Ladies and gentlemen, good day and welcome to the Q4 and FY 2025 earnings conference call of Symphony Limited, hosted by ICICI Securities Limited. As a reminder, all participants lines will be in listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star and zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Aniruddha Joshi from ICICI Securities Limited. Thank you, and over to you, sir.
Yeah, thanks, Sejal. On behalf of ICICI Securities, we welcome you all to Q4 Symphony. We have the senior management represented by Mr. Achal Bakeri, Chairman and Managing Director, Mr. Nrupesh, Managing Director Corporate Affairs, and Mr. Amit, Group CEO and Executive Director. Now I hand over the call to management for initial comments and the presentation. Then we will move for question and answer session. Thanks and over to you, sir.
Aniruddha, are we audible?
Yes, sir. You are.
Yeah. In fact, his voice was breaking. It was not clear to us, if you wish to saturate.
Is it okay, sir?
Still it is breaking. Are you on speakerphone?
No, not on speakerphone. Handset only. Maybe some issue with the line, sir.
Are we clear and are we audible?
Yes, sir. Loud and clear.
Yes, sir. Loud and clear.
Thank you. We are good to go.
Okay. All right. Good morning. Good afternoon, everybody, and welcome to Symphony's annual results earning call. We have our presentation as always, which my colleague, Nrupesh Shah, will take us through. The customary safe harbor statement applies. Over to you, Nrupesh.
Thank you, and welcome to FY 2025 and March quarter conference call. We have a presentation giving the performance highlights. At our consolidated level, we have surpassed the revenue milestone of INR 1,600 crore, which was our aspiration since years, and at a consolidated level, we have registered the top line of INR 1,576 crore. That is 36% growth YoY. Similarly, March quarter revenue is the highest ever. It is 47% consolidated growth versus March 2024. Happy to also share highest ever annual as well as March quarter consolidated EBITDA as well as PAT. Coming to standalone performance.
For the first time, we have surpassed the milestone top line of INR 1,000 crore, that is INR 1,182 crore, showing top-line growth of 49%, which is on account of our years of initiatives of better penetration in semi-urban and rural markets, robust sales through alternate channels and also adjacent category and LSV have also contributed decently well. Coming to March specific, the top-line growth is 47% and again, happy to report highest ever annual and quarterly EBITDA and PBT, not PAT on account of exceptional item. There has been decent expansion in EBITDA margin by more than 500 basis points at our consol level and more than 400 basis points at a standalone level.
There has been also YoY gross margin expansion on account of, as guided earlier, launch of 17 new models as well as value engineering and substantially streamlining the supply chain in addition to operating leverage and economies of scale. The board has recommended final dividend of INR 8, a face value of INR 2, that is 400%. In all, this amounts to total payout during FY 2025, INR 178 crore, which is 84% of the consolidated profit vis-à-vis our stated guidance of 60% payout. Coming to company specific guidance in the respect of subsidiaries. To start with, the companies which we are going to retain, that is GSK China, have registered strong financials on account of robust growth in domestic as well as international market.
It has repaid loan of INR 13.5 crore out of its profitability and internal accruals, and hence current outstanding, including interest accrued, is about INR 49 crore. As updated earlier,
IMPCO Mexico is going to buy technology transfer as well as nine IPRs, and GSK China is selling to IMPCO, which were specifically developed for IMPCO Mexico. In new scenario, it has been found worthwhile to sell to IMPCO Mexico. The transaction value is about INR 43 crore, and considering GSK's strong financials and cash flow position, it won't need this amount. Hence net of expenses close to INR 40 crore, which GSK will receive from IMPCO, will be utilized towards repayment of loan to Symphony. In addition to that, we expect that from profitability and cash accruals of GSK China in FY 2026, by end of FY 2026 or around that, the loans to Symphony should be completely paid off and GSK China, in line with Symphony India as well as IMPCO Mexico, should be self-sufficient and debt-free.
About Symphony Brazil, which is more like a trading subsidiary to take the advantage of fourth largest air cooler market in the world. The top line growth, of course, on a small base is up from INR 26 to INR 39 crore, and we see a huge potential. Coming to IMPCO Mexico and Climate Technologies, two companies which are on block. IMPCO Mexico is registering consistent strong financial growth driven by broader product offering, wider distribution network. IMPCO Mexico will pay to GSK China towards IPR by completely out of its profitability and internal accruals, which otherwise would have directly accrued to Symphony India. However, these transactions achieve multifold objectives in terms of it will get a better value as it will own those IPRs and technology know-how. Secondly, GSK China is monetizing these assets and will earn a profit on that.
Thirdly, in a very tax-efficient way, funds will flow to Symphony India. Coming to Climate Technologies, Australia, we don't have any good news to share in terms of the performance, except at least last 11 quarters, degrowth has been reversed to an extent. So the degrowth began starting June 2022 quarter, at least that has been reversed. The slight positive momentum is driven by product expansion, which has been recently introduced, broader geographical and distribution reach, as well as cost optimization. However, on account of several initiatives which we have taken, as well as product availability, supply chain availability, team, as well as now it's going to serve much bigger market, we expect any prospective buyer will see what they are going to get down the line and its prospects.
Before taking you through specific financials, we would like to explain about the exceptional items during the year as well as the quarter. First and foremost, as until March 2023, GSK China was not doing well, and hence there was equity impairment of INR 1.55 crore as suggested by auditor. It was taken in March 2020 quarter. In addition to that, out of total loan, auditors have recommended to impair loan worth of INR 7.73 crore in FY 2024. However, as explained earlier, due to strong financials and visibility and potential of GSK China, now auditors themselves have recommended, and we have accepted it, the write back of INR 9.28 crore. Of course, it is a non-cash transaction, it is an accounting transaction, it is below the line transaction. But just to draw your attention. On the other hand, our total equity investment as well as loan given to Climate Technologies is substantial.
Out of which small part auditors have recommended as per Ind AS as well as accounting standard amounting to about INR 50 crore to take as an impairment. This is on equity investment by Symphony India in Symphony AU. So that has been recorded in the current year as well as in current quarter. Again, as explained for GSK China, this is non-cash outflow accounting adjustment. No way it is impacting ongoing transformation process of Climate Technologies, future roadmap, and in our expectation, its realizable value. Giving further update on Pathways, on which during the year we have taken total write-off of close to INR 50 crore, out of which very small amount of INR 49 lakhs has been recovered so far. However, we have succeeded in substantial legal progress to ensure we can optimize our recovery potential.
We have secured power of attorneys as well as equitable mortgage in Symphony's favor in all for 13 immovable properties, including valuable land parcels, residential and office complexes in Delhi as well as NCR region, and they are owned not only by Pathways, but also in the individual capacity of promoters and associates. In the interest of time, I am not taking you through other legal measures which we have taken as we have already updated earlier, and available in the investor presentation of 18th February, announcement of 5th February, as well as 29th of October. But we are on top of it and trying our level best. Next, please. This is the summary of exceptional items amount-wise, first at a consol level.
At a consol level, total exceptional item is at a pre-tax level about INR 50 crore, that is write-off on Pathways, and post-tax, it is about INR 38 crore. At consol level in March 2025 quarter, there is zero impact. In nutshell, in all at a consol level, exceptional item is INR 50 crore. Coming to standalone. There are variety of items as explained earlier. Write back of GSK China, impairment of equity investments in Symphony Australia, and Pathways write-off, all put together at a pre-tax level INR 91 crore and at a post-tax level INR 71 crore. And during the quarter, on account of GSK China and Climate Technologies, the net effect is INR 41 crore at a pre-tax level, and INR 34 crore at a post-tax level. So result to be viewed in light of this. Coming to consolidated financials for FY 2025. As mentioned earlier, top line is INR 1,576 crore.
The EBITDA is INR 316 crore, up from INR 173 crore. EBITDA is up by 83% versus top line growth of 36%. PAT, after taking exceptional item of INR 50 crore, stands at INR 213 crore versus INR 148 crore. That is growth of 44%. Coming to capital allocation at a consol level, total capital employed in the business based on monthly capital deployed is INR 248 crore versus previous year in excess of INR 300 crore. Capital deployed is lower despite increase in top line and bottom line. Translating into ROCE in core business 101%, and return on net worth percentage is up from 18% to 28% at a consol level. We have thought it appropriate to also share with you actual consolidated and as two companies are on block. If we exclude their performance, what could have been pro forma consolidated for FY 2025.
Revenue from operations in pro forma would have been INR 1,290 instead of INR 1,576. EBITDA would have been INR 305 instead of INR 316. PAT would have been higher by INR 9 crore. That is instead of INR 213 crore, INR 222 crore. Capital deployed would have been down from INR 248 crore to INR 33 crore. In nutshell, even though turnover will be marginally lower, however, profitability as well as capital allocation will be far superior. In addition to, as guided earlier, management bandwidth and focus will be fully deployed to more profitable growth-oriented domestic opportunities as well as exports and international business from Symphony India, which in new geopolitical environment are quite potential. This is waterfall chart for EBITDA margin, which was 14.94% for FY 2024, now stands at 20.05%. Coming to consol quarterly financials. Top line is INR 488 crore, up by 47%. EBITDA up by 77% at INR 103 crore from INR 59 crore.
PAT stands at INR 79 crore, up from INR 48 crore, 63%. At our PAT level, the percentage improvement is 165 basis points, and at our EBITDA level, the percentage improvement is 358 basis points. Again, we wish to emphasize, and as we will go down the line, even for standalone, as we have guided repeatedly, and it is available in transcript, at least for last three years, our complete focus is how to improve the EBITDA margin percentage. Because even if there is a decent improvement in gross margin, but if we can't control the items in between, then higher or lower gross margin are irrelevant. Hence, as you can witness, there has been consistent focus, and it is also yielding in terms of the actual performance. This is a waterfall chart of consol EBITDA, which is up from 17.64% to 21.22%. Next, please. Coming to Symphony India standalone performance.
Revenue is INR 1,182 crore, up from INR 796 crore. That is growth of 49%. Gross profit margin percentage stands at 49.75%, up by 73 basis points, and absolute amount-wise, it is up by 51% at INR 588 crore. EBITDA is up by 78% from INR 161 to INR 287 crore. On standalone, EBITDA margin stands at 24.25%, that is more than 400 basis points improvement. PAT stands at INR 176 crore versus INR 153 crore after taking into account and providing for exceptional items amounting to INR 91 crore. Notionally, had those exceptional items wouldn't have been, INR 50 crore is a cash exceptional item, and INR 50 crore is a non-cash exceptional item. The PAT would have been INR 247 crore, just for a record purpose. About capital employed. Based on monthly average capital employed on a standalone basis, it is INR -32 crore versus INR 44 crore.
Academically, it translates into infinite ROCE, which we believe some of the investors see it with a high growth, but we are fine with that. RONW percentage stands at 23% vis-à-vis 18%. Our treasury stands at INR 458 crore versus INR 395 crore. This is in addition to our equity investments and loans given to subsidiaries amounting to INR 258 crore, which we believe part of that, or as and when two companies are monetized, it should be also recovered. Coming to standalone EBITDA margin percentage, it is up from 20.21% to 24.25% with the breakup as it is displayed. Next please. Coming to standalone quarterly performance.
Some of you may recollect that when December quarter was muted, we had guided that we are sitting on decent amount of advances, especially for new models, as their production was to begin starting for some models in January and some models in February. On account of that, but also on account of decent performance and collections during March quarter, across the product, including new models, across the trade channel, including semi-urban and rural market, the turnover is INR 368 crore, up from INR 251 crore, that is 47%. Gross margin stands at 49%, up by 34 basis points. EBITDA is INR 99 crore versus INR 63 crore. That is 56% up vis-à-vis top-line growth of 47%. Margin-wise, it is above 27%, showing improvement of 159 basis points. PBT, excluding exceptional item, is INR 109 crore versus INR 69 crore.
But actual PAT is INR 44 crore, down from INR 46 crore, on account of exceptional item of INR 41 crore provided during the quarter. That is impairment of Climate Technologies in GSK China, net off. Had that non-cash impairment been not there, or if we exclude it notionally, PAT would have been INR 78 crore, that is up by 43%. Again, just for record purpose. So standalone EBITDA margin waterfall chart, up from 25.29% to 26.88% with the breakup as being displayed here. Just hold it. Yeah, next. Now taking you through the subsidiary-wise performance. As we have five subsidiaries, I have to take you through and bother through many more financials, but please bear with us because there was also expectation and consistent requests from many analysts that we must share subsidiary-wise detailed data also.
For GSK China, the revenue from operations for FY 2025 is INR 100 crore, up by 126%, while EBITDA is INR 20 crore, up by 337%, and PAT is INR 15 crore. So phenomenal growth, of course, on a low base. Coming to March quarter, top-line growth is up from INR 12 crore to INR 25 crore. EBITDA stands at INR 6 crore. Symphony Brazil, which is a trading subsidiary, and Brazil performance needs to be viewed. Brazil standalone as being displayed here, and also the EBITDA and PAT, which we retain in Symphony India because it is merely export facilitation company. Importantly, its turnover for the year is INR 39 crore, and PAT is INR -3 crore on account of Forex loss of INR 3.3 crore as well as extra shipping cost of INR 2 crore. However, if we consider Symphony India, we are quite optimistic about Brazil operation.
We are continuously expanding our product offering as well as expanding the dealer and distribution network. Ultimately, it is the fourth largest air cooler market. About IMPCO Mexico, top-line growth during the year is 22%, stands at INR 216 crore. EBITDA is INR 29 crore, up by 9%, and PAT is INR 18 crore, up by 63%. Even for the quarter, it has registered a decent performance. Coming to Climate Technologies, top line is INR 172 crore, down by 7%. EBITDA INR -18 crore. However, the solace is it is slightly reduced YoY, as well as PAT is INR -28 crore, on account of interest and non-cash item like depreciation, et cetera. For March 2025 quarter, there has been marginal improvement in the top line by 12% to INR 49 crore. However, at EBITDA and PAT level, it is leading as the numbers show here. Coming to outlook.
Again, as per our IR policy, we are not giving or sharing any forward-looking numbers, whether for the quarter or for the year, whether in terms of the top line, profitability margin or profitability. Our outlook will be more like qualitative factors. Summer of 2025 commenced with quite encouraging momentum. In South India and Central India, summer set in well in time, and we witnessed robust demand in the initial phase. However, post 31st March, as all summer-related industries are witnessing, and we are no exception, we are facing mild and erratic weather. However, due to several initiatives, of course, vis-a-vis previous year, so far it is muted performance.
However, we have to keep in mind we are working in such an industry wherein just consistent heat of 7- 10 days is enough to sell off everything in that market, and especially in Northern, Western, Central, and Eastern India, depending upon the territory, still 7- 11 weeks have to go. Repeatedly in the past, we have witnessed that it can move in any direction. Again, on account of several measures which we have taken over years, now we have quite decent penetration apart from general trade through several other trade channels in semi-urban as well as rural market, and still we see a huge potential to expand. In modern trade across the sub-channels, whether large format stores, regional large format stores, also D2C, also institutional sales, et cetera.
Each of them are generating decent sales performance, and there has been strategic focus to scale emerging markets, accelerating digital expansion, and deepening partnership with the modern trade. We have to also report that as we have introduced adjacent category in last two years. Adjacent category, which consists of tower fan, kitchen cooling fan, selling round the year, water heater, which is counterseasonal, and in addition to that, large space ventilated air cooling, centralized air cooling. All these three categories together have also contributed decent amount of sales during the year, and they are highly potential in all respect. As conveyed earlier and explained our rationale from exiting two companies, sharpen focus and more management bandwidth on growing opportunities. As well as we are exiting from those two companies, not necessarily from those two territories, depending how situation evolves.
In current situation, we see a huge prospect in U.S.A. because there we compete only with Chinese players, and in current tariff environment, already we have started receiving huge inquiries which are request to supply in the shortest possible time. Of course, that is not going to be feasible, but doors have opened. Thank you. We are open for question and answer.
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Palaash Gandhi from Investec. Please go ahead.
Hello?
Please go ahead.
Hello. Hi. Good afternoon, sir. This is Aditya Bhartia from Investec.
Hi, Aditya.
Hi, sir. You mentioned that there was an anticipation of a strong summer, and consequently, we did have a very strong Q4. Things are not really playing out as per those anticipations in the month of April. Does that mean that inventory at the channel level at this stage would be significantly higher than what we usually have, let's say, at the beginning of May?
I would request Amit to answer.
Aditya, the points regarding the season planning out right now is pertinent. The inventory that is there in the channel at this moment is slightly higher than what we had at the same time last year. That said, this is still too early in the day for the season to pan out. Most of the country, we still have three weeks of May and the entire June available for us. Like Nrupesh mentioned, we are making all efforts across the channels to address the same.
Sure, sir. Would it be possible to share anything on how April has panned out in terms of sales?
I am afraid, Aditya, at this stage, it will not be right to pre-share the numbers. All we can again repeat is the weather has been erratic. It has not been in line with our expectations. I will not be able to share numbers right now.
What we can share, probably our April performance or until now in the current quarter, would have been the best in the industry vis-à-vis peers. That is number one. Number two, last year was exceptional summer. If we exclude June quarter vis-à-vis earlier summer, vis-à-vis earlier June quarter, it has been a decent performance.
Okay. Understood, sir. My second and last question is, if you could share how exactly our LSV portfolio and the lower range of air coolers, Bharat range that we had launched, how exactly those initiatives are shaping up? How large those businesses would have become? How are we thinking about those businesses moving forward? Thank you.
Good point, Aditya. Starting with the LSV portfolio, it is still building up. It is a category creation work that we are doing in an organized B2B kind of environment. It is growing in double digits. Again, I am not at liberty right now to share the values, but it is growing well into solid double digits year-on-year basis. Coming to the Bharat range that you mentioned, that is a portfolio we had created to penetrate the rural markets in particular. From the perspective of the business that is focused on the rural segment, I would add that we are growing again in high good double digits for that sector. The Bharat range itself has been expanded to add a couple of product ranges to cover a larger spectrum of the rural segment. Overall rural segment is on strong, high double-digit growth rate.
Understood, sir. That is very helpful. Thank you.
Thank you. The next question is from the line of Shraddha Kapadia from SMIFS Limited. Please go ahead.
Hello, am I audible?
Yes, ma'am.
Thank you so much for the opportunity, and congratulations on the good set of numbers. Sir, my question is majorly on the channel dynamic. Has there been a notable shift in the channel dynamic, like is the e-commerce share growing? Also are there any strategic partnerships or channel expansions like e-commerce or institutional buyers? How do we plan to increase the market penetration?
Shraddha, overall, I would say it is still a bit early in the day to comment on the channel dynamics for this year versus the last year. The dynamics also vary by the regions and barring South, the season is still to play out in most parts of the country. at this point in time, I will not say there is any marked shift in the channel mix at the industry level across the country. Specifically about specific channels, as we mentioned in the presentation, rural and semi-urban is one clear segment that we are focusing on. In addition, the adjacent segments of the tower fans and the new category of water heaters is something that we are expanding our presence into. Those are part of the additional incremental focus.
Okay, sir. Thank you so much for the reply. Sir, would it be possible to give the percentage contribution for the LSV and the adjacent categories in terms of sales? Previously it was contributing approximately 10%. Is the contribution still maintained or can we see an increase?
Yes. Earlier that percentage we had given on a consol basis. Currently, in the interest of competition, we do have the numbers, but what I can broadly say, adjacent category, LSV put together on a standalone basis itself, which was earlier in small single-digit percentage, is now in decent double-digit percentage. And at a consol level, it will be even much higher.
Okay, sir. [Thank you so much for your time.]
Thank you. Ladies and gentlemen, you may press star and one to ask a question. A reminder to all the participants that you may press star and one to ask a question. The next question is from the line of Aniruddha Joshi from ICICI Securities. Please go ahead.
[Yeah. Sir, we want to understand about the market. Obviously, the weather conditions have been erratic, but if can indicate how does the market develop in, let's say, which is a major market in, let's say, March? South India is a major market or is South India at all not affected whatever happens in March per se? Or let's say North India is only important from a May, and June perspective. That is question number one. If you can share impact of weather condition regions in India and on the business of Symphony also, as well as domestic. That is question number one. Then question number two, we have introduced some of the differentiated products, let's say, single user air cooler. Then we have also introduced a fan also, which can be used in kitchen also.]
[Any updates on these differentiated new launches which we have done? Thanks.]
[Sure. Let me take up the first question first. As you rightly highlighted, the months of March and April this year were sort of prominent for the southern part of the country.] The remaining part, North, East, even most of the West, the months of May and June are where majority of the end consumer sales happen. That is how it has been, and hence, the weather pattern in March and April, they matter more to the sales in the southern part of the country. Most of the remaining regions I said earlier, they still have to see the peak of the season as we go forward. Coming to the specific products, let's say the kitchen cooling fan that we launched, that's a segment that we are building. That segment along with the tower fan segment, they are again growing well.
They are growing in strong double digits for us. They are also helping us expand into new kind of channels and counters across the country. The kind of stores that we were not able to get into earlier. [Similarly, I think when you said the single-person cooler, probably you are talking about the Buddy or Duet Mini , which are really desktop kind of models.] Again, those models were developed more for the global market. But again, we are seeing good traction and the numbers are small. We introduced the product actively in the market in the last season only. Numbers are small, but in terms of growth percentages, they are seeing high growth.
Okay. Sure, sir. That's helpful. Yeah. Thank you.
Thank you. The next question is from the line of Viren Deshpande from Alpha peak Investments. Please go ahead.
Hello?
Yeah, go ahead.
Yes, sir.
Am I audible?
Yes.
Sir, congratulations for the very good set of numbers and the diversification which we are doing into non-seasonal businesses is really good because the seasonal variations to some extent can be avoided. So that diversification is good one. Initial response also as per your information seems to be quite good. So that is good one. Now, regarding the subsidiaries sale, et cetera, you had taken a conference call also last time, and you had mentioned that process will continue for some time, and you are expected to realize quite a decent amount by selling those companies or investments in those companies. Now, I think we have taken the impairment of INR 50 crore in this quarter. So can you give us a rough idea of how much can be realized from the sale of those subsidiaries?
First and foremost, on 12th of April, we decided and finalized to put IMPCO Mexico and Climate Technologies on block. So it is less than a month since we have decided. We have appointed the investment banker with a specific milestone. So process has just begun, so it is very difficult to specify when it will be completed and how much value will be realized. Even though, as you know very well, in Climate Technologies, we have transformed the company, and down the line, any potential buyer should see AUD 6 billion -AUD 8 billion of market opportunity with our supply chain completely set, local team, brand, and product availability.
Yes.
Even though our performance so far post-acquisition is not up to the mark, it is bleeding. Based on that, we expect optimum value for it.
Okay.
As far as IMPCO, Mexico is concerned, our equity investment is less than INR 3 crore. As outlined earlier, apart from sale monetization value, INR 43 crore will move to GSK and in turn to us before sale transaction.
Yes.
That itself is going to be realized.
Yes.
In addition to that, as it is doing very well and it is very ripe in terms of the timing and in terms of its scale and size to have the optimum valuation. Both put together, we need to see how much we realize, but difficult to point out. That is related to investment banking transaction. Obviously, we will attempt and try to get the best value, needless to say. As far as your second part of the question was impairment.
Yes.
Impairment and investment banking transaction, both are quite different points. Impairment is done based on auditor's view, considering recent performance and next year what they estimate based on our recent performance. It is auditor's recommendation, and as a good governing company, we could have very well avoided that, and we would have been fine with just observation of auditor, but we decided to go as per the recommendation. It is completely non-cash item.
Yes.
That is the clarification. Now let me give you two hypothetical examples. These two companies put together, one on a higher side, assuming we realize INR 100 [and our investment is INR 60.]
Yes.
[That will be profit of INR 40 crore or a loss—]
Yes.
[—of INR 100 crore.]
Yes.
[In addition to that, whatever impairment we have taken, that will be added at that stage. However, if INR 60 is realized as INR 40, then there will be a loss of INR 20. Loss of INR 20 will be adjusted and will be lower to an extent of impairment. This is purely hypothetical mathematical example I am sharing with you.]
[It is fine. Thank you for mentioning this clearly. Basically, what I was trying to make is that impairment which we have already taken this time, which is good as a prudent accounting practice, and we have gone as per observations of the auditors. It is impairment. Now, what will be recovered from the proceeds of this, the impairment definitely as an equity something better and therefore we will have a very good credit, maybe wherever we get something good. Is that a correct observation?]
[No, we hope so, and we expect that we need to see the realization of two companies put together. Isn't it?]
Yes.
[As part of our business model, whatever realization happens, we do not even need that cash. We do not need that money to grow the business.]
Yes.
[That will be in addition to our current credit position.]
[Yes. You mentioned that maybe those companies, after the divestment also, whoever is the buyer of that company may continue to source production from Symphony India.] The sale—
It is feasible.
Sales may not be affected.
Too early to comment on that, but it is very much feasible due to variety of reasons.
Okay. The second question was regarding the—
Also keep in mind that IMPCO, Mexico is having own brands—
Yes.
—and Climate Technologies is having own brands. But having said that, over a period of time, Symphony India has also, to an extent, established its own brand in respective territory. So you know, there are several permutations, combinations. Apart from the kind of the supply chain which we have established, which is also going to be hugely beneficial for the new acquirer, and hence they may like to continue in their own interest also.
Thank you. Ladies and gentlemen, in order to ensure that the management is able to address questions from all the participants, please limit your question to two per participant. If you have a follow-up question, I would request you to rejoin the queue. The next question is from the line of Sanjay Chawla from Renaissance Investment Managers. Please go ahead.
Thank you for the opportunity. Just a couple of housekeeping questions. In your standalone revenues that you have reported this year, which is around INR 1,180 crore for the year, what is the mix of domestic sales versus exports?
Girish, if you can share those figures. Just a moment. Our CFO is getting those figures. Meanwhile, if you have any other questions.
I have a follow-up to this once I get some sense. On the domestic side, whatever that number may be, what is the mix of your core air cooler revenues versus the adjacent and newer categories? Broadly, the mix. That's a follow-up.
Girish, please. Domestic and export.
Yes. Domestic turnover is INR 1,065 crore and the export is INR 117 crore.
So broadly you can say that 90% is domestic and 10% is export.
Got it.
Does it answer your question?
Yes, it does. On the domestic, the follow-up is, how does the split look like between your core air cooler revenues and the adjacent and newer category revenues?
I think in response to earlier question, we tried to answer that. If we consider household air coolers and we consider adjacent plus LSV plus geysers and spares, now it is in high double-digit percentage, which used to be low single-digit percentage few years before. At a consol level, it will be much higher.
Understood. It is high teens right now. Where do you think this mix might be headed over the next, let us say, three to five years? What is the corresponding impact on the gross margins as a result of that?
No, I think very difficult to quantify that. Again, as per our IR policy, we will not be in a position to answer that, even though obviously we do have the short-term to long-term business plan, not only for adjacent category, for each of the product and for each of the category.
Okay. My last question is, on the air cooler side, how has your market share behaved on a YoY basis based on your estimates? How confident are you of holding on to your market share in the air cooler in the domestic side?
Sanjay, again, too early to comment on that. Initial indications are clearly in our favor. Again, you know our business model. We are the market leader and even in terms of placing the material.
Okay. Got it. Thank you and all the best.
Thank you.
Thank you. The next question is from the line of Rahul Gajare from Haitong Securities India. Please go ahead.
Yeah. Hi. Good afternoon, gentlemen, and thanks for the opportunity. I had two questions. One was on the exceptional items, and I think you touched upon that impairment very well, so I understand what has really happened in the Australian entity. The second question I had was, just continuation of the earlier question, on domestic and export. I wanted to know how are exports doing. Because I think some time back, certain geographies like Sri Lanka, Egypt had some trouble. I want you to specifically call out which particular geographies are doing well for you and where are you getting incremental inquiries from, and how do you see this export number of INR 117 odd crore shaping up over the next, say, two years or so, especially given the tariffs which are there on China and other entities. Thank you very much.
Rajesh Mishra will answer that. He is a CEO international business. Please.
In terms of the international business, you mentioned about Sri Lanka. Yes, we had an issue with Sri Lanka in the past few years. But the good thing is now we have bounced back and Sri Lanka is back on track. Middle East, we are doing pretty well. We are unable to sell in that market. So overall I would say all the territories are doing pretty well and we believe that the good part is that the air coolers are gaining traction and people in more and more countries are understanding that this is a product which definitely has a lot of potential. So we believe that in the coming years, air coolers will see good growth in most of the countries.
You are not talking about U.S., because that could be a big market, especially after the tariff.
Correct. U.S. is a massive opportunity. As Mr. Nrupesh had mentioned in his presentation, we already have some serious inquiries from the large U.S. buyers, including the top retailers. They wanted us to supply a sizable quantity in this season, which would be starting pretty soon. Unfortunately, because of the eight weeks of lead time and the production time that is required, we won't be able to meet that requirement. But we are definitely shipping some quantity this year. We also are very upbeat about opportunities in the U.S., especially with what has happened on the tariff front with China. As far as air coolers are concerned, it is only Chinese companies which are in competition. With them out of the race, I think we believe that we have a very good opportunity in the U.S. market.
Okay. Not necessarily a number, but do you think that your export business can double over the next, say, three years or so, given the opportunity that we are seeing now?
Yeah. Obviously. We have all the reasons to believe so.
Okay. Thank you very much and all the very best.
Thank you. The next question is from the line of Vinay Nadkarni from Hathway Investments. Please go ahead.
Yeah. Good afternoon. Am I audible?
Yeah. Go ahead.
Yes.
Yeah. Just two questions. One was on your employee cost, because I can see the improvement in EBITDA is largely driven by reduction in employee cost. Any particular reason why this sudden drop in employee cost?
Vinay, if you could maybe help us understand your observation better, because at the overall level, the employee cost as a percent of the turnover is well within the bands that we have historically operated in.
I think your observation is with the reduction in absolute amount of employee cost.
Yes.
But obviously, the scale of operation and economies of scale have played the role. Because as you will appreciate, whether employee cost or any overheads, not necessarily go up in line with the growth of sales and profitability. That is how in terms of percentage of the turnover or even profitability, it has given positive effect. Even few other factors and that always to happen.
Okay. Thanks a lot. The second question was on this. In your December quarter, you had mentioned that you have pumped in a lot of inventory into the channels because of big demand for air coolers and the inventory in the channels had kind of diminished after a brilliant season last year. Given that there could be some kind of a setback because of this summer this year, is there any possibility of using some of that inventory for your export orders? Or they are different products.
Vinay, that is what we did in the December quarter and even in March quarter, that is part of our standard business approach. We place material in advance in the market, and we still are quite bullish that we will be able to address the channel inventory within the domestic market. In any case, most of the global markets require different products as well as specifications, and the domestic inventory is hardly useful for the global markets.
Okay. Lastly, this FTA signed with U.K. yesterday.
Again, in response to that question, please keep in mind that so far, even in June quarter, even though it is muted, but there has been decent amount of lifting by the trade also in D2C. If so, decent amount of lifting would be there only and only if there would have been down the line secondary customer sales. Because that is also important to notice. That too, in June quarter, in fact, post 28th February , whatever billing is done, it is without any off-season discount.
Okay. The last question was on this FTA with U.K. Is there any benefit that the company has got?
Not really. U.K. is not such a huge market. In any case, the duties weren't there. So really, that will not matter.
Okay. Thanks a lot. Thank you very much.
Thank you. Ladies and gentlemen, please limit your question to two per participant. If you have a follow-up question, I would request you to rejoin the queue. The next question is from the line of Rohit Maheshwari from TATA AIG. Please go ahead.
Good afternoon, sir, and congratulations for good set of numbers. First question is out of INR 186 crore quarter-over-quarter sales, can you help with the deferral sales number which you had in quarter three, which you booked in quarter four?
No, we can't quantify that. Obviously, in the interest of the competition and otherwise. But our March quarter performance is on account of one is a deferral sales. But secondly, also decent traction and collection, because vis-à-vis whatever sales we have generated in March quarter, no way unbilled advance would have contributed more than 25%. So even in normal course, I think March quarter's collection across the channels, territories, and products have been quite decent.
Okay. Sir, second question is, maybe I missed your equation, your April 12th call, so just maybe I would be repeating it again. CT Australia, which you have decided to exit, you have given seven odd years to transform the company from where it was and where it is today, and you said in the call that it's a AUD 6 billion-AUD 8 billion type of market. I am not able to understand. If you think it's a decent market and you can find prospective buyers, and it's such a great market and giving to a company for seven odd years to transform, and now you are exiting it. Either you are finding operational challenges or something. Can you throw some light on this part?
No, we have given enough light, red light and green light in terms of the numbers and performance. However, just to summarize, we acquired this company in July 2018. Again, irrespective of the reasons, ultimately what matters is the performance. The reality is performance is not up to the mark. Still going into some details, just 15 months thereafter, stringent lockdown of COVID happened over there. Whatever transformation measures we had thought of, it got delayed almost by 2.5 years, and our real work started post January, February 2022. As a first step, as we know the base, we reduced cost of doing the business that is overhead by more than 50% so far. While acquiring it was AUD 15 million, and currently it stands at AUD 7 million.
Secondly, there were some local change in the regulation in terms of the gas ducted heaters, et cetera. On account of that, we had to quickly transform the product category. Now in last two quarters, the products which we have launched are much more suitable and better. Along with, we were working for last three years to create the dealer and distribution network, which is also reasonably in place. Most importantly, setting the complete sourcing as well as supply chain in place. It is there. In light of that, we expect the best possible value realization considering the prospects. Also, we believe that as a geography, as a product category, whether IMPCO Mexico or CT seems to be of good interest for prospective buyers.
Okay.
Sorry, just to add to what Nrupesh mentioned. Look, so currently the CT operations are now almost at the final stage of turnaround. As you would have seen, as we mentioned, that the last quarter we had a growth. Going forward, we are confident that CT will register a reasonable growth. Earlier, we were playing in a market which had a total addressable market size of about AUD 200 million. Now we are in a market with the new products that we have introduced, AUD 5 billion market size. It is AUD 5 billion - AUD 7 billion, yeah. Billion, sorry. What we are trying to say is that we are into a stage where we are very confident about future of CT. Therefore, we expect a reasonable and good valuation of CT. What it also means that it is not going to be a desperate sale at all.
We will realize a reasonable value. The whole idea is that we want the management bandwidth to be focused around markets where we see the opportunities to be of bigger size.
Sir, just related to this question. When you are saying it is about to come a turnaround and you are seeing a given market of AUD 5 billion -AUD 7 billion type of market, and the outlook looks good as per what you are guiding it. It clearly makes either you would have found the better opportunity in terms of growing the company to next level, rather than putting your energy to CT Australia now. Can I say that?
While it is turnaround, it will take some more time and a lot of effort and energies from the management here to really take it to that next level and—
Right.
—reap the real benefits. We believe that the same time spent in markets like Brazil or U.S. or other markets, we will kind of gain a lot more. It is choosing between good and better. That is what- It was a tough call, but we felt that with the limited time, we focus on markets which have much larger potential for us.
Okay. Just last question. Why do not we think of entering into BLDC fan market? Because it will be an adjacent market for us. Yes. I think this is a market which is growing very fast in India, and it is poised to reach towards a decent size by 2029. Are we thinking or we are at all not thinking on those lines?
Rohit, that is an interesting question. I do understand the BLDC market for fans is growing. It is not a thought that has not crossed our mind, and we are constantly evaluating multiple categories. While on BLDC, I must say that we have introduced BLDC coolers, and we are the first to introduce BLDC coolers in the market in India. We also have our tower fans with the BLDC technology. Coming back to fans, we will continue to evaluate it and as and when we find whether that category or something else suitable to our preferences and margin expectations, we would make a move.
Yes. This was my precisely point because you have all the ingredients with you. You have your healthy initiative where you have already launched BLDC. You know technology, so it can be a perfect bet for you in the market, which is expected to be a $2 billion type of market by 2029, which is poised to grow at 9%- 9.5% odd. Thanks. That is it.
Thank you.
Thank you. Ladies and gentlemen, that was the last question for today. I now hand the conference over to the management for closing comments.
All right. Thank you very much everybody for participating in this call. We hope we have answered your questions adequately and thrown light on all the issues that have been raised. Looking forward to seeing you in next quarter. Thank you, and have a great day. Bye-bye.
Thank you. On behalf of ICICI Securities Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.