Hindware Home Innovation Limited (HINDWAREAP) Earnings Call Transcript

So I think good evening, everyone. Now we have the entire top management of Somany Home Solutions. We have, from the finance team, Sandeep Sikka, the Group CFO; and Naveen Malik; and other business heads. I think Q1 was a very challenging quarter for most of the Indian corporates. One thing is good that the second half of Q1 was good and the economy has opened up and things look better. So especially in view of Q1, if you look, I think the company has delivered an excellent trajectory on the headline -- top line sales front. On the margins front, I think the management will explain. But Sikkaji and Naveenji, it would be pertinent if you can help us with -- as to what were the salient takeaways of Q1, how the trajectory for the Q2 and second half of FY '22 look. We do understand that air cooler is an important segment of Q1, which saw a miss. But if you look at the other Building Products and the Consumer Appliances, I think we have delivered a very strong growth. I think our plastic pipe and fitting, TRUFLO has also done a good trajectory. So keeping Q1 as a base and in many companies, by and large, the long-term investor believe that the Q1 was an aberration. So with this as a preface, I would request the management to spend initial 10, 12 minutes on the opening preface and then share the outlook as to how the second half of FY '22 looks like. And after that, how the outlook for FY '23 and FY '24 is. Over to you. [Operator Instructions]

Good afternoon. I'm Naveen Malik. Good afternoon, ladies and gentlemen, and welcome to the Somany Home Innovations Limited Q1 FY '22 Earnings Call. I hope you are all safe and healthy. I would like to take you through our financial performance during the quarter under review, following which Mr. Rakesh Kaul, Mr. Sudhanshu Pokhriyal and Mr. Rajesh Pajnoo will discuss the key highlights of their respective businesses. Q1 FY '22 was a very difficult quarter for the industry in general on account of the second wave of the COVID-19 pandemic causing a devastating impact on many lives and forcing many states into lockdowns. SHIL registered healthy growth in Q1 FY '22 despite the difficult environment, particularly in the early part of the quarter. Consolidated revenue from operations came in at INR 342 crores, registering a growth of 85% year-on-year. Revenue for the quarter was primarily impacted by the lockdown. EBITDA came in at INR 17 crores, having grown from an EBITDA loss of INR 14 crores in Q1 of FY '21. Sequentially, though, we witnessed current traction in EBITDA as well as margins owing to the lockdown and the higher raw material prices. Going ahead, we expect margins to improve on account of relaxation of lockdown and recent price hikes implemented by businesses to address the cost inflation. Profit after tax during the quarter came in at INR 103.6 crores as compared to loss of INR 24.5 crores in quarter 1 of FY '21. The reported profit after tax also includes the exceptional items comprising recognition of fair value net gain of INR 66.11 crores from its investment in HPL, Hintastica Private Limited, on account of loss of control of subsidiary and recording a gain of INR 34.75 crores on account of slump sale of water heater business undertaking by the company to HPL, then a wholly owned subsidiary, during the quarter ended 31 December 2020. Just to clarify, the numbers which we are talking here are the consolidated numbers. Let me now walk you through the -- our segmental performance. The revenue for the Consumer Appliances business was INR 67.6 crores, registering a growth of 55% year-on-year. EBIT for quarter 1 FY '22 stood at negative INR 5.1 crores, and while it marked an improvement over the negative INR 8 crores in quarter 1 of FY 2021, it was significantly lower than the EBIT of INR 7.5 crores in the previous quarter. Profitability for the segment was impacted by the advertising cost that was already committed to in addition to loss of sales in the air cooler segment and impact of lockdown. The Consumer Appliances business was severely impacted by the pandemic, but we have started to see promising sign of a recovery from July onwards. We are confident that we will be back to seeing healthy growth in the coming quarters for the segment. Moving on to the Building Products segment. Revenue for this division stood at INR 265.3 crores, registering a growth of 98% year-on-year. EBIT came in at INR 15 crores for quarter 1 FY '22, up from an EBIT loss of INR 9.5 crores in quarter 1 of last year. Turnover for the plastic pipes and fitting business stood at INR 87 crores in the quarter under review. The performance of Building Products segment was impacted in April and May, however, we saw a good recovery in the business since June, which has only further improved in July. We expect to see this business back on its high-growth trajectory very soon. The revenue of the Retail segment. The revenue stood at INR 9.5 crores, having grown 2% year-on-year. Q1 FY '22 was truly a difficult quarter for everyone. However, we remain bullish on our business prospects, and are confident that we will be -- we will bounce back to our growth trajectory soon. We continue to drive our business on the lines of innovation and esthetics, delivery products, gear to improve customers' life -- gearing to improve consumers' lives with its rich legacy. Our brand, Hindware, will continue to move from strength to strength, delivering on its goal. We are already seeing revival in our business divisions and expect normalcy to return very soon. I would now request Mr. Rakesh Kaul to take you all through the Consumer Appliances and Retail businesses. Over to you, Rakesh.

Yes. Thank you, Naveen, and a very good evening to everyone out here. First of all, I hope all of you are nice and safe, your families are doing well, too. We've seen the worst through, hopefully, through the second wave of the pandemic, and I'm sure that much efforts are being utilized nowadays to see that maximum population gets vaccinated. And hopefully, we see through the coming quarters without any uncertainty regarding the pandemic. Let's give it our best shot. So if you see, the consumer business had felt the maximum brunt of the second wave with the demand being impacted badly. The primary reason for this decline was a loss of sales of the cooling products driven by the air coolers and fans in quarter 1, which is generally a very, very key selling season. In fact, 65% of the annual volumes of sell-out of air coolers happens this quarter and more than 6 weeks through the quarter were badly impacted during this quarter, which obviously damaged the consumer sentiment and also there was a significant reduction in demand. Also at the same time, since majority of the states -- it was a state-specific lockdown, even e-commerce was not allowed to sell nonessential items. And majority of our Consumer Appliances come under nonessentials, and hence, even e-commerce, which contributes a significant part of our business, was not able to deliver material to the consumer, hence, impacting the business further. However, we take this as a one-off event, and we believe that the Consumer Appliances will maintain its growth momentum. And you all know that we have historically grown at a CAGR of 30% to 35% and driven by strong fundamentals. We believe that we can continue to maintain leadership positions at various categories on digital and even off-line, like being #2 in kitchen chimneys overall and overall being -- among the top 5 players in the air cooling segment. So we intend to continue with that strengthening of our earlier CAGR growth. We also strengthened our portfolio in the quarter 1 despite so much uncertainties in the business. We launched 15 new products, thereby emphasizing that we continue to be bullish about this business, and we continue to invest in this business. As far as the quarter 1 performance of FY '22 was concerned, our revenue, as Mr. Naveen pointed out, grew by 55%, which the possibility could have been much higher if the air cooling products would have delivered -- which did not deliver because of the pandemic. Also, as I mentioned, the second wave had severe impact on the quarterly performance of the business. However, we have seen an uptick in the business in the month of July with the opening of the economy towards the later part of July -- June. We expect the quarter 2 FY '22 to be significantly better than Q1 and helping us achieve the recent growth trends which we have achieved in the past couple of years. As far as the Retail segment is concerned, the performance of this business was also significantly impacted because of our large base of franchisee business and our stores which are just doing numbers now. So delivering a loss on EBIT level, though it was significantly much lesser than what we did last year and at the same time, this was after 2 consecutive quarters of delivering profitability in the retail business. However, we are confident that we'll be able to report positive EBIT numbers in quarter 2 of FY '22 on continuation of the back of rationalizing costs, improving efficiencies and as we have adopted a capital-light business model for this business. To conclude, I would like to reiterate that despite Q1 FY '22 being significantly impacted, we expect to see our return to healthy growth rates in both the businesses of Consumer Appliances business and Retail. I must admit that the on-ground situation is improving as we are talking by the day, and we are also taking the requisite measures to improve our profitability significantly. At this stage now, I would like to invite Mr. Pokhriyal to take you through the performance of the bath business. Thank you, and over to you.

Thanks, Rakesh, and a very good afternoon to all of you. This is Sudhanshu Pokhriyal. I handle the BPD business. Q1 FY '22 proved to be a very challenging time for all the businesses, especially in the month of May. We witnessed -- we, however, have witnessed very sharp revival in our business, which helped us register a robust revenue growth of 92% in Q1 of FY '20 (sic) [ FY '22 ] over FY '21. The recovery of the business was aided by increase in real estate demand and home improvement. In the quarter, our efforts was focused on expanding our distribution network and also improving in terms of our customer satisfaction. We onboarded over 100 new channel partners in this quarter and kept them engaged by conducting multiple dealer meets, especially online during the lockdown. We also undertook efforts to assist our dealer partners, monitor their ongoing developments and manage their operations in a seamless manner. I'd like to reiterate that over the last 3 quarters, we have actually outperformed against our competitor significantly, continuously for the last 3 quarters. During the quarter, we've also launched 9 new sanitaryware products and 4 new fossil-less fuels. In July, we have our mega launch of the touch-free water closet, again, learning from the COVID period requirement of the consumer. And to aid this touch-free water closet, we will be launching a 360-degree campaign on media, which will be hitting media in the coming weeks. We are also actively marketing ourselves as a modern innovative design-led brand, increasing our presence on social media. We continue to strengthen our connect with the millennials. We are leveraging technology and innovation and that we have at our disposal. We're increasing product consideration and awareness using beautiful design and thoughtful features as a bedrock for all our new launches. We've also refreshed our product displays and in-shop imagery across the stores. We increased our brand salience on the retail front. In conclusion, Q1 FY '22 was a difficult quarter for us. We are happy with the recovery, which we witnessed in June. This also gives us confidence in knowing that the business has regained its high-growth momentum post easing of restrictions. Going ahead, I am certain that the business will continue to deliver robust growth and help us carve out a larger pie of the market. Now let me invite Rajesh Pajnoo to take you through the plastic pipes and fitting business. Rajesh, over to you.

Yes. Thank you, Sudhanshu. Apologies, and good afternoon to everyone here. Thank you all for joining on this call. The plastic pipes and fittings division delivered excellent growth despite the challenges and setbacks posed by quarter 1. TRUFLO has grown at a rate faster than that of the industry, with sales more than the doubling over quarter 1 financial year '21 and it has helped us further fortify our place as the fastest-growing pipes brand in the country. Our sales of INR 87 crores registered a growth of 109% year-on-year. Sequentially, the growth was impacted due to the second wave of pandemic and subsequent lockdowns. During the quarter, we launched around 30 new SKUs, further expanding our offerings to consumers through our extensive network of around 201 active distributors. As mentioned on previous calls, we are undertaking steps towards establishing a strong connect with the influencer community to help us further accelerate our growth and enhance brand visibility. We believe these measures strengthen our place as one of the prominent place in the pipes industry. We continue to provide training to our channel partners and influencers to help them improve their skills through various certificate courses. Even in these tough times, this strategy of ours has borne fruit, reflected in our impressive growth during the quarter. We also felt the effect of pandemic, but the inherent strength of our business helped us navigate this challenging phase and the subsequent recovery in June gave us the confidence that we will remain the fastest-growing company in this segment. Thank you very much. And I would like to conclude the opening remarks. Good luck.

Thank you, Rajesh. I think his screen has got stuck. Who will be the next in line, Sandeepji?

So I think we can start with the Q&A now. And all the participants who are interested in questions, I think they can raise their hands and you can...

This was a good opening remark from all the businesses heads. [Operator Instructions] Sandeepji, what kind of a CapEx are we planning over FY '22, '23? And essentially, this is a pure asset-light company. And is the understanding right that this would not require material CapEx going ahead?

So basically, if you see that today, we are rightly poised on the asset utilization given the fact that post demerger, this SHIL vertical doesn't have plans. In terms of the overall CapEx at a group level, SHIL and Brilloca together, they will spend around INR 15 crores to INR 20 crores each, but broadly, these expenses are on 2 parts. One is the development of showrooms, like, in the market, we develop a lot of display centers along with our dealers. Second and big investment is towards the molds, which is on the consumer side, when we design a product, we patent a product, the design is ours, so our mold is also ours. Other than this, one investment which we already disclosed to the market is on our water heaters on a consolidated basis. But that is a 50-50 JV between SHIL and Atlantic now, although it's not -- it will not be consolidated asset, but it will go below as an -- item below profit and loss on a year -- on a quarter-to-quarter basis. So this is broadly the guidance on this. But going forward, we had spoken about this that when the need arises, we have spoken about the fact that at an appropriate time, let's say, kitchen business itself is reaching INR 400 crores, INR 500 crores, at that particular time, outsourcing may not be fully viable, as such, because the supply assurance is also becoming very, very critical today. And in order to control various aspects and given the fact that there would be a critical mass, so we may look at development of those assets or putting up the capacities at that particular time. But I can assure you that any further CapEx, which we do, will be more value accretive in terms of that measurement -- underlying measurement ROCs will be bigger. But overall, ROCs, which right now, like in Q4, we had a ROC above 40%. But definitely, some ROCs fall will happen, but a lot of absolute value addition will happen on the EBITDA side. So the fall in the ROCs will be traded off with the absolute EBITDA gain on the P&L.

Sir, I have got one question. Sir, has the competitive intensity across unorganized segment taken a dent or this is an interim blip? And every time whenever we say that unorganized will take a backseat, after 2, 3 months, they come back with vengeance. So how is the scenario this time basically?

So I think market has evolved over last 12 to 15 months, if you see during the COVID times. The presence online for the branded player is much stronger because [Technical Difficulty] So the demand online, the visibility of the brands online has increased substantially because people sitting at home in order to buy anything, first, they have to look at the Google, they try to google out anything. And there, the player of the branded things come into the picture. But India is a highly differentiated market. There are different demographic profiles. The purchasing power parities are different. So unorganized market will keep evolving over a period of time. But the opportunities which are there for a branded player today definitely has increased a lot because of higher visibility of products online. So we feel that this competitive pressure will continue over a period of time with India because India has a different subset of underlying criteria, both in terms of earning capacities, per capita GDP. So different people require different sort of products, some based on utility, some based on branding. So -- but there is a huge opportunity for brands to evolve over a period of time and eat away into the unorganized player.

Sir, we have a couple of questions in line. Mr. Amit Zade, you can unmute yourself.

My question is regarding what kind of cost inflations are we seeing in sanitaryware and faucetware off late? And what kind of price hikes have we taken in both of these 2 categories?

May I request Mr. Sudhanshu, if you can take this question, please?

Amit, so in terms of the input price hikes, we've of course seen price hikes, especially in brass for our faucet business, which over the last 12 months has actually increased by more than 50%. We're currently trading at about INR 470, INR 480 [Technical Difficulty] last year July. So a massive price increase has happened. However, we have been beating price increases. And let me say -- and of course, there have been price increases in terms of all the -- the gas prices have gone up. Most of these prices have also gone up. So what we've done is that over the last, I would say, since January of this year, we've been taking -- in the last 7 months, we have taken multiple price hikes. In the month of February, we had taken a price hike of more than 3% in sanitaryware and about 5% in our light product division like fittings, seat covers. And again, in the month of June, we've taken further pricing increase...

Sudhanshuji, the voice is feeble. You will have to take the mic near it for the better clarity, please.

So can you hear me better now?

Yes. Now it's far better.

Sorry for that. So let me repeat. So we took a price increase of about 3% in the month of February for our sanitaryware products. And we took a price increase of about 5% for our APD and seat cover business. APD is a light product division, for example, which are systems -- plastic systems and concealed systems which are made for our BPD business. Again, we took another price increase for our sanitaryware business in the month of June, which was to the tune of 5% to 8% for our sanitaryware products and between 8.5% to 10% for our plastic PVC systems and concealed system products. So we've taken a pretty significant price increase because of -- to pass on these increased input prices. In our faucet business, we have taken a price increase of 9.7% in the month of March -- in Feb/March. And we are, again, taking a price increase, which is happening in Q2 right now, which will again be in the tune of about 9%, to take care of this 50% increase in our brass prices. So to answer your question, yes, there have been significant input price pressures on us. And much of the price increase has been passed on to the consumers.

My second question is, within the same space, so one of our competition -- so we are given to understand that one of our competition who is relying on China for their sanitaryware product is facing some supply chain disruption. So are we seeing any increased traction to our product? And how are we placed to capitalize on that, sir?

So what we believe is that a lot of our strategies are right now working very well in the market. So our increased traction in the market right now is because of that. We've launched a lot of innovative products. We've improved our customer service in the market. We've also -- our campaign "Thoughtful is Beautiful" is doing fantastically well and it's received fantastic response from the consumer. Large part of our traction is because of these efforts. There are reports -- I also saw the same report some time back. However, I believe that competitors are actually impacted pretty much equally from the impact because of Chinese imports. So I don't think that is the key reason for us to do well. That's not my belief. What we believe is that a lot of our strategies have started working very, very well. So I wouldn't really be able to put a finger to it is that we are doing well because of them doing badly.

Understood. And sir, one last question, if I may. Sir, you have also said that -- in your opening remarks that we are gaining market share in the last 3 quarters. So any color on -- not on a quarterly basis, but maybe FY '21 closing, what could be our market share in the sanitaryware and faucetware?

So it's very difficult to put a number to this. We believe our market -- there are no syndicated disclosures, which are published in this industry, which gives you the market shares. These are generally calculated after looking at individual companies results. We believe our market shares are in the tune of 27%, 28% in sanitaryware and about 8% to 9% in faucets. So I think -- also because of COVID, the category growths have substantially changed between one quarter to the other. I would be in a position to answer this question much better in Q1 of next year. But I can tell you, looking at results in this company, we have been farther than many of our competitors. So definitely we will win market share gains. Putting a number to it right now, I think, would be premature.

We have Nikhil Gada.

Sir, my first question is, when I look at our gross margins for 1Q FY '22, and I compare it with 1Q FY '21 and even 1Q FY '20, we have still done decently on the gross margin level, but we are seeing a very sharp increase in employee expenses. Any specific reason? Have we given some salary hikes or we have added new people in the system? Can you help me on that, please?

So if you see, definitely, there is some rise in the salary hikes because last year, the hikes didn't happen because of the COVID, but we have done hikes as per the industry standards in those range. But apart from it, if we see the bigger chunk of an employee percentage, you will see it is definitely on account of the lower sales. When you have lower sales because of the COVID, salaries keep paying on. So on an overall basis, the percentage is the increase. Nikhil, have I answered your question?

Nikhil, are you there?

Sorry, sir, I just lost the audio. I did not get the answer. Can you please repeat it?

So you had 2 questions. One, was there any increase in the salary hike? So there was some salary hike, which has been given across the company because last year employees didn't get any hike. And -- plus on account of loss of sales due to the COVID, the percentage employment -- employee cost as a percentage to overall sales look higher. These are the 2 reasons, which I can explain to you.

Got it, sir. And sir, in this specifically, in building materials, so some time back we had uploaded a presentation where we had mentioned that we are planning to launch a separate vertical for faucets. So just wanted to understand what is the strategy over here? And why the specific reason to separately launch a vertical? I just wanted to get your mind share on that?

So if you see sanitaryware, it's almost INR 4,500 crore market, faucet is touching around INR 9,000 crore market. So if we have seen that when you verticalize a particular thing, the deeper focus comes into the play. And once the deeper focus is there, the growth element starts playing into the whole picture and the incentivization of people, incentivization of the team to help us to achieve the faster growth into the market.

So are we trying to say that we will have a separate distribution team and a separate branding and completely different business?

So this is -- no, no, no. These are only part of verticalization is there. So back-end teams, they all report to Mr. Sudhanshu. So internally, they were already segmented. We are putting more focus into it. Mr. Sudhanshu is leading the overall team there, and everything reports into him only.

I can add to this. What we do is we -- I mean, all our back end, all the brands are more common. It's just that a faucet by nature is a more distribution-led product in comparison to sanitaryware, which is largely a dealer-led product. So if you [Technical Difficulty] distributors, for -- to make a significant progress in this, we wanted to have a separate team or a separate vertical [ for ] [Technical Difficulty] distributors of faucets, and that's what we have done. Everything else is common now.

Got it, sir. And sir, just sticking to this faucets question...

Nikhil, can you just come later. There are a lot of questions. Next, we have Chetan Gindodia.

My question primarily is with respect to what are the trends that we are seeing with respect to overall demand in the Building Materials segment, especially in the month of June and July now? So in July, have we reached back to our -- this March and April levels? And how do you see the Building Materials segment growth over FY '22?

Yes. I'll request Sudhanshu and Mr. Rajesh Pajnoo if you can address, this is a market-related question. I think you are the best guys to answer this.

So I request Mr. Pajnoo, maybe he can take it first.

That's fine. See, there is a traction and market has -- particularly in June and July, they have started coming back to their normal course. And it seems that especially with how we are looking at it is like quarter 3 and quarter 4 are going to be too good and too promising. The demand is going to be there, the projects are going to get completed and new projects are going to come there in the market, which have already been launched. So we see, if nothing unforeseen comes in the way, we see the third and fourth quarter are going to be as good as they were in the previous year. Sudhanshu?

Yes. I totally echo what Mr. Pajnoo is saying. But for, of course, the impact, if at all, of the third wave, if it comes, of course, there's so much of news around that. But for that, I think you've seen heavy demand and already back to the pre-second wave numbers. If these averages continue, of course, there will be...

Whether July is basically -- are you saying July is back to what it was in month of March?

The demand, like I said, we are going back to pre-COVID levels, yes.

Okay. You're already seeing going back to be pre-COVID levels. Okay.

We're going really close to pre-COVID levels. Yes.

And the same thing for consumer business as well?

Chetan, yes, as far as the Consumer Appliances business is concerned, we are seeing a turnaround from the later part of the June month because consumer -- overall, the consumer-facing businesses also got impacted of e-commerce as well, which has become a major significant contributor, primarily because of nondelivery of nonessential items because of the state-wise lockdown. Having said that, we're looking at July -- in certain categories, we're seeing a huge demand recovering back to the levels of -- definitely of around January, February, for sure, in the month of July.

January, February. So basically, when you say January, February and not March, basically...

No, no. When I say January, February, I meant quarter 4.

Okay, okay. So things are coming back to normal.

Now we don't know because there is so much of uncertainty around what is exactly the normal. But what I can say is that the demand is looking up, the business is looking back to the quarter 4 levels, that's what I can say. It's very difficult to say whether it's all normal because, as we are sensing around us, there is still a lot of fear around in the minds of the consumer for shopping out. Those fears are still there. So I wouldn't say that things will return back to normal. But the business is looking up in a different fashion. We, as businesses, have also customized ourselves to reaching out to consumers in a different fashion, whether it is through D2C channels or whether it is through the alternate channel route or the omnichannel route. So we have also devised and customized our way of approach, how to reach our consumers in a different manner and not just depend purely on when the shops are going to open full throttle and we achieve a pre-COVID level of business.

My second question is at the company level, what is the total raw material cost increase? And what is the percentage price increase? I'm thinking on a blended basis because there are too many segments. I'm not asking segment-wise, I'm saying at the company level. And in the second quarter, do we see full impact of the price increase, and therefore, as you go back to fourth quarter levels in terms of revenue, whether we should assume EBITDA margins and profitability also coming back to fourth quarter or better?

So in terms of the overall increase in the input raw material prices, and I'm talking basic raw material prices, like for pipes, it is the PVC resin; for faucets, it is brass and also the fact that when we talk consumer product, we use plastic, steel, copper, everything. So on an average, average price hike, we can assume, is somewhere around 30% as such. A part of it is passed on. And this is -- and when I say 30%, it's a blended rate on an approximation basis because then the weights also have to assign to each other and this is year-on-year basis. And -- a lot of it has been recovered. I'll say that some part of the recovery will still happen in Q2 because prices are still firming up as such. So these are the ranges I can advise you today on this, but these are ballpark numbers.

Next, we have Mr. Dixit Doshi.

Yes. Can you hear me?

Yes, please.

Just one question from my side. This water heater business, we have transferred in a slump sale basis to subsidiary. So let's say, last year, full year, our consumer business was INR 455 crores. So how much was this water business contributed in that sales?

So broadly, I can answer your question in percentage. So if you net out water heater last year against this year because this quarter 1 didn't have the water heater, so our consumer products business, which in the results, you see a growth of 50%, that should be somewhere around 60%, 65% -- 65%, 66%.

Okay. And this JV will only manufacture or they will only do the sales part?

So they will do the full business, manufacturing as well as sales. Plus apart from it, since the JV is with Atlantic, which is one of the very large French companies, they have their other bouquet of products, which will introduce into India. And not only that, we have now rights to sell our products into various [ SAARC ] countries. That also increases and enhances our opportunity in the international markets.

Okay. And one last question. Once this COVID thing settles down, let's say, 2, 3 quarters down the line, what could be the steady-state EBIT margin at least in consumer and building product if you can mention?

So if you see on a Q3, Q4 basis, our consolidated EBIT margins, so they were in a range of somewhere around 10% to 11%. So we have given a guidance that this will further enhance over a period of time going forward. We have given that EBITDA margins in the range of around 15% on an overall product portfolio in 3 to 4 years' time.

Now we have next in line, Mr. Pritesh Chheda.

So I have one question on -- aspirationally, we wanted to control or bring down the working capital cycle. Now with so many vertical heads and each having its own demand, how do you foresee reduction in working capital cycle? And who should be entrusted with the job of making sure that the working capital cycle aggregate at the company level reduces?

So these are 3 distinct verticals inside the organization because that is one key mantra, which we have learned for growth. If you see the success of our pipes, if you see the success of our consumer products into the market because this is a separate verticalization. The inventory of one division has nothing to do actually with the inventory of the other division. Each of the businesses have their own set of targets in terms of bringing it down. In the month of March, we were having an average net working capital cycle of around 100 days, 105 days, so which we have given a guidance in the next 2 years, we should be -- we are targeting that we should be able to bring down by 15% to 20%. Part of the businesses are our growth businesses wherein the focus today is more on the growth side because we don't want to lose our sales just by optimizing the inventory. So -- but I understand at the same time, we have to be optimized. So the focus is there, and each business has a focus. So it is -- it consolidates at a group level also in terms of consolidation. But each businesses work along very closely with the respective support department so that they optimize the inventory. But despite these inventories, like -- and the receivables which we have, as we are growing substantially, our ROCs, as I told you in March quarter, although this quarter is not measurable in the right context because of the COVID thing, was 40% plus.

But at the aggregate, so...

And that is aggregate, I'm telling you.

So my question was actually on the working capital only. When you say that few businesses are in growth mode, this has always been the case with our company for so long. So we have been continuously adding verticals of products. If that's the case then, the 15%, 20% reduction in working capital is at the company level after factoring your growth aspiration, or you would have a situation where eventually you might think through that, "Okay, I'm growing, so there's no need to reduce the working capital?" So communication to shareholder, is that aggregate including all the group aspirations that you have?

Yes. So when we are making a communication to the market, it's on a consolidated basis. But if you see -- like -- I'll answer your question in a different manner. Let's say, if we are growing at 45%, 40% -- like, consumer business, historically, the CAGR for last 2 to 3 years has been 35%. Pipes has grown substantially given the small base. Now it has become a critical mass. So their growth rate has been even 60%, 70% plus. We lost some markets on BPD, but now the recovery for the last 2 quarters has been pretty good. So we -- it's not a single lever that the focus is only on inventory reduction. So you can reduce the inventory any day, any time. But the first focus is improving the sales, improving the growth. But at the same time, we try to control and see on a day-to-day basis how the inventories can also be optimized. So that is why we have not given an aggressive target to the market on an overall basis. And this is spread out over the next 2 years, actually. We're not saying that we'll do everything in next quarter or something.

Yes. My second question is on the sanitaryware side. There, few players have talked about supply issues, maybe they would be imported as well. So are we facing any supply issue? And how is our supply situation or structure set? How much is in-house manufacturing for us? And how much is outsourced? And do we import anything?

Sudhanshu, may I request you, please?