Aaron Industries Ltd (NSE: AARON) Q2 2025 Earnings Call dated Nov. 22, 2024
Corporate Participants:
Amar Chinubhai Doshi — Chairman and Managing Director
Monish Amarbhai Doshi — Director and Chief Financial Officer
Paresh Naik — President of strategy and business development
Karan Amar Doshi — Whole-time Director
Analysts:
Jay Shuryavanshi — Analyst
Prathamesh — Analyst
Harshwardhan — Analyst
Sunil — Analyst
Smith — Analyst
Jignesh — Analyst
Presentation:
Operator
Good day, ladies and gentlemen and welcome to the Aaron Industries Limited Earnings Call. [Operator Instructions]. Today we have Mr. Amar Doshi, the Chairman and Managing Director; Mr. Monish Doshi, Chief Financial Officer; Mr. Karan Doshi, Whole Time Director; Mr. Paresh Naik, President. I now hand the meeting over to Mr. Amar Doshi, Chairman and Managing Director for his opening words. Thank you. And over to you, sir.
Amar Chinubhai Doshi — Chairman and Managing Director
Good evening, everyone. Can you hear me? Hello?
Operator
Yes sir. You are audible.
Amar Chinubhai Doshi — Chairman and Managing Director
Okay. Good evening, everyone. It’s a pleasure to welcome you all to our first ever investor conference call. On behalf of the entire team, I want to thank each of you for taking the time to join us. Your support and belief in our vision mean a great deal to us. And we are excited to share our story and plans for the future with you.
Before we dive in, let me take a moment to introduce Mr. Paresh Naik, President of the company is leading in a strategy and business development having vast experience of more than 35 years in sales and marketing of IT, telecom and distribution of products. Out of the 35 years, last 20 years he was in Reliance Industries Limited as taking care of sales and distribution.
Under his leadership, we are confident that our market which will increase and we will foray into new avenues. As this is our first conference call, we want to take a moment to share our journey so far. We believe it’s important for you to understand the roots of our business, the challenges we have overcome and how these experiences have shaped the direction we are headed in today.
To provide a deeper perspective of our journey and to share some insight into our financial performance, I would like to invite Mr. Monish Doshi, our Executive Director and CFO to take the floor. Over to you, Monish Doshi.
Monish Amarbhai Doshi — Director and Chief Financial Officer
Thank you, Amar Doshi. Now let me take you back to where it all started. Our journey began in 2013 where our founder, Amar Doshi saw a unique opportunity in the vertical transportation market here in India. At that time, elevator manufacturing in India faced two major challenges. First, a significant portion of components had to be imported, which added cost and complexity.
Second, there was a general lack of faith in Indian manufacturers as imported brands dominated the market. In addition to this, we saw another great opportunity. Many domestic elevator companies, despite having potential, were struggling to manufacture quality products due to lack of robust manufacturing units.
The number of such companies in India was substantial and we recognized the gap we could fill. Instead of viewing these domestic companies as competitors, we thought strategically and decided to target them as partners. We positioned ourselves as an OEM partner to empower these companies with high-quality product, thereby helping them to compete on a level playing field with the industry leaders. This approach allowed us to add significant value to the ecosystem while creating new opportunities for growth. Overcoming these hurdles wasn’t easy. It took us years of hard work and unwavering commitment to prove ourselves, build trust and earn a reputation in the industry. But with persistence, innovation and the support of a talented team, we carved out a space for us.
Through our creative and forward thinking approach, we soon gained a strong foothold in the Indian market. One of the defining moments in our journey was the introduction of our autodoor systems, a solution that few Indian companies could offer at the time. This innovation was widely embraced by customers across the country and allowed us to establish a truly pan-India presence. Another game changer for us was our decision to embrace backward integration in 2018. After successfully launching our public issue in that year, we began working on this strategic initiative to further strengthen our operations and address a gap in the market. With this vision, we set up a stainless steel polishing unit which enabled us to reduce dependency on imports and start supplying polished stainless steel sheets directly to our customers and suppliers. What began as a strategic move to strengthen our operations quickly turned into a thriving business segment, expanding our reach and impact.
Today, as we reflect on more than a decade in business, we are proud of how far we have come, but we are equally excited about what lies ahead. India, as you know, is one of the largest market for both elevators and stainless steel consumption. With the country’s infrastructural growth projected to accelerate rapidly over the next 10 years, the opportunities are immense. However, instead of relying on imports, we want to reverse the flow.
Our vision is to develop high-quality, innovative products here in India that not only meet domestic demands but also enable us to export to other market across the globe. At the heart of our vision is a simple principle identifying the pain points of our customer and the industry and developing solutions that empower them to overcome their challenges.
Innovation and sustainability have always been our driving force and we will continue to stay true to this value as we move forward. Before wrapping it up, I would like to share some financial data with you all. Our journey of growth continues with yet another remarkable quarter. Revenue from operations surged by an impressive 30.64 percentage year-on-year to INR18.29 crores. This reflect the increasing demand for our product and our ability to capture market opportunities effectively. EBITDA witnessed a robust growth of 48.90% standing at INR3.27 crore. This was supported by operational efficiencies with our EBITDA margin improving to 17.87% compared to 15.68% in the same quarter last year.
Profit before tax grew significantly by 75.96% year-on-year reaching INR2.50 crore. Profit after tax followed suit growing by 52.01% year-on-year and stood at INR1.82 crore. Lastly, our earning per share increased to INR1.72 a significant 56.36% growth year-on-year delivering greater value to our shareholders.
Half-yearly performance for the first half of this financial year, we have maintained strong growth momentum. Revenue from operations grew by 20.18% reaching INR35.48 crores compared to INR29.53 crores in H1 financial year 2024. EBITDA rose by 32.53% to INR6.62 crores with EBITDA margin improving to 18.65% up from 16.91% in the same period last year.
Profit before tax increased by 40.09% year-on-year to INR5.12 crore in rupees. And profit after tax climbed to INR3.69 crore a growth of 31.52% year-on-year. Earning per share for the half year stood at INR3.50 up from INR2.63, delivering a growth of 33.08% year-on-year. Now I would like to open the floor to questions. Please feel free to ask about anything whether it is our journey, our current operations or our plans for the future, we are here to share. Thank you.
Questions and Answers:
Operator
Mr. Jay Shuryavanshi [Phonetic], you can start with your question.
Jay Shuryavanshi
Good afternoon, everyone. Hello, am I audible?
Amar Chinubhai Doshi
Yeah. Good afternoon.
Jay Shuryavanshi
Yeah. So congratulations for your first con call.
Amar Chinubhai Doshi
Thank you.
Jay Shuryavanshi
So basically I want to ask the question on what is the company’s vision for next three to five years?
Paresh Naik
Okay. Yeah, Parish Naik here. Good afternoon. I would — before answering this question, I would like to draw everybody’s attention at the consistent revenue growth for the last three years that the company has delivered. The revenue growth has been 36% year-on-year. So this reflects the commitment of the company to grow every year by taking the right steps on the production and on the sales part.
Now to enhance this and for the future growth, what we have done is that we have focused on two aspects. One is production and second is increase in our sales and distribution. So on the production front, we have invested largely into automatic machines. So this has led to our increase in production. And we’ll be doubling the production by the end of this quarter itself. Plus on the distribution front, we have ensured to have distributors in large cities of every state. Today we have more than 12 distributors around the whole nation. And we are even increasing our warehouse, establishing warehouses.
Warehouses help in delivering products at a very short notice wherever it is required. We have warehouses at present in Kolkata, in Ahmedabad and we have a warehouse even in Indore. We have distributors around the whole country. So the enhanced production and increased distribution will help us to grow year and year and we assure you that we will exceed the 36% growth that we have achieved in the last few years. Thank you.
Jay Shuryavanshi
Thank you, sir.
Operator
Mr. Prathamesh [Phonetic], you can ask your question now.
Prathamesh
Yeah, so first of all, so congrats for the good set of numbers. So my question. I have couple of questions. So first I’ll start with the increasing capacity that we are going to do from 2,000 to 5,000. So currently, sir what — at what capacity utilization we are running at let’s say for FY24?
Karan Amar Doshi
Hi, this is Karan here. So currently we were actually producing somewhere between 1,800 to 2,000 doors a month. And looking at the — our capacity pre-installation of the new machine, we were actually running at around 80% of our capacity. Now after once the new installation is into operational, we will be having a capacity of around 5,000 doors a month. And we look forward to increasing the assembly lines, the sales that Mr. Parish said, the warehouses and the distribution network too.
So that the capacity that we have actually installed, we hope to reach to fulfill those capacity and get the maximum utilization of the machinery.
Prathamesh
Okay, so the 5,000 auto doors is basically per month that we can produce.
Karan Amar Doshi
Right. That is per month.
Prathamesh
Okay. And by when, sir, we expect to reach peak utilization.
Karan Amar Doshi
That depends on actually how the market is supporting us and how fast we are actually able to cope up with all the — will require some more working capital and everything. So we are actually working on it, but that might take us a couple of years. And so two or three years down the line we look to utilize it completely, right? And if we achieve it before that, then it will be a good result for us also.
Prathamesh
Okay. And the customers that we have in this segment. So are these recurring customers or like how does it work? It’s completely B2B.
Paresh Naik
See Paresh here. Just to explain our business, we are purely into B2B. We are OEM. We are suppliers to the OEM. We are not installing the elevators. We are actually supplying to the companies who are installing elevators. So it is purely number one, it is purely B2B. Number two, the best part of our business is that 80% of our customers are recurring customers. This recurring customers have established trust in the last few years.
They have so much of trust in our products and our after sales service that we are getting consistent business from throughout the India through a very large number of customers. So the dependency on one or two customers or a very small segment is not there with us. So that is helping us to expand further because in every region as we have those satisfied customers with their reference, we are grabbing business from other customers also in that state or in that city.
Prathamesh
Okay. Got it. Yeah. So just last question on the stainless steel division side. So just wanted to know what are these sheet and where are these sheets used, this PVC coatings, decorative SS sheets and what’s its contribution in overall revenue as of now.
Paresh Naik
Okay, so again over here I’ll just brief you that elevator business is basically dependent on SS sheets. Any manufacturing that we do of the auto door or cabin, it is made out of SS sheets. That is number one. These SS sheets are — there are different processes that we have built in our factory which add value to those SS sheets. Like polishing, like giving color by the process called PVD, where we get SS sheet in gold color, in rose gold color, in black and multiple other color shades.
Then we even have our own designer sheet division from where we get the sheets which has got various designs on it. And we have our own embossing machine. So the embossed design is such a product, which I can say we have a monopoly. Nationally it is only one company, Jindal [Phonetic], which supplies the embossed sheet. Till date it was import. The majority of the sheets which were adding of the designer category were imported. Now with our backward integration and by establishing the whole factory setup, we are now able to give the import substitute. And this helps in our elevator business also because nowadays customers are going for a better aesthetic elevators.
With the growing demand in the small bungalows and other segments, the customers are asking for designer cabins for which we have not — we are not dependent on the open market. We have our own division supplying us various types of sheets. So we are able to customize and for our own in-house consumption. And we are even having, we have built the capacity wherein we are even trading these sheets. So I hope this answers your question.
Prathamesh
Yeah, okay. Yeah, right, sir. So on blended basis it will increase our EBITDA margins if I’m right.
Paresh Naik
Sorry.
Prathamesh
So with the help of this product, this SS sheets, will it increase our EBITDA margins in coming time?
Monish Amarbhai Doshi
Yes, definitely. Basically, this increase — expansion of this backward integration has helped us in reducing our cost. Sorry. So first of all it has helped us in reducing our cost. Second, this is all value addition which we can do on SS which very rare people in India or very rare company in India can do that.
So it will increase our EBITDA by value addition as well. Right now we have been more focused on fulfilling our in-house demand for steel. But now with the expansion of production, we will be catering new customers as well where we can sell them at a higher price or with a higher margin. Even these sheets are used in interiors as well as exteriors of residential projects or for hotels. So even that avenues will open once we are ready to penetrate those market. So definitely it will help us in boosting the EBITDA margin.
Prathamesh
Any ballpark figure you’d like to give sir, on the margin side? Currently, I think we did somewhere around 17%.
Monish Amarbhai Doshi
Yeah. Right now for the near future, we’ll be maintaining this figures only. But once we are into complete production phase, this figures would improve quarter to quarter.
Prathamesh
Okay. Got it sir. That’s it from my side. Thank you.
Monish Amarbhai Doshi
Thank you.
Operator
We’ll take the next question from Mr. Harshwardhan [Phonetic].
Harshwardhan
Hello, can you hear me?
Amar Chinubhai Doshi
Yeah. Hello.
Harshwardhan
Yeah. Yeah, yeah. First of all, congratulations for a profitable growth over last many years. Three to five years.
Amar Chinubhai Doshi
Thank you.
Harshwardhan
Yeah, yeah. My question is what is the revenue breakdown of all your products? Which is the — I mean automatic doors contribute how much to the revenue? Overall revenue.
Monish Amarbhai Doshi
Okay. So the automotive — automatic door systems contribute to around 62% of — sorry 58% this year. Last year it was around 62%. Cabins contribute to around 14% this year and it was 13.6% last year. And there are other components also which we sell like for elevators also. So that goes around to 10% of the overall turnover.
And remaining everything is into stainless steel sheets where there are multiple finishes which we provide.
Harshwardhan
Okay. And just some time back sir mentioned that some — you do some trading also on sheets.
Monish Amarbhai Doshi
Yeah.
Harshwardhan
At time. So what is that? What is the percentage of that income in overall revenue?
Monish Amarbhai Doshi
So that is around — yeah, so that is around 15% of the total revenue.
Harshwardhan
Okay. Okay. So I think your elevator cabin must have — must be having the highest margin.
Monish Amarbhai Doshi
Yeah. Right now if you see based on the figures right now the elevator business has the highest margin. But as I told that stainless steel division is full of value addition. So once the turnover from there increases, the revenue generation from stainless steel business increases, the margin can go better in that.
Harshwardhan
Okay. Okay. And these automatic doors you supply to the OEMs, right? Like I saw some of your clients being named as AWAD and technocraft [Phonetic], right?
Monish Amarbhai Doshi
Yeah.
Harshwardhan
So apart from the glass, you do everything else.
Monish Amarbhai Doshi
Sorry, I didn’t get you, sir. Could you repeat the question, please?
Harshwardhan
Yeah. In automatic doors.
Monish Amarbhai Doshi
Yeah.
Harshwardhan
You do everything of stainless steel component or you even do the doors as well?
Monish Amarbhai Doshi
No, we even do the door mechanism as well. So the automatic door consists of two parts. One is the mechanism which helps the door to operate automatically and the other is the door panels which we see. So that is made out of SS. So our whole customer base for autodoor is domestic players where they don’t have the in-house facility of manufacturing. There are — I could tell that there are almost like 5,000 companies in India which are into elevators.
But we will hardly know around 10 names of the industry leaders. So those 5,000 companies can be our customers. And to them, we can supply our door systems which they’ll be using to install the lifts as based on their requirements. They have a regional presence. But in that case, we have a pan India presence.
Harshwardhan
Okay. Okay, got it. And what is your future ambitions for this company? Say five year out, not large but maybe five to ten year period ambition. Maybe it is okay if you haven’t started working on it, but what is your ambition?
Monish Amarbhai Doshi
Like Mr. Paresh said that for next three years, we’ll be majorly focusing on expanding our market reach. But if you see about the five to 10 years, we have identified few avenues where we can enter based on the sheet metal fabrication and the value addition of stainless steel polishing. Like I said that we can also cater to interior-based products which are used in infrastructure. So in that case, we’ll be focusing on that in the future. But right now we haven’t finalized it because our main focus will be to expand the market for the products which we have for the coming years.
Harshwardhan
Okay.
Monish Amarbhai Doshi
Yeah.
Harshwardhan
Okay. So and this new machine which you have bought from Salvagnini. So how — what is the future visibility of jobs on that machine itself? For how long do you need that machine to be utilized completely for one year, two year?
Karan Amar Doshi
Hi, Karan here. So as I said earlier like we all from the capacity of 2000. From the capacity of 2,000 we have now new capacity of 5,000 doors. And along with doors it also considers like elevator cabins and some other stainless steel products that complement the elevator industry.
So but for fully utilization of the machine, I think the main part that we want to focus on is getting the orders for that. So if the running — I don’t see after once it’s operational, I don’t see any problem with running the machine. But then it should not be generating inventories that we are not able to sell. So we are working on — means solidifying our distribution network and looking for new areas where we can actually supply this door systems.
Right. But within two to three years that is our — that is our holistic view of how we should be reaching there.
Harshwardhan
Okay. Okay. Okay. That’s it from mine.
Karan Amar Doshi
Thank you.
Harshwardhan
Yeah, thank you.
Operator
We’ll take the next question from Mr. Sunil [Phonetic].
Sunil
Yeah. Thank you for the opportunity and congratulations on a good sets of number. Am I audible?
Monish Amarbhai Doshi
Yeah. Thank you, Sunil ji.
Sunil
So most of the questions are answered what I had in my mind. Just wanted to understand out of INR150 crore expansion which you have mentioned in your presentation, what exactly we are spending on door-related products. What you have explained that over a period of 2 to 3 years, you are planning to increase the capacity to 5,000 doors. And so understand if you possible bifurcate INR150 crore into different products or something.
Karan Amar Doshi
Right. So the new capacity of INR150 crore we mentioned is actually considering this 5,000 doors that we manufacture plus the capacity we have developed for the embossing line which we still haven’t actually — we haven’t started getting revenue on that. But from next quarter we are hopeful that we’ll start taking orders for that. And so breakup wise if you see then elevator market is going after the — from the INR150 crores elevator market would be around 60% to 70% of that whereas the stainless steel division would be contributing to the — 30% to — between 30% to 40%.
Sunil
Okay, understood. One more question on the client base which you have mentioned saying that just now, I mean answering to the previous person you have mentioned that you have various clients and you don’t have a threat to the business and all. But in your presentation you mentioned in weakness saying that dependence on few key clients for revenue. Is this something confusing in your presentation?
Paresh Naik
Yeah, yeah. I would like to clarify on that. It says that there are — see always there are some top customers. So in any industry, there are some top customers. But the good part with us is that we have a very broad network of customers. So the dependency is not very high on the basic, on few customers. That is why we have ramped up our distribution setup and we are establishing the warehouses. Till last financial year, yes, there were few major customers on whom we had the dependency but now it is not so. We have more than 1500 customers at present who are buying products from us from which more than 70% are consistent buyers.
So I would like to clarify that yes, we have some customers who are our — we can say that they are our large customers but we do not have any threat.
Sunil
Understood. Got it. One more question on market share, what is the current market share we have and what we are planning to achieve?
Paresh Naik
See the — if we look at the whole picture domestic market then it is more than INR4,000 crore — INR40,000 crore of market. That is India as a whole. So elevator market. So there is a huge demand and we are the beginners. So as the demand is there and we have a very clear vision of setting up a very big manufacturing plant which we have already done. So we’ll be able to supply to a large segment that will be in phases. At present, I would say that our market share would be minuscule, but as the demand is there, we’ll be able to improve the market share.
Sunil
Okay. Yeah. Looking at the presentation and the designs which we have mentioned on the website, I understand that we are producing a high quality and good quality of design doors which we are supplying it to the customers, correct? So yeah, so that’s what the specialty we have. But looking at the other commercial elevators and all, I’m sure there are a number of suppliers who do not get into the quality design and all. And they just want plain metal sheet and all. So again, when you are talking about INR40,000 crore market share, the market for this particular business, are you sure that the designer doors which we are producing have certain number of market or we will be looking into the plain door market also in future.
Paresh Naik
See, I’ll just take it in detail this question. As I explained earlier, our strength is in value addition.
Sunil
Correct.
Paresh Naik
That does not mean that we do not make the plain vanilla doors.
Sunil
Okay.
Paresh Naik
Yes, that is also manufactured by us. We started with that, but we did this backward integration and we built our own capacity. We built — we have the expertise in making those designer sheets that is at an advantage to us and to the customer because we are able to customize as per the demand. In the recent trend, the stainless steel sheets and the designer cabins are in demand from the bungalow segment and from the low rise commercial segments from even the malls. They are — and even the showrooms, if you go to any big showroom, they have a very nice designer cabin installed. So all this and even the architects are now asking, the inquiries coming for having a facade or having a backdrop at the reception by the designer sheets. See over here the advantage is that the designer sheets are from the SS. So there is very less chances of corrosion and the durability is very high. So all these things are actually helping us. I hope this answers that.
Sunil
Yeah, yeah, yeah, yeah, definitely. And thank you so much. That’s all from my end and all the best for the future.
Amar Chinubhai Doshi
Thank you. Thank you.
Operator
We’ll take the next question from Mr. Dakshay. Mr. Smith [Phonetic], you can ask your question.
Smith
Hi, good evening. So my first question is with regard to raw material price and hedging side and how we manage. Is there any pass through contract or with the customer or we take that risk on ourselves and we do hedging. So on that side that is first question. Second question is with regards to Capex side. So we have done INR150 crore of Capex and what is the projected Capex next year with regards to working capital and on the fixed machinery side? So you can answer.
Karan Amar Doshi
Hi, Karan here, Mr. Smith. So the first question is regarding the raw material we are purchasing, right? So if we have any contracts with any companies for that, right? Am I right?
Smith
Yes, yes.
Karan Amar Doshi
Okay. So the raw material actually we are purchasing the stainless steel mainly it’s stainless steel 304. So that is locally means from India. If we are buying it then that is from Jindal and other. But like 60% to 70% of our raw material it is getting imported from other companies like other countries like Vietnam, Indonesia, Malaysia. So as such we don’t have a contract with them.
Smith
[Technical Issues]
Karan Amar Doshi
Hello. Yeah, so we — actually we don’t have, right now we don’t have any contracts with these kind of companies. But then we look at the, what is the, which company is giving the raw material the best price and what is the delivery time we are expecting and according to that we actually plan our supplies.
Smith
I’m just adding one point to get more clarification on my question. What I am asking is you are purchasing commodity steel and other components, right? So from purchase to delivery there would be a price fluctuation of 4%, 5%. So is it possible? Is there any pass through contract with customer or we have to buy that.
Karan Amar Doshi
Okay. On the customer side. So like actually the raw material that we’re buying and then we are doing some value addition on it, right, because when we are taking the stainless steel we — maybe we are — fabrication is a part of value addition and then maybe the — making the sheet decorative is a part of value addition. So with all this actually value addition, it’s not like we are selling it on a commodity basis. We have our own margins and if there is a fluctuation means a reasonable fluctuation in the stainless steel market, we do not have this.
We do not have to worry about the cost of supplying to our customers. But when, yes of course, when there is a general trend of when this raw material has increased by quite a proportion, then we do revise our prices accordingly. And most of the time what happens is in our industry the delivery time and the ordering time is between one month to one and a half month. So generally if there is any large scale this difference in the cost then we can start taking the new orders with that with a new cost. So it’s balanced in that way.
Smith
Okay.
Karan Amar Doshi
Go ahead.
Smith
On the other side, on the side of Capex next 12 months.
Karan Amar Doshi
Okay. The Capex on the — means most of the expansion that we had planned to do is — will be getting over by end of this quarter. Maybe some just complementary expansion, some. Maybe some minor expand means Capex is required in the next quarter or something but it’s mostly done. So we are not seeing to increase any — see any increase in the Capex from next quarter.
Smith
Okay. And on working capital side as we have projecting from 2,000 doors to 5,000 doors per month. So there will be substantial increase in the working capital side because we have inventory days of around 150 days. So five months of revenue would be stuck in the inventory. So there will be huge demand for working capital. How are we planning to manage this?
Karan Amar Doshi
Yeah, so for answering that like the new machine, the new machine we are actually — we have installed, it gives us quite of leverage on the manufacturing time. So currently what we were actually manufacturing within a 15 to 20 day period, this with the help of this machinery, we will be reducing this time from five to seven days. So in that way actually we will be rotating our inventory faster. And once — actually once with the spare capacity we have, we’ll be taking orders and lining up the orders in a way so that we do not have to actually increase the what you call the inventory cost. We’ll be focusing more on balancing the inventory and getting the inventory rotated on a faster basis, so.
Smith
Okay. As you said that from order to delivery, we are taking only 1 to 1.5 months. So why there is an inventory level of 150 days. Are we stocking raw material and then we supply from time to time basis or is there any other model which we are following?
Karan Amar Doshi
No means one of the reasons for actually keeping our raw materials on a little higher side is because of the uncertainties that actually it’s happening in the throughout the world. So we have seen a time on the COVID times, so maybe when this few crisis happened that the raw material wasn’t available easily or the cost for raw material was very high. So we are actually planning. I mean strategically we have actually increased our raw material to keep at a certain level so that we do not have to incur heavy cost for this.
The second thing is some of our products are like on the shelf products so that the customer actually demands it — means if the — if he has a payment ready for it then he is — the payment is done and the same day actually we deliver this kind of products. Like the stainless steel doors which are — means on the basic stainless steel doors which are a running item. Then we keep it on the shelf and we have it stocked in our godowns also like we have established this warehouses, so we have it stocked it over there also. So all this actually, the cycle time for actually purchasing raw material and getting it to the delivered at the end means the working capital if you see it’s around I think 90 days. And I think that is — means the working capital we have been managing from since even though we have been growing our business, this is the working capital days we are actually managing.
Smith
Okay. And I have seen your top customer list in your presentation. But actually if you seen in around ourselves, we find similar lifts or fashion door [Phonetic] lift. We are not seeing that in your customer table. So are they — were they backward integrated or they are supplying from — they are taking supply from other vendors.
Paresh Naik
Yeah, Paresh here. See the — in this elevator, the whole elevator business there are few players who have a national presence and few are who have come to India, the MNCs. At present the market that we are catering to is the installers who are not amongst these companies but with enhanced capacity, we are now planning to even supply to them that is in the form of contract manufacturing. We will be doing the contract manufacturing for them. So that stage has now come. So by next year, we are even going to approach to them. At present there was enough demand from the regional elevator companies and they were buying from us. So we did not have any spare capacity to go to any big companies who have got a very big demand and they also squeeze us a lot on our margins. So this was a strategic move that we were holding ourselves and as we had enough orders on our books so we did not touch them.
But now, yes, in the next financial year, we also have few inquiries and we’ll be now handling them.
Smith
Actually, we are expanding from 2,000 doors to 5000 doors. So we are doing a massive expansion. So. And we are investing INR150 crore. So what gives you that much confidence that we will be able to meet our capacity expansion fulfillment? So actually I want to know your philosophy or thought process behind that mega expansion. So what gives you confidence? Actually, that is what I am trying to understand [Phonetic].
Paresh Naik
I’ll go in detail on that. The confidence that we have in our expansion is because the demand in the market. The demand in the market is huge and the demand will even grow further by — due to the urbanization which is going up. The multi-storied buildings which are being made because the increase in population. The cities do not have that much of space. So the vertical growth is coming in all the segments. New segments are adding up.
As I said, the bungalow segment where elevator is now not a luxury but it has become a necessity. So because of all these factors, I’m sure other than those multinationals also we have a huge market to cater to. That is why we have increased our distribution so that we can reach to every corner of the nation. And I’m sure this will help us a lot and we’ll be able to consume the total capacity that we have built in manufacturing.
Smith
Okay. Got it. Thank you. Thank you very much from my side. Thank you.
Amar Chinubhai Doshi
Thank you.
Monish Amarbhai Doshi
Thank you.
Paresh Naik
Yeah. Thank you.
Operator
We’ll take the next question from Mr. Prathamesh.
Prathamesh
Yeah, sir. As you mentioned in your presentation we are going to do incremental top line of around INR150 crores from door division. So by when are we expecting this? Sir.
Karan Amar Doshi
Hi. So this incremental we are expecting within three years because like once the expansion phase ends and the production starts, we’ll be catering new market. We’ll be expanding our distribution channel. As I say — as we said that already we are into development of that. So within three years, we can reach that quantum.
Prathamesh
Okay. And any overall top line guidance you like to give?
Monish Amarbhai Doshi
Yeah, definitely the top line will be on a upper scale because of all the setup which is required to grow any company. We have already on the verge of completing that. So now our target is just to increase the market reach and penetrate as much as we can. So definitely it is going to be on a higher side.
Prathamesh
Okay. A similar level to the — our past performance of 30% to 35%.
Monish Amarbhai Doshi
Yeah, we are positive about it and hopefully it should be better than that also. We’ll be targeting to increase that percentage also.
Prathamesh
Okay. So thank you.
Operator
We’ll take the next question from Mr. Jignesh [Phonetic]. Yes.
Jignesh
You explained that you will approach top players for contract manufacturing. So I wanted to understand all these players are already taking material from other players, your competitors. So is there a process where you need to get empanelled and will it take time to get that empanelment done?
Paresh Naik
Yes, yes, that will take time. That is why I said that today we have our order books full. So parallelly we are approaching these MNCs and the national players for empanelment [Technical Issues] its own time. But that will not affect our sales and it will not even affect my production capacity. I will not have any excess because we have enough market and enough demand. So this process is — we have initiated that and we have few companies with whom we have started the discussion. So I hope in the next financial year, we should be able to declare those tie-ups also.
Jignesh
Okay. And broadly the revenues since in last year or maybe one or two years back, your main focus is on Gujarat, Rajasthan and Maharashtra. And slowly you are going to other states.
Paresh Naik
Yes, yes, yes. It was more on these states because first of all, due to the proximity to Gujarat state it [Indecipherable] so we could focus more on that. That was strategic because first of all I should be strong in my own territory and then I go out for expansion. So we did it strategically. That first of all let me cater to the market where I’ll be able to reach the fastest. So and the customers from all these regions, they gave us a very good response.
So because of this, we were encouraged to increase our production capacity. And parallelly we have increased our distribution also.
Jignesh
Right. And this stainless steel embossing that you mentioned, apart from Jindal, no one is doing in India.
Paresh Naik
No, there is no manufacturer in India.
Jignesh
Okay. So going forward can it happen that you also can become a supplier to Jindal or you will do it in your independent brand?
Paresh Naik
No, we will do it in as an independent brand itself because of our hard work that we have put in in establishing this. Then there is no point diluting my own image and supplying to Jindal. Because Jindal as a player is very huge and we would not like to go into their fold. Rather we will do it on our own and establish our own name. So that is our strategy at present. But yes, if Jindal — we have a contract manufacturing setup then we can supply to Jindal also.
Jignesh
Okay. And since your Capex is getting completed and you are getting — you have a very good order book. So any future Capex on your drawing board or your — you will take time to maybe a year or two to firm up your further plans.
Paresh Naik
See Mr. Karan Doshi gave a reply on this earlier to an earlier question. I will repeat the same.
Jignesh
Okay.
Paresh Naik
In this financial year we have completed our major expansion. So in the next financial year, we do not have any plans for any major Capex. We will be focusing more on expanding our business and establishing more distributors and warehouses. So that is all, no major Capex plan.
Jignesh
Right. And to understand going forward, your revenue will be a mix of elevators and stainless steel. And in elevators also you would be doing kind of contract manufacturing. So that contract manufacturing margin would be a bit lower than your normal business. So with stainless steel coming in, is my assessment right that your margin will remain stable if not increase because of contract manufacturing?
Paresh Naik
Yeah, see contract manufacturing. See in any business there are — we have to balance the top line and the bottom line. So the top line will come from all these huge numbers that we can get from contract manufacturing and the bottom line will come from all the value addition that we do on the stainless steel and the products that we customize. So we’ll balance it accordingly. We will not let the bottom line go.
Jignesh
Right, understood. Thank you.
Operator
We’ll take the last question from Mr. Smith.
Smith
Thank you for the opportunity. Actually, from out of total elevator cost, how much our product constitute? Out of INR1,000 of elevator, how much product value which we provide, doors and cabins and everything?
Monish Amarbhai Doshi
So in — I just want to confirm that you are asking in elevator, how much valuation does our product have for a lift? Am I right?
Smith
Yes. Yes.
Monish Amarbhai Doshi
Yeah. Okay. So if you see the complete elevator, all the — including all the components, then our product almost covers 30% to 35% of that for a — if you. Yeah, but if we are talking about high rise, then that portion goes to around 40% to 45% because the number of doors increases based on the vertical height of elevator required.
So for bungalows, if we talk that is G plus 2, G plus 3, it would suffice around 35%. And for high rises, it would go up based on the number of floors, but that would be close to 40% to 45%.
Smith
And are we expecting any further leverage on the balance sheet in coming one year on the working capital side or on the long term debt side [Phonetic].
Monish Amarbhai Doshi
Could you repeat, please?
Smith
Are we expecting any further leverage on the balance sheet side from with respect to long term debt or the short term debt? No.
Monish Amarbhai Doshi
No, right now we are not looking into it. We are not expecting for the next two years.
Smith
Capital demand from our internal accruals only.
Monish Amarbhai Doshi
Could you repeat, please?
Smith
We will meet our working capital requirement from our internal accruals only.
Monish Amarbhai Doshi
Yeah, definitely, yeah.
Smith
[Technical Issues]
Monish Amarbhai Doshi
It could be increasing our borrowing major scale. We will be — basically, we’ll be controlling our debt-to-equity ratios. And with the increase in revenue, we’ll be reducing the debt, which we have right now.
Smith
Okay.
Monish Amarbhai Doshi
[Technical Issues] our cash flows as well with the revenue increase.
Smith
Got it. Got it. Thank you.
Monish Amarbhai Doshi
Yeah. All right. Thank you.
Operator
I would now like to hand over the conference to Mr. Monish Doshi for the closing comments.
Monish Amarbhai Doshi
Ladies and gentlemen, as we conclude today’s conference call, I would like to extend my heartfelt appreciation to all of you for taking the time to join us and engage with our company. Your interest and confidence in our vision are invaluable to us and we truly appreciate your thoughtful questions and insights throughout the session.
As a public limited company, we remain committed to creating long term values for our shareholders while upholding the highest standards of transparency, performance and accountability. Your continued trust and support inspire us to push forward with our strategies and deliver results that benefits all stakeholders. If you have any further questions or require additional information, please don’t hesitate to reach out to our investor relationship team.
Once again, thank you for your time, trust and belief in our company. We look forward to a brighter future together. Have a wonderful evening. Thank you.
Paresh Naik
Thank you all.
Amar Chinubhai Doshi
Thank you all.
Operator
[Operator Closing Remarks]