Ladies and gentlemen, good day and welcome to the Q1 FY 2025 earnings conference call of Symphony Limited, hosted by IIFL Securities Limited. As a reminder, all participant lines will be in the 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 then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Hardik Rawat from IIFL Securities Limited. Thank you, and over to you, Mr. Rawat.
Good afternoon, everyone. On behalf of IIFL Securities, I welcome everyone to Symphony's 1Q FY 2025 earnings conference call. We have the pleasure of having with us the senior management team of Symphony, led by the Chairman and Managing Director, Mr. Achal Bakeri, Managing Director, Corporate Affairs, Mr. Nrupesh Shah, and Group CEO and Executive Director, Mr. Amit Kumar. Without further delay, I will now hand over the floor to the management for their opening remarks, which shall then be followed by a Q&A session. Over to you, sir.
Thank you, Hardik. Good afternoon. This is Achal Bakeri. I welcome all participants to this conference call. The customary safe harbor statements apply. I would like to say that we have had an excellent quarter, and we believe that this is not a flash in the pan. Symphony has turned the corner and so has three of its four subsidiaries. The fourth subsidiary too, is in the process of turning the corner, and we believe that the future is much brighter for us than the last few years have been. I will now request our Managing Director, Mr. Nrupesh Shah, to walk us through the financial numbers, after which we are all available to answer any questions that you may have. Thank you very much. Nrupesh Shah?
Welcome you to financial year 2025 Q1 earnings presentation. Good afternoon to all of you. Coming to performance highlights for June quarter on a consolidated basis. Top line stands at INR 531 crore, up from INR 302 crore, 76% YoY growth, resulting into console EBITDA margin of 21%, almost double to last year in terms of the percentage and absolute amount by INR 112 crore. Leading to PAT of INR 88 crore versus INR 24 crore, that is 16.6%.
For the first time in the history of Symphony, in any quarter, we crossed the milestone top line of INR 500 crore, and this is by far the highest quarterly console standalone as well as subsidiaries as a block together, top line as well as PAT number. For Symphony India, the top line is INR 373 crore, up from INR 172 crore. That is 116% growth. EBITDA margin, INR 82 crore versus just about INR 7 crore.
PAT at INR 69 crore, up from INR 14 crore, that is 375%, translating into 18.4% of the top line. This is console minus Symphony India, that is subsidiaries or overseas revenue except ex-Forex. For YoY, not just Symphony India, but subsidiaries as a block, turnover has been INR 158 crore, up by 22%. EBITDA of INR 29 crore, up by 41%. PAT more than double, of course, on a low base, up from INR 9 crore-INR 20 crore. But again, this has been considering the kind of the subsidiaries we had to face and turn around and COVID time, et c. It's really coming out with decent number.
About the performance highlights for June quarter. Standalone performance is driven, of course, by strong summer and heat wave. But it's not just only and only on account of that. Many things also came into order and whatever strategies and efforts and Symphony transformation phase III, which we were talking about, all helped to lead to this performance. Eventually, it is on account of product penetration and perseverance. This performance is also on account of tremendous penetration, and we believe that there are miles to go for semi-urban and rural markets.
Most befitting product portfolio and range at every price point and for every territory. D2C has been a growth driver, which is 100% prepaid for us, and our entry in adjacent product category has also received overwhelming response. We talk about this. By the way, during the quarter, even LSV has also seen a decent traction i.e. ducted and industrial air cooler. The decent improvement in EBITDA and hence PAT margin is on account of expansion in gross margin. D2C segment has reached to a critical mass and scale and very happy to share that it's EBITDA margin percentage is now in line with normal trade or general trade which until last year was negative.
And as you know, D2C or e-commerce is a segment where a lot can be done. Again, on account of decent growth in top line, there has been substantial operating leverage because to an extent, fixed cost remain almost around the same level. And apart from Symphony India, it is particularly in IMPCO Mexico and GSK China have also come out with decent quarterly number. We'll also like to share about the brand performance, because ultimately that matters the most, what consumers think about and what kind of the brand pool is.
Symphony's share in Google search for air cooler category was more than 60%. Means if there have been more than 100 million searches, then 60 million plus searches have been just for Symphony. All other brands and unorganized players put together less than 40%. Second important figure is YouTube and OTT search in June quarter has been mind-blowing, 540 million plus impressions and 130 million plus views have been registered. Number of prospective customers visited on our D2C website in last 12 months were in excess of 4 million.
During the summer, we carried out industry's biggest and impactful and still value for money out of home campaign. Again, the data as showing in this slide can be easily cross-verified from respective search engine or YouTube, et c. We also came out with the innovative sales channel that is getting Symphony air cooler in 10 minutes by delivery through Blinkit. Of course, it was in selected cities, but it was also runaway success. About overseas subsidiaries, as I said earlier, it has been a highest ever quarterly revenue, EBITDA, as well as PAT, despite Climate Technologies has not delivered up to the mark.
About IMPCO Mexico, YoY, its revenue grew by 46%. This is on top of strong June 2023 quarter, in which YoY its top line grew by 38% and PAT has grown by 77% on top of 52% PAT growth in June 2023 quarter. Climate Technologies demand headwind persist. Also, some of the local macro and microeconomic factors have also played a role. However, on account of successful execution of Part One, despite the growth in top line, we could contain the EBITDA as well as PAT. Business transformation, including Part Two, is progressing as planned. About GSK China, it has seen a strong positive top line as well as bottom line, as you would have observed almost for last two years.
After continuously bleeding for three years and financial support from Symphony India, quarter-after-quarter, it is improving mainly on account of CODB we could reduce substantially. We rationalize the operations. Happy to share that out of about INR 69 crore of loans granted by Symphony to GSK China in June quarter, plus in the month of July so far, INR 7 crore has been repaid. Hence, remaining outstanding is INR 52 crore. Considering current year's business plan of GSK, we are quite hopeful and there is a decent visibility of additional repayment of loan.
In GSK China, I would also like to add that it is turning out to be a source of finished goods and product for our subsidiaries in Mexico and in Australia. The outsourcing of manufacturing that we have done in Australia and in Mexico has been partly outsourced to our subsidiary in China, GSK, and that has also resulted in its improved performance. It has been a win-win situation. The cost of product manufactured or COGS has reduced overall. The company in China is able to retain a profit and at the same time offer the product to the sister companies at a lower cost than they were manufacturing themselves. Here is a case of synergies finally kicking in.
Coming to consolidated financials. Waterfall chart. In June 2023 quarter, EBITDA margin was 9.3%, which has grown to 21% on account of improvement in gross profit margin percentage by 1.5% at a console level, while employee cost, advertisement and sales promotion, freight, rent, travel and other expenses have seen a decent positive, mainly on account of huge increase in top line. If we see the picture in totality of trailing 12 months at a console level, the top line stands at INR 1,385 crore, up by 19%, and PAT stands at INR 212 crore, up from INR 110 crore, that is 92% growth, and PAT margin has improved almost by 600 basis points.
And importantly, we will also like to highlight, despite this, in line with our philosophy and business model, whether on a standalone or for subsidiaries, our capital employed has remained the same, which is INR 301 crore versus INR 300 crore, driving ROCE as well as RONW very well. Coming to standalone financials, this is the waterfall mechanism, almost the same factor driving the growth. And on trailing 12 months basis, for our standalone basis, that is July 1st, 2023 to June 30th, 2024, top line is almost about INR 1,000 crore, up by 70%, PAT INR 207 crore, up from INR 154 crore, that is 35%, and capital employed in standalone business is just about INR 24 crore.
And now as on June 30th, treasury stands at about INR 491 crore versus INR 342 crore, and hence Board of Directors deem it appropriate to have a decent payout, which I will cover in detail later on. About subsidiaries' financials. Company-wise, IMPCO Mexico, it is for the first time in any of the quarters, it touched or crossed the turnover of INR 100 crore, up from INR 77 crore- INR 112 crore, and PAT up from INR 10 crore- INR 17 crore. Climate Technologies, it is subdued performance, turnover down from INR 51 crore- INR 44 crore. However, as you can see, still we could contain the PAT, mainly because of Part One of the transformation has been executed.
However, we believe that this is due to certain, we had the orders, we could have done certainly better than this, but there were logistical delays which did not permit us to execute many of the orders that we already had. Had that not happened, then we would have certainly surpassed last year's sales number. So we believe that by the end, for the financial year, for the rest of the year, there is significant potential to do better than last year in Australia.
About GSK China, turnover up from INR 12 crore- INR 16 crore, and at a PAT level, from INR -1 crore- INR 3 crore after providing for interest on loan to Symphony Limited of almost similar amount, that is INR 3 crore. About Symphony Brazil, of course, this was completely off-season, so not really relevant. But as reported earlier, Brazil witnessed excellent summer. And in GSK China, Brazil, in IMPCO Mexico, as well as Symphony India, the inventory is below normal level at a trade level as well as at a company level.
We have to remember that in Brazil, our winter months are their summer months. So the last quarter was actually their winter. And since we only sell coolers in that country, they had virtually no sale. I might also like to add that GSK China also supplies coolers to Brazil. It is turning out to be a source of products for all the three international subsidiaries.
About shareholders payout. It is our stated payout policy that at least 60% of the PAT to distribute to the shareholders. Today morning in the board meeting, board of directors have approved buybacks amounting to INR 71.40 crore. That is 10% of the net worth at a price of INR 2,500, in addition to interim dividend at 50%, that is INR 1 dividend on a face value of INR 2, amounting to about INR 7 crore.
All in all, total payout of about INR 78 crore. In addition to that, at a company level, there will be buyback taxation and incidental expenses. All put together, total payout will be close to INR 97 crore. Coming to new products. We thought it appropriate, this is the most opportune time to come out with and launch pathbreaking large range of air coolers. In all, 17 models across six range have been launched. I will request Amit Kumar to explain that.
For the coming summer season, we are introducing 17 new models as Nrupesh has mentioned, and these are spread across six product ranges. Out of which four ranges are completely new format, new performance levels that we are coming up with. In addition, we have two products that we are adding to the successful Sumo and Jumbo ranges. The four ranges that we are adding include the Silenzo range, which is India's quietest air cooler, lower India sound levels by about 10 dB versus the current ranges that we have.
We are also introducing the Air Force range, which is the high performance, high air flow product range that we are introducing especially for the markets in North and Central India. We also have the Maxwind range, which is again a model focused on the desert cooler market with additionally high air performance driven by exhaust fan model. Arctic Circle is the further upgrade of the successful Sumo 75 range. So it is a wider format, slimmer in depth, delivering unparalleled cooling and high air performance.
It is also being provided with a further upgrade to the i-PURE air filtration technology that we have. Arctic Circle comes with i-PURE+ as a standard feature into the product. We are introducing Jumbo 200 as the largest capacity, largest airflow model in the long successful Jumbo range, which is especially popular in northern and eastern parts of the country. And we are introducing Sumo 60 as an upgrade into the window air coolers that we have. So it is the next generation product for the successful Sumo junior range. All of these products that we talked about will be available in the market for the coming summer 2025 season.
We are formally launching them in a distributor conference being held tomorrow. The 17 models are going to be unveiled.
Yes. Along with that, we are introducing the storage water heaters range from Symphony, representing the innovation and the high-quality performance that the brand is known for. Also coming up with features that in our view offer consumers a new dimension in bathing. We believe the range that we are introducing gives a luxury bathing experience to consumers, based in particular two unique features that we are adding to our product. The first is the proprietary PUROPOD cartridges or filters that we are adding to our water heater.
They provide nine layers water filtration technology for the water passing through our water heater, which makes the water softened, helps to reduce hair fall, as well as helps to improve the skin friendliness of the water coming from our water heater. In addition to that, we are introducing the AI-enabled smart controller, which comes with next generation features in controlling water heater performance. These features include timer settings, water temperature settings, efficient child safety modes, also alarms and error codes in case there is some malfunction into the heater.
These are again, supported by our AI technology, and which we are embedding now into the water heater. The water heaters are coming under three ranges. The first, the flagship range is the Symphony SPA, which is a five star range and will come in three different sizes. Next, we have the Symphony SOUL, which is in a more conventional shape, cylindrical form with a plastic body, and this will also come in three sizes. The third in the range is Symphony SAUNA, which is again, that traditional cylindrical shape in metal body and comes in three sizes.
This is PUROPOD, both of them.
Yes. Both these ranges, SOUL and SAUNA, in addition to SPA, will have the PUROPOD technology coming as standard accessories with it.
You might wonder how come we are getting into water heaters after having maintained for a long time that we are an air cooler company. To that, I would like to say that back in 1994, we had actually introduced the country's first, in fact, the world's first all-plastic water heater with advanced features like polyurethane foam insulation, variable thermostat, and advanced safety features. Those were as revolutionary in the field of water heaters as our coolers were when they were launched. It was because of our financial stress that we were in the early 2000s and in the 2000s, that we had to exit from the category, so as to conserve resources and focus on air coolers.
This is a category to which we are no strangers. Like I said, we in fact created, sort of reinvented this category, and although we exited from it, we set the benchmark for the entire industry and all other water heaters that you see in the market today, from all the companies, owe their existence to what we had done back in the 1990s. Until the 1990s, all water heaters by the largest manufacturers who had been around for 40, 50 years, were all in metal, all simple cylindrical shapes with no product differentiation whatsoever. Although we had to exit, our product was reverse engineered and adopted by the entire industry and has become the industry standard for the last 30 years.
We have now reentered the category, and with once again, features which will become industry defining, and which will be significant differentiators from anything available in the market. One primary reason to also get into this category, was that for our online businesses, whether it is e-commerce or D2C, what we need is continuous presence in the market. We need continuous visibility. With this product category, we will be continuously visible so that we are able to build on the traffic that we generate on the visitors that we have on our websites, on our D2C or on e-commerce, and we are able to essentially capitalize on that.
Prior to this, in fact, a year ago, a year and a half ago or so, we had also introduced tower fans, which are in one sense an adjacent thing to coolers. Essentially, tower fans are, one can say, an air cooler without water. We have already sort of moved away from coolers into tower fans, and this is one step further. I might also add that in geographies other than India, whether it's in Australia and in Mexico, we have been selling heaters, room heaters, not water heaters, room heaters. Cooling and heating products have been in our portfolio forever.
Australia, in fact, more of our turnover comes from heating than from cooling. In Mexico too, heaters form a significant part of our turnover. Having counter seasonal products is again something which does happen in Symphony, not in India, in other geographies, and it is happening once again in Symphony after a gap of maybe 15, 20 years.
Yes. With water heaters for round regions, we will have adjacent product categories that is surrounds, LSV, as well as water heaters. Of course, because of our now decent presence in Brazil as well as Australia, which are in Southern Hemisphere, air cooler sale will happen during our winter over there. In a way, in various ways, we are trying to optimizing the business by de-risking the modes. Coming to outlook, again, as per our IR policy, we will resist from giving specific guidance about the next quarter or year in terms of the number or percentage of the growth.
However, June. So below normal trade inventory in India, Mexico, and Brazil. Pathbreaking and industry-leading innovation products. Increasing focus on sustainable as well as eco-friendly products. We do have now geography-specific products in the country as well as in respective subsidiaries and in respective subsidiaries under respective brands. As well as thrust on semi-urban and rural market, as well as adjacent product category. By the way [Non-English content] I believe there were certain skepticism expressed about the category, about the potential, about the growth. Certainly, we believe that in terms of the category, it is very young.
I think lot to do, a lot can happen, and certainly there is a huge growth potential in many, many respects. Even in the respect of new launch, in our history for the first time, at a time simultaneously, we have launched 17 new models across six range. Again, to launch them, lot has gone behind that for many, many quarters and years. About, as Achal may express, it is our subsidiary company in Symphony India, which are working in tandem with each other in terms of complementing research and development, sales and marketing. Yes. With this we are open for question answer.
Thank you very much, sir. We will now begin the question- and- answer session. Anyone who wishes to ask questions may press star and one on their touchtone phone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use only handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. You may please press star and one to ask questions. The first question is from the line of Manoj Gori from Equirus Capital. Please go ahead.
Thanks for the opportunity. Sir, congratulations on extremely good set of performance during the current quarter.
Thanks.
My first question is, given that we have seen normal to severe summers in the current season, also channel would have faced some demand supply challenges. In this scenario with any fear of stockout situation in the next summer, can we see inventory levels or inventory built-up exercises in terms of volumes probably may increase as compared to earlier period, and we may see relatively better 2Q and 3Q performance as well?
Look, as I said, as per our IR policy, we will resist from giving any specific guidance, quarter-wise or otherwise. But we very much maintain that, as we have conveyed in the past, that in Symphony India as well as on a console basis, on a CAGR basis, I think in line with few years before the CAGR growth what we had, we should register that kind of growth. Secondly, because of Stellar summer and demand of air cooler. I think many more avenues in terms of dealer distribution network, including further penetration in rural and semi-urban, for sure has opened up apart from many alternate modern channels.
Right, sir. I was not actually asking about any specific numbers, but it was more from a directional point of view, like how the channel behavior has been. That was regarding that. Secondly, on the subsidiary business, again, at the subsidiary level, obviously the revenue seems to be far stronger, and that was largely driven from IMPCO. But margins, we have seen there has been marginal decline over there. CT, we have seen some pressure, though we have been able to control the cost.
If we look at the overall margin improvement, it has been largely because IMPCO contribution has been significantly higher. If you can share your views on both the subsidiary at individual level, like how we see them in the coming years and also of the cost of doing business that we were taking many initiatives. Probably has this been completely implemented or we might see some more actions in the coming days.
As far as Australia is concerned, the cost of doing business is in the process of being improved upon. We have already come a long way from where we were when we acquired the company. But there still is some improvements which will happen in the months to come. We will finally be able to execute everything by June 2025. That is when our lease expires. Until then, we will still bear some overhead, which we don't need. But from thereafter, there will be almost no overhead or no CODB that we don't need, and our entire CODB reduction plan would have sort of fallen in place, yeah. Like I said, much of it has already happened, and a little bit of it to go is this.
As far as sales and top line is concerned, we have introduced a lot of new products in the last one year, whether it is panel heaters, whether it is fireplaces. We are also betting big on reverse cycle air conditioners in Australia. By reverse cycle, I mean air conditioners which both cool and heat. These products will also begin to gain traction and bear fruit. I think in the next 12 months or maybe less, you will see the entire turnaround happen. I think many years ago when we acquired IMPCO, and none of you were there then, about 15 years ago, we had a similar situation, and it took a few years for us to turn the corner.
But once we did, we never looked back. As you can see, nobody talks today, we do not even remember today about the times that we faced when we first acquired IMPCO. We believe that a similar situation will arise in Australia as well. Like I said before, China is proving to be a company which will supply products to all the three international subsidiaries, whether made in its own factory in China or sourced from other vendors in China.
Products are being routed through them because they are able to source at a lower price, lower cost than subsidiaries are able to themselves. As a result, it benefits both the Chinese company as well as the other subsidiaries. Along with that, the business in China itself, the domestic market itself, has seen some improvement and is steadily improving. All of this put together, we believe that the Chinese subsidiary is also now on a firm track towards being sustainable and profitable.
Thank you, sir. Lastly, we finally evaluated some of the other categories, and we reentered into water heaters, and we have launched three series as of now. Still early days, but how are we targeting to scale this business in the coming years? Now when we have already entered into storage water heaters, we would be open to evaluate other product categories in the coming years, especially in the electrical space.
Manoj, even in the past, whenever we were asked this question, we have always maintained that we will never say never. I still maintain that. Although I must also add that we are not actively considering any other category at the moment. We do not know what the future has in store for us. But as of now, like I said, we are not looking at any other category. The water heater category itself is a fairly large category and a competitive category and we have a fair amount of work to do to grow in that category.
Likewise, our tower fans also have, we believe, in our view, has great potential, and we have our work cut out to build that portfolio of products. Of course, our industrial cooler business is increasing at a respectable rate. But there still is a long runway ahead of us for that. So as of now, we are going to focus on these categories. But then again, if some compelling idea comes along or opportunity comes along, we will certainly evaluate those. But at this moment, we are not looking at any.
Sure, sir. Got it, sir. Thanks a lot, sir, and wish you all the best, sir.
Thank you very much, Manoj.
Thank you. We will take the next question from the line of Abhishek Ghosh from DSP Mutual Fund. Please go ahead.
Hi, sir. Thanks for the opportunity. Just couple of questions.
I am sorry to interrupt. Mr. Ghosh, your audio is not clear, sir.
Is it better now? Hello?
Still that static is there. You may proceed now. It is much better.
It is better? Yeah. Thanks for the opportunity, sir. Just in terms of your entry into the water heater category, in terms of distribution, if you can help us explain in terms of what is the distribution channel and what will be the difference between the current one or will it be largely overlapping? Just some sense around that will be helpful, sir.
To begin with, we will concentrate on the channel that we are already in, and as we go along and as we scale up, we will certainly diversify into other channels. I will not be able to say anything more specifically other than that. It is going to be a phased go-to-market strategy. As I said, in first phase, we will focus on some of our channels where we are already selling coolers, and then we will see how, going forward, how we expand the channel.
Sir, when you have taken this or while you have considered this decision, you have already taken a feedback from the channel in terms of what proportion of the channel already sells the water heater also as a product category? Would it be fair to assume that 20%-30% of the channel does sell this product category as well? Is there an estimation there?
You can safely say that, yes.
Okay. And sir, just the other thought, in terms of the, would you have any regional biases when you get into this product or will it be a pan-India launch? How should we look at it? Or will you go first in the West or is there a thought out as far as the regional presence is concerned when you ramp up this water heater category?
No, it will be a phased launch. What will be phase I and what will be phase II and therefore, it is still being worked on. But it will be a phased launch. It will not be a sort of a big bang, all India launch at one go.
Okay. So this season you will be able to capture some of the market shares in this season. Is that fair estimate or you are targeting it for next season? How should we look at it?
We will capture somewhat in this season, yes.
Okay. This will be like your cooler business also, outsource model that you will have to deal with and set up an ecosystem of vendors. That is the way to look at it as far as the manufacturing is concerned.
Yes. It will be a third-party manufacturing so the ecosystem sort of already exists, and we have tapped into that. Yeah.
Okay, great. Sir, the other thing is on the domestic air cooler mark-
Sorry to interrupt. Mr. Ghosh, I would request you to kindly rejoin the queue for follow-up questions, please.
Okay, sure. Thank you so much.
Thank you, sir. We will take the next question from the line of Aditya Bhartia from Investec. Please go ahead.
Hi, sir.
Hi, Aditya.
My first question again is on water heaters. Just wanted to understand, in your internal targets, how are you thinking about this category scaling up in the next three to four years? What is the kind of target that you are having in terms of market share? Like you mentioned that 20%-30% of our existing channel would be selling water heaters. At the same time, what proportion of water heaters would be getting sold from our existing channel? Would like to understand that, I think.
Aditya, honestly, it is a little premature to get to that level now. I think why don't we come back to this a year from now?
Sure, sir. My second question is on air cooler performance this quarter, wherein it appears that summers had set in a little late in northern part of the country, which otherwise is the key market for the category. Despite that, we managed to deliver exceptional revenue growth. Just wanted to understand, have we seen the proportion of revenues that get derived from other regions increasing sharply in first quarter, or is it that north really picked up? Essentially just trying to understand, is this category becoming a little more broad-based?
Oh, very much so. We have seen demand actions from across the country. As Nrupesh said a little while ago, there was a time when there was a feeling that this category seems to be on its, sun seems to be setting on this category. This summer has proven that that is far from true, and we have seen demand for this from markets where we had never seen demand like this. The non-traditional markets like the South or the East and the Far East or the Northeast, which are not traditionally, never really big air cooler markets. This year, we have sort of reset the equations across the country.
By the way, in that connection, if we talk about summer-related, any industry, of course, in cooling industry, air cooler as a category vis-a-vis fan and air conditioner has registered the highest growth. But we believe that in our estimate vis-a-vis any summer-related industry, air cooler has registered the highest growth. So whether it is beverages, whether it is ice cream or any other products. That is the kind of the potential and the future runway.
Great. That's very encouraging.
There are many reasons for that, and very convincing reasons apart from commercial reasons.
Again, this is not only in India, but even in Mexico, where the category has existed for a very long time. It seems that now there is a sort of a revival in the category, and the category has become a mainstream category. It is not really a fringe product anymore. It's become mainstream for the retailers and for consumers, as much as air conditioners or refrigerators or televisions are.
Great. Last bit, if you could-
Sorry to interrupt, Mr. Bhartia. I would request you to kindly rejoin for follow-up questions, please.
Sure. Thank you.
Thank you so much, sir. We will take the next question from the line of Pulkit Patni from Goldman Sachs. Please go ahead.
Thank you for taking my questions, and sir, congratulations. I think phenomenal performance.
Thank you.
My first question is on the industrial cooling business now. It has been a very long time since we have been hoping that there is growth. You did mention in the presentation, I do not know how comfortable you are with sharing the numbers in this quarter. More importantly, can you explain what is the kind of orders you are getting there?
Can one say that industrial cooling is something which also as a category is seeing inflection, and we could see much higher growth into the future? Or is it just because this was a terrible summer that you saw more orders, but you really cannot say that it is an inflection in this category? Your commentary and thoughts on the industrial cooling products is what we would like to hear.
Thank you, Pulkit. That is a very good question, and I wish I had a better answer for you. But I would not say that we are seeing an inflection point. It has seen a significant tick in sales, but as a percentage of total sales, it is still in the sort of high single digits. So it is still not a significant contributor to the overall revenue. We absolutely, despite whatever, we believe that the potential exists and that time will come when the inflection point will be reached.
Now, the inflection point could be very different. For example, what I said just a little while ago about the domestic coolers. Although the domestic cooler category was a very large category, it seems that this summer was another inflection point. Likewise, in industrial coolers, down the road, we believe that there could be a significant inflection, but that day has unfortunately not yet come. We are working on it, and we are focused on it. But I think it's a matter of patience and just perseverance, and not giving up on it.
Sure, sir. Any numbers you can share on that? Still early.
Pulkit, I would request you not to ask that question.
Sure, sir. My second question is on water heaters. See, in water coolers, we are early entrants. We have a substantial market share, so your right to win is very visible there. Can you highlight in water heaters, what is our right to win? Because it's a pretty well-covered category, multiple brands, and people have set up large capacities, actually, in-house to manufacture and sell this.
Just wanted to know, in our internal thinking when we decided to get into this category, and I can understand it, in a way, helps us even out our sales because we've been a very summer-centric company to sort of a more evenly spread out. But what is the other right to win that we have in the water heater category which prompted us to get into this?
Pulkit, again, very pertinent question. That's something that when we think of doing anything outside coolers, that's something that clearly plays on our mind. What is it that we bring to the table to be able to convince our customers that there is solution. Right now we are focusing on two things. One is continuous innovation into the product. I am not sure if you could go through the deck that we presented about the water heater.
Before launching the products, we had a chance to do a detailed sort of mapping of the sector, and we identified a couple of value propositions that, in our belief, are not being offered by the products existing in the market, which is what we have tried to cover through the smart AI controller and the PUROPOD purification system. Coming back to that specific, but the first leg of the answer is continuous innovation into the category to bring value proposition that consumers are looking for, but not available.
The second is leveraging our reach and the brands that connect with the consumers to offer high quality premium products, delivering the right performance, leveraging across the channels in terms of reach and consumer price. These are the two sort of legs on which we believe we will be able to drive the water heater category growth for the company.
Sure, sir. I would like to understand this a little better, so maybe I will request for a separate call later on this issue. Thank you.
Certainly, sir. Thank you.
Thank you. We'll take the next question from the line of Rehan from Equitree Capital. Please go ahead.
Hi. Thanks for the opportunity. Wanted to congratulate the management on such great numbers. I just had a question. On a YoY basis, could you tell us more on the value versus volume growth? How much volume growth has the company seen?
Due to competitive reasons, because air cooler for face, we are the only listed company.
Right.
Hence earlier we were sharing that detail, but unfortunately now we are unable to share because it goes against business interest. You can very well assume that it has been very strong volume growth also. Of course, depending upon the summer geographical requirement, it's a sales mix also which plays the role. As you know, we have low price product to highly priced product, so it depends on that too.
Okay. Secondly, wanted to understand, as per some last interaction that we've had, I wanted to stay on the follow-up.
I'm sorry to interrupt. If this is a follow-up question, you'll have to rejoin sir.
No, it's the same question only.
No, please continue.
Just wanted to ask whether, has the company decided to take any price hikes basis the communication earlier?
Now in the current quarter you mean?
Going forward in the current quarter, you can share light on both.
Yeah. Of course. It will all be a strategic pricing. There will be price increases in some models and in some they may not be. So it is all going to be what serves us best in the market. Yeah.
Okay. Just one last thing. What would be the margin profile that the heaters would probably get, the new product segment that you are trying to enter, what are the kind of EBITDA margins you are expecting?
Initially it will be low, but as we scale up it will certainly improve and be good.
Any range you can give?
It is too early for that. Yeah.
Okay. Thank you, sir.
Thank you. We'll take the next question from the line of Rahul Gajare from Haitong Securities. Please go ahead.
Yeah. Hi. Good evening, sir, and congratulations for a very strong quarterly performance.
Thank you, Rahul.
Yeah. The question that I have is again on the water heater, and I wanted to just try to address one aspect of the water heater. Just like we see in your air cooler business, you have placed the water heater products at a premium end of the industry with the kind of features that you have introduced, which clearly tells me that that is the only space that you are targeting. You have a sense of the industry size of the premium water heater that you would be targeting? Because I think the industry would be in the range of some INR 3,000 crore-INR 3,500 crore.
Rahul, we have three ranges. We are introducing three ranges as Amit explained. SPA is going to be the most premium range, whereas SAUNA and SOUL are not as premium. They will be more sort of mid-market products. They will be fairly competitive.
Because by the looks of it did feel like you are targeting only the premium end, you know.
No. See, that is the beauty of it. We are going to be able to sell a premium looking product at a competitive price.
With premium features and pathbreaking features.
Yes.
Value for money and still competitive, and hence thought it appropriate to foray into this.
Sure. Okay. That's all that I had. Thank you very much and all the very best.
Thank you.
Thank you. The next question is from the line of Pramod Amthe from InCred Research. Please go ahead.
Yeah, hi sir. This is with regard to your international operations. Two questions on that.
Pramod, we can't hear you. Pramod, your voice is We can hear you, but it's not very clear.
Yes, sir.
Is it better, sir, now?
Yes.
I have two questions with regard to your international operations. The first one is with regard to China. There have been some scrappage incentives given for white goods. Does air cooler qualify for that? Or if the competitor product like AC qualifies, what is the repercussion for your operations? Second, if we have to look at your-
Pramod, your question was not clear.
No, I was saying there are some scrappage incentives given by the China government for white goods. Recently they have survived all the white goods sector. So in that, does the air cooler qualify or ACs qualify and hence it may affect your business?
No, it doesn't really affect us one way or the other.
Okay. The second one is with regard to if you look at your geography of operations, the per capita income profile of the customer is substantially different for each of the countries. When you look at India and the air cooler outlook versus ACs, how do these customers look at air cooler as a proposition versus ACs? What is the uniqueness which continues to be there in those markets for a cooling-based segment?
It's only in India where unfortunately people consider air cooler as the poor man's air conditioner. Whereas in other geographies, it is a product which is used for applications where an air conditioner is not feasible, or even as a substitute to air conditioners, and not necessarily a cheaper substitute. People use it for a variety of reasons. For example, in Australia or in the U.S., or even in Mexico, people have whole house cooling in dry climates, because they find that the cooling is much better than what an air conditioner provides.
So it's not really a poor man's air conditioner in those markets. Portable air coolers are used for outdoor applications or for places where their whole house may be air conditioned, but the patio or the garage or the backyard may not be air-cooled. They'll put an air cooler next to the pool or near in the backyard. It's sort of used for applications where an air conditioner is either not possible or is not available. Even in the richest of homes, even in India, even in the richest of homes, there are air coolers.
Even in last summer, when there was a shortage of air coolers, I was getting calls from people whose entire homes were air-conditioned and still wanted air coolers for their gardens or their pets or their kitchens or their security cabins or their quarters of their domestic staff. So that's how it is. It's not really, I'm saying for the third time, but not a poor man's air conditioner.
Okay. Thanks for this detailed answer. All the best.
Thank you. We will take the next question from the line of Mayur Parkeria from Wealth Managers India Private Limited. Please go ahead.
Hello.
Yes, Mayur.
Good evening, sir. Yes, good evening, sir, and thank you for taking my question. I wish you a very happy congratulations for achieving whatever set benchmarks you all had and coming back to the growth trajectory after a very long period of time and what is expected from Symphony. I wish you that you continue to do the same.
Thank you very much-
Having said that-
...Mayur.
Yes, sir. Having said that, sir, what we have seen in terms of seasonality, whenever we have had a phenomenal year ahead, post the June quarter, the September and December quarters equally run up for us in a similar manner. May not be a very high quarterly growth, but surely it does match up and continue for us. First question is, one is the historical past, this seasonal trend, when we see that.
On the other side, suddenly the weather season in India in terms of monsoon has been very severe and some coldness has also come and some weather change has come. Given these two things, do you believe that we will continue to have the September and December quarters continue to be looking good in terms of forward booking and in terms of various trade channels? Do you see that is it too early to take a call on that right now?
Mayur, in these months from July to December, or in fact all the way up to maybe January or so, whatever sales that the company does, it goes only to the channel. The end customer does not buy in these months.
They never bought in these months.
We believe that the current quarter thereafter and the year as a whole should be fairly good. We essentially do not give forward-looking statements. I will not be able to say anything more than that. All in all, things are looking good.
Okay, that's great. With the strong performance you've had, do you believe that in a standalone entity, when we look at margins of I know it's a very big improvement in terms of June of 2023, but in general, around the margins which we currently had around 2021, 2022 currently has. Do you believe that it was slightly lower than what we could have achieved, or is there a reason, we would have spent on A&P, that's a slightly discretionary, it's a choice on us, I understand that. But do you believe we could have done better and there is room to do better, and if that, what are those levers which we should look forward to? Thank you, sir. That was from my side. Wish you all the best.
Yeah. Mayur, that's a good question. In fact, we could have done better, and we would have done better had there not been a demand-supply mismatch. We actually maybe left INR 70 crore-INR 80 crore, INR 60 crore-INR 70 crore, anybody's guess, worth of sales on the table. We had the demand, but we couldn't cater to that demand because of the demand-supply mismatch. Had that not happened, had we been able to cater to that demand, the margins would have been closer to, if not higher than, the numbers that we historically had.
But this has been also learning for us in terms of third summer. Of course, as you would have seen, YoY, we have fairly caught up with the demand. But again, current year, whatever we have witnessed, whether in terms of the production, meeting the demand, as well as supply chain, there have been decent amount of learnings, and we are implementing them.
Right, sir. Sir, with your permission, can I ask just one more question, sir?
Sorry?
Yeah, with your permission, can I ask one more question? Normally two I would have asked, but can I take one?
I think Michelle is here.
I understand, sir. I will come back with the question later in connect call.
Yeah, I think you will have to get back into the line. Otherwise Michelle will throw you out.
I understand, sir. Sorry. Thank you, sir. Thank you.
Thank you very much, sir. We will take that as the last question for today. I would now hand over the conference to the management for their closing comments. Over to you, sir.
No, thank you for your participation, valuable support, and inputs. Looking forward to meet all of you in Q2 conference call and as and when opportunity permits, maybe an investor meet or otherwise. Thank you.
Thank you, members of the management. On behalf of IIFL Securities Limited, that concludes this conference. We thank you for joining us, and you may now disconnect your lines. Thank you.
I missed to thank IIFL Securities for hosting this conference call. Thank you, IIFL Securities too.
Hardik, thank you.
Thank you. Have a great day. Bye-bye.
Thank you.