Electronics

V-Guard Industries Limited: Updated

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(A) Shareholding Pattern of V-Guard Industries

V-Guard Industries Ltd - Shareholding Pattern
V-Guard Industries Ltd - Shareholding Pattern more than 1 % (Promoters)

Mutual Funds Holdings in V-Guard Industries

V-Guard Industries mutual funds holding

Since 31-Dec-20 the Mutual Funds/ UTI Holdings in V-Guard Industries has increased steadily from 9.98% in 31-Dec-20 to 14.30% in 31-Dec-21.

(B) Executive Management of V-Guard Industries

(i) Mr Kochouseph Chittilappilly – None Executive Chairman till March 31, 2020

Mr Kochouseph Chittilappilly is the founder of V-Guard. His age is 72 years. He had been the Managing Director of the Company since its inception. In April, 2012, he passed on this baton to his son Mr. Mithun Chittilappilly. In FY17 he assumed the position of Non-Executive Chairman of the Board and continued as such till Mar-20. 

Also, he is involved in philanthropic activities with K. Chittilappilly Foundation, a non profit organization found by him. Mr Kochouseph did Masters in Physics in 1970. He also setup another business venture ‘Veegaland Developers’, involved in construction of ready to occupy flats & apartments in Cochin.

Mr. Kochouseph Chittilappilly has two sons, Mr Mithun K Chittilappilly & Arun Chittilappilly.

(ii) Mr Mithun K Chittilappilly – Managing Director

Mr Mithun is the part of V-Guard Industries's management since 2006. He is Mr Mithun is post graduate years old. in Management from University of Melbourne, Australia. Prior to joining V-Guard, he worked with Deloitte & Hewlett Packard. He joined V-Guard in May 2006 & appointed as MD in April 2012.

His wife Ms. Joshna Johnson Thomas was on the BOD as Non Executive Director (Non-Independent) and received remuneration of Rs. 73.94 lacs for FY21. Ms. Joshna Johnson Thomas, resigned from the Board effective from 1-Apr-21.

Remuneration of Mr Mithun K Chittilappilly for FY21 was Rs 5.24 Cr being, 0.19% of Net Sales and 2.60% of the Net Profit for FY21.

(iii) Mr. V Ramachandran - Executive Director & COO

Mr V Ramchandran is the Executive Director and Chief Operating Officer of V-Guard Industries. He is on the Board of the Company as a Whole Time Director since June-13.

He has 30 years of cross functional experience across blue chip companies like HUL and LG Electronics.

During FY21, he received Remuneration of Rs 2.93 Cr, being 0.11% of the Net Sales and 1.45% of the Net Profit.

(iv) Mr B Jayaraj - Non-Executive Non-Independent Director

Mr. Jayaraj is the Non-Executive Non-Independent Director of the Company. He has been associated with V-Guard group for more than three decades. Further, he joined the Company as Non-Executive Non-Independent Director, in April, 2020.

Moreover, he has handled diverse roles in various companies in the group, starting as an Accounts Manager way back in 1986, after completing Bachelor of Commerce and CA - Intermediate. Further, he is actively involved in the Group’s Charitable activities.

During FY21, he received Remuneration of Rs 0.04 Cr, being 0.002% of the Net Sales and 0.02% of the Net Profit.

(C) Revenue Segments

V-Guard Industries Ltd -Revenue Segment

Revenue Segment in past 5 FYs

V-Guard Industries segment wise revenue

From the above graphs it is clear that the Segment-Wise Revenue remains more or less the same Quarterly and Annually since past 5 Financial Years.

Financial Performance of Segments in FY21 and in Q3 FY22

i) Electronics

This Segment comprises voltage stabilizers, digital UPS systems and solar inverters. In FY21 this segment grew by 0.60% and contributed 28% to the total revenues.

There is a close linkage between the demand for these products with that of consumer electronics such as air conditioners, refrigerators and televisions. V-Guard is the market leader in the voltage stabilizer
category in many regions across the country. Further, the Competitors are largely regional players with limited presence.

ii) Electricals

The Company’s electricals segment comprises house wiring cables, pumps, switchgears and modular switches. Drivers for growth are home construction activity, weather conditions and consumption spending. This segment grew by 14.30% during FY21 and contributed 44.60% to total revenue.

House wiring cables is the largest product category for the Company. The Company focuses mostly on
the retail segment of this market. This market in India is primarily driven by growth of real estate including residential and commercial, industries, utilities, and infrastructure.

iii) Consumer Durables

The consumer durables segment includes fans, water heaters, kitchen appliances and air coolers. Revenue
from this segment grew by 9.2% during FY21. The segment accounted for 27.3% of total revenue in FY21.

In the solar water heater category, the Company is focused on rooftop residential solar water heaters
which are sold to both individual consumers as well as institutional buyers. Production is completely inhouse in a market that has lower competition and scope for long-term expansion.

The Company’s product range in fans includes ceiling fans as well as table, pedestal and wall fans.

Further, in kitchen appliances, the Company’s range of products includes induction cooktops, mixer-grinders, gas cooktops, rice cookers and others.

Moreover, in Air Coolers the Company has a range of desert coolers, window-fitted coolers, personal coolers and
room coolers. These products have been rolled out to more South and non-South markets

(D) Segment wise Margins - V-Guard Industries

V-Guard Industries Ltd -Segment wise Margins

(E) Geographical Breakup of Revenues: V-Guard Industries

V-Guard Industries geographical break up

(F) Market Share of V-Guard Industries

V-Guard Industries market share

(G) Financial Parameters of V-Guard Industries

V-Guard Industries financial parameters

In FY21, operating income grew by 9% from previous year. Further, Operating Income Grew at CAGR 12% p.a. from period FY12 to FY21. Moreover, in FY21, Company has reported lost of 400-500 Cr of Sales due to Covid Impacts in Various Location in India and ~150Cr of sales lost due to short supply.

Further, Over the years, Company reported Decrease in ROE, whereas, ROCE shown stable performance.

(H) Management Outlook

New Launches

  • During FY21, V-Guard Launched Multiple Products such as Modular Range of Fans, Table Fans, Water Purifiers.
  • During FY21, the Company launched several new products such as water purifiers, breakfast appliances, kitchen hobs and chimneys through online channels that saw an encouraging response from customers. The categories of hoods & hobs and breakfast appliances are completely outsourced at present. Further, the Company will consider investing in manufacturing capabilities once revenues expand to more substantial levels.

New Manufacturing Plant & Investments:

  • Additionally, V-Guard Started a manufacturing plant for the Production of Fans in state of Uttarakhand.
  • Further Company has invested Rs. 33 Cr for 18.71% Stakes in a Startup called "Gegadyne".
  • Additionally.  V-Guard Industries Ltd has approved a Scheme of Amalgamation amongst the company, Simon Electric Private Limited (SEPL) of amounting Rs. 27.3 Crore.
  • Company has made a Total investment of Rs 44.63 Cr in V-Guard Consumer Products Ltd (VPCL), Wholly own Subsidiary of V-Guard for further expanding business specifically to reduce reliance on imports / OEMs and to deliver efficiencies over time. Also to increase Company's share of in house manufacturing of the business.
  • Company's Consumer Durables Projects and Manufacturing Plants are still under investment.
  • V-Guard Has stated that it will Expand the Consumer Durables business Because of High Volumes, but have low Margins.

Raw Material

  • During FY21, there was significant increase in the prices of key raw materials like copper, aluminium, steel, ABS etc. which has duly reflected in product pricing.

(I) Concall Highlights - Q3FY22

Quarterly Performance

V-Guard Industries quarterly yoy
V-Guard Industries quarterly qoq
  • In Q3FY22 revenue increased by ~6% on QoQ Basis to ~Rs. 967 crore from Rs. 907 Cr in Q2FY22.
  • Company's sales in South and Non-South markets witnessed growth of 15.0% and 17.7% YoY basis respectively.
  • In Q3FY22, V-Guard, reported stagnant Gross margins of 30.6%, whereas in Q2FY22 reported 30.09%.
  • Further, in Q3FY22, Company reported Declined PBIDT ~8.5% from Q2FY22.
  • In Q2FY22, Company recorded PAT of Rs 52 Cr against Rs. 59.1 Cr in Q2FY22. Consequently, PAT decline by ~12.5% QoQ.
  • Company witnessed increased in Raw Material Prices by 20-25% in Various Categories.
  • Further, as per the Management Margins are declined due to facing high pressure due to rise in input costs, which resulting Contracted lesser Margins.
  • V-Guard commands 42-45% market share in organised stabilizers industry.
  • Moreover, V-Guard continues to focus on increasing penetration in Non-south market, new product launches and expanding retail chains.

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References:  Annual Reports, News Publications, Investor Presentations, Corporate Announcements, Management Discussions, Analyst Meets & Management Interviews, Industry’s Publications.

Disclaimer: The report only represents personal opinions and views of the author. No part of the report should be considered as recommendation for buying/selling any stock. Thus, the report & references mentioned are only for the information of the readers about the industry stated.

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