Carysil Limited (NSE: CARYSIL) Q3 2025 Earnings Call dated Feb. 13, 2025
Corporate Participants:
Chirag Parekh — Managing Director
Anand Sharma — Executive Director
Analysts:
Harsh Shah — Analyst
Unidentified Participant
Resha Mehta — Analyst
Nikhil Gada — Analyst
Yug Patel — Analyst
Gautam Vandra — Analyst
Udit — Analyst
Tushar Raghatate — Analyst
Saumil Shah — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to Carysil Limited Q3 and Nine Months FY ’25 Earnings Conference Call. As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing start and zero on your touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Chirag Parekh, Promoter and Managing Director. Thank you and over to you, sir.
Chirag Parekh — Managing Director
Good evening, ladies and gentlemen. Thank you for joining the Limited quarter three and nine monthly FY ’25 Earnings Invest Conference call. I trust you have an opportunity to review our financial results and investor presentation, both available in the company’s website and on stock exchanges. Joining me on this call are Mr. Anand Sharma, Executive Director and Group CFO and SGA Investor Relations Advisors. With over 30 years of learning at, we focus on rapidly translating those learning into action, which has helped us grow over the years. We have also stayed a step ahead and emerged as a bigger, stronger force in the market. We have continued with our multi-multi-prolonged holistic strategy for growth and continuous innovation, investment in capacity expansion, brand visibility and expanding our reach across new geographies worldwide.
Our commitment to brand development both in India and internationally has been instrumental in strengthening our position as a trusted name in the kitchen industry. We are working to become the most trusted one-stop kitchen solution company by forming partnerships with global marquee customers, leveraging technology, strategic marketing, building a robust ecosystem, keen understanding on evolving consumer preferences.
Innovation, as you know, is a key driving force of and continuously we strive to introduce cutting-edge products and technology resonate with the lifestyle. Keeping the customer engaged and inspired on a continuous basis. Additionally, our strategic diversification of product allows us a comprehensive and integrated range of kitchen solutions making a one-stop destination. We have successfully expanded or footprint in global markets with over more than 50 countries worldwide, the sites of global expansion to increase production capacity, we have committed to provide best quality to our global customers, investing in the state-of-the-art manufacturing South process, adopting best-in-class process our products meet the highest international benchmark.
While we are focused on business expansion, we are committed to the environment and peoples is reflected in our ESG certification and Great Place to Work certification. We recognize the strength, expertise of our people fundamentally our growth, therefore talent acquisitions with our product business remains a key priority as we focus on building a young, energetic, motivated high-skilled team to support our expansion planned domestic market.
We are also focusing on the women empowerment very, very strongly, attracting, developing, retaining top industry talent. We aim to foster innovation, enhance operational efficiency, deliver exceptional customer experience. At, no, sorry. Furthermore, in the Nine-Month FY ’25, we took significant steps in-product innovation and portfolio optimization.
We have successfully designed high-margin models for — of quart sinks for the international and the Indian market along with the stainless steel sinks and a large variety of high-margin kitchen faucets to cater the domestic industry. To support the development, we invested INR35 crores in new, machineries, utilities and new products, reinforcing commitment to deliver high-quality cutting-edge kitchen solutions.
Simultaneously, as part of our continuous performance improvement strategy, efficient working capital manner, optimized use of resources, we have under — we have undertaken a rationalization of our product portfolio by discontinuing slow-mowing SKUs and focusing more on high value-added products to streamline enhance our offerings, improve overall inventory management and position.
During quarter three FY ’25, we have enhanced marketing efforts and run strategic marketing campaign, including participation in exhibitions, in Dubai, advertisement on the TV ads and in the theaters and a bunch of distributors and customers meet. Also, we run social media campaigns and investment we had about INR3 crore-plus last quarter-over our regular marketing spending.
Our participation in the exhibition allowed us to showcase our cutting-edge kitchen solutions to a diverse audience, including industrix for architects and potential customers. Our Big Five exhibition in Dubai has helped us reinforcing our brands international market and tap into New business opportunities. The overwhere response from the attended combined with key stakeholders enhance our brand credibility and market positioning. We have shown a strong growth in our UAE subsidiary in the last quarter. As part of our brand — sorry, as we move forward, our focus will be on creating averness with consumers, industry profiles and businesses, our unique benefits of through a well-structured and strategic marketing campaign. We believe that well-planned strategic marketing campaign we can significantly expand the to a global scale. Our vision is to obviously position as a global pioneer in the industry. In the upcoming quarter, our key objectives are going to be achieve higher-value growth, streamlining working capital and boosting margins to drive long-term success. We aim to accelerate value-creation, enhance working capital efficiency improving profitability in the coming quarters, positioning our business for sustained growth. Squad business so one second coming back to the business for the coming quarters we will start with the good news. Finally, we are pleased to inform you that our major customer, Karan USA has been awarded a huge order by one of the biggest US home retail chain and we are expecting large flow of orders from them by this quarter. This will also require a fresh investments in new malls with the addition of the malls, machinery infrastructure. This achievement is testament to our continuous efforts to expand and diversify our customer portfolio. As of December 31, 2024, our planned capacity utilization stood at 65%. We are also happy to inform a second breakthrough by the new SKU has been approved with IKEA for their global requirement and which will overall improve our capacity utilization to 80% in the coming quarters of FY ’26. 25 — sorry, 25% 25.6% business. Quarter three FY ’25, our steel sink business experienced a softer performance due to scale of some major orders. However, the momentum still remains strong and healthy pipeline, encouraging mainly with the existing customers experience their interest in expanding their portfolio, including our steel sinks. We will provide updates once these contracts — new contracts are signed. Meanwhile, operational efficiency remains robust, capacity variation remains around 80% in Nine-Month FY ’25. We would also like to let you know that China Plus — with the China Plus strategy, we’ve been receiving a large number of inquiries for the steel sink for the US and other markets. So one more feather in the gap for the stainless steel division. We have able to secure a good size order with — start as a starting point with Kolar India for the stainless steel sinks for our long-term journey with Kolar. Subsidiaries performance. The December quarter is typically a softer period for overall international over subsidiary due to ending of their calendar year. Domestic business. Our domestic business remained relatively flat quarter three FY ’25 due to softer market conditions. However, we expect a more value-driven growth in coming quarters. The implementation of the DI VII standards has provided the unique opportunity to assemble and manufacture built-in appliances, products like kitchen hoods, hubs, ovens,, etc this capture significant market-share. We are also building capacity, meet the demand of the current sales forecast, see OEM opportunities. Additionally, our faucet division is progressing well with introduction of new technology of like powder, coating and chrome plating, which is going to gain momentum, not only for kitchen faucet but also for the bathroom faucets. We anticipate a strong domestic growth in the faucets industry. Strategic priorities following key initiatives, product innovation, infrastructure expansion, new factory will be constructed on the land opposite to suffice the above our expansion plans in the built-in appliances. If required, we may have to — we may use this land for further expansion business. Cost optimization and improvement of profitability in the US subsidiary. We do understand that the last quarters in the US subsidiary have not been great. It is — we feel it’s an initial period time, we are also learning the business, but now we have a plan. We are implementing a structured cost optimization plan US subsidiary with a clear roadmap to achieve profitability in the coming quarters. Terms of customer expansion, we are broadening our customer-base across with diverse product portfolios who penetrate the market. Leadership strengthening, we are enhancing our leadership team to drive operational excellence and effectively execute our strategic vision. With this, I hand over call to Mr. Anand Sharma, our Executive Director and Group CFO, to brief you on our financial performance. Thank you.
Anand Sharma — Executive Director
Thank you, sir. Good evening, everyone. Let me take you through the company’s consolidated financial performance quarter three FY ’25 performance. Consolidated total income stood at INR205.5 crores for Q3 FY ’25. This grew by 8.9% on Y-on-Y basis, but marginally lower than the previous quarter, primarily due to holiday overseas subsidiary and lower sales in Steel sink segment. EBITDA for quarter three FY ’25 stood at INR31.2 crores as compared to INR36.1 crores in Q3 FY ’24. EBITDA margin for quarter three FY ’25 was impacted mainly due to a reason like the export freight cost increased from 6.5% in March ’24 to 9.3% in December ’24 due to 3 issues.
This has resulted in impact of margin by INR2.1 crores on Q-on-Q basis. However, with the current ceasefire which is freight rate has came down sharply and current freight costs will be at pre-March ’24 level. We have incurred strategic additional marketing spend of INR3 crores in Q3 FY ’25, which will drive the growth for future. There was adverse impact of GBP INR translation difference due to consolidation of the UK balance sheet in Indian rupee as on 31st March 24, where the rupee is appreciated from 112 in September ’24 to INR107 in December ’24. This has resulted in notional loss of around INR2.8 crores in-quarter three FY ’25. However, GBP iron now strengthened to INR108 plus, this will benefit us in coming quarters. Increase in price for key raw-material MMA from 1.79 per kg from 1.79 per kg in April ’24 to $1.33 in $2.33 in September ’24 to now 2.5 to in December ’24. However, this current trade shows that this will come down to around 2.02 per kg in March ’25 onwards. So this will going to have benefit.
However, this has resulted around INR70 lakh cost increase in quarter-to-quarter basis. We also have some retention and training of additional skilled manpower to meet the upcoming demand and to enhance utilization.
Profit-after-tax and after monetary interest stood at INR12.5 crores as compared to INR15.3 crore in Q3 FY ’24 due to reasons stated earlier. Coming to nine months FY ’25 performance, sales volume for sync stood at 4,72,193 as compared to 4,10,728. This is a recording growth of 15% on Y-o-Y basis.
Our standalone zinc stood at 1,946 unit as compared To 8598 in Nine-Month FY ’25, recording impressive growth of 27%. Kitchen and other products stood at 41,759 unit in nine months FY ’25 as compared to 43,418 in last year Nine-Month period. There is a marginal degrowth mainly due to BI shoe and the import. Consolidated total income stood at INR614.9 crore in Nine-Month FY ’25 as compared to INR496.1 crore in nine months FY ’24, a recording a growth of 24% Y-on-Y. Total income increased mainly due to two reasons, business has improved and there is a better efficiency in the plant and performance of US subsidiary has also improved. EBITDA for Nine-Month FY ’25 stood at INR105.9 crores as compared to INR97.4 crore in Nine-Month FY ’24. Profit-after-tax and monet interest stood at INR45.2 crores in nine months FY ’25 as compared to INR42.4 crore in nine months FY ’24. Now coming to utilization of QIP proceeds, we have raised INR125 crore through QIP for capex, working capital and general corporate portfolio. The working capital allocation of INR31.25 crores is deployed in the business reduction — which has resulted in reduction in bank borrowings and cost management. We have capex allocation of INR62.5 crores, which includes investment in moles, machinery, new facilities. Till now, we have utilized around INR5 crores in major — because the major capex plan is underway, which will be utilized in FY ’25, ’26. Out of general corporate purpose fund allocated of INR27.9 crores, INR5 crore is utilized for marketing, branding and promotional activities. The remaining fund will be utilized in the coming period and the same, the balance we maintain is with the banks. Now coming to debt position, as on 31st December 2024, our consolidated borrowings stand at INR255 crores as compared to INR300 crores as on 31st March 2024. The debt utilization on 31st December ’24 are mainly in the areas like we have INR95 crores debt, which is for the acquisition of Surface Limited and rate LUC. INR35 crore of the capex is used in the term-loan for India operation and INR125 crores is used as our working capital. So we have efficiently used our working capital and try to reduce our debt, which can be seen from the March to the 31st December level. Thank you. Now I ask operator to open the floor for question-and-answer. Over to you, operator.
Questions and Answers:
Operator
Thank you very much. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press star and one on the touchstone telephone. If you wish to remove yourself from the question queue, you may press R and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles.
Participants are requested to please limit the questions to two per participant. If you have a follow-up question, you may rejoin the queue.The first question is from the line of Harsh Shah from Dalal & Broacha. Please go-ahead.
Harsh Shah
Yeah. Thanks for the opportunity. Few questions from my side. So firstly, on the gross margin front. So if you could kind of help us understand the dip in the gross margin, especially on a sequential basis. So even if I adjust the increase in the raw-material cost, the dip in the margins on the gross — at the gross margin front is almost by around 250 basis-point to 300 basis-points.
So one question is that so when I do consolidated minus standalone to find out the subsidiary gross margin, it seems that there has been some one-off or maybe I don’t know the reason for a drop-in gross margin at the subsidiary level. So if you could kind of help us understand?
Chirag Parekh
So the gross margin mainly because of the US subsidiary where we have operating loss. Second, since we are doing consolidation in Indian rupee, as I explained in my speech, when we did our consultation on 30th of September, the INR equivalent is INR112, which came down to INR107. So when we do again the consolidation on 31st December, the difference in the consolidation is all got into quarter three because we cannot change the first six-month period number so that consolidation difference came in-quarter three itself. So that has bring down the gross margin side.
But how would — I mean, I’m not understanding how is my gross margin kind of getting impacted at the subsidiary level.
So yeah, I’ll tell you. So like you have opening a stock, which is valued at, say, INR112 of closing stock — sorry, closing stock is IN 112. When you do the other consultation, you valued at INR107. So INR5 is getting lost just in the transmission. So there is a notional transmission dividends of around INR3 crore at the subsidiary level.
Harsh Shah
Got it. Got it. That was clear. Secondly, going-forward in terms of the employee cost, so we have seen for the last four quarters, it’s been on a continuous rise and you even alluded in the investor PPT saying that a lot of training programs kind of have been done. But so how should one look in terms of at where this number would stabilize as a percentage of sales.
Chirag Parekh
Yeah, Chirag Parik here, CMB. There is — I think you know great point on the employees. So I think as far as on the workforce, we were expecting this increase in the sales in the sink business. We’ve been carrying quite a bit of workforce with us. And so we see this ERE costs rising since last few quarters. Finally, anyway, we announced this new business, which be coming through will be optimizing this.
As far as the new sales force, what we have recruited, they’re going under — going training and we are now, as I said, focusing on more high-value-added products. So we have introducing — we just introduced products, some of them went out-of-stock. So in the quarter one, ’25, ’26, we’ll have a complete range of new high-vargin products, which this thing has been assigned to introduce in the Indian market.
Harsh Shah
And sir, if I may, I mean, what would be the percentage to sales that you’re looking at. So meaning in terms of absolute, say, right now on a consol basis, it’s somewhere around INR20 odd crores for Q3, then should we consider this run-rate to continue?
Chirag Parekh
What INR20 crores?
Anand Sharma
I’m not understand that INR20 crores of what
Harsh Shah
Employ costs
Anand Sharma
So basically I’ll tell you, we have cost benchmark like 10% of the sales. If anything in that range, it’s all acceptable because number-one, we are growing. We have to have a more talented manpower. And second, we have built something — something you know for our future capacity expansion. So that’s why we still work. Skill workforce,
Chirag Parekh
Which is not easy to get. Yeah, yeah. So we carried on the scale workforce.
Anand Sharma
But 10% of the sales is our benchmark. So just for your benchmarking for the 10% of sales.
Harsh Shah
Got it. Okay. Now you also mentioned that a large flow of order you’re expecting from Karen. So now you would kind of be doing some sort of capacity expansion. Any number in mind in terms of what would be the incremental capacity that would come in?
Chirag Parekh
So where-is — there is no capacity expansion because we already have a million sync capacity in-place. We are doing production expansion. So the planned utilization is expected to improve from 65% to 80%.
Harsh Shah
Okay. So this will be in the quarts business, 65% to 80%.
Chirag Parekh
Yeah, 60%, 80% will be the quart signals. What it requires fresh investment is only on the some moles and machinery, which is required to dedicate to this new customer.
Operator
Sorry, it up, may I request you, Mr to please rejoin the queue. We have participants waiting for this.
Harsh Shah
Sure. Yeah.
Operator
Thank you. Participants are requested to kindly restrict the questions to two per participant. The next question is from the line of IAC from Capital. Please go-ahead.
Unidentified Participant
Yeah. Hi, am I audible?
Anand Sharma
Yes.
Unidentified Participant
Yeah.
Unidentified Participant
Thank you for the opportunity. I just wanted to know if you could give me an exact number for this quarter on how much we have sold-in value terms in each segment, that is what do you think in appliances? Could you just help me with the number?.
Anand Sharma
So I’ll give you the number for the quarter core, we have value of INR92.95 crores. Still sync we have INR12.76 crores. Appliances we have INR7.62 crores, fauceted and FWE 3.4 and Stanagan and others 1.56, so total INR118.3 crores for India business.
Unidentified Participant
Okay, this is — so this is India alone, you’re saying.
Anand Sharma
Yes, India will list. So that is — that includes Limited India and Steel. India.
Unidentified Participant
Okay, understood. And also could you just shed some light on the process part? Is there any kind of demand? I mean, I would have missed it in the initial comments, I wasn’t present, but could you just like shed some color on what is going on in the process side? And are we expecting any incremental orders going-forward? And also on the quantum of color, if possible, if you could just give us some idea.
Chirag Parekh
Yeah. The momentum in the quarter since orders will expect it to flow-in this quarter itself. We are gearing up as far as our internal team and our plant is concerned for these orders. Some indication has already been given to us. So we are already gearing up for that.
And the second question was on the. So the — so the coal — so the is a good starting point of the — the value could be about $1 million a year to start with, but it’s a good starting point with such a global company can only take you to places from here. Yeah, also the first question you said it’s on the court thing, I just want to understand on process.
Unidentified Participant
Could you just like emphasis on that like a little,
Chirag Parekh
Did you? Did you use the word process?
Unidentified Participant
Yes.
Chirag Parekh
Okay. So faucets, if you see — if I had to see the process, the last number which Mr. Anand Sharma said yeah. So the faucet, if you talk about it’s been sold about three — upward close to INR3.5 crores in the last quarter. If I had to remember maybe some six, seven years back would be about INR30 lak INR35 lakh something. I’m not trying to — maybe I’m wrong somewhere, but it has been a huge step forward for on the faucet side.Everything needs a faucet. So I think it’s wise for a company to introduce faucets, where if you’ve seen the growth, you know the growth is muted across all the economics in the world.
So it’s where you could get growth is by introducing new products, especially faucets which everything requires of faucet. And we’ve seen — that’s why we are ramping-up our faucet capacity.
Unidentified Participant
So we have received orders already from some existing player is it?
Chirag Parekh
We are — we have been — we expect a good increase because we just launched it and it’s been accepted very well in the market and orders have started flowing in.
Unidentified Participant
That will be. Thank you..
Operator
Thank you very much. The next question is from the line of Resha Mehta from GreenEdge Wealth. Please go-ahead.
Resha Mehta
Yeah. Thank you. So one question is on the — so our exports to the US so it’s almost a 20% revenue contributor for us. So any thoughts that you can share in terms of are we expecting any kind of tariffs to be imposed on the kitchen sinks that we export? Because while we hear you that instead you were rather talking about the China plus One opportunity that we have.
But do we see that tariffs as a risk to our exports — to our kitchen sink exports to the US, the quart does famously sink?
Chirag Parekh
So all I can say is that nothing has been heard in court site as of now. Metal is something which has been announced the duty for the any imports of the stainless steel or metal things, it is still not clear. But if the duty — I had to talk with few of my customers last night, but if they are still clarifying with their internal trade, if the duties on the steel things and steel is not out at all. We don’t export to US, I think maybe 1% may maybe. So it’s not a — it’s a very, very small. But if it is — if it is applicable, then we see only the rise in-demand of the sinks in the US so it may work on in our favor.
Resha Mehta
Okay, but you’re not hearing anything on the things. As of now, no, there’s nothing on-board.
Chirag Parekh
There is nothing on-board and I think we should not kind of speculate things. I think as of now, we hear it on a stainless steel things and aluminum metal products. So I think I think the — as far as the ports the business, probably we will see, you know, probably we can — if this holds true, then we may see a demand out of surge in the business of the quart sinks in the US.
Resha Mehta
And why would we talk about China plus one? This is for which particular product because as I understand, the main competition for us in cost are the European players and not the Chinese imports, right, the Chinese exports to US per se. So for which product exactly are we talking about the China plus one opportunity?
Chirag Parekh
No, so Europe is Europe so less you are, but Europe is still — some part of the Europe is still like we penetrate Croatia, right? So, we were buying from China, now it’s moved to us. But what was the still sink side, it is that the still sink, like I said that we did some deals, we are having a strong traction in the stainless still sink demand and we are expanding in the stainless steel side. So mostly it has to do with more of the stainless steel and fossils. And India will be now for the built-in appliances.
Resha Mehta
Understood. And the second question is, basically, we have been encountering weak demand, right? And you’ve mentioned reasons for that, right? But however, how do you see this going-forward? Because we have also seen volume degrowth in cord, stainless steel things and alliances, we have seen a pretty sharp decline, right? So how do you see this going-forward considering US, it’s an uncertain market? UK, again, which is a bulk of our revenues, almost 40% revenues comes from there. So how do you see your subsidiaries there in the UK doing? So any outlook on-demand on each of these markets and these product segments would kind of help from an FY ’26 perspective,.
Chirag Parekh
So no thing is that we don’t know. The global economic economy, the demand is muted, that also includes India now and we have seen results of other companies also. So I think nothing, but one silver lining for us is that kitchen sink becomes a very functional product and it becomes a very necessity product. And we have not seen a major decline in the kitchen sinks. Moving forward, as where the demand is muted, the economies are the — we see that the growth — a strong growth can come by getting by doing some great deals with some new customers. So this new deal which our customer did with one of the US major, a large deals like this will help us to grab a larger market-share and in result will increase our growth in the quads.
Appliances on the other side, while the value has gone down and the — and the quantity we have almost sent the same quantity is that because the Delhi was the North India Delhi and we do appliances everything 100% in India only. So the whole quarter — and I probably would have heard it that quarter three was completely, they are shut-down so because of the pollution control. So there was the high value-added products which we could sell-in the North India market did not happen in-quarter three and the quantity has remained same, but we have a — we have a more decline in the value growth. UK now. The last one in the UK. So UK, yes, the Economy is bad. These people are struggling and we have — but somewhere we’ve been able to maintain our — even if it’s not grown very steady growth in LD in UK. The reason is that more-and-more customers are preferring products from us. And I had also said it last-time also because the biggest competition for us is Germany. And all our companies in Germany, the inflation cost is rising, the products are rising. So there has been a massive now price difference — cost difference between us and that. So we have been able to grab more-and-more customers. So expansion of the customer-base in UK is right now helping us to drive our sales in UK.
Operator
Thank you.
Chirag Parekh
Okay. Yeah. Hope I answered all your questions.
Operator
The next question is from the line of Nikhil Gada from Abacus Assisted Management. Please go-ahead.
Nikhil Gada
Yeah, hi, sir. Thanks for the opportunity. Sir, my first question is, you sort of mentioned that we can see the expanded capacity as in the capacity utilization to go to 80% in the coming quarters. When can we sort of achieve this.
Chirag Parekh
So I would like to — I would obviously like to have it soon as possible, but I think — I think you’ll be able to see it coming gradually from this quarter, slowly, slowly. Yeah. So I would say, 80%, 80% if I’m trying to be optimistic, it will be from quarter one.
Nikhil Gada
And we are currently working on the entire 1 million line right of we are currently operating on 800,000, 900,000.
Chirag Parekh
Capacity is 1 million because we said that current — the last quarter three capacity utilization was 65%, around 65%.
Nikhil Gada
Got it, sir. And sir, just also you mentioned about IKEA as well that the second set of SKUs has been approved by them. So can you highlight what kind of order flows and from when can we see this coming into the numbers?
Chirag Parekh
Yeah. So IKEA, I think we have — IKEA we have — we have already got the order flow. We are expecting a 10% to 15% rise in the sales with the business.
Nikhil Gada
And sir, if you don’t mind, can you share how much contributes right now?
Chirag Parekh
So as you know, last-time, IKI is always that because of our contract with IQ, I’m not able to disclose the number, but the whole ICA business is a substantial business for us.
Nikhil Gada
Got it, sir. One last question, sir. The value-added product mix, which you sort of highlighted in the early statements. Is this largely for the — I missed your statement, whether it’s for the Indian markets or whether it is for this new customer that we have just onboarded?
Chirag Parekh
So the high-margin products are the — I would say the high margins there are two kinds of one is like it’s quite high-margin and one is mediocre. So the very-high margin products are for India. The US business particular will obviously draw higher margins because of the US dollar currently, which is in our favor right now. Also, I would like to an opportunity is also that we have — the freight rates have crashed. In the US, the acrylic prices, which is one of our key components in the things have always also declining. So overall, I think — and last I was said there is nothing that we are talking, which we are not — that you have not heard before. I always said and I said again, when the US business increases, when the US partner business increases, the margins will grow. When we had experienced this during the COVID time where our margins were to — we had gone to 2022 around I think 20% to 23% guidance, right? And so I think the time is back for us now. US is back, our forex rates are favoring us, the goods are going low. So we definitely see a margin expansion happening from — gradually from quarter-four and I think probably a good impact you can see from quarter one
Operator
Thank you. The next question is from the line of Yug Patel from Anand Rathi. Please go-ahead.
Yug Patel
Yeah. Good evening, sir. So my first question is on to the capacity expansion. So as you know, when we reach to the capacity utilization of 80% to 85%, we tend to increase our capacity. So what would be the planned capacity expansion for quart rings, sinks and faucets?
Chirag Parekh
So I think it’s a very good question. But I think the quarter where we’ve achieved 80% expansion, I think the company should start planning about how to increase the capacity because like I said, any large major customer wants at least 10% to 15% idle capacity in the plant before they do. So if we — the quarter which we touch 80%, the company will start looking at expanding the capacity of more than 1.6 and that’s why exactly the QIP was raised for this reason.
Yug Patel
Okay. And my second question is on to the margin side. So if you look at our operating margin, so it has gone below 2%, which is the lowest in last two to three years. And if I see that our freight cost has spiked up in FY 2022, which has been the highest, but then we will able to maintain our margin to 18%. So what has changed now and when we can expect this number to normalize?
Chirag Parekh
US, US, US have — US have definitely the decline in the US sales have spoiled again. The increase in the freight cost has changed the game for us. So this would soon start changing in the coming quarters. Yeah. And — and we need to and we need to understand that with all this happening at the — as I said at the same time, we have a increase in our key material costs in the quarter three is accrualing. So everything we Call-IT a perfect storm like we had all these increases, we had low value-added product sales. And then on-top of that, we had an increase in the input cost and the freight cost, which kind of spoiled the party and the margins guidance, it went below the margin guidance.
Operator
Thank you. The next question is from the line of Gautam Vandra from Shubhalakshmi Family Office. Please go-ahead.
Gautam Vandra
Hi, thank you for the opportunity. Sir, my first question is in previous con-call, you mentioned that there is a 1 lakh capacity you have added to the kitchen appliances. Could you please clarify which specific product in the kitchen appliances category has these capacities increased? Yeah, it is for the board and cook tops.
Okay, okay, sir. And my another question is, are we generating any sales from countertops in the Indian market?
Chirag Parekh
Not yet. No. Okay.
Gautam Vandra
And my final question before I jump to the queue, like what are the plan to grow the domestic segment like our plan to — our plan to improve and grow our Indian market, our business segment overall in the Indian market?
Chirag Parekh
Yeah. So we have a — so we are — so we are kind of drawing up a great plan. I think the first plan we got into place was introducing high-margin products, things with better utility. Now what is that? That is a thing soiled in the tech, they are called the workstation thing. The workstation sinks are complete functional things where you can wash and clean and even have with the glass.
Typically a sink like that sells for a retail INR25,000 to INR40,000 against a normal sink of INR10,000. Now that’s in right now, right? So I think that’s the first thing. Second thing, we have come out with new quarts quarts thing with bezel designed for catering the high-end segment of the market. Example, let’s say a thing 24 by-18, 24 18 is the largest selling model in India. We are only one for sing model which is catering to all the segments of the market, which is not right. Somebody has more money to pay, he wants to pay money, but does has an option?
No, we didn’t have an option. So the same big bowl, we Call-IT, 248 used to cater to the mid-end — to the high-end of the market. Now we have a complete different category of the model, the high-end market, which is now compromising already we expect in the quarter for about 10% of our sales will be of high-end — high-end margin products.
Secondly, we introduced the new built-in appliances, which are of great value. For example, we introduced 300 — we tried a 300 quantity of built-in refrigerator, not built-in refrigerator. We — everything got stocked out and now we are without stock. So now we are bringing in with a double dose refrigeration. Average price of this could be more than INR2 lak to INR3 lakh one-piece. Then we introduce the AI-driven smart appliances with a digital screen or where you don’t have to use even if a guy like me goes at night, I want to cook some food. If I put something in I just have to press a rice button. I have to press a popcorn button so automatically it generates the time and the heat what is required to do it. The third category of we introduce all the ovens are with built-in air fryers. Air fryers becoming very, very popular. We completely did not have this segment. So these kind of new products are in-demand and they’re going to add to the — not just the value, but also the margin. Very important point is a faucet because all the faucets what we have launched are with an average retail price of INR20,000 to INR25,000. And to my mind, a faucet is an ornament to a kitchen. A kitchen becomes a necessary item, but faucet becomes a ornament to a kitchen. Why would somebody not pay a kitchen 40,000 and would pay over a faucet has got a PVD, looks good and stands out. Out. It comes under aesthetic a. Now I am very, very surprised, honestly to see this demand in the surgery the faucets where people are able to pay a higher price than the things also. So I think we are going to keep that momentum. I’m very, very happy, satisfied with my team that we are able to adapt new technologies very, very fast. Diversification is the answer, but we are all playing with the box. We are using the same distribution system. What can we sell-with the thing at the same time, which gives you better margins. So hence, we are very confident with the strategy moving forward and this should — this will not should will result in better growth and better margins.
Operator
Thank you. Thank you. The next question is from the line of Udit from YES Securities. Please go-ahead.
Udit
Yeah. Thank you for the opportunity, sir. And thank you also for explaining the growth prospect going ahead. I just wanted to take on the numbers that given all the orders and the growth that you are talking about, so the quarterly run-rate, which will take us to INR1,000 crore number on annualized basis. When do you expect from which quarter should it translate?
Chirag Parekh
See, hi, good question. This is INR1,000 crore — this INR1,000 crore, I think is also eating me also as a of a company, why do we arerating? We’re talking about 1,000. What has happened is suddenly — and last quarter also I mentioned this or I think probably you were in our factory. I don’t know, I remember maybe I’ve seen you or met, but the — I had mentioned this and this is — and this is not a trial — I’m trying to doctor with the, but global scenario, who knew this is such a — we are in a period where there’s so much of uncertainty and now the blows every day morning. You don’t know what’s happening. So we are in a very uncertainty period, geopolitical situation in inflation situation.
Hence, I think organically with these large deals, we will grow and I think we will reach to a 1,000 from us. What is important for right now, our focus is how do we improve back our margins, how do we improve on our capacity, how do we become more innovative and seize the opportunities in the world. I think the — I think we are on a right track. This deal was very, very important for my customer, Karan, it’s very, very important because I’ve been talking about this for a long-time.
This happens once a lifetime. If you have two deals like this my friends, I think the INR1,000 crore will not look very far from us.
Udit
That’s very clear and also I respect sir that you have been maintaining that rest at least to reach that and I understand the uncertainties. But yeah. And sir, just one more question if I may squeeze in. Specifically to the Sternhagen brand and how much of it will be the focus and how much will carry because few quarters back, we were saying that’s turn again, we will, you know a bit — could be on a sideline maybe.So what is the status now and how are you looking at that side of the business?
Chirag Parekh
So I think Ston is a — isn’t it a burning question every quarter and also I think the goods is not coming. I think the strong we have just kept it as it is organically whatever we can grow. One thing which was just missing is, for example, we had a review meeting on Stone Ireland is we need to indigenize the stern products. Can you believe it every Stone product with a retail price drive of INR50,000 to-1 lakh.
Compared to my competition, it’s about 5 to 10 times more. This is ridiculous. Luxury is there, customer can tape on how long — I mean, how much a customer can pay. So we have started indigenizing the product in the next quarter, we’re going to slash the price of at least by 30% to 40% for some key products. That’s strategy one. Strategy two is, we did not have a project series which can give us volumes. So we are focusing on the — we are launching the Pro series we call-in April 2025, which we have specifying for some large products in India. People love the brands turn them.
Projects want to use it, why we are not able to get a penetration? We have the B2B tablets because we are atrociously priced as far as our pricing concerned. We need to recheck our prices and I think that’s the answer to Stone Island. Just I do understand the Stone Island sales is less than $1 million a year. How much time we are giving to it, I think we are not giving even more than 5% of our time to it. We just want to see whatever we want to put it in the market, what are the gaps, we want to fill those gaps up and we just want to let that brand move-in the market. If it gives us $2 million and fine, it gives $1.5 million, $2 million fine, but when the right time comes,
I think we are going to push it. So I think we are still in a — the — we’re still trying to learn the pricing game. If you are able to hit the right pricing game in the quarter one, I will be able to answer your question in your quarter two conference call.
Operator
Thank you. The next question is from the line of Tushar Raghatate from Kamayakya Wealth
Management. Please go-ahead.
Tushar Raghatate
Yeah, good afternoon, sir, and thank you for the opportunity. Sir, just wanted to know like in the domestic market, you’ve been increasing your dealers distributors, but in tandem, the sales are not growing. Mostly the reason for that?
And secondly, sir, what are your marketing efforts which you are planning going-forward in order to create a brand in India? So yes, sir, that would be my questions.
Chirag Parekh
Yeah. See, there is — it is not our company, the whole demand in India market is muted. There is a low demand. Last quarter, Delhi was suffering from pollution, all the construction was stopped. Everything was stopped, come to a halt, not our company, other companies also suffered that. So we have seen growth in other states of India, but minus north. We — when the North comes back-in, you will see the growth in the domain. That’s point number-one.
The point number two is, when the market is flat or muted, we try to see what opportunities what can we see in India. And that’s what I’m saying. We’re not looking at quantity, we’re seeing value-driven growth. So we are focusing on value-driven. We launched, I think I I’ve said it in my many replies to other fellow members. But I say it again, we have launched new kind of things, workstation things, new faucet, new appliances and I think that’s going to drive us the growth in Index.
As far as the distribution and the branding is concerned, we are opening now more galleries. I think that’s what giving us a very good momentum in the sales. The campaign, the Kapoor campaign, we are going to — we are going to keep on doing it. We had advertised a lot of advertising, which happened last quarter — last quarter, people are very excited on tele television to see the brand is made. Very — honestly been able to maintain the sales. I think if this kind of marketing actually would have not go, we probably would have declined in sales.
So I think we are — I think we are good able to maintain that. We are — we do we do want to continue our momentum on-brand building and marketing, but for the right problems.
Tushar Raghatate
Got it, sir. Sir. Sir, in your stainless sink business, there has been a competition in India like Nirali NJ is a company they Have been a good competitor to you. So how do you see the competition in the stainless? I understand cost thing you have a moat kind of moat in India, but on the stainless steel front and the appliances front, I just wanted to know why a company — any buyer would go for carousel appliances, why not any Bosch or any other companies — the MNC companies for the appliances business,
Chirag Parekh
You will not able to earn everything. Isn’t it? Somebody buys Bosch, somebody buys, right? Somebody buys cap and whatever, it’s a different product. We all don’t buy the same television, same clothes, the same way everybody cannot buy the same appliance. I think it’s very clear. How we are able to sell appliances, I think it’s a very good question is when the trust factor comes that this company, Carousel is a trusted brand, when I come to buy a sink, why don’t I buy appliances, give me a one-stop solution is what the key and that’s why they buy it. So I think this one keystop solution is the major — we are launched in seven — I don’t know, seven years back, we were asking, sir, why are you launching why are you launching appliances? Why launching? What do you understand?
Today, we have almost 20% 25% of our business is appliances, right? As far as the stainless things is concerned, that’s why the things are concerned, you have a right question. Is not my competition. My competition is not anyone. My competition is we offer unique products, unique stainless steel things, which of — which offers a better function value and design as I took a customer. So when you’re looking at an average value, our average value must be maybe INR6,000, INR5,000, INR6,000. Maybe our competition has INR3,000, maybe half than ours. So I think we are in a very different category of the market, yes.
Operator
Thank you. The next question is from the line of Saumil Shah from Paris Investments. Please go-ahead.
Saumil Shah
Hi, thanks for the opportunity. Sir, how is the current quarter shaping up? I mean, we were expecting to cross INR850 crores in the current financial year. So are we on-track to achieve it?
Chirag Parekh
No so I think I think we are definitely on a track to cross INR800 crores. Now let’s see how the quarter-four ends, but we are definitely looking if the same momentum comes, I think we’ll be doing 850, 820 crores, something like that. Yeah, something like that.
Saumil Shah
Okay, okay. And sir, in terms of EBITDA, I mean we were at the lowest in terms of EBITDA 14% in last many years. So I mean, how is the current quarter shaping up? And by FY ’26, where do we see the EBITDA margin settling down?
Chirag Parekh
See, one thing, if we can just split on a standalone and consol basis, right? So I think our CFO and Mr our Executive Director. So Sharma clearly stated. So if you see on a standalone, standalone, our margins have been yeah, just one second. I’m just trying to pull out something for you is a standalone margins.
What just give me a second.
You’re talking about on a stand — the standalone margin, right?
The standalone.
Anand Sharma
So what standalone margins so what happens they do calculate the margin where they not getting the other income.
Saumil Shah
But the other income includes exchange difference and interest. So exchange difference is actually operational income, which you should include and that price.
Chirag Parekh
So anyway, taken — taken into that on a standalone basis and obviously you can talk to Mr separately and give the details or on investor presentation, but the margin has improved from 18% to 19% on a standalone.
On a consol basis, it has gone to 14%, is that the reason there were two major reasons. One is the notional value impact which taken on the UK companies and second is the US companies integrating into this. So this — so as on operational level, it’s not bad. Unfortunately, we have to face this both this thing. But moving for — moving forward, the extend rate looks good, it looks strong. And so I think we should be getting back to our normalized margin guidance of 18%.
Anand Sharma
And adding to that, if you — if you see what I said in my speech, every factor coming from the export freight to exchange to raw-material price, everything in-cycle is getting reversed. So whatever the factor was affected in the quarter three, all the factors getting reversed in the current quarter itself. So it’s not something we are talking for page. This is what is there like spread from 9.3%, it is coming to 6.5%. Like pound, which is came down to 107%, we today say 18.5%, like MMF price from 1.79%, 1.33 and 2.52 again came down to 2.02. So all the same factor which has impacted quarter three is all coming down. So I think this is going to improve our margins.
Saumil Shah
Okay. So thanks for your detailed explanation. So to summarize, from current quarter, we can go back to the 18% EBITDA margin. If I look at consol numbers,
Chirag Parekh
We are going back on our original guidance of 18%. We still do not on the operational side, I think nothing is wrong. The margins are there, but this notional which we would take for the UK. And yes, US, yes, I think the US we are looking at turning around, which quarterly not happen because of the year ending there was cash-flow issues. So we were also trying to minimize the inventory level, which would — which has also resulted in some decline in sales in the US.
Yeah. Minus that, I think operationally are still very good. It has not been the best quarter. Yes, we agree, but we are going to — we are going to 100% get back on our guidance of 18 plus.
Saumil Shah
Okay. Okay. That’s it from my side. Thank you and all the best.
Operator
Thank you. Ladies and gentlemen, this will be the last question for today, which is from the line of from Capital. Please go-ahead.
Unidentified Participant
Hello, sir. Thank you for the opportunity. I have three more questions. So one question, sir, if this sales surfaces, nine months we have had INR6 crore, I think PBT loss. So how do you see this subsidiary doing in FY ’26?
Chirag Parekh
No, no, there is no loss. There is no loss in-service loss you see in US,
Unidentified Participant
United, United Services,
Chirag Parekh
Sorry. United right, there is a loss in the Nine-Month period. But if you look at the quarter, it is at the breakeven level and we already stated — stated this quarter we’ll have a breakeven with — at operating level, it will not be a loss. And going-forward from quarter one onwards, we see that it turn into the profitable.
Unidentified Participant
And is that subsidiary growing, sir, can we expect, let’s say, $10 million kind of sales next year?
Anand Sharma
No, so I think we were expecting the demand to grow, which has not grown to be honest. We’re expecting quarter-on-quarter the fabrication business will grow in the United States, the collection is down the line, but which is not grown. So the strategy changes are not trying to be more quantity-driven. We are we are as we are we are changing our sources of material supply, which is going to yield in better margins.
Number two is we are going to cut now the high-end gemstones, which again is going to increase our margins.
Third, there are lot of operating costs we were unnecessary in that the fabrication. So which
Chirag Parekh
We are since the business has not grown in terms of revenue, we have to cut-down those cost rates. So Mr. Anand Sharma is going to the US next week. There is a strategy form. So all the unnecessary expenses or operational costs, even we have three showrooms. One showroom was making losses. So we are shutting down the showroom. So all necessary actions we are trying to see to see that in the quarter-four itself of the current year, on the operating side, we have a breakeven.
Unidentified Participant
Okay. Okay. Okay. That is good to know, sir. Second question, sir, is the steel sink, I think we were looking to expand capacity from 1.8 lakhs to 2.5 lakhs. So can you just maybe update on that?
Chirag Parekh
So we are — we are — we are just waiting for the final clearance of. I think on the team team expansion is going on, just see going on. We are just waiting for some final we are just waiting for the final clearance From our buyers to go-ahead. Once that — once that goes through, we’ll be getting back to that.
Saumil Shah
So this capacity expansion will finish, let’s say, by Q1 and we will be able to use this capacity next year
Chirag Parekh
And it should — it should finish by quarter two, end-of-quarter two.
Unidentified Participant
Okay. Okay. I see. And another question, sir, what is our marketing spend for the nine months and what is the strategy? And how do you see that number moving into FY ’26?
Chirag Parekh
Yeah. So I think broadly, on the — on the purely branding advertising, you want to — we definitely want to spend around 8% to 10% to 10% coming. We need to start building up. I think we have not been visible as a brand, it’s a great brand, but to an order now to vehicle we have taken the business of India very seriously. I also mentioned that we have — we are going to appoint one of the big force to help us to build a strategy in India. So that exercise will be going to start from the 1st of March to build the India. And I had mentioned this, we want to do the INR500 crore India story in the coming year.
So we would — we are trying to do a blueprint for India and how do we build a INR500 crore store in India within the next five to seven years?
Unidentified Participant
So this 10% number is only on the India sales side?
Chirag Parekh
Yes, yes.
Unidentified Participant
And do we do any marketing expense in UPS?
Chirag Parekh
UK, we do — we don’t do much of marketing in UK because it’s mostly OEM, what we do for those.
Unidentified Participant
Yeah. Okay. Okay. And then sir, my final — final question, sir, is if I look at US business, ex of United, it’s like 13%, 14% of our business and UK, which is I think a significantly smaller market is 40% of our business. So US business, I think at least theoretically, logically, if I think about it should be significantly larger than UK business. So can you maybe update on some business development efforts in the US yeah.
Chirag Parekh
This — this deal what we have gone through recently will put up, I think the US business about around 25%. Yeah.
Unidentified Participant
This is FY ’26 ’25?
Chirag Parekh
Yes. Yes, yes.
Unidentified Participant
Okay. Okay. Thank you. Thank you for asking my questions. Thank you.
Operator
Thank you. Ladies and gentlemen, that was the last question for. I would now like to hand the conference over to the management for closing comments.
Chirag Parekh
Thank you, everyone. I hope we’ve been able to answer all your questions satisfactorily. However, if you need further clarification to want to know more about the company, please get-in touch with SGA team, our Investor Relations Advisor. Thank you. Have a great day.
Operator
Thank you. Thank you. On behalf of Limited, that concludes this conference. Thank you for joining us and you may now disconnect your lines