Ladies and gentlemen, good day, and welcome to the SJS Enterprises 1Q FY 2024 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 touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Ronak Mehta from JM Financial. Thank you, and over to you, Mr. Mehta.
On behalf of JM Financial Institutional Securities, I welcome you all to 1Q FY 2024 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, and Ms. Devanshi Dhruva, Head Investor Relations. As we do always, we will start the call with brief opening remarks from the management, followed by a Q&A session. With that, over to you, Devanshi. Thank you.
Thank you, Ronak. Good morning, ladies and gentlemen, and thank you for being with us over the call today. We appreciate it. Moving on, this is how we intend to take today's conference call forward. I will pass on the dial to Mr. K.A. Joseph, our MD and Co-Founder, who will make the opening remarks and brief you all about our latest acquisition, Walter Pack India's performance. Then he will hand it over to Mr. Sanjay Thapar, our CEO and Executive Director, who will take you through some of the slides of our presentation that have been uploaded on the stock exchange as well as on our website. Sanjay will take you through the industry view, our business performance, and also give a strategic outlook for the future growth of the company at the end.
Mr. Mahendra Naredi, our CFO, will update you on our financial highlights, post which we will open it up for Q&A. The duration of this call will be around 60 minutes, and we will try to wrap up our comments in about 20 minutes so that we leave enough time for you guys to ask questions. If time is not enough, please feel free to reach out to us through email, and I will try to answer all your questions to the best of my abilities. Thank you once again, and I will now hand it over to Mr. Joseph to make his opening comment. Over to you, Joe.
Yeah. Thank you, Devanshi, for the introduction. Hello and good morning, everyone. I trust you 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, I am happy to inform that we have completed the transformative acquisition of Walter Pack India within the set timeline. After the successful acquisition of Exotech and the robust performance we delivered there in the last two years, we have gained more confidence in our execution capabilities of acquiring and integrating companies that could take SJS to the next level of growth. We now strongly believe that to strengthen our market leadership in the aesthetic business, inorganic acquisitions will continue to be our core strategy going forward. Walter Pack acquisition has opened up a plethora of new opportunities for us.
With this acquisition, we have penetrated deeper in the passenger vehicles and consumer appliances segment, thereby further reducing our two-wheeler dependence. According to SJS Q1 FY 2024 pro forma numbers, which includes Walter Pack India, gives about 36% revenue contribution would be from two-wheeler, 36% from passenger vehicles, and 28% from consumer appliances and others. Both Exotech and Walter Pack acquisition have helped us to balance our portfolio concentration from a large two-wheeler player to an overall automotive and consumer appliances player.
With Walter Pack acquisition, we have not only acquired a very large growth and high-margin business at a good valuation, but at the same time, achieved many key strategic objectives in terms of addition of new and emerging technologies, new customers, manufacturing capabilities, and increased management bandwidth. I would also like to highlight that Roy Mathew, one of the founders of Walter Pack India, will continue to spearhead Walter Pack with a 10% stake.
This will ensure seamless integration in the long term, short term, and harnessing optimum revenue synergies in the medium term. I am excited and eagerly looking forward to seeing how SJS grows multi-folds in the future with all the synergy and cross-selling opportunities playing out amongst the three companies. We have seen a good start for Walter Pack this quarter. Walter Pack Q1 witnessed a strong revenue growth of 21% year-on-year and a robust margin performance with EBITDA margins around 31.5%. Please note that for FY 2024, only nine months financials of Walter Pack India will be consolidated with SJS financials. With that said, I would like to now hand over the call to Sanjay to take you all through some of the business and industry highlights for the quarter. Thank you, and over to you, Sanjay.
Yeah. Thank you, Joe, for updating our investors and analysts on Walter Pack. Hello, good morning, everyone. Starting with our Q1 highlights, we have seen a robust start to FY 2024 financial year, as we yet again outperformed the automotive industry for the 15th consecutive quarter. Our consolidated revenues, that is SJS plus Exotech together, grew by 13.6% YoY on the back of strong 18.6% YoY growth in the automotive segment for us. That is the two-wheeler and passenger vehicles combined. The automotive segment has grown well for us, both in the domestic market at 14.2% YoY, and exports market at about 120.7% YoY. Q1 FY 2024, we generated INR 77.1 million in cash flows, taking total cash and cash equivalents to INR 2,849.7 million as of 30th of June.
However, post the completion of our Walter Pack acquisition recently, our cash and cash equivalents stand at INR 461.7 million and the net debt stands at INR 539.8 million. We added two marquee customers to our already large portfolio, Toyota Tsusho and Autoliv. Autoliv is the world's largest automotive safety supplier, with sales to all major car manufacturers in the world, and we have bagged a large order of IML parts from them. SJS has been consistently growing ahead of the industry, and this quarter is no different. In Q1, the two-wheeler industry production grew 1.3% YoY, while SJS consolidated two-wheeler sales grew by 15% YoY. The company witnessed passenger vehicle segment growth of 24.6% on a year-on-year basis, while the industry production volume grew by 7%. Automotive, that is two-wheeler plus passenger vehicle industry production, grew only 2.3% YoY.
While SJS witnessed a robust growth of 18.6% YoY on account of new business wins and increasing share of business in the automotive segment. Overall consolidated SJS sales grew by 13.6% year-on-year, partially impacted on account of slow recovery in the consumer appliance segment and some degrowth in the farm equipment segment. However, I am delighted to inform you that we are seeing improvement in the export markets, and our export revenue almost doubled for the quarter compared to the last year same quarter, which was impacted due to geopolitical issues in Europe and also macroeconomic slowdown in North America. The increase in export revenue this quarter is largely due to our winning new businesses with our existing customers in South America and EMEA. Our exports initiatives are playing out steadily. Appointing sales agents in South America is helping us to strengthen our presence in that region.
We intend to hire more such agents in North America and Europe as well to grow exports. We are seeing gradual pickup in demand in North America and Europe as well. The bounce back in export revenue will definitely help us grow further, and it restates our belief that exports will be one of the core growth drivers for our company in the future. Apart from adding two new customers like Autoliv and Toyota Tsusho, as I mentioned earlier, we continue to expand our wallet share by winning new businesses from key customers like Mahindra, TVS, Visteon, Hyundai, Bajaj Auto, Continental, Honda Motorcycle & Scooter India, amongst others. Before I hand over to Mahendra, I would like to share one more update with you.
On the CSR front, we have been supporting a paraplegic climber, Mr. Manikandan, since the past seven years and year after year, he has been winning medals and laurels in this field, making India proud. This quarter too, we sponsored him for the IFSC Paraclimbing World Cup held in June 2023 at Switzerland, and he won a bronze medal for our country. So we are very proud of him. We also extended coverage of our Swachh Bharat initiative for garbage cleanup to five more surrounding villages, taking the total count to 12 villages. Our aim is to provide a cleaner and hygienic environment for people to live in. These initiatives make us feel very proud that our CSR initiatives are bringing about a definitive change and creating a positive impact in the society. Be it in healthcare and in sanitation, sports, education, rural development, around the surrounding community.
I would now like to hand over the call to Mahendra, our CFO, to update you on the SJS financial performance before I talk to you about the future growth. Over to you, Mahendra.
Thank you, Mr. Thapar. Good morning, everyone. Moving to slide 12, which talks about our financial performance in detail. As you all know, consolidated revenue at INR 1,172.5 million has grown at 13.6% YoY, on back of strong growth in automotive segment and exports. On the domestic front, SJS witnessed 14.2% YoY growth in automotive segment. However, a degrowth of around 10% in consumer appliance and other segment, resulting in 8.4% YoY growth in domestic sales. Yet domestic sales outperformed the underlying automotive industry growth. Export growth during this quarter by 90.8% on YoY basis on account of new business wins and gradual export market recovery. Export performance was due to a strong growth in the PV segment and some recovery in consumer appliance segment.
Q1 FY 2024 exports constitute 11% of consolidated sales compared to 6% of the sales last year that was impacted due to external geopolitical and macroeconomical factors. EBITDA at INR 313.8 million grew 12.8% YoY on a margin of 26.1%. This has impact of 30 basis points on a YoY basis, and that was due to a one-off expenses under other expenses to the tune of INR 8 million for interest on GST. PAT at INR 180 million grew 11.1% YoY, and PAT margin stood at 15.4%. Our ROCE during the quarter stand at 38.6% and ROE at 14.5%. As Mr. Thapar mentioned earlier, our cash and cash equivalents were at INR 2,849.7 million at the end of June 2023.
However, post Walter Pack acquisition, it was at INR 461.7 million, and our net debt post-acquisition has increased to INR 539.8 million, and equity share capital has increased to INR 310.38 million, post preferential allotment to our promoter, Mr. Joseph. Now, his overall shareholding has increased from 15.5% to 16.9%. Moving on slide 13, that shows the quarterly financial in a snapshot. I would like to bring to your notice the pro forma financial of SJS for quarter one FY 2024 by including Walter Pack numbers for Q1. All the Walter Pack numbers are not reflected in the consolidated financial reported for this quarter. From quarter two and onwards, Walter Pack Financial will be consolidated with the SJS numbers, which is our 90.1% holding in Walter Pack India. As Mr. Joseph mentioned earlier, Walter Pack has kicked off the year with a great start in Q1 FY 2024.
Pro forma revenue for Q1 FY 2024 would have been INR 1,528.7 million, a YoY growth of 48.2%. Pro forma EBITDA margin were at 27.3%, witnessing 120 basis points margin expansion as compared to Q1 FY 2024 reported margin. This would result in a PAT growth of 52.1% and EPS growth of 51.8% YoY. Even after considering the impact of lower other income and higher interest costs on loan taken for Walter Pack acquisition, then also our pro forma EPS would have been 21% higher than reported Q1 FY 2024 EPS, thereby highlighting the fact that Walter Pack India business will be an EPS accretive for us. This reinforce our conviction in Walter Pack business, and we are confident of achieving our growth target in the medium term on back of various cross-selling opportunities, synergies between all the three businesses, and growing economics of scale.
I would now like to hand over the call back to Mr. Thapar to talk about our future plans and growth outlook.
Thank you, Mahendra. Moving ahead, we are absolutely on track in executing our organic growth strategy by addressing the aesthetic requirements of multiple end industry segments, increasing our global presence, introduction of new technology products, and building mega customer accounts. This is consistently helping us outperform the underlying industry growth rates.
On the Exotech capacity expansion front, we would like to update everyone that post the Walter Pack acquisition, we see many synergies between the two companies, Exotech and Walter Pack. Both plants are in close proximity at Ranjangaon in Pune. Hence, the company has deferred its chrome plating capacity expansion CapEx plan by a year to calendar year 2024. We are revising our expansion plans to align more effectively with the evolving business requirements of both Walter Pack and Exotech. This rework aims to create a more conducive strategy that can accommodate the changing needs and demands of both companies.
In the interim, we have charted out an alternate plan so that Exotech growth does not get hampered in the short run. We are increasing capacity at Exotech by default utilizing our underutilized capacities in painting, et cetera. We have recently bagged a large order for painting as well at Exotech from a large passenger vehicle OEM. Simultaneously, we are also partnering with external chrome plating suppliers to utilize their excess capacity, creating a win-win situation for both parties. Hence, for the period FY 2024-FY 2026, we maintain our stance of a 20%-25% organic growth. As a company, we have always focused on introduction of new premium products and technologies that are complex to manufacture and that will enable us to increase our addressable market quite significantly.
It is our consistent focus on innovation that has enabled us to stay ahead of the curve and be a preferred supplier to most of our customers. SJS has already started accelerating its efforts to increase kit value in both two-wheeler passenger vehicle and consumer segments, and the addition of new technology premium products. We can see that growth playing out with the addition of chrome-plated parts through Exotech, IML, IMD, and IMF parts through the recent Walter Pack acquisition. SJS is also working on a few new age products like optical plastics cover glass, which will further drive up the kit value that we supply to customers. Our organic and inorganic strategies have helped us make SJS a significant player in the automotive interior space.
We are confident that even in the future, any acquisition we do will open up a new opportunity for us to achieve higher business growth and will be complementary or an extension to our existing businesses. Hence, we believe we will continue to outperform the underlying industry growth. Recovery in the consumer sector and the export markets will help us accelerate this momentum of our growth trajectory even further. The inorganic growth through Walter Pack will be over and above the 20%-25% organic growth that we have guided.
SJS will continue to deliver on its robust financial and operational guidance of 2024, with a 50% YoY growth in the SJS consolidated revenues, and a consolidated PAT growth of about 40% YoY, with the addition of Walter Pack revenues and a robust margin profile in our existing businesses. This, of course, will be post-consolidated our 90.1% stake in Walter Pack for a nine-month period in this financial year. With that said, I come to an end of my quarterly update. Thank you, and we are now open to answer any questions that you would have.
Thank you very much. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Our first question is from the line of Amit Hiranandani from SMIFS Limited. Please go ahead.
Congratulations, team, for the WPI acquisitions and a very good set of numbers in Q1 FY 2024.
Thank you.
Thank you.
My first question is basically, what was the contribution from new products in the consolidated revenue, and what was it in FY 2023?
Amit, good question, and our contribution for this quarter was around 10%, and it was around the same in the last year.
Okay. And sir, we understand that Exotech margins on Q1 slightly dropped. Possibly, we understand that due to the new product development, trial runs, etc. Wanted to understand what could be the sustainable annual margin, and where do you see it in the next three years?
Amit, as we already guided in the past, this small blip in this quarter. However, Exotech will continue to perform 14%-15% sustainable margin.
And sir, where do you see it in the next three years? Any chance to improve it further?
As I have said earlier in our earlier calls, we had inherited a legacy of existing customers. The margins that are there are largely what are agreed with Walter Pack in the past. But as with Exotech in the past, sorry. In the future, we hope to increase our exposure to export customers, where margins would be higher. But to be conservative, we are still maintaining our guidance at about 14%, 15% EBITDA margin on a sustainable basis for the next two, three years. Beyond that, of course, we feel that this could improve.
Definitely in the last two years, as you know, once we've acquired it, this business was actually traditionally doing margins of around 11%, 12%. In the last three years itself, because of the operational efficiencies, economies of scale, and all the efforts that we've put in, we've already improved margins by around 300 basis points, and last year it was around 15%. We hope to continue this, and 14%- 15% right now we feel would be sustainable margins for the next, at least in the medium term.
Okay. Next on the Exotech's new plant capacity expansion. I just missed the initial comment. Can you please brief me a little more on this thing? Because what we're expecting is by FY 2024 end, the plant should be ready, but I think it is delayed by one year, you are saying.
No, it's not delayed. It's a conscious decision on our part because when we guided you on expansion, we see a very robust demand coming in by cross-selling our Exotech products to existing SJS customers. To meet that demand, we planned a CapEx. Now, what we found is a more innovative, frugal way to increase capacity by de-bottlenecking. When Walter Pack was acquired, there's a lot of synergy between Walter Pack and Exotech in terms of injection molding, for example, amongst other things. Now we are planning a comprehensive plan which would address the needs of both these plants. So we've just deferred that investment by one year, as I said in my commentary, and we will now try and grow this. In the short term, we'll be using capacities of our suppliers and de-bottlenecking, as I said.
Our paint shop at Exotech was underutilized, which we are now using, and we've also won businesses. So that will increase sales without the need for chrome plating capacity specifically at Exotech.
Basically we would just want to be more effective and not be very frugal with our investment. If this investment can actually help both the businesses, then it would be better to chart out a new plan for us so that both Exotech and WPI requirements are met.
Then, sir, you must be having some revised CapEx guidance, right? For Exotech and standalone separately.
Yeah.
Yes. SJS for this year, for FY 2024, SJS would be somewhere around INR 10 crores- INR 12 crores, and Exotech would be another INR 10 crores- INR 12 crores. And Walter Pack for the next nine months would be around INR 10 crores. So overall CapEx for this year would be somewhere around INR 34 crores-INR 35 crores.
Okay, thanks. I'll come back in the queue. Thank you so much.
Thank you.
Thank you. Our next question is from the line of Joseph George from IIFL. Please go ahead.
Hi. Thank you. Good morning. Just one question on the postponement of the Exotech capacity. You mentioned that in the interim you would be using chrome plating capacity of your suppliers. When you take that service from a third party, how do we see the margins of Exotech moving in the coming year or so? Because if you are outsourcing the process, it will be negative for margins.
Yeah, Mr. Joseph. We believe that it will not impact our margins. Yes, in an outsourcing model, the raw material cost is going up, but at the same time, the manufacturing and the admin and employee costs will not increase, and that has an impact. Overall EBITDA level, we believe that it will not have any impact. In fact, at the PAT level, we believe that our PAT will go up because we will not have a depreciation.
And just to add to this, it is not that we are postponing the CapEx. We are only doing it more intelligently to make sure that our investments are as frugal as possible to make sure that we extract the maximum ROCE from the business.
Moreover, if you look at it at a consolidated basis, we will try and maintain our 25%-27% margins that we have guided for, and that will not get impacted.
Understood. And the second question was, when you say that the CapEx has been postponed, our old understanding was that, compared to the last year's revenues of INR 130 crores in Exotech, with the new capacity, the potential for revenues would have been closer to INR 300 crores or so. So in terms of the scale of capacity expansion, are those numbers still holding even though it's postponed by a year? Or is the scale of revenues and CapEx also likely to be changed?
No, nothing. Absolutely we are on track. We are still holding those numbers. It's only a smarter way of doing things. And we already have a very strong trajectory of customer demand for Exotech. So everything goes as per plan, and we are very bullish on growth at Exotech.
Understood. Thank you.
Thank you. Our next question is from the line of Piyush Parag from Nuvama Wealth. Please go ahead.
Good morning, sir. I hope I am audible.
You are a little unclear.
May we request you to use the handset for optimum audio quality, please?
Am I audible now, sir?
Yes.
Yes, better than before.
Yeah, congratulations for the good numbers. My questions would be more on the WPI level. If you can just throw some light in terms of the actual performance of WPI in the quarter, and how is it expected to over the next couple of years, debt cash positions of the business. Probably more outlook on the revenue and EBITDA for this particular company, and what is the capacity currently and how is the revenue potential, and how do we expect it to grow. If you can just throw some light on WPI.
Mr. Piyush, we could not get your full question. Your voice was very mumbled.
If you could just be a little louder.
Yeah.
Okay. My question was more on WPI performance, how has been during the quarter, and how do we see its revenue and EBITDA outlook over the next two, three years? Currently, what is the capacity and how do you expect this capacity and revenue potential to improve in the medium term? That was my question. Am I audible now, right?
Yeah. You are audible.
Yeah, cool.
Walter Pack India has done this quarter, INR 356 million turnover with an EBITDA of 31.5%. We are always reaffirming that we will maintain our growth rates 20%-25%, and Walter Pack will be part of that. What was the third question? On the capacity side, company is currently working on 75%. They have two plants. One is in Pune and second is in Manesar. One plant is working on 75% and another is working on 65%. So average, you can say 72%, 73%. That was the current capacity as of now for the current financial year.
Let me supplement that by giving you an outlook on Walter Pack. It is a very transformative, I would say it just puts SJS into another trajectory. The in-mold forming technology that Walter Pack has, they have very strong knowledge on tooling, and in fact, there are very few companies in the world which have that expertise. So Walter Pack Spain, which was the parent of Walter Pack India, is amongst the global benchmarks for in-mold forming and IML technologies. There is a trend of using IME, and there is a trend to use also electronics and lighting inside the ambient lighting of the car. So there are some very innovative technology in place, and there is a very strong demand from customers.
In fact, in this year, you will see, I will not name the customers because these projects are under development, but you will see a lot of cars from mega passenger vehicle OEMs in India, which will have these new generation technologies coming in. So while on an overall consolidated level, we have guided that we will grow at about 20%-25% organically, and Walter Pack also will grow at that. This year, they will grow a little faster because they address also a consumer durable segment. And overall, I would like you to think of us as an entity that has an end-to-end solution for all aesthetic parts.
Walter Pack is going to actually help us introduce a lot of new technologies to the customers in India and overseas. I think the growth path is extremely positive for Walter Pack.
For FY 2024, as we have guided last time also, overall consolidated growth including WPI will be 50%. You can interpret the growth with that because organic growth of SJS and Exotech together, as Sanjay mentioned, will be 20%-25%.
Okay. Did you say 50% overall growth?
Yes, overall 50% YoY growth for FY 2024.
Okay. That's good. Okay. Yeah, that was my questions. Thanks a lot.
Thank you. Our next question is from the line of Mr. Ronak Mehta from JM Financial. Please go ahead with your question, sir.
Yeah, thanks for the opportunity. So continuing on WPI, I wanted to check, what are the opportunity areas for cross-selling from the existing business? I believe some of the PV OEMs for whom SJS was a tier two supplier earlier now becomes tier one post Walter Pack India acquisition. So how has been the response from the customer's end in terms of awarding new business after the acquisition? If you can throw some color on that.
Yeah. Thank you for that question, Ronak. See, one is we have a cross-selling opportunity between two companies. They also make some dials, overlays, et cetera, so that SJS will gain more out of that business. And also, we have Walter Pack has one sort of new order, of course, we don't want to name the customer here, worth about INR 30 crores-INR 40 crores for FY 2025. So this year, maybe we would get about INR 20 crores-INR 30 crores out of that for this year. And another consumer business will also grow by almost about 50% for FY 2024. And because of that, the content per vehicle is also increasing, which will impact our overall sales as well for SJS.
Just to supplement what Joe has said. As I said, large in-mold forming parts are the forte of Walter Pack India. Walter Pack does not supply to any two-wheeler OEM. Companies like Bajaj, companies like Royal Enfield, companies like Honda, we are in the process of telling them what we could do with IML technology that could improve aesthetics, especially for the plastic fairing assemblies of these bikes. Both for the EV segment and for the conventional IC engines, I think the IML and IMD technologies that we have to offer, and IME will piggyback on this, will find a lot of demand when the customer sees this. At the moment, we are working on some development projects, which I think are very exciting technologies. Cross-selling to two-wheeler customers and cross-selling to our large consumer appliance customers.
Whirlpool of the world, Samsung of the world, they use a lot of large IML parts which require deep forming, which at SJS we could not do. With Walter Pack, those markets are within reach for us, and we already enjoy a very strong customer relationship. I see the synergy playing out extremely well in terms of how growth at Walter Pack will come. Plus, how will the whole entity, all these three companies working together could offer some solutions which are truly innovative.
Especially, on the Exotech and on the Walter Pack side, both the places we have added new passenger vehicle customers. In fact, there will be a lot of cross-selling opportunities between Exotech and Walter Pack also because both of them have customers which can be used for cross-selling opportunities. Like Mahindra is there in Exotech, we have Maruti and Tata Motors with Walter Pack. A lot of cross-selling opportunities between these two companies will also be possible.
Understood. Okay. One more question. On the recent addition of the new clients, Autoliv and Toyota Tsusho. Just wanted to clarify, will this be only for the India business or you will also export to their global plants?
Our strategy always has been that we take customers and we grow them into mega accounts. Our focus, as I said earlier, is to prove our credentials with them, with these global companies in the Indian market, then use the goodwill that we've generated in terms of a capability demonstration to penetrate into their global network. These are, let's say, starting steps. With Autoliv we won a large order, of course, for the India market. But once we deliver these parts to their satisfaction, we will certainly be having a conversation with them, "Let's take it global." Luckily for SJS, we've grown because customers have wanted us to grow.
The guys come to us and say, "Why don't you come and supply to me at this location?" I think we are competitive in terms of quality cost delivery, that helps us win customer confidence to introduce us in more and more plants globally. That has been the key, that will be the key for both these customers as well.
Understood. One more housekeeping question to Mahendra. Mahendra, on the consolidated financials, other expenses have seen a sharp jump both on YoY and Q-on-Q basis. Is that only because of the outsourcing in the Exotech business? If you can throw some color on that.
Other expenses have increased on account of two reasons. One is that there has been an increase in subcontracting employees, which comes under our other expenses. The other reason is there is a one-time expense in terms of a provision made for interest on GST to the tune of INR 8 million, that's a one-time expense. That's the two reasons because of which the other expenses for this quarter looks a little high.
Understood. Okay. That is all from my side. Thank you.
Thank you. Our next question is from the line of Karn Bhargava from WealthBridge Capital Advisors. Please go ahead.
Numbers. I have two questions. I think I misheard the number for the WPI revenue. If you could just clarify on that for this quarter.
WPI revenue for this quarter grew 21% YoY to INR 356 million.
INR 356 million? Okay. There's been a lot of talk on the IME side, that's the in-mold electronics. I think last we spoke, you had mentioned that the product is still under development. Is there any update on that? What kind of a market are you looking at in this?
The applications are quite diverse. We are looking at two-wheelers, we are looking at four-wheelers. Since this is a new technology that the OEMs themselves are now trying to evaluate. We have some prototype build requirements or projects going on with a few customers. It will take time because in the Indian market, typically what it involves is there's a functional layer, as I said earlier, which is the printed layer. Then there is a decorator layer, sorry, and then a functional layer, which has the electronic parts. Phase one of this introduction is going to be LEDs are going to be implanted in the functional layer, and that is going to be molded together, making it, let's say, phase one of IME, if you may.
The next phase is going to be that there are going to be electronic components like ICs also form the part of the functional layer, which can reduce the size of the underlying PCB or connectivity with the body control modules in a car. All that functionality we're building. But since this is a new technology, it will take time. My expectation is that it would be another two, three years before you could see real-life IME parts coming in.
Okay. Okay.
The other part is that, okay, Walter Pack Spain for IME technology. We have a technology support agreement with Walter Pack, and Walter Pack Spain, sorry. Walter Pack Spain will be our technology partner really in terms of advising us how to implement IME in the existing IML and IMF products that we have in India.
Okay. So Walter Pack Spain will be helping you out with the development of the product as well?
Absolutely. Yeah, absolutely. Yeah.
Thank you.
Thank you. Our next question is from the line of Shrinjana Mittal from RatnaTraya Capital. Please go ahead.
Yeah. Hi. Thank you for the opportunity, sir. Two questions from my side. One is on Exotech. Exotech sales quarter-on-quarter was also slightly down. What could be the reason for that?
Generally also, if you will see, Q2 and Q4 are usually stronger quarters for us due to festive season and seasonality. Compared to that, you cannot compare the Q1 to growth in terms of Q4 and Q1.
No. Specifically for Walter Pack this quarter, there was Walter Pack supplies to the farm equipment. Sorry, Exotech. My mistake. We have so many companies that I get confused at times. Okay. Exotech, this year grew, let us say, de-grew a little bit because the farm equipment demand was soft. John Deere is an important customer. They export parts to North America, and that demand was subdued. Plus, of course, there was some delays in launching of a new product by the sanitary ware segment we supply to Geberit. These two areas impacted a little bit the sales for this quarter, but the demand for Q2 remains robust, and we hope to achieve our sales growth trajectory at Exotech, which of course, is very strong demand.
Understood, sir. Thank you very much. Second question is on exports. As you mentioned, I think around 11% is the contribution of exports. Just wanted to see what was it last quarter, because you mentioned that the exports have grown in this quarter.
Last quarter, our export was 7.9%, and which has now gone up to 11%.
In fact, the entire year last year, if you will see, because of the geopolitical issues in Europe as well as macroeconomic issues in North America, exports had been impacted. Overall, for the year, in fact, exports took a dip of almost 32% de-growth. But this year, because we are seeing the demand coming back in Europe as well as we are winning new businesses on our export front. That is why we are seeing the growth coming back and export revenue has almost doubled this quarter compared to last year's same quarter.
Right. Going forward for this year, organically, we are guiding for around 20%-25%. Just only for export business, what are you targeting on the growth front?
We do not provide guidance specifically, but as I said earlier in my commentary, on a quarter-on-quarter basis, exports has jumped up by close to about doubled, about 90% growth overall this last quarter versus the quarter a year before. Moving forward, we feel that this momentum should continue. We expect growth to return. For us, Asia, India, and South America have grown well. North America and Europe still continue to be in the recovery mode, so it is a wait-and-watch situation there. But overall, we feel that we should come back to the pre-disruption levels that were there last year. We should come back to what we were a year ago.
Maybe FY 2022.
Thank you, Sanjay. Thank you so much. That was very good.
Thank you. Our next question is from the line of Ridhima Goyal from Acquaint Bee Ventures. Please go ahead.
Hi, Sanjay, and hi, Devanshi. Just one question from my end is, what is the consumer durables mix on the overall revenue, and what is the growth profile in this quarter for consumer durables segment?
Sorry, can you repeat the second part of your question?
What is the growth for this quarter in the consumer durables part?
Consumer durables was a little muted growth. I would say almost about 2%, 3%. And overall, as a percent of sales, it was somewhere around 15%, 16% of our sales.
15%-16%. Okay. Just one more part. I know that you guys don't disclose your order book as such.
A little louder, Ridhima.
Hello, am I audible now?
Yes, ma'am. We would request you to use your handset, please, for optimum audio quality.
Hello, am I audible now?
Yes, ma'am. Please go ahead.
Yeah. I know that you guys don't disclose your order book as such, but it would be great if you can give some product clarity. Like, what is the overall order book in terms of value and also its execution time? Is it executable in two, three years or maybe five years?
Consumer durables is a very important segment for us, and we have made further inroads by this Walter Pack acquisition, where we've added a new consumer product line to our portfolio, which is these fascia plates that you have for modular switches. Walter Pack is a large supplier of these to Legrand, which is a leader in this business. And the demand is just not just in India and overseas. Also, as I said, on one hand, the SJS product portfolio has very bright potential because we are under-penetrated in North America, as I mentioned earlier. We are making inroads. South America, we've already seen the results. We will add to our feet on the ground in North America and Europe to accelerate that further.
Plus, these new technology areas, both in terms of the Legrand business for modular switch plates, that is also consumer business, and the IML businesses that we could do with the likes of Whirlpool and the other appliance manufacturers. That, in the medium to long term, would be very large growth drivers for our consumer appliance business. Already, as Joe mentioned in his earlier commentary, look at this company as a consolidated entity.
That is what I would encourage everybody to see. Our dependence on two-wheelers has come down. Two-wheeler and four-wheeler now are largely similar, thanks to the addition of Walter Pack to our business. The consumer appliance business also will be significantly higher, thanks to a large proportion of Walter Pack revenues going to the consumer businesses. Overall, I think we will grow at about 20%-25% that we guided earlier in terms of the midterm growth guidance that we have given.
Also, if you will notice, last year, we added Mabe Group and even IFB on our consumer appliances front. Those will also grow over a period of time, because initially, as we said, that whenever we acquire new customers, we have a smaller chunk of their sales. But going forward, maybe after a year or two, we will start getting more business from them as well. We will keep on increasing our global presence as well as customer spread also in consumer appliances. We are also in talks with a few.
I understand your point, but my question was related to the order book. It would be great if you can disclose the value, the order book. What is your current order book overall?
We do not give order book.
The execution time for that.
Segment-wise or anything. Overall, what we have guided for is 20%-25% organic growth, and of that, almost 90% of our order book is confirmed for this year.
For FY 2024?
For FY 2024, overall SJS plus Exotech consult business.
Including WPI?
No, not including WPI, but on the WPI front also, almost around 90% of the order book is confirmed for FY 2024.
Okay. Just last I need to understand was, do we have some common customers between WPI and SJS as a whole?
Yes, we do, but a very small overlap. WPI supplies to Tata Motors. We supply to Tata Motors as well, but our content is much smaller. WPI are very large parts, contributing almost about INR 2,500- INR 3,500 content per vehicle. Our current supply from SJS are just these dials that we supply, and of course, the optical plastic parts that we will do will increase that quite well. Plus, we do chrome plating, so that is some of it. The common customers largely are Mahindra, for example, they do not supply too much. We have a large presence in Mahindra, so there are a lot of cross-selling possibilities that exist because we will not cannibalize the business if that is the question.
Understood. Okay. That is it from the side. Thank you.
Thank you. Our next question is from the line of Rohan Samant from Multi-Act. Please go ahead.
Yeah, thanks for the opportunity. My first question was on the technical support fees that Walter Pack pays to its parents. What was it earlier and what will it be now that we own it? When you have calculated the pro forma numbers, what have you considered there? If you can talk about in terms of, say, percentage of sales.
Okay. Earlier, the technical fees was paid by Walter Pack was in the range of 3.5% of the sales value. We have agreed for a fixed amount over a period of time. That was not on a percentage of sales. But if I say broadly on the sales, it will be around 1%.
Okay. So when you have done the pro forma calculation, you considered 1% because that is what-
That has been considered, yes.
Okay. And sir, secondly, our guidance of 50% revenue growth, and 40% profit growth, but Walter Pack is a higher margin business, so it is margin accretive. So why would the profit growth be lower than revenue growth? What am I missing here?
As I had mentioned earlier, we are in a transformation stage, think of it as the whole entity. This guidance for 40% PAT is on the consolidated level of all these three businesses put together for us. As I said, we are entering many new exciting areas like optical plastics, cover glass, which we will do for the first time. I said that we will, in our last earnings call, I had mentioned that we will be expanding or accelerating our growth footprint. We are not so worried about EBITDA because we have a very consistent track record. Typically what happens is that when you start a new product or product line, before you offer to a customer, you do a lot of trials internally. There is a larger consumption of raw materials, manpower, which is not billed to the customer.
That impacts the EBITDA to a certain extent in the short term. Also, when we launch a product, we are extra careful in terms of quality. Any efficiency improvement that comes in is once that stabilizes. If our past track record you see at SJS standalone, we do close to about 30%-32% of EBITDA over the last five to six years. And we have been steady maintaining that. These are new generation products requiring, in the short term, additional materials, additional testing requirement, new manpower being hired to handle or to create competency in those areas. These are the short-term costs that may impact margins in the short term, and that is what is behind the 40% guidance that we have done.
Just to supplement here, one is the business side, another is when we made the acquisition of Walter Pack, we have taken the loans for that. So there will be an interest cost on that, plus a lot cash of our internal accrual or our cash balance has been used to fund this acquisition, which was earlier generating income, and now this income will be very negligible income in this FY 2024. So this all three factors will make the PAT at 40% growth over last year.
Got it, sir. Thank you and all the best for the future quarters. Thank you.
Thank you.
Thank you.
Thank you. Our next question is from the line of Amit Hiranandani from SMIFS Limited. Please go ahead.
Thank you for the opportunity again. Just continuing with the WPI side, if you, sir, can tell us more about going forward strategy, in domestic and exports. I understand export is almost zero for WPI. So what is your strategy over there? Is there any restriction from Walter Pack Spain that we cannot go in certain countries or we cannot acquire any customers? On the WPI side, if I can continue, on the revenue target, if you can give for 2024, 2025, please.
Yeah. As I said, WPI is a great acquisition for us. There is a technology support agreement that is available to us. There is a very clear understanding between us and the parent company that we are allowed to service the existing customers that we have. There are some areas that we were missing out earlier. I mentioned the cases of large IML parts to Whirlpool and to Samsung. These are very large companies globally, and we do not do any large part IML part with them. That is a great growth opportunity for us moving forward. We are also, as I mentioned earlier, the IME technology that will ride on that is something that we will do. Primarily, growth, I think, we are very clear that there is going to be huge legs of growth for the Walter Pack business going forward.
Walter Pack is not existent in many of the customers that SJS already has a strong relationship with. This just adds some additional opportunity for Walter Pack technologies to be used for these customers. Cross-selling, exports and penetrating the Indian market faster with new technology products like IME. Those are the growth vectors for Walter Pack.
Overall, as a company for SJS and Exotech put together organic, we have mentioned that it will be growing at a CAGR of 20%-25%, and inorganic acquisitions will add to this growth above this 20%-25%. However, we will not be able to give any guidance in terms of Walter Pack currently, because the acquisition has just got completed, and we will work out the details and our strategy for the next medium-term, at least for the next three to five years, and probably then we will be able to take your question and give out the details later.
I will just rephrase it. At the optimum utilization capacity of WPI, how much revenue we can generate?
Currently, we are at a capacity utilization of about 60%-70%, and we can generate revenue close to INR 200 crores.
INR 200 crores you are saying at full utilization?
Yes.
Okay. One last question from my side. On the standalone side, SJS, I understand, is trying to acquire some strategic customers, which will, of course, benefit in the mid to long term. Can you please tell us, these customers are from domestic or international markets? Secondly, are we going to see some impact on the margins due to this strategic step, and sustainability of the margin, if you can tell us on the annual basis for SJS standalone, please.
These customers are both domestic and export customers, and for the existing customers, it is new technology. I talked of optical plastic, optical glass, where we are adding to our management bandwidth in terms of hiring some subject matter experts who will support this program. We will, of course, have costs associated with that. That is what is going to impact. But what customers that we are talking of are existing customers because our universe of customers is very large. But we are opening new doors in terms of new technologies with them, which is increasing the addressable market very quickly.
Okay. My question has been answered. Just one request. From Q2 FY 2024, we are going to incorporate WPI in the consolidated numbers. It is a request, if the team can provide WPI's financials separately, please. Yes, sir. Thank you so much.
Thank you. Our next question is from the line of Arun J, who is an investor. Please go ahead. Mr. Arun, your line has been unmuted. Please go ahead with your question. Ladies and gentlemen, the line for Mr. Arun has dropped. We move to the next participant. Our next question is from the line of Vishal Khurana, who is an investor. Please go ahead.
Yeah. Hi. Thank you for the opportunity. My first question is, we are almost providing the aesthetics to almost every two-wheeler OEM except for Hero . What is really stopping us to onboard Hero with SJS, and who is the current supplier to Hero in aesthetics?
Hero is a company that we have been pursuing. They like us. They have visited and audited us. What I am told, the ball is not in my court, it is in Hero's court. They have to take a call as to when to start buying from us. They know SJS very well. They understand that we have a strong capability. It is just wait and watch. It should happen sooner than later, that is our hope.
Their current supplier is Classic Stripes.
My second question is, in the previous quarter investor presentation, we had mentioned that we are onboarded Foxconn, who will be making electric vehicles in India, and we will be supplying aesthetics to them. May I know when they are going to put up that facility for this contract manufacturing of EVs they are going to?
No, Foxconn is not going to make EVs. Foxconn is going to supply parts to EVs. We announced last quarter that we had won a business from Foxconn, which was in the area of the display screen of the EV. They supply to a company, I will not name it because the product is still under development, but it should start production in Q2.
Okay. My last question, sir, is, we also discussed that we will be entering into television and medical devices aesthetic segment. Is that correct?
Yeah. We won a business for some decorative decals for the television industry, so that we have done. Medical devices, of course, the opportunity is in terms of displays and in terms of overlays, and maybe IML parts. That is a market that we are mining. We are in touch with customers, and we hope to grow that business as well.
And sir, how big can this TV opportunity be since we are manufacturing a lot of television and other electronic items in India now?
It is wait and watch. Our specialty is make long-lasting, durable aesthetic parts. The opportunity in other areas is larger. Television, while that is an opportunity, we have still not sized it, to be honest, to say how large it could be. At the moment, we just entered this last quarter. We will examine as we have discussions with the customers to see what more is possible.
Okay. Thank you so much, sir, and all the best.
Thank you.
Thank you. Ladies and gentlemen, that was the last question of our question-and-answer session. I would now like to hand the conference over to the management for closing comments.
Thank you everyone for joining us on this call. If any of these questions were left unanswered, please feel free to reach out to us and we will answer it to the best of our abilities. Thank you.
Thank you. On behalf of JM Financial, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.