Centum Electronics Ltd (NSE: CENTUM) Q3 2025 Earnings Call dated Feb. 17, 2025
Corporate Participants:
Nikhil Mallavarapu — Executive Director
K S Desikan — Chief Financial Officer & Head, Strategy
Analysts:
Bhoomika Nair — Analyst
Harsh Mehta — Analyst
Ankit — Analyst
Chirag — Analyst
Raman KV — Analyst
Yash — Analyst
Pranav — Analyst
Rohit — Analyst
Presentation:
Operator
Ladies and gentlemen, good day, and welcome to Centrum Electronics Limited Q3 and Nine Months FY ’25 Earnings Conference Call, hosted by DAM Capital Advisors Limited. 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 star then zero on your touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Ms Bhumika Nair from DAM Capital Advisors. Thank you, and over to you, ma’am.
Bhoomika Nair — Analyst
Thank you. Yeah, good evening, everyone, and a warm welcome to the Q3 FY ’25 Earnings call of Centrum Electronics Limited. We have the management today being represented by Mr Nikhil Malawarpu, Executive Director; Mr K.S., Chief Financial Officer. At this point, I’ll hand over the floor to the management for their initial remarks, post which we’ll open up the floor for Q&A. Thank you, and over to you.
Nikhil Mallavarapu — Executive Director
Thank you, and good afternoon, everyone. Welcome to our earnings call to discuss the performance of the 3rd-quarter and nine months of financial year 2025. Let me first mention a special thanks to our host today at DAM Capital. Thank you. Now let me start by briefing you on the key performance highlights for the quarter and the year-to-date results under review, after which our CFO, Mr, will take you through the financial highlights. Thank you. In the 3rd-quarter under review, consolidated revenue from operations declined by 6% year-on-year, but increased by around 8% quarter-on-quarter. Similar to last quarter, it is important to note that revenue for certain contracts have been accounted on a net basis. The gross value of such contracts was INR32 crores in Q3 FY ’25 and INR71 crores for nine months FY ’25. So adjusting for gross value, the revenue for Q3 FY ’25 has grown by 13% quarter-on-quarter and for the nine months FY ’25 by 6% year-on-year. For Q3 FY ’25, our consolidated EBITDA margin stood at 6.9% and standalone EBITDA margin stood at 11.8%. Our margins were impacted mainly due to the losses in the Canadian subsidiary and lower utilization due to delays in new project starts in France. The company is considering various strategic measures with regard to the subsidiaries Canadian operations, and we will announce the same in due time over the coming quarters. Thanks. The order book position stands at INR675 crores as on 31st December 2024. The pipeline continues to remain strong for both build-to-spec and EMS customers in our standalone business. And in other updates, Sentum also received an export award for FY ’23-’24, recognizing the best-performing electronic hardware exports from SCPI in Karnataka. To conclude, we remain optimistic that the performance in the coming quarters is expected to improve in terms of revenue and margins, driven by growth in the high-margin build-to-spec business within the standalone entity. As we had mentioned earlier, a large part of the revenue for the build-to-spec business in the standalone entity is expected in Q4 of the financial year and that should help improve the revenue and the margins in and we remain confident in that happening. Now I’d like to hand over the call to our CFO, Mr, to brief you on the financials. Thank you.
K S Desikan — Chief Financial Officer & Head, Strategy
Thank you, Nikhil. Once again, a warm welcome to all of you. At a consolidated level for the 3rd-quarter, the revenue from operations were INR281 crores, which has increased quarter-on-quarter by 8% and declined by 6% year-on-year. The EBITDA for the quarter was INR19 crores, which declined by 33% year-on-year with EBITDA margins reported at 6.9%. We had a net loss of INR19 crores for the quarter that is primarily due to an exceptional item as explained in the notes to the publications. For nine months ended at a consolidated level, the revenue from operations were INR787 crores, declining marginally by 1%. The EBITDA for this period was INR55 crores, which declined by 19% year-on year-on-year. The EBITDA margins were reported at 7% and the net loss for the period was around INR24 crores, again mainly due to that exceptional item. At a standalone level, for the 3rd-quarter, the revenue from operation was about INR181 crores, which grew by 8% quarter-on-quarter and 2.5% year-on-year. The EBITDA for the quarter was about INR21 crores, which grew by 3.4% quarter-on-quarter and declined by 5% year-on-year. With our EBITDA margins reported at 11.79%, the net profit for the quarter was around INR9 crores, which declined by 5.2% quarter-on-quarter and 16% year-on-year. For the nine months ended at a standalone level, the revenue from operations for the period was about INR480 crores, representing a growth of 3.5% year-on-year. The EBITDA for the period was about INR55 crores, which declined 9% year-on-year. With the EBITDA margins reported at 11.49%, the net profit for the quarter was around INR123 crores, which declined by around 16% year-on-year. With that, we can open the floor on Q&A session. Thank you.
Questions and Answers:
Operator
Thank you very much, sir. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press star and one on their touchstone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we’ll wait for a moment while the question queue assembles. Thank you. Before we move on to the question, a reminder to all participants, you may press star and want to ask a question. We have a first question from the line of Harsh Mehta from Perpetual Capital Advisors. Please go-ahead.
Harsh Mehta
Hello and hello, can you hear me?
Operator
Yes, sir. Yes,
Nikhil Mallavarapu
We can take your questions.
Harsh Mehta
Yes, sir. First of all, sir, we have been trying to contact the company since a very long-time. We have emailed the IR team and the CES team, but we haven’t received any replies and we have asked follow-up. We have sent follow-up emails also. So this was the first issue that we had we faced. It was very difficult to get-in touch with you all. Now, the question which I had, sir, I wanted to know what is the roadmap to make the international business profitable? And what are the margins that you expect in the long-run?
Nikhil Mallavarapu
So, Harsh, first of all, to your first point, apologies that it was difficult to reach us. I will make sure that our IR team is aware about this and we reach-out to you to provide the necessary information that you need. Coming to the second question with regard to the roadmap for making the subsidiary operations profitable. Fundamentally, you know, as we’ve explained in the past, we have two-parts of the business in the subsidiary itself. We have the engineering services part of the business, which is more or less focused in France. And then we have a product business for — around passenger information systems for the railway market, which is sitting in Canada. And when you look at the overall picture of the subsidiary as a whole, even if you take the nine months period, our France operations, which is the engineering services business has been more or less at a breakeven level, whereas the loss is majorly contributed from our Canadian operations, wherein basically the costs of having an engineering team sitting there is not being compensated through the margins and the billing that we’re able to achieve in the — in that part of the business. So our first priority and action is around basically addressing — addressing the Canadian losses that we have. And towards that, I think there’s a couple of points. First, in the short-term itself, we are — we’ve been negotiating quite strongly with some of our customers to obtain additional purchase orders for additional variation orders for the — to support the engineering team in Canada and in the meanwhile what we’ve also been doing is in the last 12 to 18 months have created a team in India that is able to execute this similar kind of work. So we have been shifting a lot of the work from Canada to India, especially on some of the new contracts that we’ve won. The majority of the execution has happened from India. It is the older projects and programs where the support is still continuing from Canada for which we are having some hard discussions with our customers to come to a solution. So these — it’s a bit early for me to say that, but we will have — we will be basically making some strategic decisions with regard to the Canadian operations in the next couple of quarters to ensure that it doesn’t continue to drag the overall P&L. That’s the first one. Second is with regard to the France business itself, right? Where it’s — as I mentioned earlier, it’s still at around a breakeven level at the moment. Our objective there is to improve the margin by basically improving the utilization rate of the — of the engineering team that we have there. We’ve worked quite closely with multiple customers. We have actually a very good feedback and engagement with multiple customers, including with Airbus, with Talas, in fact, just in the last few weeks, we have been recognized as a platinum and panel supplier for their engineering services business. So we have the opportunity. We have the opportunity to grow with them and improve the utilization rate. However, some of the projects that we had estimated to start in Q3 have been — have been delayed. So we expect that to happen in Q4 and going into the subsequent quarters as well. So at a high-level, those are the two key actions that we’re taking to improve the margin profiles. And our objective is to try to move that margin up to a say 7% level or so in the short-term, in the coming year and then push it up further as growth comes in to 11% 12% range in the subsequent years.
Harsh Mehta
Okay. Sir, can you tell me what was the thought process and the expectations that you had when you actually acquired these two businesses?
Nikhil Mallavarapu
I guess it’s — the expectation is clearly not what we are at today. I mean, I think just to answer the question simply, you know, if you look at the benchmark numbers that we are able to see even for a French company, which largely onshore delivery, we see about 10%, 11% EBITDA is what is achievable. And as we are able to do more work offshore that EBITDA margin should improve up further. But I think we’ve not successfully been able to achieve that because of some of the issues that I already mentioned. But as I mentioned, we have a plan on what to do and we’re taking some tough decisions to make sure that in the short-term, we fix this margin issue on the subsidiary.
Harsh Mehta
Just last thought process.
K S Desikan
You know, when we acquired, we had two businesses with us. One was the EMS business, the other was the BTS business. But we never had engineering services as an offering. So while we had a team of 100 plus engineers for our own BTS business, they were designing our own products. So the idea was to acquire this engineering services business so that we are able to address the entire spectrum of the OEM needs and also to synergize that. But when we acquired this product business of Canada came along with it and we acquired essentially for the engineering service business. But like what Nikhil mentioned for various reasons, we needed to clean-up and then the COVID and all of that. We are not able to be until they achieve that margins that Nikhil was questioning about. But just to tell you, there were a couple of good cases where we were able to synergize certain designs that were made at the France subsidiary have been moved to manufacturing in India. And in a case or so where we were manufacturing, we were able to get the designs done by the subsidiary. So there is some synergy, but not to a great extent, it has not been harnessed. And margins, we have a plan to improve it at the French subsidiary level.
Harsh Mehta
Right. Sir, on your sense business, can you tell me your onshore and offshore split as of today?
Nikhil Mallavarapu
Yeah. So in terms of headcount, we are roughly about 60 — you can say two-thirds, so 65% or so is onshore and 35% offshore. So it’s a rough breakup.
Harsh Mehta
Right. And sir, last question, what led to the slowdown in the BTS International business, like it was more or less almost zero in the quarter.
Nikhil Mallavarapu
Sorry, can you repeat that again, please?
Harsh Mehta
Sir, I wanted to know what led to the slowdown in the BTS international business for the quarter?
Nikhil Mallavarapu
This — I mean BTS business quarter-wise maybe be difficult to look at because it’s — it depends — it may be a bit lumpy in nature. But we — I mean on the overall BTS numbers at the subsidiary level, as I mentioned earlier, it’s largely driven by the Canadian part of the business. And so it’s — it may be a bit lumpy in nature, but the issue there is not so much the revenue as much as the — as much as the costs that we have on the Canadian team.
K S Desikan
No, just to add a couple of points that like what Nikhil said, today, the cost in the Canadian subsidiary is disproportionate to the revenue that we book. That is because there are older projects where we need to do a certain kind of activities to get them completed where you don’t get the revenue. That’s number-one. And number two, there is a general slowdown in the business. So there were not significant fresh orders that came up and that again goes to say that we need to look at the cost structure in the Canadian business and you know, look at it in a strategic manner to see what needs to be done with the cost, apart from moving to India to get the cost advantage.
Harsh Mehta
Sir, your current order book is executable over what period of time?
K S Desikan
The international BTS business is what you’re asking.
Harsh Mehta
Your overall order book.?
Nikhil Mallavarapu
Yeah. So the overall order book, again, just to break it up a little bit in terms of each of these pieces of the business, the build-to-spec part of the business is typically executable over a two to two — like let’s say 2.5 year period. The EMS part of the business is roughly in the range of nine to 12 months. And the engineering services part of the business is maybe even shorter in the range of six months or less, basically. So — and go-ahead.
Harsh Mehta
Sir, are there any defense programs through which the company can benefit?
Nikhil Mallavarapu
Yeah. So in the domestic BTS business, the standalone BTS business is almost completely focused around the defense and space market in India. So there are multiple different areas that — and programs that we’ve been working towards. So space has clearly been one area that we have been very strong in. We’ve just in the last year, we won over INR300 crores contract for satellite-based payloads for electronic warfare applications. And in Q4, we are also expecting some substantial orders we will receive them from the radar domain and these are for naval programs. Also in missiles has been another area that we’ve been in and we have some opportunities there that will be coming up. Broadly speaking, land systems, so these are even on tank electronics and so on. We’ve done a lot of efforts in terms of R&D of indigenizing Russian imported products and we started to win orders for that in the past year. So with all of this, I think these are electronic warfare, space, radars and land systems are broadly areas that we have been building strong capabilities in. And I think you will see that reflected in the — in the form of our domestic or standalone BTS order book, which has increased quite well from where it was at around INR376 crores at the end of FY ’23 to INR427 at the end of FY ’24 to INR563 crores at the end of nine months. And we expect this to further improve by the end of this financial year with some additional orders that we’re expecting in Q4 as well. So the domestic defense part of the business is doing well for us and we expect to see some strong growth coming in from this part of the business for us.
Harsh Mehta
All right. Thank you so much. I’m looking-forward to hearing from your IR team.
Nikhil Mallavarapu
Sure, thank you you.
Operator
Thank you. We have our next question from the line of Ankit from Shubkam Ventures. Please go-ahead.
Ankit
Yes, sir, good evening. A few questions from my side. So sir, since there is so much of volatility in all your businesses, plus on a quarterly basis also there is no linearity. So just wanted to know based on the current order book and the visibility which you have across all your businesses. What kind of EBITDA you are targeting this year? Last-time you mentioned around INR130 crores. But after the performance of Canadian subsidiaries, do you feel that this number needs a revision
Nikhil Mallavarapu
Yes so I think we will we will have to revise what we had initially assumed because of the overall performance of the subsidiary essentially the revenue on the subsidiary has been lower than what we had expected for a couple of reasons. One is, again, on the Canadian part of the business, we have been trying to negotiate an additional variation orders with some of our key customers there as a result of some of these project overruns, which have not been secured as yet, but we are continuing to push that. So that has been one of the major reasons. And also on — as I mentioned earlier, the utilization rate also, which we were in France on the engineering services, which was expected to improve with new project starts has been delayed. So as a result of this, our subsidiary performance both on-top line and bottom-line is below what we had originally targeted for. We will have to — we will have a lower number. Having said that, I think it’s important again to say that in Q4, on the standalone number itself, we will have a strong jump because as we’ve been saying, the build-to-spec domestic part of the business for defense and space is heavily skewed towards Q4. So we will see a good improvement from a margin and revenue standpoint on the standalone numbers in Q4. So maybe basically if you’d like to just comment in terms of the overall
Ankit
Yes, sir, what’s the revised number?
K S Desikan
Sure, sure. Sure. So like what Nikhil mentioned, you know, essentially this standalone is in a share is in the direction that we have been estimating and projecting. The problem is from the subsidiary. And like what you mentioned in Canada certain things, the variation order and also some people on bench in the French business and the new orders starting from the Q4 of current year. So in the light of this, I would say that considering the good performance of standalone in Q4, we should be doing about INR100 crores of EBITDA for the full-year.
Ankit
Okay. And for next year, so yeah. So basically what I’m trying to understand is that shall we be rest assured that the Canadian subsidiary won’t be a trigger post June quarter?
K S Desikan
That’s what we are working towards it. So yeah, the best-case, I think we should be able to fix because we — it is taking a little more time than what we really anticipated because of the delicate situation that we have. We have customer deliveries in India to El and we have not fully transferred the knowledge to India. So we have to maintain this for some more time and also find a solution for the older contracts which are being maintained there. So I would say June is a good estimate. The worst-case before September, we should be able to you know, ensure that Canada is no longer a.
Ankit
So can we expect some a big exceptional losses coming from Canada, you might be taking some cost-reduction measures like a VRS or something like that. So can we expect some major exceptional items in the coming quarters from the Canadian subsidiary?
K S Desikan
It’s too early, Mr Ankit, to say because these are matters that we need to balance it out and then you know, we will keep you posted. But like I said, maybe June, we try to close it out as worst-case by September, we should be able to stop the bleeding from Canada.
Ankit
Okay. So considering that factor,
Operator
Mr Ankit,
Ankit
Just one last question. Earlier participants asked five questions, just allow me to ask a couple of more questions. So sir, assuming that whatever losses you might be incurring in the Canadian subsidiary, so considering that, what could be your EBITDA for the full-year, sir, next year, FY ’26.
K S Desikan
No, like what Nikhil was saying, at a — at a standalone level, we should be able to achieve around 13% to 14%. And at a subsidiary level, including Canada, we should be between 6% to 7% of EBITDA.
Operator
Thank you, sir. Ladies and gentlemen, in order to ensure that the management is able to take questions from all participants in the conference, please restrict yourself to only two questions per participant. Should you have a follow-up question, we request you to rejoin the queue. We have our next question from the line of Chirag from Ashika Institutional Equities. Please go-ahead.
Chirag
Hi. A couple of questions. Hope, am I audible? Hello.
Operator
Yes, sir.
Chirag
Yeah. So if I look at your performance between FY ’23 to FY ’24 on nine months standalone basis, we have delivered around 52% revenue and that time this gross and net accounting-related thing was not there, okay, a year back. Right now on gross — gross accounting basis, between FY ’24 to ’25 aggregate 3/4 performance, the growth is 16%, right? So on full-year basis, from at standalone level, on a gross accounting basis, this time, what growth we are expecting? Because last year-on standalone, the growth was 26.5%, okay. So yeah, I’m not considering anything related to subsidiary underperformance on-top line and bottom-line. As we are expecting around INR100 crore kind of EBITDA at standalone level for FY ’25, right? Yeah.
K S Desikan
So on gross accounting basis at the standalone level, it should be similar to what you said last year, about 26%.
Chirag
So we are expecting Q4 to be blockbuster, right? And the spillover of the revenue, which —
K S Desikan
Which we have been saying even in the last quarter, in the second-half, especially in the Q4, the revenues must be increasing significantly.
Chirag
And basic and this gross and net difference get normalized. I mean from FY ’26 or when? I mean, yeah.
K S Desikan
Yes, FY ’26, it should get normalized.
Chirag
Okay. Okay. And I tracked your company since past five years and I am — I’m just trying to understand since past three years, we are taking steps to turn-around the subsidiary, okay, but it is taking a too much amount of time, okay, and that is somewhere impacting overall consolidated performance. So — when you think this severance and all things get addressed and we will see a clear picture of P&L. Yeah, you answered in previous participant question that somewhere in September. But from directional point-of-view, this legacy contracts which are there in the Canadian business, when you know that complete complete get over and the impact will get it is from the P&L.
Nikhil Mallavarapu
Okay. So, it’s the — we basically fundamentally speaking, there’s two options. One is the customer pays for the costs that we are incurring or we need to cut the costs and try to do it in India or even discontinue the new thing completely, right? And this is the discussion that we are having with some of the — basically with the lead customers on this point. And we obviously want to arrive at a solution that ensures the continuity of the contracts and the projects and so on. So we don’t impact too badly the end-customers. So this is what we are basically in the process of doing right now and that’s what we feel we will make those decisions in the coming couple of quarters. Thanks.
Chirag
Thank you. Okay. And shall we maintain our 15% plus kind of growth guidance for next two years?
Nikhil Mallavarapu
Yeah. So for the next year, again, with regard to our standalone business, we remain confident of maintaining a healthy growth rate that we’ve been tracking for the past couple of years. I think that’s — it’s one visible in the order book on the domestic BTS part of the business which we’ve won in the past in this current year in fact. And also on the EMS side of the business, we have a good set of new customers that have come on-board, which we are in the ramp-up and qualification stage today, which would start hopefully coming into the revenues in the coming year and be into full swing the year-after. So our — our growth visibility on the standalone business is quite strong in the — for the next year. So on the subsidiary front, obviously, it depends on what we will end-up doing with the Canadian subsidiary and also in terms of the improvement on the utilization in France, which we should doing. But as I mentioned, the major objective of the subsidiary is not so much on huge growth, but rather fixing the margins.
Operator
Ms, two questions are up, we request you to rejoin the queue. Ladies and gentlemen, we request you to restrict to one question per participant only. We have our next question from the line of Raman Kevi from Sequent Investments. Please go-ahead.
Raman KV
Hi, sir. Can — am I audible?
Operator
Yes, sir.
Raman KV
Sir, initially you guided for 18% to 20% growth on gross accounting basis. So now that there has been a degrowth in the subsidiary, so what is the guidance as on the consolidated basis with respect to FY ’25? And what are you guiding for FY ’26 on the consolidated as well as standalone basis you want to
Nikhil Mallavarapu
Yeah, yeah. So on the revenue growth, yes, we — the drag in the Canadian subsidiary is pulling it down and we expect to close the year with gross accounting 13% of revenue growth as against the 18% and mainly because of the drop-in the subsidiary.
Raman KV
And so for FY okay
Nikhil Mallavarapu
At this point of time, I wouldn’t guide anything. Let us because we have certain actions to take-in the Canadian subsidiary, perhaps we can see it in the next con-call.
Raman KV
Oh, okay. Can we expect 202
Nikhil Mallavarapu
Just to restate what I was saying earlier. I think the point is on the standalone figures, we can continue to expect a strong growth rate that we have seen in the past year and what we will see in this year, I think we feel we have a visibility to continue a strong growth rate in the standalone level. With regard to the subsidiary, there are a few question marks around what we are planning to do based on what — how the discussions pan-out with some of our key customers over there. So that’s where I would say it’s a bit premature to give any clear guidance with regard to subsidiary numbers today.
Raman KV
Okay, okay. Thank you, sir. Sir, and also with respect to BTS, EMS and engineering division, can you give the margin like what’s the margin of BTS? What’s the margin — EBITDA margin of EMS project and EBITDA margin of engineering project.
Nikhil Mallavarapu
So while we are not this, okay, go-ahead, go-ahead.
K S Desikan
Yeah, no see the — see the problem or the point in giving an EBITDA margin for a BTS business, I’m sure like other participants mentioned, there is a volatility in-quarter after quarter. So any number that you look at, my suggestion is, please look at it on a yearly basis.
Raman KV
Yes, whether it is EBI or BMS and all of that.
K S Desikan
So having said that, BTS generally is about 18% to 20% and EMS, it is between 11% to 13% and that is what we are targeting and we are achieving on a yearly basis.
Raman KV
So what about the engineering division
K S Desikan
Engineering division right now, which is the French subsidiary, it is at about 1.5%, 2% and that is what Nikhil has been mentioning that we are working to improve that.
Raman KV
Okay. Thank you, sir.
Nikhil Mallavarapu
And just to clarify that point, I think the — on the subsidiary, the French operations has a better EBITDA margin, which is the pure engineering services is maybe around 4% or so, but that’s all been pulled down by the losses in the Canadian.
Raman KV
Okay, sir. Yes.
Operator
Thank you. We have our next question from the line of Yash, a shareholder. Please go-ahead.
Yash
Yeah, good evening all. Thanks for the opportunity. Sir, like all the participants have asked the other questions, which clarified a lot and thanks for clarifying the things. And also, see, our company is into great business and also — so most of our competitors are actually their — their valuations are very-high also. So just want to understand like it’s a win-win for everyone. So when can we realistically touch some INR10,000 crores market cap? I mean, is it achievable in next three to five years like that? Just want to understand on that actually, because our company is into great business and also, but still it’s not getting the right valuations and also that was the reason I’m yeah
Nikhil Mallavarapu
I can’t really comment on the market cap and all of that right now, but quite simply put, I think one of the fundamental points is that while our standalone business is doing well. The value for that is not — we feel is not being captured appropriately because of the drag that we have on the subsidiary. And so because in that the consolidated number is not reflecting a very good picture. So this is the reason that we are going to be taking some key decisions with regard to the subsidiary and specifically the Canadian part of the business to address that fundamental point, right?
Yash
Yes, sir. Me said the market capital also, is it realistic to assume that no our company cannot reach now at a consolidated level, the revenue of INR2,500 crores to INR3,000 crores in next four to five years, is it achievable because of the huge demand in the defense sector and all the initiative by Government of India? Is it a realistic expectation, sir.
Nikhil Mallavarapu
I mean, once again, I won’t comment specifically on the numbers, but I think we have clearly big ambitions and we are addressing big programs both on the defense side of the of the business, we are tracking some of multiple different opportunities in a pipeline of opportunities that are substantial. And also on the EMS side of the business, we have — we’ve continued to add strategic customers with large spends. So I think we remain confident in our ability to grow. Grow with the tailwinds that we’re seeing both on the defense side as well as the EMS side of the business. And on the subsidiary, we are taking the actions that we already talked about.
Yash
So yes, sir. Yes, sir. Thank you, sir. One last question is that the company is any QAP or any strategic investor when there were some news in the media and I just want to hear explanation on that clarification on that.
Nikhil Mallavarapu
Yes. So we are — we sought and got approval from our Board to be able to raise some funds through either a QIP or other means and so we are pursuing those options but we will be able to share that information maybe a bit later earlier but this is all-in anticipation of some of the growth opportunities that we are seeing for us, especially on the standalone part of the business.
Yash
Okay. Sure, sir. Thanks for your patience. Yeah.
K S Desikan
And just to add, on that point and combining it with your previous questions about the growth and the very fact that we have obtained an approval from the Board of Directors to evaluate a fundraising activity, that should give us confidence of our growth possibilities that we are looking at. So the fundraise, which actually we got the approval, but the Timing-wise we need to get back is essentially a growth capital. So that’s what I wanted to add. Thank you.
Yash
Yeah, sure, sir. Thanks for your patience and asking — answering the questions and also we — tough times understand it’s a tough times for our company. So we are a long-term investor and probably we’ll be in journey with you for several years ahead also. Yeah, all the best. Thank you.
K S Desikan
Thank you very much.
Operator
Thank you. We have our next question from the line of Pranav, an individual Investor. Please go-ahead.
Pranav
Good evening, Mr Jasil Kanan. Yeah. My couple of very restricted questions. One is on your — as I understand year-on-year, the subsidiaries are becoming a challenge, whether it is France, Canada or whatever it is. And this is perhaps somebody said five years, but I have been saying right from 2014 since we have acquired. Now when I’m looking at it, for the INR20 crores, you are putting money into this subsidiary. When I segregate this business of subsidiary and this and if I look at it in last eight or 10 years, the kind of time, money we have been spending on this subsidiaries. So then instead of that, if we start concentrating somewhere else, this company can grow to X level, which we cannot imagine because has a very good presence abroad. Also has a very good name in India and I personally believe space will be one sector which will get opened up this year and defends the way Prime Minister is working on this line. I’m sure in next five — for next five years, it may happen that India will be an exporter status and people will be put to place. That is the possibility for next five years. If people go and read the lines or the way the strategies are being planned. I may go wrong, but if I go correct, that may be the thing. So are we wasting time on doing and improving these subsidiaries or are we have a better plan for something else because lot of resources, time and constraints are going into this kind of subsidiaries? So this is my first question. And my second thing what I would like to know is what is the kind of things we are planning in space because this is a — this is one sector or region where things are going to explode. And I think so India will become a very significant player and where Centrum is looking at and what kind of opportunities we are going to have with collaborations and whatever it is. Has a very big presence and Centam has been performing very well in this sector. That these two questions. Thank you very much. Thank you thank you. Thank you very much.
Nikhil Mallavarapu
Thank you, Pranav. I think I must, in a way, thank you for your constant reminder around the time that we’ve lost and the time and resources we lost on the subsidiary, I think the message is well heard and I can assure you that these discussions are being deliberated, you know, very, very seriously at our Board level also. And as I mentioned, some of the decisions or discussions that we are having with regard to the Canadians operations as a first, but more generally the subsidiary are being discussed and considered in light of the substantial growth opportunities that we and everybody believes exist for the standalone part of the business. So, so these discussions are being had and we will — we will be making some decisions on this going-forward. But having said that, it’s — I would say that it is not all lost. There are certain synergies that as mentioned, which have come in and we are looking at how to do basically better leverage some of these things to be able to grow. So you know, we will be analyzing and assessing the feedback that you’ve given and we will take some actions towards that in the coming quarters basically. Second, with regard to your question on space or maybe,, anything you’d like to add-on the first point before we before we go to the space?
K S Desikan
No, no, I think that’s perfectly right. I think now, thank you very much for your valuable insights as you have been frequently giving. We are assessing the situation and we’ll come up with some action. That’s the right answer,. Thank you.
Pranav
Appreciate it, sir. That’s second question. Appreciate it. Thank you yeah.
Nikhil Mallavarapu
So with regard to space, as I mentioned, we have a good position there. We’ve basically over-time moved up the value chain from where we were many years ago where we were delivering very niche components to now delivering full satellite payloads. As I mentioned earlier on the call and also on the previous quarterly presentations, this year marked or basically 2024 marked biggest order that we’ve received in the space sector so-far, which was for a constellation of three satellites with payloads for that. And it is clearly first-time realization in India and many first-time realizations for the country. So what — and these are for military applications. And what we understand because we are more-and-more interfacing with end-users itself because of the criticality of the projects that we are executing. We do understand that once we are able to demonstrate this project that we will expect a few multiple other satellite constellations also repeat constellations, so to speak to come up in the coming couple of years. So that’s with regard to the projects that we are currently doing. In addition to that, there are some other areas within the space itself, which we are working on. One of the other areas is around a situational awareness, debris tracking and so on where there are different ongoing efforts and projects on that front where clearly I would say a front-runner in the in this space, in the area for some of these projects as well. So we are doing some of that and then you know, even on even at a subsystem level, we see some important opportunities coming back from ISRO. ISRO has been, you know, I would say relatively flat for the last few years, but with some new projects and programs coming in, we expect some new significant opportunities coming in from there also in the next couple of years. And finally, we are also looking at some opportunities to build full satellites, right, in these areas. So these are, I would say at a high-level some of the things that we’re doing on the space side and it is clearly an area that we’ve built a good position in and we want to make sure that we continue to be a frontrunner in the space in India.
K S Desikan
Just to add, no, you’re absolutely right, Mr that the space economy is going-forward will grow in a significant manner. And what we can say at this point of time is we have equipped ourselves to serve all the layers of this space thing. So we have been building competencies and capabilities. And thanks to our historical track-record, all the players in this segment, right, from the ISO to the private players ranging from the start-ups to the big boys. Everyone considers us as important electronics partner. So I agree that this will be a very good growth. But only question is about the timelines on how soon it will happen, but it will definitely happen. The direction is very clear and we are ready and I think it should happen going-forward.
Operator
Thank you. Thank you so much, sir. MR. Pranav, we have two questions are up. We have a follow-up question from the line of Chirag from Ashika Institutional Equities. Please go-ahead.
Chirag
Yeah. So one forward-looking question. So whatever internally you decided on in terms of turnaround and progress apart from top-line growth, should I consider that we are somewhere lagging one year hello,
Nikhil Mallavarapu
Yeah, so sorry if I understand your question, your point is are we lagging by one year considering the subsidiary performance? Is that?
Chirag
Yes. Yeah.
Nikhil Mallavarapu
I mean, yeah. I mean I think you know, I rather than say that specifically like that, I think on the stand — coming back to it on the standalone part of the business, we will continue to be I would say, more or less on-track with what we have — what we’ve said. On the subsidiary, yeah, I mean we clearly missed what we had hoped we to achieve this year. And in light of that, you know we have to take some strategic calls and decisions on the way forward basically, you know, for some of this split. So I would not talk about it as one year behind or anything like that, but rather would rather split the two into what we’re trying to do fundamentally because on the standalone part of the business, the growth profitability is coming from there. On the subsidiary, as I’ve clearly mentioned in the past, our objective is not to have some huge growth in the short-term, but really to fix our margins. So even if it means some degrowth in the short-term.
K S Desikan
Yeah, just to add-on that, you know, I don’t know that one year lag probably is a perspective. But you know, if you look at like what Nikhil said, the past three years of standalone, it has been a very strong growth both in terms of revenue as well as the profits. Subsidiary revenues have been stagnant or slightly lower and it is, you know, a lot of multiple issues. So if you keep them separate and see, I think so in standalone, I don’t think we have lost anything because we have been growing from — right from ’22 if you look at the numbers. So, yeah, we need — but we need to focus a little more and do something in the subsidiary level, while the standalone will continue to grow.
Chirag
Okay. Thank you all the very best.
Operator
Thank you. We have our next question from the line of Rohit, an Individual Investor. Please go-ahead.
Rohit
Hello. Yeah. Hi, I just wanted to know what is the drive of the Canadian business on our company? And the second thing is like earlier also we assumed the Central American business, the energy business that the proceeds we had to put into provision and this time also that is there. So is this what do you say? This is a last provision which we can expect, or are there something which needs to hello. So go-ahead.
Nikhil Mallavarapu
So I think there are three questions that you had put. One is what is the drag of the Kennedyan subsidiary? What you see between the consolidation and the standalone, almost all the last consumers are Canadian subsidiary and the French one is almost like breakeven. So that’s on the drag. And I didn’t understand about the energy division that you talked about that was a couple of years ago, not now. So and the point that you referred currently, is that about the exceptional item that we showed in the current quarter
Rohit
Any reason.
Nikhil Mallavarapu
Yeah, that this is just to explain, this is an associate company of the T&S where we have about 30% shareholding. And you know, we just — our receivables were secured with a contract till September, but this company has now been referred to, which is a process by which the French core tries to revive the company towards its you know, sustenance and growth. So as a matter of abandoned caution and prudence, we have provided for the entire exposure. But as it evolves, perhaps in the next month or so, should we get able to get a better clarity and how much of it we will recover depends on is there an investor who is taking forward and all of that. So that’s about the current exceptional thing.
Rohit
I just wanted to know what are the chances of any recovery? Is there any — is there something optimistic about it? If you have any chance that you get something back or something.
Nikhil Mallavarapu
Anything you want to add?
K S Desikan
Yeah. Yeah. So we read — you know the — in terms of the possibility of recovery, this company that we are with that we have, you know that we’ve provided for the — this exceptional item has from what we understand currently, four interested parties who are who are bidding on the company to carry-on the operations and so on. So there is a reasonable interest in the company and there is a — in front of it, a substantial contract that the company itself is expecting to receive, they’ve already received a letter of intent and so on. So we are hopeful that we should be able to recover you know, at least a partial amount of this. But as mentioned, you know, to be to be prudent, we have provided for the entire amount in the current quarter.
Rohit
So thank you. I know you guys are working very hard and thank you for it and all the best.
Nikhil Mallavarapu
Thank you. Thank you.
Operator
Thank you. Ladies and gentlemen, that was the last question for today. And I now hand the conference over to Ms Bhoomika Nayer from DAM Capital. Please go-ahead.
Bhoomika Nair
Yes, thanks to all the participants for being on the call and particularly the management for giving us an opportunity to host you and for answering all the queries. Thank you very much, sir and wish you all the very best.
K S Desikan
Thank you. Thank you.
Nikhil Mallavarapu
Thank you, everyone. Thank you, everyone, and thank you, Bumika and the DAM team. And I just — once again, just to summarize, I know this quarter was a not a great one at a high-level, but I think it’s important to just reemphasize once again that we are confident and we’re seeing very good traction happening on our — the core part of our business, which is around the EMS and the defense and space products piece in our standalone entity. And with regard to subsidiary, all the feedback and points that we have received with regard to the amount of time and resources that has gone into it has been well-received and we are discussing this at the Board level to make sure that we take the appropriate steps quickly so this doesn’t continue for too much longer. Once again, thank you all for your interest and we look-forward to your continued support.
Operator
Thank you. Thank you, sir. On behalf of DAM Capital Advisors Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.