Ladies and gentlemen, good day and welcome to SJS Enterprises Limited Q3 FY 2025 Earnings Conference Call hosted by IIFL Capital Services Limited. As a reminder, all participant lines will be in the listen only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing the star then zero on your touchtone phones. Please note that this conference is being recorded. I now hand the conference over to Mr. Joseph George from IIFL Capital Services Limited. Thank you, and over to you, sir.
Thank you, Steve. Good morning, everyone. On behalf of IIFL Capital, I welcome you all to the 3Q FY 2025 results conference call of SJS Enterprises Limited. I also welcome the senior management of SJS, Mr. K.A. Joseph, promoter and MD, Mr. Sanjay Thapar, CEO and Executive Director, Mr. Mahendra Naredi, Chief Financial Officer. Now I will hand over the call to Ms. Devanshi Dhruva, Head of Investor Relations, to take the call forward. Over to you, Devanshi.
Thank you, Joseph. Good morning, ladies and gentlemen, and thank you for being with us over the call today. We appreciate it. Moving on, this is how we intend to take today's conference call forward. I will pass on the desk to Mr. K.A. Joseph, our MD and promoter, who will make his opening remarks and then hand it over to Mr. Sanjay Thapar, our CEO and Executive Director, who will take you all through some of the slides of our presentation that has been uploaded on the stock exchanges as well as on our website. Sanjay will take you all through the industry view, our business performance, and then give a strategic outlook for the future growth of the company at the end. Mr. Mahendra Naredi, our CFO, will update you all on our financial highlights, post which we will open it up for Q&A.
The duration of this call is around 60 minutes, and we will try to wrap up our comments in about 20 minutes. So we leave enough time for you guys to ask questions. If the time is not enough, please feel free to reach out to us through email or write to us, and I will try and answer all your questions to the best of my ability. Thank you once again, and I will now hand it over to Mr. Joseph to make his opening comments. Over to you, Joseph.
Yeah. Thank you, Devanshi, for the introduction. Hello, and good morning, everyone. I trust you all had a chance to look at our investor presentation and the results published yesterday. SJS continued its growth momentum in Q3 FY 2025 and delivered 31 consecutive quarter of outperformance, with a strong Y-o-Y growth of 15.4% in the automotive business, significantly surpassing the industry growth of 7.1% in production volume. With a consolidated revenue of INR 1,785.6 million in Q3 FY 2025, the company showcased its ability to consistently outperform market benchmarks. This performance was driven by strong performance in the passenger vehicle segment, reflecting SJS' strategy of expanding its customer base and product portfolio in the passenger vehicle segment organically and inorganically, reinforcing its position as a leader in the industry.
Aligned with our vision for growth, expansion for Exotech capacity is already on track, and we have also commenced the development of a cover glass manufacturing facility in Vasai, marking a significant milestone in enhancing our production capabilities. These facilities will not only increase our capacity to address rising demand, but also strengthen our position as a leader in advanced aesthetic and functional products. With a robust financial foundation and consistent cash flow generation, we are well equipped to pursue strategic growth initiatives. Our key focus areas include planned CapEx in the cover glass segment, as well as going on expansion of Walter Pack and Exotech. Additionally, our strong balance sheets enable us to scale operations efficiently to meet diverse application demands while actively exploring inorganic growth opportunities to further strengthen our market presence.
Moving forward, we remain focused on delivering quality products to our customers by being the one-stop solution provider for aesthetic products, driven by premiumization and the adoption of advanced technologies. We are committed to building long-term relationships with all our stakeholders. We continue to focus on gaining momentum in the aesthetic business, maximizing operational efficiencies, and leveraging our strong liquidity position, while also exploring new prospects and markets for growth. With that said, I would now like to hand over the call to Mr. Sanjay Thapar to take you all through some of the business and industry highlights for the quarter. Thank you, and over to you, Sanjay.
Thank you, Joe. Hello and good morning, everyone. Building on a solid foundation of the first half of this financial year, we are pleased to announce yet another quarter of very strong performance across all operational and financial parameters. The strategic initiatives we implemented at the start of the fiscal year have delivered impactful results, and we will continue to build the momentum in the coming quarters. Coming to some key updates, talking of the quarter gone by, Q3 FY 2025 was marked by yet another quarter of better-than-industry performance by SJS, with a consolidated revenue growth of 11.2% year-on-year to INR 1,785.6 million compared to 7.1% Y-o-Y growth in the automotive that is two-wheeler and passenger vehicle industry production volumes. As mentioned earlier, this growth is primarily attributable to our strong performance in the passenger vehicle business.
During the quarter, domestic sales grew 12.3% year-on-year on back of a 22.6% year-on-year growth in our TV business, outperforming the underlying industry. On back of robust margin performance delivery by our company, I am delighted to share that the consolidated EBITDA grew 16.9% year-on-year to INR 482 million. Our PAT grew 32.9% year-on-year to INR 277.1 million with margins at 15.5%. In terms of production volumes, the auto industry, two-wheeler and passenger vehicles combined grew by 7.1% year-on-year in Q3 FY 2025, whereas SJS delivered a year-on-year growth of 15.4%, which is over 2X of the industry growth. Exports for the quarter stood at INR 115 million. We won a large export business in the U.S. market, for consumer durables segment, and we also added Tube Investments of India in their journey to make EV tractors.
Continued winning new businesses with mega customer accounts like Stellantis, Mahindra, Whirlpool, Bajaj Auto, Visteon, Royal Enfield, Marelli, Atomberg, Samsung, amongst others.
Sorry to interrupt. The line for the management has been disconnected. Please hold while we reconnect them back. Thank you. Ladies and gentlemen, the line for the management has been reconnected. Yes, sir, please go ahead.
Yeah, sorry for that glitch. I was talking of the highlights. We won a large export business in the U.S. market in the consumer durables segment and added Tube Investments of India for the EV tractor business. We continued winning new businesses with mega customer accounts like Stellantis, Mahindra, Whirlpool, Bajaj Auto, Visteon, Royal Enfield, Marelli, Atomberg, and Samsung, amongst others. Exotech and Walter Pack, adding an additional 4.1 MW captive solar power generation capacity reinforces our commitment to a greener planet. Talking of nine-month export performance, SJS exports grew 20.3% year-on-year. Growing exports remains a key focus area for SJS, driven by our efforts to strengthen our presence in the high potential global markets. We remain focused on deepening our presence in the existing geographies while exploring possibilities to tap into new markets. On the business segment performance, Exotech demonstrated exceptional performance during this quarter.
It reflects the company's efficiency in operations, sustained demand for its offerings, and the strategic approach to capturing market opportunities successfully. In the domestic business, passenger vehicle segment has outperformed the underlying industry growth, showcasing the strength of our product offerings and the effectiveness of our customer-centric, organic and inorganic strategies. With a solid operational framework and targeted investments, we are poised to sustain this momentum, delivering long-term value to our stakeholders by unlocking new avenues for growth. On the ESG front, SJS continues to demonstrate its commitment to sustainability through impactful initiatives. With Exotech and Walter Pack addition of 4.1 MW captive solar power generation capacity is a step in this direction to our commitment for a greener planet.
At SJS, our dedication to social responsibility is evident through contributions towards medical treatment for the underprivileged and support for the different arts center, which empowers specially abled children with education and skill development opportunities. Through these and many other initiatives that we've already taken, SJS continues to embed sustainability and social responsibility into its core operations. We hope to drive meaningful change for a better future for our community. I would now like to hand over the call to Mahendra, our CFO, to update you all on the SJS financial performance before I come back to talk about the future growth outlook. Over to you, Mahendra.
Thank you, Mr. Thapar. Good morning, everyone. Let's delve into the financial stats first. Slides 13 to 16 provide a concise overview focusing on the consolidated picture of SJS. In Q3, our consolidated revenue reached INR 1,785.6 million, showcasing growth of 11.2% on a YOY basis. This robust performance is attributed primarily on back of strong business growth in passenger vehicle segment. Moving to EBITDA, we achieved INR 482 million, representing a YOY growth of 16.9% with a margin of 26.6%, improved by 102 basis points YOY due to enhanced operational efficiencies. Our consolidated PAT for the quarter stood at INR 277.1 million, demonstrating a robust YOY growth of 32.9%, with the PAT margin standing at 15.5%, improving by 253 basis points YOY, primarily due to higher EBITDA margins, lower finance costs, and increase in other income.
The company had strong cash flow generation, which has positively impacted our consolidated ROCE, which stand at 25.9% and ROE recorded at 17.4% on an annualized basis. In nine months FY 2025, we generated strong operational cash flows amounting to INR 1,463.1 million, with a free cash flow reaching INR 1,003 million. Additionally, cash and cash equivalents stood at INR 874.8 million, positioning the company with a net cash balance of INR 754.4 million. Strong free cash flows strengthen our ability to pursue future growth and strategic investment. As you are all aware, with the addition of Walter Pack India products in our portfolio, we have penetrated deeper with our new generation products that contributed 27% of the consolidated revenue including Q3 FY 2025. Walter Pack India acquisitions has effectively helped to balance our portfolio across two-wheeler passenger vehicle and the consumer segment in the right manner.
During nine months FY 2025, exports grew 20.3% YOY to INR 421.6 million, constituting 7.5% of the total revenue. Q3 FY 2025 exports were at INR 115 million, which constituted 6.4% of the total consolidated sales. Both Exotech and Walter Pack are primarily domestic business and hence export as a percentage of our consolidated sales are at 6.4% in Q3. Our strong financial position remain a key enabler of growth with robust cash flow generation, providing a solid foundation for strategic investment. A major focus area is our plant CapEx of around INR 100 crore in Pune for chrome plating and painting capacity expansion and around INR 40 crore in the cover glass segment aimed at expanding production capabilities to cater to rising demand for advanced technology products that have diverse application.
Additionally, our improved credit rating from A+ positive to AA stable by ICRA, which is one notch higher, highlights our commitment to the financial discipline and the consistent performance, further strengthening our ability to pursue growth opportunities and the long-term expansion initiative. Notably, few companies in the auto industry have attained such a high credit rating. We are also happy to inform you that your company has been awarded certificate of appreciation from The Institute of Company Secretaries of India in recognition of our best practices and the good governance culture. I would now like to hand over the call to Mr. Thapar to discuss about our future plans and growth outlook.
Thank you, Mahendra. Moving to our outlook for future growth. As we look ahead, our robust cash flow generation continues to provide a very strong foundation for us to pursue strategic expansion initiatives. As told, company is incurring a CapEx of close to INR 100 crore for chrome plating painting in Pune, another INR 40 crore for the cover glass facility at Hosur. With this expansion, we are not only strengthening our production capabilities, but also preparing ourselves to be future ready to cater to the emerging opportunities like cover glass for displays and enhance our kit value. This additional capacity in chrome plating and painting will not only help us serve the domestic market, but also enable us to address demand in global markets. In addition to our CapEx expansion projects, the key strategic focus for our company is the expansion of our export business.
As we have mentioned earlier, our ambition is to increase the share of exports in our consolidated revenue. We are actively working towards achieving an export target of 14%-15% of consolidated sales by FY 2028 by expanding into new geographies, increasing penetration in existing markets and adding new products to meet the need of our global customers. Our focus on exports has started to yield results as we bagged large orders in the last two quarters from key OEMs like Stellantis and Whirlpool amongst others. Our strong balance sheet and cash flows enable us to look for better inorganic opportunities as we make strategic capital investments in new technologies to expand our product portfolio and reach. This approach not only enlarges our addressable market, but also strengthens our positioning as a one-stop solution provider for aesthetic and functional human machine interface parts.
Lastly, I would like to say that premium migration remains a key driver of our growth strategy. Leveraging our customer relationships, expanding our product portfolio and reach, we are confident to maintain a strong growth momentum, surpass industry benchmarks, and maintain our superior margins that deliver long-term value to our stakeholders. With that said, I come to an end of my quarterly updates. Thank you. We are now open to the Q&A session.
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. The first question is from the line of Khush Nahar from Electrum Portfolio Managers. Please go ahead.
Hi, sir. I am audible. Thank you for the opportunity. My first question was more on the demand side, how are we looking at demand in the domestic and the export region? Also, I see that our standalone business has grown only 2%. Any particular reason in terms of maybe supply chain issues or demand issues? My second question was, is it right to assume that quarter three is a seasonally weak quarter post the festive month? If we can go back to the 18%-20% growth that we were doing from Q4 onwards.
You are right. Let me take the last part of the question first. Yes, Q3 typically is cyclically a lower quarter, primarily for the reason that there is a new model change happening in the automotive industry, consumers like to buy a new model. But this year, there were a large supply float in the trade and that accounted for lower volumes or low production volumes for the OEM to normalize the supply chain in the industry. Our growth trajectory, we have always maintained that we are not dealing from the industry. If industry volumes go down, our volumes do go down. But then overall, on an overall basis, we outperform the overall industry volume growth. We have continued to show that in this quarter as well. For two-wheelers, we were in line with the industry growth. Four-wheelers or passenger vehicles, we grew 22.4%.
Hello.
Sorry.
Yes, ma'am.
Is the management line disconnected? Can you just connect again?
Okay. Sure. Ladies and gentlemen, the line for the management has been connected. Yes, sir. Please go ahead.
Yeah, Khush. We were disconnected. Coming back to the question. I had mentioned that quarter 3 typically is a lower sales quarter because of the change of the year. But overall, the data that you referred to was QOQ. As I said, our volumes are not dealing from the industry, though we tend to grow faster. I said, for this quarter, the two-wheeler sales were in line with the industry growth and the passenger vehicle sales, we grew at 22.4% vis-à-vis 2.8% on a consolidated basis. Coming back to the standalone SJS that you referred to. Here, mostly exports were lower in this quarter versus the last quarter, and that accounted for that nominal increase. But if you look at our standalone nine-month numbers, our growth has been 13% on standalone SJS. Our Exotech revenues on a year-on-year basis have grown at 25.5%.
And what we reported in terms of the overall numbers, you have that data. We continue to go strongly.
All right, sir. Sir, in terms of demand, any outlook you can share in terms of domestic and export mainly because export is a big focus for us for Exotech and the Walter Pack India also.
Export, as I said, we have already won very large businesses. In this quarter, we won a business from a very large plant of Whirlpool in North America, and we will be the sole supplier for the product that we supply to that division, and that is one of the very large divisions of Whirlpool. That is a big win. In the current quarter, sales have been lower in exports, primarily because of soft market conditions in Europe and North America. But we are optimistic that they will come back. The outlook remains very positive. Exports, as I said, we are today, just at the fringe of the large export market. There is a huge opportunity out there. We reported last quarter that we won a large global business from Stellantis.
That is a long-term business, an 8-year program, very large volumes across North America, Latin America, as well as Europe. With this Whirlpool also, our order intake continues to be very strong, and we are sure that we will do great business in exports.
Right, sir. Thank you for the detailed answer. One question, if I can squeeze in. What is the operational timeline for the optical glass plant? Is it right to say that this glass technology that we developed can be also used in other segments, like maybe cell phones, TVs, et cetera?
The larger picture that you must see is that cover glass that we've already started investment, so that plant should be ready somewhere by September, October of this year. We already started work on ordering equipment for that plant. The shed is ready and equipment orders are in process. This plant will come into steam maybe towards the end of FY 2026. That is the timeline. Coming back to your view that is it fungible with other areas? Absolutely it is. We are in fact very excited that there could be much larger possibilities beyond the cover glass in this business. We are looking at displays in a holistic manner and we are in early stages of discussion of seeing that how could we enlarge our presence in the display market per se, not just cover glass.
With that, we could address multiple business segments. Once we get to that, we will surely come back to you to announce what we are doing.
Correct, sir. Thank you.
Thank you. In order to ensure that the management is able to answer questions from all participants, please limit your questions to two per participant. The next question is from the line of Suraj Malu from Catamaran. Please go ahead.
Hi, sir. Just if you look at Walter Pack Spain globally, they have BMW, Mercedes, Tesla, Audi, all of these global brands as their customers. I just wanted to understand, do we serve these customers via Walter Pack India as well or is that in pipeline for us?
No. Walter Pack India is primarily an India-focused business. The belief we had when we acquired this company was that all of Asia, all of India, 100% is with us. And some key customers that were already SJS customers we will continue to serve. Notably, Whirlpool, for example, is our business. But the Walter Pack Europe or North America business that they do out of Spain and North America, that is a Walter Pack business. We don't supply to them. But having said that, we have a strong relationship with Walter Pack in Spain, so we are always exploring the possibilities of what we could do to be a sub-supplier to them to address these markets. That's something that is for the future. But at the moment we are focused on India.
Got it. But we'll not speak directly to Walter Pack Spain's customers?
Yeah. There is an agreement that while with the running technical assistance agreement that we have, we will not compete with them, with the customers that they have in Europe. This is a three-year non-compete agreement that we have.
Got it, sir.
One and a half years is gone.
Sorry?
Yeah. One and a half years ago, we signed this three-year agreement, so another one and a half years to go. That is the current agreement that we have with Walter Pack Spain.
Got it, sir. We are free to speak to these customers after total 3 years from the start?
Yeah. Technically we can, but we build on building relationship and trust with our partners. Ideally there is a cooperation that we are in. I think Walter Pack Spain recognizes that Walter Pack India is the most profitable or most cost-efficient plant that they have in the world. There could be plenty of possibilities of partnering with Walter Pack Spain rather than competing with them. I think our strategic intent is better served in terms of jointly addressing the global needs and carving out business amongst us.
Got it, sir. Thank you very much.
Thank you.
Thank you. The next question is from the line of Ajox Frederick from Sundaram Mutual Funds. Please go ahead.
Hi there. Congrats on the new order wins. I had one question. Sir, on the WPI and Exotech business, if I find the QOQ growth, it has been negative. Despite our primary customer growing on a QOQ basis, can you shed some light on that, sir?
Sorry, I did not get your question. Growth has been negative where?
Yes, sir.
You are talking about QOQ number?
Yes. I am talking about QOQ, quarter-on-quarter, WPI and Exotech.
Give it to Mahendra.
Ajox, we have disclosed our revenue in our presentation and QOQ number if you see for Exotech and Walter Pack. Exotech has grown by 2.4% and Walter Pack has declined by 4.1%. And overall basis they have, let us say, reduced by maybe 1%.
But the important point I would like to add to what Mahendra just said, quarter to quarter, depending on the model mix, depending on the off-take of the customer, as I said
Demand because of supply float in the market was lower in some cases. The important operating number you should look at is the 9-month number for these companies. Walter Pack has grown very strongly, close to about 20.5%, and Exotech has grown at about 25%, 26%. There is extremely robust growth. Quarter to quarter is not the right way to look at a company because there are so many factors in terms of some particular model supply float being more, the customer demand going down in a quarter. I think that doesn't impact the overall very strong growth trajectory that we have in both these companies.
Also, just adding to what Sanjay said. Usually Q2 is a stronger quarter for us because it's just before the festive period, and that's why you know that production starts before the festive period, so that's why we also supply. Q2 and Q4 are usually stronger. Q3 is generally a little weaker quarter compared to Q2 because of even plant shutdowns and all that happens during this quarter.
Okay. Very clear. The second question is on your other expenses, which is bundled under Walter Pack and Exotech. That has bumped up. Is it because of any new tooling you are doing or what's causing that?
Ajox, it's a normal business. We have a provision for the ECL, estimated credit loss, in this quarter. That is why it is happening. It's a normal business. Accounting adjustments happen every quarter on quarter. This time we have an amount of INR 8.8 million, and maybe that is causing the higher other expenses.
Okay. Yes. Is that a one quarter phenomenon or it gets bumped up?
When you compare with the quarter 2 of the last year, it was not there. That is why you are seeing a higher amount in this quarter. But it is a normal scenario in an accounting manner.
Understood. Sir, the final question is on standalone business. Like you said, the margins were pretty strong in this quarter and there was some decline on the employee cost also sequentially seen. What caused that on a QOQ?
Ajox, you have to repeat again. What your question says?
Decline of what?
Employee costs.
Employee costs.
Standalone, yes.
In the standalone, you are comparing with the quarter 2?
Yes.
From the quarter 2, which was a higher turnover and higher manpower. Versus quarter 3, it's a decline in the turnover, so also people cost will get declined. We don't have all people as a permanent. There are some casual people also doing deployers. As per the business requirement, it keeps on up and down.
We align it with the sales offtake that there is. There is a component that we can fine-tune to minimize cost and employee cost is one of the areas.
Okay. Very interesting, sir. Sir, any idea, anything beyond that new Whirlpool win? When that will come through, how much can be the potential from that? Any rough sense?
It is a business for North American plant of Whirlpool. This is for a dishwasher plant, and we will supply overlays to them. We are replacing an American supplier, and that is what we will cater to.
Okay. When will this come for the production part?
We should start immediately. I think in one quarter, next quarter, we should be able to start supplies.
Okay. This will take our consumer business mix substantially higher from where we are right now?
Yeah. Our focus really is to balance our mix. Today consumer is 20%. It will remain aligned because the other businesses also are growing. I think secularly, the mix will remain with the two-wheeler, four-wheeler and consumer mix will remain same because we have strong growth in all the areas. As a proportion of sales, it is likely to remain similar to 20% or thereabouts.
Okay, sir. Sir, just a final question. Sorry for extending this. On exports, any other potential customers we are closer to crack at this point in time? Anything?
The strategy we have is that we look at large mega accounts. We have been trusted by supplying to them successfully in one geography. Continental for one, Stellantis the other. These are very large global companies and we are growing business with them. Similarly, Whirlpool, we are at the tip of the iceberg, as I said earlier. That is the reason why I say that to be an Indian, which is truly global in terms of what we cater to across the world. Our thrust is on growing this export business, and we have, I think a very promising pipeline of opportunities that we are pitching for. That would be and will be a game changer for SJS in the coming years.
Fantastic, sir. Congrats once again and all the best. Thank you.
Thank you.
The next question is from the line of Pradyumna Choudhary from JM Financial. Please go ahead.
Yeah. Hi, sir. Congratulations on a decent set of numbers. My first question is, on the exports front, you spoke about exports being lower due to subdued environment in Europe and the U.S. But given a low base and given the kind of orders you've been winning, isn't it a little too soon for us to be linking to the market in terms of our exports growth?
Those are two things, really. As I said, what we have as historical exports, that of course depends on what is the demand in those markets. It's not that everything has come down. For example, we supply to Visteon for some dials, and that dial business has grown quite dramatically in the last quarter. We've in fact grown by close to about 90%. That's one product. There are some areas, where Visteon also has a plant in Tunisia where the demand has come down. It depends on market to market, what happens. Similarly, Whirlpool in Europe, demand has been lower. As Devanshi said earlier, the quarter 3, you have a lot of plant shutdowns that happen, especially in the export area. You have a subdued demand in November and December for export markets. That's just a function of this.
If you look at the overall exports, again, on a year-over-year basis, whatever it is, we have grown close to about 20%. The pipeline remains extremely strong. We see a lot of traction from the customers, and I have repeated many times earlier. The products that we sell are light, easy to ship, and the companies in Europe and North America, our competitors in Europe and North America, cannot really compete because of their very high operating costs. There is a natural advantage for printing companies in India wanting to address the export market. That makes us extremely bullish that we are absolutely right in terms of our focus, because this is an area where we feel that we have an edge over competition in that market.
Understood. Could you give us that number? Like in Q3, what was the year-over-year growth or degrowth in exports and consumer durables?
One moment. Devanshi, do you have the numbers? You want to know the quarter-over-quarter export-
Year-over-year, but for Q3.
Q3 YOY-
Q3 versus Q3 FY 2024.
Q3, we have grown overall 11.2%, out of which two-wheeler grown by 8.4% and passenger vehicle has grown by 22.4%. Rest has come out from the consumer goods.
I was actually looking for this number for exports and for consumer durables.
For the export only. The export business, YOY basis is a kind of a flat overall, and out of which consumer segment has remained, I guess, flattish.
What was the reason for a flattish consumer durable business?
Like Mr. Thapar said, it's a subdued demand in the market, especially we are supplying to the export and the U.S. And deliberately quarter 3, Europe, largely it was Europe where the QOQ demand was lower. As I said, in this quarter, you typically have a slowdown, plant shutdowns happen, and that is the reason why you see demand to be a little lower. But of course, there are political uncertainties still prevailing in Europe, and that has impacted the demand in those regions.
Fine. Just last two questions. One is on the Stellantis side, the order we had won, when would the supply start for that? Second is, you spoke about two previous participants. You spoke about how Walter Pack India can't sell to geographies where Walter Pack Spain has said in terms of Walter Pack Spain resisting customers. Would it not limit our ability to cross-sell to our international customers towards the next time?
Let me address that part of the question first. When we acquired Walter Pack India, it was a new technology area. Walter Pack Spain is one of the few companies in the world which has this capability. It was strategically very important to get into this area, which we have done successfully, step one. Step two was that we still have a lot to learn. It is a new business, which is in the process of building capability and scaling up in India. The market in India itself is so large, and the opportunities in the global markets are so large that we really don't have to compete with Walter Pack Spain. You would understand that if we are a partner and we have a technology tie-up arrangement with them, it does not make sense to attack them in their home market.
We are, as I answered earlier, in a spirit of cooperation, and we have extremely cordial relationship with Walter Pack Spain. I think we have much more to gain. It is not that we've given away geography. All of Asia with us is with us. Walter Pack Spain cannot sell in this territory. All of India is with us. Walter Pack Spain cannot come here and sell. Then the key customers like Whirlpool, Walter Pack Spain cannot supply to. We have safeguarded our interest very well.
As I said to an earlier question, we are in the process of discussing with them, and there are possibilities where we could together collaborate because Walter Pack Spain recognizes that the cost efficiency of Walter Pack India operations or the Ursalil Walter Pack India operations are far better than what they can achieve in Europe for the nature that I said earlier, again, it is a printing.
When you have IML part, there are two parts to it. One is the printed outer layer or the decorative surface that you have. That is a natural advantage that we can get when we compete in an IML business because of the nature of the decorative surface is printed. We are much more efficient than Walter Pack Spain. There are lot of collaborative opportunities. That is what we'll focus on rather than cannibalizing or eating into Walter Pack business. As I said, legally, the agreement is for three years, so one and a half years is gone. We will see how this develops.
All right. That question regarding the Stellantis order come in.
Yeah. Stellantis supply should start from July next year. We are in the process of submitting samples, approvals. That's a large business. Tooling is under development. There are different phases, different part numbers there. As I said earlier, we are, for the first time, the owner of the complete branding for a vehicle. That's a very prestigious project for us and we are very eagerly looking forward to start supplies.
July 2025, you said, right?
Yes, July 2025.
All right. Thank you, and all the best.
Thank you.
The next question is from the line of Amit Hiranandani from PhillipCapital India. Please go ahead.
Yeah. Thanks for the opportunity and congrats team for good set of performance. Sir, how do you see the growth trajectory for the company's consumer durable segment?
So extremely strong. My answer to that is that we are the consumer durable segment, typically whatever parts we supply currently, they are highly profitable for us and we have very strong relationship with all the marquee names. Again, answering the same thing, a large market exists outside India. India, of course, we are supplying depending on the volume. That is business as usual. The huge opportunity that we see for growth is exports. North America and other regions are very, very large markets where all these consumer durable companies do lot of sales. Samsung in Thailand has a very large plant, which is a great opportunity for us. Markets outside India, volumes being very large are the key focus area for us moving forward.
We are in the process of addressing RFQs, getting RFQs, seeing how can we do a more meaningful business and see if we have an opportunity to do not just components but some assemblies for those customers. This is in process, but we are very optimistic.
Right. Sir, on the cover glass, for the benefit of all, if you can help us understand more about this product, competitors in India, how much import happens, and what is our right to win here? Also if you can throw some outlook on the revenue and margin for the cover glass, please.
Okay. Let me tell you, all cover glasses in India are imported so far. We will hopefully be the first guys off the block and we will have an early mover advantage. As I've said in the earlier calls, the cover glass is a part of a display. Everybody can see that the number of displays and the size of displays in cars are increasing. That is a key trend for premiumization that we see playing out. Customers want larger displays, and sometimes these displays combine two or three displays in one, and the cover glass encompasses all of these. We are committed to do the cover glass, but at the same time we are very excited. In our conversations with customers, we see an opportunity that we could become an aggregator of the display as well.
This is still early times, as I said earlier in this call. Maybe we will revise our focus on what is the opportunity set that we have. It is a little early to say in terms of what revenues it will be or what margins will be, but what I would like to mention here is wherever competition intensity is low and the parts are imported, there is a natural tendency that margins should be very attractive. We are moving with that thesis. I would say that by and large, whatever margins that we command at SJS in our overall numbers, we will continue to target towards that by climbing up the value chain really. With lower competition intensity, the pricing pressure should be lower.
Right. Sir, continuing on this, do we have any orders in hand for this product?
Yes. As we said, we are negotiating, discussing. We have tacit approvals. The pricing has been approved. We are in that process of consolidating the orders. As I said, not just orders for the cover glass, we are also looking at a larger play. At the moment it's early times, so I would not like to disclose because this is confidential information, but we are very optimistic.
Sure. Sir, few question on the bookkeeping side-
I'm sorry to interrupt, sir. Can you please fall back in the question queue for further question?
Yeah.
Thank you. The next question is from the line of Jyoti Singh from Arihant Capital Markets. Please go ahead.
Yeah, thank you for the opportunity. My question is from the earlier participant only on the cover glass side. As we are optimistic and also basically it is imported. As far as I know, one or two players in the market industry, they are also planning to manufacture cover glass in India. If you can highlight on that, how it will be differentiating the pricing point of view.
Two things. Cover glass is basically as the word says, glass. The key part to this is the printing that is done on the cover glass. At SJS, we have more than close to 35 years of expertise in printing on parts which are literally under the driver's nose. We are making dials and we are exporting dials across the world. The people who will make these displays are people who are already buying dials from us. There is a good customer relationship that we have in place. The customers realize just by an ambition to make cover glass is not the reason that you could be successful. The entire business or the company has to be geared towards delivering highly sensitive aesthetic parts.
You can imagine if I export dials which are equivalent to a cover glass in terms of printing. In fact, cover glass is in a higher specification in terms of printing. I think those people who have that ambition would need to do a lot of work. I am not saying that there will not be competition. Obviously, it is a very attractive emerging market, so a lot of people will have ambition to get into this business. Again, repeating that we have an early mover advantage. We have a relationship of over 15, 20 years with all these large global OEMs who do these displays in the driver information system. We would have an edge over them.
Okay. Thank you, sir.
Because of our strong quality and delivery capability.
Okay. Another question on the advance logo side that we are currently supplying to Tata Motors. Are we in active discussion to supply other OEM also?
We already are supplying, so it is not just Tata. To the entire two-wheeler industry. I mean, not the entire two-wheeler industry, but most of these people, we supply logos. We supply to Honda Motorcycle & Scooter Company, we supply to Bajaj, we supply to Royal Enfield, we supply to TVS. We already have a lot of that two-wheeler business. In four-wheeler business, we do a lot of business with Mahindra, we do a lot of business with Tata. We are already present in this business.
Yes, sir. I am talking about the advance logo that we are implementing with the ADAS. I am talking on that side.
Okay. Sorry, advance logo, I did not understand.
The ADAS type.
Yes.
Which you are doing for Tatas.
Okay. Now, see, it is up to the OEM to decide on what kind of design can be incorporated on their product. Okay? We have had discussions with Hyundai and Suzuki and all that. But they would not like to go with the bubble kind of a finish that what we have seen with Tatas. So it also depends on the shape of the logo, the lettering, and all that. It is not that everybody would like to universally adopt and then follow someone kind of strategies. Let me answer it this way. We have the capability. We have proven it with a very large OEM. So the customer recognize that, yes, SJS is the de facto supplier of such parts. So as and when the possibilities arise or whatever platform they want to use it, obviously, SJS is first or a preferred mode of call.
Okay. Thank you, sir. And sir, on the Dixon side, what are the pro-
Ma'am, please call back in the question queue for further questions.
Yeah, sure. Thank you.
Thank you. The next question is from the line of Lokesh Manik from Vallum Capital. Please go ahead.
Yes, I am audible?
Yes, you are audible.
Perfect. Sanjay, the first question was on your vision for exports at 15% by FY 2028. Do Whirlpool and Stellantis take us there, the big orders on that front?
They take us to a large distance. As I said, Whirlpool, we just acquired the complete business for one plant. Now, obviously they do their homework in terms of checking our costs, our delivery capability and our quality reputation. We tick all those boxes. I am very proud to say that if I go to an export customer and pitch for our company, people pay serious note because we not only supply to the marquee OEMs, but we deliver them flawlessly throughout the world. We are in an extremely strong position. This does not take me to the 15% completely, but takes me somewhere close to that. At the moment, we are looking at much larger or thinking bigger as to what could we do with the platform that we have created in SJS and an amalgamation of the technology that we have.
Just to example, I have an IML plant or IMD plant, I have a chrome plating and a painting plant, I have a 3D lux or a printing plant. A lot of these products that are required in those markets or opportunity for new aesthetics that come in is maybe amalgamation of two or three technologies or maybe all of these technologies. That is something that a company that does just one part of business cannot do. That is why I said earlier that we are not just looking at discrete components or an assembly, but we are looking at maybe sub-assemblies and we could do some sort of business which is much more higher value add.
I am quite optimistic that moving forward exports, we have gone out and said that, yes 14%-15% of my top line in the next three years has to come from exports, and we are very actively driving that. I just cited some examples that we won large successes in the face of global competition in the last two quarters, so I am quite optimistic.
Okay. My second question was for Mahendra , is on the cover glass CapEx, what is the asset term that we should expect?
Yeah. We have allocated around INR 40 crore. If I talk about the asset turnover, at a peak level, we are estimating 2.5 to 3 x.
Okay. That's it from my side. Thank you so much.
Yeah, thank you.
Thank you.
The next question is from the line of Sahil Rohit S anghvi from Monarch Networth Capital. Please go ahead.
Yeah. Thank you for the opportunity and appreciate your performance. My first question is, the outperformance that we've got on the passenger vehicle side, can you give us some more details on what the reasons for it? Is it the new products? Is it new customers? Exactly which some of the products that you can outline, what's driving that outperformance?
Mahindra is doing exceedingly well. In our businesses at both Exotech and Walter Pack, we have that as a customer. Mahindra recently launched a new range of vehicles, the Born Electric vehicles. We see good traction moving forward also. They are in the ramp-up phase, so we ship them parts, and there's a very large content on their Born Electric range of vehicles. There are two vehicles that you're aware, 60 and 90. We are present in both of those. With Walter Pack, we have started supplies to the new Dzire for IML parts. That also has contributed to our increased sales. We've also started supplies for the new IMD part, for the lit logo that we supply to Tata for their vehicles. That lit logo volumes have increased, so they like it and there's good customer demand for that.
They've implemented across different models. This part we supply, we are a tier 2 position. We supply to the airbag supplier, and he installs it in the steering wheel. Of course, the supplies to Maruti Suzuki for some parts and Continental for dials. These are some of the reasons which have led to our outperformance in the passenger vehicle market.
Got it, sir. This is interesting. My second question would be, would you be able to disclose the quantum of the order that we've got with Whirlpool for the dishwasher plant or maybe the term over which we'll be servicing this or maybe an annual run rate? Would it be possible?
No. I mean, this is confidential information. There are competitors across the world, so I would choose not to say. Let me suffice it to say that's a very large plant and we've got 100% of that business for that plant. Typically, if you don't goof up in terms of supplies and quality, this business stays with you. It's a stable business and a stable long-term business.
Right now, the agreement is for 5 years, is it? How long?
Typically, the customers have contracts for 3 years at a time, so this will continue to get renewed, as I said, unless we give a customer reason to complain, which we have not so far. We don't have a single warranty recall. Customers are enthused with us. They understand that not only this part, we could supply some other parts around this part. I think we are in a very exciting phase where customers globally are starting to discover the capabilities of SJS. That, I think, leads to a lot of customer enthusiasm for approaching us for new development or whenever a new model is launched. That was our focus, to be the first port of call or a preferred port of call for customers launching a new product. I think we're slowly getting there.
Amazing, sir. Congratulations. That is all from my side. Thank you.
Thank you.
The next question is from the line of Rohan Advant from Prad Capital. Please go ahead.
Yeah, thanks for the opportunity. Sir, my first question is that while you have done exceedingly well in the PV segment, and it seems you would continue to do so, on the two-wheeler front, our outperformance has been coming down, and we match the industry, maybe slightly ahead. We used to grow much faster earlier. Is anything changing in the two-wheeler space that you are not able to do the 1.5x-2x of industry growth?
No. All along, I have been maintaining that a two-wheeler is a finite size vehicle. There are no interior, exterior. What you see is what you see. We have always maintained that our two-wheeler business will grow organically. The growth that will come will largely be for passenger where we are increasing content. The positive set in the two-wheelers really is that when EVs or EV two-wheelers start coming into mainstream, then the display that they have for the electronic cluster.
T he transition from the mechanical to the electronic cluster which we are doing for Foxconn, for example. We also won a business for Ather. Those, when they start becoming mainstream and their proportion in the overall two-wheeler volume starts increasing, then you would see that increase in content in two-wheelers. For the moment, two-wheeler electric vehicles are hardly 5%-6% of the overall volumes, so they still do not make a dent. If you look at the consolidated mix, there is no meaningful gain that is visible in the content in two-wheelers. When the localization of these displays happens and when the EVs are, let us say, 50% of the EV sales, you will then start seeing this 1.5x performance by SJS.
Also, Rohan, just adding to what Sanjay has has said. If you will actually see, even in this quarter, although two-wheelers, it does show 8% volume growth, but actually it is the scooter segment which has grown higher. The motorbike segment has grown a little lower. Scooters, as you know, is a segment where we do not have much presence as decals and all is not much used. That is why if you will see
But beyond that, the key point, his question was that the premiumization trend that we are outgrowing the market. My point is that outperformance will happen when higher contents of premium products, which, for example, EVs are, will take mainstream. We have won recently a very large order, again, they are a Tier 2 position, for Suzuki two-wheelers, where they are transitioning or they are increasing volumes of the lens mark assembly that they will use. We continue winning that business with Marelli and with Visteon. So we are very optimistic, but I have always guided that two-wheeler sales is going to be typically in line with the market industry growth, RMV growth, and four-wheelers is where you will see that outperformance because of increasing kit value for premium products.
Understood. And sir, my second question is that starting Q4, which is the ongoing quarter, we would be cycling a very strong base because we had a step-up growth in the March 2024 quarter. So are we confident of growing double digits on this elevated base?
We are always confident because we have done a lot of homework and we are using this opportunity to strengthen our capabilities and work on reducing waste in all the processes. So our focus is twofold. One is to outperform the market in terms of growth. The other is to look at all the possibilities to drive cost efficiency in our operations, reducing scrap, reducing wastage. So we see a lot of scope and the effort that we have put in over the years, I think will bear fruit. So it is a twin thing. It is not just the increasing sales. It is also increasing profit and profitability as well.
Got it. Thank you, and all the best.
Thank you.
The next question is from the line of Prateek Giri from Subh Labh Research. Please go ahead.
Thank you.
Oh, hi. Greetings. Am I audible?
Yes, you are.
Thanks for taking my question, and congratulations on good set of numbers. Mr. Thapar, all my questions are answered. I have a few left, which is first one is on IME. I understand we have an aspiration to be in this segment. I just wanted to understand-
Sorry, which segment? Sorry, I missed that part. Which segment are you talking of?
IME. Electronics.
IME. Yes.
Yeah. I was just wondering, is it possible to develop something in-house? In the meanwhile, we look for an acquisition opportunity.
No, we are already developing IME parts with those. IME.
IME, I am talking, Mr. Thapar.
In-mold electronics. Yeah, okay.
Electronics. Right. Correct.
Yeah. No, so we are already doing that. In fact, we have made a lot of prototypes, as you know. These products are not in serial production. A lot of companies and their design centers come to us to say, "What can we do with the aesthetic surface and the functional surface?" So we already have a lot of prototypes that have been given. So those teams are discussing with their marketing people. Typically, understand that to introduce an IME in a product, whether it's a consumer appliance or a vehicle, whether a two-wheeler or a four-wheeler, it has to be implemented at the inception of the design of that product. You can't have a retrofit, which a lot of decorative parts can be fitted.
The new launches that these people will do, so they will, of course, work out the economics and the feature, cost benefit analysis, and then decide to introduce. But we are actively developing IME parts and supplying these concepts to the OEMs or tier ones to then pitch to the final customer. I think it's a matter of time, but this is new, not just in India, but globally as well. So I think it is a matter of time. Maybe in the next 2 to 3 years, you would see IME penetration starting to increase in India.
Understood, Mr. Thapar. It can be fair to assume that it is going to take some time, but the work is happening.
Yeah. We already have, for the past one or two years, we've been giving prototypes and concept proofs to customers, and they are very excited. Now, to bundle it into a vehicle, they need to decide what model, what features to introduce. I think the OEMs today recognize that, yes, it is possible. It's a question of who takes the first step in this direction.
Understood. Very useful. Mr. Thapar, my second question is related to the global markets. I understand we have aspiration for the OEs market also in exports. But in U.S.A. and Europe, we have seen the emergence of Chinese brands. I just wanted to understand how this changes our opportunity size, given the Chinese OEs must be sold by Chinese and Chinese ecosystem?
No. We have a new president in the North American market who's a notorious friend or not a friend with the country that you mentioned. The idea is that, look, at our end, we can't control the geopolitical dynamics of what plays out. But what we can do is that what can we do with our own capability and our own relationship with the customers. We continue to do that very strongly. And companies realize that they need to diversify supply chains. I think there's a place for the Chinese to play, there's a place for India to play. There has been, for the last two, three years, the China Plus One story. We have not really focused on China Plus One as an alternate. I just give you that example of what business we won, the global business with Stellantis.
This is not China Plus One. This is a new technology that was introduced. I am much more proud of winning businesses on our own merit than position myself as a substitute for China. We think that they are just another competitor. In fact, I export some parts to China. We are not afraid of the Chinese technically. We have all the capability and the skill sets here. We have the customer relationships. We speak English much better than our Chinese counterparts or competitors do. I think we have everything in the favor of a company like SJS, which has proven its technical capability and the ability to support overseas markets, without disruption in supplies through COVID and the pandemic and the Suez Canal challenges. I think that is what global customers look at in a partner.
Understood. You are saying, that if you compare our nearest competitor, any competitor from, say, in China on the technology front and product front, you are saying we are as good as any other Chinese player, which has similar business line.
Absolutely. If not better, because the Chinese companies, again, mass produce one particular category of products. If there is a guy making dials, he will continue making dials, and he would like to make only one model. I make 7,000 Stock Keeping Units and I have 13, 14 different technologies that I can offer. When a customer looks at a prospective supplier to onboard, he would rather buy multiple parts from one supplier than choose different supplier for each category of parts. It increases the headache. That is the rationale where we said that we want to be a single source or the single-stop solution provider for all aesthetic parts. That is something that we have or we do better than the Chinese who focus primarily on one technology in a company.
Very helpful, Mr. Thapar. Always a pleasure listening to you. Thank you.
Thank you so much.
Ladies and gentlemen, due to time constraint, this will be the last question. It is on the line of Shrinjana Mittal from RatnaTraya Capital . Please go ahead.
Hi. Thank you for the opportunity. I just have two questions. One is on WPI. I just wanted to know how are we on the integration side? It has been a couple of quarters, right? The run rate which we look at is currently INR 40 odd crore, and it has been that for a couple of quarters. You mentioned in the last call as well that there were some delays in the Tata Motors launches there. That is also one of the reasons. Could we throw some light on that part?
Yeah. Okay. Let me start with Tata Motors first. Delays in launches was one year ago. Those launches of those vehicles have been launched. The new Safari, new Harrier, new Curvv, almost all of Tata vehicles. Walter Pack is the main supplier for IMD, IML parts. Unfortunately, the volume at Tata Motors has not been as well as they promised. That is a little bit of a lull for the moment. In terms of features, it is a fantastic vehicle, so I hope it will do well, and we are long-term suppliers committed to that. That is one part of the question. When supplies come back, it is not just Tata Motors. As I said in the call earlier, we are supplying to Maruti Suzuki for the new Swift, new Dzire, and that is leading to increased sales.
We are looking at Mahindra and Volkswagen as other customers for Walter Pack. We already are in the consumer appliance business, so we do a lot of consumer electrical business. Walter Pack has all the technologies. Only historically we inherited some customers. The new customers we are working on and that will lead to the growth trajectory at Walter Pack. At the same time, we are focusing on the other part of your question was integration of Walter Pack into SJS. As we announced earlier, we have appointed a group COO, a gentleman called Mr. Mahendra Singh who is on board. He is stationed at Walter Pack's plants in Pune and his key job to facilitate this integration. We are still in the stages of integration, but we hope that by the end of the year, the integration part should be clear.
Then we move to the next phase, which is improving or scaling up that business, as we have demonstrated very successfully for Exotech. We go to the next phase of integration and acceleration of the trajectory of Walter Pack next year onwards. That is the broad plan. I hope I have answered your questions.
Yeah, that is very clear. Thank you. I just have one more question. On the consumer appliances side, firstly, congrats on the new order win. I just wanted to understand that this quarter has been flattish YOY, right? In terms of growth for the consumer side. I think it was you who mentioned before as well, some part of it is also because of exports being weak. But even on the domestic side, it would have been flattish, right? Because export is still a small portion. Is it just an end industry impact for us or what would be the reason for that?
Sorry, just to understand your question better, you are focusing on consumer?
Yeah, consumer segment. Yeah.
Yeah. This quarter was weak for the reason that most of these overseas customers, November, December, they are generally slack periods because they are finishing their year, and they start again around the middle of January. Typically, that is a cyclical variation. But overall, in terms of uncertainties in Europe, especially the geopolitical tensions there, people are a little cautious and demand has been hit in Europe. So Europe and even North America, were lower, which we hope will come back. These are the legacy products that we have. The new businesses, I have already talked of, that we are opening more doors, so we are not just depending on those businesses. Moving forward, we think this will come back. And we are extremely bullish on our capability to be a very strong player in the export market.
And that is why we are saying that we are going all out. And these two large order wins, both with Stellantis, which is a global product across the world, and also with this complete ownership of supplying parts to one major plant in North America. Both these will support our case for exports.
Yeah. That is very clear. Thank you. Thank you, and all the best.
Thank you.
Thank you. Ladies and gentlemen, that was the last question for today's conference call. I now hand the conference over to Ms. Devanshi for the closing comments.
Thanks, Steve. I would like to thank everyone for joining the call. I hope we have been able to respond to most of your questions adequately. For any further information, we request you to please get in touch with us. Stay safe, stay healthy, and thank you once again for joining us. Have a good weekend.
On behalf of IIFL Capital Services Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.