Amber Enterprises India Limited (AMBER) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen. Welcome to Amber Enterprises India Limited's Q3 FY '22 Earnings Conference Call. This conference call may contain forward-looking statements about the company which are based on beliefs, opinions and expectations of the company as on the date of this call. These statements are not the guarantees of future performance and involve risks and uncertainties that are difficult to predict. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Daljit Singh, Managing Director of Amber Enterprises India Limited. Thank you. And over to you, sir.

Hello and good morning, everyone. First and foremost, I hope you all are keeping safe and healthy. On the call, I am joined by Mr. Sudhir Goyal, our Chief Financial Officer; Mr. Sanjay Arora, CEO of Electronics Division; Mr. Sachin Gupta, CEO of RAC and CAC Division; and SGA, our investor relation advisers. We have uploaded our results presentation on the exchanges, and I hope everybody had an opportunity to go through the same. The consumer durables industry witnessed good growth during the quarter. Despite concerns around the third COVID-19 wave, double vaccination has helped us in driving positive consumer sentiment. The demand was driven by a shift in consumer behavior from price consciousness towards technologically advanced premium products with quality, value proposition and safety aspects. Work from home and stay at home continued to create good demand for the industry as leisure travel is restricted, so certain section of consumers are spending on upgrading consumer durables. Retailers have adopted omnichannel strategies to cater to consumer across channels. Retailers are also offering affordable finance schemes, extended warranty, same-day installation services, which has helped to attract first-time consumers, which further -- which is further aiding the demand. Rising raw material prices and supply chain issues continued to plague the quarter. Amber has been able to pass on higher raw material prices to the customers. And channel inventories levels are being managed by effective supply chain planning in line with growth expectations. I'm pleased to share that, on all metrics, including revenue, EBITDA and PAT, we were able to surpass the pre-pandemic level for the quarter. Another important update during the quarter was on acquisition of a majority ownership in AmberPR Technoplast India Private Limited, erstwhile Pasio India Private Limited. This acquisition will help our company to grow its component segment, with focus on providing more backward integrated solutions in key component of RAC segment, which is cross-flow fan; along with solution of injection molding component for other industries, which is refrigeration and automobile segment. We are glad to announce the commencement of production at our 3 new facilities, Kadi, which is Gujarat, for injection molding components; Chennai, in Tamil Nadu, for sheet metal component and heat exchangers; and Supa, Maharashtra for our sheet metal components in phase 1. The expenditure incurred for the commercialization of these 3 new plants led to decline in profitability for the stand-alone operation. However, once the revenue starts flowing in, we expect profitability to normalize. A little update on PLI scheme. During the quarter, Amber Enterprises had received approval for the manufacturing of AC components under normal investment category for a threshold incremental investment of INR 300 crores. Our subsidiary IL JIN Electronics have also received approval for manufacturing lower-value [ intermediaries ] of ACs under large investment category for a threshold incremental investment of INR 100 crores. We believe the production-linked incentive scheme approved by the government would help provide a level playing field to domestic players and create enabling environment for the industry to compete globally. I'll now talk about our divisional performance. The mobility application division, which includes Sidwal. With the increase in government's thrust towards mobility for all, we believe we are in sweet spot to leverage this opportunity. The expansion of metros in newer cities as well as modernization of railways are creating new opportunities in this space. We are making good progress on new product development for various business categories. Our order book stands healthy at more than around INR 450 crores. Update on motor division, which includes PICL. We have increased our product offering to our customers by adding new models for both the domestic and international markets. We are also adding new customers in this division. We expect our motor division to double in revenues while also increasing margins. BLDC is currently a very small [ core ] part of our portfolio we have, which we have recently started. The reliability cycle is going on and we are about to start production. Hence, BLDC, we'll be adding as revenue from both sides in captive as well as also in component solution to our customers in coming financial years. Update on electronic division, which includes IL JIN and Ever. As a part of diversification, we have started production of new age applications like wearable and hearables. We have recently added both as our customers. As the market is moving rapidly towards inverter ACs, we are confident of growing our revenue share from this division going forward. There is a good traction due to PLI scheme, and we are a rightly placed company to give the required solutions. We are also getting queries and already onboarded customers for inverter PCB boards. We are also getting a lot of queries, and approvals are already in process for [ refrigerators ] and washing machine and other new products also, so we are hopeful that in electronics division also we will be doubling the revenue in coming 2 years from now. Component division, which include both AC and non-AC components. Our component division has played a very positive role. Contribution from component division has increased to 54% in 9 months financial year '22 from 50% in 9 months financial year '21. We are adding new products, new customers and new geographies. We have onboarded new customers like Samsung for sheet metal components and heat exchangers and Voltas Beko for injection molding components for washing machine and refrigerators. Our recent acquisition of AmberPR is a part of component division business. Integration is happening smoothly, and we expect future growth -- future revenue growth in AmberPR also. Update on RAC division. Our RAC division is performing in tandem with industry. Industry growth on a year-to-date basis is at single digits. It seems that industry would touch around 6.2 million to 6.5 million units this financial year. However, at Amber, we are expected to touch around 3 million units this year. Inventory levels have been normalized [indiscernible] are witnessing good growth. On the commercial RAC side, we have added entire product lineup of our commercial ductables. We have also started offering full range of our cassette ACs to our existing customers. We expect to outnumber the industry in volume terms in this financial year. To conclude, I would like to reiterate that our constant endeavors would be to increase penetration and increase our wallet share in existing customers, continuously add new customers, create a foothold in the exports market and enhance our products with new technologies by focusing on R&D. I'll now take you through our consolidated financial highlights. In revenue, quarter 3 financial year '22 revenue stood at INR 974 crores versus INR 765 crores in Q3 FY '21. 9-month FY '22 revenue stood at INR 2,270 crores versus INR 1,432 crores in 9 months FY '21. For the quarter, RAC contributed 39% of total revenues, while components and mobility application contributed 61% of the revenues. Operating EBITDA. Q3 FY '22 operating EBITDA stood at INR 74 crores versus INR 62 crores in Q3 FY '21. 9 months FY '22 operating EBITDA stood at INR 163 crores versus INR 81 crores in 9 months FY '21. Operating EBITDA margins for Q3 and 9 months FY '22 stood at 7.6% and 7.2%, respectively. Q3 FY '22 and 9 months FY '22 operating EBITDA does not include ESOP expense of INR 4.17 crores and INR 11.6 crores, respectively. PAT. Q3 FY '22 PAT stood at INR 33 crores versus INR 28 crores in Q3 FY '21. 9-month FY '22 PAT stood at INR 52 crores versus INR 7 crores in 9 months FY '21. At Amber, we are all set to leverage on multiple opportunities. Our endeavor is to grab majority of market share on RAC and components side. We believe this opportunity will further strengthen our presence in domestic market and create a strong foothold in exports market. Now I will open the floor for the questions here. Thank you.

[Operator Instructions] The first question is from the line of Ankur Sharma from HDFC Standard Life Insurance.

Just firstly, if you could tell us the volumes of ACs that were sold during Q3. I think you said full year number of [ about ] 3 million. If you can just tell us, what was the number for Q3? And if possible, [indiscernible] IDU [ and then ODU ].

So in total, like, for the financial year, as I told, it's we are expected to be nearing 3 million, while on 9 months we have done around 1.1 million numbers. However, we are restricting to give the diversified numbers of ODU, IDU and -- due to confidentiality matters.

Okay, fair. Because sir, I mean -- so my follow-up will be that you're looking at a pretty steep increase in Q4, right? I mean you're doing [ about ] 1 million orders Q3, and you're looking at close to 3 million for the full year -- implies almost 2 million numbers for Q4. So just on the overall demand side, how are you seeing demand, [ sales ]? We did hear about some slowdown in volume, especially in November, December, for the industry as a whole. So if you could talk about where are you seeing the demand. Is it more for you because of new customers? Or is it that you expect the industry to also do equally well?

So Ankur, the demand is back to the normalized level now and -- in the industry, and we are pretty confident. And our order book looks at we will be crossing around -- we'll be doing around 3 million numbers. However, in the industry, if you see, the demand should be back the -- from last year. Like it was around 5.2 million to 5.5 million. This year, we are expecting that it should do around 6.3 million to 6.5 million, so demand is coming back again. And with, of course, the working from home as the new normal, everybody is spending upon the upgradation as well as the comfort living. And [ this product stays ] something linked to the comfort living. And we are hopeful that the -- and third wave now with COVID is also -- it's pretty much not hit us that badly as we were expecting earlier like second wave, so we are hopeful that this should pretty much further add to the demand of the industry also.

Okay, fair. And sir, just on that piece of whether it is more of market share gains for you. And also are you seeing the benefits of the import ban? I remember you said, going into '23 as well, you will start seeing the benefits come through in terms of import ban and therefore you getting a bigger share of brands [ who were earlier importing ]. So is that benefit also flowing through in Q4? Or is that more of a FY '23 kind of...

So out of all the numbers which we did of -- like due to the import ban, the phase 1 started with the gas charging. We have been able to convert into the full-fledged manufacturing for, out of that, around 2 customers. And remaining 2, 3 customers would be now converting, into the coming financial year, into the full-fledged manufacturing. So import ban is definitely playing a good role, but at the same time, those bigger numbers, you will be seeing, will be added in next financial year, looking forward.

Fair, yes. And just one last question, if I may...

Sorry to interrupt, sir. Mr. Sharma, we -- may we request that you return to the question queue? There are participants waiting for their turn.

Sure. Perfect, cool.

[Operator Instructions] The next question is from the line of Madhav Marda from Fidelity Investments.

I just wanted to understand. Like we've added both as a customer for our electronics division. It seems [ that company ] is actively moving beyond RAC only as their end market into more of a diversified set of end markets, so can you give us like just your -- maybe your 3- to 5-year outlook on how we expect [ to grow ] beyond the RAC division as well? And like what are the growth opportunities and sort of strategies as well, [ sir ]?

So Madhav, as Amber now, we have diversified into 5 business verticals, like you have seen. And this is how we are seen: So 1 of the verticals is room AC division verticals. Another is components, which includes both AC and non-AC. And third is the electronics, which includes IL JIN and Ever. And fourth is our mobility application, which is Sidwal. And fifth is our motor vertical, which is PICL. So looking into [ all these cylinders ], all these 5 verticals are seeing good growth due to multiple reasons in each and every vertical. And we are looking at good growth numbers all in RAC also, where we are adding customers due to import ban as well as due to more offerings. In electronics vertical also, we are hoping to double the revenue in coming 2 years because of increase in our horizon of [ inverters, AC ] controller board now being approved by various customers. We have also expanded into hearables and wearables, with both as a customer. Similarly, in our mobility application division, we are seeing good growth with a new thrust of air-conditioned coaches as well as different verticals into the -- more offering of the products for the mobility application also is on the cards. Similarly, in PICL, we are seeing -- with BLDC motor coming, which is pretty much we are not offering any solutions over there. Now that [ has been through ] reliability, and we are hopeful that in the PICL also we should be doubling the revenue. And in components and which is -- includes AC and non-AC components, we are seeing a lot of traction over there. And we have added Samsung as a customer where we have added for components of sheet metal and heat exchangers. We are also talking to Samsung for further components maybe of injection molding or other components and PCB also. And we have added Voltas Beko as customers for [ refrigerator ] and washing machine. And however, we are not present for refrigerator and washing machine as an offering in electronic division. [ Probably ] we are offering there also in the [ front division ]. So all our divisions now are seeing towards huge growth. And we are hopeful that, in next like 2 to 3 years, all these divisions should be pretty much double the size of where we are today.

And then each of these divisions has like their own -- like a business side. And each of them are looking at opportunities across all of the various end markets, right, rather than just RAC, [ I guess ].

Yes, it's a focused approach. Each division is now headed by a CEO. Like for electronics, we have Mr. Sanjay. I mean, RAC, we have Mr. Sachin with us. [ Mr. Udaiveer ] is there for mobility applications. So each and every division is now with a focused approach. And we will be looking to expand division [ and all ], so there could be multiple opportunities, whether it is RAC, non-RAC. We will be looking at all across for the -- expanding the horizon of the division. So it could be like, for components, if you get good opportunities in injection molding components -- so we will be definitely looking at -- from that angle rather than only RAC and non-RAC segments. So we will be increasing and giving the solution in each division all across the [ verticals completely ].

[Operator Instructions] The next question is from the line of Ravi Swaminathan from Spark Capital.

Sir, my first question is with respect to the kind of volume growth that we anticipate for the air conditioning market next year. This year, you have mentioned, it's around 6.3 million to 6.5 million. What kind of volume growth we can expect for next year, assuming that there is no lockdown in the -- during the peak summer season; and what kind of growth that Amber can anticipate for that similarly.

So I anticipate that with the now third COVID wave not hitting us as well as not seeing any future COVID waves coming in too -- so industry should be better than the pre-COVID levels. So I think -- so it should be touching somewhere around 7.8 million to 8 million. It could be -- around 7.5 million to 7.8 million would be, I would say, a good number to achieve from current 6.2 million to 6.5 million, which would be surpassing the pre-COVID levels. I mean this is what I feel so, looking into that now the air -- the working from home would be still a new normal because that's a new normal now rather than linked to the COVID. It would be -- again, people will be definitely investing into the comfort living.

Got it, sir. And Amber, would we grow on par with the industry or above the industry? So what kind of growth we can see in terms of [ volumes, sir ].

So as Amber, we have always outnumbered the industry. So here also we will be definitely looking at increasing our market share with the industry. And outnumbering the industry, as always, our endeavor had been.

Got it, sir. My second question is with respect to the commercial air conditioning initiatives that we have taken. What kind of proportion of the overall revenue is commercial air conditioning [ now ]? And how much can it grow into -- over the next 2 to 3 years? And if you can give the same commentary for exports also will be great.

So for commercial AC, the -- has just started. And a couple of the offerings, we have already given to our customer samples as well as reliability cycles. And all that is going on, while with some customer it has already started in the production. Cassette AC, which was not in our offering as a part of commercial, is also now part of it. So that has also -- that is seeing a lot of good traction because there's -- no one is offering in the industry today as an [ ODM ] solution. So we have already started that offering and a lot of traction is there. So I would see that the number should be growing. However, it would not be a lot of -- I mean it would not be a very big chunk of the revenue and -- in a percentage point of view as of overall consol level of the Amber group, but yes, these are the numbers. This is a product which we were not offering. And definitely it increases our -- expands our product offering to our customers and more -- will increase the wallet share with our customers too.

Got it. And with respect to exports also...

So exports. We are already -- like we earlier also mentioned that exports is -- of course, there's a high reliability cycle. And with -- each country have their own energy norms and energy regulations, so we need to develop the products. So the products for U.S. market now is already under prototyping and are now been -- or as -- and the prototypes, we are offering to our customers. So I should see another 1.5 to 2 years further. We should be able to crack this into the mass production levels, while [ at the release ] level, we are seeing some traction and the product lineup is pretty much there. And now the reliability cycle with the customers as well as the production orders should start flowing in coming at least 7 to 8 months or maybe 1 year, around 1 year from now.

Got it, sir. And my final question is with respect to the consol EBITDA margin. So are we set for somewhere around 8%, 8.5% kind of EBITDA margin over the next 1, 2 years, considering the fact that there is a PLI scheme, that there will be some benefits, but on the other hand, commodity prices are going up. So what kind of margins that you will be anticipating...

Well, it's very difficult to tell about the percentage level, looking into the commodity changes and all that. However, we are confident of maintaining our EBITDA levels as well as increasing [ the value terms ] as we move forward.

[Operator Instructions] The next question is from the line of Dhruv Jain from Ambit Capital.

Sir, I had a question with respect to the stand-alone non-RAC component business, right? You've seen a strong growth in that, but if I'm not wrong, that also houses the gas charging element. So if you could just give us a sense in terms of what was the contribution of the gas charging part. And we've generally also seen a very good growth, so if you could just give us some sense on what's happened in this quarter.

So you are asking about the gas charging, the parts -- or like revenue from gas charging.

Yes, sir.

So on average -- like we need to get back to you and to the gas charging exact numbers as to what revenue or what kind of, like, margins we have got from there, but however, we have done -- the gas charging is around 400,000 numbers which we have done the gas charging so far in first 9 months. And that is not a part of this 1.1 million. That's separate from 1.1 million.

So which will be in the stand-alone business itself, right?

Yes.

Yes, yes, yes.

Okay. And so I'll get back to your team for that number. Just sir, the other question was with respect to the acquisition of Pasio India. Now I understand that you also had an offering on the cross-flow fan side. So if you could just give us some sense on the past numbers of this company and the rationale that you -- for which you bought this company.

So this company is basically -- their leadership position of offering is cross-flow fan. And that is a product which we were not offering as -- to our customers at the component level, so now with this company with Amber, we have been able to increase our share of cross-flow fan [ with our ] customer. Historically, last year, it -- this company has done at 51 crores of revenue. And we are looking at this year pretty much at somewhere around...

90 crores...

90 crores of revenue at the financial year-end. [Audio Gap] some trends on the margins...

Sorry to interrupt, Mr. Jain. May we request that you return to the question queue? There are participants waiting for their turn. [Operator Instructions] We'll move on to the next question. That is from the line of Nitin Arora from Axis Mutual Funds.

Sorry. Again I'm asking more on the industry side because your commentary starts talking about a good demand. Sir, when we look at your volume growth, it's down 27% on a declining base of 5%, and you're saying demand is good. And Q4 run rate or what you guided looks optically very high, so -- and when we look at the retails of ref, washers, everything is on a declining mode for Q3, as per the data, so I just wanted to understand from you is -- one, how has been the industry decline for this quarter? Because you always say you always outperform the industry, so I'm assuming on the declining also you will have outperformed it. So how much will that be, the [ industry decline ]? And second, though January has gone now completely, how has been the confidence of the channel of the OEMs taking back their inventory? Because the temperature is still not looking that great to procure the inventory and go ahead. And I think now there have been no shortages too much in the system compared to the last year. So if you can throw some light on that, that will be really helpful, sir, of where is -- this confidence of demand is good, is coming back.

So Nitin, like post the second wave, everybody was apprehensive on the inventory levels and all that, but a good thing was that there was a -- very normalized inventory levels post the second wave of COVID. However, as we moved forward, there were 2 challenges. One was the QCO. Another was the BEE rating change, which was leading to a lot of ambiguity because everybody [ as well as industry ] requested to move these forward, looking into the inventory levels, as well as they're looking into the second wave which has hit us. And so as industry, everybody requested the government and -- but there are a lot of -- there was a lot of ambiguity in terms of this BEE rating change and QCO until the end of, I think, October, November basically, which was leading to, I would say, a lot of conservativeness in the industry. However, now that is post us and past us. And the third wave was also -- everybody was envisaging third wave and nobody knew that -- what kind of wave would it be. And now I think the third wave also is pretty much -- if not past us, but at least we are [ through this, not that bad ] as it was in the second wave. So now everybody is pretty much optimistic about the industry and about the demand. And that is why we are seeing a lot of -- a good order book is there with us for this Q4 quarter. And we are envisaging that this industry should be back with a good demand and should hit around 6.3 million to 6.5 million numbers. And we should be touching around the 3 million numbers.

And sir, generally -- really helpful. And sir, generally on the other businesses [ where you are entering the red part ]. And motor has been [indiscernible] we want to expose [ with ] BLDC, but do you think, from a profitability perspective, we already run a business where we hold a very high market share [ but then a ] very thin-margin business? I'm talking in percentage terms, not in absolute, because that's the seasonality [ which gets you growth ] in the absolute EBITDA. You think -- from a profitability perspective, you are the last entrants in that space, whether it's variable; whether it's direct part; and people, existing vendors who has really big market shares there. So from a profitability perspective, to scale up, do you think it will take much more time and if the existing cash flows of the existing business only will support them? Because generally the CapEx requirement has been very on a higher side for you being -- whether you acquire a company, you put CapEx there; or whether it's the existing business. So if you can throw some light on the profitability perspective on this new business, that will be helpful, sir. That's my last question.

So Nitin, from refrigerators and all that, what we are looking at is to expand our horizon and offerings [ or ] the components of the refrigerators, washing machine and not the complete finished product as of now. And there in components, the margin levels are in line to the industry standard of the existing components only, over there. [ Next ], regarding in terms of CapEx increasing in terms of the -- for the offerings [ of this ], this should be -- we should be able to support it from our own internal accruals only. This doesn't require a lot of CapEx. However, at the same time also, if you look into it, that we are into -- primarily into AC side; the refrigerator and washing machine added to that, in the component. Same component segment would add us to the better asset utilization only. So I mean it's -- it creates a good [ building ] situation for the customer as well as for us. And that is why we are looking into more and more better offering to our customers from the same set of the assets, [ if possible ].

[Operator Instructions] The next question is from the line of Aditya Bhartia from Investec.

Sir, first thing that I wanted to understand was on gross margins, wherein our performance has been pretty decent, especially given the way commodity costs have moved up. Now what we understand is that [indiscernible] are struggling to pass on the complete impact to customers, while despite having an ODM business, we appear to have passed on a fair bit of impact to customers. Just want to understand why -- how has that been possible? Because historically also you've mentioned [indiscernible] that typically there is a bit of delay in passing on increased costs. And is ban on import of [ refrigerants for ACs ] improving your bargaining powers [ with this ] customer?

So Aditya, in terms of gross margins, we have been able to maintain our gross margins, as the end result. And commodity prices, we were able to pass on to our customers because obviously everybody understood that there is a huge impact on the commodity pricing. And with all the new ratings which were coming in as well as new model lineup coming in, we were able to successfully pass on with our customers because this is something which we started discussing a long time back with our customers in terms of passing on these commodities because at the same -- because there is a huge impact over there. And we were able to successfully make customers understand as well as increase this -- pass on these commodity changes to our customers. At the same time, the ban on the refrigerants obviously is a -- completely different. That has no -- I mean, no impact on this commodity pricing or maybe, I will say, negotiation with the current customers on this commodity because that is completely different. That is de-linked to this commodity price. Obviously there is -- there was a change on the commodity pricing over there also, but that's something -- we were able to take it from the customers immediately because that was a part of our contracts that, if there is any commodity change, I mean, it could be passed on immediately.

But sir, historically we have seen a bit of a lag. This time, there has been no lag, pretty much. And especially with customers suffering, with brand owners suffering, how has that been managed? And going forward also, should we be building-in almost similar margins?

No, it -- there was a lag. However, we were able to discuss with our customers that we need to start it ahead of time rather than just waiting for the end of the quarter or -- and then discussing. So maintaining the discipline. As well as in Q3 also, a lot of commodities were settling down. So that also helped us. And we decided in Q4 also, like you'll see, that a lot of commodities have pretty much settled down and the pricing have settled down. So there should not be any impact of the commodity. [ And if there needs ] -- there is a substantial change, we would be able to go to our customers back and ask for the changes.

Understood. And last question, sir, on...

Sorry to interrupt, Mr. Bhartia. May we request that you return to the question queue?

Sure.

[Operator Instructions] The next question is from the line of Bharat Shah from ASK Investment Managers Limited.

Two questions. One, if we consider also current year is the base, that is financial year ended March '22, over the next 3 years that is from fiscal '22 to fiscal '25, do we believe overall business would approximately double? And if you can share the structural growth drivers for each of the verticals both for the industry as well as Amber in specific. And second question, if you can throw some light on what will happen to profitability as we move along in the next 3 years-plus kind of a journey.

Sure, Bharat [indiscernible]. Thank you very much. And so Bharat [indiscernible], like we are now focusing ourselves as Amber into 5 business divisions: RAC; then electronics; PICL, which is motors; then mobility application; and components. So all of these verticals, as Amber, we are in a very sweet spot to capture upon the growth which is in front of us. Specifically if you see, there are a lot of -- if I take division by division or business head by business head, like in room AC, with a lot of localization and Make in India and PLI incentives as well as working-from-home culture -- is leading to a lot of demand locally over here. And as Amber, we are now present in South side also, which we were earlier not there. I mean the [ city facility ] should be operational pretty much in end of July, August; and we should be able to cater to our customers from there also. And we are already present in North. We are now -- we are also having offering of the entire product lineup with us. So as Amber, we are ready to capitalize upon this growth which lies ahead of us in room AC division and since we are present everywhere and we are -- have the complete product lineup and product range in ODM category with that. And we can increase the wallet share with the customers as we move forward. Secondly, into the components. Also, we have added a couple of plants, like 2 downstream facilities, 1 in Kadi which is -- which started operational. There we are looking at refrigerator and washing machine. And we envisage further inquiries from customers over there, like Hitachi and -- as we move forward also. And in Samsung -- in Chennai, we started with Samsung over there, where we have added sheet metal and heat exchangers as components for AC and our refrigerated components also as we move forward. And there is a lot of other inquiries also for that components division. So we are looking at -- and even our injection molding side also is looking at a good growth rate. And good inquiries are there in the pipeline. Similarly, in electronics, also we see good inquiries for PCBAs of refrigerator, washing machine, air conditioner inverter controller board now, with -- already approved with a couple of customers. And some customers will be coming onboarded in coming financial year. So we should be able to gain the market share as well as gain the wallet share with all these customers as we move forward. And mobility application, we are already sitting on a handsome order book of around INR 450-odd crores; and that is something -- we are pretty strong over there. And recently with new -- a new type of air conditioners required in mobility application, we are already there and, I mean, in -- as an offering to our customers. We have already onboarded good customers like Alstom and [ Bombardier ] in mobility application. So all are -- similarly, in PICL, also the BLDC is something which we were pretty empty over there. And with that offering, we are already there. So RAC, where we were not offering at all any motors in the [ indoor side ], we will be able to offer that. So each and every vertical would -- should see a good, diverse -- good growth. And we are highly hopeful that we should be able to -- as Amber, we are present all across, pan-India presence, so we should be able to capitalize upon this growth due to obviously Make in India, a push from the government due to the demand which has been aggregated, as we move forward into the country.

So just speaking...

I'm sorry to interrupt, Mr. Shah. Sir, may we request that you return to the question queue? There are participants waiting for their turn...

Yes. And this is just the first question and the follow-up that I'm asking. On the next 3 years from fiscal '22 to '25, supposing our business is [indiscernible] the fiscal '22, do we think it will be more like 200 plus by the time [ we complete ] 3 years [indiscernible]? And will -- the profitability, will it be maintained, improved or [ as it is ]?

So I mean, as a company, we definitely would be looking forward to grow at a better level. I mean we'll be able -- try to maintain "25% absolute return on EBITDA" levels moving from FY '22 to FY '25. I think that's what we would like to maintain as we move forward.

25% growth in EBITDA over that 3-year time frame.

Yes.

[Operator Instructions] The next question is from the line of Naval Seth from Emkay Global.

Sir, sorry for harping again on volumes. So if I look at your volumes, which are down like 17% on 2-year CAGR, while industry retail sales are down kind of 6% to 7% over the same period. So were there some delay in dispatches from your end because of the Omicron kind of risk, where channel or brands were kind of hesitant to kind of take up the volumes? Or because numbers are not adding up in terms of commentary, what you are saying, that demand is normalized but volumes are down 27% Y-o-Y.

So thank you, Naval, for the question. So Naval, if you see, like the industry has seen definitely from -- still not yet gone to the pre-pandemic level. So we were at 7.2 -- 7.5 million, went down to 5.2 million, while now it is coming back to 6.5 million. And we are hopeful that next year, next financial year, the industry should be crossing the pre-pandemic level and reaching to around 7.8 million to 7.5 million numbers. So volumes are coming up back now again. Obviously, during last 2 years, there have been a lot of disruption in terms of second wave due to COVID and then third wave in place; as well as also a lot of changing regulatory, changing from QCO and BIS as well as BEE rating also. Now with all that already done and behind us -- so we definitely look forward for a good volume growth as an industry. In the Q4, the order book is healthy for us, and we are hopeful to come close to a 3 million mark which was pre pandemic. And if you see, as industry, definitely the pre-pandemic level has -- not yet reached, but for Amber, we are already there and looking forward to 3 million mark in the Q4 -- at the end of the Q4.

Got it. And follow-up to this is, sir, to clarify there were no delay in dispatches. Or customers are not getting converted from fully built up to only components as our component business has grown exponentially. So nothing of that sort is -- was there in 3Q, right?

So as of now, we have not seen anything as yet. In fact, there is more and more traction. And in fact, now like we are adding and converting the gas charging customers into fully built units. And so 2 of the customers have already been converted this year. Remaining 3 customers will be changed next year, next financial year. So we don't see any changes over here. As well as, at the same time, due to Omicron, we have not seen -- yes, there was a little halt on the -- in January, there is -- there was a little halt over there for the -- from Omicron perspective, but yes, it is back to normal now. And we have already made up the numbers, which the dispatches have already been again started by the customers.

Got it. And second question, on the component. Basically, sir, on PICL and Ever and IL JIN, you have stated revenues to double in the next few years...

[ Mr. Seth ], I'm sorry to interrupt, but may we request that you return to the question queue? There are participants waiting for their turn. [Operator Instructions] The next question is from the line of Sonali Salgaonkar from Jefferies.

Sir, my first question is, any updates on the PLI's you would like to share in terms of how do you foresee the revenues, margins and CapEx in both these opportunities?

We can't hear [ you ].

Sorry. Mr. Salgaonkar, can you repeat the question again, please?

Yes, sir. Sir, any updates you would like to share on the PLI schemes, the approvals that you have received, in terms of what kind of revenues, margins and CapEx you envisage over the coming years?

So from PLI scheme, as an update. Like we have already been approved, as Amber, in the INR 300 crore normal investment category. And our subsidiary IL JIN has also got approval in the INR 100 crore category for then components over there. And now this PLI, definitely this is a year of CapEx investment. And we should see the benefits coming out of it into the coming financial years as we move forward. So as per the construct of the PLI, this financial year is a financial year for the investments to be done. And the next financial year starting, the PLI would [ be starting contributed ]. The incremental sales and all that has to be started in the next year.

Got it, sir. Sir, my second question is again regarding this 3 million volumes that you foresee in FY '22. So the difference between 3 million and 1.1 million that we have achieved in 9 months, is this because of the order book from new customers or from the existing customers and the demand side is looking up much brighter? And do you foresee price hikes going ahead in Q4 as well?

I would say this is an aggregated demand from both our existing as well as the new customers, right? If you see historically also, Q4 is pretty much the largest chunk always; and that is what we envisage this year also. And so this is a complete mix of both the current -- that uptake from the current customers as well as the addition of the new customers which we added [indiscernible].

And anything on the CapEx, sir...

Sorry to interrupt, Ms. Salgaonkar. May we request that you return to the question queue? There are participants waiting for their turn. [Operator Instructions] The next question is from the line of Kalpit Narvekar from Allianz Global Investors.

Two questions from my side. Firstly, if you could share some color in terms of our competitiveness versus the Chinese manufacturers, particularly in the exports market. So U.S. versus -- U.S. and UAE. What is the kind of parity versus the Chinese manufacturers? And second question is have you -- if you could talk a little bit on the, say, automation initiatives, say, on manufacturing or warehousing automation on your side that you've made in the last, say -- since COVID.

So Kalpit, on the competitiveness aspect of the exports. So we are already looking at a couple of export market, like the UAE, like the Middle East as well as the U.S. market. On the -- I would say, on the components side, we are there already because we are already exporting motors to Middle East. And we have been doing that; and as well as to U.S. now, [ probably ] nearing to start. So there is a competitiveness on the export on the components side. However, on the finished goods side, there is still disparity over there on -- but yes, we are looking at -- there are -- there is a mix of products. So there are some products where we are competitive with China. And there are some products where we are not competitive with China as of today but, of course, with PLI in place and localization happening. So we see that this difference should be built upon and should be narrowing down as we move forward and making us more and more competitive. So there is a journey to be traveled. Of course, first is the product lineup and offering to our customers as well as aligning ourselves to the requirement of customers and requiring -- requirement of the energy regulation of the country, so -- which we are in that phase right now, so we are already doing the prototyping. We are already making the product lineup ready and all that. However, in meantime, we have decided that, with PLI coming in, localization coming in, it should be -- and obviously the volumes increasing, we should be becoming more and more competitive as we move forward. On the automation front, the question you asked. I mean yes. We are very cognizant about the automation part and Industry 4.0. That is a new normal as we move forward. So within our company, we have our automation [ cell ] which is moving towards automation; and creating our own automation arms, robotic arms; as well as creating various kind of low-cost automation between the plants also. So as we move forward, we are already very focused on the automation because we can see that, in order to be more competitive as the volume increases, automation and Industry 4.0 will be the new normal as well [indiscernible]. So we are already working on it. And the [ cell ] within us, [indiscernible] [ the number ], who works on automation, yes, is highly equipped and creating the automation opportunities within the group [ already ].

[Operator Instructions] The next question is from the line of Bhavin Vithlani from SBI Mutual Fund.

Just one question from my side. On the refrigerator, you mentioned that you will limit your exposure to the component and largely the common ones that are there for the air conditioner. Could you help us understand your thought process? Why is that so? Because some of your competitor EMS players are already planning for [indiscernible] ODM for refrigerators.

Sure, Mr. Bhavin. Thank you very much for your question. And so the idea over here is that, within our verticals, how we can utilize our assets as well as remain in the verticals where we are present and further diversify and have more asset utilization in the current [ formula ]. So that is the reason. And it doesn't require much of CapEx, while going for the complete ODM or finished product of -- or products like refrigerator do require a lot of CapEx. So we have -- and we see a lot of opportunities already present here in the components side only of the refrigerator and washing machine. So that is reason we are looking forward that -- how we can actually increase our wallet share within that same customer and while, at the same time, maintain good EBITDA margins over there on the components side. And hence, we are restricting to our components strategy and increasing more and more offerings to our customer and building more stickiness to our customers on a year-round basis.

[Operator Instructions] The next question is from the line of Bhoomika from DAM Capital.

Sir, in terms of as we scale up in the non-RAC segment, how does the margin profile move? As you've seen this quarter, PICL margins have improved, but [ SG&A level ], while there's a growth in the revenue profile, remained at a lower level. So if you can just talk about that. And number two is in terms of with the PLI scheme coming up. What would be the CapEx that we've done, so far? And what are we looking for FY '22 and -- up till '24. And gross and net debt, if it's possible, please.

So Bhoomika, on the margin level. [ We are starting ] to -- as we move forward and as we add more and more components and diversify into the components. So that would -- obviously, margin profile will be better. And as I mentioned earlier also, that -- on an absolute basis, that we are looking at maintaining "25% absolute return on EBITDA" levels moving forward on -- from FY '22 to FY '25. However, on the PLI side, we are very well in range to the -- approvals has already been done. From the CapEx side, we are already there as a CapEx, and I think -- so from the investment side, we should get approval. And we should be able to get the benefits of PLI, as we move forward into the next financial year, from the CapEx side. So this year, like -- or we are envisaging CapEx of around 375 crores on a consol basis. And next financial year, we'll be looking at a CapEx of somewhere around 250 crores to 275 crores as we move forward into the next financial year. On the debt levels on a consol level...

Net debt...

On the net debt level. Consol level, we are at 400 crores, yes. And at the year-end, we should be seen somewhere around 300 crore at the net debt levels, [ as we will do in ] next financial year.

[Operator Instructions] The next question is from the line of Manoj Gori, Equirus Securities.

Sir, I have one question. So currently if you look at within RAC business that we are doing. So of the total IDU, ODU, [ CDU or ] window air conditioners, what contribution will be coming from your window air conditioners? Can you give some color over there?

So Manoj, like we don't -- due to the confidentiality matters, actually we don't disclose the numbers on IDU, ODU and window AC level, but we have a substantial market share, I can say, in the window AC. Like it's somewhere around 900,000 to 1 million, [ as in ] industry. So we have a majority share in window air conditioners as we move forward.

Right. So sir, my question was actually regarding that because, if you look at -- recently we were speaking with a few of the brands. And what -- they were indicating that probably, next year, the focus will be -- relatively would be lower on window air conditioner. And in that case, should it impact us as well? Because obviously, when you look at some of the larger brands, we are definitely supplying the major chunk to them. So can you throw some light, like, how the scenario could pan out if brands start focusing [ lower or ] window air conditioners? That's all from my side.

So Manoj, window has always been, I mean, diminishing in the percentage terms only as -- on total industry only. And same was with Amber also. And we also feel that on a percentage basis window would not be increasing anymore. It would be staying there only. In the terms of the value, if you look into it, the number, value terms, it will be pretty much the same as we have today. So it is not in the growth mode over there. However, the -- obviously the growth comes from the split air conditioners and inverter air conditioners. As we move forward, more and more [ inverterization ] is happening, so definitely there would be increasing over there. So -- and obviously, on window AC, we don't envisage a lot of growth over there since it is -- it has always been there. And the value term, it is constant only.

So you don't expect any sharp down slide into window market share in the overall AC side for the industry.

They could be a little bit...

It should be a gradual one that we have seen.

They could be a little different [ per customers ], obviously, if there is a downturn in the window side. However, we are confident that, if window is going away, then split will be added, obviously. There will be a replacement from window to split. So that is where we can definitely make up for those gone volumes also.

Thank you. Ladies and gentlemen, that was the last question. I now hand the conference over to Mr. Daljit Singh for his closing comments.

So with the growth opportunities we foresee on the domestic and export front, along with the government support, we believe we are well positioned to capitalize on this opportunity. Thank you, everyone, for joining us. I hope we have been able to answer all the queries. In case you require any further details, you may please contact us; or our investor relation advisers, Strategic Growth Advisors. Thank you very much for joining in.

Thank you. Ladies and gentlemen, on behalf of Amber Enterprises India Limited, we conclude this conference call. We thank you for joining us, and you may now disconnect your lines. Thank you.