IFB Industries Limited (NSE: IFBIND) Q3 2026 Earnings Call dated Feb. 04, 2026
Corporate Participants:
Unidentified Speaker
Soumitra Goswami — Chief Financial Officer
Kartik Muchandi — Head, Finance & Accounts and HAD, Marketing
RANJAN MOHAN — NATIONAL SALES HEAD, HOME APPLIANCES
C. S. GOVINDARAJ — EXECUTIVE DIRECTOR, MANUFACTURING, HOME APPLIANCES DIVISION
NARAYANAN — MANAGING DIRECTOR, ENGINEERING DIVISION
BIKRAMJIT NAG — CHAIRMAN
JAYANTA CHANDA — CHIEF FINANCIAL OFFICER, ENGINEERING DIVISION
Analysts:
Unidentified Participant
Lakshminarayanan — Analyst
SHREYANSH JAIN — Analyst
Naveen Baid — Analyst
Presentation:
operator
Ladies and gentlemen, Good day and welcome to IFB Industries Limited Q3FY26 earnings conference call hosted by Nirmal Bank Equities. 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. This conference call may contain forward looking statements about the company which are based on the beliefs, opinions and expectations of the company as on date of this call.
These statements are not guarantees of future performance and involve risks and uncertainties that are difficult to predict. I now hand the conference over to Ms. Arisha Khosla from Nirmal Bank Equities. Thank you. And over to you ma’. Am.
Unidentified Speaker
Thank you. Bhumi I Arshia Khosla, on behalf of Nirmal Bank Institutional equities welcome you all to the third quarter FY26 earnings call of IFB Industries Limited. From the management today we have Mr. Bikramjit Nag, Chairman. Mr. P.H. narayanan, M.D. engineering Division. Mr. C.S. govindraj, ED Manufacturing. Mr. Sumitra Goswami, CFO. Mr. Jayant Chandar, CFO Engineering. Mr. Karthik, Head Finance and Accounts and Mr.
Ranjan Mohan, National Sales Head Home Appliances. I would now request the management to give their opening remarks post which we shall open the floor for Q and A. Thank you. And over to you sir.
Soumitra Goswami — Chief Financial Officer
Good afternoon everybody. I am Soumitra Goshami, the Chief financial officer of IFB Industries Limited. I welcome you all for IFB Industries Limited investors call for third quarter Indian failure FY 2526. Now I’ll be informing you about the quarter. Revenue for the quarter was 1382 crore in its last year 1232 crore which is a growth of 12%. TBDIT for the period was 18.9 crore and its percentage to revenue was 5.8%. As compared to last year 89.6 crore which was 7.3% on revenue there is a decline in pvdit amount by 8.7 crore which is a decrease over last year by 9.8%.
Fixed expenditure for the quarter were well behind budget. However in case of some expenditure head expenditure increased over last year. Pvt. For the period is 45.3 crore which is 3.3% on revenue against last year’s figure of 44.9 Kuru. In this quarter an incremental liability of 13.38 crore has been recognized. As an exceptional item. This is in line with Labor Code notified by the Government of India on 21st of November 2025. This charge reduced the PBT amount to reach 31.9 crore in its last year 44.9 crore. Q3 PAT was 24.51 crore which is 1.8% on revenue against last year rupees 34.436 which is 2.8% on revenue.
YPD December figures are like this. Revenue for that period was 4020 crore against last year 3666 crore which is a growth of 10%. TBDIT for that period was 253.35 crore and its percentage to revenue is 6.3% as compared to last year 255.22 crore which was 6.9% on revenue. Fixed expenditures of the quarter were well within budget. However, in case of some expenditure like service expenditure, CSR cost office expenditure expenditure increased over last year. PBC before exceptional item for the period was 147.5 crore crore which is 3.7% on revenue against last year’s 141.92 crore which is 3.9% on revenue.
PBP after exceptional item for the period was 134.14 crore which is 3.3% on revenue against last year 141.92 crore Tax for a nine month period was 99.62 crore which is 2.5% on revenue against last year 106.50 crore which is 2.9% on revenue. With this I will be requesting to start the question and answer session.
Questions and Answers:
operator
Thank you very much. We’ll now begin the question and answer session. Anyone who wishes to ask a question may press Star and one on their touchstone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Our first question comes from the line of Lakshmi Narayanan K from Tunga Investments. Please go ahead.
Lakshminarayanan
With respect to the appliances division, it was mentioned that there was a cost benefits that actually had to come in. But if I actually look at it a nine month basis that doesn’t show up in terms of your year on year growth in pbd, IT or even pbt. Can you just explain if you know the cost benefit has come where exactly it has actually gone?
Kartik Muchandi
Yeah, Karthik here from Appliance division, the Cost Innovation what has come in PNDL on a YTD basis was 35 crore. But what has happened is during the same period Forex has depreciated by around 6%. The impact of that on material cost was 29 crore negative. Also the commodity mainly copper and GP has increased. So this negative impact was another 18 crore. So this negative impact in commodity and Forex has eaten into the cost innovation.
Lakshminarayanan
So is there a way in which we normally do some hedging or because I thought we would hedge it prudently or why would this Forex launch happen?
Kartik Muchandi
Yeah, hedging. We have a hedging policy where we hedge 100% of the forex exposure against the underlying. Okay, but this Forex negative is with respect to last year. Last year dollar was around 86 and this year our average buy is a dollar around 89. So that 6% negative impact is increasing the metal.
Lakshminarayanan
In other words, 18 crores would have is an exceptional item for Q3. Is that a way to think?
Kartik Muchandi
Sorry, can you please repeat the question?
Lakshminarayanan
You talked about 18 crores of forex and the copper related stuff. Right. So that is only in Q3 it happened or it is actually nine months. It’s actually it spills over to 2/4 of new crops.
Kartik Muchandi
Yeah, I’ll again repeat this impact was for the year YTD. So 80 again I’ll repeat. 29 crore is the impact of forex and 18 crore is the impact of commodity. So forex is still at an elevated level. If you see dollar is still around 90 and commodity like copper is bridged 12,000. So this impact will. We cannot predict the currency and commodity. But as of now this impact is.
Lakshminarayanan
That’s the case. Do you think this will continue for how many quarters this issue will be left? Hello.
Kartik Muchandi
Yeah, sorry, can you please.
Lakshminarayanan
My question is that for how many more quarters you will. Whether this will continue in Q4 or this will also continue in Q1 of next year. Like how are you thinking about it?
Kartik Muchandi
Yeah, as of now a commodity is at this level.
Lakshminarayanan
No, my question is that for the full year you have any kind of a number in mind in terms of what would be this impact of Forex and the other one you talked about? Right. So is it 28 plus 19 crores for the full year how much you think it would be or whether it would actually put right after the Q4?
Kartik Muchandi
Yeah, we cannot, we will not be able to give forward statement in terms of what will be the impact for next quarter. SRS dollar and currency will be there.
Lakshminarayanan
My question is slightly different this is actually behind us or this will continue. I mean I’m not asking for quantification also. But you think this will continue?
Kartik Muchandi
If you look at January, the rupee except the last two days it has again appreciated but rupee was still around 90 and copper was in excess of 12,000 LME. So there was not much change in January with respect to quarter three.
Lakshminarayanan
So the cost benefit which is actually mentioned with the Marshall, that will continue, that is on track and that will happen in Q3 and Q4 and in addition to it there are some other costs, some variable cost reduction was also there. Can you just explain how much it is and when you will actually start getting the benefits of that? And then also last call you had mentioned that there was a McKinsey project that is going on in terms of improving our E commerce channel. Can you just let me know what is the total outlay of cost you have given for that particular project and what will be the, what will be the total benefit you will get from that initiative also?
Kartik Muchandi
Yeah, as far as the material cost project with A and M is concerned, so in the first quarter we had cost 4 crores. Second quarter 12 crore. Third quarter 19 we are expecting 44 crores. So we are expecting to close the year with a material cost reduction of 79 crores. And as far as A and M project is concerned in quarter four we have got the expected increase in E Commerce sale what we had projected though we will not be in a position to give the numbers. Sorry. As far as is concerned the growth in E Commerce project is in line with what we had expected.
Lakshminarayanan
And what is the cost outlay for that McKinsey project you have like what is the number you would like to spend on the project?
Kartik Muchandi
Sorry, we will not be able to disclose the commercial terms with McKinsey.
Lakshminarayanan
Another question is related to the gross margin for the appliance situation. While you actually give the PBD itd, Can you just elaborate what has been the gross margins of this particular thing? Nine months as a percentage term, nine months of last year.
Kartik Muchandi
No, sorry sir, we don’t give gross margin indication.
Lakshminarayanan
Not. I mean I’m just saying not the indication but what has actually happened.
Kartik Muchandi
No, no, no sir, we don’t give the gross margin.
Lakshminarayanan
That will help us to understand whether, I mean what kind of material benefit it has come because all the things that are taken place comes after that. Right, so that’s the reason of asking this question. It will be helpful if maybe for the, for the, for the benefit of all the investors you can use this information. In exit is a profit. So another question is that what are, what is the number of units of. Of washing machine you have sold and what, what is the market share in front load, top load and in air conditioners? Can you give the market share numbers?
RANJAN MOHAN
Yeah.
So this is Ranjan. The market share in terms of front load addressable market share is touching around 25% plus. And in, in top loader it is. It was 9.6 or 10%.
Lakshminarayanan
And with respect to the last year how much was it like? Have we increased market share?
RANJAN MOHAN
So in front loader there has been. I’ll not say substantial but there has been a good increase in market share. And in front load it is almost. At par, a slight increase.
Lakshminarayanan
And in terms of number of units, can you just give the number of units made in fy?
RANJAN MOHAN
Sorry we don’t give the numbers. I’ve shared the share with you.
Lakshminarayanan
What is the, what is the market? What is the. Do we have enough capacity on both washing machines, the front load and top floors Going forward as the growth comes in, do we have enough capacity or how much more is available for us?
C. S. GOVINDARAJ
Hello. Yeah, I can answer this. This is Gohindra here. As far as capacity for front loader is concerned we have got capacity about. 85 to 90,000 and we have used about 88%. So still we have got enough capacity to meet the market needs. Similarly in top loader we have got a capacity of about 65,000. There also we are operating at around. 90% in the peak months. So we have got enough capacity and we have already started working on how to increase the capacity.
Lakshminarayanan
Can you see the market share and this number for AP also market share as well as capacity utilization.
C. S. GOVINDARAJ
As far as AC capacity utilization is concerned we are in the peak month, we are touching about 80 to 85%. And as far as market share. Ranjan, can you please answer?
RANJAN MOHAN
Yeah please. So although there has been a growth in AC volumes, our share is right now very low which is around 3. 3.5%.
Lakshminarayanan
Okay, thank you. I will come back in.
operator
Thank you. Our next question is from the line of Shayans. Jen from Swan Investments. Please go ahead.
SHREYANSH JAIN
Hello. Hello, can you hear me?
operator
Go ahead with your question.
SHREYANSH JAIN
So my first question is how are you looking at the whole washing machine growth rates for us? You know, because last few quarters had been weak and we were hopeful of gaining market share. And obviously top load as a category was something that we had just recently. Not recently but we had entered quite late. And that category we were given to understand that for us will be a high growth category. So in that sense how do you look at 5% growth rate in top load? And our channel check also suggests that you would have lost some market share in the offline market at least on the front load washing machines.
So what are your comments on this?
RANJAN MOHAN
Yeah, first of all I don’t know from where you got this information that the growth is 5%, the growth is much more. And I shared just now the kind. Of market share
SHREYANSH JAIN
given in your invest presentation. Sir.
RANJAN MOHAN
No, that is you are talking about the quarter. I was talking about the yt. Ah, so I was talking about the YTD growth. I was talking.
SHREYANSH JAIN
I’m just talking about the quarter specific.
RANJAN MOHAN
So quarter, quarter. Overall the industry was a bit sluggish. We have been able to maintain our share. Rather a slight improvement in some decimals was there in top loader also. But on YTD basis there has been an increase both in terms of growth as well as in terms of share also.
SHREYANSH JAIN
Okay, so when you look at some of the other players who had entered the market much later than us, they have reached about 10% market share in washing machines. So just in light of that we.
RANJAN MOHAN
Are talking about top loaders
SHREYANSH JAIN
washing machines overall. Washing machines.
RANJAN MOHAN
First of all, we are into fully automatic machines. So in top loaders the growth rate is far ahead of the industry growth rate and is far ahead of any. Player in the industry. That is for the top loader. I have answered in terms of front loaders. I said we have been able to maintain the market share. It has not increased substantially but we. Have been able to retain our position.
SHREYANSH JAIN
So as per our understanding you are saying the market would have grown below 5% because you are saying you have outgrown the market.
RANJAN MOHAN
In top loaders. Yes.
SHREYANSH JAIN
Okay, so my second question is what. What portion of our cogs is, is imported? Because the impact of Forex seems to be really high. So can you help us with that? How much do we procure from out of India?
Kartik Muchandi
Yeah, Karthik here, product to product, it differs. It is between 20 to 30%.
SHREYANSH JAIN
20 to 30% of my overall cost. Is it?
Kartik Muchandi
Yes.
SHREYANSH JAIN
And how much of this would relate to home appliances?
Kartik Muchandi
Yeah, this is. I’m answering for home appliances please.
SHREYANSH JAIN
Okay. Okay. And for overall as a company, how much do you import? Hello? Hello?
RANJAN MOHAN
Hello, can you hear me?
SHREYANSH JAIN
Yes.
RANJAN MOHAN
Hello. Can you. Can you hear me?
SHREYANSH JAIN
Yes, sir.
RANJAN MOHAN
At the company level our input content is almost the same as whatever Kartik has told. Because home division is catering to the. 80% of our company revenue. So Naturally whatever input percentage they are having and that at the company level the percentage is almost same. It is around 20 to 20, 20 to 30% only.
SHREYANSH JAIN
Okay, so my next question is, you know when I look at your investor presentation, our channel schemes and discounts they have gone up by 100 basis points. So from 25% of gross sales it has gone to 26 odd percent. So can you help us understand where this number settle at? Or because ACs and reps is slightly newer category for us or this, this will keep on increasing. Can you help us there?
Kartik Muchandi
Yeah. During the quarter we had given higher promotion scheme for customer like cashback free if the essential kids. This has increased the cost of skill.
SHREYANSH JAIN
Okay, but the last few quarters we were talking about, you know, rationalizing these spends that we’ve been doing, you know, consistently. And we had also mentioned that we will see something on the ANP front at least on the ATL side. But I think those two things have not actually materialized. So where are we? Sir.
Kartik Muchandi
We have started the process. We have put in a full time team working on this. We expect the gains to come in subsequent quarters. We have started tying up with all the channel partners where the payout will be linked to volumes. The benefits of this will come in Q4 and starting from Q1 of next year.
SHREYANSH JAIN
Okay, and the last question, the 44 crores of cost savings that you’re talking about. Can you explain to us where which line item is? Is this gross profit or is this below that? And also we will look at 1520 crores of cost savings on the logistics front. So has that also come through in this quarter or not yet?
Kartik Muchandi
To answer your first question, 44 crore is the reduction what we are expecting in material cost. So it will be a part of gross. Okay, logistic cost. We have started the activity but the full impact of that is yet to come.
SHREYANSH JAIN
Okay sir, thank you. All the best. I’ll get back in the king.
operator
Thank you. Our next question comes from the line of Vinod Krishna from Evidence Wealth. Please go ahead.
Unidentified Participant
Sir, are you able to hear me? I’m audible.
operator
Yes.
Unidentified Participant
So my question is on your ability to pass on the cost. Are we like you had? I understand there’s an import component and also commodity prices. So how many quarters lag normally you take to pass on? Or it’s a function of competition and item to item or you can pass on because we have good markets here in microwave and washing machines or by Q4 have we already passed on the at least some part of the cost to the customers?
RANJAN MOHAN
Yeah, we have planned that this will be a judicial call based on the market scenario and we have already planned. Something for the Q4
Unidentified Participant
because this is. A continuous thing, right? Rupee depreciates around 3,4% every year. So if we do so we have in the business model that we pass on the cost. Right?
RANJAN MOHAN
Yeah, yeah, yeah.
Unidentified Participant
The second question. Thank you. Second question sir is on the. How do you look at competitions or is it like there is enough room for many players or it’s very. Even though there are few players it’s very intensive. So because Vikram sir has been guiding around he’s been saying we should grow minimum 20% on home appliances. So when do we think we will get to a stage in terms of. We have done our distribution, we have channel extraction. When do you think we will get into that flywheel of 20% growth in home appliances? Because that’s what is your organization target is what has been communicated in all the con calls.
RANJAN MOHAN
So there were some last time also there were some changes which we have brought in in terms of manning etc. Plus we are also working on improving our productivity through our counter sales representatives. So we expect that from quarter four on onwards there’ll be a good change which you will be. Which will be visible.
Unidentified Participant
Normally if you can give qualitative comments on the. How do you look at competition? Is there enough room like because from a custom when we see. When we go to channels and see we just see too many players but from your angle maybe there are. There’s room for all of them in the.
RANJAN MOHAN
In the categories we are in. We feel we have got enough room to grow and to consolidate our positions.
Unidentified Participant
Yes, yes that. This is not a question, that is a suggestion. If you can conduct con call immediately after the result because there are two days nobody knows what has happened because sometimes I understand it’s. We are not. We are human beings and there’s a huge difference between guidance and what is happening and we don’t know and price just keep. People just react and we have to wait for two, three, four days or else whenever you can conduct concur on that day if you can release the result whatever if you can match it that there is not a big huge time gap it would.
It would be easier sir.
C. S. GOVINDARAJ
Keep your position in mind.
Unidentified Participant
Last question. So we can take that we are going like in terms of distribution, channel extraction and all the cost benefits and also the branding that you’re planning. We can say in the next two to three years we should. We should deliver home appliances growth of 20% we can say that given that we have.
RANJAN MOHAN
I think you are saying two to three years. We. We are saying it will be before that.
Unidentified Participant
No, I’m saying In the next two, three years if I take a CAGR it will be 20%. I’m not saying we’ll wait for.
RANJAN MOHAN
Yeah, yeah. That is what we are targeting.
Unidentified Participant
And then this you are. Sorry sir, I’m just repeating. And I can assume that there’s an increase a park cost will be passed on with some time lag and market conditions.
RANJAN MOHAN
Definitely it has to be.
Unidentified Participant
Thank you. Thank you sir. Thank you very much sir. All the best.
operator
Thank you. Our next question is from the line of Manoj Ghori from Aquarius Capital. Please go ahead.
Unidentified Participant
Yeah, thanks for the opportunity. Question would be to Mr. Nag. So we have been talking about cost savings and margin improvement for more than a year. It has been almost. It has been around one and a half year or even more than that. So far we haven’t seen any improvement. This was only a quarter related issue about RM prices going up, INR depreciation. But throughout there are no signs of any margin improvement which we can term as sustainable. Secondly, when we look at the numbers of other companies who have reported we don’t see that impact into those companies. Whether we talk about large appliances, we talk about electrical companies, even there we are not able to see any such major impact on their cogs.
Third, we have been talking about annual savings of roughly around 200 crores and we are talking about 20 crores impact. Roughly around 20 crores impact of INR depreciation and material increase. But still there should have been gross margin improvement and EBITDA improvement. Rather than that we have seen margin contraction. If you can please clarify on these three issues. First
BIKRAMJIT NAG
you. You first answer then I will take it.
Kartik Muchandi
Yeah. On the margin not improving I had already answered that there are three things. One is commodity forex going up has eaten into cost innovation. During the quarter we had given consumer offers like cashbacks. So those had a negative impact on the P and L. We got a growth but whatever gross margin came out of the growth part of that was eaten out by this promo cost.
Unidentified Participant
Probably if you look at other companies which and into the categories. So let’s say AC is a category which has been relatively more impacted as compared to washing machine and there the discountings were normally higher versus the trend. Still we haven’t seen such kind of impact on the overall margins. Secondly we just talked about three, three and a half percent market share into room ac. When I look at the industry size of close to around 1.3 to 1.4 cr it comes to close to around roughly around 5 lakh units which is our present capacity. So how can.
So we are doing some manufacturing for brands as well. So this data I am not sure. Can you explain how we have derived that three and a half percent in room AC on market share.
BIKRAMJIT NAG
So the room split ACs I’m talking. About. You might be considering the window AC also. But I was talking about the split split AC industry. In split AC industry the share which we currently have is around three, three. And a half percent.
Unidentified Participant
So even if we consider 10%.
BIKRAMJIT NAG
We. Are, we are not into window ACs. Sorry, you said something I missed out.
Unidentified Participant
Yeah, I was just saying like if we look at window AC contributes close to around 10% of the room AC market, let’s say 15% that comes to close to around 12 million units. 12 million units into 3.5% will be roughly around 4.2 lakh units. And we do some manufacturing for brands as well. That number should be around one and a half two like kind of number.
BIKRAMJIT NAG
So that figure is not that high. Our majority of the failures into our brand.
Unidentified Participant
Okay, okay. And Mr. Vikramji, if you can clarify on the cost savings because we have been committing and we have been talking about the same for almost one and a half years.
Unidentified Speaker
I think the first point I would like to state is. I will explain this. The first point I would like to state is overall end to end management has not been up to the mark which is right from looking at the. Look at the entire chain which is sourcing to sales and this we have to title the 4, 5 areas to title which we are doing now. And actually one of the points came from one of the shareholders on one of these conference calls And I will repeat this point and why I’m thankful for that is in one of the calls one of the shareholders said look, don’t try and do everything yourself, use third party consulting firm etc.
You move faster. And I never did that. And we delayed it and then we brought in algorithm. So a lot of delay happened and that’s a mistake on our part. We couldn’t get it done internally to the extent desired. And I’ll tell you why this point is important for me, for us as a company. We then brought in McKinsey for a different project which has now really given us traction in E Comm. And we are expanding that to marketing cost with like McKinsey also. So profitability will come from the following. Karthik, you should have Summarized this better one is good management of stakeholders scheme which is both rationalizing of skill as well as ensuring time with all those 3,000 odd accounts.
3,000 odd accounts roughly translates to about 9 to 10,000 counters. These tie ups are not done. Now what we’ve done is post this McKinsey document. We have nine points to work out account wise or counter account wise account is what? Suppose there is an account called Reliance he reliances 500 counters. Or there could be a single owner driven account which has single dealer or sing sorry single shop or you might have two shops etc. These tie ups are not done with all the tie ups are only done with approximately 10% or 15% of accounts leading to approximately.
Approximately say 30% accounters or 25% accounters. But this is a. There is a lacuna here and tightening of this. Now we have a full time team only to do this. This came out of the McKinsey thing and what to do in that. So McKinsey and then we also agree the team. The team which Our team and McKinsey together came up with the document which also said account by account all product rationalizing of scheme, rationalizing of cash back etc etc then schemes to be done on higher, higher priced products etc. So if pricing is higher, pricing is better or where our margin is better, where we see more scope we do something extra there and tighten it in areas where the scope is where margins are tighter.
You understand? So looking at products etc. These tie ups need to be done which we’ve not done well now that work is going on full steam. So this is point. This one is one is material cost, other is this. Then comes logistics cost which we are working with A and M and the. And the logistics tower is being built. The logistics tower will have to control 150 crores of logistics cost. 150 or 175 crores of logistics cost. We expect approximately 15 to 20% there. All of these things together is going to give us double digit margin.
I’m confident of that. The team has not been able to execute or project manage the entire thing. That is a problem and that we are correcting. Not having a CEO has also had its pitfalls. We found our CEO. The CEOs agreed to join by 15th of April. CEO is not from a consumer durable company. Neither is the CEO from. The CEO is from a different industry but very well experienced in sales and distribution and marketing. He comes with that background and comes from a company of over 20,000 crore sales. The company is very well known and well known for consistent double digit margin for over 20 years.
So I think we found the right person at least to lead on the volume and margin side. And this has just taken a lot of time and we have totally seen about 476 people and the last person who selected did not join at the last five minutes but dislike gentleman has agreed to join and he’s a better person but I can’t disclose the name now. Yeah but he sent us a letter yesterday confirming this. Sure, sure. So I think, yeah, so I think, I think, I think on the margin side, this point on material cost innovation with AMM logistics cost with ammonia.
E. Com with McKinsey and marketing cost with McKinsey. All of this will lead to and which will lead to the tie up of all those 3000 odd accounts etc. Etc. All of this will lead to margin. That is my belief.
Unidentified Participant
No sir, it sounds interesting. So sounds interesting just to counter this.
Unidentified Speaker
Your point, your point on margin, on your point of margin on when you. When you compare us with other industries. Absolutely correct. So before this call we had a call. I said the same thing to my team. Even if you look at for example engineering division. Engineering division also faces price increase issues but they manage it. But our management of this has been not up to the mark. Appliance division and of course copper suddenly going, going. These are things we have to tackle.
Unidentified Participant
So now just lastly when you talked about copper moving up INR has been under pressure though it has improved in last few days. But if you look at copper prices continues. Yeah, copper prices continues to remain at copper at 13,000. So and we have not taken. We are just planning to take price hikes. So how can we expect it? Yeah. So how can we see probably the cost savings actually flowing in? Probably not in Q4 also because yet we have not taken a price hike but somewhere in FY27 point of view how can we see actually cogs a positive impact? Because of the cost rationalization measures that you are taking actually flowing it to peer level.
Unidentified Speaker
The cost rationalization thing are internal even though we are saying to or that our internal target is higher point number one on number two. Number two, we are working on certain DAV etc to see how we can rationalize things. See if in EC for example hypothetical. Let us take a hypothetical scenario. Suppose Copper goes to 16,000. Yeah, 1600 whatever. And then it may go ahead. Suppose it goes from present. Suppose if it goes up by. By another 20% then what do we do? These are scenarios we have to think we have to think through I told the division this Mr.
Govinda is in charge of this so they are now thinking through on various scenarios if the commodity prices ABCD happen then what can we do and how should we work on this beforehand I have said that so we have to work out scenarios and work out defensive play on what all we need to do there’s no point in the quarter passing and then just reporting the price has increased I’ve said exactly what you’re saying so that work is still not fully done and this is the same thing I have told A M also we have told AM if you are going to work on cost innovation and parallel ABCD happens we are not like really really gaining so we are involving them in this also to like think it through what else is possible so that it flows into PNL in a positive manner.
Unidentified Participant
Right, right. Got it. So hope sir things fall in place for you and we see margin improvement. Wish you all the best sir.
operator
Thank you. In order to ensure that management is able to address questions from all the participants in the conference please limit your questions to one per participant. If you have more questions you can rejoin the queue. Our next question is from the line of Naveen Bait from Nirvama Asset Management. Please go ahead.
Naveen Baid
Thank you for the opportunity. I had a question on the engineering division. What sort of growth are we seeing over the next couple of years and which segment is going to be driving that growth and just some color on the margin.
JAYANTA CHANDA
Hi, this is Jain and so if you will on your first question our growth targets are in excess of 20% per annum. We intend to grow and we are pushing the order obtainment in that direction only. So regarding margins we are currently at 14.5% PVDIT which is slightly lower than previous quarters. This is because some startup expenses we are doing in the electronic sector we hope to recover that and engineering division’s margin objective is 17 to 18% EBITDA.
Naveen Baid
And what sort of capex are we coming up in our envisaging.
JAYANTA CHANDA
This year Engineering division is nearly doing 100cr of capex. We are modernizing our lines, we are adding new presses. There are new businesses from newer customers which have called for.
Unidentified Speaker
Can I just take a. Can I. Can I just interject please? Sorry, I’m just interjecting. I think the capex plan what you’re telling me is not fully correct because this is only possibly Bangalore you’re talking but when you take into account Delhi as well as Gujarat proposed capex then what is the capex
JAYANTA CHANDA
I was talking. What was approved in FY 2526. The Gujarat thing. That is. So in we have about 200 CRF capex planned for our new plants in Gujarat. If I may share. We are venturing. We are in advanced stocks for.
RANJAN MOHAN
We are in advanced talks with the company. Yes. For a. For a. For a project which is not entirely something that we do now. But it’s for the automotive sector. And so we are talking to government of Gujarat as well as to private parties for land etc. And it is a project with planned sales of how much this is? I think 400 cr. Yes. About 300.
JAYANTA CHANDA
Phase one will be 200 years to 200 here. Going up to 400. 500 in the third year.
Naveen Baid
So 200 crores of investment likely to lead to peak sales of 500.
RANJAN MOHAN
One second. One second this investment. So we are now looking at should we do a leased plant or should we buy the land and do it. So that is being worked out as we speak. If we do a leasehold plant it has certain advantages as well as disadvantages. And of course the capex will come down. So we are not sure as yet on that score. With the plant supposedly buy the land and do the. Then it comes to 100cr or 120cr something in that like region. And without that I think it will be around 56ccr.
And other is a project in Gurgaon which will be around the same. About 50 cr. 50 to 75 cr. 75 cr. So yeah. So from that angle these two alone will be 200 cr Delhi and Gujarat. If we do land as well and if we just lease and do it then of course the capex is reduced. So we are looking into this and we will take a call on this in the next 30 days.
Naveen Baid
So if I just for the moment assume that you’ll do. You’ll actually buy the land. So 200 crores of capex in Gujarat and NCR and 100 crores in Bangalore. So 300 crores of capex in the division. And you said this could lead to peak sales of what 500 crores or more peak sales.
RANJAN MOHAN
No. So. Will be 200. 200 in phase one.
Naveen Baid
Okay.
RANJAN MOHAN
And 400 it will go up to in next three years.
Naveen Baid
Okay.
RANJAN MOHAN
The project should give us 100 crores plus. Project in Bangalore should give us 100 crores plus.
JAYANTA CHANDA
And if we count the after if you count the chain.
RANJAN MOHAN
Yes, yes. And the chain factory. The chain factory in Bangalore that will.
JAYANTA CHANDA
Give us 150 to 200 crores in the beginning going up to 500 crores by 4th or 5th year.
Naveen Baid
Which plant are you talking about this one.
RANJAN MOHAN
For? For the chain. Motorcycle. Motorcycle. Chain.
Naveen Baid
Got it? Yeah, got it.
RANJAN MOHAN
So all of this together then you know could be with land and all 300 to 400 cr and without land of course it comes down. But the turnover we are expecting is far far higher. So we. We give a proper note note on this in our annual thing annual report and the quarter quarter of May we will give a proper.
Naveen Baid
Got it. Thank you. All the best.
RANJAN MOHAN
Thank you.
operator
Thank you. Next we have a follow up question from Lakshmi Narayan and KG from Tunga Investments. Please go ahead.
Lakshminarayanan
From a manufacturing division. Can you just model the business breakup between various and. And in terms of. I think which are the areas where we have a distinct leadership in those different. That is one thing related to manufacturing. Second, in terms of our motor division, can you just outline because there has been some. You’re trying to get the motor stable. There have been some changes you have done. Can you just let us know? I mean has the product come out well and then what are your plans for both the domestic captive as well as domestic non captive.
What are you planning to do with that? And third is with respect to a distribution how in the last nine months how we have increased our distribution footprint in the appliances division. If you can just give a. Give answers to this.
RANJAN MOHAN
Can Mr. Khanna and can Anand or Mr. Khanna please answer about motor. We see or you will answer who’s. Who is there? Anand and Mr. Khan are there? No sir, I can answer on meter. I think as far as AC motor goes supplies have already started to go up and we are talking to the other companies which is voltas, blue star etc. And with voltas is gone to the R and D and the discussions have started on the technicalities etc. I think Bluestar thing got delayed for various reasons. At Bluestar went and they are now talking to us and I think our people are visiting them around the 14th, 15th of this month and samples will be sent with Voltas.
The volumes are very large that we are talking to talking on. If you see the AC market as you said it’s 15, 16 million someone said and split is about 90% of that and it’s all in water nowadays. So we need to break through against Chinese pricing. And government of India has still not done the BIS thing on motor as yet. Now we started working with the ministry to impose the BIS standards also why that is going on because there is no standard for this. So government is working with us on this and I think Currently you will see there will be a spurting and domestic thing will go up and we are well poised for that because we have capacities on the ground.
And my view is even though it has taken so much time, the project management again has not been done as well as it should have been done. I think we may fall short of capacities in gpos, especially in ac. The plan is to sell to others. In Washard we’ve reached out to others for plant growth, but we’ve not got any favorable thing as yet. We are again reaching out to Bosch in India and we have also started talking to Samsung again in India to see whether they can take it from us or not instead of importing it from wherever they’re importing it now those discussions are on but nothing has justified of it.
Ideal scenario should be 40% should be sold internally, 60% should be sold to others. That’s the plan I’ve set for them. So we are working on this and.
Lakshminarayanan
What kind of addressable market, what kind of revenue potential.
RANJAN MOHAN
Sorry, sorry, I can’t hear you. Sorry, I can’t hear you.
Lakshminarayanan
Sorry. What kind of revenue. Yeah, what kind of revenue potential you can actually emphasize in this particular division? And we are the addressable market.
RANJAN MOHAN
See, the market for AC Motor is 15 million or 14 million whatever it is. And that. That is the market today. And how are. Sorry,
Lakshminarayanan
what is the realization promoter? Are you just trying to understand?
RANJAN MOHAN
So we are working out those numbers but anything, anything less than 10% margin will not work. It’s not fixed, it’s not financially feasible. So that’s the target we have everywhere. We are not achieving it is a separate one. But that’s what we need to achieve. The Chinese have done it. The Chinese are very, very good. Good at cost. At cost innovation. So we have to compete with the Chinese and we have to become better than. There’s no point in all Indian companies saying the Chinese prices are very low. We have to compete with them. That’s why.
Lakshminarayanan
Okay. On the distribution part and. And the business mix of motors, not the motors engineering division and because you’re talking about 20% growth. Trying to understand other growth would actually come from audience which.
RANJAN MOHAN
Which division? Which division?
Lakshminarayanan
There are two questions. One is on the appliance division. Want to know how the distribution footprint has actually increased in the last nine months for the previous year. Nine months. And second in terms of the engineering business, we are talking about a 20% growth. How are you going to get that growth organically and therefore what is the business mix? We have engineering division between two Wheelers.
RANJAN MOHAN
Or what is the engine because it’s getting cut on my phone question on the engineering division.
NARAYANAN
His question is that how are we going to ensure 20% growth in engineering division and what are we. Yes, so sir, we are already supplying to all the OEMs in India whether in two wheelers or four wheelers. All of them buy from us in some way or the other. Number two, we are also actively present in tier one and tier two companies also who are supplying to the OEMs. Now we are increasing our share of business. Our marketing is driving the increase of share of business with these companies and also we are venturing into newer areas.
This Gujarat investment which we talked about a few. It’s a completely new area, it’s a futuristic thing that is going to get us a completely new about 200cr to start with. That will be an absolutely new revenue stream for us. Similarly we are into other breakthrough projects what we call newer products which have become mandatory due to government legislation like break this etc we are venturing into that. So these will give us additional revenue streams. So three pronged approach basically increase the share of business with each OEM and each of our customers increase get into newer revenue streams through investments and and just push marketing to get it.
We are quite sure because many of the orders are right now in maturity stage and we are also preparing ourselves for the investment that will follow. So. We are more than confident that we will be able to deliver this. Target which we are talking and what.
Lakshminarayanan
Are the business mix between different segments in engineering direction between two wheelers or non two wheelers?
NARAYANAN
Sorry, your question was what is the business that we are getting into?
Lakshminarayanan
How much percentage is driven by two wheeler OE and how much is driven by engineering?
NARAYANAN
Engineering division roughly 50% of our turnover comes from two wheelers and 50% comes from four wheelers. If you. Yes, that’s it.
Lakshminarayanan
And another question on distribution, how we have done on distribution or IFB points with respect to last year and this year in the appliances?
BIKRAMJIT NAG
I can answer that. You see as I said post the McKinsey report we are very focused and this even from before we’ve been trying to do but not done a very good job at which is the 3000 odd accounts which are all the Pareto counters. Those need to be properly supplied with all our products and most of these will fall under the direct dealer route. I think only about 15 18% will fall under the distribution group and we hope that all these tie ups will be done by April. By April end actually it may not be done by 31st of March.
But we sincerely hope that all this tie up will be done by April end if that is done. If we are able to do this. Of course it’s a very busy but I’m hoping now it will get done because real focus has come into this post. The McKinnon meeting and the team working on this full time. You will see growth across categories in each account. Reliance is an account. For example today say we are weak in AC or in refrigerators for say any one of the two. And we need to talk to or talk to all these accounts for all the products and even to small dealer on all the products and hopefully this will get done.
So I’m not calling it distribution alone, I’m calling it direct dealer sales as well as distribution.
Lakshminarayanan
Got it, got it, got it. So Mr. Nay, one last question to you. If you just look at for the next three years or five years, what are the markers of success you have in vistas in your mind particularly in terms of the appliance? Or it could be no division. When you look back after five years when you say that we have been successful, what are the vectors? We are actually thinking that you would be satisfied.
BIKRAMJIT NAG
We thought of three years, we’ve not thought of five years. There is an internal thing for three years and in no category should we be below 10% market share.1. In more category and especially in washer etc. Our market share should grow significantly from wherever we are today. We are already supposing top loader. We are at hypothetically, whatever share we are at, we should get double the share, etc. So I think, I think we have an internal plan but because we don’t give guidance, I can’t talk about it in that manner. But our thing internally is always talking on exponential growth.
We have not delivered on that. We are very well aware of that. But what we are doing, I’ll tell you, apart from these margin factors which you all have discussed and correctly and whatever we’ve answered, we have answered this point of bringing in A and M as well as making the delay happened. I did not understand the importance of bringing in these firms and making a separate team work on it. What I mean by separate team from our operations, we have pulled out people and put them into this set up. So now for example McKinsey has five, has five people in Goa or something like that.
So does Ann. And with them we have put in another five, six people. So you see that team working together as one and chasing impact. That is something that has taken Me by surprise and most importantly my internal people are very, very enthused by this and whenever corrections are needed they are like correcting things themselves. So that has been a good thing. Now coming back to the point on growth, we only talk on exponential growth internally including in auto component division, for example. We thought apart from this Capex M and A is on the cards.
So far nothing has happened. But we’ve seen exactly 57 companies and we could have bought many of them. We chose not to buy out of financial prudence. Many of the companies were extremely good, but they were very expensive and some we did the deal and then they backed out by saying other things, etc. Etc. We had to back out. Sorry. So we are aggressive on both these divisions and especially appliances. No company can be considered to be run well with its running at 5 and a half 6% margin. I am very, very clear on this and what we are doing to correct this is also if you see at the top level, lots of people we have replaced lots of people in the regions we have replaced, we have replaced people in the branches.
We are doing a correction on Manning and this correction on Manning that we are doing now aggressively based on data is helping to rectify things. It will help to rectify things in the time to come. But as a company, let me tell you also and as an individual, me personally, it’s very difficult when you replace people and I’ve gone very, very slow on this. I don’t enjoy doing it. But then we came to the realization that we had no choice and it’s very, very painful. But the process has been slow and we are aware of that.
But we’ve now started doing it and we are doing it aggressively now. And lots of people we’ve cheated, which we’ve never done. I’ve been in this company for 30 years and we have never done it. But we are doing it now. And I hope and I’m sure we’ll see results.
Lakshminarayanan
Wonderful. This has been very exponential growth and.
BIKRAMJIT NAG
For exponential growth in appliances this has to be more than 20% is not, is not adequate with the capacities that we have.
Lakshminarayanan
I mean I think it’s just clear that in spite of having such a great brand, we are under utilizing it from a profitability point of view. And I hope all these initiatives will fall in this company. Will do. Thank you so much.
BIKRAMJIT NAG
Thank you.
operator
Thank you. Our next question is from the line of Vinod Krishna from Avendus V Wealth. Please go ahead.
Unidentified Participant
So I’m audible. Sir?
BIKRAMJIT NAG
Yes, please.
Unidentified Participant
So can you throw light on Your what are the kind of feedback that you’re getting on your refrigeration? How Acceptance, competition, refrigeration but that’s a new category for us and ACS also is it well accepted or any changes to be made in the product and you’re doing it. So if you can throw more light on because these are the two new categories where we are, we’re having very small market share and what are the plans to increase the market share because these are the two where you will be having less than 10%. So.
BIKRAMJIT NAG
I think the first thing on the product on Descendator is as I said the team, many, many of our team members at the branches were just not adept at handling all the products. That took us time to understand why they are not able to do it but we just realized some people cannot do it or will not do it so we’ve replaced most of them. That’s the first thing on the market side the feedback has been by and large product is okay. There are certain areas where cost innovation has to be done. The product has been configured for far higher specs.
In certain cases there are cost innovation things there which we have to work on in certain areas. The one thing and recognize that which has come out clearly is that if we should not have gone for DC but should have gone for higher end product first. Yes, but the thing with that is the thing with that if we had come out with the higher end product like what Libre has come out with for example then placement would it have been difficult or not in the counters. You see. So this call was taken then and I was party to that call surely.
But clearly it is coming out now that the channel expected higher end products from us and not, and not what we have and there’s an issue there. But now we are, now we have what we have and we must, we must sell the capacity. Now these tie ups that we are talking about and insisting on with my team for the 3000 odd odd accounts is very, very essential to sell capacity. So first point is that second point is will we go as per market demand for Capex to make more higher end products for refrigerator? Answer is a no.
Today it’s we will not do it. We are looking at possibilities of import of CKD and all of that and seeing whether this is something we can do over the next nine months or not. If not, we will not do it. We will only focus on whatever we have postponed Capex now till it becomes profitable. Unclear on that. So no more Capex on this. As far as AC goes we have to push the higher tonnage ACs and the higher end ACs instead of I think at the lower end. And one of the things we’ve seen from the market is if you see pricing mop for one category of ac let’s say sometimes our pricing we are at number eight.
Okay. So we are between seven and nine in pricing in different markets. If this should not be this. We have to see how to improve brand recall for AC and improve pricing. That is something marketing needs to work on. So AC our product getting into AC product we have seen some issues. Some technical issues we have. We have encountered but we are connecting those but by advance on cooling side we have not seen much issue but some issues on fitting, finish etc is there some issues with the remote we have encountered but all of those have been fixed.
Unidentified Participant
So you’re. You’re confident that your market share will go from three to 10 or the next three years?
BIKRAMJIT NAG
I’m not. The question is what is my confidence. The question is what the company must do. The company must do it. Otherwise company should not. Should not be the business.
Unidentified Participant
When I say condensing, you should have a plan.
BIKRAMJIT NAG
Every. Every company should have a clear plan on what it must achieve. Your question was by and large what how do we etc. Etc. Correct?
Unidentified Participant
Yes. How do we go there? Sir,
BIKRAMJIT NAG
if you’re not there, how do we go there? We will. We will go there only by fixing the team. By having a very good team. Market by market as well as in the factory. There is no other way about fixing organization.
Unidentified Participant
And your confident. I’m not saying the guidance. I’m sorry but I was just saying that these are all fixable things. We are not in. We are not having things that are not fixable. Right? That’s my question. That was my right.
BIKRAMJIT NAG
Well I can only assure you whatever question you are asking me, you know on a lighter vein that my mother is asking me the same things. How come share prices.
Unidentified Participant
Share price is okay but IFB is known is a well known brand. So I don’t actually it looks like it’s known for a premium portioning so. And there’s so much we can actually do. So I’m just trying to understand whether the path is of frictions or it is.
BIKRAMJIT NAG
So Mr. So Mr. Govind. But if you are here, here. If you’re here on. On washers. The things we are coming out with right up to 14 kilo. When is that going to be done.
C. S. GOVINDARAJ
By sir, on the 14kg mission we should be 12 and 13kg will be. There in September and 14kg. We should be there in November or December.
BIKRAMJIT NAG
By. By December, I think all the lineup will be ready. Yes. Uploader also correct.
Unidentified Participant
Okay.
BIKRAMJIT NAG
Coming out with higher end products etc. Etc. You can ask me benchmark, if not better. The other thing I told my people is you stop benchmarking and become the benchmark yourself. I told them that we have to do that. That’s the challenge. If you ask me, sir, if you.
Unidentified Participant
Do not mind, I just repeat mine. I’m just asking like take acs because this is you. You are seeing the path to become 10%, right? It’s not something undoable. That’s my. That was my question. Because in some time we will know. So that was my question, sir.
BIKRAMJIT NAG
We must do it. We should exit AC.
Unidentified Participant
Because other places you are entrenched. Like. Yeah, because other places you are entrenched and it is more easier here you’re not entrance. So that’s what I was asking both refrigerators and it is a path to 10% here.
BIKRAMJIT NAG
Here it’s a failure, as I’m telling you here. It’s a failure to create demand for our product by marketing. And I’m strengthening overall company’s marketing ability. And one of the things which I forgot to say is one of the things we are working on is you know, we have this 10 million customer base and etc. Etc. And also direct customers to inspect. We have B2B customers for our industrial products and how we sell to our customer base directly is a business by itself which has huge, huge, huge opportunity. But we don’t know how to do it.
We as a. We have all the tools. No, this. Okay, so suppose you are a customer. Let us assume you have. You have, let’s say an IFBAC for example. But I’m not reaching out to you on a regular basis to find out what you need and for you to know what all we have. Just like a bank does with you. So if you have an HDFC account, they will send you things on housing loan and car loan. And you understand this is what we are working on now. We are strategizing this with like McKinsey itself.
Also.
Unidentified Participant
Got it? Got it. No, no. So thank you. Because this IFB is a like great brand. So expecting better growth and better. All the. All the best.
BIKRAMJIT NAG
Thank you.
operator
Thank you. Ladies and gentlemen, in the interest of time. That was the last question. I would now like to hand the conference over to management for closing comments.
Soumitra Goswami
Thank you very much for participating in this call. We will be meeting again after quarter four. Thank you very much.
operator
Thank you. On behalf of Nirmal bank equities, that concludes this conference. Thank you for joining us. And you may now disconnect your lines. Thank you.