Carysil Limited (524091) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Carysil Limited Q1 FY '25 Earnings Conference Call. This conference call may contain forward-looking statements about the company, which are based on beliefs, opinion and expectation of the company as on the date of this call. These statements are not the guarantees of future performance and involve risks and uncertainties that are difficult to predict. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Chirag Parekh, Chairman and Managing Director, Carysil Limited. Thank you, and over to you, sir.

Yes. Thank you. Good evening, ladies and gentlemen. Thank you for joining us for the Carysil Limited Q1 FY '25 Earnings Conference Call. I trust you had an opportunity to review our financial results and investor presentation, both available at the company's website and on stock exchanges. Joining me on this call is Mr. Anand Sharma, our Executive Director and Group CFO; and SGA, our investor relations advisors. At Carysil, we believe that every great product has the potential to be even greater. This commitment fuels our relentless pursuit of innovation and excellence in the kitchen sink market, encompassing both quartz and stainless steel sinks. We continuously strive to surpass our own benchmark in product design, aesthetics, functionality and durability, ensuring that each product offers outstanding value. Our dedication to quality and innovation has earned us a distinguished reputation, not only within our own country, but also across more than 55 countries around the world. Carysil has now established in 1987, where it began designing and manufacturing quartz kitchen sinks. Over the years we have grown significantly, expanding our product range under the Carysil brand to include a diverse range of products, including stainless sinks, kitchen appliances, food [ waste ] disposals, faucets and kitchen surfaces. Sternhagen, the premier bathroom brand, stands for the luxury in bath experiences, known for the advanced technology and sophisticated designs. Sternhagen washbasins are made from high-strength composite quartz, offering both durability and elegance to drive the brand growth and elevate its market position. We have appointed [ Mr. Rakesh Nair ] to lead an overseas development. Having achieved success in U.S., U.K., European and Asian markets, Carysil is now entering into new markets like Turkey, Australia, Vietnam, Croatia, et cetera. A positive sign is the increasing number of customers acknowledging reputation as a brand of value innovation. We recently completed a successful QIP, raising INR 125 crores. These funds will be allocated to expanding manufacturing capacity, acquiring new malls, existing customer, increase quartz sink business as well as for the manufacturing [indiscernible] appliances and faucets. These funds will also be support brand-building initiatives [indiscernible] in our domestic business and to meet working capital requirements for sales growth. This initiative enable us to stay ahead of industry trends and capitalize on the growing opportunities home renovation market, driven by higher quality standards. We are pleased to inform you that in spite of challenges in the Red Sea, container availability issues and longer [ shipping ] time, total income still grew by 42% Y-o-Y to INR 102 crores. Our business in the U.S. and U.K. remain strong, with increasing demand from existing customers signaling positive plans. Europe continues to face persisting challenges due to high inflation, interest cost and geopolitical issues. We are adding new customers to our portfolio and working on securing larger clients who are currently in the pipeline, by actively engaging with these prospective clients and tailoring our approach to meet their specific needs. We are confident these opportunities will soon evolve into substantial partnerships. We believe that these are alliances will enhance our market share and drive growth, increased wallet share. In our domestic businesses, we are focusing on social media marketing campaigns to reach a younger generation and deepen our market penetration in existing products. We are developing new range of models of quartz sinks and appliances. Faucet sales have grown -- have shown high growth potential, setting up [indiscernible] factory, we are also in the process of setting up integrated [ co-fabrication ] businesses in line with the U.S., U.K. and on a pilot basis. We also recently signed a contract with Ms. Mira Kapoor for our new Carysil campaign which is going to take place this month. Coming to our subsidiary division, Carysil Products Limited and Carysil Services Limited is experiencing consistent growth in the U.K. market. We are confident that the positive trend poses in strategic initial market positioning. Integration of our U.S. entity, United Granite LLC, advancing smoothly and we're starting to see encouraging signs of improvement. We are nearing the EBITDA level breakeven in this company. Our U.S. is also progressing well. We anticipate continued improvement in our financial performance and in [ cooperation ] opportunity in our cost structure. Additionally this quarter, we began operations in Turkey. We are taking calibrated actions and strategy -- and strategically evolve with gradual [ scaling ] operations, including market analysis and applying our existing expertise, ensuring smooth market penetration and steady development. Overall, we are happy and optimistic about the future prospects of our overseas subsidiaries and executing strategy to effectively drive long-term value creation and sustainable growth. Before turning it to Mr. Anand Sharma, I want to emphasize that a key driver of our progress, the efficient workforce, our effective management of operations. We have a passionate, skilled and confident team to maintain a smooth functioning and productive work environment. This expertise plays a crucial role in developing [indiscernible] that propel us to become multinational brand. With this, I would like to ask Mr. Anand Sharma to update you on the company's financial performance. Thank you.

Thank you, sir. Good evening, everyone. Let me take you through the company's consolidated financial performance. Quarter 1 FY '25 performance, sales volume for quartz sinks stood at 1,55,230 units. Stainless steel sinks stood at 37,759 units and kitchen appliances, [ ovens ], [indiscernible] and others stands at 13,751 units in quarter 1 FY '25. Consolidated total revenue stand at INR 202.3 crores from Q1 FY '25, grew by 41.7% year-on-year. EBITDA for quarter 1 FY '25 stood at INR 37.1 crores, grew by 27% year-on-year. EBITDA margin for quarter 1 FY '25 stood at 18.3%. There is a marginal impact of indication of our U.S. subsidiary, United Granite LLC, and the increasing export freight costs due to Red sea and container availability issue on the quarter 1 FY '25 EBITDA margin. Profit after tax and the monthly interest stood at INR 15.9 crores in Q1 FY '25, grew by 36% on year-on-year basis. Our consolidated net working capital days stood at 58 days as of 30th June 2024 as compared to 77 days in FY '24. Our consolidated net debt stood at INR 272 crores as on 30th June 2024. Thank you. Now I open the floor for question and answers. Over to the operator.

[Operator Instructions] First question is from the line of Harsh K. Shah from Dalal & Broacha Stock Broking.

A couple of questions from my side. So firstly, on the gross margin front, if you could help us understand the [indiscernible]. Is it all due to the change in the product mix or how is it?

No, it is -- the product mix is also one of the things, but it's also due to the higher freight cost as our executive director foresaid. With the Red Sea crisis, the freights have gone quite high. It's a mix of product mix and about the freight.

So why I asked this question is because I remember in the last con call, you had mentioned that our sales in U.S. was higher. So at that time in Q4, our gross margins have decreased substantially. So I just wanted to check whether is it a case wherein sequentially we have seen some drop in the sales of U.S.?

No, our U.S. sales have been consistent with last time. Yes, there was [ variable ] [indiscernible] now they [indiscernible] [ houses ] the new U.K. customer has come in and to some extent, just like the quarter 3, U.S. share has dropped, which is good. We're not too much dependent on new -- old customers. So that's the same mix what we have. And the major impact is because of the freight cost.

Okay. Got it. Secondly, on the QIP. So I was going through the QIP document wherein you mentioned that of INR 125-odd crores that we are raising, somewhere around INR 66-odd crores would be incurred for CapEx. So if you could help us understand what could be the incremental capacity addition, the kind of revenue we can generate? And when can we see that contributing to our numbers?

So I think you -- our -- Anand Sharma can always share with you, and you can also go through the mandate of what we have done for the QIP, where the funds are going to be allocated, that's one. Number 2 is, as I had mentioned also earlier, we are using these funds to drive the growth. We have been seeing the -- looking for some opportunities we can realize -- and for that, we will need funds for growth as you can already see the momentum picking up in revenue. So yes, we are -- things are in pipeline. There could be realizations, and for that, we need funds to expand our activities. We also mentioned that our utilization has grown to 60-plus to 70-plus percent right now of the quartz sinks capacity. We also have got some new orders for the stainless steel sinks. We are also going to use these funds for the new division of building appliances since there is going to be ban on most of the appliances, which is, I think, good for us. We have a massive opportunity coming up for the OEMs and B2C. They also put up the new faucet factory [ indiscernible ] we use these funds. So yes, so all this fund mostly we'll use it for the -- to drive our growth forward.

This INR 66-odd crores would be only for capacity addition, am I correct? And nothing for inorganic?

It is for capacity expansion and to the -- like I said it is in the mandate for which for faucets, built in appliances, fabrications, nothing for inorganic, yes.

Got it. And any sort of figure that you have in mind how much revenue this could generate? And then could we kind of see this getting realized in terms of when we could see this capacity getting onstream? That would be helpful.

I would say that you have been seeing on quarter-on-quarter there is nervousness that the U.S. is not doing well, U.K. market, how the company is going to do, but in spite of all the challenges you have seen that your company has moved forward. We have had challenging times, we have been challenging times, but we are still moving forward. We are rapidly expanding our product portfolio, our market presence, geography expansion, so that today, at least, we have been able to reach INR 800 crores run rate. So I think we're not going to leave any ball unturned and we're going to move fast. We see opportunities we're going to do. And I think we've got to move forward. As of now, I think we are moving at a rate of INR 800 crore-plus run rate, $100 million. And I think we are quite optimistic. While the challenges lies, geopolitical situation and the crisis, which is some external factors which are beyond our control. And also one last thing I want to say with that is that we are strengthening a lot of our efforts now to build the India business model. I said this last time, we had a good growth in this -- quarter-on-quarter on India business. With all these new models coming in, the QIP money getting used, we are very confident there's a lot of opportunities for the B2C and also for some OEM manufacturing, for building appliances and faucets.

Got it. And lastly, any outlook on the debt reduction part for this year and next year? Is it possible to give?

Anand, you want to answer this, please?

Yes. Harsh, we see we got these funds for the growth of the company. Anything and everything that is required for the growth, we're going to utilize this. [indiscernible] not to reduce the debt, but to grow the company with whatever requirement for the CapEx, working capital support and the brand building is required.

So is it fair to assume that the finance cost that is reflecting in the P&L for Q1 should continue for the rest of the year, or is there any plan of increasing the same? Yes. That was my last question.

So as I said, the idea is to reduce the debt organically what has come from our cash flow, not with this QIP fund. So whatever comes after the [ retailing ] what is all going on and whatever accrual we have, there will be some reflection of production, but not from the QIP fund.

Next question is from the line of Shrinjana Mittal from RatnaTraya Capital.

Sir, my question is on the quartz revenue. So if you look at it for the last 3, 4 quarters, essentially the run rate is around INR 90-odd crores. And that is the -- after the inventory correction what has come back. So there has been a comeback which we have seen in the last 4 quarters, but what I'm trying to understand is from here on in terms of the primary demand, how is it looking for us right now? What kind of growth are we seeing in the end market now that the inventory issues are behind us?

Yes. So I'm again saying that there's a good momentum the company has picked up for India and for the exports market. We are also in pipeline for some breakthroughs. We have been able to now go at a run rate of INR 800 crore-plus. It's part of all the challenges, geopolitical and the [indiscernible] economy, inflation, et cetera, challenges. So we are right now quite optimistic, bullish on what the growth forward because the rate what we're expanding our product range, our geographic expansion. So while I say we are optimistic, we also have to see that there are a lot of geopolitical issues and global challenges, which we are to face.

Next question is from the line of Vaidik from Monarch Networth Capital.

Congratulations on good set of numbers. I just have two questions. Firstly, on the quartz sink side, this quarter we grew both on volume as well as value terms. So currently, we are at 1,55,000. So by the end of the year, where do you see this number going to? Can we achieve the FY '22 volume numbers of 650,000 this quarter? And can we surpass it in this year?

So as I have already mentioned, we are already up at 70%-plus that's cover about -- that would be, going at the same run rate, would be about 700,000 sinks-plus. So in all likelihood, it looks that we'll be crossing the '22 numbers.

Okay, sir. And also, sir, one question on the -- sir, you recently mentioned in your opening remarks that you have tied up -- that you have tied up with 2 other -- you've got some 2 new contracts. So can you just repeat from whom?

I did not mention contracts.

Okay, sir. And sir, lastly, on the revenue front, you said that we are on a run rate of around INR 800 crores. But sir, earlier we had a target of INR 1,000 crores. So is there any reduction in our guidance or in -- anything in [ divest ] groups?

You see what has happened is that we have been -- which is all the global challenges coming in -- we've been kind of being very watchful on the aggressive investment what we are trying to make, right? So it is just that the current first quarter, INR 800 crore run rate is good. We are just carefully looking at the strategic situation. We're very optimistic that the kind of the breakthroughs what we are getting should be realized very soon. Because of the uncertainty across the world, some of them you can understand that some of the realizations in the collaborations or in terms of the partnerships, strategic partnerships, may take some time. So it is -- if it is, but we are expecting that on quarter-on-quarter, we expect our run rate to improve. So if -- I mean, if you -- if the geopolitical situation and Red Sea crisis, and people start getting more confident about the -- about the economics across the world, the U.S. elections go well. And if everything goes well, I mean, I don't see no reason why we don't -- by end of this year, why slowly we will not be able to start hitting close to the INR 1,000 crore run rate.

Next question is from the line of Udit Gajiwala from Yes Securities.

Yes. Sir, firstly, on the realization front of quartz sinks. So we have seen is the blended realization when you look at it being around 5,900 orders. So this is at a multi-quarter low. So is it because you are gaining new market share? Or is it because of product mix?

No, again, this is change of the product mix. So whenever you have a [ better ] product mix, which always varies quarter-to-quarter. But I think 5,900 is still a great [indiscernible] realization what we had a few years back.

Okay, sir. And sir, in presentation I guess you have mentioned that the contract with Reece Australia and Howdens U.K. So are these some new contracts or these are the existing ones that have got renewed which you have specified?

No, these are absolutely new contracts. First contract, they're going to bring in fresh revenue to the company.

Okay. So could you give some more color as to what will be the tenure and like the previous contract that you had extended for other companies where you had mentioned the INR 500 crore contract for next 5 years. Anything material on these 2 new names?

Well, I think we did -- we did -- had mentioned in absolute numbers because of the -- we need to be aware about the secrecy of all the contracts. But these are quite large-size contracts, which you can already see in the quarter 1 how the revenue was shaped. So which will help us to build our planned capacity moving forward.

Pertaining to quartz sinks, is my understanding correct?

Yes. Yes, quartz sinks. We are going to start with the quartz sinks and then they're going to start with the stainless steel sinks too. Yes.

Okay. That's great. And sir, lastly, when you are entering these new geographies like you say, Turkey, Australia and et cetera, so if you can, what is the plan in these nations that you will have to go with new customers to come on board or it will be directly you selling through some new distributors, because...

No, this is -- so this is completely B2C strategy. We're going to absolutely promote our brand. We are going to do our distribution network, we're going to have our team, we're going to have our own infrastructure. So I think that's what the new strategy is that we want to start building our own brand in GCC and Turkish market.

Got it. Got it. And sir, on the U.K. subsidiary and also the U.S. company that we had acquired, do you see that the material improvement could only happen in -- come FY '26, maybe because of the geopolitical tension and also with elections due in U.S., you might see some subdued performance to continue over there?

So I believe that last time I had said, I think we have kind of -- the home improvement sector, overall, as I think probably you've seen -- we are kind of excelling in our growth, doing some great numbers in spite of the worst ever home improvement situation [ in effect ] at this point of time because high inflation, high market rates and all these challenges on the Red Sea crisis, we can only see that this can only go up [indiscernible].

Got it. And sir, just last question, if I may incorporate, like when you say that you are focusing on the India side, and this has happened -- I mean this has been your focus area for the last 2, 2.5 years or so now, so the contribution right now is around 18% post all the news -- inorganic growth that we have done. So is there a number in mind as India should be x percentage of our pie? Or is it dependent on something else?

Yes. So I think we said always, and I also said it earlier, that we want to -- India, we would like to shape up to be a 3 -- our vision is to be a INR 300 crores company in 5 years' time. And I think we completely believe in India story. India has probably one of the most resilient economies at this point of time. Many opportunities are make in India. There is a lot of tailwinds at this point of time because of the China-plus strategy. We can already see some opportunities in a very, very advanced stage, which can take an advantage over China. And so we absolutely believe that we need to expand our bandwidth, we need to -- which we are already doing. We are inducting a lot of new teams. We are planning to substantially expand our sales teams. We kind of substantially expands our distribution channels across India. And we're going to add a lot of new products to the Indian market with -- from the QIP funds to excel our growth in India.

Next question is from the line of [indiscernible] from [indiscernible] Analyst Advisors LLP.

Congrats on a good set of numbers. You mentioned domestic demand is going -- picking up, like our domestic revenues are muted still quarter-over-quarter, even despite we almost doubled down the number of distributors, but till now, we are not seeing the results there. I asked a similar question last quarter also, but you mentioned there will be growth of 20% in domestic revenues this year. But still, if you look at the Q1 numbers, Q1 is still muted. So I agree there are challenges in the global demand. But as you already mentioned, India is having the tailwind. So kindly help us to understand where exactly we are going wrong? Is it the demand issue or what exactly the situation is, sir? So that is my first question.

See, my first reaction to this is that, I don't know, the -- compared to industries in our home improvement, you've seen there has been -- the demand is muted. There is softness in the market. As far as our numbers are concerned, we have, I think -- Anand, how much growth we have posted in domestic market?

[ 16% ].

16%?

Yes.

Yes. So to answer to this gentleman, that in spite of the softness and muted demand in India at this point of time, and we have seen related industries where the demand has softened and has gone down, at the same time we have shown an increase in performance by 16% growth over last year. So I think I would like to also again say that the quartz sinks, the fundamental, the quartz sinks, I think that's a great product. The market share across the world is increasing. People are preferring that. Number 2 is Carysil is in position as a premium product. We are not at the mass selling. We also have seen that the reason of this growth is -- the growth is because we have been targeting more premium counters. And I think moving forward, too, I think we would be improving our marketing campaign [ upfront ], [indiscernible] is towards the premium product. And I think moving forward, we see that the demand is going to increase for the premium product lines for kitchen category. As per se, even if the quantity doesn't grow, but the value per piece will go up. So we are quite confident of the strategy moving forward. The first quarter, we've shown good -- we have good results, and I think moving forward we have belief in our strategy. We're going to use this QIP money. Like I said, for various verticals, new models, and I think we are pretty confident and expanding our bandwidth and the distribution channels across India.

I think you are talking Y-o-Y, but I was talking about Q-on-Q basis. So that's fine. Secondly, sir, you mentioned about these Australian, Howdens U.K. contract. So how much they contributing Q1 FY '25?

So both these -- I mean, both these contracts put together, I think is going to be some substantial number, which you are already seeing in quarter 1.

And any guidance for FY '25, sir? Like INR 1000 crores is not looking possible for now due to headwinds going on. So any number?

So I would believe that we have, if not INR 1,000 crores, we have $100 million, right? Getting it -- getting a running rate of INR 1,000 crores if things go well. And with the external factors, which are beyond our control, things go well, I don't see any reason why we should not start hitting the run rate of close to INR 1,000 crores by end of the year, but things needs to go well, there are some external factors which are not in our control. So -- but at least we are happy that we are moving towards $100 million run rate at this point of time.

Next question is from the line of [ Vaibhav Sabu ] from Nippon AIF.

Just started earlier in the call you mentioned that you know our strategy for Middle East and GCC would involve building out our teams and [indiscernible] B2C. So are we looking to, for example, have we already hired people and workforce for that? Or are we going to acquire a local distributor, or how is the general strategy going to be? And when can we expect the cost for these same to [indiscernible]?

So we have put the distributors in place. We have started building our team. Like in UAE, we already started revenue coming in. We are targeting close to about $1 million of revenue just in UAE. We see some good revenue. We do some good cash flows. Turkey is something which is still we are building now. So we will -- we'll see in the coming quarters how that turns -- how that turns out to be. But I think we are -- the way the UAE is shaping up, the way we are shaping up UAE and what from almost from $0 B2C brand, we plan to build close to $1 million brand at this year. I think that is going to give a lot of confidence to us to moving forward and more penetration into this GCC region. We also have -- we have Dubai on the Sheikh Zayed Road, our showroom, right, and which is attracting a lot of customers and B2B clients. We have new showroom, approximately 3,000 square feet, coming up in Muscat, so that Muscat market also we are expanding. We have a good team in place. We have put Mr. Shrenik Chopra, who's the Vice President Exports, who is -- under his leadership, he's [indiscernible] create this whole team in UAE and Turkey. A few of the recruitments have already been done. The others are work in progress.

Next question is from the line of Nikhil Gada from Abakkus AMC.

Congrats on decent set of numbers. Sir, in terms of the overall margin outlook, there has been -- as you already mentioned, there's a lot of issues regarding Red Sea and higher freight cost. And what we hear is that it might continue at least for another couple of quarters. Do you think this current margin run rate -- because we have seen some impact, right, we have gone down to close to 17.8% on a consolidated basis. So do you think that this could go down further? Or do you think that we can improve from just your views.

So I think you gave a good question. I think people are asking me there's a lot on the margin side. In spite of all these challenges, I think, yes, we are at probably the lower end of the guidance what we have said because of the factors and some product mix. But I think we are very confident about the new strategy moving forward, new customers, the new products what we are going to create is going to result into only higher gross margins of the company. Secondly, our CIF is only less than 10% of our total revenue. So we have been able to curtail that down more on an FOB side. So I believe that moving forward, new customers and with the new premium product [ grade ], I think this should only help us to probably improve our margins moving forward.

And sir, is it possible that while this -- because the CIF ratio is on the lower side, is it possible to pass on this higher cost to the customers, or we have to bear this cost even going forward?

We have been sharing -- we have been bearing it, that's why we are at about 18% margin. So we have been doing, and it needs to be done gradually, slowly, yes, but it is. We are going to pass it on. At the same time we need to see that we do not lose customers also against competition. We got to do it very smartly.

Got it. And sir, lastly, I think you sort of alluded to this point. But when I see on a quarter-on-quarter basis, on the subsidiary side, we are now seeing some improvement. If I see from INR 86 crores, we have gone to somewhere around INR 100 crores, and I think it's also because partly United Granite LLC has sort of picked up. That's what my assumption is. So are we seeing now the true, actually, the value of this business coming to the fore? Or this is just initial signs and you might see much further on a subsidiary level a higher quarterly revenue run rate?

Are you talking about -- you're talking about U.S. business?

Sir, I'm talking about the overall subsidiaries business. So when I do [ concern ] minus stand-alone, we used to do INR 86 crores of run rate for fourth quarter, which has now gone to INR 100 crores. And we are doing INR 85 crores, INR 86 crores for the last 2 quarters...

Correct. Correct. Yes, yes, yes. Okay. So overall, all subsidiaries. So again I'm saying this, I think the way -- I will -- first are the U.K., I think the way my U.K. team has planned what you call a foolproof strategy, a great foolproof strategy by taking on a market share of our biggest competition. There has been figures, which have come out of our competition. I don't want to say it on the call, but you yourself can go and see it. Everybody's sales have declined. And I think we have to thank us for that. We have taken our market share of the biggest of the biggest. I think they've done a fantastic job. I think we have emerged as the #2 kitchen sink players in the U.K. market. That's one. Number 2 is with the new acquisitions, we've been able to do the massive cross-selling opportunity. We've added a lot of customers. So I think it is -- the strategy has worked out very well. Coming on the U.S. side, yes, the U.S. is probably a seasonal business on the fabrication [ worktops ], the worst ever home improvement, like I said, I go to the U.S., I see people talking. This is probably the worst quarter we have seen in the U.S., and this has been gradually picking up. So believe that -- what I honestly believe that the moving forward with the new contracts in pipeline, with the new growth initiatives on distributing kitchen sinks under our brand, and a lot of adding new products, new customers, we believe that this can only help us to take us forward from here. I doubt that any depletion in the margin can happen any more than this, unless there is -- again, is something -- external factors again. If something goes ridiculously, I mean that's not under my control then.

Got it, sir. And just one last point, sorry. Anandji, I missed the working capital cycle for the first quarter, if you could help me with that, please?

Yes. So working capital, the concerns [indiscernible] we have net working 58 days as compared to last year 77 days. So we have improved on inventory, receivables and [indiscernible] all, it has improved compared to last year.

Next question is from the line of Yug Patel from Anand Rathi Institutional Equities.

So my first question is regarding the kitchen appliances. So a couple of quarters back, you had guided a growth of 25% to -- 20% to 25% of the growth. So -- but last year, as we see the volumes on growth, it's a flattish almost. So what's your view on -- because if you see the competitors, they are reporting a good size of growth on that.

All right. So I think on the built-in appliances side, you're absolutely right, the growth has been flat. We -- since we are not an electronics company, we are not a dominant player in India. It's more like a one-stop solution what we are doing, where while we have seen a growth, but again on the same time that the markets here are quite muted and soft, and that has kind of pulled us back. The new launch of the appliances pre-Diwali and with the new showrooms which we are opening up, this will help us to further build the appliances sales. They will -- you will not see anything to something of the sharp increase, but there will be an increases because a lot of the imports are going to stop now because [indiscernible] certification going on and the expansion what we are doing in the built-in appliances is mostly not just in India, but also some OEM opportunity which we have to build. So we are quite bullish on the appliances side. The India side, we have to -- we are coming with a new strategy to sell our appliances with a different business model. And this business model, which we have been working til now, is always -- we have seen the revenue flat revenue, which I agreed to that. So we have to do some shakeups. We need to do shakeups from the marketing side. We need to do shake up from the team side. We need to do shakeups from our distribution strategy side. So I think once this has happened, pre-Diwali we'll be able to see moving quarters, the appliances sales moving forward.

Yes. And on the secondly, if we have to talk about the quartz side, historically it has always been the major contributing segment to the revenue. But as we know that the freight cost has been increasing and the global economy been facing issues. So how do you see the company focus moving ahead with the quartz? Are we looking for the fabrication business to be a major part of the revenue going ahead?

So let me -- so let me just tell you some good news on the quartz side and to all those people who are engaged in this call today. And I'm saying this again, please believe in this quartz story, this is the next big thing happening in the kitchen sink industry. We -- when we are saying that I think in the last quarter also, nobody believed that we're going to start about $100 million run rate, right, and I think, let's be honest, nobody thought. We're moving forward. We're signing contracts. They have been large part of contracts which are on the way in the pipeline. We are to understand one thing is that when you are one of those 4, 5 companies in the world having a facility in India and where you see this 4 million to 5 million sinks, even with the slowdown in global by 20%, 25%, let's start to say about 4 million sinks. Out of the 4 million sinks, we are manufacturing about 700,000 sinks. So there's still a massive opportunity for us going forward, even in the market in it's muted. But the quartz sinks market has been very stable. The quartz sinks demand has been quite consistent, and that's why we are able to see that moving forward, our competition is going to get expensive from their side. And we believe that this -- the traction in our business, by expanding our new customer base, I think it's going to be quite significant.

And lastly, sir, on the inorganic. And are you looking for any inorganic growth opportunity moving ahead?

Right now, like I said, that we -- our plan is to focus organically. We want to expand our quartz sinks. We've seen some great tracks coming in. We also see some great opportunities in the faucets, built-in appliances. As of now, we want to build the India story, and we would like to focus on the verticals which we have just started. So I think we want to -- we don't want to see any inorganic opportunity at this point of time.

[Operator Instructions] Next question is from the line of [ Bala Murali Krishna ] from Oman Investment Advisors.

So regarding the CapEx, I think we had done some INR 20 crores of CapEx in the [ appliances ] and faucets. I think that was completed or it is still under implementation?

That is still under implementation.

So Phase 1, whether it's completed, sir, Phase 2 is under..

Phase 1 is done. The Phase 1 is done. We already started about capacity of 50,000 faucets a year. That's already started.

Okay. So any other CapEx is under [indiscernible] Phase 2 [indiscernible]?

Yes. So we are, I think, clearly quite mentioned in our QIP -- our mandate that where we're going to use the funds. I think by end of -- by the end of the quarter, you'll have some more light on where the money investment where it's going to be used.

Next question is from the line of [indiscernible] from AK Investments.

I want to understand the domestic business, when you say 5 years, you will be making INR 300 crores of revenue -- that is from currently INR 140 crores you are saying that it will take 5 years? Or what is the target?

So I would -- so first, I would like to say is that we [ will ] actually, I said that's a vision what we have to achieve, right, the vision to do some [indiscernible] -- that's why the vision to be INR 300 crores. And I think at the run rate what we are going -- Anand, we did about how much domestic sales quarter 1?

INR 36 crores.

INR 36 crores. So INR 36 crores is after about INR 150 crores run rate. So moving forward with this QIP what we're going to start using it, we are going to get slowly on quarter-on-quarter, we started hitting a INR 200 crore run rate by next year. So if we're able to hit the INR 200 crore run rate there by next year, we are very optimistic then we will to reach this goal of INR 300 crores, 5 years' time.

Okay. So on the revenue side, you think if you take 5 years from INR 150 crores to INR 300 crores of revenue, basically. That is -- not run rate, but..

Yes. We have the aspiration to grow the India business. If you have to build a one day, a $100 million business in India and you have to see that within the 5 years, we need to start -- we need to start doing around INR 300 crores. So we need to start believing in the India story now, and we need to start using this QIP funds to see that India story shapes up. I mean, there is some external factors, the markets get muted, soften, something goes wrong, there's something beyond our control, that's a separate story, but the company wants to believe in how we shape up the India story.

But just to understand the [indiscernible] domestic why I think that currently we are hitting INR 120 crores, or INR 140 crores, and to double, we will be taking I think 4 years, roughly, you are saying. And you are targeting to the premium segment in which the real estate market is going well. And why it would take -- I mean, why aren't we aggressive, I would say in achieving INR 300 crores of revenue in 2 to 3 years when we are having lot of distributors, right, and we have the right fit in product, then why it will take so much time for us to achieve that?

So I would say we are being very cautious with the approach. While we want to be optimistic, we will be realistic also, happen -- to see what is happening with the global challenges. I said within 5 years, if you're able to do fast, it is good, what is the problem? I mean, we did -- honestly, anybody anticipated softness, muted in the demand? No, in the quarter 1. So those are all the home improvement factors have gone down. So it's some things that is beyond your control what's happening.

Next question is from the line of [ Sujal Jhavar ] from [indiscernible] [ PMS. ] As there is no response from the current questioner, we'll move to the next question from the line of Rohit Singh from [ Nvest Analytics Advisory LLP ].

Sir, you mentioned INR 1,000 crores run rate by the end of FY '25. So that means by Q4 starting, we will be doing at INR 250 crores. Is that understanding correct?

The understanding is, again, [indiscernible] -- like I said that -- we did not say, "going to reach," I said it will be good for us to go at a reach of INR 1,000 crores run rate. External factor challenges need to improve, isn't it? Geopolitical crisis and all the other rest of what's going on with the -- some contracts in the pipeline and which we're seeing some growth momentum moving forward, a bit optimistic here, is then we would be looking at gradually improving from a currently $100 million run rate to closer to the INR 1,000 crore run rate.

Next follow-up question is from the line of Vaidik from Monarch Networth Capital.

Sir, my question was mainly on the realization side for the quartz. It is down on a Y-o-Y basis about 5% and we can see that constantly every quarter we are seeing a decline.

Sir, can I reply this question?

Yes, yes, please.

We are looking at quarter-on-quarter basis. If you look at Y-o-Y, I have the figure, which says the average [indiscernible] 5,667. [indiscernible] 5,660. So it's almost ready. It all depends on the product mix and which market is going. So it's not anything decrease on the [ realization ] side, but which quarter, what segment has gone, which [indiscernible] is gone, and which model is gone, will decide the average selling price. So that in short, the average selling price is not going down. It is just a quarter-on-quarter basis. So whenever you take the realization rate, it should be on annual [ basis ].

Okay, I got it.

See, if this would have gone on a purely discounted, then your margin would have affected. Your margin guide would have gone down, gone to 15%, 16%. One. We're able to maintain your margin guidance [indiscernible] is only the product mix based on the market where you get a sometimes per piece, but your margins are still the same.

Next question is from the line of Ronald Siyoni from Sharekhan Limited.

I had one question related to your strategy. Like earlier, you used to be highlighting organic growth, but now we're more focusing on -- sorry, inorganic growth, but now you're tempted to us growing more organically. [indiscernible] is are we not getting good deals, say, at the right kind of valuations you -- or you want to first grow organically and thereafter, down 2, 3 years down the line, you may look at inorganic opportunity? I think maybe this would be a right time during this time period that you may get something at a good valuation?

No. See, there has to be a consolidation phase where somewhere you start acquiring companies, you are growing inorganically doing so well. So somewhere you also see some opportunities organically growing, right? So we haven't seen more -- organically trying to do for a couple of years, stabilizing that and then try to keep our eyes and ears open for any market opportunities. It's always -- it's not that we have shut down and we have not been doing, but the opportunity needs to come. That's one. And #2 is that we have to be very, very vigilant on -- and very smart on which companies in which sectors are you buying in these global challenges. So we got to be very, very careful. So hence, it's on a consolidation phase. In organic, we are -- if opportunities come, moving forward, yes, absolutely, we'll see. But right now, we are seeing more opportunities organically, and hence we're doing this.

And second one would be any key accounts or highlight that you want to [ talk about ], like have you added any accounts? Or have you added new products to the existing clients? How has the growth from the existing clients or any new acquisition of clients you may have done during quarter 1?

No, it's a mix of some great deals with Howdens U.K., which is a number kitchen manufacturer in the U.K. We have been [ sources ] from the key suppliers or probably soon were the only supplier. We have expanded our markets, like in U.K. we have -- my team has added about significant about 8 to 10 major customers in U.K. We have added some new emerging markets and we have been doing a lot of active marketing like South Africa, Australia, Indonesia. We also started some great business with Croatia, Greece, with some major brands out there. So I think we have done quite a bit across.

Thank you. Ladies and gentlemen, due to time constraint, we will take this as a last question for the day. I would now like to hand the conference over to Mr. Chirag Parekh for the closing comments.

Thank you, everyone. I hope we have been able to answer all your questions satisfactorily. However, if you need further clarification or want to know more about the company, please get in touch with SGA team, our investor relations advisors. Thank you, and have a great day.

Thank you very much. On behalf of Carysil Limited, we conclude this conference. Thank you all for joining us, and you may now disconnect your lines.