PG Electroplast Ltd (NSE: PGEL) Q3 2025 Earnings Call dated Feb. 07, 2025
Corporate Participants:
Deepak Agarwal — Moderator
Vishal Gupta — Executive Director & Managing Director-Finance
Pramod Chimmanlal Gupta — Chief Financial Officer
Analysts:
Dhananjai Bagrodia — Analyst
Natasha Jain — Analyst
CA Garvit Goyal — Analyst
Achal Lohade — Analyst
Unidentified Participant
Koushik Mohan — Analyst
Bala Murali Krishna — Analyst
Pranay Roop Chatterjee — Analyst
Uttam Purohit — Analyst
Presentation:
Operator
Ladies and gentlemen, good morning, and welcome to the PG ElectroPlas Q3 FY ’25 Earnings Conference Call hosted by Axis Capital Limited. This presentation has been prepared for informational purposes only. This presentation does not constitute a prospectus offering circular or offering memorandum and is not an offer or any action to buy or sell any securities. Nor shal part or all of this presentation from the basis of or to be relied on in connection with any contract or investment decision in relation to any securities.
This presentation contains forward-looking statements based on the currently held beliefs of the management of the company, which are expressed in good faith and in management’s opinion are reasonable. The forward-looking statements may involve known and unknown risks, uncertainties and other factors, which may cause the actual results, financial condition, performance or achievements of the company or industry to differ materially from those in forward-looking statements.
These forward-looking statements represent only the company’s current intentions, beliefs or expectations and any forward-looking statements speaks only as of on the date on which it was made. The company assumes no obligation to revise or update any forward-looking statements. As a reminder, all participant lines will remain 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 the operator by pressing star then zero on your touchstone telephone. Please note that this conference is being recorded.
I now hand the conference over to Mr Deepak Agarwal from Axis Capital Limited. Thank you, and over to you, sir.
Deepak Agarwal — Moderator
Thanks. Good morning, everyone. On behalf of Axis Capital, I welcome you all to PG DelectroPlast Q3 FY ’25 earnings call. Today, we have with us senior management, represented by Mr Gupta, Managing Director of Finance; and Mr Pramod Gupta, Chief Financial Officer. Without taking much of time, I would like to hand over the floor to the management for their opening remarks, post which we’ll open the floor for Q&A. Thanks, and over to you, sir.
Vishal Gupta — Executive Director & Managing Director-Finance
Thank you, Deepak, and good morning, everyone. Thank you for joining this call today and hope all of you are doing well. I’m joined in this call by Mr Pramod Gupta, our Chief Financial Officer. And we have already shared our presentation yesterday evening and hope you have gone through that. The 3rd-quarter of FY ’25 has marked a significant milestone in the growth trajectory of PG. The company experienced substantial momentum in its product business, while other segments also demonstrated considerable improvement. PG has reported impressive quarterly profits alongside notable sales growth for the 3rd-quarter of this financial year.
The company’s operating revenues increased by around 82% to surpass INR967 crores with the products business accounting for around 69% of these revenues. Additionally, EBITDA increased by around 97% to INR92 crore while net profits surged by around 110% to INR40.14 crores. In the first-nine months of this financial year, the company achieved exceptional growth in its product division. The revenues generated from this division reached INR2,017 crores, reflecting a remarkable growth rate of 126%, the room air-conditioners segment alone contributed INR1,636 crores, marking a Y-on-Y increase of 154%. Additionally, the washing machines segment also experienced a growth of 49% on Y-o-Y basis, while revenues from coolers surged by 27% as compared to last year.
The order book and overall visibility for the product division remains very strong, positioning this company towards significantly enhancing its growth trajectory in the product business throughout this financial year. Our latest product launches in washing machines and room air conditions have garnered a very positive reception from our clients. The company is concentrating on creating products that enable it to maintain cost leadership while also pursuing product leadership. Interest from both new and existing clients has risen noticeably and we maintain a strong confidence in the business — future growth potential for this business.
For FY ’25, we have updated our guidance for operating revenues to a minimum of INR4,550 crore for PG and an additional INR550 crores from our joint-venture Electronics employing a total group revenue of around INR5,100 crore, which reflects an impressive growth rate of around 86% compared to FY ’24 numbers. Furthermore, we are also adjusting our net profit guidance for PG ElectroBla to at least INR280 crores, which represents a substantial increase of around 105% over FY ’24 net profit of INR137 crores. The anticipated growth in our product segment, which includes washing machines, room air-conditioners and air coolers is expected to reach — is expected to grow by 98%, rising from INR1,668 crores in FY ’24 to INR3,300 crores.
Capital expenditure guidance is set between INR370 crore and INR380 crores with satisfactory progress observed in all infrastructure and capacity expansion initiatives. The company is on course to achieve its expansion targets within this year. The company wishes to emphasize its dedication to enhancing capital efficiency by increasing asset turnover through the growth of its product business. Our objective is to achieve industry-leading growth, while also maintaining best-in-class return ratios in the coming years.
With this now, I will hand over the call to my colleague, Mr Pramod Gupta, who is our CFO. He will elaborate on the financials.
Pramod Chimmanlal Gupta — Chief Financial Officer
Hi, good morning, everyone. I’m sure you have gone through the financials already. We have experienced significant growth during the first-nine months of financial year ’25 from an operational perspective. This is despite we navigating a highly challenging supply-chain environment. And also during this period, the average selling price for most of our products is slightly reduced in comparison to last year, largely due to reduced commodity price during this period. Also, I want to highlight that the availability of imported raw-material has posed significant challenges during the first-nine months.
And despite that, the company has been able to show significant growth. In the 3rd-quarter of financial year ’25, the company achieved remarkable growth in-room AC revenues, recording an impressive 180% growth. Washing machine grew almost 65% during the same-period. For the nine months, the company’s operating revenue reached INR2,960 crores, reflecting a Y-o-Y growth of 77%. EBITDA surged by 85.5% to INR287 crores, while net profit has seen a significant improvement to INR144 crores, then growing 121%. And in this period of nine months, we have seen a slight improvement in the margin, largely because of the cost management, reduced commodity price and benefits of operating leverage.
Coming to the balance sheet, at the conclusion of the nine months, the balance sheet reflects a net cash position of INR793 crores. Additionally, inventory levels are elevated are exceeding INR1,025 crores. This is actually as a result of preparation for the forthcoming air-conditioning season, which we anticipate to be very robust. As stated by Vishal jee, we have guided for INR370 crores to INR380 crores of capex that stays and we are on-track to achieve this. The — I want to again highlight the company will be prioritizing enhancing capital efficiency by maximizing the potential of both existing and new assets in the upcoming years. We maintain a strong optimism regarding the growth prospects with our targeted sector — within our targeted sector and we are confident that after the recent fund-raise, our balance and with a balance sheet, the company is positioned to further increase its market presence in the coming years ahead.
With this, I would like to open the floor for Q&A.
Questions and Answers:
Operator
Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. Anyone who wishes to ask a question may press star and 1 on their touchstone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use their 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 Dananjay Bagrodia from Ask Investment Managers. Please go-ahead.
Dhananjai Bagrodia
Sir, congratulations on a fantastic set of results. I wanted to ask you, sir, how are we looking now for the compressor assembly and which are the next few growth drivers we’re looking at because the current businesses obviously have done really well. Any new areas we’re looking at?
Pramod Chimmanlal Gupta
Yeah. So we have been actually disclosing whatever growth opportunities we have signed that is and we will continue to do so. So we don’t have right now any new update on any other new opportunities. As and when they finalize, we will be updating you. But we are pursuing several opportunities and there are interesting opportunities which are coming our way and we are hopeful that we should be able to maintain a robust sales and profit growth momentum in the coming years as well. In fact, I will further add to that. We are trying to further deepen our backward integration in some products and we are looking at those opportunities. We are in advanced level of discussions for compressors, but those things will be declared once we formalize the agreement and those things will be disclosed to everyone.
Dhananjai Bagrodia
Okay. Sure. And sir, secondly, in terms of now market-share in all these products. Do you have any idea of how much market-share we would have gained because our numbers are coming way stronger again comparatively, so this quarter or maybe for the year or how are we looking at-market share now going ahead also would it continue growing like this?
Pramod Chimmanlal Gupta
The market-share numbers are actually difficult to follow because the volume numbers are not disclosed by most of the people. And in fact, in some of the other companies do not actually also give the numbers by finished good and you know, basically the component sales. So it becomes a little difficult to actually gather that how much exactly is the market-share. But we think that we are gaining market-share because our growth rates are much faster than industry as well as some of our peers. But I don’t have the figures or any ballpark numbers also on the market-share.
Dhananjai Bagrodia
Sure. And lastly, how much capex are we looking for ’25 and ’26?
Pramod Chimmanlal Gupta
’27 and ’26, we will will ’25, ’25, ’26, ’25, ’26. We will be finalizing our business plan in the coming months and then we will disclose the — those numbers in the 4th-quarter results.
Dhananjai Bagrodia
Okay. Fine. Thank you and congratulations again.
Vishal Gupta
Thank you, Dhan and
Operator
Thank you. The next question comes from the line of Natasha Jain from PhillipCapital. Please go-ahead.
Natasha Jain
Thank you for the opportunity and good morning, sir. First of all, congratulations on a fantastic set of numbers. Sir, my first question is on the challenges that you mentioned on the supply-side. We understand that there is a shortage for compressors. So just wanting to understand how are you placed for the season till June
Vishal Gupta
And as has end, you know earlier disclosed in the call that we have elevated levels of inventory and this has been done in the anticipation of the shortage of compressors. So as far as we are concerned, we don’t see major — see, there is a challenge for the industry that is there. Definitely it is there, but we believe that we are little better prepared and we are amply covered till end of June to take care of the season. And in fact, whatever additional businesses are being by our clients if we are giving them positive response from that also?
Natasha Jain
Understood, sir. And you just mentioned to the previous participant that you are in advanced level discussion for compressors. Now when I see the latest PLI outroll, your company has got PLI, but for non-compressors. So are we in discussion outside of the PLI for compressor setups?
Pramod Chimmanlal Gupta
In compressors, given the fact that we were already in the INR300 crore category earlier in PGTL, to get into the compressor manufacturing, we had only two choices, either to actually up our existing PLI to INR600 crore, which would not have made sense because we are already through for three years in that and we would not have been able to meet the sales and basically asset creation or the investment targets in that and/or we could have applied for a new PLI with at least INR250 crore only for compressor, which is also very because in the second year of operations, we were required to reach INR1,000 crores of sales force compressors only. So it was not making sense for us to go for a PLI for compressor and that’s why we have not actually included in the PLI application for compressors. So we will be doing compressors that we do outside of it?
Natasha Jain
Yeah. Fair enough. And sir, lastly, if I may. I’ve seen your top-line growth obviously, it’s very, very strong, but on a Q-o-Q, there is a gross margin decline. So just want to understand has our product mix changed or is it mainly because of the cost escalation on raw mat?
Pramod Chimmanlal Gupta
No, no, it is actually the product mix change because Q2 typically is slightly better for the washing machines and proportion of washing machines sales is higher there. And in the Q3 and in the rest of the other quarters, the AC washing — sales are as a proportion are typically higher and gross contribution in the AC business is slightly lower than the gross contribution in washing machines. So therefore, the mix change actually leads to the gross contribution being lower in the 3rd-quarter versus the second.
Natasha Jain
Understood, sir. Thank you so much. I’ll fall-back in the queue.
Vishal Gupta
Thank you.
Operator
Thank you. Thank you. The next question comes from the line of Bala Murali Krishna from Oman Investment Advisors. Please go-ahead. MR. Krishna, if you can please unmute your line from your end and ask your question. Since there is no response, we will move on to our next question, which is from the line of CA Goyal from Invest Analytics Advisory. Please go-ahead.
CA Garvit Goyal
Hello. Am I audible, sir?
Operator
Yes. Yes, sir.
CA Garvit Goyal
Good morning, sir. Congrats for a decent set of numbers. I just want to know like in first-nine months, Goodworth Electronics is contributing loses to our bottom-line. So I just want to understand like when will this JV business will get profitable and how much revenue it did in first-nine months? So that’s my first question.
Pramod Chimmanlal Gupta
Can you please just repeat? I just missed your question.
CA Garvit Goyal
I just want to understand when we can expect JV business to be profitable? And in first-nine months, how much revenue we got from that particular segment? And
Vishal Gupta
Basically, I think INR436 crores was the revenue in the good world in the first-nine months we were. We have actually on the EBITDA done decently, but it’s just that the profit or the net is low because of interest and depreciation cost. We are working towards it and we think that next year we should be profitable on that business?
CA Garvit Goyal
And what kind of PAT margins do we expect on this on this? Whatever line is a
Pramod Chimmanlal Gupta
Range of about 1% to 2% is going to be the PAT margin in that business?
CA Garvit Goyal
And what is the outlook for next year in as a whole and as well as this segment.
Pramod Chimmanlal Gupta
So we will actually give a guidance for the whole business and for this segment, probably after the 4th-quarter business plan is getting formalized and we will have much exact and better understanding post this quarter. Basically, in the 4th-quarter, we will find less than we will share with you.
CA Garvit Goyal
No, sir, I’m not asking the numbers actually just want to understand on the demand outlook like what kind of like can we expect FY ’26 to be more in-line with FY ’25 because this year was very much exceptional to us. So do you — do you see the — this kind of growth coming in the FY ’26 as well? Like I don’t want the exact numbers, I just want to get the claim for the demand out.
Pramod Chimmanlal Gupta
The company historically has been maintaining a growth driver for the last eight, nine years at about 30% 35%. And we think that we right now have enough opportunities to continue to see that kind of growth and we will be making all the efforts to probably achieve those kind of numbers in the coming years as well. And we are doing the planning for infra and capacities accordingly. And obviously, how the business season pans out depends on many factors which are not in our control.
So that I cannot guide you right now, but as whatever is the outlook or the business we have right now, it looks like next year should also be a good year for us and the momentum seems to be continuing at our end with the good client addition and also market-share gains in the existing clients. See, I will further add to what Promodi is saying, we are always striving to have industry-leading growth and at the same time to protect our margin profile and have one of the best-in-class return ratios. So that will be always the focus of the company. Whatever is the industry growth rate, we’ll be trying to grow much better than that. That is what we have been doing for last nine years.
CA Garvit Goyal
Understood. Sir. That’s it from my side, sir. All the best for the future. Thank you.
Pramod Chimmanlal Gupta
Thank you
Operator
Thank you. The next question comes from the line of Achal Nohade from Nuvama Institutional Equities. Please go-ahead.
Achal Lohade
Yeah. Good morning. Thank you for the opportunity. Congratulations for fantastic earnings. Sir, a couple of questions. First on the — you know, of the AC growth, if you could, is it possible to get a sense how much is driven by the new client addition and how much is on account of the wallet share gain with the existing clients? Any ballpark sense on that nine months basis. Yeah.
Vishal Gupta
That number we don’t have right now with that analysis we have not done at our end. Okay. But this year, it’s actually more of a market-share gain in the existing customers, which we have seen. New client addition, we — because we had already a very large client base last year. So mining those existing businesses, existing clients was a major focus area rather than actually adding the new names. So I can say probably on a ballpark almost 90% plus revenue growth is coming from mining the new — existing clients only?
Achal Lohade
Understood. Understood. And in terms of the electronics business, if you could give more sense, you know where are we — what our plans are over next three, four, five years, what kind of adjacencies we can look at in this particular sub-segment?
Pramod Chimmanlal Gupta
So as I have been telling most of the people that electronics business at our end is a relatively large operations which we manage. We actually do all the controllers in-house, we do the motherboards for all the TVs in-house and now we have started offering these services outside also and we are seeing a good traction in them. Also, we have started doing certain other products in the electronic side like security camera as well as some sound boxes, etc., and where we see good traction. So that business has seen ex of TV, the electronic business in the first-nine months has seen a very good traction. We think we can scale-up significantly for outside sales also in that business. And we are very hopeful that in coming years, that business will become very sizable for us. We will guide on specific numbers in the — at the time of the 4th-quarter results.
Achal Lohade
Understood. Sir, any sense with respect to margins in each of these category like electronics, would it be 7%, 8%,, would it be 3%, 4%? Anything is that — yeah.
Vishal Gupta
So the margins in the electronics side are relatively very low, close to 2% to 4% depending upon the products. Right now, it is more of a EMS business only and we are not even a design out. So we do not have our own design. So we are actually just assembling these electronic components on to a motherboard and then we supply it to the customers. So the margins are relatively low, but asset turns are very-high here. So that way the business works. And as of now, the margins are going to be in that range only.
Achal Lohade
Right, understood. And just last question, if I may, sir, with respect to the EBITDA margin improvement on a Y-o-Y basis. So I presume there is no seasonality in that sense, it will be same what it was in 3Q FY ’24. Of the 90 basis-points — sorry, yeah.
Vishal Gupta
There was a seasonality. This year the AC season actually has started early for us. Last year, if you remember, the 3rd-quarter was a little painful quarter for us. We had actually why decline actually in the 3rd-quarter last year because the season started late and it started only in January. So this year season was little early and it was a healthy quarter for us. In fact, last year, 3rd-quarter utilization levels in the AC business was relatively low. This quarter, at least for the month of November and December, we were seeing good ramp-ups to utilization levels so satisfactory.
Achal Lohade
Understood. So is it fair to say that in 4th-quarter, we could see a similar margin improvement, is that a fair way of looking at?
Vishal Gupta
So operational margin should be in the similar range as the 3rd-quarter, but there will be an additional bump-up coming into the margin because in the 4th-quarter, we will be recognizing the PLI, we will receive the money from the government and that is actually built-in into the guidance. We have built-in about INR30 crores of money, which we will be getting from PLI for our last year performance, which is of FY ’24 year performance. So the way we account is that we account PLI only when we receive. So that we will be getting in the 4th-quarter and that will bump-up the margins.
Achal Lohade
Got it. I’ll fall-back in the queue for more follow-ups, sir. Thank you so much.
Vishal Gupta
Thank you.
Operator
Thank you. Ladies and gentlemen, in the interest of time and fairness to others, we request you to restrict to two questions per participant and rejoin the question queue. The next question comes from the line of Bandole from Avesta Fund Management. Please go-ahead.
Unidentified Participant
Yeah, hi. Congratulations on the stellar numbers. Good to see the progress that we’re making. My question was on the — you know what was described earlier as new opportunities in the backward integration and the components, et-cetera, including, I think compressor was mentioned a few times. So my question is around that, that typically, what sort of payback timing are we looking at for these sort of if we have to enter into this space, including co-compressor and the capex between our cash and between the internal generation, would that be suitable to take care of our aspirations in this space? And also will margins be at company-level or better or worse for this as and when these plans sort of see light of date?
Vishal Gupta
In case of ACs and washing machines, we have already achieved a very decent backward integration. In case of AC, we see a major opportunity coming out in compressors and motors also. Right now, we are at a very advanced level of finalizing a tie-up for compressors. And for this compressors, we look at least you know, 17% to 16% or 18%, around 17% of ROCE for this number. And at a company-level, it will be actually a margin-accretive because largely it will be for our own in-house consumption only. And as far as capex is concerned, we don’t see major challenge in the kind of funds we have internally available with us and the internal cash generation has also in the recent QIP, we don’t see major challenge as far as the funds is concerned, you know. Yeah.
Pramod Chimmanlal Gupta
We are very well-placed. Our balance sheet is clearly liquid and we still — we will be generating significant cash-in this year and next year and all the capex requirement will be taken care from the balance sheet cash and the cash we generate.
Unidentified Participant
So I mean in terms of timing, if, say, you had to green light any initiative, typically how long would it take you to sort of get up to a reasonable level of output which can sort of service the in-house requirement?
Vishal Gupta
Sorry, can you just repeat your question, please?
Unidentified Participant
So my question is if, say, for instance, compressors, for example, if we had to green light that, how long would it take for us to sort of be in a position to actually start rolling out compressors in a meaningful quantity to be able to sort of positively impact our operations? How long would it take to set-up the capacity?
Vishal Gupta
See, the building is already under-construction and we expect to start initial production in next nine months. Once we finalize — from the moment we finalize, nine months is I think is a good period that we’ll be able to start initial production and another three months-to fully ramp-up that production.
Unidentified Participant
Excellent. Thanks very much and all the best.
Vishal Gupta
Thank you.
Operator
Thank you. The next question comes from the line of Ayush from Stravis Capital. Please go-ahead.
Unidentified Participant
Yeah. Hi, congratulation on great set of numbers. I just had a few bookkeeping questions. In general, I just wanted to know what is the segment-wise revenue for plastic molding and electronics and mold. Could you just give me that number for this quarter alone
Vishal Gupta
So this quarter the plastic business plastic and other components was about 233 which is the other segment you wanted? Electronics is about yeah, electronics is about INR68.5 crores.
Unidentified Participant
All right, that will be it for me. Thank you so much.
Vishal Gupta
Thank you.
Operator
Thank you. The next question comes from the line of Ankar Gul from Shree Investments. Please go-ahead.
Unidentified Participant
Yeah, my question was regarding this kind of growth you have sustained for a couple of years. So what would be the next figure of growth? That would be the existing business or like you are looking at some other categories to propel the growth in the coming years, of say, 30% 35%, which you have mentioned? That’s the first one.
Vishal Gupta
I think we think still we have some headway and continue to see a good growth in both room AC as well as washing machine. Apart from that, we are contamlating some of the new products as well. And we will be sharing with you as and when we start some of those product lines, we are working on certain other initiatives and we think that those along with these existing product lines help us to achieve these aspirations which we have so much.
Unidentified Participant
So for the, let’s say year or so this existing business would be the growth triggers for you, right?
Vishal Gupta
Yeah.
Unidentified Participant
And the other sectors which you mentioned, those would be driving along with the existing ones in next two, three years, you would say?
Vishal Gupta
Yes, yes.
Unidentified Participant
Okay. I mean, is it safe to assume that you would be looking at categories like laptops, notebooks or say mobiles as a category?
Vishal Gupta
No, no, that is a different segment that is actually not a part of the main company. It is actually a part of the JV. So laptops, tablets, etc will be coming in goodwork Electronics. There we have not had any major breakthrough yet. Here we are talking of the other consumer durable businesses as well as some components components where we are looking at backward integration and also some of the other new initiatives which we are which we have already announced and some all — some more are in the line, which we are working towards to basically enhance the growth rate.
Unidentified Participant
So when can we hear from this about this in the last quarter or say in the next financial year?
Vishal Gupta
And in the 4th-quarter or — and as and when any new initiative starts to share with you. We have been proactive in sharing everything as and when have any breakthrough in any new businesses we typically share and we will be continuing that practice.
Unidentified Participant
Just a last thing, you mentioned that INR280 crores is the new guidance, but that is including the PLI benefit side, otherwise the older guidance stays, right? I mean,
Vishal Gupta
No, no, the older guidance also had INR30 crores of PLI. So we have actually increased the sales guidance and we have also improved the profit guidance. So in earlier INR250 crore also there was a INR30 crore of PLI, which we have — which we had budgeted. And in this INR280 crore also we have budgeted to INR30 crores.
Unidentified Participant
Okay. All right. Thanks.
Operator
Thank you. The next question comes from the line of Mohan from Ashika Group. Please go-ahead.
Koushik Mohan
Hi, sir. Nice to see your results was really great. Sir, I just wanted to understand this. I have three questions basically. One is this one, currently we are telling that we are doing INR280 crores. Last-time we guided for INR250 crore. I understand from the previous question that we have INR30 crore in the PLR benefits from here. So what exactly made us to improve our margins? When we look at from the last year, FY ’24 and this year full-year, if I calculate with INR280 crores, we are moving around 0.6 percentage on the PAT margin. So what is the major contributor for this?
Pramod Chimmanlal Gupta
There are a couple of contribution items. First is obviously, as I have been highlighting that commodity prices at least in the first-nine months were lower. So because of that, optically the percentage margin looks better, because you know it — raw-material cost and that is a pass-through. So on a similar or slightly lower top-line, you made the same amount of gross contribution in absolute amount. So percentages look better. That is one. Second thing is, we’ll be having some gain as a percentage of sales in terms of probably all the three, which is basically depreciation, other income and the other income and finance cost. And then finally, tax-rate also we hope that in the 4th-quarter, we should be having some gain. So all those things will actually help us to show better net margins.
Koushik Mohan
So is this considerable for the next future also? Can we sustainably we can do around 5.4 percentage PAT margin? Is it sustainable?
Vishal Gupta
I cannot actually guide you for the future, but yeah, we hope that 5% kind of a range should be possible.
Koushik Mohan
Got it. Got it. And sir, second question is on now, sir, the recent QRP what we did, like where are we utilizing those funds? And inclusive of the same thing, this year, I think so, there will be BSL star ratings for all our ACs, right? So the older SEs will be becoming — will become and will become 3 star. So by that, I think the price of wallet share price will be increased by INR1,000 or INR2,000. So is am I right with what I’m understanding?
Vishal Gupta
As far as this upgraded products are there for the next star rating. As per our internal estimates, three-star models, there will not be any major price increase. And in case of 5-star models, there will be an increase of maybe INR700, INR800. Let me tell you very clearly, these are very initial numbers. I cannot give you any definite numbers. The models are under finalization and approval with the clients. Once we have those models approval, then only we will have very clear picture at the bond level. And as far as the QIP funds are there, so the QIP, the way money has been raised the objects are very clear the way we have raised this money, partly this money is used — is being used for working capital because the working capital intensity has gone up. And partially is being for this new growth opportunities what we are looking at and this money will be used for those capex holding.
Pramod Chimmanlal Gupta
Capex, working capital and some money for creating the infrastructure for growth for the coming years. We have run-out of land and building for new growth and new growth initiatives. So we will be constructing those also in the coming years. So for those things, we will be utilizing part of the money.
Koushik Mohan
And sir, over the queer
Operator
To interrupt you there. If you could please join back the queue. There are others.
Koushik Mohan
I’ll get back-in the queue. Thank you.
Operator
The next question comes from the line of Bala Murali Krishna from Oman Investment Advisors. Please go-ahead.
Bala Murali Krishna
Hi, good morning. I think I’m audible now. Yes, yes, sir. Yeah. Yes, sir, regarding this new plant commissioning, so what is the timeline for that? Could you please repeat if you already shared that one.
Vishal Gupta
Which plant are you talking about? We have commission we have commissioning a plant in Birwadi for making AAC, which has actually got almost commissioned and we are right now doing trial production and also we are waiting for BIA certification so that will go into a final production from next month, probably most likely or towards the end of this month. Apart from that, we are also constructing a plant in Noda for expanding the capacity in washing machine, which we think we should be able to start production probably from May early and April or early May apart from that we have an ongoing kind of a plant expansion which we did in Supa which has already got into production.
Bala Murali Krishna
So I think in EAC category. So whatever the capacity enhancement we are taking, it’s already on-stream.
Vishal Gupta
So there is no right now. Yeah. So right now, the total capacity that we have is close to about 3.5 lakh ACs that we can do in both the places put together on a monthly basis.
Bala Murali Krishna
Okay. This hardware PLS sir, I think still the policy is not favorable to us and we are not moving going for — we are not moving forward in that one. Is it right or any plans for that?
Vishal Gupta
Hard PLA. But basically in IT hardware PLI, we have not had any major success yet. So we are still for client and we’re still looking for a business there. We have not yet been able to make any big breakthrough there.
Bala Murali Krishna
Lastly, on new products, which we are talking a few quarters before, which you have a larger — some big RFQs coming from the customer. So still that product is still on or whether we are discussing about any other new products which we can start making in a few, maybe in next one or two years.
Vishal Gupta
So there are some opportunities which are always coming. We are evaluating some of the other opportunity all-the-time. But as I have been saying earlier that we are really conscious about capital allocation and making the right kind of margins in those products. So based on those, only we take-up the opportunities. So there are opportunities in the pipeline, which we are evaluating even right now. So as and when any of those will materialize, we will be talking about them and we will be giving more details.
Bala Murali Krishna
Yeah, understood. But just a follow-up on that to continue this growth to maybe we should need some new products like you. You were talking about the compressor, which may come on maybe in next one year. In, maybe some white goods. We should
Vishal Gupta
Yes. We are looking at those opportunities and we are in the final stages of finalizing some of those things and we will make an announcement as and when those things are finalized.
Bala Murali Krishna
Sure, sir. Thanks a lot and all the best.
Vishal Gupta
Thank you. Thank you.
Operator
Thank you. The next question comes from the line of Pranay Rup Chatterjee from Berman Capital Management. Please go-ahead.
Pranay Roop Chatterjee
Hi, good morning, sir. Am I audible? Yes, Pranay, you are audible. Great. Sir, my question is on the new segment that you announced recently, which is the electric vehicle assembly business. Broadly, can you provide some color on the total opportunity size you are seeing here with this client and beyond? And what sort of economics we can expect from this business.
Vishal Gupta
So we right now are yet to commit any significant capex to it. We are still getting from some approvals on the client side. We hope that by second year, we should be reaching about INR500 crore kind of a sales in that business in the — in this — with this client only. Right now, we do not have any other client in mind. We are going to be working with them only. And this business will have both the assembly of the electric vehicle as well as the battery. We hope to start this business probably in the next two, three months or four months, we should start the assembly part of vehicle and battery. And then we can actually share more details. Right now, it’s still in the final stages of ordering, etc. And once we commission the plant and we ramp-up that time, we’ll share the results or more details on this.
Pranay Roop Chatterjee
Fair, fair, fair, sir. Sir, my last question is on — you had mentioned of PLI, that is fine. Somehow I mentioned in some previous call, there were some INR6 crores of state incentive as well. That’s why I thought 36 is the total number here number
Vishal Gupta
That continues to get kind of accrued every quarter, about INR1.5 crores to every quarter. That is there as a part of the estate benefit which we continue to accrue every quarter.
Pranay Roop Chatterjee
Got it, sir. Sir, that’s clear. Thanks a lot.
Vishal Gupta
Thank you.
Operator
Thank you. The next question comes from the line of Jalash from Swan Investments. Please go-ahead.
Unidentified Participant
I hope I’m audible.
Operator
Yes, you are. Please go-ahead.
Unidentified Participant
Yeah. Thank you for the opportunity and congrats on a great set of numbers. So I had a few questions. So first being, could you talk a little about the unit economics of compressors and the minimum scale, which is required to be the project to be viable or profitable because I’ve read a few reports which talk about that the minimum quantum should be around 10 million, 15 million is is what it says. So could you could you talk a little about it?
Vishal Gupta
I think we — once we finalize the agreement, we will have more details to share. That is the time — right time we will actually talk about this, but I can tell you the numbers you’re telling are probably not right. Whatever math we have done, we think numbers are much lower to get the right cost return capital, et-cetera on that. But we will be able to kind of share the details once we have the final agreement with you.
Unidentified Participant
Understood. Understood. And sir, in the budget, recent budget, there was a talk about the custom duty on open cells, which has been cut to nil from 2.5 and I guess since we — since we are in the TV manufacturing part, so does it have a sizable impact on us or per se, are we seeing anything there or not?
Vishal Gupta
No, it doesn’t actually change the unit dynamics at all for us because bill of period is a pass-through for us. And even if the duty is there or not, it is actually passed on to the prospective client for whom we are doing the manufacturing.
Unidentified Participant
Got it. And one last quick question. So, sir, could you talk a little about the industry what structure is there in terms of the RSE as in let’s assume of the 100 units which are being sold, what is right now outsourced and what is being manufactured by OEMs because there were a lot of concerns around that. Could you talk a little about the landscape there?
Vishal Gupta
This is just our internal estimates that you know till 2020, almost close to 40% to 45% of the RAC were getting outsourced and large part of it, almost 35% was actually getting outsourced from the foreign imports. Basically, the companies were directly importing from foreign players. And after that when the PLI came and the subsequent ban on gas charge ACs came, that market has started shifting, but also what happened was because a lot of companies and the clients put up their own capacities that 45% actually started reducing and probably came down to something like 37% as of last year.
And this is the year when this has started rebounding because — and that I am making a session because on the basis of the fact that in the first-nine months, all the three large outsourcing companies in the AC have shown much higher-growth than the industry growth, which is the — therefore, this year probably that number is probably inching back above 40 in our estimate.
Unidentified Participant
And what would be driving that thing basically that’s just as per you or your understanding?
Vishal Gupta
And there are many reasons, but supply-chain challenge this year is one. Second thing is basically also the economic rationale because I think the in-house cost of manufacturing typically are lower than the pricing at which the product is available to the brands from the outsourcing companies. So there are several of those reasons. And then obviously, some of the other things also, which is basically the changes which are happening in the marketplace and where the end-consumer is actually switching to the brands or those market-share gains are happening for the brands which are doing more outsourcing. So those kind of things are also leading to a slightly higher outsourcing versus the in-sourcing which is there. And that debate, I think probably has been put to rest if this trend continues next year also. So it’s a single data point, but let’s hope to see if this trend of outsourcing continues, then we will probably be over with that in-sourcing versus outsourcing debate.
Unidentified Participant
Got it, got it. Thanks a lot and best of luck.
Vishal Gupta
Thank you.
Operator
Thank you. The next question comes from the line of Natasha Jain from PhillipCapital. Please go-ahead.
Natasha Jain
Yeah. Thank you for the follow-up, sir. I wanted to understand on the components for RAC side. Now we’ve again got PLI for expanding on our component side. Sir, firstly, I wanted to understand how does the margin move here in terms of do you get more margin when you supply components versus a fully assembled unit? And in continuation to that, how has your component scale-up been for RAC
Vishal Gupta
So actually, component business is not a focus area for us. We are actually more keen to give the full solution to our clients and that is what we continue to do. In fact, component business has actually seen a much lesser scale-up for us in comparison to the finished good product business, which is what we say product business actually in our case. So that is going to remain the focus. The PLI we have taken is for components, no doubt, but those components, you can actually also use capitively for your own consumption or your own products and sell the final products and still you can get the PLI. So that is what we are going to do in the next-generation manufacturing also for which we have got the PLI right now.
Natasha Jain
Yeah. Understood. And sir, one last question. I know that you’ve mentioned in your opening remarks that the season looks very strong, but just wanted to understand we’re sitting at very-high basis compared to last year for both quarter-four and quarter one. So is there any kind of challenges or any kind of caution that you are building in your numbers?
Vishal Gupta
Basically, I said it’s looking great for us because this year at least industry again seems to be facing some kind of kind of supply-chain challenges and some critical components. And we are slightly better placed in the industry than some of our peers and even some of our clients. So from that point-of-view, we think that our positioning right now is very strong and we continue to see very strong demand at our end-up for the coming season.
Natasha Jain
So just a follow-up on that. So given that there is a shortage for compressor, sir, any new clients that you may have onboarded, particularly for the upcoming season as a result of this?
Vishal Gupta
No, we have onboarded many clients, but typically in the very first year, you don’t see a very large scale-up from any of the new client. It is only in the second and the third season typically the scale-up happens. But this year, yes, we are seeing a very huge scale-up from the clients which we added in the last two years and we are gaining market-share in most of them vis-a-vis the competition.
Natasha Jain
Great, sir. Thank you so much and all the very best.
Vishal Gupta
Thank you. Thank you.
Operator
Thank you. The next question comes from the line of Uttam Purohit from Monarch Networth Capital. Please go-ahead.
Uttam Purohit
Hello. Yes, thanks for the opportunity. So my question was on the client side. If you could provide the consultation figures of top one, top-five and top-10 clients of us?
Vishal Gupta
And that number we don’t share, but I can tell you that top-five clients in both AC and washing machine will be probably contributing close to 50% to 60% of the revenue.
Uttam Purohit
So is it fair to assume no client exceeds 15%
Vishal Gupta
In ACS in washing machine no washing machine there is a client which is growing more than 15%
Uttam Purohit
And going-forward are we aiming for more granularity or more concentration.
Vishal Gupta
We are going to prefer more granularity. We will like to have as diverse a client base as possible and not a large dependence on a single client. But then that is not in our hand only. Actually, it also depends on the market structure finally and how the market behaves. So we don’t say no to business if it is even from a single client. But yes, we at our end try all-the-time to manage the risk and have a client concentration risk in control so that we do not suffer unduly because of any thing happening to the client.
Uttam Purohit
Yes, thanks so much thank you. Thank you.
Operator
Thank you. The next question comes from the line of Mohan from Ashika Group. Please go-ahead.
Koushik Mohan
Hi, sir. This is just a follow-up question, one thing I have. Sir, I just wanted to understand which of some of our product is actually seeing fabulous growth.
Vishal Gupta
I mean, obviously, we have been telling every quarter room AC has seen a very big growth. Even washing machine has started inching up, but AC has actually seen a very, very-high growth this year for us.
Koushik Mohan
But this year though, I think it is because of the our Q1 numbers and that Q1, it was a very heat wave was happening and South India was majorly picking it up. But I just wanted to understand, is it the same kind of a scenario that you’re feeling for the Q4 also?
Pramod Chimmanlal Gupta
See, Q4 ordering has remains very strong and we have given actually explicit guidance for Q4. Now we are talking of at least 48% growth in the overall sales and that will largely be driven by actually AC because in this season or now we are entering our off-season for washing machine, but nonetheless, washing machine base also should see us very strong growth in the 4th-quarter because of the last year base. So overall, we are expecting a very significant growth on a full-year basis of almost close to more than 100% probably in AC this year.
Vishal Gupta
See, if you see what in addition to what is saying, if we can say that industry has grown around 30% 35% and in nine months, our RAC business has grown — growth has been around 150%. And see quarter-four is also looking very robust and the guidance has been already given. I think you can decifer those numbers and you can calculate yourself what will be the Q4 numbers for all product categories. And see, business is looking good. And again, the only thing which we’d like to reiterate is one thing what we are trying to do in last four, five years, you have seen that there has been a narrative of that in-sourcing happening, there is a narrative of that bad season happening, component business growing, but we have been very consistent with our narrative with our commentary on this business and we have been able to deliver on those numbers whatever we have been promising and we are very hopeful to continue this growth journey for another two, three years. We don’t see major challenge in this.
Koushik Mohan
Got it, sir, got it, got it. Thanks sir. That was all from my end. Thank you.
Operator
Thank you. The next question comes from the line of Kalash from Alf Accurate Advisors. Please go-ahead.
Unidentified Participant
Hello. So thank you for the opportunity. So, sir, my first question is I just wanted to know the IDU mix.
Pramod Chimmanlal Gupta
We actually have stopped providing those numbers by IDO and. But now actually in absolute term, the differential between the two have come down much, much less, like the differential between the volumes of outdoor and is much less than it used to be. Okay. And I think we are selling SKU now largely we are selling CBUs and we are giving the full solution to most of the plants.
Unidentified Participant
Okay, sir. And so what is the kind of capacity that is coming up in ACs and the capex that we are going to do?
Pramod Chimmanlal Gupta
So that we will share in the 4th-quarter. Right now, our capacity is about 3.5 lakh per month of CBU and we can — from both the places put together, we are actually going to take a stock of what kind of capacity expansion we need to do for the next year. So that we will share with you in the 4th-quarter.
Unidentified Participant
Okay, sir. And last question, so sir, like what would be the margin differential so in AC, so if you just supply the components or you make the as a whole so what would the margins look like?
Pramod Chimmanlal Gupta
So in the we do largely plastic components for most of the consumer durable industry and some sanitaryware and maybe auto components also. So the margins are about 0.5% differential is there between the AC and those components. So components are slightly higher, maybe about the 8% to 8.5% is the component margin business, while AC is about 7%, 7.5%.
Unidentified Participant
Okay, sir. Thank you so much.
Operator
Thank you. We take the next question from the line of Bala Morali Krishna from Oman Investment Advisors. Please go-ahead.
Bala Murali Krishna
Sir, thanks for the follow-up opportunity. Sir, regarding PLI, I think this year we are getting INR30 crores. But going-forward, I think next two, three years from PLI, we may get INR60 crores. And state instance, consistently we may get INR20 crores to INR25 crores for the next maybe five, 10 years. Is it right, sir?
Pramod Chimmanlal Gupta
Yeah. So the way it will work is this is the second year for us for PLI, which we are going to get for the last year, which was the second year of execution or sales for us. Now there are three more years, which will be this year’s 37.5, which we will book in the next year. And after that, there will be INR52 crore and INR60 crores, which we will book in actually financial year ’27 and financial year ’28. This is on the PLI. On the state government benefits, we hope to get about INR25 crores each year for the next 12 years once we make an application and our application is accepted. So which we intend to do maybe next year?
Bala Murali Krishna
Okay, thanks a lot.
Pramod Chimmanlal Gupta
Thank you.
Operator
Thank you. The next question comes from the line of Mohan from Ashika Group. Please go-ahead.
Koushik Mohan
Yeah. Sir, for every tenniss that we sold-in the market, how many RSEs have been sold?
Pramod Chimmanlal Gupta
Right now that trigger should be in our opinion, close to about 1.2 ACs are being manufactured by PG for the 10 ACs getting sold-in India.
Koushik Mohan
Okay. Thanks, sir. Thanks. And we are targeting that to go to two or three in the future.
Pramod Chimmanlal Gupta
And that is difficult to say, but it depends on how the outsourcing market plans and what brands actually see what kind of growth. But we will be preparing ourselves for a good growth and high market-share in the outsourcing segment.
Koushik Mohan
And in washing machines for every 10 washing machines, how many do doing washing?
Pramod Chimmanlal Gupta
It will be about one washing machine this year is getting made by PG
Koushik Mohan
For every 10 months. So thank you. Thank you. That’s all from me.
Pramod Chimmanlal Gupta
Thank you.
Operator
Thank you. Thank you. Ladies and gentlemen, we take that as a last question. I now hand the conference over to the management for their closing comments.
Vishal Gupta
See, business have been — last question. Okay. So business has been, you know, doing very well for us and we will reiterate only one thing that as an organization, the way we have structured our business at all product segments and at all locations also is such a way that we are able to maintain cost leadership also and focus on product leadership also and at the same time, give such value propositions to our clients that we are able to increase our wallet share with them and again keep on growing at an industry-leading growth rate and at the same time maybe improve on our margins also. And I’d like to thank all of you for attending this conference and please feel free if you have any more questions to call me or ask me or send a mail to us. Thank you.
Operator
Thank you. On behalf of Axis Capital Limited, that concludes this conference. Thank you for joining us and you may now disconnect your lines.