Ladies and gentlemen, good day, and welcome to the Amber Enterprises India Limited Q2 and H1 FY25 earnings conference call. This conference call may contain forward-looking statements about the company, which are based on the beliefs, opinions and expectations of the company as on date of this call. These statements are not the guarantees of future performance and involve risks and uncertainties that are difficult to predict. As a reminder, all participants' 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. Jasbir Singh, Executive Chairman and CEO and Whole-time Director of Amber Enterprises India Limited.
Thank you, and over to you, sir.
Hello, good morning, as well as good afternoon and good evening for the participants joining from different time zones. On the call today, I'm joined by Mr. Daljit Singh, Managing Director, Mr. Sudhir Goyal, our CFO, Mr. Sachin Gupta, CEO of CAC and RAC Division and Whole-time Director, and Sanjay Kumar Arora, Whole-time Director of IL JIN Electronics and CEO, Electronics. We have uploaded our results presentation on the exchanges, and I hope everybody had an opportunity to go through the same. As you are aware, we have three business divisions: namely, Consumer Durable Division, Electronic EMS Division, and Railway Subsystem and Defense Division. I'm pleased to say the diversification journey is progressing very well, and each division is unlocking new horizons of growth for Amber.
Propelled by each division, we had reported robust growth for Q2 FY25, with revenue of INR 1685 crore, reflecting a growth of 82%, operating EBITDA grew by 85%, and PAT grew to INR 21 crore from a loss of INR 6 crore over the same period year. Prior to taking you through divisional performance for the quarter, let me touch base on the recent strategic initiatives to shape up the growth trajectory of the group. Firstly, earlier this month, we did a groundbreaking ceremony for manufacturing plant of Ascent Circuits at Hosur in Tamil Nadu. This will add annual capacity of up to 840,000 square meters upon completion in two phases. Secondly, we have entered a joint venture agreement with Korea Circuit to foray into the advanced manufacturing of HDI, flex and semiconductor substrates PCBs.
This collaboration will further strengthen the offering of bare PCB portfolio and marks the revolutionary progression of Amber Group into a leading full-stack, backward-integrated EMS company. The JV would leverage Korea Circuit's experience of more than four decades in PCB production and help us develop competitive advantage for rapid growth and additionally bring the connect with marquee global customers. This JV will expand our horizons into newer segments, including mobile, IT modules, and semiconductor industry. From the ownership perspective, we will have seventy percent ownership through our subsidiary, IL JIN Electronics, and thirty percent with the Korea Circuit in the new JV company. Now, let me take you through the divisional performance. First is Consumer Durable Division.
This division comprises of three verticals: room air conditioners and its components, non-room air conditioner components, such as telecom components, smart meter components, IT server components, refrigerator components, microwave, washing machine, water purifier, and automobile components, and lastly, as a final product, a washing machine, fully automatic, front load and top load. Owing to prolonged summers and lower channel inventories during the period, both the vertical of RAC and non-RAC components recorded a strong growth of 104% and 68% respectively, with the blended growth of this division of 95%, leading to operating EBITDA of INR 62 crore for the quarter, representing a growth of 196% over last year. The robust growth of the division was driven by strong underlying RAC industry and increasing wallet shares by virtue of deepening relationship with customers.
Additionally, during the quarter, we onboarded one new customer for the tower ACs and cassette ACs and successfully converted a customer from gas charging earlier to now, ODM solutions. With regards to our diversification beyond air conditioners, I am pleased to report our washing machine JV with Resojet is on track and progressing very well to commence the mass production in second half. The trials are in progress for the four onboarded customers. Moving to electronics division now. The division revenue almost doubled to INR 492 crore, with a robust growth of 98% in Q2.
The journey, which began for capturing the technological shift in the AC industry from fixed speed AC to inverter AC by acquiring IL JIN, then offering PCB assembly, it has evolved now to a full-fledged division, offering solutions for appliances, consumer electronics, wearable, telecom, smart meters, automobile segment, and additionally entered into defense segment now, and further strengthened offering into the bare board PCB with acquisition of Ascent Circuits. I would like to emphasize on recent key strategic developments once again. The groundbreaking of a new manufacturing plant of Ascent at Hosur, Tamil Nadu. This will add annual capacity of 840,000 square meters upon completion in two phases, more than doubling the capacity from current level. We plan to invest around INR 650 crore for advanced manufacturing technologies of multilayer, bare PCBs, backed by state government and central government subsidies.
On the JV with Korea Circuit, JV will foray us into advanced manufacturing of HDI, flex, and semiconductor substrates PCBs. This JV will further graduate Amber as leading electronic company, offering solutions in PCB assemblies and full stack backward integrated PCB solutions for a single layer, double layer, multilayer, RF, HDIs, and semiconductor substrates PCBs. We await for the new incentive scheme by Ministry of Electronics and IT on HDIs and semiconductor substrates, which is likely to be announced in the next three to four months. Post announcement, we will finalize our CapEx plan and intimate our stakeholders accordingly. On the macro front, the bare board PCB market expect to grow to almost INR 80,000 crore market by FY 2030, from current level of INR 32,000 crore market, and with a CAGR of almost about 11%-12%.
And interestingly, close to 85% of the market today is fed through imports. So this leaves a big delta of growth for this division. These initiatives unlock the opportunity to capture the domestic market and localization potential as well. And we are also glad to announce that we have signed a buyback arrangement with our partners, Korea Circuit, where they will be buying back a percentage of the complete capacity for first two years, and then it will taper down, moving down. So the day we start with the Korea Circuit facility, we will be going for a complete 80%-90% of capacity utilizations on the year one itself. Now, coming to our third division, railway subsystem and defense.
The division reported a muted quarter with decline of 6% in quarter two, owing to delay in projects and shift in government strategies and priorities towards the non-AC coaches. However, the delay in Indian Railway offtake is more momentary and with no cancellation of orders, hence division growth potential remains very intact. On the expansion front, I am pleased to report construction is progressing well for Sidwal's greenfield expansion, and we are on track for energy efficient air conditioners, doors, gangways, and pantry systems to commence operations by quarter one of FY26. Additionally, with regards to the progress of JV with Yujin Machinery of South Korea, is progressing well for the couplers, products, gears, and pantographs, and trial of the products under this joint venture are expected to begin in India by quarter four this year or Q1 of next year.
We continue to maintain our earlier guidance of doubling the division's revenue in the next three years, backed by a strong order book of more than INR 2,000+ crore and product portfolio expansion. To sum up, we witnessed a strong quarter two, coupled with key strategic initiatives of Ascent's new plant expansion and JV with Korea Circuit, have further strengthened the positioning of Amber Group. In line with Government of India's Atmanirbhar Bharat initiatives, these initiatives augment the domestic manufacturing and import substitution capabilities. I now request Sudhir Goyal, our CFO, to take you through the consolidated financial highlights. Thank you.
Good morning, everyone. Greetings for the festive season. I am pleased to report a strong set of financials for the quarter, despite quarter two generally being a seasonally weak quarter. Let me take you through the quarterly financials first. During the quarter two financial year 2025, we clocked a consolidated revenue of INR 1,685 crore, up by 82% over last year. We recorded quarterly operating EBITDA of INR 120 crore against INR 65 crore last year, with a growth of 85%. For clarification, operating EBITDA is before impact of ESOP expenses and other non-operating income and expenses. PAT for the quarter is INR 21 crore versus the loss of INR 6 crore last year. Let me take you through half-yearly results for H1 financial year 2025, financials at consolidated level.
We recorded consolidated revenue of INR 4086 crore, strong growth of 55% over last year. Operating EBITDA of INR 320 crore against INR 203 crore last year, with a growth of 58%. PAT for the H1 financial year 2025 is 96 crore versus the 41 crore last year. Now, switching over to divisional performance. The favorable weather, coupled with the channel filling, led to remarkable growth in the consumer durables division. This division reported total revenue of INR 1069 crore for quarter two financial year 2025, against 547 crore same quarter last year, reflecting a strong growth of 95%. Coming to divisional profitability, the operating EBITDA for the quarter two was 62 crore, a growth of 196% on year-on-year basis. Moving to electronic division.
The electronic division has reported total revenue of INR 492 crore in quarter two financial year twenty-five, against INR 248 crore, growth of 98% over last year. The operating EBITDA of INR 37 crore in quarter two financial year twenty-five, representing year-on-year growth of 187%. I will reiterate, we are progressing well towards the guided revenue growth of 45% for this electronic division. To reiterate, the recent expansion of Ascent Circuits, new plant and Korea Circuit JV bodes, JV-
Well for the margin profile of division in long term, being the margin accretive segment of the business. Now coming to railway subsystem and defense division, the division reported a muted quarter, owing to slower offtake, as mentioned earlier. The revenue for the quarter to FY25 was INR 124 crore, representing a decline of 6% over last year, owing to lower revenue for the operating EBITDA declined to INR 21 crore in Q2 . On CapEx guidance, we expect the yearly CapEx to remain in the range of INR 350-375 crore, excluding the Korea Circuit CapEx and the expansion of Ascent, which we will let you know in due course of time.
On the balance sheet front, the net working capital days reduced to 27 days from 52 days in H1, and net debt stood at INR 1,277 crore at consolidated level. Looking ahead, we expect the consolidated revenue to grow around 25% for the year, and expect an improvement in ROCE to reach around 15% by the year end. The recent key initiative was new facility expansion JV with Korea Circuit and expanding product portfolio railway division, all goes well for the growth of the company. Now I request open for the Q&A.
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 handset while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. A gentle reminder, in order to ensure that the management is able to address the questions from all the participants, please limit your questions to two per participant. I repeat, please limit your questions to two per participant. The first question is from the line of Ankur Sharma from HDFC Life. Please go ahead.
Yeah. Hi, sir, good morning. Thanks for your time as always, and great numbers in both the, you know, the durable as also the electronic division. Just one question on the AC side. You know, if you could just talk about one, you know, how are you seeing festive, you know, overall industry level, you know, how is demand? Of course, Q2 was great in terms of channel filling, but in terms of end demand, how are you seeing? And also, you know, your views on overall industry growth and how much would Amber in turn be growing for FY 2025? Yeah, that's my first question.
Good morning, Ankur. So, I think on the electronics industry side, on the air conditioners, as you all have seen that, there were a lot of climatic volatilities, which we are seeing these days. Last year, I would say that it was the worst year of AC industry in forty years, and this year has been the best year of forty years of our industry. So, the channel inventories right now are at a you know, reasonable levels, which are standard levels, which keep the channel keeps-
Mm-hmm.
within. And this is the product which is not a festive, festivity product, so this used to be product earlier, which was sold in the festivities. But yes, in the southern markets, the definitely it does pump up because of the climatic conditions. But we, from a, from a growth perspective, we expect that the industry should grow 25%-30%, you know, improvement.
Mm-hmm.
from last year's number. So I expect that the industry should be in the range of one crore thirty lakhs air conditioner this year.
Mm-hmm.
as compared to about 95 lakh units last year. 95 to one crore last year. So, and we are expecting, I mean, everybody looking from the current order book and the excitement from our customers' level, we expect that the quarter three and quarter four will also be a good quarters.
Mm-hmm.
Because channel inventory is pretty low. And by December, customers will start filling in the inventory to various brands. So we expect that quarter three should also be a positive quarter for the industry. But you know, overall basis, I expect that it should be about 30% growth for the whole industry in India.
For Amber, sir, just to finish my question. Amber will grow faster for sure, right?
Amber is growing more than the industry primarily because of reasons that we've added new customer, which was earlier a gas charging customer. That is one part.
Mm-hmm.
Secondly, all our earlier initiatives, which we announced in last four quarters for, you know, launching the tower air conditioners and cassette air conditioners-
Mm-hmm.
Also, the commercial air conditioning range of ductables are now fructifying into reasonable revenues. So those kind of initiatives are also showing a very positive results. You know, all and plus the industry growth. So these are the three factors which is making Amber grow more than the industry. I believe we should continue this strength, trend, at least for the next two, three quarters.
Just a second question on the JV with Korea Circuit.
Sorry to interrupt you. I request you to come back for a follow-up question. Thank you. The next question is from the line of Natasha Jain from Nirmal Bang. Please go ahead.
Hi. Thank you for the opportunity, and good morning, everyone. So my first question is on your gross margins. Despite a very strong top-line growth, we've seen almost a 200 basis point decline in gross margin. So first, can you please explain that?
That's largely pertaining to product mix range, because whenever we will sell more finished goods, you know, the gross margins on the level is lesser there. And whenever we sell more of components, the gross margins are different there. So because this time, this quarter, we have seen more of finished goods sales sold by us, the gross margin has declined, but, you know. So that, that's very standard of our other product mix.
So, just a follow-up on that. Even in first quarter, our commentary was saying that we did more of finished goods than components. So when exactly can we see the component story playing out? Because the demand in terms of RAC is very strong. So when can this be, you know, expected to be changed?
Natasha, it's very difficult for a B2B company like us, which is delivering solutions on all the fronts. See, we sit in front of a customer as a solution provider. We don't. You know, they define what we need to sell them. So if they want more of a finished goods, we have to sell more of a finished goods. And in case they want to manufacture finished goods on their own, then we sell more of a components. So it varies from quarter to quarter, and I would like to guide everybody that, you know, we have mitigated two broad risks in our business strategies, which is, one is the brands exchanging market share should not impact us as we are supplying to everybody. You know, earlier, LG was leader, today, Voltas is leader.
Tomorrow, maybe, you know, other companies could be the leader. So, since we are supplying to everybody, that doesn't impact us. Second is, the brands exchanging the market shares, brands changing their strategies of insourcing and outsourcing. So when they start outsourcing, we will start supplying them more of finished goods, and when they want us to supply more components, we will supply. But we don't define the, you know, the mix of the components and all. So this can vary from quarter to quarter.
Understood, sir. So that's very helpful. And sir, a related question is on the channel inventory. Now, I understand that quarter two was a channel-filling quarter because of lower inventory, but we've to understand that going forward, we'll also be sitting on high bases, and because there has been a pumping of inventory in quarter two, does that mean that our growth could moderate in quarter three when actually it's a channel-filling quarter? Or do you think that the demand looks quite strong?
Industry is growing by 25%-30%. I think we'll grow more than the industry because of various initiatives taken by us. There were new products which we have launched, the new customers which I've added, which were not there last year in the balance sheet. Those kind of things will enable Amber to grow more than the industry, but yes, on long-term basis, you are right, that you know, because if we see from quarter one perspective, it was a very high base, so we will move in tandem with the industry growth.
Understood. And sir, just one last question, if I, if I may-
I request you to come back for a follow-up question.
Sure. Sure.
Thank you. The next question is from the line of Rahul Gajare from Haitong Securities. Please go ahead.
Good morning, and congratulations on a very good performance, sir. My first question is on your EMS business. Now, could you give us a sense on approximately what is the kind of investment that is being planned for the JV with Korea Circuit? I think Mr. Sudhir did indicate that we will give you a perfect number later on, but you know, some ballpark number. And typically, what should be the asset turn that one should expect in this kind of a business?
So, Rahul, you know, the asset turns in PCBs are very low. So generally, depending on what kind of PCBs you want to supply, so it ranges from 0.75 to 1.25 times. But there's another way to look at the asset turns, because in industry, government is giving good incentives. So industry is being fed by incentives from central government, which is Ministry of Electronics and Information Technology schemes. Earlier, there used to be a SPECS scheme which used to fund 25% of plant and machinery. And then the state governments are also giving the CapEx subsidies plus, you know, GST subsidies and logistics subsidies and other subsidies, in all totaling to about 30%-35%, depending on which state you want to go in for.
If you reduce that point of the almost 55% plus subsidies which you are getting back, so you will be doing a CapEx of almost about 40%-40%. From that perspective, the asset terms become very good. You know, so this is the way we are looking at, and that's why I think this is the right time to take bold and brave step to create import substitution in the country. Otherwise, we will continue to import as a nation. You know, the especially in the PCB business, there's a large total addressable market. I'll just give you all a very brief on where how we are looking it as a as an opportunity. Seven years back, India was consuming $32 billion worth of electronics.
Last year, India ended up consuming $115 billion worth of electronics in our country. As a thumb rule basis, 3.5%- 4% is what is required as a PCB of this consumption. And today, almost about 32,000 crore worth of PCBs are getting consumed in India, either through products, full products, or through imports. And incidentally, only 15% of this 32,000 crore is getting manufactured in the country. Now, that is a big delta which is lying on. And where is this $115 billion of consumption heading towards in FY 2030?
Business as usual, according to various research reports, it is heading towards $300 billion, whereas our honorable Prime Minister has taken it as a mission mode for $500 billion by FY 2030, which was announced in the Semicon conference. So if we even take the $300 billion mark, this is a $10 billion opportunity sitting for the nation. And we are assuming that at least 40%-45% or maybe 50% will continue to get imported in this form of the finished good products or through imports. So you can say, a small number of 3000 crore versus a $5 billion, that is the TAM for this kind of industry, and we want to be very brave and bold to bring this import substitution to the nation. So we will not shy away from announcing the big CapEx.
But the quantum of CapEx right now is very difficult to tell you, because we are waiting for the incentives. Now, what we hear from various media reports and during our meetings in the Ministry of Electronics and IT, that they are coming up with a very big incentive schemes, almost similar to semiconductors, kind of a thing for the HDIs and semiconductor substrates, and other electronic components which government wants them to be getting manufactured in the nation. So if that happens, and plus coupled with the state subsidies, we will come with a good number on the CapEx. We want to create a big import substitution story in India. And with the Korea Circuit technology and with the buyback arrangements with us, we don't see any risk in implementation from execution point of view.
We will become a full stack PCB player in the country, starting from single layer, multi-layer, double layer, RF, HDI, semiconductor substrates, plus PCB assemblies delivered by IL JIN and Ever. This is a very unique electronic EMS which we are creating.
So this is very helpful. And typically, how much time does it take for construction of this kind of facility that you are initiating, with Korea Circuit?
So normally, this kind of investments take somewhere about 10-12 months for construction, because the lead time of the machineries are quite long. I think as soon as. So what we are doing is, in 3-4 months' time, we will have the notification or, or the announcement by Ministry of Electronics and IT. Parallelly, our teams have started talking to various state governments, for and scouting the land lease parcel. And also one team is working with the customers along with the Korea Circuit. So we are very, having very marquee customers, which Korea Circuit is planning to shift to India, with us, and these are big names which are coming on the table.
Okay, so we'll see this as, you know, really starting to contribute in FY27. I think that is what I can make out from our discussion.
Maybe quarter four, 2026, maybe could be seen as a first kind of implementation from that. But this is on the Korea Circuit. But on the expansion plan of Ascent Circuits, we have already done a groundbreaking ceremony. We should be, you know, the plant should be up and running by next year, September. And we expect H2 of next year to contribute from the next new plant also.
Thank you. Thank you very much, sir.
Thank you. The next question is from the line of Abhishek Ghosh from DSP Mutual Fund. Please go ahead.
Hi, sir. Thanks for the opportunity. Sir, if you can help us articulate for both Ascent's eight point five lakh square meter and for Korea Circuit what will be the overall CapEx that you will entail over the next two, two and a half years?
Abhishek, we are doing INR 650 crore CapEx right now, out of which we will get almost about 50% back from the government. So net CapEx outflow will be INR 300 crore in the two financial years. This year, we have just started the construction. So the guidance as given by our CFO of INR 375 crore contains the, you know, this CapEx guidance on the minus the CapEx of the Ascent Circuits. So I think somewhere, in, if you want to answer that, total Ascent Circuits will do about INR 650 crore in next two financial year. On the HDI Semiconductor substrate, we will be able to let you...
Hello?
Yeah, Abhishek, I hope I have answered your question.
Sorry, sir, you were inaudible for 10 seconds. Okay, I'll maybe get it later. Sir, in terms of the Ascent's number, in the INR 492 crore of top line that you have done in 2Q, what was Ascent Circuits' number in that?
Abhishek, Q2 Ascent numbers is revenue is INR 83 crore and operating EBITDA is INR 16.5 crore.
Okay. Okay, got it. Sir, just one thing. In terms of the,
Sorry to interrupt you, sir. I request you to come back for a follow-up question.
Okay, sure. Thanks.
Thank you. The next question is from the line of Aditya Bhatia from Investec India. Please go ahead. Mr. Aditya, your line has been unmuted. Please go ahead with your question.
Hi. Good morning, sir. My first question is on the guidance that you've given. Given that we have had a phenomenal first half, the guidance of roughly 35% revenue growth basically means only around 5% revenue growth in the second half of this fiscal. So how should we look at it? Is it that you're just being very conservative while guiding, and overall numbers are likely to be much stronger than that?
Yeah, Aditya, our CFO is very conservative, you know that, you know. So we believe in under-committing and over-delivering, and, I think, we are seeing a robust, October and November sales also. So. But we don't want to guide any number, you know, because nobody can predict how quarter one - quarter four will go, depending on the season, because this is highly seasonal product. And if you, if you remember last year, the rain started from February onwards... you know, and, it went on till May. So we don't want to predict any number, but yes, what I can commit, is that, what we can guide is that we will outdo the industry growth for sure.
Understood, understood. In fact, last year, second half, to that extent, was a slightly weak base. Unless, again, we have a very unfavorable weather, fair to assume that we should be having a pretty decent second half?
That's right. Yes.
Growth much stronger than, Sure, sure, sure.
That's right.
So my second question is on Korea Circuit. While you mentioned that at this stage it's not possible to give complete understanding about CapEx that may get incurred, but if you could just let us know about how you're looking at the opportunity size, what kind of revenues can this company be doing? And on the buyback arrangement, what exactly is it? What proportion of capacity gets bought back by Korea Circuit?
So basically, on the buyback, it is a full capacity buyback for first two years, then it is a tapering down in next two years. Why we wanted this buyback is that, you know, the semiconductor ecosystem is getting developed in the nation, and it could, you know, we may see some kind of delays. So we don't want to sit on an investment which is, you know, not delivering on time. And Korea Circuit agreed for that, which is very good initiative by them. And they also agreed to come in 30% of the equity, which is, you know, their commitment for bringing the right technology and also their conviction and their confidence in Indian markets and the growth strategy.
They are already, you know, selling close to about $1.5-$1.6 billion worth of just PCBs in various regions, and they want to use India as a best first country from that perspective. So we are looking forward, but let me give you some timelines to all of you, I think, so to avoid any confusion. So Korea Circuit JV has been signed. Earlier, MOU was signed, but now it has converted into a proper JV, which was. The signing ceremony was also witnessed by our honorable Secretary of MeitY and Joint Secretary from MeitY. And they also appreciated this technology to be brought in India.
We will be, you know, waiting for the announcements to be done, which, from the, from the MeitY scheme, but parallelly, our teams have started working. So on the timelines, it is that even if the announcements are done by, for example, by January or February by government, to bring into the notification stage, it will be another two months' time. And then they will, they will ask companies to apply, which will be another two months' time, and then there will be approval process. So in the best case basis, the approval should come by quarter two of next financial year. After that, the, you know, the CapEx will start over. So large CapEx, whatever will be happening, whatever we decide, will come in FY twenty-seven.
So nothing is coming in FY 2026 from that perspective, except the land lease parcel. So, you know, this is what I want to tell you. But yes, I think you all would agree to me that, looking into this large import substitution domestic play, you know, this is the right time for the Indian entrepreneurs to come forward and, you know, achieve the Atmanirbharta of our nation. That is what we are looking into, and I think we are very excited by this JV signing.
Absolutely, sir. And revenue potential, anything that you would want to comment on that?
Sorry to interrupt you, sir. I'll come back, follow up.
I don't know potential, but, Aditya, just to answer your question, I think I can give you FY 2030 target, you know, for our division. That is a very strong target which we have taken, because PCBA and PCB both are clocking well. And PCBs are a better margin business. So as you have seen, our historic journey, which started from INR 300 crore top line in 2018, with just 2.7% EBITDA, has almost reached to 8% now. And I think this division now has a multi-billion dollar opportunities going forward. That's all I can say. And we want to bring it to a double-digit EBITDA division very soon. Maybe next 2 to 3 years' time, you should see that numbers going up.
Perfect. That's great to hear, sir. Thank you so much.
Thank you.
Thank you. The next question is from the line of Dhruv Jain from Ambit Capital. Please go ahead.
Good morning, thank you for the opportunity. So my first question is on capacity utilization. So if you could just spell out what is the current capacity utilization of the Consumer Durables division, and what is the kind of peak revenue you can do without incurring substantial CapEx?
On capacity utilization, all plants are at different capacity utilization. Our component plants are sitting at a capacity utilization of somewhere about 60%-65%. Our air conditioner plants, if I see on the annual capacity, maybe we are just sitting at 40%. You know, but that's not the right way to look at this industry. We look at it from a seasonal in capacity utilization point of view. So, like our new Sri City plant, that is sitting at about 60%-65% of capacity utilization, whereas our Dehradun plant is already running at 85%, 90% capacity utilization. So there are some seasons. What we see from capacity utilization is how much we can manufacture in per plant in a monthly basis. You know, that is the right way, because seasons keep on shifting.
Sometimes the season will start in February, and sometimes it doesn't start till March also. So there are four-month, five-month window period where capacity utilizations are very high, but then we hit the leaner quarters. And Sri City plant is, you know, sitting at less because that's a newer capacity. We are not touching 90% also right now there. But I think to give your answer on where we can head from the revenue perspective, I think we can grow at least by 44%-45% with the current capacity utilization we have, additionally on the revenue side.
Okay, thanks for the answer. And my second question, sir, you mentioned in your presentation with respect to commercial AC and light commercial AC coming up, right, for you. I just want to understand, say, in a two years time or three years time, how substantial it can be? Any, you know, numbers would be great.
I'll give you, I'll share my personal thought process, how we are seeing our consumer durable division in, by FY 2030. Last year, AC industry was about one crore, air conditioning industry, about 10 million numbers. This year, if it touches 1.3, by FY 2030, we are expecting three crore air conditioners to be sold in the market. So there is a clear 3X story what we have on the plate. Last year, you know, we did about 5,000 crore worth of our revenue on the AC and AC components. So even if you discount that numbers by a bit, overall, above all air conditioners, what we are doing is we've launched this commercial air conditioner division. We have also launched our tower cassette air conditioners.
Then on top of it, we have done washing machine initiatives. So plus, we are opening some doors for the exports, which is right now, you know, we are seeing some green shoots. Maybe by next year we will be able to crack something on that, and that will be substantial numbers which are coming forward. But, largely on these three, four initiatives, over and above to the standard industry growth, you know, these, this can contribute about INR 1,500 crore-INR 2,000 crore additional revenue in next three to four years' time. So that, that is what we are doing. You know, so I think we have hedged. We are trying to hedge our seasonality. We are trying to also bring some more initiatives over and above to the industry growth.
This sector can grow at least 3-3.5x in the next five years.
And just one data point on the electronics side, because it's the mix for the-
Follow-up question? Thank you. The next question is from the line of Bhumika Nair, from DAM Capital. Please go ahead.
Yeah, congratulations, sir, on a good set of numbers. My first question is related to the electronics, you know, ex-Ascent business, which I see that's seen a very strong growth, both on YOY and also on QOQ basis. So what segments are within this is really driving the growth? What new customers have you added, et cetera? If you can just kind of throw some color, would be really useful.
Good morning, Bhumika. So, you know, we have added customers in the automobile segment. We have also added. So these all initiatives, which we took three years back to diversify our applications in the PCBAs, are now giving us good results. So we started this journey in 2018 by just supplying air conditioner PCB and refrigerator PCB. That is what IL JIN used to do in 2018, when we picked up 70% stake. And it was just a SMT assembling plant, so we developed our own R&D unit, and then we, after supplying to air conditioners, we started diversifying. So today we are giving solutions in the smart watches and Bluetooth speakers. I'm glad to announce consistently from last three months, we have been clocking about a million watches every month.
Then we've added telecom sector, which is, we are supplying to companies like Tejas. Then we added smart meter companies. Then now we have recently added automobile companies, both two-wheeler and four-wheeler. We've added a defense electronics company on board from the PCBA point of view. On the Ascent Circuits, we are already delivering solutions to auto. Almost 65% of revenue is coming from the auto sector, and almost about 15% is coming from the telecom sector, and then rest is aerospace and defense sectors. This becomes a very big, good hybrid for us. Moving forward, we are, we've recently added our consumer durable companies, whom we were serving from here in the Ascent Circuits also.
So that's given us a good leeway from the PCB point of view. So I think we are horizontally deploying our customer base into Ascent now, and Ascent's customer base into the PCBAs. So this is a good synergy which we are able to do. And we are very excited. I think we are moving very positive on this division. It's a very strong division. We are almost touching about 8% EBITDA, and we want to go to a 10% EBITDA in next three years' time, and that is what the target is for this. And this division will continue to grow. I mean, it will be a very robust division for us.
Sure. So, on Ascent, what is our current utilization till the new capacity comes in, and will that help growth? And secondly, in terms of Sidwal margins, you know, I understand it is stripped because of the weaker revenue growth. You know, once the growth really comes back, do we see margins going back to the 20% that we used to see, or is this going to be the new level of growth? So, yeah, so just on Ascent utilization and Sidwal margins.
... So on Ascent, we are already sitting at 85% capacity utilization, and that's why we have done the groundbreaking. Because after the announcement of anti-dumping duty by Government of India up to six layers, we have seen a lot of interest from very marquee customers and very big names. And that's the reason why we immediately, you know, went ahead and started this CapEx. So as I told that almost 50% will come back in subsidy terms.
Sure.
Net CapEx will be about INR 300 crore from our side. But this can additionally give us a revenue of INR 550 crore-INR 600 crore on a full capacity basis. And we expect, and Ascent, as it is, can go to about INR 450 crore in the current capacities, what they have. So this means that we can do about close to about INR 1,100 crore with the new capacity and the old capacities in this. Why? By doing just a CapEx of INR 300 crore, and with good EBITDA margins.
Sure. And Sidwal margins, sir? Sorry to interrupt you.
Sidwal margins will definitely come back because there's no change in the construct of bill of material and RMC there.
Mm-hmm.
It is just matter of, you know, because we are doing expansions and there are some expenses being built. On the other side, there's little slowdown. But, Sidwal team is very confident that, by next year onwards, we will start seeing the growth. And they are also at the final leg of winning some more tenders right now. I think we will appraise all of you by next quarter call, if that materializes. So, those are also big tenders. And, we are glad that, you know, the export of Sidwal air conditioners, we are expecting to start by quarter four of next year. So that will be our very big inroads into the European markets, from that perspective.
We are already sitting on a INR 2,075 crore order book, and which will be further strengthened in this quarter, plus the export opportunities, which are sitting on the table. So this division will be a very different division now if we see from five-year point of view.
Got it, sir. Thank you, and all the best.
Thank you very much. We will now take the next question from the line of Sonali from Jefferies Group. Please go ahead.
So thank you for the opportunity and congratulations on a great set of numbers. So my first question is regarding your PLI incentives. Could you quantify how much you have received so far in H1, and probably how much you expect to receive in H2? And also, just a confirmation, you don't share these incentives back with the brand owners, right? So should we expect them to flow through directly into your EBITDA?
Good morning, Sonali. Yes, so last year we received our first PLI incentives, which was INR 15 crore. This year, we are likely to receive about INR 36 crore. Thirty?
Thirty crore in number.
30 crore in number and INR 6 crore in revenue. I think the documents have been filed, so whenever they want to announce the disbursements, it will be announced soon. And plus, we are expecting some more subsidies from Government of Haryana and other state governments. So in all, I think we are looking towards the subsidies receiving to the tune of INR 65 crore-INR 70 crore this year, which is moving online right now. And yes, as you asked us to confirm, I think it's... We, as explained earlier, that you know, because the PLIs have been given by Government of India on the threshold of some investments and the, you know, the PLIs are getting back to us on the incremental sales.
So because the incremental sales are all the endeavors of Amber management, you know, we don't think so that there's a possibility of us to pass on it to our customers. We are not passing on anything to our customers from the PLI benefits point of view, because this is not a sector which is other, like other sectors, where you have to pass on completely. Because here you have to be near to the customer, these are voluminous components, so there are many products. And customers are not giving you take or pay back arrangements in case they don't deliver the incremental sales. So, you know, that is the reason why we have not passed on. So we confirm again.
Very clear, sir. Thank you for this. Sir, my second question is regarding the AC industry. It's obviously a very strong year. Any... Could you quantify the pricing actions that the AC industry has taken in the first six months of this fiscal year? That's April to September. And also lastly, I missed the number, if you have already given, for the potential CapEx for Korea Circuit JV.
Sonali, we, on the-- I think on the CapEx front, we are right now in a stage where we are discussing with government for their incentives. I think that will be announced soon. Post the announcements are done by Ministry of Electronics, we'll come up with a number and we'll have another call with all of you. I have explained the complete total addressable market and what is our rationale behind this JV. I have also explained about the buyback arrangements which we have signed, which is a, I think, good step and good confidence which Korea Circuit is bringing on the table, and plus by bringing new customers. On the... What was your question on the AC front you wanted to ask?
The pricing actions in the industry.
On the pricing, nothing, nothing has changed on the pricing. I think industry is moving as stable. Commodities cycles are, are not very volatile, so there's no, no big changes in the pricing side.
Got it, sir. Thank you, and all the best and Happy Diwali to you and team!
Thank you.
Thank you.
Thank you. The next question is from the line of Pulkit Patni from Goldman Sachs. Please go ahead.
So thanks for taking my question. So my question is on our cash flow. While our revenue has grown significantly, so is the operating profit. We've seen working capital increase meaningfully, and that's primarily because of trade payables going down quite significantly. How should we look at this? Is it just because of the seasonality that we had higher payables in March, and we've paid that out, or how should we look at payables? Our net operating cash flows have grown quite negative this particular first half. So what's your view on that? That's question number one.
Yeah, Pulkit, so on the negative cash flow, cash from operation is because that we have a better payment terms from the creditors, and largely we bought all the material during the peak season, which is quarter four and quarter one. So in quarter two of the financial year, it gets paid. So that is why you always see that our cash flow is stressed or net working capital days are different in the quarter two and quarter three, which get normalized by year end. And this is a normal trend year on year as well.
Yeah. So this is just the trade payables getting paid out after the festive season got over, right?
Uh, yeah.
Yeah.
Not the festive season, but I don't say that it is the summer season.
The summer season. Sorry, yeah. My second question is on, again, CapEx. I think a few people have asked, but can you talk about the total CapEx, plus what is going to be the other investments, given that we've got multiple other, you know, joint ventures, Yujin, et cetera. What will also be the growth in investments that we'll do during this year, in addition to whatever gets added to the CapEx line?
So as of now, if we talk about any additional investments, that is not we can foresee in the current year, which is happening. Apart from the normal CapEx for the capacity expansion, which is to the range of around 350-375, other than the AC and Ascent expansion.
Okay, so no major investments in any of those railway JVs, et cetera, other than what you've spoken of.
Yeah.
That's helpful, sir. Thank you.
Thank you.
Thank you. The next question is from the line of Keyur Pandya from ICICI Prudential Life Insurance. Please go ahead.
Thank you. Sir, first question is on the growth. So, and you mentioned about the good momentum in demand. So in that backdrop, as well as our earlier commentary of the new capacities coming up for the brands, so considering that, how should we think of growth in second half? And when you talk-- when you mention about good momentum being continued, should we expect growth similar to H1, which is, I think, 50% kind of growth in one month?
All the brands, you know, whoever had announced their factories in South India, they have already started, and you know, the last one was Voltas, which started in quarter one, and with their Chennai plants. We have shifted both strategies into the components and the finished goods. Very difficult to predict right now how the quarter four will be, but what we have guided to everybody, I'll repeat it, that we will outdo the industry growth by good percentage points, because we've added customers, we've added new products, and we've changed our strategies from being a consolidated solution provider in terms of, you know, either components or in the air conditioner side, full side. So we are expecting a good season. Let's hope.
I think, if rain doesn't disrupt, it should be a very good season and a very good year for AC industry.
Okay, thank you. And second and last question. So, I mean, you mentioned some of the CapEx, like the Korea Circuit, et cetera, would come into this next financial year. So clearly, what would be the CapEx for current financial year, FY 2025, which includes organic CapEx as well as some stake increase, if you do. And in that context, what would be our debt level by the end of the financial year?
So if I talk about the normal CapEx, which we are doing in all the entities, it is in the range of INR 350 crore-INR 375 crore. Apart from that, we invested in Resojet JV, 35 crore, in the current H1 financial year twenty-five. Plus, we increased our stake in IL JIN and Ever by further paying around 100 crore. So that is what we have done in the investments, plus the CapEx that we are doing. In the next H2, we are not, as of now, expecting any further investments, so that is not on the block as of now.
So 370 plus 135, that would be the total cash outlay for this year. 370 normal CapEx plus 100 crore IL JIN and Ever plus 35 crore Resojet. That would be the summation?
Yes.
Okay. Okay. Thanks a lot. All the best. Happy Diwali!
Yeah. Thank you, and Happy Diwali to you as well.
Thank you. The next question is from the line of Arjun Lodha from Nuvama Institutional Equities. Please go ahead.
Good morning, everyone. Thank you for the opportunity. Sir, two questions. One is pertaining to the consumer durables business. While you've talked about overall growth for the full year for the company, it implies only 5% for the second half. Obviously, you are being conservative here. But I'm just trying to figure out, you know, if this is 5%, the swing in terms of a reduction, so to say, in terms of growth rate, would that be more of durables or electronics as well?
No. So electronics is moving very fine. The guidance which we are giving for the AC industry is pertaining because this is a very seasonal product, so we don't want to give any guidance, you know, where we can't commit, we can't honor those. But we are looking towards a 25%-30% growth in the industry. And what we are guiding is we'll definitely outdo this growth because Quarter Four has a higher base as compared to the, you know, earlier. Because Quarter Two, Quarter Three was a leaner section, and Quarter One was a bad season last year, so there were lower base there. But on the Quarter Four basis, it is sitting at a higher base.
What we have guided is that if industry grows by 30%, we will definitely cross at least 5%-10% more than the industry.
Understood. And the second question I had with respect to margins, can you help us? You know, we have seen a substantial improvement in 2Q in the durables business as well as electronics. Durables, I obviously understand it's to do with the utilization. How do you see, you know, if the current momentum to sustain theoretically, could this margin be significantly better in the second half?
Well, so each division is sitting at a different margin profile, but on the electronic side, as I've guided, we'll be closing near to about 8% on the EBITDA margins. In the consumer durable side, I think we will maintain the margins what we have done in H1. We don't see any big volatilities coming on the commodity side as of now. And that's how we think that the margins will be protected further. But yes, the more businesses which we are adding are coming up with the better margins. The larger part of significant revenue increase from those divisions from those initiatives will start flowing in next year. So as far as H2 is concerned, I think we should be able to maintain the margins.
Got it, and just one small question, if I may. Of the, total-
Sir, I request you to come back for a follow-up question.
Sure. Thank you.
Thank you. The next question is from the line of Neeraj Jain from BNP Paribas. Please go ahead.
Yeah. Hi, sir. Good morning. Thank you for the opportunity, and congratulations on a great set of numbers. Sir, most of my questions have been answered. I have just one follow-up on your, on the debt part. So what we have seen, in the first half, that the debt levels have increased a lot, maybe primarily because of an increase in short-term borrowings of the latest investments that have been done in the Resojet as well as additional state. But how do we expect the debt levels going ahead, I mean, with the additional CapEx that is expected for the next two to three years? Do we expect the debt levels to increase further from here?
Yeah, little bit increase. We are expecting the current financial year as compared to the last year, because of the investment which we have done and the CapEx which we are doing. So we are expecting a increase, may, like, it should be in the range of INR 700 crore-INR 800 crore by year-end at the net debt level.
Okay, 700-800. So, last year it was around 1,400 crore. So, is it right to assume that it would be around 2,000 crore by the end of this year?
No, no. So I'm talking about the net debt, not the gross debt. Net debt, but we do the gross debt minus-
Right
whatever cash we are having in the form of FDs and the current account balance, plus the liquid investments in the perpetual bonds of banks. So if we exclude that, so we were around INR 600 crore. So that we are expecting at a net debt level, it will be in the range of INR 700 crore-INR 800 crore by the year-end.
Sure. Thank you, sir. And sir, lastly, one question on the electronic side as well. I mean, any particular reason why we have not increased our guidance to more than 45%, considering that we have already clocked around 70%, and the momentum is expected to remain strong? And now that there is a pickup in the core PCBA business as well, from 18% last quarter, excluding SM to, 65%, excluding SM this quarter. So any particular reason why the guidance has not been revised for the second?
On a lighter note, the reason is, the precedent set by the markets itself. You know, once we could not achieve our guidance, and market punished us on an exponential basis. So we want to be very conservative and then, over-deliver our numbers, you know? But yes, all I would like to say is that, the electronic division is standing at a very strong footing, and we are seeing... If you see on each, every division, all the three divisions have opened up multi-billion-dollar opportunities moving forward for next five to 10 years' time. So we are taking the right steps. It has taken a little more time than expected for us to build this division. We were expecting that this will be built by last year, but it has taken one more year for us.
But now things are very clear. We are the only electronic EMS company in the country today giving a complete solution, backward integrated solution, coupled with the R&D, PCBA solutions and backward integrated in the PCB solutions. And both PCB as well as PCBAs, with the applications which we are addressing, are very, very big opportunities coming forward. And we have stitched very sweet deals with our good partners, identifying good partners, in both all the three divisions, whether it be Korea Circuit or by partnering and acquiring Ascent Circuits and also Yujin Machinery of South Korea. They are very beautiful company, manufacturing very marquee products. You know, you will see as we move ahead. And the deal done for the doors and gangways, and also now addition of commercial air conditioners and washing machines, so each division is progressing very well.
I think we are very excited for that, but we don't want to guide any number where, you know, then because of the seasonality and because of so many functions, it is. So we would rather be conservative guidance people and then overcommit. Overdeliver.
Sure, sir. That's very clear. Thank you and all the best.
Thank you. Ladies and gentlemen, we'll take this as the last question. I now hand the conference over to Mr. Jasbir Singh for closing comments.
Thank you everyone for joining on the call. I hope we have been able to address all your queries. For any further information, kindly get in touch with our Head of IR, Ravi Kharbanda, and or our IR team, Strategic Growth Advisors, or Rohit Singh from our IR team. So thank you very much, and we wish you all a very happy and prosperous Diwali, and safe Diwali. Thank you. Have a good day ahead.
Thank you. On behalf of Amber Enterprises India Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.