Rashi Peripherals Ltd (NSE: RPTECH) Q3 2025 Earnings Call dated Feb. 12, 2025
Presentation:
Operator
Ladies and gentlemen, good day and welcome to the Q3 and 9 months FY25 conference call of Rashi Peripherals Limited. As a reminder, all participant lines will be in the listen only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing Star then zero on your touchstone phone. I now hand the conference over to Ms. Savli Mangle from Ad Factor’s PR investor relations team for opening remarks. Thank you. And over to you, Ma’am. Thank you, Sagan. Good evening everybody and a very warm welcome to you all. Thank you for participating in the earnings call of Rashi Parasails Limited for the third quarter and nine months of financial year 2025. Before we begin, please note that this conference call may contain forward looking statements about the company which are based on the beliefs, opinions and expectations of the company as on date of this call. Statements are not the guarantee of future performance and involve risks and uncertainties that are difficult to predict. On the call Today we have Mr. Kapil Sansari, Managing Director, Mr. Rajesh Goenka, Chief Executive Officer and Mr. Himanshu Shah, Chief Financial Officer. The management will take us through the operational and and financial performance for the quarter and nine months gone by following which we will open the forum for Q and A. I now request Mr. Kapil Pansari to take us through the company. Thank you. And over to you sir. Good evening everyone and welcome to all of you to discuss our operational and financial update for the third quarter and nine months ended December 31, 2024. Along with me I am joined by our CEO Rajesh Goenka and our CFO Himanshu Shah. And our financial results, media release and investor presentations are made available on our website as well as stock exchange for you to refer. The year 2025 is poised to witness a significant acceleration in. India’s technological landscape driven by advancement in artificial intelligence, generative AI and automation. These innovations will enable businesses to adopt a comprehensive 360 degree approach to meeting evolving customer expectations and enhancing value creation. The Government of India’s steadfast commitment to digitization in recent years has played a pivotal role in positioning the industry for growth, allowing it to outpace global trends. The Union Budget 2025 reflects India’s growing commitment to domestic electronics manufacturing, aligning with the vision of make in India and Digital India. The increase in tax free income threshold to 12 lakhs under the new tax regime is a welcome step that will drive higher disposable incomes, directly influencing demand for consumer electronics, IT peripherals and gaming products which are the key focus areas of architect. Additionally, the government support for electronics industry and its effort to rationalize custom duties on critical components will make local manufacturing even more competitive, strengthening India’s position as a global electronics hub. We also welcome the push for global capability centers in tier 2 cities which will accelerate digital adoption and create new opportunities in emerging markets. This initiative supports the Digital India vision which aims to empower businesses and citizens across the country. The measures to promote domestic production of critical electronic components will ensure a more self reliant and resilient electronic supply chain in India, fostering growth in the ICT sector and enabling technology to reach every household. As India continues to grow as a digital powerhouse, the semiconductor industry plays a pivotal role in sustaining these innovations. The government’s focus on local manufacturing and investments in R and D will help India emerge as a global hub for semiconductor solutions, driving the future of technologies across industries. While the opportunities are immense, challenges like semiconductor manufacturing and workforce development remain. By addressing these gaps through policies, industry collaboration and upskilling, India can fully harness the potential of embedded solutions and AI technologies, paving the way for a connected and inclusive digital society. In conclusion, the next few years hold great progress for India’s digital transformation. As we move forward. The key to success will be embracing innovation, adapting to rapid changes and fostering collaborations across industries. The future is bright and with the right strategies, India can shape it into a global digital leader. I now hand over to Rajesh, our CEO who will discuss operational updates for the quarter. Thank you Kapil. I extend a warm welcome to all the participants in Today’s call at 6pm in the evening and we really appreciate your participation. Some of the highlight that I wish to give before I move ahead is as you all know, that the overall global market sentiments currently are not very favorable because of the various global scenarios that are coming in and that has some impact in the Indian economy also, particularly in the metro locations. But despite all these global and some Indian challenges, I would not say slow down. Rashi Peripherals continues to grow. So much so that in nine months to nine months we have current growth of 33% which is much higher than what we had planned. While the growth is sluggish, the prospect for 2025, as Kapil also mentioned, is very encouraging. And all the third party reports also indicate a double digit growth in terms of industry in the year 2025 and 2026. We at Arpitech continue to strengthen our DNA, our core, which is our reach, which is our breadth and as a result on a yoy basis our current reach or the products that we sell are now available in 721 towns of India which is increased from 705 towns. So we are directly in short selling in 721 towns of India. Even our customer base, our partner base also continues to increase by similar percentage. So earlier we had 9,900 customers. Currently as we speak we have more than 10,700 customers. And the good thing is that the major customers in terms of numbers have come from tier 3 and tier 4 cities where obviously we see a little bit extra growth. Another very interesting thing I want to share is a product gap that we had in our solutions as far as ICT industry is concerned, which was printer. We were waiting for years to have printer in our portfolio. Finally we have now started the formal distribution of HP commercial printers. So now this almost completes the basket of ICT products for us on. The customer front. We continue to foray into new verticals, new opportunities and as I mentioned in last quarter also that we forayed into quick Commerce. Quick Commerce business is going strength to strength. We have added more and more brands, more than double digit brands. We are now doing in quick commerce and that business is accelerating. To support this business and our regular business we’ve also set up an in house call center and currently we are as we speak we are handling and managing more than 500 inbound and outbound calls daily with more than 96% attendance instantaneously. Further we also delve about the embedded business so I’m happy to share that our Embedded lab continues to flourish which is in Bangalore and we have some very good new design wins which will help us to get business in near future. Rashi Peripherals further continues our commitment to sustainability by supporting E waste collection drives. I would remind everyone that all the 52 branches and warehouse of Rashi Peripherals in 52 cities of India are are also E waste collection center. So anyone and everyone can just walk in and give his E waste and which will be collected. So with this some highlights I would now like to hand over to our CFO Mr. Himanshu sir who will walk us through the financial highlights. Thank you Rajesh and good evening to all the investors who have joined Today’s Call. I would like to take you through the financial highlights for the third quarter and nine months of the financial year 2025. I’m happy to inform you that on a Consolidated basis from 9 months FY25 total income grew 33.5% to 17996 million. EBITDA rose 13.2% YoY to 22,649 million and PAD searched 62% to 15. 70 million. On a consolidated basis the quarter 32025 looks like Total income stood at 28 to 63 million up by 7.7% YoY. EBITDA was at 699 million which grew by 2.3% YoY and Packed stood at 321 million up by 29.4% YoY. Working capital days was at 54 days as compared to 55 days in 9 months FY24, thereby highlighting our operational efficiency. On an annualized basis, the ROCE and roe stood at 11.89% and 12.89% respectively for 12-31-2024. If you look at segment wise segregation on trailing 12 months basis out of our two segments, 60% of our revenue was contributed by PE.
Questions and Answers:
Operator
Which is personal computing devices, enterprise and cloud solutions and 40% is contributed by LIS which is lifestyle and it essentials reason wise bifurcation when we look at 66% of the revenue was contributed by metro regions and rest of was from non metro Recently I’m happy to inform you that recently we also received rating upgrades from Cecil and our revised rating like we have entered the AA club and our revised rating from Crystal stands at AA minus stable from Crystal A plus positive and short term rating to CRISIL A1 plus from Crystal A1. With this update we now open the forum for question and answers. Thank you sir. Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question May Press Star N1 on their Touchstone phone. If you wish to remove yourself from the question queue, you may press star N2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Our first question comes from the line of Abhishek Kumar from GM Financial limited. Please go ahead. Yeah. Hi, good evening everyone. Good to speak to you guys. I have two, three questions actually. First question is actually on the whole Gen AI opportunity that is there in front of us. We executed one order in the first half of this year. Just wanted to pick your brain on what do we see going forward? Are there more such opportunities in the pipeline and where do we stand visibly? You know, competition in on the Gen AI or data center opportunity. That is my first question and I’ll ask after this later. Okay. So Abhishek, I think this answer is that Gen AI is. Data center business opportunity continues to be immense as the deployment and availability of the chips also increases. However, what we can only see that the initial Europia was that to set up large data centers at one time. Now it seems that there are phases where the installations will start happening, which I think is a good thing. And the best thing is that the government also has released a tender which they are very about to award for AI usage for not only education institutes but other at a very subsidized cost. So as a result the consumption also will get triggered. So in short, the answer is that yes, it is very positively. It’s only that we think that it will be in a phased manner. And to answer your question about Rashi perishal, so Rashi parishes being being the one of the leader in this segment, we are well poised to be if not the leader but amongst the good ones is what I would say okay, that’s helpful. You know any deals which are currently there, you know, in the pipeline around data center etc. Like the one we executed those large deals or you know, there’s still some time away. Yeah, so that’s why I said that there are few businesses, I would not call them as deals because they are not very large, but there are few of them. They are under undergoing in phases. And just as an example Government of India that I mentioned, under the AI mission they have announced 18,000 GPU requirements. But you never know when actually the implementation will happen. Understood. Now second question is on this quarter, the growth for this quarter on a yoy basis appears a little muted. So just wanted to understand, was there any spillover of orders from Q3 to Q4 that explains slightly muted growth or was there general slowdown in demand that we witnessed? So if you Abhishek, compare from Q3 to Q3 then we have almost 7.7% growth. Right. So which is not very bad. The truth is that first half of the year definitely the demand and consumption was pretty rapid. But as we move post Diwali, the consumption pattern has been little bit slow, particularly in the metro cities. So ideally. If we go by the market then we could not have grown. But Rashi peripherals being highly penetrated and deeper into tier 2, tier 3 cities, we could get additional business which resulted in the 7.7% growth on a Q3 to Q3 basis. Understood. And while we speak I just like to add on nine months to nine months basis we continue to have a 33% growth. Yes, that is. That is well appreciated. I was just wondering on the Q3 numbers but point taken. You know one question on margins. If we look at, I mean two parts to this question. One is other expenditure seems to have gone up and therefore X of other income. The operating EBITDA margin seems to be less than 1%. So what explains that? And related question is what explains sudden spike in other income. Thank you. So other expenses have gone up majorly. Like major part of it, Almost more than 70% has gone up because of two reasons. One is the forex loss on the big deal which we did that has been booked under the other expense head and which has been compensated by the debtor which is reflecting another income. So, so there is a netting off effect in other expenses, other income. Second head is the advertisement and sales promotion expenses which are normally, you know gets reflected or gets netted off with gp. So that is so effectively net net on pat basis. If we see percentages may look, you know, as you mentioned, 1% EBITDA looking like is just a fallout of accounting treatment. Otherwise the impact is not that much. Okay, okay. No, got it, got it. Great. Thank you so much and all the best. Thank you. Thank you. The next question comes from the line of Vinay Menon from Munak Capital. Please go ahead. Hi sir. Hi sir. Thank you and thank you for this opportunity. So a few questions from one side. So sir, forex loss which we have booked, you know, can you just quantify that number of what forex loss you have booked or is it equal? Like you know we booked we have about 45 crores of other income which will obviously include normal other income. So if you can just clarify that that’ll be easier for us. So like in 45 crores of other income the forex loss compensated is runs into around 28 crores. 28 crores is the compensated. 28. Okay. And 28 crores in other expense also which is the. Which is measured on so other is the advertisement and sales promotion which is around another 28 crores which is getting like get set up in the GP in our, you know, business model. Okay. So net debt, we had no impact from this transaction. Right. Like yeah, we lost nothing. Yes. So and. And the other part of other expenses which have gone up is because of your increase in advertisement and sale. That is what you’re saying like freight there is an increase of 5% I would say. Okay. From 11 crores to 16 crores. Freight which is on the basis of the sales mix and you know, various factors which geography is getting delivered in a particular quarter and all. So those are normal business expenses, happens and normal course of business. Okay. And can we expect such because this is because of that one large deal. So for other large deals also could we see a similar kind of impact coming in the future. So the ring fencing of, you know, risk associated when we take such large exposures, we cautiously and consciously make sure that, you know, those risks are ring fenced either contractually or in the understanding. So that’s okay. Okay. How many enterprise deals did we do this quarter? Like if you can quantify the enterprise deals because we had a very strong pipeline till H2. So in this quarter, like if you can quantify some deals that would be helpful. Yeah. So in terms of if you see the regular business, if we have grown by say about 15% enterprise business we have grown at about 30, 35%. But it will be very difficult to quantify number of deals and values of deals in this forum. Okay. Okay. Okay, great. Okay, that is helpful. And what would be our debt figure for nine months? FY25. I can do gross debt. So gross debt is at 1100 crores. Okay, 1100 crores. And we are expecting this to jump off a little bit more by Q4 as we are chasing, you know, more or less the same range I’m expecting in short run till we, you know, realize the money is on this big deal and you know, settle those dimensions. Thank you so much, sir. I’ll get back in line for other questions. Thank you so much. Thank you. Next question comes from Miloni Mehta from Monarch. Please go ahead. Yeah, thanks for the opportunity. I wanted to understand how is the demand for. AI PCs going on and also how is the replacement cycle playing out? So any comments on those two things? Yeah, so Melanie, AI PC there is publicity everywhere across. However AI PCs today cost around a lakh rupees which is little bit on the higher side for Indian, not only consumer but even for commercial applications. So therefore the percentage takeoff is slower than expected. However in the coming quarters we are expecting more affordable notebooks and desktop, particularly notebooks AI notebooks to come in and which will actually increase the share. Okay, and on the replacement cycle demand. Yeah, on the replacement cycle I think what is happening is currently the replacement cycle is very slow but now Covid time heavy purchases were done now and the replacement actually starts from third year onwards. Third year onwards commercial PC starts replacing. Consumers start replacing in the fourth or the fifth year. So once the post Covid three years complete the replacement will happen. Second is Microsoft also is going for upgrade. So that also will trigger a lot of refresh. So the next year 25, 26 we expect to be a surge in the replacement and upgrade market. And that is one of the reasons all the third party reports are indicating a high double digit growth overall in the market. Okay, so my other question is related to the working capital rate or basically on Q, On Q basis we see that they have increased from 44 to 54. So do we have any inventory piled up or like can you put some comments on that? Inventories are at almost same level. The only increase is in the debtors where we have experienced a little slowdown in collections which over the period of time gets improved. We don’t see any issues there. Okay. Okay, clear. Thank you. Thank you. The next question comes from Rohit Singh from Finvestors. Please. Thank you. Thank you very much for providing opportunity for the question to management. I want to just. Sorry to interrupt, you’re sounding a bit muffled. Yeah, I want to know actually they have not mentioned any future capitalization, a plan, any order book, give some highlight. That’s over any kind of capitalization. As they mentioned, only 52 cities they have branch and 721 cities only. They are selling the products and service. Any future plan to expand their business in other cities also? So while on capex plans and all, I would, I would answer your question and then we hand over to Rajesh Goenka to answer on the expansion plan. So our business typically is not a capex heavy business. When we expand the business, it is offices we open and we increase our reach. It’s not capital intensive industry, it’s more of working capital industry wherein the only requirement is the working capital. Yeah. And to add to what Himanshu said, Rohit, as far as business is concerned, in terms of reaching number of cities, I already mentioned that we already had 10% growth in number of cities and number of customers. And our aspiration is to maintain that double digit growth. Okay, thank you sir. Thank you. The next question comes from the line of Parv Bansal from Blink Investment. Please go ahead. Am I audible? Yes. Yeah. I wanted to ask one question. That is on the operating margins, I can see that the operating margins have shrunk a lot. It is somewhat around 0.8%. So what could be the reason for that operating margin? You’re talking about ebitda, right? Yes. So and which period you are comparing, if I may ask? I’m talking about this quarter. This quarter. If you’re comparing with the quarter two or year on year? I’m comparing with quarter two. Quarter two? Yeah. So quarter two, if you see it’s a high activity month for us wherein we get economies of scale. Secondly, in this quarter there is a forex loss which has come in which has been compensated by other income. So you need to see the other income essentially for our kind of business and in our financials comprises of interest cost mainly on the delayed payments. So it is very well, you know, integrated with the operations only sales. If we see that it is in the range of for quarter on standalone basis it is 2.45% EBITDA which is I think. Take on these kind of operations and the business. We give advice of 2.5 to 2.7% which is in the range. Normal range. Yeah. I had one last question. What could be. What would be the guidance for FY25 closing and for FY26 if you have any on the EBITDA side as well as on the net profit margin long term? In long run we have delivered the EBITDA margins in the range of 2.5. Around 2.5. So that’s what we hope to maintain. Okay, that’s all. Thank you. Thank you. Next question comes from the line of Aman from finvestors. Please go ahead. Good evening Sir. Aman, my 2, 3 question was already answered. My next question is on AI segment. Any change in your strategy in distributing or selling of products enabled with AI tools keeping in view of deep deep sea effect contrary to Nvidia, please throw some light on it. Absolutely no. We continue to be gung ho as in the recent past. But at the same time we don’t want to sound overconfident and we are conscious and alert and studying if there is going to be any impact of deep seq. But while we speak there is no change in strategy. Okay sir, my follow up question on same. Any update on finalization of Zy tender of 10,000 GPUs as you mentioned in previous concur. Yeah, so what you. I know what you will also know from newspapers only that the government has already opened the tender comparison is done. L1 is identified. They are going to award the tender. And once the award tender is awarded, existing players will start providing that capacity. Whatever quantity they need more they will come to distributors like Rashid benefits to get more quantity. Okay sir, thank you and best of luck for the Q4. Thank you. Thank you. Next question comes from the line of Vineet Bansal from Pinnacle Securities. Please go ahead. Hi. Thanks for the opportunity to ask the question. I wanted to know more about the order book. So what is the quantum of the order book right now and how much of that? I mean which is the biggest segment right now in terms of end user from the order book? Yeah. So I want to clarify to our all audience here that Rashiber. Is a value added leading ICT distribution company. We are a B2B company. We do not do any end customer business directly. We always do through our partner ecosystem. So that’s one clarification we need. And second, as far as order book is concerned. So as I said earlier that so far we have been able to maintain our double digit growth. So in terms of order book, order execution, everything we are aspiring to maintain the same thing in the coming quarter as well. Okay. And my second question is regarding the new embedded lab in Bangalore. So I just wanted to understand a bit about what is. What do you expect from the lab in few years? What’s the plan over there? So basically we inaugurated the lab about four, five months back. And since then we have been developing various prototypes of various products. And some of the prototypes design has been successful. And then they are approved by various OEMs in the country. And as a result we have now started supplying those embedded components as well. As we expand into laboratory, we add more manpower. We are enhancing our design capability, solution capability and more importantly testing capability. So this also will help us to have more and more design wins in this business. Design wins is equal to business. So the more design wins we have, the more business we will have. Got it. And who will be the primary end users? To return to the question queue for follow up questions please. Sure. Thank you. Thank you. Next question comes from the line of AJ Slakhani from Unifi. Please go ahead. Yeah, hi team. I had a couple of queries. First could you just call out. Sorry to interrupt. Mr. Lakhani, you’re sounding muffled. If you’re using speakerphone, may we request to use hand? Yeah. Is it better? Much better. Yeah. Thank you. Sorry. Yeah, yeah. Hi team. Thanks for the opportunity. I have a couple of questions. The first one is that Rajeshi Kapal. Our understanding was that given the fundraise we were having a strong pool with low enterprise segment exposure. And that should have given us access to grow faster than the industry for many years to come given the fundraise. So how should I read this result? Because if you look at the commentary from the previous quarter as well we had some enterprise levels. Level deals with the education project and the networking products order. So you know, part of that was sort of executed as called out in the previous quarter. So there was a spillover effect. So if I exclude for that this shows an extreme amount of weakness. So could you call out exactly what is the demand slowdown that you’re talking about and could you split it up across channel wise as well? Yeah, so I just what happens is if you understand, if we try to understand Indian calendar quarterly. So Q1 that is April, May, June, July, August, September always are high business months in consumer and commercial both. October, November, December is the lowest quarter in the year as far as ICT business is concerned. I am not talking of other business. And then jfm, the business again starts picking up. So therefore you will see that our H1 business, we grew pretty fast. And thanks to some bigger deals, net result today is that 9 months to 9 months we are at a 33% growth which is more than 2x of the industry growth and our PAT is at 62% growth on a 9 months to 9 months basis. While saying so as I said earlier, OND has been little bit Q3 has been little bit slower than anticipated. January also has been little bit slower than anticipated. Fingers crossed for Feb and March. Okay, Rajeshi. But I don’t understand that the seasonality impact with 3Q being slow was the session, was the prelude even in FY24. So my query is not sort of answered that I get the feeling that, you know, excluding the spillover which was there from the enterprise segment, the revenue growth is very flat. And that is where I’m sort of trying to understand because this would effectively mean there’s a significant demand slowdown. So even if I eliminate the project business, still our growth is a high double digit growth. So that means the while the market is slow down, but there’s no significant slowdown. Otherwise high double digit growth without the project business would not have come. Okay, got it. The next one sir, is you made an announcement, you know, regarding the acquisition. So could you speak a little bit about, you know, the nature of that business, the kind of products that they do, what kind of margins are there in that segment, you know, what did we really see and how is that deal sort of structured? Because we bought 70% stake that was disclosed. So could you just call out a little more color on that business? So. This discussion is related to our aspiration to add different and new verticals of the IT industry from a perspective of cybersecurity. While we’ve made the announcement, we are limited in terms of sharing the transaction. It is under execution of the and working of the transaction. The perspective is that instead of starting from scratch, we acquire smaller and strategic industry partners to enter into new segments of the IT industry. This company is focused on cyber security and cybersecurity is one of the fastest growing segment within the ecosystem. Got it. Kapil, if you could just expand. I understand the thought of build versus buy but you know, what are we really buying? Are we buying relationships with, you know, with suppliers? Or are we buying the know how or are we buying, you know, the customer reach? What exactly is it that we sort of see in terms of value add? I think it’s a culmination of vendor alliance. The team, it’s a very different team. You need a very different skill set from a pre sale sales perspective, clients and the end customer. I think there is some value in the company. However, with our reach we believe that we will add value to this company from a perspective of expanding their reach on a cybersecurity portfolio. So I think this is going to be a start. What will help us do is to accelerate our acquisition of brands for distribution in the field of cyber security with a base that is available to us in this company. Got it, Got it. And just a clarification, so the 28 crore forex impact which we have received both on the other income as well as the line expense, if I, if I were to exclude for that and just look at the line item of expenses, you’re saying, could you call out what is the actual expenses on the advertising and sales promotion front which has got incrementally, it seems like a higher number this quarter. As far as quarter is concerned, the advertisement expenses are in the range of 17 crores as against the earlier quarter which was much lesser. However, we normally analyze it at 9 months to 9 months. So again 17 crores if. Want to compare the quarter it was 4 crores corresponding quarter of previous year. Against that it is 17 crores in this quarter. Okay. And could you just call out what exactly is this significant increase on account of Himanshu sir campaigns executed during this quarter. Brand campaigns executed during this quarter. Which. Which gets recovered from the brand as you know a part of CODs. So cost margin gets compensated. And that will happen with the lag effect. Right. So in the subsequent quarters as you have expensed it the depending on the revenue that you’ll book, you’ll get a support from the event. Accounting happens based on certain criteria. So mostly it gets recognized in the same quarter. Okay. And hour is very less in case where you know confirmations from brands gets delayed before the reporting like after the reporting period. Then only it will otherwise for this impact it is already there incorporated. Okay. So thank you and all the best. Thank you. Thank you. Next question comes from the line of Sankara Narayanan S from I thought pms. Please go ahead. Good evening sir. Thanks for the opportunity. So my first question is regarding the enterprise vertical. So what are your expectations in future? Let’s say from three to five years or down. So how is your working capital cycle is going to reduce? Because you told that it should be. We should see a 10% improvement in working capital cycle. So how does enterprise vertical really help managing the inventory or the receivables? So enterprise this. Okay, so enterprise business like as you see that our inventories are in the range of 55 to 60 days. Enterprise business doesn’t warrant these many kind of like these many deals for holding the inventory. So definitely overall cycle gets optimizes when we do more of wherein the inventory holding cycle is much less than what is the average cycle in the normal channel business, Sir. But at the same time your receivable days would be going forward because it should. It is having a higher receivables and payable days rather than the current segment. So in enterprise deals or the larger deals we tend to, you know set off the receivable days from the payable days wherein you know the credit terms are also negotiated in a manner so that so as to make sure that the ROEs and ROCs doesn’t get affected and we don’t end up investing in, you know, more into the gap of debtors and creditors. Sir. In that case you are expecting the ROC level to improve from this level, Sir. So depending upon deal to deal, it’s. You know why we are very conscious about ROCE and ROE on a transition level basis also. But as if you compare this with earlier quarters since the capital base has increased. So the ROC and ROE to get established at the previous levels. Yes, it will take some time. Got it. Sir, so my second question is regarding the mobile phone distribution. So you have stopped the distribution of mobile phones. So sir, my question is when did you stop this segment and what’s the reason behind it? So this mobile phone business ended sometime in 2018, 2019. The main reason for this ending was that at that point in time we realized that mobile phone is a very extensively capital intensive business. The cycles might be higher but the margins are also lower at the same time. Which compensates from an ROC ROE perspective. But you look at IT industry and the mobile phone industry, smartphones particularly this industry is almost from the size of about 2 and a half to 3 lakh crores. If you have to make any significant impact and participation in this industry, you need to participate in a revenue of at least 2 to 3,000 crores. That required about 200 to 300 crores of capital deployment. When we had stopped this at that time we did not have enough capital to do a smartphone or a mobile phone distribution business which was stressing our overall debt equity and the margin profile post that going away from the mobile industry, our total available from a debt equity perspective. From a margins perspective, I think both expansion was possible and that’s what has happened after that. Sir, one more thing. Does it contribute at a much higher share in the overall revenue during that period? Yeah, mobile phone peak volume was almost 40% share of our total revenue at peak which is also not very desirable. So in 2019 or 18, you are seeing that 40% of your revenue comes from mobile home segment. Yeah, 39 to be precise. Got it. Sir, the reason why I’m asking is during that period your working capital days have been in the range of 30 to 40. But in the last two years it have went up significantly higher. Mobile phone working capital cycles are almost half than you know as compared to it. So yes, when mobile phones were there. It was much lower but for it to it. If you see working every cycle what we are operating at, as mentioned in our earlier call also yes, we continuously strive to have improvements in that and we aim to have, you know, 10% improvement in one to two years design. And yeah, that is the optimized level we would say with our kind of penetrated infrastructure of distribution we carry. I would like to add to what Himanshu mentioned in that I think you’re comparing from last two years prior to this last two years was also during COVID times where the supply was limited and the demand was higher due to which we had an opportunity. But that is not a sustained level of distribution working capital cycle. I think post Covid that normalization has happened and therefore you see an increase which is not really an increase by design where supply was shorted. So inventories, whatever was there. Got it sir. Also sir, I could see from your DRHP that six global brands have left from your partnership in FY22. So if you could throw some light why the brands or OEMs are not willing to distribute products? No, I think six these are all very small, insignificant products that we may have bought for repair or something. From distribution perspective, only one mobile brand is what we separated. Otherwise there are not. There are no cases at all. In fact we take pride that all the brands that did get associated with Rashi Paris’s right last 25 years, Asus, Logitech, they all continue to work with us even today. I think one or two exhibited the India business only pixel. You were there if it closed out completely, otherwise there’s nothing. Thank you sir. Thank you so much. Thank you. Ladies and gentlemen, in order to ensure that the management is able to address questions from all the participants in the conference, please restrict your questions to two each per participant. If you have any follow up questions, you may rejoin the queue. The next question comes from Tejas Khandelwal from Prudent Equity. Please go ahead. Oh hello. Yeah. How much other expense can we expect in the next quarter if we keep aside the impact of the foreign exchange fluctuation? Voice is not clear. We couldn’t get your question. Can you please repeat? So I wanted to know like how much other expense can we expect in the next quarter if we keep aside the impact of foreign exchange? Same fluctuation, how much other expense? Okay, so I wanted to know the expected other expense in the quarter. 4. If you keep aside the foreign exchange fluctuation quarter for projection on other expenses, line item per se. Difficult to throw a number because it comprises a lot of variables which gets involved and gets booked under other expenses. So frankly speaking, like the major components or the regular components, to be more specific, in the other expense head remains in the same range and we don’t see any increase because those are of fixed nature like communication expenses, electricity charges, rentals which are more or less defined. But you know, advertisements and forex and all these things which have dependency on external sectors. Those only contribute to the deviations which happens under this head. Okay, okay, sir, understood. And sir, I have another question on orders. So as, as you said, we can expect orders from the data center players who have submitted bids in the recent tender. So apart apart from those orders, are there any orders in the pipeline for the company? Yeah, there are few in the pipeline and at various levels of discussions. Okay. Okay, thank you. Thank you. The next question comes from the line of Vinay Menon from Monarch Capital. Please go ahead. Just few questions on my side. One is on the PS lit vertical. If you could just expand on what products, you know, saw some slowdown so we could get some more clarity on that. Yeah, so basically in broad understanding, lit is more components and peripherals and PES is more personal devices like laptop, desktops, workstations. Overall, what we see is that lit continues to be the. At the same breath, the slowdown is particularly into the consumer laptop segments. But commercial laptop segment also continues to be on the positive side. Okay, so consumer laptops is where we saw some slowdown. Okay, yeah, that helps. That helps. Okay. And sir, in terms of roarc, we’ve always, you know, kind of put a target of 15%. So like despite 26, your voice is cracking. Yeah, I said that as a company, we’ve always. Envision to reach that 15% plus ROE ROC. So can we see this happening by FY26 or will it take a bit more time to reach there? So I would like to take this question and answer that. You know last 10 years average has been delivered between 17 to 20% ROE. Yes. And with this capital raise which we expect to, you know, to deploy in the business, in generating the new business is something the bouncing back of ROE depends on the pace at which we will be able to generate business commensurate to the capital raise. Yes. So defining 2026 as a milestone to achieve those 15 or 18% is a matter how fast the growth comes and what kind of, you know, the growth comes, what kind of margin profile it brings brings in, what segment it happens. There are various factors. Yes, we strive to reach to those levels asap. Okay, okay, that helps. And sir, like as we won a, you know, a large deal in Q1, so are we, you know like still bidding for those deals and is there any pipeline where we can say expect any kind of large deals over the next six months, anything like that which is close to completion or something like that? If you can update on that, that would be great. So as I explained earlier at the start of the call, those large deals have relatively dried out. But then small, small deals consecutively are there in the pipeline and Rashid Peripherals is in contention for the same. Okay, great. And on the embedded side, sir, like we obviously we are working on a very small base. But have we. Your voice is connecting again. Yeah. So. So in the on the embedded business we saw some good deal, you know, the first half. So did we see any of that momentum continue in Q3? Absolutely. That is what I mentioned that we’ve some got some good design wins and design wins is equal to business. So yes, especially our laboratory in Bangalore is helping us to get some good design wins. Okay. Okay. And on the enterprise side sir, last question is that we had, we bought a lot of deal which was about 1500 crores and I think first half approximately about 2000 crores is what we were doing. So in Q3 has that number. Can you give me like what has that number grow to? Like you know that would help. So Q3 to Q3 as I mentioned the number growth is 7.7% in terms. Terms of top line and PAT growth is 29% Q3 to Q3 for the enterprise division. If you can help me with enterprise deals, we thus data is not ready. PNDL is not drawn for enterprise separately. Okay. Difficult to answer instantly on those. Okay, okay. No problem, no problem. Thank you so much for your time. Thank you. Next question comes from Madhurati from Countercyclical Investments. Please go ahead. So thank you for the opportunity. Sir, I wanted to understand this embedded lab. Sorry to interrupt your sounding muffled. Maybe request to use the handset, please. Is my Ozma Audio better right now? Yeah, yeah. Sir, I wanted to understand this embedded lab business and what kind of financials or economics can we see in this segment and how is like, sir, is it like we bid for a particular product or we cater to new product for OEM and then you get manufactured it like a contract licensing or something like that. So I wanted to understand regarding this. So basically in the embedded business, basically we have authorized distribution of chips from various suppliers, which includes Intel, Nvidia, Elmos, Micron, Western Digital, so on and so forth. So their products, with their products, basically the chips, we design certain solutions because you know, nowadays everything is automated. Maybe I can give you a random example that in a normal car today they have more than 2530 chips, right? And we are one of the potential suppliers for that. So we work with those manufacturers of say automobiles, robotics, education to develop solutions. And once the solutions are done tested, then there is a gestation period of three months or six months as an experiment. Once that is proven, then it goes for mass production. Okay. So we are like a service provider supply. So we are like a consulting company to these manufacturers and we help them design applications for the chips, whatever authorized distributor we are. So. So this business would be very attractive in terms of margin. It seems so. So what kind of margin would we expect in this business on a steady state? And sir, how big would be this opportunity overall? On overall basis? Yeah, so what? I think you are perfectly on spot on that it is like a consultancy business. But this is not pure consultancy. It is buy and sell. Sell also. So we sell products and solutions both and we are also into a design phase in India. The current market size of this is estimated to be about a billion dollars. So you can understand the potential opportunity in India. Got it. And sir, how, how big would this be of our current revenue or a very small portion currently. Currently we are a startup, so it’s pretty small. But with the progress that we are having, once we break the ice substantially, I think there will be multiple times growth. Okay, got it. So just a final question from my side. So based on the design when that we have seen and based on the your like optimistic guidance that we are seeing on this segment, sir, can this segment become 5% of our revenue, 5 to 10% of our revenue over the next three to five years? I think I said that currently the market size is a billion dollar, which is billion dollar means about 8,500 crores market is existing today and which is growing rapidly. So I hope that itself gives the answer. Okay, got it. So thank you so much and all the best. Thank you. Next question comes from Vineet Bansal from Pinnacle Securities. Please go ahead. Thanks. Well, I had questions about the embedded labs which just got answered. I have one more question. So Mr. Rajesh actually mentioned in the last con call that the debt sort of normalizes at the end of the year. So I just wanted to find out like what can we expect this year in terms of debt and how much of that can normalize debt? As I said, it’s, you know, it’s working capital which is required in this kind of business and it gets, you know, fulfilled by a debt combination of debt and equity. Of course the collection phase which has gone little slow and because of it the working capital cycle has seen a little increase. We hope to get it normalized in coming months depending upon the collection trend and all the debt level can only be predicted. So we see little correction but more or less in the same range. Okay, thanks. All the best. Thank you. Thank you ladies and gentlemen. We would take that as a last question for today. I now hand the conference over to Mr. Kapil Pansal for closing comments. Hello everyone. Thank you for joining this call. For our results on quarter three, FY24, 25 and on nine months year to date numbers, I would only like to highlight that quarter three numbers because of seasonality is among the lowest in the year and therefore, if viewed from quarter two to quarter three, quarter over quarter will definitely look subdued. However, on the comparative basis of quarter three of last year, FY 2324 versus 2425, we are extremely confident that we will continue to maintain the pace and continue to grow in the market and for the organization overall. Maintaining our numbers offer double digit CAGR growth that we’ve maintained over the past few years. Thank you so much and please keep giving us your confidence and your support like always. Thank you so much. Thank you. On behalf of Rashi Peripherals Ltd. That concludes this conference. Thank you for joining us. You may now disconnect your lines.