Ladies and gentlemen, good day and welcome to SJS Enterprises Limited Q1 FY 2025 Earnings Conference Call hosted by JM Financial. 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 star then zero on your touch- tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Ronak Mehta. Thank you and over to you, Mr. Mehta.
Yeah. Thanks, [Laiba]. Good morning, everyone. On behalf of JM Financial Institutional Securities, I welcome you all to 1Q FY 2025 earnings call of SJS Enterprises. From the management team we have with us today Mr. K.A. Joseph, Managing Director and Co-founder, Mr. Sanjay Thapar, CEO and Executive Director, Mr. Mahendra Naredi, Chief Financial Officer. As we do always, we will start the call with a brief opening remark from the management team, followed by Q&A session. With that, over to you, Mr. Joseph. Thank you.
Yeah. Thank you for the introduction, Ronak. Hello and good morning, everyone. I trust you would have had a chance to look at our investor presentation and the results published yesterday. While Sanjay and Mahendra will take you all through the presentation later, the first quarter of FY 2025 started with an optimistic note with overall demand in most of the vehicle segments growing on both year-on-year and also in sequential basis. The growth was primarily driven by strong economic activity and continuous support from the government. Despite geopolitical tensions, supply chain challenges, evolving customer preferences and inflationary pressures, India has continued to demonstrate strong growth. I am also pleased to announce that SJS Enterprises has appointed a new Group COO, Mr. Mahender Singh, with over 25 years of experience in the automotive industry.
Mr. Singh's extensive background in operations will be a key in managing and expanding our multi-location operations. This position will increase our management bandwidth and drive operational excellence as we continue to scale. Now coming to some key updates. During the quarter, we continued to achieve strong financial performance and growth trajectory. The increase is largely attributed to the strategic Walter Pack acquisition growth and also the growth in Automotive and Consumer Durable segments. For the 19th consecutive quarter, SJS has delivered a better than industry growth, primarily driven by Walter Pack acquisition, premiumization trends and innovation. SJS has delivered a strong growth of 60.9% in revenue on YoY basis. The EBITDA margins reached 26.6%, a slight increase from 26.1% in Q1 of FY 2024. This has been achieved on account of the Walter Pack addition and SJS stand-alone business.
Furthermore, I am excited to announce the addition of Dixon Technologies as a new client, which will open avenue of growth in the coming quarters. Our plans for new product launches and capacity expansion at Exotech facility in Pune are progressing as planned, setting the stage for future growth. Moving forward, we remain focused on delivering quality products to our customers, driven by premiumization and the adoption of advanced technologies and building long term relationships with all our stakeholders. We continue to focus on gaining momentum in the plastics and cover glass business, maximizing operational efficiencies while also looking into new prospects and markets for growth. With that said, I would now like to hand over the call to Sanjay to take you all through some of the business and industry highlights for the quarter. Thank you all, and over to you, Sanjay.
Thank you, Joe. Gentlemen, good morning, everyone. Talking about the quarter gone by, Q1 FY 2025 was marked by yet another quarter of better-than-industry growth by SJS. Our consolidated revenue growth of 60.9% year-on-year to INR 1,886.2 million, compared to the 17% YoY growth in the automotive, both two-wheeler and passenger vehicle industry production volumes. This growth was primarily attributable to the successful integration of Walter Pack India alongside strong performance in our passenger vehicle, consumer and export businesses. During the quarter, automotive business has grown well for us both for the domestic market and the export markets with a 66.6% and a 13% YoY growth respectively.
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 33 basis points on a quarter-on-quarter basis and 51 basis points YoY to 26.6%. During Q1 FY 2025, the company generated strong cash flows of INR 397.2 million and our overall cash and cash equivalents at the end of the quarter stood at INR 766.6 million and net cash at INR 233.7 million. In terms of production volumes, the industry two-wheeler plus passenger vehicle markets grew by 17% year-on-year in Q1 FY 2025, whereas SJS' two-wheeler and four-wheeler delivered a growth of 43.1%, which was 2.5x the industry growth. This performance was mainly driven by the passenger vehicle segment, despite the industry growth in the segment being only 5.8% YoY basis for this quarter.
Overall, SJS consolidated sales saw substantial YoY increase of 60.9%. Organic growth from SJS and Exotech was 21.1% due to growth across automotive, consumer, and export businesses. Our strategy to diversify across various product categories and multiple industry segments, coupled with a broad customer base, has effectively helped us de-risk this business and reduce dependence on any specific segment. During the quarter, our export revenue grew by 13% year-on-year to INR 142 million. The growth was primarily driven by the passenger vehicles segment and the consumer durable segments. We continue to expand our share of wallet by winning new businesses from key customers like Stellantis, Mahindra, Tata, TVS, Honda, Yamaha, Continental, Bajaj Auto, Royal Enfield, Foxconn, Syrma, amongst others. We have also added Dixon as a new customer, and this will open significant new opportunities for us in the consumer durable segment.
Before I hand over to Mahendra, I would like to give a quick update on our ESG and CSR initiatives. At SJS, our commitment to environmental, social, and governance responsibilities is integral to our business strategy. Our sustainability initiatives focus on reducing our environmental footprint, promoting social welfare, and ensuring ethical governance practices. As a part of our efforts to lower carbon emissions, we are expanding use of renewable energy sources. We are making investments across our group to increase our captive solar capacity from 4 MW- 10 MW for the FY 2024-2025. Furthermore, our effluent treatment plant and sewage treatment plants have enabled us to recycle significant amounts of wastewater. We prioritize investments in advanced technologies and initiatives focused on promoting eco-friendliness, optimizing natural resource use, and improving energy efficiency. By prioritizing sustainability, we have minimized our environmental impact through operational efficiencies.
SJS continues its commitment to foster a diverse range of CSR initiatives. Our focus areas encompass education, skill development, hygiene, and health. Various community improvement projects aim to create a lasting social impact. You can also visit our ESG profile, which is placed on our corporate website now. The profile highlights our ESG initiatives that can be easily accessed by all our stakeholders. I would now like to hand over the call to Mahendra, our CFO, to update you on the financial performance of the company before I talk about the future growth outlook. Over to you, Mahendra.
Thank you, Mr. Thapar. Good morning, everyone. Let's delve into the financial snapshot. Slides 11- 14 provide a concise overview focusing on the consolidated picture of SJS. In Q1, our consolidated revenue reached INR 1,886.2 million, showcasing growth of 60.9% YoY basis. This robust performance is attributed to the Walter Pack India addition and a strong contribution from passenger vehicle and consumer segment. Moving to EBITDA, we achieved INR 505 million, representing a YoY growth of 60.8% with a margin of 26.6%, thereby improvement of 33 basis points quarter- on- quarter and 51 basis points YoY. Our consolidated PAT for the quarter stood at INR 282.4 million, demonstrating a robust YoY growth of 56.6%, with PAT margin standing at 15%, improving by 42 basis points quarter- on- quarter, primarily due to higher EBITDA margins. Our consolidated ROCE during the quarter stand at 23.3% and ROE at 19.1%.
During the quarter, the company achieved robust free cash flow of INR 397.2 million, and our cash and cash equivalents reached INR 766.6 million, with net cash position of INR 233.7 million. With the addition of Walter Pack products in our portfolio, we have increased range of new generation products that contribute to 25% of our consolidated revenue during Q1 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 Q1 FY 2025, exports witnessed growth of 13% YoY to INR 142 million. Q1 2025 exports constitute 7.5% of total consolidated sales. As you know, both Exotech and Walter Pack are primarily domestic business and hence export as a percentage of consolidated sales is at 7.5%, while exports are 13.5% of SJS standalone results.
I would now like to hand back the call to Mr. Thapar to discuss about our future plans and growth outlook.
Thank you, Mahendra. Moving to our outlook for future growth, we are confident that we will continue to outperform the industry growth by over 1.5x , leveraging our presence in multiple industry segments, our global footprint, extensive product portfolio, very strong customer relationships, and inorganic growth strategies. Our potential content per vehicle for PVs has, over the last two, three years, increased by over 4x. As a one-stop solution provider for aesthetic products, our focus has been to introduce new products and technologies that meet the futuristic needs of our customers and increase our addressable market. Execution of our organic and inorganic strategies will help us achieve a high rate of business growth in technologies that are complementary or an extension of our existing businesses.
A key inorganic strategy is to enter new geographies to accelerate our business penetration with key and new customers and significantly enhance cross-selling opportunities for our extensive product portfolio. With our focus on premiumization, we believe we will continue to surpass the industry performance in the future as well. With that said, I come to an end of my quarterly updates. Thank you, and we are now open to answer questions, if any.
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 touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we'll wait for a moment while the question queue assembles.
The first question is from the line of Amit Hiranandani from SMIFS Limited. Please go ahead.
Hi. Congratulations to the team for the strong operational performance, and many congratulations for adding Dixon to our clients list. My first question is basically what products we will supply to this Dixon customer and when we can expect the revenue to start flowing in, and how large this customer can be in the mid to long term?
Dixon, as you know, is an integrated manufacturer of electronics and has many verticals. Currently, what we are addressing is their consumer durable segment and their telecom segment. These were one businesses, and these businesses have started in a small manner. We hope that this will scale up very rapidly. Volumes are very large, so we are very excited with this collaboration with Dixon. I think we still don't have the number that what can we can reach, but all I can say is that this is a very large business, which we hopefully should grow in the coming quarters and years.
From when the revenue will start flowing in?
As I said, we already started supplies to them for some parts for the telecom segment. We will soon start supplies to their consumer durable segment businesses as well, and we hope to engage with them in a more meaningful manner to take this forward in the future.
Sure, sir. Sir, two bookkeeping questions. What will be the annual total capital expenditure for FY 2025 and FY 2026, including any planned expansion? Secondly, could you provide the revenue and EBITDA figures for Exotech and WPI separately, please?
Yes, Amit. The CapEx side, we announced and we told in the last meeting as well, we have a plan for expansion for our subsidiary, specifically the Exotech. The investment would be in the range of INR 80 crore. We also continue to expand for our glass business. There we were going to tinker around INR 40 crore. Apart from that, there will be a maintenance CapEx to the tune of around INR 15 crore per annum. That will be going to happen in the current and the next year. Roughly you can consider on a broad level around INR 170 crore- INR 180 crore.
And sir, numbers for Exotech and WPI?
In terms of margin, we see us from a console perspective rather than seeing the subsidiary. We delivered a console number, and I think we are always guiding on the same. Rather focusing on the individual company, let us focus on the console SJS.
Amit, as we have said earlier, we have a strategy of cross-selling products, so we make a decision whether to sell this product to SJS or to Exotech. That gives us that leverage in terms of a competitive advantage. We have said this before. Please look at this as an integrated business moving forward, where we are focused on growth and expansion of margins or maintenance of margins.
Sure, sir. Sir, one observation is that, basically on a QoQ basis, Exotech and WPI combined revenues increased by about 9%, but the EBITDA margin has declined by approximately 125 basis points. So what factors contributed to this decline?
As I've said in my earlier calls, we are winning a lot of new businesses both at Walter Pack and Exotech. So there some new technology started. We started some painting business in Exotech. We started some new generation technologies at Walter Pack. And what I've maintained is that when you ramp up any new product, there could be a temporary blip of a very small number in terms of EBITDA margins. We are not worried about that. Any time if you start a new project, you do a lot of trials. Those parts don't go to the customer. You bear the material cost, you bear the manufacturing cost for those parts. This is just a temporary blip. But on the long term, as I said, on a consolidated basis, we are still guiding that we'll maintain a EBITDA margin of 25% for our group companies.
Sure, sir. I'll come back in the queue. Thank you, sir.
Yeah, thank you.
Thank you.
Thank you very much. The next question is from the line of Yash Agarwal from IIFL Securities. Please go ahead.
Hello, sir. Congratulations on a great set of numbers. My question on the margin dent in case of the subsidies is already answered. I just wanted to know if you could provide the breakup of revenue across segments in the standalone business between two-wheelers, PVs, consumer durables.
Yes, we have informed in our presentation. If you have read the investor presentation, we have given the segment-wise turnover.
But that's split across the consolidated numbers. I just wanted a split on the standalone basis.
Standalone, broadly for the quarter, our two-wheeler. Normally, we try and avoid giving you guidance on specific numbers across segments because it's a very sensitive matter. But any other question you have on this topic, I mean, largely or broadly answering you, two-wheeler is roughly about 50% of our sales of our standalone business.
Okay. That's it from my side. Thank you.
Thank you very much. The next question is from the line of Hitesh Goel from Riddhish Abode Advisors LLP. Please go ahead.
Yeah, thanks sir, for taking my question. Sir, in this quarter, actually, if you see the ramp-up of some key customers have been slow, right?
Could you repeat that, please?
No, I said if you look at in the Walter Pack side, right, I mean, if you look at your key customers, the ramp-up has been slow because of the election. This quarter has been slow, right? Despite that, you have reported a good sales, right? Going forward, can you give us a sense in terms of ramp-up of programs, will this ramp rate continue to grow in Walter Pack?
You are talking specifically for Walter Pack?
Yes, Walter Pack. Yeah.
Sure. Walter Pack, we continue winning large businesses. It's a new business that we acquired now close to one year since we acquired this business. We are getting businesses across customers. Outlook is very strong. At the moment, there's a lot of development actually happening. There's a lead time here because tooling takes about eight to nine months to develop tooling and validate parts. That's typically when these programs start. We have new programs that are starting from October this year to next year, June. There are a whole lot of programs that we've already been won.
My question was actually more guided towards one vehicle which a customer is going to launch, right? I don't want to name the customer, but a key vehicle which one big customer in Walter Pack is going to launch. I think you have a decent content there, right, in terms of that. Is it right that the coming quarter will see that benefit, I mean, second quarter, third quarter we will see?
Yeah. Absolutely. While we are secret about it, but yes, there's a big launch, a very significant launch from a customer happening, which would happen soon. Hello?
Sir, the line of the current participant in the question queue seems to have disconnected. May we move on to the next question?
Yeah.
Thank you very much. The next question is from the line of Abhishek Jain from AlfAccurate Advisors Private Limited. Please go ahead.
Thanks for the opportunity, sir. Sir, in this quarter, on a standalone business, we have seen a significant expansion of the operating margin. It is around 250 basis points. Will this margin sustain?
As I say, I answered this partly earlier. Look at us as a consolidated entity because we today have built in the flexibility in the company to address the needs of a customer across our various group companies. SJS margin, Walter Pack margin, and Exotech margin are all completely interlinked. But yes, our business at SJS continues to grow strongly, and the margins are sustainable. If you look at our history, we have been close to about 50% EBITDA margin of SJS for the last many, many years. That continues to remain that way.
Sorry to interrupt, sir. The line of the current participant in the question queue seems to have disconnected. May we move on to the next question?
Okay.
Thank you very much. The next question is from the line of Aabhash Poddar from Aionios Alpha Investment Management. Please go ahead.
Yeah, hi. Thanks for the opportunity. Just wanted to understand in the presentation, you said that two-wheeler industry has grown by [21%] , whereas our growth is around 12- odd percent. This seems slower than the industry trend. Anything to call out here because last year obviously we did better than the industry. Is it just a timing phenomenon or is there anything else you are difficult to comment upon that piece?
Your voice is, there's a little bit of echo, so I can't hear you so well. Could you just repeat the first part of your question? You're talking about what? The two-wheeler industry?
Yeah, I am talking about the two-wheeler industry growth. I am saying, in the presentation, you said that the industry growth is 20%, and our growth is 12% odd. Just trying to understand, is there anything to call out here since our growth is not higher than the industry?
No, nothing really. This is just a seasonality that you have when new models get launched. Sometimes, the customer scales down the existing products. There is a very strong order intake for the new models that are already ordered to us. The customers will launch it. Nothing very significant. It varies quarter- to- quarter. But overall, our two-wheeler industry growth has been quite significant. From the last year, if you see, we have grown very strongly, and our numbers, the industry grew at about 10%, and we grew our two-wheeler business about 20%, broadly. That was the growth last year. We doubled the industry growth, FY 2023 to 2024. And 2025, this quarter, as I said, we have got multiple new businesses across all our key customers.
We do not supply to Hero, but our growth with Bajaj, Royal Enfield, Honda, TVS, all have been very strong in terms of new or successful models that are coming in. They will get launched in, I think this will normalize during the course of the year.
Just to clarify, if I were to extend this for the entire year for FY 2025, you would be confident of the fact that you will grow 1.5x of the industry growth for two-wheeler as well for FY 2025? Would that be then a fair assumption?
In my previous commentaries, I have said that as a company, we will grow 1.5x the growth rate of the industry, that is two-wheeler and four-wheeler combined. Separately, the two-wheeler industry growth will be more in line with the organic growth of the industry. We will outperform the automotive industry because we have added a lot of new generation products, which are very high-value, premium products that are being launched. On a blended basis, we will outperform the industry volumes by 1.5x in terms of our sales revenue, which we have delivered. Two-wheeler will continue to be organic rate of growth, as I said earlier, of the industry.
Thank you. Just lastly, if you could just update on the cover glass, where are we now? How close are we to delivering, and any guidance on revenue that you would have for that cover glass opportunity? That is it from my side.
Cover glass continues to be work in progress. We have got ISO certification. There is a requirement for some very critical parts. There are standards that you need to meet. Our company has been awarded the ISO certification that has been extended to cover glass. We are continuing to engage with customers. As I said in the last quarter, we expect to get our first purchase order for this business within this quarter, and we will start supplying in a phased manner. Everything is going as per plan.
Thank you very much, and all the very best.
Yeah. Thank you.
Thank you very much. The next question is from the line of Abhishek Jain from AlfAcc urate Advisors Private Limited. Please go ahead.
Thanks for the opportunity, sir. Standalone business, this quarter growth was around 6% YoY. So what is your growth target for the standalone business, and what would be the main driver for the near term and the longer term?
Abhishek, your voice is echoing a little bit, but what I understood is that you want to know what is our growth target for the organic standalone business, right?
Yeah.
As I said, mid-day, we grow 1.5x the industry growth rate, which is performing well. We continue to win new businesses. Our export businesses are performing well. We are engaging with some bidding for some very large businesses, which we hope to get some business in the next few months. The outlook is very optimistic, but the guidance still remains at 1.5x the industry growth rate.
Okay. How much the current contribution from the consumer to revenue, sir, in revenue?
For standalone or consolidated?
On consolidated.
The consumer goods has contributed 21% in the total revenue.
How the mix will change in the coming days?
As we said, we have already done a large amount of rebalancing, thanks to this strategic acquisition that we have done, both of Exotech and Walter Pack, which has increased our four-wheeler revenue, so they are equally balanced. I would imagine this trend will continue, because even the export market growth that we see will happen more in the four-wheeler segment and the consumer segment. Two-wheeler is largely the India play, which will continue to grow organically. In terms of product mix, I would imagine that we are already equal weight, in terms of two-wheeler and four-wheeler, and consumer is about 22%, and then there are a whole lot of other segments that we are working on to add to expand the market even further.
Okay, sir. My last question on your guidance on the consolidated margin that is around 25%. But in this quarter, you have already done 26%, despite that lower margin from subsidiary side, and most probably that subsidiary margin will start to improve from here on with the ramp-up of the new business. Can we expect another 100 basis points, 150 basis points of the margin expansion, and it will stand around 26.5% or 27% in the coming days?
As I said in my earlier call, we are not so worried about EBITDA margins because we have demonstrated a resilient quality that we have to maintain margins around 25%. I am now looking at a new orbit of growth for the company in terms of new technologies, new products. Growth is the driver here. We will launch new technology products. In the short term, that could impact EBITDA margins because we will do a lot of development in-house trials before we launch these products. Once we launch the cover glass, of course, there will be extensive trials that are done across various stages. Now they cost money which impacts the P&L statement. So EBITDA margin, my guidance remains at 25%, considering all these factors.
Thank you, sir. That is all from my side.
Thank you.
Thank you very much. The next question is from the line of Yash from Stallion Asset. Please go ahead.
Hi. Thank you for the opportunity. Sir, congratulations once again for a great quarter. I just want to understand on your passenger vehicle business, the industry has just grown by about 6%, but you have grown by 90% on a consolidated basis. What is driving this growth? I am just trying to understand how you are able to outperform the industry by this margin.
Basically, this is in the large part contributed by the Walter Pack acquisition that we did. That is primarily four-wheeler business. That has contributed to that large growth in the four-wheeler segment. But on a standalone basis also, we have done some very good businesses in the PV segment. SJS grew by close to about 40% with business wins from our customers, new generation products. For example, Tata now has introduced a secret to lit steering wheel logo on their vehicles. This is the first that they have introduced for the industry, which SJS launched. That has contributed to our sales. Plus, Exotech has commenced mass production for companies, for their customers. Mahindra, new models, their Black Edition, their XUV 3XO, all of these.
Very strong wins in our passenger vehicle market, and that is what I have been guiding, that now that our product portfolio for four-wheelers is very robust and very high-value products. The future growth of the company, four-wheeler market will play an important role in our growth. Even for the export markets, four-wheeler is the dominant market outside India. Our forays in the export businesses also will help grow our four-wheeler revenue even further.
Right. Sir, just sort of a best case estimate, how do you think the industry will grow this year if I just combine a two-wheeler passenger vehicle and all the other segments? Do you think industry can grow by 12%-15 % in volumes this year?
No. So you had a better vision than me because you track all these companies. But the view that we have from our customers is that passenger vehicles, there was an issue of inventory lying at dealer points, close to about 55 days in the last quarter, which I believe is being rationalized now that we have the festive season coming, which should boost sales. There are good rains, so that should improve demand in the rural sector. So one would imagine that the industry would keep pace. My bet would be that two-wheeler, which has grown about 19%, our estimates are a little lower in terms of growth of the two-wheeler market. But four-wheeler should catch up because they are at a low thanks to the new launches. So we will wait and watch and see.
As I said, our strategy as a company, no matter which segment grows or not, we are diversified in the product that we address to the markets. For us, the four-wheeler growth is primarily on account of premiumization and new product launches. That is driving growth while we are, of course, pegged to the industry growth, let's say. But we outperform the industry growth in a significant manner because of this new generation product that we bring.
Right. Sir, last question is that-
May we request that you return to the question queue follow-up questions, as there are several participants waiting for their turn.
Sure.
Thank you very much. The next question is from the line of Rakesh Jain from Axis Asset Management Company. Please go ahead.
Hi, sir. Am I audible?
Yes, sir. You're audible.
Yeah. Congratulations to the team for a good set of numbers. Sir, my question is with respect to.
Rakesh, you need to speak a little bit louder.
Sure.
The current participant seems to have been disconnected. May we move on to the next question, sir?
Yeah, please.
Thank you very much. The next question is from the line of Pradyumna Choudhary from JM Financial. Please go ahead.
Yeah. Hi, sir. Congratulations on a great set of numbers. I have got three questions. First is a follow-up to a previous participant's question. In the two-wheelers, we seem to have lagged the industry growth. You mentioned that that is largely to do with certain models being rammed down. Given that some of our key customers in two-wheeler have reported very good Q1 growth, is that the only reason, or is there somewhat, maybe in some of the models we have lost some business? That is question one. Question two is, we recently got to see some of the planned EV model launches for one of our major passenger vehicle clients. One thing I noticed was, they do not have metallic logos for their EV portfolio. Rather, they have plastic or glass logos which get lightened up. Are we supplying such parts to them?
If not, do we see a risk to certain part of the revenue if more and more models start coming in this new kind of logos? Third is a more generic industry level question, in terms of production schedules that is being shared by the OEMs, how are you seeing the demand? July particularly seems to have been quite weak across the industry. These three.
Okay. Let me take them one by one. Your first question was two-wheeler growth, whether there is something that needs to be. I mean, I have already answered that question earlier, from a part spend. We continue to win large businesses. We have not lost a business in two-wheelers. Everything is as per plan. Now, we do not supply to all the models. While the companies do report growth, for example, I do not supply to Hero MotoCorp, but I supply to some customers. Depending on within the specific customer, I would not like to call out separate customers, but some models have not done so well in terms of demand in this quarter. In some models, there is a change that they are launching a new model.
We have the businesses that are awarded to us, and these will come to production maybe this month or next month. It is purely a product mix issue, nothing to do specifically with the industry or our trend, which I say that whatever the two-wheeler organic growth is, we hope to be by and large in line with that for a two-wheeler. The second question you had was on EVs, where you see that in some vehicles you have seen that the content is a little different from the ICE engine. I repeat what I have been saying earlier. When the competition intensity increases, which is low at the moment in electric 2-wheelers, it will increase. The need for differentiation will be dominant. The aesthetic appeal of a product is the key factor for a person buying a vehicle today.
Performance is by and large given in terms of what is the range of the battery, what is the performance overall, the ride quality of the bike. Most of these are pretty sorted. I would imagine that this would normalize, and you would have more and more new generation requirements of increased aesthetics in these companies, and that we will see once the volumes increase. At the moment, we already supply to Ola, we supply to Ather. What I said earlier in my calls is that there is a transition that is happening from the conventional speedometer that you had in a two-wheeler to an electric digital cluster. We are already working with Foxconn to supply that to a very major two-wheeler EV manufacturer.
We are ready with the technologies, and depending on the model that they launch and what are the configurations that the stylists have for that particular model, that is defining the content really. But in the long term, I think the value increase on account of the digital cluster that you will have, will compensate for something else that you see is different from the ICE engine. But always there will be logos and the need for differentiation. I hope I have answered all your questions. There was a third point which I have forgotten, obviously.
The third was regarding the production schedules you are seeing from OEMs, given July was particularly weak across industry segments.
You are talking primarily with respect to two-wheelers?
No, across industry segments, two-wheelers and four-wheelers, as well as consumer goods.
Two-wheeler is okay. We see strong demand and strong order outlook. Four-wheelers is still picking up. They are hoping that with these new model launches and the festive season, things should improve. Many customers which reported a little subdued number on this first quarter, still maintain that they will catch up the volumes that they are planning from September onwards. That is the outlook broadly.
Understood. Thank you.
Thank you.
Thank you very much. Next question is from the line of Rakesh Jain from Axis Asset Management Company. Please go ahead.
Yeah. Thanks again for the opportunity. Sorry, my line got disconnected. My question was, could you help us remind what are the priorities now, given that you are doing a lot of stuff and there is a lot of inorganic additions which we have done, and can you just help us prioritize what are the areas which are more from near term, and what are some medium to long-term opportunities which we have in the kitty? I mean, the new customer addition or the new content. Where are you focusing more on the near term and more on the longer term? I will take up the second question after that.
Okay. In the short and the medium term, we see a very strong demand for our products. Capacity expansion at Exotech is on the anvil. We want to grow this very quickly, and the plans are on final stages of finalization. Expanding capacity at Exotech and Walter Pack, that is one agenda or one focus area. The second really is to get the cover glass business started. We have a good engagement with the customer, so getting the business and setting up a new plant for cover glass is on the anvil. That is again, something that we will do over the next one to two years. We will start supplies in a phased manner.
The third thing in terms of the market really is that we have now a very strong product portfolio, and we are knocking hard on the doors of these global OEMs to crack large global businesses. That is the third focus area that I have, and as I said, we are very competitive. We benchmark ourselves globally. We have a strong customer connect. We have an impeccable delivery rating, and they respect us for our quality. So we will tick all the boxes in terms of the global businesses. Now that we have COVID behind us and the semiconductor chip shortage behind us, the buyers at these global companies are now looking at launching new models. There were some supply chain constraints that they faced because of some shipping embargoes and some unrest that you see.
The war still continues, but I think it's more getting back to normal. We are very focused on driving export growth, and that's an area where I think we are making good progress and hopefully we'll give you some good news in the next quarter.
Great. The second question is: How should we look at your business mix? I'm not saying over one year, let's say next three years, with consumer durables, addition of this large client, and the opportunities you are seeing over there. Anything, if you can guide on what new segments you can look at beyond the consumer durable.
Yeah. As I said, the global automotive market is a very interesting area for us because our parts are very light and easy to ship. I already ship parts to more than 22 countries and we have a connect with all the marquee global names. That is something that we want to drive fast. If you look for a three-year perspective for my business, that's an area that I think will grow. With these technologies that we have, both in terms of the acquisition of Walter Pack, we see a large opportunity in consumer businesses using the Walter Pack technology that we have now acquired. We need to grow the Walter Pack business both in India and globally. That's again, with a strong runway for growth. The third area that we see is the technologies like medical devices, which has been on our radar.
We've started work with a few companies. We now need to scale that up and take them to the global majors. That's a new category of product that we will work on. But then, with the portfolio of technologies that we have now with us and our capability for doing ab initio design and styling, partnering with OEMs, I think that could be another growth driver in the future. Largely, growth will come from four-wheelers, as I said, in the next two to three years. Exports will grow to be a larger part of our turnover. Today, 7.5% of my consolidated revenue is exports. My target is to go to almost about 14%-15% in the next three years. That is an area that is very exciting for us, and that's what we want to continue to drive.
Yeah, that's really heartening to know, sir. Congratulations.
Thank you very much. The next question is from the line of Amit Hiranandani from SMIFS Limited. Please go ahead.
Yeah. Sir, how is the export situation progressing, and have we begun executing orders for the Exotech export orders to the Whirlpool customer?
Yeah, we've started supplies of chrome-plated parts to Whirlpool. That's one part of your question. What was the other question, Amit?
In general, the export situation in macro.
General exports is coming back for us. This quarter, our export revenue on a YoY basis for this quarter grew by about 13%. Overall, we are quite bullish on exports, as I said. But most of the export businesses, there is a lead time from you get awarded to that converting into sales. I think the big impact will be felt from next year onwards.
Sir, double-digit growth will continue in exports, right? For FY 2025.
Yeah. Barring some unforeseen circumstances in the global economic scenario. People are very closely watching what is happening in the U.S., what will happen with this war that is ongoing between, in the Middle East. There are some issues, but overall, the body language of the customers that we see is that it is more of business as usual, and they are looking at launching new models. This is an opportunity for us to get into new exports because, typically a customer tends to onboard a new supplier based on the new programs that they run. In some cases, if they have a great problem with the incumbent supplier, they may resource it, but largely the growth is driven by new products and volumes, which from award to start takes about six months to nine months, depending on the specific program and the customer.
All right. My second question is basically on the cover glass products. The revenue potential for this over the next three years, and secondly, the debt status presently and the likely we are going to repay it completely or not?
The cover glass, as I said, one day all cars in India will have a large display or a digital display. That is changing across customers. Even Maruti Suzuki, which was typically focused on low-cost vehicles, is now moving in that direction. I think it is basically driven by the end consumer. They would like to have a display and they would like to have a rear view camera, infotainment, all bundled together in a large display scene. It requires a TFT and a cover glass. I think we are in the absolute right spot. How large the market will be, is still to be assessed.
One could imagine that it will start with the high-end cars first, where Mahindra was the first with the XUV700, then Kia, Hyundai followed with their models, and now I think almost all the customers are asked by the end consumer to introduce large displays. The pace of growth of this business will depend largely on the take for the vehicle configurations that the OEMs have. The average price, I mean, prices vary from five to display that you have. Typically a large display to a small display, the price point could be from INR 500- INR 5,000 or so. That's the broad range that you have. Maybe 10%, 5% of the cars will start using it, and then 10%, and 15%, and 20%. It's a long-term game, but a lasting technology that will be there for many years.
It's hard to put a number today because this is dependent most on what does the OEM do. At the moment, largely they're imported. People are setting up capacities and now to do the local bonding, they get the TFT screen and buy cover glass. Localization efforts are on, and depending on the pace of localization that these OEMs demand, I think that will determine the size of the market and how soon does it ramp up to be very significant. Of course, the government policies of Make in India help because there will, we expect, Make in India direct restrictions for fully imported, fully built displays, and that is the reason why OEMs are driven, or the vehicle manufacturers are driven to localize in India, which is good business for us.
We will be supplying this as a Tier 2, right? Tier 2 supplier, because our largest client is-
It will be a part, yeah. Either Tier 2. Many times the OEM oversees this because this is a critical part. But yes, it will be a Tier 2 supplier. We supply to the instrument cluster manufacturers who will integrate this and make an integrated display.
Amit, I will take your debt questions. The total debt for the quarter one end is INR 533 million. During this quarter, we have repaid INR 150 million to the banker, and we have taken the loan for the acquisition of Walter Pack, and there is a moratorium period of one year, so that is going to be over now in quarter two. You will see the reduction of this term loan of acquisition in this quarter two. Net debt, total debt is INR 533 million for the quarter end, and we have a cash and cash equivalent is INR 767 million. As on June 30th, our cash position is a net cash position of INR 234 million.
That is what will greatly the margin too, also. We generate a large amount of free cash. The debt that we took for the Walter Pack acquisition largely will be repaid in this quarter. That's what we have on that.
Great, sir. Great. All the best, sir. All the best. Thank you.
Yeah, thank you.
Thank you very much. The next question is from the line of Kaushik from AK Investment. Please go ahead.
Thanks for the opportunity. Great set of numbers, sir. My question is related to guidance part. If I see the current trend rate you are blocking, suppose [INR 750-INR 800] crore of revenue. By next year, can we cross INR 1,000 crore of revenue? That is my first question. Based on the capacity also, how you are building the company for next three to five years, what is the vision you have for this company, and how the mix would be changing? Because I see you have onboarded Dixon as a customer, right? How the mix would be, suppose let's say three to five years, how do you want the mix to be? It should be consumer heavy, or it will be passenger heavy. What are your thoughts, sir?
Let me answer the last part of your question first. The future seems extremely optimistic or bright. We are marching to that tune and creating capacities across all our businesses to cater to this increased demand. We see very strong growth. Coming back to where will we be in terms of numbers, I would not like to give a guidance. I would say we will see a very strong growth, again, growing at close to 1.5x the industry growth rate. The possibilities or the segments, we focus strategically on de-risking our business so that overdependence on any one segment reduces. We've done exceedingly well on this front. FY 2019, 70% of my revenues came from two-wheelers. Today, two-wheelers is down to about 34%, 32% of my business.
We predominantly have pivoted to become a four-wheeler supplier for the simple reason that we saw that the large opportunity outside India is primarily four-wheelers. India, and maybe the ASEAN region are the only two regions outside China where two-wheelers have a meaningful play, and there's a limited content that you can offer to a two-wheeler. I think you're absolutely right. The consumer businesses, I would certainly like to grow. My medical device business, I would like to grow. I would imagine that maybe 25% consumer, close to about 30% two-wheeler, and the rest would come from four-wheelers and exports. As I said, my target is to be at 15% of export revenues on an install basis, in the next three years. That is the outlook at what I see. Our vision for the company is very simple.
We've created a skill set in the organization where we are truly an end-to-end design to delivery company. We have our own styling studio. We have factories within factories handling these multiple technologies, so there is no stress on growth for any one segment. All these are centers of excellence. I think we're very well-structured, well-positioned, and we are expanding capacity. There is no reason why we should not be one of the predominant aesthetic suppliers in the world. The mission really is to grow the export market, and I think we should be able to crack that. I'm optimistic.
Great, sir. Thank you. Any company do you aspire to become in this aesthetic market? That is my question. Based on the
Sorry to interrupt, sir. May we request that you return to the question queue for follow-up questions as there are several participants waiting for their turn.
Yeah. It's a follow-up of this one. It's a second question.
Can you just- hello, sir?
Hello.
Yeah. Thank you.
Hello, sir.
Yes, please.
Yeah. So any company that you wish to aspire to become in this aesthetic segment? That is my question. Based on the assets, how much turnover can we make based on the current capacity? These are my last questions, sir. Thank you.
Two things. There is no role model that we have. We want to be a role model. That is our target. There is no company which does everything that I do. I've stated that, and now we get that global scale. I think we will be a company that other people want to aspire to be, not the other way around. That's the vision part of the question. What else was the question? Capacity.
Based on the assets, how much turnover can you make? I mean, how much is based on the current capacity?
On capacity front, our SJS, we currently have around 65%. You can work out what is the number we can achieve. Exotech we almost achieved. It's running 95%, and that is how we are planning to have expanding and putting more CapEx in the next one. We are going to add more capacity out there. Walter Pack is somewhere 75% kind of running at this level. There is ample amount or ample growth we could able to do. We have ample lands available, and it's more of a construction and adding more machinery. There is a good amount of capacity available in the company.
Okay. Thank you, sir. Wish you all the best.
Thank you.
Thank you very much, Mr. Kaushik. The next question is from the line of Pratit Vajani from Union Asset Management Company. Please go ahead.
Yes, sir. Can you elaborate a little bit further on this Dixon opportunity as to-
Pratit, can you be a little louder?
Am I audible?
Yeah, now it's better.
Yes, sir. Can you elaborate a little further on this Dixon opportunity, considering that you have not been a part of the telecom space and even on the consumer side, you are yet to fully ramp up on the IML, IMD part which you acquired with WPI . Can you please elaborate what is the technology which you are trying to foray into with Dixon?
We have multiple technologies, as you are aware. At the moment, two business segments of Dixon is what we have. One business is with, one is the telecom segment, and the technologies are similar to the product that we already have. We make a lot of logos, we make a lot of overlays, we make a lot of other aesthetic parts. These are these parts that we will supply to them. We have also won businesses, targeting businesses with their consumer appliance segments. They are large contract manufacturers for some companies, and this is a traditional line of business that we have. For refrigerator and washing machines, we have a whole set of products that we offer, and that is what we will be offering to Dixon as well. This is just starting.
I think start of a journey, our relationship with Dixon, we hope to grow this business along with them.
Okay. Sir, just to clarify, this would be the new generation products which you highlight in your PPT? Yes?
New generation products, yeah, it could be partly new generation, old generation. Business is business, right? Our business for new generation products was mostly the IMD technologies that we have, and we have the cover glass and the IME technologies. Those potentials also could exist because these are all futuristic human machine interface technologies. But as I said, let's take it one step at a time. It's a good customer to have. We are starting with some products, and we hope to grow this because I think the ambition of Dixon is a case of the king. We want to grow this business and scale it up.
Okay, sir. Thank you, sir.
Thank you.
Thank you very much. The next question is from the line of Lokesh Manik from Vallum Capital. Please go ahead.
Yeah. Good afternoon to the team. A couple of questions from my end. One was, a few years back, we had aspirations to achieve exports 25% of our revenue, and we are stuck in single digits since a long time. Has there been a change in the strategy and focus where we are seeing good potential in the domestic markets, so we would want to focus here versus exports? That is one. I know you are knocking on the doors of the global OEMs, like you mentioned. That is one. Second was, by when do you expect the CapEx that is to be done to commence production? That is for Exotech and for the cover glass. Those two are my questions.
Okay. To answer your question on exports, and we said that it will be 25%. Typically, the exports that we did was from SJS, and we were at 19% of SJS sales were exports, when we went for the IPO in 2021, and that was that context. Since then, we had already acquired Exotech, which was 100% domestic business. We also acquired Walter Pack, which is 100% domestic business. With the denominator increasing, the percentage of export on the consolidated revenue came down. But our overall exports, and SJS, when we made that statement, it was that we were hoping that in the next three years in SJS it will be at 25% of our consolidated revenue, which we will still reach, based on the targets of the product portfolio, product that we added to our portfolio.
At the moment, the number that I am talking about is a consolidated basis, where there is close to around INR 170 crore, INR 160 crore coming from Exotech and INR 150 crore, INR 160 crore. Almost INR 300 crore of the revenue is purely domestic, added to the denominator. What I am saying is that at the moment, 7.5% of my consolidated revenue is in exports, which I hope will grow over the next three years to be 13% of my consolidated revenue.
Sorry, can you repeat that? That will be 13%-14% going forward?
Sorry.
What is your aspiration for the next three years in consolidated level? You said it was 13%. Did I get that right?
Yeah. 13%-15% is what I expect it to be. That is what the new businesses that we are targeting. Of course, we will try to do it more. I mean, our target is really to take our products across the world.
Sure. On the capacity commencing production, by what year can we expect it, or quarter?
For this capacity, you are discussing more for what? Cover glass or for Exotech?
Both. Exotech and cover glass.
Okay. Cover glass, as I said, we hope that by the end of this quarter, we should have our first order. It will start in a phased manner. Supplies in a meaningful manner will start next year. The full impact of the revenues would be felt the year after that. FY 2026 is when cover glass revenues would start to make a significant impact on our revenues. Exotech, of course, we expect by quarter one of next year, the capacity should be on stream, and we should be able to augment, and that should be operational.
FY 2026, both should be online and showing some revenue, at least at a 50% capacity. Is that fair enough understanding?
Absolutely. Yes.
Great. That is it from my side, sir. Thank you so much.
Thank you.
Thank you.
Thank you very much. The next question is from the line of Sahil Rohit Sanghvi from Monarch Networth Capital. Please go ahead.
Yeah. Hi, sir. Thank you for the opportunity, and excellent set of numbers, sir. Any update on the inorganic side of the acquisitions? I mean, are we exploring surplus assets? What is the update on that?
Absolutely. Inorganic is an integral part of our strategy. As you would know by now, we are debt-averse. We do not like taking debt. We just finished the acquisition of Walter Pack, and we will hopefully repay the debt that we took for that acquisition by the end of this quarter. We hope that we will generate, we are already generating a large amount of free cash. We will shore up revenues, and by the end of this financial year, we should again have a corpus available with strong cash generation abilities. I think sometime in next year, is when we would like to do this. But as you know, inorganic acquisitions, we are not in the business of acquiring companies just for the sake of acquiring. They have to have synergy.
We should be able to get a good strategic fit and get it at a good price. The strike rate of companies that we explore, the rate is maybe about 10%. If I look at 10 companies, maybe I zero in on one company. We are in the process, but as I said, we are in no hurry. We have close to one year, by the accumulated cash on the side to zero in on the right target.
Right, sir. No, that makes sense. I mean, we would appreciate you make justice to the acquisitions like you did to Walter Pack and Exotech. One last question is that, sir, for Foxconn, what do we supply right now? I mean, apart from what we're trying for cover glass, anything else? What do we do right now?
Yeah. Foxconn, they make the display for a TV, and we have the technology, or we have some special technologies for the display, and that is what we supply. It's a sort of a cover glass for a TV.
Okay. Thank you so much. Thank you, and all the best.
Thank you.
Thank you very much. Ladies and gentlemen, that was the last question for today's call. I now hand the conference over to the management for closing comments.
Thank you. I would like to thank everyone for joining on the call. I hope we have been able to respond to all your questions adequately. For any further information, we request you to please do get in touch with our Investor Relations team. Stay safe, stay healthy, and thank you once again for joining with us.