Ladies and gentlemen, good day and welcome to the Q2 and H1 FY 2025 conference call to discuss operational and financial performance for SJS Enterprises 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 * then 0 on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Dhruv Joshi from Nuvama Wealth Management. Thank you, and over to you, sir.
Yes. Thank you, sir. Good morning, everyone. On behalf of Nuvama Wealth and Investments, I welcome you all to the 2Q FY 2025 earnings call of SJS Enterprises. From management, we have with us today Mr. Sanjay Thapar, CEO and Executive Director; Mr. Mahendra Naredi, the CFO. As always, we will start the call with a brief opening remark from the management team, followed by the Q&A session. With that, I will hand over now the call to Mr. Sanjay. Thank you, sir.
Thank you for the introduction, Dhruv. Hello and good morning, everyone. I trust you would have had a chance to look at our investor presentation and the results yesterday. In the second quarter of FY 2025, SJS continued its growth momentum and delivered the highest ever quarterly revenue of INR 1,927.9 million in Q2 of FY 2025, surpassing industry benchmarks. This growth was primarily driven by the robust growth in the auto segment and the consumer segment, and also a strong performance in our exports businesses as well. During the quarter, we successfully secured significant orders from both new and existing clients, strengthening our presence across vital categories like the automotive and the consumer durables. Our strategic capital investments in capacity expansion and new product development further reinforce our position to seize emerging market opportunities to drive future expansions. Now I come to some key updates.
Talking of the quarter gone by, Q2 FY 2025 was marked by yet another quarter of better-than-industry performance by SJS, with a consolidated revenue growth of 18.1% YoY to INR 1,927.9 million compared to 10% YOY growth in the automotive, that is two-wheeler plus four-wheeler industry's production volumes. This growth is primarily attributable to the strong performance in our passenger vehicle, consumer, and export businesses. During the quarter, automotive business has grown well for us both domestically and in the export markets, with 15.4% and 54.7% year-on-year growth respectively, outperforming the underlying industry. On the back of robust margin performance delivery by all businesses, I am delighted to share that the consolidated EBITDA margin for the quarter improved by 370 basis points YoY to 26.6%. Our PAT grew 50.9% YoY to INR 291.5 million, with margins at 15.1%.
In terms of production volumes, the industry two-wheelers plus passenger vehicles grew by 10% YoY in Q2 FY 2025. SJS's two-wheeler plus passenger vehicle sales delivered a growth of 18.2%, which was 1.8x of the industry growth. This performance was mainly driven by the passenger vehicle segment despite the industry de-growth in the segment of 0.7% YoY. SJS has successfully repaid a term loan of INR 300 million, achieving a debt-free status. This milestone enhances our capacity to pursue growth opportunities and strategic investments in the future. I am also thrilled to share that we won a large long-term export business from a global OEM to supply to their plants in North America, Latin America, and Europe. We also continue winning new businesses with mega customers like Stellantis, Mahindra Two Wheelers, HMSI, Yamaha, Hyundai, ISV, Autoliv, Bajaj Auto, Visteon, Liebherr, BMW, Triumph, Royal Enfield, Dixon amongst others.
Export growth was another key highlight during the quarter, with a 54.7% year on year growth increase contributing almost 8.5% to our total consolidated revenue. This achievement is testament to our successful strategies amidst new business acquisitions and improving market landscape. We are focused on deepening our penetration in the existing geographies while strategically expanding into new markets. We also added Fiat Chrysler, Melfi, Italy, Stellantis, Detroit, U.S., and Stellantis, Goiana, Brazil as new customers, and this will open significant new opportunities in the coming quarters for the company. Additionally, our capacity expansion plans at the Exotech facility have been finalized with the new plant expected to be commissioned by Q1 of FY 2026. This move is critical as a part of our growth strategy aimed at scaling our production capabilities to meet rising demand.
On the ESG front, SJS has made significant strides in the ESG journey by entering into a share subscription and shareholder's agreement and power supply and offtake agreement with ASTPL and SOPL for the supply of up to three megawatts solar power. This aligns with our goal of transitioning to a green energy with renewables like solar and wind already powering nearly all our Bangalore operations. Our focus on sustainability is embedded in our long-term strategy to drive positive environmental impact. Beyond environmental initiatives, we are committed to advancing employee growth through regular training, fostering a culture of continuous improvement and teamwork. Our dedicated ESG committee provides expert oversight to ensure our initiatives align with our values, promoting a balance between business growth and social responsibility.
At SJS, embedding ESG principles is not just a moral responsibility, but a strategic priority, driving sustainable growth and enhancing stakeholder value while upholding the integrity and fairness in all our operations. I would now like to hand over the call to Mahendra, our CFO, to update you on SJS financial performance before I continue our discussion to talk about our future growth strategy. Over to you, Mahendra.
Thank you, Mr. Thapar. Good morning, everyone. Let's delve into the financial snapshot. Slides 13 to 16 provide a concise overview focusing on the consolidated picture of SJS. In Q2, our consolidated revenue reached INR 1,927.9 million, showcasing growth of 18.1% YoY. This robust performance is attributed to the passenger vehicle and consumer segment as well as export. Moving to EBITDA, we achieved INR 517 million, representing a YoY growth of 37.1% with a margin of 26.6%, improved by 370 basis points YoY due to enhanced operational efficiencies.
Our consolidated PAT for the quarter stood at INR 291.5 million, demonstrating a robust YoY growth of 50.9%, with PAT margin standing at 15.1%, improving by 328 basis points YoY primarily due to higher EBITDA margins. The company has successfully repaid a term loan of INR 300 million, resulting in a debt-free status. This has positively impacted our consolidated ROCE, which stands at 24.3%, and ROE, return on equity, recorded at 18.7% on an annualized basis. In as well FY 2025, we generated strong operational cash flow amounting to INR 192.4 million, with free cash flow reaching INR 663.2 million.
Additionally, cash and cash equivalents stood at INR 491.3 million, positioning the company with a net cash balance of INR 388.8 million. As you are aware, with the addition of Walter Pack India products in our portfolio, we have increased range of new generation products that contributes to 25% of consolidated revenue during Q2 FY 2025. Walter Pack India acquisition has effectively balanced our portfolio across two-wheeler, passenger vehicle, and the consumer segment in the right manner. During Q2 FY 2025, export witnessed growth of 54.7% YoY to INR 164.6 million. Q2 FY 2025 export constitute 8.5% of the total consolidated sales.
As you are all aware, both Exotech and Walter Pack are primarily domestic business and hence export as a percentage of consolidated sales is at 8.5%. I would now like to hand 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, a key strategic focus for our company is the expansion of our export footprint. As we mentioned earlier, our ambition is to significantly increase the share of exports of our consolidated revenue, and we are actively working towards achieving a target of 14%-15% export contribution to our consolidated sales over the next two years. This growth will be driven by a combination of expanding our presence in existing markets, entering new geographies, and optimizing our product offerings to cater to global demand. We are confident that the strategic emphasis on exports will not only diversify our revenue streams, but also enhance our market positioning and reliance on domestic market fluctuations.
Over the past few years, we've significantly enhanced our value proposition for passenger vehicles, with content per vehicle growing by more than 3x. By positioning ourselves as a one-stop solution provider, our focus remains on developing innovative products that meet future customer demands, thus expanding our addressable market and securing long-term growth opportunities. Our commitment to executing both organic and inorganic growth strategies, including optimizing operational efficiencies and expanding market presence, will drive profitability and sustained growth for the company. We are poised to continue delivery of exceptional value to our stakeholders by capitalizing on cross-selling opportunities and maintaining a strong focus on premiumization. With that said, I come to an end of my quarterly updates. Thank you. We are now open to answer questions.
Thank you very much, sir. 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 hand sets while asking a question. Ladies and gentlemen, we'll wait for a moment while the question queue assembles. Our first question is on the line from Amit Hiranandani from SMIFS. Please go ahead.
Yeah. Congratulations team for the good set of numbers and festive greetings to everyone here. Sir, my first question is on the Walter Pack India. So in H1, WPI's broad revenue is approximately INR 85 crores-INR 90 crores. As we know that this is a pause year for passenger vehicles industry, do you think we can sustain this run rate in H2 as well? Also, if you can help us understand what will be the growth drivers for WPI in the coming three fiscal years, please.
Okay. Thank you for your greetings and Diwali greetings in advance to all of the attendees and your families. Walter Pack, as I have said and maintained, is a very important strategic acquisition that we did, and we are very happy because we are today able to address businesses on RFQ from customers for a variety of new technology products which are a combination, in some cases, of IMLs, including chrome plating, painting in some cases, and on these also IMEs. We are extremely bullish. The specifics on Walter Pack, I will start with the outlook for the next three years. We are addressing very large global RFQs which have IML content in them. The domestic market, we continue to be a dominating position. We won new businesses. There are some new businesses, exciting businesses that are starting with the likes of Mahindra and Maruti Suzuki.
The growth outlook continues to be very promising. For this specific quarter, as you are aware, Tata Motors is a large customer for Walter Pack India. Tata Motors volumes, especially for the Safari and Harrier, where very large, high content materials from Walter Pack is supplied, were a little soft in Q2, but this demand is coming back and there are some new models also that are now picking up at Tata. We expect this growth to be strong. We remain positive on Walter Pack, both for the current year as well as the next three years.
Great, sir. Sir, on quarter-on-quarter basis, there was 5% drop we have witnessed in the subsidiaries revenue, I mean, the Exotech plus WPI. This, we believe, it is majorly due to the WPI only. As you know, where its top passenger vehicle clients like Lumine and Tata Motors have seen decline for the same period. This has also impacted the EBITDA margin, which came down to 19% in quarter two versus 21.6% in quarter one. Here, basically, if you can help us understand whether this level of margins for the subsidiaries are sustainable or there is some scope to improve it further.
No, definitely there is a big scope for improvement. As I mentioned in our earlier calls, whenever we introduce a new product, there are a lot of trials that go on. In the short run, margins could get impacted, but specifically for Walter Pack, as you say, it was clearly a function of lower sales to a key customer, because the demand of the customer was lower. I think with the inventory corrections that have happened in of the recent few weeks, we see demand coming back. I would imagine that this will come back. We are still at a 25%-30% outlook for Walter Pack, moving forward. As I said earlier, we are in a very dominant position because there are not very many companies which have this capability.
We are quite confident and optimistic that in the long run, we will be able to come back to those margin numbers that we looked at when we acquired Walter Pack.
Sir, what was the margin number in Q2 for WPI only?
As we said earlier, we do not guide on specific margins. I would like you to think of us as a consolidated company. Historically, we have been talking of SJS and Exotech and Walter Pack separately, but there are a lot of cross-fertilization that happens across companies because some part of the printing is done in one company, molding and injection molding could be done in another location. It is a little complex to understand on a discrete basis. Lastly, I maintain what I said. It was just a one-off that the demand for some particular customer was lower, resulting in lower sales. Specifically, if you want, Mahendra, would you like to add something to this, please?
We are not guiding about the margins separately. Please see us from a consolidated SJS, and this quarter SJS we have delivered EBITDA margin of 26.6%.
The group, that is what Mahendra is talking about. Consolidated of everything put together. I think that is a very strong performance.
No, no. Fair enough, sir. Sir, my second question is on the export side. We have seen a very good jump on a YoY basis, despite poor macroeconomic situation in the U.S. and Europe side. Just wanted to understand what has led to this growth and which clients have contributed, and for your second half guidance, please.
Yeah. Exports, as I mentioned earlier, we have all the capabilities and we are unique globally in terms of what all we have. We have a very long tenured OEM relationship with global OEMs. They recognize us for our design-to-delivery capability. We are very thrilled. As I mentioned earlier, we are chasing some very large global products and businesses. For the first time, I am very happy to announce that SJS has the complete ownership of a new global platform for the entire range of badges for a particular model. We will be supplying, or we are the company in the eyes of the customer. We have had ownership for a new global program, which will be launched across North America, Europe and South America.
Extremely large quantity, and I think that will set the tone for other OEMs or other global OEMs to trust SJS with the branding of their entire range of vehicles across the globe. This will be one of the three. We worked very hard to be here, and the sales for this new program that we have announced for these three locations will commence from, in a gradual manner, from June of 2025. These are for five-year program at an average, and volumes are extremely large. So that gives a lot of confidence to us to win or target more such businesses. Specifically for the quarter, the export performance as you said, largely we have had great success with Visteon. We supply to their programs across the world. Volumes have improved. We have added Toyota as a new business for Visteon side, and that has contributed to growth.
We have started supplies to Continental, which has led to this improved export performance for the current quarter.
H2 run rate is sustainable, right?
Yes. We are optimistic that exports is a good growth story for us, not just for H2, but also for the next four, five years. When I said that 14%-15% of my top line should come from exports, we see that margins are better. We are cost competitive. We have the product portfolio. Most importantly, we have customers trusting us. With this large business, it is actually the first of its kind for SJS, and with this under the belt, and we hope to deliver this program very successfully across the globe. We should be able to target more such large global businesses while we continue to make good inroads in India. I think diversifying to the export markets because we had a very negligible presence so far.
There is a huge TAM or untapped market opportunity available for us, and that is what drives our export focus.
Very nice to hear, sir. Lastly, one very small.
Sorry to interrupt, Mr. Amit. We request you to get back to the question queue for any follow-up questions. Our next question is from line of Ajox Frederick from Sundaram Mutual Fund. Please go ahead.
Hi, sir. Thanks for the opportunity. Sir, how much of business did we do from the consumer side during the quarter and the first half?
Mahendra, could you give some specific data on that?
Ajox, you need to be a little louder. Could you please repeat your question?
Yeah. Consumer business, how much did we do for 1Q and the first half?
In the first half, our consumer business was contribute 20.6%.
20.6% in standalone.
Correct. That's all, yeah.
20.6% of the total revenues came from consumer business.
Right.
Understood, sir. What is our outlook here, sir?
That's what we've guided, that large growth will come out of four-wheelers because we are tapping or exploring larger opportunities overseas in addition to our strong presence in India. So growth will be led by four-wheelers. Consumers and two-wheelers, consumer will continue to be our 20%-22% of our overall revenue. The two-wheelers is close to about 35% of our revenue. So this is what the sales pie will look like, and we will grow secularly across all segments. We are addressing large consumer businesses as well. There are untapped areas in consumer that we are targeting, business development teams are working on. We are extremely bullish on all these segments. The large growth will come from four-wheelers and consumer. Those are the two vectors that will drive us forward.
How much of four-wheeler business did we grow for the first half? What is the growth in four-wheelers?
Our H1 sale from the passenger side is contributing around 40%.
Okay.
When we grow in H1 from the passenger vehicle, we reported at 52%, 51.8%, precisely.
Okay. Helpful, sir. That is really commendable. Thanks, sir.
Thank you. Our next question is from the line of Krishna from Electrum Portfolio Managers. Please go ahead.
Hello. Hi, sir. Thank you for the opportunity. My first question was on the CapEx. If you could guide what will be the CapEx amount for the next three years, and separately mentioning the CapEx required for the Exotech and WPI plant.
Yeah, hi, Krishna.
I am ready to answer that. Yeah.
Krishna, regarding the CapEx, we were guiding earlier also. There is a maintenance CapEx, we say around INR 15 crore per annum. Every year we are doing for these three companies. Apart from that, we are doing a specific CapEx, and we so far identified one is the Exotech expansion, and we allocated around INR 80 crore for the same. Second was the optical glass factory. The investment, we allocated INR 40 crore for that. If you talk about a period of three years, somewhere INR 170 crore- INR 190 crore, roughly, we have a CapEx plan. As we initially mentioned, this Exotech CapEx, this plan has been finalized and some portion now has started incurring. You will see the CapEx in the current financial year in FY 2025.
Okay, sir. Sir, any timelines on the optical cover glass completion CapEx? This will be in Bangalore only or there is a location for this?
It is really in Hosur. That will be geography we highlighted because Visteon is in Tamil Nadu and they have set up a localization or a glass display manufacturing facility there. They will do the assembly of the display. Cover glass is going to be a component that we supply. Since that is our first customer, we will locate that plant there, not very far from our current Bangalore facility. Hosur is the location, and we will start investment in this year.
By FY 2026 end, we can see the completion and from 2027 revenues, is that right?
Yeah, that is what I have mentioned. So FY 2026, then we should see revenue because this is a long gestation time. There are stringent validations that are required to be done. So all that will go on, and FY 2026 is when we should see revenues coming out of that cover glass business.
Okay.
Thank you. Our next question is from the line of Ashwin Patil from LKP Securities. Please go ahead.
Hello. Good morning, sir, and thank you for taking my question, and congratulations on a fantastic set of numbers. My first question would be on the margin, sir. In the first half, we have reported margins in the excess of 26%, but we have always been maintaining our margins guidance of about 25+% . Are we saying something that second half we may see margins to fall a bit? Just wanted to have your margin outlook for FY 2025 and going forward. Also the RM basket, how is it looking to you? Some guidance on that, please.
Those margins, we have already said that we are quite a bit top of the pack in terms of margins as a company. We focus on high margin, high technology products, and we have been able to sustain this and deliver that performance year after year for past many years now. I am, as I said earlier in my earlier calls, we are not worried about margins because margins are a function of what new products that we launch. When we launch multiple new products, there are instances where we have to do a lot of validation. A lot of trials are done that we pass or not give to the customer. In the short run, margin could have a blip for a quarter, two quarters.
But as we have demonstrated very vigorously in the past, we always find a way to come back because we have extremely strong connect with our supply chain, our suppliers, and very strong focus on operational efficiencies. So even this quarter, we reported a 370 basis point increase in margins. Focus on operational efficiency is always key and paramount in our company. So we continue to drive growth, but at the same time, we want to increase that trajectory for sales growth. I think our building blocks are in position now. We have all the technologies that we need as a company. We have a very strong management team which can control operations in a very focused manner to drive that efficiency that we want. And we are looking at new product introduction, entering new markets that will move it to the next orbit.
My focus on the company is margins will follow. That is why generic margin that I have always maintained are that we will be at 25% margin. Broadly, it could be 26%, it could be 24.5%, but we do not deviate from that. That is the benchmark that when we look at any new business, the first question to be asked is that how profitable is this? We are extremely focused on profitability and we will continue to be focused on profitability. And we are now driving the growth engine. And the reason why I mentioned the export markets for the last two earnings calls, we believe that there is a very large untapped opportunity where I am competing with these people in high-cost countries, and we have demonstrated the capability. So once my export business increases, my margin hopefully should increase, but I still maintain guidance at 25%.
Okay, sir. My next question would be about the industry. What would be the aesthetics industry size at this point in time, the market size, and what would be our market share and our competitive position within that industry?
I split this question into two. Let us say, what is the size of the market in India? CRISIL, anytime we IPO'd, we had set for our data, but this market is evolving because more and more premium products which were not thought of when CRISIL published that premium report, that the industry will grow at 20% CAGR, so we should be at about INR 5,000 crore size of the market in India. And globally, of course, it is upwards of $3.5 billion. Always, what is very interesting for me is that while we continue to be a very strong player in the Indian market, winning businesses, we have extremely strong relationship with our customers. A big slice of the export business is what we focus on. So the $3.5 billion business versus the Indian market. Indian market, of course, we have continued to be strong.
We continue winning new business and new programs. Our order intake is extremely strong. But the export is the game changer, if you see. We see ourselves as a challenger in the global market. There are a lot of new programs. This new program that I said that we have done with Stellantis is in way for competition from all the traditional players that they depended on. We did a lot of technology shows. We demonstrated our capabilities. There was a lot of sampling, et cetera, that was done, concept selling, and that has resulted in this business. I see us knocking very hard on those global market opportunities, on the $3.5 billion market, that SJS is quite geared to focus on.
I see a strong runway, a lot of levers to growth, and continued growth for the company, having built the capabilities that we have over the last four, five years.
Okay, sir. In the domestic markets, our market share position-
We request you to join the question queue for any follow-up questions. Ladies and gentlemen, in order to ensure that the management is able to address questions from all participants, please limit your questions to two per participant. Our next question is from the line of Abhishek Jain from Alfaccurate Advisors. Please go ahead.
Thanks for the opportunity and congrats for a strong set of numbers. Sir, my first question in the Exotech, the new plant is going to start from the first quarter of 2026. What would be the incremental revenue of that business?
We hope to double the revenue in the next three years in Exotech. That is the idea. There are large pockets of opportunity that we have not addressed. As we said, we inherited a legacy plant. We have worked very hard to improve efficiency and improve margins quite significantly at that plant. We now see that there are a lot of opportunities, not only for printability but also for painting, and that is this plant that is going to do. Our order intake is extremely strong. A lot of new prestigious models we won, and we see a good growth trajectory. Broadly, doubling growth in the next three years at Exotech is the target for this new plant.
What is the asset turnover of that business?
Mahendra, could you take that, please?
Your question is about actual turnover of the Exotech. That was your question, right?
Exactly. You are talking about INR 80 crores in the new plant. What would be the asset turnover of that business, that new plant?
Asset turnover of Exotech. That was the thing.
Yeah. Exotech, of new business.
Okay. We are contemplating that the turnover would initially start at a lower, but at a peak level, we will reach up to 2.5 x.
Wonderful. Sir, in standalone business, how is your mix in 2Ws, 3Ws, two-wheelers, and consumer segment?
In the standalone SJS business?
Yeah, in standalone business, sir. How is the mix?
Mahendra, you have the percentages of what we do at only SJS?
Abhishek, could you repeat your question? Maybe you can be away from your phone. Your voice is coming very heavily to us.
Are you able to hear me now?
Yeah, now it is better.
Sir, in standalone business, how is the mix in passenger vehicle, 3W, two-wheelers, and consumer?
Standalone business, our two-wheelers constitute in the range of 55%-60%. Passenger vehicle, around 20%-25%. Consumer segment contributes somewhere 15%-18%. That is largely in SJS standalone.
Export which contributes around 7.5%, that only into the standalone business?
Export, we had INR 16.5 crores and that is largely from the SJS session model.
In this quarter, we have seen a very strong growth of around 21% on the top line. What is the reason of that particular growth? Is it because of the new business win in the passenger vehicle side?
We have got new business wins from customers like Bajaj, customers like SJS, Royal Enfield. Despite the decline in the vehicle volume by the OEM, our sales grew because we have high-value parts. HMSI, we won new businesses on their models. We have had a very strong set of numbers in terms of port volumes. Mahindra, for example, we won a lot of their new businesses like the Mahindra Thar, for example. We have a very large content in that vehicle and that is doing extremely well. It is a secular growth that we have. When I said that we have a very strong order intake, new models at all these customers have contributed to that growth. SOP of some new businesses started. While the four-wheeler, passenger vehicles market has declined, we have grown close to 22%. The two-wheeler business also, we have had good growth.
I would say that our sales guys have done a good job.
Despite the challenges in the-
Abhishek, we request you to join the question queue for any follow-up questions. Our next question is on the line of Hitesh Goel from Ritesh Advisors.
Thank you, sir. Sir, can you give us the number for Exotech and WPI as revenue for second quarter, sir?
Hitesh, we had disclosed this into our presentation. You can actually refer there.
No, no. 2Q FY 2024, sir, not 2025.
FY 2024.
Yeah, 2025 I have. I just want the 2024 number.
2024, we had Exotech in the range of INR 38 crore, and Walter Pack was INR 39 crore.
INR 388 crore, right? Yeah.
Yeah.
Okay. The Exotech margins on a Q1 basis would be stable directionally? The revenue is similar, yeah.
As we said, we acquired this business at a 12% EBITDA margin. We grew up to 18%. My steady state guidance on margin with Exotech is 15%-16%. That is our overall guidance. We are better, but then we are investing into new plant that could impact that a little bit, but directionally we will be at that 16%-17% till I, of course, get export business into this company, where we hope that margins will be better or higher than what is there in the Indian market.
Great, sir. My last question is on Walter Pack. If we look at one quarter, second quarter revenue of Walter Pack, it doesn't seem to be much of a difference, right? I mean, INR 46 crores versus INR 44 crores types, right? Still, I think margins have got impacted a lot. Is it because of the new models that you've got into and there is some tooling impact or modernization impact, if you can tell us something about that or because pricing-
Largely-
Yeah.
No, no, pricing remains strong, all that is good. Yes, there are some new models ramp-up phase which causes a lot of trials, et cetera, to be done, which are not billed to the customer. That's what I said, a quarter to two quarter, we are not so worried because that is inevitable when you launch a new model. That's a part of the business. Largely, it was impacted by sales. We had a shortfall at a customer where we see now sales coming back. It's a function of lower sales for this quarter.
Okay. Great, sir. Thank you.
Thank you. In order to ensure that the management is able to address questions from all participants, please limit your questions to two per participant. Our next question is on the line of Jasdeep from Clockvine Capital Advisors. Please go ahead.
Hi, sir. Thanks for taking my question. Sir, the new contract that you have mentioned from Stellantis, where you are supplying to three plants or three geographic regions of the client, what kind of products you would be supplying to them? Are these plain vanilla chrome badges, or this export would be like the Walter Pack in terms of products like IML badges?
No, it is a mix of all technology. Fundamentally, we will own the complete monogram and badging for these global platforms, so across the world, across three regions. There are totally about 27 part numbers that we will supply. There are various technologies. You have molding, painting, assembly, some special technologies. Then we have some 3D Lux parts. We have hot foiling. A key factor here is that we have moved away from discrete components, so there will be some assemblies as well. That is a big leap forward for SJS. So long we were supplying discrete components, but now we are getting to sub-assemblies and assemblies, which could help us scale up those businesses even better.
OEMs like fully finished parts, maybe some suppliers who could take responsibility for doing sub-assembly and supplying to them. That is the strategic direction that we followed, and we are very happy to be awarded this global program. That's, I think, very prestigious.
Sir, what kind of kit value do you envisage per vehicle in this contract?
It's about a INR 300 crore business overall to be supplied over the next four, five years. Broadly, that is it. There are multiple badges that go, there's a badge in the front, in the rear, on the side, there's some branding that happens. We've given some proposals which the customer found very exciting. The entire program ownership for badging is given to us.
Got it. The value of the program is INR 300 crore over five years.
Yeah, four, five years, because there are multiple models and variants. Yes. Monthly, yes.
Got it, sir. Thank you. That is all from my side.
Thank you. Our next question is from the line of Pratik Giri from Shubhlaxmi Research. Please go ahead.
Hi, am I audible?
Yes, Pratik.
Yes, you are. Yeah. Hi, team. Good evening. Mr. Thapar, I just wanted to get your sense on WPI. This is a segment for us which has given us very differentiated products, high margin products. But the last capital-
I hear an echo, so your voice is not clear. There is an echo from your side. I cannot hear you so well, so you will have to speak a little slowly.
Okay. Mr. Thapar, is it good now?
Yes, better.
I just wanted to understand capital allocation in WPI segment. This is a segment for us which is very high margin with differentiated products. But we are not seeing any incremental capital allocation in this business. I am assuming that the capacity which we have there in Pune is already at higher capacity utilization. If you can throw some light here, are we planning to do some CapEx here or put some more money into the plant, et cetera?
No. Certainly we are expanding at Walter Pack as well. As we have mentioned earlier, capacity or close to capacity is the plant in Pune, which is Exotech. Walter Pack capacity utilization is still about 70%-75%. We have capacity. We invested in this business or did CapEx in the first year when we acquired this business. As we have said that we have acquired a 7.5 acre land parcel very close to both the Exotech and Walter Pack facilities. There is expansion, enough room to grow. We are adequately invested in Walter Pack. Mahendra, would you like to add to this question on CapEx capital allocation for Walter Pack?
Pratik, when we acquired this company, they went into a major CapEx, and there was a change in the technologies happened when we took over the company. That time, the company has invested heavily, and in the last year also, we made a good amount of CapEx in this company. We are growing in this company, like Mr. Thapar said, we are 75% kind of a capacity utilization at this moment, and 25% is still available. We are doing our CapEx on an ongoing basis. I think we are fairly well allocated there. Like Mr. Thapar said, we have Exotech where we have the lands available for any future expansion. That way we are covered fully.
Just to add to that question. IML Printing or the Walter Pack business is in two parts. One is the printing business, the other is the injection molding and the forming business. Those are the complex parts of this whole business. We have adequate capacity at Walter Pack. Just to tell you that we have a lot of fungibility in terms of our processes. At Bangalore, our printing capabilities are. In case there is any need for any large program or sudden spurt in volumes for a customer, we can supplement and support that effort out of other plants as well. That is why my guidance on this is that think of us as a consolidated entity, not as some of the parts of Walter Pack, Exotech, and SJS.
We are quite fungible in terms of the technology that we have except of course for chrome plating, which is a distinct process on its own. There is a lot of commonality between Bangalore and the facility that we have in Bangalore, SJS standalone and Walter Pack. We do national molding at both locations. We do printing at both locations. Of course, forming and very high-end cutting, trimming in complex shapes is what is the capability that we have at Walter Pack.
Understood, Mr. Thapar. Very helpful. The conclusion I could get is that we are still at 75% capacity utilization with fungibility option there, and then at Exotech also we have the land parcel to do CapEx in case required for Walter Pack.
Yeah. We are already commissioning that project because injection molding is common to both Exotech and Walter Pack. Whatever investment is happening, we have an opportunity to supplement Walter Pack should that demand accelerate there we have to be. But for the moment, we are good.
Understood. Very helpful, Mr. Thapar. Just one clarification, Mr. Thapar. When you said for the glass business, the optical glass business, the revenue will start FY 2026. Should we assume is it Q1 effect in sales or midway?
Or the later part of the year.
I would say that Q2, Q3 is when we should see revenue coming out of that plant.
Understood. Mr. Thapar, congratulations on good set of numbers and greetings and festivities to the entire team. Thank you.
Thank you very much.
Thank you. Our next question is from the line of Manan Poladia from MKP Securities . Please go ahead.
Hello. Hi, sir. Am I audible?
Yes, you are.
Good. Sir, first of all, congratulations on the good quarter. Sir, my question was with respect to the question that the previous participant was just asking about injection molding and capacity utilization at Walter Pack. When you say fungible, if you could, say, put a number to what our current contribution of top line is coming from in mold forming as a business, and what sort of capacity do we have to do including the fungible capacities at SJS, plus the current capacity at Walter Pack, what scale can we get to?
Let me clarify. When I said fungible, that was to say that if there's a sudden spurt in demand, SJS at Bangalore can step in. But at the moment, Walter Pack is a fully self-contained plant. They do their own printing, they do their own forming, their own three-axis and five-axis trimming and injection molding, both 1K and 2K injection molding. They're a comprehensive composite plant capable of doing everything from design, to re-design, to component manufacturing. What I said of what fungibility was an answer to say that what CapEx we have. We said we've adequately invested in this business in the first year of operations itself, that was last year. And we have close to about 25% spare capacity. Theoretically, we could increase sales without incurring any significant CapEx at Walter Pack. That was what I meant when I said fungibility.
What I'm saying is that all companies because if they're on a high growth trajectory, if you have a large global business, for example, or a large domestic business, where you need the volumes, then you need to create capacity quickly. And that fungibility, I said primarily was that we have similar capabilities at SJS Bangalore which could step in to supplement any efforts should it be required, not that we need it at the moment. That was my question. Anything else specifically, or did I miss any part of your question?
Understood. I think that answers my question. Sir, my second question is with respect to that one model where you said you've gotten full ownership of a program from an OEM. Is that to say that you are tier 1 for that OEM for that particular product?
That's right. We will supply these badges. Sometimes the OEM, because of their supply chain, would say that there's a person who supplies a bumper and this logo will come on the bumper. We have ownership of all the badges that go onto that vehicle, and it's a global program across the world. We are the tier 1. The purchase orders will come to us directly from the OEMs.
And, sir, I know that we do a lot of business to other tier 1s. Would you say that the margin on this business would be meaningfully different?
No, as I said, we have a standard benchmark that our margins are north of 25%. That is what our target and aspiration always is, and we will always focus on that. As I said, export businesses tend to be a little more profitable for the simple reason that we compete with suppliers in countries across the world, could be Europe, North America, and we've tested ourselves for quality cost efficiencies. You can understand you don't win large global businesses unless you tick all the boxes in terms of quality, cost, delivery, and development capabilities. There's a very rigorous process that goes through. I'm very excited really to open the doors to large global programs. And our focus now, of course, will be to take the same step forward, because that will give you a credibility even more in the global market.
SJS is a known company, so we have relationship with many, many OEMs across the world. But then when you do these large global programs, other people sit up and take notice. That's, I think, we are absolutely on track of what we intend to do.
Right, sir. Just one short follow-up on that. Sir, you said kit value has created. I remember that your entire plan was to increase the kit value with the optical plastics and stuff like that within the new programs that were starting at Mahindra, Tata, et cetera. If you could just quantify as to what was the kit value last year and what is the average kit value this year?
As I said, three years ago, our kit value for a four-wheeler specifically, three-wheelers largely remains as it is with some new addition for cover glass for display for three-wheelers. Then you have these electric vehicles coming in. But four-wheelers largely was INR 80 per vehicle, roughly, which today after Exotech, Walter Pack and what new product we have from SJS is currently about INR 5,000 at an average per vehicle. And moving forward with cover glass coming in, it could be in the region of INR 8,000-INR 10,000 per vehicle. That is what we have said.
Right, sir. That answers all my questions. Thank you. Thank you so much.
Thank you.
Thank you.
Our next question is from the line of Jatin Chawla from IDBI Capital . Please go ahead.
Yeah. Hi, good afternoon, and happy earnings results. A quick question on your export side. With this large order that you have, it seems you are already at 8.5% of export contribution, and this order can add 5%- 6% contribution. So you would already be at 14%- 15% top line, which is what you were aspiring on a medium-term basis. Having won this order now, I am assuming you would be targeting more orders like this. So over the medium term, what sort of export share as a percentage of top-line aspiration should we think of over three to five years?
So two things. One is our revenue trajectory will grow, right? So it will be on a higher revenue number when I say 14%- 15%. 14%- 15% of a much higher number than you see today. That is one. The second is that most of these programs, I am extremely confident that we will, or optimistic rather, that we will win a lot of these global businesses. That is what our focus is going to be in the coming quarters. What we want to do is that while we win these businesses, there are some ramp-ups of these programs. So it is not that they start from day one. So when I guide to that 14%- 15% sort of number after three years, so these programs will come to maturity in maybe a year, two years. So it takes time.
Every time that I win a business, it is not a replacement. I mean, if I win a replacement business, I hit the ground running, and I can add to my export numbers. When I win a new global platform that the customer is launching, then it is pretty much determined by the launch schedule of that customer, at what volumes in year one, year two, year three. Usually, the second year is when the volumes really ramp up and come close to maturity of their average annual take rate. I think largely we will still stick to that 14%-15% of my sales, of the increase sales over the next three years, if that is exports, I will be happy, but then I will be happier if I do more. It is not that we are stopping at 14%-15%.
Got it.
There is a very large unaddressed market which is very exciting to me.
Sure. Typically, what sort of time period before you can kind of get these orders? What sort of engagement needs to happen? Is it a-
We do a lot of tech shows. Typically, we are known. As an Indian brand, I think more and more OEMs. We are today, as I said, maybe unique in the world, so to speak, in terms of one company having so many capabilities under one roof. For that, we are highlighting during all the tech shows and presentations that we have with the customers. They know us. They know our track record in terms of export capability to 22 countries across the world. I think we tick all those boxes. Winning businesses is largely a function of whenever the program launches. Typically, a customer starts work a year or maybe nine months before they start a new program. The global standard is close to about a year before they launch a program.
They look at suppliers because there are various events of approving, auditing, getting samples, doing retail trials. That takes close to about a year, in some cases, maybe a year and a half as well.
Got it. Quickly on-
Mr. Jatin, I request you to get back to the question queue for any follow-up questions. Our next question is from the line of [Manan Shah from ICICI Securities]. Please go ahead.
Hello. Hi. Thank you so much for the opportunity. I had only one question. Last quarter, you mentioned something about a medical device which you are going to supply. You said that you are in talks with some clients. Can you please enlighten us on that?
We don't want to name specific customers, but as I said, medical devices is an area of interest for us. At the moment, it is a very small part of our business, but it could be big. I mentioned that in the context of our inorganic growth ambitions. North America and Southeast Asia are two target geographies. The reason I mentioned medical devices especially was that a lot of that manufacturing happens in Southeast Asia. If we can acquire a company which already has a medical device manufacturer as its client, we could step in and scale up by cross-selling the multiple products that we have. That was the context that I said. At the moment, it's still small for us. We are supplying to two Indian companies, small numbers. Our ambition is large.
We are looking out for opportunities to expand the medical device or address that market, and this will be a complete new trajectory of growth for us. At the moment, it's still nascent times or early times.
Okay. What exactly are devices do we sell?
There are stuff like blood pressure monitors which require overlays. There are displays that we are targeting on these products. Some In-Mold Electronics products also applications could come in. These are the potential products that would go into these devices which are in our scope.
Okay. Understood. Thank you. That is all from my end.
Thank you. Our next question is from line of Mohit Madiwala from AnVision Capital. Please go ahead.
Hello, sir. Thank you for taking my question. Just one question on the asset held for sale. What exactly was this land and building pertaining to, and when do we expect these cash flows to come in?
Mahendra, would you like to take that?
Yeah. Mohit, we have a vacant plant in SJS, Bengaluru. We currently operate in a facility which we have shifted in 2018/2019. Our old plant is now vacant, and the board has decided to monetize this asset. This will be a kind of a strategic move for us, and that will help to strengthen our financial conditions, and that will help to our organic as well as inorganic initiatives. At the same time, that will also help to improve our asset turnover ratios.
Right, sir. Understood. That makes sense. Do we expect these cash flows to come in in FY 2025 itself in the second half?
This process has been initiated. Generally, this process takes some time. We cannot confirm to this year, but maybe within, let us say, a period of 12 months we expect the cash inflow.
Okay, understood. That is all from my side. Thank you.
Thank you. Ladies and gentlemen, that was the last question for the day. I would now like to hand the conference over to the management for closing comments.
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