In a recent interaction, Dr. Mahesh Gupta, Chairman and Managing Director of Kent RO Systems Ltd. disclosed that the company is expecting sales worth Rs. 100 crores from its newly-explored fans segment in FY25.
Optimistic on domestic demand and extreme heat during this season, Gupta also discussed his growth outlook and capex plans for Kent.
Optimistic on domestic demand and extreme heat during this season, Gupta also discussed his growth outlook and capex plans for Kent.
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00:00 Hi, this is Maitri Seth and today we have with us the Chairman and Managing Director
00:04 of Kent RO Systems, Dr. Mahesh Gupta.
00:07 Welcome to the show Mr. Gupta, thanks for joining us.
00:11 So, starting with the basic first question that I have for you is how was FI24 for Kent
00:19 in terms of growth in both sales and the bottom line and what factors influenced the growth
00:26 in FI24 for you?
00:29 Well, we have grown about 10% in the year which we have just landed and the bottom line
00:39 is equally in the same proportion and I think we are quite happy with that, we are better
00:44 than the initial level.
00:46 Although we landed about 15% but it's okay, we are happy with this.
00:53 So, what were the factors that influenced Kent RO's performance during FI24, what led
01:00 to this growth that you just talked about?
01:02 Yeah, I think the general buoyancy in the market as we can find the GST collections
01:08 are going up, advanced tech collections are going up, so people are spending right now
01:13 at this moment of time.
01:14 So, Indian growth history is helping us as well to grow.
01:15 We find a better demand, so that's how this growth has come.
01:22 Great and considering this, do you expect similar growth in FI25 and also how much contribution
01:31 are you expecting from your key product which is the water purifier?
01:35 Well, I think we continue to grow about 10% in water purifier but this year we are planning
01:43 20% growth because we will use our VLDC banks now in the market by the brand name too.
01:50 So, we will also add on to our trend more in this year and the overall turnover we expect
01:54 to grow by 20%.
01:57 That's great.
01:58 Also, there are reports that Kent RO is planning to enter the US market in 2025 to boost the
02:06 revenue from exports.
02:08 So, what kind of contribution in sales are you expecting from this step that you want
02:14 to take?
02:15 Well, what we have done for entering the US market is have a brand licensing from one
02:21 of the very prominent brand in the US which is Black & Decker and we wish to sell our
02:26 water purifier manufactured in India, branded as Black & Decker and we will sell directly
02:32 to Amazon and to the consumers in the US and I think this year, 25 will go on basically
02:39 for more of experiencing and trading our market there.
02:43 I have not added numbers which I did this year.
02:47 My main focus would be yes, we are able to establish the market and we are able to move
02:53 little bit into the system.
02:54 It's the next year that we would like to have at least 50 crores of business from the US
03:00 market in the next year 2026.
03:05 50, the number sounds really great and also you recently ventured into the fan segment
03:13 which was last year.
03:14 So, how has this first year been for you in this new segment?
03:20 The first year is more of establishing ourselves into a very competitive market.
03:24 There are more than 50 brands and turnover of 10,000 crores and we decided to venture
03:29 into this category only to provide the most modern products to the consumer which are
03:35 able to sell 65% of the latency.
03:37 A normal fan consumes 70 watts whereas our fans are consumable in 28 watts.
03:45 This much of latency saving we are able to do.
03:47 So, I thought it's a good time to give saving of electricity and climate change is the main
03:53 concern so we need to improve efficiency.
03:55 So, we ventured into this product.
03:57 The first year has gone more into creating our market, dealers and distribution network.
04:01 The turnover for this is very small this year but it's looking very robust in this month
04:08 and this year it should be much better than what we want to do.
04:13 Sir, can you give us the turnover number and also with this kind of turnover are you expecting
04:20 that you will gain 5% market share that you were targeting at in the next 4 to 5 years?
04:25 4 to 5 years we want to target.
04:27 If in 5 years time we become 50,000 crores, I would like to be 750 crores but I am optimistic
04:34 of this financial year 2025 and then we should do over 100 crores in this year.
04:39 That's great and also so this was the starting year for the fan segment but what are your
04:46 expectations for FY25, just FY25?
04:50 That's what I said 100 crores for this year.
04:53 Last year was very small, I have to calculate the numbers in the category but this year
04:59 I expect 100 crores to clock.
05:02 Okay and so there are some key trends that we have been seeing in the consumer durable
05:08 space at this point of time in the appliances space like one being that there is more focus
05:13 on the premium side and more growth is seen in the premium segment.
05:17 So my question to you is what are the other trends that you saw apart from the trend that
05:25 I just talked about not just recently but overall in the last 5 years, especially after
05:32 the pandemic, how has the consumer behaviour changed over the years?
05:36 Consumer has become more health conscious.
05:39 So anything concerning his health, offering solutions to him, he is ready to listen to
05:44 you and he is ready to implement.
05:47 We know water is an important element to keep you healthy and because impurities are increasing
05:52 and not reducing in the water which we drink today.
05:55 Because we keep contaminating our water sources with the chemicals we pour in the rivers or
06:01 the underground water, so people do require a sanitation system to get clean water.
06:07 So people are becoming more and more healthy after the COVID break.
06:12 That's a good sign and people are investing in the kitchen appliances today.
06:17 So it's a positive sign.
06:21 And sir, even the fan segment that you talk about, the product which has the brushless
06:29 DC motor technology, that is also slightly on the premium side.
06:32 Can you elaborate a little bit on what kind of a technology it is for the audience and
06:37 how does it help in saving energy for example?
06:42 As I said, the DC is a new technology which helps to save electricity in the motors.
06:50 And these motors are designed on brushless DC technology which is electronics.
06:54 We waste a lot of heat energy when we run a normal fan.
06:58 And that heat energy is saved by electronics.
07:01 As I said, the normal induction fan will consume 70 watts of power, whereas the DC fan will
07:07 consume only 28 watts of power.
07:09 So to promote these fans, government has come out with the star-setting fiction, like for
07:16 air conditioners, they have come out with fans as well.
07:20 A five-star fan should consume less than 30 watts of power and give a particular flow
07:26 rate.
07:27 And the fans are available in all types of pricing.
07:32 The lowest price of fans is Rs. 2800 to a consumer, against an induction fan of Rs.
07:39 2000 to a consumer.
07:41 Although we have higher models of fans which are more stylish and more decorative, our
07:46 fans can go up to Rs. 15,000.
07:48 But for a normal consumer, for his household, he can buy a fan of Rs. 2800 and whatever
07:55 is the extra investment of about Rs. 1000, he can recover in one year, one and a half
07:59 year based on where he is using it.
08:02 So it's quite attractive in this point of time for every consumer to buy a new fan.
08:07 However, people who are using an older type of fan will also change hands to buy a fan
08:14 in coming time because they will pay back in about one year's time.
08:18 I'll give you a similar example of bulbs.
08:22 From normal incandescent bulbs, we went to CFL.
08:25 From CFL, we have gone to LED lamps.
08:28 Now, they all are already selling their products and they pay back their cost over a period
08:33 of time.
08:34 The consumer is willing to pay to change the product.
08:37 So will they do it in the fans in coming times.
08:40 That's really positive and it sounds really interesting.
08:46 Recently, companies like Samsung and even Godrej have come up with a whole range of
08:53 AI-backed appliances.
08:55 So I just wanted to know where is Kent on that front and are you planning to incorporate
09:03 AI in your appliances and is there anything in the pipeline on that front?
09:08 Absolutely.
09:09 AI is the future of the human being and the way we live.
09:15 So AI is bound to come into all our products in our lives.
09:18 Whether it is for servicing, you put into the system, we want to provide better services
09:23 to the consumer, so AI has to come in so that we can do it faster.
09:27 We have to bring a lot of AI into our products as well.
09:32 We are working on a lot of things based on WISE commands.
09:36 We want that all our appliances should be able to operate on WISE without IoT.
09:43 So that all the products are going to come in the future and there are a lot of things
09:47 in the pipeline.
09:48 I will not be able to reveal all of them to you on this show, but a lot of things will
09:54 come in the future from us.
09:56 Okay.
09:56 And so there is also a buzz that input costs have been slightly impacted due to uncertain
10:04 geopolitical conditions at present.
10:06 So did you also see any surge in input costs in FY24?
10:10 And if you did, then what was the number and are you expecting input costs to have a negative
10:17 bearing in FY25?
10:20 There are negative bearings on the input costs because of the war happening in two fronts.
10:26 The Red Sea is a problem, the products are not moving properly and the oil prices are
10:31 not looking northwards, so they are not like southwards.
10:35 We are talking of $100 a barrel.
10:37 So these challenges will be in front of us and we are very uncertain about the future.
10:46 But we will take it as it comes along.
10:48 And the consumer will also have to bear the input on the front.
10:51 And if consumer prices go up, obviously demand will come down because it has a strong bearing
10:56 on the money a consumer can bear.
11:00 It's a bit of a dynamic model, but I don't think it will shoot up very sharply, maybe
11:06 3-4%.
11:09 Okay.
11:10 So if that happens, and as we know, it is very uncertain.
11:14 But I think we will hear it out, consumer will hear it out.
11:17 Okay.
11:18 So any impact on margins also that you expect?
11:23 Yes.
11:25 I think it will come into picture because as a consumer product, we don't want the
11:29 prices to go up immediately.
11:30 We want our prices to be stable.
11:36 The applied cost is up to 10%.
11:38 And if the volume doesn't go up higher, then that also impacts your profitability.
11:43 So that's a part of business proposition.
11:48 Okay.
11:48 And this was all on the global front.
11:51 On the domestic front, are there any other headwinds that you came across in the previous
11:56 fiscal and you were expecting to see them in FY25 as well?
12:02 Well, I think there are no headwinds at the moment in the domestic sector as far as sales
12:08 is concerned.
12:09 In fact, I find they are more robust and looking more positive in the coming time because general
12:14 elections are happening.
12:15 Mood is very positive at this moment.
12:17 We find share market going up.
12:19 We want the gold prices going up and everything getting absorbed in the market.
12:25 So this looks a little bullish.
12:27 Advanced expressions have gone up.
12:29 A lot of money is coming into the country.
12:31 The government is spending heavily.
12:33 So money is coming into the market and it's very buoyant at this moment of time.
12:36 So I don't think there are headwinds.
12:38 The headwinds are coming only from the normative side.
12:43 True.
12:44 And also, what kind of market share are you expecting for the next fiscal in the water
12:50 purifier segment?
12:51 Actually, I would be likely to be about between 35 to 40%.
12:56 Okay.
12:56 Thanks for having this conversation, Adwas.
12:58 It was a pleasure having you here and all the best for all the ventures, future ventures
13:03 for Kent Aru Systems.
13:05 It was a great time talking to you.
13:06 Thank you.
13:09 Namaskar.