Ikio Lighting Ltd (NSE: IKIO) Q3 2025 Earnings Call dated Feb. 10, 2025
Corporate Participants:
Sanjeet Singh — Whole-time Director
Atul Kumar Jain — Chief Financial Officer
Analysts:
Suyans Samant — Analyst
Vipul Goyal — Individual Investor
Darshil Jhaveri — Analyst
Pawan Katariya — Analyst
Nilesh Sharma — Analyst
Devesh Jain — Analyst
Harshit Khadka — Analyst
Jason — Analyst
Sanjay Sood — Analyst
Presentation:
Operator
Ladies and gentlemen good day the call will start within the next couple of minutes. I would request you all to stay online thank you for your patience ladies and gentlemen, good day and welcome to the IKIO Lighting Limited Q3 and Nine Months FY ’25 Earnings Conference Call.
As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchstone phone. Please note that this conference is being recorded.
I now hand the conference over to Mr. Suyans Samant from Stella Investor Relations Advisors. Thank you, and over to you, sir.
Suyans Samant — Analyst
Thank you. Thank you everyone for joining us today. We have with us today the senior management team of IQO Lighting Limited, Mr. Sanjit Singh, Whole-Time Director; and Mr. Atul Kumar Jain, Chief Financial Officer, who will represent IQO Lighting Limited on the call. The management will be sharing the key operating and financial highlights for the quarter and nine months ended 31st December 2024, followed by a question-and-answer session.
Please note this call may contain some of the forward-looking statements, which are completely based upon the company’s beliefs, opinions and expectations as of today. These statements are not a guarantee of the company’s future and involve unforeseen risks and uncertainties. The company also undertakes no obligation to update any forward-looking statements to reflect developments that occur after a statement is made.
I now hand over the conference to Mr. Sanjit Singh. Thank you, and over to you, sir.
Sanjeet Singh — Whole-time Director
Thank you all of you for joining on the Q3 and Nine-Month FY ’25 earnings call. Our presentation has been uploaded on stock exchange and I hope you all had a chance to have a look at it. We are happy to mention that overall traction continues with revenue growth of 9% year-on-year to INR374 crores in the nine months FY ’25. This was on account of continued growth in-product display and Energy Solutions and other segments.
I would like to take this opportunity to share the revised guidance of revenue to 12% to 14% for FY ’25 on account of slowdown in the OTM business as the overall LED lighting market in India has been subdued.
Turning to the Q3 FY ’25 highlights, revenue grew 4% year-on-year but declined 3% quarter-on-quarter. This growth was driven by strong performance and sustained momentum in the product display, energy solutions and other segments. However, this was partially offset by weakness in the ODM segment, reflecting the overall demand scenario for nine months FY ’25. Now let me walk you through the key business initiatives we have undertaken to drive growth and share further insights on our progress.
We are happy to announce that we are selected under the PLI scheme under IKIO Solutions Private Limited, 100% subsidiary of IKIO Lighting Limited for wide goods under LEDs. Also, we have been success — we have successfully entered the Gulf market for exporting our products under the product display segment and our progress has been strong.
Recently, Ritech Holdings Limited, UAE, a 100% step-down subsidiary of IKIO Lighting Limited, entered into a joint-venture agreement with AG Investments. This partnership aims to accelerate business growth by leveraging AG Investment’s extensive network, providing access to a broader customer-base across the Middle-East.
Coming to the US market, beyond the RV business, we now supply industrial and solar products to ESCOs and our subsidiary has begun generating revenue. Additionally, LLC, a step-down subsidiary of IKIO Lighting Limited, has signed an MOU with Metco Engineering securing a commitment of 8 million US dollars in business over the next six months.
As a result of an effort to diversify our revenue streams, our outside India contribution stands at 21% in nine months of FY ’25. As you know, we have successfully commercialized Block 1 of our 2 lakh square feet facility in May 2024, marking a key milestone in a larger 5 lakh square feet greenfield expansion project. Currently, civil construction is underway for Block II, another 2 lakh square feet, which is expected to be completed by March 2025. We are on-schedule and anticipated to be commissioned within the expected time frame.
Apart from this, we have expanded our product portfolio to include hearables and wearables and the progress has been promising. Our strategy has always focused on diversification, ensuring we are not dependent on a single client or product. While the ODM business has experienced a slowdown, we are encouraged by the strong growth in emerging verticals such as product display, energy solutions and other segments. Notably, our reliance on the ODM business has declined with its revenue contribution dropping from 55% in nine months FY ’24 to 45% in nine months FY ’25, reinforcing our confidence in our strategic direction.
Coming to profitability, in Q3 FY ’25, EBITDA and PAT margin was impacted on account of lower revenue in the OTM segment, front-loading of expenses and higher depreciation on new facilities.
In conclusion, we believe that expanding into new markets is crucial for diversify — diversifying our revenue streams, both in terms of products and geography. We are excited about the journey ahead of — ahead as our new initiatives begin to yield long-term results. With that, I conclude my remarks on our strategic direction.
I now invite Mr. Atul to present the key financials.
Atul Kumar Jain — Chief Financial Officer
Thank you. Let me now take you through our financial performance and the utilization of our IPO proceeds. As mentioned earlier by Sanjit sir, our growth trajectory continue in the first-nine months of financial year ’25.
We witnessed a revenue growth of 9% year-on-year to INR274 crores and the gross margin remained largely stable at 41%. The EBITDA stood at INR54 crore in Nine-Month financial year ’25 versus INR76 crores in nine months financial year ’24 and PAT stood at INR33 crores in Nine-Month financial year ’25 versus INR51 crore in nine-month financial year ’24.
In Q2 — Q3 of financial year ’25, our consolidated revenue up by 4% year-on-year and down by 3% quarter-on-quarter at INR121 crores. The EBITDA margin was at 12%. As explained earlier, EBITDA was impacted on account of lower revenue in ODM segment, front-loading of expenses like employee cost for new facility and product and higher depreciation on new facilities.
The PAT stood at INR8 crore. The growth was impacted due to-high depreciation on account of commercialization of new facility, Block 1 of the greenfield projecting project effective May ’24 and the reasons mentioned earlier EBITDA declined. Cash PAT stood healthy at INR148 million in Q3 financial year ’25 and INR513 million in nine months financial year ’25.
On the IPO proceeds, the repayment of debt was completed immediately after the IPO. Block 1 is now operational. For Block II civil construction is ongoing and completion is expected by March ’25. We have now deployed around 68% of the IPO funds and are on the course to complete deploying the rest within the timeline we set for ourselves.
That’s all we have from the company side, I request the moderator to please open the forum for questions.
Questions and Answers:
Operator
Thank you so much, sir. We will now begin with the question-and-answer session. Anyone who wishes to ask a question may press star and one on the touchstone telephone. If you wish to remove yourself from the question queue, you may press star in two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles.
The first question comes from the line of Vipul Goyal [Phonetic], an Individual investor. Please go-ahead.
Vipul Goyal
Hello?
Operator
Yes, please go ahead.
Vipul Goyal
Good afternoon to all. As Mr. Accounts Officer has explained everything regarding the expenses, I want to know further about the other operating expenses, which has been increased by 173% year-on-year and 92% quarter — nine months. So I can throw some light regarding the breakup what these expenses have increased?
Sanjeet Singh
Yeah. Hi, Mr. Vipul. Thank you for asking the question. Yeah, actually the other expenses have increased on account of — I’ll give — I’ll throw some light on how our US operations are going on as of now. So the subsidiary that is — that we have in the US, which is Royalux LLC.
So there we have two-parts. One is the product that we are supplying to various categories. And one is the subcontracting. So recently, we’ve entered a new market with which — I mean in which we are working with the. So with those, we are supplying products and there is part subcontracting as well. So what is happening is that the subcontracting expenses are basically coming in the other expenses.
So if you remove these, you know, so in the other expenses, then — sorry, if you remove these expenses from the subcontracting part, which we have incurred in-quarter three, then our other expenses are actually in-line with the previous quarters. So it is just an impact of how these numbers are being showed as of now because this new business that we have started on account of that. So…
Vipul Goyal
Can I say something regarding this?
Sanjeet Singh
Yeah, sure.
Vipul Goyal
So actually with these expenses, the profit has been quietly lower down due to these expenses. I thought — I thought, keep these expenses, but the R&D expenses, which you said in earlier con-calls that we are incurring a lot of expenses on the R&D. So our R&D expenses are included in these expenses, other operating expenses?
Sanjeet Singh
No, actually, I’ll clarify one more point before moving on. These expenses are not pulling down the PAT, I would say, because the PAT margins that we are making, actually what is happening is in Roylax LLC, we are supplying the product, we are doing subcontracting. So in — and in PAT, the gross margins are lower, but our PAT — the PAT that we are getting is healthy.
PAT is healthy comparable to our traditional business. So that is why the other expenses are definitely going up, but it is not pulling down the PAT from that business. And second part of your question, you were asking about the R&D expenses. Clarify about the other expenses.
Atul Kumar Jain
And the expenses I got, but if the sales doesn’t increase too much, then it ultimately the profit would be lower than if all expenses are loaded in these other operating expenses, if I presume.
Sanjeet Singh
Even if this — like in quarter three, the revenue was substantial from this business. Even going-forward, if the revenue is substantial and the percentage is increasing in terms of the revenue, it — EBITDA margins, it can still affect because the other expenses will be higher, but at the bottom-line, the PAT, it is adding healthy PAT margins to the business. So that way, we are not compromising the PAT when it comes to the business that we are doing over there.
Vipul Goyal
Sir, but the PAT margins are down by 16.2% to 6.4% from 10.3% to 6.4% quarter-on-quarter.
Sanjeet Singh
Yeah, the PAT margins are going down on account of various other reasons as well. That is because of, you know, if I — even if I exclude this US figure, even if — in that case the PAT margins are going down, the major reason for that is the depreciation. So depreciation in last quarter, quarter three, if I talk of absolute number, that was close to INR7, INR7 crores.
Entire first-nine months, the depreciation is INR18 crores, I think compared to last year, then entire nine months, the depreciation was INR8 crores. There is an increase of INR10 crores in depreciation in the first-nine months of this year. So that is one of the reasons which is because of which the PAT is lower. But cash PAT, as we mentioned in the opening remarks, they are comparable to last year’s numbers.
Vipul Goyal
Okay. So these expenses would be moderated in the time to come, I suppose?
Sanjeet Singh
Yes. Yes, yes, absolutely. So because the depreciation we are — I mean, incurred on the new facilities, the plant and machinery, they are yet to give the kind of revenue that we are expecting from the new plant and machinery. So the — as and when the revenue starts adding up from the new units, the new customer-base, the verticals, — automatically the effect will start negating.
Vipul Goyal
Okay. But the last question about the R&D expenses, could you throw some light whether it’s been included in the other operating expenses or they are very minimum?
Atul Kumar Jain
So R&D expenses, major thing is R&D people cost, this is part of our employee cost and there is — there are some other expenses, usual expenses, it is part of other expenses. So it is not…
Sanjeet Singh
So, other expenses, nothing unusual apart from what the subcontract — expenses mean. Nothing unusual apart from that.
Vipul Goyal
Okay, okay. Okay. Got the point, sir. Thank you. Thank you.
Sanjeet Singh
Thank you, Mr. Vipul. Thank you.
Operator
The next question comes from the line of Darshal Javiri from Crown Capital. Please go-ahead.
Darshil Jhaveri
Hello. Good evening, sir. Thank you so much for taking my question. Hope I’m audible.
Sanjeet Singh
Yeah.
Darshil Jhaveri
Yeah. Hi, sir. Yeah, sir, just to expand on the previous participants question. So when you say our subcontracting expenses, so how much revenue we booked and what was the subcontract expense? Would we have a figure for that available?
Sanjeet Singh
So you are asking about the breakup of the subcontracting.
Darshil Jhaveri
Yeah, right. So because we are saying that our expenses have increased because of that, so right? Because — so just wanted to know-how much revenue we have flown in — because of this? And…
Sanjeet Singh
Yeah. So basically the expense that we incurred on just the subcontracting is close to around INR12.5 crore to 12.7 crore. That is how much we have spent on that. And but like I mentioned, we were able to garner a decent or healthy PAT margins and PAT margins were close to the tune of around between 9.5% to 10%.
Darshil Jhaveri
Okay, okay, okay. So we were able to garner a standard PAT margin on this. So yeah. So then if we — so if you be able to garner those margins, then why has our EBITDA, you know decreased like why has it come down to 12% because revenue would be there, even if there’s higher other expenses, EBITDA should be in the normal range. So, is there something other that’s driving the EBITDA down further because you’re just trying to reconcile that sir.
Sanjeet Singh
Yeah, actually there are a few reasons why the EBITDA is lower than if you compare it to the previous quarter and traditionally also. The reason for that is our traditional business, the ODM business is much lower than what we had anticipated this year. And that is one of the reasons. But I would still say the silver lining is that instead apart from de-growth in that segment, we are still growing this year. That is because our other verticals have been performing well and that is a good sign for the coming times.
And apart from that, onboarding of expenses for the new businesses that we are, you know, we’ve kick-started a lot of new projects, new product categories, new product lines. So onboarding of expenses that is still happening and those new streams are yet to give the revenue, which will come at a later-stage, maybe every quarter or two like last year, year we started the business for the UAE, the Middle-East.
So now revenue have started coming in from that particular division. So likewise, when all these new verticals, when they’ll start bringing in the revenue, so this effect will start going down. And last quarter also, one more thing happened is that in our hearable wearable segment, we onboarded a couple of clients. So being the festive season, we were given very short-time to execute certain orders.
So we took a strategic decision to supply those products at very bleak margins. It was done purposely in order to onboard those clients, otherwise, we had to wait for another at least year for that cycle to come to bring them on-board. So that was some a strategic decision that we took. And now what has happened is the plan that we are getting from those two particular clients for the next year is pretty handsome.
So that was something that we did. And on-top of that, a slight effect of the product mix in the product display segment, that also changed the COGS for slightly from a couple of percentage points. So all these factors contributed to the EBITDA margins coming down. But most of the reasons that you know, like traditional business, like I said, is going down, but what we are doing to negate that effect or to counter that is we are working with three, four lighting companies.
We have already started discussions. In certain cases, we are in the process of submitting samples, approvals, all of that is happening. And I think we believe that it’s just a matter of couple of quarters and this OTM business will also — I mean, the effect will start coming down in terms of the droppage.
Darshil Jhaveri
Okay, fair enough. Got it, sir. So just wanted to know, sir, so we had — I think we had given a guidance of around 20% growth. So like how do we see that happening like right now, any guidance we want to give on revenue for FY ’25 and ’26. Similarly on EBITDA, what would we say what range would be on in this year and next year sir?
Sanjeet Singh
So, for this year, although we had given a guidance of revenue guidance of 20% increase. But due to the decline, you know in our OTM business, it has — it has come down. So first-nine months, our revenue increase is close to around 8.9%. And by the end-of-the year, we are expecting it like I mentioned in the opening remarks also between 12% to 14% due to all the various reasons that we’ve highlighted.
And EBITDA margin will remain in the range where it — it is right now close to around — for this year-around 14% is what we are expecting. And in terms of next year, we are yet to finalize the budget. We are working on that, but definitely the progress next year is going to be much better than what we have done this year. So once the final budget is ready, which will be by the next month, we will definitely give some guidance. Actual proper guidance in terms of EBITDA and revenue growth in the next — probably in the next earnings call.
One more part of your question, which I am missing.
Darshil Jhaveri
So, I think that just like one question from — last question from my end, sir. So next…
Sanjeet Singh
AJust one thing — sorry, just one thing wanted to add. If we — like you were asking about the drop-in the revenue, so if, let’s say, our ODM business would have even remained flattish this year, even then we would have achieved our target of 20%. This we did some calculation basis on assuming that if the business would have remained flat in the ODM division also, still we would have made 20% growth in revenue. But nonetheless, we are working on that and this year we should be closing at around 12% to 14%.
Darshil Jhaveri
Okay. Got it. Just last question from my end, sir. So our depreciation has already increased and now the Block II we are going to start. So what impact on depreciation will it have like next up going-forward, sir? And what’s our capacity utilization currently, so and how will that also be impacted there?
Sanjeet Singh
Yeah. So like I mentioned, we are working very closely with three, four new customers. And apart from that, I’m sure we mentioned about Honeywell as well in the previous earnings call. So we are working very closely with Honeywell as well for their fire alarm systems, sensors and all these category of product and the prospect is — looks very promising.
And it is just a matter of time. The new plant that we have set-up, business has already started, but it’s just taking some time for the product approvals, onboarding it, you know all these things, it’s not as straightforward as it looks. The approvals are already there. We’ve already supplied some trial lots. And now going-forward from next year onwards, these new areas will start showing the revenue and all of this business is going to come from the new plant itself.
Darshil Jhaveri
Okay. So in terms of capacity, what we are at currently and how much do we expect like it to be next year because the new capacity is also a large 2 lakh square feet capacity. So just wanted to know-how would it turn out, right?
Sanjeet Singh
So you’re asking specifically about the new facility, right?
Darshil Jhaveri
Overall, what’s the current overall capacity utilization and what do we expect the new capacity after the new plant capacity scale-up. I can understand will not be the optimum in the Q1 will scale-up or how do we just look at it, sir?
Sanjeet Singh
So the new plant, there are two-parts to it. One is the backward integration that we are doing. So there it is progressing really well because it is supplying to all the different verticals that we are into. So that unit is generating a handsome revenue in terms of the product that it is making for all the different verticals that we are in. And we are gradually expanding its — the potential of that plant bases on the requirement.
So if you look at that plant nine months before or six months before, and if you look at that plant today, a lot of machinery manpower, it is constantly getting added because of the requirement for the other plants.
And the second part of the new plant, which is the finished products which will go out to the end-customer. So that is something that has also already started, but it will show its effect in the next financial year as the business starts ramping-up with these new customers.
Darshil Jhaveri
Okay, okay. Fair enough. Yeah, that’s it from my side. So all the best. Thank you.
Sanjeet Singh
Thank you for your question. Thank you.
Operator
A reminder to all participants, you may press star and one to ask a question. The next question comes from the line of Pawan from Bullseye. Please go-ahead.
Pawan Katariya
Can you hear me?
Operator
Yes, Pawan, please go-ahead.
Pawan Katariya
Yeah. So sir, my question is in-spite of adding the new geographical addition, right, and also we have backboard integrated and also we have added some new products, but we don’t see any incremental revenue coming up. Yeah, in previous call, you mentioned that the — our ODM business has hampered, right? And — but since we have the backward integration done so that also — that margins could also be offset by the backward integration where we have seen margins falling in ODM, right? So, any specific reason or how do we see in-spite of taking the steps, we do not see any incremental revenue added. And also on margins once we are not able to maintain the previous margins as well.
Sanjeet Singh
Thank you, Mr. Pawan, for asking the question. So to answer your question, I’ll repeat some of the part that I present it in a different way. So what happened is the ODM business, you can see that there is a decline in the nine months that is 10 — decline is around 10%. So like I said, even if the business would have been flattish, we would have reached our target of 20% revenue growth. But at the same time, when we had planned out the entire year, you know as per the scenario where we were sitting at that point in time, we were expecting a growth of around 8% to 9% even in the ODM business.
So I was just mentioning that if that would have remained flattish, we would have seen a revenue growth of 20%. So imagine if that business would have seen a growth of — organic growth of 7%, 8%, 9% also, then the number would have been higher than what we had anticipated. So it was just on account of the market situation being such the demand was not there.
And we are not just sitting and waiting for the market to you know to provide the opportunity — this opportunity. We are expanding our portfolio. We are expanding our customer-base also. In this same segment, we are talking to around four companies, lighting companies and with two, three of them, the discussions are in advanced stages.
But you know, this industry, what happens is it takes a lot of time to convert an idea into a product, get the approvals from the customer, do the trial run. So it’s a long process. So this year, the year that has gone by, we are sitting in the fourth quarter, we believe that this year was mainly in establishing our new relationships that we have done really well, I would say. And going-forward in the next financial year, we will start reaping the benefits of the relationships that we have established.
In terms of the — I would say the backward integration or the preparedness of our development team, everybody is aligned with the plan that we are going to execute next year. Everything is aligned for that and we do have the capability and the expertise to execute all of that.
It’s just been unfortunate that one particular division did not really perform up to the mark due to all the various factors that were there in the market. But otherwise, we were on course with our plan of execution.
And like I mentioned previously also, the EBITDA margin going down is largely to 3, 4 points, which I previously have also explained in detail.
Pawan Katariya
Okay. And also one more question is like in one of our interviews, we mentioned that the new capacity which will be coming right. So we would have asset turn of almost of three to four times. So the production which has started in March ’24, right? So are we on-track to have such kind of asset turn from that facility?
Sanjeet Singh
Yeah, actually the Tower 1 got commercialized in May 2024 and that was just the commercialization. But post that it — like I said, it takes time to bring in the client, start manufacturing. The other part of the same plant which is doing for the captive usage that is progressing really well because it is supplying to all the different verticals that we are doing.
But this unit also, the relationships have been established. Like I said, in certain cases like with Honeywell, we are in very, very advanced stages. In fact, we have done some trial lots as well. So it’s now just about ramping-up and maturing the relationships that we have established. So that is going to happen from quarter one of next year.
Operator
Thank you. The next question comes from the line of Nilesh Sharma from Anantnath Skycon Private Limited. Please go-ahead.
Nilesh Sharma
Good afternoon, sir.
Sanjeet Singh
Good afternoon.
Nilesh Sharma
Sir, my question is related to our earlier Q2 con-call where one of our colleagues asked that IKIO World is a similar website. And Mr. Hardeep Singh answered that, it is our customer and we have no relations with IKIO World. But Mr. Ekam Deep Singh, who is founder of IKIO World is earlier partner of RLPL, which is Rolex Flighting Private with Singh. So while management has not disclosed that IQVOL is somewhere related to our promoters.
Sanjeet Singh
So — but we’ve actually talked about this, I’m not sure whether you’ve been part of those calls or not earlier — very early-on during our IPO journey, these things they came up and we had very clearly mentioned that Mr. Ekamdeep is the son of Mr. Hardeep. He has his business in the US that has got nothing to do with the business that is — that we are doing here in India.
So basically, the name is similar because that was kept many, many years back and at that point in time, there were no plans of us going public. So this we had discussed in detail. So there is nothing that we have not spoken about or you know it is not mentioned anywhere.
So if you go back a little further as well, I would say 1.5 years, two years back. So we did discuss a lot about this and everybody — I mean, all the investors whom we met or public enlarge during our earnings call earlier as well, we have discussed about this.
So — but if you talk about the business that is there in India and the business that is there, he is definitely one of the — one of our customers for the export this thing. But in terms of revenue, it is very, very negligible. And it is done as — it is done at arm’s-length as well.
And the — I would say the revenue that it is that little relationship is doing is I don’t have that figure as of now in front of me, but in the overall scheme of things, it is very, very small, very small.
Nilesh Sharma
But being an investor, our concern is, is there any major portion of our revenues with IKIO World and if it is and Mr. Hardeep Singh is father of Deep Singh. So how we can assess this situation, although everything that you mentioned is available on public platform. But in last con-call, you just mentioned Mr. Hardeep Singh had mentioned they are only our customer, no lessing with them. So closely associated with us around three to four years…
Sanjeet Singh
Basically he must have meant that there is no relation with the company, but there is no denying the fact that he is son. So that is obviously there, but he must-have meant that there is no relation between the companies. And that is absolutely there. There is no relation. And I don’t have the numbers, but just to throw around a figure, I don’t think it is even 1% of the overall — overall business that we are doing. So that is hardly anything.
Nilesh Sharma
Okay. Perfectly fine, sir. Sir, any guidance for next year because in this year we have cut-down our guidance from 20% to 25% to 12% to 15%. So how we can expect about next financial year?
Sanjeet Singh
So next financial year, we are still in the process of making the final budget, like I mentioned earlier, which should be ready — the final budget should be ready in March. We are you preparing that — but I don’t — I cannot really give a guidance, formal guidance as of now until I have the budget presented by the finance team and the business head.
But what I can — what I can guide is basically that the performance will definitely be better looking at the relationships that we have established, which will start maturing pretty soon or some of it has already like the UA business. This year we have — we will be ending with a substantial figure being our first year and that to the operation started in — from what I remember probably in May.
So next year from that business also, we are expecting good growth. So likewise, the Honeywell business and the new relationship that we are in the process of establishing, all of that will start kicking-in and next year is going to be a promising one for us.
Nilesh Sharma
Okay, sir. Sir, one last question. How do you see the perspective of future trade war between US and China, is there any threat of dumping of LED lights in India in our lighting business?
Sanjeet Singh
See, I don’t see that happening, but I would say that you know what is happening politically as of now, every day we also get to hear new things in which — but looking at the relationship that India and US, they both share, I think the only thing that we can look is that we’ll get an advantage out of whatever is happening as of now. So looking at the longer-term situation, I think we will end-up having an advantage out-of-the current scenario.
Nilesh Sharma
And sir, our question is threatening from the China may supply — oversupply to India, how we can compete with the pricing power of China.
Sanjeet Singh
So that I don’t think is going to happen because Indian government is, is playing its cards really safely and smartly. And if that was the case to happen, then I mean, you must be aware of all the restrictions that India has put and whatever is happening politically, it’s out there in the world for everyone to see. So we don’t see that as a threat at all.
And even let’s say, if that is a possibility, although it’s not just in case, if just hypothetically speaking, if that is a possibility, but we are well-equipped with what we are doing. So initially in our early calls also, we have spoken about this in detail, especially for the US market because we are not in India, let’s say, not in India, but in other parts of the world, we are anyways competing with the China.
So UAE market is one big example. We are competing with the players who are importing products from China. That is their main country of import, but we are still winning in terms of the pricing and the quality. So we are really in terms of quality, I would say, ahead and in terms of pricing, I would say at par with them. So we don’t really see that as a threat.
Nilesh Sharma
Okay. Thank you so much, sir, for detailed answer. And we would like to visit your plant. Is there any possibility?
Sanjeet Singh
Yes, definitely you can get-in touch with the company secretary. The email is there you in the public forums, you can get-in touch and they will align for that plant with it.
Nilesh Sharma
Okay. Thank you so much, sir and wish you all the very best for your next financial year.
Atul Kumar Jain
Thank you.
Sanjeet Singh
Thank you, Mr. Nilesh, Thank you.
Operator
Thank you. The next question comes from the line of Devesh Jain from Citibank. Please go-ahead. Devesh, please go-ahead with your question and please unmute yourself in case if you are on-mute.
Devesh Jain
Hello. Can you hear me?
Operator
Yes.
Devesh Jain
Hello. Can you hear me?
Operator
Yes, Devesh, please go-ahead.
Devesh Jain
Yeah. So basically my question was all regarding the product which I, it was explained last quarter that there is not benefit new products…
Operator
Sorry Mr. Nilesh, you’re are not quite audible. Could you please go to a quieter area? There’s a lot of background noise.
Devesh Jain
Hello. Am. Am I audible now?
Operator
Yes. Please go-ahead.
Devesh Jain
Yeah. So basically in the last quarter, it was explained that we might get into new businesses. So like are you — any updates on that what businesses you are trying to venture into now, which new products that we are trying to get into?
Sanjeet Singh
Yeah. So we’ve already discussed about that in bits and pieces during the entire call. So if I talk of new businesses, we’ve already discussed in the previous earnings call as well, one of the new businesses is the and wearables category that we have recently ventured into. UAE as a geography because the products are completely new. So I would say that segment is also in terms of products also is new for us.
That is something that — and within that Middle-East region, now we are capturing more-and-more countries because each country has its own certification requirement. So we started with just UAE to begin with and now we are capturing other geographies around that the Middle-East area as we are progressing with our certifications and product approvals. So that is something that is going on. Apart from that, Honeywell is, you know, one example that we’ve been talking of and it is maturing quite well in terms of the portfolio that we see, the portfolio buildup that we see with them and the kind of business that we can do with them in the coming future.
And in the lighting industry, again, like I mentioned due to confidentiality, I will not be able to name the branch, maybe we’ll be able to once we are in that position, but we are working with four brands as of now in terms of the new products that we are developing for them. So all of this is happening and some of the new businesses are already generating revenue, they are adding on to the revenue. And because of that, even after a sharp decline in the OTM business, we are still growing. So I would say that is really what is keeping us excited about the coming days.
Devesh Jain
So yeah, like I understand the hearables and variables piece because I think we were the original like we were manufacturing DVDs and all. So I think we already have niche over there like we already have the capabilities or the learnings from there. But like any other plans to manufacture white goods or you know, because since we have a lot of factories like you know, and probably are we like thinking towards those lines or entering into new products or other new products as well?
Sanjeet Singh
So right now, we are focusing on these product categories or the strength that we already have. We are also diversifying in electronics as well because that is one innate strength that we’ve had for more than 20 years now. So when I say of electronics, so basically PCB assembly is where we are doing so some of that part for — we started for automotive as well, which we have talked in the recent past too. So we are right now focusing on these strengths that we currently have and diversifying within our strengths. And going-forward, I mean, these new categories and geographies is what our plan is for at least the next foreseeable future.
Devesh Jain
Got it. Thanks. That’s from my side.
Sanjeet Singh
Thank you, sir.
Atul Kumar Jain
Thank you.
Operator
The next question comes from the line of Harshit Khadka from RoboCapital. Please go-ahead.
Harshit Khadka
Thank you for the opportunity. Am I audible?
Sanjeet Singh
Absolutely.
Atul Kumar Jain
Yeah.
Harshit Khadka
Yeah. Thank you. So sir, considering you had one mentioned an asset turnover of around 4 times. Could you provide your outlook on — do you have any plans on achieving a top-line of thousands CR?
Sanjeet Singh
So actually, you know this question I would like to take slightly differently. Asset turn, definitely we’ve talked of that many times in the past and this is something that I still stand-by that our asset turn for the new plant also will be in the tune of where, you know, historically around four to five times historically, we’ve always been in that range. It’s just a matter of time, as I always say. So whatever efforts we are taking today will start reaping benefits and some of them have already started and that is why hence the growth that we are seeing. So that will happen, but it’s just a matter of time. And I would say you will get an idea of where we plan to go and how much time it might take by the revenue guidance that we will give in the next earnings call because we’ll be ready with that in March. So I do have some tentative numbers, which I cannot discuss as of now. But you’ll get — you get a sense of the strategy and where we are moving ahead.
Harshit Khadka
All right. Thank you.
Sanjeet Singh
Thank you, Mr. Harshit.
Operator
Thank you. The next question comes from the line of Pawan from Bullseye. Please go ahead.
Pawan Katariya
Yeah. So I was dropped from the previous call. So just wanted to ask, so should — can we retain our EBITDA margins back to our normal margins, which were 18% to 20% in coming FY ’26?
Sanjeet Singh
So last year also when we gave the guidance, our EBITDA margins were — in the guidance also were in that range only. That was considering the performance of our ongoing ODM business as well as the — the display lighting business, all of that. But now keeping in mind where ODM business is shifting. So I think I’ll be in a better position to answer this question in the next earning call when we have an elaborate plan of how we are looking at things for the next year.
Pawan Katariya
Okay. So any ballpark figure, so not that, but at least from the other — since we are also backward integrated, right? So that would also aid some margins going-forward. So I’m not…
Sanjeet Singh
That is definitely — that is definitely helping. But at the same time, I did give out a few reasons why the EBITDA margin has gone down in this year compared to last year. So that effect will stay for maybe a quarter or two and we’ll start negating beyond that once we start generating revenues from the newer verticals because we’ve done a lot of onboarding of expenses and that will start negating — once we start generating the — I mean, substantial revenues from these business verticals.
So that will happen. But till what extent we’ll be able to improve in the next quarter or next six months, that we will be in a much better position once I have the exact budget for the next financial year. But we — I mean, our plans are to definitely improve on where we stand today and that will automatically start happening once the business starts getting developed with the newer verticals.
Pawan Katariya
Okay, because this — as you mentioned, right, these are the temporary thing which is — the front-loading of expenses has already been done, right? Once revenue starts kicking-in and the higher depreciation which we are doing, right? So this is one of temporary things. So going-forward, once the revenue increases, we should get back to our margins, right? So do you see — do you think the ODM margins to remain subdued which we have for this quarter going-forward also, they will remain the same.
Sanjeet Singh
So as of now, I can talk of the — I mean, the previous quarter and the quarter where we are sitting as of now. So this the ongoing quarter will also see similar numbers when it comes to the ODM business. We will start improving on that, whether that is now done in — with through the new verticals, new business that we will be adding on or how we will take that you eventually will start developing with the passage of time.
But for the existing quarter, you can — just for the OTM business, you can consider the existing performance itself. But like I mentioned, we are already working on with other companies and other product categories and that effect will start coming in probably from the second-quarter of next year for the ODM business.
Pawan Katariya
Okay. Thank you. Thank you, sir.
Sanjeet Singh
Thank you. Thank you so much, Mr. Pawan.
Operator
The next question comes from the line of Jason [Phonetic] from SF Private Limited. Please go-ahead.
Jason
Hello, can you hear me?
Sanjeet Singh
Yes.
Jason
Well, good morning or it’s about Evening, rather. So I have a question about UAE business. Sorry, I has joined a tad late. Do we have any revenue guidance on it and how — and also in — and if I could club it, how the RV business is going on in US?
Sanjeet Singh
So honestly speaking, this was our first year and not even an entire year. It’s been only six months we started our operations in UAE. And if you consider just this much part to — if you consider just six months for..
Operator
Ladies and gentlemen, the management has got disconnected. I would request you all to stay online while I get them connected. Thank you ladies and gentlemen, the management is back online. Please go-ahead, sir.
Sanjeet Singh
Mr. Jason, are you still there?
Jason
Yes, I’m here.
Sanjeet Singh
Yeah. Yeah, sure. So I was talking about we’ve just spent six months when it comes to this new vertical and looking at the performance that we’ve done in these six months and the relationships that we’ve built, we are very happy with the progress that we have made in this market. And next year is also looking very, very promising. So, by the end of this year, we will show you the progress that we’ve made in this year in terms of the revenue that this particular region has generated for us and what are the numbers that we are looking for in the next year.
But again, coming back to that point, within just a matter of six months, the kind of relationship that we’ve established and the number of projects that we have done, it is really something to — I would say that people really appreciate what we are doing in that particular region.
Jason
So, sir, are you able to give any revenue guidance starting after the Q4 for next financial year?
Sanjeet Singh
Yeah. So during the Q4 earnings call, we will definitely put out some guidance for the next year, so which will include the entire business. So in that call, we — if you want, we can give some guidance of what are the numbers that we are looking at in the Middle Eastern market.
Jason
Okay. My other question was related to RV business with respect to US geography. So how can you give some color to it?
Sanjeet Singh
Sorry, sir, RV business?
Jason
Yeah.
Sanjeet Singh
So what was your question again?
Jason
So you mentioned you have a mentioned in — regarding the RV business, you have in US geography, how is it looking for next financial year?
Sanjeet Singh
So RV business is also progressing. There were some hiccups in between, which were related to the inventories which were built-up there in the US so that was one major hurdle that we have now sort of crossed. It is developing well. We have — there was one big difference. Earlier we were working through, I would say not exactly there was a middle man I would say in-between earlier when we were working in that particular market. And now we have our own sales team present there.
So this is an update that we gave in the previous earnings call as well. So now we are getting much better clarity and things are progressing well. So regarding next year also, I think with the next earnings call, once we have the numbers planned out, we can give you a formal guidance or a tentative idea of how this market is looking.
Jason
Thank you. I’m looking for the next quarter and thank you for your time. Thank you.
Sanjeet Singh
Thank you very much, Jason.
Operator
The next question comes from the line of Sanjay Sood [Phonetic], an Individual Investor. Please go-ahead.
Sanjay Sood
Yeah, thanks for giving me the opportunity. In fact, just now what was discussed that I was the person who asked this question about this IKIO in United States. So just a point to highlight that it may be a good practice to-high — to basically declare how much worth of value the business you have done with them they have purchased because some kind of negotiation also takes place. Now that’s just to highlight.
And first, my only question is that you have — you are going to change the name. Now some voting is going on. So all these products you’ll be making, you have any plans to make?
Sanjeet Singh
Sorry, what was your last part?
Sanjay Sood
Like you have highlighted washing machine and so many other products. So you have actually plans to make all these products?
Sanjeet Singh
Okay, so I’ll take your question one-by-one. First part of your question was regarding the business value. That number, we can definitely — at the time of making the final balance sheet, we can definitely put out that number of how much of inter — I mean the business between India and that company, Mr. Hardeep’s son’s company, we can definitely put that number out. So it’s — like I said, it’s not a big amount.
And on-top of that, we are doing that at arm’s-length, no matter what the relation is because we have to make sure that is something that we always follow. So we are doing that at arm’s-length. So we’ll give you that figure by the fourth quarter once we have the number for the entire year. And coming back to the second part of your question, which was…
Sanjay Sood
Name change in many products what you are planning to make.
Sanjeet Singh
Name change is basically being done because we are diversifying, we are already doing a lot. So if we break-up our revenue, certain part is coming from lighting products and there is still a sizable chunk which is coming from non-lighting. S, in order to be more accessible to our customers in terms of their understanding of our company. That was a decision that we took and in fact, we were thinking about it since quite some quarters now because at the — on the face of it, it looks like we are just a lighting company, whereas if you dive deep, we are doing a lot more than just lighting. So that was done with that intention.
And the reason why all these things have been added because just to give a broader this thing and leverage to ourselves because now this name is going to stay with us for years to come, eternity to come for that matter. So it was done with that intention. But like I mentioned, you know the all the new avenues where we are working, we have clearly laid out all the new avenues and we are focusing on that as of now.
Sanjay Sood
Okay, and my last question, when do you think your like 3rd plant this will be ready man block two will be ready by March or April, when you think we’ll be achieving maybe 50% of capacity utilization of the plan.
Operator
Sorry to interrupt, Sanjay, you’re not audible. Could you please come — go to a location where the network is better? Thank you.
Sanjay Sood
Okay. Am I audible now?
Operator
Yes.
Sanjay Sood
Okay. My last question is that since your block 1 was commissioned and Block 2 is about to be commissioned, so when do you think both these blocks will be at least 50% of — your utilization will be 50%.
Sanjeet Singh
So block two, the construction work will be finished by March-April. Commissioning of that will take another couple of quarters at least because that is the time that it takes for setting up of the plant and machinery, the lines and everything.
And that is all based on as and when our existing new business verticals or the new relationships they — once they start maturing, that is when we start utilizing those plants to that tune. So I think I will be in a better position to give you a percentage for that sense, maybe in the first-quarter of next financial year when we — because we are in the phase of now starting some of those relationships or some of those products that we are about to start with.
And once we start and once we have some definite plans in terms of the volumes, which we already have, but in terms of exact timelines, I think then we will be in a better state to give you a proper figure in terms of percentage.
Sanjay Sood
Okay. Thank you. That answers correct.
Sanjeet Singh
Thank you so much, Mr. Sanjay.
Sanjay Sood
Thank you. You’re welcome.
Operator
Thank you. Ladies and gentlemen, that was the last question for today. I would now like to hand the conference over to Mr. Sanjit Singh for the closing comments.
Sanjeet Singh
Thank you so much everyone for taking out time and asking us all the important questions that you did. And looking-forward to seeing you all-in the next earnings call and looking-forward to our journey with you and journey with the — I mean the growth that we are expecting for the next year. Thank you so much.
Atul Kumar Jain
Thank you. Thank you, everyone.
Operator
Ladies and gentlemen, on behalf of Ikio Lighting Limited, that concludes this conference. You may now disconnect your lines.