranty and anti-bacterial LED bulb
      • Large scale advertising campaign for water heaters


  • Portfolio excellence
    • Pump with digital control panel with a single-phase preventive switch off feature
    • Inverter bulbs with back up capacity launched
  • Go-to-market excellence
    • Right product at right place according to channel and customer segmentation
    • Expanded presence in 60% of electrical stores
    • Tally patch implementation to track secondary sales covering 50% of company secondary sales
    • Dealer management website launched for order and stocks management
    • Targeting rural channel with towns with population of 50000 to 100000 through a focused approach
  • Operational excellence
    • App driven sales plan launched for sales productivity enhancement
    • More than Rs 100 crore cost saving through various operational initiatives
    • Investment and roll out of various technology initiatives in data and system and analytics
  • Organizational excellence
    • Company has been building a strong team (linked in shows good amount of hiring done from top B schools) and also concalls highlights stregthening of teams in B2B space
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Market Trends:

  • Annual volume of fans is around 65 million units. At Rs 2000, this could be Rs 13000 crore market
  • Water pump industry is estimated at Rs 7500 crore


  • First quarter of FY21 is expected to be severely impacted. Normalcy could be restored only during second half of the year

Other Points:

  • Promoter and management remuneration within limits
  • Mid to high single digit increase in salary inline with growth in performance
  • 6% median increase in employee remuneration
  • 1771 employees on roll on year end
  • Average increase in employee remuneration other than managerial is 10.3% and for managerial, hike is 7.56%
  • Promoter stake down from 22% to 17%, MF/FII stake is up from 45% to 51%. Individual shareholders hold 7%
  • Audit fee reasonable
  • More than 50% of management compensation is variable which is good
  • Rs 779 crore is brand and goodwill on balance sheet

Risks and Open Questions:

  • There is 33% increase in inventory with 50% increase in stock in trade
  • Details of Rs 530 crore of mutual fund investment is not available
  • Doubtful trade receivable of 6-8% of profit ar Rs 23 crore. However, as per concalls (Rs 17 crore crore of receivable is only more than 1 year old), company has a conservative and prudent policy of provisioning where as actual losses may be lesser
  • Rs 165 crore of provisions made towards cost of obligations on account of product repair, warranty etc., cash discount etc. which looks a fair practice
  • There is a significant increase in contingent liabilities and need to be tracked
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Saurabh Kumar

Saurabh Kumar

Saurabh is a finance and analytics enthusiast with professional experience in both fields. He is an avid investor in the Indian stock market and academically interested in the application of analytics in the value investment field.
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