Thank you. Good evening, everyone. I would like to welcome the management and thank them for this opportunity. We have with us today Mr. Atul Lall, Vice Chairman and Managing Director, and Mr. Saurabh Gupta, Chief Financial Officer. I shall now hand over the call to Mr. Lall for his opening remarks. Over to you, sir.
Thank you, Navin. Thank you so much. Good evening, ladies and gentlemen. My name is Atul Lall, and we also have on the call today my colleague, our CFO, Saurabh Gupta. Thank you very much for joining this meeting call for the quarter ended September 2021.
The order book in this quarter was very healthy, which has led to a strong performance in an otherwise challenging environment marked by significant raw material price inflation. You see, commodity costs have gone up significantly over the past few quarters at rates that industry has never seen before. However, our profitability has improved sequentially from pre-previous quarter on account of improved operating leverage and calibrated pricing action despite severe input cost inflation. The team has managed the inflationary pressures of commodity costs extremely well.
The commodity environment is still uncertain, and we need to keep this in mind for the upcoming quarters. However, we believe that our strategic approach and the execution of our plans to manage this better than most of our industry peers will stand us in good stead, and we're confident the second half is gonna be much better than the first half, both in terms of revenues and profitability.
Now, coming to the financial and operational performance of the quarter, the consolidated revenues for the quarter ended September 30, 2021, were INR 2,804 crore as against INR 1,639 crore in the same period last year, which is a growth of 71%. Consolidated EBITDA for the quarter was INR 111 crore as against INR 89.6 crore in the same period last year, a growth of 24%. Consolidated PAT for the quarter was INR 63 crores as against INR 52 crore in the same period last year, a growth of 20%.
Gross margins and EBITDA margin contraction year-on-year was primarily driven by substantial change in the segment mix, with higher increase in share of business from our OEM businesses like LED TVs at 53%, and also the higher commodity prices impacting our OEM business of washing machine and lighting. The company has always maintained a conservative financial profile with an optimal capital structure and investment grade credit rating. We're well-positioned with a robust balance sheet with net debt of INR 41 crores as on 30 September 2021.
Our balance sheet strength and enough credit lines from banks enable us to weather any future uncertainty and invest in long-term development of our business and puts us in an advantageous position as compared to our industry peers. Inventory levels have increased due to advance payments for the sourcing components and also various supply chain challenges across businesses. However, this remains our key focus area in the company, and it is expected to normalize in the coming quarters with the scale of business now returning to normal levels.
Our basic approach to the capital allocation policy emphasizes on return on invested capital and financial stability. Even in this quarter, we have successfully delivered a strong ROC and ROE of 30% and 26.1% , respectively, at the end of Q2, and we feel confident the same will keep improving in the coming quarters ahead.
Now, I'll share with you the performance and the strategy in each of the verticals going forward. Consumer electronics. Revenues for the quarter under review was INR 1,487 crore against INR 961 crore in the same period last year, a growth of 55%. In the current quarter, the revenues of AC, PCB and reverse logistics business in this particular vertical was INR 32 crore and INR 2.4 crore, respectively, out of INR 1,487 crore. Operating profit witnessed a growth of 34% year-on-year. That is INR 36 crore in Q2 of FY 2022 against INR 27 crore in the same period last year.
As informed to you earlier, now we have an installed capacity of 5.5 million sets. This is the capacity expansion we are undertaking, which has already been implemented. This includes backward integration in LCM and SMT lines, which is the largest capacity in India, and taking care of 35% of the Indian requirement.
We have started production of large screen sizes like 70 in, 75 in and 85 in TV. Further capacity of our SMT lines has been increased to 2.7 million per annum from 1.8 million. These expansion plans have already been executed. We have a total area of approximately 0.5 million sq ft in our integrated campus at Tirupati, which is fully backwardly integrated. We are also now further investing in injection molding and plastic processing for the mechanical LED, which will start by Q4 of this fiscal year. Now, we are the most vertically integrated, and we have the largest capacity in LED TV, and now we have our own ODM solutions ready.
As informed to you earlier in the last quarter, in monitors, we have got orders from the largest global brands, and the production line for this particular SKU has already been installed. We feel that the business execution, order execution in this particular SKU will start from Q4 of this fiscal. Hopefully, in fact, by December of this year. Lines are already installed. The capacity is 1 million LED monitors per annum. The expected volumes in year one will be in the range of 0.5 million, and we expect the order book to increase significantly from year two. The revenue and profitability numbers in this particular SKU will be almost similar to LED TVs.
Coming to lighting, the revenues for the quarter witnessed a growth of 32% year-on-year. We did a top line of INR 396 crore in Q2 FY 2021-2022 against INR 296 crore in the same period last year, and is now back to strong growth trajectory, which we have been demonstrating. We have a very healthy order book in this vertical in Q3 also.
Operating profit witnessed a growth of 14% year-on-year. It was INR 32 crore in Q2 FY 2022 against INR 28 crore in the same period last year. The margin in the lighting business has contracted due to impact of input costs, as there is always a lag in passing on the price increase. To a large extent, we've already been able to do it in Q2. We are India's largest ODM player in lighting, and we have the largest capacity in various SKUs.
LED bulbs, we have a capacity of 3 million units, which is approximately 50% of the Indian requirement. We have also developed solutions for smart LED bulbs, battens, downlights, and emergency bulbs for various customers. In battens also, our expansion plan has already been executed, and now we have a capacity of 5 million a month out of total market requirement of approximately 9 million-10 million a month. Also, in downlights, the capacity execution has already been implemented. Now, the capacity is 1.5 million per month against the total market requirement of 3 million per month.
We are in the process of developing outdoor lighting solutions, and our product portfolio comprises of street lights and commercial lights. This will be launched by next year. We have got technical approval for exports of lighting products to Europe, and hopefully now the business execution will start for Europe.
For US markets, the approvals are still awaited. We have filed our PLI application in September 2021 under the White Goods for manufacturing of LED lighting components to our own fully owned subsidiary in line with our backward integration strategy, which will make us more competitive. The total investment in the PLI project for lighting will be around INR 100 crores over a period of five years. We're expecting the approvals from the government to come within December of this year.
In home appliances, revenue for quarter saw a growth of 54%. It was INR 145 crores in Q2 versus in Q2 FY 2021. It increased to INR 224 crores in Q2 FY 2022. Operating profit increased 10% year-on-year. It was INR 17 crore in Q2 last year versus INR 19 crore in the current year. Operating margins were lower at 18.5% due to impact of commodity costs, which has been an increasing trend since there is always a lag in passing on the price increase to the customers. However, most of the increase has already been passed on in the current quarter.
We presently have 160-odd models across semi-automatic category with a large portfolio, largest portfolio ranging from 6 kg to 14 kg. Recently, we have set up a new plant in Dehradun because the order book was very healthy, and the forecast is very healthy for the next fiscal. The capacity in the semi-automatic category is going to be increased from present capacity of 1.5 million to 2.4 million by FY--t his will be done by April, May next year.
For the facility of fully automatic top loading, now the plant is operational, and we have got our orders from our anchor customer of 30K pieces, and the execution of these orders will start from 15th of November in the next month. Also, we added three new customers in HDA category. We have 96 variants across 6 kg- 10 kg category with an annual capacity of INR 6 lakh. By April next year, our combined capacity of both semi-automatic and fully automatic top loading would be around 3 million against the Indian requirement of around 7.5 million-7.8 million. That's a large capacity.
Coming to mobile phone and EMS division. Revenues for this division for the quarter under review was INR 599 crores against INR 197 crores of mobile revenues in the same period last year. This is a growth of 203%. In the current quarter, the revenues for set-top boxes and medical equipment was INR 74 crores and INR 3.3 crores, respectively, out of INR 599 crores. Operating profit was INR 19.3 crores in Q2 FY 2022 as against INR 16.2 crores in the same period last year.
Motorola mobile business with our anchor customer under the PLI scheme has now ramped up and is stabilized, with monthly volumes touching 250,000 in the current quarter, and our order book for the next quarter is significantly better. We have also finalized Nokia's feature phone business, in addition to smartphones that we are currently manufacturing, and the production is likely to commence by Q4 of this fiscal with quarterly volumes of around 0.5 million.
In addition, we have also added another major customer, itel, in the feature phone category. To meet their order book, we are setting up a new factory on lease in Noida with approximately INR 2 lakh sq ft, which will be operational by December, January, this year.
We have got the first 5G phone order. This is for a new customer, Orbic. This is primarily for export to operators like Verizon in the U.S. market. We're also hopeful and quite confident of achieving our threshold revenue targets under the PLI scheme within November this fiscal, that is next month.
On Samsung side, the 4G phone order is extremely good. We're already touching almost 0.8 million-1 million units every month, and now we've been asked to expand the capacity to 1.5 million-1.6 million units. We've taken five acres of land in Noida, and we plan to make a big integrated mobile phone campus in the following year.
Set-top box business. As for the set-top box business, since then, we manufactured INR 7 lakh set-top boxes for Jio, Dish TV, Sun Direct, and others in Q2, and the total revenues are INR 7.4 crore, with 2.1% operating margin. This business came under pressure due to the supply chain issues and availability of the chipsets for set-top boxes. We have also added new customer, Siti , in this vertical.
Medical electronics, we have sold 132 units of the RT PCR device. The revenues were around INR 3.3 crore, with a healthy operating margin of 28%.
In security surveillance systems, we have seen a very strong growth of almost 149%. The revenues were INR 99 crore in Q2 FY 2021-2022 as compared to INR 40 crore in the same period last year. Operating profit has increased from INR 1.2 crore in Q2 FY 2021 to INR 4 crore in Q2 FY 2022. The order book in this segment is very strong, and we have to go for capacity expansion by setting up a new plant in Kukatpally in Telangana.
Coming to new projects, refrigerators has remained guiding. The company has kicked off the refrigerator project. We have got the market study done, finalized the product design, appointed a technology partner. Machine onboarding has started. We will be having a capacity of 0.6 million DC refrigerators, which will be ramped up to 1 million in phase two in the year 2023-2024. This will give us a capacity of almost 7%-10% for the Indian requirement. The product categories will be 170 l-220 l. We have been sanctioned with 14 acres of land in Greater Noida, on which this manufacturing footprint will be setting up. We feel that by Q4 of 2022-2023, we should come into production in this quarter.
Laptops, tablets, IT hardware. Our factory has been approved and qualified by one of the largest global brands. In this vertical also, we have got the PLI approval under the IT hardware category. The production for this particular global brand will start from within this quarter, in another month or so.
Coming to telecom and networking products, we have entered into MOUs with Beetel Teletech Limited to form a joint venture through our wholly owned subsidiary Dixon Telecom Plant Private Limited. The JV company will have 51% owned by Dixon and 49% by Bharti Group, and the management will be with Dixon. The JV company has already got the approval from the Ministry of Communications in October of 2021 under the PLI scheme of the Government of India. We will start manufacturing GPONs, ONTs, modems, routers and set-top boxes in this particular entity. The agreements between the parties are in the final stage of conclusion, and is expected to be concluded soon.
PLI for AC components, PCB assembly for controllers. We've entered into MOU with Rexxam Co., Ltd. , who are already our partners for the last four years, to form a JV through wholly owned subsidiary Dixon Devices Private Limited. The JV company will be 40% owned by Dixon and 60% owned by Rexxam. Rexxam currently outsources to Dixon the assembly of PCB assemblies for Daikin India. Under this JV, the deeply embedded supply chain for Daikin Global from China is going to be shifted to this JV. We have applied under the PLI scheme of Government of India for AC control boards. We have committed an investment of INR 50 crores over a period of five years. For this PLI also, we are expecting approvals to come within the next 30 or 45 days.
Coming to next category of wearables and hearables. The Indian market is really booming in this. We've already started manufacturing TWS for Kodak, which is, one of the most prominent brands, not only at Indian level, but at the global level. We are further deepening our relationship with Kodak at a strategic level, which we'll be sharing with you the details shortly. In this also, the Government of India is expected to roll out the PLI scheme, which we'll be pursuing, vigorously.
I would just like to stop now, and me and Saurabh are there to address any questions. Thank you so much.
Thank you, sir. Ladies and gentlemen, we will now begin the question- and- answer session. If you have a question, please press star and one on your telephone keypad and wait for your turn to ask a question. If you would like to withdraw your request, you may do so by pressing star and one again. Participants are requested to restrict to two questions per person during the initial round. Our first question from Renu Baid from IIFL. Please go ahead.
Yeah. Hi. Good evening, sir.
Good evening.
Yeah. Hi. Good performance, sir. Three questions from my side. First, you did mention in terms of lot of initiatives in terms of new customers, new segments within the mobile phone category. Progress, can you help us update in terms of how has been the progress in terms of ramp up, and how are we expecting next six months to gear up, both for the smartphones and the PLI, as well as for the core, except for the smartphones and the feature phone, the sideline of the business.
I just want to check if, given the fact that JioPhone are getting launched and there is an expect, and we are seeing a structural trend of decline in the feature phone market. You think the Nokia and the itel addition that you have received would be more of a three to five-year opportunity until this market eventually diminishes in terms of size.
Renu, you have put us all very aptly. One, to update on our execution status and also the order book under the PLI. The ramp up after the initial challenges has stabilized fairly well. We are currently at a level of approximately 250K, and we're fairly confident that this is gonna be increasing significantly by 30%-40% more in the forthcoming quarter. We are gonna be much above the upward ceiling prescribed under the PLI, and we are confident of execution. The business looks good now, and the good and the positive aspect of this particular business is that majority of the revenues from our Android customers are coming from global markets.
As always has been as a strategy that we want to keep on acquiring customers. Acquisition of customers, as of now, has happened in the feature phone category. Both the names that I shared with you, Nokia and itel, are the topmost brand as far as feature phone is concerned.
What you said is very correct, is very true, and that's what is gonna happen. That, feature phone is an industry, is a category which is gonna be under pressure. Once the relationship is start, and we are hopeful and we are confident that they're gonna migrate to 4G and possibly 5G smartphone. Nokia, we're already doing it. For other brands, we feel confident that we should be able to get into that.
Right. Because itel is a part of the Chinese Transsion Group, that can add up significant potential volumes if that comes through, as PLI also for us.
That's right.
Sure. Second question is, yes, I think a good part of the price increase is reflected in relative improvement for the washers portfolio. Given that plastics, specifically PP and other prices have again jumped very sharply in the last one and a half months, how should we look at the margin profile and the ability to entirely transmit the price increase in the washers? Also, alongside, you will also have the scale up for Bosch. Probably do you think that second half FY 2022 could have continued headwinds for the washers margin profile because of the ramp-up cost and cost headwinds?
Again, on this, Renu, your understanding is fairly correct. The commodity super cycle continues, and it's harsh. You know that in our ODM business there is a lag in passing on the price increase to the customers. Initially there is a hesitancy that whatever may be your contract, and it takes time.
Finally we are confident that it's going to be passed on. Yes, the margin profile is going to be under challenge for some time. There is still a lot of volatility on the commodity side. Although lately, I've seen the last two weeks that the freight rates have come down by almost 30%. Yeah, one has to wait and watch, and this whole margin profile has to be under lens, you know.
Okay. The last question is on automation and factory optimization measures. If you can help us understand what are the various initiatives across the different segments. We had planned it initially for LED bulbs. How is it tracking across other segments, and how are you working in terms of digitalizing some of the factory lines and delivering the cost savings and efficiency? Thank you.
I think I'd shared with the house last time that we have partnered with Siemens for our MES and for our Path to Industry 4.0. Siemens is the gold standard globally for this particular industry process. This project has already been launched. To start with, this has been launched in our LED TV plant and our SATL plant, the new plant. This has a timeline of around eight to 12 months, but one can, I feel, start seeing some tangible results by February-March.
Once I'm convinced about it, then this relationship is going to be extended to others. At the same time, we are talking to particularly for our mobile division because we want to benchmark globally the best. We are in discussion with some global consultants for doing this benchmarking exercise for us. That's the way we are. We are extremely conscious of these initiatives and we're going to be pursuing them aggressively.
Sure. Any CapEx that we have in mind for these kind of initiatives, or savings anticipated thereafter?
I've not been able to put in a specific figure on the savings, but this seamless partnership is going to cost us almost INR 7 crore.
Got it. Sure. Thank you so much and all the best, sir.
Thank you.
Thank you, sir. The next question from Bhoomika Nair from DAM Capital. Please go ahead, ma'am.
Yes, good evening, sir, and congratulations for a good set of numbers. Just extending on the previous question on the mobile segment. You spoke about the volume numbers in the quarter being around 250,000 and kind of scaling up. You know, how would it kind of split up between smart and feature phones and, you know, how much is one looking at from Nokia and itel? If I could also get the overall volume details for the quarter. Yeah, that would be my second question.
There are two revenue streams there. One is the non-PLI revenue stream, another one is the PLI revenue stream. What I'm sharing with you, Bhoomika, is the PLI revenue stream.
Okay.
The current volumes of the PLI revenue stream for smartphone is around 325K a month for the various customers that we have, w hich we feel in the next quarter is going to go up to around 450K, o kay. Then under the PLI scheme, we are going to be launching the feature phone, which we're targeting to start from the next quarter. This business is going to be almost 1 million a month.
Okay, which would be from the Nokia and itel in this segment, ex-PLI, sir?
That's the other business of Samsung, which is a large number. Therein, the 2G phones is around 1 million, and the 4G is presently around 1 million. This is going to be up to 1.5 million-1.6 million.
Okay, sir, the other question is on the TV segment. If one looks at it, you know, we've done quite well. We've ramped up, you know, we've added customers quite regularly and moved into the higher, you know, higher inch TV, size TV. Now, how do you see growth out here over the next two to three years? Or will it be more kind of industry-driven growth?
One, in this particular vertical, it will be industry-driven growth, and we're trying our best to acquire some more share of certain brands. I can't give you the granular level details, but we are trying to acquire a larger share. Industry growth plus larger share plus backward integration piece plus LED monitor piece.
Okay. Lastly, on, you know, lighting, you spoke about the E.U. approval coming through. Can you know, while obviously the market is fairly large for us to kind of tap into, but, you know, what is the kind of volumes or what kind of revenues can we scale up to in the next two to three years? I'll come back in the queue for more questions.
It's too early to put numbers to it because it's a journey. The first major milestone in this journey was the technical approval. Good for us is the European approval, because that approval exercise itself takes five to six months and Samsung, we're making now. We are in final stages of negotiations with some European brands, and hopefully we should have a breakthrough. In the U.S. market, the approval, there is still in process. We feel it's going to take a couple of months for those approvals to come through. For me to put a number to it is very, very difficult. However, please appreciate that-
Sure.
... the global market for a single SKU, like LED bulbs, is around $8 billion-$9 billion. If we are having those breakthroughs, then the opportunity is large. It's very, very difficult, and it's not going to be prudent of me to put a number to those things at this stage.
Right, sir. Thank you very much, and all the best. I'll come back in the queue, sir.
Thank you.
Thank you. Next question from Mr. Ankur Sharma from HDFC Life. Please go ahead, sir.
Yeah. Hey, good afternoon and, congrats on a good quarter. Firstly, you know, if you could talk about the LED monitor business. You know, what is the kind of volume you're looking at? I mean, I think you mentioned you start production from Q4. So what kind of volumes do you expect in going into next year? What is the average ASP? And, you know, what kind of revenues can you get from this business? And also, can you share which brands have you tied up with?
LED monitor is 1 million. We feel that in year one we should be able to do 0.5 million. We should be able to reach 1 million from year two. The average is going to be a 19-inch monitor to start with. The average SKU is going to be somewhere around INR 8,000. The margin profile is going to be similar as TV i n this because there are certain PMA conditions which are going to be there, the backward integration piece would be deeper. We feel that in year one itself we should be able to generate a revenue of around INR 400 crore-INR 450 crore.
On the customer side, please rest assured they are the largest global brands. These are potential agreements. I'm not able to share the names as of now. We'll be making the formal announcement shortly.
Sure. Makes sense. Second, if you could talk about the laptop PLI as well. You know, I think, there you said you're starting production from Q4. Again, what kind of volumes / revenues and margins are you looking at over the next, say, FY 2022-2024?
You're referring to IT products?
Yeah, the IT, the laptop IT products, yeah.
There are upward ceilings under the PLI scheme. In year two it's INR 600 crore.
Yeah. It is basically, Ankur, INR 300 crores for this year. Of course, this year we'll only have three to four months of operations, but next year it is INR 600 crores, and then it is INR 1,600 crores, and the fourth year it is INR 2,400 crores. Basically, we feel confident that we'll broadly be able to touch that ceiling revenues. Again, as Mr. Lall mentioned, we have already-
Mm-hmm.
We tied up with one of the largest global brands. Currently start the production by December, January. We will strive towards that.
Okay. Perfect. Just one more on the lighting side, I think you've been talking about starting exports. I think you've been exploring customers outside India as well. Where are we on that one, on the lighting side?
Ankur, as I shared, in lighting, particularly when you're exploring markets like U.S. and Europe, you need the safety approvals of each brand's products that they will buy. We have recently, around four weeks back, got the approvals on the technical side from Europe, from the European labs. The U.S. approvals, I think are gonna take another couple of months. We are ready to launch a product in Europe now.
Mm-hmm.
Very confident that we'll have the breakthroughs in a month or so.
Okay. Fair. Just one last one on the CapEx, you know, because, you know, we are looking at a number of PLI schemes. I think you've spoken about quite a few new plants being set up. What kind of CapEx number can you share for 2022 and 2023, broad numbers?
Till now, we have done a CapEx of INR 165 crore.
Mm-hmm.
Because the opportunities in front of us are very large, and we are gonna pursue all of them because those opportunities look real good. We are planning another CapEx of almost INR 320 crore in the next six months.
Okay. This includes, because I saw news articles on a plant being acquired from Bharti on the telecom side, t hat's another INR 200-odd crore. That includes, that's included in the INR 3.2 billion you spoke as well?
That's right.
Okay. Got it. Okay, sir. Good. Thank you so much. All the best.
Thank you, sir. Next question from Mr. Aditya from Investec. Please go ahead, sir.
Hi. Good evening, sir.
Hi, Aditya.
You spoke about Samsung. Hi, sir. You spoke about Samsung smartphone. If I heard it right, we were speaking about almost 1 million units per month, which can be expanded to 1.5 million. Does that mean that this contract is going to be even larger than, let's say, what we already have from Motorola and from some of the other PLI customers?
Aditya, you know that this is on consignment basis. At present the 4G production for Samsung is the first level of manufacturing at SKD stage. It's not exactly comparable, but the volume is very large and the operating leverage is very large. There's no working capital intensity. The profile of the business is different.
Okay. The scope of work that we'll be doing will be very different, is it?
That's right.
Okay. Would you anticipate this relationship to be developing into something much bigger, and the scope of work to be increasing from here on? Because Samsung itself has a fairly large facility, and that's why I'm kind of asking this question.
No, it's gonna be much larger, the scale. It's gonna be much more deepened also.
Perfect. Sir, you mentioned about reaching the ceiling limit for PLI in November itself for this year. Basis what all customers you've already added, how does it look like for the next year? Given that it does appear that some of the other companies that have applied for PLI would be missing their targets, would you anticipate a similar trend to be continuing for next two years as well?
The order book looks very healthy. As per the revised guidelines in the PLI scheme for mobile, the upward ceiling for year two, because the next year becomes year two, is INR 4,000 crore. We are closely monitoring what our peers are doing, and we are fairly confident that we will be much ahead of the ceiling.
Okay. Sir, lastly, you spoke about some new customer additions on the washing machine side. Sorry, I missed those details. Was it on the semi-automatic side or top load side?
In semi-automatic category also, we have added new customers in tier 2 and tier 3 categories. Those are doing well. Yeah. We were having capacity constraints, so we are not able to execute that well. Now with the capacity expansion already in place, those tier 2, tier 3 brands are coming into our customer basket. What I specifically mentioned was that one of those is our anchor customer in FATL and fully- automatic top -loading. We have three more customers in FATL.
Okay. Any sense that you can give on the likely volumes for those customers, sir?
Each customer is somewhere in the range of around INR 25,000-INR 30,000 a year.
Understood. That's very helpful, sir. Thanks.
Thank you, sir. Next question from Sonali Salgaonkar from Jefferies India. Please go ahead.
Thank you for the opportunity, and congratulations on a great set of numbers. My first question is regarding the telecom PLI. Could you please share with us the broader contours of this, the ceiling revenues, and what are your expectations of ramping up the business?
Sonali, that basically it will be a 50% and 49 % JV with Airtel, which is of course a Bharti company. The numbers, the initial numbers that we think and the kind of visibility that has been shown by the Bharti Group is basically we're looking at anywhere between INR 1,400 crore-INR 1,600 crore revenues next year.
Overall, in the next five years, the JV would have a potential to generate revenues of somewhere around anywhere between INR 8,000 crore-INR 9,000 crore. These are broad initial numbers. Of course, the anchor customer will be Airtel. But of course, this will manufacture for other players as well, so we are also in discussions with other players as well. Clearly, we got the approval under the PLI in mid-October.
Now, we start up and we start manufacturing by Q4, somewhere in Q4. Clearly, we see that those kind of numbers which I just mentioned are definitely achievable. The ceiling numbers of course would be, t hese numbers are including taking into account the set-top boxes. Set-top boxes of course are not part of the PLI. The ceiling numbers that I've mentioned for the TV comparables is around INR 6,600 odd crores. Broadly, yeah. This, the INR 8,000 crore-INR 9,000 crore will be the potential numbers under the PLI for the next five years, which will be 50% and 49% shared by Dixon and Airtel.
Got it. My second question is regarding the chip shortages globally. Do you foresee this as a risk over the coming quarters? I mean, we have done much better than what our industry peers have done. I mean, what was our strategy? Because none of the segments have been affected by the chip shortages so far, except the set-top boxes that you talked about.
Undoubtedly, the supply chain challenges, the price increases, the volatility in the pricing, continues to be there. I think because of the nimbleness of our concerned operating teams, we have been able to do fine. Across the various product categories, let's say washing machine, in this current month we're gonna do our highest ever sale. It's gonna be a record sale.
Same is the case in TV. Also the lighting we've been able to execute well. The supply chain challenges continue to be there. If they're gonna abate, if they're gonna subside, I keep my fingers crossed. Yeah, you have to be nimble. You have to put everything under the lens and execute well. That's what we are endeavoring to do. That's the kind of thing. However, in certain things, I'm seeing that there is slowing down. There is some decrease in the freight rates.
Let's see how it pans out. The current quarter looks fine. Even the next quarter we feel that we're gonna be fine. However, the challenges are gonna be there.
Got it, sir. Lastly, just one clarification. You mentioned INR 3.2 billion of CapEx in the next six months. Have we already done INR 1.6 billion in H1? The cumulative for FY 2022, should we look at it as INR 1.6 plus INR 3.2?
It's gonna be INR 1.6 plus INR 3.2.
Yeah. Sonali, that's the right understanding. It will be around INR 4.4 billion, INR 4.5 billion, INR 4.8 billion.
Got it. Thank you.
Thank you. The next question from Ankush Agarwal from DPR. Please go ahead, sir.
Yeah. Hi, Mr. Lall. Thanks for taking my question. Sir, I wanted a sense on how are we looking to share our PLI benefit between customers. For example, in a mobile PLI scheme that you already mentioned that Nokia and Motorola would be taking up, the most part of the ceiling. For a new customer like Orbic which comes up, what is left on the table for these guys?
Well, it will be very difficult for me to share with you the granular level details.
Yeah.
Of how the value chain works. Depending upon the customer, depending upon the nature of the business, the PLI benefit is shared across various customers. I mean, that's the only statement I can share as of now, please.
Okay, will it be a right assumption that Dixon in the end will not be retaining any part of the PLI benefits?
I'm not able to share these details, please.
Fair.
Yeah.
Okay.
It's very confidential.
Okay. Thirdly, yeah. Lastly, now since almost all of the PLI business is on the prescription basis, and that is what is gonna be a larger share of the business going ahead. So, where do you think margin is gonna stabilize in the long run, let's say over the next five years or so, since almost 80%-90% of business might come from the prescription business going ahead?
We feel as of now the margins are gonna be somewhere in the range of 4%, picking up slightly. They're gonna be in the range of 4.5%. However, if in a couple of years we are able to execute and implement our backward integration strategy, also we are able to migrate more and more to ODM, then the margin profile can have some push upwards. As of now, they're gonna be in the range of around 4%-4.5%.
Okay. This is assuming our existing PLI business scales up and they remain the principal business.
That's right.
Okay. Got it. That was very helpful. Thank you.
Thank you, sir. The next question from Mr. Akshay Kumar. He's an individual investor. Please go ahead, sir.
Good evening, sir. Congrats on our great set of numbers. My first question is on the outlook, the guidance that you've given for this particular fiscal year, which is closer to between INR 950 crore-INR 5,000 crore. This actually indicates extremely strong sequential growth in the next couple of quarters. Are we on track to hit that? Could we have an updated guidance?
Akshay, your understanding is absolutely right. We feel, despite the challenges on the supply chain side, we feel confident that Q3 will be sequentially better than Q2 because the mobile businesses are completely ramped up. That will generate a decent portion of our revenues in Q3, Q4, and the new verticals that we are getting into. We feel confident that generally the numbers that we have mentioned, somewhere between INR 11,500 crore-INR 12,000 crore is what we are looking at for this fiscal year.
Thanks. Just a follow-up on this. One is online. You had mentioned that there was a lot of the CapEx that goes into setting up the entire mobile infrastructure. Given that now you've got operating leverage on your side, can we expect expansion in margins closer towards 6% this year itself? Given that you have won a fair amount of PLI schemes and there are some more coming along, what kind of revenue growth can we expect probably for the following fiscal year, following couple of fiscal years?
We feel, I mean, as shared with you that this fiscal year will be somewhere INR 11,500 crore-INR 12,000 crore. Next year, we feel confident we should be somewhere INR 16,000 crore-INR 17,000 crore. Beyond that, Akshay, it'll be very difficult for us to give any numbers because lot of moving parts are there. Yeah, for this year, INR 11,500-INR 12,000 crore, and for next year, INR 16,000-INR 17,000 crore.
Just the other question I asked was around the operating leverage that's gonna kick in on the mobile business.
Yes. Operating leverage benefit will play out across all the verticals with increasing volumes. It has already played out across the TV vertical. Basically, it will continue to play out around all the verticals including mobile. As we increase the volumes in Q3, Q4, definitely you'll see the margin expansion happening in mobile, which will lead to an overall margin expansion happening at the company level. Also, we are focusing more on backward integration, which is part of our strategy and more migration to ODM. These three levers, operating leverage, ODM as well as backward integration should increase our margins.
Since most of the growth happening going forward will be in the prescriptive business, the broader margins that we're looking for is around in the range of 4%-4.5% in the short term. We reiterate the strategy across each vertical has been to pick up a vertical, build up a large scale which takes them some time, acquire an anchor customer, keep on adding more customers, deepen the manufacturing, have a deep dive into your analysis and capability on the ODM side.
If you feel that you have the skill set, then make an attempt. That's the simple strategy to follow. That's what we're gonna do across the new verticals also. Scale will be important to generate the operating leverage, which I feel is gonna help us in margin expansion.
Would the exports also be a part of the margin expansion once that kicks in with probably the lighting products and so on?
Undoubtedly, as I've shared that we are pursuing very vigorously the export market for LED lighting. In the case of mobiles, almost 60%-70% of our revenue has come from the global market. In the earlier discussion also, I'd shared that we're gonna be pursuing the HPTL production for global market. The production and manufacturing is just about to start in a couple of weeks. We already have some traction for exports from a large global brand. Global market is going to be something we're gonna pursue, but at present it's at a very nascent stage.
Got it. Thanks a lot, Saurabh. All the best for future quarters.
Thank you.
Thank you, sir. Ladies and gentlemen, if you have any questions, please press star and one on your telephone keypad. The next question from Mr. Lokesh Garg from Credit Suisse. Please go ahead, sir.
Hi, sir. My question pertains to the LED TV segment. Basically, we have been doing this segment for a while, and now we are sort of increasing vertical integration in that with plastic injection molding and possibly other parts. Now, is there a meaningful change in margin trajectory that we should assume? Because we have been doing, let's say within 2%-3% band for a long while now. With this vertical integration step, does it scale up and does it become an example for other segments to follow then?
For example, lighting, our application. In consumer electronics also, as you would have seen that, as I shared with you, that we've already increased our PCBA capacity to 2.7 million from 1.8 million. Now, that's a backward integration process which is going to expand the margin. We are also committing CapEx for installing the injection molding capacity for doing the mechanicals for TV. Which is again towards, it's an effort for expanding the margins.
Subjectively agree, but just wanted an objective guidance also in the sense that can the 3% become 6% with these two step-ins in vertical integration?
Sorry, I'm, you're not very clear and audible. Can you again repeat?
Yeah. Basically, what I was asking, can, let's say margins, because we are at a very low level today, 3% only or below 3%. Can we get to or aim at something like 5% or 6% with PCBA and injection molding in our fold now?
No, I don't think so. You see, please appreciate, Lokesh, that this is a fast-moving business. This is a competitive business. In the last particular fiscal, because of the commodity increase and display price increase, the unit value has gone up. Unit value in our case reduced around INR 11,000-INR 11,500 in last quarter to somewhere around INR 17,000.
Now, your conversion charge does not go up correspondingly. It's a different element in the value chain. So as a percentage you will find that it come under pressure. But if you look at the gross numbers, which is being reflected in a significant expansion in the gross profits, in the operating profits, not as a margin but as operating profits, that's being reflected there. Are you getting my point?
Yes, I'm getting it. Just that probably we were expecting a meaningful delta in percentage terms also that you are saying is not necessarily immediate. My second question sort of leads from there only. You alluded in your opening remarks that there is an ODM solution ready in TVs. Earlier you were suggesting that there is some challenge related to Android system and all that. What is the progress, and are we making some progress in talking to customers also then in that segment, in that aspect?
The solution is ready, but still Google has not opened up on giving Android license there. The business will take some time to ramp up. We are pursuing with Google, but the licenses are still not coming through.
Okay. Sure. Thanks a lot, sir.
Thank you, sir. The next question from Mr. Aditya from Investec. Please go ahead, sir.
Hello sir. Just wanted to understand on the CapEx bit, given that we'll be spending another INR 320 crore in H2. If possible, if you could just give a broad breakup of what all this CapEx is entailing. Would a significant proportion of refrigerator CapEx be also happening this year itself?
Basically, broad numbers would be, like we are in the process of buying a land bank in Greater Noida. That would be basically a 20 acres land bank in Greater Noida. That will entail a CapEx of INR 50 crore-INR 60 crore with that, and that will be majorly for the refrigerator project and the backward integration of lighting, LED lighting components. INR 60 crore is basically that. Also the refrigerator project, the total CapEx for 0.7 million will be somewhere in the range of around-
INR 200 crore.
Around INR 200 crore. Part of that payment, almost 40% of that CapEx, will go as payments towards the advance towards the plant and machinery. Almost broadly, that makes it almost INR 110 odd crores.
Other CapEx is, of course, we are in the process of finalizing and concluding our agreements with Beetel. We are buying in addition to a plant in Noida, where we do our telecom and networking products. We're also buying the Beetel plant, so there is an acquisition value attached to it. I will be able to disclose that once we sign the agreement and disclose to the markets. That is one CapEx which is projected in the short term. Apart from that, there is a-
One is, we're gonna be spending almost INR 40 crore in capacity expansion in washing machines, semi-automatic, in Dehradun, in the new plant, other things. We will also be making some small CapExes for meeting the special requirements for our IT hardware. There is a regular capacity expansion and other CapEx across all the other verticals. Just like we are going to be expanding our capacity in CCTV also. Yeah, it's a mix of all this.
Also, the Rexxam JV also. There also we've applied for and once we get the approval, then there's a CapEx which is we have to do, as part of the first year CapEx. All this put together, we are looking at these numbers.
Understood. Any guidance or indication that you can give for next year as well?
Those numbers are still to be frozen. It's slightly premature. Yeah.
Okay, perfect. Thank you, sir.
Thank you.
Thank you, sir. Ladies and gentlemen, that was the last question. Now, I hand over the floor to the management for closing comments.
Thanks very much. Thanks very much, Naval and NK, and all the ladies and gentlemen who have joined this call. Thanks very much for all your support at all times.
Thank you. Thank you everybody. Thank you for all your support. Thank you.
Thank you, sir. Ladies and gentlemen, with this, we conclude your conference for today. Thank you for your participation and for using Door Sabha's conference call service. You may disconnect your lines now. Thank you and have a pleasant evening.