Ladies and gentlemen, good day, and welcome to the Symphony Limited Q4 FY 2024 earnings conference call hosted by ICICI Securities. As a reminder, all participant lines will be in the listen-only mode. There will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference, please signal an operator by pressing star and then 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. Thank you, and over to you, sir.
Yes. Thanks, Darwin. On behalf of ICICI Securities, we welcome you all to Q4 FY 2024 results conference call of Symphony Limited. We are with our senior management, represented by Mr. Achal Bakeri, Chairman and Managing Director, Mr. Nrupesh Shah, Managing Director, Corporate Affairs, and Mr. Amit Kumar, Group CEO and Executive Director. Now, I hand over the call to the management for initial comments on the quarterly and annual performance. Then we will open the floor for question- and- answer session. Thanks, and over to you, sir.
Okay. Good afternoon, everybody, and a warm welcome to all of you to our quarterly and annual earnings call. I am sure you are enjoying the summer as much as we are. I also appreciate ICICI Securities hosting this call. My colleague, Nrupesh Shah, will make a short presentation, following which we will all respond to any queries that you may have. Thank you very much, and over to Nrupesh Shah.
Hello, good afternoon. Customary safe harbor statement is applicable. Yeah, next. Coming to performance highlights. March 2024 quarter, on a standalone basis, we have registered highest ever quarterly India domestic sales. This is on account of decent summer which set in early March. Even in current quarter also, we are cashing in on India's scorching summer. We will talk further about it later on. There has been decent improvement in EBITDA margin on standalone as well as on console basis for the quarter, as well as YoY on variety of initiatives which we have taken during the year. LSV continues registering robust growth, and final dividend has been decided INR 8 on a face value of INR 2, that is 400%, and including interim dividend of INR 5, it amounts to annual payout of about INR 90 crore, that is 61% of the profit after tax.
And just to summarize the financials on a console basis YoY, there has been a 3% reduction in revenue, which stands at INR 1,156 crore, translating into gross margin percentage of 48%, that is up by 420 basis points, while EBITDA is 14.70%, up by 310 basis points and PAT of about 13%. Coming to block of overseas subsidiaries as a whole for FY 2024, overseas subsidiaries put together has registered top line of INR 433 crore versus INR 385 crore year before. That is increase of 13%, while for the quarter, it has registered sales growth of 15%. Coming to EBITDA, previous year that is in FY 2023, it was negative by about 11%. Current year, it is positive by 2.6%, registering overall improvement in EBITDA margin by about 1,170 basis points. And for the quarter, there is a positive EBITDA of 1.1%, which was - 23.4% previous year.
As far as IMPCO Mexico is concerned, for the quarter as well as for the year, it has registered highest ever top line as well as profitability. Summer has been a strong tailwind, and it has surpassed our internal budgeted financials also. Similarly, Symphony Brazil, wherein we forayed just year before, it has been a decent start and there has been a complete stock out, again exceeding our own internal budgeted financials. As far as GSK China is concerned, it's a steady performance, and first time it has registered positive EBITDA of INR 5 crore and after paying interest to Symphony, on its loan, amounting to in excess of INR 3 crore, it has registered marginal PAT. And coming to Climate Technologies Australia, demand had been persist. Of course, we are in the phase of transition for complete transformation.
However, on account of some of the initiatives which have been already implemented, starting Q3, we are witnessing, despite lower sales, decent improvement in gross profit as well as EBITDA margin percentage. Coming to consolidated financials for Q4, it stands at INR 332 crore, up by 8%. Gross profit margin, about INR 161 crore, 48.5%, up by 720 basis points. Absolute EBITDA, INR 60 crore, up by 158% and translating into 18.2% for the quarter, while PAT is INR 48 crore. And year as a whole, as we saw initially, top line of INR 1,156 crore and on a console basis, our total capital employed is INR 302 crore, which translates into ROCE of about 50% and return on net worth of 18%. And absolute EBITDA during the year stands at INR 170 crore, up by 24%, despite reduction of 3% in top line.
This is the waterfall chart of console EBITDA margin during FY 2024, up from 11.6% to 14.7%, mainly on account of improvement in operational performance of subsidiaries, which has translated into improvement in gross profit margin. Coming to standalone financials. For March 2024 quarter, it stands at INR 251 crore. Absolute gross profit margin is INR 121 crore, that is 48.4%, while EBITDA is INR 63 crore, up by 33%. 25.3% EBITDA margin, and after making one-time exceptional provision of impairment of about INR 7.7 crore for loan granted to GSK on account of accounting policy and standard, post that, standalone PAT stands at INR 46 crore. Otherwise, it would have been about INR 54 crore. Year results, standalone financial, top line is INR 796 crore, down by 10%.
PAT of INR 153 crore, which is 19.2%, up by 60 basis points, and our core capital employed in the business stands at about INR 44 crore, translating into ROCE of 362% and RONW of 18%. As on March 2024, our treasury, that is surplus fund, stands at about INR 395 crore. EBITDA margin YoY almost remains the same, up from 20% to 20.2%. Coming to subsidiary wise performance, Climate Technologies Australia, top line 185 crore, reduced by 18%. EBITDA, INR -23 crore versus INR -43 crore year before, and PAT, INR - 25 versus INR - 43 crore year before. For IMPCO Mexico, top line is INR 178 crore, up by 51%. EBITDA, INR 27 crore, more than double. PAT is about INR 11 crore, and there also there is a significant improvement in GP margin and EBITDA margin percentage.
GSK China, the top line is up by 36%, INR44 crore. EBITDA is 5 crore. Also happy to inform that almost for last two years, GSK China is completely self-sufficient to meet with its financial need, including working capital as well as its business growth. For last two years, no more financial assistance or loan in any form is required by GSK. Symphony Brazil, which is more like a trading subsidiary. This was actually our first year of operation and registered INR 26 crore of top line and positive EBITDA of INR 3 crore. Coming to outlook. Starting March, it has been a decent summer. There has been all around phenomenal demand, and summer sets in early in Southern India, Eastern India, and Maharashtra, and we are witnessing excellent demand across all these regions, across the models.
Still two more months to go, and as demand, as further summer sets in Central India and Northern India, it's likely to pick up further. As you know, Symphony very well maintains its numero uno status in air cooler industry. We are very confident about the long-term structural growth and performance in domestic as well as overseas market on account of intensified heat wave and climate change, which is already witnessing and will further witness strong tailwind in air coolers. Now, as we are witnessing improved performance in subsidiary companies, we are actually leveraging complementary strengths of our international business, which is our unique moat in many respects. Coming to Climate Technologies in two parts. One is initiatives which have been already implemented or in the final phase of completion. There has been a substantial rationalization of OpEx, that is cost of doing the business.
When we acquired the company, its annual OpEx was INR 77 crore. In FY 2023-2024, we reduced to INR49 crore, and next year it is likely to be around INR 38 crore. There has been decent rationalization in gross profit margin percentage, especially in last two quarters. As it can be seen in Q4 of 2024, gross profit margin percentage stood at 40% versus - 7%, while in Q3 of FY 2024, it was + 40% versus 28%. In first two quarters, as these measures were not implemented, actual effect is of last two quarters. This is mainly on account of calibrated pricing and revamped product portfolio and the sourcing mix. Further initiatives which are already in pipeline, and we believe that by September 2025, further measures which will be executed. One is completely outsourced business model, which is progressing well.
By September 2025, as far as portable air coolers are concerned, they will be outsourced from India, and the rest of their other products will be outsourced from China. The complete supply chain, OEM products, et c, will be already set and decided. There is a complete revamping of the product category for which we believe there is a decent traction, and they are also reasonably and decently profitable. Now we have also a decent distribution channel that should help us to really scale up. Thank you. We are open for question and answer.
Thank you, sir. We will now begin the question- and- answer session. Anyone who wishes to ask a question, please press star and the pound on the touchtone telephone. If you wish to withdraw your question from the queue, you may press star and two.
There is some disturbance.
Sir, before the question queue is getting formed, Aniruddha here. Just two questions from my side. Sir, we had introduced one kitchen fan also, and we have also at least partially introduced the personal air cooler also. Any update on these two initiatives that we had done? In terms of scale, or are these products pan-India, or how has been the performance of these two products? That is question number one. Question number two is about air purifier. Now, since a larger public is aware about the air quality pollution, all these details, is there any potential to have air purification benefits in air coolers also?
The way fan companies are now offering air purification benefits also. Just your views on that. The third question, can you elaborate a bit more on the region-wise growth rates? I mean, let's say metro, tier 1 cities or rural markets, and in terms of probably the market share that we would be having in these regions and if there is any gain in the market share. Yeah. Thank you.
I request Amit Kumar to answer these questions.
Aniruddha, I'll pick this up in the sequence that you talked about. Starting with-
Okay.
...power fans and the personal fans that you mentioned. These are niche products, and we are following a focused channel strategy for them. We have taken a conscious call of not spreading these across the entire country and the entire channel that we have. These are going on to niche channels. As of now, we are focusing on a select set of cities in the double digits across the country. Most of these are metros and tier one cities. For this year, the focus is on building the markets in these cities for these products. As we go forward, we would figure out how we expand the distribution across more regions and channels. The second point around the air purifier, I do understand that's a category that has gotten consumer sort of understanding and in some markets, at least acceptance.
I do wish to highlight some of our models already come with i-PURE, which is an air filtration technology that we introduced many years back into a select premium range of products that we have. That continues to be there, and those models we have made available across the country. To that extent, a subset of our air coolers already offer air purification benefits, and consumers can use these products if they want both cooling and air purification as a combined benefit from the product.
Regarding the regions and market shares, obviously, we are collecting early information, but I think it's too premature at this point in time, this going one third into the season, to talk about market shares for now. Allow us to hold off to this maybe end of the June quarter, we'll have a better sense of how we are doing on the market share for this season.
Okay. Sure, sir. Very helpful. Thanks.
Thanks, Aniruddha.
Thank you. The next question is from the line of Naysar Parikh from Native Capital. Please go ahead.
Hello. Hi. Thanks for taking the question. My first is-
Sorry to interrupt. The line is not very clear for you. I request you to please use the handset while you are speaking.
Hello. Hi. Is this better?
Yes. Much better, sir. Please go ahead.
My first question is, if we look at our A&P spend, right, for this quarter, it is almost halved. It was standalone and maybe even console. Are we in a bid to save costs? Are we under-investing in the channel? How should we think about it, and how should you think about the A&P spend for the next year?
No. It is more about year as a whole. As such, due to some strategic reasons, in March 2023, it was disproportionately high. Secondly, considering current year, the way in which summer is shaping up, we decided to spend somewhat higher amount in June quarter. Ultimately, it is year as a whole. Of course, YoY also in 2023-2024, there is a decline in advertisement and sales promotion expenses. Just to remind you, in 2022-2023, there were some of the one-time advertisement and sales promotion expenses, more like sales marketing, market research, somewhat related to D2C e-commerce initiatives, etc, also. What is in current year as a whole is more like a normalized advertisement and sales promotion expenses.
Okay. Second question is, can you give mix between how much broad channel mix, how much is from home and how much is industrial? Also within the home segment, how much is GT, MT, online? Just some rough directional idea.
As far as central and ducted air cooler, overall on a console basis, it constitutes about 15%-17% of the top line. We do not have company-wise data. Profitability-wise also, it is almost proportionate. I mean to say, centralized air cooling is also equally profitable. What was your second question?
Sorry, GT, MT, and online mix.
This is too early because just one month of the current summer is over. However, YoY and in absolute quantity, it is showing phenomenal growth. All put together in FY 2023, FY 2024, it would have contributed almost 30% or 1/3 of the sales, which consist of large format stores, RCS, e-commerce, D2C, institution, etc.
Okay. That 30%, 40%, and the remaining would be GT, right? That is how we should think.
That's right.
Okay, fine. Got it. All right. Thank you so much. I'll come back in the queue.
Thank you. We have the next question from the line of Balasubramania n from Arihant Capital. Please go ahead.
Good afternoon, sir. Thank you so much for taking my questions. Sir, my first question regarding Climate Technologies Australia, what's your thought process on changes in in-house business to outsource to a business model? So what is going to change in next over two to three years? And the second question are, we are in the pipeline of launches of in heaters side. So what kind of opportunities we have on heaters and portable ACs?
The Australian subsidiary was always a heater cum cooler company. It is not as if heaters are a new introduction. However, all this while it was focused on gas ducted heaters. The big change is that we are transitioning from gas to electric. We are slowly reducing our reliance on the gas ducted heating business and with the introduction of electric products, hoping to scale up the electric heating sort of category. It is just a matter of changing from gas to electric. We were always in heaters. Among the new products, as far as heating is concerned, yes, we have panel heaters which can be on the wall. We have oil-filled column heaters which are like portable heaters. We have built-in electric fireplaces. We have strip heaters which are mounted on the ceiling for verandas and for outdoor areas.
These are new heating products that we have introduced. Among air conditioners, yes, we have introduced portable air conditioners. That range too is being fine-tuned and calibrated for the summer to come. All of these products are going to be sourced from China. These products have been specially developed for us as per our specifications by vendors in China. The products which Climate Technologies used to make until so far which is roof-mounted air coolers and gas ducted heaters are also being outsourced to various manufacturers in China. Only portable air coolers which Symphony Limited specializes in will go from India. All the other products will be outsourced to China. As a result of all this, we are on one hand, significantly contracting our manufacturing capabilities and the space required in our overhead as is evident in the numbers that we have shown of CODB reduction.
It also leads to significant reduction in our cost of goods sold and an improvement in our gross margin, which is also evident in the numbers which have been shared with you. This also allows us to completely focus on sales and distribution and not sort of divert any of our bandwidth on manufacturing-related matters. This is something which we did 15 years ago when we acquired our company in Mexico. It was also a fully vertically integrated manufacturing facility and we transformed the entire business model into an asset-light, capital-light business model. We divested all the manufacturing, divested the real estate, outsourced everything, partly within Mexico or to China or to India.
The focus solely remains on sales and also you are able to reduce the cost of doing business, reduce the cost of goods sold, and most importantly, it becomes a variable cost business model. In other words, that is what we had done in Mexico several years ago. We did it in China recently and now we are in the process of doing in Australia as well. The way we call it in India is we have tried to symphonize these companies. Sort of adopt a business model and a philosophy which is very much akin to what we have done at Symphony . I hope I have answered your question.
All right. Yes, sir. Sir, how much price hike done in Q4 and what kind of price hike we can expect in coming quarters? Because the demand is very strong because of the summer seasons. If you could throw more light on the demand side and the price hike side.
I suppose, I assume you are referring to India.
Yes, sir.
Yeah. There will not be a significant price hike in this quarter. There will be some minor price hikes, but a lot of the prices have already been committed. So we will not be able to change the price significantly. There will be some minor price improvements, so don't expect much on that front. Yeah.
Is there 1% or 2% in that range, sir, or a bit even more?
No, you can say in that range. Yes.
Okay.
Yes.
Thank you, sir.
Thank you. The next question is from the line of Mayur Parkeria from Wealth Managers. Please go ahead.
Hello. Am I audible?
Yeah.
Yes. Good afternoon and thank you for taking my question. It has been coming back recently and trying to see over these years how it is done. Couple of questions from my side regards to Nrupesh Bhai also. Sir, in such a strong environment of summer season, even globally, there is in most parts of the world and in India. Is there a risk that we face a stock-out situation?
Again, a good question. To some extent, that is sort of happening in some select models in our case. However, our operations team is working day and night to meet with the demand. Yes, it is an unprecedented situation, and not only us, but pretty much the entire market, whether air coolers, air conditioners, are facing a similar situation. But like I said, our operations team is trying its best to be able to fulfill the demand.
Sir, we have always maintained a flexible manufacturing and rather capacity because it helps us to optimize our efforts on distribution as well as capacity change also, which we can monitor. In situations like this, if I remember such a strong summer, no early rains, and it has come after a couple of years, even before COVID, I remember it was 2016, 2017, times there were such, and we had broken a lot of financial records for us at that time based on that capacity. In today's time, is it not possible to actually take away strong market share from peers who will have to expand and we should and rather increase our market?
But your line seems to be breaking up in between, sir.
Hello. Is it clear now?
It's slightly better, sir. Please go ahead.
Yeah, it's a good question, and that is what we are striving our best to do. So like I said, our operations team is leaving no stone unturned to be able to meet the demand. So who knows-
Can we gain market share in this timeframe, sir?
We probably already have, although at this stage, we are not bothered about tracking that. That we will see at the end of the summer. At this point, we are just focused on fulfilling orders. I am sure that is going to be the outcome at the end of the summer.
Sir, just continuing with similar questions. When we had such strong summers in the past, I remember that our EBITDA margins were in the region of 28% in the domestic part, I am saying. In the domestic part, 28%, 30% also it has gone. Do you think in the next FY 2025, because our season is actually June quarter to June in that sense, do we think that FY 2025 can be a year where we come back to our, I know it is not situation, but for one of the years, is it possible that we hit that kind of back to our old margins given the strong tailwind we had?
First of all, I really appreciate your being so much on top of all the historical numbers. That is very remarkable. I may also say that our margin at its best, EBITDA margin, was 32%.
Okay.
Not only 28%, but 32%.
Yeah, I stand corrected. Yes, sir.
No, no problem. What I am saying is that our endeavor and our aspiration is to be back to that level. It might not happen this year, but in the next two years or three years or so, that is where we aspire to be back again.
Oh, Achal. So, okay.
Remember I said aspire, right?
I understand, sir.
We are certainly doing our best to do that. Do not hold me to that.
Sir, is it because compared to those historical years, we still remain an outsource model, our operations have not gone across. Is it just because that over these years, the pricing as the inflationary on the cost side must have gone up, but our pricing may not have taken as proportionate increase over longer periods of time, and hence our margins will take time to come to those? Or is it something else at play? Because in a strong summer, we can state-
Nothing else. There is nothing else. What you said at the outset is exactly what the reason is. Costs went up during COVID and because of sort of tepid summers, our pricing did not sort of keep up with the cost increases, which is why there has been a sort of a shrinkage in our gross and EBITDA margins. But with the trend of this summer, we will certainly be revising our pricing going forward, and we will gradually inch back towards or we will try to inch back towards our historical margins.
Okay. Sir, normally for our ordering. Can I just continue with small questions, two questions, please?
I am sorry?
Hello. Can I just continue for small questions? Two more small. Yeah?
I think if you can join the queue, there are several other people waiting, so I think it will be.
I will join, sir. Just one last question from my side. I will join the queue after that, sir. Last question. Thank you. Sir, our normally ordering takes place prior to our December season, right? From our dealers' perspective, it is just that the deliveries happen later on, but the ordering happened much before that. Are you saying that the ordering pattern post-March has actually undergone a change? Is it that the estimation of demand was a similar kind, and it is just the execution of the demand? We are seeing a structural change in the way now the ordering is also, even in this season, it is still happening.
No.
Thank you so much, and I join it.
There is no structural change. It is only that the demand is coming from regions where modern retail and/or regional retail chains are strong and which do not buy in the off-season. It is the GT which buys in the off-season, so which is why what we are seeing this. Otherwise, there is no structural change.
Okay, sir. Thank you so much. I join the call.
Thank you. Ladies and gentlemen, we request you to please restrict your questions to two per participant. We have the next question from the line of Manoj Gori from Equirus Securities. Please go ahead.
Yeah, thank you for the opportunity. First of all, it's just a good two years that you are enjoying the summer. It's quite a while now that we are actually going through a very smooth summer. My question would be, if you look at probably north market, still it's not operating to its potential. Do we see any business loss? Probably we could have done significantly better probably in the upcoming quarter. While-
Manoj, before you go any further, your voice is not clear.
Is it better now, sir?
Sir, speaker, if you can use the handset, please.
Yeah. Is it better now?
Yeah.
Sir, I was just regarding to the north markets, probably it's not operating at its potential. Do we see any business loss? Probably we could have done significantly better volumes in the upcoming quarter. Or we are seeing so strong demand from the south market, probably, we are just trying to meet the demand requirement over there. Just any thought on the overall demand environment, if you can throw some light.
It's a little, north will fire now. The summer generally sets in the north a little later. It's not that north is not going to happen. It's certainly just a matter of time. Once north fires, then that will also just add to what we are already doing.
Right. And sir, so far the demand-supply situation, probably, we are able to meet it, right?
Yes. Because again, the kind of products we sell in the north and the kind of products we sell in the south are somewhat different. So the manufacturing facilities are also different. There will be no overlap or very marginal overlap in that. There shouldn't really be any problem with that.
Right, sir. Secondly, if you look at the gross margins, we did somewhere around 48% for the full year at standalone level. This is despite a profit sharing that we do with our subsidiary. Can we expect some improvement over there? Or probably this should be normal case, at least for next couple of years, for FY 2025 and 2026?
I really don't know. I haven't thought that far or we aren't really looking at that. But like I said in response to the previous question, we are aspiring to and working in the direction of restoring our historical EBITDA margins. So in the process, everything will go up, whether it is gross margin or PAT or profit before tax, whatever. It's a matter of time, but that's the direction in which we would be heading.
Right, sir.
More importantly, the parameter will be EBITDA margin, because once we take care of EBITDA margin, whether it is CODB or whether it is meal of material, everything is accounted for. Secondly, you would have also observed that in Q4 2024, even though top line is up by 5%, our EBITDA margin percentage is up by more than 530 basis points.
Right.
Same is about console, not only for Q4, but year as a whole.
Right, sir. I was just coming to that because if you look at, we did took some initiatives for improving on the cost side, especially on the subsidiary, and probably the positive impact is visible during FY 2024. In fact, you have already given some indication on FY 2025 as well. Just want to understand on revenue side for Climate Technologies, probably we have taken a lot of efforts over there, but revenues have declined significantly during the current year. What is the roadmap ahead? Probably where do we see this revenues from INR 180 odd crores moving in next couple of years? That would be helpful.
Our first endeavor would be to recoup the lost revenue, what it was last year or the year before. Our first endeavor would be to be back at that level.
Right, sir. Sir, lastly, if you look at the receivable days, that has increased from roughly around 35 days- 53 days. Normally we keep it very tight. Just wanted to understand any one-offs over there?
Again, that is because of the significant, so far the business that has come is more from regions where there is a domination of modern retail and digital chain stores where we do extend credit, and online also. It is more a function of that. But it will certainly be reined in the days, in a few weeks. A couple of weeks.
And mind that billing starts from third week or fourth week of February until middle of May. So typically, it will be at its peak as on 31st March.
Right. Thanks a lot, and wish you all the best, sir.
Thank you.
Thank you.
Thank you. The next question is from the line of Siddhant from Goodwill. Please go ahead.
Yeah. Do you see this summer as an inflection point for the commercial cooling, or there is some time away? Are you seeing inquiries around that, or how is that business going?
Again, it appears as if you are using a speaker. You are not using your handset. Would you mind using your handset because your voice is-
Yeah. Can you hear me better?
Yeah, it is better.
Yeah. So in the industrial cooling segment, are you seeing any rise in inquiries? Is that as an inflection point, or does that still seem to be far away?
Rise because of the current summer, is that what you are saying?
Yeah.
Yes, of course. Because of the spike in heat, there is a much larger level of inquiries and orders also. So of course, what we are seeing in domestic is also something we are witnessing in industrial coolers.
Okay. Apart from that, where is the channel inventory? Like you said, it is clearing out. So where was it, like six to eight months or 12 months ago, last season?
Yeah, of course, it was much higher than it is now. It is pretty much gone now.
It is pretty much gone now. So technically, even after the summer, in H1 could continue to do well, right?
That is right. That is what we expect.
Going back to the 25% or 28% margin aspiration, what are the competition levels compared to 2016 versus 2024? Because I would assume the market has gotten a lot more competitive, so it would be tougher to-
Not really. First of all, again, we correct you. It was not 25%, 28%. It is more like 32%.
Yeah.
Competition, there is nothing new about competition. We have been there, done that. We have been around. The faces change, the names change. The pecking order may change, but the number of players has been as long as it has always been. So there is really nothing different about competition. Like I said, it is just the players have changed. So we have faced competition all through our history. So really, nothing significant has changed. At the end of the day, it is just more people who copy Symphony's products. That is all.
Yeah. We have seen that. Okay. Superb. Thank you so much.
Reflected also in our market share.
Correct.
It remains like that.
Correct. That is perfect. Thank you.
Thank you.
Thank you. The next question is from the line of Ayush C . From Shravas Capital. Please go ahead.
Yeah. Hi, am I audible?
Yes.
Yeah. Thank you for giving me the opportunity. I just wanted to understand, leaving all the countries aside, I just want to understand how the demand scenario is in India, and going forward, how you are going to cater to this demand.
Can you speak on the , can you use your handset, please?
Yeah, sure. Yeah, I just want to understand how is the demand scenario playing out in India, leaving all the other countries aside, and how are you going to cater to this demand going forward?
Demand scenario. I think we just spoke on this while we have been talking about that the demand has been unprecedented because of the summer. And we are catering to it.
All right. Any new product launches in line?
Not really. Nothing exceptional for us. We are continuously introducing new products. We have been doing that every year, and we will continue to do that going forward.
All right. Thank you.
Thank you.
Thank you. The next question is from the line of Lakshminarayanan K G from Tunga Investments. Please go ahead.
Yeah. Thank you, sir. Two questions. One is on the standalone thing. Our advertising has actually come down. I just wanted to understand whether it will get, we are booking lower this quarter, the next quarter it will go up, or how to think about it.
We have already answered that a few minutes ago, but we will answer that again. Nrupesh bhai , please.
Whatever advertisement and sales promotion expenses we have incurred in 2023, 2024, that is normal. In 2022, 2023, in fact, there were some of the one-time advertisement sales promotion expenses like related to D2C, e-commerce, some of the market research and market surveys, some of the overseas studies, etc. Whatever we have incurred in 2023, 2024, it is normalized. And that's what we had conveyed even in 2022, 2023. Secondly, our overall, or most of the market spend happens in March quarter and June quarter, and depending upon how season unfolds, and depending upon the requirement, that is spread between these two quarters.
Got it. And what is the freight and forwarding charges in the standalone for the full year?
I think that we can answer you separately. We don't have the figure readily available.
Got it. Thank you.
Thank you. The next question is from the line of Rahul Gajare from Haitong Securities. Please go ahead.
Hi. Thanks for the opportunity. Good evening, sir. I just have one question, given most of my questions are answered. Now, it's a small thing, but the loan that we have given to the Chinese entity and the impairment that we've done in this particular year, could you tell me how much of the loan is still outstanding? Is it closer to INR 60 crore after this impairment that is outstanding?
Overall loan, including outstanding interest, was about INR 61 crore out of-
Okay
INR 7.80. Impairment has been provided for. It doesn't mean it has been written off, it is provided for. So remaining is about INR 53 crore.
Okay. How much time do you think you can actually recover this loan in? Because I am just trying to think, will there be more impairments and possible write-offs sometime in future, given the performance of the Chinese entity that we have seen for the past couple of years?
Let me take you through Chinese acquisition. When we acquired the company, it was a bankrupt company, and on a top line of INR 50 crore, it was incurring the losses of INR 16 crore. We acquired the company just for about INR 15 million, and at that time the guidance given was in three to five years' time we will break it even. That is what we actually achieved in three years. Because the acquisition objective was apart from various complementary strengths, really the sourcing strengths, design and development, R&D, access to Chinese market, etc. However, post that is in 2018, 2019, post achieving the breakeven, on account of COVID and due to variety of other reasons, it completely disrupted.
However, for last two years, again it is back on track and the EBITDA, of course it is small vis-a-vis total, but this is the highest ever EBITDA what we have registered in current year. We expect this to grow further and we do not expect, in a nutshell, any write-off or impairment. We expect the cash flow and profitability to improve and hence the loan to return. Hopefully even impairment also, we should be in a position to reverse.
Okay, fair enough. That is the only thing that I had. Thank you very much and best wishes for the very strong season that we are looking at in FY 2025.
Thank you.
Thank you. The next question is from the line of Aditya Bhatia from Investec. Please go ahead.
Hi. Good evening, sir. My first question is on inventory situation in the U.S., because we had spoken about there being de-stocking carried out in the last few quarters for the year or so. Are we starting to see demand improving, which can aid Climatech profitability and performance going forward?
No, couldn't understand your question. If you can use the handset, please, Aditya. Aditya, can you please repeat the question by using the handset?
My question is on the demand situation in the U.S. We are seeing massive de-stocking taking place over there because of muted demand conditions. Are we starting to see an improvement in performance in the U.S., which in turn can aid performance of Climate Technologies as well?
Not at the moment. At the moment, whatever I said earlier, in case you heard it with regards to Climate Technologies is all limited to Australia. The U.S. is something that we are not considering. Whatever happens in the U.S. will be an upside.
Understood. At this stage, we are not seeing any green shoots. If in case they play out, then that can provide a bit of an upside.
Correct.
Understood, sir. On the domestic business, while I really appreciate the candid comments and the insights that you shared on margin, I am just wondering, if we are having a fairly strong demand scenario, then would the focus be more on market share or on margins? Is there a scope of improving market share a little more by maybe just keeping the margins where they are as opposed to looking for an expansion?
It will essentially be on the bottom line. It is sort of a good combination of market share and margins. We are not going to forsake volumes, but we will maximize volumes and maximize margins.
Understood, sir. One last bit, on the northern part of the country, sorry, I could not completely understand how exactly demand trends have been. Has the summer properly set in and have you started seeing very strong growth in north as well? Or so far it has been in other parts of the market.
North India is yet to fire and we expect it to happen anytime soon now.
Understood. Given that north is the bulk of air coolers market, what does it mean for the overall air cooler industry or our sales, let's say, in the month of April? If you could just kind of give some indications around that.
Well, north is going to sort of wait. Summer is going to set in. In all these years it never has been that the summer hasn't set in. Just a matter of time. So in fact, we are sort of in one sense glad that it did not happen so far because otherwise we would have been burning the candle at both ends. We would have not been able to meet the demand for both the south and the north had it happened simultaneously. So in a way it's good that the summer is staggered so we are able to cater to the demand and not really have to forsake any demand, any sales.
Sure, sir. North would be what proportion of our business?
Again, those are numbers that we sort of don't disclose. But of course, it's the largest market in the country.
Right. That's really helpful, sir. Thank you so much for these insights.
Thank you, Aditya.
Thanks.
Thank you. For participants who have joined the question queue, we request you to please pick up your handset to ask your question after your name has been announced. We have the next question from the line of Shraddha Kapadia from Share India. Please go ahead.
Hello, am I audible? Hello?
No, you are not audible. Please use your handset.
Shraddha-
Hello, is this better?
Yes, please.
Hello. Is this better?
Yeah, better.
Yeah. Okay. Congratulations on the good set of numbers. Actually, I just had one question. Considering this year it's election, are we expecting any increase in the revenues due to election or have you witnessed some other trends?
No, election to the best of my memory has never had any major impact on our sales. It is the summer, the severity of the summer is the only criteria that impacts sales.
Oh, no. Actually, if we have the rallies and everything and the public gathering, there we normally see the air coolers and everything. That was the main point.
No, sure. They do use our coolers. You will find our air coolers on the stage also behind every political leader-
Got it.
...that is giving a speech. The coolers that you see would most likely be a Symphony.
Yes.
But sure, that happens, but that does not lead to a huge surge in sales.
Okay. Just one more question. In terms of adjacencies, is there any specific product which we have seen performing very good or some product which you would like to highlight?
No. The only adjacency that we have got into are tower fans, which are also doing very well. But within air coolers it is the segment of kitchen cooling fans that we elaborated at the beginning of the session, that are also doing well, which have been introduced recently and are doing already quite well. All in all, you are seeing the numbers.
Sure. Okay. Thank you so much.
Thank you.
Thank you. The next question is from the line of Shehzad from Evolve Media. Please go ahead.
Hello.
Yeah, go ahead.
Am I audible? Yeah. Actually, I do not have any questions. The question has already been answered regarding the adjacents. Thank you very much for giving me time. My queue has already been solved.
Thank you.
Thank you very much.
Thank you. The next question is from the line of Mayur Parkeria from Wealth Managers. Please go ahead.
Am I audible properly now?
Yes, sir, you are audible. Please go ahead.
Okay, sir. Thank you for taking my question again. Sir, two questions from my side. First, I wanted to actually give a token of appreciation for the management on the Australian subsidiary. It has been a very long journey for us from FY 2019 onwards and the kind of pain we went through over these years. If I remember correctly, around INR 250 crores-INR 60 crores of the top line when we acquired that subsidiary. Over these five years or so, what would have been the accumulated loss, or rather, cash loss, which would have happened over these years in Australian subsidiary?
Yeah. Give us a minute.
Meanwhile, if you have another question until that figure is compiled.
Yeah. Sir, you were mentioning most synchronized all the international subsidiaries that happened in terms of asset-light model, in terms of cost structures rationalization. Can we now safely say that the international subsidiaries will no longer be a drag on the domestic numbers? Not only drag, but also any kind of support and any kind of pressure on the balance sheet, P&L. From here on, the focus is to grow next two, three years, and if the interpretation is correct, because it has been a very long journey, can you help us with some targets or something which we can look forward to from the international subsidiaries? That is it.
So, two things. First of all, we would not like to give a, sort of, what is it called? A forward-looking statement. However, we must also point out that the journey became longer because of COVID. Had COVID not happened, then the journey would have been over long ago. Because of COVID, we weren't even able to go there for three years or two years. We could not even visit. They could not go to China. Chinese couldn't go there.
Everything sort of came to a standstill. So were it not for that, things would have been very different. But we would, at the very minimal, like to restore the top line that existed. Given the latest cost margins and cost of doing business, without that changing, with the same percentages growing the top line. That is going to be what we would endeavor to do the least. To answer your question, we have an accumulated loss of INR 86 crores in the Australian subsidiary.
In continuation of your financial
Sorry to interrupt, sir. But the line for you is breaking up.
Just to remind you, when we acquired IMPCO Mexico, initially for five, six years, we had to continuously pump in the financial assistance by way of loan, which not only recovered its interest, but it is completely self-sufficient and debt-free. Similarly, GSK China, despite being China, almost for last 2 years, no more financial assistance is required. Hopefully, we are striving to achieve the same for Climate Technologies.
Sir, what has been our export in FY 2024 from India?
Again, that's a number we will pull up and-
Separately.
...separately you can talk.
Otherwise, in segment reporting, what we are already disclosing it is that, but we don't have LDU.
Okay, sir. Thank you.
Thank you. The next question is from the line of Premalal Kota from IBM India. The current participant seems to have left the line on hold. We will proceed to the closing comments, sir. I would now hand the conference over to the management for any closing comments.
Yeah. Thank you all the participants for your valuable insight as well as questions and sparing the time. Also, thanks to Anirudh and ICICI Securities for hosting this conference call. Looking forward to see and meet all of you in June quarter conference call.
Thank you. On behalf of ICICI Securities, that concludes this conference. Thank you all for joining us. You may now disconnect your line.