Macfos Ltd (BSE: 543787) Q4 2025 Earnings Call dated May. 20, 2025
Corporate Participants:
Unidentified Speaker
Atul Maruti Dumbre — Chairman & Managing Director
Binod Prasad
Analysts:
Unidentified Participant
Bhumika Maheshwari — Analyst
Parikshit Kabra — Analyst
Balaji Vaidya — Analyst
Swaraj Mehta — Analyst
Kiran — Analyst
Abhijit Mitra — Analyst
Rohit — Analyst
Shabam — Analyst
Presentation:
operator
Ladies and gentlemen, good day and welcome to MacForce Limited, H2 and FY25 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 this conference call, please signal an operator by pressing Star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Ms. Bhumika Maheshwari from Haim Securities. Thank you.
And over to you Ma’ am.
Bhumika Maheshwari — Analyst
Thank you Steve. A very good evening ladies and gentlemen. Thank you for joining Meforth Ltd. Quarters and half year ended 31 March 2025 earnings call. Joining us on the call today from the management team are Mr. Latul Dumre, Chairman and Managing Director, Mr. Vinod Prasad, Full Time Director and CFO and Mr. Nilesh Kumar, Full Time Director of Medforce Limited. We will now commence the call with the opening thought from the management post which we will open this forum for the Q and A session where management will be glad to respond to any queries that you may have.
Before we go on to the mail call, I would like to read the standard disclaimer. There may be a forward looking statement about the company and the subsidiaries which are based on the belief, opinion and expectations of the company’s management. As on the date of this call the company does not assume any obligation to update their forward looking statements if those beliefs, opinions, expectations or other circumstances should change. These statements are not guarantees of future performance and involves risk and uncertainties that are difficult to predict. Consequently, listeners should not place any undue reliance on such forward looking statements.
With this I hand over the call to Mr. Atul Dumre, Chairman and Managing Director Mcfoose Limited to take it forward. Over to you Atul Sir.
Atul Maruti Dumbre — Chairman & Managing Director
Thank you. So first of all I would like to welcome all our dear share owners and thanks a lot for sparing this time for this call from your busy schedules. So we are very pleased to share our financial results for financial year 20242025 which highlighted the significant progress that we have made in key areas of our business. During this year we have achieved a revenue of almost 258cr with EBIT of almost 27cr and PAT margins of around 18cr.
So these results to us represent the robust growth that robo.in has always shown. And if you convert these numbers to growth in revenue it’s 104% growth in revenue, 61% growth in our EBITDA and 65% growth our path. This underscores the strength of our business model and our efficiency in operational execution. The overall year was marked by healthy demand for our product offerings and we are optimistic that this demand will continue. As we always say, electronics is becoming big part of life day by day. As well as the alignment of government policies for manufacturing in India, especially in the segment of electronics, these are and will remain key drivers for growth our segment.
Atul Maruti Dumbre — Chairman & Managing Director
A notable progress this year has been expansion of our product catalog. So we have added over 50,000 new SKUs or new products. So I just want to highlight one thing here though. This 50,000 as a number looks very big, but we all have to understand that these are primarily small and low cost items that we have added. Nevertheless, it’s a addition to our product portfolio, a strategic one and this has significantly enhanced breadth of our product offerings. We have also enhanced our marketing efforts both in the digital marketing as well as in the physical marketing.
So this year we have actively participated on the first time in a lot of domestic exhibitions. So the exhibitions in Pune, Delhi, Bangalore, Hyderabad, we have attended a few this year. So there’s enhanced marketing initiatives we believe will broaden our brand visibility and market presence. Along with that are key business indicators. Website and traffic, total number of orders served, average order value and customer retention continue to grow and show strong and positive trends. As we look to the future, we remain guided by our strategic frameworks which are Roku 1.0 and Roku 2.0. We believe this will continue to shape our roadmap for 2025 beyond robo 1.0 for I mean most of our regular investors know this but for people who are new here, Robo 1.0 represents our electronic distribution business which is a core business that we have.
So basically here we onboard a principal supplier, have a distribution agreement with them, get their products on board at a competitive price and these products are distributed in India, that is Robo 1.0. The focus here is delivering electronic tech products at competitive prices backed by robust customer support with minimum lead times. And in Robo 1.0 we are investing in our IT infrastructure enhancement as well as we are strengthening our supplier partnerships to optimize the procurement as well as reducing lead times. The expansion of our SKU this year reflects our ongoing efforts to build comprehensive and reliable store in electronics domain in India.
Now let’s talk about Robo 2.0. Robot 2.0 is basically a strategic shift or a long term strategic shift for developing and scaling our own proprietary brands and our own proprietary products. So Almost over past two years we have putting in increasing focus for Robo 2.0 and we have doubled down our efforts for research and development in 2024 2025. ROBO 2.0 is an initiative which is central to our long term vision and positions Macross for sustainable growth for next five to 10 years. In past year alone we have successfully launched around 186 new products under our in house development program for Rohu 2.0.
So these products are basically from two main categories. One is development boards and modules and other is drone parts. So key additions in this new SKUs are agricultural drone frame, ready to fly drone kits, some telemetry modules, some TFT and HMI displays, so on, so forth. Also we have our own brand which is Pro Range under which we have launched 650 odd products this year and all these products have been well received by our customers which reaffirm our quality and innovation as well as our belief that Robo 2.0 is going to be a strong pillar for us over next five to ten years.
Again, I would like to thank you guys for your trust and support. As I always say, we always consider our investors or share owners as one of our partners and we believe that you guys are also a key pillar for us and I assure you that we will always be working for bright and innovative future for robo.in that’s it from the management side guys. I’ll be taking any questions or doubt you have and trying to answer them to best of my abilities. Thanks again.
Questions and Answers:
operator
Thank you sir. We will now begin the question and answer session.
Anyone who wishes to ask a question may press Star and one on their touch tone telephone. If you wish to remove yourself from the question queue you may press enter. Two participants are requested to use handset while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Parikshit Kabra from PK Day Advisors. Please go ahead.
Parikshit Kabra
Hi, thank you for the opportunity and congratulations on a good set of numbers. My question actually is quite a fundamental and basic question because I’ve been struggling to intuitively understand why a large scale enterprise customer who may be purchasing these products in bulk would, you know, come to VOBU and come to MacForce for its procurement requirements rather than doing it direct Would it be fair in my understanding that the tail end equipment that they might have, the arbitrary equipment that they might need, components that they might need is when they come to MacForce and besides that they do direct procurement.
Atul Maruti Dumbre
First of all Parikshitji, thanks a lot for your question and it’s actually a very good question, a fundamental question that you as you already said so if you look at Robo’s journey I would say in 2014 we started as totally as a online store. We didn’t have any corporate customer per se. We are totally focusing on online sales or the retail sales, B2C sales, whatever you would like to call it. Almost for first four or five years of our journey and through the journey we realized that there is a lot of industrial customers who need the support as well as our products. And then we formed a corporate sales team and around 2019 and started to sell to the corporate customers. So just to give you a prospective our corporate sales around 201920 times were all 5% of our total sales. Five years from that moment today we our corporate sales are almost 50% half of our business. We have a strong corporate support or corporate sales team, key account managers to support corporate customers.
And I believe we have learned to make to sell our products to let’s say small and medium scale corporate customers. Part of that journey, I believe that would be to gain these corporate customers coming as you said large scale corporate customers in coming times for us as on today we are not doing a lot of last case customers. Again part of your question was that why would a large scale customer would buy from us. So basically when you go into electronic distribution model generally a large scale customer have even the small or large scale customer have to buy from the authorized channel partners because the principal or the company who owns the product they really don’t want to get into the local distribution country wise their key strength is designing and developing these new products and bringing them to market to solve customer issues.
Yes, whenever there are higher volumes there are generally tri party meetings. The one with principal who owns the product, the distribution who is matt first and then the customers. And of course there are ABCD things. But generally in electronic distribution even a large scale customer would want to go with the local distributor because it is mandated by principal most of the times. And and secondly they need a number of support if the product is not working. They need some support locally who would support them if they require small quantity because their production has increased a little bit more at the last moment or their product is not proving to the exact specifications where they want it to be.
So all those kind of small things are taken care by local distribution or the credit terms. How would a manufacturer or supplier Say sitting in Europe will give credit terms. And if those credit terms are not, if the payment is not served by that customer, how would they go about it? So for all these practical reasons, generally the thumb rule is they go with distribution partner.
Parikshit Kabra
Got it. So would it then be fair to think of Mac Force as the master distributor for many of these components in India? Do we have exclusive distribution for many of these things?
Atul Maruti Dumbre
We have distribution for many of these things. We are authorized distributor for over 250 brands. However, we are not exclusive distributor for most of them. We are exclusive for a few brands. However, we are not exclusive for most of the brands that we have.
Parikshit Kabra
Okay, so then there must be other authorized channel partners in India just like us. Is our right to win the sheer size and breadth versus our competition.
Atul Maruti Dumbre
So for any business, this is true for any business, it always want to win a lot of market share. However, once you are doing a significant business for any brand, you get certain advantages once you have a good product portfolio. So customer prefers to get a lot of products from one distributor. Secondly, once you are doing the pricing that you get and the support that you get from the brand also depends on how much volume or how much of the total revenue you are moving. So once you are of a certain size or moving a certain business for the partner, then you almost have that edge over even with a few distributors in the country.
Parikshit Kabra
Perfect. Let me just ask you one last question before I get back in the queue. How would you describe our market share in this industry and who are the key competitors in India?
Atul Maruti Dumbre
So as we always say in India we don’t see a single competitor because we are doing Multiple segments around 70,000 SKUs as on today. So we have the most comprehensive portfolio. Internationally we always say that there are these three or four big players who are on digikey, Farnell Mouser. So internationally we believe that these are more of similar business models. Of course we are stocking in India, so we have leverage in that. But yes, locally we don’t see there are people who are doing having a few thousand SKU in one segment. 2000 is still in different segments. But nobody have a comprehensive store or comprehensive portfolio like Robo.
Parikshit Kabra
Nobody’s of the same size. But if you look at the entirety of the industry of all the equipment that you’re providing, what would be the market share in India for you? Do you have a sense of that?
Atul Maruti Dumbre
This question like market share? We have also tried to calculate a lot of times however, because the market is, you can say fragmented or there are a lot of things that there are a lot of components in the market. So we are not, we really don’t have a number to put on here that how much is the market size and how much of that is we are doing as a business.
Parikshit Kabra
Got it. Thank you so much for your time. I’ll get back in the queue.
Atul Maruti Dumbre
Yeah, thank you. Parasiti.
operator
The next question is from the line of Balaji Vaidya from Nafa emc. Please go ahead.
Balaji Vaidya
Atul. We know that Nilesh many contracts and great set of numbers. Just couple of questions. One, you know we have seen broad basing of your SKUs to almost 70,000. Now what I’m trying to understand is considering that you have given more business to your vendors, I was expecting that the days payable number to actually be higher than last year. Meaning that you would have kind of bargained for better, you know, payable days. But I’ve seen that in FY25 your favorite days has actually come down. So any thoughts on that? That was point number one. Point number two, this SKU addition, I mean of course this was always a planned strategy but does the 90 day trade barrier also have some kind of a, you know, some kind of an impact on this particular decision of yours to broadbase the number of SKUs? Thank you.
Atul Maruti Dumbre
Malaji ji, I didn’t get your second part of this question about SKUs. Could you please repeat that?
Balaji Vaidya
So if you look at the, you know, the days payable, the amount of time that you would take to pay to your vendors, that has actually dropped compared to last year. So I was actually expecting that then a days payable number would actually go higher considering that you have given more business.
Atul Maruti Dumbre
Yes. And second question was, second question was
Balaji Vaidya
how much of the, you know, the current geopolitical situation, the trade barriers,
Atul Maruti Dumbre
okay,
Balaji Vaidya
that has played a part in trying to broadband your SKUs in the last quarter of this financial year.
Atul Maruti Dumbre
Okay, so I’ll answer the second part first that how much of a geopolitical situation has played a role in broadening our number of SKUs? So I don’t think it has played any part, I mean active part. Yes, of course there is a geopolitical situation. I mean something sometimes every time something is going on around which please going to impact a lot of businesses in India. Probo is no exception. However, this broadening of scu, we really haven’t thought much that way. Our thinking process is simple. We look at a certain target for revenue short term and long term that we want to do.
And for doing that revenue or growing the Business we always see which categories we want to target. Not the SKU Number of SKUs to be added but the categories. We see what is the best that we can do with our existing categories and then if we need to or want to add any extra category in our portfolio and then once we zero down on particular category then we see what kind of product we should target for that category to have a certain revenue in coming one to five years, whatever. So the decision is totally based on that.
So there are some categories where the product is selling one single se selling at one lakh rupee a piece, maybe 60,000 rupee a piece. So there maybe we would just add two or five products and even if you sell like 2030amonth, the revenue will by 2030 lakhs. Let’s say roughly for some categories if a product is selling only at let’s say 4,500 rupees then we’ll multiply it by number of products that we can sell and accordingly we’ll see if we need to add 10 SKUs for the category or maybe 1000 SKUs. It’s totally based on the type of category and type of product and the pricing.
So that is how we think. So generally the we do not have this geopolitical order situation considered while doing this sku new product or new skills to be added. And that’s why in my management prospective I said that I want to highlight that though the number looks good, these are primarily small and low cost products. It was just a strategic decision. Secondly you mentioned about payable days. Yeah, I think Vinod is the best person to answer that.
Binod Prasad
Hi Balaji. So trade for March 24 was around 8 crore and in in March 25 it’s around. In March 24 it was 7 point total 8 crore and in March 25 it’s 10 crore. So it has gone up by 2 cr and all are less than you can say 6 months. So I was actually looking at it from number of days, you know, I mean it’s actually come down to 18 days from 30 odd days. So that was my broad question. But that’s fine. So I’ll tell you. So generally we always want to have the credit from our suppliers which is whatever based on 30 days, 45 days, 60 days, whatever. In our case more often than not we are importing these products internationally and it is, how to say hard to get that credit terms going with principals because they are international though we try our best.
So when our business goes on increasing your like the amount of these days should increase like the if I’m doing 10 lakh rupees with 30 days credit generally I’m doing let’s say 60 lakh rupees worth of credit next year because my business is growing and I need higher credit terms. But number of days generally are the same, they are not increasing or decreasing. I think it is more situational. I mean this is as on the 31st of March. So to answer your question the days are not changing that much but it is more situational that whether we have bought it on 1st of March or 10th of March, one big shipment coming here and there are a lot of shipment coming 10, 20 days here and there will make that difference.
Have I answered your question?
Balaji Vaidya
Thank you. I have one question on Robo 2.0. Of course you have mentioned the successful launch of 186SKUs and of course it’s understandable that it’s too early to talk about revenue numbers etc. But would you have any ballpark SKU target? Like for example you have 70,000 SKUs out of which 186 SKUs are ROBO 2.0 which is at this point in time a rounding of error 0.25%. So would you have like a SKU target in mind saying that okay, over the next 2 years 10% of my total SKUs must be Robo 2.0 or some such number like that.
Binod Prasad
Yes. So Balajiji, we don’t have a SQ number target as I said. So all our targets or the general thinking process is revenue based. So we have rough targets in our mind that okay, we want to do these, these revenue in longer term with Robo 2.0 for which categories are the best category to target and then we want to target a certain product in a certain category. So it depends if like if a 1 lakh rupee selling price product is doing well in Robo 2.0 I’ll be more than happy to just make 4,5 more SKUs and generate a good revenue out of it.
And if let’s say 5000 rupees selling price worth of product is doing good in Robo 2.0 and again there is a market scope for making 50 of those SKUs because there is a market demand then we’ll be making more of those. So our thought process is more revenue driven rather than number of SKUs driven even in Rohu 2.0. So right now our key matrix for Rohu 2.0 is making the products, launching them in the market and get the first response from the market that whether the products are selling, Is the quality up to the mark? Are the functionalities of the product up to the mark? What are other customer expectations? And then what slowly and gradually will move to what revenue those category and products are driving and then double down on the categories that are doing well or us well for us or products that are doing well for us.
So that is the, that is the thinking process. Currently we have, I think in last year was the first year where we have launched n number of products aggressively and we are happy with the initial response, products are selling and people are happy with the quality. That is the first feedback. So we will continue working towards growing this.
Binod Prasad
Great. Congrats and wish you all the best.
Binod Prasad
Yeah, thank you
operator
Thank you. The next question is from the line of Swaraj Mehta from Perpetual Capital Advisors. Please go ahead.
Swaraj Mehta
Hello. Thank you for the opportunity and congratulations on a great set of numbers. I just wanted to understand that gross margins have declined significantly this year. And so could you elaborate on the key factors that are driving this drop and do you see this as a structural shift or is it temporary? And how do you anticipate gross margins evolving in the coming quarters? Thank you.
Atul Maruti Dumbre
Okay, so I would talk more. So gross margin for us is a mix of our corporate business as well as our retail business. And as a company, as a team, we always like to focus more on our net margins or pat levels because we have our expenses under our control.
And as long as that is happening, we are very sure what pat margins we are making since the gross margins is is a mix of a number of factors. This year specifically, we have, as we have told in our H1 commentary, We have a lot of big orders or I’ll say a few big orders coming in H1 which we don’t foresee in future as on today. And for if you see our cross margins in H1, they are around 17% so they have dropped because of those big orders. If you see in H2 we have again maintained our regular 23, 24% gross margins level, which are generally we are happy with.
And I think in long run we don’t see any, I mean as of today we don’t see any significant change in the gross margin. So whatever we have maintained in H2, we are confident that we’ll continue on the same path. It was one exception in H1 because of the big orders that we have done.
Swaraj Mehta
Okay. And other expenses. What are, if you could give the breakup of what are the key components that are driving this rise? One, you mentioned marketing and other. Are there specific costs that have risen or any. Any one time cost in other expenses.
Atul Maruti Dumbre
No. I mean nothing comes to my mind that there is any other expenses that we have reason as I said. Like if the gross margins in the H1B low because we have this big orders coming. So of course once you have higher or higher volume orders you have to do them at only at a certain margin.
Swaraj Mehta
But I mean after that there is nothing that comes to mind for increase in expenses which is abnormal. I mean other than our regular. Regular expenses or regular percentages that we target for.
Atul Maruti Dumbre
I’m sorry, I could not get the last word. Can you repeat what you said?
Swaraj Mehta
Yeah. There is no abnormally increase in other expenses other than what the regular percentage that we target for. For our make one to three expenses.
Atul Maruti Dumbre
Okay. Okay. Thank you.
Swaraj Mehta
Yeah.
operator
The next question is from the line of Kiran from Tabletree Capital. Please go ahead.
Kiran
Hi. Thank you so much for taking my question. Couple of questions. First question being we have achieved about 250 crore of revenue. If I ignore the one time or two time big orders in H1 could you tell me so minus that. So 250 minus whatever it is. Right. 60 crore. 80 crore. 90 crore
Atul Maruti Dumbre
would be around 190 cr.
Kiran
190. Okay. So that. That was about 60. Okay great. So 190 cr. So 190 cr is the revenue. So of this 190 cr can we. Can you tell us for B2C and B2B how has the average order values increased year over year? I’m not looking for exact numbers. Right. Because you don’t give a split. But I’m just trying to see if average order value is increasing. Number of orders per customer is increasing because you’re adding a lot more customers. Both on the B2C and B2B perspective So is it the number of orders that’s increasing or is it the average order value that’s increasing year on year?
Atul Maruti Dumbre
Yeah. So if you look at the presentation particularly for this year our average order value has increased. I mean it is four. I mean. I mean as. As we are not giving the split numbers. I’m just giving you the total all businesses number. So the average order value is around 4,600 rupees. Which was around 4,000 rupees last year. Okay. And before like before a year ago. Like before a year that to that it was 4,900 rupees.
So as a business we always like to or want to increase our average order value. However, as a. How to say the focus of doing business or the top of the head thing that we have, we never look at it that way. Whether I just want to increase my average order value from 4600 to let’s say 5000 and then what are the things that I want to do for that? No, that is not how we principally think. The principal thinking is always from the top line of the top line of the business. Okay, we have done let’s say 234 whatever revenue we have done this year and then we want to increase it to a certain number.
For that we’ll split the categories and we’ll see which category is doing what business and then which category has the potential to increase and then what are the things to be done so on, so forth. So if a category, let’s say we have added these small components so the orders of the small component average order value of these small components will be obviously small. Right. However, I really don’t go into that as a matrix. My matrix is always my top line and the profitability and then for that if I have to increase the average order value or increase the number of orders because anywhere revenue will be multiplication of those two.
I really don’t keep either of these as a focus. I generally keep the category and growth of the individual category as a focus. So yeah, it has increased in last year. However, the management or the thinking process being like this the focus will be always increasing the top line with the certain margin. Have I answered your question?
Kiran
Yeah. No, no. Perfect. That was absolutely superb. Thanks for that. The second is of the. I mean this is more of financial question that your inventory suddenly increased to 5556 crore from 24 crore. Is that a result of building up this 73,000?
Atul Maruti Dumbre
I mean these are all low cost. So I’m just trying to see whether you’re anticipating a lot of growth in the first half of the year and therefore the inventory has built up so high or is it a function of something else?
Bhumika Maheshwari
So the inventory is function of multiple things One of which you rightly pointed out that our number of products that we have to keep in stock if the products increase. So yes, that number of SQ Increase have certainly have a role to play in inventory increase. However let’s say a top of. Let’s say 5 to 10 share inventory is also role of or rather the function of timing.
So just to explain you the situation sometimes if we. If we know that our stocks are on their highest peak so that time our inventory will be 10 to 20% higher but it is just maybe momentary. Let’s say if you calculate in middle of March it will be higher and if you go to middle of April, it will go down a bit because we have. If you look at our revenue, we are also consuming a lot of inventory. And then maybe some three, four big parcels are delayed. They are not arrived on time. So I think these two combined is showing that rise in the inventory.
However, our regular numbers for inventory rotation days and inventory aging that how old is our inventory, those numbers are in line. So I assure you there is nothing to be concerned about the inventory. It’s mix of two things. Yes, we have increased number of SKU and then that contributes to wind increase. Secondly, it’s just situational that 10, 20% of that thing.
Kiran
Got it, got it. Perfect. Thank you so much.
operator
Thank you. The next question is from the line of Abhijit Mitra from AONIS Alpha Investment. Please go ahead.
Abhijit Mitra
Yeah, thanks for taking my question. I hope I’m audible. Yes, Abhijit, you’re audible. Yeah. So in absence of this one time orders or large orders, I think you mentioned the sales number also. So just to maintain this year’s number, it means the 39, 40% growth. So I’m just curious what kind of growth projections are odds you have in FY 26 or 25.
Atul Maruti Dumbre
Yeah. So Abhijiti, we generally as a we do not give any forecast for the in the number C per se. However, what we have said is I’ll say right. But if you look into our the way we work right now means because we knew from day one that these are one time order can may or may not repeat.
So from day one how we have checked even internal targets and everything that we always exclude those one time orders from the revenue that we are doing as well as our growth targets that we are taking. And we will keep on doing the same because that is the practical way of doing things. If we just add those one time orders and then think on top of that how much we want to grow and everything, it becomes really unrealistic. So what we have been saying is something that we are confident that we do that we, we will, we will continue on the growth path that we have been doing historically.
You have to exclude the one type big orders when we cannot say this because that is the most practical thing to do. Understood, Understood. And then there will be some improvement of margins because these are margin dilutive orders. So you expect net profit margin to reach around 8 and a half 9%. Again as this, you know, normal course of business resumes. I as on margin is like there are two things. One is this Big orders coming in or not coming in. And then also it is dependent on the product mix that we are selling in a particular year or a particular quarter, whatever.
However, I would also not like to comment on those. Whatever percentage of margin we are targeting. So whatever we are doing historically, I think this time it’s around at level. If you see around 7%, we are always trying to improve it or at least maintain that.
Abhijit Mitra
Okay, got it. And lastly, I think you mentioned that the inventory edition has been mostly, you know, in terms of small ticket items. You know, it’s, it’s, it’s, it’s small items. So this, you know, small and low cost items. So this AOV will reflect accordingly if it in the first, first half of, you know, first nine months.
I mean will the AOV sort of come off because of this kind of. Is there a shift in sort of product mix that you are trying to suggest when you say that this Invent edition is mainly because of small and low cost items. So let me just, I mean correct me if I’m wrong. So what you’re asking is average order value, will it increase because of this low and low cost item?
Atul Maruti Dumbre
There are or it’s hard to predict because what may happen is our regular customers will also buy this low cost item in the regular orders. So that value should increase because they’re already buying 10 product from me. Let’s say average order value at this point, 4600. Even if they add 500 rupees worth of these products. So my average order value should go up again. I’ll have some customers who are only buying these new products. So maybe the order they are placing is only 1000 rupee or 2000 rupees, which is let’s say for the time being 1500 average order value for the customer who is only buying this new product. So it is really hard to predict what will prevail when you calculate the total average order value.
Because we already have a big customer base which are buying these existing products with 4600 average order value. So both are the possibilities will when we come to know when it happens. Yes. However, we are confident that any of this happened ultimately we are going to generate higher revenue. I mean that is what the whole point is of adding these activities. And that is how we think that, okay, whether our old customer buys 500 rupees worth or whether our, whether a new customer comes and buy 500 rupees worth of this product doesn’t really matter as long as I’m gaining that 500 rupees in revenue.
And that is how we think that the category and the revenue and then multiply by number of whatever orders or total category wise revenue and add this up and then see if it is viable to add that category.
Abhijit Mitra
Understood. And your inventory days you don’t feel is going to go up permanently, right? I mean so sort of come off again next year, you feel this year, this sudden jump of inventory days that that is going to normalize sort of again next year you think, or it’s sort of moment high in terms of days that you see from here on.
Atul Maruti Dumbre
So primarily because we have added these products, we expect our inventory days to go slightly up. However, you have to understand this is a different category of products and these products have higher margins. So they allow us to have higher inventory days because the margins slightly higher margins take care of these inventory days. So we actually, we don’t consider inventory based as a standalone metric. But we knew that when we are adding this 50,000, whatever SKUs we have added 50,000, we cannot look closely, very closely to each of the products, cannot pay attention to each of the product.
We have to buy them in kind of bulk. So there will be more inefficiencies in inventory. However, the margins on this product are such way that even those little bit inefficiencies in inventories, even little bit generation of dead stocks are taken care in the margins. So we are okay with that. So it’s kind of a trade off that we are doing now how much it will add to our inventory days and everything that we are not sure at this moment. However, whenever we calculate our inventory rotation it is always category wise. So we will have a clear picture internally that okay, for these particular products, how we are doing, what are the margins and if it is good or not, for others it should continue the same.
We have historical data. So accordingly we’ll tweak and move and you know, readjust align our path.
Atul Maruti Dumbre
Hello? Yeah. Can you hear me?
Abhijit Mitra
Yeah, yeah. So have you, have you? Yeah, yeah, yeah, yeah.
Abhijit Mitra
That’s, that’s all from my side. Thanks for the answer. That’s all from my side. Wish you all the best.
Atul Maruti Dumbre
Thank you.
operator
Thank you. The next question is from the line of Rohit, an individual investor. Please go ahead.
Rohit
Thank you for the opportunity. It’s always a pleasure to listen to you speak and understand the business model. My first question so what we have seen is the growth has been rapid and the return on capital and net worth has come down.
And I mean over time if the growth of our business is faster than the or is higher than the returns that we generate on the capital that we are investing. What that means is we would need further dilution along the way. So I think we diluted one and half two years back. Do you see? I mean for us to maintain our growth rate, us requiring to dilute sometime next year or the year after that. And the following question is three of you together own equal amount of stake. So what is the cumulative promoter stake below which you are not comfortable going? Or do you think along those lines at all? Thank you
Atul Maruti Dumbre
Rohit ji. Thanks a lot for your questions. So as you mentioned, growth has been rapid and according to that the dynamics of the business are changing. So we are also very fluid on this. We have been doing since only over a decade. I guess we are every year we are growing and then we face some new challenges, we find some new solutions. So it’s really things are really clear. In hindsight however, looking in the future picture is always little bit fuzzy. We know the direction. However we always keep on course correcting as we go in future whatever is the best for the business to the best of our abilities.
Now as on today we really don’t have any plans for dilution. Of course even if we had, it would be really stupid to say it out loud on the, on this call. But yeah, to be very frank, we don’t have it as in as on today. And whether we’ll have it in recent future or not, that only the business requirement or the dynamics will decide. Secondly, three of us currently own equal stake which is around roughly 69%. So yeah, we also are not, we have also never discussed this that you know, how much is the minimum below which we are comfortable or not comfortable.
We just diluted whenever we felt that there was a business requirement. And then we are here at 69. So yes, there is no such number or percentage. Never, never was the discussion to be very frank that below what will comfortably we will be not being so comfortable or whatever.
Rohit
Thank you, that was helpful. And so I mean we have started taking debt. I mean we are today at the end of the year at least. It’s again a point in time depending on when we decorate the inventory. But the debt is at the highest level that we’ve had so far obviously because the business is growing.
So do we have an internal metric on what is the maximum debt at any point of time that we’ll take in terms of its ratio to equity or any such number that we look at beyond this we won’t take any debt. For the debt you are Saying for the loans. Yeah, debt on the balance sheet.
Atul Maruti Dumbre
Yeah. So we really don’t have any highest number of debt. So our thinking is very simple. As I always say, we want to grow this much to grow this much with this much margin to do that what categories demands what whether we have money to do the that to buy inventory or whatever investment we want to do.
If you don’t have money then what are the options Debt options we have. So if we say take whatever 5 crore as a debt, extra debt then what we have, what are the returns that we have to give on that and is the category that we want to expand will provide us more than what, what investment in debt and returns it will have? If it is a yes, we’ll go ahead. If it is A not then we’ll, we should, I think we shouldn’t do that. So this is the top down process. So if category requires certain amount and we are confident that we can earn more than what is going as a interest of the debt then why not? And we only take that when we are sure of that return.
I think that is the thinking behind that. And to be very frank, I think you guys, the investors are really good at these financials and numbers crunching everything. We on the other hand are more of driving by this approach of top line and growth and categories more of a business person’s or technical approach. Me personally if I go look into these ratios and this and that it becomes really too much to look at. And you know you just, we, we just as a management, we just try to keep it simple. I think that helps us or the way we have been doing this and it works well for us so far.
So yeah, that’s, that’s about that.
Rohit
Thank you. So two questions last. What is the ad? I mean the publicity spins that you did this year? Do you have an idea of what the number there? And the second question I have is, I mean in the sense of see you move from B2C to B2B in 2019. I guess the next part of the journey would be to probably supply the bulk requirement of the customer as and when required. So where are we on that journey? I mean I think right now we provide for the R and D departments and the bulk requirement are provided by some of these big traders or big distributors.
So do you think see us in reaching that level in some categories?
Atul Maruti Dumbre
Okay, I’ll, I’ll answer your first question first. The marketing speed generally our target is to maintain it, maintain it below 2.5% of the overall revenue. That is Sorry, the online revenue, that is the internal number. I’m not sure exactly how much we are doing that or doing as on now. But yes, it is under that which is below that. I think mainly the question arise because we did participate in domestic exhibitions this year, multiple of those. However, we are always like whatever marketing activity do we always have the limit for that expense.
So anything we do we. You have to maintain it below that. And I think this year we have got this budget for that because we have grown revenue well and that has allowed us to have that extra percentage in budget which we can use on this domestic exhibitions. Secondly, you ask about growing from B2C to B2B and where do we foresee that going up? So yeah, we have grown from B2C to B2B and as on today we are doing a lot of not only the R and D orders but also small productions or small to medium scale companies production orders.
We are doing some, I would say production or big orders for some of the big companies and obviously we would love to order and increase that. However, I mean, how long, how far? We are really not, we are not really doubling down on that as a target per se because there are different dynamics that comes into play for those orders. And even small and medium scale companies base is growing very rapidly in India and that customer base, we are already fulfilling their requirement. They are happy with the service and the products and the prices that we give.
So of course we’ll try to go into those high volume productions. But when and how or how much that happens is currently that I really can’t foresee.
Rohit
Perfect. No, awesome. This is very helpful. Thank you so much for your time. Until I’ll get back to the queue.
Atul Maruti Dumbre
Yeah, thank you. Roji.
operator
The next question is from the line of Shabam individual investor. Please go ahead.
Shabam
Hello, can you hear me?
Atul Maruti Dumbre
Yes Shubham, I can hear you.
Shabam
Hey, so I had the same question on the line of like when you will be moving from RD to this bulk order. So I think that has been answered because I’ve been a customer to Fourier Products and most of your sales are in the category of development boards, that is Arduino Raspberry PI and second is probably 3D printers. So those are like one time or like low volume orders which are not probably repeated after R and D cycle is completed. So like will you be getting into bulk orders like Mouser. Digikey if you have to compare yourself with them.
Atul Maruti Dumbre
Yeah, as I already said Shubham, that is always on the table that we want to have these big Customers, we want to grow these orders.
However, I’ll just like to slightly add on through this. So yeah, the way you mentioned Arduino and Raspberry PI, there are some customers who buy let’s say a thousand Raspberry PI or a thousand pieces Arduino per month from us. So the dynamics of markets are also changing. A lot of customers even they do, they have 500,000 pieces worth of product requirement. They don’t want to go into the cycle of developing their own boards and everything. So they are using these boards also as their, I’ll say small and medium scale volume production only when they move something like 5,000, 10,000 pieces a month, then they are moving to developing, designing their own boards to save some cost and moving in that direction.
So yes, we would like to be serving those customers as well and strategically. I cannot tell you on this call exactly what we are doing. But yes, we assured strategically we are doing things internally which will position us well to serve these orders, to service customers, to support these customers.
Shabam
So yes, yeah, yeah, got it. And just a small question, like how big is the opportunity for a tall innovation mission for you guys? Is there anything that is by supply? L1, L2, L3, any kits?
Atul Maruti Dumbre
So we have been supplying this atal innovation kits to the different customers.
And these are, since these are standard kits, I think we have already listed them as a single product, the whole kit as a single product on our website. So yes, we have been supplying those kits directly to some end consumer as well as to some of the project guys who have been buying these kits and then you know, doing the execut own.
Shabam
Okay. Okay, that answers my question. Thank you for your time.
Atul Maruti Dumbre
Thank you, Shubham.
Atul Maruti Dumbre
Thank you. The next question is a follow up question. It’s from the line of Parikshit Kabra from, from PKD Advisors. Please go ahead.
Parikshit Kabra
Hi, thank you for the follow up. Actually, people have spoken about margins in this call previously and you have maintained that you guys are targeting the current margins at the steady state, the current levels. You want to maintain that, but there is a pattern, there’s a trend to your margins for the last few years. You peaked and I’m talking about EBITDA margins. You peaked at about 16% in FY22 and since then like clockwork is reducing by a couple of percentage points each year. Could you elaborate on why that is happening and why we think that will stop happening from next year onwards?
Atul Maruti Dumbre
Okay, right now I don’t have the numbers in front of me or the exact data. However If I talk about our pat margins as on today we are always like, you know, even, even in the current margins we are always trying to maintain, we in future we want to maintain those margins. And this is not a secret. I mean it’s very obvious that when we are going for the biggest margin, bigger margin, sorry, bigger market or more of industrial customers would have to sacrifice some margin or the margin goes on reducing. Of course everybody knows since like since as this is not the secret, this is the second thing is also not the secret that
okay, it will go down only up to a certain level.
Because after that the margins should stabilize. Let’s say give or take half a percent or 1% here and there. Because beyond that then the business also becomes not lucrative to do on those margins. So on one side we are always trying B2B customers or the high volume customers or the higher market size. On the second side this also reduces margin slightly and then we believe that it will stabilize at some level. Now we are always trying to maintain our margins or do a little tricks here, little tricks there to increase add on the margins half a percent there, 1% there.
If you have list, I mean if you are listening to me closely in the call, whenever I’m talking about those high, low value 50,000 SKU you always hear me saying that the margins are good on those products. So it is also one of the effort to target a category where we have higher margins so that we can gain something which we are gain margin somewhere where we are losing half a percent, 1% somewhere else. So this kind of things are always going on and let’s see how it goes.
Parikshit Kabra
All right, perfect. Thank you so much.
Atul Maruti Dumbre
Yeah, thank you.
operator
The next question is from the line of KUR from Nivesha. Please go ahead.
Unidentified Participant
Hello sir. Yes, origination. I have just two questions on your side. One clientele website we have mentioned many government association organization and a corporation. So are this any order on repetitive nature from that side? I heard your question till the point where you said there are a lot of government client mention on our website. We have many organizations from the government sides and many national level institutions which were our client. So are this order from their sides is in repetitive nature?
Atul Maruti Dumbre
Yeah.
So we have essentially two types of businesses. One is our online business. Another is corporate sales. So generally our corporate sales orders are repetitive in nature, depends on customer requirements. So even if it is a company like let’s say Tata Mahindra or Bajaj and if they just want to set up a test lab or the R D lab in their Company, they’re ordering few components, few multimeters or devices from us. It will be one time purchase. But even if they are making us some device which is like 400, 500 pieces a month or every 400, 500 pieces every quarter, it will be up repetitive in nature.
So our B2B orders are generally repetitive in terms of if they are production based orders, if they are lab based or R and D based orders, small prototyping, then we have seen that they are repetitive from the type of customer but different products.
Unidentified Participant
Okay, and your second question is, you mentioned that we have increased the SK1 Nobody 2.0. So as we are entering the production of our own products, do we even see any or foresee any vendor issue because we are categorying the same products that maybe they are also doing so? Do you face any vendor leaving our site and last nine months?
Atul Maruti Dumbre
We do not. We have not first of all. So okay, I’ll answer the question straight first. We have not seen any vendor leaving the site because generally these vendors like the market is open, like in one category we have 8, 10 vendors maybe doing the similar kind of products. Everyone has his own strength and everyone has his own. Some, some are like premium quality products, some are like very cheap, some are in the middle somewhere. They provide value to different kind of customers. So our vendors or the agreements are non restrictive on these kind of products generally. Secondly, as a part of or strategic part of Ruby 2.0, we are never trying to replace a product on our website that will be too much effort for too little of a gain.
So we always see the categories that we believe will do good in future. And secondly, we want to fill the market gaps. I always give example of smart Alex modules where we seen that there are some principals in China manufacturing the modules who are very cheap, but the quality is not that good or rather very bad quality. And there are some principal Europeans who are making those modules development books who are really pricey. The quality is good, the price is really high. So we found a gap where we felt that okay, we can make the modules in India and we can provide a one year warranty, the quality should be good, but the price we can keep right in the middle where there is a customer base who would like to procure these products and will be happy with the performance because they want to use them in industry use cases at a reasonable price.
They don’t really want to pay the European premium. And we have been developing this product and we have been finding some good customers base in this gap that we have founded so thinking is more like that find the gap and try to place the product in that gap rather than just replacing a product. Because ultimately what will we gain then? If I’m just replacing my old revenue by my own product, the delta of revenue will be nothing or not significant.
Unidentified Participant
Okay. And I think in the future also we’ll have to follow this team, right?
Atul Maruti Dumbre
Yeah. We want to follow the same strategy in future because that’s the most logical thing to do.
Unidentified Participant
Okay. Thank you. And all the best for the future.
Atul Maruti Dumbre
Yeah. Thank you, K.
operator
Thank you. Ladies and gentlemen, that was the last question for today’s conference call. I would now like to hand the conference over to Ms. Bhumika Maheshwari for the closing comments.
Bhumika Maheshwari
Thank you, Steve. On behalf of AIM Securities Limited I thank Max Force team for giving time we spent on this call and responding to all the queries in a detailed way. I would also like to thank all the participants for joining this call.
Now I would like to hand it over to Steve for closing remarks.
operator
Thank you. On behalf of MacForce Limited and HeimSecurity. That concludes this conference. Thank you for joining us. And you may now disconnect your lines. Thank you. Sa.