IFB Industries has a branding challenge - while the company has seen high gross margins, it has struggled with a couple of things - 1) getting significant shelf space with sellers, compared to its competitiors, and 2) seeing gross margins translate into EBITDA margins. IFB Industries EBIT margin annually stands at 3.08%, compared to 5.66% for a company like Blue Star.
Investor Ashish Kacholia raised the issue at the company's earnings call. Rajshankar Ray, the CEO of the firm's Home Appliances Division, noted that the company is shifting its retailer touch strategy to showcase its airconditioning products, and also moving more aggressively in advertising to drive consumer demand. IFB, Rajshankar said, "will focus specifically on more use of ATL(Above the Fold advertising) as compared to BTL (Below the Fold)." ATL is significantly more expensive due to its higher visibility with consumers.
Rajshankar added that they have seen a positive response from retailers to recent A/C product showcases, and expect demand to rise considerably. While the company said customer pull is set to take off, it also added that the dealers aren't yet convinced that demand will soar, suggesting a continued uphill battle with sellers.