Amber Enterprises India Limited (NSE: AMBER) Q2 2025 Earnings Call dated Oct. 23, 2024
Corporate Participants:
Jasbir Singh — Chairman and Chief Executive Officer
Sudhir Goyal — Chief Financial Officer
Analysts:
Ankur Sharma — Analyst
Natasha Jain — Analyst
Rahul Gajare — Analyst
Abhishek Ghosh — Analyst
Aditya Bhartia — Analyst
Dhruv Jain — Analyst
Bhoomika Nair — Analyst
Sonali Salgaonkar — Analyst
Pulkit Patni — Analyst
Keyur Pandya — Analyst
Achalkumar Lohade — Analyst
Nirransh Jain — Analyst
Presentation:
Operator
Ladies and gentlemen, good day, and welcome to the Amber Enterprise India Limited Q2 and H1 FY ’25 Earnings Conference Call.
This conference call may contain forward-looking statements about the company, which are based on the beliefs, opinions and expectations of the company as on date of this call. These statements are not guarantees of future performance and involve risks and uncertainties that are difficult to predict. [Operator Instructions]
I now hand the conference over to Mr. Jasbir Singh, Executive Chairman and CEO and Whole-Time Director of Amber Enterprise India Limited. Thank you, and over to you, sir.
Jasbir Singh — Chairman and Chief Executive Officer
Hello, good morning as well as good afternoon and good evening for the participants joining from different time zones. On the call today, I’m joined by Mr. Daljit Singh, Managing Director; Mr. Sudhir Goyal, our CFO; Mr. Sachin Gupta, CEO of CAC and RAC Division and Whole-time Director; and Sanjay Kumar Arora, Whole-Time Director of ILJIN Electronics and CEO of Electronics.
We have uploaded our results presentation on the exchanges, and I hope everybody had an opportunity to go through the same. As you are aware, we have three business divisions, namely Consumer Durable division, Electronic EMS division and Railway Subsystem and Defense division. I’m pleased to say the diversification journey is progressing very well and each division is unlocking new horizons of growth for Amber. Propelled by each division, we had reported robust growth for Q2 FY ’25 with revenue of INR1,685 crores, reflecting a growth 82%. Operating EBITDA grew by 85% and PAT grew to INR21 crores from a loss of INR6 crores over the same period year.
Prior to taking you through divisional performance for the quarter, let me touch base on the recent strategic initiatives to shape up the growth trajectory of the group. Firstly, earlier this month, we did a groundbreaking ceremony for manufacturing plant of Ascent Circuits at Hosur in Tamil Nadu. This will add annual capacity of up to 840,000 square meters upon completion in two phases. Secondly, we have entered a joint venture agreement with Korea Circuit to foray into the advanced manufacturing of HDI, flex and semiconductor substrates PCBs. This collaboration will further strengthen the offering of bare PCB portfolio and marks the revolutionary progression of Amber Group into a leading full stack backward-integrated EMS company. The JV would leverage Korea Circuits experience of more than four decades in PCB production and help us develop competitive advantage for rapid growth and additionally bring the connect with marquee global customers. This JV will expand our horizons into newer segments, including mobile, IT modules and semiconductor industry. From the ownership perspective, we will have 70% ownership through our subsidiary ILJIN Electronics and 13% — 30% with the Korea Circuit in the new JV company.
Now let me take you through the divisional performance. First is Consumer Durable division. This division comprises of three verticals: Room air conditioners and its components; non-room air conditioner components such as telecom components, smart meter components, IT server components, refrigerator components, microwave, washing machine, water purifier and automobile components. And lastly, as a final product washing machine fully automatic front load and top load.
Owing to prolonged summers and lower channel inventories during the period, both the vertical of RAC and non-RAC components recorded a strong growth of 104% and 68%, respectively, with the blended growth of this division of 95%, leading to operating EBITDA of INR62 crores for the quarter, representing a growth of 196% over last year. The robust growth of the division was driven by strong underlying RAC industry and increasing wallet shares by virtue of deepening relationship with customers. Additionally, during the quarter, we onboarded one new customer for the tower ACs and cassette ACs and successfully converted a customer from gas charging earlier to now ODM solutions.
With regards to our diversification beyond air conditioners, I am pleased to report our washing machine JV with Resojet is on track and progressing very well to commence the mass production in second half. The trials are in progress for the four onboarded customers.
Moving to Electronics division now. The division revenue almost doubled to INR492 crores with a robust growth of 98% in Q2. The journey, which began for capturing the technological shift in the AC industry from fixed speed AC to inverter AC by acquiring ILJIN, then offering PCB assembly. It has evolved now to a full-fledged division, offering solutions for appliances, consumer electronics, hearable, wearable, telecom, smart meters, automobile segment and additionally entered into defense segment now, and further strengthened offering into the bare board PCB with acquisition of the Ascent Circuit.
I would like to emphasize our recent key strategic developments once again, the groundbreaking of a new manufacturing plant of Ascent at Hosur, Tamil Nadu. This will add annual capacity of 840,000 square meter upon completion in two phases, more than doubling the capacity from current level. We plan to invest around INR650 crores for advanced manufacturing technologies of multilayer bare PCBs backed by state government and central government subsidies.
On the JV with Korea Circuit, JV will foray us into advanced manufacturing of HDI flex and semiconductor substrates PCBs. This JV will further graduate Amber as leading electronic company, offering solutions in PCB assemblies and full stack backward integrated PCB solutions for a single layer, double layer, multilayer, RF, HDIs and semiconductor substrates PCBs. We await for the new incentive scheme by Ministry of Electronics and IT on HDIs and semiconductor substrates, which is likely to be announced in the next three, four months. Post announcement, we will finalize our capex plan and intimate our stakeholders accordingly.
On the macro front, the bare board PCB market expects to grow to almost INR80,000 crores market by FY 2030 from current level of INR32,000 crores market and with a CAGR of almost about 11% to 12%. And interestingly, close to 85% of market today is fed through imports. So this leaves a big delta of growth for this division. These initiatives unlock the opportunity to capture the domestic market and localization potential as well. And we are also glad to announce that we have signed a buyback arrangement with our partner Korea Circuit, where they will be buying back a percentage of the complete capacity for first two years, and then it will taper down moving down. So the day we start with the Korea Circuit facility, we will be going for a complete 80% to 90% of capacity utilizations on the year one itself.
Now coming to our third division Railway Subsystems and Defense. The division reported a muted quarter with a decline of 6% in quarter two, owing to delay in projects and shift in government strategies and priorities towards the non-AC coaches. However, the delay in Indian Railways offtake is more momentary and with no cancellation of orders, hence, division growth potential remains very intact. On the expansion front, I am pleased to report construction is progressing well for Sidwal’s greenfield expansion, and we’re on track for energy-efficient air conditioners, doors, gangways and pantry systems to commence operations by quarter one of FY ’26. Additionally, with regards to the progress of JV with Yujin Machinery of South Korea is very — is progressing well for the couplers, products, gears and pantographs and trial of the products under this joint venture are expected to begin in India by quarter four this year or Q1 of next year. We continue to maintain our earlier guidance of doubling the division’s revenue in the next three years, backed by a strong order book of more than INR2,000 crores plus and product portfolio expansion.
To sum up, we witnessed a strong quarter two, coupled with key strategic initiatives of Ascent’s new plant expansion and JV with Korea Circuit have further strengthened the positioning of Amber Group. In line with the government of India’s Atmanirbhar Bharat initiatives, these initiatives augment the domestic manufacturing and import substitution capabilities.
I now request Sudhir Goyal, our CFO, to take you through the consolidated financial highlights. Thank you.
Sudhir Goyal — Chief Financial Officer
Good morning, everyone. Greeting for the festive season. I’m pleased to report a strong set of financials for the quarter despite quarter two generally being a seasonally weak quarter.
Let me take you through the quarterly financials first. During the quarter two financial year ’25, we clocked a consolidated revenue of INR1,685 crores, up by 82% over last year. We recorded quarterly operating EBITDA of INR120 crores against INR65 crores last year with a growth of 85%. For clarification, operating EBITDA is before impact of ESOP expenses and other non-operating income and expenses. PAT for the quarter is INR21 crores versus a loss of INR6 crores last year.
Let me take you through half yearly results for H1 financial year ’25 financials at consolidated level. We recorded consolidated revenue of INR4,086 crores strong growth of 55% over last year. Operating EBITDA of INR320 crores against INR203 crores last year with a growth of 58%. PAT for the H1 financial year ’25 is INR96 crores versus a INR41 crores last year.
Now switching over to divisional performance. The favorable weather, coupled with the channel filling led to remarkable growth in the Consumer Durables division. This division reported total revenue of INR1,069 crores for quarter two financial year ’25 against INR547 crores same quarter last year, reflecting a strong growth of 95%. Coming to divisional profitability. The operating EBITDA for the quarter two was INR62 crores, a growth of 196% on a year-on-year basis.
Moving to Electronics division. The Electronics division has reported total revenue of INR492 crores in quarter two financial year ’25 against INR248 crores, growth of 98% over last year. The operating EBITDA of INR37 crores in quarter two financial year ’25, representing year-on-year growth of 187%. I will reiterate, we are progressing well towards the guided revenue growth of 45% for this Electronics division. To reiterate the recent expansion of Ascent Circuits, new plant in Korea Circuit JV dwell for the margin profile of division in long-term, being the margin-accretive segment of the business.
Now coming to Railway Subsystem and Defense division. The division reported a muted quarter owing to a slower offtake as mentioned earlier. The revenue for the quarter two financial year ’25 was INR124 crores, representing a decline of 6% over last year, owing to lower revenue for the operating EBITDA declined to INR21 crores in quarter two.
On capex guidance, we expect the yearly capex to remain in the range of INR350 crores to INR375 crores, excluding the Korea Circuit capex and the expansion of Ascent, which we’ll let you know in due course of time.
On the balance sheet front, the net working capital days reduced to 27 days from 52 days in H1. And net debt stood at INR1,277 crores at consol level. Looking ahead, we expect the consol revenue to grow around 25% for the year and expect an improvement in ROCE to reach around 15% by the year end. The recent key initiatives, Ascent facility expansion, JV with Korea Circuit, and expanding product portfolio of Railway division augurs well for the growth of the company.
Now I request — open for the Q&A.
Questions and Answers:
Operator
Thank you very much. We will now begin the question-and-answer session. [Operator Instructions] The first question is from the line of Ankur Sharma from HDFC Life. Please go ahead.
Ankur Sharma
Yes, hi sir. Good morning. Thanks for your time as always. And great numbers in both the Durable as also the Electronics division. Just one question on the AC side. If you could just talk about; one, how are you seeing festive overall industry level? How is demand? Of course, Q2 was great in terms of channel filling but in terms of end demand, how you’re seeing? And also your views on overall industry growth and how much would Amber in turn be growing for FY ’25? That’s my first question.
Jasbir Singh
Good morning, Ankur. So I think on the electronic industry side, on the air conditioners, as you all have seen that there were a lot of climatic volatilities, which we are seeing these days. Last year, I would say that it was the worst year of AC industry in 40 years. And this year has been the best year of 40 years of our industry. So the channel inventories right now are at reasonable levels, which are standard levels, which keep — the channel keeps them. And this is the product which is not a festive — festivity product. So this used to be product earlier, which was sold in the festivities. But yes, in the southern markets, definitely, it does bump up because of the climatic conditions.
From a growth perspective, we expect that the industry should clock a 25% to 30% improvement from last year’s number. So I expect that the industry should be in the range of 1 crore 30 lakhs air conditioner this year as compared to about 95 lakhs last year — 95 lakhs to 1 crores last year. And we are expecting — I mean everybody looking from the current order book and the excitement from our customers level, we expect that the quarter three and quarter four will also be a good quarters because channel inventory is pretty low. And by December, customers will start filling in the inventory to various brands. So we expect that the quarter three should also be a positive quarter for the industry. But overall basis, I expect that it should be about 30% [Phonetic] growth for the whole industry in India.
Ankur Sharma
And for, Amber, sir, just to finish my question. Amber will grow faster for sure, right?
Jasbir Singh
Amber is growing more than the industry, primarily because of reasons that we added a new customer, which was earlier a gas charging customer. That is one part. Secondly, all our earlier initiatives which we announced in last four quarters for launching their tower air conditioners and cassette air conditioners, also the commercial air conditioning range of ductables are now fructifying into reasonable revenues. So those kind of initiatives are also showing a very positive results, and plus the industry growth. So these are three factors, which is making Amber grow more than the industry. I believe we should continue this trend at least for the next two, three quarters.
Ankur Sharma
And just a second question on the…
Operator
Sorry to interrupt you, sir. I request you to come back for a follow-up question. Thank you. The next question is from the line of Natasha Jain from Nirmal Bang. Please go ahead.
Natasha Jain
Hi. Thank you for the opportunity and good morning everyone. Sir, my first question on your gross margin despite a very strong top line growth, we’ve seen almost 200 basis point decline in gross margin. So first, can you please explain that?
Sudhir Goyal
That’s largely pertaining to product mix range because whenever we will sell more finished goods, the gross margin on the level is lesser there. And whenever we sell more of components, the gross margins are different there. So because this time, this quarter, we have seen more of finished good sales sold by us. The gross margin has declined. But — so that’s very standard of the product mix.
Natasha Jain
Sir, just a follow-up on that. Even in first quarter, our commentary was saying that we did more of finished goods than components. So when exactly can we see the component story playing out because the demand in terms of RAC is very strong. So when can this be expected to be changed?
Jasbir Singh
Natasha, it’s very difficult for a B2B company like us, which is delivering solutions on all the fronts. See, we sit in front of a customer as a solution provider. We don’t — they define what we need to sell them. So if they want more of a finished goods, we have to sell more of a finished goods. And in case they want to manufacture finished goods on their own, then we sell number of a components. So it varies from quarter-to-quarter, and I would like to guide everybody that this — we have mitigated two broad risks in our business strategies, which is, one is the brand exchanging market share should not impact us as we are supplying to everybody. Earlier, LG was leader, today Voltas is leader, tomorrow, maybe other companies could be the leader. So we — since we are supplying to everybody, that doesn’t impact us. Second is the brands exchanging the market shares, brands changing the strategies of insourcing and outsourcing. So when they start outsourcing, we will start supplying them more of finished goods. And when they want us to supply more components, we will supply, but we don’t define the mix of the components and all. So this can vary from quarter-to-quarter.
Natasha Jain
Understood, sir. That’s very helpful. And sir, a related question on the channel inventory now. I understand that quarter two was a channel filling quarter because of lower inventory. But we have to understand that going forward, we’ll also be sitting on high basis. And because there has been a bump in of inventory in quarter two, does that mean that our growth could moderate in quarter three when actually it’s a channel filling quarter? Or do you think that the demand looks quite strong?
Jasbir Singh
Industry is growing by 25% to 30%. I think we’ll grow more than the industry because of various initiatives taken by us. So there were new products, which we have launched, the new customers, which we have added, which were not there last year in the balance sheet. So those kind of things will enable Amber to grow more than the industry. But yes, on a long-term basis, you are right that because if we see from quarter one perspective, it was a very high base. So we will move in tandem with the industry growth.
Natasha Jain
Understood. And sir, just one last question, if I may.
Operator
Sorry to interrupt you ma’am. I request you to come back for a follow-up question.
Natasha Jain
Sure.
Operator
Thank you. The next question is from the line of Rahul Gajare from Haitong Securities. Please go ahead.
Rahul Gajare
Good morning and congratulations on a very good performance. Sir, my first question is on your EMS business. Now could you give us a sense of approximately what is the kind of investment that is being planned for the JV with Korea Circuit? I think Mr. Sudhir did indicate that we will give you, for example, later on but some ballpark number. And typically what should be the asset turn that one should expect in this kind of a business?
Jasbir Singh
So Rahul, the asset turns in PCBs are very low. Generally, depending on what kind of PCBs you want to supply. So it range is from 0.75 times to 1.25 times. But there’s another way to look at the asset turns because industry — in industry government is giving good incentives. So industry is being fed by incentives from central government, which is Ministry of Electronics and IT schemes. Earlier, there used to be a spec scheme, which used to fund 25% of plant and machinery. And then the state governments are also giving the capex subsidies plus GST subsidies and logistics subsidies and other subsidies, in all totaling to about 30% to 35% depending on which state you want to go in for.
So if you reduce that point of almost 55% plus subsidies, which you are getting back, so you will be doing a capex of almost about 30% to 40%. So from that perspective, the asset turns become very good. So this is the way we are looking at, and that’s why I think this is the right time to take bold and brave step to create import substitution in the country. Otherwise, we will continue to import as a nation. And especially in the PCB business, there’s a large total addressable market.
I’ll just give you all a very brief on where the — how we are looking at it as an opportunity. Seven years back, India was consuming $32 billion worth of electronics. Last year, India ended up consuming $115 billion worth of electronics in our country. As a thumb rule basis, 3.5% to 4% is what is required as a PCB of this consumption. And today, almost about INR32,000 crores worth of PCBs are getting consumed in India either through products, full products or through imports. And incidentally, only 15% of this INR32,000 crores is getting manufactured in the country. Now that is a big delta, which is lying on. And where is this $115 billion of consumption heading towards in FY 2030? Business as usual, according to various research reports, it is heading towards $300 billion, whereas our honorable Prime Minister has taken it as a mission mode for $500 billion by FY 2030, which was announced in the SemiCon Conference. So if we even take the $300 billion mark, this is a $10 billion opportunity sitting for the nation.
And we are assuming that at least 40%, or 45%, or maybe 50% will continue to get imported in this form of the finished good products or through imports. So you can say a small number of INR3,000 crores versus the $5 billion, that is the TAM for this kind of industry. And we want to be very brave and bold to bring this import substitution to the nation. So we will not shy away from announcing big capex. But the quantum of capex right now is very difficult to tell you because we are waiting for the incentives.
Now what we hear from various media reports and during our meetings in the Ministry of Electronics and IT that they are coming up with a very big incentive schemes, almost similar to semiconductors kind of thing for the HDIs and semiconductor substrates and other electronic components, which government wants them to be getting manufactured in the nation. So if that happens and plus coupled with the state subsidy, we will come with a good number on the capex. We want to create a big import substitution slowly in India. And with the Korea Circuit’s technology and with the buyback arrangement with us, we won’t see any risk in implementation from execution point of view. So we will become a full stack PCB player in the country, starting from single layer, multilayer, double-layer, RF, HDI, semiconductor substrates plus PCB assemblies delivered by ILJIN and Ever. So this is a very unique electronic EMS, which we are creating.
Rahul Gajare
This is very helpful. And typically, how much time does it take for construction of the kind of facility that you are envisaging with Korea Circuit?
Jasbir Singh
So normally, this kind of investments take somewhere about 10 to 12 months for construction because the lead time of the machineries are quite long. I think as soon as — so what we are doing is in three to four months’ time, you will have the notification of the announcement by Ministry of Electronics and IT. Parallelly, our teams have started talking to various state governments for — and scouting the land piece parcel. And also one team is working with the customers along with the Korea Circuit. So we are very — having very marquee customers, which Korea Circuit is planning to ship to India with us, and these are big names which are coming on the table.
Rahul Gajare
Okay. So we’ll see this really starting to contribute in FY ’27. I think that is what I can make out from our discussion.
Jasbir Singh
Maybe quarter four ’26 could be seen as a first kind of implementation from that. But this is on the Korea Circuit. But on the expansion plan of Ascent Circuits, we’ve already done a groundbreaking ceremony. We should be — the plant should be up and running by next year September. And we expect H2 of next year to contribute from the next new plant also.
Rahul Gajare
Thank you very much sir.
Operator
Thank you. The next question is from the line of Abhishek Ghosh from DSP Mutual Fund. Please go ahead.
Abhishek Ghosh
Yes, hi sir. Thanks for the opportunity. Sir, if you can help us articulate for both Ascent’s 8.5 lakhs square meter and for Korea Circuit, what would be the overall capex that you will entail over the next two, 2.5 years?
Jasbir Singh
Abhishek, we are doing INR650 crore capex right now, out of which we will get almost about 50% back from the government. So net capex outflow will be INR300 crores to — in the two financial years. This year, we have started just the construction. So the guidance as given by our CFO of INR375 crores contains this capex guidance on the minus the capex of Ascent Circuits. So I think somewhere if you want to answer that total Ascent Circuit will do about INR650 crores in the next two financial years. On the HDI semiconductor substrates, we will be able to let you [Technical Issues]
Abhishek Ghosh
Hello?
Jasbir Singh
Yes, Abhishek, I hope I’ve answered your question.
Abhishek Ghosh
Sorry sir, you were inaudible for 10 seconds. Okay, I’ll maybe get it later. Sir, in terms of the Ascent’s number in the INR492 crores of top line that you have done in 2Q, what was the Ascent Circuits’ number in that?
Sudhir Goyal
So Abhishek, Q2 Ascent’s number is — revenue is INR83 crores and operating EBITDA is INR16.5 crores.
Abhishek Ghosh
Okay, okay. Got it. Sir, just one thing in terms of the…
Operator
Sorry to interrupt you, sir. I request you to come back for the follow-up question.
Abhishek Ghosh
Okay. sure. Thanks.
Operator
Thank you. The next question is from the line of Aditya Bhartia from Investec India. Please go ahead. Mr. Aditya, your line has been unmuted. Please go ahead with your question.
Aditya Bhartia
Hi. Good morning sir. My first question is on the guidance that you’ve given. Given that we have had a phenomenal first half, the guidance of roughly 25% revenue growth basically means only around 5% revenue growth in the second half of this fiscal. So how should we look at it? Is it that you’re just being very conservative while guiding and overall numbers are likely to be much stronger than that?
Jasbir Singh
Yes, Aditya, our CFO is very conservative. You know that. So we believe in under-committing and over-delivering. And I think we are seeing a robust October and November sales also. So — but we don’t want to guide any number because nobody can predict how quarter one — quarter four will go depending on the season because this is highly seasonal product. And if you remember last year, the rain started from February onwards. And it went on until May. So we don’t want to predict any number. But yes, what I can commit is that — what we can guide is that we will outdo the industry growth for sure.
Aditya Bhartia
Understood. In fact, last year, second half to that extent was slightly weak base. And unless, again, we have a very unfavorable weather, fair to assume that we should be having a pretty decent second half?
Jasbir Singh
That’s right. Yes.
Aditya Bhartia
Growth much stronger than — sure, sure, sure. Sir, my second question is on Korea Circuits. While you mentioned that at this stage it’s not possible to give complete understanding about capex that may get incurred. But if you could just let us know about how you’re looking at the opportunity size, what kind of revenues can this company be doing? And on the buyback arrangement, what exactly is it? What proportion of capacity gets bought by Korea Circuit?
Jasbir Singh
So basically, on the buyback, it is a full capacity buyback for first two years, then it is a tapering down in the next two years. So why we wanted this buyback is that the semiconductor ecosystem is getting developed in the nation. And it could — we may see some kind of delays. So we don’t want to sit on an investment, which is not delivering on time. And Korea Circuit agreed for that, which is very, very good initiative by them. And they also agreed to pump in 30% of the equity, which is their commitment for bringing the right technology and also their conviction and their confidence in Indian markets and the growth strategy. They are already selling close to about $1.5 billion, $1.6 billion worth of just PCBs in various regions, and they want to use India as the best first country from that perspective. So we are looking forward.
But let me give you some timelines to all of you, I think, so to avoid any confusion. So Korea Circuits JV has been signed. Earlier MOU was signed, but now it has converted into a proper JV, which was — the signing ceremony was also witnessed by our honorable Secretary of MeitY and Joint Secretary of MeitY. And they also appreciated this technology to be brought in India. We will be waiting for the announcements to be done, which — from the MeitY scheme but parallelly our teams have started working. So on the timelines, it is that even if the announcements are done by — for example, by January or February by government, to bring into the notification stage, it will be another two months’ time. And then they will ask companies to apply, which will be another two months’ time, and then there will be approval process. So in the best case basis, the approval should come by quarter two of next financial year. After that, the capex will start over. So large capex whatever will be happening, whatever we decide will come in FY ’27. So nothing is coming in FY ’26 from that perspective, except the land piece parcel. So this is what I want to tell you. But yes, I think you all would agree to me that looking into this large import substitution domestic play, this is the right time to — for the Indian entrepreneurs to come forward and achieve the Atmanirbhar of our nation. So that is what we are looking into, and I think we are very excited by this JV signing.
Aditya Bhartia
Absolutely, sir. And revenue potential, anything that you would want to comment on that?
Operator
Sorry to interrupt you sir. I request you to come back for the follow-up.
Jasbir Singh
I don’t want to give any revenue potential but Aditya just to answer your question, I think I can give you FY 2030 target for our division. That is a very strong target which we have taken because PCBAs and PCB both are clocking well and PCBs are a better margin business. So as you have seen, our historic journey, which started from INR300 crores top line in 2018 with just 2.7% EBITDA has almost reached to 8% now. And I think this division now has a multibillion-dollar opportunities going forward. That’s all I can say. And we want to bring it to a double-digit EBITDA division very soon. Maybe in the next two to three years’ time, you should see that number is going up.
Aditya Bhartia
Perfect. That’s great to hear sir. Thank you so much.
Operator
Thank you. The next question is from the line of Dhruv Jain from AMBIT Capital. Please go ahead.
Dhruv Jain
Good morning. Thanks for the opportunity. So my first question is on capacity utilization. So if you could just spell out what is the current capacity utilization of the Consumer Durables division? And what is the kind of peak revenue you can do without incurring substantial capex?
Jasbir Singh
On capacity utilization, all plants are at different capacity utilizations. Our component plants are sitting at a capacity utilization of somewhere about 60% to 65%. Our air conditioner plants, if I see on the annual capacity, maybe we are just sitting at 40%. But that’s not the right way to look at this industry. We look at it from a seasonal capacity utilization point of view. So like our new Sri City plant that’s sitting at about 60%, 65% of capacity utilization, whereas our Dehradun plant is already running at 85%, 90% capacity utilization. So there are some seasons. What we see from capacity utilization is how much we can manufacture in per plant on a monthly basis. That is the right way because seasons keep on shifting. Sometime the season will start in February and sometimes it doesn’t start until March also. So there are a four month, five month window period where capacity utilization is very high but then we hit the leaner quarters. And Sri City plant is sitting at lesser because that’s a newer capacity. We are not touching 90% also right now there. But I think to give you an answer on where we can head from the revenue perspective, I think we can grow at least by 40% to 45% with the current capacity utilization we have additionally on the revenue side.
Dhruv Jain
Okay. Thanks for that sir. And my second question, sir, you mentioned in your presentation with respect to commercial AC and light commercial AC coming up, right? So I just want to understand, sir you say, two years’ time or three years’ time, how substantial it can be? Any number would be great?
Jasbir Singh
I’ll give you — I’ll share my personal thought process, how we are seeing our Consumer Durables division by FY 2030. Last year, AC industry was about 1 crore — air conditioning industry, about 10 million numbers. And this year, if it touches 1.3 million. By FY 2030, we are expecting 3 crore air conditioners to be sold in the market. So there is a clear 3 times story what we have on the plate. Last year, we did about INR5,000 crores worth of our revenue on the AC and AC components. So even if we discount that number by bit, overall, above air conditioners, what we are doing is we’ve launched this commercial air conditioner division. We have also launched our tower cassette air conditioners. Then on top of it, we have done washing machine initiatives. So plus, we are opening some doors for the exports, which is right now, we are looking — we are seeing some green shoots. Maybe by next year, we will be able to crack something on that and that will be substantial numbers, which are coming forward. But largely on these three, four initiatives over and out to the standard industry growth. This can contribute about INR1,500 crores to INR2,000 crores additional revenue in the next three to four years’ time. So that is what we are doing. So I think we have hedged — we are trying to hedge our seasonality. We are trying to also bring more initiatives over and above to the industry growth. And — so this sector can grow at least 3 times, 3.5 times in next five years’ time.
Dhruv Jain
Sir, just one data point on the Electronics…
Operator
Sorry to interrupt you sir. I request you to come back for a follow-up question. Thank you. The next question is from the line of Bhoomika Nair from DAM Capital. Please go ahead.
Bhoomika Nair
Yes. Congratulations, sir, on a good set of numbers. My first question is related to the Electronics ex-Ascent business. If I see that seen a very strong growth, both on Y-o-Y and also on Q-o-Q basis. So what’s really — what segments are within this is really driving the growth? What new customers have you added, et cetera? If you can just kind of throw some color would be very useful.
Jasbir Singh
Good morning Bhoomika. So we have added customers. In the automobile segment, we have also added. So these are all initiatives which we took three years back to diversify our applications in the PCBAs are now giving us good results. So we started this journey in 2018 by just supplying air conditioner PCB and refrigerator PCB. That is what ILJIN used to do in 2018 when we picked up 70% stake. And it was just an SMT assembling plant. So we developed our own R&D unit. And then we — after applying to air conditioners, we started diversifying. So today, we are giving solutions in the smart watches and Bluetooth speaker. I’m glad to announce consistently from last three months, we have been clocking about 1 million watches every month. And then we’ve added telecom sector, which is — we are supplying to companies like Tejas. Then we added smart meter companies. Then now we have recently added automobile companies, both two-wheeler and four-wheeler, and we’ve added defense electronics company onboarded from the PCBA point of view.
On the Ascent Circuits, we are already delivering solutions to auto, almost 65% of revenue is coming from the auto sector and almost about 15% is coming from the telecom sector and then rest is aerospace and defense sectors. So this becomes a very big, good hybrid for us. And moving forward, we are — we’ve recently added our consumer durable companies whom we were serving from here in the Ascent Circuits also. So that’s given us a good leeway from the PCB point of view. So I think we are horizontally deploying our customer base into Ascent now, and Ascent customer base into the PCBAs. So this is a good synergy, which we are able to do. And we are very excited. I think we are moving very positive on this division. It’s a very strong division. We have — we are almost touching about 8% EBITDA, and we want to go to a 10% EBITDA in next three years’ time. And that is what the target is for this. And this division will continue to grow. I mean, it will be a very robust division for us.
Bhoomika Nair
Sure. Sir, on Ascent, what is our current utilization till the new capacity comes in? And will that help grow? And secondly, in terms of Sidwal margins, I understand it has slipped because of the weaker revenue growth. Once the growth really comes back, do we see margins going back to the 20%-odd that we used to see? Or is this going to be the new level of growth? So yes, so just on Ascent utilization and Sidwal margins.
Sudhir Goyal
So on Ascent, we are already sitting at 85% capacity utilization, and that’s why we have done the groundbreaking, because after the announcement of anti-dumping duty by government of India up to six layers, we have seen a lot of interest from very marquee customers and very big names. And that’s the reason why we immediately went ahead and started this capex. So as I told that almost 50% will come back in subsidy terms. So net capex will be about INR300 crores from our side. But this can additionally give us a revenue of INR550 crores to INR600 crores on a full capacity basis. And we expect — and Ascent as it is, can go to about INR450 crores odd in the current capacities what they have. So this means that we can do about close to about INR1,100 crores with the new capacity and the old capacities in this by doing just a capex of INR300 crores and with good EBITDA margins.
Bhoomika Nair
Sure. On Sidwal margin, sir?
Sudhir Goyal
Sidwal margins, we’ll definitely come back because there’s no change in the construct of bill of material and RMC there. It is just a matter of — because we are doing expansions and there are some expenses being built. On the other side, there’s a little slowdown but Sidwal team is very confident that by next year onwards, we will continue — we will start seeing the growth. And they are also at the final leg of winning some more tenders right now. I think we will appraise all of you by next quarter call if that is — if that materializes. So those are also big tenders. And we are glad that export of Sidwal air conditioners, we are expecting to start by quarter four of next year. So that will be our very big inroads into the European markets from that perspective. We are already sitting on the INR2,075 crores of order book and — which will be further strengthened in this quarter, plus the export opportunities, which are sitting on the table. So this division is — will be a very different division if we see from a five-year point of view.
Bhoomika Nair
Got it sir. Thank you and all the best.
Operator
Thank you very much. We will now take the next question is from the line of Sonali from Jefferies Group. Please go ahead.
Sonali Salgaonkar
Sir, thank you for the opportunity and congratulations on a great set of numbers. Sir, my first question is regarding your PLI incentives. Could you quantify how much you have received so far in H1 and probably how much you expect to receive in H2? And also, just a confirmation, you don’t share these incentives back with the brand owners, right? So should we expect them to flow through directly into your data?
Jasbir Singh
Good morning Sonali. Yes, so last year, we received our first PLI incentives, which was INR15 crores. This year, we are likely to receive about INR36 crores, INR30 crores is a number and INR6 crores in ILIJN. I think the documents have been filed. So whenever they want to announce the disbursals, it will be announced soon. And plus, we are expecting some more subsidies from Government of Haryana and other state governments. So all I think we are looking towards the subsidies receiving in the tune of INR65 crores to INR70 crores this year, which is moving online right now.
And yes, as you asked us to confirm, I think it’s we have — as explained earlier that because the PLIs have been given by Government of India on the threshold of some investments and the PLIs are getting back to us on the incremental sales. So because the incremental sales are all the endeavors of Amber management, there’s — we don’t think so that there’s a possibility of us to pass on to our customers. We are not passing anything to our customers from the PLI benefits point of view because this is not a sector, which is like other sectors where you have to pass on completely. Because here, you have to be near to the customer. These are voluminous components. So there are many products. And customers are not giving you a take or pay back arrangements in case they don’t deliver the incremental sales. So that is the reason why we have not passed on. So we confirm again.
Sonali Salgaonkar
Very clear, sir. Thank you for this. Sir, my second question is regarding the AC industry. It’s obviously a very strong year. Any — could you quantify the pricing actions that the AC industry has taken in the first six months of this fiscal year, that’s April to September? And also lastly, I missed the number if you have already given for the potential capex for Korea Circuit’s JV?
Jasbir Singh
Sonali, we — on the — I think on the capex front, we are right now in a stage where we are discussing with government for their incentives. I think that will be announced soon. Post the announcements are done by Ministry of Electronics, we’ll come up with a number, and we’ll have a call with all of you. I’ve explained the complete — total addressable market and what is our rationale behind this JV. I have also explained about the buyback arrangements, which we have signed, which is I think, good step and good confidence, which Korea Circuit is bringing on the table and plus by bringing new customers. On the — what was your question on the AC front, do you want to ask…
Sonali Salgaonkar
The pricing action — the pricing actions in the industry.
Jasbir Singh
On the pricing, nothing has changed on the pricing. I think industry is moving as stable. Commodity cycles are not very volatile. So there’s no big changes in the pricing side.
Sonali Salgaonkar
Got it sir. Thank you and all the best and Happy Diwali to you and team.
Jasbir Singh
Thank you.
Operator
Thank you. The next question is from the line of Pulkit Patni from Goldman Sachs. Please go ahead.
Pulkit Patni
Sir, thanks for taking my question. Sir, my question is on our cash flow. While our revenue has grown significantly, so is the operating profit. We’ve seen working capital increase meaningfully, and that’s primarily because of trade payables going down quite significantly. How should we look at this? Is it just because of the seasonality that we had higher payables and [Indecipherable] and we’ve paid that out? Or how should we look at payables? Our net operating cash flows are — have grown quite negative this particular first half. So what’s your view on that? That’s question number one.
Sudhir Goyal
Yes. Pulkit, so on the negative cash from operation is because that we have a better payment terms from the creditor and largely, we bought all the materials during the peak season, which is quarter four and quarter one. In quarter two of the financial year it gets paid. So that is why you always see that our cash flow is stretched, our net working capital days are different in the quarter two and quarter three, which get normalized by year end. And this is a normal trend year-on-year as well.
Pulkit Patni
Yes. So this is just the trade payables getting paid out after the festive season got over, right?
Sudhir Goyal
Yes. Yes. Not the festive season but I don’t say that it is a festive season.
Pulkit Patni
I mean the summer season.
Sudhir Goyal
Yes.
Pulkit Patni
The summer season, sorry, yes. My second question is on again capex. I think a few people have asked. Can you talk about the total capex plus what is going to be the other investments given that we’ve got multiple other joint ventures, Yujin et cetera, what will also be the growth in investments that we’ll do during this year in addition to whatever gets added to the capex line?
Sudhir Goyal
So as of now, if you talk about any additional investment, that is not we can foresee in the current year, which is happening apart from the normal capex for the capacity expansion, which is to the range of around INR350 crores to INR375 crores other than the KCC and Ascent expansion.
Pulkit Patni
Okay. So no major investments in any of those Railway JVs, et cetera, other than what you’ve spoken on?
Sudhir Goyal
Yes.
Pulkit Patni
Thank you.
Sudhir Goyal
Thank you.
Operator
Thank you. The next question is from the line of Keyur Pandya from ICICI Prudential Life Insurance. Please go ahead.
Keyur Pandya
Thank you. Sir, first question is on the growth. So — and you mentioned about the good momentum in demand. So in that backdrop as well as our earlier commentary of new capacities coming up for the brand. So considering that, how should we think of growth in second half? And when you talk — when you mentioned about good momentum being continued, should we expect growth similar to H1, which is 50% kind of growth in 1H?
Jasbir Singh
All the brands, whoever had announced their factories in South India, they have already started. And the last one was Voltas, which started in quarter one in their Chennai plant. And we have shifted both strategies into the components and the finished goods. And very difficult to predict right now how the quarter four will be. But what we have guided to everybody, I’ll repeat it that we will out-do the industry growth by percentage points because we’ve added customers, we’ve added new products, and we’ve changed our strategies from being a consolidated solution provider in terms of either components or in the air conditioner site, full site. So we are expecting a good season. Let’s hope. I think if rain doesn’t disrupt, it should be a very good season and a very good year for AC industry.
Keyur Pandya
Okay. Thank you. And second and last question. So I mean, you mentioned some of capex like the Korea Circuit, that would come in this next financial year. So clearly, what would be the capex for current financial year FY ’25, which includes organic capex as well as some stake increase if you do? And in that context, what would be our debt level by the end of the financial year?
Sudhir Goyal
So if I talk about the normal capex, which we are doing in the — all the entities, it is in the range of INR350 crores to INR375 crores. Apart from that we acquired — we invested in Resojet JV, INR35 crores in the current — H1 financial year ’25. Plus, we increased our stake in ILJIN and Ever by further paying around INR100 crores. So that is what we have done the investment plus the capex that we are doing. In the next H2, we are not as of now expecting any further investments. So that is not on the blog as of now.
Keyur Pandya
So INR370 crores plus INR135 crores, that would be the total cash outlay for this year, INR370 crores normal capex plus INR100 crores ILJIN and Ever, plus INR35 crore Resojet, that would be the submission?
Sudhir Goyal
Yes.
Keyur Pandya
Okay. Thanks a lot. All the best. Happy Diwali.
Sudhir Goyal
Thank you. And Happy Diwali to you as well.
Operator
Thank you. The next question is from the line of Achal Lohade from Nuvama Institutional Equities. Please go ahead.
Achalkumar Lohade
Good morning everyone. Thank you for the opportunity. Sir two questions. One, this is pertaining to the Consumer Durables business. While you’ve talked about overall growth for the full year of the company, it implies only 5% for the second half. Obviously, you are being conservative here. But I’m just trying to figure out if this is 5%, the swing in terms of a reduction, so to say, in terms of growth rate, would that be more of Durables or Electronics as well?
Jasbir Singh
No. So Electronics is moving very fine. The guidance which we are giving for the AC industry is pertaining because this is a very seasonal product. So we don’t want to give any guidance where we can’t commit — we can’t honor those. But we are looking towards a 25% to 30% growth in the industry. And what we are guiding is we’ll definitely outdo this growth because quarter four has a higher base as compared to the earlier, because quarter two, quarter three was a leaner section and quarter one was bad season last year. So there were lower base there. On quarter four basis, it’s sitting at a higher base. What we have guided is that if the industry goes by 30%, we’ll definitely cross at least 5% to 10% more than the industry.
Achalkumar Lohade
Understood. And the second question I had with respect to margins. Can you help us — we have seen a substantial improvement in 2Q in the Durables business as well as Electronics. Durables, I obviously understand to do with the utilization. How do we use — how do you see if current momentum to sustain theoretically, could this margin be significantly better in the second half?
Jasbir Singh
Well, so each division is sitting at a different margin profile. But on the Electronic side, as I guided that we are we’re — we’ll be closing near to about 8% on the EBITDA margins. And the Consumer Durables side, I think we will maintain the margins what we have done in H1. We don’t see any big volatilities coming on the commodity side as of now. And that’s how we think that the margins will be protected further. But yes, the more businesses, which we are adding are coming with better margins. The larger part of significant revenue increase from those divisions — from those initiatives will start flowing in next year. So as far as H2 is concerned, I think we should be able to maintain the margins.
Achalkumar Lohade
Got it. And just one small question, if I may. Of the total…
Operator
Sorry to interrupt you sir. I request you to come back for a follow-up question.
Achalkumar Lohade
Sure. Thank you.
Operator
Thank you. The next question is from the line of Nirransh Jain from BNP Paribas. Please go ahead.
Nirransh Jain
Hi sir. Good morning. Thank you for the opportunity. And congratulations on a great set of numbers. Sir, most of my questions have been answered, and I have just one follow-up on the debt part. So what we have seen in the first half that the debt levels have increased a lot, maybe primarily because of an increase in the short-term borrowings of the latest investments that have been done in the refrigerators as well as additional stake. But how do we expect the debt levels going ahead? I mean with the additional capex that is expected for the next two to three years. So we expect the debt levels to increase further from here?
Jasbir Singh
Yes, a little bit increase we are expecting in the current financial year as compared to last year because of the investment that we have done, and the capex which we are doing. So we are expecting increase — like it should be in the range of INR700 crores to INR800 crores by year-end at the net debt level.
Nirransh Jain
Okay. INR700 crores to INR800 crores. So last year, it was around INR1,400 crores. So is it right to assume that it would be around INR2,000 crores by the end of this year?
Sudhir Goyal
No, no. So I’m talking about the net debt, not the gross debt. Net debt what do that gross debt minus whatever cash we are having in the form of FDs and the current account balance, plus the liquid investments in the perpetual bonds of bank. So if you exclude that, we were around INR600 crores. So that we are expecting at the net debt level, it will be in the range of INR700 crores or to INR800 crores by the year-end.
Nirransh Jain
Sure. Thank you sir. And sir, lastly, one question on the Electronics side as well. I mean any particular reason why we have not increased our guidance to more than 45% considering that we’ve already clocked around 70% and the momentum is expected to remain strong and now that there is a pickup in the core PCBA business as well from 18% last quarter, excluding Ascent to 65%, excluding Ascent this quarter. So any particular reason why the guidance has not been revised for the segment?
Jasbir Singh
On the lighter note, the reason is the precedent set by the market itself. Once we could not achieve our guidance and market punished us on an exponential basis. So we want to be very conservative and then over-deliver our numbers. But yes, what I would like to say is that the Electronics division is standing at a very strong footing. And we are seeing — if you see on each and every division, all the three divisions have opened up multibillion-dollar opportunities moving forward for the next five to 10 years’ time. So we are taking the right steps. It has taken a little more time than expected for us to build this division. We were expecting that this will be built by last year, but it has taken one more year for us, but now things are very clear. We are the only Electronic EMS company in the country today, giving a complete solution, backward integrated solution coupled with the R&D, PCBA solutions and backward integrated in the PCB solutions. And both PCB as well as PCBAs with the applications, which we are addressing are very, very big opportunities coming forward.
And we have stitched very sweet deals with our good partners, identifying good partners in both all the three divisions, whether it be Korea Circuits or by partnering into acquiring Ascent Circuits and also Yujin machinery of South Korea. They are a very beautiful company, manufacturing marquee products, you’ll see as we move ahead. And the ToT done for the doors and gangways and also now addition of commercial air conditioners and washing machines. So each division is progressing very well. I think we are very excited for that. But we don’t want to guide any number where — then because the seasonality and because of so many functions it is. So we would rather be a conservative guidance people and then overcome it — over deliver it.
Nirransh Jain
Sure sir. That’s very clear. Thank you and all the best.
Operator
Thank you. Ladies and gentlemen, we’ll take this as the last question. I now hand the conference over to Mr. Jasbir Singh for closing comments.
Jasbir Singh
Thank you, everyone, for joining on the call. I hope we have been able to address all your queries. For any further information, kindly get in touch with our Head of IR, Ravi Kharbanda and — or our IR team, Strategic Growth Advisers or Rohit Singh from our IR team. So thank you very much and we wish you all a very happy and prosperous Diwali and safe Diwali. Thank you. Have a good day ahead.
Operator
[Operator Closing Remarks]