Carysil Limited (524091) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Acrysil Limited Q4 and FY '22 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 guarantees of future performance and involve risk 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. Thank you. And over to you, sir.

A very good afternoon, everyone. A very warm welcome to the Q4 and FY '22 Earnings Call of Acrysil Limited. Along with me on this call, I have Mr. Anand Sharma, our CFO and SGA, our Investor Relation Advisor. I hope you 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. FY '22. The year was marked by second and third wave of COVID-19 and Cyclone Tauktae, which affected our domestic operation in account of state-wide restrictions. However, with large-scale vaccinations opening up, market revival and economic activities have led to normalization in businesses. The last quarter of FY '22 has been impacted by increased raw material prices, elevated freight costs and other geopolitical issues. Despite of these issues, we have strong momentum in demand for home improvement product, especially the quartz kitchen sinks. Home improvement sector has witnessed traction over last 2 years post pandemic and changed the perception of consumers spending on home improvement products. Homes have become the half of people's lives, and they're willing to spend more time on home improvement products and solutions. Demand for new housing construction renovation is on increasing trend. Consumer preferences for superior innovative products matching their kitchen aesthetic share drive demand for diversified basket of products globally. I'm delighted to share the Board of Directors has recommended a final dividend of INR 1.2 per equity share in addition to dividend of INR 1.2 per equity share declared in February 2022. The total dividend of FY '21 - '22 amounts to INR 2.4 per equity share, which is 120%. Coming to our recent acquisition. I'm pleased to inform that Acrysil U.K. Limited, our wholly owned subsidiary of Acrysil Limited has acquired 100% shares of Tickford Orange Limited, U.K. holding company of its operating subsidiary Sylmar Technology Limited on 1st April 2022. Sylmar is a manufacturer, distributor and customizer of high-quality solid surface products for kitchen and bathroom. Being a leading player in the U.K. solid surface market, we shall argue well for Acrysil to strengthen its balance and market share in U.K. and opening up new sales channels and cross-selling opportunities for the company. Acrysil U.K. acquired 100% equity shares of a total consideration of GBP 11 million. The acquisition is funded through mix of debt and internal accruals. Coming to the company's performance. Our company has recorded strong performance in FY '22, which is marked by total income growth of 56% Y-o-Y. Our company has maintained EBITDA margins of 22.7% for FY '22 despite of high shipping costs and increased raw material prices. Our company has been consistently putting efforts on controlling costs. Our company profitability has improved by 66% in FY '22. With shifting preference for quartz sink from traditional sinks, the share of business from quartz kitchen sinks has remained at 77% of our total consolidated revenues. With sharp increase in steel prices, the price differential has narrowed between quartz and steel globally and have seen significant shift towards quartz sinks. Export revenue for FY '22 stood at INR 381.8 crores, growth of 61% over FY '21. This was an account of robust demand from international markets and tie ups with large retail houses over the year. Domestic revenue stood at INR 97.5 crores, a growth of 53% over FY '21. Demand from domestic market improved on account of increased consumer spend towards home renovation improvement. We expect this momentum to continue moving forward. Coming to our capacity expansion. Our expansion plan of 160,000 quartz sink is progressing as per schedule and expect it to be completed in the current quarter. This will take the quartz manufacturing capacity from 840,000 sinks to 1 million sinks per annum. The further expansion of 200,000 units of quartz kitchen sink is expected to complete by Q3 FY '23. Coming to our stainless steel sink expansion. Our company is doubling capacity of stainless steel, which is expected to finish by the quarter 1 from 90,000 units to 118,000 units per annum. Let me update you on our incorporation of wholly owned subsidiary of Acrysil Ceramics Tech Limited. The wholly owned subsidiary of incorporate on 12th April '22 with the objective of manufacturing selling of high-tech ceramic kitchen sinks and bath products. Globally, it has a market share about 10%. Very few players are manufacturing it. Being a specialized category like the quartz kitchen sink, we will use our expertise to manufacture this product and leverage our sales channel for ceramic kitchen sinks and bath products. Coming to our contracts with IKEA. We are supplying kitchen sinks for them for the global requirement. The supply with IKEA in the FY '23 expected to double twice of FY '22. This partnership is a testament of our commitment and global standards of our products. We already got the award for the same. We expect our partnership with IKEA to further strengthen as we expect to supply them for kitchen and bath products moving forward. We also got a strong commitment from the leading bath manufacturers, GROHE AG, Germany, their strong commitment for purchase of quartz and stainless steel kitchen sinks. Our company has been focused on increasing penetration in domestic market by increasing marketing and promotion activities. Our recent collaboration with Vaani Kapoor for our new Carysil marketing campaign that is the heart of my own, #HeartOfMyHome has been carried out successful during the year, and it showcases a new range of built-in appliances, including built-in coffee makers, which signifies the cutting-edge innovation, technology and design pioneered by Carysil. Carysil has also launched the new carysilshop.com as part of our e-commerce initiative, and we have received a very strong response. Acrysil is in partnership with large companies, home retailers like Lowe's, Home Depot in the U.S. for supply of the big brands like [indiscernible] [ care ] and B&Q for online supplies. Our strategic tie-ups shall lead to more sustainable and repeat business for the company. Such tie-ups shall drive the future growth of the company. Acrysil is well poised to capitalize on the rising consumer demand of lifestyle kitchen and bathroom products. With our increasing product profile, upcoming capacity and recent acquisitions, we are confident of increasing the footprint geographies and provide value-added and innovative products with the end consumers. Now I would like to hand over the line to Mr. Anand Sharma, our CFO, to update you on the financial performance of the company. Over to you.

Thank you, sir. Good afternoon, everyone. Let me take you through the consolidated performance of the company for the financial year 2022 and fourth quarter. Quarter 4 FY '22 performance. The total income, including foreign exchange gain stood at INR 141 crores for quarter 4 FY '22 as compared to INR 104.3 crore in quarter 4 FY '21, recording a growth of 45%. This growth was on account of a strong demand from both domestic and international markets. EBITDA of the company stood at INR 31.3 crores, excluding [indiscernible] expenses as compared to INR 24 crores of quarter 4 FY '21, recording growth of 30%. EBITDA margin for quarter 4 FY '22 stood at 22.2%, excluding [indiscernible] expenses as compared to 23% in quarter 4 FY '21. The margins have been impacted due to high freight cost and increased raw material prices. Profit after tax and minority interest stood at INR 16.4 crores in quarter 4 FY '22 as compared to INR 13 crore of quarter 4 FY '21, recording a growth of 25%. FY '22 performance. The total income stood at INR 492.4 crores for FY '22 as compared to INR 355 crores FY '21, recording a strong growth up 56% year-on-year. We have reported EBITDA of INR 115.5 crores, excluding import expenses for FY '22 as against INR 71.6 crores for FY '21, a growth up 61% year-on-year. EBITDA margin for FY '22 stood at 23.5%. Profit after tax and minority interest for FY '22 stood at INR 64.8 crores as compared to INR 39.1 crores of FY '21, recording a growth of 66% year-on-year. Our debt to equity ratio stood at 0.54x as of 31st March 2022. Our return on capital employed stood at 24% as of 31st March '22 as compared to 22% of 31st March '21. Our return on equity stood at 28.9% as of 31st March 2022 as compared to 22% of 31st March 2021. Now we will open the call for questions. Over to operator.

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

Wanted to know what is the quartz sink volume that you would have done for the full year. And when this 1.2 million capacity comes up by, let's say, quarter 3 of this year, when do you think that you'll be able to fully utilize that capacity?

Yes. So coming back to your first question, last year, we did total 650,000 quartz sinks. And for the current quarter, which we have been in the last quarter, I think we are going almost at the rate of about 800,000 annual capacity. Quarter 3, we've expected to touch 1. to the expected capacity expansion of 1.2 million sink. See, right now coming back to what is the quartz trend is concerned, Pritesh bhai, that we -- I had just gone on a global tour and I'm back. So something is very interesting and exciting that the quartz, the quartz sinks volume continue to grow. That's number one. Number two is that because of the supply chain disruption, there has been a little bit of stocking by the distributors, which is now -- they will be kind of liquidating in the quarter 1 for the year. Number three, that whatever the rate cost impact and what we have witnessed, we have been able to at least about 40% to 50% pass on to the distributors. Now coming that and coming off a little bit, we don't know on the supply chain disruption cycle. We are as of now not changing any of our plans. As far as the capacity expansion is concerned, I think we are quite confident based on the current order booking that we should be -- that could a little bit high because of the little bit of inventory buildup by the distributors. So let us see. I think we will have a clear picture after quarter 1, what's happening to the quarter 2 and 3.

Because I was asking this 1.2 million volume. Do you think that you'll be able to fully utilize the capacity in FY '24?

No. So that's what I'm saying that as of now, we are going on track. If anything, I'm saying there's a little bit inventory plus/minus, which is happening because of the supply chain disruption. So we will -- we'll have a more clearer picture after quarter 1. As of now, things are as per plan.

Mr. Chirag, may I request that you return to the question queue for follow-up questions. [Operator Instructions] The next question is from the line of Vinayak Mohta from Stallion Asset.

Congrats on a good set of numbers. I broadly had 2 questions. So the first question was just trying to understand what is our right to win here in the quartz sink market. Are we the lowest quartz producer? Or because there are 4 more competitors, as you have mentioned. So how do we -- how are we able to differentiate ourselves among them? And if you could just broadly give us the market share of the larger players as well? And the second question would be, with all the capacities coming on stream, we are broadly looking at a double -- like given -- although capacities are doubling, so we are broadly looking at a INR 1,000 crores of revenue from the current business and broadly a INR 100 crores revenue run rate that the acquired business is on. So broadly by -- so just totaling on 2 and 20% growth that we expect. So by when do you think this INR 1,100 crores to INR 1,300 crores run rate of the revenue can be reached? So these are broadly the 2 questions I have.

See, the quartz -- as far as the quartz kitchen sink is concerned, I think we are definitely the lowest player in the world. We approximately about 15% to 20% cheaper. And while I say that, I also would like to reckon the fact that our quality is very high expected even in competition with the other global players. So we are very confident with the breakthroughs we have with large accounts in U.S., U.K. and in Europe and with IKEA. We should be able to continue our momentum of growth. So that's one. Number two, as far as the market share of the other 4 competitors, largely, 80% of the SCHOCK technology has been commanding the market share across 4 players. Now the last news what we have is that I would not like to make, but one of our competitor has increased the capacity to 1.3 million sinks. And it has been -- it is also -- they are almost utilized. So the momentum of the quartz sink is there, especially of the quartz technology. We should be between the market share between the 4 players. I don't know exactly, but between the 4 players, we account like the SCHOCK technology 80% of the quartz in global market share. That's 2. And the three, I was not able to clearly -- I just -- I was not able to get your question very clearly. Was it on the -- when are we going to touch that INR 1,200 crore run rate annual rate?

Yes. So basically, the current business takes you to INR 1,000 crores considering the current revenue and the acquired business, the INR 100 crore revenue run rate, right? So that total gets down to INR 1,100 crores as we're doing a little growth on the acquired business, something like a INR 1,200 crore mark. Just a broad view on what the capacity utilization basically.

No, no. I think there is some gap in the understanding. That's not the right understanding. Current, our turnover is INR 493 crores. And with the additional capacity coming in, we'll add another 20% 30% to the existing line up. And apart from that, there will be additional from the acquisition. So it's not going to INR 1,000 crores of your understanding. I think the match is not made.

But your capacity is doubling. So shouldn't the revenues ideally double up on the quartz sink part?

No. It's -- sorry, so there are -- in doubling pricing, steel sink. What we heard in the speech is we are doubling capacity on the steel sink.

No. But quarter [indiscernible] Results speak to 1.2 million, right, like strong FY '21 base?

Yes. Yes. That is…

That is what I meant.

That is coming in quarter [indiscernible].

Yes. Anand, let me answer this. So the current base on the quarter 4 run rate to date, we did about INR 140 crore plus -- about INR 160 crores. Plus you had about INR 100 crores on the capacity expansion and plus the U.K. acquisition. So I think we are at about $100 million rate at this point of time, if you take all into consideration. We expect that after all the initiatives of our company has been done, which we expect to done by end of this current year, we would like to continue our momentum of growth of 30% to 40%. And with our initiatives of ceramic kitchen sink faucets and the built-in appliances, I think we should -- let's see next year what happens. But as of now, I think as for the current situation, the capacity expansion and the acquisition looks like about $100 million run rate.

The next question is from the line of Udit Gajiwala from YES Securities.

Sir, firstly, just want to clarify that the 160,000 capacity target coming this quarter, is it on the greenfield.

No. So that's not on the greenfield. It's part of the expansion of our current plant manufacturing.

Okay. And sir, secondly, can you just highlight what will be our export geographic distribution for '22? And what are the impacts of all these geopolitical situation like demand must have softened and like you said that the dealers have already stocked up inventory. So how do you see the year panning out during and also…

Yes. So I think coming at the first point, I think U.S. would be still about 25%, 30% of our market share following by U.K. and Europe by another 30%. And then it will be the India would be another about 20%, 25% and then balance 15%, 20% will be rest of Asia and Gulf. So this is just a broad market segmentation. Well, we are at this time, we believe that of the geopolitical situation, there is unrest in Europe side, yes, there is. But like I said that the secondary sales have not dropped to -- has not dropped. It's still in -- it has a great momentum. So maybe partially on the quarter 1 side, as of now, we have not witnessed anything significantly, but we cannot acknowledge geopolitical situation what is happening. So as of now, I think things are on track. But like I said, that we will see after quarter 1, I think we'll have a greater -- I mean, we'll have a much clear picture after quarter 1, what's going on. But as of now, seems things on track. If we have some little bit of stock with the distributors, the little bit of orders, deferment can do from quarter 1 to quarter 2.

Right, right. And sir, lastly, if you can just help on the margin front, like that acquisition that we did is like below our benchmark margin. Like it's a 18% margin, and we are actually witnessing the RM installation and everything. So how do you see margin going ahead for this coming year? If you can throw some light, that will be helpful.

Yes. So it's a good question. I don't think so, Acrysil where I know about 10, 20 years back, we also made a EBITDA margin of maybe 10%, 12%. So I think it is -- that comes our capabilities of company, how do we increase the current 14%, 15% margin to 18% to 20%. So we have already laid a plan for it. How are we going to do it. So there are many opportunities when you can do it. I think for a surface company like a kitchen worktop company based in U.K., fabrication and manufacturing in U.K., I think as of now, it's a great margin. And overall, I'm saying as a market, I think 15%, 16% margin is a great EBITDA margin to have. Yes, our company, our NDO will be that -- and we have a plan in place. How do we improve? Slowly, gradually the margins close to 18% -- 18% to 20%.

Mr. Gajiwala, may we request that you return to the question queue for follow-up questions. The next question is from the line of Nikhil Gada from Abakkus Asset Manager.

Congrats on a very strong growth. Sir, my first question is sort of a follow-up to the previous participant. So when we say that there can be an order deferment from 1Q to 2Q and there was significant sort of inventory built up by the distributors, did it sort of aid our sales for 4Q and that can have a sort of a ripple effect on 1Q where we might have a lower sort of a order booking. Is that understanding correct?

Yes. So I don't -- yes. So I don't think there's going to be a significant difference. I think we are as per quarter 1 also, we are on a very strong path of growth. The backlog what we had, if you remember in the last quarter in the investor calls for the -- we had a huge backlog of orders, which customers are filling in with orders. So one good part is that the backlog is cleared now. People are getting delivery time in less than 6 weeks now. So I think that's a good thing. [Foreign Language] I think we'll have a -- it's not a significant deferment which will happen. If it happens, it will be a little bit of deferment, maybe by not all customers but few customers. As of now, our order booking is quite good. But like I said, that deferment with few customers or few countries can take place, but nothing significant.

But for 4Q, we did not see any more lifting by the channel than what we generally would have seen because of this geopolitical issue.

No. So there has been a huge backlog for us in quarter 4. So it's very hard to know for -- inventory buildup could be mostly, I think, for the backlog because people think that the company is going to take 10 weeks lead time, they might as well order at one shot. So we will not get the sinks because the home improvement sector is still witnessing a good growth across the world. So because of that, we think the situation where the customer would have probably ordered a little bit more looking [indiscernible], we may not get the sinks on time. So -- but nothing significant.

I understood, sir. And sir, my just the second question. So we have now reached a very decent sort of run rate in the domestic market as well. And we are also doing the branding part as well. So just firstly, how do we see the domestic business shaping up for FY '23? We are at around INR 90-odd crores. So can we sort of grow at double the speed as in like 50%, 60% for FY '23? And what were the A&P spends for FY '22?

So it's a very good question. On the domestic market, we have witnessed a very strong growth, and we have never able to witness such a strong growth in the last few years. And because of our collaboration with Vaani or our new range of appliances, by able to supply more things to the domestic market because now we have the capacity in place. We have witnessed a very strong growth even quarter-on-quarter about 24%. And we expect -- and based on the current order booking, which we have when we're closing the April month, now we're looking at the May and June order booking. In sales, we'll have a significant growth as far as the domestic market is concerned. It's quite exciting for us. So I think that's one. Number two, the A&P spends for us from domestic market -- Anand, it would be -- it's about 8%, right?

It's around 6%, sir. 6%.

It's -- yes. 0.6, yes.

6% of total sales, right?

Total sales, yes.

No, only domestic sales, right?

No, no, 6% total sales.

The total A&P for the company, 6% of sales.

Yes.

Okay. Because then that is a significant boost up, right, from what we have been doing in the past?

Yes, yes, yes. We mean…

Sorry, Nikhil. Correction. This A&P is only 2% of the total sales, it's 5% of the domestic sales.

Understood, sir. Understood. So I was just assuming there would be some one-off call because we signed this Bollywood celebrity?

No, no, no.

The next question is from the line of Pranav Mehta from Equirus Securities. This is the operator. Mr. Mehta, we are not able to hear you.

Yes. Sir, what I wanted to understand is that currently the German suppliers might be facing a lot of difficulty due to this ongoing crisis. So are we seeing any demand generation [ searching ] to us because of that? And your tie-up, update on tie-up with other big-box retailers across the world, if you can throw some light on that. My second question was related to the consolidated debt that -- the peak debt that you will be seeing after this acquisition of U.K. and new capacities coming up.

Yes, sure. No. So we have not heard or witnessed anything by the German players. They are having a tough time because of the geopolitical situation, that's one. What the news we have that all the companies have increased the capacity for the demand in quartz sinks. I think that's one. Number 2 question was on debt, right?

Yes, sir.

Debt. Anand, [Foreign Language] consolidated now?

Our current debt consolidated INR 136 crores. With the new acquisition loan, it will increase by another INR 53 crores for this year. So another 89. So it's a [indiscernible] of INR 200 crores max.

Okay, sir. So max, it would be INR 200 crores?

Yes.

And sir, any update on your, let's say, tie-up with other big-box retailers that you had been mentioning like…

Yes, yes, yes. I thought I had missed. Yes, I just noted this point. So we are in advanced stocks with some large retailers across the world. There are more and more opportunities for us. So as when it goes through, we shall let -- we'll let you know.

And sir, one related question. What was the contribution from IKEA this year?

So we are unfortunately not able to -- as per the contracts with the customer, we're not able to disclose part of the confident information.

Okay. And as you said that you would be also getting orders from IKEA, let's say, 1 or 2 years down the line for your bath products as well. So can you throw some more light on that, sir?

So as of now, like I said, we all have been awarded to double our sales with IKEA and the necessary investment has been done. We should start within the next 2 to 3 months. GROHE also, we have done the necessary investment. In quartz and steel, that also take momentum. And third on the IKEA, on the new kitchen sink front is that we are now exploring the possibility of adding the new product lines along with this. The team is going to visit us soon. And then we will see the outcome out, of course. But if it starts, all the greenfield projects, they'll take about a year's time.

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

In the event of -- because of European thing or whatever, as what's been discussed before, if there is a slowdown in that part of the world, can you not push volumes in this country? In the past calls, you had indicated that because of supply side constraints, the market share in India was constrained and you could look to build that up.

So we will be exactly doing that. We would be passing on the capacity to India. If we witness if any slowdown in the orders from the U.S. concern.

Yes. Exactly. That is what I was wondering. Second, now the steel sink and quartz sink prices have converged, in fact, better steel sinks may be costing more than quartz sinks. In that context, you should be seeing a very strong demand, not only from the replacement market, but also from the OEM market.

Yes. So we are already seeing that, right? And that's why we have able to witness at the sharp growth.

[Operator Instructions] The next question is from the line of [ Vivek Gautam from GS Investment ].

Yes. So this extra demand, which came through COVID in India as well as abroad in export, will it sustain beyond COVID, sir?

You see the fundamentals of the company as far as the quartz sinks are very strong. So I don't think anything is going to move on the long, long term. The demand for the quartz sink is continued, it will -- is -- has continued to improve and will continue to improve. So there is no question on that.

And the recent price in interest rate in U.S. housing market, is it having any negative impact on our sales side?

No, we have not still witnessed any what -- see the home improvement sector overall has witnessed more than -- we would have read in news about 15% to 20% of the inflation home improvement. And most of the companies have been able to pass on to the consumer and able to maintain their margins because the home improvement sector overall is very encouraging in this point of time. Not all sectors are able to pass on this price increase, and we have seen some dramatic fall in the bottom lines on the other companies. So I think we are in a quite fortunate in a sweet spot at this point of time.

And then the earlier calls, you had mentioned that the freight cost -- there is -- increased freight rates are not having much impact on us. And we are able to pass it on. But the way you are mentioning that something also that we cannot pass on the entire freight price increase breakup to the customer side.

See, 90% of the export sales are FOB, so 90% of the freight cost is already passed on. And whatever the 10% beyond is there, it is not a significant impact on the company. That's why we -- company is able to still able to more or less sustain the margins.

Mr. Gautam, we would request to return to the question queue for follow-up questions. The next question is from the line of Jehan Bhadha from Nirmal Bang.

If I look at the raw material as a percentage of sales, it has come down in Q4. But in your earlier commentary, you said that EBITDA margins have come down because of raw material and freight. So can you throw some more light on this? Exactly of raw material, what do you mean, packaging or something?

See, we've seen -- so we have been able to take packaging as part of the raw material. Yes.

Because if I look at just other line item of RM2 sales, that has in fact come down, yes?

Correct. Mr. Sharma, so packaging, it is not raw material. It is material cost more than the raw material.

And more it's on the quarter side, the trend is increasing for the raw materials. So that has impacted quarter 4 rather than the entire year.

Okay. So overall, if we were to look at the next year, that is FY '23, so last year, for the first 3 quarters, our EBITDA margins were at close to 22%. And this quarter, quarter 4, it has come down slightly to 20.5% around that region. So going forward, should we assume quarter 4 as the base for coming year?

See, we have to see the things…

Yes. No, go ahead, Anand. Yes. For me it's maybe [Foreign Language]

Yes. Maybe 2 things. Yes. Two things. I think one is the freight cost which is inclusive. If we compare with the last year, last year, the freight cost was around 8% of the sales, [ margin ] 12.6% of sales. So 4.65% increase already happened between last year and current year and it is increasing trend. Number one. Number two, raw material prices are also increasing, but it's all depend on our ability to pass on, which we are doing since every quarter. There may be a spillover between the quarter-to-quarter, but we have that capacity to pass on the cost. But there may be a spillover between the quarter-to-quarter. So I don't think that quarter 4 is the benchmark. I think for us, we should take a year as a benchmark.

The next question is from the line of Priyam Khimawat from ASK Investment Managers.

When I try and calculate our realizations for quartz sinks, it comes to around INR 5,700 per sink in FY '22. And if I recollect correctly, it was at a similar level in FY '21 as well. So how do we see this going forward?

So that is all depends upon the product mix.

Okay. So going forward, if we ramp up our entire 1.2 million sink capacity, what realization are we looking at?

So I -- as of now, I think we should be able to maintain that.

Okay. No scope for further improvement due to mix improvement?

No, no. See, that's what I'm trying to say that country to country, the price varies. The Indian market is more smaller things than larger things. But then proportionately, their RM cost and other material costs also will go down. So the margins will not be impacted. So for now, it was -- we're just at the beginning of the year. So it's very tough to predict what is going to be the product to me because it's like on a monthly basis changes.

Understood. Understood. Sir, and what were our steel sink volumes in FY '22 and quarter 4?

Our FY '22 quartz sink volume is 650,000 sink for the year.

Steel, steel, steel. He is asking steel sinks was 104,000. Was this 68,800?

Yes. 104,000 for the year.

Yes. 104,000 for the year. Yes. Against 68,800.

The next question is from the line of [ Anant Jain ], individual investor.

One question that I have is that because of the inflation and some kind of slowdown in the housing market that you are witnessing in the states, are there any forward looking numbers in terms of order book? Or any other such parameter that you could specify which tells us on a comparative basis, how this year is -- the beginning of this year is versus how the beginning of last year was. I mean, in terms of what kind of visibility, any number that you could give.

No. So number wise, we don't have anything at this point of time, but we're still able to see a [ great ] momentum in the -- for the market in United States because parameter, it is not been driven by the home -- by new homes. So that…

You keep on saying it's by renovation.

Yes. Correct. So the home -- so home improvement continues to do very well even now in the U.S.

More like sir, there must be some demand coming out from various players who are the partners in U.S. and Europe. If there's anything that you can indicate what is coming out from there.

No. So as of now, the -- I think order booking as far U.S. market is concerned, it's good. It's in place in the export target. The last year was a different scenario because COVID was hit, and there were lot of issues during last time regarding the backlog of orders. So it would not be a right comparison any ways for referring to last year.

Okay. Just one more question, bookkeeping question, sir. I would want to understand our kitchen appliances numbers and also our bathroom products numbers, sales numbers in last 5 years. If you could give me some information around that. How has that shaped up?

So on the appliances side, I think we have touched a turnover of close to INR 20 crores. And I think 5 years back was, I think, less than INR 5 crores maybe. Yes. And -- but if you can share e-mail later, we can send you the detail last 5 years what has happened. And as far as the bathroom products, we launched only 5 years back. And bathroom is not a category, which we are focusing. This year, now we have done collaboration with Sussanne Khan and Farah Khan, so we see a sharp increase in bathroom sales. But currently, the bathroom sales is for us is about somewhat insignificant. It's about 1% of our total sales of the company. Yes.

[ Mr. Jain ], may we request that you return to the question queue for follow-up questions. The next question is from the line of Harshil Shethia from AUM Fund Advisors.

Sir, earlier, you said that your debt can go up as high as INR 200 crores. Is that number right for FY '23?

Yes. Based on this current numbers what we have, we had debt of INR 236 crores, which improves term debt and the working capital borrowing, both.

Okay. That is for FY '22?

FY '22. For FY '23, there is a borrowing of INR 54 crores coming for the acquisition. So adding everything together with some working capital, we have benchmarked INR 200 crores for the '22 - '23.

The next question is from the line of [ Chintan Mehta from North Star Fund ].

Yes. Sir, I wanted to know something on few difference in the raw material sourcing side. So [ in there, really ] what percentage of raw material gross in terms of manufacturing of one thing, say how much percentage of mold and coated silica, PMMA, like that?

30% approximately.

Individually, if I can get the breakup, sir?

So we might [indiscernible].

I mean, how much of mold is used, how much of silica is used to produce 1 quartz sink, sir.

No, that was -- that is part of our formulation.

Okay, sir. Sir, how much do we import, sir?

The import is about 50% of material cost.

Okay. So 50% that we import. And the components and the spare parts are still 100% imported, sir?

Where is Anand? You have any -- I don't have the details what are spare parts. The spare parts are more or less -- the built in appliances all imported still.

The next question is from the line of [ Akshay Chheda ] from [indiscernible] Research. Sir, we are not able to hear you. Request you to please rejoin the question queue. We'll move on to the next question from the line of Kartik Soni from Satco Capital Markets.

My question is [Foreign Language]

There we have normal growth sales. It is just a promoter score to realize the value of the company. So there was no distress sale. But we're lucky enough to get this done because he is already our client and he had a great comfort level all the time. So that's what we're able to…

The next question is from the line of Ravi Naredi from Naredi Investments.

First of all, thank you very much for the nice results you are giving year by year. Can you bifurcate margin between export sale and domestic sale?

Yes. Mr. Sharma, you will answer that.

Yes, yes. So our export margin is around 24% is export and around 18% to 19% in the [ stake ] for the quartz sink.

Quartz sink. Okay. And how much CapEx planned for financial year '23 and '24?

'23 and '24, we had not yet planned.

Not yet planned. But whatever you have mentioned in the investor presentation, that is the only [indiscernible] course, right?

Yes. Yes, as on date, whatever we have planned, we have already announced.

The next question is from the line of Nikhil Gada from Abakkus Asset Management.

Sir, my question is on the working capital side. We have seen a very strong improvement in our receivable cycle. And on the other hand, some amount of increase in the inventory days. So could you help us understand as in what has changed over here, especially on the receivable days?

So on the export side, we're able to reduce the receivables into improvement, that's from -- with few customers lies 30%, very important customer. The new customers have also a very short credit line. And as far as the domestic market, we had earlier 90 days payment term cycle. Now it has got down below 45 days. So these are the 2 major improvements.

Sir, if I may ask, when have we done this changes? Has it been in this particular quarter? Or -- because can we see a further improvement in '23 and '24 for the same?

So we have been doing this exercise based on our last call also where I mentioned that we are -- the company wants to continue to improve on the working capital. So the endeavor is of -- now we obviously want to include, there will be a continuous improvement, we would -- the company would trust on it. So we believe we can see some improvement quarter-on-quarter. Yes.

And sir, and just on the inventory side, as in…

Yes, so -- yes, yes, yes, better. So on the inventory side, i.e., [indiscernible] different inventory, like finished goods, what has happened, we have around INR 12 crores goods at the port, which is lost because of the machine issues. So there was a INR 12 crores inventory, which we have taken in the books. Raw material, imported raw material particularly, we had increased our active stock because of this China issue and the lockdown and the logistical issue. For our imported item, which is our raw material and the plumbing kit, we have increased the [indiscernible] stock. I think this is temporary. Once things normalize, we have heard that China is normalizing. So let's see, within a month or 2, I think we'll back to again to the [ near ] level, or else we will have all the plan to reduce the inventories.

I understood it, sir. I just have one more question, if I can ask, sir.

Yes, yes, sure.

Sir, so just from your perspective, since we are seeing improvement in working capital as well as very strong operational performance, what sort of an internal estimate you have on the free cash flow generation that we can have over the next 2 years because we are raising our debt cycle as well, right, from INR 120 crores to maybe around INR 200 crores?

Yes. So you can see our debt and EBITDA. Our EBITDA is around INR 115 crores, okay? Best we have currently and with the currently INR 136 crores. So a very comfortable portion, it's 1.2x of the EBITDA. Coming to the '22 - 23, then we are talking of INR 200 crores benchmark, EBITDA, we are expecting around INR 150 crores. So we are keeping our debt in a very comfortable position. Debt equity is 0.53. All the probability will not go beyond 7 max. Okay. So within that parameter, we are resilient about the debt, and we are keeping within the limit and as per our growth plan.

The next question is from the line of Suhrid Deorah from Paladin Capital.

I just wanted to check, there was a resolution taken some quarters ago for QIP. I just wanted to check the current status of that.

Suhrid, sorry, I'm not able to get it.

There was an enabling resolution taken a few quarters ago to raise money for an equity fund raise. I just wanted to check your current thoughts on that.

Yes. So we are in the process. We're still in process of that.

And the use of those funds will be for?

These are the new expansion plans which we have for the ceramics, faucet and built-in appliances.

The next question is from the line of Abhishek Agarwal from Prithvi Finmart.

Sir, my question is regarding your expansion thing. Like as we in last 2 to 3 years, we are expanding aggressively. So is this expansion backed by order or how it is? Or so can you explain on this, sir?

The expansion is based on growth led. It's more on the quartz growth led expansion and whatever the contracts we have signed with the new customer.

So whatever expansion what we have planned as of now, we can easily absorb in next 1 or 2 to 3 years, correct?

Yes.

Sir, what is our main raw materials? And what is the source of that?

The raw materials mainly are quartz and resins, which few quartz -- few are imported and few from India.

Okay. So can we get a break up of that, sir? What percentage is coming from India?

So I think of approximately 50% India, 50% abroad. Yes.

The next question is from the line of [ Anika Mittal from Invest Research ].

Sir, my first question is how the profitability at overall level for Acrysil is going to be impacted with inclusion of overseas acquisition. Like in this quarter also, we already saw a dip in margins. So do we expect a further dip in margins with inclusion of that subject?

Yes. Mr. Sharma, I'm not able to -- can you answer that? I'm not able to understand.

Yes. So first of all, this quarter, it's not because of acquisition. I know this margin is down. As we explained earlier, this is only because of the increase in the freight cost and the input cost. This normally we pass on to the customer. We have already taken a step to increase the prices, so should normalize. So it's spillover from quarter-to-quarter, number one. Number 2, the current margin of the acquisition company is around 17% to 18%. Now with the company acquiring this -- the new company, we have planned to increase its margin. So overall company level, we had benchmarked 20-plus EBITDA margin going forward. So we don't see any major impact of the acquisition on our margin profile.

Okay. Okay. Got it, sir. Got it. Sir, my next question is, can you please put some color on Acrysil Ceramic Tech Limited like in the terms of when the operations are likely to be commenced? Or what is the size of market opportunities there?

Sir, for you.

Yes. So like I said, that we are in process -- exploring the opportunities and to tying up conflicts on various nudge customers of ours and it's in the process. So once it's done, I think we expect it to have this within the next 3 months' time, and it's going to be a greenfield project. And this is going to be the high tech...

Sorry, you're not audible.

Is it clear now?

Yes. Can you please repeat?

So the whole manufacturing facility of ceramic is going to be for high-tech ceramic sinks. We told you few companies in the world has that technology. And we've been able to get the access to this technology. So this is be the -- it will be the first company in India to manufacture high-tech ceramics kitchen sinks. So we're already in the process of negotiation with very large customers across the world. And it will be on a one, if you put up the manufacturing facility, it will be on at least about a 60%, 70% buyback arrangement. And also we will use this as a leverage for the Sternhagen products for bathroom.

Okay. Means in next 2 to 3 months, we will clear as a picture on this particularly?

Yes. Yes. Yes.

Ladies and gentlemen, due to time constraints, we will take that as the last question. I would now like to hand the conference over to Mr. Chirag Parekh for closing comments.

I would like to take this opportunity to thank 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 Strategic Growth Advisers, our Investor Relations advisers. Thank you once again. Stay safe.

Thank you. Ladies and gentlemen, on behalf of Acrysil Limited, that concludes this conference call. Thank you for joining us, and you may now disconnect your lines.