Carysil Limited (524091) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Acrysil Limited Q2 and H1 FY '21 Earnings Conference Call. This conference call may contain forward-looking statements about the company, which are based on the beliefs, opinions and expectations of the company as on 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. Chirag Parekh, Chairman and Managing Director of Acrysil Limited. Thank you, and over to you, Mr. Parekh.

Good evening, everyone. A very warm welcome to the H1 FY '22 earnings call of Acrysil Limited. Along with me on this call are Anand Sharma, CFO and SGA, our Investor Relations Advisor. I hope everyone got an opportunity to go through our financial results and investor presentation, which has been uploaded on the stock exchange as well as on our company's website. I hope that all of you and your loved ones are safe. Post the second wave of COVID-19, we have witnessed pickup economic activities and business across industries are coming back to normalcy. The large-scale vaccination across the country and also in other countries abroad and significant drop in COVID cases. We see increasing confidence of masses and this allow a most [indiscernible] and conducive operational environment for businesses. We are witnessing a strong demand traction for our products in domestic as well as in international markets. International demand is driven by changes in the preferences of the people and fully greater important of -- as especially the quartz kitchen sinks. Demand in domestic market is driven by lower interest rates on home loan, government incentives, consumer preferences, larger spaces, preference towards home renovation as worked from home are still in the mindset of people. Home improvement sector has been considerably growth as people are working from home and it brought approach and lifestyle as well. There has been behavior shift in consumer preferences for both home improvement products and focus on health and housing. Disruption of spending on loan improvement and home solutions has changed the pandemic. With the pandemic as homes have become a hub of people's lives and one find a new need to improvise and upgrade. Coming to the company's performance. Company reported a stellar performance with total income growth of 79% Y-o-Y and PAT growth of 123% Y-o-Y for the first half of FY '22. Company has achieved EBITDA margin of 23.3% despite our high freight rates, cost situation creating across best case. Our raw material prices continue to remain stable, company has been viewing -- reviewing cost regularly and take measures to control costs. Export revenues grew by 79% to INR 272 crores in H1 FY '22. This was on the back of robust demand for international market and shift of consumer preference from stainless steel to quartz sinks in the major global markets. In domestic market, also the quartz sinks are witnessing sharp uptick post the reopening of economic. Domestic revenues grew by 77% to INR 45 crores in H1 FY '22. With the pickup in real estate segment in India along consumer preference of both aesthetic kitchen product, we expect the sink movement to sustain moving forward. The capacity utilization in our manufacturing plants is impacted during Q1 FY '22 due to the second wave of COVID-19 pandemic. Cyclone Tauktae and subsequent restrictions imposed by the government, however, the plant’s capacity utilization has increased optimally during Quarter 2 FY '22. Coming to our capacity expansion. We have been consistently expanding our production capacities in response to spot and demand. I'm delighted to inform the company has successfully completed the expansion of 140,000 units of quartz sinks announced in June 2021 with a short span of time. The manufacturing capacity of quartz kitchen sinks now increased from 700,000 units, 840,000 units per annum. The commercial production for this capacity has started on 21st October 2021 onwards. Our company is currently undertaking 2 CapEx plans of 160,000 units and 200,000 units of quartz kitchen sinks which we expected to complete it by Quarter 1 FY '23 and Quarter 2 FY 2023, respectively. The proposed capacity expansion will increase manufacturing capacity from 840,000 units to 1.2 million sinks per annum. The company will be approximately spending INR 58 crores for the proposed expansion. Expansion will be funded through mix of debt and internal accruals. And the stainless steel segment side, our company is undertaking capacity expansion of stainless steel sink by doubling the production capacity from 90,000 to 180,000 per annum. With a small capital outlook to this INR 10 crores. The new capacity is expected to come on the stream by Quarter 4 FY '22. Our strategic partnership with IKEA is progressing well. And our company is supplying quartz kitchen sink for their global requirements. The partnership is perfect testament of our commitment to offer global standard products. We expect this to further standard going forward. Our associated grow as further said then last year, we entered a supply stainless steel kitchen sink also. International ties will help us to reach deeper into the core markets like our U.K., U.S. and Europe. Our company has been continuously focused on branding activities. Our innovative and marketing initiatives significantly drive our brand recall. We continue to timely refresh our initiatives keeping them in line with evolving market trends. In view with the belief our company recently signed the Bollywood celebrity Miss Vaani Kapoor for the new marketing campaign for our Carysil brand, which will start by 15th of this month. The association with Vaani Kapoor, we hope to come to sign brand edition create a brand we call for lifestyle products among the youth. Our company strives to offer exceptional service in our brands. Carysil is strong, having a strong brands. Recall tin-roof to be unparalleled trust and confidence we have gained for IN users over the years. For Carysil, we have received great response from omnichannel sales, for Sternhagen brand. We have partnered with Sussanne Khan to launch the line of products. At Acrysil, we are now driven by a passion for constantly innovative and consistently expanding. Our drive for innovative perfectly reflects the commitment to excel with time for offering the best-in-class product. We are focused on scaling operation increase in-house power develop and increased consumer awareness. Just one last point, which is not there I want to add that the company is planning to focus on the online e-commerce platform, which is a smaller part of the company field at this point. And the last call meeting we've taken resolution to form a separate subsidiary, and we would like to boost this segment of online sales for the Kitchen and bathroom products. Now I would like to hand over the line to Anand Sharma, our CFO, to update you on the financial performance of the company. Mr. Anand Sharma.

Thank you, sir. Good evening, everyone. Let me take you through the financial performance of the company. Quarter 2 FY '20 performance, the consolidated total income, including foreign exchange gain stood at INR 121.9 crores for Quarter 2 FY '22 as compared to INR 77.1 crore in Q2 FY '21, Y-o-Y growth of 58%. This was on the back of growing demand from both domestic and international markets. EBITDA of the company stood at INR 28.5 crores for Quarter 2 FY '22 as compared to INR 17.1 crores at Q2 FY '21, recording a growth of 67%. EBITDA margins for Quarter 2 FY '22 stood at 23.4% as compared to 22.1% in Q2 FY '21. Recording an improvement of 130 basis points. Profit after tax and monetary interest stood at INR 17.7 crores in Q2 FY '22 as compared to INR 9.4 crores in Q2 FY '21, recording a growth of 88%. Coming to H1 FY '22 performance. The consolidated total income, including foreign exchange gain stood at INR 221.2 crores for our H1 FY '22 as compared to INR 123.7 crores in H1 FY '21, recording a growth of 79% year-on-year. EBITDA for H1 FY '22 stood at INR 51.4 crore as against INR 27.4 crores for H1 FY '21. On year-on-year growth of 88%. EBITDA margin for H1 FY '22 improved by 120 basis points to 23.3% from 22.1% on H1 FY '21. Profit after tax and minority interest for H1 FY '22 stood at INR 31.1 crores as compared to INR 14 crores for H1 FY '21, recording a growth of 123%. Our net debt to equity stood at 0.4x as on 30th September 2021. On an annualized basis, our return on capital employed stood at 27.8% whereas return on equity stands at 28.1%. Now we will open the call for questions. Over to you, operator.

[Operator Instructions] The first question is from the line of Pritesh Chheda from Lucky Investment Managers.

Yes, sir, congratulations on good set of numbers and season greetings. Sir, first question on the quartz sink side. The pace at which we are adding capacity is really phenomenal, and we continue to surprise on the capacity expansion. So one, if you could touch a bit on what -- is there any back-to-back arrangement that you think is there for sales possibility for these type of capacity expansion? A little bit on the market if you could tell us and now on board, we're talking about 1.2 million sink. Do you think that by Quarter 4 of next year, you should actually be fully utilizing that capacity of 1.2 million sinks? So moving on to quartz sink side. My second question is on the domestic market where we have more stainless steel and appliances. There is a big tailwind in the market. We are seeing it across building products. How are you looking at this market? And what kind of growth rates do you foresee on the domestic side of the business and your preparedness for it as well?

So these are 2 questions, right?

Yes, sir.

Okay. So I think the first question on the quartz for sink, see there is definitely -- preference shift from a consumer point of view. And we have been seeing quarter-on-quarter, the demand of the quartz sink is growing higher. This preference shift which I've been always talking since last, I think, many years that if this preference shift from quartz from steel sinks to quartz sink, this comes up, there is a massive opportunity for our company. And this is what exactly is happening now. While the company is doing everything to get new customers like IKEA, GROHE, et cetera, some large customers in the U.S. like Menards. Domestic market is opening. So yes, as we are penetrating across the world. But along with this combination of new customers and this -- and this growing demand for the quartz sink, that is, I think, mainly because of the consumer preferences. And we have to understand that the quartz sink market share still is only 10% of the total -- of the total kitchen sinks in the world. So I believe that this is -- we see as we assume, it's a fashionable growth. The demand of the quartz sink has been increasing year-on-year, and the company will, I think, we'll have to increase the capacity base on the market demand. Number two, on the capacity utilization -- so this 1.2 million is what is the current order booking position and plus the forecast we see, we feel that this 1.2 million should -- minimum be the capacity expansion the company should do. We should not be in a situation that we start having the bad delivery track record. So looking at the demand, and looking at the current order book position and the new customer tie-ups, I believe that the company needs to at least do 1.2 million sinks. We should be finishing the 1 million sinks by April -- by April, May 2022, and we should finish the another 200,000 sinks, we think the 1.2 million sinks should be done by end of Quarter 2 2020. Domestic front, we're very surprised with what's happening...

So just one clarification here. So from a utilization perspective, as soon as a capacity comes on board, even from a utilization perspective, you will hit full utilization on whatever capacity comes on more than any quick way considering the order book visibility that you are at?

Yes. Yes, that's what we should. Yes. Domestic front, I think we have -- we've been pretty much surprised with how did the government efforts and how this 1 crore vaccination a day are the facts that completely change the life -- I'm right now in United States and people appreciating what we -- what India is doing right now. And I think we should be very, very stable in terms of economy, and we could see the big demand coming up. I guess we had our Diwali season and all, but we see a sudden spot in the demand of the sinks and appliances. We had some probably a record sales in domestic, what we are experiencing in terms of quartz sinks, steel sinks and the built-in appliances. And we expect that this is going to be -- we expect that 2022 is to even be a more robust growth for domestic market for sinks and appliances.

We should not limit our vision to 1.2 million, right, in the quarter, considering that just 10% of the sink market, which is like a 5 million or 50 million for a company of our size, you think that you can actually reach a couple of million also over the next 3, 4 years?

So a good question. I just go back, turn back the clock. And about just 10 years back, we were not even making 100,000 sinks. So from 100,000, we're looking at a million sinks now trying to be the world's maybe third, fourth largest manufacturer. And this growth has been consistently coming in. So even if we go back this growth of CAGR 20% to 30%, what we've been doing, and this is the demand what quartz sinks is going to be there. And I think then, which we are 100% not limiting ourselves to 1.2 million, and we will be able to see probably a large increase in the demand of the quartz sink.

[Operator Instructions] The next question is from the line of Manish Ostwal from Nirmal Bang.

In your initial remarks, you pointed out that despite of the loans to cost, we were able to manage the margins. So whether we took the price hike to manage the margin. Can you explain this statement, sir?

So 90% of our sales approximately are FOB based. And the -- say, this is borne by the customer. But whatever the 10%, 12%, what do we have or the safe prices that we have taken a price increase from our customer.

Okay. And sir, one data point, what is the total 1H volume of costs -- 1H FY '22 volume, sir?

The...

So first half, quartz sink is 3 lakhs, 1273 units.

The next question is from the line of Prateek Agrawal from ASK Investment Managers.

Good set of numbers. One maintenance question, which one is cheaper? Stainless steel or quartz? I went to your showroom and the quartz was like INR 8,000 to INR 12,000. Stainless steel was much, much more expensive. And I went with the opposite view actually.

Yes. So I think you should understand that we have a full set of range of stainless steel sinks. So we have press sinks and we have the hand fabricated sinks. So the press sinks are more conventional sinks, which are costing about INR 4,000 to INR 5,000. And then we have this Quadro sink, which has it's more squarish and modern in shape, it is about INR 10,000 to INR 12,000. So that's the price difference because it's a different technology and different manufacturing method and from the consumer perception it's been viewed this -- the more modern series as a more premium product. Yes, and we have sinks that are comparatively -- the quartz sinks are cheaper than some of our high-end stainless steel sink.

Yes, exactly. So if they are better as they claim and if they are cheaper or similar, and obviously, demand should be strong as people discover the product. I think people are simply not aware of the product.

And we also have the -- that lies in a stainless steel sink prices. So that is also now making the gap between the quartz and stainless steel narrow.

Sure. The other question was on the other businesses. While quartz sink is the major component of total? What is really happening to the other businesses? stainless steel plus the other appliances that you sell and the QIP plans and the use of QIP money, if you could elaborate a bit.

See, if you are seeing my statement in the announcement, we are already expanding the stainless steel to doubling the capacity from 90,000 to 180,000 sinks, all right? So that's what's -- also, there is a big surge in demand on the stainless steel kitchen sink cycle and then they too is expand more and if demand continues to increase. And India starts with robust growth and plus if there is a shortage of products coming from China, there is a big supply chain disruption from China because of factories are not working at full capacity there. There are lots of issues. So people are looking towards better factories in India. And if we're able to deliver better quality sinks. And I think that there'll be a big surge in stainless steel demand too. But for the appliances of concerned, I said that we have been recording some great sales, record high sales in built-in appliances, and we expect this category to continuously grow quarter-on-quarter. As far as the QIP is concerned, our progress is on. We've been -- we will let you know at the right time when it's done.

Okay. But the amount was large in the context of the CapEx, it could actually increase capacity by 60-odd percent if you raise INR 150 crores. Could you give us some insights into plan or that's for later time?

You see, we have many projects under our belt. So at the right time, we will announce that, maybe CapEx plan, and why was the reason we are doing this QIP. So apart from what the current products where we manufacture, some very interesting opportunities, which may become adjacent to our business, we can substantially add value to our business in terms of growth.

[Operator Instructions] The next question is from the line of Varun Arora from GE Shipping Family Office.

Congrats on very good numbers. Sir my question is related to the capacity expansion, the rate at which you are expanding, it's quite phenomenal. So I wanted to understand. Previously, you've mentioned that we were kind of constrained for capacity for domestic market. Now with this capacity expansion, do you think that you can meet both the exports as well as domestic market demand? If you can give some color as to how the domestic market is shaping up. This capacity expansion that we are doing. Is it based on the order book that you're purely getting from the new customers and existing customers on the export side? Or is it also like you're building in some increase on the demand side for the domestic market?

So yes, so I think the capacity expansion the last 400,000 is definitely keeping in mind the Indian market. There is a definitely surge in demand in India. And again, from the preference point of view, and I said that the stainless steel prices are increasing. So people are preferring more quartz sink. That's what it seems like. And I think this demand is expected to rise quite high. And that's why is the main reason where we had to additional expand another 200,000 sinks. So the main increase of this expansion is looking at the current order booking position and the forecast we've been receiving and the expected surge in demand we expect in the domestic market based on what the current order booking is.

All right. Sir, my second question is related to income. You mentioned that you reckon that growth appears sustainable. So here, the question is basically for -- at the industry level, previously, historically, you have been seen some sort of cyclicality as far as the demand for quartz sink is concerned. The reason I ask this, I believe the demand is also a function of new construction, new home construction. So clearly, right now, where the global interest rates are -- I mean, it's on an upswing. But previously, like have you seen that the demand for quartz sink, is it linked to new home construction? And hence, any sort of cyclicality in the demand that we've seen historically?

No. So I mean, historically, the export partner is mainly the demand and the growth is driven by the renovation because every 5-year a kitchen is changed, 4 or 5 years. And India largely demand is by the new construction level. What I said, the pandemic has changed this. Now what has happened is people are moving out from their -- they're having card of second homes and -- I mean, U.S. right now for business shape and I've been speaking to my clients here and think the surge is still -- the surge is quite huge here. If you go to Home Depot store and Lowes and all these large retail stores, there's still queues and queues people are -- and now that's having mainly a renovation of the homes. And like I said in my last week in India also, the renovation trend was never there in India, but now because the pandemic situation people have, instead of buying new homes -- the real estate sector is not best right now. So people are starting renovating and I would say, upgrading their homes. And the kitchen sink is probably one of the more integrate thing -- integral part of the kitchen, which needs to be changed. So I believe largely this demand has been driven now by -- largely by renovation market.

The next question is from the line of Udit from Yes Securities.

Congratulations for a great set of numbers. Sir, one thing that when you plan for any capacity addition, is it based on the preorders that you have in hand? Or -- and if so, then what are the profit of geographies that you are seeing in this kind of robust demand that you have? So backed via these capacity addition?

Yes. So like I said earlier, the capacity increase is taking out of the current order booking position and then what we expect sticking to our custom of the likely increase going to happen. And also to taking into consider the surge which we have been saying in the domestic market and the preference shift to quartz sink, higher price of stainless steel sinks. I think all these factors put together the -- I would say that it is at least, I think we should start meeting now in roads to build up capacity in order not to lose customers because the demand can also even further surge. The geographies, I think, is across the world. I would not say -- but our main markets are India, America, U.K., Europe. So mostly, it's been driven by that. And you have large customers like GROHE and IKEA and all which are apparently value our products across the world.

Sir. And on the last clients that you mentioned. So are you in the process of getting newer clients or we are deepening a profit with the existing one, like what kind of demand is that?

No, we didn't -- our efforts are continuing. Our efforts will continue to tap more and more customers. Our efforts will be like we export to more than 50 countries around the world. We have a plan to -- the next 5 years to do at least 75 or 80 countries. And in the next 8 to 10 years, we need to cross 100 countries. So we have our export development sales, and I think that continues to be able to tap the export market to grow. In the domestic side, we are now focusing more on uplifting the current dealers to large showrooms in order to increase the revenue and to make the -- and to enhance our brand equity in the domestic part.

Got it. And sir, just last...

[Operator Instructions] The next question is from the line of Suraj Deora from Paladin Capital.

I just wanted to point out that you've done a phenomenal job with the expansion and it's really commendable the pace at which you guys are expanding so consistently and so quickly. I think it's a great job, and I really would like to congratulate the team for that. I have just one question on, one sort of clarification. My presumption earlier was that the QIP money was being used for the greenfield side because the existing site could only support 1 million sinks. But it seems like we're not able to expand the internal accrual beyond 1 million. So I just kind of understand is the 200,000 expansion that you've announced. Is it in the same location? Or is it already at a new location? And therefore, the QIP money is for something completely different, which you've just alluded to earlier in this call?

As all these things, standard are largely expenses are more on the greenfield on the info product, right? Fortunately, the company able to sustain the EBITDA margins, and we have good internal approvals. So I think, to a large extent, this has helped us for the company to grow it with internal cash accruals and the debt levels, like my CFO said, the issue is quite -- the banks are quite eager to fund us. So I mean, sometimes the margins could have gone the other way, but we're happy that we're able to sustain the margins. We are able to get good internal cash accruals and with the help of debt we should -- we are able to fund these new products by ourselves. As far the QIP is concerned, we -- as we are saying we are continuously growing in all the various categories to quartz, steel sinks, built-in appliances, I think our endeavor is to start manufacturing as much as we can to put up new manufacturing facilities across our categories. And we also see some very interesting opportunities adjacent to our business, our current businesses, and it could be very exciting for our company in terms of growth revenues for future. So we should be using whenever the QIP is done, I think we have -- we've got a lot of opportunities, and we should be able to use this money for this growth. For the quartz sink and the other interesting opportunity there.

I think to this -- the question is -- this 200,000 coming -- this is coming at the industry and the new facility. So it is a combination of both. So we are optimally utilizing [indiscernible].

Location is adjacent to the current [indiscernible] facility.

[Operator Instructions] Next question is from the line of Nikhil Gada from Abakkus Asset Manager.

Congrats on a great set of numbers. Sir, my first question is regarding our German partner shop is planning to set up capacity in the U.S., that's through some media article says. I come to know about that. So can you help us understand how this would shape up the U.S. market for us, whether it will increase the competitive intensity? Or do you think it will overall expand by -- for the quartz sink?

Yes. So we also came across this article and this is over the period of 4 to 5 years, we plan to invest this money. See, honestly, I think from the price competitiveness, I don't know what are the -- I think, but honestly, that's their problem. I don't think as far as -- we have seen the other competitors manufacturing units, which they approved in Europe and North America. I just honestly don't know how the [ CBA ] for them is going to work. So that's in terms of -- so we are not quite worried as far as the cost competitiveness are concerned. I think our volumes are growing in this part of South India, and we should be more and more price competent. So I think that's one. As far as the overall, I don't think so that the competitiveness is going to increase. But I think the overall demand of the quartz sink itself, this is one of the important signs that what the companies are looking in future as far as the demand of the quartz sinks are concerned now the shop is probably put the unit just for the U.S. market and selling to the U.S. market. So what we see is that -- I mean only we can see that the demand of the quartz sink in the market share, the quartz sink being very exciting over years to come.

I understand, sir. And sir, just the second question, for this 2 lakhs expansion at adjacent to our plant in Bhavnagar. Do we still have further room to add more capacity over here or we will have to just completely look at freight location to add further capacity?

Well, we have to -- even that is the last thing. Advances have been done by adding [indiscernible]. So we have to -- we -- our company is now planning to acquire some large piece of land around the [indiscernible] . So we are company trying to get the land bank so that we see a further capacity expansion.

Understood, sir. Sir, I just had one bookkeeping question, if I can ask it right now. Or I'll come back to the queue. Sir, so just on the [ A&T ] side, now that we're expanding in the domestic market. How do we see our [ A&T ] trend shaping up over the next couple of years? Are we going to go full blown into the advertising part of it or we will still try to do more detail activities?

No. I think you will see a lot of activation as far as the [ A&T ] concerned. Vaani is one of the single what the company -- that the company is now looking to focus on the Indian market. And we would be -- year-on-year, we'll be increasing our budgets on the [ A&T ] side as far as India is concerned. So you will see a lot of activation from our side, the brand -- from the perspective of the brand building. We recently hand our brand manager also to handles all the branding activities in India. So yes, we would be looking more and more activities around [ A&T ] to build Carysil brand in India.

[Operator Instructions] Next question is from the line of Dhavan Shah from ICICI Securities.

Congratulations on the superb result. So I have a question regarding the industry growth. So I think whatsoever, our numbers are growing. So is it in line with the industry growth? Or are we capturing market share from the other players also?

Whatever the news we have all the cords are attached across the world are quite busy because there has been a slow in growth and demand on quartz sink across the world. And all the factories are full right now manufacturing quartz sinks. And there is still ample growth what we see. So by law , yes, I mean, there could be a little build of cannibalization of we taking over some market share also. But largely, I think it's driven by -- driven by new demand for quartz sinks.

Okay. Okay. And secondly, I just wanted to understand what the input -- inflation. So based on the gross margin, I think it seems that we have taken price growth also against the input for pricing. So I wanted to understand because I think our contracts are mainly revised on the calendar year basis. So how much price revision are we going to take from the next year? Because based on the answer, the volume numbers for the quartz sink for first half, our net realization for quartz comes to around INR 5,600 a sink, as compared to around INR 5,800 a sink last year. So maybe there should be some the size-based differentiation maybe there, that's why I think realization might come down. But I think if you can share, I mean, what price inflation have we taken for this year? And maybe what can be there in the next year, if you can share?

So technically, our export price has gone higher. So maybe there were more shift prices sales and less exactly. We moved to taxi because of this large variation of the freight. So per sink price value direction has increased and not gone down. That's point number one. The point number 2 is we have increased the price with our customers 3 times during the calendar year. We do not have annual pricing. Maybe with 1 or 2 customers. But even that, we've been able to manage to break through it and we have got a price increase for it. Largely, you see the improvement in the margins, EBITDA numbers is because the company -- even with this volatile situation as far as the input costs are concerned, freight charges are concerned, the company is able to sustain the margins. And so we have gone for a 3 price increase during the calendar year. We are -- so I think we should be fine, honestly, but if we'll see anything, will comes over the next calendar year. But right now, I think we have secured the margins of the company by passing on the price impact to our customers.

Just to add here, whenever there is an increase in domestic sales on the quartz sink, the overall price realization will be lower. And since our in the second quarter the domestic sales have increased. So it has some impact. And number two, we are focusing more on the FOB price. So overall, if CIF component is lower and FOB is higher than the surge in realization will also be lower. But if there has no impact on our margin, we have protected our margin and whatever increase required to pass on the costs we have already done -- already explained by sir.

[Operator Instructions] The next question is from the line of Ajay Vora from Edelweiss.

Congratulations on good set of numbers. Just wanted to take -- when we are talking about this existing product range, and the interesting opportunities which you are looking at, broadly, what do you think is really missing within the product basket which we are offering right now? What are we looking at in terms of growth opportunity?

Good question. So first of all, we are trying to convert as much as the traded activities, traded products are going into manufacturing. So we have already -- I think last time I said that we are planning to start to manufacture kitchen quartz for made in India because we are looking at a big demand coming from export and for India. When you are aligned with large customers like IKEA, GROHE, Menards and many large customer base across the world. So you have a huge basket of kitchen and bathroom product, which you can put in the channels. And like I said that China, there's a lot of issues with the supply chain and we have a large opportunity. So I think, first of all, we're trying to convert into manufacturing, and we want to gain our competitive edge on that in terms of technology also. Second being, the ceramic products, we've been receiving a lot of inquiries for ceramic products, but high technology ceramic products, which I believe that kind of technology in India is not available. So these are all -- could be interesting projects, which we can manufacture sink and the bathroom product which we were boosted with strong Sternhagen category, if at all we come. It would be a big move to the Sternhagen category. We would do compete with the local manufacturers in India and we're able to gain a large market share. Very other interesting bits of opportunities like which we are -- we have been seeing a huge surge in, for example, faucets right now, the taps, the kitchen tap, because kitchen taps are going along with the kitchen sink. It is kind of -- it is part of sink. And if we -- the company can I'm saying look at opportunities to make kitchen faucets, so you can pack it with the sinks and grow the -- as many sinks you sell, you can sell faucets. So there are opportunities around, the company is constantly trying to see -- we do not want to move our focus right now because the demand of the kitchen sink is so high. But as and when the time permits and we see an opportunity we will complete -- we will be jumping on to it.

Very interesting perspective. So this ceramic thing, I'm assuming that if that happens, it will be through inorganic group?

So we have not still -- there are different possibilities. But all I can see if we go into ceramic, it will be a very different kind of high technology ceramic product. We'll get a potential to sell in the large -- to the large players across the world.

[Operator Instructions] The next question is from the line of Akshay Chheda from Canara Robeco.

Sir, on the domestic side, just I wanted your sense like now you'll be focusing strong on the domestic side. So how do you see the competitive intensity in the domestic market, like I assume that it would be largely dominated by the steel sinks and it would be more of the unorganized players. So how do you see that competitive intensity? And secondly, also, how would you be increasing the -- I mean, how would we tap in the domestic market, like will we continue with our dealer distributor network or then we will be also looking to tie up with some large developers we -- say, Godrej Properties or something? Because then, yes, I mean, more on the B2B side. So how do you see the domestic markets? Yes, these are the 2 questions.

Largely on the -- since you wanted the last sentence of own approach Godrej, we obviously target a huge tie of business, Godrej Properties for stainless steel sink. So largely, our low-priced sinks, we're trying to sell to the large builders and property developers. Yes, we have some tie-ups to large corporate developers, but that is in lower cheaper range of stainless steel sinks. But our company has been always very margin focused. So we do not go below level. So we've been always -- Carysil is a brand, we've been looking at a premium product, and we are not a mass wholesaler like other brands. So I think that's one. And number 2 is the quartz, there is always a clear strategy between the quartz and the stainless steel sinks. So for quartz sinks more of the quartz sinks, the preference based on the market geographies, we've been selling across the dealers and also into the builder segment. There is a geography -- many geographies in India, they only like the industrial sinks. So we try to offer them the new stainless steel Quadro sinks, which are one of general ones I was talking that is higher price than quartz sink. So I think there's a market differentiation strategy for us with which material we want to penetrate the market. I don't know if I answered your question, but.

Yes, yes. Got it. Basically, I wanted to understand like if there is a possibility of a margin hit going on. But yes, that's fine.

The next question is from the line of Yash Kothari from Citrus Advisors.

Yes. So firstly, amazing results, congratulation on that. I just wanted to know, in your last con call, you had said that every additional 1 lakh units that the company brings in as capacity it adds to around INR 45 crores to INR 50 crores of revenue. So does that still hold true?

So our current price realization is about INR 5,500 crore, I think, the current 5,000 maybe. So I think every 100,000 would add probably about INR 50 crores to INR 55 crores.

So in that way, I would assume that the 200 -- that the 2 lakh units that are coming that would obviously add to INR 100 crore of top line?

Yes. Yes.

Okay. So following up on that, you have given a target of INR 500 crores revenue to be achieved in, I think, 5 years in your last con call on the one that you -- another one before that. And looking at the figures already, I think you've already reached a INR 400 crore top line, if I look at the trailing 12 months. So do you think you can probably make an adjustment to this target and give a higher target to us probably since you're almost 90% there now and in less than obviously [indiscernible] ?

Good question. So I honestly feel that the long term has become short term for us. I think this is a very good sign, honestly, from the company's perspective. And yes, we are already -- if you look at the last quarter, INR 122 crores quarter sales. So we already had a INR 500 crore annual rate, we had a lot of expansion and things in place. So I think, yes, I think the times are quite interesting. I think we need to -- we are already -- I would not need to but you will probably see some statements coming from my new -- statements coming in soon, that how we're going to now realign our growth strategies and what are the new targets you want to set for the company.

The next question is from the line of Aman Vij from Astute Investment Management.

One question from my side. So if you can talk about currently, how has that IKEA, Menards and GROHE sourced in terms of sinks globally? And what kind of market share are we targeting in the next 2, 3 years? And do you think we can cross INR 800 crores per customer -- big, big customer in the next 1, 2, 3 years.

So unfortunately, we don't have data, but all we know that in their presentation that they are -- what they lift the granite sinks is at a phenomenal level. The buying power, what these guys have and the reach they have across the world, I mean it's very, very huge. As far as we're concerned, all we can say is that unfortunate because of the contracts, we cannot unveil what we're doing with them. While the numbers are confirmed, all I can say, they are substantial. They will be substantial, I would say, year-on-year, we have just -- last month got an e-mail from IKEA saying that you have complied 100% with the deliveries, and we have gotten about a 5 star on them. And the more and more this kind of accolades, we have -- the -- all I can say is that the business with them is -- it can only further increase. And yes, I think there's INR 800 crore or more. But a company would obviously -- would like to maximize the share of business with these companies. Company is doing every bit. We are continuously expanding our sales with them by adding new models and by increasing the production capacity.

In terms of quartz sink, our factory be number 1, number 2, number 3 supplier to these companies as of now?

So we have just a bigger relationship, if I grow is concerned, we are a single source for grower. As far as IKEA is concerned, we are one of the sources, what -- like I said, that they are very happy with our -- with our commitment. And all we can see is in future, just our business share increasing year-on-year with that.

And sir, on Menards also if you can talk about?

Menards is growing very strong. And right now, as we're talking, I mean, U.S. and I have con calls with my customer here. So I think they're very strong, they're surge, they're big demand. It's been going quite well. And we are adding more and more models in the United States. For example, the Kitchen and Bath International Show is the largest American show, just taking place in February 2022 in Orlando, Florida, we decide with our strategic partners with the largest display of quartz sinks in that show. So that would be probably the largest range of quartz sinks in North America, we will be able to exhibit there. So there's a lot of commitment from our side for the U.S. market. and with many partners like [ Karan ], Menards, KRAUS. And all we can see is, we just basically want to support this demand what's coming up in the U.S. market.

Thank you very much. Ladies and gentlemen, due to time constraint, that will be the last question for today. I will now hand the conference over to Mr. Parekh for closing comments.

Yes, thank you. I would take this opportunity to thank everyone for joining on this call. I hope we have been able to address all your queries. For any further information, please get in touch with our strategic growth advisers, and investor relations advisers. Thank you once again, and stay safe. God bless.

Thank you very much. On behalf of Acrysil Limited, that concludes this conference. Thank you for joining us. You may now disconnect your lines. Thank you.