Epack Durable Ltd (NSE: EPACK) Q3 2025 Earnings Call dated Feb. 03, 2025
Corporate Participants:
Rajesh Kumar Mittal — Chief Financial Officer
Ajay Singhania — Managing Director and Chief Executive Officer
Analysts:
Bhoomika Nair — Analyst
Aniruddha Joshi — Analyst
Harshit Saini — Analyst
Kaushal Sharma — Analyst
Deepali Wani — Analyst
Balasubramanian — Analyst
Subhajit Das — Analyst
Jalaj Manocha — Analyst
Shraddha Kapadia — Analyst
Amit Agicha — Analyst
Rahul Deshmukh — Analyst
Kunal Tokas — Analyst
Unidentified Participant
Presentation:
Operator
Ladies and gentlemen, good day and welcome to the Q3 FY ’25 Earnings Conference Call of Epack Durable Limited hosted by GAM Capital Advisors. 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 Bhoomika Nair from DAM Capital Advisors. Thank you, and over to you, Ms Nair.
Bhoomika Nair — Analyst
Thank you. Yeah. Thanks, Michel. Good evening, everyone, and welcome to the Q3 FY ’25 earnings call of EPAC Durable. We have the management today being represented by Mr Bajang Bothra, Chairman and WholeTime Director; Mr Ajay Singhania, Managing Director and CEO; and Mr Rajesh Mittal, CFO.
At this point, I’ll hand over the floor to Mr Singhania for his initial remarks, post which we’ll open up the floor for Q&A. Thank you, and over to you, sir.
Rajesh Kumar Mittal — Chief Financial Officer
Thank you. Okay. Thank you. This is Rajesh Mittal, just giving the opening remarks. Thank you and a very good afternoon, everybody. Welcome to our earnings conference call to discuss the performance of the 3rd-quarter and year-to-date results of the financial year 2025. Let me first thank you, our host for today’s earnings call, DAM Capital.
Now let me give you some of the key financial highlights for the quarter and period under review. For the 3rd-quarter under review, revenue from operations stood at INR377 crores, which increased by 35% year-on-year. The EBITDA was INR24 crores, which increased by around 1.3% year-on-year with EBITDA margin reported at 6.37%. The net profit was around INR2.5 crores.
Talking about nine months under review, revenue from operations stood at crores, which increased by 71% on a year-on-year basis. The EBITDA was reported at around INR86 crores, which increased by around 41% on a year-on-year basis with the EBITDA margin reported at 5.60%. The net profit was around INR17 crores as compared to around INR8 crores in the nine months ended for the previous financial year, which represents an increase of 132% on a year-on-year basis. The PAT margin stood at 1.14%. Now I would request our Managing Director and CEO, Mr Ajay DD Singhania to brief you on the operational highlights. Over to you, sir, please.
Ajay Singhania — Managing Director and Chief Executive Officer
Yeah. Thank you, Rajesh ji, and once again, good afternoon, everyone. So like shared, we had a strong performance in Q3 FY ’25 with revenue surging 35% year-on-year due to strong industrial tailwinds as well as addition of new customers across all segments. EBITDA grew substantially vis-a-vis previous quarter by 150%, driven by better product mix resulting in higher gross margins.
On a year-on-year basis, the EBITDA growth is lower because of higher costs related to our new facilitated, which has not yet reached optimal utilization. The capacity utilization at City is gradually being ramped-up as we gear up to meet customer demands with enhanced production efficiency to support the growing needs of key customers across multiple product categories.
And as we reach optimal levels of utilization in coming quarters, this plant will contribute considerably well to our margins. For the 3rd-quarter, the product business has contributed 98% of total revenue and revenues from room AC segment contributed 66% of revenue, which has grown by 37% year-on-year. Overall, in last quarter, some key operational highlights where when we laid the foundation of our wholly-owned subsidiary at for which the construction has already begun.
And at this new subsidiary, we are targeting to start production of room ACs around Q3 of the next financial year that is in August, September is what we are targeting to start production for the high sense product. At the same time, we believe that our diversification strategy has definitely helped us in this quarter despite growing at and in RFCs, the overall dependence on RSC has reduced to 66%.
With this, I now open the floor for QA session.
Questions and Answers:
Operator
Thank you very much, sir. We will now begin with the question-and-answer session. Anyone who wishes to ask questions may press star and one on the touchtone phone. If you wish to withdraw yourself from the question queue, you may press star and two. Participants are requested to use only answers 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 Anirud Joshi from ICICI Securities. Please go-ahead.
Aniruddha Joshi
Yeah. Thanks for the opportunity. So sir, just two, three questions from my side. One, we have seen the other expenditure as a percent of net sales has gone up. And as you rightly mentioned about the initial expenses at Shricity new plant. So perhaps that means in light of this, how do we see the margins for the whole of FY ‘256 panning out? And essentially, when do we see the normalization happening at Shricity plant? That is question number-one.
Question number two is, if you can share more details on hence, what are the products that we will be manufacturing and is there any roadmap in, let’s say, two-year, three-year roadmap as far as the production is concerned? That is a second question. Third is the media news flows indicated about in a way high sense of taking a stake also in the area and at the subsidiary level. So any progress on that front as well? Yeah, this is a question mark from my side.
Ajay Singhania
Thanks. Thanks, Anil. So the first question around margins, question, like what we have been or what we have been guiding the market also from the very beginning is that as our — this new solicity facility is getting stabilized and we are seeing quarter-on-quarter improvement in its capacity utilization by end of this calendar year, we definitely see the city facility reaching its normalized caps rate utilization to around 50% from current 15% to 20% utilization.
And for this current fiscal year, we believe that our EBITDA margins would be around 7.25 to 7.5 range, which we have been also guiding previously to the market. So we have — we were targeting to keep the margins somewhere around 7.5% to 7.5% and further normalization of CCT would definitely help us drive margins better in the coming years.
In terms of the high product roadmap, like I started seeing that our construction of facility for AC is already started and we are looking to complete the construction around the end of July and then the testing and everything setup of equipment will take another two months. So by September, we’ll begin — we foresee that we should start the OEM production of air conditions.
At the same time, our washing machine, which is currently being already set-up at is now in the final stages of testing. So washing machine will be rolled-out earlier around Q2 of the next year — financial year and in Q3 AC. And a more detailed roadmap in terms of the other appliances like registers and also what we’ve been talking about are definitely at least two years ahead. So those would be somewhere in FY ’28.
Aniruddha Joshi
Sure, sir. Understood.
Ajay Singhania
In terms of the stake, like I think the clarification was also given a maximum of 26% stake is what is under discussion with in this new wholly-owned subsidiary EPAC manufacturing. So this is currently under discussion and because it is also subject to a lot of regulatory requirements and approval by the Government of India, so is waiting for us to complete the construction of the new facility and by then we will be initiating the process.
Aniruddha Joshi
Okay. Sure, sir. Understood. Understood, sir. And just lastly, one question. Now, how do you see the innovate season panning out and considering the announcements regarding income tax and budget, definitely there is a potential that the consumer discretionary segment should logically benefit like AC or white goods or auto, etc. So where are we — how do we see the — in a way, demand panning out in the coming season? Yeah. Thanks. That was the last question.
Ajay Singhania
In terms of — in terms of our core product, the Room AC segment, the strong demand continues since last nine months or so and even currently also the inventory levels in the trade are much lower or you can see are well within the normalized inventory levels and the demand continues to grow. The order book for the season is extremely good. And with this additional impetus given by the Government of India in terms of additional discretionary in terms, we believe that AC is definitely one segment which will see a lot of better traction. So I think this definitely is a good news for the overall durables and AC especially with the continuing even in Feb, I mean, definitely we are on for a very good time.
Aniruddha Joshi
Okay. And means again there are some indications that there are issues in supply-chain of compressor. So is it largely resolved or we may see some issue in Q4?.
Ajay Singhania
So issues in supply-chain definitely have impacted the industry even in the last quarter. Q3, we had lot of disruptions in the critical raw-material copper, which kind of disrupted the industry. There was no local supply available and the BA’s approval was not given to the Chinese manufacturers. So that definitely impacted the industry.
And currently, the BA’s approval has been given to a few suppliers abroad, which will help us normalize the copper requirement. Compressure is something which is not directly or currently impacting the industry, but definitely June onwards, when a few suppliers lose their BIS certificate unless a renewal is done, that will definitely lead to certain disruptions. So till June, July, we believe that there are no critical disruptions in terms of compression, but yes, copper has already impacted us.
Operator
Oh, okay. So thank you. Thank you. The next question is from the line of Rohit Tiwari from Investors. Please go ahead. Rohit, I have unmuted your line. Please proceed Rohit, we are unable to hear you actually can you please use your handset as the current participant is not answering, we will move on to the next question, which is from the line of Harshit Saini from Summer Wealth Advisors. Please go-ahead.
Harshit Saini
Good afternoon, everyone. So Harshit here from Summer Wealth Advisors. My first question is regarding the sales growth. So, which seems to be quite lower than the previous quarters. We have also seen drop compared to the last quarter. However, one of our competitor has reported strong numbers. So what do you think is the driving difference behind the performance?
Ajay Singhania
And thanks, Ashish. Overall, if we see our nine-month growth only year generation is 83% and in nine months, we have already crossed INR1,550 crores, which is 10% more than the overall 12 months of previous year. So especially in AC, we talk about the company has performed remarkably well by delivering 83% growth on — in last nine months.
And previous quarter also we have grown by 35%. But like I mentioned, there were certain supply-chain disruptions in terms of availability of copper, which not only disrupted us, but also the entire industry, wherein maybe a few coverage from some suppliers might have helped them to sustain, but it definitely impacted us and the whole industry.
Harshit Saini
Okay. And what would be our revenue target for the next year or the next quarter.
Ajay Singhania
And our previous guidance to the market was that we are looking at overall revenue of INR2150 for the 12 months that has been our guidance previously also. So we would like to maintain the same guidance that we are looking to close the year at 250 plus.
Harshit Saini
Okay. And the next year guidance?
Ajay Singhania
We have not shared in next year guidance as of now. So at the right time, we will share the guidance for next year as well.
Harshit Saini
Okay, sir. That’s all from my side. Thank you.
Ajay Singhania
Thanks, Ashit.
Operator
Thank you. We’ll take the next question from the line of Kaushal Sharma from Equinox Capital Ventures. Please go-ahead.
Kaushal Sharma
Hi, sir, am I audible?
Operator
Yes, sir. Please proceed.
Kaushal Sharma
Thank you, sir. Okay. Sir, my question regarding on the compressor side as we see that there is a short supply of the compressor and we can see that we are importing largely from outside India and one of the competitor is also making compressor in their company. So are we planning any manufacturing on the compressor side so that we can also get backward integration over there as well?
Ajay Singhania
Yeah. Thanks. We definitely understand that the current concerns around the supply-chain and specialty compression availability in the long-term. Having said that, we also believe that as we have been meeting regularly with the government agencies, DPIT and a lot of rounds of discussion along with the — with the compression manufacturers has happened.
And the kind of issuances given by the two leading manufacturers, both and GMCC has been that they are going to increase their capacity in India next year and at the same time, two more plants, one from Daiken along with its JV partner, Richi has been also initiated and then LG has also started its production. So we believe that within next 12 to 14 — 18 months, sufficient capacity will be developed within the country to meet the domestic requirement and hence any challenge long-term is not integrated. However, in the short-term, yes, there are some challenges wherein we seek the government’s entire interference to grant further BIS licenses at least for next 12 months. But in the long-run, we don’t see — we don’t foresee much challenge in terms of domestic capability available for compressors.
Especially, one more thing I’d like to highlight here is that definitely last quarter there were some challenges in terms of compression availability as well. The reason was very obvious that China was kind of pushing its exports to especially US market in light of the change in government there and the contemplation that the duties are going to be increased, the import duties from China are going to be increased. So there was a lot of push from China to the US market and that definitely led to a short-term supply shortage to other countries like India. But this quarter, we definitely see that supply shortage is getting normalized and there is no big challenge at least for next two quarters of the peak season for the EC season.
Kaushal Sharma
Okay, sir. Thank you very much for answer. Thanks, question.
Operator
Thank you. A reminder to all the participants to please press star and one to ask questions. The next question is from the line of Dipali from Ventura Enterprises. Please go-ahead.
Deepali Wani
Good afternoon, sir. My first question is regarding, would you be able to provide us a timeline regarding your small domestic appliance and large appliance like has the production begun and what is the capacity utilization of the — of all these products?
Ajay Singhania
Okay. So Dipali in terms of our diversification into newer larger appliances like coolers and washing machines, cooler is something for which we have already ramped-up our production and for the season, we are looking to produce anywhere between 60,000 to 70,000 coolers per month and an annualized number 2.5 lakhs is what we’re looking at in terms of coolers especially.
For washing machine, the lines have been set-up. The trial production has already been completed since the beginning of this of the previous quarter. And currently, we are waiting for a lot of approvals from our client side, which we see that would be granted by end of this quarter. So definitely Q1 should be one — Q1 of next financial year should be the period from where our real mass production should start for washing machine. And therein we are looking to ramp-up our capacity in a phased manner to 100,000 per month-on an annualized capacity of 1 million in the first calendar year of — or the first financial year ’26, ’27, ’26 for the washing machines. Similarly, for the timelines for the small capacity we see.
From our current product portfolio of just mixer grinders and induction cook tops, we are further expanding our product offerings and we are starting air fryers to begin with from the end of next month. So towards mid of March, we should be starting our production for air and then more categories are under addition and we’ll see a lot of newer products coming in Q2 of next financial year.
Your second question on capacity utilization, the annualized capacity utilization for AC for APAC as well as entire industry is around 50% to 55%. That holds true for our — both the older facilities, as well as, whereas for Slicity, the annualized capacity currently stands at around 15% to 20%, which we are now ramping-up and we believe that by end of Q3, we should have — we will touch the normalized levels of 50% capacity utilization for.
Deepali Wani
Yes. Sir, my second question is regarding the working capital requirements. As you previously discussed that the trade receivables were not discounted in the last quarter, are we seeing something like — something similar happening in the coming quarter or in this quarter, did we observe anything like that? And what are our working capital levels like and how are we maintaining our inventory levels?
Ajay Singhania
This working capital requirement actually we are having maintaining around as we quoted in the last-time also around for this December around INR350 crores. And if the requirement comes with respect to the discounting, if business needs, then there will be some — some amount of discounting which we will need because in the month of this March, which is the — which is the major business period for us for the quarter-four, there might be some requirement that we will get the discounted in this quarter-four also. And we will be maintaining this business — this requirement around INR350 crores to INR360 crore.
Bhoomika Nair
Okay. So do you think we will require an additional amount of debt to finance any of our capex requirements or any other additional capacity which we want to ramp-up?
Ajay Singhania
No. No. For capex requirement, there would not be any requirement. You know that we already have some funds which will be utilized in the time to come. As far as the first capex requirement, there is no requirement of any fresh loan. Okay.
Deepali Wani
Do we have any revenue guidance regarding the supply, the BLDC motors that we want to sell from Evapo?
Ajay Singhania
Yeah. So Dipali for our joint-venture company Pago Motors. The new greenfields facility is being set-up at Biwadi, which will be completed by end of Q1 of next financial year. So currently, we are still continuing production at the makeshift facility in Silvasa. So we’ll continue the production at the makeshift facility for another three months of this peak period and then the greenfield facility will be started in Diwadi around end of May or June.
And we are definitely looking to achieve our PLI targets in terms of revenue for the first year of operation and for this new facility. Okay. So that you’re targeting to achieve with a revenue of almost INR150 crores at the new facility for financial year ’25-’26.
Deepali Wani
Okay. My last question would be regarding the PLI scheme. A few companies did get the PLI scheme, which was recently-announced regarding the AC. Did we apply for any additional PLI or initial PLI scheme is only valid for us? And what was the receivable for PLI during this year and how much has been received already?
Ajay Singhania
Okay. So in terms of PLI, 2.2 EPAC did not apply for the — any additional PLI for the — in the new 2.2. We are continuing with our first application of INR300 crores in EPAC IPAC durable and INR50 crores in Ipavo. So we have limited our application to that amount only. In terms of receivable, our last receivable of approx INR30 crores is Expected to be received by end of — before end of March. So technically we — last year also we received it in the month of March. So this year also we are integrating that March should be the time by when we should receive this INR30 crores, which has been accured in the last previous financial year. And this year, we are allowed max PL of INR37.5 crores, of which close to INR21 crores has been accured in the last nine months. INR28 crores has been accured in last nine months.
Deepali Wani
Okay. One another question if you can take it. There was some something regarding QCO on copper and you said that there’s some local manufacturer that has promised you to deliver the QCO copper by December end. Is this still happening or is the production delayed or are we procuring copper from some other source?
Ajay Singhania
Yeah. So in terms of copper, so this is what I was addressing in the previous question also that the domestic manufacturers who had promised to set-up facilities by September, October or before the start of season did not complete their facilities and none of them could start production. So since the entire industry was put at a scenario where the domestic manufacturing capacity was not available and imports were stopped. So that highly disrupted the supply-chain for copper.
Now I mean a few supply imported suppliers — import suppliers have been granted BA, so at least that will provide us relief in the short-term. At the same time, we definitely wish that the domestic suppliers who had been promised to set-up capacities come with it as soon as possible so that we can start sourcing the copper locally.
Deepali Wani
Perfect, sir. Thank you so much. That’s all from my end.
Operator
Thank you. Thank you. You may please press star and one to ask questions at this time. The next question is from the line of Bala Subramanian from Arihant Capital. Please go-ahead.
Balasubramanian
Good evening, sir. Thank you so much for taking my questions. Sir, my first question is regarding RAC side. Is there any approximate revenue breakup for IDU, ODU and WAC and the domestic on the revenue side for nine-month basis? Of these terms.
Ajay Singhania
Yeah. So Spala, our for nine months ended December, we have done a revenue of almost 1,200, right. Yeah, AC is around INR1,200 crores is what we’ve achieved for AC. I hope that answers your question.
Balasubramanian
So I’m asking like percentage terms of ASC itself IDU, ODU and windows air-conditioner domestic aircloud in-person.
Ajay Singhania
I don’t have the number in front of me right now. Hopefully if you can drop-in the line?
Operator
MR. Supramanian, do you have any further questions?
Balasubramanian
Yes, yes, ma’am.
Operator
Sure.
Balasubramanian
My next question, sir, regarding this capex for AC business like around INR240 crores over next three years and like what’s the current status on it?
Ajay Singhania
We have already capitalized INR55 crore in the first-nine months actually and we are on the track as we mentioned last-time that there will be around INR220 crore to INR40 crore investment in next two years. The company has already invested around INR55 crore to INR60 crore in first-nine months.
Balasubramanian
Okay, sir. Okay. Got it. Sir, on the PLA side, how much we have realized as a 900 basis, sir?
Ajay Singhania
Sorry, come again. PLA, PLX. PLI? PLI understood what is the cost amount PLI?
Balasubramanian
Sir, how much till the Nine-Month FY ’23 basis, how much like realized
Ajay Singhania
Total amount would be around INR37 crore out of INR37 crores INR27 crore has been accrued in the first-nine months?
Balasubramanian
Okay, sir. Yeah, thank you, sir.
Operator
Thank you. The next question is from the line of Das from Clover Capital. Please go-ahead.
Subhajit Das
Hi, thank you for the opportunity, sir. Sir, I just wanted to know on the future growth path. So you had some mentioned that our company will be growing by 50% or two, three years down the line. So are we on-track on the bottom-line and the top-line? So how do you foresee, sir?
Ajay Singhania
Okay. So thanks, Subhajit. I don’t recall having mentioned anywhere that we will be growing at 50% over next three to four years. And but definitely we said that for this current financial year, ’24 to ’25, we had mentioned a 50% plus growth and we are on-target to achieve that growth. Having already grown at 77% in the last nine months, I think our projection in terms of the current financial year holds good that will surpass our initial target of 50% plus growth.
Subhajit Das
Okay, sir. And one more thing, sir, are we — are we also doing something to enhance our PAT margin, which is about 1.1% 1% in future?
Ajay Singhania
Yes, right., see, enhancing PET margin, I think we already started addressing that the current PAT dent in the PAT has definitely been because of the increased expenses of the newer. And as our utilization of this facility improves in the coming quarters, we will definitely see a better improvement in the PAT and overall margins as well.
So definitely, the company is working on improving the PAT margins and as we improve our utilizations and at the same time, the diversification journey which we started six months ago is definitely paying us that our product diversification and the overall product mix is helping us further improve the overall patent margins.
So like the last quarter, we see that our dependence on EC AC despite growing at 37% has come down to 66%. So this in itself is an indication that we are also growing well with our other areas like the components and the small appliances and also the large appliances. So each of the levers which we have put in-place have started firing and we definitely see that with all these combinations, we will be able to enhance our pipe further in the coming quarters.
Subhajit Das
So have you kept any ballpark figure for that in the future?
Ajay Singhania
So revenue guidance I’ve definitely shared with everybody.
Subhajit Das
No, I’m talking about the PAT margins are like had any ballparks these are in mind or in your calculation from 1.1% to somewhere in future.
Ajay Singhania
If you see, if you see last nine months also, we were having around 1% for the first-nine months of Apple to Apple basis practically. And if you see the business in-quarter four is better than the — because the seasonal industry, you can compare the numbers which we have already declared with the stock exchanges, you have the annual reports also with us with you. You can compare the number on quarter-on-quarter basis, it will give you a better idea.
So actually,, we are not sharing any forward-looking numbers over any of the calls. We have only shared the numbers in terms of revenue. In terms of PAT guidance, till-date, we have not shared any guidance on the PAT numbers and we definitely curtail ourselves from sharing any such numbers. Okay, sir. And sir, one more last question is like —
Operator
How are you doing Sadas, I would request you to rejoin the queue for follow-up questions, please. There are others waiting. Thank you, sir. We’ll take the next question from the line of Jalaj from Swan Investments. Please go-ahead.
Jalaj Manocha
Yeah. I hope I’m audible.
Operator
Yes, sir. Please proceed.
Jalaj Manocha
Yeah. First of all, thanks for the opportunity and congrats on a decent set of numbers specifically on the margins. So I have a few questions. First of all being, I just wanted to understand what explains this thing partially, I do understand that the gross margins have improved over the sequentially over the quarter. But if you could give some some paint to it as to what is the reason behind — exact reason behind the improvement in gross margins and the EBITDA margins?
Ajay Singhania
Okay. So Jalesh, in terms of the improvement in gross margin, like I shared earlier, our — in the previous quarter, our dependence on AC was somewhere around 77%, which has come down to 66%. So this means that our overall product mix in this Q3 has helped us get better margins, especially if I say that our compound is something which has grown almost fourfold from Q2 to Q3. So that definitely something which is driving our both improvement in margin as well as the overall EBITDA margins as compared to Q2. So our diversification strategy definitely we see is helping us improve our overall gross margins.
Jalaj Manocha
Got it. Understood. And sir, this is a little more long-term question, understanding of the business and how we are seeing. So let’s assume two years, three years down the line, how do we see the business shaping up moving away from the RSC industry per se or RSE share because I understand RSE in itself for contract manufacturers is growing decent at, 15% 20% or even north of that. So how do we see — what would a revenue mix or in which direction are we Moving the business how are you seeing that thing happening? Three years, maybe two years, three years down the line, I’m not asking for any guidance, much more from a perspective.
Ajay Singhania
Yeah, understood. Understood. So, especially RAC definitely is now growing — the market is growing at anywhere between 18% to 20% is the kind of growth the market has started talking about in the near, medium-term for next three to four years. And we at EPAC definitely see that we will outgrow this number and we will grow at a much better percentage in terms of AC, RAC sales. Despite growing at, let’s say, above the market growth of 20% in AC.
We believe that our overall dependence on AC on an annualized basis will come down from 80% to somewhere around 60% 65% in next two to three years, which essentially means that our small appliances, the new segment of larger appliances like washing machines and coolest as well as component business is deemed to grow at a much faster rate. So this overall diversification of product mix will help us achieve both enhanced margins as well as also improve our overall capacity utilization in a 12-month period.
So that’s the overall strategy on which the company is working in a medium-term basis if you talk about.
Jalaj Manocha
Got it. And one last question. Quickly, on what sort of target ROC profile or ROE profile do we target, let’s assume we reach to a peak capacity utilization onto our CCP plant and otherwise, what directionally do we see as a peak ROCE or an ROE profile for the business?
Ajay Singhania
The current capacity utilization on an annualized basis for RAC limits us to anywhere between 50% to 55%. In recent few years, we have seen that the seasonality is improving or the demand also coming in the non-season of typical AC for AC. So going-forward, we definitely are working to improve our RAC utilization from 60%, 65% in near short — medium-term, let’s say, three to four years as the market is maturing. So that is where we see the utilizations for?
Jalaj Manocha
So I meant more from a ROC profile. I — what I meant was a return — return on capital employed for the business, basically the — basically in terms of the — what we have invested capital, I guess we sit on a capital base of almost INR53 crores — yeah, INR530 crores on the plant and equipment and there would be some sort of working capital also invested in the business. So I meant what sort of returns are we expecting on that, more from an IRR perspective or an ROE ROCE perspective.
Ajay Singhania
So in terms of ROE, ROCE, we are looking at anywhere around 15% to 16% in the next two to three years. So FY ’27, ’28 onwards, we definitely believe that we’ll be able to improve the ROE to 15% plus level.
Rajesh Kumar Mittal
The reason is that because as of now, the capacity as already mentioned, capacity has not been utilized completely in the fruits in the coming years.
Jalaj Manocha
Got it. And one last question, if I may squeeze in. So sir, this is per se with regards to the 50% 55% capacity utilization you mentioned for RSE. So as a conceptually, I wanted to understand, is there a possibility of fungibility of the RSE capacities being used for other components or other — let’s assume the same line being used for a washing machine or a deep cooler freezer, is there a possibility? Because as a contract manufacturer, that is what differentiates us from a pure-play brand who has an OEM who doesn’t have a much more product portfolio that way?
Ajay Singhania
Yeah. Absolutely., we agree with you. And I think this is one area where we are working and when I see that we will improve our overall utilization from 50-55 to 65 plus, that’s the whole idea that most of the manufacturing capability is fungible and can be utilized for similar other larger appliances like washing machines and coolers and et-cetera. And this is the direction we have taken. So like the impact we can see in the previous quarter also, the more we balance our capacities by adding other appliances, we definitely see the impact coming on the margins and the overall return matrices as well.
Jalaj Manocha
Got it. Thanks a lot and best of luck.
Ajay Singhania
Thank you so much.
Operator
Thank you. We’ll take the next question from the line of Bumika Nair from GAM Capital Advisors. Please go-ahead.
Bhoomika Nair
Yes, sir. Sir, just wanted to understand how our component revenues are scaling up and how do you see that kind of first-in the nine months, how much it has contributed? And which areas you’re seeing brands kind of sourcing from us and how do you see that scaling up over the next couple of years?
Ajay Singhania
And for nine months ended period, our component steel stands at almost 6% of the total revenue and for the previous quarter, Q3, it was almost 14%. So that’s in percentage terms. And in revenue terms, it is currently close to around INR90 crores, which we believe we should ramp it up to at least INR190 crores to INR200 crores for this entire calendar year for this entire financial year. That’s the number we are looking at.
And the major components we see being outsourced by the brands are especially like cross-low fan, copper tubular powers and controllers. So all these three major components, which are both high-value as well as category components are something in which EPAC has been getting business from all the brand customers.
Bhoomika Nair
Okay. Okay, got it, got it. And we are seeing a lot of brands kind of coming and certifying and lifting material from us from this component business per se. So this can definitely grow faster than the finished good part of it. Components will probably grow at a faster pace. Sir, over the next one or two years, where do you see the contribution from that broadly about a 10% level moving over the next two, three years?
Ajay Singhania
So, like I shared in all we are looking that AC from 80% will come down to 65% in the growth phase. So compound is definitely from 4% in the last year, currently at almost 6% and then up to 12% to 15% is definitely one number we are looking at in the medium-term in next two to three years.
Bhoomika Nair
Sure, sure. Sir, the other area is on exports. I know it’s very small right now, but you know-how is that demand kind of scaling up any outlook in terms of that business?
Ajay Singhania
So exports definitely for us has grown substantially in this current financial year as well as last year from 4% — currently it is 4% of the overall revenue in AC. So exports contribute almost 4% of the total AC revenue, which used to be typically 1% or 2% in the previous year. So it has already grown by 200% in this current year. And going-forward, we definitely see much better growth in ECs as our own manufacturing is helping us drive a lot of cost leadership as compared to China. So within next three to four years, we see a much larger and rapid growth in export as well.
Bhoomika Nair
Sure, sure.
Ajay Singhania
The current financial, it is nine months ended period, it’s already 4% of the total AC revenue.
Bhoomika Nair
Got it. Got it, got it. Got it. It. And lastly, sir, if I may just have the gross debt and the net-debt numbers, net cash numbers.
Rajesh Kumar Mittal
Yeah,, this if you see the total debt as of today in the books is around 490 crores
Bhoomika Nair
Okay and cash book
Rajesh Kumar Mittal
Cash-and-cash equivalent is not much. It is around INR13 crore around.
Bhoomika Nair
Okay.
Rajesh Kumar Mittal
That is crore. INR480 crore, around INR78 crore is the net-debt numbers.
Bhoomika Nair
Understood. Understood. Fair point. Sir, I’ll come back-in the queue. Thank you.
Operator
Thank you. The next question is from the line of Shraddha Kapadia from Share India. Please go-ahead.
Shraddha Kapadia
Thank you so much for the opportunity and congratulations on the good set of numbers. So basically, my question was on the capacity utilization. If you could provide the capacity utilization for all your manufacturing facilities which is there? And also a brief idea for the capacity utilization for your products, mainly RAC and components?
Ajay Singhania
Thanks. So the capacity utilization like I shared in the previous question also, both for Dehradun and Biwadi, it has been close to 55% to 60%. So for AC as a whole, the plant as a whole has been 50% to 60%, whereas Suicity is something which definitely is a concern for us currently and it stands at 15% to 20%. And this is one area we see that will help at least in Q4, we should see a better utilization of and going-forward in next three to four quarters, we believe that we will achieve a similar utilization what we are achieving at and Blue and annualized basis at as well.
Shraddha Kapadia
Okay. Sir, could you provide for product-wise for and the components,
Ajay Singhania
The product-wise utilization actually because this is a mix of the manufacturing facilities. So since we are not reporting numbers on a segmental basis and the manufacturing capacities are fungible. So they are not aligned except heat exchanger, everything is fungible. Hence the utilization is on an overall basis only currently.
Shraddha Kapadia
Okay, sir. Okay, sure. Thank you so much for taking my question. Thank you.
Ajay Singhania
Thanks. Thanks
Operator
We’ll take the next question from the line of Amit from Hawa. Please go-ahead.
Amit Agicha
Good afternoon, sir. Am I audible?
Operator
Yes.
Ajay Singhania
Yeah.
Amit Agicha
Thank you. Thank you for the opportunity and congratulations, sir. Sir, my question was with respect to the employees. Like what is the current workforce size and are there any plans to increase hiring? And is there a skilling and development program in-place for employees, particularly in research and development and manufacturing?
Ajay Singhania
The number of employees is around 800 in terms of white-collar. Okay. Total number of employees in white-collar currently is around 800. And in blue-collar because it is seasonal, so we have a lot of contractual workers joining us on a seasonal basis as and when required. So that exact number is going to be there with me handy. In terms of skill development, yes, especially for skill development, both in terms of the manufacturing skill as well as R&D is something for which we were highly committed and where we focus a lot.
So like in manufacturing, we have special skilling centers and brazer training centers, razor schools and all those things, I mean, which are like the best practices in the industry. We are already doing it. In R&D, our current trend stands at around 80 people, so which is almost like 10% of the total white-collar manpower what we have and it has been growing rapidly since last two to three years. So R&D manpower or focus on R&D is very-high for us and this is what makes us stand-out as 100% ODM for ACs.
Amit Agicha
And sir, what is the total proportion or percentage of the revenue which is being spent on research and development?
Ajay Singhania
And the percentage of revenue won’t be significant here because we are an OEM ODM manufacturer for us, I think it is more important to look at our R&D expense in terms of the total employee cost, so which currently spends at around 15% to 17% of the overall employee costs.
Amit Agicha
15% to 17% of the overall employee cost
Ajay Singhania
Is our spend in R&D. Hello.
Amit Agicha
Thank you, sir. And all the best for the future.
Ajay Singhania
Thank you so much.
Operator
Thank you. A request to all the participants kindly limit your questions to two per participant. Should you have a follow-up question, please rejoin the queue. We’ll take the next question from the line of Rahul from LKP Securities. Please go-ahead.
Rahul Deshmukh
Hello, sir. Thank you for the opportunity. I just wanted to know the bifurcation of debt. How much is current debt out of 490 CR? And my second question is that how we are going to fund the working capital for the high sense production. So do we have enough internal accruals or are we going to raise any short current debt?
Rajesh Kumar Mittal
Yeah. This — out of this INR490 crore, I will say that because this is mainly the working capital and the term-loan is around INR60 crore to INR70 crore only. So major amount is the — because of the working capital requirement, which is the cash credit and the bill discounting amount. The INR400 will be the current amount as. And as far as the second question is concerned, there is no such requirement to raise any further term-loan and because we already have the funds with us available for the further expansion, which will be utilized for the capex.
Rahul Deshmukh
Okay. And I just wanted to know the contribution from RAC for the quarter three of FY 2024. Sales contribution.
Ajay Singhania
Sales contribution for
Rahul Deshmukh
RDC contribution.
Ajay Singhania
The sales contribution of RAC was 66% of the total revenue of INR370 crores for this Q3
Rahul Deshmukh
And for the Q3 of FY ’24.
Ajay Singhania
FY ’24, FY ’23 FY ’24 AC was about 65%. 65%.
Rahul Deshmukh
Okay. Thanks. Thank you, sir.
Operator
Thank you. The next question is from the line of Kunal Tokas from Fairvalue Capital. Please go-ahead.
Kunal Tokas
Hello, am I audible?
Operator
Yes, sir, please.
Kunal Tokas
Yes. Okay. If this question has already been asked and I’m sorry because I was a little late to the call. But my question is about the water — washing machine industry. And specifically, if you can share of the overall industry, how much volume is outsourced versus a made by the OEMs themselves and what sort of trade-offs happen here? Because we have seen strong outsourcing momentum in air-conditioners. Can a similar can be expected in washing machines.
Ajay Singhania
Thanks, Rahul. So it’s washing machine segment, if we see, today the overall market size of washing machine is around 14 million, of which 45% is semi-automatic by value and 55% is fully automatic. Of this fully automatic, there are two types, the top-load and the front-load. Top-load is something which is currently almost manufactured in India and front-load is something which is essentially imported.
There are only few manufacturers which produce front-load. So — and there has been almost 8% to 10% CAGR in washing machines in last four to five years and it has — the growth has been mainly driven by the fully automatic segment of top-load and front-load both. And this is one area where APAC has invested currently. So we are starting production with the fully automatic topload machines, 8, nine, 10 KGs and then also we are launched coming up with other platforms. So our entire range of platforms will be ready by end of June for the topload fully automatic machines.
And then at the same time, we have also decided to get into the semi-automatic machines because like you said, semi-automatic is something which currently is an OEM ODM — ODM-driven product and we see a good growth even in this segment and as the brands are not increasing their own in-house capacities, the dependence on OEMs and ODMs is increasing and which is kind of replicating the growth in RACs as you rightly mentioned. So definitely, the growth prospects for washing machine is very-high.
And for us, the best thing is our manufacturing facilities are fungible and can be utilized similarly for washing machine, which kind of also helps us beat the seasonality of AC. So this definitely is one-product where we see a lot of growth and helping us drive continuous growth and better utilization.
Kunal Tokas
Okay, and another question I had was are there significant synergy opportunities for making washing machines as well? Like you said, your facilities are fungible.
Ajay Singhania
Yeah. Sure. And yeah. So Kunal, definitely there are a lot of synergies in terms of manufacturing, like I shared earlier also, the facilities are fungible. And only as a thumb-rule, I’ll say that the manufacturing infrastructure required for one indoor unit of an AC is almost equal to the infrastructure required for making one desert cooler or one washing machine. So it is a highly coke — this is a high-level of synergy between the manufacturing capability required.
Kunal Tokas
Okay. Understood, sir. Thank you very much.
Ajay Singhania
Thank you. Thanks a lot.
Operator
We’ll take the next question from the line of Dipali from Ventura Enterprises. Please go-ahead.
Deepali Wani
So thank you for taking my question again. I want to know your opinion about why we are not able to have the expected capacity utilization from the Siricity plant because I think initially we were expecting higher levels for this quarter, which we were not able to achieve due to some reason. Can you explain what reasons can be behind this?
Ajay Singhania
Yeah. So the 3 City is a facility we started in Jan of ’24. It’s a 12 month-old facility and already we have brought up the utilization to almost 17% 18% on an annualized basis. So — and a lot of larger customers, brands take a lot of time to validate a facility and approve. So we — it takes three to four months for us to get the approvals from the brand customers for a newer facility.
Hence this has been slightly delayed, but then we are on-track to utilize it in the current quarter, wherein we believe that utilization will significantly improve. And as we get further approval from other brand customers, not only for RS but also small domestic appliances line which are currently being set-up at City, we believe that utilizations will significantly improve in next two to 3/4.
Deepali Wani
So we actually require new approvals from our regular clients again for the City plant as well.
Ajay Singhania
Every new facility — every new facility is subject to audit and approval by the clients.
Deepali Wani
Okay. So that you think is taking a little longer-than-expected?
Bhoomika Nair
Yes, it should — but now, I mean as we have entered the current high season time, it’s already-approved by most of the key customers.
Deepali Wani
All right. Would you able to comment on the realization per EC or how much do we earn from one AC? Would you be able to share that?
Ajay Singhania
Okay. At the gross margin level, certain thumb rules or ballpark figures I can definitely share since we are not reporting numbers on segment basis. But yes, RST as a whole is something which has the lowest metal margin. So like our current annualized metal margins are around 14.5% to 15%, that’s a better reflection of the AC margins, gross margins , whereas the metal margins for components and the small domestic appliances are significantly better. So that’s a broad guidelines — guidance I can give you.
Deepali Wani
All right. Did we observe any depreciation of the rupee effect on our margins as well during this quarter?
Ajay Singhania
No, no. Last quarter there was no loss on account of rupee depreciation. Yeah. For us, see, there is more commodities as well as the exchange rate or something which are passed-through in terms of our price revision with the customers on a quarterly basis. So generally, the impact is not significant for us as a whole.
Deepali Wani
Got it. Would you be able to share the gross block numbers and what is the current asset to turnover ratio? Projected, sorry, asset.
Rajesh Kumar Mittal
The gross book as of today is around INR850 crores, okay. And the turnover ratio actually it will annualize this to be 2.75% to 2% more in the time to come. Yes.
Ajay Singhania
And definitely, I mean, we mean we are looking to improve this asset turnover like we have been repeatedly saying about new product mix and better gets rate to clinicians. So we are definitely looking to improve the asset turn as we move forward.
Deepali Wani
Thank you. That’s it from my end.
Operator
Thank you. The next question is from the line of Sudan Sidiki from GS7 Security and Trading Private Limited. Please go-ahead.
Unidentified Participant
Hello, sir. Good afternoon. Sir, I just wanted to know the current financial year EBITDA margin and like is there any chance that we will be able to increase our EBITDA margins, let’s say, two to three years in the double-digit
Ajay Singhania
Current EBITDA margin for the Nine-Month ended period is 5.6% and historically, we have been maintaining a material margin of 7.5% to 8% and EBITDA margin. Yeah, EBITDA margin of 7.5% to 8% is what we have been maintaining historically since last two to three years. And like I shared, our guidance remains that for this year also, we should be able to maintain anything between 7.25% to 5%.
And going-forward, as we change our product mix and revenue mix, definitely there is scope to improve. But double-digit is something that we have not shared and we are not giving any guidance on that. But yes, we definitely look to improve it beyond 7.5% in coming two to three years.
Unidentified Participant
Okay. Okay. Thank you so much and best of luck. Thank you.
Ajay Singhania
Thank you, Mr.
Operator
Thank you. The next question is from the line of Jalaj from Swan Investments. Please go-ahead.
Jalaj Manocha
Thanks for the opportunity again. Sir, two quick questions. So you mentioned that the gross block currently is around INR850 crores. So what is the sort of peak revenues we can flock on this, assuming the seasonality and everything? That was first question. And second I had was I wanted to understand the — the unit economics across washing machine, if you could give some broad numbers on that? Thank you.
Ajay Singhania
Okay. So Jalej, the peak revenue for our kind of industry with so much of investment in manufacturing is anywhere between 3 to 3.5 kind of — so with INR850, we can see that anywhere between INR2,800 crore to INR32 crores is an ideal or a max limited revenue possible. Yeah. And second question was around.
Jalaj Manocha
Second question was, I wanted to understand the unit economics, the asset turns and specifically margins on the washing machine business.
Ajay Singhania
See, now for that, like I shared earlier, it is about fungibility. So all this we are doing to improve our asset turn. So with AC, the highest limit of asset tend possible is around 2.5 to 3%. So with by addition of washing machines and then utilizing the capacities in the offtake season, we are working to achieve an asset turn of 3.5 to 4% kind of, which is what we are striving to achieve in next two to three years.
Jalaj Manocha
And the margins in washing.
Ajay Singhania
So overall, the gross margins for a larger product like washing machine is generally similar to debt of an EC. So again, this would be a broader, but yes, 15% to 16% kind of a gross margin is definitely something which can be achieved even for a washing machine.
Jalaj Manocha
Got it. Thank you.
Operator
Thank you. The next question is from the line of Mayan Kapoor, an Individual Investor. Please go-ahead.
Unidentified Participant
Thank you, ma’am. My questions have already been answered. Thank you sir.
Ajay Singhania
Thank you.
Operator
Thanks,. We’ll take the next question from the line of Sarveshwara Sharma, an Individual Investor. Please go-ahead.
Unidentified Participant
Thank you, ma’am. Am I audible?
Operator
Yes, sir, please proceed.
Unidentified Participant
Yeah. Sir, regarding the AC, what percent of compressor was also AC sir? And are the ACs or in India or imported? And my second question will be, do you have any plan to manufacture these compressor in the future? Okay.
Ajay Singhania
So Mr Vishura, the compression value of the total bill of material cost for an EC is anywhere between 25% to 30%, that’s the value of a compressor in an AC. And currently, for India, 40% to 45% of compressors are manufactured domestically and 55% of the compressors are imported from China or other countries. In terms of EPAC getting into manufacturing of compressors for AC especially if I talk about there is no plant currently for us within next three to four years is definitely not what we are looking at.
Unidentified Participant
Okay. Thank you, sir. All the best.
Operator
Thank you. Ladies and gentlemen, as there are no further questions from the participants, I now hand the conference over to Ms for closing comments. Over to you, ma’am.
Bhoomika Nair
Yeah. I would just like to thank all the participants for being on the call and particularly to the management for giving us an opportunity to host and answering all the queries. So thank you very much, sir, and wishing you all the very best.
Ajay Singhania
Thanks, Rumika. So thanks all participants in this earnings call. I hope we have been able to answer your questions satisfactorily. If you have further questions or would like to know more about the company, please reach-out to our IR Managers at Valorem Advisors or any of the numbers mentioned on our website? Thanks a lot.
Rajesh Kumar Mittal
Thank you.
Operator
Thank you, members of the management. On behalf of DAM Capital Advisors, that concludes this conference. We thank you for joining us and you may now disconnect your lines. Thank you