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

Ladies and gentlemen, good day, and welcome to Amber Enterprises India Limited Q3 and 9M FY '25 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Jasbir Singh, Executive Chairman and CEO and Whole-Time Director of Amber Enterprises India Limited. Thank you, and over to you, Mr. Singh.

Hello, good morning. Greetings for 2025, and thank you for joining from different time zones. On the call today, I'm joined by Mr. Daljit Singh, Managing Director; Mr. Sudhir Goyal, Group CFO, Sanjay Arora, CEO of Electronics Division and Whole-Time Director of ILJIN Electronics. We have uploaded our results presentation on the exchanges, and I hope everybody had an opportunity to go through the same. I'm pleased to report robust quarterly performance in quarter 3 FY '25 with revenue of INR 2,133 crores, registering growth of 65%. Operating EBITDA almost doubled to INR 162 crores, recording 97% growth; and PAT grew to INR 37 crores from a loss of minus INR 1 crore over corresponding period in the previous year. As you are aware, we have 3 business divisions, namely Consumer Durable division, Electronics division and Railway Subsystem and Defense division. Let me take you through the divisional performance. The Consumer Durable division, which consists of room AC and its components, plus non-room AC components and washing machine. The RAC industry continued the growth momentum with channel inventory filing during quarter 3 in anticipation of the positive summer season. We recorded the blended division growth of 67%, led by both RAC and non-RAC vertical. RAC grew by 71%, and non-RAC vertical grew by 43%.

Management, please go ahead.

Yes. And the resulting EBITDA of this is INR 116 crores, reflecting growth of 115% over last year. The strong performance is driven by the underlying growth in RAC industry, coupled with conversion of new customers from gas charging [ cooling ] and deepening of customer relationships. Beyond the RAC, the commercial AC is picking up trust. I'm pleased to report addition of 1 new customer and strengthening of commercial AC order book. The washing machine JV with Resojet is progressing well, and trials are in process with new customers -- progressing with new customers. And we expect to commence the mass production from the new plant by H1 of the next financial year. Switching to Electronics division. The division continued the remarkable growth momentum, clocking revenue of INR 472 crores, reflecting growth of 96%, and resulting EBITDA of INR 34 crores, reflecting 193% growth. Looking into current order book. We are pleased to revise our revenue growth guidance for Electronics division from 45% earlier to 55% for FY '25, propelled by both PCBA and bare board verticals. The journey, which began to capture the technological shift from fixed speed inverter -- fixed speed AC to inverter AC in 2018 has now evolved into a comprehensive full stack EMS company. In the PCBA vertical, we continue to expand our customers with addition of renewable energy customers. On the strategic expansion front, the construction is progressing well for the new facility at Hosur, and we expect to start commercial production by Q4 of FY '26. Additionally, we earlier announced the JV for HDI, Flex and Semiconductor Substrates, PCB with Korea Circuit company, a pioneer for Korean PCB industry with more than 4 decades of experience. To reiterate, the JV will bring the world-class technology into India. We'll leverage and connect with marquee global customers along with an interim buyback arrangement for initially 2 years. On way forward, we are waiting for the finalization of the electronic component scheme by Ministry of Electronics and IT which, as per the recent media articles, has got the nod from the Finance Ministry, while, in parallel, we are scouting for the land and have started engaging with the customers. To summarize, the Electronic division is on transformative growth path with the addition of customer applications on PCBA front and on the bare board front, the Ascent facility expansion, coupled with Korea Circuit JV will unlock the new scales for the company. Now coming to our third division, Railway Subsystem and Defense. The division reported a muted quarter with a decline of 13% in quarter 3 on expected lines, owing to delay in offtake of products. The division profitability also got impacted due to delays and product expansion expenses. We expect to get back to normalized range of 18% to 22% by H2 of FY '26. To emphasize, delays in offtake are momentary with no cancellations of orders. During the quarter, we further strengthened the order book with an additional air conditioner order for a metro project. And on the defense front, the vertical is gathering a robust traction with visibility on sizable export opportunities over midterm. On the expansion front, the construction is progressing well for Sidwal greenfield facility for HVAC pantry doors and gangways and is expected to commence operations by quarter 2 of FY '26. Similarly, the JV with Yujin Machinery of South Korea is progressing well. We expect the facility to be ready by quarter 1 of FY '26, product trials to begin from quarter 2 -- or quarter 3 FY '26, onwards from -- for the Driving Gears, Coupler and Pantograph. We continue to remain confident on the long-term pension of division and maintain our guidance of doubling the revenue in next 3 years, backed by strong order book visibility of INR 2,000 crores plus and increasing wallet share. To sum up, we witnessed a robust quarter, and we look forward. The roadmap is in place for multifold scale-up for each division as expansion strategy unwinds. Now let me hand over to Sudhir Goyal, our CFO, for the financial highlights.

Hello, everyone. Good morning. I'm pleased to report a strong performance for quarter 3 and 9 months for financial year '25. Let me first take you through the quarterly consolidated financial highlights. The consolidated revenue for quarter 3 financial year '25 grew by 65% year-on-year to INR 2,133 crores compared to INR 1,295 crores in previous year. And operating EBITDA increased to INR 162 crores during the quarter compared to INR 82 crores last year, reflecting a strong growth of 97% year-on-year. Please note, operating EBITDA is before impact of ESOP expenses and other nonoperating income and expenses. We record PAT of INR 37 crores against a loss of INR 1 crore in previous year, same quarter. Let me take you through the 9-month financials. Revenue for 9 months in financial year '25 increased to INR 6,219 crores compared to INR 3,924 crores in previous year, recording a growth of 59%. Operating EBITDA increased to INR 482 crores against INR 285 crores in 9 months financial year '24, with a growth of 69% year-on-year. PAT increased to INR 133 crores compared to INR 40 crores in previous year, reflecting a growth of 228%. Now let me take you through the divisional performance. Firstly, revenue and operating EBITDA details are not comparable with the public segmental results. To start with Consumer Durable division, the division reported revenue of INR 1,555 crores in quarter 3 financial year '25 compared to INR 932 crores, reflecting a growth of 67% year-on-year on the back of strong RAC business growth, driven by positive season. Operating EBITDA for the quarter increased by 150% year-on-year and stood at INR 116 crores compared to INR 46 crores in quarter 3 financial year '24. Coming to Electronic Division performance. Revenue and operating EBITDA are not comparable with published segmental results. The revenue for the quarter increased to INR 472 crores, compared to INR 241 crores in previous year, reflecting a growth of 96% year-on-year. Operating EBITDA for the quarter increased to 193% year-on-year and stood at INR 34 crores compared to INR 12 crores in quarter 3 financial year '24. I will reiterate, we are progressing well and expect to close the year with revenue growth in excess of 55% for financial year '25. There's a revision in guidance. Earlier it was 45%. Now we are growing by more than 55% during the year. Moving to Railway Subdivision and Defense division performance. Again, to emphasize, the revenue and operating EBITDA, these are not comparable with the published segmental results. The division reported a muted quarter owing to slower uptick as mentioned earlier. Revenue for the quarter stood at INR 106 crores, reflecting a decline of 13% year-on-year and resulting operating EBITDA of INR 12 crores, impacted due to slower uptake and product expansion expenses. On the return on capital employed, with a strong underlying business performance, we expect improvement in ROCE and expect to cross 15% mark by the year-end. Just to summarize: The key initiatives taken earlier during the year of Ascent facility expansion, JV with Korea Circuit and expanding product portfolio of Railway division bodes well for the growth of the company. Now I hand it over to the operator, and happy to answer all the queries.

[Operator Instructions] The first comes from the line of Natasha Jain with PhillipCapital.

Congratulations, team, for a great set of numbers. My first -- I have 2 questions. My first question is on the RAC side. So now in the past few quarters, we did more of assembly, because of which, our margins were flattish. Now when I see your consolidated gross margin, you further declined by 106 basis points. So I just want to know if you could throw some light as to how RAC components did versus RAC SM and some growth in between those 2 segments?

So the gross margin impact is largely due to the product mix. Like, we need to give you the very detailed estimation for that because margin varies from product to product. Like we explained earlier, there are different margins for different targeting different energies plus component -- which component revenue share is how much. So it's very difficult to give you the complete data and at how to measure it. But it's a normalized thing, and there is no big impact in the margins -- gross margins during the financial year.

Sir, so can we expect that the components business is picking up, specifically the RAC components?

Yes. The Components business is picking up. On the back, other side, RAC Heat & Cool is also picking up. If you see the growth in both these products, there's a good growth we have done in the current quarter and the full 9 months as well.

Understood, sir. Sir, and my second question is on the electronics side, and you've revised your guidance upward from 45% to 55%. Now given, in the short term, we have capacity constraints for Ascent, also there has been ASP decline in hearables and wearables, so what is going to move the needle so much that we are revising our guidance so much?

Natasha, first of all, congrats on your new role.

Thank you so much, sir.

We are actually -- if you see the traction and the journey of Electronics division, we keep on -- we've added a lot of applications. So we started our journey with the Consumer Durable, specifically by supplying PCB applications and assembly boards to consumer wearables, especially air conditioners and then we graduated into the refrigerator and washing machine. But now we are giving solutions in the space of telecom, in smart meter space. We are giving solutions in the auto space, both four-wheeler and two-wheeler. And in fact, recently, we have just started commercial vehicles business also and we want more than defense. So looking into that, plus the Ascent Circuit growth potential, we have revised the guidance. And we are very strongly hopeful that we shall be able to maintain more than 55% of the growth of this vertical.

[Operator Instructions] Next question comes from the line of Bhoomika Nair with DAM Capital.

Congratulations on a great set of numbers. Sir, just wanted to understand the RAC segment a little better. Now if I look at it for the 9 months period, we've grown steadily well. Even this quarter, we've grown about 71%. Now if you understand, a lot of the brands booking up a lot of capacities and even in a lean season, too, they've continued to outsource. If you can just explain what's driving this growth, what's the end market growth. And coming into the next season, given the overall slowdown in consumption and the base of last year being very high, how are you looking at the upcoming season, really?

Bhoomika, we feel that, first of all, I'll give you the reason for 71% growth of this vertical. You would be aware that we were doing gas charging for large multinational companies. And we have been telling that we have converting those, [ including ] players, and that has already happened. And that's the reason of the growth. And also, the factories which brands we are putting, it has already done. So there is no more new factory which is getting announced as of now. All the 6 brands who were putting up, their factories are up and running. There is no brand which is left out now. And from our perspective, as a solution provider, we have tagged along with them while supplying our components as well as finished goods. So this year, we have also seen some spillover because of a large demand which came to us, and that's the reason why we have outnumbered the industry growth. For the coming year, I personally feel the industry should be growing. This year, industry ends up at about 25% growth. Next year, industry is expecting good summers. And in that anticipation they are ramping up the inventory right now. But you are right that there is some demand slow down. We yet need to see that slowdown because right now, inventory is getting filled at the primary level, at the dealers' level, and that's how the ramp-up is happening. But as far as number is concerned, I think we will grow in tandem with the industry. And because of our addition of some new customers onboarded, we may outnumber the industry growth next year.

Sure, sir. This is helpful. Sir, on Sidwal, you spoke about the deferment by Indian Navy, which has resulted in a bit of a sluggish 9-month period. Now going ahead, how are you looking at the ramp-up coming back? Because this year, we will probably see some decline in revenues and drop in margins. But as we move ahead into '26, where do you see the acceleration coming through? What kind of execution can be there? And do margins then revert back to 20% if revenue growth comes back? Or should we structurally look at a lower margin profile out there?

Bhoomika, we intimated everybody in last quarter also when the railway announced focus on non-AC production because of the accidents which happened And there was a lot of, even, cry in the market that the government needs to plan on the BPL families and so for the -- it seems that the government is only thinking about air-conditioned trains. So the focus entirely changed and that's why we revised our guidance that this will be a muted year. And right now, if I see, there were 2 main issues. One is the 200 Vande Bharat Express order that got delayed in execution because of the structural shift in the number of coaches. Earlier, 1 train was having 16 coaches. Now government has revised it to 24 coaches. So the whole construct of designing of the train systems got changed, and that's delayed. But now what I've heard, just 10 days back, is that they have been cleared. So most probably, it is moving by a year delay. So next year, this whole will come back from H2 onwards. And as far as another project which was delayed was the Mumbai Metro project. Again, we are hearing now since the elections are over and everything is done in Maharashtra, so that is also coming up again on track. Apart from that, there is nothing -- no change in Sidwal. Yes, we did get hit in the margins because of -- in anticipation of the growth, the expenses also were increased. There were teams which were built. And on the other side, there was -- the slowdown happened. These delays happened, which was totally not foreseen. But what we feel right now is all these 2 projects are coming again on board. We feel that the margins will come back again. We will continue to get hit for next quarter and next to next quarter. After that, we will see these margins coming up because the vendors have already given us indication of resuming the supplies from H2 onwards. We expect this division to grow next year. And apart from that, there are some defense projects which are getting added, and the order book on the defense side is also getting added. I believe next year, we should be able to come back to the normal 18% to 22% range by H2 -- post H2 range.

[Operator Instructions] Next question comes from the line of Aditya Bhartia with Investec.

Just wanted to understand these new customers that have been moved from gas charging to ODM solutions. How large could those customers be? And how much they may have contributed in third quarter and 9 months of this fiscal?

These are large multinational companies, which were earlier importing their products and then the gas ban was announced by government of India. So we started helping them by gas charging products. But ultimately, the roadmap was very clear that you cannot continue like this. You have to either put up your own facility or you convert it into manufacturing in India. And their volumes are growing. I think they are gaining traction. They are -- so far our expectations, we thought that they will grow in the range of 25%, 30%. But 2 of our customers, they have grown by more than 45%. So we got benefited because of that. And the whole shift of that [indiscernible] started giving us the -- more traction on the finished goods side. But one of the customers, the gas charging machine product category, they have put up their own factory, and they've already allowed us to -- for the supply of components. So we will be supplying components to one, and we have started supplying some of those goods to the other 2.

Understood, sir. So the reason why I was asking is that, like you mentioned, room AC category grew by 31%. Just wanted to kind of get some sense how much would have existing customers grown by. And how much these new customers could have contributed? How relevant are these customers in the overall scheme of things?

These are long-term contracts, Aditya, because once you shift to ODM, when you design products and invest in approvals, so these are all long-term projects, which we are onboarded right now. As on the percentage side, I think very difficult to say because largely, customers have got added on the CAC front, also, the commercial air conditioners front also. These 2, 3 customers which have come on board, you can say that they have been instrumental in giving us the growth over and above the industry growth.

Sure, sir. That's helpful to understand. And is it fair to kind of think about outsourcing industry growing at a pace much, much faster than the overall industry in a good summer season, and therefore, the benefit being disproportionate this year?

Well, see, outsourcing industry, it's very difficult to predict at our level because we are a B2B solution provider. What we focus on is how deep we can deliver comprehensive solutions to the industry. I particularly feel that last year, India was at $10 million mark. And this year, with the 25%, 30%, we should end up at INR 1,30,00,000 lakhs market. By FY '30, it is expected to be close to about 3 crore or 3.5 crore air conditioners. And if you see, last 5 years, 4 years trend also, from 7.2 million in COVID time, it has come to 1.3 million. So looking to this, there's a 3x growth kind of a thing possible for this if these numbers stack up rightly. Enough growth for everybody in the whole air conditioning industry. I personally feel we are tagging along with the industry growth. The strategical shifts of customers will continue. They may outsource, they may buy components. So from our side, it is very important. The relevant thing from our side is that how much business we are doing with the customer on the absolute basis irrespective of the structure and form of the solution which we are providing.

[Operator Instructions] Next question comes from the line of Aniruddha Joshi with ICICI Securities.

Yes. Sir, congrats for excellent set of numbers.

Thank you.

So currently, the industry capacity [ movements ], how do you see the current industry capacity of the brands as well as the EMS players both put together? And how do you see the capacity changing by FY '26 end and by FY '27 end? I guess most of the projects are already in place now, so what should be the capacity change maximum?

See, everybody has put up different capacities, all the brands and all the 6 new units which had come are at very different capacities. Some have put up 0.5 million capacity. Some have started at 2 million. Whenever a brand puts up a facility or a -- they will think long term. So they have thought about next 4, 5 years at least to put up these facilities. And to add on the capacities on assembly lines is not a very big challenge because it's just a 6-month job. So you can add the assembly businesses anytime while going -- while moving in the season also. I believe that, overall, we should look at it how the seasonal capacities are panning out. So on the seasonal capacity side, I would say industry should be at around 65% of capacity utilization, something like that. That's a very ballpark number which comes to the mind. But every brand has a different capacity utilization. We cannot comment on behalf of our customers. But as Amber is concerned, we are at a capacity utilization of 65% at the moment in our room air condition facilities.

Okay. Sure. Sir, that's helpful. Then on the second question, in a way, probably we would have gained market share. So is there any loss of market share? Or is it pure industry growth that we would have grown, which, in a way. right now, the kind of growth that we are building is much higher than what the market growth also seems to be. So is there a -- is there a likely market share gain or -- anyway, market would have also growth at similar rate in Q3?

We don't calculate it on a quarterly basis. I think by year-end, we'll calculate where are we. Last year, we were at 26% of the manufacturing footprint of air conditioner. And if industry grows by 30% and numbers end up growing by 50%, 60%, then definitely, we would have grown in our market share.

[Operator Instructions] Next question comes from the line of Ankur Sharma with HDFC Life.

Just 1 question, on this proposed JV with Korea Circuit on the manufacturing of PCBs, if you could just help us, what is the overall CapEx that you're looking at here? What could be the asset turns? And I understand you are expecting quite a bit of subsidy as well. So you have some [ Broadcom ] tools, right, when do you commission this plant? Yes.

So on the Korea Circuit, we are waiting for government to finalize the incentive scheme. You would have all heard through the media reports that it has already got known from the financial industry. So earlier, we were talking about INR 40,000 crore incentive, but the node, which has come from the financial industry is going to be INR 25,000 crores. And we are waiting for the structure. We are not ready to restructure, final restructure, which is going to come out for the -- especially for the PCB parts. And once that is there -- earlier, we were hearing it is INR 1,000 crores minimum investment, but now we don't know because of this exchange. Maybe they have reduced or they have increased, we are not knowing about that. I personally feel that we expect that it should get announced by -- at a better time. And in case it does so, there will be a notification after that. And then at least 2 to 3 months will be given for the applicants, and then another 2 to 3 months for the approval system. So by next year half, maybe by September, the approvals will be in place. And then that is when the process will start. But what we have done parallel is we have started scouting for land. And the incentives, which is talked about, is quite a good number. It is more than 40% for HBIs and semiconductor substrates from the [ sentry ] industry. And over and above to that, the state governments are also giving incentives. Like, the Hosur expansion, we have been able to negotiate 35% of incentives from the state government. So we feel that it's a time to put a bold foot forward for creating this whole ecosystem in India. And if I'm just to give you just the numbers on the electronics getting consumed and the reason why we are planning this large CapEx, whenever the incentive schemes were announced, largely, if we see India as a country, consumes $32 billion of electronics 8 years back. Last year, we consumed $115 billion. Business-as-usual is expected to be in the range of $300 billion, $285 billion to $300 billion, whereas our Honorable Prime Minister has taken a mission mode for getting the number to $500 billion because this is 1 sector which is labor-intensive and it creates a lot of jobs also. If we see what it calculates into the total addressable market for the bare board, you see the last year, this is a MeitY number, which I'm talking to you right now. It is, I think, available on the MeitY's website -- is -- India consumed about INR 30,000 crores plus PCBs and only 10% of that got manufactured in India. So with the incentive schemes coming in right now, I think there's a huge potential for this going up. And if we talk about 5 to 10 years from now, it is -- there's a large potential and TAM available for this. And we will be a single stack company offering a complete solution from single-site multiple -- multilayer RF category, flex category, HDI, semiconductor substrates, all categories in 1 place. So that is what we are aiming to deliver, too, in the markets.

That's very helpful, sir. Also, have you [ chosen ] on how much are you looking to invest in this JV in terms of overall CapEx number? I understand that the subsidies that you get thereafter, but is there a number you can share?

There will be a threshold investment criteria by government. So as I explained earlier, it was INR 1,000 crores when we were talking of INR 40,000 crores of incentive scheme. Now it would have been shifted. I -- we don't know whether it has shifted. That will be the number which we will have to put up for getting approved by the ministry. So if it is INR 800 crores, we'll have to do minimum INR 800 crores. If it is more than that, we will have to do that. So I think it should be in the range of INR 1,000 crores plus.

[Operator Instructions] Next question comes from the line of Dhruv Jain with AMBIT Capital.

Sir, the first question that I've had was on the Consumer Durable side. So if you could just tell us what's the peak capacity of the peak revenue that you can use with the current capacity. The reason why I'm asking this question is that government recently announced the third round of appliances P&L and we did not participate in that, so just your thoughts there. That's my first question.

Well, we've already got approval of INR 400 crores PLI. And that's the reason why we did not apply for any further PLIs. And the earlier PLIs are moving very fine. We are getting reimbursement from government in time, and we are very thankful to Indian government for all those reimbursements, which are happening on time. On the capacity utilization, to answer your question, I've already addressed this question earlier, but I'll reiterate. We are currently at 65% level. And we can calculate where we can go, would be complete 95% or 98% of new capacity utilization if that goes fine.

Sure. And then the second question was on the JV losses, right? So we've seen that Q-o-Q losses of JV have kind of reached up. So I wanted to understand what's the pathway on the broader -- how should we look at this number going forward in terms of how it breaks even and how those -- how that number calculated to profits going forward?

Well, as far as the Railway JV is concerned, that's a new facility and a new product lineup. We believe that it should break even in next financial year. We should see losses coming down from quarter 2 of next financial year. And as far as the other business is concerned, that is a turnaround story. And we are expecting next financial year, it'll continue to lead. But after that, there is a complete turnaround story, which is happening. They have received new orders and a new CEO also has joined from -- ex Coda CEO has joined the company. And there's a lot of positive things which are happening.

[Operator Instructions] Next question comes from the line of Teena Virmani with Motilal Oswal Financial Services Limited.

Sir, my question is related to this JV that Ankur also asked you on the expected turnover or the asset turnover that you can expect from this particular facility. So basically, if you take this assumption that the incentives are provided and Amber invests into this particular facility, over a longer term, 3- to 4-year, sort of 5-year term period, where do we see the scale up which can happen in this particular subsidy of Yujin and Korea Circuit? And my second question is on the margins of Railway segment. Like you mentioned, that margins will come back to the normal 19%, 20%, which it was earlier. But what kind of margin profile is there for the newer areas like those in gangways? Do you think that similar margins will be there for those portion also? Sir, these are my 2 questions.

So on the first question, the asset turns normally in the PCBs are similar to OSAT businesses. It is in the range of 1 to 1.25. However, what -- how we should look at it is since government is giving incentives, almost 70% to 75% will be given back collectively by MeitY as well as these trade governments. So the asset turns from that perspective is much better. It goes to about 2.5x to 2x. And also on -- to answer your second question on the Railway front, yes, we expect the margins to come back from H2 onwards of next financial year. So first, next quarter and next to next quarter will be impacted because of the slowdown, but then we are coming back again. On the margins of the new product categories. So first 2 trains will be coming from the principals in Korea as well as from Austria. But after that, it is shipped to India. So since the first 2 trains will come, that is just a trading. There will be hardly any margins in that. But once the manufacturing starts from H2 onwards, from Q3 of the next financial year onward, the margin profile of these product categories are in a similar range of 15% to 18% range.

[Operator Instructions] Next question comes from the line of Achal Lohade with Nuvama Institutional Equities.

Congratulations for great earnings. Sir, if you could give us -- I know it's kind of a repeated question, but for 9 months, what would have been the industry growth in your estimate? I mean you have said about 20% growth for the full year. Does that mean that fourth quarter, the underlying assumption is actually a lower number?

Well, I think what we hear from the brands, everybody has grown differently, most of them are reporting 30%, 35% growth, and some have reported 20% also. But on the industry side, I think the first 9 months should be somewhere about 50% growth kind of thing, what we hear from everybody. Quarter 4, of course, is because it was -- it's already a large quarter last year. So percentage-wise, there could -- I don't think that we should look at 30% or 35%. And that's the reason why I said that industry should be in the range of 25% by year-end.

Understood. And the second question, sir, with respect to the electronics guidance, when you mentioned 45%, it implies actually a very small number for fourth quarter for the electronics revenue. So just wanted to understand what number could it be. I mean is it a very, very conservative number? Or is this a realistic number we should work with?

No, we have given a conservative number. We have already revised the guidance. We have said that now it is not growing at 45%. It is growing at 55% plus in that -- for the complete year. So we are very hopeful, strongly hopeful to deliver that 55% growth in the Electronics division.

[Operator Instructions] Next question comes from the line of Nirransh Jain with BNP Paribas.

Congratulations on a great set of results. Sir, my first question is on Ascent Circuits. I just wanted to check, like, what is the revenue breakup for this quarter? And the profitability as well? And 1 question from accounting perspective. Are you seeing any flow-through in minority interest from the Ascent Circuits? I mean, the minority interest has almost been flat in the last 3, 4 quarters, while the Ascent Circuits revenue should start flowing in through, right? Or am I missing anything here?

Well, Ascent Circuit has done INR 82 crores in quarter 3. And we expect Ascent Circuits to grow in the range of 30% -- sorry, 20% to 25% range. And we have onboarded 5 new customers recently. So whenever the new customers gets added, the share of business is very skewed initially for the first year and then its ramping, ramps up. We are already getting very good traction in Ascent Circuits on the single multilayer PCB business, primarily because of the anti-continuity imposed. And we expect that in next 2 years, Ascent Circuits will be doubling mix revenue from where it is today. There's a lot of potential in that, and that's the reason why we are putting up CapEx also. And you asked for -- a second question, can you please repeat it?

Sir, we are not seeing any change in the minority interest in the last 4 quarters, while we expected that the Ascent Circuits' profitability will also impact the minority interest. So I just want to understand, am I missing anything here? I mean why the minority interests are not going up as per the -- like, as the Ascent Circuits revenue consolidates?

We own 60% of that, and it is a path to control transaction, which we have done with them.

[Operator Instructions] Next question comes from the line of Deepak Krishnan with Kotak Institutional Equities.

I just wanted to check, you've seen a lot of interest with other peer as well as companies potentially putting up compressor plants due to the restrictions of imports coming through. Our thought as to why we are not considering that given the sort of strong growth. So just your views on that, sir.

We are already in touch with our suppliers for the capacity ramp up, and most of the suppliers are indicating a lot of capacity being ramped up at the level. But however, in case we see that there is a shortage coming in, we [ suddenly planned ].

Sure, sir. And maybe I just wanted to understand what is the inventory level currently and channel given your -- the summer assets. The previous summer was very strong. Virtually, stock-ups have ramped up now to what are we seeing volumes coming in. So in terms of overall inventory level, is it at normalized levels? Do you see this growth momentum continuing to Q4? And after that, does it depend upon the season? Just maybe a check on the inventory level at an aggregate industry level.

So how you see that brands buy from us only when there is a normalized inventory level or less inventory level. So our uptake is reflective that the inventory levels are at a very normalized level at this moment of time. However, we still need to see how the summer season spans out to be. Because generally, the trend is that from December onwards, brands start pushing up, filling the inventory at the dealers level, and that's how the primary sales happen. I think we all should look at the secondary sales number from February onwards. That will actually define how the season is going on.

[Operator Instructions] Next question comes from the line of Amit Mahawar with UBS.

Congratulations on great scale up across business. Sir, I just have 1 question. On a 3- to 4-year basis, very clearly, the electronic division will lead the growth, even in profitability. And consumer is any way is going to be a steady state. But in the Electronics division, sir, across the 2, 3 divisions, can you help us understand how will we strategize the exports opportunity? And once the new facility by Q4 '26 starts and stabilizes in '27, '28, should we expect a significant export scale up or that's going to cater to maybe 80%, 90% India only?

Well, right now, Amit, it is 90% India and very small exports which are happening. But yes, as the ramp-up is happening, things are already in touch with -- for a lot of exports, not only for PCBs, but the PCBAs also. I believe, for tracking customers outside India, it takes a little time and gradually share of business grows. So it's -- to answer your question on the 3 to 4 years trajectory, yes, we see a significant scaling up of exports happening from both Ascent Circuits as well as Railway.

Sure. And a quick one on CapEx and the cash flows. How should we think about maybe around next year, what kind of operating cash flow and investment should we understand? That's it.

On the electronic side? Or you're asking for the whole group?

Overall, overall, overall.

Overall, I can tell, Amit, division wise, so we are planning for about INR 250-odd crores CapEx in our Consumer Durable division, where we are bringing up some new model lineups and also ramping up on the component side in solutions, plus we are also investing for our exports readiness. And then we are also investing in our washing machine business category. On the electronics side, we think that we have already announced INR 650 crore CapEx in Hosur. Out of which, land partial has come this year. The major portion will come next year, close to about INR 400 crores to INR 450 crores will be next year for the Ascent Circuits and PCBs. And then our Railway division has already been announced. We are -- last year, we announced INR 350 crores CapEx for the 3 facilities, which are coming up in Faridabad. Out of which, INR 100 crores has already been spent -- is being spent this year. And about INR 150 crores will come next year. So that is going to be the overall CapEx at the group level.

And congratulations.

Thank you.

Next question comes from the line of Manoj Gori with Equirus Capital.

I have just one question. If you look at, there are some uncertainties around the supply chain. Earlier it was on the group copper. Now currently, there are some ones on the compressor side as well for the upcoming, sir, how do you see industry and reversal place in terms of inventories and productivty? Can we expect some disruption if industry grows at around 15% or more than that?

So the compressor supply chain issue, so copper supply chain issue has been resolved by government. They've already moved out the inner group from the category. And the [ BISA ] is also been revised for another year. And plus, we are very thankful to all the copper manufacturing companies who have put up their facilities for building up, plain competitive facilities. I think copper, more or less is resolved. As far as the compressor is concerned, I think February and March is good to go for everybody. But yes, April sounds a little tricky, because the shipments, there is a delay in shipments. And the companies who -- with large order book was given to them, but they are supplying in a limited, [ measured ] way, I would say. So April may get impacted in case compressor doesn't get resolved. But we are talking -- I think we are getting assurances. But from China, we have now also shifted to other geographies. So I don't think should that -- a very large issue should come up from that perspective on the compressor side also, because you see, worldwide, there's a lot of capacities available.

Right, sir. Sir, secondly, on the Electronics announcement of the team that the government is likely to announce. Any time lines do you expect, like, by when you should be coming out with any scheme announcements or any indication or any judgment from your end? That's all.

I believe you're talking of the electronic component scheme. Hello?

Yes, sir.

Yes. Okay. So basically, since it has been noted by the finance ministry, it's a matter of time it has gone to the Cabinet. It can -- we are expecting that it should get announced in the budget. But in case it doesn't get announced, whether most likely it should come in the month of March. And after that, government will give some time for applicants to apply. And then, of course, there is a filtration process and approval process. So most likely, by end of August, September, all the approvals should be in [ their ] place.

[Operator Instructions] Next question comes from the line of Shrinidhi Karlekar.

Sir, would it be possible to comment broadly how much price increases are required in your AC, it's a really good business, to compensate for the recent commodity increases and currency depreciations?

There's a little uptick on the gas refrigerant prices, which has impacted in the range of INR 100 to INR 120 per air conditioner. Other than that, it's a pass-on strategy from our side. So whenever any kind of currency or commodity is hit, we've demonstrated, in the past, that we pass on to our customers at a quarterly lag basis. Ours is a B2B business. We operate on price variation clauses with our customers.

So not much of inflation on the other company because of copper apart from gas?

Not, really. Copper is in the same range currently operating.

Next question comes from the line of Vipraw Srivastava with PhillipCapital.

I'm audible, right?

Yes. Very audible.

Right. Yes, sure. Sir, on the Korea Circuit JV, so I mean if you look at Korea Circuit, they are also into manufacturing of semiconductor substrates. You are starting with barebone manufacturing. You -- what's the time line you're looking at when you transition from bare board manufacturing to a semiconductor specific manufacturing?

So JV basically for HBI flex and semiconductor substrates, we will be beginning with HBI as a first phase and then move to semiconductor substrates because we think that FY '27, '28 will be the year when India's semiconductor ecosystem will get built up. Before that, we are planning for HBI.

Fair enough. Fair enough. And sir, secondly, I mean, obviously, this whole CapEx which you're going to do with Korea Circuit, it's going to be heavily financed by the government of India. So I mean do you see the significant effect of this on the EMS assembly business, also can go I feel is the -- you might actually price out the competitors if you are backward integrated into barebones.

Well, of course, I mean, Ascent Circuits acquisition has really helped us for ramping our PCB business also because Ascent Circuits is largely into telecom and auto and defense, aerospace businesses. So we are now gaining traction because of the PCB. So there is a cross deployment of customers in both PCBA and PCB. And I believe we will be able to do that. And that's the reason why we have commented that this journey started from INR 300 crore in 2018 when we acquired, even, Electronics. At that time, EBITDA used to be 2.8%. And this year, you have seen the results and we've guided the market that we'll be growing 55% plus. And we expect our margins to be in the range of 8% EBITDA. And I think there's a possibility of increasing it to double-digit number in next financial year itself.

You have the buying agreement with Korea Circuit, right? So, I mean, is the notion correct that it can help you on having a quick ramp up of PCB facility?

Yes. So it was nice of them to accept this arrangement of uptake of 2 years because in India, it takes a little time for customers to approve and get the regulatory approvals and on. So from our side, they have agreed to uptake the capacities for the first 2 years.

[Operator Instructions] Next question comes from the line of Naushad Chaudhary with Aditya Birla Mutual Funds.

Apologies, I'm in a bad network, so if my call gets stopped. Two, 3 very quick clarification. Sir, first, in our electrical -- electronics business, typically, what is the length of contract we do in this business and sales for our Railway business?

Well, it's -- depending on which applications we are serving. Normally takes close to about 2.5 to 3 years to onboard our customers. In Railway division, it's a process of 4 years minimum, if everything goes fine at all the steps. And then you become part 2. And then finally, after supplying 300 quarters -- or 3 years, then you become part 1 supplier in the Railway. In electronics, generally, the contracts are long-ish time to come -- ranging from 3 to 5 years contracts.

Okay. Secondly, on the Ascent Circuits, sir, this is slightly a dated question in terms of -- I was just trying to understand what was the incentive for the Ascent Circuits promoter to sell a majority stake to us at such an attractive valuation? Can you elaborate on that?

It's -- there was the issue of succession and promoter is aging, and he thought because he has 2 daughters, so he was trying to sell it from last 1.5 years, and we were meeting many bankers as well as many potential buyers. And finally, when we met him, the deal clicked.

Okay. And last, in the RAC components, ex of compressor, what other major components we don't have in our portfolio? And any plan to add if we have any?

We're currently doing about 70% of what goes into air conditioner. We don't have refrigerant. We don't have compressors. We don't have copper tube. We don't have aluminum wiring. There are many other components we don't have.

Any plan to add those as well? Or is there a technical barrier?

No, there's -- of course, as a team, we keep on evaluating which component to buy and which to get into. Of course, as a growth strategy, teams are already evaluating various options.

Thank you. Ladies and gentlemen, due to time constraints, we have reached the end of question-and-answer session. I would now like to hand the conference over to the management for closing comments.

Thank you, everyone, for joining on the call. I hope we have been able to address all your queries. For any further information, kindly get in touch with our Head of IR, Ravi Kharbanda or Arvind Singh from IR team, or Strategic Growth Advisors team. And we wish you all a very happy 76th Republic Day in advance. Thank you. Have a great day ahead.

Thank you. On behalf of Amber Enterprises India Limited, that concludes this conference. Thank you for joining us. You may now disconnect your lines.