Ladies and gentlemen, good day and welcome to Q2 FY 2024 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 Ms. Renu Baid from IIFL Securities Limited. Thank you, and over to you.
Thank you. A very good afternoon, everyone. On behalf of IIFL, I would like to welcome you all to the Q2 FY 2024 Earnings Conference Call of Symphony Limited. From the management, we have with us today Mr. Achal Bakeri, Chairman and Managing Director, Mr. Nrupesh Shah, Managing Director, Corporate Affairs, and Mr. Amit Kumar, Executive Director and Group CEO. Without taking much time, I would now like to hand over the call to the management for the opening remarks. Thereafter, we can start the session with Q&A. Thank you, and over to you, sir.
Thank you very much, Renu and IIFL for hosting this call, and also a warm welcome to all the participants, and thank you very much for being here. The customary safe harbor rules apply, which I will not repeat. I will hand over the call to my colleague, Nrupesh Shah, to take us through a short presentation, post which we are all here to take any questions that you may have. Thank you very much.
Hello. Welcome to everybody in Q2 Conference Call of Symphony. Coming to performance highlights of Q2. The revenue from operations at our console level stands at INR 275 crore, marginally higher than September 2022 quarter. Stand-alone sales, that is Symphony India, INR 196 crore, out of which INR 191 crore is our domestic sales in the country, which is in line with Q2 of last year. This is despite erratic summer season. Gross margin and EBITDA margin percentage in line with our continuous efforts and endeavor have improved, which is mainly on account of value engineering, softening of input costs, and continuous thrust on development and launch of new products and favorable product mix. Coming to subsidiaries performance, Climate Technologies Australia, again, it has not performed up to the mark.
Performance is impacted mainly on account of domestic demand behavior on account of macro as well as microeconomic situation, particularly in Australia. However, IMPCO Mexico has delivered highest ever H1 as well as Q2 revenue. In a lighter way, what we have earned from IMPCO Mexico, that we lost in Australia, ultimately, both put together has become a zero-sum game, while GSK China has delivered a steady performance and it doesn't need any assistance by Symphony India for last one and a half year. Board of directors have announced second interim dividend of INR 2 per share amounting to INR 14 crore. Coming to Sankey chart of Q2 stand-alone financials, the revenue is INR 196 crore. EBITDA margin stands at INR 53 crore, which is despite lower top line, YoY higher by 13%.
In terms of the percentage, it is 26.8%, that is in excess of 5% YoY improvement, while PAT stands at INR 50 crore, that is 11% up, and percentage wise, it is 25.4%, including treasury income that is up by 470 basis points. Coming to waterfall chart, explaining the EBITDA margin movement, 21.6%- 26.8%, mainly on account of improvement in gross margin, favorable freight and forwarding, as well as other expenses. Capital employed on a stand-alone basis in Q2 stands at INR 55 crore, marginally lower than previous year. ROCE at 296% in our core business and return on net worth stands at 21%, while treasury is INR 589 crore, excluding equity investment and loans and advances granted to subsidiaries. Coming to console financials, revenue is INR 275 crore.
Coming to EBITDA margin, it is INR 42 crore absolute amount wise, that is 16% higher, and EBITDA percentage stands at 15.5%, that is up by 210 basis points YoY, and PAT stands at INR 35 crore, up by 10%, while percentage wise, 12.70%. Just stay for a while. This is the waterfall chart of console EBITDA margin percentage. On console basis, the ROCE in core business stands at 37%, while RONW is 15%. H1 financials. Standalone stands at INR 368 crore. EBITDA stands at INR 59 crore, that is down by 19%, and PAT stands at INR 64 crore, down by 8%, and percentage-wise, it is 17.40%, up by 80 basis points. Just stay for a while.
Console in the first half stands at INR 577 crore, while EBITDA almost in line with the previous year, INR 70 crore, and percentage-wise 12.2%, about 40 basis points higher, while PAT is again in line with the previous year, INR 59 crore. Coming to outlook, despite last few challenging years and seasons, Symphony has maintained its [Non-English content] position in air cooler industry, maintaining around 50% market share in the organized sector. Of course, number two, three, and four, five players keep on changing internally, while Symphony's market share, market leadership and thought leadership very much continues. That is reflected in innovative value-added products, calibrated strategic price hike, and continued thrust on semi-urban as well as rural area. There is also major emphasis on sales through alternate channel, which annually now accounts for more than 30% of the sales, which pre-COVID used to be around 10%.
We have successfully entered into adjacent product category. They have received good traction. They are not only adjacent product category, but we have also diversified into other distribution channel as suitable to those products. As far as international markets are concerned, apart from India, certainly despite temporary challenges, the long-term structural drivers are very much placed in overseas market on account of intensified heat wave and climate change. As far as Climate Technologies Australia is concerned, as we updated earlier, there has been a major transformation going on. That has resulted into huge reduction in CODB. In FY 2023-2024, the CODB will be down by 60% vis-à-vis when we acquired it. Next year it will be further stabilized.
We are completely revamping the product category and from existing product category of installed products now into completely mobile products offering much better value proposition, as well as there is a better demand and better margins. Almost we have shifted from in-house manufacturing to outsourced business model, as well as leveraging retail distribution channel. Thank you. Opening the floor for question answer.
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press Star and One on their touchtone telephone. If you wish to remove yourself from the question queue, you may press Star and Two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. We have our first question from the line of Rahul Gajare from Haitong Securities. Please go ahead.
Good evening, sir, and many congratulations Nrupesh Shah on the promotion.
Thank you.
Yeah. Sir, I have got a couple of questions. First, on the India business. After the first quarter, you had indicated that certain geographies had high inventory of channel. I want to understand how is the channel inventory progressed at the end of the second quarter on the domestic business? And if you can share financials of the CT Mexico and the China business. That will be the first question. Thanks.
Rahul, you rightly highlighted that at the end of the first quarter, we clearly in parts of the country, we were sitting on high inventories. And that was a challenge that we were envisaging getting into this quarter. However, as we speak, as you would have noted during the presentation,
The quarter this year, the billing that we have been able to do in the channel has been very close to what we did the same quarter last year. And that was possible on initiatives focused on expanding the network further and going a bit deeper into the rural market. So the net inventory that we have been able to place in the market at this point in time, compared to last year's same point in time, we are at a slightly higher number. But given the initiatives we have taken, we are certain that we will be able to take it forward suitably.
And coming to subsidiary companies financials, for April to September, six months, Climate Technologies Australia, top line is INR 91 crore versus INR 115 crore, while EBITDA wise it is INR -14 crore versus INR -11 crore.
For IMPCO Mexico, it is up from INR 69 crore to INR 107 crore and EBITDA wise it is INR +18 crore versus INR 7 crore. GSK China up from INR 19 crore to INR 23 crore top line wise and EBITDA wise up from INR 1 crore to INR 3 crore.
Yeah. Thanks for that, sir. Sir, the next question I have is on the Large Space Venti-Cooling business. That has been gaining traction. Is it possible you can give us some color on what is the performance has been, and what is the kind of potential that you see in the rest of the year?
No, so the color is, there is a decent growth. We are by and large achieving our internal target. Still, on a standalone basis, it hasn't touched double-digit percentage so as to report the segment reporting. However, on a-
Percentage. Okay.
Segment reporting wise. However, on a console basis, it contributes almost 16% - 17% of the top line.
Right, sir. Thank you very much. All the best for the remaining year. Thanks.
Thank you.
Thank you. Ladies and gentlemen, to ask a question, please press star and one on your phone now. We will take our next question from the line of Hardik Rawat from IIFL Securities. Please go ahead.
Hello. Hi. Thanks for the opportunity. Actually, I missed out on the EBITDA number for Australia. Could you please repeat that, the revenue and EBITDA numbers for both the current quarter and the previous quarter?
Sure. I have April to September number for Climate Technologies Australia. For the first half, top line is INR 91 crore versus INR 115 crore, and EBITDA is I NR -14 crore versus INR -11 crore, while IMPCO Mexico, top line is INR 107 crore versus INR 69 crore, and EBITDA is INR +18 crore versus INR 7 crore.
All right. Thank you so much. Apart from that, you mentioned that your market share currently stands at 50% of the organized market, right? I just wanted to understand as to what would be the share of the organized market of the overall market. If you have any indicative numbers that would help.
Value-wise, it will be close to 27%, 28%. Sorry, volume-wise it will be about 27%, 28%. Value-wise it will be close to 40% of the total size.
All right. With regards to your business in Australia, just wanted to understand what is the status of the transition that you are undertaking to the outsourced model. Do we expect that to compete in this fiscal or fiscal year 2025?
I think transition should be by and large complete by end of current financial year. Next year, 2024-2025, we should see the complete benefit and effect of transition. Currently, most of the manufacturing facilities have been outsourced. Reduction in CODB, to a major extent we have already achieved.
Actually, I wanted that number as well, like the reduction in CODB, you said 60% has been achieved in FY 2024.
I am saying vis-à-vis pre-acquisition.
Yes.
Pre-acquisition, the cost of doing the business was close to AUD 15 million. In current year, that is in 2023-2024, we will end it less than AUD 7 million. Next year it will be further down.
Understood. All right. One last question with regards to any new launches that you planned in coolers and adjacency in this, the remaining fiscal for the purchasing .
In India?
Both in India and the export market.
For the current season, as we are going around with the primaries right now, we have launched new ranges in the desert cooler category particularly, which are titled, Windblast and Jumbo Plus Air Series. In addition, we have launched a product focused on the kitchen cooler segment, which is Duet i. These are the two key products we have launched in the domestic market. For the global market, an additional product on the cooler side is actually what we call Buddy, which is one of the smaller tabletop coolers, which we have launched in this quarter particularly.
Understood. Thank you so much. Alright. One last question with regard to guidance. With this quarter ending, what sort of a guidance are we looking at in terms of revenue and EBITDA for FY 2024? If you could help with that.
Recently, we have uploaded our new investor relationship policy, and as a part of the policy, in line with most of the consumer durable and consumer-facing companies, we are not going to issue any guidance, whether short-term or medium-term.
Right.
Let we more focus on actual performance and delivery.
Got it. Thank you so much. Thank you so much for that.
Thank you. Ladies and gentlemen, to ask a question, please press Star and One on your phone now. Participants who wish to ask a question are requested to press Star and One on their phone now. Ladies and gentlemen, to ask a question, please press Star and One on your phone now. We have a question from the line of Chinmay from Emkay Global. Please go ahead.
Yeah. Hi, sir. Am I audible?
You are.
Yeah. I just really wanted an understanding of why the margins have expanded despite the lackluster top-line growth.
Can you please repeat the question?
Yeah. I just wanted to get an understanding of the reason behind the expansion in the margins, despite a slower growth in the top line, if I compare it. I just wanted an understanding of that.
As this waterfall chart explains, first and foremost, improvement in gross profit margin by 3.30% on account of any price increase, also on account of decent sales mix, and also launch of new models have helped in that respect. Of course, supported by somewhat moderation in input cost, coupled with better and efficient logistic supply chain, and also other overheads and expenses. Primarily these three reasons. These three put together take care of almost 5% improvement in EBITDA margin.
Yeah. That was the only question I had. I'll go through the presentation once again. Thank you.
Thank you. Ladies and gentlemen, to ask a question, please press Star and One on your phone now.
Renu, even though you are the host, please feel free to ask the question, because there can't be any conference call without your question.
We'll take the next question from Anupama Prakash Bhootra from Arihant Capital. Please go ahead.
Yeah. If you can quantify the price increase in this quarter with last year-on-year.
No, I don't think on account of competitive reasons we'll be in a position to share that.
In percentage terms, can you share how much percentage year-on-year?
We have a large model portfolio having more than 60 models in the country and more than 100 models across the world. In some of the models there may be a price increase, in some models there may not be a price increase. We won't like to comment on that.
Okay. Thank you.
Miss Anupama, are you through with your question?
Yes, I am done. Thank you.
Thank you. We have our next question from the line of Prashant Sharma from Sharekhan. Please go ahead.
Yeah. Thank you for the opportunity. Just want to understand, sir, when do you expect the channel inventory to return to the normal?
Prashant, as we said, the channel inventory at this point in time is slightly higher than the last season. But clearly we are working on plans to bring it to normal levels within the coming season or so. So definitely we are anticipating, on the back of some focused initiatives, that by end of this season, we would bring it down broadly to what we call normal, obviously subject to the seasons and how the weather pans out, but that's the plan right now.
Okay. Thank you very much.
Having said this, there are many regions where inventory is almost normal, where season was decent and inventory was normal.
Okay. Which area are we seeing the issues? I mean, still have the higher inventory?
This, Prashant, would particularly be in select states in north and west, where the inventory is higher than what will be considered normal inventory.
Okay. Thank you very much. That's all from my side.
Thank you. We have our next question from the line of Rahul Gajare from Haitong Securities. Please go ahead.
Sir, following up on my earlier questions, can you also give us the revenue and EBITDA of the China business? And yeah, so that's the first question.
So about GSK China, in first six months, top line is INR 23 crore versus INR 19 crore last year. EBITDA is INR +3 crore versus INR +1 crore.
Okay. Sir, also, with respect to your export market now, I recollect because of the political uncertainty or turmoil, export business was impacted to some extent. Now, given the recent disturbance that we are seeing in Middle East, given that Middle East are the large part of your export, how do you see the export business panning out? And yeah, your thought on this, please.
Rahul, the uncertainties are still a bit. It would be a bit premature to comment on this from a season perspective. The market for Middle East particularly builds up somewhere towards the end of the year. The core markets that we serve, especially the GCC countries, as of now, they don't seem to be impacted because of the ongoing situation there. We anticipate the situation will not affect much into our core markets where we export. To that extent, we do not see or anticipate a major concern on the Middle East market in particular.
Sir, the Egypt market and Sri Lankan market, the business over there, is that normalized now or that business is still slow?
The traction is building. I would not say it's normalized, but we are seeing some positive movement, and hopefully, things should sort of move in the positive direction as we go forward.
Sure. Thank you. Thank you very much, sir.
Thank you, Rahul.
Thank you. Ladies and gentlemen, that was the last question for today. I now hand the conference over to management for closing comments. Over to you.
Thank you all the participants for your valuable time. We are well aware that this is a busy season for the results, and back-to-back many conference calls have been lined up. Thanks to IIFL, and particularly Renu, for hosting this call. Thanks.
Thank you, sir. On behalf of IIFL Securities Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.