Elin Electronics Limited (NSE: ELIN) Q4 2025 Earnings Call dated May. 26, 2025
Corporate Participants:
Akash Sethia — Head of Strategy
Praveen Tandon — Chief Executive Officer
Analysts:
Deepak Agarwal — Analyst
Darshil Pandya — Analyst
Kunal Mehta — Analyst
Pratap — Analyst
Vidhi Raika — Analyst
Amar Maurya — Analyst
Niraj — Analyst
Dhruv Shah — Analyst
Sahil Doshi — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to Q4FY25 Elin Electronics Limited Earnings Conference Call hosted by Access Capital. 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 this 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 Mr. Deepak Agarwal from Access Capital. Thank you. And over to you, Mr. Deepak.
Deepak Agarwal — Analyst
Yeah. Thank you, Hamchat. Good afternoon everyone. On behalf of Axis Capital, I welcome you all to Allen Electronics Limited Q4FY25 and FY25 earning conference call. Today we have with us management represented by Mr. Kamal Satya, Managing Director Mr. Praveen Tandon, Chief Executive Officer and Mr. Akash Vya, Head of Strategy. Without taking much of your time I would now like to hand over the floor to the management for their opening remarks post which we’ll open the floor for Q and A.
Thank you. And over to you sir.
Akash Sethia — Head of Strategy
Thank you very much. Deepak ji. Good evening ladies and gentlemen. This is Akash Sethia. And we also have on call today our managing director Mr. Kamal Sethiya and our CEO Mr. Praveen Tandon. Thank you for joining our earnings call for the fourth quarter and full year ended March 2025.
I am very pleased to share that the company has reported the strongest set of numbers since our ipo. With our strong focus on operational efficiency and growth we believe the next several quarters should continue to see higher growth in in both revenue and margins. From here on coming to our overall performance for the quarter. Our operating revenue for the quarter was rupees 315.7 crores against rupees 277.8 crores in the same period last year up 14% on a yoy basis. On a quarter. On quarter basis it was up from INR266.3 crores by 19%.
Consolidated EBITDA for the quarter was INR20.3 crores against INR12.4 crores in the same period last year. This has been driven by 70 basis points of higher gross margins and some operating leverage playing out. Also it is pertinent to note that within this there are non recurring items of 1.4 crore rupees and therefore recurring EBITDA is INR19 crores for the quarter with an adjusted EBITDA margin of 5.9% against the reported margin of 6.4%.
Consolidated profit after tax for the quarter Was 17.2 crores against 3.5 crores in the same period last year. This includes a net benefit of 7.5 crores towards profit on shares sold by subsidiary Elim Appliances Private Limited of Elim Electronics Limited.
Our liquidity position remains strong with net cash of 75 crore rupees as of March 2025. Our cash capex spend in the entire financial year 2025 was at INR40 crores. Our working capital cycle as at March 2025 is unchanged from March 2024. At the next 52 days I would like to circle back on our actual performance versus the guidance shared at the start of the year. We have guided for a revenue range of 1165 to 1200 crores. We have achieved 1180 crores.
We had guided for an EBITDA of a range of 60 to 65 crores. We achieved 52 crores. We had guided for a cash capex spend of INR40 crores. We actually spent 40 crores. We had guided for A net working capital of 45 to 50 days. We are actually at 52 days. As you can see it has been a mixed bag for us in terms of full year delivery largely relating to the miss on EBITDA margin front. However, we take great comfort and pride in our Q4 performance especially regarding margins. As you can see we have seen both revenue growth and margin expansion in Q4. We are very confident of this margin expansion and revenue growth sustaining in full year si26.
I would like to share with you also what has led to the margin uptick in Q4. We have created an Operations Excellence team to bring in operational efficiencies for the business via Industry 4.0, best practices within industry and a strong focus on automation. Through these activities we have achieved a savings of 1.5 crores for Q4 or an annual run rate of 6 crores per annum. We are further confident of achieving this and increasing this to 8 to 9 crores for the full year SR26 across labor and overheads.
I would now like to outline our aspiration and strategy for the company going forward for the next two years. The aspiration is to be a one stop shop for all high value, high volume home appliances and durable needs for our OEMs and customers. This includes our existing business which is lighting fans, small appliances and our planned new business which is medium appliances such as air fryers, air coolers, chimneys, OTG’s and so on. We will continue to add such products in our portfolio over the next several quarters.
Let me explain the significance of this. These medium appliances that we are planning to make have realizations between INR2100-5000 rupees per product. This is substantially more than our realization from our current range of products which stand at between 300 to 600 rupees per product. This means that our average realizations will be moving up substantially over the next few years as revenue contributions from medium appliances increase. In the last year we have executed on this strategy by increasing our fans business and commencing the OFR business. This year both the fans and OFR business should see substantial growth. We will also be entering air coolers, chimneys, OTGs and FYRs.
Now. This is important because on these higher realization products the direct labor cost and other overheads as a percentage of revenue decline substantially. Therefore, what this does is create both higher and more predictable margins. This is also in line with our goal for getting back to 7 to 7.5% EBITDA margin by financial year 2027.
Now I would like to share with you the performance and strategy in each of our business verticals going forward. In the lighting fans and switches segment, the revenue for the quarter was IMR 86.3 crores against INR78.5 crores in the same quarter last year. This was primarily driven by an increase in revenue from fans which was partially offset by a reduction in the lighting business. The LED lighting business declined from 57 crores last quarter to 50 crores in the current quarter. This was largely led by a volume decline in certain categories.
Further, we would like to share an update with you on the lighting business. Our key customer signify has entered into a JV with a competitor for the consumer lighting business. This has happened fairly recently and full details on how this will impact us are not fully visible yet. However, going by the actions of our customer and the preliminary discussions we have had with them, it seems that a reasonable share of the consumer lighting business which is patent down lights etc. Could be shifted to the JV entity which may cause a reduction in lighting revenue for us. We estimate this lighting revenue reduction to be in the 45 to 50 crores for the full year. However, this JV entity has also worked as an opportunity for us as Most of the OEMs and brands do not want to work with competition and the JV is half owned by a competitor. They have initiated development discussion in all seriousness with us. We hope to start business with them within the next few months.
Net of New Customer Addition the net impact we potentially expect on our business is likely to be In the range of 30 to 35 crores for fiscal 2026. Over time our endeavor is to neutralize the impact totally regarding our fans business. Our seedling and PPW fans business has done quite well in the quarter. Our revenue for the quarter is up 2x on a yoy basis. We are further working on making some operational enhancements that should further drive revenue and profitability in the fan business. Also, our export of fans out of Goa has commenced. Like we have highlighted earlier, we are optimistic of expanding our entire export business.
Moving on to the home appliances segment, revenue rose from 68.7 crores last quarter to 87.1 crores this quarter. This was primarily driven by a strong growth in the kitchen and home care business. The kitchen and home care revenue increased from 43.7 crores in the last quarter to 61.7 crores in the current quarter. This was on the back of an improvement in sales of mixer grinders and irons. Personal care segment was flat yoy. We expect this to revive in the coming quarters. Future growth is going to be driven by this segment and a strong focus on growing ODM share of the business. While still masync, we expect this to grow strongly over the next several quarters.
A quick update on the segment in the upcoming Diwali plant that we announced recently, we will be making medium sized appliances such as chimneys, coolers, air fryers and potentially microwave ovens as well. With a clear objective of becoming a one stop shop for brands for high volume small and medium appliances. We have renamed the segment to Home Appliances. We are also optimistic about our nascent export business given the tire of situation and the uncertainty it has created for global supply chains. Most global OEMs are seriously looking to diversify supply chains away from China and towards India. We are in exploratory talks with a few global OEMs to localize in India and and export to USA and the Western world. While still in early stages, the engagement levels have been very encouraging.
Further, the government stance on local manufacturing and disincentivizing imports via BIS and QCO makes us further optimistic on our business going forward. Moving on to the SHP motor segment, revenues were up from 49 crores to 51 crores primarily driven by an increase in revenue from terminal blocks and synchronous motors.
Please note this segment reflects only third party revenue. Although revenue from third party as a segment has been muted, this has been captured as higher revenue from complete appliances via captive consumption. Actual motor consumption and production has been quite strong.
Now I would like to set out our guidance. For the full year 2026. We believe revenue will be in the range of 1350-1400 crore rupees representing a growth of 15 to 18% over FY25. EBITDA for the year is forecast at between 6 to 6.5%. Capex for the year will likely be in a range of 100 to 125 crores. The split is 60 crores approximately towards phase one of the new plant in Diwadi and the balance for the existing business and factories once the new factory in Diwadi is stabilized in two years from starting. This will also help us drive up our ROCE since cash sitting idle on the balance sheet has has been a drag on roce.
A further quick update on the numbers of the Biwari business. We expect the plant to be operational and contributing to revenue by March 2026. We expect a revenue of INR140 crores in FY27 and 250 crores in FY28. The full revenue potential of the plant is between 550 to 600 crores. At a plant level we expect a steady state EBITDA of 7 to 7.5%. At these levels ROCE for the plant will be 20% pretax. As always, we remain committed to drive value for our customers and shareholders alike. With this we conclude our opening remarks.
We can now open the floor for Q and A. Thank you.
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 their touchstone telephone. If you wish to remove yourself from the question queue, you may press star 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. The first question is from the line of Darshulpandya from Fintrus Capital. Please go ahead.
Darshil Pandya
Hello. Am I audible sir?
Akash Sethia
Yes, you are.
Darshil Pandya
Yes, sir. Congratulations on a very strong comeback quarter. Sir, my questions. You know it is. It is on the guidance that we have given 6 to 6.5% EBITDA margins and you know the guidance that you just given. So I just wanted to ask what. You know, what does management thinks about, you know, how we will be achieving this guidance? Will it be led by the fans and the home appliances which are strongly come up and will this be over the quarters or it will be spread out between 40 or 60% in H1 versus H2 how it will look like.
Akash Sethia
Sure. So let me just wait. It down into two. I’ll just talk about first the revenue guidance and then the margin guidance. The revenue guidance, like we said, is a growth of 15 to 18%. You know, in FY26 that we expect over FY25. This will largely be led by the home appliances segment, the motor segment and the fan segment. Right. We’ve already mentioned that. Lighting, we expect some sort of degrowth. This overall growth 15 to 18% that I’m talking about is despite the reduction in the lighting business.
Now I just move to the margin front. For FY26, we are guiding for an EBITDA of between 6 to 6.5%. Please do note that even in the current quarter we have reported an actual margin of 6.4%. And after adjusting for some lumpy business, we have reported an adjusted margin of 5.9% which is already close to the guidance that we are setting up. One of the key reasons how we’ve gotten to this, to this number already is you mentioned that we’ve set out an operations team. This team is doing a very strong kind of focus and activity under the savings on manpower as well as overheads. So we’ve already, we’ve already done a savings of 1.5 crores for the current quarter which is a run rate of 6 crores per annum. What we are saying is that this run rate will be bettered and we are expecting a net savings for the entire year of approximately eight to nine crore rupees at the minimum. We are fairly confident that with the right work, this number could be larger.
Now all this is being driven by Industry 4.0 best practices in the industry as well as a strong focus on automation. I’ll just pause here if there are any further queries to this. Happy to clarify.
Darshil Pandya
No, it sounds. And so the capacity utilization for FY25 of our current plant. If you can just share.
Akash Sethia
Sure. Look, so obviously I’m just going to give you a blended number, varies by product segment and within product segments. Also we have segments at a very, very, you know, high level across for the entire company it’s approximately between 70 and 75%.
Darshil Pandya
70 to 75%.
Akash Sethia
That’s right.
Darshil Pandya
Got it. So we are actually running at a very good optimum levels. Got it. And sir, just wanted to confirm all our products are sold to OEM or to the main client. Just to understand
Akash Sethia
We are only a third party manufacturer. We do not have any own brand in any finished product. We only. We are a third party contract manufacturer. Great. So we do actually only give it to the OEMs and then the OEMs give it to the main customer.
Darshil Pandya
That’s right. So do we have any plans to, you know, connect with the customer directly and rather make some, you know, that something can help us in the margin side?
Akash Sethia
No, because, you know, look, we’re very clear with our philosophy. We continue, we want to continue to be a third party, you know, contract manufacturer for OEMs because your customer cannot be your customer and a competitor. If you launch a brand, then our customer becomes in some sense our competitor and we want to avoid that confusion. So we will continue to remain third party. There is no plan of launching our own brand or anything like that.
Darshil Pandya
And with regards to, as we have seen some good growth in the sans business and the home appliances business. So do we have in future any plans to cut down to maybe three, four or five products that can yield up good numbers? Do we have something? Because right now we have a lot of products in our basket.
Akash Sethia
The growth has been broad based. We see no reason to cut down our business as long as each engine or each sub engine of the company is performing. Why should we cut down on anything? Obviously, you know, there is always the paragraph
Darshil Pandya
But you know, just to just as, you know, we can see some good growth in the segments that we are seeing currently. And you know, so just, I’m not trying to say that, you know, we just should just cut off but just to understand, you know, since the other segments which are right now performing well for us, we might, you know, make some expertise over there because the other products, as of now, what I’ve, what I’ve been seeing in the yearly numbers is, you know, are not so increasing. Maybe the growth is not that good when it’s, when it is, when it is compared to our home appliances or you know, fans businesses. That’s, that’s the whole point of understanding.
Akash Sethia
No, no, we are fairly confident. Look, home appliances are very strong. Fans have been very strong motors like we mentioned. Optically it is not showing growth to you because this is captured, this captures only third party motor sal. What it does not capture is captive consumption. So that is captured in the strong complete home appliances. So each of our home appliance, fan and motors business has shown strong growth. The only business that has shown some degrowth is the lighting business. We’ve explained that already. We hope to make strides in mending that
Darshil Pandya
Last. Just if you can repeat the Biwadi plant revenue that we just you had shared. I just missed on the numbers that you just explained.
Akash Sethia
I’ll just repeat it, but after this, I would just request you to just rejoin the Q. Because there are other parties cases. So on the Biwadi business, the plant is expected to be operational by March 2026. So for the first full year of operation, which is fiscal 27, we expect a revenue of 140 crores. For fiscal 28, we expect 250 crores. The full revenue of the plant. The full revenue potential of the plant is between 550 to 600 crores.
Darshil Pandya
Got it, Got it. I’ll call back and review. Thanks so much, Aadash.
Operator
Thank you. The next question is on the line of Kunal Mehta from Sunidi Securities. Please go ahead.
Kunal Mehta
Hi, very good evening and congrats on amazing set of numbers. So my first session would be on the employee expenses which you know have been almost the same as last year. But there has been a mention in the presentation that going ahead there will be an improvement about 2 to 2.2 crore per quarter. So please explain maybe that how like will there be the benefit?
Akash Sethia
Sure, sure, sure. So let me just take a moment to just explain this. What we are saying is that already in the current quarter there have been a savings achieved of 1.5 crores. Now to your point of the employee number on an absolute basis being same, please look at the labor cost of the employee cost to revenue ratio where you will see that despite the same kind of absolute cost there has been a sharp improvement in revenue. So the way to also look at it is not only on an absolute basis but in terms of cost relative to revenue. So you will see that from 14, 14.5% levels of employee cost to revenue where we were for last year, for majority of the last year we have managed to bring this down to slightly under 13% for the current quarter. We expect for the full year us to be able to bring this down to around 12.5% for the full year for the company as a whole. That is probably the correct way to look at the savings. Not probably on an absence. I hope that clarifies.
Kunal Mehta
Yes. And sir, the other expenses has also seen improvement about 60 basis points if you see over here. So that is because of any power savings or
Akash Sethia
Primarily power. Right. But also there is work ongoing on every, you know, expense line item. So we literally, you know, we’ve taken a fine tooth comb and you know, every expense line item is being monitored extremely carefully. Carefully. Like we said, this is just the start of the. You know, the whole savings exercise under the operational excellence team. The numbers that I’ve given you of savings of 8 to 9 crores are fairly conservative. Extremely confident that we will, you know, achieve these numbers, if not surpass them.
Also, one point I’d just like to make, there is a lot of work ongoing under a new CEO under the, for the purchasing side. You know, he is a supply chain specialist and is doing a lot of work on the purchasing side which, you know, is not fully reflected in our numbers today. So we have, you know, the guidance that we’ve mentioned is fairly conservative. Once all of this comes together, you know, efforts on the purchasing, on the labor and the overheads, we are fairly sure we mentioned that by fiscal 27th we want to get back to the 7, 7.5% EBITDA. We are 100% confident of getting back to these numbers by that time.
Kunal Mehta
So you, when you say purchasing, sir, you mean that gross margins are likely to improve from the 25 28% which is of FY25 to maybe hit 27, 28% in the coming years.
Akash Sethia
If you look at our current quarter, we are at Approximately close to 27%. Right? You’ve already seen that improvement. Now obviously, you know, this is not going to happen every quarter because there is some mix also that plays a part which we’ve transparently highlighted also in our investor presentation. But yes, it is correct that we expect that, you know, gross margins should continue to get better over the next few quarters. And when I say get better, I’m not saying from this current quarter but from the seven, from the 25% that we’ve normally set out. We do expect that there could be a potential to improve at least 100 basis points on that number.
Kunal Mehta
Okay, so and the capex that is mentioned about a total of 110 odd crores for the next year that will be complete deployed next year or will there be phases and will it be debt and internal accruals or only internal accruals?
Akash Sethia
Sure. So let me just split that out like we mentioned. Total capex for the year is estimated at between 100 and 125 crores. Of this approximately 60, 65 crores is towards phase one of Biwadi Bhiwadi. The total capex is in the range of 1995 crores. So out of the 1995, this year we will be spending 60, 65 which is approximately 2/3 the balance. You know, 50, 60 crores is for the existing business, the existing factories. With this, you know, revenue should be approximately 1350 to 1400 this year and approximately 1750 crores. Next year because a bulk of the capex is towards Biwadi. Bhiwadi like we mentioned will only come on Stream by March 2026. So the full benefit is going to going to be visible only in fiscal 27. So that’s the way to look at capex and revenue and totality.
To your second question, this is going to be largely funded only by internal accruals. Even after this large round of capex we do not expect to have any debt on our books. When I say debt I mean long term debt. Working capital debt on a need basis obviously is actually present right now.
Kunal Mehta
Okay sir, I have more few more questions. I’ll come back in the queue.
Akash Sethia
Thank you.
Operator
Thank you. The next question is from the line of Pratap from Mount India Intra Finance. Please go ahead.
Pratap
Am I audible?
Operator
Yes sir.
Pratap
Yeah hi and congrats on a good set of numbers. So my first question was regarding the JV that was set up with the contract manufacturer our peers. So the net impact that we are considering of 40 to 35 crores. So have we already got into discussions with some of the other brands that might be moving away from them or is this something that we expect to happen in the future?
Akash Sethia
Okay, let me just give you some context. These discussions with these other brands were ongoing even before the, before this JV came up. However, because of the whole oversupply situation, you know there was no meaningful headway being made now with this JV coming up with you know signify aligning with another contract manufacturer brands typically view you as either supplier or competitor, not as both. Right. So these brands are now in serious discussions with companies such as ours to kind of look to move some part of the supply chain or product production to us over them.
So now what we are saying is that this discussion is ongoing, it’s at a fairly advanced stage but no revenue is currently coming in from this. What, what we’ve estimated is that the total impact net of customer additions for this should not be more than 50 to 35 crores in reduction in lighting business for fiscal 2024 and going forward just to follow up on that. So as that JV scales up is there any possibility that there might be more leakages from our current book of business with fitness we mentioned in full transparency we don’t know, it’s still early days.
Point 1 what we understand is that this is restricted to the consumer lighting part of the business. We are also present in the professional or the office part of the lighting business. So point one the of. So in our business, you know, 50% is consumer, 50% is professional. So from what we understand, the professional part is not under the jv. That is point one, point two under the consumer part, we’ve already taken a reasonably, you know, high estimation of revenue going away already and which is what we’ve communicated so incrementally whether everything will go away unlikely. I mean, you know, whether you are, you know, a partner in a jv, nobody wants to have reliance on only, you know, one, one supplier. So will it go away completely? I don’t think so. But like I said, it’s still very, very early days. This was all done only late March. It’s not even two months. So maybe by next quarter we will be in a position to give you a better update. But as things stand, this is the, this is the information that we can, that we can share with you.
Pratap
Understood, sir. And regarding our medium appliances that you, are we already kind of selling medium appliances or is that something a kind of a resume plan that we’re developing for the future?
Akash Sethia
So look, some segments we already selling, so we already, you know, doing, you know, PPW, fans, BLD fans, OFRs, so on and so forth. But a bulk of the medium appliances that we are intending to get into will come out of the Diwadi facility which is air coolers, air fryers, ovens, potentially microwaves. So while we’ve already made some sort of headway in getting into medium appliances, but this will only scale up over the next couple of years. What is our current revenue from medium appliances? If we kind of measure that should be, if I talk of medium appliances currently being fans and OFRs, it should be in the range of 65 to 74.
Pratap
Okay, thank you for taking my questions. I’ll call that in the group.
Operator
Thank you. The next question is from the line of Vidhi Raika from TradeLink Exim India Private limited. Please go ahead.
Vidhi Raika
Hi. Congratulations on the good result. I just wanted to ask you had mentioned that there are going to be new for the product launches. So what kind of spa products are you planning to launch? Thank you.
Akash Sethia
Thank you for your question. We just mentioned, right. We are getting into medium appliances, larger sized appliances. Some of them that we will be launching in fiscal 27 out of Diwari are air coolers, air fryers, chimneys and OTG ovens. These four categories are already identified as. And when we find new categories to add, we will notify. All of you via stock exchanges of the same.
Vidhi Raika
Okay, thank you so much.
Operator
Thank you. The next question is from the line of Amar Maurya from Lucky Investment. Please go ahead.
Amar Maurya
Thanks a lot for the opportunity. Just want to understand more about your guidance of 18% and which will be largely driven by home appliances and fans. So what exactly in home appliances these are the existing customers growth we are talking about or this is some new customer addition into the growth.
Akash Sethia
So sir, it is a combination of both but it is more towards, you know, new customers. So when I say new customers sir, I don’t mean a new customer to end in, I mean a new product segment being sold to them. So for example, if I already have customer a who I’m selling lighting to but not selling home appliance products to. I am talking of that cross selling opportunity that we are now getting deeper into. Now as we know in India for there are only those, you know, 10, 15 or 20 brands that sell lighting, fans, small, medium, large appliances. Right. It is about basically, you know, deepening your relationship and your business penetration for customers. We sell only one segment to. To be able to cross sell other segments too also. So the revenue growth that we are talking of is largely on account of. On account of that.
Amar Maurya
Okay. And these contracts are largely signed or besides speculation as of now.
Akash Sethia
So firstly they are not, you know, contracts. They are more. It’s a po to PO kind of, of kind of business relationship. That said, you know, these relationships tend to be very sticky. Once the customer comes on board. It is fairly difficult to move supply chains away because you know, there are tools, dies and modes that it’s difficult to just shift, you know, the tooling away from one supplier to another. So even though point one, point two, most of them at least in terms of the revenue guidance that we are giving, most of them already in the bank.
Amar Maurya
Okay, fantastic, fantastic. And secondly now the 6% margin improvement, this is largely on operating leverage benefit we are talking about or there is a.
Akash Sethia
Yeah, I’ll just take you through it. I’ve mentioned, you know there are two, three points obviously that are, you know, kind of playing out in it. One is a slight improvement in terms of gross margins. Who is, you know an operations excellence team that we have created that is helping us drive savings in manpower. As well as overheads. This activity alone we estimate will save us anywhere between 8 to 9 crore rupees for the full year. 20, 26 and 3, there is a general benefit in terms of, you know, your indirect cost of fixed cost remain fixed even as your turnover increases. So therefore you know those expenses as a percentage of revenue obviously decline leading to a margin uptick which is also operating leverage. So it is a combination of these three. I would also like to point out that the 6% is the lower end of the guidance that we’ve set up. We’ve actually set out a guidance of 6 to 6.5%. We hope that we are able to achieve the upper end of the guidance.
Amar Maurya
Got it. And lastly we are talking about a working capital improvement of around 35 days and largely from inventory and payable days. So what exactly we are going to do with inventory and inventory?
Akash Sethia
I mean we are not talking of 35 days improvement. We are currently at 52 days. We are saying that we will do 40 to 45 days. So we are talking of say between 7 days on the lower side, 12 days on the higher side. I mean that is the kind of improvement that we are talking about. So currently 52 days, we saying we get to 40 to 45 days.
Amar Maurya
So 52 days, your inventory days is 70 days, correct?
Akash Sethia
Oh no, I mentioned is not 70 days.
Amar Maurya
Debtor days is 70 days, correct?
Akash Sethia
Yeah, debtors,
Amar Maurya
Debtors is 70. Inventory would be 52 correct.
Akash Sethia
Inventory is closer to 45. So inventory we look at on. On material consumed
Amar Maurya
Material basis. Okay, got it, got it. I think we are looking for revenue basis.
Akash Sethia
That’s the difference. We’ve said that out also in our investor presentation. So you can just have a look if you have any is specific to this. Once you’ve had a look at the presentation you can connect with us offline.
Amar Maurya
I had looked into the presentation. Perfect, perfect. Fantastic sir, thanks a lot and congratulations for a very good set of number of years.
Akash Sethia
Thank you.
Operator
Thank you. The next question is from the line of Niraj from White Pine Investment Management. Please go ahead.
Niraj
Yeah, I think congratulations on the numbers. Good improvement. Structural thing that we have seen is that you’re moving away from a smaller to slightly medium sized appliances which is a welcome sign. So few things. One, on the new products that you’re talking of, how will you what is the strategy to get more customers? Like why would customers come to you for those business which we actually are existing in India like the air coolers, chimneys, fryers, OTGs. So can you get some thoughts on. How you plan to get those customers for those products.
Akash Sethia
Sure, sir. See, there are two, three aspects to this. Right? Point one is in a lot of these categories, there is bis. That is common, which means that, you know, from imports, people have had to localize. Now when you localize, alien as a company is one of the few organized companies that is an option for a brand to partner with for their production needs. That’s point one. Point two, if I look at categories that are not under bis, there are also a lot of these categories.
Let me give you an example. Nothing to do with bis. Let me give an example. Air cooler. If I look at the market, 65 or 70% of the market is unorganized. As things stand, this ratio of organized is going on improving every year for the last five, seven years. Right. Given a choice, given the same price, every brand will prefer to buy from an organized company than an unorganized company purely on the benefit of reliability that organized company offers to you. Right? That is the second element to it. Third is obviously cost leadership.
Now, once you become of a certain size and scale, there are lots of economies of scale that kind of kick in, that make it, you know, very, very difficult for smaller companies to compete, compete with or for them to compete with us. Right? So it’s a combination of these two. There is BIS ongoing in a lot of the categories of the products. There is a shift from unorganized to organized and then there is the element of leadership. If all these three, you know, present in one or the other segment, we are fairly confident that, you know, we will be able to kind of, kind of attract customers and deliver the numbers that we’re talking about.
Please also note that the numbers that we have spoken about are also after discussion with customers. These are not unilateral numbers. This is all, you know, bilateral kind of discussion with customers.
Niraj
Okay, one related question. Two related questions. The gross margin of this medium appliances, how do you see, Will it be similar or even lower or higher? Because this is the first time you move into a higher side appliances. Sure. I think look company wide, we are currently at maybe around 25, 26% gross margin.
Akash Sethia
For these larger appliances. Gross margins, it’s sense of lighting lower. We’re probably closer to between 18 to 20% or 19 to 22% in that kind of range. That said, the EBITDA is slightly higher because like I pointed out from a labor cost and other overheads perspective, That ratio to revenue drops significantly. So if you look at it from a gross margin perspective it is slightly lower than some of our than the current company average. But if you look at it from an EBITDA perspective these are all products that are in the 7 to 7.5% to 8% kind of EBITDA range that one can expect.
Niraj
And hypothesis question on how do you compare yourself with the US Chinese cost? Because what we know we are standing in front of a potential trade agreement and please comment on will it is there a potential opportunity to you and what’s the differential between you and China in terms of costing and how should we look about it? Like if Tomorrow China is 30% India becomes 10% does it benefit you? Just some broad number would be useful.
Akash Sethia
The differential in you know, India versus China first has to be looked at from an apple to apple perspective. So when you look at an Ellen of India you have to compare this with an LN of China.1 in China there are all sorts of suppliers. There are small, medium, large, all kinds of suppliers, right? So one is you do an apple to happen comparison there. Second obviously this number is going to vary widely. This is what kind of product that you are talking about. But if I were to give you a very very large generalization and please I’m deviating my statement by telling you large generalization as things stand today maybe China is more competitive by anywhere between 4% on the lower side, 7, 8% on the higher side it is less than 10%. The price of it’s not larger than that. And if you look at China labor, China labor is almost 4x that of Indian labor cost. So the only difference that remains is largely on the bill of material side. On the conversion side we actually more competitive on the bill of material because of the scale and the incentives that the government offers them. They are probably more competitive which is the number that I gave you, right? Average generalization 4 to 8%.
Niraj
Okay. This is a broad range. Thank you very much.
Operator
Thank you. Ladies and gentlemen, in order to ensure that the management is able to address questions from all participants in this conference, please limit your questions to two per participant. The next question is on the line of Dhruv Shah from Ambika fincap. Please go ahead.
Dhruv Shah
Yeah. Hi Akash, Congratulations on a really good set of numbers. I just have one question. You mentioned on the call that you are running at 70% capacity. Till what capacity can you go till the time the new capex at the existing facility can come up.
Akash Sethia
If you. See that when we talk about capacity utilization there are two kinds of capacity utilization. One is obviously at the back end which is the molding power press, you know, all of that which actually does, you know, the production of the parts and components. Two is obviously the assembly capacity which actually just does the assembly on the, on the line. Now when I talk of the assembly capacity that is that can be increased very easily because that you can run multiple shifts to, to increase capacity. So the more critical bottleneck as such is the capacity at the back end of the molding plants, of the power pieces, so on and so forth. So when I’m Talking of the 70 to 75%, I don’t see any challenge. If there is enough demand, we can easily scale this up to 85, 90, 95%.
Dhruv Shah
Okay, fair enough. Thank you so much.
Operator
Thank you. The next question is from the line of Kunal Mehta from Sunidi Securities. Please go ahead.
Kunal Mehta
Sir, can you just, just confirm again that he’s saying it is a lighting segment for, for this full year, y’ all finished at around 242 crores. And you’re saying there’ll be a net impact of about 35 crores even after, you know, maybe signing another 15 odd crores.
Akash Sethia
This whole signify JV will be in the — will not be available. Right. So we are saying that there will be a background, say maybe 15, 20 crores available for the. Because it takes time and moving supply chains away. So the net reduction that you can model in is gross 50 less new customers, say 15 to 20. So net net reduction of say around 30, 35 crores. Ballpark. We are hopeful, we’ve mentioned that we want to be able to completely neutralize this. But just in the spirit of transparency we are stating that this is something that you can consider as your worst case kind of kind of scenario. We’ve also mentioned this AV is very, very new. So maybe you know, as we get more further information, as we get, you know, updates on the next one, we will also be able to shed More light on the impact of this. So this is also very new. These numbers are basis early, early assessment bias.
Kunal Mehta
Okay, so what comes under the other EMS segment?
Akash Sethia
This is all smaller, right? Like you know, for example, we also sell mixer grinder blades, like just the blade. Okay. To other kind of contract manufacturers. So products like those, it’s a fairly small number. It’s not a large number, but these are small, small components basically that are sold.
Kunal Mehta
Okay. And sir, in the non EMS segment we are seeing, you know, consistent growth over the last years. So what we did this year we did about 278 crores in the non EMS segment. So can you just throw some light on that? You know what, currently we have Denso and ifb. So do we see more revenue coming from those? And will Diwadi plant have any of those manufacturing?
Akash Sethia
Sure. So look for the Biwadi plant. I’ll just answer first. That is actually very close to the auto belt of Manisar. Right. One of the prominent auto belts in India is at Manisar. So we are very hopeful that we could expect new business. That said, auto business is a long gestation business to get. Typically there are multiple audits. It takes several quarters to get busy. So it is a little bit premature for me to give you any sort of indication on whether we will get business. That said, whether are we trying for it? Most definitely we have because you have a sticky business. Good names, decent margins, good payment terms. So it’s definitely a business that we would look at scaling up. But it’s a little bit too premature whether, you know, that plant will get any auto business.
Secondly to your broader question, you know, that business broadly is, you know, is automotive where you know, Denso, Magneti, Marelli, Musashi are a key customer. And then there is the consumer business which is, which is largely ifv. And we have a small medical cartridge business where we sell medical cartridges to a company called Molbio. That’s the broad extent of the business.
Kunal Mehta
Okay. So we are in order to consistently our revenue growth, sustained revenue growth in that segment as well.
Akash Sethia
So the way to look at it is this segment will be slower revenue growth but slightly better margins. EMS segment will be higher revenue growth but slightly lower margins than the components business. That’s the way to probably look at profit Business.
Kunal Mehta
Okay. And sir, you mentioned about 250 crores in FY28 from the new plant, Diwali. And you said that potential is about 550 crores. So that will still be about 50% capacity utilization. So after the Diwali plant comes we can expect about 2,2000 crores of total revenue potential. The company can like on. So I mean can that be like are we running on already exhaust like top like max out shifts or this can be you know, improved.
Akash Sethia
No, no. Let me just, just clarify. See from our existing three facilities we can do a revenue of approximately 1700 odd cores. Okay. Full revenue potential is approximately 550 to 600 crores. So if you add up everything then the total revenue potential goes up all the way to approximately 2300 crores. Right? 22, 23. That is 0.1. Now Biwari, obviously we are saying that March 26, you know, we will complete it. We’ve given you a fair idea that within two years we can see you know approximately 45, 50% kind of revenue utilization being achieved. As regards, you know, slightly higher utilization. Maybe you know it happens over three, three and a half years. It’s a little early to say. Just give us some time because the plant is not up yet. Once we have the plant up and running we’ll be able to give you more, more color on, you know when we can expect better, better utilization.
Kunal Mehta
Okay. And sir, can we estimate the depreciation for the next year to be about 30 crores with about is 50, 50 crores of capitalization of the new plant?
Akash Sethia
You’re talking of depreciation? Yes. 30 crores is probably the, I mean probably on the higher side at 28 should be around 27, 28, 29 crores.
Kunal Mehta
Okay. Okay. Okay. Thank you.
Operator
Thank you. The next question is on the line of Sahil Doshi from Thinkwise wealth managers. Please go ahead.
Sahil Doshi
Yeah. Thank you for the opportunity and congratulations Aakash. On a great set of numbers, two points just on gross margin, we’ve seen significant benefit in terms of revolution sequentially also this is partially because of lighting business declining and incrementally. When you’re seeing 100 basis point improvement in gross margins on an annual basis, is this also being driven by lighting business declining?
Akash Sethia
I mean I don’t have the exact numbers right now to be able to. You know actually I can. Just get back to you separately on this point. But as a general comment, I just want to reiterate that the 100 basis points gross margin that I’m talking about improvement is more from the historical average of approximately 25% that we have been operating at. It is not from current level. If you look at this quarter we are already at approximately 27%, 26.5%. Right. It’s going to be very tough to further increase 100 basis points from here. So please treat that 100 basis points improvement from mean levels and not from the current quarter levels.
Point two, some of that improvement is driven by a sales mix benefit. Some of that has been driven by some of the work that you know, our purchasing team has been, you know, working extremely hard. So some of that benefit has been driven by them. So it’s a combination of change in sales mix as well as some sort of savings. We’re doing a lot of work around consolidation of vendors across all the plants, optimization, hard negotiation. So a lot of it is also benefit on those accounts. Regarding a specific question of lighting, I just have to get that. I don’t really have the data but goes handy.
Sahil Doshi
Sure. Just the reason I ask this is for example say if the signify business ramps down significantly maybe a little more aggressively than what we are thinking. Just trying to understand is there a possibility of our expenses of the fixed cost staying at where it is or could that actually you can cut that at the same pace.
Akash Sethia
Look, we can cut fixed costs to a certain extent. I mean it’s very hard if assuming worst case scenario there’s a very steep drop in business from them. It’s going to be very difficult obviously to make that number 0 or whatever. But yeah, to a certain extent we are flexible we can cut cost on but like you can already appreciate there’s a certain number to which it can go down. It cannot never become zero or something.
Sahil Doshi
Sure, sure. And just wanted to check. You have done a great job on purchasing side it seems but working capital is taking a little longer. So could you possibly illustrate where we are in this journey and by when do we think we should be at the aspirational 45 days or something like that?
Akash Sethia
I think Prinji, maybe you are the right person to to just come in on this and just answer Kahil’s question.
Praveen Tandon
Yeah, rightly said we have not touched our figures of 45 days this time. But yes, we are on the right track looking to the overall expansion in the total inventory management. So we are on the right track and we believe by H1 we will be around touching the same target numbers as for the current operational efficiencies which we are delivering. So sure, Praveenjee, we had seen some improvement in the recent H1 also, but possibly that sustained. So could you call out meaning what are the steps we are taking and so that it becomes more sustainable and permanent.
As Akashi mentioned that we have built in a operation Excellence team. It doesn’t only reflect the excellence team with respect to the overhead and productivity reference to the inventory levels, how we manage the AR&AP of the customers and the vendor. We manage now on a fortnightly basis all across since last quarter. So we are in a way the last year the improvement which you saw from April to September was considerable and this six months being the season time. So a lot of inventories were invented in indented. The import inventory was high and we could not have the right model mix. And there were some sales corrections. So it was not controlled in that pattern.
But now we are on a fortnightly basis review mechanism and the excellence team is now working out how to shorten their lead times so that we are on our targets of inventories and working capital. Sure, sir. Perfect. And just wanted to check on this. You know we’ve had plans to launch Chimneys and scale up OFR as well as, you know, possibly OTGs in the coming year itself with this new Biwadi plant. Does it mean that this is pushed by a year or can we use our existing facility for it to start off? No, currently if we see OFR from last year, this year will be considerable amount. Maybe about 5x the numbers what we have got the mandate for our customers. So OFR is a big business now. I mean H1N quarter three, quarter two and quarter three will be the major quantity up which we have already received the orders and the plan is in progress looking to the otg. We will be starting from quarter already the orders are processed.
Yes, the scale up which we project in a larger scale as medium domestic appliances will be done in Biwadi plant next year. So there will be bigger lines so more productive and more efficiencies can be derived out there. So currently we will be Doing that OFR and OTG here. So it’s not. We are shifting. We will be making this year only in quarter two and quarter three. You will see the numbers closer the same thing. Chimney, sir. It is on a currently prototype and designing phase. So we are already in discussion with the customers. As the validation time it takes some time. So we are installing basic instruments and fixtures for that out here. So I don’t see that chimney.
By quarter three we’ll be able to get the testing clearances done. But as Biwadi is progressing and if we are able to have that by November December. So we can initiate the test trials and the supply chain from quarter four. Possible. But currently it is under trials with the customers.
Sahil Doshi
And just lastly want to check, you know this quarter our motor segment we said because of internal consumption we couldn’t have a higher sale. Could that also become a constraint for growth in the next year? And secondly on the personal care which you said you expect any revival. Could you talk about that segment and the potential from exports as well?
Akash Sethia
Let me just clarify regarding motors. So there is no capacity constraint. What I see is that the preference always of the company is to achieve a value addition on a higher sales number. Right. So if I sell just the motor, say the motor is example for 500 rupees. Say the complete mixer brand is for 1,000 rupees, right. So if I sell motor I achieve a margin on 500 rupees. If I sell mixer grinder I achieve a margin of 1000 rupees. So the goal of the company is always to kind of, kind of look for you know, a higher value addition moving up the value chain. So what we are just trying to say is that although optically, you know, third party sales of motors are kind of, you know, 49 to 51 crores. Which is not a meaningful revenue. But the motors business itself has done quite well because you know we’ve utilized all that increased offtake in our own captive consumption for sales of you know, mixer grinders and fans and so on and so forth.
Sahil Doshi
Okay, got it. And just on the personal care, if you can comment.
Akash Sethia
Yeah, so look, personal care, you know, it’s a little bit, you know, tough to give an exact estimation on your. When that exact bump up comes hopefully, you know, in the run up to Diwali is the season time. So we are fairly confident that you know numbers should. Should start to start to start to improve. It was a little bit, little bit of. Little bit of a disappointment this quarter. Numbers being flattish. But we are fairly hopeful we Constant engagement with our customers who drive this faster.
Sahil Doshi
Sure. Thank you so much and best wish to the team.
Operator
Thank you, ladies and gentlemen, as there are no further questions from the participants, I now hand the conference over to the management for closing comments.
Akash Sethia
Thank you. Thank you, everyone, for your trust in ln in us. We hope to deliver on this trust over the next several quarters and do well for all our stakeholders. Thank you.
Operator
Thank you. On behalf of Access Capital. That concludes this conference. Thank you for joining us. And you may now disconnect your lines.