Salzer Electronics Limited (517059) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Salzer Electronics Limited Q3 and 9 Months FY '24 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Ms. Poonam Sanghavi from Progressive Shares. Thank you, and over to you, ma'am.

Thank you, Nirav. Good morning, everyone. On behalf of Progressive Shares, I welcome you all to the Q3 and 9 months FY '24 Post Earnings Conference Call of Salzer Electronics Limited. This conference call may contain forward-looking statements, which are based on the beliefs, opinions and expectations of the company as of the date of this call. These statements are not guarantee of future performance and involve risks and uncertainties that are difficult to predict. I now invite Mr. Amit Sharma for the opening remarks to be followed by a question-and-answer session. Over to you, sir.

Thank you, Poonam. Good morning, everyone, and thank you for joining us today to discuss the unaudited financial performance for the quarter and 9 months ended 31st December 2023 of Salzer Electronics. I have with me Mr. Rajesh Doraiswamy, Joint Managing Director, Mr. P. Sivakumar, Assistant Vice President, Marketing; Mr. P. Bellary, Assistant Vice President, Business Development; Mrs. R. Menaka, General Manager Accounts; Mr. K.M. Murugesan, Company Secretary; Mr. Jitendra Vakharia, Director, Kaycee Industries; and Mr. Raman, COO, Kaycee Industries. I shall take you through the consolidated financial performance of the quarter and 9 months ended December 2023 now. During the third quarter, we achieved a 10% year-on-year growth in sales revenue, demonstrating the underlying strength of our business. Revenues increased to INR 270.35 crore from INR 245.60 crores in the previous corresponding period. This growth was driven by Wires & Cable and Industrial Switchgear businesses. Growth in the sector led to demand for products like Building wires and Agri Cables, which contributed to the most of this increase. However, sequentially, there is a decline of 4% compared to the previous quarter, reason being our OEM sales slowing down and our exports also declining by 30%. EBITDA, excluding other income, saw an impressive growth, increasing by 25% year-on-year and 17% quarter-on-quarter. EBITDA was at INR 31.02 crore in Q3 FY '24 as against INR 24.90 crore in Q3 FY '23. The EBITDA margin for the quarter stood at 11.48%, up from 10% a year ago, mainly on account of reduced material costs in Switchgear business division. The profit after tax grew by nearly 28.11% Y-o-Y to INR 13.48 crores in Q3 FY '24. PAT margins also improved 1.3 percentage compared to previous quarter and 700 basis points compared to previous year. Coming to our 9-month financial performance. In the 9 months ended December 2023, net revenue in 9 months FY '24 stood at INR 839.74 crore as against INR 734.36 crore in 9M FY '23, a Y-o-Y growth of 14.35% driven by business from Industrial Switchgear and Wires & Cables segment. The EBITDA, which is excluding the other income, stood at INR 83.90 crore in 9M FY '24 as against INR 71.23 crore in 9M FY '23, a growth of 17.78%, mainly on account of reduced raw material prices as well as increase in sales price. The EBITDA margin at 9.99% saw an increase of 29 basis points for the 9 months. The profit after tax was at INR 33.75 crore in 9M FY '24 as against INR 29.77 crore in 9 months of previous year, a Y-o-Y growth of 13.36%. The PAT margin stood at 4.02%. Moving on to the breakup of revenue as per the business divisions. The Industrial Switchgear division contributed 54.80% to the overall revenue in this quarter and 55.03% in the 9-month FY '24. This business grew 3.5% Y-o-Y in Q3 FY '24 and 14.4% Y-o-Y in 9M FY '24. The EBITDA margin for this business division stood at 14.60% in Q3 FY '24 and 12.39% in 9M FY '24. Margins improved almost 2 percentage points compared to the previous year. In Q3 FY '24, our 3-phase transformer sale was flat Y-o-Y. However, in 9M FY '24, it grew at about 67.85% and Wire Harness business grew 60.12% Y-o-Y and 52.77% in 9M FY '24. The Wires & Cables division contributed nearly 39.02% to our revenue this quarter and 39.10% in 9M FY '24. There is increase of 23.22% Y-o-Y in this division during the quarter and 18.73% in the 9-month period of FY '24. EBITDA margin for this division stood at 8.13% in Q3 and 7.17% in 9 months, again, a 2% improvement compared to the previous year same period. The Building Products division has contributed 6.18% to revenue in this quarter and 5.87% in the 9 months. This business is the only B2C business that we have where we are all selling many electrical products for the building sector. Due to a higher sales outstanding, we are slowing down sales to specific distributors for this division and also there is a reorganization of the team and channel, which leads to improved growth trend in the coming quarters is what we suppose, which will help us increase our contribution from this segment. On the exports front, this quarter, the export share of revenue was nearly 24.50%. For this 9 months, an export share of revenue was 27.69%. Growth in export was 26% Y-o-Y. However, in Q3 FY '24, exports declined by about 5% Y-o-Y. Now that's all from my side. I would like to now hand over the call to Rajesh to take us through the business developments and way ahead. Over to you, Rajesh. Thank you.

Thank you very much, Amit. A very warm welcome to everyone for the Salzer Electronics Limited Third Quarter Earnings Conference Call. Thank you all for taking time to join us today. I think the results have been shared, updated presentation also has been shared. Hope you all must have gone through it. I'd like to share some recent developments and the outlook for the future. As we are almost in the middle of Q4 and stepping into the fiscal year of '24/'25, it's imperative to gain insights into the anticipated trajectory of the global market scenario. For us, I think a very cautiously optimistic view, the market is poised to undergo moderate growth driven by several key factors. As economies rebound from various geopolitical tensions, the surge in investments is expected in various construction infrastructure projects across the world and particularly India. This will, in turn, escalate the demand for all electrical products, including Wires & Cables. Also, the global shift towards clean energy is fostering investments in the renewal energy projects. The widespread adoption of automation and smart technologies across industries is fueling demand for specialized electrical components, wires and cables that support high speed data transmission and connectivity. Currently, the ongoing geopolitical tensions exemplified by the US-Houthi Red Sea war introduced new uncertainties that can disrupt global markets and supply chains potentially leading to higher prices and shortage of raw materials. Escalating prices of key raw materials such as copper, aluminum, silver, plastics, et cetera, are exerting pressure on manufacturers' margin and could translate into higher prices for finished products. Following the COVID-19 pandemic, global supply chains have been disrupted by Russia-Ukraine conflict and then the Israel-Hamas war and more recently, the Red Sea disturbances. These events have exposed vulnerabilities in supply chains, leading to delays in deliveries and shortages of crucial components. This disruption poses a significant threat to the production and availability of various components and raw materials across the world. Now coming to the key developments that have happened at Salzer in the last quarter. During this quarter, the overall market faced a slightly slow pace, especially in the Industrial Switchgear sector, influenced the global geopolitical uncertainties and economic slowdown in the U.S. and Europe. Despite these challenges, our Industrial Switchgear business as well as the Wires & Cable business grew. The notable increase in demand for Wires & Cables was mainly driven by both building wires and the agri market cables. While the numbers reflect a slight slowdown sequentially in our growth, particularly in comparison to previous quarter, we remain confident in the long-term potential of the business. The increase in EBITDA and PAT, coupled with improved margins, underscores our ability to navigate challenges and capitalize on the opportunities. I'm also very happy to share an update for our joint-venture company, Salzer Kostad EV Chargers Private Limited. The company has completed the development of DC fast chargers, which is suitable for various types of cars. The charger has almost completed the testing at the Automotive Research Institute in Pune, and we expect to launch and bring the product into sale in the current quarter. This strategic move not only solidifies our positions in the rapidly evolving electric vehicle charging industry, but also demonstrates our commitment to pushing the boundaries of technological advancements. We believe that this infusion of capital into this joint venture is not just a financial transaction, but a strategic step that aligns seamlessly with our long-term vision. Recently, we also secured a patent for our product, heavy-duty energy-efficient automatic changeover, which is listed in our Building segment business. This patented innovation made its mark -- debut in the sales in 2016. This is a very precise solution crafted to effectively manage the distribution of generator power, the backup power in the residential buildings. Its function is to help prevent overloading on generator. This product has benefited in revenue generation of around INR 10 crore so far, and it is a high-end product that will help the company thrive in the future. As far as our subsidiary, Kaycee Industries Limited is concerned, the sales have been growing consistently and the EBITDA margin is also improving. Kaycee's top line grew 20% year-on-year to INR 12.3 crore in Q3 of this financial year from INR 10.2 crore in the last year. EBITDA grew 40% year-on-year to INR 1.62 crore in Q3 FY '24 from INR 1.16 crore in the previous year third quarter. PAT margins are also at impressive 8.59% this quarter, an improvement of 23% over the previous year in Q3. As we approach the last quarter of this fiscal year, we acknowledge the increasing challenges and slight slowdown in the Indian markets as well as the Western markets. However, we are well positioned with the diverse product portfolio to continue the growth that we have been having. Our enduring partnerships with key global players also will provide stability during these challenging times. Looking ahead, we are optimistic about the medium- to long-term prospects of the company, despite near-term exits. We see significant potential for growth and value creation, driven their strategic initiatives like our foray into EV charging along with diversification of products into various new sectors, one, including the HVAC sector that we have done recently and the renewable sectors. I thank my entire team at Salzer Electronics for their untiring efforts and all our stakeholders for their continued support and faith in our company. Thank you all once again for your support. And now let's take questions.

[Operator Instructions] The first question is from the line of [ Ritesh Oswal ], an individual investor.

Your Q3 revenue is INR 270 crores and inventory is INR 290 crores. As per industry standard, it should be below INR 100 crores because it's not a high-margin business causing 73%. Any reason for high inventory?

Our inventory base have remained almost same compared to what it was in March or September at 90 days. We have to -- when we look at the inventories and the receivables, I think we have to annualize the sales. So basically INR 290 crores of inventory is for the annual revenues of approximately INR 1,100 crores that we might achieve.

Because there is fluctuation in metal, plastic polymer, nobody in the industry is keeping -- is maintaining such large inventory. Unable to digest INR 290 crore inventory and INR 270 crore sales.

I think I repeat that. I think INR 270 crore is a 3-month sale.

Yes. I know INR 270 crore...

We need to -- as an industry, I think we have been consistently maintaining an inventory of close to actually 110 days, which has now reduced to 90 days. At the max, we will be able to reduce another 10 days of inventory on the annual sales. That's the standard for this business that we are doing.

Yes, if you are reforming the supply chain, you can reduce up to -- till 30, 40 days. So ROC will be increased.

It won't be possible, sir, because our process time for the product production itself is close to around 30 to 45 days.

Yes, I know from this -- I know industry, copper wire, it's not long duration process. It's not chemical industry or construction industry you would need such long inventory. Because major raw material is your metal products. So it's okay.

[Operator Instructions] The next question is from the line of [ Devansh Singla ], an individual investor.

I wanted to ask like that the company want to expand in the charger business, in the electrical vehicles. I want to ask what are the risks from the swapping batteries? They are getting traction in the market right now.

You're asking, are we getting into swapping of batteries?

What are the risk of that? Like you are getting into the charger business, that swapping battery is getting more traction in the market right now with the new start-ups coming in.

Yes, sir. I think electric -- EV business is still evolving. I think there will be a lot of new technologies that will keep coming up. But looking at the most developed countries, what has happened over the last 4 to 5 years, I think the charging business will remain because swapping of batteries for 4-wheelers and buses and trucks might not be an easy solution. So I think chargers will...

We've seen countries like Vietnam, where 90% of the charging is through swapping only.

Mostly for the 2 wheelers.

Yes, in 2 wheelers, yes.

But whereas we are concentrating on a 4-wheeler charging.

Okay, okay, okay.

Four-wheeler, buses and trucks.

The next question is from the line of [ Balamurali Krishna from Oman Investment Advisors ].

Congratulations on good numbers. So my first question is regarding the DC chargers.

Bala sir, sorry, but your voice is not coming clearly.

Yes. My first question is regarding the DC chargers. So we are going to launch in this quarter. So do we have any orders in place to supply or any talks with any other customers for the immediate revenue potential there?

We don't have orders in hand, but we are in talks with multiple potential charge point operators in the country to give our chargers for evaluation and supply.

Okay, sir. And so what could be the potential of this segment if you scale up and fully ramp up production of the chargers in FY'25, FY'26, so what could be the revenue potential from this charger?

It is very, very difficult to estimate the potential -- revenue potential for a product like this because of the way that the market is operating at this point. So -- but the potential is immense. We see the total market size to be close to 2 lakh chargers in the country over a period of next 3, 4 years. So 2 lakh chargers means it's kind of more, I would say, each charger will be costing anywhere between INR 7 lakhs to INR 10 lakhs is the cost of the charger when you can imagine the market size. So that's the market size that we are seeing in the country. But what revenue the company can generate in the next 2 to 3 years is very difficult to estimate at this point of time. Maybe a couple of quarters down the line, we will be in a better position to say where we stand. As far as the capacity is concerned, we have a capacity to produce 100 chargers a month at this point of time.

Okay. Understood, sir. And regarding the margins, do you see any uptick in the upcoming quarters because of softening of this metal price?

Yes, I think we have seen -- I think we are back at 11% plus EBITDA margin levels as of now. And I think this will continue for the Q4. And going into the next quarter, we might see some improvement further on this.

Next question is from the line of Senthilkumar Natarajan from Joindre Capital.

Sir, my first question is, what is our site cost for this quarter, sir? I'm asking this in the context of Red Sea issue. Do we face any impact due to this Red sea issue?

You're talking about the freight cost, the outbound and inbound freight cost, correct?

Yes, sir.

I have to take a look at it. Yes, I think it has definitely increased -- not increased. I believe it has remained flat compared to a year before last year. I mean, sorry, year -- last year 9 months and this year 9 months. More or less, it has remained flat.

So right now, we are not facing any challenge in supply chain? I'm right sir?

I think it will -- whatever is happening now will get reflected in the coming quarter.

Okay, I understand that. And my second question is, I could see there is 29 percentage degrowth in revenue from Asia region on sequential basis. Any particular reason for that, sir, because we don't have any supply chain issues in the Asia region, right?

You're talking about the export revenue, right?

Yes, yes, yes. On a sequential basis, particularly on Asia region?

Yes. I think the -- it is not 29%, I think it is 19% Asia, it has declined. Overall, our exports have declined considerably in this quarter sequentially. I think we are seeing a complete slowdown in U.S. and Europe mainly because of -- I think that impact is having an impact across the world. That is the reason that we are seeing a slowdown in overall all markets. I think Middle East for us has declined. Asia, Europe, all markets have declined in this quarter sequentially. But year-on-year, in 9 months, I think we are still flat, I would say, compared to last year.

Okay. Do we see any recovery signs?

We will have to wait and watch because I think it's election year in many countries. And the information that we hear from our customers, particularly from U.S. is that the markets are not that very good. Until last -- until 6 months September, things are actually not bad. But now I think they feel the heat and then it looks like the markets are slowing down in U.S. So we will have to wait to see when this can improve. I expect that it will continue like this in Q4, and maybe we can see some improvement from Q1 next fiscal.

Okay. Understood. And lastly, what is your gross debt as on December 2023, sir, gross debt?

It remains as it is like last quarter at INR 280 crores.

This includes the term loan, right?

No. Term loan is additional 9 crores.

9 crores, okay.

[Operator Instructions] Next question is from the line of Vipin Abraham from Integritechnologies Private Limited.

Congratulations on a good set of numbers. So the question I will ask is that the Building segment...

Can you speak little louder, please?

Yes. So the Building segment revenue for the 9 months have come down from 7.8 percentage of the overall business to around 5.9%. And I understood that you have reduced it purposely because you are facing collection issues. So if this segment is a very profitable one, then what are we trying to do about it to make the changes and improve the -- that business segment?

I think as we mentioned in the call, we are trying to reorganize a little bit both our team as well as the channel. I think since being a retail business and in the retail business, we're not being a very, very strong brand as of today. We are definitely facing some collection issues with the specific distributors. So that's one of the reasons that we have specifically not gone very aggressive on sales. And the result is that I think the sales is stagnating at around INR 16 crores for the last 4, 5 quarters. Idea is to ensure that now we don't lose the money because of collection issues. At the same time, we are trying to improve on the quality of the distributors and also trying to see how we can approach the customers directly to do this business. So that's -- those are the things that we are doing. Hopefully, from next fiscal onwards, we will see growth coming in. However, I would like to mention here that if you look at a year ago, FY '22 to FY '23, I think we have seen close to 60% growth, almost 55% growth. That means we are already operating on a higher base for FY '24. So we have to stabilize a little bit in this year before we continue to grow at the same pace.

Just one more question. What would be your guidance approximately for the next year in revenue?

For Building segment or overall company?

Overall, overall.

I think this year itself, our guidance when we started this year was close to 20%. However, I think on a consolidated basis, we see we are growing at around 14% as of now, though the profitability has improved. We expect that we will close this year at close to around 14%, 15% growth. Next year, we expect that it is most of the hindrance that we are facing now will be over. And with whatever we have done -- work we have done in this year can give us a growth of anywhere between 18% to 20% for next year.

[Operator Instructions] Next question is from the line of [ Rohit Dubey from RD Capital Group ].

I have a question regarding the business potential. So when we talk about the growth in the future and margin improvement, may I know how much is dependent upon the external factors like fall in raw material and industry growth? And how much is dependent upon the efforts that we are making? And I would also like to understand the efforts that we are making as a company to improve our sales in ROC?

I think the external factors might impact our top line growth, if there are major untoward incidents that can happen across the world. The economy is not growing like they expect U.S. to go into recession, but it has not really gone into recession, but there's a slowdown. Those kind of things might definitely impact the top line growth. However, I would like to stress that as a company, we are quite spread out. There's no concentration of business for us in any country or any customer beyond 8% at the max today on the total revenues. So that gives us a very good spread for us. But if we see a volume growth of close to 20%, 25%, then we can expect a good margin improvement on the EBITDA levels.

One follow-up question, sorry, if I may?

Sorry?

One follow-up question regarding this. You said, 20%, 25% growth you might see. So what will be the catalyst for that growth? I would like to understand that.

I think the -- basically, our products are used in the infrastructure. So basically the infra growth will fuel demand for all our products.

Okay. So mostly dependent upon the industry.

Yes.

Next question is from the line of Pranay Gandhi from Green Portfolio.

Sir, first thing I want to touch base back with the EV charger side of the business. Previously, the management was contemplating on the business plan. And I believe as you just mentioned that we are looking to supply it to charge point operators. So with that side of business, have you totally closed the other angle where you were looking to set up your own infrastructure and charge points?

No, we have not closed it, but our focus right now is to establish the product quality and reliability, so we will continue -- we will start doing sales of the product to charge point operators in the first phase. At the same time, I think we are also exploring to see how we can become a large charge point operator. I think that business is a completely -- has different dynamics than to manufacturing because we are completely shifting the whole scenario from a manufacturing company to a service providing company and which needs enormous capital, which needs a complete different dynamics. But we are not closing the chapter, we are keeping it open and we are exploring that.

Okay. And sir, what is the per piece cost of the EV chargers? And how many kilowatts are we talking about?

Our capability is to produce starting 30 kilowatts and go up to 240 kilowatts in terms of -- in multiples of 30 kilowatts. Pricing, I think the 30 kilowatts will be anywhere between INR 5 lakhs to INR 6 lakhs and 60 kilowatts will charge between INR 10 lakhs, INR 11 lakhs and going upwards like that.

Okay. And I believe since the current capacity is 1,200 units. So even with 30 kilowatts, if we consider it gives the top line of around INR 70 crores. And I understand the fact that we are just going to test it in this quarter itself. But how do you see it growing considering the fact, as you had already mentioned that there's immense potential on this side of the business from INR 70 crores and I understand previously you have mentioned that it has the potential for the company to reach INR 500 crores. So firstly, if you have to expand the manufacturing capacity, how much would it cost? And if you could just explain the matrix? And how do you see the growth moving forward in this side of the business?

My opinion, I think this is not a very high CapEx-intensive industry. This is a more technology-oriented product. As you rightly said, if we do all 30 kilowatt, there are INR 70 crore revenue capacity as of now. Or if we do all 60 kilowatts, actually, we always keep 60 as a benchmark barometer. 60 kilowatt if we do, then it is INR 120 crore revenue capacity that we have as of now. So to take it 5x more, we expect that there should be a CapEx of between INR 70 crores to INR 100 crores at the maximum level, I'm talking about it, It has to be lower than this to achieve INR 500 crore to INR 600 crore top line.

And if probably in the future, the company decides to set up its own infrastructure, what would be the expenditure related to it?

Okay. That's all different ball game. You meant to say that when we become our own charge point operators, correct?

Yes. Yes.

Yes. That's a whole different ball game because suppose you want to install 1,000 chargers at 10 lakhs, then you know how much it works out to. So it's close to INR 100 crore investment. And 1,000 charges as a charge point operator, it's a very small quantity.

Right.

So that's a whole different ball game that we are looking at that, that should be done. We would like to become a charge point operator, but then when we come to that stage, I think we will make a plan, and I expect that we will do that through a subsidiary of company, different company.

Fair enough, sir. Sir, one final question. Previously, you have mentioned that the ideal case scenario target would be doubling the top line in the next 3 years. So with the current product portfolio that we have, do you think that sort of revenue is achievable considering the fact that this year, we'll be doing 14% and the next year, it would be 18%? Doubling the revenue over the next 3 to 4 years seems far-fetched as of now?

I really don't see it as a big challenge. Definitely, I think we are constantly doing a lot of things, getting new products into the line, adding new customer sectors as our customers. So that's a constant work that we are doing. We are still confident to double our business from 1,000 last year FY '23 to 2,000. I didn't say 3 years. I think 3 to 4 years was our target. So internally, we have a 3, but we would like to commit 4. So definitely, I think in 4 years from last year, we'll definitely -- we are still confident that we will be able to double this with whatever we are doing now.

Next question is from the line of [ Devansh Singla ], an individual investor. Due to no response, we will move to next participant. Next question is from the back of [ Mohit Doshi ], an individual investor.

Actually, I had just 3 questions. So actually, in this quarter, the Wires & Cables division grew, I mean, at a pretty robust growth. So could you please let us know if this was -- I mean, basically due to a particular product or just a random reason?

No. I think Wires & Cable business have been -- have not been growing very well in the last few quarters because of various reasons, which has again found its place. And I think the agri market cables in this quarter. It's also a seasonal quarter. We don't have the reason that it has grown well this quarter. And year-on-year also, I think last year was not a great year for entire agri cables. So because of that year-on-year also, we see 18% growth. And most of this growth is because of volumes and not in price.

Okay. And sir, second question was related to interest rate -- interest rates. So it has -- finance cost has been up by almost 4.8% quarter-on-quarter and almost 30% year-on-year. So any -- I mean, is there any particular reason? Or it's just for working capital that is being used?

There are 2 things that have happened. One, I think the overall borrowing also has gone up by around INR 20 crores compared to last financial year. That is one. Secondly, the interest rates in India have gone up by around 1.5%, Indian rupee interest rates. And also the dollar interest rates have gone up by close to 2% to 2.5%. I think that is the impact that we are seeing in the finance cost.

Okay, sir. And just one last question. So sorry, it might have been repeated. So it's the year-on-year growth in the EBITDA and EBITDA margin has been about 24% and 120 bps almost, respectively. So any particular reason for those numbers?

I think in this quarter, if you see, we have considerably reduced the raw material cost. I think that is the main reason for the increased EBITDA margin. And this has happened because of the constant reduction in material costs that we have been working on and also the increase in sales price to close to around 3% that we have got the last several quarters.

Next question is from the line of [ Devansh Singla ], an individual investor.

I have recently started tracking this company. I am very interested in this EV business. I had the question before also. I wanted to know about... [Technical Difficulty]

Your voice is not coming. Can you please speak through the handset?

Okay. Am I audible now?

Yes.

Yes,, I wanted to know if you are thinking of any partnership with four-wheelers or commercial vehicle manufacturers like Tata or Mahindra?

No, I think we have not really worked on that. But at the same time, we also don't see a big potential that the automotive makers will get into partnership with the charging manufacturers because that...

Like that now there is a BluSmart. They are having four-wheeler taxis. They are having their own fleet of charging stations. Like you can partner...

That's a different story. I'm talking about the automobile manufacturers. I don't think they will be interested in any chargers of the kind that we are making. But yes, the fleet operators might.

Yes, you can act as a fleet operator and like partner...

They are our potential customers.

Yes. Like different automobile manufacturers have their different patents for chargers. Like they're in mobile micro-USB type. See, there are different chargers for EVs like Ola and Ather in two-wheelers. They are having different chargers. You can partner...

We are not getting into two-wheeler chargers. We are not getting into two-wheeler chargers. We are only into the four-wheeler, buses and truck chargers.

Okay. So your charging stations will have pin for these automobile manufacturers, the charging pins you will be compatible with those?

Yes, with all the cars.

Okay. But there will be no partnership with these, fundamental partnership?

No, not required to be.

Next follow-up question is from the line of [ Balamurali Krishna from Oman Investment Advisors ].

Could you please update on this Hosur plant...

Bala, your voice is not coming clearly.

Could you please update on this Hosur plant capacity utilization levels as of now in this cables harness business?

I think on an average, all of the plants are currently operating at around 70% capacity.

Okay. And then EV chargers -- so I think EveyTrans is the biggest operator as of now because they are covering the entire Mumbai region. So are we in talks with them for the chargers?

Which company?

EveyTrans, which is a collaborator, the subsidiary of Olectra. They have around 9,000 buses order from Mumbai and Suburban area.

No, we are not in touch with them as of now, but maybe I've noted it.

So Olectra is going to supply approximately 8,000 buses to the Mumbai region. So there, the EveyTrans is the operator. So better maybe we can get some opportunity over there.

Yes, yes, definitely. I' have noted down and thanks for this information.

Okay. And lastly, so in this FY '25, so we are starting with the 30-kilowatt chargers. So we can expect some higher kilowatt chargers in FY '25 itself? Or maybe it will take some time to get those chargers?

No. We are already ready with 30, 60 and 90. We can produce this up to 90 right now. And we can also produce 120 and 240 in a couple of months' time.

Next question is from the line of [ Nikhil Gupta ], individual investor.

Congratulations on a good set of numbers. Sir, the Wires & Cables divisions have grown approximately 23% to 25% in this quarter. So I just wanted to understand that which products, particularly in this segment have contributed to this growth if you can help me out?

Yes. I think the top line growth has come mainly because of the Wires & Cables because the Switchgear business division has only grown around 4%, but the Wires & Cables division has grown around 23%. So the overall growth of 10% is mainly because of the Wires & Cables in terms of revenues. However, in terms of profitability, if you see, I think our EBITDA in the Switchgear division in this quarter has gone up to around 14.5% compared to 12.8% in the previous year. And actually, sequential quarter, it was only around 11.5%. So there is a substantial improvement in the EBITDA margins of the Switchgear division. On the Wires & Cables also, we are seeing improvement in EBITDA margin close to around 1 percentage point year-on-year as well sequentially.

Okay. That's great to know, sir. Also the exports have declined sequentially. So was this specifically due to the geopolitical tension or any other reason must be there?

No. I think it is a combination of both geopolitical tensions as well as the general slowdown in the Western markets because of the inflation, which they have been talking for many, many quarters now. I think we're really seeing it right now.

Okay. Okay. Got it, sir. Sir, and if we focus on the growth and expansion phase, so any key geographical market or region that we are targeting upon to reach?

We are working on various new products and markets. I think we were targeting the Australia and New Zealand market for the last year, which we have secured some good business there, which we will see -- the benefits of that we will see -- we are seeing this year, and it will continue to grow next year. The next is I think we are also focusing on Saudi Arabia and also many other Middle Eastern countries, where we are seeing potentially high growth in the coming years.

Okay, okay, sir, that's great to know. Sir, one last bookkeeping question from my side. So what are the inventory debtors and creditors day as of December, if you could help me?

Sorry, say that again.

What are the inventory debtors and creditors days as of December, if you could help me?

Inventory, I think I had just mentioned to the first. Inventory days are at around 91 days right now, same as 91 days in September. Receivable days are at 94 compared to 96 in September.

The next question is from the line of [ Nihar Mehta ], individual investor.

I noticed on the revenue part, there was an increase. I have joined late. If you could reiterate what are the key drivers for our revenue growth? But also mentioning as it has increased somewhere odd around 9%, but it's also been dropped by 4.1% sequentially. So if you could highlight reasons for that?

Yes, I think revenue -- our revenues increased consolidated 10% compared to previous year. And quarter-on-quarter, it has declined 4%. This year-on-year revenue increase in the business divisions, if you see, our Switchgear division increased around 4% compared to last year third quarter, and Wire & Cable increased 23% compared to last year third quarter. So primarily the 10% increase has come because of the good business that we have secured from Wire & Cable industry on the revenue front.

Also on the employee expenses side, have you hired or are you planning to extend your human capital in terms of team building because I saw there was a significant increase on a Y-o-Y basis in terms of employee expenses?

Yes, I think we have a year-on-year increment that we give. So that has been accounted for. And of course, new additions, new team and new people in place. So these are the 2 reasons for increase in the overall employee cost. However, any cost of employment in terms of percentage to sales remains at around 3.5%.

Okay. Okay. Okay. And also, I observed that there is a small reduction in our raw material prices. So is it -- I mean, are we purchasing the raw materials in bulk just because we're getting it at a lower price? Or how it is like impacting our revenue?

Overall, I think post the pandemic scenario, the raw material prices started dropping, which -- I think the impact of which is now being seen, one. And secondly, the increase in our sale prices to some extent on an average around 3% increase is also having an impact on the reduced consumption.

And what all is included in the other income because I saw a significant jump in that line item also? So if you could highlight.

Yes, sure. The other income mainly includes dividend received from our investments and the foreign exchange rate difference and also some investment profit on sale of investments.

The next question is from the line of [ Parth Patel, an HNI ].

I wanted to understand when will the Switchgear -- when do you expect the Switchgear business growth to again pick up? And secondly, on the Wire & Cable side, do you expect similar growth to continue?

Wire & Cable, yes, I think we will hopefully continue to grow at around -- between 15% and 20%. That's what we expect for the full year as well as for the next few quarters. Switchgear, ideally speaking, it has to grow 15%, 20% year-on-year, but for our decline in exports and also a slowdown in the Indian market. So we think Q4 might also be a little bit similar to what we saw in Q3 or a little better than Q3. But going forward for next year, we definitely expect the overall business to grow at 18% to 20%.

Got it, sir. And just a follow-up question on that. So in India, as such, I mean, we are hearing a lot on the infrastructure side and a lot of projects, et cetera, are also picking up. I do understand with upcoming elections, some of them might be stalled or delayed. But is it linked to the infra activity in India because that seems to be doing well?

So it is linked to the infra activity. So as I said, I think last year, we had a very good growth on the Switchgear business, close to around 33%, 34% growth on the Switchgear business. So that means that we are looking at a higher base and then growing it from further at that pace onwards. And particularly last year, Q3 and Q4 was a very good quarter for Switchgear industry -- Switchgear business for us. So again, we are looking at a higher base and try to grow from there. So that's where the growth percentage is coming down for this quarter. But nevertheless, I think we will definitely get back to around 15%, 20% growth rate in Switchgear industry in the coming quarters for next year.

Got it, sir. And on the EV charging side, sir, in last con call, you were mentioning that you are looking at the GTM approaches. So whether to partner with someone or go direct to the consumer, et cetera. So have you finalized the road map as to how you're going to roll it out in the next one or 2 years?

No, I think as I just mentioned in the call, we will first start to try and sell the chargers to the charge point operators and various consumers and customers who would like to buy and install, that will be the first phase of business that we will do from this company. Secondly, we will also try and explore how we can become a charge point operator.

Got it. And so sorry, I joined late so you had to repeat that. I'll just go through the con call notes again.

As there are no further questions, I would now like to hand the conference over to Mr. Rajesh Doraiswamy for closing comments.

Thank you very much, all of you, for your interest in the company. Looking forward to interact with you again for the next quarter. Thank you all.

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