Carysil Limited (524091) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Q4 and FY '25 Earnings Conference Call of Carysil Limited. 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 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 call over to Mr. Chirag Parekh, Promoter and Managing Director of Carysil Limited.

Good evening, ladies and gentlemen. Thank you for joining us for the Carysil Limited Q4 and FY '25 Earnings Conference Call. I trust you had an opportunity to review our financial results and investor presentation, both available in 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. Before we get into discussions about business, I, on behalf of the entire Carysil family, would like to, first of all, give heartfelt condolences goes to victims of Pahalgam to salute the bravery of our armed forces, the unwavering courage, dedication and precision under our strong leadership of Prime Minister, Shri Narendrabhai Modi, Operation Sindoor to punish the perpetrators and planners for the attack on innocent citizens. This operation has demonstrated that India is strong enough to protect its people and territory right to become a developed nation by 2050 by all means. Macroenvironment and strategic positioning. The global economy is undergoing a period of profound transformation. While geopolitical tensions and ongoing trade disruptions continue to present challenges, they're also giving rise to new opportunities. In this rapidly evolving landscape, agility, resilience and a focus on long-term value creation have never been more important. We have navigated extremely challenging environment over the past 3 years. The period was marked by significant global disruptions, including supply chain constraints, inventory destocking cycles and a broader economic slowdown, particularly in Europe, U.K., one of our key markets. One of the most significant event today is repositioning of global trade due to sharp escalation in global tariff programs led by the recent increase by the U.S. tariffs. This has triggered a wave of reciprocal measures reshaping global trade dynamics, and rush to sign bilateral trade deals. India has signed an FTA with the U.K., which will increase the ease of doing business with the 2 countries and will open further sectors into bilateral trade. India just completed the 11th round of FTA negotiation with the EU and advancing towards signing an FTA with the EU. Amid these shifts, Carysil is emerging as a preferred global supplier due to global standard, high-quality production, competitive pricing and sustainable supply partner. Trade realignments, particularly those involving China and Vietnam, combined with rising manufacturing costs in European regions are creating a favorable tailwind for our business. Despite external pressures and geopolitical issues, our business model has proved to be resilient and adaptive. We remain agile, responding swiftly to changing market dynamics and continue to find our own path for own strategic initiative, disciplined execution, we have maintained stability and growth. During this period, we successfully entered into new contracts and deepened relationships with existing customers, which I'll talk about this soon. This growth reflects the strength of our business fundamentals and our unwavering focus on execution and expansion. During the last 3 years, our Quartz segment has grown to a CAGR of 12%, reaching about 645,000 units, while our stainless-steel sinks, which is Carysil Steel Limited segment has stronger growth of 20% CAGR scaling up to 155,000 units. On the financial front, please inform that total income has grown CAGR of 17%, reaching to INR 815 crores, almost $100 million, while EBITDA has improved to a CAGR of 14% to INR 141 crores. These results underscore the inherent strength of our products and commitment to long-term growth. Update on performance on the quartz sink divisions. We are pleased to inform that the segment continues to perform strongly by encouraging demand trends across many international markets. Our quartz sink operations are currently in the range of 60% to 67% capacity utilization, which is likely to significantly improve in coming quarters. As informed earlier through a press release, a key highlight for quarter 4 '25 has been a significant deal with the U.S. major retail chain through our customer, Karran, which is going to additional capacity and supply of 150,000 quartz sinks across spread 1,800-plus stores across United States. The huge bulk orders are placed. We are proud to share this summer, every store across United States will have the Carysil manufactured kitchen sinks. Dispatches are going on in tens of thousands. While we already started seeing bottlenecks in the molds, we had ordered approximately 7 molds, and we need to immediately order 3 more molds as per the last e-mail. To support this supply, we have earmarked a significant investment for molds and infrastructure expansion at a rapid pace. We also did signed a landmark agreement with U.K. major Howdens, the largest kitchen manufacturer in U.K. And still, we have to announce a lot of news. As I said -- mentioned before, there is calmness before the storm. I would like to give some breaking news here. As I mentioned in my last speech, we were going to bid for IKEA's global tender, which is a complete non-U.S. business to increase our market share with IKEA as a quartz sink supplier from 25% to approximately 75%, technically increasing our business with IKEA by 3x. I'm proud to announce in principle, we have awarded this RFQ award and subject to approval process of the quality standards. Our company had taken preventative actions by already capacity building and ordering those molds required to enhance this capacity. The final audits are on the way, and we accept -- and we expect that this to complete very soon to further sign the final purchase order with IKEA, maybe within the next 60 days. Not just this, we are bringing -- signing some record historic deals of our company and it's all coming through. We still have many more to come. Overall, we see a strong momentum in exports and not just the U.K., Europe, India, Southeast countries, down under countries, including Israel, are showing significant amount of growth. I believe there is a significant opportunity for our company to leverage our technology and cost competitiveness in this tariff war against our competitors from European countries. What would be the challenge? I think, the biggest challenge we see is to now build the capacity to -- from currently which we are utilizing 65% and to build and to start manufacturing to 85% to 90% within 90 days of time. As you know, with the downward trend, we had shut the Plant 4, which had an additional 250,000 capacity. We are restarting now immediately. We started recruiting manpower, the infra and the raw material required for the same. As you'll see the wait for a few quarters, the further additional enhancement of the capacity needs to be done. If it needs to be done further this, we will see after a few quarters. Moving on to the Stainless Steel Sink business, is thanks to the tariff war that we have started receiving overwhelming response now for stainless steel sinks also, since there's a big tariff on China and Vietnam. We have always maintained high technology. We have invested in PVD new machines, and we have made some significant breakthrough with Kohler India and Schaeffler to start selling them stainless steel kitchen sinks. We have already commenced our supplies to IKEA, significantly over competition in quality test. They are seriously now looking Stainless Steel division to be one of the major sources of supply to Global IKEA. And not just that, we have also started receiving high level of inquiries from the U.S. and Europe. I'm very positive it's going to work out as we may have a significant expansion in the Stainless Steel Sink division, too. The segment continues to witness robust demand. Our current operations are running at a capacity of already 80-plus percent demand of the high qualities of sinks in India and export market. To meet rising demand and better value addition, we have earmarked a CapEx of more than INR 7 crores -- INR 7 crores to INR 10 crores for expanding our stainless sink capacity with additional 70,000 units. With this expansion, increasing the total capacity to 250,000 units. We expect the new capacity to be operational as early as quarter 3 FY '26. Turning on to appliances and faucet. I'm delighted to share we have successfully commenced our in-house assembly and manufacturing kitchen hoods and faucets, and rapidly expanding into this category. Current assembly is around 30,000 to 35,000 faucets a year, and the goal is to target 100,000 units by end of the year. To up the game in this field, we are in discussion with leading global companies for the technology transfer, which we plan to achieve it very soon. With BIS restrictions, we have no choice but to invest in the next-generation technology to meet the global quality standard to enhance our competitive edge. We will soon be laying the foundation stone for a new factory built-in appliances facility for manufacturing and assembling kitchen hoods, hobs, ovens, et cetera, and we will be able to shorten the delivery times. We need to up our game in innovation and cost -- optimize cost efficiencies. This futuristic design with -- meeting with technology will meet highest international quality standards. Carysil has been rapidly gaining prominence as a key supplier in the Indian market. Over the last few years, our kitchen faucet business has grown by 40%, and we expect a big growth coming in this year. Food Waste Disposers, with the growing demand of the food waste disposers for a greener planet, we are now actively exploring the in-house assembling of the food waste disposer with the appliances, which we are currently importing to be self-reliant. This transition will enhance margins, quality improvement, ensure more efficient lead times. We are also launching a massive campaign on this, how we use food waste disposer and its benefits. Our trust and commitment to make India a story across category remains robust. And not just that, we'll be investing in the first kitchen and the bathroom countertop, fabrication facility in Delhi and planning other 2 centers this year -- by end of the year, making Carysil the only first organized player in the Indian market, leveraging our U.K. and fabrication technology, which we invested in the company in the U.K. and U.S. by launching incredible seamless technology of the sinks with the countertops and in turn, launching our own surface brand, CaryStone. Let me provide a brief on our international subsidiaries. Our subsidiaries in U.K. and UAE have continued to deliver strong performance. In particular, the UAE business have been robust demand in appliances category, reaffirming our strategy of strengthening the high potential global markets. Our ratio is reversed now, with the sales of 80% appliances and 20% sinks in UAE. With the riding success with the first Dubai showroom, we are now opening a second showroom in Sharjah of 3,000 square feet on the main Sheikh Zayed Road to add better value and range of appliances and sinks. We'd also like to give some good news that Carysil has now got a breakthrough in UAE with the biggest developer, Emaar, which is a state-owned company for the Carysil sinks. I'm also pleased to announce that, we have been robustly growing more than our budgeted for the UAE market. In the U.K., both Carysil Products and Carysil Surface are performing well, and we expect this positive trend to continue into the fiscal year, especially after the FTA deal in India and U.K. We have added a significant amount of major customers will help to keep this growth momentum even with the adverse market conditions. Carysil Company is now emerging to be among the top 3 in the U.K. top performers in kitchen category. United States and United Granite LLC, our recent U.S. acquired subsidiary, which remains subdued for a year due to challenging local market conditions and margin. Quarter 1 has now started turning around the corner with -- by cutting more exotic and high value-added granites and stones. The mantra was simple that you cut less and make more, thus by improving the gross margins. Carysil Limited is helping and providing the gap to working capital to add more high-value granite and quartz slabs in the factory, and also improving our sourcing competitiveness. We are optimistic and confident the subsidiary will turn to profitability in FY '26. It will also play a significant role in establishing the fabrication unit in India, and building world-class fabrication seamless technology, which will be a huge proposition along with sinks and faucets, domestic business and strategic growth. While we take pride in our global footprint, we equally focus and expand, reach in India. Like I mentioned in my last speech, I've never been bullish about India, which I'm now. Over the last 3 years, we have made consistent efforts to elevate our domestic business and optimize the potential vibrancy and aspiration of young India. We introduced series of workstation things, new range of faucets of luxury and convenience to our customers. We have significantly expanded our dealer network from 1,500 to 4,000. Like I said, we're going to thrust a lot of building new galleries, which we plan to achieve from 140 to 200 galleries by end of this fiscal year. We have ambitious target to grow by 25%, 30% at about INR 170 crores, INR 180 crore revenue this year. It's not going to come easy. We are going to severely focus on building our team, our brand building, marketing activities and thus by dealer expansion across pan-India. We're also going to strengthen our service network by not just franchising, but having our own service people and team with 24-hour service with our own Carysil vans, which result into the better sales of the company. With the indigenization by faucets and appliances, we'll have a better cost competitiveness and innovation to stay ahead of the curve. Riding on the success of workstation quartz sinks, Carysil is now introducing stainless steel workstations also now for first time 1.2-millimeter thickness, which is 20% above the standard thickness for better sturdiness and higher quality to stay ahead of the competition. This initiative will differentiate Carysil the rest of the competition. The company has invested in the second PVD machine, which will arrive in the next 90 days' time to cater the domestic needs and the export needs. These strategic initiatives will borne fruits, will lay a solid foundation, strong economic outlook. We will have a clear and confident vision to double this to INR 300 crores in the midterm and further grow to INR 500 crores in the long-term. In the next coming quarter 2, I would be seeing our program of this India story and also our next 100 million, how we're going to achieve this. To support this, we have strengthened our manufacturing capacity of appliances and faucets. We are aggressively expanding our brand presence through digital marketing, website, updated product and dealer loyalty programs. Our pan-India footprint continues to grow. We opened 5 new appliances experience centers for a better experience. Our R&D initiative is also underway, focusing on the development of new sink materials, innovation, faucet engineering and of the built-in appliances. The journey ahead is promising, approaching the spirit of purpose and innovation, whether it's enhancing our product portfolio, entering new markets or investing in people and technology. We are committed to build a future that is bold, inclusive and sustainable. At Carysil, we remain steadfast in our commitment for a greener initiative. Sustainability is not a goal, but embedded in the heart of manufacturing and product development processes. Our plants are continuously upgraded eco-friendly technologies aimed at minimizing waste, conservating water, energy use and operations remain efficient, environmentally responsible. We actively support a range of CSR activities and focus on education, skill development and community. We firmly believe in creating a long-term value for our stakeholders. As a responsible corporate citizen, we continue to lead our purpose, integrating sustainability and social responsibility of every facet of our growth journey. Now, I would like to ask Mr. Anand Sharma to update on the company's financial performance. Thank you.

Thank you, sir. Good evening, everyone. Let me take you through the company consolidated financial performance. Quarter 4 FY '25 performance. Consolidated total income stood at INR 205.1 crores for Q4 FY '25, grew by 6.8% on Y-o-Y basis. EBITDA for quarter 4 FY '25 stood at INR 35.8 crores with margin of 17.5%. Profit after tax and minority interest stood at INR 18.6 crores in Q4 FY '25, growth of 19.6% on Y-o-Y basis. Coming to FY '25 performance. Sales volume for quartz sink stood at 645,000 units. Stainless Steel Sink stood at 155,000 units. Kitchen appliances and others stood at 632,000 units in FY '25. Consolidated total income stood at INR 819.9 crores for FY '25 as compared to INR 688.1 crores in FY '24. It grew by 19.1% on Y-on-Y basis. EBITDA for FY '25 stood at INR 141.7 crores as compared to INR 133.6 crores in FY '24. It grew by 6.1% Y-o-Y. EBITDA margin for FY '25 stood at 17.3%, marginally impacted due to higher MMA price, which is our primary raw material, increase in export freight costs, some additional manpower costs, which we built for capacity elevation and marketing spend for our domestic business. Profit after tax and minority interest stood at INR 63.7 crores in FY '25, as compared to INR 57.9 crores in FY '24. It grew by 10.1%. Gross debt stood at INR 265.5 crores as on 31st March 2025. Our debt-to-equity ratio stood at less than 0.5% -- less than 0.5. Cash and bank balance stood at INR 68 crores, which includes fixed deposit earmarked for CapEx from our QIP Fund. Working capital days stood at 87 days based on the sales. Our working capital days for March '25 increased primarily due to strategic decision to increase the level of imported inventory for our traded goods, primarily owing to BIS standard implementation from March 2025. So we have to maintain sufficient inventory for our finished goods, as well as we wanted to have material for our in-house manufacturing of chimney and hobs. This buildup inventory is aimed to strengthening our supply chain and supporting our future growth. We anticipate that working capital days will normalize in upcoming quarters as inventory levels stabilize. We have also built some inventories in our UAE company, because this is growing in a very fast pace. So, overall, inventories are high, but it will come into normal cycle within the quarters. On the capital expenditure front, during FY '25, we have invested INR 45 crores, out of which INR 12 crores is spent in quarter 4 FY '25 alone. These investments were directed towards procurement and installation of new machineries, equipment and molds, which are critical to supporting our upcoming manufacturing facilities and enhancing our production capability. With this, I open the floor for questions and answers. Over to you operator.

[Operator Instructions] The first question is from the line of Ayush Chabria from Shravas Capital.

Yes. So I just wanted to understand, like going forward, now that we have signed so many deals, what is the level of capacity utilization do you expect at the quartz sink level? And any guidance on the revenue going forward with the new deals coming in?

Yes. So like I mentioned, I think we have to build -- we will be starting utilizing our capacity month-on-month progressively. So we expect to achieve 85%, 90% capacity utilization within the next 3 to 4 months.

All right. Also just trying to understand on the...

Latest by quarters. Yes.

Also so just trying to understand on the raw material front, have we seen prices cool off? Because I think a few quarters back we were commenting on prices being elevated and that affecting our gross margin. So do you see any cool off in the prices?

Yes, both the prices have cooled down. The freight charges as well as our material prices, especially the MMA prices, which was very high as our CFO said. So it's already cooled down at this point of time. So that's why we have -- would have seen our margins for quarter 4 has improved quite significantly than previous quarters.

All right. So going forward, we maintain the guidance of 18% to 19% margins, right, on EBITDA basis?

Yes. We will stand to maintain 18% to 20% our margin guidance. We stick to that.

Also, do we see any impacts on the tariffs going forward? I mean, there's no clarity as of now, but do you see any tail risk coming or playing out because of that?

So, I think just now, everybody is getting a 10% attractive -- attracts duty, anything which is imports in the U.S. But we don't see any significant increase in the tariffs as not that there is a reciprocal duty on sinks. So I think as of now, I think it all looks good, but let's see what comes on further.

Also, I would like to clarify. We do not fall under the same quartz surface category like others do. We have a different category. So we don't fall under the same category of the quartz surfaces, which we had clarified in the last time.

The next question is from the line of Resha Mehta from GreenEdge Wealth Services.

Sir, Chirag, your opening remarks sounded off a pretty buoyant demand scenario that you're looking at. So with that, do you think that a INR 1,000 crores revenue is possible in the current financial year itself, which is FY '25-'26?

Yes. I think number is our outcome of what we're going to do. Our -- I think the guidance what we had given is a 15% increase in revenue should be around INR 925 crores, INR 930 crores for this year. I think as of now, we are just busy on focusing to enhance our capacity. So if the -- what I would say is that we have a potential to reach a INR 1,000 crores annual run rate in quarter 3, quarter 4. Yes, it could be possible. But right now, I think we are slowly and gradually busy in just improving -- just increasing our production capacity.

Right. And in your opening remarks, did I hear you right that 2.5 lakh quartz in capacity which was dormant is kind of going to -- you're going to like restart it? Because I think the current existing capacity is 10 lakhs.

Yes.

So, okay. So then our capacity goes up to 12.5 lakhs. So the 12.5 lakhs capacity and then on that, we'll reach a 90% -- 85%, 90% capacity utilization in the next 3 to 4 months. Is that understanding right?

No, that is not the right understanding. The understanding we have 1 million sinks, 10 lakh units capacity. We had shut down 1 plant for, which we had approximately 250,000 units. So we are restarting that.

Okay. Understood. And...

So, capacity remains at 100,000 sinks. It is not 12.5 lakhs remains at 10 lakh units. So the 85%, 90% capacity is on 10 lakh units.

Sorry to interrupt you, ma'am. But we request you to rejoin the queue for follow-up questions. The next question is from the line of Vishal Dudhwala from Trinetra Asset Managers.

Okay. My question was based on rate cost, right. [Technical Difficulty].

We're not able to hear you, sir.

Sir, we request you to use handsets...

Your connectivity is bad.

Okay. Am I audible now?

Yes, better now.

So what has caused the significant increase in freight cost in recent year given that the majority of your exports are on FOB basis? So are the export handled on FOB shipping point or the destination basis? And additionally, since your import are on CIF basis, is that expense included in COGS or other expense?

Sir, can I answer this question?

No, sir. Yes.

Okay. So like you said, most of our export is on FOB basis. That's why the impact what we are seeing is much lower than it could have been if more CIF -- our terms would have been, okay? So impact is not that major. It is 1.5% only against the 2x cost increase. Coming to import, import is on a CIF basis. So, everything goes into the raw material cost, it is not shown separately.

Okay. And one more question. Is the company open to include the promoter entity in its consolidated financials since it supplies important raw material? It might help improve transparency and be good for company in long-term.

Sir, you have to answer.

Should I repeat?

Sorry. Can you come again? I'm not able to hear him properly.

Okay. Is the company open to include the promoter entity in its consolidated financials, since it supplies important raw materials? It might help improve transparency and be good for the company in the long run.

So I can answer this question.

Yes, answer. Yes.

Yes. So the parts material, which we buy from the promoter entity, Acrycol Minerals, this is a related party transaction, which is already disclosed in the annual report. There is a transfer pricing policy approved by the Board. So, the transparency is already maintained. Now coming to your question, whether that can become a consolidation and come into the consolidated balance sheet, that's a question for future, which may be addressed at appropriate time.

Okay. And one last question, if you allow.

Yes.

Okay. So how is the company viewing the outlook for the export market this year?

Sir. What is it? I'm sorry, I'm just having a lot of problems hearing this gentleman. Sorry, can you talk slowly and loudly, please?

How is the company viewing the outlook for the export market this year? Are you seeing any key opportunities or challenges?

So, I already mentioned in my speech, no, my friend, what are the deals we are making. We did Lowe's. We got RFQ for IKEA. And we have -- okay. So we have a huge tailwind coming in for the export market across all the categories. One of the -- if you have joined late, but then let me brief you that Lowe's, we signed a significant deal and now we got award from IKEA's global tender for increasing our share from 25% to 75%, which is a significant increase. So overall, the demand, the tailwind looks good in the export market across the world.

We'll take our next question from the line of Vaidik from Monarch Networth Capital.

Congratulations, sir, on good set of numbers. Sir, I have 2 questions. Firstly, on the quartz sinks side, as you mentioned in your opening remarks that for Karran, we have received -- that we have signed an agreement to supply 150,000 quartz sinks on an annual basis to 1,800 stores. So can you just mention how much will we supply in FY '24 to Karran, a ballpark volume number?

Yes. So I think we'll be able to later on give you this information per customer what it is. But U.S. approximately, Anand, does about 25% revenue? 25%, 30%?

That's 30% of our business, export. 30% of export.

30% of our business. So if you take about 550,000 units approximately export, 30,000 would be U.S. would be around 175,000, 180,000, out of which Karran should be around 120,000 approximately. So this would be -- you are actually talking about doubling the business by adding Lowe's to it.

So does this mean that in FY '24, Carysil had supplied around 120,000 units to Karran? And overall in FY -- sorry in...

Approximately, yes. Approximately.

Okay. And in FY '25 overall...

We expect in '25, '26, we are looking -- it could be a potential about 240,000 units with Karran for -- including the Lowe's deal.

So that is for FY '27, right? In FY '26, you mentioned in your opening remarks that will go to 150,000.

No. Combining, I'm saying. This is -- I said additional, we are doing 150,000, additional.

Okay. So additional 150,000, you will start supplying to Karran.

Correct. Yes. So, correct. So there will be some cannibalization, but you are talking about approximately 240,000 units, which includes the U.S. deal, the new major with the U.S. major.

Okay, sir. Got it. And sir, on the stainless-steel side...

Sorry to interrupt you, but we request you to rejoin the queue for follow-up questions as there are participants waiting for their turn. The next question is from the line of Sanjay from Bastion Research.

So, my first question will be on -- sir, we have seen significant growth in the volumes during the quarter. But when I see the realization per kg, it has been dropped both in case of quartz sink and in case of steel sink. So how do we see realization going forward? So during the quarter, we have seen 20% drop in the realization per kg in quartz and steel sink.

So I can just tell you a very -- just a very ballpark thing is that it is based on the product mix. So the product mix has changed, and hence, this has gone up. For example, a single board will cost much less. Now since the U.S., which is a high value-added product, which is going to now have -- with the new crackdown deal with the U.S. major, this will increase the purpose realization. And I think which you would see from the quarter 1 results.

Okay. Sir, my second question would -- since we are seeing so much demand from across the globe and we are focusing on India as well. And probably from Q1, Q2, we will be at 90% capacity utilization. So how are we planning on the CapEx side? Can you share any ballpark numbers? What are the CapEx plans we have? And what is the amount we are seeing for FY '26 and '27 going forward?

So, for the current year, we have envisaged CapEx of about INR 50 crores, which includes expansion of overall from sinks to fabrication to these appliances. We will -- like I said, in the coming quarters, we will take the decision if we need to further enhance the quartz sinks capacity as well as the stainless steel sinks. It all depends upon how the market reacts, the demand is sustainable or not. So I think within the coming quarters, we'll have a better clarity on this.

The next question is from the line of Resham Jain from DSP Asset Managers.

I have 2 questions -- so 2 questions. One is with respect to India business, which is INR 150-odd crores. And you mentioned that in medium term, we see that business going to INR 300-odd crores. So if you can just give a sense because in India, we are doing multiple things, quartz sink, steel sink, faucets, appliances. So what will drive majority of the growth? That is question number one. And secondly, from the overall economics perspective, margins and all, because we are investing currently, I presume margins will be much lower than our overall business. So how do you see the margin also moving over the next few years? Or would you focus more on revenue and margin is okay to get maybe 2, 3 years later?

Yes. Thanks, Resham. So like I said, in the quarter 1, I would be displaying my whole next $100 million plan and my INR 300 crores midterm and INR 500 crores domestic plan, which I would like to meet the investors and I'm going to display it that what our plans, how we are going to achieve it with what strategy. So, I think we definitely you will have more clarity. But just to give you answer right now in a very, very brief way, I think we are seeing an opportunity across the categories from quartz sinks to steel sinks to faucets and the appliances. So, I think we see all the categories, the growth needle moving very fast. But I do believe that we have a significant opportunity to move this needle further up in the sinks and the faucet category, which should be the largest contributor in this. As far as the margins are concerned, the company in the last year has taken some significant efforts to cut down the operational cost on innovation, technology improvement, efficiencies at the operation level. The material prices are cooling down, freights are cooling down. Our new customers, our new models have a much better value addition. For example, the U.S. deal, the IKEA, which were coming, we will have a great value addition. So that's why I think we are sticking to our margin guidance, 18%, 20%. And I absolutely believe, and to answer your last question, we would not be focusing on numbers. Like I said, number is the outcome. We will not compromise on our margins. So we have always remained very prudent and agile that our margin model should not be disrupted. I mean, it can be for a quarter 1 or 2, but on the long-term, the margin model should have a constant improvement moving forward.

Yes. And the second question is with respect to the quartz sink volume. You mentioned that you can reach 90% utilization of 10 lakh capacity in next 3 to 4 months. For the full year, how should one think about the volume? Is it whatever volume you are getting, is it like onetime and then it will happen -- the next big onetime will come later or it will be more sustainable order? How should one think about the overall full year volume growth outlook?

Yes. So very good question. Even I'm also looking for the same answer, how it's going to be. So I think right now, I think it is all good. We'll see in the coming quarters how honestly it shapes out to be. It's very, very hard to predict at this point of time how the markets are reacting. You still have this tariffs war hanging up. But right now, all looks good, but we'll have more clarity in the coming quarters, how it looks. The only silver lining here I see is that that we have a significant opportunity because of the cost and the quality of what we have. So I think the consumers are going to have a much better cost levels at the stores. There has been a lot of inventory stocking in the last year. So a lot of destocking has happened. So I think now the home improvement category will -- you'll be looking at -- I think I'm very bullish on it. I think this year, you'll see people building on inventory as well as the consumers will have a better price and a better product. So I believe that the home improvement sector should overall improve significantly across the world.

The next question is from the line of Reet Ranawat from Aventus Capital.

Yes, sir. Would you tell me your kitchen appliances manufacturing in the last 2 years. So, the volume reported in the kitchen appliances...

Sir, we are not able to hear you. Sorry.

Sorry to interrupt you, sir, but there's a lot of background noise coming from your line.

Hello. Am I audible now?

Yes, sir.

You are audible. There's a lot of background noise. We're not able to hear you.

Yes. I shifted. So, we started with the kitchen appliances manufacturing in the last 2 years. So the volume reported under kitchen appliances and others is mainly from faucet, right?

Sorry, I'm not able to understand.

So, the volume reported under your Kitchen Appliances and Other segment, mainly all the volume is from faucets, right? Or is it from -- so there was some confusion around line.

No. So, I do make it clear. We are building the manufacturing capacity of the faucets also. Like I said, we are at 35,000 pieces a year. We are also building the end of the year faucets to about 100,000 pieces. And we are building the new built-in appliances factory, also the mix of ovens, hoods and the hobs to about 100,000 units a year.

Got it. And...

No, go on, please.

Okay. So I can see that from 35,000 to 1 lakh of faucets and around 1 lakh capacity for kitchen appliances, am I right?

Yes. We are putting up the factory for that. And next month to build a new appliances factory.

Okay. Got it. And do you have a time line for that surfaces that you mentioned in your opening comments, so the facility for surfaces and countertops?

Surfaces and countertops, we have a time line. We should be achieving it within 150 to 180 days.

Okay. Got it.

So it will happen approximately by end of quarter 3, latest this year.

Okay. So do we have like the capacity for that or.

Yes. So I think the capacity, we are still on a working stage, but we will know in the next quarter what exactly how much we would be doing it.

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

Chirag bhai, in spite of quartz sink volume growing at 2022 level and steel sink rising 105 to 155, kitchen appliances also rise. Our net profit in financial year '22 was INR 64.8 crores and financial '25, INR 63.7 crores. So our margin is half compared to financial year '22. So we want the reason and when our '22 margin will come?

Yes. So we have been saying this, Naredi bhai, from quarter-on-quarter that we are under severe pressure for the increase in the raw material prices. There have been severe increase in the freight company invested heavily on the other divisions, subsidiaries and all. So that all the input prices are cooling off now. Freight charges also have gone down. The customers knew the product mix will also attract a higher value addition. So you have already seen it from quarter 4, right? You would have seen for the year, but if you have to see the -- in the quarter 4, the margin expansion has been significant. I think if I'm not mistaken, our CFO would probably say, I think there's improved, Anand, from 16% to 19%, right? EBITDAs quarter 4?

Yes, sir. 18% -- 16% to 18%.

Yes. 16% to 18%. So, it was inevitable, and we stick to our margin guidance of 18% to 20% for the current year. FY '25, '26.

We'll take our next question from the line of Ashutosh Parashar from Mirabilis.

Just 2 questions. First is on -- if you could please provide the breakup of the revenue between faucets and appliances in that segment? And how much of this was from UAE? So, largely the exports to UAE and the split between appliances and faucet's part? And second is, if you would please elaborate on the plans of the new CaryStone brand that called out in your commentary. What are we trying to do here in that services business in India? Are we trying to tie up with real estate developers? Or will we do it through our dealer distributor channel? Just plans on that front.

Okay. So the -- coming to your first question, I'll ask our CFO to answer, but I'll answer your second, third and fourth question. So starting with your last question, the CaryStone is -- we are already in advanced talks with some of the major stone guys and the modular kitchen guys, which they have promised to give a certain amount of guaranteed quantity. So I think that's how we're going to start. Why we're doing CaryStone is because if you want to have a seamless integration, you need to have the same colors of our sinks in the quartz surfaces. Hence, we are launching our new line of our own designed quartz, which will have a seamless integration to our sinks. As far as the UAE appliances, we don't export right now. The UAE is an independent subsidiary based in UAE. So they procure these appliances, they trade it through various parts of the world, and they sell it. The only thing what we export is the sinks to the UAE. I'll request my CFO to give you a breakup of the faucets and appliances. Anand, if you can share that?

Yes. So the faucet, this year turnover for FY '24-'25 is INR 15.22 crores against last year INR 11.27 crores. So there is a growth of 35% on faucet side. Coming to appliances, appliances turnover for this financial year is INR 31.45 crores against last year, INR 29.81 crores, growth of 6%. This is for our India business. UAE business has already spoken about. So total UAE business for this year is INR 14.41 crores, which mainly appliances, which is from their sourcing. It is not going from India.

Okay. And just, sir, one follow-up on this UAE business. We had plans of opening showrooms in a lot of places like Sharjah and Oman and also what is the progress on that front?

So the plan, or it is already the deal is done. So already the showroom is on the making. We expect opening in the first week of July or in the month of July.

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

Congrats on a good set of numbers for the fourth quarter. So firstly, sir, just regarding the IKEA business, can you call out what kind of a volume -- incremental volume can we see with this deal signing that you've done?

So, the potential, Nikhil bhai, is going to be about 3x from our current volume. We have significant revenue with IKEA. I would say in a digit about 10% of our total revenue. So that could -- so in terms of number, it is huge. 3x of that would somewhere be in the range of about 180,000 to 200,000 units what we're going to have. So I think, there's going to be a significant rise, and this comes a complete non-U.S. business. So I think the potential to achieve this is quite high.

Got it, sir. And is the assumption right that this is also going to be a high value-added product as in terms of margins or...

That's correct. That's correct.

Sir, in that context, just looking at your stand-alone numbers, FY '24, we did margins somewhere around 21.7%. Do you think this is -- these margins -- we can surpass these margins with these contracts and the overall capacity utilization in '26? Do we look at 22%, 23% EBITDA margins?

Yes. So I would rather say that, by that -- our focus has always been on a margin improvement. Sometimes you can have a bad quarter here. But I think, overall, the company's endeavor is always to improve to not to sacrifice the margin model to constantly improve that. So I think, that is going to be our emphasis in the coming quarters, coming years.

[Operator Instructions] The next question is from the line of [ Sujan ] from ASP Finserv.

So, first of all, congratulations Chirag sir, for your good set of numbers. My first question is, I just want to know that, will you please clarify your target market and audience in which regions in India are you primarily focusing on? And is there a stronger emphasis on B2B sales and B2C for also and for the...

We lost you.

Am I audible now, sir?

We lost you. Yes, you're audible now.

Am I audible now, sir?

Yes sir, so please repeat your question, sir.

Sorry for the interruption. I just want to ask...

I understand we are focusing in India on the premium market segment, the mid- to premium for the appliance.

Kitchen appliances and quartz or both?

Yes. Overall, our category that we target the premium segment of the market.

I just want to know about like primarily focusing on like B2B or B2C and which -- like in segment like kitchen appliances, you do the B2C more and small quartz B2B. So overall, which part of you are more in the domestic market?

Yes, domestic market, we're doing about 80% B2C and we do 20% B2B -- 20% to 25% B2B.

And another question, sir, from my side is, could you please provide the insight into the company distribution strategy for kitchen appliances? Are you leveraging existing distribution channels, or you are considering partnership with retail channels?

Correct. Good question. I think 70%, we are leveraging our network in terms of appliances. But we are -- about 30% of that, we are tying up with the electronic chain like we did 2 big tie-ups in Kerala, with one is with G-Mart and second is with some other large retail, I forget the name. So we are now -- I was very happy and pleased to see that, our brand was placed with Panasonic, Whirlpool or the large appliances other company. So I think we are emerging in at least in parts of the -- I mean, the whole of Kerala now is the electronic brand. So I think it takes time. It's not that something which you can achieve overnight. But I think our constant effort will result into that. So I think somewhere we need to leverage. But looking in the next 3 to 5 years down the line, I think we'll have 50% of our channels completely new than our current set of dealers. So we have to get into inroads with large modern trade electronic stores to get to up our game in the appliances segment.

Sir, just follow-up question on the last for...

Sorry to interrupt you, but we request you to rejoin the queue for follow-up questions. The next question is from the line of Vansh Solanki from RSPN Ventures.

Yes. I just want to ask on a current order regarding the U.S. So is it a onetime contract or a multiyear agreement? And is there a renewal terms or minimum volume commitments like something like that, if you can give details about?

No, these are all long-term contracts, which are at least for the last source they changed was after 15 years or something. These are very, very long, long-term contracts. We do not have any period of time mentioned.

Okay. And what is the guidance about average effective tax rate, because in the last 2 years, we are getting about 27%, 28% because of the U.S.A. subsidiary loss. So what would you think whether it will go to 24%, 25% like before?

Anand, can you answer? I'm not able to understand.

Sorry, you have to repeat your question.

So, in last 2 years, our average effective tax rate was around 27%, 28%. But if we see...

Tax rate, okay.

Yes. If we see before that our tax rate will be around 24% in last 4 years. So what would you think for the next period it will be?

Okay. So the tax rate has gone up, because of the higher tax rate in U.K. Earlier tax rate in U.K. was 19%, which from the last financial year raised to 25%. So because of that, our average tax rate has gone up. There is no change in tax rate in domestic business stand-alone.

Okay. And the last question is about working capital days. You mentioned it is 87 days as of now. So will there be a decrease in that?

Yes. So we are working, because there are some onetime inventory stock we have built up for our future demand because of the BIS issues, but that will get consumed and then overall normal operating cycle will come into play and will improve from this level. So they're definitely going to have a lower working capital going forward.

The next question is from the line of Rupesh from Intelsense Capital.

So I have several questions. First, I think on subsidiaries. So first question, I think, is on United Granite. Maybe if you can give how was the profitability for Q4? And how do you see next year panning out? The second question on subsidiary is Carysil products U.K., the revenue moved from GBP 9 million to GBP 12 million. So if you can give some idea about what led to this growth? And can we expect similar growth in FY '26? That is another question. And then in U.K., I think you said you had some deal with some retailer. I didn't -- if you can get -- I didn't understand that part. So if you can give some details around that. So that is the first question on subsidiaries.

Okay. So I think the subsidiary, there was a downturn. It was in the U.S., the home improvement business for the high mortgage rates, which is still there. But I think the improvement on -- we have improved from our part; we have started targeting the upper high class of the U.S. market. So we have started cutting the marbles and quads of very high and a unique exotic marbles and quad, which has led into higher profit margins. So, which we were about negative 8% to 10%. We have now crossed the breakeven. I think, we are about at 2% or 3% profit now. Coming quarters, I think we see a significant improvement in the margins moving forward. That's for the U.S. subsidiary. As far as the U.K. is concerned, we are immensely focusing on new products. We have launched ceramic. We have launched a new kind of faucets. We have introduced new kind of sinks. We have additional about 12 to 14 new customers on board. So I think that our team is very, very active to -- because we have a massive cost leverage here to take on the competition. As I mentioned in my speech, we are emerging to be in the first 3 majors in the U.K. market. Howdens was the largest kitchen manufacturer in the U.K., which we had signed a deal last year. So we are exclusively to Howdens. It's a very, very strong business, about 80,000 to 100,000 sinks a year just for Howdens. And they are still going very strong. I just -- I am in U.K., while I'm speaking and I'm meeting them, and they are still a few of the -- while the U.K. is not in the best of the economic in the situation. But surprisingly, the home improvement, with some of the large retailers still have been very strong. So I think by expanding our product range and by adding new customers, we should be able to continue our momentum.

Ladies and gentlemen, in the interest of time, we'll take this as our last question. I now hand the conference over to the management for closing comments.

Yes. I'm just trying to open my -- thank you, everyone. I hope we've been able to answer all your questions satisfactorily. However, if you need any further clarification, or want to know more about the company, please contact the SGA team, our Investor Relations Advisor. Thank you, and have a great evening.

Thank you. On behalf of Carysil Limited, that concludes this conference. Thank you for joining us and you may now disconnect your lines.