Q3 24/25

Feb 6, 2025

Summary

Q3 revenue grew 8% YoY and EBITDA rose 27%, while washer weakness restrained appliance mix and margins. AC turned EBITDA-positive; a ~₹200 crore cost program targets substantial savings within 12 months.

Ladies and gentlemen, good day and welcome to IFB Industries Q3 FY 2025 earnings conference call hosted by Nirmal Bang Institutional Equities. This conference call may contain forward-looking statements about the company, which are based on the belief, opinion, and expectation of the company as on the date of this call. These statements are not guarantees of future performance and involve risks and uncertainties that are difficult to predict. As a reminder, all lines will be in 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 and zero on your telephone. Please note that this conference is being recorded. I now hand over the conference to Mr. Krishnan Sambamoorthy from Nirmal Bang Institutional Equities. Thank you, and over to you, sir. Thanks, Yusuf. On behalf of Nirmal Bang Institutional Equities, we welcome you all to the results conference call of IFB Industries. The management is represented by Mr. Bikram Nag, Chairman; Mr. P. H. Narayanan, MD, Engineering Division; Mr. C. S. Govindaraj, ED, Manufacturing & AP; Mr. Soumitra Goswami, CFO; Mr. Jayanta Chanda, CFO, Engineering; Mr. Kartik Muchandi, Head, Finance & Accounts, Marketing; and Mr. Ranjan Mohan Mathur, Head of Sales of our Appliance division. Over to the management to open the conference, following which we will have the Q&A. Good afternoon, everybody. I am Soumitra Goswami, the Chief Financial Officer of IFB Industries Limited. I welcome you all to IFB Industries Limited's investors call for third quarter for FY 2025. I have with me Mr. Bikram Nag, Chairman of IFB Industries Limited; Mr. P. H. Narayanan, Managing Director of our Engineering Division; Mr. Jay Chanda, CFO of our Engineering Division; Mr. C. S. Govindaraj, Executive Director, Manufacturing of our Appliance Division; Mr. Kartik Muchandi, Head of Finance of our Marketing Division of Appliance Division; Mr. Ranjan Mohan Mathur, the Head of Sales of our Appliance Division. Now I will inform you about the quarter three results. Revenue for the quarter was INR 1,232 crores against last year's INR 1,140 crores, which is a growth of 8%, and in value terms, the growth amount is INR 91 crore over last year. EBITDA for the period was INR 90 crores and its percentage to revenue for third quarter was 7.28% as compared to last year's INR 70 crores, which was a percentage term of 6.17%. EBITDA amount came across a growth of 27% year-on-year. Muted revenue growth in November impacted the margin a little bit for the quarter. Fixed expenditure for the quarter was well behind budget. EBIT for the period was INR 35 crores against last year's EBIT of INR 32 crores, which is a growth of 31%. Q3 PAT was INR 34 crores as compared to last year's INR 24 crores, which is a growth of 52% over last year. Results of YTD December 2024 period are as follows. Revenue for the YTD period is INR 3,665 crores against last year's INR 3,227 crores, which is a growth of 13%. EBITDA for the period was INR 255 crores and its percentage to revenue was 6.96% as compared to last year's INR 186 crores, which was 5.67% on revenue. EBITDA amount came across a growth of INR 69 crore over last year, which is a growth of 37%. EBITDA growth is attributable to higher revenue, which fixed expenditure contained within budget. EBIT for the YTD period was INR 152 crores, which is 3.9% on revenue as compared to last year's INR 74 crores, which was 2.3% on revenue. Growth in EBIT was 92%. PAT for the period was INR 107 crores, which is 2.9% on revenue in comparison with last year's INR 65 crores, which is 1.7% on revenue. Growth in PAT is 92%. With this, I will request to start the question and answer session. Thank you very much. We can 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 withdraw 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. First question is from the line of Manoj Gori from Equirus. Please go ahead. Yeah. Thanks for the opportunity. This question is for Mr. Nag. My question is, when we did our channel checks during the October-November month, and when we spoke with some of these large format national chain players, they had indicated sales were relatively good for IFB Industries. In fact, they had also compiled some of the third-party market share data where IFB Industries washing machine sales growth was into low double digits. What we had assumed is probably our primary growth should be higher than our secondary sales growth, given that we had pushed limited inventories or stock in the September quarter. But when I look at the presentation, everything doesn't fall in place with the sales mix. Just need some clarity over there why there is such a mismatch versus our number and third party results. Our understanding is that. Our understanding is October was good. September, October was good. But November, December, things just. They were like subdued. We are not able to understand why, even from third parties. The reason why third party was muted to such an extent, we are really not able to understand. Secondary was okay, but primary just cooled off. If you look at, we did not push any stock in the supply chain issues. Our primary sales for the festive season would have been more into October month, but the festive season was well- Yes, but primary for November about this, and we are not able to understand why as yet. But if you speak to the same third parties, I think they report coming out every 2 months. I think you will see- November combined data, which shows low double-digit growth for IFB Industries in- Yes washing machines, including your top loads and front loads. I was just- No, our October was good. Our October was good. Our October was good. Very good, in fact. September was. November was an issue. Okay. November and December both have been an issue. We are not able to really understand why, but it is across industry is what I am told. The washer has been hit and AC has seen sequential growth. Right. I am not able to correlate this. Normally, you say December quarter and all, a lot of the dealers, they switch their working capital and all, but that cannot be the reason. That cannot be the reason alone. For some like reason, washer sales has been hit. We are still analyzing the data, but we are not able to get a proper answer why. Right. It is across regions. My second question would be on the margin side. Last month, November, when we had called for 2Q earnings, I think we were very confident October month where the growth was relatively better. We were expecting margins to be relatively stronger. Now it is one year since we have been talking about margin improvement. Absolutely right. This is what is worrying us. Very significantly so far. Now we are talking about majority of the benefit kicking by fourth quarter of FY 2026. I will tell you what has happened. October was very good. But November, December, because the washer sales fell where the margins are high, and AC sales went up where the margins are lower. Therefore, there was a mismatch. If the washer sales were as per target, we would not have had a problem. The problem is what surprised us was the AC sales, that your washer sales fell. This is not something that we had expected. Right. We are just not able to understand why. If you see, there were some commodity pricing issues, aluminum, for example. I had also spoken, I think about two months back regarding bringing in a consultant from the Swiss school, and we said we were looking into McKinsey and Alvarez & Marsal, if you recall. Right. I think one of the investors had said that, "It's better you close this fast." We did a lot of work internally also. The commercials did not align. Alvarez & Marsal was closed in the last week. McKinsey, we have chosen Alvarez & Marsal. The first round team that we are working on is a pretty large target of approximately INR 200 crore over an 18-month period, with significant savings coming within the first 12 months. This is in addition to whatever we do on our own. The sign-off is in place, and the project starts on the 15th of February. The Alvarez & Marsal team come in to the Goa office on 15th of February, I think. Right. As per your initial discussions, if it did not please- 19th of February. Sorry. Yeah. As per your initial discussions, what are the key areas probably you have highlighted or identified where you believe that the cost efficiencies would be visible? One is the weight of the machine. One is weight of the machine, one is logistics. Weight, logistics, rationalizing of schemes. They've also spoken on certain issues on design optimization for certain things. Sure. They've also spoken on where we over-engineer certain things. This they've both engineering teams pointed. They have both benchmarked our machines vis-à-vis others, and they showed us in various areas where we have over design scope, over-engineered. These are things that have to go through testing and validation. On a first pass, it is the work that we are done with. Right. And sir, obviously, as you stated, there will be a lot of testing. Obviously, it is a long process. Is any improvement which we can expect? We have been hearing for a year of margin improvement. Probably from when should we expect any sort of improvement in margins on year-over-year basis? Whether it should be during FY 2025 or probably it will start from first quarter of FY 2026. No, I think margin improvement, as we have discussed, was supposed to happen by this quarter. Right. Last quarter, this quarter. That has not happened because according to me, according to us, the washer sale has fallen. Right. If you see the margin drop, the margin drop is primarily, the main reason for the margin drop is washer sales. If washer sales hit as per target, the margin would have been better. The margin might not have been completely different. But margin would have been much better as compared to whatever we have presented. The issue is that the basic cost down things would have added further to the margin. I am trying to say that. Right. Now, we believe that washer sales should be back on track, but January was not back on track. January was not good. We hope February and March will be good. We are not able to understand why suddenly washer across brand has taken a hit. Our news is bad, and the margin is in washer. But in AC, the cost down proposal in AC that we worked on, those things got delayed till February, that will come in on March. Am I right in saying that? When does the AC cost down kick in? Yes, sir. It will kick in fully by March. The AC cost down, which was supposed to be last quarter, was postponed till February, I think. If that starts kicking in by February, March, then in AC we thought the volume will give us margins. Right. Got it, sir. Sir, one last question, if I can. What happened is, we need washer sales to come up. These are sitting me, at least high supply. Sales have to hit this. Mm-hmm. Understood, sir. So last question from my end. If you look at room ACs, how things have panned out with Hisense in terms of association with regional retailers or with e-com players and even with pan-India retailers, how things are progressing? Probably, you would have got some commitments or probably visibility in terms of volumes going into- The commitment that we have, as Rukhsana, for this quarter and probably next quarter, is that our capacity should be sold. Okay. For AC. Right. Yeah. Got it, sir. Thank you, sir. Thank you for the update. Thank you. Surprisingly, I will just take a minute. Surprisingly, we saw that in the industrial washing machine segment, we have a lot of orders which are hanging, meaning someone has given us an order, we still have the material, et cetera. But in industrial, the margin has gone up, but the sales has also fallen. But the margin has gone to over 18% in the months of December and January. Right. So we are just going to analyze all of the data now. Sure, sir. Sure. Yeah. Thank you. Thank you. Thank you. Next question is from the line of Anand Munjha from Sharewell. Please go ahead. Hello, sir. Sir, a large part of the question is answered about the cause. One more thing, sir, we are still doing built-in dishwasher, oven, chimneys. These are very small segments with respect to the size of the company, and I am sure they would be loss-making. Any thoughts of cutting down these small businesses so that we can focus on larger appliances? No. These are good margin products. We want that volume there. We are competing. Because long term, we see that more and more kitchen is coming up in India. People will want to eat the chickens, and this becomes a huge segment going forward. So we should be in it. Okay. I am looking at this segment from last multiple years, sir. This segment has not grown much for us, sir. Yes. For us, it has not grown, but for others, it has grown. We have not done well. Now we made a separate team to really look at this. We have to succeed in this. Just because we have not done well does not mean we keep giving up the segment in the first place. Segment has to succeed. On the overall scheme of things, I was thinking at INR 5,000 crore size of business, whether this will materially impact the financials of the company going forward. Yes, your point is correct. We need to be in. Opportunities come up. Suddenly, maybe an opportunity becomes a buy of someone or this, that. We do not know what will happen in the future. This is a segment that will grow, and we must be in the segment with 15% share, 15%-20% share. After a long time. Yeah. Understood. Sir, one more clarification, cost reduction plan of INR 200 crore. This is part of the P&L item, which you are saying we would be able to reduce over the next 12 months? Yes. No, it is 12 to 18 months, but substantially, it should come in in 12 months. Our P&L will reduce by INR 200 crore in terms of cost, sir? It should add to our P&L. In terms of cost, yes, I have understood your question. In terms of cost, it should reduce, adding to our P&L. Karthik, am I right in phrasing it? Yeah. Sir, after quarter 2 of FY 2026, 15%-16% reduction will come, and 100% realization will happen by end of FY 2026. Otherwise, the rest will come only after that. Okay. Karthik, there are two parts to it. One is things like weight and all, which whoever identified. One is things that we have identified over the last seven, eight months. Yes, sir. Right. Yes, sir. When we put both those things together, between now and March of 2026, all those costs will come in. Because one is our internal thing and one is what we do with algorithm also. Yes. If we implement everything, then close to INR 200 crore will come. Okay. Sir, salary would be part of this cost? Or which is the largest cost for this INR 200 crore? It is not salary. We have not touched that at all as yet. We are looking into that on how to rationalize. For example, let us say in Goa, which is the fastest. In a certain department, we have 33 people split between two plants, which is Kolkata and your washer. So now with them sticking together, that should come down by maybe 10%. All those things will be rationalized by decisions will be taken. Okay. If salary is not the largest cost, which is the largest one? For that work, we are also using EY for some aspects. Okay. Sir, if you can give the breakup of this INR 200 crore, which is the largest cost, sir, which will be saved? Karthik or Govindaraj. Yeah, I can answer that. The material cost will be about INR 150 crores. On that, the weight reduction, then the electronics sourcing, then the benchmarking with other competition and taking ideas from that to reduce the material cost to INR 140 crores. The logistics cost, about INR 20 crores. We have got a clear breakup. INR 200 crores. Out of INR 200 crores, we are saying about INR 150 crores to INR 170 crores. Okay. Understood, sir. Last question on the refrigerator plant. Are we at breakeven level, sir, at the subsidiary level? Or there are losses? No, there are some losses. Because EBITDA-wise, I think we are okay, but EBT-wise, we are not okay. We need more sales. Hopefully, by April, we should be at about 35,000, 40,000 a month. Hopefully, by June, we should be close to the EBT breakeven. Okay. And sir, what is the capacity, you said there? INR 4 million. About 1 million per year. Yeah, 1.1 million. At 50% utilization, we will be profitability even, you are saying. We should be, yeah, right. Thank you, sir. Thank you. Thank you. Next question is from the line of Natasha Jain from QED Capital. Please go ahead. Thank you for the opportunity. Good evening, sir. My first question Hi is on the opening remarks that you made. You said that washers demand has been slowing down and we are not able to gauge. Sir, we have also observed on the ground that people are postponing their spend for other white goods to buy AC. Is that a trend that you likely see and will it actually harm the other white goods in the coming season because people will switch to AC? Having said that, do you see your AC demand increasing? Hopefully we do not see that. Because if that happens, we have a problem. Having said that, the fact that AC sales are growing, logically should have nothing to do with somebody wanting to buy a washing machine, because washing machine is a need. AC is much more of a luxury item. Washing machine is not. Because people are buying less, we are not able to understand this fully, but we are really studying this. To answer your question, if AC sale goes up, can we etcetera. We are looking into that. We actually believe our capacities will be solved. We are also working out for next year, taking into account if present trend continues, do we need to do some things for enhancement of capacity. Our capacity is about 500,000 a year. If we are close to that, then for next year we have to think. This thing on cost down and all that we are working on for AC, which comes into effect from February, March this year, this will really help us make margin in AC. The thing is with AC, what was not doing well for a while has now picked up. I agree to your point, but as you mentioned that washers is a necessity. While it is, the only challenge I see is probably we have more of premium offerings. In times when demand slow down- No, I do not think so. If you see LG, Samsung, etcetera, they are all doing premiumization. LG is giving up the 7 kg segment, etcetera. I do not think the issue is that. Issue is people are postponed purchase and we are not understanding why. Or maybe we are not able to market it as aggressively as we should in order to entice people to buy. Maybe we should spend more on that. Fair enough, sir. While you touched the point on marketing, a related question on that. I remember a couple of quarters back we had suggested that while the products are very good, company lags a little on the marketing side. Probably that feedback has been taken positively because when we went on the ground, we did see greater instance of traction for marketing for IFB Industries compared to previous quarters. Just wanted to know, sir, where are we in that leg and- We are going to come out with a brand new ad campaign maybe in the next two weeks. Both for washer and for AC and for refrigerator. It will be a Pan India. It will be a Pan India thing. While I am saying that, I think technically we may prefer to do it state-wise. Got it. Sir, will you quantify your geographic revenue mix? We do not publish it to us like that. Do you want it state-wise? When you are talking geography mix, are you talking north, south, east, and west, or are you talking state-wise? No, I am talking north, south, east and west. Roughly revenue contribution from those four. It is best you send your request, if you can. I will provide it offline. Okay. Sure. Thank you, sir. I will follow up with you. Thank you. Thank you. Next question is from the line of Resham Jain from DSP Asset Managers. Please go ahead. Hi, sir. Good evening. I have three questions. First is with respect to washing machine. We have launched multiple new products over the last three, six months in higher kg products. Obviously, market has been little subdued. One is macro factor which once they understand. On the company side, given that there are certain product gaps over here, I presume that could have offset some of the growth factor to some extent. That is my first question, sir. The question is whether we have product gaps or the question is whether product gaps are being done away with? I am saying that despite filling the product gaps over the previous three, six months, despite macro not being favorable, which is for the industry, IFB per se could have done better. Yes. We have done better, but it could have done a lot more better in some of the capacities. The data shows on certain capacities we have not done as well as we should have done. That micro-analysis is leading us to reassess state-wise what are the different points, and the holes are being plugged. Understood. Doing the CapExes and launching those products have actually been factors. Okay, got it. I think the related question is between top load and front load. Obviously, IFB Industries is leaders in front load. But in top load, which is the largest pie of the washing machine market, if a company needs to grow much faster, then probably top load is where Yes growth would come in. Is that the right way of saying it? The top load market is a much, much bigger market than the front load automatic market. The top load semi-automatic market is a much larger market. If you look at that, our internal assessment tells us there is no reason why we should not do 50,000-60,000 a month versus today's present about 30,000 a month, 30,000-32,000 a month. During the October period, I think it touched close to 40,000. Our internal assessment is that. We have to do a lot more work on the ground to really ramp up volumes and top load. Understood, sir. With the investments we made already in the design, et cetera, et cetera, the models go out. The more we sell, the more the money we make eventually, and the margins will then go up. We need to do a better job on the ground. Understood, sir. The second question is with respect to IFB Point. We visited some of your IFB Point in some cities, and we felt, after interacting, that some of these IFB Point do not have significant footfalls. According to you, out of I do not recall the exact number of IFB Point, but how many of the IFB Point on a standalone basis actually are profitable and how many are not? Do you have that data? Yes, we have that. For us, I think about 20%-25% is an issue, but it is an issue because of some local state-level management issues which need to be solved. These are the IFB Points running and functioning. Now we have had a change in management, and the IFB Point has been given to someone else, and some restructuring is taking place. We have seen traction. I think, Karthik, you know, November, January for IFB Points the customer has been better. Yes, sir. It has improved over the year. Yes, it has improved, and we need to do a lot more. IFB Point, apart from anything, is a very good marketing tool for us. We need to do a much, much better job at marketing this. What is happening is, in many of the markets you will see, I think you have gone around the market and seen this. One of the reasons for lower footfall is you have a bigger store next to an IFB Point, and in the bigger store, the same product is being sold at INR 100 cheaper. That logically should not happen. That logically should not happen. If our own company does things like that, foolishly, then these things will happen. So we have to clamp down on all this and promote IFB Points. That is the direction which I have given to Mr. Ashwin, which he will carry out. Okay, understood, sir. The last and final question is with respect to AC, where we heard that there has been certain issue on the compressor sourcing side. Some of the brands and OEMs were facing some issues on the compressor sourcing. So how are we prepared for the same, let us say for the current upcoming summer season? Which is factory on the BIS, Karthik? No, sir. The compressor which are being sourced from China. Yes, this is because of the BIS rules. Are you talking because of that? Okay. I am not fully aware, sir, but what we heard is that compressor sourcing is a bit challenging. I think that we are covered. Maybe Mr. Govindaraj can answer this. I will answer this question. Of course, we are also expecting a demand-supply gap in compressors, but we have already taken care of that. We have mostly covered till the end of March, and for the month of April also we have started working. Compressors from China, there are some issues so some came manufactured earlier. I think we have covered up till May and June. We have already placed the orders. Our person is there to monitor this. We don't foresee any issues. Okay, great, sir. Thank you very much and all the best. Thank you. Thank you. Next question is from the line of Nisarg Vakharia from NV Alpha Fund. Please go ahead. Good evening, everyone. Two, three questions. The first question is that long back when our AC sales had not ramped up, we used to say that the AC sales are the sales because of which we lose margins. Now, all put aside, if I see this quarter, year-on-year, EBITDA has expanded from INR 65 crores to INR 89 crores. This is despite the fact that you have sold lower washing machines and higher AC. Is it safe to assume that the losses in the AC business have completely stopped and you are now profit making there? AC, we are not having losses, I think. Can you answer that? Yeah. From negative we have moved to a positive side. Okay. Second is that year-on-year, the EBITDA margin has expanded because of two reasons. One is there is a reduction in unallocable expenses. So INR 11 crores is that number. And INR 66 crores of depreciation has increased year-on-year. Can you please clarify on both these points, what these are? This is Soumitra Goswami. Increase in depreciation cost, I will explain. Depreciation cost for that quarter has increased by INR 6 crores as compared to the corresponding quarter of last year. This increase is due to the fact there are two things which have happened in this quarter. First of all, we have added AC asset of around INR 55 crores, and this has contributed around INR 4.3 crores depreciation. Also there are some addition of fixed asset during the YTD period, which is amount around INR 61 crores. These have increased the depreciation figure by around INR 1.7 crores. The INR 4.3 and INR 1.7 make it total that depreciation cost has increased by INR 6 crore as compared to last year. The interest cost also has increased marginally, I think INR 1 crore only. That is also due to addition of these steps. Because our borrowing has gone down, so interest cost in relation to borrowing has gone down drastically in this quarter as well as in YTD period. Yeah, sir, I was actually referring. So thank you for explaining the depreciation increase. I was referring to the unallocable expense which has reduced year-on-year. Unallocable expense is in relation to what? Which category? Or at the company level. Sir, the U.K. product, HAD segment-level margin. Below the segment-level margin, there is a column called unallocable expenditure. Now if you see that has reduced by 11 crores. Karthik, in the segment profitability, there is no unallocable expenditure. Everything is allocated. Including depreciation, segment cost, everything is allocated. Including our overhead expenditures also. The product profitability statement is coming to me every month. Of the month and also for the YTD period. There is no- Let me explain my question better. I understand. I am saying that if you look at the unallocable expenses, FY 2024, the full year, that number was 54 crores. Okay? In FY 2025, that number has become half. It is a good thing. No, I am- I am trying to understand how has that happened. No, I am telling you only one thing. I think there is some mistake in understanding. You can call me offline. There is no unallocable expenditure in the product profitability statement. Nothing is there. I do not know where from you have got this INR 50 crore figure. If you can call me offline, we can discuss in detail. There is no problem. There is no unallocable expenditure. I will call you offline, sir. Okay. Yes, no problem. No problem. Okay. Thank you. Thank you. Next question is from the line of Shayansh Jain from Swan Investments. Please go ahead. Hello. Yes, please go ahead. Hi. Thank you for the opportunity. My first question is on the AC business. You are saying we are EBITDA positive and also depreciation because we are talking about improving our market share from, say, 3% to 6%. In our previous calls, you have also guided for about 3.5 lakh, 4 lakh, 4.5 lakh, 5 lakh units of ACs in FY 2025. If I just back calculate the 9 months AC, you would have hardly done about 2 lakh to 2.5 lakh units of ACs. I think Q4, I do not know how much we can do Q4, but we will slightly be behind your guidance of 4 lakh, 4.5 lakh, 5 lakh ACs for FY 2025. How are we looking at this whole piece and you are targeting 6% market share. I mean, I am just trying to understand qualitatively the type of acceptance or is this just a tailwind that the industry has generally? I think it is a tailwind that the industry has. That has been received well over the last few years. I think that would obviously help, because if your product quality was bad, then the tailwind would not help you. As far as the go, in the first six months, we never did. In the first seven months, we've not done as well as we should have done. But the last two odd months has been good. Two, three months, if you take January also. Looking at February months, we'll be below our overall thing that we have been planning. But if you see why we are saying our capacity will be fully utilized is if we take a five-month period going forward, whatever we see, our view is that if you look at it from now till June, I think we'll have an issue on. We will. I think we'll be near about full capacity. Of course, the product quality has a say in there, apart from tailwind. Okay. How are we priced versus competition in the AC? Our pricing is, I think, higher than. We are relooking at our overall strategy on this, and we are trying to take prices up and sell more of 10,000 units and all of that. Whatever segment cost, et cetera, we are having, we are not going to pass on. I think we want to play to our brand prism and we don't want to discount between either way, LG higher end, et cetera. But today, if you take a like-to-like model, LG higher end is priced higher than us. We would like to bridge that gap over time. Okay. But vis-à-vis features and all, I think we are okay. My second part to this AC business is as we target 5 lakh ACs this year, and somewhere before we mentioned that we are 50% of this. So, next year, should we actually look at profit percentage margins improvement, or how should we look at it from this? Yes. We continue there. Okay. Sir, my second question is on the refrigerator business. I think you gave volume in terms of production, but if you can help us on what kind of revenues we are doing in this business also. We will give it to you offline. Because that's a big company, as you know. Amount of sales we do within IFB Industries is less. IFB Refrigeration Limited business is a separate question. How much IFB Industries is doing exactly, we will give it to you offline. Sure. Sir, my last question is on the washing machine piece. Q1 you said we did fairly well. Can you just quantify what kind of growth rates we would have witnessed in October? Also, somewhere in the presentation you mentioned that we faced a situation where we couldn't meet the demand. I think, when I go back, this is happening a lot of times with us. When there's a very strong demand, we've not been able to get to that demand and probably because of that we lose some sales. How do you look at this whole thing from a demand supply point? There is a trade-off. Let's say now we built up stock for washer and AC. AC we sold, washer we have not sold, and we are like stuck with inventory. Okay. We always make an assessment three months, let's say. We all buy raw material, we convert to finished goods, et cetera. The sales and purchase don't work hand in hand. Either you lose some sales or you're stuck up with inventory. I think better planning has to go into this. But as I said earlier, we are not able to understand why sudden slowdown in washer. Now we are stuck with stock. There's an issue. But for the AC season, we started building up stock. If you see our figures now, the inventory has gone up essentially because of AC and because of washers which were not sold. But AC is a planned stock build, but washer is not. Washer is a failure to sell because of market issues, which we're not able to understand why. To answer your question again, maybe I can use the term better way of planning, but why this has happened this time, honestly, I just don't know on the washer front. Okay. Sir, my last question is, we've noticed that there is some chaos in employee front. There is about 60, 70 odd employees that have been used. We just need to understand, you also mentioned that two plants now which are going to look at 40% leverage coming in from there. This 9.9% employee cost as a percentage of sales, is this there to stay here? Percentage of sales can come down in two ways. Suddenly sales grow by 50%, suddenly it becomes Okay. In absolute terms, it should come down. I'm just trying to understand, is there a space where I mean, I'll be looking at There is always space to look at things in absolute terms. We need to be more innovative in consolidating roles. I keep telling my team who is on this call that they should do it. If they see what is happening in the U.S. and the way certain things are done, we should learn from it. We are having two plants 1 meter away, two sets of accountancy, two sets of purchasing. This is not needed. For a period of time, we can separate like company also. Certain things can be done like that. I think we will discuss this. We are using EY for our finance transformation thing, and we will come up with this within the next two weeks. Okay. Sir, just last one on the accounting front, sir. When we open an IFB Point, what is the cost that we have to incur in terms of CapEx for inventory and stocks? No, I mean, a lot of the cost is on either franchisee, if it is franchisee-led. If it is done by us, it comes to around INR 3 crore approximately. Out of the 475, how many are on our books and how many are on franchisee? I think about, How much is it? I think around 170. Sir, 180 are our books. 180 franchisee? Yes, sir. Okay. Okay. It is INR 300 and INR 180 lakhs. Okay. Inventory, all of this is coming on CFO? Yes. Okay. All right. Thank you, sir, and all the best. Thank you. Thank you. We have a follow-up question from the line of Manoj Gori from Equirus. Manoj, please go ahead. Just continuing with the previous question, when you said that you are strict with washes, is it alarming enough that maybe you need to give incremental discount to the channel because if you look at next washing machine season will be into March-April? We are still far away from that. No, we don't need to. No. We don't need to do all that. But we are looking at what can we do to directly entice the customer and go to channel. Some sort of schemes might be launched in the Diwali. We are looking into that. Yes. We may do that. Sure. schemes that too select markets, not across the market. Right. Okay. Thank you. Thank you. Thank you. We have our next question from the line of Mukta Shah from Agility Advisors. Please go ahead. Hello, sir. Hi. Hi, sir. Thank you for the opportunity. I just had one question. In previous calls, the company's mentioned the plans to manufacture products for the railways and also for the electronics division. Can you please share some more thoughts on this side? Are there any acquisitions which we are specifically targeting for the same? On acquisition so far, whatever we got so far and work is going on is on the component side. In railways and electronics, we have not found suitable company as yet. But we are doing work to develop that. Both railways as well as the electronic industry, we are talking to the customers directly, some of the customers, well-known brands, to whom we can supply certain things. That work is progressing well, but it is taking time because of the development portion, et cetera. Okay. Thank you. Thank you. We have our next question from the line of Vivek Kumar from Best Research. Please go ahead. Are you clear, sir? Yes, please. I wanted to ask a question on this. If you already have market share in microwave oven and vent blower, what is it, how are you going to gather market share? Because when you go to the retail outlet, you see too many people selling costly AC. Of course, we have tailwinds, but if the tailwinds subside, tops integration, how will we manage to fill our capacities? Because you already told your capacities are full now because of the tailwinds and also product being good. But if you see, there is a lot of competition both ACs and refrigerators. How are you going to ensure on a long run that when those rates normalize as still we will fill our capacity, get our margins and maintain profitability? If you can give a guide of what you are thinking about. I think as far as AC goes, I think we are on the right path. We struggled for nearly five years in the market. As far as refrigerator goes, we have just launched a marketing campaign for the customers wherein we have increased the warranty on our refrigerator from one to four-year warranty on refrigerator. That has created a noise in the market. We have done that because we believe that the quality of the production, and the company, especially people in the development really believe in it. While in refrigerator, everyone gives one plus one warranty, et cetera, I think we have gone for a four-year clean warranty. Right, Mr. C.S. Govindaraj? Yes, sir. Yeah, we are going for four years. This was launched, I think, on Monday. Saturday or Monday. It has been received very well by customers, also by the retailers. It is helping us gain a lot of traction with retailers. We have to find innovative ways to sell our product to the same channel to whom we are selling front load, top load, and AC. Now, window without tailwind, there is no choice for us. We have to keep finding innovative ways on the ground to do all this. Because why I am asking is that when a customer goes to buy a refrigerator, there is only so much that the retailer will have for refrigerator. It is not like other products where you can put 10 brands, 15 brands. So you will get that space only if the customer needs to ask for your product. Fast-moving only will be put by retailer because he cannot put all the brands that are on the market. Correct, sir. So we have to create demand for our brands. Yes. Lastly, the ACs you said we are struggling, and that now you are very confident, three years. So what did you do differently that we are struggling, and now we are no more struggling like three years back, the last three years? We struggled for four and a half years. We were losing money. We did a lot of work of seeing the market on the ground with our team, with the retailers, that is paying off now. It has been very slow and a very tedious process for us. Do you think even if you take a bit from the you will be able to- Sorry? Even if you keep taking it on a rotating basis, you will still be able to give your I think so. I think more than anything, the team is very confident with the product, so are the retailers now. The retailers have gained a lot of confidence in this. Any region where your AC sales are more, like your market share is more in some one. Okay, sir. This is my last question. Any area where you are doing much better than the rest? No, in both AC and Haier, we are doing better in the east. We are doing well in the east. We are doing well in north too, which is Chandigarh, Punjab region, et cetera. We are doing very well there. It seems like two things. I mean, some places we are not doing well at all. For example, Andhra Pradesh, Telangana, we are not doing well at all. We have to go state by state and fix things and improve things. In certain states, it's. You are confident those longer-term growth will improve things in these states also, Andhra, Telangana, and- I mean, do we have a choice? We have to do it. We have no choice. Thank you very much. Thank you. Thank you. We have our next question from the line of Abhishek Ghosh from DSP Mutual Fund. Please go ahead. Hi, sir. Thanks for the opportunity. Just in terms of the consolidation of the CFO from the Home Appliances Division, how to understand where are we in that? That is a very good question. We have gone through six or seven CVs, and we shortlisted a few. But at the final thing, it did not happen. Not for anything else, but because we did not think they were suitable for an end-to-end role. The problem we are facing is, which I think you asked about last time, but I cannot remember, is that the ones who are good at sales and marketing have come across as being weak on the factory side and development side. Our product, actually, technology product, actually needs someone with a flair for both. That is difficult to find, and that is to close it soon. Okay. But you want just one CEO who will take care of both, and you do not want to spread the responsibilities in terms of marketing and the factory part? That is already done. Sales and marketing is run by Mr. Mathur. Factory is run by Mr. C.S. Govindaraj. But the CEO must understand overall business, which means he must have some knowledge of everything. Otherwise, we will have a problem. Got you. Okay. Wish you all the best with that, sir. The other question is in terms of new models which you have launched, and how- You are talking washer or AC? Washers. Yeah. Which you have launched in October. How is the channel feedback? Very good. I think what I would request all of you to do is to go into the market and give us the feedback, whatever you honestly see or hear from the market. Give us the feedback. It is very clear to me at least that the channel feedback that I get is very good. Okay. But why the sudden slowdown has happened, there I am not getting an answer at all. That is puzzling me from the washer side. Okay. We will revert back. Okay. Thank you. Ladies and gentlemen, that will be the last question for today. I now hand the conference over to the management for closing comments. Over to you, sir. Anything you have to say? Thank you, everybody, for participating in this call. We will meet again after the quarter four. Thanks once again. Thank you. Thank you. On behalf of Nirmal Bang Institutional Equities, I thank you for this conference. Thank you for joining us, and you may now disconnect your line.